QC LABS, DBA CANNALYSIS, A CORPORATION

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4. Remittance and Reporting. Beginning as set forth above and monthly thereafter, OPERATOR shall report and remit payment to CITY of the applicable operating agreement fee set forth in Section 2 of this AGREEMENT. OPERATOR shall report to CITY any gross receipts received during the preceding monthly reporting period and shall remit to CITY on or before the last day of the month following the operating agreement fee due and owing during said period as applicable in accordance with Section 2 of this AGREEMENT. When the last day of the month falls on a City Holiday or City Hall Closure Day then the reporting/remittance date shall fall on the next City business day following. The operating agreement fee shall be acknowledged and agreed by CITY to be paid timely if paid on said date. When reporting/remitting is made by mail, the postmark date shall serve as proof of timely reporting/remittance. Records Inspection, Examination and Audit. OPERATOR acknowledges and agrees that CITY is empowered under this Agreement to inspect, examine and audit OPERATOR's books and records (including tax filings and returns), to ascertain the amount of operating fees due and owing. CITY or its authorized agents shall have the power and authority to conduct a full inspection, examination and audit of such books and records (including tax filings and returns) at any reasonable time, including but not limited to, during normal business hours. In the event any such books, records, tax filings and returns cannot be made fully available within the City of Santa Ana, OPERATOR acknowledges and agrees that it shall reimburse CITY for the cost of all transportation, lodging, meals, portal-to-portal travel time, and other incidental costs reasonably incurred by CITY or its authorized agents in obtaining said full inspection, examination and audit. In the event that said records inspection, examination and audit determines that a net operating agreement fee payment deficiency of greater than Five Percent (5%) exists; OPERATOR acknowledges and agrees that it shall reimburse CITY for the full cost of said records inspection, examination and audit reasonably incurred by CITY or its authorized agents. 6. Past due date — Past due penalty; Late interest. A. Any OPERATOR entity or individual who fails to pay the operating agreement fees required by this AGREEMENT when due shall be subject to past due penalties and interest as set forth herein. i. OPERATOR shall be considered past due if the required monthly operating agreement fee is not paid by the last day of the month following the month for which it is due. ii. For failure to fully pay any monthly fee when due, the following past due penalty and late interest charges shall be added to the unpaid balance amount owing: 1) A past due penalty of Twenty -Five Percent (25%) per month; 2) A late interest charge of One and One Half Percent (1.5%) per month added to the unpaid balance amount owing, inclusive of any prior past due penalty or late interest charges accrued. 4