What changed in this filing

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Item 1. Business

2023-03-28 compared with 2022-03-24 · 812 added, 596 removed, 30 unchanged (98% of the section changed)

following discussion should be read in conjunction with our consolidated financial statements and the related notes to the consolidated

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

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 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.

The following discussion should be read in conjunction

with our consolidated financial statements and the related notes to the consolidated 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 as detailed below.

Zoned Properties, Inc.

(“Zoned Properties”

or the “Company”), was incorporated in the State of Nevada on August 25, 2003.

In October 2013, the Company changed its name

to Zoned Properties, Inc.

and in April 2014, the Company shifted its business model to address commercial real estate in the regulated

cannabis industry.

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

The Company 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.

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

Company’s Property Technology, Advisory Services, Commercial Brokerage, and Investment Portfolio collectively 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:

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.

Green Building Council, and the Forbes Business 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”).

The Company has the following wholly owned subsidiaries:

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 Arizona Properties,

3 unchanged sentences

Zoned Properties Brokerage,

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

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

ZP Data Platform 1, LLC

(“ZP Data 1”) 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.

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 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,

ZP Data Platform 2, LLC

(“ZP Data 2”) was organized in the State of Arizona on June 21, 2022.

ZP RE Holdings, LLC

(“ZPRE Holdings”) was organized in the State of Arizona on September 20, 2022.

ZP RE AZ Stone, LLC (“ZP

Stone”) was organized in the State of Arizona on October 19, 2022.

ZP Brokerage MS, LLC (“Mississippi

Brokerage”) was organized in the State of Mississippi on October 4, 2022.

ZP Brokerage FL, LLC (“Florida

Brokerage”) was organized in the State of Florida on October 20, 2022.

ZP Brokerage AL, LLC (“Alabama

Brokerage”) was organized in the State of Alabama on October 20, 2022.

ZP RE MI Woodward, LLC

(“ZP Woodward”) was organized in the State of Michigan on November 22, 2022

ZP Brokerage MO, LLC (“Missouri

Brokerage”) was organized in the State of Missouri on November 30, 2022.

During 2022, the Company has closed the following

wholly owned subsidiaries:

Gilbert Property Management,

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

This subsidiary was dissolved on July 5,

Zoned Colorado Properties,

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

This subsidiary was dissolved on

July 22, 2022.

Zoned Oregon Properties,

LLC (“Zoned Oregon”) was organized in the State of Oregon on June 16, 2015.

This subsidiary was dissolved on December

Zoned Illinois Properties,

LLC was organized in the State of Illinois on July 15, 2015.

This subsidiary was dissolved on November 4, 2022.

We are a real estate development firm for emerging

and highly regulated industries, including legalized 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 model;

our Property Technology, Advisory Services, Commercial Brokerage, and Investment Portfolio

collectively 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

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

Green Building Council, and the Forbes Business

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”).

We have developed and expanded into multiple

business divisions focused on real estate services and investments currently focused on the legalized and regulated cannabis industry;

including property technology, advisory services, commercial brokerage services, and a property investment portfolio.

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 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 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.

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 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 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

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.

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.

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.

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.

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 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

The core of our business involves identifying

and developing commercial properties that intend to operate within highly regulated industries, including the legalized 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.

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.

The 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.

These properties are leased to licensed and legalized cannabis tenants and are located in areas with established zoning and permitting

Three 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.

While our primary focus is on investing in the

acquisition of new properties to grow our portfolio, we may occasionally sell an asset when the circumstances and opportunity present

a value opportunity for the Company.

On 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

There 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 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.

The 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.

The Company has been involved with local representatives

on behalf of our own properties held in our portfolio and on behalf of third-party clients 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 can directly impact the continued development of any licensed cannabis facilities that

operate within municipal limits.

In 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.

The 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 needs.

We require our prospective tenants

and clients to go through due diligence in order to meet the Company’s standards.

Our vision is to be recognized for setting the

standard in sustainable development for emerging industries, while increasing community prosperity and shareholder value.

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.

We are the sole member of 15 limited liability

Chino Valley, Green Valley, Kingman, Zoned Arizona, Zoned Advisory, ZP Data 1, ZP Data 2, Arizona Brokerage, Mississippi Brokerage,

Florida Brokerage, Alabama Brokerage, Missouri Brokerage, ZPRE Holdings, ZP Stone, and ZP Woodward.

Five of these entities—Zoned

Arizona, Green Valley, Kingman, Chino Valley, and ZP Woodward—have acquired land and/or real property and own our properties.

Multiple 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.

As it relates to the regulated cannabis industry,

we are strictly 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.

Our initial real estate services and property

acquisition targets have been in Arizona.

Recently, we have expanded real estate services, namely advisory services and brokerage services,

across multiple state markets, and we have acquired properties in Michigan.

We believe that both Arizona and Michigan have established

state-regulated cannabis programs with robust regulatory frameworks for licensing and operating within their respective regulatory marketplaces

the business environment in which our clients and tenants operate) and have strong consumer demand to support the business operators

in their respective state marketplaces (i.e.

the consumers that support our clients’ and tenants’ business operations).

Company expects to target expansion into new state marketplaces for both its real estate services and its acquisition of properties into

its property investment portfolio that have strong growth trends in both regulatory frameworks and consumer demand.

The Company believes

these are two of the most important market factors that have influence related to the value of real estate development and property investment

Recent Corporate History and Transactions

Our properties located in Chino Valley and Green

Valley are leased by Broken Arrow Herbal Center, Inc.

(“Broken Arrow”).

Our properties located in Tempe (through November

30, 2022) and Kingman are leased by CJK, Inc.

Additionally, on the Tempe property, the Company leases parking lot

space for an antenna location to a third party.

On November 30, 2022, Zoned Arizona, CJK, and

VSM LLC (“VSM”) entered into the Tempe Second Amendment to the Tempe Lease, as amended.

Concurrently with the execution of

the Tempe Second Amendment, CJK assigned all its interest in the Tempe Lease to VSM.

On December 1, 2022, ZP Woodward entered into

an Exclusive Option Agreement for the Purchase of Real Property (the “Option Agreement”), dated December 1, 2022 between

ZP Woodward and FL MI RE 22, LLC (the “Woodward Assignor”).

Pursuant to the terms of the Option Agreement and subject to

the conditions therein, ZP Woodward was granted the exclusive option (the “Option”) to assume all of the Woodward Assignor’s

rights and obligations under certain purchase agreements and other definitive documents as described in the Option Agreement (collectively,

“Assigned Rights”), all related to real property located in Pleasant Ridge, Michigan and as more particularly described in

the Option Agreement (the “Woodward Property”).

In December 2022, the Company exercised its rights to acquire the properties

located at 23616 and 23622 Woodward Avenue, Pleasant Ridge, Michigan for a purchase price of $2,292,549;

including cash of $867,549,

and a land contract promissory note of $1,425,000.

The properties consist of approximately 9,060 square feet of land with approximately

6,192 square feet of rentable buildings space.

Simultaneously, the Company paid cash of $590,000 to the Woodward Assignor in assignment

fees and deposits for the rights to acquire two adjacent properties (the “Parking Lots”), which is reflected as escrow deposits

on the accompanying consolidated balance sheets as of December 31, 2022.

As discussed below, ZP Woodward acquired these Parking Lots.

On December 1, 2022, in connection with the acquisition

of the Woodward Property and Parking Lots, ZP Woodward, as landlord, entered into a Licensed Cannabis Facility Absolute Net Lease Agreement

(the “Woodward Lease”) with Rapid Fish 2 LLC, as tenant (“Woodward Tenant”), whereby ZP Woodward leased the Woodward

Property and the Parking Lots located in Pleasant Ridge, Michigan to the Woodward Tenant.

The Woodward Lease commenced on December 1,

2022 and has a term of 14 years and 4 months through March 1, 2037, with two 5-year options to extend the term, exercisable by the

Woodward Tenant pursuant to the terms and conditions of the Woodward Lease.

On February 24, 2023, ZP Woodward entered into

a Land Contract, dated February 24, 2023, by and between Gangnier Investments LLC (the “Gangnier”) and ZP Woodward (the “23634

Land Contract”).

Pursuant to the terms of the 23634 Land Contract, Gangnier agreed to sell to ZP Woodward certain real property

located at 23634 Woodward Avenue, Pleasant Ridge, Michigan (“23634 Woodward”) for the purchase price of $755,984, comprised

of $85,894 of cash, $240,000 of previously paid escrow deposits and a land contract note payable of $430,000 (the “23634 Land Contract

The 23634 Land Contract Note Payable accrues interest at the rate of 7% and is payable in 48 monthly installments of $3,865,

beginning April 1, 2023, until the purchase price and interest are fully paid, provided that such purchase price and all interest will

be fully paid on or before March 31, 2027.

There is no prepayment penalty.

The 23634 Land

Contract contains terms and conditions typically stated in similar land contract or installment sale contracts.

On February 27, 2023,

ZP Woodward acquired a fee interest in 23600 Woodward Avenue, Pleasant Ridge, Michigan for the purchase price of $1,253,070, comprised

of $903,070 of cash and $350,000 of previously paid escrow deposits and, as of such date, ZP Woodward has acquired the property interests

in the Woodward Property contemplated in the Option Agreement and Master Agreement.

The Parking Lots properties consist of approximately

15,246 square feet of land with approximately 3,463 square feet of rentable buildings space and approximately 7,872 square feet of covered

Chino Valley, AZ

On 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 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 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”).

The Company’s Significant Tenants have completed the Investment by Tenants

to the Facilities totaling in excess of $8,000,000 and have satisfied the contractual obligations related to the same.

On August 23, 2021, Chino Valley and Broken Arrow

entered into the Third Amendment (the “Third Chino Valley Amendment”) to the 2018 Chino Valley Lease, as amended (the “Chino

Valley Lease”), effective September 1, 2021.

The parties 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.

Accordingly, 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 to 67,312 square feet of 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.

On January 24, 2022 and effective on March 1,

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

Valley Lease, 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 Tenant as a tenant improvement allowance or lease incentive for investment

into the premises, which was capitalized as a lease incentive receivable and is recognized on a straight-line basis over the remaining

lease term as a reduction to the lease income.

Pursuant 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.

Green Valley, AZ

On 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.

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 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

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 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.

On 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 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.

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

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.

The Company’s Significant Tenants have

completed the Investment by Tenants to the Facilities totaling in excess of $8,000,000 and have satisfied the contractual obligations

related to the same.

In connection with a promissory note, on July

11, 2022 and reaffirmed on December 7, 2022, the Company entered into a Deed of Trust Agreement that secures the Company’s performance

under the promissory note.

The Deed of Trust Agreement transfers and assigns to the lender the right to sell the assets of Tempe and

rights to rental income in case of default under the promissory note.

On November 30, 2022, Zoned Arizona, CJK, and

VSM entered into that Second Amendment (the “Tempe Second Amendment”) to the Tempe Lease, as amended.

Concurrently with the

execution of the Tempe Second Amendment:

(i) CJK assigned all its interest in the Tempe Lease to VSM (the “Assignment”), and

(ii) VSM subleased a portion of the Premises (as defined in the Tempe Lease), pursuant to that certain Sublease dated November 30, 2022

between VSM, as sublessor, and CJK, as sublessee.

Pursuant to the terms of the Tempe Second Amendment,

among other things, and in consideration of Zoned Arizona’s agreement to enter into the Tempe Second Amendment:

(i) VSM paid Zoned

Arizona $300,000 (the “Assignment Price”), (ii) VSM agreed to commit at least $3,000,000 to be spent toward capital improvements

to the Premises within two years after the effective date of the Tempe Second Amendment (the “Capital Commitment”), (iii)

VSM agreed to deposit an additional security deposit (the “Additional Security Deposit”) of $147,600 to be held by Zoned

Arizona per the terms of the Tempe Lease, and (iv) VSM agreed to cause its affiliate, GDL Inc.

(doing business as Green Dot Labs) (“GDL”)

to execute and deliver to Zoned Arizona that Guaranty of Payment and Performance dated on the same date as the Tempe Amendment, which

Guaranty of Payment and Performance requires GDL to guarantee and be liable for VSM’s compliance with and performance under the

The Guaranty of Payment and Performance was entered into on November 30, 2022.

If VSM fails to deliver to Zoned Arizona

invoices or other documentation acceptable to Zoned Arizona showing the Capital Commitment has been satisfied in a timely manner, VSM

will be in default under the Tempe Lease.

No other terms of the Tempe Lease were modified.

Pursuant to ASC 842-10-25, the lease modification

was not accounted for as a separate contract and the Company shall account for the modification as if it were a termination of the existing

lease and the creation of a new lease that commenced on the effective date of the modification.

Accordingly, the Company considers the

assignment fee paid as a part of the lease payments for the modified lease and shall amortize the $300,000 assignment fees into rental

revenue on a straight-line basis over the remaining term of the modified lease.

On December 31, 2022, deferred revenue related to this

lease modification amounted to $298,565 and is included in contract liabilities on the accompanying consolidated balance sheet.

Additionally, on the Tempe property, the Company

leases parking lot space for an antenna location to a third party.

On 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.

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.

On November 30, 2022, Kingman and CJK entered into the Second Amendment (the “Kingman

Second Amendment”) to the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Kingman

Pursuant to the terms of the Kingman Second Amendment, CJK agreed to grant Kingman a right to terminate the Kingman Lease upon

15 days’ prior written notice in Kingman’s sole discretion, without any obligation to do so, provided that Kingman may not

exercise this right to terminate if CJK is operating its business as a going concern at the premises which is the subject of the Kingman

Pleasant Ridge, MI

On November 29, 2022, ZP Woodward, as landlord,

entered into a Licensed Cannabis Facility Absolute Net Lease Agreement (the “Woodward Lease”) with Rapid Fish 2 LLC, as tenant

(“Woodward Tenant”), whereby ZP Woodward leased the Woodward Property located in Pleasant Ridge.

Michigan to the Woodward

The Woodward Lease commenced on December 1, 2022 and has a term of 14 years and 4 months through March 1, 2037, with two 5-year

options to extend the term, exercisable by the Woodward Tenant pursuant to the terms and conditions of the Woodward Lease.

Lease contains customary obligations of the Woodward Tenant consistent with an absolute triple net lease agreement, including (i) the

payment of real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or

estate taxes), (ii) payment of insurance premiums and operating costs of ZP Woodward related to the operation of the Woodward Property,

and (iii) maintenance and repair obligations to maintain the Woodward Property in first-class retail condition.

The Woodward Lease includes

a Guaranty of Payment and Performance by Ammar Kattoula and Thomas Nafso.

The Woodward Lease contains an abatement of the full or partial

rent that would otherwise have been due for the months from December 2022 to March 2023.

Subsequent to the abatement period.

Lease provides for payment by the tenant of monthly base rent beginning at $40,319 per month and increasing by 3% per year over the term

of the lease, as well as real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding

income or estate taxes) levied upon or assessed against the Company.

In addition, pursuant to the terms of the Woodward Lease, the Woodward

Tenant agreed to maintain insurance in full force during the term of the Woodward Lease and any other period of occupancy of the premises

by the tenant.

The tenant shall have the option, exercisable by written notice to ZP Woodward given not later than 180 days prior to

the expiration of the then current term, to extend the term for two further terms of five years each on the same terms and conditions

as provided in this Lease.

The Company considers tenants whose annual base

rent exceeds over 10% of the Company’s annual rental income to be a Significant Tenant.

The Tempe Lease, Kingman Lease, Chino Valley

Lease, Green Valley Lease, and the Woodward Lease are considered significant and the tenants are referred to as the Significant Tenants.

During the years ended December 31, 2022 and

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:

2021, all of the Company’s real estate properties are leased under triple-net leases to tenants that are controlled by Significant

For the years ended December 31, 2022 and 2021, revenues associated with Significant Tenant leases described above is summarized

Woodward Tenant *

Revenues from these Significant Tenants began in December 2022 and are expected to amount to over 10% of the Company’s rental revenue in future periods.

As of December 31, 2022 and 2021, the Company

had an asset concentration related to the Significant Tenants.

As of December 31, 2022 and 2021, the Significant Tenants collectively

leased approximately 59.8% and 79.2% of the Company’s total assets, respectively.

Future minimum lease payments to be received,

on all leased properties, for each of the five succeeding calendar years and thereafter as of the period ended December 31, 2022, consist

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”).

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,

KCB Jade Holdings, LLC Investment

On 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

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

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

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

On 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.

If (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 issuance.

Upon 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.

Any 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.

On 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.

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.

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

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.

In 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.

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 due.

Apart from the terms described above, the terms

of the A&R Debenture are substantially identical to the terms of the KCB Debenture.

On 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.

Right of Prepayment .

KCB may prepay the

Second A&R Debenture at any point after 18 months following the Issue Date, in whole or in part.

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.

Voluntary Conversion .

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.

Conversion Percentage.

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”).

Right 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.

Apart from the terms described above, the terms

of the Second A&R Debenture are substantially identical to the terms of the A&R Debenture.

The convertible note receivable has been accounted

for at amortized cost and is evaluated for collectability at each reporting date.

As of December 31, 2022, based on management’s

analysis, the Company recorded a loss on note receivable investment of $210,756 which consisted of convertible notes receivable and interest

receivable amounted to $200,000 and $10,756, respectively.

In connection with management’s analysis, the Company considered the

current financial situation of KCB and an assessment of KCB’s franchising opportunity in the cannabis industry from a macro-industry

While the opportunity may prove valuable in the long-term, currently significant macro-industry challenges have caused management

to take a conservative approach in its evaluation and conclude that this was the most appropriate position at this time on behalf of the

Company and its shareholders.

On December 31, 2022, convertible note receivable and interest receivable

amounted to $0.

On December 31, 2021, convertible note receivable and interest receivable amounted to $200,000 and $10,756, respectively.

Gilbert Property

On 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

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

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

In addition, pursuant to the terms of the Lease, the

Tenant had an option to purchase the Property (the “Option”) that was exercisable 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.

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.

In connection with the sale, the Company received

net proceeds of $322,332 and recorded a gain on sale of rental property of $51,944.

Investment in Joint Ventures

On December 31, 2022 and 2021, the Company held investments with

aggregate carrying values of $58,293 and $74,554, respectively.

The entities listed below are partially owned by 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.

On April 22, 2021, ZP Data 1 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.

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.

Pursuant to the Beakon Operating Agreement, ZP Data 1 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 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.

(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 the Company and the non-affiliated party.

Equity and Joint Ventures, between ZP Data 1 and the non-affiliated party.

Each of the entities has 50% equity ownership and voting

rights, and joint control in Zoneomics Green.

rights, and joint control in Beakon.

ZP Data 1 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.

On 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.

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

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.

Our ideal prospective

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.

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.

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 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

We target clients who require assistance with

the identification and development of regulated cannabis properties.

Our ideal prospective 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.

We 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.

Currently, the Company uses general industry

marketing to communicate its real estate services to industry operators and prospective clients.

These include an industry newsletter

that the Company distributes.

Industry reputation, word-of-mouth, and networking are the primary tools the Company has used to complete

the marketing of our services.

We have previously and may in the future engaged with marketing, design, and public relations firms 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.

1 unchanged sentence

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 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 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

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.

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%.

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 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 (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.

The 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.

More competitors have recently entered the marketplace.

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 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.

Government Regulation

Real Estate & General Business Regulations

We 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.

In 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.

We expect regulations to get tighter as time

Federal 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 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

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

The 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 federal law.

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

The inconsistencies between federal and state

regulation of cannabis were addressed in a memorandum (the “Cole Memo”) which then-Deputy Attorney General James Cole sent

District Attorneys in 2013 outlining certain priorities for the DOJ relating to the prosecution of cannabis offenses.

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.

On January 4, 2018, former U.S.

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.

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.

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.

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.

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.

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.

To date, there has been no new federal cannabis

memoranda issued by the Biden Administration or any published change in federal enforcement policy.

Regardless, U.S.

federal government

has always reserved the right to enforce federal law regarding the sale and disbursement of medical or recreational marijuana, even if

state law sanctioned such sale and disbursement.

Although the rescission of the Cole Memo does not necessarily indicate that marijuana

industry prosecutions are now affirmatively a priority for the DOJ, there can be no assurance that the U.S.

federal government will not

enforce such laws in the future.

The sheer size of the cannabis industry, in addition to participation by state and local governments

and investors, however, suggests that a large-scale federal enforcement operation would more than likely create unwanted political backlash

for the DOJ and the current administration.

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

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.

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

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

the Cole Memo.

The 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.

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

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 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 the U.S.

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.

State 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.

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 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

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

authorize 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 under U.S.

federal law, nor may it provide

a defense to any federal proceeding which may be brought against the Company.

Many states and U.S.

territories have legalized the medical and/or

adult use of cannabis.

We 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 “Risk Factors,” there are significant risks associated with our business.

Financial 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.

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.

The 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.

Local, 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.

As of December 31, 2022, we had nine full-time

employees, including our chief executive officer, chief operating officer, and chief legal officer, and multiple part-time employees who

operate as independent contractors of the Company.

We have established a national network of external partners, contractors, and consultants

to which we outsource various operational tasks in an effort to minimize administrative overhead and maximize efficiency.

We believe that a diverse workforce is important

to our success.

We will continue to focus on the hiring, retention and advancement of women and underrepresented populations, and to cultivate

an inclusive and diverse corporate culture.

In the future, we intend to continue to evaluate our use of human capital measures or objectives

in managing our business such as the factors we employ or seek to employ in the development, attraction and retention of personnel and

maintenance of diversity in our workforce.

The success of our business is fundamentally connected

to the well-being of our people.

Accordingly, we are committed to the health, safety and wellness of our employees.

We provide our employees

and their families with access to a variety of innovative, flexible and convenient health and wellness programs, including benefits that

provide protection and security so they can have peace of mind concerning events that may require time away from work or that impact their

financial well-being;

that support their physical and mental health by providing tools and resources to help them improve or maintain

their health status and encourage engagement in healthy behaviors;

and that offer choice where possible so they can customize their benefits

to meet their needs and the needs of their families.

We also provide robust compensation and benefits

programs to help meet the needs of our employees.

We believe that we maintain a satisfactory working relationship with our employees and

have not experienced any labor disputes.

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