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P ROGR ES S RE POR T

To: Jacoby Cook, Chief Executive Officer

From: Misha Claytor, Chief Financial Officer

Date: March 12, 2018

Subject: Progress on the Dispensary Project

PROJECT DESCRIPTION (JACOBY)

Stratton Oakmont aims expand our business to establish ourselves in the growing cannabis industry. Our
goal is to be able to provide dispensary services at competitive prices in the states that have legalized
recreational cannabis. Currently we plan to start with dispensaries in California, and then more in other
states as they legalize cannabis for recreational use. Each of these facilities we establish will provide the
community with added jobs in the form of sales staff, managerial staff, stockers, suppliers, delivery
drivers, and regular security, as well as contribute to the growing cannabis industry. All planned facilities
will be subject to government regulation and federal law regarding the sale of cannabis.

SUMMARY OF WORK COMPLETED (JACOBY)

As of today, we have completed about 30% of our project goals. The necessary licenses needed to
purchase, grow, store, and distribute legalized cannabis has been applied for and granted by the
California state government and the US federal government. We have also purchased four locations in
Los Angeles, California to be converted into dispensaries. Two of these locations are now owned by us,
and two are under 18-month lease. Currently this portion of our project is under budget by $992,548,
which will be used toward renovations of these buildings. Ten new contracted employees were hired to
oversee operations as we move on to later phases of the project and conduct hiring for retail and
warehouse facilities.

WORK COMPLETED (MISHA)

• Obtained a license to purchase, grow, store, and distribute for a profit through the sale of
legalized recreational and medicinal cannabis crops. This action was required by the state of
California before we could proceed with any other works. We officially received our licensing on
March 5, 2018.

• Purchased two pieces of real estate outright and two 18-month property leases in the greater Los
Angeles area. The following properties were obtained for Stratton Oakmont’s use:

o 7221 Beverly Blvd. Los Angeles, California 90036. This is a 6,370 sq. ft. location that we
purchased for $ 3,699,000 and it is sitting on a little less than an acreage of land. It is a
retail storefront that is located within a target demographic within the city.

o 800 N Alameda St. Los Angeles, California 90012. This is a 29,000 sq. ft. retail location at
the heart of the busy city. We were able to secure] the 18-month lease for $ 1,696,500.

o 1901 S Hoover St. Los Angeles, California 90007. This is a 16,454 sq. ft. retail location in a
high-density location that services 623,000 people within a 3-mile radius. Our hope is
that this location will serve as our flagship home store. We purchased this property
outright for a total of $12, 700,000.

o 1024 Santee St. Los Angeles, California 28208. This is a 50,664 sq. ft. industrial warehouse
that we were able to secure the 18-month lease for $911,952. It will act as a storage and
grow facility that will feed into our retail locations.

• Hired independent contractors for renovations and improvements on our new properties. Their
costs were built into the cost for purchasing or leasing the properties.

WORK REMAINING (MISHA)

• Hire 10 full-time contracted staff members to oversee the start-up operations. The expectation is
that these employees will be responsible for:

o Hiring and managing part-time retail staff.

o Hiring and managing part-time warehouse staff.

o Hiring a service for part-time delivery drivers.

o Stocking our warehouse and retail locations.

o Hiring and managing an independent security and maintenance firm.
• Analyze first year operation costs to see where we have room to grow.

• Come up with a projected soft and hard open dates based on the expected timelines for
renovations from the renovation contractors.

• Purchase initial product stock.

COST ANALYSIS (MISHA)

The cost analysis for the work to date is as follows:

PERMANENT PROPERTIES

Location Cost

Home Store - Hoover St. Property $12,700,000

Branch 1 - Beverly Blvd. Property $ 3,699,000

Total $16,399,000

NON-PERSISTENT PROPERTIES

Location Cost

Branch 2 - Alameda St. Property $ 1,696,500

Warehouse 1 - Santee St. Property $ 911,952

Total $ 2,608,452

We were able to complete this portion of the work under budget by $992,548 that we will be putting
towards future additional renovation efforts.
ANALYSIS OF FUTURE COSTS
The breakdown of expected future costs are as follows:

New Management $10,000,000

Maintenance / Security $ 5,710,000

Future Renovations $ 992,548

Total $16,702,548

With the addition of the future expected costs, we anticipate that will use approximately $ 35,710,000 to
complete this phase of our operation. As you are aware we were granted $36,000,000 in discretionary
funds from the federal government and S.H.I.E.L.D.

APPRAISAL (MISHA)

While the project is currently in its infancy, we anticipate being able to progress along our desired
timeline for the next phase of production. The locations we chose for our retail store-fronts represent
prime locations for our target demographics and as such we are going to be able to recover from the cost
of startup within the first three quarters. We anticipate that there may be a cooling off period after we
open for business as the novelty of recreation cannabis wears off on the general population. After that
period, we will have regular customers a fairly few competitors for anyone to choose from.

CONCLUSION (MISHA)

We are making strong efforts to accomplish the goals outlined in our projected agenda. The next phase of
production will require greater diligence on behalf of Stratton Oakmont to ensure that we have hired full-
time retail management, properly forecasted our first-year costs, established a hard and soft opening
date, and that we have purchased sufficient supplies to open our initial three retail locations. It’s my
recommendation that if we allocate 10% more of our Stratton Oakmont in-house resources we may be
able to recover and complete the remaining 70% to completion for the next phase of development.