What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-14 · 508 added, 495 removed, 42 unchanged (96% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Information

and Factors That May Affect Future Results

This quarterly report on Form 10-Q contains forward-looking

statements regarding our business, financial condition, results of operations and prospects.

The Securities and Exchange Commission (the

“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s

future prospects and make informed investment decisions.

This quarterly report on Form 10-Q and other written and oral statements that

we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and

assumptions regarding future events or performance.

We have tried, wherever possible, to identify such statements by using words such

as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”

“believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts,

expenses, the outcome of contingencies, such as legal proceedings, and financial results.

Factors that could cause our actual results

of operations and financial condition to differ materially are set forth in the “Risk Factors” section of the Company’s

annual report on Form 10-K for the fiscal year ended December 31, 2024, as the same may be updated from time to time.

We caution that these factors could cause our

actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make

and that investors should not place undue reliance on any such forward-looking statements.

Further, any forward-looking statement speaks

only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect

events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events

or circumstances.

New factors emerge from time to time, and it is not possible for us to predict all of such factors.

Further, we cannot

assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause

actual results to differ materially from those contained in any forward-looking statements.

The following discussion should be read in conjunction

with our unaudited consolidated financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q.

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.

Zoned 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.

The 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”

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 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.

Due 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 of business.

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.

The 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.

Zoned Properties maintains a portfolio of properties that it owns,

develops and leases.

As of March 31, 2025, the Company leases land and/or building space at the seven 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, two of the leased properties are zoned and permitted as regulated cannabis

cultivation and processing facilities, and one property is leased for the future development of a licensed medical and adult use marijuana

retail dispensary.

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

As of March 31, 2025, a summary of rental properties

owned by us consisted of the following:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking Information and Factors That May Affect Future Results

quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations

and prospects.

The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information

so that investors can better understand a company’s future prospects and make informed investment decisions.

This quarterly report

on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking statements that set out

anticipated results based on management’s plans and assumptions regarding future events or performance.

We have tried, wherever

possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,”

“project,” “intend,” “plan,” “believe,” “will” and similar expressions in

connection with any discussion of future operating or financial performance.

In particular, these include statements relating to future

actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal

proceedings, and financial results.

Factors that could cause our actual results of operations and financial condition to differ materially

are set forth in the “Risk Factors” section of the Company’s annual report on Form 10-K for the fiscal year ended December

31, 2024, as the same may be updated from time to time.

caution that these factors could cause our actual results of operations and financial condition to differ materially from those expressed

in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to

update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect

the occurrence of anticipated or unanticipated events or circumstances.

New factors emerge from time to time, and it is not possible

for us to predict all of such factors.

Further, we cannot assess the impact of each such factor on our results of operations or the extent

to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking

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

elsewhere in this quarterly report on Form 10-Q.

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.

Zoned 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.

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 June 30, 2025, the Company leases land and/or

building space at the seven 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, two

of the leased properties are zoned and permitted as regulated cannabis cultivation and processing facilities, and one property is leased

for the future development of a licensed medical and adult use marijuana retail dispensary.

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

Below is summary of rental properties owned by us as of June 30, 2025:

Chino Valley,

Green Valley,

Portfolio Total

(special use)

2 unchanged sentences

(special use)

Portfolio Total

Date Acquired

Dec 22/Feb 23

Lease Start Date

December 2022

Lease End Date

Undeveloped Land Area (Sq.

Developed Land Area (Sq.

Total Rentable Building Sq.

Vacant Rentable (Sq.

rented as of March 31, 2025

Annual Base Rent (*,**)

Annual base rent represents amount of cash payments due from tenants.

For Tempe, AZ, table includes rental income generated from the lease of parking lot space used by a third party as an antenna location.

Annualized $ per Rented Sq.

Chino Valley,

Green Valley,

Pleasant Ridge,

Results of Operations

The following comparative analysis on results

of operations was based primarily on the comparative financial statements, footnotes and related information for the periods identified

below and should be read in conjunction with the unaudited consolidated financial statements and the notes to those statements for the

three months ended March 31, 2025 and 2024, which are included elsewhere in this quarterly report on Form 10-Q.

The results discussed

below are for the three months ended March 31, 2025 and 2024.

Comparison of Results of Operations for the Years Ended December

31, 2024 and 2023

For the three months ended March 31, 2025 and

2024, revenues by reportable business segments were as follows:

the Three Months Ended

Property investment portfolio

Real estate services

Land Area (Sq.

Rentable Building Sq.

Rentable (Sq.

rented as of June 30, 2025

Base Rent (*,**)

Annual base rent represents

amount of cash payments due from tenants.

For Tempe, AZ, table includes

rental income generated from the lease of parking lot space used by a third party as an antenna location.

$ per Rented Sq.

of Operations

following comparative analysis on results of operations was based primarily on the comparative financial statements, footnotes and related

information for the periods identified below and should be read in conjunction with the unaudited consolidated financial statements and

the notes to those statements for the three months ended June 30, 2025 and 2024, which are included elsewhere in this quarterly report

on Form 10-Q.

The results discussed below are for the three and six months ended June 30, 2025 and 2024.

of Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

the three and six months ended June 30, 2025 and 2024, revenues by reportable business segments were as follows:

investment portfolio

estate services

Total revenues

For the three months ended March 31, 2025, total

revenues amounted to $974,552, including property investment portfolio revenues $760,892, which consists of rental revenues, as compared

to total revenues of $837,052, including property investment portfolio revenues of $691,292, for the three months ended March 31, 2024,

an overall increase of $137,500, or 16.4%.

For the three months ended June 30, 2025, total

revenues amounted to $937,774, including property investment portfolio revenues of $757,626, which consists of rental revenues, as compared

to total revenues of $692,326, including property investment portfolio revenues of $679,326, for the three months ended June 30, 2024,

representing an overall increase of $245,488, or 35.4%.

This increase was attributable to an increase in rental revenues of $78,300, or

11.5%, primarily attributable to an increase in rental revenue from our recently acquired properties in Chicago, IL and Surprise, AZ,

and a net increase in real estate services revenues of $167,148, or 1,285.8%, attributable to an increase in advisory fees, commissions

and assignment fees earned on real estate listings.

For the six months ended June 30, 2025, total revenues amounted to

$1,912,326, including property investment portfolio revenues of $1,518,518, which consists of rental revenues, as compared to total revenues

of $1,529,378 including property investment portfolio revenues of $1,370,618, for the six months ended June 30, 2024, representing an

overall increase of $382,948, or 25.0%.

This increase was attributable to an increase in rental revenues of $147,900, or 10.8%, primarily

attributable to an increase in rental revenue from our recently acquired property in Chicago, IL and Surprise, AZ, and a net increase

in real estate services revenues of $67,900, or 46.6%, attributable to an increase in commissions and assignment fees earned on real estate

listings, offset by a decrease in advisory fees.

The increase in property investment portfolio

revenues was primarily due to the signing of a new lease with new tenants at our recently acquired properties located in Chicago, Illinois

which began in January 2024 and Surprise, AZ which began in July 2024.

All of the Company’s real estate properties are leased under

absolute-net or triple-net leases with our tenants.

Operating expenses

For the three months ended March 31, 2025, operating

expenses amounted to $545,781 as compared to $708,143 for the three months ended March 31, 2024, representing a decrease of $162,362,

For the three months ended March 31, 2025 and 2024, operating expenses consisted of the following:

the Three Months Ended

Compensation and benefits

attributable to an increase in rental revenue from our recently acquired properties in Chicago, IL and Surprise, AZ, and a net increase

in real estate services revenues of $235,048 or 148.1%, attributable to an increase in advisory fees, commissions and assignment fees

earned on real estate listings.

increase in property investment portfolio revenues was primarily due to the signing of a new lease with new tenants at our recently acquired

properties located in Chicago, Illinois which began in January 2024 and Surprise, AZ which began in July 2024.

All of the Company’s

real estate properties are leased under absolute-net or triple-net leases with our tenants.

For the three months ended June 30, 2025, operating expenses amounted

to $665,586, as compared to $589,188 for the three months ended June 30, 2024, representing an increase of $76,398, or 13.0%.

six months ended June 30, 2025, operating expenses amounted to $1,211,367, as compared to $1,297,311 for the six months ended June 30,

2024, representing a decrease of $85,694, or 6.6%.

For the three and six months ended June 30, 2024 and 2023, operating expenses consisted

of the following:

Professional fees

Brokerage fees

General and administrative expenses

General and administrative

Depreciation and amortization

Real estate taxes

Business development costs

For the three months ended March 31, 2025, compensation and benefit expense increased by $20,504, or 7.7%, as compared to the three months ended March 31, 2024.

The increase was attributable to an in stock-based compensation of $40,112 related to an increase in accretion of stock option expense and an increase in health insurance of $11,647, offset by a decrease in executive and staff salaries and other benefits of $31,255.

For the three months ended March 31, 2025, professional fees decreased by $44,509, or 36.4%, as compared to the three months March 31, 2024.

This decrease was primarily attributable to a decrease in consulting fees of $27,869 and a decrease in legal fees of $19,491, offset by an increase in other professional fees of $2,851.

For the three months ended March 31, 2025 and 2024, we recorded brokerage fees amounting to $0 and $103 330, respectively, representing a decrease of $103,330, or 100%.

Brokerage fees occur as the result of various percentage-based commission splits we pay to our licensed brokerage team members who participate in various real estate listing transactions.

General and administrative expenses consist of expenses such as rent expense, insurance expense, travel expenses, office expenses, telephone and internet expenses, advertising and marketing expense, and other general operating expenses.

For the three months ended March 31, 2025, general and administrative expenses decreased by $22,936, or 29.1%, as compared to the three months ended March 31 2024, primarily to a decrease in advertising travel and conference fee expenses.

For the three months ended March 31, 2025, depreciation expense decreased by $1,139, or 1.3%, as compared to the three months ended March 31, 2024 due to a decrease in depreciable rental properties.

For the three months ended March 31, 2025, real estate taxes increased by $10,648, or 38.9%, as compared to the three months ended March 31, 2024 related to our Michigan property.

For the three months ended March 31, 2025, property portfolio business development costs decreased by $21,600, or 100%, as compared to the three months ended March 31, 2024.

Property portfolio business development costs are costs related to forfeited escrow deposits and the write off of costs related to projects which we decided not to pursue.

Income from operations

As a result of the factors described above, for

the three ended March 31, 2025, income from operations amounted to $428,771 as compared to income from operations of $128,909 for the

three months ended March 31, 2024, representing an increase of $299,862, or 232.6%.

Other (expenses) income, net

Other (expense) income primarily includes interest

expense incurred on debt with third parties and also includes other income (expense).

For the three months ended March 31, 2025 and 2024,

total other expenses, net amounted to $282,913 as compared to total other expenses, net of $32,436, respectively, representing an increase

of $250,477, or 772.2%.

This increase was attributable to an increase in interest expense of $36,484 primarily related to an increase

in notes payable, and an increase in loss in fair value from an interest rate swap of $213,993, which resulted in a loss from derivative

– interest rate swap of $88,390 for the three months ended March 31, 2025.and compared to a gain from derivative – interest

rate swap for the three months ended March 31, 2024.

As a result of the foregoing for the three months

ended March 31, 2025 and 2024, net income amounted to $145,858, or $0.01 per common share (basic) and $0.01 per common share (diluted),

and $96,473, or $0.01 per common share (basic and diluted), respectively.

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate

adequate amounts of cash to meet its needs for cash requirements.

We had cash of $993,918 and $1,019,980 as of March 31, 2025 and December

31, 2024, respectively.

Our primary uses of cash have been for the acquisition

of new property investments, compensation and benefits, fees paid to third parties for professional services, real estate taxes, general

and administrative expenses, and the development of rental properties and other lines of business.

All funds received have been expended

in the furtherance of growing the business.

We receive funds from the collection of rental income, and real estate services, which primarily

includes advisory fees and brokerage fees.

The following trends are reasonably likely to result in changes in our liquidity over the near

term to long term:

An increase in working capital requirements to finance our current business,

Addition of administrative and sales personnel as the business grows,

The cost of being a public company,

An increase in investments in joint ventures and other projects, and

An increase in investments in rental properties.

We may need to raise additional funds, particularly

if we are unable to continue to generate positive cash flows from our operations.

We estimate that based on current plans and assumptions,

that our available cash will be sufficient to satisfy our cash requirements under our present operating expectations for the next 12 months

from the date of this quarterly report on Form 10-Q.

Other than revenue received from the lease of our rental properties and real estate

services, and from a bank note, we presently have no other significant alternative source of working capital.

We have used these funds to fund our operating

expenses, pay our obligations, acquire and develop rental properties, invest in joint ventures, and to grow our company.

We may need to

raise significant additional capital or debt financing to acquire new properties, to develop existing properties, to assure we have sufficient

working capital for our ongoing operations and debt obligations, and to invest in new joint venture and other projects.

Recent Property Acquisitions and Related Note

On July 8, 2024 (the “Closing”), ZP

Dysart acquired a property in Surprise AZ (the “Surprise Property”) from NWC Dysart & Bell LLC (“NWC”).

Surprise Property is a tract or parcel of land containing approximately 1.114 acres, together with all improvements, buildings, leases,

rights, easements, and appurtenances pertaining thereto.

The Surprise Property was acquired for an aggregate purchase price of $1,712,541,

which included (i) $1,100,000, representing the Purchase Price, (ii) reimburse to NWC for onsite and offsite improvements of $492,022,

and (iii) closing costs, commissions, and fees customary to the acquisition of real estate of $120,519.

As previously disclosed, on January

23, 2023, ZPRE Holdings entered into a Purchase and Sale Agreement and Joint Escrow Instructions, by and between NWC, as the seller, and

ZPRE Holdings, as the buyer.

Such agreement was subsequently amended on May 12, 2023, October 25, 2023, and December 20, 2023 (as amended,

the “Agreement”).

Pursuant to the terms of the Agreement, NWC also agreed to complete a number of on-site and off-site improvements

to the Surprise Property (the “NWC’s Work”) in exchange for ZPRE Holdings’ reimbursement of up to $250,000 for

the off-site work and reimbursement of up to $350,000 for the on-site work (collectively, the “Reimbursements”).

The obligation

to complete the Reimbursements was conditioned upon the closing of the sale of the Surprise Property.

Subsequent to entry into the Agreement

and as approved by NWC under the terms of the Agreement, ZPRE Holdings designated ZP Dysart as the named buyer for the Closing.

In connection with the Surprise Property Closing,

ZP Dysart entered into the Construction Loan Agreement (the “PMF Loan Agreement”), dated as of July 8, 2024, by and between

ZP Dysart and Private Money Funding, LLC (“PMF”).

Pursuant to the terms of the PMF Loan Agreement, PMF agreed to loan up to

$1,620,000 to ZP Dysart, which loan is evidenced by a promissory note (the “PMF Note”).

ZP Dysart’s obligations under

the PMF Note and the PMF Loan Agreement are secured by a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture

Filing (the “PMF Deed”).

The PMF Loan Agreement, the PMF Note, any guaranties, and all other related documents executed and

delivered concurrently with the PMF Loan Agreement are referred to herein as the “PMF Loan Documents.” Pursuant to the terms

of the PMF Loan Agreement, on July 8, 2024, ZP Dysart issued the PMF Note with the maximum principal amount of $1,620,000 to PMF (the

“Maximum Amount”).

Interest accrues at the rate of 12% per annum, with ZP Dysart paying interest only in arrears, in monthly

installment payments, beginning on August 1, 2024 through July 1, 2029 (the “Maturity Date”).

ZP Dysart may prepay the PMF

Loan in full or in part at any time.

However, during the first 48 months of the term of the loan, if ZP Dysart pays any principal payment,

ZP Dysart will pay to PMF a prepayment premium equal to (i) 5% of the amount of principal prepaid in months 1-24;

(ii) 2% of the amount

of principal prepaid in months 25-36;

and (iii) 1% of the amount of principal prepaid in months 36-48, which amount will be due and payable

at the time ZP Dysart pays the principal payment.

During the year ended December 31, 2024, the Company borrowed $1,020,000 of the Maximum

Amount and received net proceeds of $983,940, net of origination fees and costs of $36,060.

During the three months ended March 31, 2025,

the Company borrowed $300,000 of the Maximum Amount and received net proceeds of $300,000.

As of March 31, 2025 and December 31, 2024,

the principal amount of the loan is $1,320,000 and $1,020,000, respectively, and accrued interest payable amounted to $0 and $0, respectively.

On March 3, 2025, ZP Dysart entered into a First

Amendment with its tenant related to the Sunday Goods Lease at the Surprise Property.

The First Amendment clarifies and defines the process

by which the tenant improvement Allowance for the Tenant Work at the Surprise Property would be completed.

Subject to the terms and conditions

of the Sunday Goods Lease, and so long as there is no default ongoing beyond any notice and/or cure period, partial payments of the Allowance

development costs

For the three months ended June 30, 2025, compensation and benefit

expense increased by $67,291, or 24.6%, as compared to the three months ended June 30, 2024.

The increase was attributable to compensation

expense of $94,083 associated with the increased real estate services, partially offset by a reduction in staff salary expense of $21,852

and compensation fees of $4,940.

For the six months ended June 30, 2025, compensation and benefit expense increased by $87,795, or 16.3%,

as compared to the six months ended June 30, 2024.

The increase was attributable to compensation expense of $86,723 associated with the

increased real estate services, increased stock-based compensation of $39,124 related to accretion

of stock option expense , increased health insurance expense of $12,431, partially offset by a reduction in staff salary expense

of $47,483 and compensation fees of $3,000.

For the three months ended June 30, 2025, professional fees decreased

by $30,852, or 34.7%, as compared to the three months ended June 30, 2024.

This decrease was primarily attributable to a decrease in consulting

fees of $32,297 and a decrease in legal fees of $1,039, offset by an increase in accounting fees of $2,484.

For the six months ended June

30, 2025, professional fees decreased by $75,361, or 35.7%, as compared to the six months ended June 30, 2024.

This decrease was primarily

attributable to a decrease in consulting fees of $56,833 and a decrease in legal fees of $20,530, offset by an increase in accounting

fees of $2,002.

For the three months ended

June 30, 2025 and 2024, we recorded brokerage fees amounting to $75,244 and $0, respectively, representing an increase of $75,224,

For the six months ended June 30, 2025 and 2024, we recorded brokerage fees amounting to $75,224 and $103,330, respectively,

representing a decrease of $28,106, or 27.2%.

Brokerage fees occur as the result of various percentage-based commission splits we

pay to our licensed brokerage team members who participate in various real estate listing transactions.

General and administrative

expenses consist of expenses such as rent expense, insurance expense, insurance expense, travel expenses, office expenses, telephone

and internet expenses, advertising and marketing expense, and other general operating expenses.

For the three months ended June 30,

2025, general and administrative expenses decreased by $34,734, or 34.9%, as compared to the three months ended June 30, 2024, primarily

attributable to a decrease in advertising, travel and conference fee expenses.

For the six months ended June 30, 2025, general and

administrative expenses decreased by $57,670, or 32.3%, as compared to the six months ended June 30, 2024, primarily attributable

to a decrease in advertising, travel and conference fee expenses.

For the three months ended

June 30, 2025, depreciation expense decreased by $1,686, or 1.9%, as compared to the three months ended June 30, 2024.

months ended June 30, 2025, depreciation expense decreased by $2,825, or 1.6%, as compared to the six months ended June 30, 2024.

For the three months ended June 30, 2025, real estate taxes increased

by $2,430, or 6.8%, as compared to the three months ended June 30, 2024.

For the six months ended June 30, 2025, real estate taxes increased

by $13,078, or 20.8%, as compared to the six months ended June 30, 2024.

For the three months ended

June 30, 2025, business development costs decreased by $1,275, or 100.0%, as compared to the three months ended June 30, 2024.

the six months ended June 30, 2025, business development costs decreased by $22,875, or 100.0%, as compared to the six months ended

June 30, 2024.

Business development costs are costs related to forfeited escrow deposits and the write off of costs related to projects

which we decided not to pursue.

(loss) from operations

As a result of the factors described above, for the three months ended

June 30, 2025, income from operations amounted to $272,188, as compared to income from operations of $103,138 for the three months ended

June 30, 2024, an increase of $169,050, or 163.9%.

For the six months ended June 30, 2025, income from operations amounted to $700,959,

as compared to income from operations of $232,047 for the six months ended June 30, 2024, representing an increase of $468,912, or 202.1%.

(expenses) income, net

Other (expense) income primarily includes

interest expense incurred on debt with third parties and also includes other income (expense).

For the three months ended June 30,

2025 and 2024, total other expenses, net amounted to $245,862 and $135,4215, respectively, representing an increase of $110,441, or

This increase was attributable to an increase in interest expense of $40,479 primarily related to an increase in notes

payable and an increase in loss in fair value from an interest rate swap of $69,962.

For the six months ended June 30, 2025 and

2024, total other expenses, net amounted to $528,775 and $167,857, respectively, representing an increase of $360,918, or 215.0%.

This increase was attributable to an increase in interest expense of $76,963 primarily related to an increase in notes payable and

an increase in loss in fair value from an interest rate swap of $283,955.

income (loss)

a result of the foregoing, for the three months ended June 30, 2025 and 2024, net income (loss) amounted to $26,326, or $0.00 per common

share (basic and diluted), and $(32,283), or $(0.00) per common share (basic and diluted), respectively.

For the six months ended June

30, 2025 and 2024, net income amounted to $172,184, or $0.01 per common share (basic and diluted), and $64,190, or $0.01 per common share

(basic and diluted), respectively.

and Capital Resources

is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements.

We had cash of $985,847

and $1,019,980 as of June 30, 2025 and December 31, 2024, respectively.

primary uses of cash have been for the acquisition of new property investments, compensation and benefits, fees paid to third parties

for professional services, real estate taxes, general and administrative expenses, and the development of rental properties and other

lines of business.

All funds received have been expended in the furtherance of growing the business.

We receive funds from the collection

of rental income, and real estate services, which primarily includes advisory fees and brokerage fees.

The following trends are reasonably

likely to result in changes in our liquidity over the near term to long term:

An increase in working

capital requirements to finance our current business,

Addition of administrative

and sales personnel as the business grows,

The cost of being a public

An increase in investments

in joint ventures and other projects, and

An increase in investments

in rental properties.

may need to raise additional funds, particularly if we are unable to continue to generate positive cash flows from our operations.

estimate that based on current plans and assumptions, that our available cash will be sufficient to satisfy our cash requirements under

our present operating expectations for the next 12 months from the date of this quarterly report on Form 10-Q.

Other than revenue received

from the lease of our rental properties and real estate services, and from a bank note, we presently have no other significant alternative

source of working capital.

have used these funds to fund our operating expenses, pay our obligations, acquire and develop rental properties, invest in joint ventures,

and to grow our company.

We may need to raise significant additional capital or debt financing to acquire new properties, to develop

existing properties, to assure we have sufficient working capital for our ongoing operations and debt obligations, and to invest in new

joint venture and other projects.

Property Acquisitions and Related Note Payables

July 8, 2024 (the “Closing”), ZP Dysart acquired a property in Surprise AZ (the “Surprise Property”) from NWC

Dysart & Bell LLC (“NWC”).

The Surprise Property is a tract or parcel of land containing approximately 1.114 acres, together

with all improvements, buildings, leases, rights, easements, and appurtenances pertaining thereto.

The Surprise Property was acquired

for an aggregate purchase price of $1,712,541, which included (i) $1,100,000, representing the Purchase Price, (ii) reimburse to NWC

for onsite and offsite improvements of $492,022, and (iii) closing costs, commissions, and fees customary to the acquisition of real

estate of $120,519.

As previously disclosed, on January 23, 2023, ZPRE Holdings entered into a Purchase and Sale Agreement and Joint

Escrow Instructions, by and between NWC, as the seller, and ZPRE Holdings, as the buyer.

Such agreement was subsequently amended on May

12, 2023, October 25, 2023, and December 20, 2023 (as amended, the “Agreement”).

Pursuant to the terms of the Agreement,

NWC also agreed to complete a number of on-site and off-site improvements to the Surprise Property (the “NWC’s Work”)

in exchange for ZPRE Holdings’ reimbursement of up to $250,000 for the off-site work and reimbursement of up to $350,000 for the

on-site work (collectively, the “Reimbursements”).

The obligation to complete the Reimbursements was conditioned upon the

closing of the sale of the Surprise Property.

Subsequent to entry into the Agreement and as approved by NWC under the terms of the Agreement,

ZPRE Holdings designated ZP Dysart as the named buyer for the Closing.

connection with the Surprise Property Closing, ZP Dysart entered into the Construction Loan Agreement (the “PMF Loan Agreement”),

dated as of July 8, 2024, by and between ZP Dysart and Private Money Funding, LLC (“PMF”).

Pursuant to the terms of the PMF

Loan Agreement, PMF agreed to loan up to $1,620,000 to ZP Dysart, which loan is evidenced by a promissory note (the “PMF Note”).

ZP Dysart’s obligations under the PMF Note and the PMF Loan Agreement are secured by a Deed of Trust, Assignment of Leases and

Rents, Security Agreement and Fixture Filing (the “PMF Deed”).

The PMF Loan Agreement, the PMF Note, any guaranties, and

all other related documents executed and delivered concurrently with the PMF Loan Agreement are referred to herein as the “PMF

Loan Documents.” Pursuant to the terms of the PMF Loan Agreement, on July 8, 2024, ZP Dysart issued the PMF Note with the maximum

principal amount of $1,620,000 to PMF (the “Maximum Amount”).

Interest accrues at the rate of 12% per annum, with ZP Dysart

paying interest only in arrears, in monthly installment payments, beginning on August 1, 2024 through July 1, 2029 (the “Maturity

ZP Dysart may prepay the PMF Loan in full or in part at any time.

However, during the first 48 months of the term of the

loan, if ZP Dysart pays any principal payment, ZP Dysart will pay to PMF a prepayment premium equal to (i) 5% of the amount of principal

prepaid in months 1-24;

(ii) 2% of the amount of principal prepaid in months 25-36;

and (iii) 1% of the amount of principal prepaid in

months 36-48, which amount will be due and payable at the time ZP Dysart pays the principal payment.

During the year ended December 31,

2024, the Company borrowed $1,020,000 of the Maximum Amount and received net proceeds of $983,940, net of origination fees and costs

During the six months ended June 30, 2025, the Company borrowed $300,000 of the Maximum Amount and received net proceeds

As of June 30, 2025 and December 31, 2024, the principal amount of the loan is $1,320,000 and $1,020,000, respectively,

and accrued interest payable amounted to $0 and $0, respectively.

On March 3, 2025, ZP Dysart entered into a First Amendment with its

tenant related to the Sunday Goods Lease at the Surprise Property.

The First Amendment clarifies and defines the process by which the

tenant improvement Allowance for the Tenant Work at the Surprise Property would be completed.

Subject to the terms and conditions of the

Sunday Goods Lease, and so long as there is no default ongoing beyond any notice and/or cure period, partial payments of the Allowance

(the “Allowance Payments”) provided by Landlord shall be made to Tenant as follows:

1 unchanged sentence

execution of the First Amendment to the Lease;

(#2) $150,000 was paid on March 28, 2025 (#3) $150,000 to be paid on May 1, 2025,

(#2) $150,000 was paid on March 28, 2025;

(#3) $150,000 was paid on May 1, 2025;

and (#4) the remaining $400,000 of the Allowance shall be withheld by Landlord until completion of the Tenant’s Work on the

12 unchanged sentences

current Form W-9, Request for Taxpayer Identification Number and Certification, executed by Tenant.

During the existence of any event of default,

PMF may, at its option, exercise any one or more of the remedies described in the PMF Loan Documents or otherwise available, including

declaring all unpaid indebtedness then evidenced by the Note (including any late charges that are then due and payable, any advances thereafter

made from the loan and any accruing costs and reasonable attorneys’ fees which are the obligation of ZP Dysart under the PMF Loan

Documents) to become immediately due and payable.

Unless PMF otherwise elects, such acceleration will occur automatically upon the occurrence

of any event of default described in PMF Loan Agreement or PMF Deed.

After maturity or during the existence of any

event of default, or at any time that ZP Dysart is more than 10 days delinquent in the payment of money as required by the Note or the

other Loan Documents (whether or not Holder has given any notice of default or any cure period has expired), then all amounts outstanding

thereunder will thereafter bear interest at the default rate of 18% per annum from the date such payment became due until paid, but in

no event to exceed the highest rate lawfully collectible under applicable law.

Pursuant to the terms of the PMF Loan Agreement,

following ZP Dysart’s satisfaction of the conditions to funding the PMF Loan and recordation of the PMF Deed, the loan proceeds

will be disbursed in multiple advances through escrow, first in the form of an initial advance in the amount of $1,020,000 for the purpose

of contributing funding towards acquiring the Surprise Property (the “Acquisition Advance”).

The remaining loan proceeds will

be used for the purpose of financing for the completion of Sunday Goods’ Work (as hereinafter defined) (the “Construction

Following the Acquisition Advance, subject to satisfying the conditions set forth in the PMF Loan Agreement, ZP Dysart

will be entitled to request the Construction Advances from the remaining loan proceeds at the following stages of completion of the construction

of Sunday Goods’ Work:

(i) first advance in the amount of $300,000 at 50% completion, and (ii) final advance in the amount of $300,000

at 100% completion and issuance of certificate of occupancy.

The PMF Loan Agreement contains representations,

warranties and covenants customary for a transaction of this type.

Pursuant to the terms of the Unconditional Repayment

Guaranty (the “PMF Guaranty”), dated as of July 8, 2024, by the Company, in favor of PMF, the Company guaranteed to PMF the

full and prompt payment of the principal sum of the PMF Note or so much thereof that may be outstanding at any one time or from time to

time in accordance with its terms when due, by acceleration or otherwise, together with all interest accrued thereon, and the full and

prompt payment of all other sums, together with all interest accrued thereon, when due under the terms of the PMF Loan Agreement, the

PMF Note, and in any deed of trust, security agreement, lease assignment and other assignment or agreement referred to in the PMF Loan

Agreement or the PMF Note and/or now or hereafter securing the PMF Note or setting forth any obligations of ZP Dysart in connection with

We may secure additional financing to acquire

and develop additional and existing properties.

Financing transactions may include the issuance of equity or debt securities, obtaining

credit facilities, or other financing mechanisms.

Even if we are able to raise the funds required, it is possible that we could incur

unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing.

if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have

rights, preferences or privileges senior to those of existing holders of our common stock.

The inability to obtain additional capital

may restrict our ability to grow our business operations.

For the Three Months Ended March 31, 2025 and

Net cash flow provided by operating activities was $330,632 for the

three months ended March 31, 2025, as compared to net cash flow provided by operating activities of $213,818 for the three months ended

March 31, 2024, representing an increase of $116,814.

● Net cash flow provided by operating activities for the three months

ended March 31, 2025 primarily reflected net income of $145,858, adjusted for the add-back of non-cash items consisting of depreciation

of $88,508, amortization of debt discount of $6,418, accretion of stock-based stock option expense of $56,606, and loss from the changes

in fair value from an interest rate swap of $88,390, offset by changes in operating assets and liabilities primarily consisting of a decrease

in accounts receivable of $121,966, an increase in deferred rent of $123,146 attributable to rent abatement on our new tenant leases at

our Chicago, Illinois and Surprise, AZ properties, a decrease in lease incentive receivable of $6,880, a decrease in prepaid expenses

of $40,313, a decrease in accounts payable of $10,983, a decrease in accrued expenses of $86,037, and a decrease in contract liabilities

cash flow provided by operating activities for the three months ended March 31, 2024 primarily reflected net income of $96,473, adjusted

for the add-back of non-cash items consisting of depreciation of $89,647, amortization of debt discount of $4,615, accretion of stock-based

stock option expense of $16,494, a loss on forfeited escrow deposit of $21,600, and income from the changes in fair value from an interest

rate swap of $125,603, offset by changes in operating assets and liabilities primarily consisting of an increase in accounts receivable

of $42,908, an increase in deferred rent of $88,048 attributable to rent abatement on our new tenant lease at our Chicago, Illinois Property,

an increase in accounts payable of $58,025, an increase in accrued expenses of $128,038, an increase in contract liabilities of $23,508,

and an increase in security deposits payable of $27,730.

During the three months ended March 31 2025, net

cash flow used in investing activities amounted to $648,841 as compared to net cash used in investing activities of $1,771,916, representing

a decrease of $1,123,075.

During the three months ended March 31, 2025, net cash used in investing activities was attributable to the

purchase of rental properties and improvements of $450,000, an increase in investments in cost method investee of $84,110, and an increase

in escrow deposits of $8,681 and an increase in capitalized project costs of $106,050.

three months ended March 31, 2024, net cash flow used in investing activities amounted to $1,771,916.

During the three months ended March

31, 2024, net cash used in investing activities was attributable to the purchase of rental property of $1,585,878 primarily in connection

with the acquisition of property in Chicago, Illinois, a purchase of property and equipment of $6,480, an increase in capitalized permit

costs of $56,290, and an increase in escrow deposits of $123,268 in connection with escrow deposits made on other potential acquisitions

the existence of any event of default, PMF may, at its option, exercise any one or more of the remedies described in the PMF Loan Documents

or otherwise available, including declaring all unpaid indebtedness then evidenced by the Note (including any late charges that are then

due and payable, any advances thereafter made from the loan and any accruing costs and reasonable attorneys’ fees which are the

obligation of ZP Dysart under the PMF Loan Documents) to become immediately due and payable.

Unless PMF otherwise elects, such acceleration

will occur automatically upon the occurrence of any event of default described in PMF Loan Agreement or PMF Deed.

maturity or during the existence of any event of default, or at any time that ZP Dysart is more than 10 days delinquent in the payment

of money as required by the Note or the other Loan Documents (whether or not Holder has given any notice of default or any cure period

has expired), then all amounts outstanding thereunder will thereafter bear interest at the default rate of 18% per annum from the date

such payment became due until paid, but in no event to exceed the highest rate lawfully collectible under applicable law.

to the terms of the PMF Loan Agreement, following ZP Dysart’s satisfaction of the conditions to funding the PMF Loan and recordation

of the PMF Deed, the loan proceeds will be disbursed in multiple advances through escrow, first in the form of an initial advance in

the amount of $1,020,000 for the purpose of contributing funding towards acquiring the Surprise Property (the “Acquisition Advance”).

The remaining loan proceeds will be used for the purpose of financing for the completion of Sunday Goods’ Work (as hereinafter

defined) (the “Construction Advances”).

Following the Acquisition Advance, subject to satisfying the conditions set forth

in the PMF Loan Agreement, ZP Dysart will be entitled to request the Construction Advances from the remaining loan proceeds at the following

stages of completion of the construction of Sunday Goods’ Work:

(i) first advance in the amount of $300,000 at 50% completion,

and (ii) final advance in the amount of $300,000 at 100% completion and issuance of certificate of occupancy.

PMF Loan Agreement contains representations, warranties and covenants customary for a transaction of this type.

to the terms of the Unconditional Repayment Guaranty (the “PMF Guaranty”), dated as of July 8, 2024, by the Company, in favor

of PMF, the Company guaranteed to PMF the full and prompt payment of the principal sum of the PMF Note or so much thereof that may be

outstanding at any one time or from time to time in accordance with its terms when due, by acceleration or otherwise, together with all

interest accrued thereon, and the full and prompt payment of all other sums, together with all interest accrued thereon, when due under

the terms of the PMF Loan Agreement, the PMF Note, and in any deed of trust, security agreement, lease assignment and other assignment

or agreement referred to in the PMF Loan Agreement or the PMF Note and/or now or hereafter securing the PMF Note or setting forth any

obligations of ZP Dysart in connection with the loan.

may secure additional financing to acquire and develop additional and existing properties.

Financing transactions may include the issuance

of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

Even if we are able to raise the funds required,

it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek

alternative financing.

Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution

or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.

inability to obtain additional capital may restrict our ability to grow our business operations.

the Six Months Ended June 30, 2025 and 2024

cash flow provided by operating activities was $569,790 for the six months ended June 30, 2025, as compared to net cash flow provided

by operating activities of $246,788 for the six months ended June 30, 2024, representing an increase of $323,002.

Net cash flow provided

by operating activities for the six months ended June 30, 2025 primarily reflected net income of $172,184, adjusted for the add-back

of non-cash items consisting of depreciation of $176,692, amortization of debt discount of $12,836, accretion of stock-based stock

option expense of $68,636, and loss from the changes in fair value from an interest rate swap of $137,309, offset by changes in operating

assets and liabilities primarily consisting of a decrease in accounts receivable of $152,676, an increase in deferred rent of $239,805

attributable to rent abatement on our new tenant leases at our Chicago, Illinois and Surprise, AZ properties, a decrease in lease

incentive receivable of $13,761, a decrease in prepaid expenses of $150,957, a decrease in accounts payable of $63,080, a decrease

in accrued expenses of $21,264, a decrease in contract liabilities of $6,840, and an increase in security deposits payable of $15,399.

Net cash flow provided

by operating activities for the six months ended June 30, 2024 primarily reflected net income of $64,190, adjusted for the add-back

of non-cash items consisting of depreciation of $179,517, amortization of debt discount of $9,230, accretion of stock-based stock

option expense of $29,511, a loss on forfeited escrow deposit of $22,875, and income from the changes in fair value from an interest

rate swap of $146,646, offset by changes in operating assets and liabilities primarily consisting of a decrease in accounts receivable

of $57,783, an increase in deferred rent of $145,518 attributable to rent abatement on our new tenant lease at our Chicago, Illinois

Property, a decrease in accounts payable of $31,733, an increase in accrued expenses of $157,157, an increase in contract liabilities

of $19,201, and an increase in security deposits payable of $17,730.

the six months ended June 30 2025, net cash flow used in investing activities amounted to $845,652 as compared to net cash used in investing

activities of $1,773,619, representing a decrease of $927,967.

During the six months ended June 30, 2025, net cash used in investing

activities was attributable to the purchase of rental properties and improvements of $600,000, an increase in investments in cost method

investee of $84,110, an increase in escrow deposits of $18,181 and an increase in capitalized project costs of $143,361.

During the six

months ended June 30, 2024, net cash used in investing activities was attributable to the purchase of rental property of $1,587,476 primarily

in connection with the acquisition of property in Chicago, Illinois, a purchase of property and equipment of $6,480, an increase in capitalized

project costs of $58,720, and an increase in escrow deposits of $120,943 in connection with escrow deposits made on other potential acquisitions

of rental properties.

the three months ended March 31, 2025 and 2024, net cash provided by (used in) financing activities amounted to $292,147 and $(21,794),

the six months ended June 30, 2025 and 2024, net cash provided by (used in) financing activities amounted to $241,729 and $(44,411),

respectively.

During the three months ended March 31, 2025, net cash provided by financing activities consisted of net proceeds from a

note payable of $300,000, offset by cash used for the repayment of notes payable of $7,853.

the three months ended March 31, 2024, net cash used in financing activities amounted to $21,794, which consisted of the repayment of

notes payable.

Contractual Obligations and Off-Balance Sheet

Contractual Obligations

We have certain fixed contractual obligations

and commitments that include future estimated payments.

Changes in our business needs, cancellation provisions, changing interest rates,

and other factors may result in actual payments differing from the estimates.

We cannot provide certainty regarding the timing and amounts

We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the

tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations,

and cash flows.

The following tables summarize our contractual

obligations as of March 31, 2025 (dollars in thousands), and the effect these obligations are expected to have on our liquidity and cash

flows in future periods.

Payments Due by Period

Contractual obligations:

During the six months ended June 30, 2025, net cash provided by financing activities consisted of net proceeds from a note

payable of $300,000, offset by cash used for the repayment of notes payable of $31,413 and cash used for the purchase of treasury shares

During the six months ended June 30, 2024, net cash used in financing activities amounted to $44,411, which consisted of

the repayment of notes payable.

Obligations and Off-Balance Sheet Arrangements

have certain fixed contractual obligations and commitments that include future estimated payments.

Changes in our business needs, cancellation

provisions, changing interest rates, and other factors may result in actual payments differing from the estimates.

We cannot provide

certainty regarding the timing and amounts of payments.

We have presented below a summary of the most significant assumptions used in

our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our

consolidated financial position, results of operations, and cash flows.

following tables summarize our contractual obligations as of June 30, 2025 (dollars in thousands), and the effect these obligations are

expected to have on our liquidity and cash flows in future periods.

Due by Period

Convertible notes

Interest on convertible notes

Notes payable

Off-balance Sheet Arrangements

Other than discussed herein, we have not entered

into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.

We have not entered

into any derivative contracts that are indexed to our shares and classified as shareholders’ equity.

Furthermore, we do not have

any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk

support to such entity.

We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk

or credit support to us or engages in leasing, hedging or research and development services with us.

Our off-balance sheet arrangement

includes the notional amount of our interest rate swaps which we use to hedge a portion of our exposure to interest rate fluctuations.

Sheet Arrangements

than discussed herein, we have not entered into any other financial guarantees or other commitments to guarantee the payment obligations

of any third parties.

We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’

Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves

as credit, liquidity or market risk support to such entity.

We do not have any variable interest in any unconsolidated entity that provides

financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Our off-balance sheet arrangement includes the notional amount of our interest rate swaps which we use to hedge a portion of our exposure

to interest rate fluctuations.

Currently, our interest rate swap fixes the variable rate interest on our bank swap note payable.

We intend to fund our interest rate

swap payments utilizing cash flows from operations.

As of March 31, 2025, the notional amount of our interest rate swaps was $4,406,083.

In interest rate swaps, the notional amount is the specified value upon which interest rate payments will be exchanged.

The notional amount

in interest rate swaps is used to come up with the amount of interest due.

Critical Accounting Estimates

Our discussion and analysis of our financial condition

and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting

principles generally accepted in the United States.

The preparation of these consolidated financial statements requires us to make estimates

and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets

and liabilities.

We continually evaluate our estimates, including the critical ones related to an interest rate swap, the allowance for

accounts receivable, impairment of rental properties, and the valuation of equity transactions.

We base our estimates on historical experience

and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making

judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Any future changes to

these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities.

results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting estimates

affect our more significant judgments and estimates used in the preparation of the financial statements.

Interest rate swap

In connection with a bank loan executed in 2022,

the Company entered into an interest rate swap agreement to manage interest rate risk related to debt that accrues interest at variable

The Company accounts for its interest rate swap agreement in accordance with the guidance related to derivatives and hedging activities.

to fund our interest rate swap payments utilizing cash flows from operations.

As of June 30, 2025, the notional amount of our interest

rate swaps was $4,395,334.

In interest rate swaps, the notional amount is the specified value upon which interest rate payments will

be exchanged.

The notional amount in interest rate swaps is used to come up with the amount of interest due.

Accounting Estimates

discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which

have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these consolidated

financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and

expenses, and related disclosure of contingent assets and liabilities.

We continually evaluate our estimates, including the critical

ones related to an interest rate swap, the allowance for accounts receivable, impairment of rental properties, and the valuation of equity

transactions.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under

the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that

are not readily apparent from other sources.

Any future changes to these estimates and assumptions could cause a material change to our

reported amounts of revenues, expenses, assets and liabilities.

Actual results may differ from these estimates under different assumptions

or conditions.

We believe the following critical accounting estimates affect our more significant judgments and estimates used in the

preparation of the financial statements.

connection with a bank loan executed in 2022, the Company entered into an interest rate swap agreement to manage interest rate risk related

to debt that accrues interest at variable rates.

The Company accounts for its interest rate swap agreement in accordance with the guidance

related to derivatives and hedging activities.

The Company is exposed to market risk from changes in interest rates.

The Company agrees to exchange, at specified intervals, the difference

between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount.

Interest payments receivable

and payable under the terms of the interest rate swap agreement are accrued over the period to which the payment relates and the net difference

is treated as an adjustment of interest expense related to the underlying liability.

Because the variable interest rates used to calculate

payments under the terms of the swap agreement are calculated using different benchmarks than those included in the Company’s variable

rate debt agreement, the swap agreement is not considered an effective cash flow hedge.

Accordingly, changes in the underlying market

value of the remaining swap payments are recognized into income as an increase or decrease to other income (expense) each reporting period.

In accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”)

820, Fair Value Measurements and Disclosures , the Company believes values provided by its counterparty represent the fair value

of its swap agreement.

The Company believes that the quality of the counterparty to its swap agreement mitigates the counterparty credit

The estimated fair value of the interest rate

swap agreement is reflected as a derivative liability on the accompanying balance sheets with changes in the fair value reflected in income

(loss) from derivative - interest rate swap on the accompanying statements of operations.

The Company uses derivative financial instruments

only to manage interest rate risks and not as investment vehicles.

Information regarding the interest rate swap is as follows:

Fair Value of

The Company agrees

to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed

upon notional principal amount.

Interest payments receivable and payable under the terms of the interest rate swap agreement are accrued

over the period to which the payment relates and the net difference is treated as an adjustment of interest expense related to the underlying

Because the variable interest rates used to calculate payments under the terms of the swap agreement are calculated using

different benchmarks than those included in the Company’s variable rate debt agreement, the swap agreement is not considered an

effective cash flow hedge.

changes in the underlying market value of the remaining swap payments are recognized into income as an increase or decrease to other

income (expense) each reporting period.

In accordance with the Financial Accounting Standards Board’s (the “FASB”)

Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , the Company believes values

provided by its counterparty represent the fair value of its swap agreement.

The Company believes that the quality of the counterparty

to its swap agreement mitigates the counterparty credit risk.

estimated fair value of the interest rate swap agreement is reflected as a derivative liability on the accompanying balance sheets with

changes in the fair value reflected in income (loss) from derivative - interest rate swap on the accompanying statements of operations.

The Company uses derivative financial instruments only to manage interest rate risks and not as investment vehicles.

regarding the interest rate swap is as follows:

December 7, 2022 interest rate swap

December 10, 2032

Accounts receivable

We recognize an allowance for losses on accounts

receivable in an amount equal to the estimated probable losses net of recoveries under the current expected credit loss method.

The allowance

is based on an analysis of historical bad debt experience, current receivables aging and expected future write-offs, as well as an assessment

of specific identifiable customer accounts receivable considered at risk or uncollectible.

On January 1, 2023, we adopted ASC 326, “Financial

Instruments - Credit Losses”.

In accordance with ASC 326, an allowance is maintained for estimated forward-looking losses resulting

from the possible inability of customers to make required payments (current expected losses).

The amount of the allowance is determined

principally on the basis of past collection experience and known financial factors regarding specific customers.

The expense associated

with the allowance for doubtful accounts on accounts receivable is recognized in general and administrative expenses.

Rental properties

Rental properties are carried at cost less accumulated

depreciation and amortization.

Betterments, major renovations and certain costs directly related to the improvement of rental properties

are capitalized.

recognize an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries under

the current expected credit loss method.

The allowance is based on an analysis of historical bad debt experience, current receivables

aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts receivable considered at risk

or uncollectible.

On January 1, 2023, we adopted ASC 326, “Financial Instruments - Credit Losses”.

In accordance with ASC

326, an allowance is maintained for estimated forward-looking losses resulting from the possible inability of customers to make required

payments (current expected losses).

The amount of the allowance is determined principally on the basis of past collection experience

and known financial factors regarding specific customers.

The expense associated with the allowance for doubtful accounts on accounts

receivable is recognized in general and administrative expenses.

properties are carried at cost less accumulated depreciation and amortization.

Betterments, major renovations and certain costs directly

related to the improvement of rental properties are capitalized.

Maintenance and repair expenses are charged to expense as incurred.

Depreciation is recognized on a straight-line basis

over estimated useful lives of the assets, which range from 5 to 39 years.

Tenant improvements are amortized on a straight-line basis

over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess

the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases

and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on

these assessments.

The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization

rates and available market information.

Estimates of future cash flows are based on a number of factors including historical operating

results, known trends, and market/economic conditions.

Our properties are individually reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

An impairment exists

when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted

An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value.

analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.

If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment

losses may be different and such differences could be material to our consolidated financial statements.

The evaluation of anticipated

cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that

could differ materially from actual results.

Impairment occurs when the carrying amount of

our rental properties exceeds its recoverable amount.

For our rental property, we considered the recoverable amount to be the respective

properties fair value less costs to sell (FVLCS) plus its value in use (VIU).

The recoverable amount is the higher of the asset’s

fair value less costs to sell (FVLCS) and its value in use (VIU).

Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 39 years.

improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles,

such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and

allocate the purchase price based on these assessments.

The Company assesses fair value based on estimated cash flow projections that

utilize appropriate discount and capitalization rates and available market information.

Estimates of future cash flows are based on a

number of factors including historical operating results, known trends, and market/economic conditions.

properties are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of

an asset may not be recoverable.

An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash

flows over the anticipated holding period on an undiscounted basis.

An impairment loss is measured based on the excess of the property’s

carrying amount over its estimated fair value.

Impairment analyses are based on our current plans, intended holding periods and available

market information at the time the analyses are prepared.

If our estimates of the projected future cash flows, anticipated holding periods,

or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated

financial statements.

The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy,

rental rates and capital requirements that could differ materially from actual results.

occurs when the carrying amount of our rental properties exceeds its recoverable amount.

For our rental property, we considered the recoverable

amount to be the respective properties fair value less costs to sell (FVLCS) plus its value in use (VIU).

The recoverable amount is the

higher of the asset’s fair value less costs to sell (FVLCS) and its value in use (VIU).

FVLCS and VIU as defined as follows:

Value Less Costs to Sell (FVLCS):

value is typically determined by market prices or appraisals or tax value.

any costs that would be incurred to sell the asset (like commissions).

in Use (VIU):

is the present value of the future cash flows the asset is expected to generate.

flows should be based on leases in place.

We have capitalized land, which is not subject

to depreciation.

Stock-based compensation

Stock-based compensation is accounted for based

on the requirements of ASC 718 – “Compensation –Stock Compensation ”, which requires recognition in the

financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments

over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively,

the vesting period).

The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange

for an award based on the grant-date fair value of the award.

The Company has elected to recognize forfeitures as they occur as permitted

under FASB’s Accounting Standards Update (ASU) 2016-09 Improvements to Employee Share-Based Payment Accounting .

used in the estimation of stock-based grants may include the volatility of our common stock, expected term of exercise, our discount rate

and our dividend rate.

Recent Accounting Pronouncements

Management does not believe that recently issued,

but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Quantitative and Qualitative Disclosures

about Market Risk

Not applicable to smaller reporting companies.

Fair Value Less Costs

to Sell (FVLCS):

Fair value is typically

determined by market prices or appraisals or tax value.

Subtract any costs that

would be incurred to sell the asset (like commissions).

Value in Use (VIU):

This is the present value

of the future cash flows the asset is expected to generate.

Cash flows should be based

on leases in place.

have capitalized land, which is not subject to depreciation.

compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation ”,

which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange

for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange

for the award (presumptively, the vesting period).

The ASC also requires measurement of the cost of employee, director, and non-employee

services received in exchange for an award based on the grant-date fair value of the award.

The Company has elected to recognize forfeitures

as they occur as permitted under FASB’s Accounting Standards Update (ASU) 2016-09 Improvements to Employee Share-Based Payment

Assumptions used in the estimation of stock-based grants may include the volatility of our common stock, expected term

of exercise, our discount rate and our dividend rate.

Accounting Pronouncements

does not believe that recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the

accompanying consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk

applicable to smaller reporting companies.

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-Q

Item 2. Management’s Discussion and Analysis