Contract analysis

I. Interview Logistics Witness. Ryan Mateo Serrano ("Serrano"), Controller, Verimark Coastal Resorts LLC ("VCR"), a wholly owned subsidiary of Verimark Hospitality Group Inc. ("VHG" or the "Company"). Serrano is a subject of the Audit Committee's ongoing internal investigation. He has been on administrative leave from VHG since August 7, 2023. Serrano has been employed by VHG for approximately five years. Counsel for

II. Upjohn Warnings and Acknowledgments At the outset of the interview, before any substantive questioning commenced, Howard Quinn administered the firm's standard Upjohn warning script (version dated August 14, 2023, a copy of which is maintained in the investigation file). Mr. Quinn advised Serrano of the following:

1. Calderwood & Harkness LLP represents the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. Calderwood & Harkness does not represent Serrano individually, and no attorney-client relationship exists between Calderwood & Harkness and Serrano.

2. The purpose of the interview is to gather facts in connection with the Audit Committee's internal investigation into certain expense-reporting irregularities and revenue-recognition practices at VCR. The investigation was authorized by resolution of the Audit Committee on July 31, 2023.

3. The attorney-client privilege with respect to communications during this interview belongs to VHG, acting through its Audit Committee, and not to Serrano personally. Serrano does not have the authority to assert or waive any privilege on behalf of VHG.

4. VHG, through its Audit Committee, may in its sole discretion choose to waive the privilege and disclose the contents of this interview, including this memorandum and any notes taken during the interview, to third parties, including but not limited to government regulators, law enforcement agencies, and the Securities and Exchange Commission.

5. The substance of this interview is confidential. Serrano was instructed not to discuss the interview, the questions asked, or the information he provided with any other current or former employee, officer, or director of VHG or VCR, or with any other third party, other than his own personal counsel, Marco A. Ruiz. After each of the foregoing warnings was delivered, Mr. Quinn paused and asked Serrano whether he und

III. Background and Employment History Serrano provided the following background information in response to preliminary questions from Liam Donahue. Personal Information and Title. Serrano's full legal name is Ryan Mateo Serrano. He holds the title of Controller of Verimark Coastal Resorts LLC. His principal office is located at 7820 Gulf Breeze Parkway, Suite 400, Destin, Florida 32541, which serves as VCR's divisio

1. Coral Dune Resort & Residences, located at 14200 Emerald Coast Parkway, Destin, Florida 32541. Serrano described Coral Dune as VCR's flagship property and stated that the Phase III expansion of the resort was a significant focus of capital-improvement activity during the period under investigation.

2. Palmetto Bluff Club, located at 3950 Longboat Key Drive, Sarasota, Florida 34228. Serrano described Palmetto Bluff Club as a smaller property with a focus on club membership and timeshare-interest sales, including Phase II units that had been brought to market during 2022. Serrano stated that he was responsible for all financial reporting related to these two properties and that the fictitious purchase orders and

IV. Fictitious Purchase Orders and Shell Entities A. Overview of the Scheme In response to questions from Liam Donahue, Serrano acknowledged his role in creating and processing fictitious purchase orders attributed to three purported vendors for capital-improvement work at VCR-managed properties. The three entities — Gulf Standard Contracting LLC, Clearwater Design Collective Inc., and Suncoast Property Services LLC

V. Revenue-Recognition Practices at VCR A. Serrano's Role in Revenue Recording Donahue transitioned the interview to questions regarding VCR's revenue-recognition practices, a separate but related component of the Audit Committee's investigation. Serrano described his involvement in VCR's monthly and quarterly close processes, which included the recording of revenue from timeshare-interest sales. Serrano stated that

VI. Serrano's Relationship with Daskine and Prescott Donahue asked Serrano to describe his working relationships with Garrett W. Daskine and Nicole Prescott, and the dynamic within VCR's leadership team. Serrano described Daskine as the primary authority at VCR and the individual who set the strategic and operational direction for the division. Serrano characterized Daskine as a "dominant personality" who made major

VII. Serrano's Personal Exposure and Posture Marco Ruiz made a brief statement on behalf of his client regarding Serrano's cooperation posture. Ruiz stated that Serrano was participating in the interview voluntarily and that Serrano recognized the seriousness of the matters under investigation. Ruiz stated that Serrano understood his potential personal exposure in connection with both the fictitious purchase-order sc

VIII. Documents Referenced During Interview During the course of the interview, Serrano was shown selected documents from Calderwood & Harkness's investigation files. The documents were presented to Serrano for identification and comment and included the following:

1. Sample Purchase Orders. Printouts of selected purchase orders from VCR's accounts-payable system attributed to Gulf Standard Contracting LLC, Clearwater Design Collective Inc., and Suncoast Property Services LLC. Serrano reviewed the purchase orders and confirmed their authenticity. He acknowledged that the purchase orders were created by him in VCR's system.

2. Invoice No. GSC-2023-007. A copy of Invoice No. GSC-2023-007, dated February 14, 2023, in the amount of $94,500, described as "lobby renovation materials — Coral Dune Phase III." Serrano confirmed the invoice was fictitious, that no such materials were procured or delivered, and that the invoice was processed for payment at Daskine's direction.

3. Florida Secretary of State Filing Records. Certified copies of the formation and registration documents on file with the Florida Secretary of State for Gulf Standard Contracting LLC, Clearwater Design Collective Inc., and Suncoast Property Services LLC. Serrano reviewed these documents, confirmed that he served as registered agent for GSC and CDC, and confirmed that the information in the SPS filing was consistent

4. VCR Revenue-Recognition Journal Entries. Printouts of selected journal entries from VCR's general ledger reflecting the recording of timeshare-interest sales revenue for Q3 2022 (quarter ending September 30, 2022) and Q1 2023 (quarter ending March 31, 2023). Serrano reviewed these entries and confirmed their general accuracy, stating that they reflected the revenue-recognition methodology directed by Prescott. Ser

IX. Follow-Up Items and Open Questions At the conclusion of the substantive questioning, the following follow-up items and open questions were identified. Serrano, through his counsel, agreed to provide additional information on the following topics:

1. Bank Account Information. Serrano agreed to provide, to the extent he has records or can reconstruct the information, the specific bank accounts (including financial institution names, routing numbers, and account numbers) to which payments were directed for each of the three shell entities — GSC, CDC, and SPS. Serrano stated he entered this information into VCR's accounts-payable system and may be able to recall

2. Communications. Serrano agreed to identify and, to the extent they are in his possession, produce any communications — including emails, text messages, and messages on any messaging platform — between Serrano and Daskine or Prescott regarding the shell entities, the fictitious purchase orders, the revenue-recognition change, or any related topic. Marco Ruiz stated he would review any such communications for privil

3. Cash Payments. Serrano agreed to provide additional detail regarding the approximately $35,000 to $40,000 in cash payments he stated he received from Daskine over the course of the scheme, including his best recollection of the timing, amounts, and circumstances of each payment, and whether he has any documentary evidence (such as personal bank-deposit records) corroborating these payments. Marco Ruiz made two req

X. Conclusion The interview of Ryan Mateo Serrano concluded at approximately 12:40 p.m. Eastern Time on September 27, 2023. No other witnesses were present during the interview, and no audio or video recording was made. This memorandum reflects counsel's summary of the interview based on contemporaneous notes taken by Steven Hollander during the interview. It is not a verbatim transcript of the interview. To the exte