Vendini Incorporated

Business Plan

MALAWI

Date: June 2021

 Non-Disclosure and Confidentiality Agreement

The undersigned ("Recipient") hereby agrees that all financial and other information
("Information") that it has and will receive concerning Vendini is confidential and will not
be disclosed to any individual or entity without prior written consent.

The Information shall remain the property of Vendini and shall be returned to Vendini
promptly at its request together with all copies made thereof.

Recipient acknowledges that no remedy of law may be adequate to compensate Vendini

for a violation of this Agreement and Recipient hereby agrees that in addition to any legal
or other rights that may be available in the event of a breach hereunder, Vendini may seek
equitable relief to enforce this Agreement in any Court of competent jurisdiction.

Date Signature

This is a business plan and does not imply an offering of securities.

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Contents

1 EXECUTIVE SUMMARY.....................................................................................................10

1.1 High level financial overview................................................................................................11

1.2 Financial summary.................................................................................................................12

1.3 Purpose...................................................................................................................................12

1.4 Description of business..........................................................................................................13

1.5 The Promoters........................................................................................................................13

1.6 Socio-Economic Benefit........................................................................................................14

2 THE ENTITY..........................................................................................................................14

2.1 Legal entity.............................................................................................................................14

2.2 Trade Name............................................................................................................................15

2.3 Physical Address....................................................................................................................15

2.4 Financial Year........................................................................................................................15

2.5 Directors.................................................................................................................................15

2.6 Contact Details.......................................................................................................................15

2.7 Registrations...........................................................................................................................15

3 PRODUCTS AND SERVICES..............................................................................................16

3.1 Product Offering.....................................................................................................................16

3.2 Product Description................................................................................................................17

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 3.3 Product Specifications............................................................................................................17

3.3.1 Future Line and Range Extensions.....................................................................18

4 INDUSTRY ANALYSIS.........................................................................................................19

4.1 Summary of the Industry........................................................................................................19

4.1.1 Cannabis Legalization in Africa.........................................................................19

4.1.2 African Cannabis Market....................................................................................19

4.1.3 Cannabis Malawi Overview...............................................................................20

4.1.4 Global Cannabis Market.....................................................................................20

4.1.5 Application Insights............................................................................................21

4.1.6 North American Cannabis Market......................................................................22

4.1.7 Cannabis Legalization in Europe........................................................................23

4.1.8 Forecast European Market..................................................................................24

4.1.9 Malawi Cannabis Legalization...........................................................................24

4.1.10 Concentrates and Infused Products Sector Analyses..........................................26

4.2 Value Drivers.........................................................................................................................30

4.2.1 Critical Issues.....................................................................................................31

4.3 Industry Price Structures........................................................................................................31

4.4 Trends and Problems..............................................................................................................31

4.5 Legal and Regulatory Environment.......................................................................................32

4.6 Economic Outlook..................................................................................................................32

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 4.7 Growth Constraints................................................................................................................33

4.8 Growth Opportunities.............................................................................................................33

4.9 Cyclicality and Seasonality....................................................................................................33

5 TARGET MARKET ANALYSIS..........................................................................................33

5.1 Targeting................................................................................................................................34

5.2 Positioning..............................................................................................................................35

5.3 Functionality...........................................................................................................................35

5.3.1 Product Features.................................................................................................35

5.3.2 Price Quality.......................................................................................................35

5.3.3 Use......................................................................................................................35

5.3.4 Expressive...........................................................................................................36

5.4 Marketing Mix........................................................................................................................36

5.5 Marketing Research................................................................................................................36

5.6 Target Market and Geographic Coverage..............................................................................37

5.7 Letters of Intent, contracts and orders on hand......................................................................37

5.8 Distribution Channels.............................................................................................................37

5.8.1 Marketing & Sales..............................................................................................37

6 COMPETITOR ANALYSIS..................................................................................................38

6.1 Market Share..........................................................................................................................38

6.2 Barriers to Entry and New Entrants.......................................................................................38

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 6.3 Substitute Products.................................................................................................................38

6.4 Marketing Budget...................................................................................................................39

6.5 Marketing Strategy.................................................................................................................39

6.5.1 Implementation...................................................................................................39

6.5.2 Market Organization...........................................................................................44

7 SUPPLIER ANALYSIS..........................................................................................................45

7.1 Suppliers.................................................................................................................................45

7.2 Bargaining Power of Suppliers..............................................................................................45

7.3 Availability of Raw Materials................................................................................................45

7.4 Exchange Rates......................................................................................................................45

8 OPERATIONAL ANALYSIS................................................................................................45

8.1 The Cultivation of Cannabis Activities..................................................................................47

8.2 The Facility............................................................................................................................48

8.3 The site plan...........................................................................................................................49

8.4 Product Driven Facility..........................................................................................................49

8.5 Genetics Sourcing and Strain Discovery Program.................................................................50

8.6 Offtaker 1s cultivators – competent grower...........................................................................51

8.7 Malawi and African Sativa Strains.........................................................................................52

8.8 Extraction...............................................................................................................................52
8.8.1 What is it?...........................................................................................................52

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 8.8.2 Our Competitive Advantage in Extraction.........................................................53

8.9 Reject Rate.............................................................................................................................54

8.10 Quality Management System.............................................................................................54

8.11 Quality Assurance Lead Integrated Operations...............................................................56

8.12 Internal Audit.....................................................................................................................58

8.13 Storage and Handling of Harvested Crop Production........................................................59

8.14 Nature of Construction and Finishes..................................................................................60

8.15 Ventilation System.............................................................................................................60

8.16 Special Areas for Handling of Highly Toxic, Hazardous and Sensitizing Materials.........62

8.17 Water Systems....................................................................................................................62

8.18 Maintenance.......................................................................................................................63

8.19 Equipment..........................................................................................................................64

8.20 Maintenance.......................................................................................................................65

8.21 Qualification, Validation and Calibration..........................................................................65

8.22 Sanitation............................................................................................................................66

9 MANAGEMENT & HUMAN RESOURCES......................................................................67

9.1 Management structure............................................................................................................67

9.1.1 Exectutive 1........................................................................................................68

9.1.2 Exectutive 3........................................................................................................68

9.2 Executive 2.............................................................................................................................68

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 9.3 Roles and Responsibilities.....................................................................................................68

9.4 Number of employees............................................................................................................70

9.5 Skills Required and Training Programmes............................................................................71

9.6 Staff Turnover........................................................................................................................73

10 INTERNAL AND EXTERNAL RISKS................................................................................73

10.1 Situational analysis.............................................................................................................73

10.2 Weakness Evaluation.........................................................................................................73

10.2.1 Malawian Health Products Regulatory Authority..............................................73

10.2.2 Sufficient Stock Reserves...................................................................................74

10.2.3 Cost per gram......................................................................................................74

10.2.4 Production and Quality Control Reports............................................................74

10.3 New Technologies..............................................................................................................74

10.4 SWOT ANALYSIS............................................................................................................75

10.5 Threats, risks and contingency plans..................................................................................75

11 SOCIO ECONOMIC BENEFITS.........................................................................................76

11.1 Job Creation........................................................................................................................76

11.2 Poverty Alleviation............................................................................................................76

11.3 Skills Transfer....................................................................................................................76

12 Financial Projections...............................................................................................................77
12.1 Assumptions.......................................................................................................................77

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12.2 Annexures...........................................................................................................................77

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1 EXECUTIVE SUMMARY

Vendini is a vertically integrated cannabis supplier which includes cultivation and

extraction/manufacturing facilities throughout Malawi Since demand is expected to increase
over the next years, market would require a continuous increase in production. Future
building improvements can be made to grow the operation.

Vendini is a private limited company formed and authorized under the Company laws of
Malawi, and will be led by Executive 1, who will serve as CEO / Co-founder and Executive 2
who will serve as Operations Director.

Our Vision

 To improve the wellbeing of individuals through our innovative products in this

rapidly growing industry.

Main Goals

 Own and operate cannabis cultivation and extraction/manufacturing facilities in

Malawi.
 To produce high-grade cannabis and cannabis products, including concentrates and
flowers, and build a recognizable brand in a rapidly growing industry.
 To ensure all cannabis products that will be distributed meets all regulatory
requirements and has passed any and all required laboratory testing.
 To be fully compliant with all legal requirements and be primed and ready for national
expansion.
 To uplift the local community through socio economic development opportunities.
 To produce consistent high-grade cannabis oil and build on the recognizable brand of
Malawi Gold.

Mission

 Our mission is to be the leading producer of the highest-grade cannabis products

globally, originating from Malawi.
 To deliver consistently high quality and uniform cannabis products for medicinal usage.
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  To become a trustworthy and socially responsible producer within the community.
 To drive a economic growth and to create employment opportunities within the
community.

Main Objectives

 Low product and facility contamination risk.

 High-quality, consistent product.
 High yield.
 Low production cost per gram.
 Net annual income to create wealth to harvest investments.
 Monthly sales and capacity increasing steadily throughout the first two years.

1.1 High level financial overview

Note: Based on $10m Investment.

VENDINI

High-level forecast FY2022 FY2023 FY2024 FY2025 FY2026

Sales 4 958 333 9 718 333 10 107 067 10 511 349 10 931 803
Cost of sales (989 683) (1 690 990) (1 758 630) (1 828 975) (1 902 134)
Gross profit 3 968 650 8 027 343 8 348 437 8 682 375 9 029 670
Gross profit % 80,0% 82,6% 82,6% 82,6% 82,6%

Net operating costs (1 445 400) (1 503 216) (1 563 345) (1 625 878) (1 690 914)
- General operating costs
- Employee costs (3 000) (3 120) (3 245) (3 375) (3 510)
- Administration costs (1 442 400) (1 500 096) (1 560 100) (1 622 504) (1 687 404)

EBITDA 2 523 250 6 524 127 6 785 092 7 056 496 7 338 756
Depreciation - - - - -

EBIT 2 523 250 6 524 127 6 785 092 7 056 496 7 338 756
Interest and finance charges - - - - -

PBT 2 523 250 6 524 127 6 785 092 7 056 496 7 338 756

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1.2 Financial summary

Vendini will fund its start-up costs largely through equity financing.

A full blown cannabis plant with a capacity of 2,000 kilos per annum at start-up will cost in
the region of USD 10 million including working capital. This being based on recent quotes
from various skilled and qualified market leaders.. Vendini’s aim is to support communities
across Malawi by engaging them as contract manufacturers at a later stage of the lifecycle.
This will boost the economy, improve the economic wellbeing of the local farmers and
surrounding communities and other related stakeholders.

Due to the nature of the industry and the demand for stock, one would need to carefully
consider which customers to target at inception. We have chosen to service the Offtaker 1
offtake agreement (Annexure B).

1.3 Purpose

The promoters of this document have identified an opportunity within the medical cannabis
industry would like to become the leading manufacturer in Malawi to produce a range of
products to support this market. The purpose of the document is to support an application for
a license to produce within the country of Malawi. The license application to not limited to
but includes the following:

1. Unlimited growth of all strains of Cannabis in outdoor, greenhouse or indoor

facilities for medical grade Cannabis on its own leased properties and on
contracted growers properties.
2. Purchase of product from other growers for processing (contract growers).
3. Import and export of seeds / mother plants for all strains of Cannabis including
the cloning of tissue culture and breeding of own seed strain in accordance
with customer demand.
4. Exportation of bulk raw material Cannabis crops to international clients.

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 5. Build and operate GMP (Good Manufacturing Practice) extraction plant for
processing Cannabis products from raw material crops, including a research
and testing laboratory for product development.
6. Sales, distribution and exportation of processed products from the GMP facility.
7. A transportation permit for Cannabis products.
8. A water usage permit for farming activities.

1.4 Description of business

Vendini and its key personnel have been in the cannabis industry for a number of years in
different projects, one of which is in South Africa and the other in Swaziland. Our aim is to
produce through cultivation and extraction as well as to procure local product across the
communities.

With the proposed facility we are able to focus on the core dynamics of cultivation such as the
formation of seedbanks, genetic acquisition and preservation as well as the unrivalled
knowledge surrounding the correct cultivation of pure medicinal cannabis. The top quality
grown produce will be refined in the production, extraction and product manufacturing
facility which is aimed to be a EU GMP certified facility. Vendini has a number of off take
off agreements that are lined up to supply top quality products for the growing of needs of
patients in countries legalized to participate around the globe.

1.5 The Promoters

The promoters of this application are Exectutive 1, Exectutive 3 and Executive 2.

The promoters are experts in the field and organizational structure has been designed from
past knowledge and extensive experience in the industry. These include financial experts,
strategic experts, technical experts, operational experts, sales & marketing experts, supply
chain management experts and growing technologists. Some will be directly employed and
others will be contracted to the company through a consultancy basis for a minimum period of
three to five years for skills transfer. The key objective is to achieve solid, sustainable
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growth and

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enhanced value and this management team guarantees the co-creation of wealth within an
industry that has a high growth potential and is extremely lucrative; a newly born industry in
Malawi that is now legal. Vendini will offer an entrepreneur-friendly innovative culture in
which all stakeholders can realize both financial and personal value.

1.6 Socio-Economic Benefit

Vendini aims to uplift and empower the Malawian communities through different initiatives,
from employment, charitable initiatives and socio economic development.

Job creation will consist of direct and indirect employment. The entity will employ around 60
direct jobs with indirect employment in excess of 20,000 jobs once we contract the local
farmers to produce for market demands as we progress through the various lifecycle stages of
the business.

These jobs will include management, skilled, semi-skilled and unskilled employees.

One of the key objectives is to empower the farmers across the entire country to grow
Cannabis legally and become subcontractors to our organization.

Once the company reaches a specific profit margin and turnover, further socio economic
development contributions will include skills development, training and mentoring of
communities, investment in social wages of employees and support to schools and education
through bursaries.

2 THE ENTITY

2.1 Legal entity

Vendini

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2.2 Trade Name

Vendini

2.3 Physical Address

Blantyre 3.

2.4 Financial Year

February

2.5 Directors

The directors of the business are:

Chief Executive Officer Exectutive 1

Managing Director Exectutive 3

Legal Director Executive 2

2.6 Contact Details

Exectutive 1

Executive 2

2.7 Registrations

The business will be registered for:

Tax Type Reference No.

Company Tax

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 VAT

PAYE

Workman’s Compensation

3 PRODUCTS AND SERVICES

3.1 Product Offering

The global CBD (Cannabidiol) market size was estimated at USD 1.34 billion in 2018 and is
expected to expand to USD 24 billion in 2027. Increasing awareness regarding health benefits
pertaining to CBD consumption is projected to foster the growth. High demand for CBD in
pharmaceutical formulations owing to its healing properties is anticipated to bode well for the
market in near future.

This effectively allows Vendini to enter the local CBD market legally. The platform of the
setup will be a lucrative springboard to launch the Vendini brand, a huge opportunity exists in
terms of building this business into a highly lucrative company.

Flowers
Vendini will include an indoor and outdoor cannabis facility. Our strategy includes
supplementing our own flower production with 3rd party extract grade flower in order to
scale processing ability at our facility.

Extract
Vendini will produce and utilize pharmaceutical grade cannabis extract in our own product
line. This will include pharmaceutical formulations, new cannabis delivery systems &
devices.

Vendors
Vendini will attract and form strategic partnerships to distribute high quality pharmaceutical
cannabis products.

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3.2 Product Description

3.3 Product Specifications

We will produce high end quality products that will be sold at premium prices in the domestic
and export market.

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3.3.1 Future Line and Range Extensions

Vendini shall focus on growing the flower and oil ranges and at a later stage shall broaden it
scope with a range of Vendini line and range extensions.

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4 INDUSTRY ANALYSIS

4.1 Summary of the Industry

4.1.1 Cannabis Legalization in Africa

4.1.2 African Cannabis Market

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4.1.3 Cannabis Malawi Overview

4.1.4 Global Cannabis Market

Spending on legal cannabis worldwide is expected to hit $ billion by 2027 including

recreational use. The recreational market will cover 67% of the spending; medical marijuana
will take up the remaining 33%.

Tom Adams, editor-in-chief of Arcview Market Research and managing director for BDS
Analytics, writes in the introduction: “… the expansion of medical cannabis markets can be
expected to lead to broader public acceptance, “setting the stage for the eventual move to
adult- use legalization” and that this model “will drive the world market, excluding the United
States

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and Canada, to grow at 35% annually to $10.5 billion by 2027, as a key part of the $57 billion
overall market.”

The largest group of cannabis buyers will be in North America, going from $9.2 billion in
2017 to $47.3 billion a decade later. The largest growth spread, however, is predicted within
the rest- of-world markets, from $52 million spent in 2017 to a projected $2.5 billion in 2027.

According to the report: “The Road Map to a $57 Billion Worldwide Market"1:

(1) The initial decision by many U.S. states and Canada to create medical-only cannabis
regulations prompted many other countries to act similarly while California’s and
Canada’s willingness to legalize adult recreational use triggered a second wave of
laws internationally to increase access to medical cannabis.
(2) South America has some of the most liberal medical cannabis programs. Led by
Brazil, Argentina, Peru and Uruguay, the South American medical cannabis market
may grow from $125 million in 2018 to $776 million in 2027.
(3) Germany is poised to be the leader of the European cannabis market, and Italy is
expected to be second with $1.2 billion in sales by 2027. Overall, however, the
European cannabis market is not expected to grow as stridently as its potential
suggests.
(4) Country’s legal cannabis market is forecast to grow from $52 million in 2018 to $1.2
billion in 2027, the 5th largest in the world.
(5) Israel has a small population and a long history of legal medical marijuana use. It
continues as a leader with years in the development of cannabis pharmaceuticals.

4.1.5 Application Insights

The chronic pain segment held 37.4% of the revenue share in 2016. Reports of various
researchers, states that medical cannabis is safe for treating patients with chronic pain and
neuropathic pain. The growing number of clinical trials with marijuana to treat neuropathic
and chronic pain is one of the key indicators, which showcases rising usage of cannabis in
pain management over the coming few years.

However, cancer will be the fastest growing application segment with a CAGR of 18.2%
during the forecast period 2017-2025.

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1
https://arcviewgroup.com/research/reports/

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4.1.6 North American Cannabis Market

Although the federal government still considers the use of cannabis a criminal offence, more
than half the states of America have legalized it in some form. Most states sell it only for
medical purposes, often broadly defined. But eight states – Alaska, California, Colorado,
Maine, Nevada, Massachusetts, Oregon and Washington – have gone further, legalizing the
recreational use. Legal weed is more high-priced than the black market variety, but it is better
value: three times more potent and only about 50% more expensive2.

Legal cannabis sales reached $9.2 billion in North America in 2017, according to a new report
from cannabis industry analysts A review Market Research, in partnership with BDS
Analytics. That represents an unprecedented 33% increase over 2016.

The report further predicts the entire legal cannabis market to reach $24.5 billion in sales – a
28% annual growth rate by 2021 – as more states legalize cannabis for recreational use and
existing markets mature.
30

25

20

15,
15 12, 4
8,9 4
5,0
10
2,7
1,4 1,8
5 8,4 8,2 8,4 9,1
6,5
4,9
4,3
0
201 201 201 2018 (projected) 2019 (projected) 2020 (projected) 2021
5 6 7 (projected)
Figure 1. Medical and recreational cannabis sales forecast, billion $

2
http://www.economist.com/blogs/graphicdetail/2016/02/daily-chart-10
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4.1.7 Cannabis Legalization in Europe

Between 2013-2016 some 79,500 tons of hemp were produced across Europe. In 2016, 25,000
hectares of
European land
was used for the
cultivation of
hemp, equating
to an estimated
value of €50
million.
However, the
European
Industrial Hemp
Association
(EIHA) estimate
that number to
be much higher
at 33,000
hectares
in 2016 having
been on a steady
incline since 2012.

Europe, particularly France and Finland, have a long history using hemp for fibres,
construction material and textiles, though in the last 25 years this sector has come into bloom,
increasing production by upwards of 500% (that’s 250% in lt 8 years).

Two years ago, a report from the European Convention on Human Rights (ECHR), stated that
drug use, when not injuring others, should not be illegal in the EU.

While there are 35 million people in Canada and 325 million in the United States, the
European Union is home to almost 510 million. Having just legalized medicinal cannabis in
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January 2018, Germany is another growing market, with over 80 million people. The same
goes

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for Greece and Macedonia, too, which also has a medical cannabis program that is taking off.
That’s why the European markets are becoming increasingly important to the cannabis sector.

Germany positioned itself as Europe’s market leader by liberalizing its medical program in
2017: “While sales there are restricted to pharmacies, the country’s lawmakers have approved
a fairly liberal list of qualifying conditions expected to rapidly swell the ranks of registered
patients over the course of 2018 and beyond.”

Italy, Belgium, Croatia, the Czech Republic, Finland and Poland are also named as launching
similar programs, as well as the Spanish region of Catalonia “moved past tolerance and
embers of designated clubs.” And last in January 2018 Malta legalized cannabis, permitting
the production for medical use.

Though there has been progress regarding recreational cannabis, such as cannabis social clubs
(legal in Belgium, Spain, Netherlands and Slovenia) and sporadic decriminalisation, it is not a
priority of European legislators to legalise recreational use. Though they do estimate that
recreational cannabis will also be legalised in the not so distant future.

4.1.8 Forecast European Market

The second edition of the European Cannabis Report – produced by London-based advisory
group Prohibition Partners – suggests that with 12% of the continent’s 739 million people
being either “irregular and intensive” cannabis consumers, Europe’s annual:

 Overall marijuana market will reach 56.2 billion euros

 Potential medical marijuana market will hit 35.7 billion euros
 Potential recreational market value will reach 20.5 billion euros
 Estimated hemp market will hit 48.9 million euros

4.1.9 Malawi Cannabis Legalization

The socioeconomic effect of legalising cannabis in Malawi would lead to lower government
expenditure on law enforcement coupled with increased tax revenue, according to a thesis by
Vladislav Lakcevic, an analytical strategy development professional who specialises in
economic studies in Africa.

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Lakcevic’s research shows that, despite actively enforced prohibition, Malawi is a major
producer and global supplier of cannabis. The United Nations Office on Drugs and Crime
estimates up to 9.1% of the Malawin population use cannabis. Tax revenue would be a key
benefit of legalising it, Lakcevic argued.

Besides the economic potential of medical and recreational cannabis, there is also the
production of hemp. Local commercial production of hemp is not allowed by law but
industrial cannabis or hemp can be used in the production of 25 000 consumer products.

In 2016, government indicated it planned to legalise medical marijuana in Malawi. in March

2017, the Medical Controls Council (MCC) has released its medical marijuana guidelines for
the cultivation, production and use of medical cannabis. This is of significant importance to
prospective medical cannabis growers, patients and all Malawins who are interested in seeing
a legal cannabis market. The document provides strict guidelines and information to
applicants wanting to grow, test or manufacture medical cannabis related products in Malawi.

There are currently 3 types of licenses that one can apply for.

1. Cultivate/grow and produce Cannabis and Cannabis resin;

2. Extract and test Cannabis, Cannabis resin and/or cannabinoids;
3. Manufacture a medicine containing cannabinoids.
In order to be granted a permit to perform these functions, applicants require permission not
only from the MCC but also from the Director General of Health. In following this process,
applicants must also undergo a stringent suitability test which comprehensively assesses all
aspects of an applicant’s intentions and prior conduct. It is also deemed necessary for
agricultural applicants to demonstrate adequate security on their farms and to ensure that all
of the product can be accounted for during and following production.

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4.1.10 Concentrates and Infused Products Sector Analyses

$700 000
$600 000
$500 000
$400 000
$300 000
$200 000
$100 000
Profit Margin
$-

s
Annual Revenue Annual OperatingStartup Cost Costs
With in-house processingPurchase Extracts from third part0%

ie
s 10% 20% 30% 40%

Figure 2. Profit & Costs benchmarks

Ryan Long, the head of business development for California-based Absolute Extracts, figures
that there are probably “hundreds” of concentrate producers across the country.

That estimate includes companies focused specifically on making concentrates, dispensaries

that produce and sell their own concentrates, and small one- to two-man operations in places
where concentrates are still either illegal or only partly legal, such as in Michigan.

Many of today’s larger concentrates companies started as tiny operations, but a good number
have quickly moved out of basements and into industrial warehouses featuring high-tech
equipment that costs tens of thousands of dollars.

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 From a business
perspective, the profit
margins can be huge, in
some cases up to 85%.
And demand is growing
rapidly as the availability
of concentrates increases.

Customers are also willing

to shell out top-dollar for
these products. Nationally,
patients and consumers
who favor concentrates spend an average of $4,800 each year, more than double the average
amount spent by cannabis users in general, according to What Cannabis Patients and
Consumer Want, a marketing research report published by Marijuana Business Daily.

Companies are going to be constantly on the lookout for ways to improve their processes
and maximize their returns on the cannabis plants they use.

According to BDS Analytics, cannabis concentrate's market share grew from 9.8% to 11.7%
from 2016 to 2017, while traditional cannabis flowers' market share fell 67.3% to 63.2% for
the same time period.

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 The majority of infused

more than 30 $2 000

product companies produce
000 fewer than 12 products,
which is why median
13-30
$ 850 000 revenue for this group of
1
businesses is so similar to
12 or fewer that of infused product
$600 00
0
companies as a whole.
Media
n
While companies that
Figure 3. Typical infused product manufacturer annual
revenue by number of products offered produce more than 30
products are generating more revenue than businesses with a smaller range of offerings, it’s
likely not because they’re producing more products. Rather, successful businesses are
expanding on their product lines as they grow, and the wider selection is a result of added
revenue.

Lastly, the market in some states is maturing, and consumers/patients are increasingly
demanding new types of products – leading to greater innovation and offerings.

The majority of infused product companies are manufacturing more than one type of good –
typically edibles and concentrates, as these categories dominate the infused product
landscape. Nearly half of all businesses are producing topicals, though just a small number
have chosen to focus on this category exclusively – as it comprises a relatively small portion
of the retail and medical markets.

Infused product companies are a relatively new type of cannabis business, as the market for
products like vape cartridges and infused lotions was essentially nonexistent in most markets
just five years ago. But despite the lack of experience for most businesses in this segment of
the industry, consumer and patient demand has been steadily increasing.

Entrepreneurs are drawn to this segment of the industry because of the strong demand, falling
price of wholesale cannabis and a general lack of restrictions on the number of available
licenses in some key markets. There’s also the potential for more sophisticated players to

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establish large and recognizable brands, as the same basic principles that make for a
successful product in the traditional economy apply to the cannabis industry as well. An
increasing number of companies are now selling products in multiple states, and even some
celebrity brands are gaining traction in the market.

Portion of all infused product manufacturers that are profitable or break-even: 79%

One of the key hurdles that concentrates must face has to do with a negative public perception
of the extraction process. However, as innovation and technology becomes a more integral
part of the industry, producers of concentrates are developing cleaner, safer, and more
efficient tools and processes to overcome this stereotype.

Demand for cannabis concentrates and edibles is exploding, offering a window into trends
that will likely play out in the larger cannabis industry over time.

Infused products and edibles are

Topicals the fastest growing category in
45
6% % the cannabis industry, proving
24 extremely popular with
% 63%
Concentrates recreational consumers and
medical patients alike. While
22% 68
% flower still accounts for the
Edibles

Produce exclusively Part of Product majority of retail sales,

line
concentrates and edibles continue
Figure 4. Percent of cannabis manufacturing
to eat into flower’s share of the
businesses
Source: Marijuana Business Daily market with each passing year.

Manufacturers have taken notice and are extending product lines to occupy multiple segments
of the infused products category. While this may maximize revenue in the short term, the
industry grows more sophisticated by the day – and manufacturers that specialize on
providing a top-quality product to a very narrow portion of the market may end up finding
more success than those spread across multiple categories.

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4.2 Value Drivers

1. Vendini will attribute its success to the quality. Vendini analyses and determines the
percentage of active ingredients in each sample of cannabis to give patients the
information they need to compare strains. The lab analyses cannabis flowers and all
of the various concentrates, topical, tinctures, and edibles. Currently in the process of
getting ISO 17025 certification.

2. In this industry it is important that the customer experiences products and services of a
high quality. Brand acceptance will be achieved through brand promotions and below the
line marketing campaigns such as wet demos, sampling and point of sale promotions.
This will secure long-term customer loyalty to optimize the profitability.

3. New developments and technologies with an innovative structure are required to satisfy
the demand of the customers. This is specific to turnaround time. Synchronizing demand
and supply is a difficult task, however with modern technology orders taken in stores can
immediately reflect in distribution depots for immediate picking, invoicing and dispatch.

4. Save resources by outsourcing where necessary. Outsourced sales, merchandising and

distribution is common in Malawi. The cost of setting up an internal national network far
outweighs the cost of outsourcing. Vendini will consider setting up internal sales forces at
a later stage when economies of scale are reached. Outsourcing will ensure quick
penetration within the region for select trade sectors.

5. The utilization of cultivation capacity is critical for the long-term profitability.

Additionally, the exploration of new markets and customer segmentation is a key element
of the whole business process.

6. A carefully selected assortment of products as well as the selected choice of customers

has the potential to gain a competitive advantage in the market place.

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 7. A critical factor in the industry is cost management off a proven volume of sales
determined from competitor’s sales. Based on this, Vendini has selected very specific
volume drivers which are to be launched going forward.

4.2.1 Critical Issues

 Key accounts and relationship with trade.

 Competent organizational structure.
 Efficient cultivation runs to maintain cost per kilo.
 Internal supply chain must be integrated with the external one.
 Accountability of service providers.
 Infill rate requirements.

The above are critical issues and if managed efficiently, millions are saved per annum. If we
can benchmark our development opportunity on our competitor’s successes, we must assume
that the opportunities are very achievable and likely under the correct management and
planning.

4.3 Industry Price Structures

Our prices as per the offtake agreement are highly competitive and being an under license
manufacture the barriers to entry are very difficult for new entrants to undercut prices.

4.4 Trends and Problems

Understanding the environment in which a company operates is a fundamental requirement

for effective marketing. This includes the macro (external) and micro (internal) environment
that
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affect the company and its competitors. In order to develop a marketing strategy, the decision
makers need to understand its firm’s resources and capabilities as well as the external forces
that can influence the organization.

There are various scanning processes that allow Vendini to identify possible threats within
these environments. Environmental scanning is an essential part of the strategic planning
process. These include a SWOT analysis of the internal and external environment. With
respect to the external environment, Porters Five Forces has been applied which involves
scanning threats from competitors and assist in creating a competitive advantage in the market
place. PESTLE has also been applied to examine the Political, Economic, Socio-cultural,
Technological, Legal and Ecological environments.

4.5 Legal and Regulatory Environment

Compliancy in line with the industry requirements will remove any and all risk in the
successful launch of the brand and will ensure long-term sustainability in the creation of
wealth.

The business is subject to the following rules and regulations:

 Weight and measures.

 Health and Safety Audits.
 Product labeling laws.

4.6 Economic Outlook

This category is one that will continue to grow with huge opportunity for innovative products
as the industry has shifted to the legalization of medical cannabis.

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4.7 Growth Constraints

Capacity restraints can result in a short supply of stock requirements causing infill rate issues
with key accounts. However, an expansion can be initiated timeously to resolve this.

4.8 Growth Opportunities

The following growth opportunities exist:

 Line extensions.
 Range extensions.
 New trade sectors.
 Export markets.

4.9 Cyclicality and Seasonality

The monthly turnovers are fairly constant as we will be producing in line with offtake
agreements and distribution partners around the globe.

5 TARGET MARKET ANALYSIS

Medicinal cannabis has often been hailed as resilient to economic pressures as consumers
require this for medicinal purposes. Vendini’s target market is vast and can be segmented into
the multiple categories. Vendini serves patients, dispensaries, cooperatives, collectives,
concentrate producers, edible manufacturers, and growers. The product range Vendini has
earmarked for launch will predominantly be substitute products of its direct competitors, but
with a high focus on quality assurance. This is what drives volumes. Multiple growers around
the globe duplicate/substitute these products due to the demand for stock. The threat of new
entrants is low due to the high capital cost in entering the market, most important licenses are
limited. The barriers to entry not only involve the capital cost, but also the development costs
such as developing the right strains for the perfect product. Consumers tend to scout new
substitutes on the market till they find the product and quality that suits their needs.

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5.1 Targeting

Our target market is a niche market that will supply cannabis for medicinal use to:

- Produce cannabis for the local and export market at top end pricing.
- Produce top quality cannabis with a global appeal.
- Capture the high end of the cannabis consumption market.
- Establish a well-known brand that represents quality, consistency and value-added
product.

Being a private company focused on the specific geographic locations both in Malawi and
cross border, the company will apply a concentrated or niche marketing strategy as there are
only a few market segments. Vendini can service as a result of the limited capacity. One
cannot comprehend the global demand for medical cannabis and should the export market be
the primary target market, the demand for stock would require multiple production facilities
around the globe to support it. Vendini’s marketing segmentation will include local marketing
with homogenous preferences.

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5.2 Positioning

The way the brand is communicated and how consumers perceive the brand relative to
competing products is of utmost importance to Vendini. We will be providing a range of
products consumers already consume that is of world-class quality at high-end but affordable
prices.

5.3 Functionality

5.3.1 Product Features

The range consists of cannabis-based products with add value qualities. Generic or substitute
lines provide for immediate consumer adoption. Assuming there is a compelling reason to
purchase, such as price and added value, significant inroads will be made into eroding
competitors market share.

5.3.2 Price Quality

Being a private company with smaller overheads, Vendini will be able to offer world- class
quality products at more affordable prices than its major direct competitor.

5.3.3 Use

Medical cannabis is known as critical medication with many health benefits.

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5.3.4 Expressive

A variety of SKU’s will be made available to suite the preferences and tastes of various
consumers.

5.3.4.1 User

Users will be all consumers suffering from some type of ailment. The substitute/generic lines
have been in existence for some time with many medical and scholar reports published
supporting our claims and the consumers are well aware of this generic product range.

5.3.4.2 Benefit

5.4 Marketing Mix

In order for Vendini to be successful in its endeavors, the marketing mix needs to be
examined to ensure that the range has the right features, it is priced right, listed within the
correct sales channels and promoted to ensure sell through and repeat purchases.

5.5 Marketing Research

Market research has been done across all sectors of the cannabis industry in Malawi and
abroad. This has been done through face-to-face interaction with buyers to assess listing
opportunities; identifying competitors in the industry; and store visits.

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If Vendini can bench its development opportunity on their competitor’s local and global
successes, one must assume that the opportunities are very achievable and likely under the
correct management and planning.

5.6 Target Market and Geographic Coverage

Vendini’s target market will be primarily focused on the export market.

5.7 Letters of Intent, contracts and orders on hand

Offtaker 1 has issued offtake agreements to support the startup and the facility production
capacity has been designed to meet their expectations. Offtaker 2 and Offtaker 3 have also
concluded agreements but will remain as secondary options as and when we expand
operations.

5.8 Distribution Channels

An assessment will be done with consideration of economies of scale to determine how the
supply chain should be structured going forward considering sales channels will be opened to
new trade sectors. Vendini will control and co-ordinate the required stock levels and the stock
movement between warehouses, in accordance with laid down policy. Vendini undertakes
deliveries to customers and to regional depots.

5.8.1 Marketing & Sales

The Vendini sales and marketing initiative is conducted on four fronts:

 Direct contact
 Sales Teams
 Sales Agents
 Sole Distributors

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6 COMPETITOR ANALYSIS

6.1 Market Share

It is difficult to establish how much market share each international competitor currently
enjoys of the volume reflected in the statistics, however Vendini has chosen to engage in a
market that has many deterrents for new entrants and one that has high growth potential.

6.2 Barriers to Entry and New Entrants

Due to the demand for stock in this industry, one can only enter and compete in this industry
with a plant that has the right equipment and expertise. The cost of these plants is highly
capital intensive and can cost tens of millions of USD’s dependent on the quantity of output
and demand for stock. Consistency in cost and quality is the key to this industry. Achieving a
high quality cannabis extract and flower will be the key to the success of the venutre. These
factors steer new entrants away from the industry.

Customer switching costs are little or none, which means there is no problem for new

entrants. Incumbency advantages are based on cost and quality.

Vendini’s collective combined management team has more than 60 years experience in
cultivating and extracting cannabis. Vendini’s technical team has the ability to produce a
world-class quality range of products allowing them to compete on a global competitive level.

6.3 Substitute Products

There are no substitute products for medicinal cannabis.

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6.4 Marketing Budget

Based on the offtake agreement in place, there is no need for a hefty marketing budget at this
point. Once we are ready to launch our brand, the budgets reflect a healthy bottom line which
in turn means we can allocate a decent marketing budget to suit the launch strategy.

6.5 Marketing Strategy

Offtake agreements will remain the primary focus of marketing the products. Export
initiatives with new line and range extensions will contribute significantly to Vendini’s
accelerated growth strategy.

Vendini will develop a range of products for the niche target market.

The companies' vision is to take full advantage by developing and promoting a competitive
brand in a high-volume category, servicing local and at a later stage – offshore demands.
Demand for high volume coupled with exponential growth is expected, so the roll out into the
various new trade sectors will be initiated very carefully with the support of volume and
financial budgets to avoid cash flow issues. Further line extensions and range extensions shall
be developed at a later stage and launched to strengthen the brand and its presence.

Vendini will review and screen all potential sales agents in accordance with company’s
requirements and will be contracted with specific performance measures in place.

Vendini will apply ethical business practice. They will not attempt to mislead the consumer in
any manner or form.

New line extensions and range extensions shall be developed at a later stage and launched to
strengthen the range and its presence.

6.5.1 Implementation

Once we have solidified the venture foundation, Vendini may focus on building its own
brand. Identifying, appointing, training and monitoring of national and cross border sales and

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merchandising companies and distributors. The following functions will entail the following
implementation plans and functions:

6.5.1.1 Sales and Merchandising functions

 Evaluating the appointed sales and merchandisers performance for each region.
 Manage all key account listings and activity.
 Trading Terms negotiations.
 Pricing.
 Promotion planning.
 Appointment of Agents.
 Sales & service to Independents.
 Forecasting product demand.
 P.O.S. development.
 Advertising.

6.5.1.2 Sales Management

 A sales strategy for achieving the targets needs to be documented with input from all
parties.
 Structured reports with analysis identifying critical success factors will be done
regularly.
 Allocated management responsibility with the correct resources will be clear in
order to ensure focus in all trade sectors to protect Vendini against poor
performances.

6.5.1.3 National distributor

 Specialists in the field.

 National infrastructure.
 Offer highest coverage in organized trade.
 One drop off point and thereafter distributors transships to regional depots.
 Offer stock protection for goods damaged in transit or in warehouse.

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  Real time Technology platform.
 Proof of delivery & GRV numbers available within 24hrs on their IT
system.

6.5.1.4 Stock control in depots

 Oversee inventory management in depots as well as internal finished goods.

 Managing and reconciling monthly stock takes in depots.
 Monitor stock levels in depots, communicating accurate information to operations for
production planning.
 Managing the dispatch of finished goods to the service provider.
 Managing internal finished goods as well as invoicing and dispatch of factory customers.
 Reconcile statistical sales data by SKU for marketing and operational purposes.

6.5.1.5 Trade Marketing

Consolidate this function in terms of the following:

 One person handling all Trade Marketing Administration (Sales assistant). Develop
one manager to internally manage the trade marketing function.
 Ensure all trade-marketing activities are effectively communicated both internally
and externally to Agents.
 Develop a trade marketing promotional plan by customer account.
 Regular visits to buyers are imperative for a number of reasons;
o To keep the brand a priority in the buyers minds.
o To build a positive pro-active working relationship with the buyers.
o To address any issues early before they become a serious problem.

6.5.1.6 POS & Racking

 Consolidate this responsibility and give it to one person to handle.

 Source good quality and cost-effective racking and POS manufacturers to support all
POS requirements.

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  Allocate a budget for POS and Racking and plan POS requirements to coincide
with promotions and new launches.
 Develop a system for keeping a record of racks and where they are placed.

6.5.1.7 Marketing aspects

 A brand plan needs to be developed following a strategic process.

 All brand elements (Product, Packaging, POS, Communication, Web Site etc.) need to
strictly follow the brand blueprint in order to avoid brand erosion and inconsistency.
 A manager will be allocated the responsibility of handling and coordinating all
marketing activities.

6.5.1.8 Layout Principals

 Always keep the brand grouped or blocked on the shelf.

 Display with other related cannabis products.
 Position like for like variants next to opposition.
 Within the brand layout, the considerations are: -
o Colour contrasting. I.e. do not place similar colours next to each other.
o Give stronger variants option of better position or extra space.
o New line extensions to receive any additional space and prominence.
o Encourage cross merchandising using strips, power wings and till point space.
o Where possible utilize floor stands for additional P.O.S.

6.5.1.9 Listing Procedure with buyers

The listing procedure outlines the presentation strategy to the buyers of the various target
markets to ensure implementation.

6.5.1.9.1 Presentation

 Quality @ the right price.

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  Selling point and pricing.
 Excellent/compelling packaging.
 New entrant committed to the trade and consumer.
 Good margin opportunity.

6.5.1.9.2 Point of Sale

These tools can be in the form of:

 Racking - freestanding units are available for permanent and promotional alternatives.
 Display stands - Counter
 Posters

With the introduction of Point of Sale, the brand would be more exposed, and it is a
highly effective tool. To place product on shelf is only a result of succeeding with the 'Sell
In', however 'Sell thru' is our goal. To realize the full potential of our product we need to
offer it the platform required to do so.

6.5.1.9.3 Sales & Distribution

 Sales and merchandise agents in all regions.

 National distributors – reputable market leaders.

6.5.1.9.4 Product

 World class growing facility.

 Excellent product quality & new product development program.
 Product selection based on top sellers.
 Rate of sale objective to exceeded competitors based on price and quality – proven
historically.

6.5.1.9.5 Price

 As per List price.

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  Negotiate advertising and promo spend.

6.5.1.9.6 Trading Terms (max. negotiated

below) These vary in line with the sectors of

trade.

6.5.1.9.7 Other key selling points:

 We are a focused and an independent company.

 This allows for quick decision-making, no other distractions.
 A new product development program that will be focused on developing the category
within the various sectors.

6.5.2 Market Organization

Marketing organization is composed of a group of divisions or personnel striving jointly to

achieve qualitative and quantitative selling objectives for systematic execution of various
plans and policies. It assists in the administration and management of marketing policies and
in the expansion and growth of the organization. The importance of the marketing
organization is to co-ordinate the various departments to efficiently deliver the consumer
demands. Vendini research and development team will develop the various product lines;
Procurement will order sufficient raw materials; Production will ensure sufficient stock is
produced in line with demand and infill rate requirements; Finance will ensure the supply of
raw materials fits the demand for stock and supporting expenditure; Distribution division will
ensure stock is delivered to warehouses in order to deliver to customers and to ensure depots
maintain a minimum of two weeks stockholding at all times; Sales division will ensure the
SKU’s are listed with target markets; and the Marketing division will ensure awareness
campaigns and the like are in place to move the stock; in addition to provide stock
requirements feedback to the production, procurement, finance and sales departments.

All department heads will work in synchronization to ensure the flow is efficient.

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7 SUPPLIER ANALYSIS

7.1 Suppliers

The principal suppliers to Vendini have all been sourced from local suppliers and will be
sourced in line with the customers’ requirements as it relates their specifications.

7.2 Bargaining Power of Suppliers

The bargaining power of the suppliers is low as there is an abundance of suppliers of the raw
materials required for cultivation. As a result, Vendini will ensure that a minimum of two
suppliers is registered to ensure a steady flow of materials.

7.3 Availability of Raw Materials

Seeds and growing materials are freely available.

7.4 Exchange Rates

Importing raw materials will be affected by exchange controls due to the volatility therefore
these costs will to be considered for each and every transaction. Due to the high profit
margins they are not a concern.

8 OPERATIONAL ANALYSIS

The six important operational processes for the Vendini facility:

• Process 1: Seed and germination

The following are required:

 A receiving bay;
 A testing room;
 A laboratory;
 A quarantine/ Sample room;

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 A vault/ Primary storage room;
 Seeding germination area;
 Greenhouse
 Security

All seeds and other requirements will be received via the receiving bay. All received items
will then be stored in their respective areas (Receiving room, Quarantine room, Vault and
Storage). The seeds will then be germinated in the Seeding germination area. Once the
seeding is then strong enough the small plant will be planted in the Flowering and Harvesting
area (Greenhouse). All of the mentioned areas will be secured by a Biometric Access Control
system. The receiving bay will be permanently closed to restrict all access.

• Process 2: Harvested product

Security is required for the harvesting product route.

The factory already has an indoor controlled HVAC system in place which will control the air
temperature. An automated trimming process will be used and the cannabis flowers will be
graded into (3) three categories, namely top flowers, popcorns and trim. The harvested
product will then be moved to a drying room. The existing storage area will be converted into
the drying rooms.

• Process 3: Dried product

For the dried product route, the following are required:

 Drying rooms;
 Secure and airlock area before milling;
 Milling room;
 Packaging area;
 Gowning for packaging area;
 Gowning for milling area;
 Packaging material room;
 Airlock area between the milling and packaging area/quality area;
 Airlock between packaging and vault;

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 Vault; and
 Security.

• Process 4: Dispatch
For the despatch route, the following are required:
 Despatch room; and
 Security

• Process 5: Waste
For the waste route, the following are required:
 Wash bay
 Primary waste area; and
 Security.

• Process 6: Oil extraction

As a community driven company, it is Vendini's mission to provide products of

the highest possible quality, while contributing to the sustainability of the
communities they have the privilege of serving.

8.1 The Cultivation of Cannabis Activities

Vendini is applying to obtain a license to cultivate cannabis crops for medicinal purposes.

Vendini activities would include the following:

• Decide on which cultivars to cultivate in line with the offtake agreements.

• To import feminized seed from registered seed banks and seed suppliers.
• The seeds sourced from suppliers listed with the relevant certification. (CoAs and THC test
results).

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• The seeds will be transported in sealed airtight containers (contamination proof).
• Use secured mode of transportation (i.e. armoured or pharmaceutical couriers).
• On receipt officially log and sign for the seeds.
• The seeds are then stored in an airtight labelled container at the selected temperature.
• The indoor cultivation plan includes germination, seedling transplanting, maintenance,
fertilization, harvesting, drying, and storage/curing.
• Warehousing, storing, keeping of raw materials prior to extraction.

Cultivation, Harvesting and Extraction.

The grow site is divided into four areas:

1. Cloning area
2. Vegetative/ mother plant area
3. Vegetative growing area
4. Flowering area

8.2 The Facility

 An indoor greenhouse facility, allowing for growing and extraction of cannabis all
year round in a hygienically controlled environment.
 An outdoor facility.
 Climate controlled and data driven decision making.
 Tightly sealed separated rooms throughout the facility.
 Our own product testing and tissue culture laboratories for quality control and genetic
preservation.
 LED lighting system in place.
 Aeroponic growing system, with controlled fertilization within the irrigation system.
 Air purification technology to reduce airborne and surface contaminants.
 A highly secured facility with guarding and a 24 hour security control system in place.
 A 3 tier vertical grow area on movable racking systems to maximize grow area.

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  Employee decontamination area providing employees with clean room protocols such
as disposable gowns, booties, gloves, hair nets and face masks.

8.3 The Site Plan

8.4 Product Driven Facility

Vendini believes in the use of state-of-the-art technology, advanced growing conditions and
sophisticated infrastructure to create a world-class commercial growing environment to
produce market leading cannabis products.

The propagation, growing, harvesting, drying and curing of the cannabis plants are done
under one roof in an indoor greenhouse grow facility - this ensures more safety on the process
whilst focusing on full product efficiency.

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OUR FACILITY COMPONENTS
 The fully secured facility with the cultivation and processing area includes:
 Quality and administration facilities
 Propagation and clone rooms
 Vegetative rooms
 Flowering rooms
 New generation drying equipment
 Extraction and processing equipment

8.5 Genetics Sourcing and Strain Discovery Program

The genetics used by Vendini will be supplied by approved and accredited international seed
banks. The correct laboratory analysis and certification regarding the composition of the
genetics and key findings associated with, propagation, auto flowering, and growth cycles of
specific individual strains.

Vendini will be optimizing land race genetics to become more resilient, resistant to humidity,
heat and crop failure.

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8.6 Offtaker 1s cultivators – competent grower

Offtaker 1 being the preferred offtake agreement will align their competent growers to ensure
product is consistent and up to their standard required.

- Cultivator 1 of Offtaker 1 (Pty) Ltd will be appointed as our senior grow specialist.

- Cultivator 1 is a competent grower and comes with the Offtaker 1 off-take agreement,
he therefore has a vested interest that the quality and quantity meet the agreement.

- Offtaker 1 (Pty) Ltd is made up of experts in the cannabis field, namely scientists,
agronomists, pharmacists, regulatory consultants and commercial personnel who are
experienced in seed/clone platforms through to cultivation methodology and
cultivation harvesting technology.

- Offtaker 1 have been involved in designing and developing various commercial

cultivation operations, handling the full scope from design through to interaction with
regulatory bodies, facilitating harvesting, packaging and export of products.

- The Offtaker 1 management team are proficient in the commercial cannabis economy
and cannabis supporting products.

- Cultivator 1’s extensive experience in the industry, is comprehensive, and is bolstered

by Offtaker 1’s partnership with an International Cultivating Operation that has over
30 years of experience in greenhouse and indoor cultivation and who form part of
Cultivator 1’s advisory team.

- The grow contract with Cultivator 1 is performance based, and incentivised, to

achieve the target yields.

- Cultivator 1 will report directly to MANCO.

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8.7 Malawi and African Sativa Strains

8.8 Extraction

8.8.1 What is it?

Vendini will use both Co2 extraction method as well as Ethanol extraction method to get the
primary extract. Having both of these technologies in production it will provide the Vendini
production facility with flexibility with regard to the ultimate product specifications that may
be tailored to specific off take conditions and different extraction options for greenhouse
material.

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8.8.2 Our Competitive Advantage in Extraction

Vendini is one of only few companies providing the variety of 2 different extraction methods
which allows us to create more end products and meet a larger number of end users needs.

 CO2 Extraction

 Ethanol Extraction

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  Cultivation techniques used that produce high quality cannabis with low risk of failure.
 An indoor grow facility that is well secured and air temperature and humidity
controlled allowing for all year round growing.
 Indoor grow facility ensuring a less likelihood of pests and unwanted bacteria.
 A team of experienced management with experience in business and in cannabis.
 Continuity and best practices throughout the entire process to ensure product quality
 Our aeroponic indoor grow system, which produces a greater yield, efficiently uses
water and does not require any grow medium for our plants.
 Strong relationships with our offtake partners.

8.9 Reject Rate

The reject rate is extremely low if all the control systems are in place.

8.10 Quality Management System

Vendini is continuously committed to cultivating the highest standard of quality cannabis

crops for medicinal purposes in a manner that is ethical and which satisfies the Vendini
customers, regulatory system and the stakeholders of Vendini.

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Vendini has a Quality Management System (QMS) in place that is integral and which
look at focusing on consistency when it comes to meeting the industry standards of
GMP/ GACP requirements. Vendini will create, document and implement Quality
management manuals that are in line with GMP/ GACP as well as being in compliance
with all the other relevant standards that govern the medicinal cannabis industry.

Vendini will look at three types of cultivation processes that will take place at the
Vendini facility such as: the cultivation of industrial cannabis, the cultivation of seeds,
and the cultivation for medicinal usage. Currently Vendini is drawing up, developing and
implementing the Standard operating procedures (SOP) policy and the objectives. These
SOP policies are drawn up for every critical and important activity that will take place at
the Vendini facility. All of the Vendini SOP are written up in compliance with the Good
Agricultural Cultivation Practices (GACP).

The core and support processes of the Vendini company is defined by the SOPs and these
processes described are all the processes that are necessary to realise and deliver the
desired output of Vendini. These including the receiving of cannabis strains, germination,
vegetative growth, pre-flowering phase, the flowering phase, harvesting of the crop,
manicuring, packaging, storage and finally the dispatch phase. The support processes that
will be described in the SOP are all the processes of the other business requirements of
Vendini that are needed to be in place to manage resources, control quality and conduct
business in an orderly manner.

The SOPs of Vendini are required to be updated by Vendini every 2 years and all SOPs are
prescribed to be written in a certain manner with a uniform format throughout. It is the
responsibility of the research manager of Vendini for supervising the process of identifying
each required SOP in the company. The research manager is required to compile, update, co-
author and return superseded copies of all of their SOPs. It is then the responsibility of the
responsible pharmacist of Vendini as well as the director to make the final approval of the
SOP.

Vendini is continuously committed to cultivating the highest standard of quality cannabis

crops for medicinal purposes in a manner that is ethical and which satisfies the Vendini
customers, regulatory system and the stakeholders of Vendini.

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Vendini has a Quality Management System (QMS) in place that is integral and which
look at focusing on consistency when it comes to meeting the industry standards of
GMP/ GACP requirements. Vendini will create, document and implement Quality
management manuals that are in line with GMP/ GACP as well as being in compliance
with all the other relevant standards that govern the medicinal cannabis industry.

Vendini will look at three types of cultivation processes that will take place at the
Vendini facility such as: the cultivation of industrial cannabis, the cultivation of seeds,
and the cultivation for medicinal usage. Currently Vendini is drawing up, developing and
implementing the Standard operating procedures (SOP) policy and the objectives. These
SOP policies are drawn up for every critical and important activity that will take place at
the Vendini facility. All of the Vendini SOP are written up in compliance with the Good
Agricultural Cultivation Practices (GACP).

The core and support processes of the Vendini company is defined by the SOPs and these
processes described are all the processes that are necessary to realise and deliver the
desired output of Vendini. These including the receiving of cannabis strains, germination,
vegetative growth, pre-flowering phase, the flowering phase, harvesting of the crop,
manicuring, packaging, storage and finally the dispatch phase. The support processes that
will be described in the SOP are all the processes of the other business requirements of
Vendini that are needed to be in place to manage resources, control quality and conduct
business in an orderly manner.

The SOPs of Vendini are required to be updated by Vendini every 2 years and all SOPs are
prescribed to be written in a certain manner with a uniform format throughout. It is the
responsibility of the research manager of Vendini for supervising the process of identifying
each required SOP in the company. The research manager is required to compile, update, co-
author and return superseded copies of all of their SOPs. It is then the responsibility of the
responsible pharmacist of Vendini as well as the director to make the final approval of the
SOP.

8.11 Quality Assurance Lead Integrated Operations

• Align with regional leadership team to monitor key metric and identify trends in product
quality conformity, customer's complaints, corrective action, audit findings,

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performance

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 of external providers.
• Ensure quality specification and third-party trait requirements are incorporated into the
QA programs I collaboration with platform leads.

Parent Seed Production Manager

• Responsible for management of the Parent Seed Conditioning plant and local seed
production assistance.
• Occupational Health and Safety Management
• Inventory/ Cold storage management and distribution of parent seed to production
regions ensuring reliable supply of quality seed to commercial production responsibly in
field.
• Budget Management

Seed Quality Testing Laboratory Manager

• Quality Assurance and management of the seed testing.

Analytical Chemist

• General quality control (Quantitative and qualitative testing of flowable, granulated,

powered insecticide, fungicide and herbicides).
• Formulation development and verification - granulated herbicides.
• Formulation alteration and verification.

• Quality Assurance.

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8.12 Internal Audit

Periodic Internal Audit is done to ensure manufacturing practice is compliant. Standard

operation procedure is applicable to all departments of the plant. Auditing the facility and
prepare an audit report comprising or recommendation and corrective action necessary for
respective department Verification of department activities is used to determine effective
implementation of quality system Auditing is carried out by our QA.

Vendini will have an independently owned and operated medical cannabis screening
facility that supports the movement to mandate that medical cannabis adhere to the same
standards as other food and drugs. Vendini will run both an analytical and a
microbiological laboratory with their own sets of procedures and standards to operate
effectively and deliver high-quality results. It will offer comprehensive medical cannabis
safety screening and an independent certification system including the "Safe Cannabis"
seal, labels, and stickers for participating dispensaries and growers. Participants have to
consent to undergo occasional audits to ensure that the labels aren't misused. The lab is
not affiliated with any collective dispensary, collective cooperative grow, or any other
organisation involved in medical cannabis distribution to patients.

Vendini will analyse and determine the percentage of active ingredients in each sample of
cannabis to give patients the information they need to compare strains. The lab will
analyse cannabis flowers and all of the various concentrates, topical, tinctures, and
edibles. Currently in the process of getting ISO 17025 certification, Vendini serves
patients, dispensaries, cooperatives, collectives, concentrate producers, edible
manufacturers, and growers. Alignment and Standardization of quality assurance system
and processes across all Africa 10 location according to ISO 9001:2008.

Vendini ensure that cannabis material are properly packaged and stored.

Packaging and storage of all dried material:

All of the dried product that has been processed by Vendini, needs to be graded and
weighed with the appropriate barcode tag attached to the clear sealed bags of the
processed material. This label is clear, firmly fixed and is made from nontoxic material

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which will

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ensure that the label does not contaminate the product. The label that is attached to the
dried product will include information for botanical identification such as species,
variety, chemo type, origin, as well as details of the cultivar area and the date that the
product was harvested. The dried product will be double bagged and will be stored in a
very dry and well ventilated store room that is equipped with high end security vault
door, with cameras and will be controlled with controlled access into this storage room
All plant movements will be bio-tracked: this will be done with scanners.

The seeds- the genetics will be captured. The genetics that will be captured will be the
plant botanical identification showing the particular species, variety, chemo-type and
origin of the plant. Labels for the seed trays are then printed and the seeds will be planted
into the barcoded seed tray where all movements of the seed will be tracked. The plants
that have grown from the seeds will then be transferred into 1 litre bags and labels for the
bags will be printed and out on the bags and links between the trays to the bags will be
created. Plants that have grown into bigger plants will then be transferred from 1 litre
bags into 7 litre bags and subsequently thereafter into 30 litre bags.

Every time the plant is moved from one bag to another they will always be linked back to
the previous bag through the barcoded labels that were created in the beginning. All the
movements of the bags will be tracked through the scanning process. This system of
plant tracking will ensure that there is complete transparency and that the movement
complies with all the regulations that are in place.

8.13 Storage and Handling of Harvested Crop Production

Vendini will examine the crop production assigned for the storage area. The production
must be stored free of any defects, in a very professional manner and separately with
appropriately labelled.

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Crop production stored for delivery must be suitably packaged in the specific shipping
containers in order to prevent damage and quality impairments (e.g. contamination,
corrosion or chemical reactions).

Every transport packaging unit shall be marked as follows:

Order numbers; Delivery item; lot/batch number; number of units/quality; expiry dates (if
applicable). Vendini would be obliged to ensure the traceability of the crop production.

8.14 Nature of Construction and Finishes

At the Vendini facility it of great importance that the construction and the finishes of the
facility are of a high standard to ensure security against any unauthorized access into the
Vendini facility. At Vendini the facility entrances, doors and frames are fire rated and
equipped with the appropriate locking hardware, door closers, contact switches and
electronic access control mechanisms.

8.15 Ventilation System

Our Harvest crop section has a well ventilated system to allow air into the structure.
Ventilation within the facility is required to achieve a balance for the humidity in the
greenhouse, and to control pollen. If there is excessive moisture in the buildings this can be
linked with occupant illnesses and the deterioration of building material. Excessive moisture
on almost all indoor materials leads to growth of microbes, such as mould, fungi and
bacteria.

In the facility, management are required to regularly inspect and maintain heating,
ventilation and air conditioning systems. Routine inspections and cleaning of drip pans,
check proper flow and to check that the drain is unobstructed. In the factory, low indoor
humidity is required to be maintained at 30-60%. The gutters and down spouts are
required
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to be kept in working order and ensure that they drain water away from the foundation.
Adequate drainage around the facility is required and the sloping of the ground away
from the building foundations so that they do not stay wet.

Ventilation System Design

At the Vendini facility the total amount of window openings will be required to be 15%
of the total floor area of each greenhouse compartment. Windows are fitted with a rail
mechanism and opens and closes by means of a push pull system.

At the Vendini facility there will be an air extraction unit in place which extracts air from
all the main packing rooms. All the areas within the facility will be equipped with a
system that filters air in order to prevent the escape of any possible odours. A highly
efficient particle air filter will be fitted at the facility to ensure appropriate ventilation and
filtration. In order for Vendini to achieve critical energy balance which is pertinent to
plant growth and production , there is need for timely dispensing of the heat load for
green house climate management to comply with GAP requirements.

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8.16 Special Areas for Handling of Highly Toxic, Hazardous and Sensitizing Materials

Vendini facility is equipped with an area for handling highly toxic, hazardous material
which has Air-handing System.

In the Vendini facility there is a control area which is a space within the building which
is enclosed and bounded by exterior walls, fire walls, fire barriers, or roofs where
quantities of hazardous materials not exceeding the maximum allowed quantities per
control area, are stored, dispensed, used or handled.

The following actions are required for the employees and management of Vendini to
abide by when handling of hazardous substances:

 Personal protective equipment: the employees that are dealing with hazardous substances
are required to wear certain protective equipment such as, gloves, gown, safety glasses, face
shields, respirator, closed toe shoes and a splash apron. The respirators that the employees
are required to wear are specialized masks that are designed to protect the employee from
specific airborne hazards.
 Transportation and storage: hazardous substances in the lab at the Vendini facility are
required to be stored in a specific area such as a base cabinet or refrigerator. All chemical
containers are required to be labelled with their chemical name and have the hazard
warnings written on them as well.
 Waste disposal: all waste products should not be disposed of by dumping them down a sink
or flushing down the toilet or discarding them in the regular trash. All hazardous waste will
be disposed by contacting the contracted chemical waste disposal company.

8.17 Water Systems

At the Vendini facility borehole water will be supplied to the facility as and when it is
required.

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Growing tables that will be installed throughout the facility will have an ebb and flood
irrigation system and overhead sprinkler system that will be put in place for the growing
of the cannabis plants.

In the technical area within the facility are:

• Day storage tanks.

• Drain water tanks.
• UV treatment and filter sets.
• Fertiliser mixing tanks with associated pumps sets and mixers

8.18 Maintenance

The maintenance at Vendini is the responsibility of the Production Manager as well as

the master growers (to be appointed under the Pharmaceutical Director). The Operations
Director is responsible for the premises and ensures that all physical features, water
outlets and electrical fixtures are kept in a good state of repair.

At Vendini we will also look to outsource an external company that will assist with the
management of our equipment maintenance and recording system. (e.g. Manage and
track plant and equipment for machinery, scale, instruments and other critical assets.
Generate preventive and adhoc work order for servicing the plant and equipment as well
as unplanned service repairs).

Periodically the facility will be checked for leaks and damaged equipment and repairs to
the damaged equipment will be made immediately to ensure that the equipment is again
working properly. Monthly inspections of all the indoor and outdoor storage locations
will be performed as well. Maintenance Policy has been put in place for the efficient
operation of production. The maintenance in the Vendini facility must be carried out
annually according to the manufacturer’s guidelines and by qualified technicians. All the
systems in the facility are required to be checked properly before any planting can
commence. This

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includes the checking of cooling/heating, lighting, irrigation, and fertigation as well all
the control systems. All maintenance and repair costs and records must be kept.

8.19 Equipment

Equipment for harvest and plant cultivation and processing is kept clean at all times
to eliminate the risk of contamination this includes all machine parts that are used for
harvest as well as laboratory equipment for testing.

Equipment that is purchased by Vendini should be purchased from suppliers that

have a proven track record and who supply equipment of a high standard and quality.
All equipment should only be used according to the manufacturer’s guidelines. All
equipment has to be cleaned regularly and must be free of oil and if necessary it
should in some instances by sterilized after use, especially if it has been used for
harvesting to ensure that any remaining residue does not result in cross
contamination.

The following are equipment that will be installed In the Vendini facility as part of
the heating system that is required for the facility greenhouse:

• A heat storage tank.

• Kerosene burners with alarm panels and ventilation grills.
• Hot water boilers, a chimney and drain installation and safety valves.
• Flue gas cooler with safety pressure switch and safety valves.
• Overhead pipe rails through the greenhouse with insulation.

At the Vendini facility the following equipment is required to be in place for the effective
growing of cannabis plants:

• The humidity within the facility greenhouse will be adjusted by the means of a fogging
system that will be put into place and this fogging system will be automatically controlled.
• There will be artificial lighting in place.
• Operating software (fertilization, irrigation and fogging).

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All equipment is required to be serviced regularly to ensure that it is working to a
high standard and the service record of the equipment is required to be kept by
management.

8.20 Maintenance

The production manager and the master growers will oversee and will notify when
maintenance is required by qualified technicians. Ulster shall outsource to an external
company to manage our equipment maintenance and recording system. (e.g: Manage and
track plant and equipment for machinery, scale, instruments and other critical assets).
Generate preventive and adhoc work order for servicing the plant and equipment as well
as unplanned service repairs. All maintenance and repair records will be kept by Vendini.

8.21 Qualification, Validation and Calibration

Vendini is currently in the process of developing a formal validation Master plan for the
company’s operations.

The company’s general types of qualification, will be divided into:

Design qualification- the design of the items is in accordance with GAP/GMP requirements

Installation qualification- the items have been installed in accordance with its design
specifications

Operations qualification- the item is operating in accordance with its design specifications.

Process performance qualification- the item will constantly meet its predetermined
specification and quality attributes.

The equipment in the facility will be constantly monitored and calibrated when necessary in
between routine servicing and maintenance procedures. Software updates will be done
periodically by an outsourced IT specialist as well as the equipment when needed.

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8.22 Sanitation

The facility area is regularly cleaned and disinfected. Normally undertaken using a
detergent step, followed by the application of a disinfectant and water. Equipment is also
regularly disinfected. All our personnel at Vendini are trained to sanitize before touching
any equipment in the premises.

As follows:

 Walls, ceilings and floors: the walls and the floors are cleaner with a vacuum steam cleaner.
The floor will then be mopped with detergent solution. The surface area will be wiped with
disinfectant solution as per concentration in purified water.

 Corridors: all stains that are present in any of the corridors are removed immediately. The
floors of the corridors will be mopped with a detergent solution and the area is wiped down
with disinfectant which has been mixed in purified water.

 Doors, windows and glass panels: any dust and stains that are present on the doors, windows
and glass panels are removed with a lint free cloth. The doors and the windows will be
mopped with a dry cloth and the doors and floors mopped with a wet cloth.

 Tables, desks, pallets: the pallets will be cleaned with a vacuum cleaner. Any adhere
material will be removed. All plastic pallets will be cleaned with tap water and mopped with
a solution.

 Ledges, supply grill & return grill, light fixtures: the ledges, supply grill & return grill will
be cleaned with a vacuum cleaner. The light fixtures will all be cleaned with a cloth duster.

 Toilets and basins: the toilets will be cleaned using 5% phenyl or harpic. The disinfectant
solution that is used to clean the toilets and basin shall be prepared daily. Two buckets will
be used when the cleaning takes place, in the one bucket it will be the disinfectant solution
and in the other bucket it will be plain water. The mop will be dipped into the disinfectant
solution and the floor will be mopped and cleaner, when the mop gets dirty it will then be
dipped into the clean water in the other bucket and it will then be squeezed dry and dipped
back into the disinfectant solution and the cleaning will then commence. After the cleaning
and sanitation is completed then the concerned supervisor will check the area to ensure that

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it has been cleaned properly.

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The areas that have been cleaned are inspected daily by the house keeper and supervisors in
charge. At Vendini we will have cleaning charts in place which will be kept to monitor all
cleaning and they will be updated regularly. The cleaning methods used are specified in
accordance to the required frequency, methods and chemicals required by the quality control
manager.

9 MANAGEMENT & HUMAN RESOURCES

9.1 Management structure

CHIEF EXECUTIVE OFFICER

MANAGING DIRECTOR

FINANCIAL ACCOUNTING
PRODUCTION MARKETING

LOGISTICS BANKING KEY ACCOUNTS

OPS FINANCE AUDITING

Figure 1. Vendini Functional Organogram

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The organizational structure is a centralized, functional departmentalized structure, which
involves centralized control with the existence of separate functional departments.
Centralization is the extent to which authority and decision-making vests in top management.

9.1.1 Exectutive 1

He comes from an entrepreneurial background with over 25 years experience. He has

surrounded himself with strategic advisors, mentors and specialists over the years and has
gained knowledge and insight into all aspects of business. The cannabis sector is a fairly new
legalised sector globally but brand new in Malawi. As a result he has sourced experts in the
industry and spent millions in consulting fees to enable him to engage in this industry. His
business acumen and experience over his working career will ensure the success of this new
venture.

9.1.2 Exectutive 3

He comes with a wealth of strategic management experience. He has a corporate background

and has served as a board member on various companies. His strengths lie in sales, marketing
and supply chain management.

9.2 Executive 2

Executive 2 will be the company representative in Malawi and will be responsible for all
regulatory and compliance issues. He will also be responsible for negotiating with various
stakeholders in the sector including assets and property transactions in relation to the product
portfolio.

9.3 Roles and Responsibilities

Exectutive 1

1. Operations
a. Procurement;
i. Inventory
ii. Vendor
iii. Relationships

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 2. Procurement;
a. Planning;
b. Maintenance / Engineering;
c. Bill of materials;

3. Production;
a. Production & maintenance;
b. Packaging & maintenance.
c. Quality control;
d. New product development.
e. Ops finance
f. Product Costings
g. Yields
h. Wastage
i. Chemist - QC reports
j. Buying price neg.
k. Contracts
l. Accounts payable

Executive 4 | MBA

1. Finance
a. Ops finance
b. Product costings
c. Yields
d. Wastage
e. Chemist - QC reports
f. Inefficiency management and reporting
g. Capital financing
h. Fixed & variable costings
i. Contracts
j. Accounts payable.

2. Financial accounting - overseeing

a. Financial reporting - Contracting and overseeing Auditors
b. Auditing & corporate governance – overseeing
c. Accounts receivable
d. Management accounts
e. Systems and procedures

3. Sales & Marketing

a. Sales
b. Marketing
c. Trade marketing

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 d. New line extension
e. Packaging designs
f. R&D
g. NPD
h. Brand planning
i. Key account management

Exectutive 3

1. Sales
a. Sales staff management
b. Agent management
c. Price management
d. Quality management
e. Service levels
f. Purchasing – point of sale material
g. Deliveries
2. Marketing
a. Market
planning
b. Brand planning
c. NPD
d. Advertising
e. Promotion
f. Budgeting
g. Trade marketing
h. Logistics

Executive 2

1. Legal
a. Legal department
b. Corporate social responsibility
c. Stakeholder negotiations
d. Property management
e. Social responsibility

9.4 Number of employees

The start up facility will employ approximately 60 direct staff. This will grow with further
expansions.

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9.5 Skills Required and Training Programmes

Various skills will be required to manage the various departments. The staff compliment will
include skilled, semi-skilled and unskilled employees. The employees will undergo various
training programmes to ensure the various divisions are operating at efficiency levels.
Employees within the operational division will also be rotated between the divisions to ensure
they are well versed. On-going in-house training will constantly be done.

Vendini looks to cultivate the highest quality of medicinal cannabis in Malawi and therefore
in order for that to happen, training of employees working within the Vendini facility is
required to be of a high standard

Training needs are identified during the recruitment process and by our specialist.
Training is of great importance to Vendini to ensure that the capacity of our personnel
working for the organization is built to be able to cultivate the highest quality medical
cannabis in Malawi, therefore Vendini will always look to ensure that cannabis
cultivation and primary processing training is executed properly.

Induction training is implemented and given to all new employees within the organization.
The induction training involves introducing the employee to the company Vendini.
Employees will be trained to recognize cannabis as well as get to know the common and
scientific names of the various cannabis plants.

Employees will be made aware of all the laws governing cannabis, general hygiene, clothing
requirements, first aid, safety and security, fire and emergency evacuation procedures, the
national and regional regulations governing labour as well as introducing the employees to
GAP and GMP guidelines for pharmaceutical grade APIs. Specific training will be required
for specific jobs within the Vendini facility. The employees will get trained in their respective
areas and on the job training analysis will be implemented by the relevant manager/
supervisor.

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The master growers and assistant growers will be responsible for training all personnel in the
propagation, harvest and post-harvest processing stages of medicinal plant production. After
tutorial introduction documentaries and examination will be given that then has to be passed
before they can progress on into the actual greenhouses for real time hands on practical
training.

Personnel entrusted with handling herbal material is given proper personal hygiene
training to ensure that the quality of processing, manufacturing and production of
Cannabis are not compromised. As well as training in the production techniques.

Personnel training includes in-house and external:

 In house training: in house training is done by the quality manager within the company.
 Expert training: this can be done In-house with experts contracted to train staff in the facility.
 External training: this is done by accredited outside contractors. This is where the staff are
sent on accredited course offered by accredited training providers, the National Standard
Bureau and other National related institution that give accredited training and
certification. The certificates showing attendance are kept by the HRM in the personnel
training files. After the adequate training has been done is a specific area, the staff are then
evaluated and put to work in their areas. The staff are then re-evaluated on their practical
experience.

Training needs are identified during recruitment process and by our specialist. Training
of personnel will be conducted regularly. The training records of all employees are
maintained and attendance at training is verified by signature.

Exams will be held every 3 months to monitor employee’s progress. Vendini have a
system in place that keeps all the records in file of each employee's performance and
track record of their training.

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9.6 Staff Turnover

Leadership will ensure the correct organizational culture is embedded within the company.
Organizational fit is of primary importance to ensure a very low staff turnover. Rewards and
recognition and praise will be implemented through rewards programmes, benefits and bonus
structures.

10 INTERNAL AND EXTERNAL RISKS

10.1 Situational analysis

The company addressed the various environmental scanning processed that have been applied
or will be applied going forward to address the micro and macro environments. A PESTLE
examination coupled with an examination under Porters Five Forces for the external
environment and an examination under Barneys Characteristics for the internal environment
will assist Vendini in securing long-term sustainability.

Both these SWOT analysis have been utilized to identify possible risks that Vendini would be
subject to.

Vendini once Phase 1 and Phase 2 expansion plans are complete will have efficient internal
resources being experienced human resources, fully automated physical resources and
organizational resources. Financial resources are being addressed in this application. These
have been assessed in line with Barneys Characteristics. It is suggested that firms that use
their internal strengths in exploiting environmental opportunities and neutralizing threats,
while avoiding internal weaknesses, are more likely to gain a competitive advantage over their
competitors.

10.2 Weakness Evaluation

10.2.1 Malawian Health Products Regulatory Authority

Vendini will comply with all the regulatory requirements as it relates to the growing,
extraction, selling and distribution for both local markets and exports.

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10.2.2 Sufficient Stock Reserves

The procurement division and the production division must follow carefully and comply with
all production forecasts that are presented by the sales division at the monthly management
meetings with consideration for unexpected inefficiencies that can cause production
stoppages. Stock reserves must at all times fall in line with rate of sale of the various stock-
keeping units (SKU’s). Therefore, carrying sufficient stock reserves will resolve the threat of
being suspended or de-listed for failure to meet infill rate requirements from blue chip
customers.

10.2.3 Cost per gram

Due to the highly delicate weight in terms of value, this important the master grower ensures
maximization of each and every crop. Failing which this could be devastating to the company
cash flow.

10.2.4 Production and Quality Control Reports

Cannabis manufacture is a highly specialised industry and quality control reports need to be
managed by a full time qualified chemist to ensure quality is consistent and yield is
maximised.

10.3 New Technologies

There is no risk of future technology impacting or threatening the sustainability of the

company. All equipment that produces stock is mechanical with no complex technology.

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10.4 SWOT ANALYSIS

10.5 Threats, risks and contingency plans

 Cost per kilogram maintenance. Evaporation, wastage and / or a bad crop can severely
impact on the gross profit margins. Ensure that department heads are versatile and are
trained within each and every department in the event of resignation or sickness that
results in a supervision crisis.
 Infill rates. The production capacity poses some constraints in terms of supplying
additional customers over and above the offtake agreement demand for stock. The
production and demand for stock will need to be monitored to ensure infill rates are
met.

Contingency planning can assist in maintaining gross profit margins, market share, staff
support, cash flow and sales levels. Whilst the plan B might cost the firm money, it can avoid
the failure or collapse of the business.

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11 SOCIO ECONOMIC BENEFITS

11.1 Job Creation

The company will create in excess of 60 direct jobs and approximately 20,000 indirect jobs
through empowering the local farmers across Malawi as contract manufactures within the
next five years.

11.2 Poverty Alleviation

Vendini will be engaging with various specialists in socio economic development. Providing
jobs will primarily be the poverty reduction measure. Creating jobs will be provided though
skill enhancing education and training to both direct and indirect employees. Vendini will
also engage in job creation through providing financial and non-financial support to SMME’s
once they have established themselves. The key objective is to empower communities
throughout Malawi. Identify and empower local growers to manufacture product for Vendini.

11.3 Skills Transfer

 90% of the staff compliment will be Malawian nationals. Select employees will be
sourced for various positions, but the majority will engage in skills development
programmes to ensure skills transfer.
 Training needs are identified during the recruitment process and by our specialist.
 Botanical / Horticultural and hydroponics training programme is given to all our
personnel handling the plan.
 Personnel entrusted with handling herbal material is given proper personal hygiene
training to ensure that the quality of processing, manufacturing and production of
Cannabis are not compromised.
 Training in production techniques will be provided.

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12 FINANCIAL PROJECTIONS

12.1 Assumptions

- Cost price per kilo is based on industry standards.

- Selling price per kilo is based on offtake agreement.
- Set up costs as per quotes received from suppliers.
- Sales volumes escalate as per offtake agreement.
- Administration costs all accounted for in line with size and type of facility.
- Sales collected cash on delivery as per offtake agreement.
- Cost of sales has been assumed to pay cash on delivery and excludes the provision of
trade credit facilities.
- Turnovers are projected in line with offtake agreement – set up cost phase and expansion
phase.
- Expansion phase in month 3 is critical to meet the demand for stock as per the offtake
agreement.

One needs to bear in mind that the budgets will need to be revised and or flexed once we have
created some historical information.

12.2 Annexures

 ANNEXURE A – FINANCIAL BUDGETS

o Capital investment.
o Owners contribution.
o Capex set up phase.
o Calculations (growing and cost of sales).
o Valuation.
o High level forecast – profit and loss.
o Projected balance sheet.

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 o IS Yr 2022
o IS Yr 2023
o IS Yr 2024
o IS Yr 2025
o IS Yr 2026
o Amortization
 ANNEXURE B – OFFTAKER 1 (OFFTAKE AGREEMENT)

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