What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-04-01 compared with 2025-03-25 · 626 added, 351 removed, 135 unchanged (88% of the section changed)

41 unchanged sentences

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.

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;

6 unchanged sentences

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”).

law such as the Controlled Substance Act of 1970, as amended.

The core of our business operations involves

13 unchanged sentences

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 December 31, 2024, 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.

of March 25, 2025, a summary of rental properties owned by us consisted of the following:

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 April 1, 2026, 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.

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.

As of December 31, 2025, a summary of rental

properties owned by us consisted of the following:

Chino Valley,

Green Valley,

Portfolio Total

(special use)

2 unchanged sentences

(special use)

Portfolio Total

Date Acquired

9 unchanged sentences

Annual Base Rent (*,**)

rent represents amount of cash payments due from tenants.

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.

Annualized $ per Rented Sq.

Chino Valley,

1 unchanged sentence

Pleasant Ridge,

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 consolidated financial statements and the notes

to those statements for the years ended December 31, 2024 and 2023, which are included elsewhere in this annual report on Form 10-K.

The results discussed below are for the years ended December 31, 2024 and 2023.

of Results of Operations for the Years Ended December 31, 2024 and 2023

the years ended December 31, 2024 and 2023, revenues by reportable business segments were as follows:

On December 31, 2025, the Company, through its

wholly owned subsidiaries Chino Valley, Green Valley, and Kingman (collectively, the “Landlords”), entered into Amended and

Restated Absolute Net Lease Agreements (the “A&R Leases”) with the respective tenant entities Broken Arrow Herbal Center,

(Chino Valley and Green Valley) and CJK, Inc.

(Kingman) (each, a “Tenant”), each with an effective date of January 1,

Each A&R Lease provides for an initial term of 14 years commencing January 1, 2026 and ending December 31, 2039, unless earlier

terminated pursuant to its terms.

The A&R Leases were contingent upon, among other conditions, the consummation of a change of control

transaction involving the Tenant(s), including the transfer of majority ownership and control of the applicable Tenant to A&R Consultants,

LLC (or its designee) and the transfer of the applicable cannabis license to A&R Consultants, LLC (or its designee).

These contingencies

were resolved on March 31, 2026.

Pursuant to the A&R Leases, A&R Consultants, LLC provided a guaranty of payment and performance

in favor of each Landlord.

Base rent under the A&R Leases varies by property and is set forth in the respective rent schedules (including,

for example, monthly base rent of $3,500 for the Green Valley property and $4,000 for the Kingman property, and a step-up schedule for

the Chino Valley property).

The A&R Leases include, among other provisions, (i) a right of first refusal with a right of first refusal

period of up to 60 days and (ii) a short-term exclusive option that permits the Tenant to purchase, on an all-or-none basis, the three

leased properties (Chino Valley, Green Valley and Kingman) for an aggregate purchase price of $9.0 million (the “Purchase Option”).

The Purchase Option originally stated that the Purchase Option may be exercised during an option period ending March 30, 2026;

the parties have subsequently agreed that optionee will have until April 10, 2026 to exercise the Purchase Option, and if exercised,

requires a closing no later than June 30, 2026.

The Purchase Option contemplates (a) a $400,000 non-refundable earnest money deposit

to be applied toward the down payment, (b) a $4.0 million cash down payment at closing, and (c) $5.0 million of seller financing.

seller financing would bear interest at 7% per annum over a 36-month term with payments calculated on a 15-year amortization schedule

and a balloon payment at maturity, and would be secured by loan documentation (including a loan agreement, promissory note and deeds

of trust) against all three properties.

The properties would be conveyed on an as-is/where-is basis without representations or warranties

from the applicable landlord/seller.

In connection with the anticipated change of control transaction for the Chino Valley Tenant, on

December 30, 2025, the Company, through Chino Valley Properties, LLC, entered into a Consent of Landlord and Agreement Regarding Lease

(the “Consent Agreement”) with Broken Arrow Herbal Center, Inc., AC Management Group, LLC (the existing guarantor), A&R

Consultants, LLC (the new guarantor) and Elevate Holdings, Group, LLC.

The Consent Agreement provided, among other things, that the Landlord’s

consent to the sale transaction is conditioned on the payment to Landlord at closing of (i) $389,984 for past due rent, additional rent

and late charges and (ii) $965,000 as compensation for rent concessions reflected in the A&R Lease, both of which were received by the Company on March 31, 2026.

Upon receipt of such amounts,

the Consent Agreement provided for the release of the existing guarantor from liability for periods after closing and A&R Consultants, LLC executed a new guaranty of the A&R Lease.

Management Buyout Asset Purchase Agreement

On January 15, 2026, the Company entered into

an Asset Purchase Agreement (the “MBO APA”) by and among the Company, Zoned Arizona, ZP Dysart, ZPRE Holdings and collectively

with Zoned Arizona and ZP Dysart, the “Real Property Sellers” and, together with the Company, the “Seller Parties”

and each, a “Seller Party”, and BPB Partners, LLC (the “Buyer”).

The Buyer is owned by Bryan McLaren, the Company’s

Chairman of the Board, Chief Executive Officer and Chief Financial Officer;

Berekk Blackwell, the Company’s President and Chief

Operating Officer;

and Patrick Moroney.

The Company formed a Special Transactions Committee

of the Board of Directors (the “Committee”), consisting of its three independent directors, that has reviewed, negotiated

and overseen the MBO APA and the other transaction documents and the transactions contemplated by the MBO APA (the “MBO”).

The Committee approved the MBO APA, the other transaction documents and the MBO, prior to its execution.

The MBO APA and the other transaction

documents and the MBO were also approved by the full Board of Directors prior to its execution.

Pursuant to the terms of the MBO APA, the Seller

Parties agreed to sell to the Buyer, and the Buyer agreed to purchase from the Seller Parties, subject to the terms of the MBO APA, all

of the Seller Parties’ rights, title and interest in and to the Company’s business (the “Business”), and the

assets, properties and rights of the Seller Parties, subject to modification as set forth in the MBO APA, and other than the Excluded

Assets (as defined in the MBO APA) (the “Assets”).

The Assets include, among other things, (i) the real property located

Madison Drive, Tempe, AZ;

(ii) the real property located at 13150 W.

Bell Road, Surprise, AZ;

(iii) the real property located

Ashland Avenue, Chicago, IL;

(iv) the Company’s membership interests in ZPRE Holdings, Arizona Brokerage, Florida Brokerage,

ZP Data 2, ZP Ohio B, LLC, and Zoneomics Green;

(v) all rights under all contracts to which any Seller Party is a party or is bound as

of the closing date that is related to the Business;

(vi) all intellectual property of the Seller Parties;

(vii) all prepaid expenses,

security deposits, and certain other operational assets;

and (vii) potentially certain additional assets that may be acquired by the

Seller Parties prior to the closing of the MBO, as discussed below.

Subject to adjustment as set forth in the MBO

APA, the purchase price for the Assets will be $7,000,000, less the Assumed Indebtedness (as defined in the MBO APA) (the “Purchase

The parties to the MBO APA acknowledged and agreed

that between January 15, 2026 and the date of the closing of the MBO, the Company or one or more affiliates of the Company may acquire

or invest in additional real estate assets (“Additional Assets”).

Upon acquisition of or investment in the Additional Assets,

(i) such Additional Assets shall be deemed included in the “Assets” for purposes of the MBO APA, (ii) the Purchase Price

will be increased by the amount of the cash purchase price paid therefor by the Company or its affiliate, (iii) the Purchase Price will

be decreased by the amount of any cash and/or debt instruments issued by the Company or its affiliate to the seller of such Additional

Assets (the “Additional Asset Acquisition Indebtedness”), and (iv) such Additional Asset Acquisition Indebtedness will be

deemed included in the assumed liabilities pursuant to the MBO APA.

The parties to the MBO APA also acknowledged

and agreed that between January 15, 2026 and the closing of the MBO, the Company may sell the real estate assets located at 23622-23634

Woodward Avenue, Pleasant Ridge, MI (the “Pleasant Ridge Assets”) to a third party for a purchase price to be determined.

The Pleasant Ridge Assets are not currently included in the “Assets” for purposes of the MBO APA.

In the event that the sale

of the Pleasant Ridge Assets is not consummated prior to the closing, then the Pleasant Ridge Assets will be deemed included in the “Assets”

and the Purchase Price will be increased by the amount of the appraisal value of the Pleasant Ridge Assets, as determined as set forth

in the MBO APA.

The parties to the MBO APA further acknowledged

and agreed that between January 15, 2026 and the closing, the Company may sell the real estate assets located at 2144 N.

Chino Valley, AZ;

2095 Northern Avenue, Kingman, AZ;

Commerce Point Place, Green Valley, AZ (collectively, the “CKG

Properties”) to a third party for a total purchase price of $9,000,000 (the “CKG Purchase Price”), of which $4,000,000

is expected to be paid in cash and $5,000,000 is expected to be paid via a promissory note payable to the Company (the “CKG Note”).

In the event that the sale of the CKG Properties is not consummated prior to the closing, then the CKG Properties will be deemed included

in the “Assets” and the Purchase Price will be increased by the amount of the CKG Purchase Price.

If the sale of the CKG

Properties is consummated prior to the closing, then the CKG Properties will not be included in the “Assets,” but the CKG

Note will be included in the “Assets” for purposes of the MBO APA, and the Purchase Price will be increased by the principal

amount of the CKG Note.

Pursuant to the terms

of the MBO APA, the MBO APA may be terminated at any time prior to the closing by:

(a) The mutual

agreement of the parties, each in their sole discretion;

(b) The Company

or by Buyer if there shall be in effect a final non-appealable order, judgment, injunction or decree entered by or with a governmental

entity restraining, enjoining or otherwise prohibiting the consummation of the MBO;

if there shall have been a breach in any material respect of any representation, warranty, covenant or agreement on the part of any Seller

Party, which breach has not been cured within 10 days after receipt of notice of such breach by the Company;

(d) The Company

if there shall have been a breach in any material respect of any representation, warranty, covenant or agreement on the part of Buyer,

which breach has not been cured within 10 days after receipt of notice of such breach by Buyer;

(e) Any party

in the event that the closing has not occurred by September 30, 2026, which date may be extended by 90 days as set forth in the MBO APA;

notice by Buyer to the Company, if there shall have been a “Seller Material Adverse Effect” (as defined in the MBO APA) following

the Effective Date which is uncured for at least 20 business days after written notice by the Buyer;

(g) The Buyer,

during the 180-day period following the Effective Date, if the Buyer determines that its due diligence review is not satisfactory for

any reason in its sole discretion;

(h) The Company,

in the event it receives a proposal on terms more favorable to the Company’s stockholders than those set forth in the MBO APA,

subject to the terms of the MBO APA, prior to the date that is the later of (i) the date on which the Company receives stockholder approval

as set forth in the MBO APA, and July 14, 2026 (the date on which the Buyer’s due diligence period expires).

The closing of the MBO

is subject to certain closing conditions, including, but not limited to, (i) the Company and the Committee having received an opinion

as to the fairness of the transactions, from a financial point of view, to the shareholders of the Company, and such opinion remaining

valid and in full force and effect as of the closing;

(ii) MBO APA and the transactions set forth therein being approved by both (1)

the shareholders of the Company holding a majority of the voting power of the Company, as required by Nevada law, and (2) shareholders

of the Company holding a majority of the voting power of the Company, but excluding for such purposes any such shareholder, and shares

or stock of the Company, held by any persons who own, control or have any interest in the Buyer (i.e., a ‘majority of the minority’

uninterested shareholders);

(iii) receipt of any required regulatory approvals;

(iv) raising by the Buyer of the capital required, in

its sole discretion, to fund the Purchase Price;

and (v) other customary closing conditions.

The MBO APA contains customary representations,

warranties and covenants.

If the MBO APA is approved

by the Company’s stockholders, as required, the Company expects that the closing of the MBO will take place by the end of 2026.

Assuming that the MBO APA is approved by the Company’s stockholders, as required, and the Company can successfully sell and liquidate

100% of the Company’s assets and operations, the Company expects (i) to pay off any remaining debt, settle any remaining accounts

and agreements, liquidate the Company’s outstanding preferred shares, and then distribute the net available balance of cash to

stockholders as a return of capital through a special dividend, and (ii) to subsequently complete a reverse merger or other transaction

involving the public company.

Going concern consideration

Our consolidated financial statements have been

prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the

normal course of business.

As reflected in our consolidated financial statements, the Company had a net loss of $2,854,415 and had cash

provided by operations of $781,476 for the year ended December 31, 2025.

Additionally, as of December 31, 2025, the Company had cash of

$837,767 and stockholders’ equity of $3,067,626.

On December 31, 2025 and effective January 1, 2026, the Company entered into Amended

and Restated Absolute Net Lease Agreements with certain tenants (See Note 14 – Subsequent Events).

The Amended and Restated Absolute

Net Lease Agreements include, among other provisions, (i) a right of first refusal with a right of first refusal period of up to 60 days

and (ii) a short-term exclusive option that permits the tenant to purchase, on an all-or-none basis, three leased properties (Chino Valley,

Green Valley and Kingman).

The Purchase Option originally stated that the Purchase Option may be exercised during an option period ending

March 30, 2026;

however, the parties have subsequently agreed that optionee will have until April 10, 2026 to exercise the Purchase Option,

and if exercised, requires a closing no later than June 30, 2026.

Additionally, on January 15, 2026, the Company and certain of its subsidiaries

entered into the MBO APA with the Buyer to sell substantially all of its properties to the Buyer, a company owned by management (See Note

14 – Subsequent Events).

The closing of the MBO is subject to certain closing conditions, including, but not limited to, approval

by the Company’s stockholders and the Buyer obtaining financing.

If the Company sells some or all of its properties, it will have

minimal or no operations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern for a

period of twelve months from the issuance date of this Annual Report.

There can be no assurance that the Company will sell its properties.

If the Company sells its properties, the Company’s cash flow provided by operating activities would decrease substantially and the

Company may need to raise capital through debt and/or equity financings to fund any ongoing operations, may need to curtail its operations,

or may decide the liquidate the Company.

The consolidated financial statements do not include any adjustments related to the recoverability

and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to

continue as a going concern.

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 consolidated financial statements and the notes to those statements for the years ended

December 31, 2025 and 2024, which are included elsewhere in this annual report on Form 10-K.

The results discussed below are for the

years ended December 31, 2025 and 2024.

Comparison of Results of Operations for the Years Ended December

31, 2025 and 2024

For the years ended December 31, 2025 and 2024,

revenues by reportable business segments were as follows:

Property investment portfolio

1 unchanged sentence

Total revenues

the years ended December 31, 2024, total revenues amounted to $3,793,289, including property investment portfolio revenues $2,884,286,

which consists of rental revenues, as compared to total revenues of $2,886,991, including property investment portfolio revenues of $2,481,892,

for the year ended December 31, 2023, an overall increase of $906,298, or 31.4%.

This increase was attributable to an increase in rental

revenues of $402,394, or 16.2%, 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 $503,904, or 124.4%, attributable to an increase in commissions

and assignment fees earned on real estate listings, offset by a decrease in advisory fees.

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.

the year ended December 31, 2024, operating expenses amounted to $2,690,119 as compared to $2,717,804 for the year ended December 31,

2023, a decrease of $27,685, or 1.0%.

For the years ended December 31, 2025, total

revenues amounted to $4,140,458, including property investment portfolio revenues of $3,080,654, which consists of rental revenues, as

compared to total revenues of $3,793,289, including property investment portfolio revenues of $2,884,286, which consists of rental revenues,

for the year ended December 31, 2024, representing an overall increase of $347,169, or 9.2%.

This increase was attributable to an increase

in rental revenues of $196,368, or 6.8%, 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 $150,801, or 16.6%, 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 year ended December 31, 2025, operating

expenses amounted to $3,926,000 as compared to $2,690,119 for the year ended December 31, 2024, representing an increase of $1,235,881,

For the years ended December 31, 2025 and 2024, operating expenses consisted of the following:

6 unchanged sentences

Business development costs

For the year ended December 31, 2024, compensation and benefit expense decreased by $38,741, or 2.9%, as compared to the year ended December 31, 2023.

The decrease was attributable to a decrease in health insurance expense of $37,752 and a decrease in stock-based compensation of $61,760 related to a decrease in accretion of stock option expense, offset by an increase in compensation and benefits of $60,771.

For the year ended December 31, 2024, professional fees decreased by $37,381, or 9.6%, as compared to the year ended December 31, 2023.

This decrease was primarily attributable to a decrease in consulting fees of $36,518, a decrease in public relation fees of $18,257, and a decrease in other professional fees of $1,000, offset by an increase in accounting fees of $10,749 and legal fees of $7,916.

For the year ended December 31, 2024 and 2023, we recorded brokerage fees amounting to $158,871 and $64,680, respectively, representing an increase of $94,191, or 145.6%.

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 year ended December 31, 2024, general and administrative expenses decreased by $35,680,

or 9.7%, as compared to the year ended December 31, 2023, primarily to a decrease in travel and conference fee expenses.

For the year ended December 31, 2024, depreciation expense decreased by $22,815, or 6.0%, as compared to the year ended December 31, 2023 due to a decrease in depreciable rental properties.

For the year ended December 31, 2024, real estate taxes decreased by $15,134, or 9.2%, as compared to the year ended December 31, 2023 related to our Michigan property.

For the year ended December 31, 2024, property portfolio business development costs increased by $27,875, or 107.2%, as compared to the year ended December 31, 2023.

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.

from operations

a result of the factors described above, for the year ended December 31, 2024, income from operations amounted to $1,103,170 as compared

to income from operations of $169,187 for the year ended December 31, 2023, an increase of $933,983, or 552.0%.

(expenses) income, net

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

the year ended December 31, 2024, total other expenses, net amounted to $529,212 as compared to total other expenses, net of $657,335,

respectively, representing a decrease of $128,123, or 19.5%.

This decrease was attributable to an increase in interest expense of $71,979

primarily related to an increase in notes payable, and a decrease in loss in fair value from an interest rate swap of $200,102 resulting

in 2024 other income of $167,460 from the interest rate swap.

the year ended December 31, 2024 and 2023, we incurred an equity method loss of $0 and $52,110, respectively, a decrease of $52,110,

During the year ended December 31, 2023, we recorded an impairment loss from unconsolidated joint ventures of $45,000 and

a loss from unconsolidated joint ventures of $7,110.

income (loss)

a result of the foregoing for the year ended December 31, 2024 and 2023, net income (loss) amounted to $573,958, or $0.05 per common

share (basic) and $0.06 per common share (diluted), and $(540,258), or $(0.04) 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 $1,019,980

and $3,099,795 as of December 31, 2024 and 2023, 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:

in working capital requirements to finance our current business,

Impairment loss

For the year ended December

31, 2025, compensation and benefit expense increased by $110,754, or 8.6%, as compared to the year ended December 31, 2024.

was attributable to an increase in executive and staff compensation and related benefits of $53,501, primarily attributable to the

payment of bonus splits on project fees generated by transactions to team members, an increase in stock-based compensation of $33,502

related to accretion of stock option expense, and an increase in health insurance expense of $23,751.

For the year ended December

31, 2025, professional fees decreased by $98,790, or 28.1%, as compared to the year ended December 31, 2024.

This decrease was primarily

attributable to a decrease in consulting fees of $100,000, offset by an increase in other professional fees of $1,210.

For the year ended December

31, 2025 and 2024, we recorded brokerage fees amounting to $131,236 and $158,871, respectively, representing a decrease of $27,635,

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, debt expense, insurance expense, travel expenses, office expenses, telephone and

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

For the year ended December 31, 2025,

general and administrative expenses decreased by $23,346, or 7.0%, as compared to the year ended December 31, 2024, primarily due

to a decrease in advertising and marketing expenses of $40,239, offset by an increase in other general and administrative fees of

$6,900 and an increase in bad debt expense of $56,685.

For the year ended December 31,

2025, depreciation expense increased by $2,957, or 0.8%, as compared to the year ended December 31, 2024 due to an increase in depreciable

rental properties.

For the year ended December 31, 2025, real estate taxes

increased by $6,560, or 4.4%, as compared to the year ended December 31, 2024 related to our Michigan property.

For the year ended December 31, 2025, property portfolio

business development costs increased by $246,665, or 457.9%, as compared to the year ended December 31, 2024.

Property portfolio

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

which we decided not to pursue.

For the year ended December 31, 2025, impairment loss from rental properties

increased by $3,118,716, or 100.0%, as compared to the year ended December 31, 2024.

In 2025, (1) we were notified that a vehicle crashed

into our Chicago building, causing significant structural damage.

The City of Chicago declared the building unsafe and ordered its demolition.

As such, as of December 31, 2025, the Chicago property is a vacant lot of land.

In connection with the damage and demolition of the building,

during the year ended December 31, 2025, we recorded an impairment loss of $1,018,716, and (2) in an effort to avoid litigation related

to the defaults under the lease, the Company is currently in negotiations to sell the Woodward Property to the New Tenant for approximately

$600,000 in cash plus the assumption of the notes payable outstanding on the Woodward Property.

If the Company sells the Woodward Property

for $600,000, the net carrying value of the Woodward Property of approximately $2,700,000 would exceed the $600,000 sale price by $2,100,000.

While the Company believes the sale is likely to occur, there is a possibility that the sale will fail to occur, in which case there is

a strong likelihood that the New Tenant will be unable to continue paying rent, causing an ongoing default under the lease.

Based on these

conditions, our projected future cash flows, anticipated holding periods, and market conditions have changed.

Accordingly, during the

year ended December 31, 2025, we recorded an impairment loss of $2,100,000.

(Loss) Income from operations

As a result of the factors described above, for

the year ended December 31, 2025, loss from operations amounted to $(1,885,542) as compared to income from operations of $1,103,170 for

the year ended December 31, 2024, representing a decrease of $2,988,712, or 270.9%.

Other (expenses) income, net

Other (expense) income, net primarily includes

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

For the years ended December 31, 2025

and 2024, total other expenses, net amounted to $965,521 and $529,212, respectively, representing an increase of $436,309, or 82.4%.

This increase was attributable to an increase in interest expense of $100,440, primarily related to an increase in notes payable, an

increase in impairment loss on equity securities of $50,000, and a negative change in gain or loss in fair value from an interest rate

swap of $289,369, offset by an increase in other income of $3,500.

Equity method loss

For the years ended December 31, 2025 and 2024,

we incurred an equity method loss of $3,352 and $0, respectively, representing an increase of $3,352, or 100.0%.

During the year ended

December 31, 2025, we recorded a loss from unconsolidated joint ventures of $3,352.

Net (loss) income

As a result of the foregoing, for the years ended

December 31, 2025, net loss amounted to $(2,854,415), or $(0.24) per common share (basic and diluted), and for the year ended December

31, 2024, net income amounted to $573,958, or $0.05 per common share (basic) and $0.06 per common share (diluted).

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 $837,767 and $1,019,980 as of December 31,

2025 and 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

5 unchanged sentences

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 annual report on Form 10-K.

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”).

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.

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 annual report on Form 10-K.

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

estate services, and from a bank note and other notes payable, 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.

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis