You can’t conduct a google search for “the best Island life in the world,” without finding Roatan near the top of every list. This underrated Caribbean island has just
recently started hitting the mainstream and shows no signs of stopping. Located 40 miles north of Honduras in the Caribbean sea, the island is a territory of Honduras.
It is approximately 50 miles long and five miles wide. Over the centuries, Roatan has been populated by a mix of pirates, slave traders and military forces. Today, it is a
haven for US retirees, the diving community, and multitudes of tourists. The population of Roatan is approximately 100,000 ppl with over 60% catering to the tourist
industry and 20% being tourists/short term visitors.

The island has three major features that make it a great investment opportunity. It is located in southern part of the Caribbean sea and below the hurricane belt. As a
result, a lot of cruise ships are now making the island a stop on their itineraries that were disrupted by hurricane Harvey. The real estate market on the island is just
starting to react to its new found popularity and the timing for investment is ripe. The second feature is that Roatan is located next to the Mesoamerican Barrier reef –
the second largest coral reef in the world, making it a launch pad for the western hemisphere’s diving community. And finally, this is one of the rare small Caribbean
islands with an international airport! Multiple direct flights from the US and Canada, amongst other countries, land at this airport and the Tranquil Seas resort is a mere
fifteen minutes drive away.

Although the island is part of Honduras, the forty miles of ocean has buffered it from the political uncertainties of the mainland. The island has a strongly knit community
and though there is some crime on the island, it is comparable to other tropical beach resorts and doesn’t suffer from the disastrous statistics one hears about on the
mainland.
The island is pretty much self governed with both local and country officials realizing the tourism potential of the island and ensuring its growth. US dollars are just as
accepted on the island as the Honduran Lempira. In fact all significant amounts – real estate for sale or rent, flights, etc. are quoted in USD.
This culture offers the investor a great amount of insulation from the instability of the mainland, but also affords them the upside as eventually Honduras follows the path
of Costa Rica or multiple other Caribbean Islands.

This is the first concern that comes into peoples minds when they consider investments in the country of Honduras.
The goverment of Honduras is not stable and the recent ruling against the existance of ZEDES (Zones for Economic
developments) in the country has raised concerns amongst potential investors. However, the primary reason for this
is that the ZEDEs are looking to act within their own legal framework. The other primary concern is the reputation
Hoduras has for drug related violent crime.

It is important to note that Roatan is an oasis from both these issues that have a much larger impact on the
mainland.

Polititcally, Roatan generates a large bounty of tax revenue from its tourist trade and all the political parties in the
country are supportive of tourism and foreign investment on the island. The ZEDEs are an exception as they are
looking to act outside the Honduran legal framework.

The proposed project will be owned by a company registered in Honduras and subject to Honduran financial laws
which negate any political rist.

It is also important to note that the bulk of the project revenues come from sales of land lots within the property and
the initial investment is expected to be completely returned to the investors within three years.

We are also establishing connections with the Crawfish Rock village leaders and expect to have their full support and
cooperation.

With regard to the violence, Roatan has a low crime rate compared to most of the Caribbean and many US cities.
There is no production of drugs on the island and crimes are mostly petty. The exceptional violent crimes are
triggered by persona fueds and within minor drug distributors.

FX

There are some considerations on the FX front. Roatan accepts US dollars
as well the Honduran Lempira (HNL). There was a brief period at the
beginning of 2016 when it appeared the local government may have
wanted to standardize around the HNL and businesses stopped accepting
USD, however, the gov’t soon dropped the idea and both currencies
stayed in popular circulation. Around 85% of resort charges are paid in
USD and only 15% in HNL If the US Dollar were to appreciate against the
HNL, this would only benefit the business as costs would be lower relative
to the USD revenues. On the other hand, if HNL became stronger, we
would raise the USD prices for resort bookings, which would be expected
in the tourist market. Honduras is still relatively cheap for the standard of
tourism offered and there is room for the prices to go up without making
the retreat any less competitive on the cost front.

FXREAL ESTATE

Real Estate pricing data is fairly limited for Roatan as the number of
transactions are very small and not all transactions are recorded digitally.
The following synopsis is based on conversations with brokers on the
island.

The Real Estate market on Roatan has reflected the US economy more
than mainland Honduras’ economy. The market crashed ten years ago
alongside the US and has been stagnated at those levels since. Activity in
this market has only just picked up over the past year as the US economy
has taken an upturn. Real estate is still cheaper here than other Caribbean
Islands and Central American countries that transitioned to a tourist
economy earlier. This gives a good potential upside to the property value.

Though the island is fairly insulated from activities on the mainland, there is
still a risk that these activities may spill over to the island causing a
downturn. However the government is aware of the tourism related
revenue potential of the island and is pushing to expand this are for further
growth.

The land being purchased slopes up from the beach to a high ridge. We
will clear a large beach along the waterfront and only start construction
after the land has risen a few feet in consideration of a potential sea level
rise.

Property Sale Revenues

• ✤ Land Sales – $11.50mm
• ✤ Villa Sales – $7.40mm
• ✤ Condo Sales – $9.25mm
• Total Sales – $28.15mm

Resort Revenues (Annual)

• At 60% occupancy
• ✤ Rooms – $1.01mm
• ✤ Cabanas – $0.51mm
• ✤ Restaurant – $0.55mm
• ✤ Spa/Other – $0.14mm
• ✤ Commercial/Retail – $0.40mm
• Total Resort – $2.61mm

Capital Costs

• ✤ Land purchase – $4.00mm
• ✤ Homes/condos – $8.92mm
• ✤ Resort – $6.50mm
• ✤ Retail/commercial – $5.00mm
• ✤ Other – $1.30mm
• Total Capital Costs – $25.72mm

Recurring Costs (Annual)

• ✤ Staff – $0.90mm
• ✤ Maintenance – $0.10mm
• ✤ Marketing- $0.06mm
• ✤ Utilities – $0.10mm
• ✤ Food and Beverage – $0.16mm
• ✤ Commercial/Retail – $0.20mm
• Total Recurring Costs – $1.52mm