Contract analysis

I. Attendees The following individuals were present for the interview: Interviewee: Nicole Prescott, Vice President of Finance, Verimark Coastal Resorts LLC ("VCR"), a wholly owned subsidiary of Verimark Hospitality Group Inc. ("VHG") Counsel for Interviewee: Candace O'Brien Langford, Langford Pace LLP, Tallahassee, Florida For the Audit Committee of the Board of Directors of VHG / Calderwood & Harkness LLP: Howard Q

II. Upjohn Warnings and Acknowledgments At the outset of the interview, Howard Quinn administered the standard Upjohn warning to Ms. Prescott. Specifically, Mr. Quinn advised Ms. Prescott of the following:

1. Calderwood & Harkness LLP represents the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. in connection with an internal investigation. Calderwood & Harkness does not represent any individual employee or officer of VHG or any of its subsidiaries, including Ms. Prescott personally.

2. The attorney-client privilege for this interview belongs to VHG, acting through the Audit Committee. The Audit Committee may, in its sole discretion, choose to waive the privilege and disclose the contents of this interview to third parties, including government agencies, regulators, or other parties, at any time in the future. Ms. Prescott does not have the authority to assert or waive the privilege on her own be

3. The substance and content of the interview are confidential. Ms. Prescott was instructed not to discuss the substance of the interview, the questions asked, or the information she provided with any other employees, officers, or directors of VHG or its subsidiaries, or with any third parties, other than her personal counsel, Ms. Langford.

4. Ms. Prescott is expected to answer all questions truthfully and completely. Mr. Quinn asked Ms. Prescott whether she understood each of the foregoing points. Ms. Prescott confirmed that she understood each point. Mr. Quinn then asked Ms. Langford whether she had any comments or questions regarding the Upjohn warnings. Ms. Langford confirmed on the record that she had independently advised Ms. Prescott regarding th

III. Background and Employment History Ms. Prescott was asked to provide background information regarding her employment history with VHG and her current role at VCR. She provided the following information. Ms. Prescott stated that she has been employed by Verimark Hospitality Group Inc. for approximately nine years, having joined VHG in approximately 2014. She stated that she initially joined VHG's corporate finance

IV. Revenue-Recognition Practices at VCR A. General Overview of Timeshare-Interest Sales Process Ms. Prescott was asked to describe VCR's timeshare-interest sales process. She stated that VCR sells timeshare interests in its resort properties to individual purchasers, typically through on-site sales presentations and off-site marketing events. She explained that prospective purchasers enter into a written purchase ag

V. Expense-Reimbursement Irregularities and Shell Entities A. Prescott's Knowledge of the Fictitious Vendor Scheme Ms. Prescott was asked about capital-improvement purchase orders processed through VCR's accounts payable system. She initially stated that purchase orders for capital improvements at VCR properties were prepared by Controller Ryan Serrano and submitted for review and approval in accordance with VCR's st

1. Creation: Controller Ryan Serrano was responsible for creating the purchase order in VCR's procurement system, including identifying the vendor, specifying the goods or services to be provided, and entering the dollar amount.

2. Review and Approval — VP Finance: Ms. Prescott was responsible for reviewing the purchase order for accuracy, budget availability, and conformity with VCR's capital-improvement plan. She stated that her review was intended to serve as a financial control checkpoint.

3. Final Approval — Division President: For purchase orders exceeding $25,000, Division President Garrett Daskine was required to provide final approval before the purchase order could be issued and the corresponding invoice processed for payment. Ms. Prescott acknowledged that the forty-seven (47) purchase orders directed to the three shell entities — Clearwater Design Collective Inc., Gulf Standard Contracting LLC,

VI. Prescott's Understanding of Internal Controls and SOX Obligations Ms. Prescott was asked about her understanding of VHG's internal controls over financial reporting and the company's obligations under the Sarbanes-Oxley Act of 2002 ("SOX"). Ms. Prescott confirmed that she was familiar with VHG's obligations under SOX Sections 302 and 404. She stated that she understood that Section 302 requires VHG's Chief Execut

VII. Relationship with Other Subjects Ms. Prescott was asked to describe her working relationships with the other individuals who have been identified as subjects of the investigation. Ms. Prescott described her working relationship with Division President Garrett W. Daskine as "professional." She stated that Mr. Daskine was a "strong personality" who "expected results" and who did not welcome pushback on financial m

VIII. Document Preservation and Cooperation Ms. Prescott was asked about her compliance with document preservation obligations in connection with the investigation. Ms. Prescott confirmed that she received the document preservation notice issued by Calderwood & Harkness LLP on July 24, 2023. She identified this as the targeted preservation notice directed to VCR custodians in connection with the Audit Committee's inv

IX. Areas Identified for Follow-Up Based on the substance of the interview, the following areas have been identified for follow-up in a subsequent interview of Ms. Prescott and/or through other investigative steps:

1. Ms. Prescott's personal email communications with Mr. Daskine and Mr. Serrano regarding the formation, operation, and invoicing activities of Clearwater Design Collective Inc., Gulf Standard Contracting LLC, and Suncoast Property Services LLC.

2. Specific personal expenditures funded through proceeds received by Ms. Prescott from payments made by VCR to Clearwater Design Collective Inc., including amounts, dates, and categories of expenditure.

3. Ms. Prescott's interactions, if any, with HSA personnel, including engagement partner William Gentry or other HSA team members, regarding Q1 2023 revenue-recognition questions or any other audit-related inquiries during the period under investigation.

4. Details of Ms. Prescott's communications with Mr. Daskine in which she purportedly raised concerns about the revenue-recognition practice, including approximate dates, the specific substance of those conversations, whether any other individuals were present, and whether the conversations were documented in any form (e.g., emails, text messages, calendar entries, or contemporaneous notes).

5. Any written communications between Ms. Prescott and VHG corporate finance personnel, including CFO Griffith's team, regarding VCR's quarterly financial schedules submitted for consolidation into VHG's SEC filings.

6. Additional detail on the purchase order approval process, including any documentation of Ms. Prescott's review of the forty-seven (47) fictitious purchase orders, the nature and extent of her review, and whether she retained copies of supporting documentation such as vendor proposals, scope-of-work descriptions, or proof-of-completion records.

X. Conclusion and Next Steps The interview concluded at approximately 1:15 p.m. on October 11, 2023. The interview lasted approximately three hours and forty-five minutes, including one break of approximately fifteen minutes taken at approximately 11:30 a.m. At the conclusion of the interview, counsel Langford stated on the record that Ms. Prescott was willing to participate in a follow-up interview to address the ar