What changed in this filing

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Item 1. Business

2022-03-24 compared with 2021-03-31 · 585 added, 663 removed, 41 unchanged (97% of the section changed)

1 unchanged sentence

financial statements that appear elsewhere in this annual report on Form 10-K.

As used in this annual report on Form 10-K

and unless otherwise indicated, the terms the terms “Zoned Properties”, “Company,”

“we,”

“us,”

or “our”

refer to Zoned Properties, Inc.

and its wholly owned subsidiaries, Gilbert Property Management, LLC, Green

Valley Group, LLC, Kingman Property Group, LLC, Chino Valley Properties, LLC, Zoned Oregon Properties, LLC, Zoned Colorado Properties,

LLC, Zoned Illinois Properties, LLC, Zoned Arizona Properties, LLC, Zoned Advisory Services, LLC and Zoned Properties Brokerage,

LLC, as the context may require.

used in this annual report on Form 10-K and unless otherwise indicated, the terms the terms “Zoned Properties”, “Company,”

“we,” “us,” or “our” refer to Zoned Properties, Inc.

and its wholly owned subsidiaries, Gilbert Property

Management, LLC, Green Valley Group, LLC, Kingman Property Group, LLC, Chino Valley Properties, LLC, Zoned Oregon Properties, LLC, Zoned

Colorado Properties, LLC, Zoned Illinois Properties, LLC, Zoned Arizona Properties, LLC, Zoned Advisory Services, LLC, Zoned Properties

Brokerage, LLC, and ZP Data Platform 1, LLC as the context may require.

Properties, Inc.

(“Zoned Properties”

or the “Company”), was incorporated in the State of Nevada on August

The Company is a strategic real estate development firm whose primary mission is to provide specialized real estate

and sustainability services for clients in the regulated cannabis industry, positioning the company for real estate investments

and revenue growth .

We intend to pioneer sustainable development for emerging industries, including the regulated cannabis

We are an accredited member of the Better Business Bureau, the U.S.

Green Building Council, and the Forbes Real Estate

We focus on investing capital to acquire and develop commercial properties to be leased on a triple-net basis, and engaging

clients that face zoning, permitting, development, and operational challenges.

We provide development strategies and advisory

services that could potentially have a major impact on cash flow and property value.

We do not grow, harvest, sell or distribute

cannabis or any substances regulated under United States law such as the Controlled Substance Act of 1970, as amended (the “CSA”).

(“Zoned Properties” or the “Company”), was incorporated in the State of Nevada on August 25,

The Company is a real estate development firm for emerging and highly regulated industries, including regulated cannabis.

is redefining the approach to commercial real estate investment through its integrated growth services.

Headquartered in Scottsdale,

Arizona, Zoned Properties has developed a full spectrum of integrated growth services to support its real estate development and investment

Advisory Services, Brokerage Services, Franchise Services, and Property Technology (“PropTech”) Data Services each

cross-pollinate within the model to drive project value associated with complex real estate projects.

With national experience and a

team of experts devoted to the emerging cannabis industry, Zoned Properties is addressing the specific needs of a modern market in highly

regulated industries.

Zoned Properties is an accredited member of the Better Business Bureau, the U.S.

Green Building Council, and the

Forbes Real Estate Council.

The Company does not grow, harvest, sell or distribute cannabis or any substances regulated under United

States law such as the Controlled Substance Act of 1970, as amended (the “CSA”).

Company has the following wholly owned subsidiaries:

Gilbert Property

Management, LLC (“Gilbert”) was organized in the State of Arizona on February 10, 2014.

Chino Valley Properties,

LLC (“Chino Valley”) was organized in the State of Arizona on April 15, 2014.

Kingman Property

Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014.

Green Valley Group,

LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

Zoned Oregon Properties,

LLC was organized in the State of Oregon on June 16, 2015.

Zoned Colorado Properties,

LLC (“Zoned Colorado”) was organized in the State of Colorado on September 17, 2015.

Zoned Illinois Properties, LLC was organized

in the State of Illinois on July 15, 2015.

Zoned Arizona Properties, LLC (“Zoned

Arizona”) was organized in the State of Arizona on June 2, 2017.

Zoned Advisory Services, LLC (“Zoned Advisory”)

was organized in the State of Arizona on July 27, 2018.

Zoned Properties Brokerage, LLC (“Zoned

Brokerage”) was organized in the State of Arizona on March 17, 2021.

March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures

The Company is monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak

to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and our business is uncertain.

Currently, all of the properties in the Company’s portfolio are open to its Significant Tenants and their customers and

will remain open pursuant to state and local government requirements.

The Company did not experience in 2020, and does not foresee

in 2021, any material changes to its operations from COVID-19.

The Company’s tenants are continuing to generate revenue

at these properties and they have continued to make rental payments in full and on time and we believe the tenants’

position is sufficient to cover its expected rental obligations.

Accordingly, while the Company does not anticipate an impact

on its operations, it cannot estimate the duration of the pandemic and potential impact on its business if the properties must

close or if the tenants are otherwise unable or unwilling to make rental payments.

In addition, a severe or prolonged economic

downturn could result in a variety of risks to the Company’s business, including weakened demand for its properties and

a decreased ability to raise additional capital when needed on acceptable terms, if at all.

Properties is a strategic real estate development firm whose primary mission is to provide specialized real estate and sustainability

services for clients in the regulated cannabis industry, positioning the company for real estate investments and revenue growth .

We intend to pioneer sustainable development for emerging industries, including the regulated cannabis industry.

accredited member of the Better Business Bureau, the U.S.

Property Management, LLC (“Gilbert”) was organized in the State of Arizona on February 10, 2014.

Valley Properties, LLC (“Chino Valley”) was organized in the State of Arizona on April 15, 2014.

Property Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014.

Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

Oregon Properties, LLC was organized in the State of Oregon on June 16, 2015 and is currently inactive.

Colorado Properties, LLC (“Zoned Colorado”) was organized in the State of Colorado on September 17, 2015 and is currently

Zoned Illinois Properties,

LLC (“Zoned Illinois”) was organized in the State of Illinois on July 15, 2015 and is currently inactive.

Zoned Arizona Properties,

LLC (“Zoned Arizona”) was organized in the State of Arizona on June 2, 2017.

Zoned Advisory Services,

LLC (“Zoned Advisory”) was organized in the State of Arizona on July 27, 2018.

Zoned Properties Brokerage,

LLC (“Zoned Brokerage”) was organized in the State of Arizona on March 17, 2021.

ZP Data Platform 1, LLC

(“ZP Data”) was organized in the State of Arizona on April 14, 2021.

March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide.

The Company is monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak to date, the

ultimate duration and severity of the outbreak and its impact on the economic environment and our business is uncertain.

Currently, all

of the properties in the Company’s portfolio are open to its Significant Tenants and their customers and will remain open pursuant

to state and local government requirements.

The Company did not experience in 2020 or 2021 and does not foresee in 2022, any material

changes to its operations from COVID-19.

The Company’s tenants are continuing to generate revenue at these properties, and they

have continued to make rental payments in full and on time and we believe the tenants’ liquidity position is sufficient to cover

its expected rental obligations.

Accordingly, while the Company does not anticipate an impact on its operations, it cannot estimate the

duration of the pandemic and potential impact on its business if the properties must close or if the tenants are otherwise unable or

unwilling to make rental payments.

In addition, a severe or prolonged economic downturn could result in a variety of risks to the Company’s

business, including weakened demand for its properties and a decreased ability to raise additional capital when needed on acceptable

terms, if at all.

are a real estate development firm for emerging and highly regulated industries, including regulated cannabis.

We are redefining the

approach to commercial real estate investment through our integrated growth services.

Headquartered in Scottsdale, Arizona, we have developed

a full spectrum of integrated growth services to support our real estate development and investment model;

Advisory Services, Brokerage

Services, Franchise Services, and PropTech Data Services each cross-pollinate within the model to drive project value associated with

complex real estate projects.

With national experience and a team of experts devoted to the emerging cannabis industry, we are addressing

the specific needs of a modern market in highly regulated industries.

We are an accredited member of the Better Business Bureau, the

Green Building Council, and the Forbes Real Estate Council.

on investing capital to acquire and develop commercial properties to be leased on a triple-net basis, and engaging clients that

face zoning, permitting, development, and operational challenges.

We provide development strategies and advisory services that

could potentially have a major impact on cash flow and property value.

We do not grow, harvest, sell or distribute cannabis or

any substances regulated under United States law such as the CSA.

We do not grow, harvest, sell or distribute cannabis or any substances

regulated under United States law such as the Controlled Substance Act of 1970, as amended (the “CSA”).

are in the process of developing and expanding multiple business divisions;

including an advisory services division, a licensed

commercial real estate brokerage division, a real estate division focused on franchise services, a real estate division focused

on real estate data, and a nonprofit charitable organization to focus on community prosperity.

Each of these operating divisions

are important elements of the overall business development strategy for long-term growth.

We believe in the value of building

relationships with clients and local communities in order to position the Company for long-term portfolio and revenue growth backed

by sophisticated, safe, and sustainable assets and clients.

core of our business involves identifying and developing commercial properties that intend to operate within highly regulated

industries, including the regulated cannabis industry.

Within highly regulated industries, local municipalities typically develop

strict regulations, including zoning and permitting requirements related to commercial real estate, that dictate the specific

locations and parameters under which regulated properties can operate.

These regulations often include complex permitting processes

and can include non-standard codes governing each location;

for example, restricting a regulated property or facility from operating

within a certain distance of any parks, schools, churches, or residential districts, or restricting a regulated property from

operating outside a defined set of hours of operation.

When an organization can collaborate with local representatives, a proactive

set of rules and regulations can be established and followed to meet the needs of both the regulated operators and the local community.

including an advisory services division, a licensed commercial

real estate brokerage division, a real estate division focused on franchise services, a real estate division focused on property technology

data for real estate, and a nonprofit charitable organization to focus on community prosperity.

Each of these operating divisions are

important elements of the overall business development strategy for long-term growth.

We believe in the value of building relationships

with clients and local communities in order to position the Company for long-term portfolio and revenue growth backed by sophisticated,

safe, and sustainable assets and clients.

core of our business involves identifying and developing commercial properties that intend to operate within highly regulated industries,

including the regulated cannabis industry.

Within highly regulated industries, local municipalities typically develop strict regulations,

including zoning and permitting requirements related to commercial real estate, that dictate the specific locations and parameters under

which regulated properties can operate.

These regulations often include complex permitting processes and can include non-standard codes

governing each location;

for example, restricting a regulated property or facility from operating within a certain distance of any parks,

schools, churches, or residential districts, or restricting a regulated property from operating outside a defined set of hours of operation.

When an organization can collaborate with local representatives, a proactive set of rules and regulations can be established and followed

to meet the needs of both the regulated operators and the local community.

Company currently maintains a portfolio of properties that we own, develop, and lease.

We currently lease land and/or building

space at all five of the properties in our portfolio.

Four of the properties are leased to licensed and regulated cannabis tenants

and are located in areas with established zoning and permitting procedures.

Two of the leased properties are zoned and permitted

as licensed and regulated cannabis dispensaries, and two of the leased properties are zoned and permitted as licensed and regulated

cannabis cultivation facilities.

We currently lease land and/or building space

at all four of the properties in our portfolio.

These properties are leased to licensed and regulated cannabis tenants and are located

in areas with established zoning and permitting procedures.

Two of the leased properties are zoned and permitted as licensed and regulated

cannabis dispensaries, and two of the leased properties are zoned and permitted as licensed and regulated cannabis cultivation facilities.

Each regulated property may undergo a non-standard development process.

Various development requirements

in this process may include initial property identification, zoning authorization, and permitting guidance in order to qualify

a commercial property for subsequent architectural design, utility installation, construction and development, property management,

facilities management systems, and security system installation.

are significant challenges that take place when zoning, permitting, and developing facilities that intend to operate within a

regulated industry, including the regulated cannabis industry.

Various development requirements in this process may include

initial property identification, zoning authorization, and permitting guidance in order to qualify a commercial property for subsequent

architectural design, utility installation, construction and development, property management, facilities management systems, and security

system installation.

June 1, 2021, we closed on the sale of our Gilbert, AZ property with a third party (the “Purchaser”) pursuant to which we

agreed to sell, and the Purchaser agreed to purchase, the property located in Gilbert, Arizona, for an aggregate purchase price of $335,000.

In connection with the sale, we received net proceeds of $322,332 and recorded a gain on sale of rental property of $51,944.

are significant challenges that take place when zoning, permitting, and developing real estate with facilities that intend to operate

within a regulated industry, including the regulated cannabis industry.

Each state and local jurisdiction may adopt specific zoning and

permitting regulations that may be unique compared to alternative jurisdictions.

The Company has gained valuable knowledge and

developed best practices in this area by successfully completing four major projects in the state of Arizona, a highly regulated

market for the regulated cannabis industry.

The Company intends to replicate this business model in other states as markets mature

and rules and regulations are established.

process for obtaining zoning authorizations and permitting for a regulated cannabis facility can take several months to complete.

The process primarily involves working directly with the local government representatives.

Notwithstanding proper zoning and permitted

use, we may work with local zoning authorities in order to revise zoning codes and regulations.

The Company has been involved

with local representatives for each of the properties currently held in our portfolio and on behalf of third-part client properties.

For example, the Company worked directly with local representatives in Tempe, Arizona to update the local zoning code that regulates

licensed cannabis facilities.

The successfully adoption of these code amendments directly impact the continued development of

any licensed cannabis facilities that operate within municipal limits.

the event a property is not currently zoned or does not currently allow permitted use as a regulated cannabis facility, we may

work with local authorities to seek changes to existing zoning or permitted use.

Our efforts may not be successful.

our property located in Gilbert, Arizona has not been successfully zoned and permitted for a prospective regulated cannabis facility

nor has it been leased to a licensed cannabis operator.

We may lease this property to a non-cannabis tenant in the interim or

divest our ownership of the property entirely.

Company has established a network of experts in the fields of real estate, design, construction, operations, and corporate social

responsibility in order to provide tenants and clients with comprehensive solutions to best meet their needs.

We require our prospective

tenants and clients to go through extensive due diligence in order to meet the Company’s standards as sophisticated and

experienced operators.

vision is to be recognized for setting the standard in sustainable development for emerging industries, while increasing community

prosperity and shareholder value.

We believe that a focus on real estate and the sustainable development of properties will bring

value to the local communities in which we operate and to local stakeholders.

While we intend to expand into a variety of emerging

industries, our current focus is on developing projects within the regulated cannabis industry.

are the sole member of nine limited liability companies:

Zoned Advisory Services, LLC (“Zoned Advisory Services”),

Zoned Arizona Properties, LLC (“Zoned Arizona”), Gilbert Property Management LLC (“Gilbert Management”),

Green Valley Group LLC (“Green Valley Group”), Kingman Property Group LLC (“Kingman Property”), Chino

Valley Properties LLC (“Chino Valley Properties”), Zoned Colorado Properties LLC (“Zoned Colorado”), Zoned

Illinois Properties LLC (“Zoned Illinois”), and Zoned Oregon Properties LLC (“Zoned Oregon”).

these entities own our properties:

Zoned Arizona, Gilbert Management, Green Valley Group, Kingman Property, and Chino Valley Properties

have all acquired land and/or real property.

state-licensed operators from across the United States have approached Zoned Properties for strategic partnership and/or advisory

services for development and prospective sale-lease back arrangements.

We are continuously evaluating these projects as we seek

development partnerships, prospective sale-lease back arrangements, and explore financing terms with capital funding sources.

believe that we are well positioned to benefit from ancillary development opportunities that the regulated cannabis industry presents

without having to deal with the risk of directly cultivating, distributing, or dispensing the product, which is still illegal

under federal law.

The Company has gained valuable knowledge and developed

best practices in this area by successfully completing project for third party clients across the country in multiple state and our own

major projects in the state of Arizona, a highly regulated market for the regulated cannabis industry.

The Company intends to replicate

this business model across the nation as markets mature and rules and regulations are established.

process for obtaining zoning authorizations and permitting for a regulated cannabis facility can take months or sometimes years to complete.

The process primarily involves working directly with the local government representatives following state-level legalization.

Notwithstanding

proper zoning and permitted use, we may work with local zoning authorities in order to revise zoning codes and regulations.

has been involved with local representatives for each of the properties currently held in our portfolio and on behalf of third-part client

properties across the nation.

For example, the Company worked directly with local representatives in Tempe, Arizona to update the local

zoning code that regulates licensed cannabis facilities.

The successfully adoption of these code amendments directly impact the continued

development of any licensed cannabis facilities that operate within municipal limits.

the event a property is not currently zoned correctly or does not currently allow permitted use as a regulated cannabis facility, we

may work with local authorities to rezone the property or seek changes to existing zoning codes or permitted uses.

Our efforts may not

be successful.

For example, the property we sold in June of 2021 located in Gilbert, Arizona was not successfully zoned and permitted

for a prospective regulated cannabis facility and was ultimately divested as a non-core asset.

Company has established a network of experts in the fields of real estate, design, engineering, construction, operations, security, and

corporate social responsibility in order to provide tenants and clients with a full-spectrum of real estate solutions to best meet their

We require our prospective tenants and clients to go through due diligence in order to meet the Company’s standards.

vision is to be recognized for setting the standard in sustainable development for emerging industries, while increasing community prosperity

and shareholder value.

We believe that a focus on real estate and the sustainable development of properties will bring value to the local

communities in which we operate and to local stakeholders.

While we intend to expand into a variety of emerging industries, our current

focus is on real estate projects within the regulated cannabis industry.

are the sole member of eleven limited liability companies:

Zoned Advisory, Zoned Arizona, Gilbert, Green Valley, Kingman, Chino Valley,

Zoned Colorado, Zoned Illinois, Zoned Oregon, Zoned Brokerage, and ZP Data.

Four of these entities own our properties:

Zoned Arizona,

Green Valley, Kingman, and Chino Valley have all acquired land and/or real property.

state-licensed operators from across the United States have approached Zoned Properties for strategic partnership and/or advisory services

for development and prospective sale-lease back arrangements.

We are continuously evaluating these projects as we seek development partnerships,

prospective sale-lease back arrangements, and explore financing terms with capital funding sources.

are a non-plant touching organization.

We believe that we are well positioned to benefit from ancillary development opportunities that

the regulated cannabis industry presents without having to deal with the risk of directly cultivating, distributing, or dispensing the

product, which is still illegal under federal law.

initial holdings and acquisition targets have been in the State of Arizona.

Unlike many other states that have legalized and regulated

cannabis, Arizona’s program has some of the strictest regulations in the country and limits the number of dispensaries that

will be allowed to be open and operate within the state.

While there are hundreds of dispensaries in Denver, Colorado, the entire

state of Arizona can have a maximum of 130 operating dispensaries under current legislation.

Two of our properties in Arizona

(Kingman and Green Valley) are leased to licensed operators that have been awarded dispensary licenses.

This limitation on the

number of dispensaries permitted to operate in Arizona under current legislation will limit our ability to purchase additional

property in Arizona for lease to dispensary operators.

cannabis, Arizona’s program has some of the most robust regulations in the country and limits the number of dispensaries that will

be allowed to be open and operate within the state.

While there are hundreds of dispensaries in Denver, Colorado, the entire state of

Arizona will have a maximum of 169 operating dispensaries under current legislation.

This limitation on the number of dispensaries permitted

to operate in Arizona under current legislation may limit our ability to purchase additional property in Arizona for lease to dispensary

Corporate History and Transactions

April 22, 2016, Zoned Colorado Properties, LLC (“Zoned Colorado”), a wholly owned subsidiary of the Company, entered

into a Contract to Buy and Sell Real Estate (the “Parachute Agreement”) with Parachute Development Corporation (“Seller”)

pursuant to which Zoned Colorado agreed to purchase, and Seller agreed to sell, property in Parachute, Colorado (the “Property”)

for a purchase price of $499,857.

Of the total purchase price, $274,857, or 55%, was to be paid in cash at closing and $225,000,

or 45%, was to be financed by Seller at an interest rate of 6.5%, amortized over a five-year period, with a balloon payment at

the end of the fifth year.

Pursuant to the terms of the Parachute Agreement, the parties cooperated in good faith to complete

due diligence during a period of 45 days following execution of the Parachute Agreement.

The closing was subject to certain contingencies,

including that Zoned Colorado must obtain acceptable financing for the purchase and development of the Property, the grant of

a special use permit by the Town of Parachute, approval of a protected development deal or equivalent agreement by the Town of

Parachute, execution of a lease agreement by a prospective tenant and the prospective tenant’s obtaining a license to cultivate

on the Property.

Pursuant to the terms of the Parachute Agreement, Zoned Colorado had a right of first refusal on eleven additional

lots owned by Seller in Parachute, Colorado.

In April 2016, the Company paid a refundable deposit of $45,000 into escrow in connection

with the Parachute Agreement.

In January 2021, the Parachute Agreement was mutually terminated and the refundable deposit of $45,000

was returned to the Company.

May 1, 2018, Zoned Arizona, Green Valley Group, Kingman Property, and Chino Valley Properties executed lease agreements with our

Significant Tenant at each of the respective properties.

May 1, 2018, Zoned Arizona, Green Valley Group, Kingman Property, and Chino Valley Properties executed lease agreements with our Significant

Tenant at each of the respective properties.

These locations generate rental revenue.

The lease agreements have a

22-year term, expiring on April 30, 2040.

Additionally, we own land located in Gilbert, Arizona that is leased as vacant land.

leases dated May 1, 2018, with Zoned Arizona, Green Valley Group, Kingman Property, and Chino Valley Properties each include a

Guarantee of Payment and Performance by Mr.

The lease agreements have a 22-year term, expiring

on April 30, 2040.

leases dated May 1, 2018, with Zoned Arizona, Green Valley, Kingman, and Chino Valley each include a Guarantee of Payment and Performance

Abrams and the tenant organizations.

on May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement by and between the Company and

Broken Arrow Herbal Center, Inc.

(“Broken Arrow”) (the “Broken Arrow CASA”), with a term expiring on April

30, 2040, unless earlier terminated as provided in the Broken Arrow CASA.

Additionally, on May 1, 2018, the Company entered into

that certain Confidential Advisory Services Agreement by and between the Company and CJK, Inc.

(“CJK”) (the “CJK

CASA”), with a term expiring on April 30, 2040, unless earlier terminated as provided in the CJK CASA.

Each of the Broken

Arrow CASA and the CJK CASA may be terminated prior to the expiration of the respective term upon the occurrence of any of the

(a) by the Company for any reason at any time upon 30 calendar days’

written notice to the other party;

either party immediately upon the mutual agreement of the parties, evidenced by a writing signed by the parties;

or (c) immediately

by either party in the event of an actual finding, by a court of competent jurisdiction, of fraud, gross negligence or willful

misconduct of the other party in connection with these agreements.

Pursuant to the terms of the Broken Arrow CASA and CJK CASA,

Broken Arrow and CJK engaged the Company to perform certain advisory services in exchange for a fee equal to 10% of Broken Arrow’s

and CJK’s gross revenues (the “Revenue Fee”), commencing January 2019.

The Revenue Fee was to be paid on a monthly

basis, no later than 30 calendar days following the end of the immediately preceding calendar month, and the amount of such monthly

payment of the Revenue Fee is equal to the product of (a) 10%, multiplied by (b) the gross revenues of Broken Arrow or CJK, as

the case may be, for such immediately preceding calendar month.

Notwithstanding the foregoing, upon the filing of the federal

or state tax returns of Broken Arrow or CJK, as the case may be, (i) the advisory client shall calculate the Revenue Fee based

on the amount of the advisory client’s gross revenue reported on such federal or state tax returns, and (ii), if the amount

of such calculation is greater than the sum of all monthly Revenue Fees payable to the Company under the Broken Arrow CASA or

the CJK CASA, as the case may be, the applicable advisory client is required to pay to the Company the amount of such difference,

which amount is in addition to all monthly Revenue Fees due to the Company under the Broken Arrow CASA or the CJK CASA.

December 31, 2018, each of Messrs.

Abrams and Carra was a significant stockholder of the Company.

January 1, 2019, the Company, Christopher Carra, Alan Abrams, Clayton Abrams Revocable Trust (the “Clayton Abrams Trust”),

and Kyle Abrams Revocable Trust (the “Kyle Abrams Trust”

and together with the Clayton Abrams Trust, the “Trusts”)

entered into a Stock Redemption Agreement (the “Stock Redemption Agreement”).

Prior to entry into the Stock Redemption

Agreement, (i) Mr.

Carra was the owner 2,028,335 shares of the Company’s common stock, representing approximately 11.6%

of the Company’s outstanding shares as of January 1, 2019, and (ii) Mr.

Abrams, together with the Trusts (collectively,

the “Abrams Affiliates”), owned 3,611,669 shares of the Company’s common stock, representing approximately 20.7%

of the Company’s outstanding common stock as of January 1, 2019.

Pursuant to SEC rules, each of Messrs.

Carra and Abrams

was deemed to be a “related person”

due solely to their status as significant stockholders of the Company.

to the terms of the Stock Redemption Agreement, the parties agreed that the Company would redeem an aggregate of 5,640,004 owned

Carra and the Abrams Affiliates (the “Stock Redemption”) such that Messrs.

Carra and Abrams would no longer

be stockholders of the Company and would no longer be deemed to be “related persons”

under SEC rules.

for the Stock Redemption, the parties agreed that:

Company and Broken Arrow, which was owned at the time of the transaction, in whole or in part, directly or indirectly, by

Abrams and Carra, amended the Broken Arrow CASA to reduce the gross revenue fee payable by Broken Arrow from 10% of

gross revenue to 0% of gross revenue,

Company and CJK, which was owned at the time of the transaction, in whole or in part, directly or indirectly, by Messrs.

and Carra, amended the CJK CASA to reduce the gross revenue fee payable by CJK from 10% of gross revenue to 0% of gross revenue,

Company and Mr.

Abrams amended the convertible debenture dated January 9, 2017 (the “Abrams Debenture”) to extend

the maturity date of the Abrams Debenture from January 9, 2022 until January 9, 2030, and

Valley and Broken Arrow amended the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018

(the “Chino Valley Lease”) to increase the monthly base rent payable by Broken Arrow from $35,000 to $40,000.

effectiveness of the Stock Redemption and the transactions set forth above:

Carra and Abrams no longer beneficially own any shares of the Company’s common stock.

Accordingly, they are no longer

be significant stockholders of the Company or “related persons”

under the SEC rules.

Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Chino Valley and Broken Arrow

continues in full force and effect, except as amended by the Chino Valley Lease Amendment to increase the monthly base rent

payable by Broken Arrow from $35,000 to $40,000.

Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Green Valley and Broken Arrow

continues in full force and effect.

Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement (concerning the Company’s Tempe, Arizona property)

dated May 1, 2018 between Zoned Arizona and CJK continues in full force and effect.

Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Kingman and CJK continues in

full force and effect.

May 29, 2020, Chino Valley and Broken Arrow entered into a second amendment to the 2018 Chino Valley Lease, as amended (the “2020

Chino Valley Amendment”), effective May 31, 2020 (“Effective Date”).

Pursuant to the terms of the 2020 Chino

Valley Amendment, among other things, the base rent was adjusted to $32,800 per month, and the base rent was abated from June

1, 2020 to July 31, 2020.

Any increase in the rentable area of the leased premises will result in an increase in all amounts calculated

based on the same, including, without limitation, base rent.

Pursuant to the terms of the 2020 Chino Valley Amendment, the parties

agreed that if there is any change in laws such that the dispensing, sale or cultivation of regulated cannabis upon the premises

is prohibited or materially and adversely affected as mutually and reasonably determined by Chino Valley and Broken Arrow, Broken

Arrow may terminate the 2018 Chino Valley Lease, as amended, by delivering written notice to Chino Valley, together with a termination

payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned

after termination for the balance of the term.

In addition, the parties agreed that from the period from the Effective Date to

June 30, 2022 (the “Improvement Period”), Broken Arrow will and/or Broken Arrow will cause its affiliate, CJK, to

invest a combined total of at least $8,000,000 of improvements (“Investment by Tenants”) in and to the property that

is the subject of the Chino Valley Lease and the property that is the subject of the Tempe Lease (discussed below, and collectively

referred to as the “Facilities”).

If Broken Arrow and/or CJK fails to deliver to the Company receipted bills for hard

and soft costs of improvements to the Facilities totaling at least $8,000,000 on or before June 30, 2022, Broken Arrow will be

in default under the Chino Valley Lease and Tempe Lease, as amended.

May 29, 2020, Green Valley and Broken Arrow entered into the First Amendment (the “Green Valley Amendment”) to the

Green Valley Lease, effective May 31, 2020.

Pursuant to the terms of the Green Valley Amendment, among other things, the parties

agreed to abate the fixed base rent of $3,500 from June 1, 2020 to July 31, 2020.

In addition, the Green Valley Amendment provides

that any increase in the rentable area of the leases premises will result in an increase in all amounts calculated based on the

May 29, 2020, Chino Valley and Broken Arrow entered into a second amendment to the 2018 Chino Valley Lease, as amended (the “2020

Chino Valley Amendment”), effective May 31, 2020 (“Effective Date”).

Pursuant to the terms of the 2020 Chino Valley

Amendment, among other things, the base rent was adjusted to $32,800 per month, and the base rent was abated from June 1, 2020 to July

Any increase in the rentable area of the leased premises will result in an increase in all amounts calculated based on the

same, including, without limitation, base rent.

The parties also agreed that if there is any change in laws such that the dispensing,

sale or cultivation of cannabis upon the premises is prohibited or materially and adversely affected as mutually and reasonably

determined by Green Valley and Broken Arrow, Broken Arrow may terminate the Green Valley Lease by delivering written notice to

Green Valley, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of

the base rent which would have been earned after termination for the balance of the term.

May 29, 2020, Zoned Arizona and CJK entered into the First Amendment (the “Tempe Amendment”) to the Tempe Lease, effective

May 31, 2020.

Pursuant to the terms of the Tempe Amendment, among other things, the base rent was increased to $49,200 per month,

and the base rent was abated from June 1, 2020 to July 31, 2020.

Any increase in the rentable area of the leased premises will

result in an increase in all amounts calculated based on the same, including, without limitation, base rent.

Pursuant to the terms

of the Tempe Amendment, the parties agreed that if there is any change in laws such that the dispensing, sale or cultivation of

cannabis upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Zoned Arizona

and CJK, CJK may terminate the Tempe Lease by delivering written notice to Zoned Arizona, together with a termination payment

Pursuant to the terms of the 2020 Chino Valley Amendment, the parties agreed that if

there is any change in laws such that the dispensing, sale or cultivation of marijuana upon the premises is prohibited or materially

and adversely affected as mutually and reasonably determined by Chino Valley and Broken Arrow, Broken Arrow may terminate the 2018 Chino

Valley Lease, as amended, by delivering written notice to Chino Valley, together with a termination payment which shall be the sum of

(i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the

addition, the parties agreed that from the period from the Effective Date to June 30, 2022 (the “Improvement Period”), Broken

Arrow will and/or Broken Arrow will cause its affiliate, CJK, Inc.

(“CJK”), to invest a combined total of at least $8,000,000

of improvements (“Investment by Tenants”) in and to the property that is the subject of the Chino Valley Lease and the property

that is the subject of the Tempe Lease (discussed below, and collectively referred to as the “Facilities”).

As of December

31, 2021, the Company’s Significant Tenants have completed improvements to the Facilities totaling in excess of $8,000,000 and

have satisfied the contractual obligations related to the same.

August 23, 2021, Chino Valley and Broken Arrow entered into the Third Amendment (the “Third Chino Valley Amendment”) to the

Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018, between Chino Valley and CJK, as amended (the

“Chino Valley Lease”), effective September 1, 2021.

to the terms of the Chino Valley Lease, the parties previously agreed that between May 31, 2020 and May 31, 2022 (the “Improvement

Period”), Broken Arrow would and/or Broken Arrow would cause its affiliate, CJK, to invest a combined total of at least $8,000,000

of improvements in and to the property that is the subject of the Chino Valley Lease.

The parties also previously agreed that the base

rental payments under the Chino Valley Lease would increase commensurate to any and all expanded and operational square footage on the

premises by calculating the fixed rate of $0.82 per square foot per month by the new operational square footage.

Broken Arrow has now

satisfied its contractual obligation regarding these capital improvements.

in the Third Chino Valley Amendment, the parties agreed that, as of September 1, 2021, the rental payment is increased to $55,195 per

month base rental payment, plus additional rental payments, as a result of the increase in the square footage of the operational space.

This lease modification qualifies as a separate contract as the modification grants the tenant additional right of use not included in

the original lease, as amended, and the increase in monthly rent payments is commensurate with the standalone price for the additional

square footage being leased.

January 24, 2022, Chino Valley and Broken Arrow entered into the Fourth Amendment (the “Fourth Chino Valley Amendment”) to

the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018, between Chino Valley and CJK, as amended.

Pursuant to the terms of the Fourth Chino Valley Amendment, the parties acknowledge that an additional 30,000 square feet have become

operational, increasing the premises to a total of 97,312 square feet of operational space.

In connection with the Fourth Chino Valley

Amendment, the Company paid $500,000 to CJK as a tenant improvement allowance for investment into the premises, which shall be capitalized

as a lease incentive receivable and recognized on a straight-line basis over the remaining lease term as a reduction to the lease income.

to the terms of the Fourth Chino Valley Amendment, effective March 1, 2022, the monthly base rent was increased to $87,581, representing

an increase from $0.82 per square foot to $0.90 per square foot, for all current and future operational square footage that may be developed

as the premises continues to expand.

In addition, Broken Arrow agreed that it would provide audited financial statements to Chino Valley

on an annual basis no later than March 20 th of each calendar year.

May 29, 2020, Green Valley and Broken Arrow entered into the First Amendment (the “Green Valley Amendment”) to the Green

Valley Lease, effective May 31, 2020.

Pursuant to the terms of the Green Valley Amendment, among other things, the parties agreed to

abate the fixed base rent of $3,500 from June 1, 2020 to July 31, 2020.

In addition, the Green Valley Amendment provides that any increase

in the rentable area of the leases premises will result in an increase in all amounts calculated based on the same, including, without

limitation, base rent.

The parties also agreed that if there is any change in laws such that the dispensing, sale or cultivation of cannabis

upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Green Valley and Broken

Arrow, Broken Arrow may terminate the Green Valley Lease by delivering written notice to Green Valley, together with a termination payment

which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination

for the balance of the term.

In addition, under the Tempe Amendment the parties agreed to an Investment by Tenant (as defined

above in the subheading Chino Valley ) to the property that is the subject of the Chino Valley Lease and the property that

is the subject of the Tempe Lease.

If Broken Arrow and/or CJK fails to deliver to the Company receipted bills for hard and soft

costs of improvements to the Facilities totaling at least $8,000,000 on or before June 30, 2022, Broken Arrow and CJK will be

in default under the Chino Valley Lease and Tempe Lease, as amended.

May 29, 2020, Kingman and CJK entered into the First Amendment (the “Kingman Amendment”) to the Kingman Lease, effective

May 29, 2020, Zoned Arizona and CJK entered into the First Amendment (the “Tempe Amendment”) to the Tempe Lease, effective

May 31, 2020.

Pursuant to the terms of the Kingman Amendment, among other things, the parties agreed to abate the $4,000 base

rent from June 1, 2020 to July 31, 2020.

In addition, the Kingman Amendment provides that any increase in the rentable area of

the leases premises will result in an increase in all amounts calculated based on the same, including, without limitation, base

The parties also agreed that if there is any change in laws such that the dispensing, sale or cultivation of cannabis upon

the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Kingman and CJK, CJK

may terminate the Kingman Lease by delivering written notice to Kingman, together with a termination payment which shall be the

sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the

balance of the term.

and Broken Arrow, together, operate under the company brand, “Hana Meds”, and are referred to as the Company’s

Significant Tenants.

the years ended December 31, 2020 and 2019, substantially all of the Company’s real estate properties are leased under triple-net

leases to tenants that are controlled by one entity (each, a “Significant Tenant”

and collectively, the “Significant

Tenants”).

For the years ended December 31, 2020 and 2019, rental and advisory revenue associated with the Significant Tenants

amounted to $1,176,666 and $1,146,654, which represents 96.8% and 91.0% of the Company’s total revenues, respectively.

of December 31, 2020 and 2019, the Company had an asset concentration related to the Significant Tenants.

As of December 31, 2020

and 2019, the Significant Tenants represented approximately 83.2% and 87.1% of the Company’s total assets, respectively.

Pursuant to the terms of the Tempe Amendment, among other things, the base rent was increased to $49,200 per month, and

the base rent was abated from June 1, 2020 to July 31, 2020.

Any increase in the rentable area of the leased premises will result in

an increase in all amounts calculated based on the same, including, without limitation, base rent.

Pursuant to the terms of the Tempe

Amendment, the parties agreed that if there is any change in laws such that the dispensing, sale or cultivation of marijuana upon the

premises is prohibited or materially and adversely affected as mutually and reasonably determined by Zoned Arizona and CJK, CJK may terminate

the Tempe Lease by delivering written notice to Zoned Arizona, together with a termination payment which shall be the sum of (i) any

unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term.

addition, under the Tempe Amendment the parties agreed to an Investment by Tenant (as defined above in the subheading Chino Valley )

to the property that is the subject of the Chino Valley Lease and the property that is the subject of the Tempe Lease.

If Broken Arrow

and/or CJK fails to deliver to the Company receipted bills for hard and soft costs of improvements to the Facilities totaling at least

$8,000,000 on or before June 30, 2022, Broken Arrow and CJK will be in default under the Chino Valley Lease and Tempe Lease, as amended.

As of December 31, 2021, the Company’s Significant Tenants have completed improvements to the Facilities totaling in excess of

$8,000,000 and have satisfied the contractual obligations related to the same.

As soon as the improved, rentable areas have received

all required approvals for occupancy and commencement of operations, the Company and Broken Arrow expect to complete any appropriate

amendments to the Lease Agreement.

May 29, 2020, Kingman and CJK entered into the First Amendment (the “Kingman Amendment”) to the Kingman Lease, effective

May 31, 2020.

Pursuant to the terms of the Kingman Amendment, among other things, the parties agreed to abate the $4,000 base rent from

June 1, 2020 to July 31, 2020.

In addition, the Kingman Amendment provides that any increase in the rentable area of the leases premises

will result in an increase in all amounts calculated based on the same, including, without limitation, base rent.

The parties also agreed

that if there is any change in laws such that the dispensing, sale or cultivation of cannabis upon the premises is prohibited or materially

and adversely affected as mutually and reasonably determined by Kingman and CJK, CJK may terminate the Kingman Lease by delivering written

notice to Kingman, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the

base rent which would have been earned after termination for the balance of the term.

and Broken Arrow, together, operate under the company brand, “Hana Meds”, and are referred to as the Company’s Significant

During the years ended December 31, 2021 and 2020,

substantially all of the Company’s real estate properties are leased under triple-net leases to tenants that are controlled by one

entity (each, a “Significant Tenant” and collectively, the “Significant Tenants”).

For the years ended December

31, 2021 and 2020, rental and advisory revenue associated with the Significant Tenants amounted to $1,255,130 and $1,176,666, which represents

68.9% and 96.8% of the Company’s total revenues, respectively.

As of December 31, 2021 and 2020, the Company had an asset concentration

related to the Significant Tenants.

As of December 31, 2021 and 2020, the Significant Tenants represented approximately 79.2% and 83.2%

of the Company’s total assets, respectively.

minimum lease payments primarily consist of minimum base rent payments from Significant Tenants.

Future minimum lease payments to be

received, on all leased properties, for each of the five succeeding calendar years and thereafter as of December 31, 2021 consists of

the following:

Future annual base rent *:

* Future annual base rent does not include the Fourth Chino Valley Amendment,

effective March 1, 2022 which increased the monthly base rent to $87,581, or an annual base rent to $1,050,972 (See Chino Valley above).

Jade Holdings, LLC Investment

March 19, 2020, the Company made an initial investment of $100,000 into KCB Jade Holdings, LLC (“KCB”).

for the investment, KCB issued to the Company a convertible debenture (the “Original Debenture”) dated March 19, 2020

(the “Issuance Date”) in the original principal amount of $100,000.

The Original Debenture bears interest at the rate

of 6.5% per annum and matures on March 19, 2025 (the “Maturity Date”).

on the outstanding principal sum of the Original Debenture commences accruing on the Issuance Date and is computed on the basis

of a 365-day year and the actual number of days elapsed, and shall be payable annually due by the first day of each calendar anniversary

following the Issuance Date.

may prepay the Original Debenture at any point after 18 months following the Issuance Date, in whole or in part.

However, if KCB

elects to prepay the Original Debenture prior to the Maturity Date or prior to any conversion as provided in the Original Debenture

in whole or in part, the Company will be entitled to receive a number of KCB units, in addition to such prepayment amount, constituting

10% of the total outstanding units and 10% of the total percentage interest following such issuance and at the time of such issuance.

or after six months from the Issuance Date, the Company may convert all or a portion of the principal balance and all accrued

and unpaid interest due into a number of units equal to the proportion of the outstanding amount being converted multiplied by

33% of the total number of units issued and outstanding at the time of conversion, constituting 33% of the total percentage interest

(the “Conversion Percentage”).

If KCB defaults on payment of the Original Debenture, the Company may, at its option,

extend all conversion rights, through and including the date KCB tenders or attempts to tender payment in full of all amounts

due under the Original Debenture.

Conversion rights terminate upon acceptance by the Company of payment in full of principal,

accrued interest and any other amounts due under the Original Debenture.

(i) KCB does not elect to exercise its rights of prepayment prior to the Maturity Date, (ii) the Company does not elect to exercise

its rights of conversion, and (iii) KCB pays to the Company all outstanding principal and interest accrued and due under the terms

of the Original Debenture on the Maturity Date, the Company will still be entitled to receive a number of units, in addition to

such payment amount, constituting 8% of the total outstanding units and 8% of the total percentage interest following such issuance

and at the time of such issuance.

purposes of the Original Debenture, an “Event of Default”

will be deemed to have occurred upon the occurrence of any

of the following:

fails to make any payment of the principal, interest, costs, indemnities, or expenses

pursuant to the Original Debenture when and as the same shall become due and payable;

occurs any default, whether in whole or in part, in the due observance or performance

of any obligations or other covenants, terms or provisions to be performed by KCB under

the Original Debenture or any of the representations and warranties of KCB ceases to

be true and correct in all respects;

makes a general assignment for the benefit of its creditors;

applies for or consents to the appointment of a receiver, trustee, assignee, custodian,

sequestrator, conservator, liquidator or similar official for itself or any of its assets

and properties;

voluntarily commences any proceeding or file any petition seeking liquidation, reorganization

or other relief as a debtor under the United States Bankruptcy Code or any other liquidation,

conservatorship, bankruptcy, general assignment for the benefit of creditors, moratorium,

rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws

of the United States or other applicable jurisdictions from time to time in effect and

affecting the rights of creditors generally (collectively, the “Debtor Relief Laws”);

involuntary proceeding is commenced or an involuntary petition is filed against KCB seeking

(1) liquidation, reorganization or other relief in respect of KCB or its debts, or of

a substantial part of its assets, under any Debtor Relief Law, or (2) the appointment

of a receiver, trustee, assignee, custodian, sequestrator, conservator, liquidator or

similar official for itself or any of its assets and properties;

consents to the institution of or fails to contest in a timely and appropriate manner,

any proceeding or petition described in clause (f) above.

the occurrence of an Event of Default, the entire principal balance and accrued and unpaid interest outstanding under the Original

Debenture, and all other obligations of KCB under the Original Debenture, will be immediately due and payable and the Company

may exercise any and all rights, power and remedies available to it at law or in equity or other appropriate proceeding, whether

for the specific performance of any covenant or agreement contained in the Original Debenture and proceed to enforce the payment

thereof or any other legal or equitable right of the Company.

amount of principal or interest not paid when due will bear interest at the rate of 12% per annum from the due date thereof until

Original Debenture contains customary representations, warranties and covenants of KCB.

February 19, 2021, after the end of the 2020 fiscal year, the Company made an additional investment of $100,000 into KCB (the

“Additional Investment”).

In exchange, the KCB issued to the Company an amended and restated convertible debenture

(the “A&R Debenture”) on the same date (the “Amendment Date”).

A&R Debenture amends and restates in its entirety the Original Debenture.

Pursuant to the A&R Debenture, the Company and

KCB agreed to certain new terms that did not exist in the Original Debenture, which are described below.

Accrual Commencement.

Pursuant to the A&R Debenture, interest on the Initial Investment begins accruing as of March 19,

2020, while interest on the Additional Investment begins accruing on February 19, 2021.

In the A&R Debenture, the parties acknowledge that each time that KCB sells one of its franchise locations, KCB

earns a fee (an “Initial Fee”), and that KCB also earns a fee when one of its franchise locations renews its franchise

with KCB (a “Renewal Fee”).

Pursuant to the A&R Debenture, the Company and KCB agreed that, as additional consideration

for the Additional Investment, KCB will pay to the Company, in perpetuity, 5% of any Initial Fee received by KCB after the Amendment

Date, as well as 5% of any Renewal Fee received by KCB related to any franchise locations sold after the Amendment Date, in each

case to be paid within five (5) days of receipt of KCB thereof.

addition, following the Amendment Date, KCB agreed not to decrease the amount it charges its franchise locations for an Initial

Fee or any Renewal Fee as in effect on the Amendment Date without the prior written consent of the Company, or to take any other

actions that would reduce the value of KCB’s obligation to the Company with respect to these franchise fee payments.

obligation to pay the Company the franchise fees listed above will survive any termination, repayment or conversion of the A&R

Failure by KCB to pay the Company the franchise fees in the manner described above will result in an event of default,

and, among other things, any due and unpaid franchise fees will accrue interest at 12% per year from the date the obligation was

from the terms described above, the terms of the A&R Debenture are substantially identical to the terms of the Original Debenture.

Commercial Lease

March 3, 2021, subsequent to the 2020 fiscal year end, Gilbert Property Management, LLC (“Gilbert”), a wholly owned

subsidiary of Zoned Properties, Inc.

(the “Company”), entered into that certain Commercial Lease Agreement (the “Lease”),

dated as of February 26, 2021, between Gilbert and AZ2CAL Enterprises, LLC (the “Tenant”).

to the terms of the Lease, Gilbert agreed to rent the property located at 988 S.

182 nd Place, Gilbert, AZ (the

“Property”) to the Tenant for a term of 24 months, from April 1, 2021 to March 31, 2023, for monthly rent of $2,750;

March 19, 2020, the Company made an initial investment of $100,000 into KCB Jade Holdings, LLC (“KCB”).

In exchange for the

investment, KCB issued to the Company a convertible debenture (the “KCB Debenture”) dated March 19, 2020 (the “Issuance

Date”) in the original principal amount of $100,000.

The KCB Debenture bears interest at the rate of 6.5% per annum and matures

on March 19, 2025 (the “Maturity Date”).

Interest on the outstanding principal sum of the KCB Debenture commences accruing

on the Issuance Date and is computed on the basis of a 365-day year and the actual number of days elapsed and shall be payable annually

due by the first day of each calendar anniversary following the Issuance Date.

KCB may prepay the KCB Debenture at any point after 18

months following the Issuance Date, in whole or in part.

However, if KCB elects to prepay the KCB Debenture prior to the Maturity Date

or prior to any conversion as provided in the KCB Debenture in whole or in part, the Company will be entitled to receive a number of

KCB units, in addition to such prepayment amount, constituting 10% of the total outstanding units and 10% of the total percentage interest

following such issuance and at the time of such issuance.

or after six months from the Issuance Date, the Company may convert all or a portion of the principal balance and all accrued and unpaid

interest due into a number of units equal to the proportion of the outstanding amount being converted multiplied by 33% of the total

number of units issued and outstanding at the time of conversion, constituting 33% of the total percentage interest (the “Conversion

Percentage”).

If KCB defaults on payment of the KCB Debenture, the Company may, at its option, extend all conversion rights, through

and including the date KCB tenders or attempts to tender payment in full of all amounts due under the KCB Debenture.

Conversion rights

terminate upon acceptance by the Company of payment in full of principal, accrued interest and any other amounts due under the KCB Debenture.

(i) KCB does not elect to exercise its rights of prepayment prior to the Maturity Date, (ii) the Company does not elect to exercise its

rights of conversion, and (iii) KCB pays to the Company all outstanding principal and interest accrued and due under the terms of the

KCB Debenture on the Maturity Date, the Company will still be entitled to receive a number of units, in addition to such payment amount,

constituting 8% of the total outstanding units and 8% of the total percentage interest following such issuance and at the time of such

the occurrence of an Event of Default, as defined in the KCB Debenture, the entire principal balance and accrued and unpaid interest

outstanding under the KCB Debenture, and all other obligations of KCB under the KCB Debenture, will be immediately due and payable and

the Company may exercise any and all rights, power and remedies available to it at law or in equity or other appropriate proceeding,

whether for the specific performance of any covenant or agreement contained in the KCB Debenture and proceed to enforce the payment thereof

or any other legal or equitable right of the Company.

amount of principal or interest not paid when due will bear interest at the rate of 12% per annum from the due date thereof until paid.

February 19, 2021 (the “Amendment Date”), the Company made an additional investment of $100,000 into KCB (the “Additional

Investment”).

In exchange, KCB issued to the Company an amended and restated convertible debenture (the “A&R Debenture”)

on the Amendment Date.

The A&R Debenture amends and restates in its entirety the KCB Debenture.

Pursuant to the A&R Debenture,

the Company and KCB agreed to certain new terms that did not exist in the KCB Debenture, which are described below.

Interest Accrual Commencement :

Pursuant to the A&R Debenture, interest on the Initial Investment begins accruing as of March 19, 2020, while interest on the

Additional Investment begins accruing on February 19, 2021.

Franchise Fees .

In the A&R Debenture, the parties acknowledge that each time that KCB sells one of its franchise locations, KCB earns a fee (an

“Initial Fee”), and that KCB also earns a fee when one of its franchise locations renews its franchise with KCB (a “Renewal

Pursuant to the A&R Debenture, the Company and KCB agreed that, as additional consideration for the Additional Investment,

KCB will pay to the Company, in perpetuity, 5% of any Initial Fee received by KCB after the Amendment Date, as well as 5% of any

Renewal Fee received by KCB related to any franchise locations sold after the Amendment Date, in each case to be paid within five

(5) days of receipt of KCB thereof.

addition, following the Amendment Date, KCB agreed not to decrease the amount it charges its franchise locations for an Initial Fee or

any Renewal Fee as in effect on the Amendment Date without the prior written consent of the Company, or to take any other actions that

would reduce the value of KCB’s obligation to the Company with respect to these franchise fee payments.

KCB’s obligation

to pay the Company the franchise fees listed above will survive any termination, repayment or conversion of the A&R Debenture.

by KCB to pay the Company the franchise fees in the manner described above will result in an event of default, and, among other things,

any due and unpaid franchise fees will accrue interest at 12% per year from the date the obligation was due.

from the terms described above, the terms of the A&R Debenture are substantially identical to the terms of the KCB Debenture.

August 2, 2021, KCB issued to the Company a second amended and restated convertible debenture (the “Second A&R Debenture”).

The Second A&R Debenture amends and restates in its entirety the A&R Debenture.

Pursuant to the Second A&R Debenture, the

Company and KCB agreed to revise certain terms in the A&R Debenture, as follows.

of Prepayment .

KCB may prepay the Second A&R Debenture at any point after 18 months following the Issue Date, in whole or in

However, if KCB elects to prepay the Second A&R Debenture prior to March 19, 2025 (the “Maturity Date”) or prior

to any conversion in whole or in part, the Company will be entitled to receive a number of KCB Class B units (“Class B Units”),

in addition to such prepayment amount, constituting 10% of the total outstanding KCB Units (as defined in KCB’s Limited Liability

Company Operating Agreement (the “Operating Agreement”)), for the avoidance of doubt, being 10% of the total of KCB’s

Class A units (“Class A Units”) and the Class B Units together, and 10% of the total Percentage Interest (as defined in the

Operating Agreement) following such issuance and at the time of such issuance.

On or after six months from the Issue Date, the Company is entitled to convert all or a portion of the principal balance

and all accrued and unpaid interest due under the Second A&R Debenture (the “Outstanding Amount”) into a number of Class

B Units equal to the proportion of the Outstanding Amount being converted multiplied by the Conversion Percentage, as defined below).

Should KCB default on payment hereof, the Company may, at its option, extend all conversion rights, through and including the date KCB

tenders or attempts to tender payment in full of all amounts due under the Second A&R Debenture.

Conversion rights will terminate

upon acceptance by the Company of payment in full of principal, accrued interest and any other amounts due under the Second A&R Debenture.

The Conversion Percentage will be 33% of the total number of Units (for the avoidance of doubt, being 33% of the total

of the Class A Units and the Class B Units together), issued and outstanding at the time of conversion, constituting 33% of the total

Percentage Interest (the “Conversion Percentage”).

of Maturity Units .

If (i) KCB does not elect to exercise its prepayment rights prior to the Maturity Date, and (ii) the Company does

not elect to exercise its conversion rights, and (iii) KCB pays to the Company all outstanding principal and interest accrued and due

under the terms of the Second A&R Debenture on the Maturity Date, then the Company will still be entitled to receive a number of

Class B Units, in addition to such payment amount, constituting 8% of the total outstanding Units (for the avoidance of doubt, being

8% of the total of the Class A Units and the Class B Units together) and 8% of the total Percentage Interest (as such term is defined

in the Second A&R Debenture) following such issuance and at the time of such issuance.

from the terms described above, the terms of the Second A&R Debenture are substantially identical to the terms of the A&R Debenture.

March 3, 2021, Gilbert entered into that certain Commercial Lease Agreement (the “Lease”), dated as of February 26, 2021,

between Gilbert and AZ2CAL Enterprises, LLC (the “Tenant”).

Pursuant to the terms of the Lease, Gilbert agreed to rent the

property located at 988 S.

182 nd Place, Gilbert, AZ (the “Property”) to the Tenant for a term of 24 months,

from April 1, 2021 to March 31, 2023, for monthly rent of $2,750;

provided, however, that no rent is due for the month of April 2021.

addition, pursuant to the terms of the Lease, the Tenant has an option to purchase the Property (the “Option”) that

can be exercised any time after the fourth month of the lease term, but no later than the end of the 12 th month

of the lease term.

The purchase price of the Property would be $335,000.

If the Tenant exercises its Option, $750 of each lease

payment made prior to close of escrow, along with the security deposit will be credited toward the purchase price of the Property.

If the Tenant exercises its Option, close of escrow will occur no later than 30 days after opening of escrow.

The parties agreed

to make every reasonable attempt to fully execute a purchase contract within seven business days of the Tenant’s notice

of its desire to exercise the Option.

addition, pursuant to the terms of the Lease, the Tenant has an option to purchase the Property (the “Option”) that can be

exercised any time after the fourth month of the lease term, but no later than the end of the 12 th month of the lease

On June 1, 2021, the Company closed on the sale of its Gilbert, AZ property with the Tenant pursuant to which the Company agreed

to sell, and the Tenant agreed to purchase the property located in Gilbert, Arizona, for an aggregate purchase price of $335,000.

connection with the sale, the Company received net proceeds of $322,332 and recorded a gain on sale of rental property of $51,944.

in Joint Ventures

December 31, 2021 and 2020, the Company held investments with aggregate carrying values of $74,554 and $0, respectively.

listed below are partially owned by the Company.

The Company accounts for these investments under the equity method of accounting as

the Company exercises significant influence but does not exercise financial and operating control over these entities.

Investments are

reviewed for changes in circumstance or the occurrence of events that suggest an other than temporary event where the Company’s

investment may not be recoverable.

April 22, 2021, ZP Data entered into a Limited Liability Company Operating Agreement (the “Beakon Operating Agreement”) with

a non-affiliated joint venture partner in connection with the formation of Beakon, LLC (“Beakon”), a Delaware limited liability

company formed on April 16, 2021.

Beakon signed a licensing agreement for the licensing of a consumer data/marketing software platform

that Beakon will white-label for the cannabis industry.

Beakon’s goal is to develop and leverage the platform to help drive foot

traffic to brick and mortar retail (i.e.

dispensaries), and thus enhance the value of the real estate and mitigate risk.

the Beakon Operating Agreement, ZP Data purchased 50 units of Beakon for $50, which represent 50% of the membership interests of Beakon.

Each unit represents, with respect to any member, such member’s:

(i) interest in Beakon’s capital, (ii) share of Beakon’s

net profits and net losses (and specially allocated items of income, gain, and deduction), and the right to receive distributions of

net cash flow from Beakon, (iii) right to inspect Beakon’s books and records, and (iv) right to participate in the management of

and vote on matters coming before the members as provided in the Beakon Operating Agreement.

The transactions discussed above resulted

in a joint venture, in accordance with ASC 323-10 – Investments- Equity and Joint Ventures, between ZP Data and the non-affiliated

Each of the entities has 50% equity ownership and voting rights, and joint control in Beakon.

ZP Data will account for its investment

in Beakon under the equity method of accounting in accordance with ASC 323.

During the year ended December 31, 2021, the Company contributed

$86,000 to Beakon.

On December 31, 2021, the Company recorded an other-than-temporary impairment loss of $73,970 because it was determined

that the fair value of its equity method investment in Beakon was less than its carrying value.

Based on management’s evaluation,

it was determined that due to market conditions and lack of committed funding, the Company’s ability to recover the carrying amount

of the investment in Beakon was impaired.

For the year ended December 31, 2021, the $73,970 impairment loss is included within loss

from unconsolidated joint ventures on the consolidated statement of operations.

May 1, 2021, the Company entered into a Limited Liability Company Operating Agreement (the “Zoneomics Green Operating Agreement”)

with a non-affiliated joint venture partner in connection with the formation of Zoneomics Green, LLC (“Zoneomics Green”),

a Delaware limited liability company formed on May 1, 2021.

Zoneomics Green’s goal is to utilize advanced property technology to

provide solutions for property identification in regulated industries such as regulated cannabis.

Pursuant to the Zoneomics Green Operating

Agreement, the Company purchased 50 units of Zoneomics Green for a capital contribution of $90,000, which represent 50% of the membership

interests of Zoneomics Green.

Each unit represents, with respect to any member, such member’s:

(i) interest in Zoneomics Green’s

capital, (ii) share of Zoneomics Green’s net profits and net losses (and specially allocated items of income, gain, and deduction),

and the right to receive distributions of net cash flow from Zoneomics Green, (iii) right to inspect Zoneomics Green’s books and

records, and (iv) right to participate in the management of and vote on matters coming before the members as provided in the Zoneomics

Green Operating Agreement.

The transactions discussed above resulted in a joint venture, in accordance with ASC 323-10 – Investments-

Equity and Joint Ventures, between the Company and the non-affiliated party.

Each of the entities has 50% equity ownership and voting

rights, and joint control in Zoneomics Green.

In June 2021, the Company contributed $90,000 to Zoneomics Green.

target clients who require assistance with the identification and development of regulated cannabis properties.

1 unchanged sentence

clients will have a commitment to sophisticated, safe, and sustainable project development.

The most significant barrier to success

for many industry operators and prospective clients includes distractions from primary business operations.

These distractions

often include services related to the identification, zoning, permitting, and development of real estate.

The most significant barrier to success for

many industry operators and prospective clients includes distractions from primary business operations.

These distractions often include

services related to the identification, zoning, permitting, and development of real estate.

complete significant due diligence on prospective tenants and prospective clients regardless of industry focus.

Credit-worthiness,

character, and cash flows are all important traits that contribute to a sophisticated client for the Company.

Credit-worthiness, character,

and cash flows are all important traits that contribute to a sophisticated client for the Company.

the Company does not actively market its services using any direct marketing campaigns.

Industry reputation, word-of-mouth, and

networking are the primary tools used to complete the marketing of our services.

We maintain an updated website, shareholder presentation,

and profile outlining the Company’s services.

Industry reputation, word-of-mouth, and networking

are the primary tools used to complete the marketing of our services.

We have engaged a public relations firm, Proven Media, to assist

with our industry branding and to help maintain an updated website, shareholder presentation, and profile outlining the Company’s

These tools are created for transparency of operations and activities.

executive management believes the reputation of having integrity is an essential tool for marketing and business development.

Our executive management believes the reputation of

having integrity is an essential tool for marketing and business development.

commercial real estate market is highly competitive.

We believe finding properties that are zoned for the specific use of allowing

regulated cannabis operations may be limited as more competitors enter the market.

Several competitors have recently entered the

We face significant competition from a diverse mix of market participants, including but not limited to, other public

companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders,

as well as would be clients, regulated cannabis operators themselves, all of whom, who may compete against us in our efforts to

acquire real estate zoned for cannabis grow and retail operations.

In some instances, we will be competing to acquire real estate

with persons who have no interest in the regulated cannabis business, but have identified value in a piece of real estate that

we may be interested in acquiring.

We believe finding properties that are zoned for the specific use of allowing regulated

cannabis operations may be limited as more competitors enter the market.

Several competitors have recently entered the marketplace.

face significant competition from a diverse mix of market participants, including but not limited to, other public companies with similar

business models, independent investors, hedge funds and other real estate investors, hard money lenders, as well as would be clients,

regulated cannabis operators themselves, all of whom, who may compete against us in our efforts to acquire real estate zoned for cannabis

grow and retail operations.

In some instances, we will be competing to acquire real estate with persons who have no interest in the regulated

cannabis business but have identified value in a piece of real estate that we may be interested in acquiring.

Estate & General Business Regulations

are subject to applicable provisions of federal and state securities laws and to regulations specifically governing the real estate

industry, including those governing fair housing and federally backed mortgage programs.

Our operations will also be subject to

regulations normally incident to business operations, such as occupational safety and health acts, workmen’s compensation

statutes, unemployment insurance legislation and income tax and social security related regulations.

Although we will use our

best efforts to comply with applicable regulations, we can provide no assurance of our ability to do so, nor can we fully predict

the effect of these regulations on our proposed activities.

addition, zoning commercial properties for specific purposes, such as regulated cannabis dispensaries or cultivation facilities,

is subject to specific regulations to the zoning requirements for the city, county and state related to any regulated cannabis

We expect regulations to get tighter as time goes on.

are subject to applicable provisions of federal and state securities laws and to regulations specifically governing the real estate industry,

including those governing fair housing and federally backed mortgage programs.

Our operations will also be subject to regulations normally

incident to business operations, such as occupational safety and health acts, workmen’s compensation statutes, unemployment insurance

legislation and income tax and social security related regulations.

Although we will use our best efforts to comply with applicable regulations,

we can provide no assurance of our ability to do so, nor can we fully predict the effect of these regulations on our proposed activities.

addition, zoning commercial properties for specific purposes, such as regulated cannabis dispensaries or cultivation facilities, is subject

to specific regulations to the zoning requirements for the city, county and state related to any regulated cannabis facility.

regulations to get tighter as time goes on.

and State Regulation of Cannabis

Supreme Court has ruled that it is the federal government that has the right to regulate and criminalize cannabis, even for

medical purposes.

Therefore, federal law criminalizing the use of marijuana preempts state laws that legalize its use for medicinal

Supreme Court has ruled that it is the federal government that has the right to regulate and criminalize cannabis, even for medical

Therefore, federal law criminalizing the use of marijuana preempts state laws that legalize its use for medicinal purposes.

federal government regulates drugs through the CSA, which places controlled substances, including cannabis, in a schedule.

Cannabis is classified as a Schedule I controlled substance.

A Schedule I controlled substance is defined as a substance

that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high

potential for abuse.

Department of Justice (the “DOJ”) defines Schedule I drugs, substances or chemicals

as “drugs with no currently accepted medical use and a high potential for abuse.”

However, the U.S.

Food and Drug

Administration (the “FDA”) has approved Epidiolex, which contains a purified form of the drug CBD, a non-psychoactive ingredient

is classified as a Schedule I controlled substance.

A Schedule I controlled substance is defined as a substance that has no

currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse.

Department of Justice (the “DOJ”) defines Schedule I drugs, substances or chemicals as “drugs with no currently

accepted medical use and a high potential for abuse.” However, the U.S.

Food and Drug Administration (the “FDA”) has

approved Epidiolex, which contains a purified form of the drug cannabidiol (“CBD”), a non-psychoactive ingredient

in the cannabis plant, for the treatment of seizures associated with two epilepsy conditions.

The FDA has not approved cannabis

or cannabis compounds as a safe and effective drug for any other condition.

Moreover, pursuant to the Agriculture Improvement

Act of 2018 (the “Farm Bill”), CBD remains a Schedule I controlled substance under the CSA, with a narrow exception

for CBD derived from hemp with a tetrahydrocannabinol (“THC”) concentration of less than 0.3%.

The FDA has not approved cannabis or cannabis

compounds as a safe and effective drug for any other condition.

Moreover, pursuant to the Agriculture Improvement Act of 2018 (the “Farm

Bill”), CBD remains a Schedule I controlled substance under the CSA, with a narrow exception for CBD derived from hemp with a tetrahydrocannabinol

(“THC”) concentration of less than 0.3%.

Company maintains its operations so as to remain in compliance with the CSA.

Even in those jurisdictions in which the manufacture

and use of medical marijuana has been legalized at the state level, the possession, use and cultivation all remain violations

of federal law that are punishable by imprisonment and substantial fines, and the prescription of marijuana is a violation of

Moreover, individuals and entities may violate federal law if they intentionally aid and abet another in violating

these federal controlled substance laws, or conspire with another to violate them.

inconsistencies between federal and state regulation of cannabis were addressed in a memorandum (the “Cole Memo”)

which then-Deputy Attorney General James Cole sent to all U.S.

District Attorneys in 2013 outlining certain priorities for the

DOJ relating to the prosecution of cannabis offenses.

The Cole Memo acknowledged that, notwithstanding the designation of cannabis

as a Schedule I controlled substance at the federal level, several states had enacted laws authorizing the use of cannabis for

medical purposes.

The Cole Memo noted that jurisdictions that have enacted laws legalizing cannabis in some form have also implemented

strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession

As such, conduct in compliance with those laws and regulations is less likely to implicate the Cole Memo’s

enforcement priorities.

The DOJ did not provide (and has not provided since) specific guidelines for what regulatory and enforcement

systems would be deemed sufficient under the Cole Memo.

In light of limited investigative and prosecutorial resources, the Cole

Memo concluded that the DOJ should be focused on addressing only the most significant threats related to cannabis, such as distribution

of cannabis from states where cannabis is legal to those where cannabis is illegal, the diversion of cannabis revenues to illicit

drug cartels and sales of cannabis to minors.

Even in those jurisdictions in which the manufacture and

use of medical marijuana has been legalized at the state level, the possession, use and cultivation all remain violations of federal

law that are punishable by imprisonment and substantial fines, and the prescription of marijuana is a violation of federal law.

individuals and entities may violate federal law if they intentionally aid and abet another in violating these federal controlled substance

laws or conspire with another to violate them.

inconsistencies between federal and state regulation of cannabis were addressed in a memorandum (the “Cole Memo”) which then-Deputy

Attorney General James Cole sent to all U.S.

District Attorneys in 2013 outlining certain priorities for the DOJ relating to the prosecution

of cannabis offenses.

The Cole Memo acknowledged that, notwithstanding the designation of cannabis as a Schedule I controlled substance

at the federal level, several states had enacted laws authorizing the use of cannabis for medical purposes.

The Cole Memo noted that

jurisdictions that have enacted laws legalizing cannabis in some form have also implemented strong and effective regulatory and enforcement

systems to control the cultivation, processing, distribution, sale, and possession of cannabis.

As such, conduct in compliance with those

laws and regulations is less likely to implicate the Cole Memo’s enforcement priorities.

The DOJ did not provide (and has not provided

since) specific guidelines for what regulatory and enforcement systems would be deemed sufficient under the Cole Memo.

In light of limited

investigative and prosecutorial resources, the Cole Memo concluded that the DOJ should be focused on addressing only the most significant

threats related to cannabis, such as distribution of cannabis from states where cannabis is legal to those where cannabis is illegal,

the diversion of cannabis revenues to illicit drug cartels and sales of cannabis to minors.

January 4, 2018, former U.S.

Attorney General Jeff Sessions issued a new memorandum which rescinded the Cole Memo (the “Sessions

Memo”).

The Sessions Memo stated, in part, that current law reflects “Congress’

determination that cannabis

is a dangerous drug and cannabis activity is a serious crime,”

Attorney General Jeff Sessions issued a new memorandum (the “Sessions Memo”) which rescinded

the Cole Memo.

The Sessions Memo stated, in part, that current law reflects “Congress’ determination that cannabis is a dangerous

drug and cannabis activity is a serious crime,” and Mr.

Sessions directed all U.S.

Attorneys to enforce

the laws enacted by Congress by following well-established principles when pursuing prosecutions related to cannabis activities.

The Company is not aware of any prosecutions of investment companies doing routine business with licensed marijuana related businesses

in light of the DOJ position following issuance of the Sessions Memo.

However, there can be no assurance that the federal government

will not enforce federal laws relating to cannabis in the future.

As a result of the Sessions Memo, federal prosecutors are now

free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities, despite the existence of state-level

laws that may be inconsistent with federal prohibitions.

No direction was given to federal prosecutors in the Sessions Memo as

to the priority they should ascribe to such cannabis activities, and thus it is uncertain how active U.S.

federal prosecutors

will be in relation to such activities.

prosecutors appear to continue to use the Cole Memo’s priorities as an enforcement guide.

Merrick Garland, who became Attorney

General on March 10, 2021 has indicated that he would deprioritize enforcement of low-level cannabis crimes such

as possession, and has shared his view that the government should focus on large-scale criminal enterprises that circumvent state

legalization laws instead of going after people who abide by local cannabis policies.

The Company believes it is too soon to determine

what prosecutorial effects will be created by the rescission of the Cole Memo or any replacement thereof and when or if the Sessions

Memo will be rescinded.

Attorneys to enforce the laws enacted by

Congress by following well-established principles when pursuing prosecutions related to cannabis activities.

The Company is not aware

of any prosecutions of investment companies doing routine business with licensed marijuana related businesses in light of the DOJ position

following issuance of the Sessions Memo.

However, there can be no assurance that the federal government will not enforce federal laws

relating to cannabis in the future.

As a result of the Sessions Memo, federal prosecutors are now free to utilize their prosecutorial

discretion to decide whether to prosecute cannabis activities, despite the existence of state-level laws that may be inconsistent with

federal prohibitions.

No direction was given to federal prosecutors in the Sessions Memo as to the priority they should ascribe to such

cannabis activities, and thus it is uncertain how active U.S.

federal prosecutors will be in relation to such activities.

Federal prosecutors appear to continue to use the Cole Memo’s

priorities as an enforcement guide.

Merrick Garland, who became Attorney General on March 10, 2021, has indicated that he would deprioritize

enforcement of low-level cannabis crimes such as possession, and has shared his view that the government should focus on large-scale

criminal enterprises that circumvent state legalization laws instead of going after people who abide by local cannabis policies.

believes it is too soon to determine what prosecutorial effects will be created by the rescission of the Cole Memo or any replacement

thereof and when or if the Sessions Memo will be rescinded.

President Joseph R.

Biden, who assumed office in January 2021, has not yet indicated whether and when

he will decriminalize or legalize cannabis and has previously stated that he is opposed to legalization.

The sheer size of the

cannabis industry, in addition to participation by state and local governments and investors, suggests that a large-scale federal

enforcement operation would more than likely create unwanted political backlash for the DOJ and the current administration.

is also possible that the change of Congressional leadership in January 2021 could change the priorities of Congress and encourage

reconciliation of federal and state laws.

Regardless, at this time, cannabis remains a Schedule I controlled substance at

the federal level.

federal government has always reserved the right to enforce federal law in regard to the sale and

disbursement of medical or adult use cannabis, even if state law authorizes such sale and disbursement.

It is unclear whether

the risk of enforcement has been altered.

legislative safeguard for the medical cannabis industry, appended to the federal budget bill, remains in place following the rescission

of the Cole Memo.

For fiscal years 2015, 2016, 2017 and 2018, Congress adopted a so-called “rider”

to the Consolidated Appropriations Acts (formerly referred to as the Rohrabacher-Farr Amendment and currently referred to as the

Rohrabacher-Blumenauer Amendment) to prevent the federal government from using congressionally appropriated funds to enforce federal

cannabis laws against regulated medical cannabis actors operating in compliance with state and local law.

The Rohrabacher-Blumenauer

Amendment was included in the fiscal year 2018 budget passed on March 23, 2018.

The Rohrabacher-Blumenauer Amendment was

included in the consolidated appropriations bill signed into legislation by former President Trump in February 2019.

the Rohrabacher-Blumenauer Amendment, former President Trump issued a signing statement noting that the Rohrabacher-Blumenauer

Amendment “provides that the Department of Justice may not use any funds to prevent implementation of medical marijuana

laws by various States and territories,”

and further stating “I will treat this provision consistent with the President’s

constitutional responsibility to faithfully execute the laws of the United States.”

On June 20, 2019, the House approved

a broader amendment that, in addition to protecting state medical cannabis programs, would also protect state adult use programs.

On September 26, 2019, the Senate Appropriations Committee declined to take up the broader amendment but did approve the

Rohrabacher-Blumenauer Amendment for the fiscal year 2020 spending bill.

On September 27, 2019, the Rohrabacher-Blumenauer

Amendment was renewed as part of a stopgap spending bill, in effect through November 21, 2019, and was then renewed through

a series of stopgap spending bills passed in 2020.

On December 27, 2020, the amendment was renewed through the signing of

the fiscal year 2021 omnibus spending bill, effective through September 30, 2021.

Despite the rescission of the Cole Memo,

the DOJ appears to continue to adhere to the enforcement priorities set forth in the Cole Memo.

Cole Memo and the Rohrabacher-Blumenauer Amendment gave licensed cannabis operators (particularly medical cannabis operators)

and investors in states with legal regimes greater certainty regarding the DOJ’s enforcement priorities and the risk of

operating cannabis businesses.

While the Sessions Memo has introduced some uncertainty regarding federal enforcement, the cannabis

industry continues to experience growth in legal medical and adult use markets across the United States.

Vice President Kamala

Harris is the lead sponsor of the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act, which seeks to end the federal

prohibition of marijuana, among other things, but in March 2020, it was reported that Vice President Harris has adopted the same

position as President Biden, who opposes legalization.

Currently, there is no guarantee that state laws legalizing and regulating

the sale and use of cannabis will remain in place or that local governmental authorities will not limit the applicability of state

laws within their respective jurisdictions.

Biden, who assumed office in January 2021, has not yet

indicated whether and when he will decriminalize or legalize cannabis and has previously stated that he is opposed to legalization.

sheer size of the cannabis industry, in addition to participation by state and local governments and investors, suggests that a large-scale

federal enforcement operation would more than likely create unwanted political backlash for the DOJ and the current administration.

at this time, cannabis remains a Schedule I controlled substance at the federal level.

federal government has always reserved

the right to enforce federal law regarding the sale and disbursement of medical or adult use cannabis, even if state law authorizes such

sale and disbursement.

It is unclear whether the risk of enforcement has been altered.

One legislative safeguard for the medical cannabis industry, appended

to the federal budget bill, remains in place following the rescission of the Cole Memo.

For several years, Congress has adopted a so-called

“rider” provision to the Consolidated Appropriations Act (formerly referred to as the Rohrabacher-Farr Amendment and currently

referred to as the Rohrabacher-Blumenauer Amendment) to prevent the federal government from using congressionally appropriated funds to

enforce federal cannabis laws against regulated medical cannabis actors operating in compliance with state and local law.

rescission of the Cole Memo, the DOJ appears to continue to adhere to the enforcement priorities set forth in the Cole Memo.

Cole Memo and the Rohrabacher-Blumenauer Amendment gave licensed cannabis operators (particularly medical cannabis operators) and investors

in states with legal regimes greater certainty regarding the DOJ’s enforcement priorities and the risk of operating cannabis businesses.

While the Sessions Memo has introduced some uncertainty regarding federal enforcement, the cannabis industry continues to experience

growth in legal medical and adult use markets across the United States.

When she was a U.S.

Senator, Vice President Kamala Harris was

the lead sponsor of the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act, which seeks to end the federal prohibition of

marijuana, among other things, but in March 2020, it was reported that Vice President Harris has adopted the same position as President

Biden, who opposes legalization.

Currently, there is no guarantee that state laws legalizing and regulating the sale and use of cannabis

will remain in place or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions.

Unless and until the U.S.

Congress amends the CSA with respect to cannabis (and as

to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may

enforce current U.S.

Congress amends the CSA with respect to cannabis (and as to the timing or scope of any such potential amendments

there can be no assurance), there is a risk that federal authorities may enforce current U.S.

federal law criminalizing cannabis.

Supreme Court has ruled that it is the federal government that has the right to regulate and criminalize cannabis, and

federal law criminalizing the use of marijuana preempts state laws that legalize its use, cannabis is largely regulated at the

laws that permit and regulate the production, distribution and use of cannabis for adult use or medical purposes are in direct

conflict with the CSA, which makes cannabis use and possession federally illegal.

Although certain states and territories of the

authorize medical and/or adult use cannabis production and distribution by licensed or registered entities, under U.S.

law, the possession, use, cultivation and transfer of cannabis and any related drug paraphernalia is illegal and any such acts

are criminal acts under federal law under any and all circumstances under the CSA.

Although the Company’s activities are

believed to be compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis

may neither absolve the Company of liability under U.S.

federal law, nor may it provide a defense to any federal proceeding which

may be brought against the Company.

of December 31, 2020, 35 states, plus the District of Columbia (and the territories of Guam, Puerto Rico, the U.S.

Islands and the Northern Mariana Islands), have legalized the cultivation and sale of cannabis for medical purposes.

those states, the sale and possession of cannabis is legal for both medical and adult use, and the District of Columbia has legalized

Supreme Court has ruled that it is the federal government that has the right to regulate and criminalize cannabis, and federal

law criminalizing the use of marijuana preempts state laws that legalize its use, cannabis is largely regulated at the state level.

laws that permit and regulate the production, distribution and use of cannabis for adult use or medical purposes are in direct conflict

with the CSA, which makes cannabis use and possession federally illegal.

Although certain states and territories of the U.S.

medical and/or adult use cannabis production and distribution by licensed or registered entities, under U.S.

federal law, the possession,

use, cultivation and transfer of cannabis and any related drug paraphernalia is illegal, and any such acts are criminal acts under federal

law under any and all circumstances under the CSA.

Although the Company’s activities are believed to be compliant with applicable

state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability

federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company.

As of December 31, 2021, 37 states, plus the District of Columbia (and

the territories of Guam, Puerto Rico, the U.S.

Virgin Islands and the Northern Mariana Islands), have legalized the medical use of cannabis.

In 18 of those states, the sale and possession of cannabis is legal for both medical and adult use, and the District of Columbia has legalized

adult use but not commercial sale.

In November 2020, voters in Arizona, Montana, New Jersey and South Dakota voted by referendum

to legalize cannabis for adult use, and voters in Mississippi and South Dakota voted to legalized cannabis for medical use, and

in February 2021, the Virginia legislature approved a bill that would legalize cannabis for adult use beginning in 2024.

bill is awaiting signature by the governor, and if signed, Virginia will be the first southern state to legalize cannabis for

Also in February 2021, New Jersey Governor Phil Murphy signed three bills into law that legalize cannabis for adult

addition, in November 2010, Arizona voters passed the Arizona Medical Marijuana Act (“AMMA”).

The AMMA designates

the Arizona Department of Health Services (“ADHS”) as the licensing authority for the program.

ADHS is tasked with

issuing Registry Identification Cards (“RIC”) to qualifying patients, designated caregivers, and dispensary agents,

as well as selecting, registering, and providing oversight for nonprofit medical marijuana dispensaries.

With permission from

ADHS, qualifying patients or their caregivers may cultivate marijuana if the patient lives more than 25 miles from a dispensary.

patients can legally possess and purchase medical marijuana under Arizona law as long as they hold a RIC.

They acquire their medicine

from non-profit medical marijuana dispensaries.

These dispensaries acquire, possess, cultivate, manufacture, deliver, transfer,

transport, supply, sell, and dispense medical marijuana.

Arizona is divided into 126 Community Health Assessment Areas (each,

a “CHAA”) and each CHAA may only have one dispensary located within it.

Dispensaries are the only place patients are

legally allowed to purchase medical marijuana in Arizona.

Arizona law permits the number of CHAAs to change based on the number

of registered pharmacies in Arizona.

In order to operate, a dispensary must have a Dispensary Registration Certificate and Approval

to Operate Certificate from ADHS.

The first dispensaries began operation in 2012, and it is anticipated that at maturity, there

will be about 112 dispensaries statewide - one in each CHAA not part of one of Arizona’s Native American Indian Reservations.

Eleven other states have laws that limit THC content, for the purpose of allowing access to CBD products.

will continue to monitor compliance on an ongoing basis in accordance with our compliance program and standard operating procedures.

While our operations are in full compliance with all applicable state laws, regulations and licensing requirements, such activities

remain illegal under federal law.

For the reasons described above and the risks further described in the section entitled “Risk

Factors,”

there are significant risks associated with our business.

transactions involving proceeds generated by marijuana-related conduct can form the basis for prosecution under the federal money

laundering statutes, unlicensed money transmitter statute and the Bank Secrecy Act.

Previous guidance issued by the Financial

Crimes Enforcement Network, a division of the U.S.

Department of the Treasury (“FinCEN”), clarifies how financial

institutions can provide services to marijuana-related businesses consistent with their obligations under the Bank Secrecy Act.

Prior to the DOJ’s announcement in 2018 of the rescission of the Cole Memo and related memoranda, supplemental guidance

from the DOJ directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining

whether to charge institutions or individuals with any of the financial crimes described above based upon marijuana-related activity.

While our operations are in full compliance with all applicable state laws, regulations and licensing requirements, such activities remain

illegal under federal law.

For the reasons described above and the risks further described in our Annual Report for the year ended December

31, 2020, as filed with the SEC, there are significant risks associated with our business.

transactions involving proceeds generated by marijuana-related conduct can form the basis for prosecution under the federal money laundering

statutes, unlicensed money transmitter statute and the Bank Secrecy Act.

Previous guidance issued by the Financial Crimes Enforcement

Network, a division of the U.S.

Department of the Treasury (“FinCEN”), clarifies how financial institutions can provide services

to marijuana-related businesses consistent with their obligations under the Bank Secrecy Act.

Prior to the DOJ’s announcement in

2018 of the rescission of the Cole Memo and related memoranda, supplemental guidance from the DOJ directed federal prosecutors to consider

the federal enforcement priorities enumerated in the Cole Memo when determining whether to charge institutions or individuals with any

of the financial crimes described above based upon marijuana-related activity.

Consequently,

those businesses involved in the marijuana industry continue to encounter difficulty establishing banking relationships, which

may increase over time.

Our inability to maintain our current bank accounts would make it difficult for us to operate our business,

increase our operating costs, and pose additional operational, logistical and security challenges and could result in our inability

to implement our business plan.

inability of our current and potential tenants to open accounts and continue using the services of banks will limit their ability

to enter into triple-net lease arrangements with us or may result in their default under our lease agreements, either of which

could materially harm our business and the trading price of our securities.

state and federal marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require

us to incur substantial costs associated with compliance or alter our business plan.

In addition, violations of these laws, or

allegations of such violations, could disrupt our business and result in a material adverse effect on its operations.

it is possible that regulations may be enacted in the future that will be directly applicable to our proposed business.

predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional

governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

of December 31, 2020, we had one full-time employee, our chief executive officer, and multiple part-time employees who operate

as independent contractors of the Company.

We have established an extensive network of external partners, contractors, and consultants

to which we outsource various operational tasks in an effort to minimize administrative overhead and maximize efficiency.

those businesses involved in the marijuana industry continue to encounter difficulty establishing banking relationships, which may increase

Our inability to maintain our current bank accounts would make it difficult for us to operate our business, increase our operating

costs, and pose additional operational, logistical and security challenges and could result in our inability to implement our business

inability of our current and potential tenants to open accounts and continue using the services of banks will limit their ability to

enter into triple-net lease arrangements with us or may result in their default under our lease agreements, either of which could materially

harm our business and the trading price of our securities.

state and federal marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to

incur substantial costs associated with compliance or alter our business plan.

In addition, violations of these laws, or allegations

of such violations, could disrupt our business and result in a material adverse effect on its operations.

In addition, it is possible

that regulations may be enacted in the future that will be directly applicable to our proposed business.

We cannot predict the nature

of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations

or administrative policies and procedures, when and if promulgated, could have on our business.

of December 31, 2021, we had four full-time employees, including our chief executive officer and chief operating officer, and multiple

part-time employees who operate as independent contractors of the Company.

We have established an extensive network of external partners,

contractors, and consultants to which we outsource various operational tasks in an effort to minimize administrative overhead and maximize

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business