What changed in this filing

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Item 1. Business

2024-03-26 compared with 2023-03-28 · 785 added, 780 removed, 62 unchanged (96% of the section changed)

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 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 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:

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 as detailed

Properties, Inc.

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

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.

Properties is a technology-driven property investment company focused on acquiring value-add real estate within the regulated cannabis

industry in the United States.

The Company aspires to innovate within the real estate development sector, focusing on direct-to-consumer

real estate that is leased to the best-in-class cannabis retailers.

Headquartered in Scottsdale, Arizona, Zoned Properties is redefining

the approach to commercial real estate investment through its standardized investment model backed by its proprietary property technology.

Zoned Properties has developed a national ecosystem of real estate services to support its real estate development model, including a

commercial real estate brokerage and a real estate advisory practice.

Company operates in two organized segments;

(1) the operations, leasing and management of its commercial properties, herein known as

the “Property Investment Portfolio” segment, and (2) the advisory, brokerage and technology services related to commercial

properties, herein known as the “Real Estate Services” segment.

The Company targets commercial properties that face unique

zoning or development challenges, identifies solutions that can potentially have a major impact on their commercial value, and then works

to acquire the properties while securing long-term, absolute-net leases.

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”).

Zoned Properties corporate headquarters are located at 8360 E.

Raintree Dr., Suite 230, Scottsdale, Arizona.

For more information, call

877-360-8839 or visit www.ZonedProperties.com.

of December 31, 2023, the Company has the following wholly owned subsidiaries:

Chino Valley Properties,

11 unchanged sentences

ZP Data Platform 1, LLC

(“ZP Data 1”) was organized in the State of Arizona on April 14, 2021.

(“ZP Data 1”) was organized in the State of Arizona on April 14, 2021 (inactive).

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 RE Holdings, LLC (“ZPRE

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

ZP Brokerage MS, LLC (“Mississippi

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

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

ZP Brokerage FL, LLC (“Florida

1 unchanged sentence

ZP Brokerage AL, LLC (“Alabama

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

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

ZP RE MI Woodward, LLC

2 unchanged sentences

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

During 2022, the Company has closed the following

wholly owned subsidiaries:

Company also maintains a 50% equity interest in two joint ventures.

2023 and 2022, the Company dissolved the following wholly owned subsidiaries:

Gilbert Property Management,

11 unchanged sentences

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.

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

ZP RE AZ Stone, LLC (“ZP

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

This subsidiary was dissolved on March 28, 2023.

believe in the value of building long-term relationships with our tenants, clients and the local communities in which our properties

are located in order to position the Company for short-term success and long-term growth backed by sophisticated, safe, and sustainable

core of our business operations involves identifying, securing, acquiring, and leasing 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, including cannabis properties.

We often refer to these requirements

as cannabis approvals.

These regulations often include complex permitting processes that require longer development timelines than traditional

commercial real estate 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.

to the complex nature of the Company’s core business operations and target investment properties, the Company may secure dozens

of potential property candidates for acquisition and prospective tenant candidates for leasing at any given time, all in the normal course

The process of securing a potential property candidate may include completing contractual agreements such as an option agreement

or a purchase agreement, which may include various contingencies and conditions precedent related to the ultimate consummation of the

acquisition, investment, or transaction.

Simultaneously with the securing of potential property candidates, the Company will advertise

and market a property to prospective tenant candidates for a long-term, absolute-net lease agreement, which may include various contingencies

and conditions precedent related to the ultimate commencement of the lease and tenancy.

In order to deliver a successful investment property

transaction, the Company must collectively receive all cannabis approvals from state and local governing authorities that may be required

at a given property, secure a qualified tenant to lease and operate the property, and complete the acquisition of the property.

Company’s current investment properties are located in Arizona, Illinois, and Michigan with 100% occupancy and a weighted average

lease term over 10 years.

Each of the Company’s leased properties is occupied by a commercial cannabis tenant.

Properties maintains a portfolio of properties that it owns, develops and leases.

As of March 2024, the Company leases land and/or building

space at the six properties in its portfolio to licensed and regulated cannabis tenants in areas with established cannabis regulations

and zoning procedures.

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

leased properties are zoned and permitted as regulated cannabis cultivation and processing facilities.

The Company considers the two

cultivation sites in its portfolio as legacy properties, and may consider selling or leveraging those properties to unlock equity and

create capital availability in the future.

The Zoned Properties investment thesis has evolved over the years as the cannabis industry

has emerged, and is currently focused on investing capital into direct-to-consumer properties, located in state-markets with robust cannabis

consumer demand in the industry.

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.

Properties is in pursuit of property acquisitions that can be characterized as consumer-facing, retail dispensary properties that are

positioned to be leased to retail dispensary cannabis tenants under net leasing structures.

As of March 2024, the Company has agreements

in place to acquire prospective investment properties with prospective cannabis tenants located in Arizona, Missouri, and Illinois.

the coming quarters and years, the Company plans to initiate and target its investment activity in Delaware, Maryland, Minnesota, Ohio,

and other potential state-markets with robust cannabis consumer demand.

the past few years, the Company has completed a strategic shift in focus towards direct-to-consumer real estate that is leased to the

best-in-class cannabis retailers in the industry.

The Company will continue to utilize its proprietary property technology as a competitive

edge when identifying investment properties.

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 legalized 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 projects for third party clients across the country in multiple states, as well

as our own projects located in Arizona, Illinois, and Michigan, each highly regulated markets for the legalized cannabis industry.

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 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.

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.

In the event that local zoning, permitting or any other required cannabis approvals are not received, a prospective investment

property opportunity may fail, in which case the Company would move to terminate any agreements in place with prospective property sellers

and prospective tenants at the property.

While the Company intends to include contingencies and conditions precedent in its agreements

with property sellers and prospective tenants, it may be possible that these risk mitigants fail, causing the Company to incur fess and/or

lose escrow deposits.

Company has established a network of experts in various fields of real estate:

title and escrow, property insurance, property lending,

property technology, commercial banking, commercial brokerage, property design and construction, property management and operations,

and property security 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.

are the sole member of 14 limited liability companies:

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, and ZP

Six of these entities—Zoned Arizona, Green Valley, Kingman, Chino Valley, ZPRE Holdings, and ZP Woodward—have acquired

land and/or real property and own our properties.

of the best-known, state-licensed cannabis operators from across the United States have approached Zoned Properties for strategic partnership

related to the acquisition and leasing of retail dispensary properties and/or real estate services related to cannabis real estate projects.

We are continuously evaluating these opportunities as we expand our investment property pipeline.

Zoned Properties has built an active

cannabis real estate investment and services ecosystem in which we are exploring various development partnerships, preferred service

provider arrangements, and partnerships with capital funding sources.

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.

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 and Illinois.

We believe that Arizona, Michigan and Illinois have established state-regulated cannabis programs with robust regulatory frameworks for

licensing and operating within their respective regulatory marketplaces (i.e.

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).

The 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 potential.

Corporate History and Transactions

property located in Chino Valley is leased by Broken Arrow Herbal Center, Inc.

(“Broken Arrow”), doing business as Hana Dispensaries.

property located in Green Valley is leased by Broken Arrow, doing business as Hana Dispensaries.

property located in Kingman is leased by CJK, Inc.

(“CJK”), and subleased by Helping Camo LLC, doing business as Story Cannabis.

property located in Tempe is leased by VSM, LLC (“VSM”), doing business as Green Dot Labs.

property located in Pleasant Ridge is leased by Rapid Fish, LLC (“Rapid Fish”), doing business as NOXX Cannabis.

property located in Chicago is leased by JG IL LLC (“Justice Grown”), doing business as Justice Cannabis Co.

Valley, Arizona

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

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.

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.

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.

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

March 2024, the Company announced its plan to list its property in Chino Valley, Arizona (the “Chino Valley Property”) for

sale at a purchase price of $16 million.

This potential transaction marks a significant development in the Company’s strategic

real estate portfolio optimization.

The Chino Valley Property has been a valuable non-core asset within the Company’s property

investment portfolio and this potential sale is part of a strategic shift to streamline the Company’s portfolio and concentrate efforts

on a direct-to-consumer real estate strategy.

Valley, Arizona

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 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.

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.

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.

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.

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.

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.

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 Tempe Lease.

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.

to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“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.

the Company recorded the $300,000 as a contract liability and will amortize the $300,000 Assignment Fees into rental revenue on a straight-line

basis over the remaining term of the lease through April 2040.

On December 31, 2023 and 2022, contract liability related to this lease

modification amounted to $281,340 and $298,565, respectively, which has been included in contract liabilities on the accompanying consolidated

balance sheets.

Additionally,

on the Tempe property, the Company leases parking lot space for an antenna location to a third party.

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

May 31, 2020.

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

June 1, 2020 to July 31, 2020.

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

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

The parties also agreed

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

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.

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.

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 and CJK.

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 Lease.

August 2, 2023, the Company entered into a Sublease Agreement (the “Sublease”) with CJK and a subtenant in connection with

the Company’s Kingman property.

Pursuant to the Sublease, the Sublease shall be effective on August 2, 2023 and end on the one

year anniversary, or (ii) the last day of the Term of the Master Lease (whether due to expiration or termination thereof by the Company,

whichever is earlier (the “Sublease Expiration Date”), such period being referred to herein as the “Sublease Term”,

unless terminated earlier pursuant to the terms of this Sublease or otherwise by consent of the Company, CJK and Subtenant.

The subtenant

shall have two options to extend the Sublease Term by one year periods each (each a “Sublease Term Extension” and collectively

the “Sublease Term Extensions”), which shall be exercisable by Subtenant no later than 90 days prior to the expiration of

the Sublease Term, as may be extended.

to the Kingman Lease, if pursuant to any assignment or sublease, CJK receives rent, either initially or over the Term of the assignment

or sublease, in excess of the Rent called for hereunder, or in the case of this sublease of a portion of the Premises in excess of such

Rent fairly allocable to such portion, after appropriate adjustments to assure that all other payments called for hereunder are appropriately

taken into account, CJK shall pay to the Company, as Additional Rent hereunder, 50% of the excess of each such payment of rent received

Accordingly, the Company shall receive additional rent of $3,500 per month during the term of the sublease.

Additionally,

the subtenant will pay a security deposit of $22,000 per the terms of the sublease.

The Company and CJK have agreed to split the Security

Deposit at 68% (the Company received $14,960 of the $22,000 Security Deposit).

Ridge, Michigan

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 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.

The Woodward 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.

Lease contains an abatement of the full or partial rent that would otherwise have been due for the months from December 2022 to March

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

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:

the Woodward 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.

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.

May 14, 2023, ZP Woodward entered into an Assignment and Assumption of Lease (“Assignment”) whereby the Woodward Lease was

assigned from Rapid Fish 2 LLC (“Old Tenant”) to Rapid Fish LLC (“New Tenant”).

Old Tenant and New Tenant share

common ownership.

The assignment of the Woodward Lease is conditioned upon issuance by the City of Pleasant Ridge, Michigan of a final

cannabis business license to New Tenant and ZP Woodward’s receipt of a fully executed Reaffirmation of Guaranty from the guarantors

of the Woodward Lease.

The Assignment contains other terms as are customary for a document of this type.

December 15, 2023, ZPRE Holdings entered into an Agreement Regarding Purchase and Sale Contract (the “Agreement”), effective

as of December 15, 2023, by and between Keystone, as assignor, and ZPRE Holdings as assignee.

Pursuant to the terms of the Agreement,

Keystone agreed to assign to ZPRE Holdings its right, title and interest in that certain Purchase and Sale Agreement dated May 5, 2022,

by and between the Seller and Keystone, as amended (the “Original PSA”).

Pursuant to the terms of the Original PSA, the Seller

agreed to sell to Keystone certain real property located at 3499, 3451, and 3455 South Ashland Avenue, Chicago, Illinois, 60608 (the

“Ashland Avenue Property”) in exchange for a purchase price of $1,250,000, to be paid by Keystone (the “Purchase Price”).

Pursuant to the terms of the Agreement, ZPRE Holdings agreed to deposit the following amounts into escrow:

(i) $40,000, representing

reimbursement to Keystone or its designee for the earnest money deposit paid under the terms of the Original PSA, (ii) assignment fees

of $185,000, and (iii) $1,210,000, representing the Purchase Price less the $40,000 earnest money payment.

On January 19, 2024, the Company

paid these funds in the aggregate amount $1,435,000.

January 19, 2024, ZPRE Holdings and Keystone entered into that certain Assignment and Assumption Agreement, dated as of January 19, 2024,

by and between Keystone and ZP Holdings (the “Assignment Agreement”).

Pursuant to the terms of the Assignment Agreement,

Keystone assigned to ZP Holdings all of Keystone’s right, title and interest in and to the Original PSA to purchase the Ashland

Avenue Property.

On January 19, 2024, the transactions contemplated by the Agreement and Assignment and Assumption Agreement closed and

ZPE Holdings completed the acquisition of the Ashland Avenue Property under the Original PSA, as assigned.

The completed transactions

were subject to closing costs, commissions, and fees customary to the acquisition of real estate, including a $65,000 commission payable

and a $79,634 sponsor fee payable.

January 18, 2024, ZPRE Holdings entered into a Licensed Cannabis Facility Absolute Net Lease Agreement (the “Justice Grown Lease”),

with a commencement date of January 19, 2024, by and between ZPRE Holdings, as landlord, and JG IL LLC (“Justice Grown”),

Pursuant to the terms of the Lease, ZPRE Holdings agreed to lease the Ashland Avenue Property to Justice Grown for use as

a licensed recreational adult-use (and, if permitted, medical) cannabis dispensary in accordance with Illinois law.

The Justice Grown

Lease has a term of 15 years, with four five-year renewal terms.

Investment Portfolio

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

Tempe Lease, Chino Valley Lease, and the Woodward Lease are considered significant and the tenants are referred to as the Significant

the years ended December 31, 2023 and 2022, all of the Company’s real estate properties are leased under triple-net and absolute-net

leases to tenants that are controlled by Significant Tenants.

For the years ended December 31, 2023 and 2022, revenues associated with

Significant Tenant leases described above are summarized as follows:

Woodward lease *

from these Significant Tenants transitioned from CJK to VSM in December 2022.

of December 31, 2023 and 2022, the Company had an asset concentration related to the Significant Tenants.

As of December 31, 2023 and

2022, the Significant Tenants collectively leased approximately 69.4% and 59.8% of the Company’s total assets, respectively.

December 31, 2023, all rental payments have been made on a timely basis.

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, 2023, consist of the following:

Future annual base rent:

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

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.

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.

in Joint Ventures and Equity Investments

December 31, 2023 and 2022, the Company held investments with aggregate carrying values of $4,923 and $58,293, 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 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.

Pursuant to the Beakon Operating Agreement, ZP Data 1 purchased 50 units of Beakon for $50,

$50, which represent 50% of the membership interests of Beakon.

which represents 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,

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

5 unchanged sentences

rights, and joint control in Beakon.

ZP Data 1 will account for its investment in Beakon under the equity method of accounting in accordance

ZP Data 1 accounts for its investment in Beakon under the equity method of accounting in accordance

with ASC 323.

1 unchanged sentence

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

an other-than-temporary impairment loss of $73,970, its remaining net carrying value, 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 and regulatory conditions, implementing the Company’s business model was at risk and that the Company’s ability

to recover the carrying amount of the investment in Beakon was impaired.

Beacon is currently inactive.

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 represents 50% of the membership

interests of Zoneomics Green and the other joint venture partner received 50% of the membership interests for the contribution of its

intellectual property and a number of non-monetary contributions.

identified in the Zoneomics Green Operation Agreement but provided

no capital contributions.

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

(i) interest in Zoneomics Green’s

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

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

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

Green Operating Agreement.

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

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

Each of the entities has 50% equity ownership and voting

rights, and joint control in Zoneomics Green.

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

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

Currently, the Zoneomics

Green team has completed the creation of the foundational design, technology platform, and market positioning for Zoneomics Green to

launch in the cannabis industry.

However, in order to successfully launch, the technology platform relies upon a required merchant banking

While Company management knew this risk was a major factor going into the investment, it was not foreseen exactly when an

appropriate merchant banking solution would be available given the federal status of regulated cannabis and specifically the federal

banking status as it relates to regulated cannabis, even for ancillary services such as Zoneomics Green.

The regulatory status related

to cannabis banking reform and regulation at the federal level, which the Zoneomics platform relies upon, is uncertain and the Company

believes it is appropriate to cause an impairment of the Zoneomics Green investment at this time, while also understanding that Company

believes Zoneomics Green may still create material value for the Company in the future.

Additionally, the Company is using the Zoneomics

Green technology within its own business to generate leads for new projects.

The Company has no further financial or investment obligations

at this time.

Accordingly, on December 31, 2023, the Company recorded an other-than-temporary impairment loss of $45,000 because it was

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

Based on management’s

evaluation, it was determined that due to market and regulatory conditions, implementing the Company’s business model was at risk

and that the Company’s ability to recover the carrying amount of the investment in Zoneomics was impaired.

June 24, 2022, the Company’s wholly-owned subsidiary, ZP Data Platform 2 LLC, purchased 875 shares of Series A convertible preferred

stock of Anami Technology, Inc., a California corporation, for $50,000, or $57.14 per share.

The Company’s ownership percentage

is less than 20% and it does not have the ability to exercise significant influence as described in ASC 323-10-15-6.

This equity instrument

does not have a readily determinable fair value.

Accordingly, the Company elected to measure this equity security at its cost minus impairment,

If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same

issuer, the Company shall measure the equity security at fair value as of the date that the observable transaction occurred.

If the Company

subsequently elects to measure this equity security at fair value, the Company shall measure all identical or similar investments of

the same issuer, including future purchases of identical or similar investments of the same issuer, at fair value.

The election to measure

this equity security at fair value shall be irrevocable.

Any resulting gains or losses on the securities for which that election is made

shall be recorded in earnings at the time of the election.

On December 31, 2023 and December 31, 2022, investment in equity securities

amounted to $50,000.

target tenants for our Property Investment Portfolio activity and clients for our Real Estate Services activity who require assistance

with the identification and development of regulated cannabis properties.

Our ideal prospective tenants and/or clients will have a commitment

to operating their business and real estate projects with an emphasis on sophistication, safety, and sustainability , and stewardship

to the local community in which they operate.

complete significant due diligence on prospective tenants and prospective clients.

Credit-worthiness, character, and capital are all

important variables that contribute to a target tenant and/or client for the Company.

the Company uses general industry marketing to communicate its Property Investment Portfolio and Real Estate Services to industry operators

and prospective clients.

These include an industry newsletter that the Company distributes, as well as electronic and physical mailers

directed to cannabis industry operators and property owners.

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 services.

These tools are created for transparency of operations and activities.

Our executive management believes the reputation of

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

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

Our executive

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

commercial real estate market is highly competitive.

We believe finding properties that are zoned an/or approved for the specific use

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

More competitors continue to enter the

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

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

be clients, regulated cannabis operators themselves, all of whom, may compete against us in our efforts to secure and acquire real estate

zoned and/or approved 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 alternative 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

Controlled Substances Act and “Cole Memorandum”

federal government regulates drugs through the Controlled

Substances Act (21 U.S.C.

§ 811) (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.

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.

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

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

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.

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.

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.

Cannabis is classified as a Schedule I drug.

federal law, a Schedule I drug or substance has a high potential for abuse, no

accepted medical use in the United States, and a lack of accepted safety for the use of the drug under medical supervision.

States Food and Drug Administration (the “FDA”) has approved Epidiolex, which contains a purified form of cannabidiol (“CBD”),

a non-psychoactive cannabinoid found in the cannabis plant, for the treatment of seizures associated with two epilepsy conditions.

FDA has not approved cannabis or cannabis derived compounds as a safe and effective drug for any other indication.

In the United States, cannabis is largely regulated at the state level.

State laws regulating cannabis are in direct conflict with the federal CSA, which makes cannabis use and possession federally illegal.

Although certain states authorize medical or adult-use cannabis production and distribution by licensed or registered entities, under

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.

The Supremacy Clause of the United States Constitution establishes that the United States Constitution

and federal laws made pursuant to it are paramount and, in case of direct conflict between federal and state law, the federal law shall

The Company faces risks for operating in an industry that is illegal under federal law, including that third party service providers

could suspend or withdraw services.

See section entitled “Risk Factors” herein.

Until 2018, the federal government provided guidance to federal law

enforcement agencies and banking institutions through a series of United States Department of Justice (“DOJ”) memoranda.

most significant of these memoranda was drafted by former Deputy Attorney General James Cole in 2013 (the “Cole Memo”).

Cole Memo offered guidance to federal enforcement agencies as to how to prioritize civil enforcement, criminal investigations and prosecutions

regarding marijuana in all states.

The Cole Memo put forth eight prosecution priorities:

the distribution of marijuana to minors;

revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;

the diversion of marijuana from states where it is legal under state law in some form to

other states;

the state-authorized marijuana activity from being used as a cover or pretext for the trafficking

of other illegal drugs or other illegal activity;

violence and the use of firearms in the cultivation and distribution of marijuana;

drugged driving and the exacerbation of other adverse public health consequences associated

with marijuana use;

the growing of marijuana on public lands and the attendant public safety and environmental

dangers posed by marijuana production on public lands;

marijuana possession or use on federal property.

January 4, 2018, former United States Attorney General Jefferson Sessions rescinded the Cole Memo by issuing a new memorandum to all

United States Attorneys (the “Sessions Memo”).

Rather than establish national enforcement priorities particular to marijuana-related

crimes in jurisdictions where certain marijuana activity was legal under state law, the Sessions Memo instructs that “[i]n deciding

which marijuana activities to prosecute ...

with the DOJ’s finite resources, prosecutors should follow the well-established principles

that govern all federal prosecutions.” Namely, these include the seriousness of the offense, history of criminal activity, deterrent

effect of prosecution, the interests of victims, and other principles.

former Attorneys Generals who succeeded former Attorney General Sessions following his resignation have not provided a clear policy directive

for the United States as it pertains to state-legal marijuana-related activities.

It is still not yet known whether the DOJ under President

Biden and Attorney General Merrick Garland will re-adopt the Cole Memo or announce a substantive marijuana enforcement policy.

General Garland stated at a confirmation hearing in 2021 before the United States Senate that “It does not seem to me a useful

use of limited resources that we have, to be pursuing prosecutions in states that have legalized and that are regulating the use of marijuana,

either medically or otherwise.

I don’t think that’s a useful use.” Recently, in testimony in February of 2023 before

the Senate Judiciary Committee, Attorney General Garland said the DOJ is “still working on a marijuana policy” and that policy

– when issued – “will be very close to what was done in the Cole Memorandum.” [1]

there is no guarantee that state laws legalizing and regulating the sale and use of marijuana will not be repealed or overturned, or

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

until the United States Congress amends the CSA with respect to marijuana (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.

Currently, in the absence

of uniform federal guidance, as had been established by the Cole Memo, enforcement priorities are determined by respective United States

Attorneys, and notwithstanding public statements to the contrary, federal law enforcement could enforce the CSA – and its criminal

prohibition on commercial cannabis activity.

the passage of the Agriculture Improvement Act of 2018 (popularly known as the “2018 Farm Bill”), cannabis with a tetrahydrocannabinol

(“THC”) content below 0.3% dry weight volume is classified as hemp and has been removed from the CSA.

Hemp and products derived

from it that are lawfully cultivated or manufactured in accordance with the 2018 Farm Bill, U.S.

Department of Agriculture regulations

and applicable state laws may now be sold into commerce and transported across state lines.

The 2018 Farm Bill explicitly preserves the

authority of the FDA to regulate certain products containing cannabis or cannabis-derived compounds such as CBD under the federal Food,

Drug and Cosmetic Act (“FD&C Act”) and Section 351 of the Public Health Service Act.

In conjunction with the enactment

of the 2018 Farm Bill, the FDA released a statement about the regulatory status of CBD, noting the FDA’s position that it is unlawful

to introduce food containing added CBD into interstate commerce, or to market CBD products as, or in, dietary supplements, regardless

of whether the substances are hemp-derived.

In January 2023, the FDA issued a statement in connection with its denial of three citizen

petitions requesting that the agency engage in rulemaking to establish regulations under which CBD derived from hemp could be legally

marketed as a dietary ingredient in foods and dietary supplements.

The FDA stated that it is seeking assistance from Congress to create

a new regulatory pathway that is better designed to regulate products that contain hemp derived cannabinoids, including CBD.

In the interim,

the FDA stated that products (including dietary supplements, conventional foods, and animal foods) on the market are at risk of FDA enforcement

as the agency deems “appropriate.” To date, the FDA’s enforcement actions against companies manufacturing CBD products

has primarily been limited to the issuance of warning letters to companies whose products have made prohibited, misleading, and unapproved

Various states have also enacted state-specific laws pertaining to the handling, manufacturing, labeling, and sale of CBD

and other hemp consumable products.

While some states explicitly authorize and regulate the production and sale of hemp-derived CBD consumable

products or otherwise provide legal protection for authorized individuals to engage in such activities, other states restrict the sale

of CBD products or prohibit such products outright.

Schroyer, (2021 February 22) Attorney general nominee Garland signals friendlier marijuana

stance, available at https://mjbizdaily.com/attorney-general-nominee-merrick-garland-signals-friendlie r-marijuana-stance/

Financial Institutions and Banking

Due to the CSA categorization of marijuana as a Schedule I drug, federal

law also makes it illegal for financial institutions that depend on the Federal Reserve’s money transfer system to take any proceeds

from marijuana sales as deposits.

Banks and other financial institutions could be prosecuted and possibly convicted of money laundering

for providing services to cannabis businesses under the United States Currency and Foreign Transactions Reporting Act of 1970 (the “Bank

Secrecy Act”).

Therefore, under the Bank Secrecy Act, banks or other financial institutions that provide a cannabis business with

a checking account, debit or credit card, small business loan, or any other service could be charged with money laundering or conspiracy.

While there has been no change in U.S.

federal banking laws to accommodate

businesses in the large and increasing number of U.S.

states that have legalized medical and/or adult-use marijuana, the Department of

the Treasury Financial Crimes Enforcement Network (“FinCEN”), in 2014, issued guidance to prosecutors of money laundering

and other financial crimes (the “FinCEN Guidance”).

The FinCEN Guidance advised prosecutors not to focus their enforcement

efforts on banks and other financial institutions that serve marijuana-related businesses so long as that business is legal in their state

and none of the federal enforcement priorities referenced in the Cole Memo are being violated (such as keeping marijuana away from children

and out of the hands of organized crime).

The FinCEN Guidance also clarifies how financial institutions can provide services to marijuana-related

businesses consistent with their Bank Secrecy Act obligations, including thorough customer due diligence, but makes it clear that they

are doing so at their own risk.

The customer due diligence steps include:

Verifying with the appropriate state authorities whether

the business is duly licensed and registered;

Reviewing the license application (and related documentation)

submitted by the business for obtaining a state license to operate its marijuana-related business;

Requesting from state licensing and enforcement authorities

available information about the business and related parties;

Developing an understanding of the normal and expected activity

for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus adult-use customers);

Ongoing monitoring of publicly available sources for adverse

information about the business and related parties;

Ongoing monitoring for suspicious activity, including for

any of the red flags described in this guidance;

Refreshing information obtained as part of customer due diligence

on a periodic basis and commensurate with the risk.

With respect to information regarding state licensure obtained in connection

with such customer due diligence, a financial institution may reasonably rely on the accuracy of information provided by state licensing

authorities, where states make such information available.

Because most banks and other financial institutions are unwilling to

provide any banking or financial services to marijuana businesses, these businesses can be forced into becoming “cash-only”

While the FinCEN Guidance decreased some risk for banks and financial institutions considering serving the industry, in practice

it has not substantially increased banks’ willingness to provide services to marijuana businesses.

This is because, as described

above, the current law does not guarantee banks immunity from prosecution, and it also requires banks and other financial institutions

to undertake time-consuming and costly due diligence on each marijuana business they accept as a customer.

Those state-chartered banks and credit unions that do have customers

in the marijuana industry charge marijuana businesses high fees to pass on the added cost of ensuring compliance with the FinCEN Guidance.

Unlike the Cole Memo, however, the FinCEN Guidance from 2014 has not been rescinded.

As a result, 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.

Controlled Substances Act Rescheduling

There have been recent developments regarding the potential for cannabis

to be removed from the most restrictive schedule under the CSA.

On October 6, 2022, President Joe Biden requested that the Secretary of

Department of Health and Human Services (“HHS”), Xavier Becerra, and Attorney General Merick Garland initiate a scientific

review of the basis for cannabis’ scheduling under the CSA.

After approximately 11 months of review, on August 29, 2023, HHS Assistant

Secretary of Health, Rachel Levine, sent a letter to Drug Enforcement Administration (“DEA”) Administrator, Anne Milgram,

recommending rescheduling marijuana from Schedule I to Schedule III of the CSA.

The recommendation was based on a scientific and medical

review by the FDA with an analysis of the eight factors determinative of control of a substance under the CSA.

As a result, the DEA can now initiate a formal rule-making process

that would potentially reschedule marijuana from its current Schedule I classification.

The DEA is bound by the HHS recommendation in

regard to the scientific and medical matters but can ultimately make a different scheduling decision.

The DEA may also account for the

United States’ treaty obligations, including the United Nations Single Convention on Narcotics.

The DEA will consider several factors

that include:

(1) marijuana’s actual or relative potential for abuse, (2) scientific evidence of its pharmacological effect, (3)

the state of current scientific knowledge;

(4) history and current pattern of abuse, (5) scope, duration, and significance of abuse, (6)

risks to public health, (7) psychic or psychological dependence liability, and (8) whether marijuana is an immediate precursor of a substance

already controlled under the CSA.

The DEA has not yet started a formal rule-making process, which would require a public hearing on the

record with an administrative law judge(s) making the final decision whether to adopt the new regulation.

The regulation would be subject

to challenges and judicial review.

The DEA is not under a required timeline to initiate and complete this process and has not yet initiated

On September 13, 2023, the Congressional Research Service (“CRS”)

published a report stating that the DEA is “likely” to reschedule marijuana according to the HHS recommendation.

to the CRS report, this would have “broad implications for federal policy” and potentially impact state medical and recreational

If rescheduling occurs, various federal agencies such as the DOJ, FDA, FinCEN, and the Internal Revenue Service (“IRS”)

may issue additional memoranda providing further regulatory, tax, and enforcement priority instruction as it relates to marijuana that

would replace the previous guidance.

As of December 31, 2023, 37 states, the District of Columbia, Guam,

Puerto Rico, the Northern Mariana Islands and the U.S.

Virgin Islands have passed laws broadly legalizing marijuana for medicinal use

by eligible patients.

In the District of Columbia, the Northern Mariana Islands, Guam and 24 of these states –Alaska, Arizona, California,

Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey,

New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia and Washington – marijuana is legal for adult-use regardless

of medical condition, although not all of those jurisdictions have fully implemented their legalization programs.

Internal Revenue Code, Section 280E

An additional

challenge to marijuana-related businesses is that the provisions of the Internal Revenue Code, Section 280E (“Section 280E”),

are being applied by the IRS to businesses operating in the medical and adult-use marijuana industry.

Section 280E prohibits marijuana

businesses from deducting ordinary and necessary business expenses, forcing them to pay higher effective federal tax rates than similar

companies in other industries.

As a result of Section 280E, the effective tax rate for many of the Company’s tenants and clients

can be highly variable and depends on how large its ratio of non-deductible expenses is to its total revenues.

Therefore, businesses in

the legal cannabis industry may be less profitable than they would otherwise be.

If rescheduling were to occur, it is anticipated that

the IRS will provide additional guidance on Section 280E and its applicability to the Company’s business.

Federal Protections

Moreover, certain temporary federal legislative enactments that protect

the medical marijuana industries have also been in effect for several years.

For instance, certain marijuana businesses receive a measure

of protection from federal prosecution by operation of temporary appropriations measures that have been enacted into law as amendments

(or “riders”) to federal spending bills passed by Congress and signed by the past three presidents.

For instance, in the Appropriations

Act of 2015, Congress included a budget “rider” that prohibits the DOJ from expending any funds to enforce any law that interferes

with a state’s implementation of its own medical marijuana laws.

The rider is known as the “Rohrabacher-Farr Amendment”

after its original lead sponsors.

Notably, the Rohrabacher-Farr Amendment has applied only to medical

marijuana programs and has not provided the same protections to enforcement against adult-use activities.

While the Rohrabacher-Farr Amendment

has been included in successive appropriations legislation or resolutions since 2015, its inclusion or non-inclusion is subject to political

There is a growing consensus among marijuana businesses and numerous

congressmen and congresswomen that guidance and temporary legislation are an inappropriate way to protect cannabis businesses.

bills have been introduced in Congress in recent years to decriminalize aspects of state-legal marijuana trades.

This has led to a bipartisan

Congressional Marijuana Working Group in Congress.

In December 2022, the U.S.

House of Representatives and Senate passed, and President

Biden signed into law, the Medical Marijuana and Cannabidiol Research Expansion Act, which provides for significantly broader opportunities

to study cannabis.

Other important measures have received successful votes in congressional committees or passage in the U.S.

Representatives.

For instance, the SAFE Banking Act, which had more than 200 cosponsors and would prevent federal banking regulators from

taking adverse actions against financial institutions solely due to an institution’s provision of financial services to state-legal

marijuana businesses, passed the U.S.

House of Representatives with strong bipartisan support in 2019 and 2021, and again passed the House

as an amendment to the America COMPETES Act in 2022.

However, the SAFE Banking Act has failed to pass the U.S.

For these reasons, the Company’s investments in the U.S.

market may subject the Company to heightened scrutiny by regulators, stock exchanges, clearing agencies and other U.S.

section entitled “Risk Factors” herein.

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

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

For the reasons described above and the risks further

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

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, 2023, we had nine full-time and part-time employees, including our chief executive officer and chief operating officer.

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.

believe that a diverse workforce is important to our success.

We will continue to focus on the hiring the best-qualified individuals

for our various workforce needs, with an emphasis on retention and advancement of women and underrepresented populations, and to cultivate

an inclusive and diverse corporate culture.

2 unchanged sentences

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.

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.

also provide robust compensation and benefits programs to help meet the needs of our employees.

We believe that we maintain a strong

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