Due Diligence

Our Philosophy

As a result of experience gained since 1988, we are well aware of the fact that only a relatively small number of businesses become successful public companies.

In addition, to align our interests we invest in our clients, which moves the relationship well beyond that of “consultant and client”.

Those individuals and organizations with which we have established relationships over the years know that we represent and assist companies because we truly believe in the business and its long-term potential.

We are well aware that our ongoing ability to continue to succeed as a business is contingent on our reputation, which is based not only on what we do and how we conduct ourselves, but also the quality of the companies that become part of our client portfolio.

It is for these reasons that we conduct a thorough review of a company, its management, objectives, history, business planning, issues, and potential for success before entering what we call, “a partnership”.

Our Thoughts

1. The public market is a difficult environment within which to operate. As compared to large cap companies, small and micro cap companies face additional pressures, which include concerns about business growth, trading liquidity, the ability to raise capital for business developments, a shortage of bargaining power and management groups that are not intimately aware of the demands of the public arena.
   
2. The Howard Group treats the public market as a business, which requires a unique and well-developed strategy for each client. The same principles that apply to building a successful long-term business are applied to assessing the public arena. We need to develop a strong understanding of your business to assess our ability to bring ongoing value to the relationship.
   
3. The Howard Group stakes its reputation on its clients. We are well known and trusted within the investment community and investing public, as we work with and assist our clients over the long term. We are responsible to the people within our network, as public companies are to their shareholders.
   
4. At the end of the day, to accept a company as a client we must answer, “ Yes ” to the question, “Would we buy this stock?”

The Process

Stage 1:

A) Please submit an outline of the following:

The questions contained in Appendix A (below) can be used as a guide to provide us with the information specific to the above points.

B) Please outline your needs, aspirations and objectives . The Howard Group must understand what management expects from a relationship with our company.

Too often we find that management does not think beyond, “We need IR or PR” or “We need to maintain our stock price”. In short, you need to recognize what you are looking for before we can properly assess whether or not there is a role for The Howard Group.

The questions contained in Appendix B (below) will assist you in providing information specific to this area.

C) An initial conference call will be held with management following receipt of the requested information.

Please note: The Howard Group will sign a Non-Disclosure Agreement if required.

Stage 2:

The Howard Group will require a presentation from management to discuss in detail the information that has been provided. Additional due diligence may involve discussions with members of the Board of Directors, major external shareholders, members of the investment community and partners/clients of the company.

Stage 3:

The Howard Group requires the potential client to present to the Board of Directors of the Insight Limited Partnership, which was established to invest in micro and small cap opportunities. The Insight LP Board is comprised of five members, four of whom are independent directors.

Appendix A

1. Outline your planned major milestones and timelines for the next 12 months.
2. Have you met previous objectives and milestones as contained in your business plan? If yes, please explain. If no, please describe why targets were missed.
3. Do you have a current marketing plan?
4. How is the market responding to your current products?
5. Have you had any market research/marketing studies completed by a third party? If yes, please include.
6. Do you have any sales and marketing agreements in place and/or any long-term sales contracts?
7. Is the company subject to any non-compete agreements? If yes, please include the details.
8. Pl ease describe your current sales force.
9. Who are your customers? Where are they located?
10. Have you lost customers? If yes, what were the circumstances?
11. Describe your relationship with your suppliers and/or manufacturers.
12. Describe all intellectual property. Do you have patents or patents pending? Have there been any attempts at infringement?
13. Do you have any pending litigation or complaints that may interrupt your company from doing business? If yes, please explain.
14. What is your strategy to create `blue sky’ potential?
15. How well do all components of your business fit with the strategy? Be specific.
16. What are the biggest risk factors that could affect your business?
17. How do you plan to mitigate these risks?
18. Who are your major competitors?
19. What is your advantage over competitors?
20. Have you undertaken any partnerships or joint ventures? If yes, please explain.
21. Do you foresee any acquisitions on the horizon?
22. Do you personally have an exit strategy? If yes, what is it?
23. Do you currently have analyst coverage? If yes, with whom? Do you agree with their conclusions?
24. Do you have any disgruntled shareholders? If yes, who are they and why?
25. How much stock does management hold? Insiders? Institutions?
26. Are there any current or past issues concerning members of management or the board in relation to any breach of securities regulations?
27. Does your company utilize any profit sharing plans? Any stock purchase plans? If yes, please describe.
28. Have you completed any financings? With whom? Who was the lead? How much stock do they hold? What is their current sentiment for your company?
29. Will you be seeking additional financing in the near future?

Appendix B

1. Have you employed any IR firms in the past?
2. If yes, were the results in line with expectations?
3. What were your expectations?
4. Did your business perform according to plan during this period?
5. What were the contractual arrangements?
6. What do you think your stock is worth and why?
7. What is your daily average trading volume?
8. What is your objective for daily average trading volume in three months?
9. Do you think your shareholders and the market understand your business?
10. Do you think the market has an understanding of your business objectives?
11. Do you think the market has an understanding of your roadmap and timelines?
12. Have there been events in the past that would have created apprehension in the market about the business and/or management’s abilities to execute the business plan?