LUMIERE CONSULTING, LLC

                                                        a Colorado Company

 

 

DUE DILIGENCE CHECKLIST

 

1.   Capitalization:   Provide a table, indicating the title, authorized amount and amount outstanding as of a recent date;  of all indebtedness, shares and other securities of the Company indicating interest rates, maturity dates, and numbers of shares reserved for specific purposes, as appropriate.

 

2.         Projections:  Provide projections of  the operating statements and balance sheets for the next Three (3) fiscal years.  Footnote any  abnormal, non-recurring or unusual items and briefly explain the facts and assumptions upon which these projections are based, these proforma projections should be assembled in accordance with Generally Accepted Accounting Principles (GAAP) .

 

3.   Audited Financial Statements:  Provide copies of the audited financial statements for as many years as are available.  Explain all abnormal, non-recurrent and unusual items in footnotes and supporting documents.

 

4. Interim Financial Statements:  Provide a copy of the latest available interim profit and loss statement and balance for  the current year and corresponding period for last year.

 

5. Operations Analysis:  Provide breakdowns of the total sales and revenues and income before taxes and extraordinary items for the latest Three (3) fiscal years and estimates for the current year, according to major products and customers.

 

6. Major Products and Services:   Provide a summary description of each of the Company's present major source of revenues, including sales and profit potential.

 

7. Marketing:  Provide a summary of the manner in which the Company markets it's products. Include number of salespersons, number and locations of sales offices, and distributorship or sales representative arrangements.  Also, state the manner in which the Company distributes or sells it's products in foreign countries.

 

8. Product Development: Set forth the research and development expenditures during each of the last three fiscal years! breaking out any material customer sponsored research activities. Provide a summary of the Company's major product development programs and commitments, Describe the status of any proposed new product which will require a material investment of resources.

 

9. Use of Proceeds: Provide a breakdown of the intended use of the net proceeds to be received by the Company from the contemplated public offering. To the extent that proceeds from the public offering will be used to discharge indebtedness incurred in the last 12 months, indicate the nature of such indebtedness and describe the transaction in which it was incurred.

 

10. Patents, Trademarks and Licenses: Summarize principal patents, trademarks, trade names and service marks held by the Company which are material to the Company's business. List the number of patents and patent applications of the Company. Briefly summarize all license, franchise or concession agreements to which the Company is a party. Provide information as to the importance of such rights to the Company's business.

 

11. Departments: Provide a summary description of each of the Company's major departments or divisions and a brief indication of the number of people in, and functions performed by, each.

 

12. Operating Policies: Provide a summary description of the Company's general operating policies and procedures, including the distribution methods and procedures, general merchandising, pricing and buying policies.

 

13. Major Suppliers: Provide a summary description of the Company's major suppliers, the type of products and an approximation of the dollar purchases made from each in the latest year.

 

14. Raw Materials: Describe the sources and availability of raw materials I components, parts or other items used to produce the Company's products. Indicate whether or not the Company is dependent upon any single source (or limited sources) of supply, naming the supplier and the type of material or component.

 

15. Seasonality: Describe the extent to which the business of the Company is or may be seasonal.

 

16. Material Adverse Developments: Briefly describe current and possible future developments that have or may have a material adverse effect upon the Company including, but not limited to possible actions by customers, competitors, suppliers, labor unions and key personnel, as well as possible financial and economic developments.

 

17. Working Capital Items: Describe the practices of the Company and its industry relating to working capital items (e.g., where the Company is required to carry significant amounts of inventory to meet rapid delivery requirements of customers or to assure itself of a continuous allotment of goods from suppliers; where the Company provides rights to return merchandise; or where the Company has provided extended payment terms to customers).

 

18. Backlog: Set forth the dollar amount of backlog orders Believed to be firm, as of a recent date and as of a comparable date in the preceding fiscal year, together with an indication of the portion of the backlog not reasonably expected to be filled within the current year, and seasonal or other material aspects of the backlog. There may be included as firm orders government orders that are firm but not yet funded and contracts awarded but not yet signed, provided the nature of such orders is specifically noted.

 

19. Major Competitors: Provide a summary description of the major competitors in each of the areas serviced by the Company, including the nature of the products distributed, the comparable prices and quality, etc. Set forth the principal factors of the competition, e.g. price, performance, etc., and the manner in which the Company meets such factors.

 

20. Comparable Public Companies: Provide the names of the most comparable publicly‑owned companies in the company's field, and briefly distinguish each from the Company. Furnish copies of any prospectuses you have obtained which describe those companies or which describe operations comparable to those of the Company.

 

21. Employee Relations: Provide an indication of the total number of employees and the number in each major category (i.e., production, sales, administrative, clerical, etc.), and discuss union representation, if any, strike history, etc.

 

22. Capital Expenditures for Environmental Control:  State any material effects that compliance with any laws for the protection of the environment may have upon the capital expenditures, earnings and competitive position of the Company, as well as estimated capital expenditures for environmental control for the current and following fiscal year.

 

23. Physical Facilities: Provide a summary description of each of the Company's major physical facilities, including location, type of facility construction, tenure (owned or leased), square footage, nature and extent of utilization and adequacy in view of the Company's anticipated growth.

 

24. Leases: Provide an indicated of the Company's total minimum annual and probable annual lease rental obligations, a summary description of the general terms and a breakdown thereof.

 

25. Personal Benefits: Provide an indication of any automobiles, boats, airplanes, homes, recreational or other facilities or memberships owned or maintained by the Company for the use of officers, directors or significant shareholders.

 

26. Organizational Chart: Provide an organizational chart of the Company's management.

 

27. Significant Contracts: Provide a summary description (about a paragraph) of the subject matter, material terms and parties of each significant contract or understanding (written or oral) to which the Company or an officer or director is a party, including contracts or understandings with suppliers, employees, management, financial institutions, landlords, and others.

 

28. Litigation: Provide a summary description of the parties, subject matter and resolution of any material litigation (as well as administrative and judicial proceedings including, but not limited to, those involving environmental protection) to which the Company, its officers, directors or employees have been a party within the past three years and a summary description of any actions that are presently in process, pending or threatened.

 

29. Contingent Liabilities: Provide a summary description of any contingent or possible liabilities which are not covered by insurance in the ordinary course of business and which are not carried on'the Company's balance sheet or in the notes thereto, including guaranties, warranties, material oral commitments or understandings, and others.

 

30. Dividends: State the frequency and amount of any cash dividends declared on the Company's common stock for the two most recent fiscal years, any restrictions on the Company's ability to pay such dividends in the future and the Company's present intention with respect to the future payment of such dividends.

 

31. Tax Status: Briefly indicate the Company's current tax status, including the latest year through which the Company is cleared for federal income tax purposes and any significant questions raised by the Internal Revenue Service since the year through which the Company is cleared.

 

32. Expansion Program: Provide a summary description of the Company's expansion plans, including new facilities, personnel, products and other material areas of investment.

 

33. Company Studies: Provide a brief summary opinion of and a copy of any studies ' reports, or analyses of the Company prepared by the Company, management consultants, financial concerns, investment bankers or others since the date of the Company's incorporation.

 

34. Subsidiaries or Related Companies: Provide a summary description of: (a) the nature of the Company's relationships with any subsidiaries or related companies, and (b) with all companies in which officers, directors or major shareholders of the Company or members of their family have a direct or indirect interest in excess of 10%, whether or not such companies are doing business with the Company. List all such companies, showing their proper corporate name, state of incorporation and percentage of voting securities owned by the Company or other subsidiary (identifying such owner).

 

35. Employee Benefit Plans: Provide a brief description of all employee benefit plans, including any bonus, incentive compensation, profit sharing, deferred compensation, stock option, stock purchase, pension or other employee benefit plan. Indicate the total dollar amount involved for last year and projected for this year, based upon the estimated results for the current fiscal year.

 

36.  Directors: List the names and birth dates of all directors of the Company; indicate all positions and offices with the Company held by such person; state his or her term of office as director and any periods during which he or she has served as such; briefly describe any arrangement or understanding between ' such director and any other person or the Company pursuant to which he or she was or is to be selected as a director or nominee; and state any other directorships in other public companies.

 

37. Executive Officers: List the names and birth dates of all officers of the Company; indicate all positions and offices with the Company held by each such person; state his or her term of office as officer and the period during which he or she has served as such, and briefly describe any arrangement or understanding between such officer and any other person pursuant to which he or she was selected as an officer.

 

38. Significant Employees: Identify those persons who are not officers but who make or are expected to make significant contributions to the business of the Company, such as production managers, sales managers or research scientist, disclosing the same information as required of an officer under the preceding question.

 

39. Family Relationships: State the nature of any family relationship between any director, officer or key employee.

 

42. Business Experience: Describe the business experience during the past five years of each director or officer of the Company, including his or her principal occupations and employment during the past five years, the name and principal business of any corporation or other organization in which such occupations or employment were carried on.

 

40. Executive Compensation: Furnish on a separate sheet the information required in the table below concerning all cash compensation (including amounts deferred under a 401(k) plan) paid to each executive officer of the company for services in all capacities to the Company during the past two fiscal years.

 

Name and Salaries,

1998

1999

 

41. Proposed Remuneration: Describe all remuneration payments proposed to be made in the future pursuant to any on‑going plan, resolution or contractual arrangement to any of the officers or directors of the Company.

 

42. Transactions with Management: Briefly describe any transactions between the Company and its officers and directors, either directly or indirectly, and any indebtedness of such individuals to the Company, whether secured or unsecured.

 

43. Sale of Securities. List all sales of securities by the Company during the last three years, indicating the date of sale identity of purchaser, purchase price and form of consideration received.

 

44. Security Ownership: State the number of shareholders of record of each class or series of shares as of the latest practicable date and furnish the following with respect to any person who is a beneficial owner of more than 5% of any class of the Company's voting securities:

 

                                                                                          Numbers of

                                                                                          Shares

Name and                                     Class of                       Beneficially                         Percent

 

Address                                         Security                              Owned                        of Class

 

45. Security Ownership of Management: Furnish the following information as to each class of equity securities of the Company or any subsidiaries beneficially owned by each of the directors and officers of the Company, as well as those securities which may be acquired through the exercise of stock options within 60 days after the proposed filing date of the registration statement (please include information as to securities held in trust by or for such individuals, as well as securities held by their relatives, indicating the nature of such trust or relationship):

 

Name or                                                                                 Numbers

Number of                                                                        of Shares

Persons                                          Class of                       Beneficially                         Percent

in Group                                       security                              Owned                         of Class

 

46. Production Locations: Describe the locations in which the products of the Company are produced. Indicate whether or not the company utilizes other manufacturers on a subcontract basis.

 

47. Qualification to Business: List all states and any foreign countries in which the Company leases or owns real property, maintains personal property, or has employees, and as to such states or countries, indicate whether the Company is qualified to do business in such jurisdiction

 

48. Exhibits to the Registration Statement and Other Key Contracts: Furnish copies of each of the following (or verify that such documents are in our possession) with respect to the Company and each of its subsidiaries:

 

(a) Any plan of acquisition, reorganization, readjustment or succession to which the Company has been a party since its incorporation.

 

(b) The Articles of Incorporation and By‑Laws as presently in effect.

 

(c) Specimen stock certificates and copies of all constituent instruments defining the rights of holders of long‑term debt.

 

(d) Any plan setting forth the terms and conditions upon which outstanding options, warrants or rights to purchase securities of the Company or any of its affiliates have been or are proposed to be issued,

together with specimen copies of such options, warrants, or rights; or, if not issued pursuant to such a plan, copies of each such option, warrant or right.

 

(e) Any voting trust, shareholder, repurchase, registration right or similar agreement affecting the rights of shareholders to which the Company or any officer, director or 10% shareholder is a party.

 

(f) All bonus, incentive compensation, profit sharing, pension, retirement or deferred compensation plans, contracts or arrangements. If any such plan, contract or arrangement is not set forth in formal document, furnish a reasonably derailed description thereof in response to Question 37. Include any available booklet or other written description of any such plan, contract or arrangement.

 

(g) All indemnification contracts, insurance policies or other arrangements under which officers or directors may be indemnified against liabilities incurred in such capacity.

 

(h) Every material contract not made in the ordinary course of business which remains to be performed in whole or in part, or which was made or succeeded to within the past three years by the Company or any subsidiary, including, but not limited to, the following:

 

1. Bank agreements and other loan agreements (including amendments, renewal letters, notices and waivers, if any)

 

2. Material leases

 

3. Material contracts with suppliers or vendors

 

4. Material contracts with customers

 

5. Partnership or joint venture agreements

 

6. Form of contract with distributors, sales representatives or sales agents

 

Indicate by footnote whether the Company would seek to obtain confidential treatment for certain provi

sions of such contracts in connection with filing such contracts as exhibits to the registration statement.

 

49. Due Diligence Documentation: Furnish copies of each of the following (or verify that such documents are in our possession) with respect to the Company and each of its subsidiaries:

 

(a) Good standing certificates in state of incorporation and all states and foreign countries where qualified to do business, if available.

 

(b) Minutes of all meetings of directors, committees of directors and shareholders, including copies of any written notices if given and any written consent to action without a meeting.

 

(c) Any agreements relating to sales of securities by the Company including any private placement memoranda or other offering circulars.

 

(d) Permits and consents for issuance or transfer of the Company's securities.

 

(e) Agreements for loans to or from and any other agreements (including consulting and employment contracts) with officers, directors, or employees, whether or not now outstanding.

 

(f) Schedule of all insurance policies in force covering property of the Company and any other insurance policies such as "key man" policies or products liability policies.

 

(g) Employee confidentiality agreements.

 

(h) All letter which have been sent to auditors in connection with year‑end and current interim audits, including "litigation letters" for past five years.

 

(i) Copy of any auditors' letters to management regarding internal accounting controls and compliance with Foreign Corrupt Practices Act, for past five years.

 

(j) Active litigation files, including letter asserting claims, complaints, answers, etc. and information

regarding any material litigation to which the Company is a party or in which it may become involved.

 

(k) Any settlement documents for litigation.

 

(1) Any decrees, orders or judgements of courts or governmental agencies.

 

(m) Description of any warranty claims which have been made against the Company, any subsidiary, or any partnership or joint venture and the resolution of such claim.

 

(n) Records setting forth all issuance or grants of stock I options and warrants by the Company, listing the names of the issuees or grantees, the amounts issued or granted, the dates of the issuances or grants, the number of shares presently exercisable and the consideration received or to be received by the Company in each case.

 

(o) Lists of all current owners of shares, including addresses and numbers of shares owned. This numerical listing of stock certificates should show certificate number and date, name of shareholder, number of shares, date of board approval and permit or consent to transfer, and should trace subsequent stock transfers.

 

(p) Lists of all options proposed to be granted, if any, including names and addressed of proposed options holders and number of options to be held by each.

 

(g) All communications with shareholders for past five years.

 

(r) All press releases for past five years.

 

(s) Samples of marketing and sales literature used for various products.

 

(t) Permits for conducts of business, including licenses, franchises, concessions and distributorship agreements.

 

(u)  Copy of any business plan, financial plan and off any financial projections.

 

(v)  Copy off any internal or outside studies of the Company, or the markets for its products (e.g., by management consultants).

 

(w)  Summary of Y2K service interruption agreement (if any).

 

(x)  Summary of all OSHA inquiries (if any).

 

(y)  Summary of all EPA,, EEO, or similar governmental agency inquiries (if any).

 

(z)  Status of contracts subject to Renegotiation Act (if any).