What changed in this filing

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Item 9A. Controls and Procedures

2026-04-01 compared with 2025-03-25 · 1841 added, 1419 removed, 1614 unchanged (67% of the section changed)

CONTROLS AND PROCEDURES

Controls and Procedures

maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant

to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Disclosure controls and procedures include controls

and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act

is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information

is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow

timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal

financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this annual

report on Form 10-K.

Based on this evaluation, our principal executive officer and principal financial officer concluded that as of December

31, 2024, our disclosure controls and procedures were not effective.

The ineffectiveness of our disclosure controls and procedures was

due to material weaknesses, which we identified in our report on internal control over financial reporting.

control over financial reporting

annual report on internal control over financial reporting

management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining

adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Our management, with the participation

of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial

reporting as of December 31, 2024.

Our management’s evaluation of our internal control over financial reporting was based on the

2013 framework in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management concluded that as of December 31, 2024, our internal control over financial reporting was not

ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses which we identified in our internal

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,”

as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed

in our company’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified

in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal

executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Our management, with the

participation of our principal executive officer and principal financial officer, evaluated our company’s disclosure controls and

procedures as of the end of the period covered by this annual report on Form 10-K.

Based on this evaluation, our principal executive

officer and principal financial officer concluded that as of December 31, 2025, our disclosure controls and procedures were not effective.

The ineffectiveness of our disclosure controls and procedures was due to material weaknesses, which we identified in our report on internal

control over financial reporting.

(1) the lack of multiples levels of management review on complex accounting and financial reporting

issues, (2) we had not implemented adequate system and manual controls, and (3) a lack of adequate segregation of duties and necessary

corporate accounting resources in our financial reporting process and accounting function as a result of our limited financial resources

to support hiring of personnel and implementation of accounting systems.

Until such time as we expand our staff to include additional

accounting personnel and hire a full-time chief financial officer, it is likely we will continue to report material weaknesses in our

Internal control over financial reporting

material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there

is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected

on a timely basis.

on Effectiveness of Controls

principal executive officer and principal financial officer does not expect that our disclosure controls or our internal control over

financial reporting will prevent all errors and all fraud.

A control system, no matter how well conceived and operated, can provide only

reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect

the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the

inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances

of fraud, if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making

can be faulty, and that breakdowns can occur because of a simple error or mistake.

Additional controls can be circumvented by the individual

acts of some persons, by collusion of two or more people, or by management override of the controls.

The design of any system of controls

also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will

succeed in achieving its stated goals under all potential future conditions;

over time, controls may become inadequate because of changes

in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a

cost-effective control system, misstatements due to error or fraud may occur and not be detected.

in Internal Control

were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s annual report on internal

control over financial reporting

Our management, including our principal executive

officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting

(as defined in Rule 13a-15(f) under the Exchange Act).

Our management, with the participation of our principal executive officer and

principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2025.

management’s evaluation of our internal control over financial reporting was based on the 2013 framework in Internal Control-Integrated

Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management concluded

that as of December 31, 2025, our internal control over financial reporting was not effective.

The ineffectiveness of our disclosure controls

and procedures was due to the following material weaknesses which we identified in our internal control over financial reporting:

the lack of multiples levels of management review on complex accounting and financial reporting issues, (2) we had not implemented adequate

system and manual controls, and (3) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial

reporting process and accounting function as a result of our limited financial resources to support hiring of personnel and implementation

of accounting systems.

Until such time as we expand our staff to include additional accounting personnel and hire a full-time chief financial

officer, it is likely we will continue to report material weaknesses in our internal control over financial reporting.

A material weakness is a deficiency or a combination

of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

Limitations on Effectiveness of Controls

Our principal executive officer and principal

financial officer does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors

and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that

the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints,

and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems,

no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have

been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns

can occur because of a simple error or mistake.

Additional controls can be circumvented by the individual acts of some persons, by collusion

of two or more people, or by management override of the controls.

The design of any system of controls also is based in part upon certain

assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated

goals under all potential future conditions;

over time, controls may become inadequate because of changes in conditions, or the degree

of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system,

misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control

There were no changes in our internal control

over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors currently has six members and there is one vacancy.

following table sets forth the names, positions and ages of our directors and executive officers as of the date of this annual report

on Form 10-K.

All of the current directors’ terms expire as of the Annual Meeting and will serve until their successors are duly

elected and qualified.

forth below is certain information regarding our executive officers and directors.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORATE GOVERNANCE

Our Board of Directors currently has four members

and there is one vacancy.

The following table sets forth the names, positions

and ages of our directors and executive officers as of the date of this annual report on Form 10-K.

All of the current directors’

terms expire as of the Annual Meeting and will serve until their successors are duly elected and qualified.

Set forth below is certain information regarding our executive officers

and directors.

Bryan McLaren

Chairman, Chief Executive

Officer, Chief Financial Officer, Treasurer, and Secretary

Chairman, Chief Executive Officer, Chief Financial Officer, Treasurer, and Secretary

Berekk Blackwell

President and Chief

Operating Officer

Independent Director,

Chair of the Compensation Committee

Alex McLaren, MD

Director, Chair of the

Strategic Committee

Independent Director,

Chair of the Audit Committee

Derek Overstreet, PhD.

Independent Director

Independent Director,

Chair of the Nominating and Governance Committee

Cole Stevens.

Independent Director

McLaren is the son of Dr.

Alex McLaren.

Information about our Officers and Directors

information concerning the directors and executive officers listed above is set forth below.

The information presented includes information

each individual has given us about all positions they hold and their principal occupation and business experience for the past five years.

In addition to the information presented below regarding each director’s specific experience, qualifications, attributes and skills

that led our board to conclude that he should serve as a director, we also believe that each of our directors has a reputation for integrity,

honesty and adherence to high ethical standards.

Each has demonstrated business acumen and an ability to exercise sound judgment, as

well as a commitment of service to our company and our board of directors.

McLaren, MBA.

McLaren has served as Chairman and Chief Executive Officer of the Company since 2014 and as Chief Financial Officer

of the Company since 2018.

McLaren has a dedicated history of work in the sustainability industry and in business development.

to joining the Company, McLaren worked as a sustainable development expert for both large corporations such as Waste Management, Inc.,

and for institutions of higher education such as Northern Arizona University.

McLaren has a Masters of Business Administration Degree

with an emphasis on Sustainable Development, a Master’s Degree in Sustainable Community Development, and an Executive Master’s

Degree in Sustainability Leadership.

As Chief Executive Officer and Chief Financial Officer, Mr.

McLaren is able to provide our Board

with valuable insight regarding the Company’s operations, its management team and associates as a result of his day-to-day involvement

with the Company.

Blackwell has served as our Chief Operating Officer since July 1, 2021, and as our President since July 1, 2022.

to his appointment to these positions and since September 2020, Mr.

President and Chief Operating Officer

Independent Director, Chair of the Compensation Committee

Independent Director, Chair of the Audit Committee

Independent Director, Chair of the Nominating and Governance Committee

Background Information about our Officers and Directors

Biographical information concerning the directors

and executive officers listed above is set forth below.

The information presented includes information each individual has given us about

all positions they hold and their principal occupation and business experience for the past five years.

In addition to the information

presented below regarding each director’s specific experience, qualifications, attributes and skills that led our board to conclude

that he should serve as a director, we also believe that each of our directors has a reputation for integrity, honesty and adherence

to high ethical standards.

Each has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of

service to our company and our board of directors.

Bryan McLaren, MBA.

McLaren has served

as Chairman and Chief Executive Officer of the Company since 2014 and as Chief Financial Officer of the Company since 2018.

has a dedicated history of work in the sustainability industry and in business development.

Prior to joining the Company, McLaren worked

as a sustainable development expert for both large corporations such as Waste Management, Inc., and for institutions of higher education

such as Northern Arizona University.

McLaren has a Masters of Business Administration Degree with an emphasis on Sustainable Development,

a Master’s Degree in Sustainable Community Development, and an Executive Master’s Degree in Sustainability Leadership.

Chief Executive Officer and Chief Financial Officer, Mr.

McLaren is able to provide our Board with valuable insight into the Company’s

operations, its management team and associates as a result of his day-to-day involvement with the Company.

Berekk Blackwell.

Blackwell has served

as our Chief Operating Officer since July 1, 2021, and as our President since July 1, 2022.

Prior to his appointment to these positions

and since September 2020, Mr.

Blackwell served as our Director of Business Development.

From December

2018 until June 2021, Mr.

Blackwell also served as President of Daily Jam Holdings LLC.

From January 2016 to December 2018, he served

as Vice President of Due North Holdings LLC.

From December 2018 until June 2021, Mr.

also served as President of Daily Jam Holdings LLC.

From January 2016 to December 2018, he served as Vice President of Due North Holdings

Prior to joining the Company, Mr.

Blackwell developed domestic and international markets

for Kahala Brands, a global franchise organization with more than 3,000 retail locations in over a dozen countries.

He also led emerging

brand and portfolio operations for several private equity groups investing in the restaurant franchise space.

Blackwell earned his

Blackwell developed domestic and international markets for Kahala Brands, a global franchise organization

with more than 3,000 retail locations in over a dozen countries.

He also led emerging brand and portfolio operations for several private

equity groups investing in the restaurant franchise space.

Blackwell earned his B.A.

in Finance from Fort Lewis College.

Blackwell and his spouse filed for bankruptcy in the U.S.

Bankruptcy Court, District of

Arizona on November 13, 2020.

Friedman, who has served as a director since 2014, is the Owner/Principal of Triple J Management Services, which specializes

in consulting and professional services for the alcoholic beverage industry.

Friedman was most recently President and CEO of Gold

Coast Beverage Distributors, a position he held for the last 10 years of his 23 years with the company.

During his tenure as President/CEO,

Gold Coast more than tripled sales revenue and increased EBITDA by more than five-fold.

and his spouse filed for bankruptcy in the U.S.

Bankruptcy Court, District of Arizona on November 13, 2020.

Art Friedman.

Friedman, who has served

as a director since 2014, is the Owner/Principal of Triple J Management Services, which specializes in consulting and professional services

for the alcoholic beverage industry.

Friedman was most recently President and CEO of Gold Coast Beverage Distributors, a position

he held for the last 10 years of his 23 years with the company.

During his tenure as President/CEO, Gold Coast more than tripled sales

revenue and increased EBITDA by more than five-fold.

Over the same period, Mr.

Friedman led significant

market share gains through organic growth as well as consolidating wholesaler acquisitions.

Friedman began his career with General

Foods Corporation, now part of Kraft Foods.

He has served on the distributor advisory councils of Diageo-Guinness, Heineken USA, InBev

and Miller-Coors.

Friedman graduation Cum Laude with a Bachelor of Science in Business Management from the University of Florida,

Warrington School of Business.

We believe that Mr.

Friedman’s background as an advisor in the area of business management and his

experience in operating, growing and advising companies provides us with the requisite skills and qualifications required to serve on

Friedman’s service as a director at the Company since 2014, together with his business background, provides business,

governance, organizational and strategic planning expertise to our Board and makes him a valued member of the Audit Committee, the Compensation

Committee, which he chairs, and the Strategic Committee.

McLaren, who has served as a director since 2014, is an accomplished and well-known orthopedic surgeon, professor

and researcher.

Alex was most recently Vice President of Clinical Outcomes for Shared Clarity, LLC from 2016-2019.

From 2006 until 2016,

McLaren served as program director of the Banner University Medical Center-Phoenix (Ariz.) Residency Program in Orthopedic Surgery.

He is the former director of Orthopedic Education for Banner Good Samaritan Medical Center in Phoenix.

He was also the program director

of the Phoenix Orthopedic Residency Program at Maricopa County Medical Center between 1998 and 2000.

He has been in private orthopedic

surgery practice twice during his career in Phoenix.

After graduating from Queen’s University School of Medicine, Kingston, Ontario,

Canada in 1977, Dr.

McLaren completed an orthopedic residency at the University of Western Ontario in 1982 and a fellowship at the University

of Southern California in 1983.

McLaren is first and foremost an orthopedic educator and researcher whose career has included

teaching, research and administration of educational programs.

His clinical interest includes orthopedic infections, revision arthroplasty

and complex musculoskeletal trauma.

With hundreds of publications, numerous grand-funded projects, and medical association postings,

McLaren has established a prized reputation in his field.

We believe that Dr.

McLaren’s services provided to numerous organizations

provide us with the requisite skills and qualifications to serve on our board and as a member of the Compensation Committee and the Strategic

Committee, which he chairs.

Honaman, who has served as a director since 2016, is the Principal and CFO of Advanced Benefit Solutions, Inc.

44 North), an insurance agent and consultant, since 2010.

Friedman led significant market share gains through organic

growth as well as consolidating wholesaler acquisitions.

Friedman began his career with General Foods Corporation, now part of Kraft

He has served on the distributor advisory councils of Diageo-Guinness, Heineken USA, InBev and Miller-Coors.

Friedman graduation

Cum Laude with a Bachelor of Science in Business Management from the University of Florida, Warrington School of Business.

Friedman’s background as an advisor in the area of business management and his experience in operating, growing and advising

companies provides us with the requisite skills and qualifications required to serve on our board.

Friedman’s service as a

director at the Company since 2014, together with his business background, provides business, governance, organizational and strategic

planning expertise to our Board and makes him a valued member of the Audit Committee, the Compensation Committee, which he chairs, and

the Strategic Committee.

Honaman, who has

served as a director since 2016, is the Principal and CFO of Advanced Benefit Solutions, Inc.

(d/b/a 44 North), an insurance agent and

consultant, since 2010.

From 2008 to 2009, Mr.

1 unchanged sentence

Prior to that time, Mr.

Honaman spent seven years at Wilcox Associates, Inc., a civil engineering firm, most recently as CFO and Treasurer.

Honaman also served in several capacities at Wolohan Lumber Co.

for over 20 years, including as Vice President of Merchandising,

Senior Vice President of Finance and CFO.

spent seven years at Wilcox Associates, Inc., a civil engineering firm, most recently as CFO and Treasurer.

Honaman also served in

several capacities at Wolohan Lumber Co.

for over 20 years, including as Vice President of Merchandising, Senior Vice President of Finance

Honaman began his career as a CPA on the audit staff at Ernst & Young LLP.

Honaman brings to the Board extensive experience dealing with and overseeing the implementation of accounting principles and financial

reporting rules and regulations.

With his substantial business and management experience for five years as a certified public accountant

and an auditor at Ernst & Young LLP serving numerous public companies in various business sectors, including insurance agencies,

Honaman provides relevant expertise on accounting, investment and financial matters.

His service as a chief financial officer at

Advanced Benefit Solutions, Inc.

(d/b/a 44 North), Wilcox Associates, Inc.

and Wolohan Lumber Co., together with his accounting and management

experience, make him a valued member of our Board, Compensation Committee and Strategic Committee, and an effective Non-Executive Chair

of the Audit Committee.

Honaman brings to the Board extensive

experience dealing with and overseeing the implementation of accounting principles and financial reporting rules and regulations.

his substantial business and management experience for five years as a certified public accountant and an auditor at Ernst & Young

LLP serving numerous public companies in various business sectors, including insurance agencies, Mr.

Honaman provides relevant expertise

on accounting, investment and financial matters.

His service as a chief financial officer at Advanced Benefit Solutions, Inc.

44 North), Wilcox Associates, Inc.

and Wolohan Lumber Co., together with his accounting and management experience, make him a valued

member of our Board, Compensation Committee and Strategic Committee, and an effective Non-Executive Chair of the Audit Committee.

Honaman meets the definition of an “audit committee financial expert” as established by the SEC.

Overstreet, PhD.

Overstreet, who has served as a director since 2017, is the co-founder and CEO of Sonoran Biosciences, Inc.

Sonoran Biosciences, Inc.

develops new sustained-release pharmaceutical formulations for applications including orthopedic infection

and postoperative pain management.

Overstreet holds a Bachelor’s degree in Biomedical Engineering from Case Western Reserve

University and a Doctoral degree in Biomedical Engineering from Arizona State University.

His expertise is in the development of novel

polymer-based materials for medical applications including drug delivery.

He has authored 11 peer-reviewed scientific publications and

two patent applications.

We believe that Dr.

Overstreet’s experience navigating the scientific field of pharmaceuticals and drug

delivery can be instrumental in assisting the strategic development and implementation of the Zoned Properties’ business model.

Prior to 2012, Dr.

Overstreet was a post-doctoral fellow at the Laboratory for Nanomedicine at the Barrow Neurological Institute.

Kane, who has served as a director since January 21, 2022, is the co-founder and Managing Partner of Diamond Bridge Capital,

an investment firm, where he has managed a portfolio of public and private investments primarily focused on the small cap sector since

In addition, since May 2021, Mr.

Kane has served as an advisor to Harbor Access LLC, a U.S.

and Canadian based investor relations

In this role, he advises companies on corporate strategy and investor awareness.

In addition, Mr.

Kane owns and manages a real

estate portfolio in the New York and Connecticut regions.

From August 2014 to July 2020, he served as a research analyst for Wooster

Capital Management, LLC, a hedge fund.

Kane has a long history in the investment management business, previously working at the multi-billion

dollar Schonfeld Group hedge fund, serving as a published analyst at Sidoti & Co.

and working for the billion dollar Michael Steinhardt

family office.

Kane was one of the first investors in GrowGeneration Corp.

GRWG) and served on its board of directors from

May 2014 to January 2018.

He graduated from Troy University, with a B.S.

Stevens, who has served as a director since November 2024, brings over a decade of experience in capital markets advisory,

corporate finance, and strategic growth leadership.

He has a proven track record of driving value creation and expansion across diverse

industries, including technology, healthcare, and real estate.

Cole Stevens.

Stevens, who has served

as a director since November 2024, brings over a decade of experience in capital markets advisory, corporate finance, and strategic growth

He has a proven track record of driving value creation and expansion across diverse industries, including technology, healthcare,

and real estate.

Since 2019, Mr.

Stevens has served as President of AllAccess Capital Markets,

a prominent North American capital markets advisory firm.

In this capacity, he has consistently demonstrated exceptional leadership and

financial acumen, successfully guiding organizations through periods of growth, transformation, and strategic evolution.

expertise has earned him recognition on leading broadcast platforms, including appearances on CBC’s Lang & O’Leary

Exchange and multiple features on BNN (Business News Network).

has a Bachelor of Commerce from the Ted Rogers School of Management at Toronto Metropolitan University (formerly Ryerson University),

with a focus on Global Management.

Stevens has served as President of AllAccess Capital Markets, a prominent North American capital markets

advisory firm.

In this capacity, he has consistently demonstrated exceptional leadership and financial acumen, successfully guiding organizations

through periods of growth, transformation, and strategic evolution.

Stevens’ expertise has earned him recognition on leading

broadcast platforms, including appearances on CBC’s Lang & O’Leary Exchange and multiple features on BNN (Business

News Network).

Stevens has a Bachelor of Commerce from the Ted Rogers School of Management at Toronto Metropolitan University (formerly

Ryerson University), with a focus on Global Management.

The Company believes that Mr.

Stevens’ strategic experience will be invaluable to the Company

as it pursues its mission to deliver innovative, value-driven real estate solutions in emerging regulated markets

in Certain Legal Proceedings

directors and executive officers have not been involved in any of the following events during the past 10 years:

any bankruptcy

petition filed by or against any business of which such person was a general partner or executive officer either at the time of the

bankruptcy or within two years prior to that time;

Stevens’ strategic experience will be invaluable

to the Company as it pursues its mission to deliver innovative, value-driven real estate solutions in emerging regulated markets

Involvement in Certain Legal Proceedings

Our directors and executive officers have not

been involved in any of the following events during the past 10 years:

any bankruptcy petition

filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy

or within two years prior to that time;

any conviction in a criminal

19 unchanged sentences

with a member.

have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those employees

responsible for financial reporting.

The code of business conduct and ethics is available on our corporate website, www.zonedproperties.com.

We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website or in

filings under the Exchange Act to the extent required by applicable rules and exchange requirements.

of our seven board members are independent.

Code of Ethics

We have adopted a code of business conduct and

ethics that applies to all of our employees, officers and directors, including those employees responsible for financial reporting.

code of business conduct and ethics is available on our corporate website, www.zonedproperties.com.

We intend to disclose any amendments

to our code of business conduct and ethics, or waivers of its requirements, on our website or in filings under the Exchange Act to the

extent required by applicable rules and exchange requirements.

Director Independence

Three of our four board members are independent.

The Board has determined that each of Messrs.

Friedman, Honaman, Kane, Dr.

Overstreet, and

Stevens is an independent director pursuant to the NASDAQ listing standards.

Under the NASDAQ rules, no director qualifies as independent

unless the Board affirmatively determines that the director has no material relationship with us (directly, or as a partner, stockholder

or officer of an organization that has a relationship with us).

assessing the independence of our directors, the Board considers all of the business relationships between the Company and our directors

and their respective affiliated companies.

This review is based primarily on the Company’s review of its own records and on responses

of the directors to questions in a questionnaire regarding employment, business, family, compensation and other relationships with the

Company and our management.

Where relationships exist, the Board determines whether the relationship between the Company and the directors

or the directors’ affiliated companies impairs the directors’ independence.

After consideration of the directors’ relationships

with the Company, the Board has affirmatively determined that none of the individuals serving as non-employee directors during the fiscal

year ended December 31, 2024 had a material relationship with us and that each of such non-employee directors is independent.

McLaren was not considered an independent director during his service on the Board during the fiscal year ended December 31, 2024 and

2023 because of his employment as our Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Treasurer, and Secretary.

Alex McLaren, MD was not considered an independent director during his service on the Board during the fiscal years ended December 31,

2024 and 2023 because Bryan McLaren is the son of Dr.

of Directors and Board Committees

of our directors and director nominees are encouraged to attend the annual meetings of our stockholders, as may be applicable.

Board of Directors held two meetings during the fiscal year ended December 31, 2024.

Each of our current directors attended 100% of the

aggregate number of the meetings of the Board and meetings of the committees on which he or she served.

Board currently has four committees:

the Audit Committee, the Strategic Committee, the Compensation Committee, and the Nominating and

Governance Committee.

As of March 25, 2025, the members and Chairs of our standing Board committees were:

Friedman, Honaman, and Stevens is an independent director pursuant to the NASDAQ listing

Under the NASDAQ rules, no director qualifies as independent unless the Board affirmatively determines that the director has

no material relationship with us (directly, or as a partner, stockholder or officer of an organization that has a relationship with us).

In assessing the independence of our directors,

the Board considers all of the business relationships between the Company and our directors and their respective affiliated companies.

This review is based primarily on the Company’s review of its own records and on responses of the directors to questions in a questionnaire

regarding employment, business, family, compensation and other relationships with the Company and our management.

Where relationships

exist, the Board determines whether the relationship between the Company and the directors or the directors’ affiliated companies

impairs the directors’ independence.

After consideration of the directors’ relationships with the Company, the Board has

affirmatively determined that none of the individuals serving as non-employee directors during the fiscal year ended December 31, 2025

and 2024 had a material relationship with us and that each of such non-employee directors is independent.

Bryan McLaren was not considered an independent

director during the fiscal years ended December 31, 2025 and 2024 because of his employment as our Chief Executive Officer and Chief

Financial Officer.

Board of Directors and Board Committees

All of our directors and director nominees are

encouraged to attend the annual meetings of our stockholders, as may be applicable.

The Board of Directors held one meeting during

the fiscal year ended December 31, 2025.

Each of our current directors attended 100% of the aggregate number of the meetings of the Board

and meetings of the committees on which he or she served.

Our Board currently has four committees:

Audit Committee, the Compensation Committee, the Nominating and Governance Committee, and the Special Transactions Committee.

As of April 1, 2026, the members and Chairs of our standing Board committees were:

Independent Directors

Derek Overstreet

Non-Independent Director

Alex McLaren, MD

Audit Committee members are “independent” under the NASDAQ listing standards and SEC rules and regulations.

Directors has determined that one of the members of the Audit Committee, Mr.

Honaman, meets the definition of an “audit committee

financial expert” as established by the SEC, and that Mr.

Friedman, Dr.

Overstreet, and Mr.

Kane as the three other members of

the Audit Committee, meet the definition of “financially literate” as established by the SEC.

The Audit Committee provides

assistance to the Board in fulfilling its oversight responsibilities relating to the quality and integrity of the financial reports of

The Audit Committee has the sole authority to appoint, review and discharge our independent accountants, and has established

procedures for the receipt, retention, response to and treatment of complaints regarding accounting, internal controls and audit matters.

Audit Committee

All Audit Committee members are “independent”

under the NASDAQ listing standards and SEC rules and regulations.

Our Board of Directors has determined that one of the members of the

Audit Committee, Mr.

Honaman, meets the definition of an “audit committee financial expert” as established by the SEC, and

Friedman, and Mr.

Stevens as the two other members of the Audit Committee, meet the definition of “financially literate”

as established by the SEC.

The Audit Committee provides assistance to the Board in fulfilling its oversight responsibilities relating

to the quality and integrity of the financial reports of the Company.

The Audit Committee has the sole authority to appoint, review and

discharge our independent accountants, and has established procedures for the receipt, retention, response to and treatment of complaints

regarding accounting, internal controls and audit matters.

In addition, the Audit Committee is responsible for:

reviewing the

scope, results, timing and costs of the audit with our independent accountants and reviewing the results of the annual audit examination

and any accompanying management letters;

reviewing the scope, results,

timing and costs of the audit with our independent accountants and reviewing the results of the annual audit examination and any

accompanying management letters;

assessing the independence

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accounting policies, financial results and earnings releases, and the adequacy of our internal controls.

responsibilities of the Audit Committee are more fully described in the Audit Committee’s charter.

Audit Committee held four meetings during the fiscal year ended December 31, 2024.

Compensation Committee members other than Dr.

McLaren are “independent” under applicable NASDAQ listing standards.

The Compensation

Committee assists the Board in fulfilling its oversight responsibilities relating to executive compensation, employee compensation and

benefit programs and plans, and leadership development and succession planning.

In addition, the Compensation Committee is responsible

reviewing the

performance of our Chief Executive Officer;

The responsibilities of the Audit Committee are

more fully described in the Audit Committee’s charter.

The Audit Committee held four meetings during

the fiscal year ended December 31, 2025.

Compensation Committee

All Compensation Committee members are “independent”

under applicable NASDAQ listing standards.

The Compensation Committee assists the Board in fulfilling its oversight responsibilities

relating to executive compensation, employee compensation and benefit programs and plans, and leadership development and succession planning.

In addition, the Compensation Committee is responsible for:

reviewing the performance

of our Chief Executive Officer;

determining the compensation

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of material changes to or the termination of our benefit plans.

Compensation Committee reviews and discusses with management the disclosures regarding executive compensation to be included in our annual

proxy statement.

The responsibilities of the Compensation Committee are more fully described in the Compensation Committee’s charter.

Compensation Committee held two meetings during the fiscal year ended December 31, 2024.

Strategic Committee members other than Dr.

McLaren are “independent” under the applicable NASDAQ listing standards.

The Strategic

Committee assists the Board in developing and maintaining the Company’s business strategies and any related matters required by

federal securities laws.

In addition, the Strategic Committee is responsible for:

Company’s current business strategies.

Explore new business strategies

for the Company.

Report business strategy

analyses to the Board.

Strategic Committee held two meetings during the fiscal year ended December 31, 2024.

and Governance Committee

Nominating and Governance members (except for Dr.

McLaren) are “independent” under applicable NASDAQ listing standards.

Nominating and Governance Committee assists the Board in fulfilling its oversight responsibilities relating to Company and Board policies,

and in relation to the nomination and election of Board Members.

In addition, the Nominating and Governance Committee is responsible

and reviewing the Nominating and Governance Committee Charter;

The Compensation Committee reviews and discusses

with management the disclosures regarding executive compensation to be included in our annual proxy statement.

The responsibilities of

the Compensation Committee are more fully described in the Compensation Committee’s charter.

The Compensation Committee held two meetings

during the fiscal year ended December 31, 2025.

Nominating and Governance Committee

All Nominating and Governance Committee members

are “independent” under applicable NASDAQ listing standards.

The Nominating and Governance Committee assists the Board in

fulfilling its oversight responsibilities relating to Company and Board policies, and in relation to the nomination and election of Board

In addition, the Nominating and Governance Committee is responsible for:

establishing and reviewing

the Nominating and Governance Committee Charter;

establishing and reviewing

various Company policies, such as the Company’s Insider Trading Policy and Code of Ethics.

responsibilities of the Nominating and Governance Committee are more fully described in the Nominating and Governance Committee’s

Nominating and Governance Committee held two meetings during the fiscal year ended December 31, 2024.

the fourth quarter of the fiscal year ended December 31, 2023, there were no material changes to the procedures by which stockholders

may recommend nominees to the Board.

and Director Indemnification Agreements

Company entered into an Indemnification Agreement (each, an “Indemnification Agreement” and collectively, the “Indemnification

Agreements”) with each of the Company’s officers and directors.

The Indemnification Agreements supplement the indemnification

provisions provided in the Company’s articles of incorporation and bylaws and any resolutions adopted pursuant thereto and generally

provide that the Company shall indemnify the indemnitees to the fullest extent permitted by applicable law, subject to certain exceptions,

against expenses, judgments, fines and other amounts actually and reasonably incurred in connection with their service as a director

or officer and also provide for rights to advancement of expenses and contribution.

The responsibilities of the Nominating and Governance

Committee are more fully described in the Nominating and Governance Committee’s charter.

The Nominating and Governance Committee held

one meeting during the fiscal year ended December 31, 2025

During the fourth quarter of the fiscal year

ended December 31, 2025, there were no material changes to the procedures by which stockholders may recommend nominees to the Board.

Officer and Director Indemnification Agreements

The Company entered into an Indemnification Agreement

(each, an “Indemnification Agreement” and collectively, the “Indemnification Agreements”) with each of the Company’s

officers and directors.

The Indemnification Agreements supplement the indemnification provisions provided in the Company’s articles

of incorporation and bylaws and any resolutions adopted pursuant thereto and generally provide that the Company shall indemnify the indemnitees

to the fullest extent permitted by applicable law, subject to certain exceptions, against expenses, judgments, fines and other amounts

actually and reasonably incurred in connection with their service as a director or officer and also provide for rights to advancement

of expenses and contribution.

EXECUTIVE COMPENSATION

following 2024 Summary Compensation Table (the “SCT”) summarizes all compensation recorded by us for the years ended December

31, 2024 and 2023 for our “named executive officers” as such term is defined in Item 402(m)(2) of Regulation S-K (each, an

“NEO” and collectively, the “NEOs”).

Summary Compensation

The following 2025 Summary Compensation Table

summarizes all compensation recorded by us for the years ended December 31, 2025 and 2024 for our “named executive officers”

as such term is defined in Item 402(m)(2) of Regulation S-K (each, a “Named Executive Officer” and collectively, the “Named

Executive Officers”).

2025 Summary Compensation Table

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President and Chief Operating Officer

August 16, 2024, the Company’s Compensation Committee approved a Compensation Memo whereby project team members may receive up

to 80% bonus splits of project fees generated by transactions.

Project fees may include Acquisition Fees, Management Fees, Disposition

Fees, or Promote Fees.

Each transaction may vary significantly in the types of fees generated and the amount of fees generated depending

on project terms and conditions.

On August 16, 2024, the

Company’s Compensation Committee approved a Compensation Memo whereby project team members may receive up to 80% bonus splits

of project fees generated by transactions.

Project fees may include Acquisition Fees, Management Fees, Disposition Fees, or Promote

Each transaction may vary significantly in the types of fees generated and the amount of fees generated depending on project

terms and conditions.

Such amounts are included in bonus above.

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“Note 11 – Shareholders’ Equity”.

Disclosure to Summary Compensation Table

as otherwise described below, there are no compensatory plans or arrangements, including payments to be received from the Company with

respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other

termination of employment with the Company, or our subsidiaries, any change in control, or a change in the person’s responsibilities

following a change in control of the Company.

Employment Agreement & Golden Parachute Agreement

May 23, 2018, we entered into an employment agreement with Mr.

Represent commissions paid

Narrative Disclosure to Summary Compensation Table

Except as otherwise described below, there are

no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that

would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company,

or our subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

McLaren Employment Agreement & Golden

Parachute Agreement

On May 23, 2018, we entered into an employment

agreement with Mr.

McLaren (the “2018 Employment Agreement”).

Pursuant to the

terms of the 2018 Employment Agreement, the Company agreed to continue to pay Mr.

McLaren a base annual salary of $214,500, and to award

McLaren with an annual and/or quarterly bonus payable in either cash and/or equity of no less than 2.5% of the Company’s net

income for the associated period.

2018 Employment Agreement has a term of 10 years.

Pursuant to the terms of the 2018 Employment Agreement, the

Company agreed to continue to pay Mr.

McLaren a base annual salary of $214,500, and to award Mr.

McLaren with an annual and/or quarterly

bonus payable in either cash and/or equity of no less than 2.5% of the Company’s net income for the associated period.

The 2018 Employment Agreement has a term of 10

The term and Mr.

McLaren’s employment will terminate (a “Termination”)

in any of the following circumstances:

McLaren dies;

McLaren’s employment will terminate (a “Termination”) in any of the following circumstances:

immediately, if Mr.

receives benefits under the long-term disability insurance coverage then

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without Good Reason, upon not less than three months’ prior written notice to the Company.

the event of a Termination for any reason or for no reason whatsoever, or upon the expiration date of the 2018 Employment Agreement,

whichever comes first, all rights and obligations under the 2018 Employment Agreement shall cease (i) as to the Company, except for the

Company’s obligations for the payment of applicable severance benefits thereunder, and for indemnification thereunder, and (ii)

McLaren, except for his obligation under the restrictive covenants in the 2018 Employment Agreement.

Company and Mr.

McLaren also entered into a Golden Parachute Agreement (the “Golden Parachute Agreement”) on May 23, 2018.

No benefits shall be payable under the Golden Parachute Agreement unless there shall have been a change in control of the Company, as

set forth below.

For purposes of the Golden Parachute Agreement, a “change in control of the Company” shall mean a change

of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under

the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is in fact required to comply

with that regulation, provided that, without limitation, such a change in control shall be deemed to have occurred if (A) any “person”

(as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under

an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the shareholders of the Company in substantially

the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule

13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting

power of the Company’s then outstanding securities;

or (B) during any period of two consecutive years (not including any period

prior to the execution of the Golden Parachute Agreement), individuals who at the beginning of such period constitute the Board and any

new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction

described in clauses (A) or (D) of this paragraph) whose election by the Board or nomination for election by the Company’s shareholders

was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the

period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority;

Company enters into an agreement, the consummation of which would result in the occurrence of a change in control of the Company;

(D) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger

or consolidation which would result in the voting securities of the Company outstanding immediately prior to it continuing to represent

(either by remaining outstanding or by being converted into voting securities of the surviving entity) of more than 50% of the combined

voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation,

or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition

by the Company of all or substantially all the Company’s assets.

purposes of the Golden Parachute Agreement, “Cause” means termination upon (a) the willful and continued failure to substantially

perform duties with the Company after a written demand for substantial performance is delivered by the Board, which demand specifically

identifies the manner in which the Board believes that duties have not substantially been performed, or (b) the willful engaging in conduct

which is demonstrably and materially injurious to the Company, monetarily or otherwise.

purposes of the Golden Parachute Agreement, “Good Reason” means, without express written consent, the occurrence after a

change in control of the Company of any of the following circumstances unless, such circumstances are fully corrected prior to the date

of Termination specified in the notice of Termination:

diminution in Mr.

McLaren’s authority, duties or responsibility from those in effect immediately prior to the change in control

of the Company;

In the event of a Termination for any reason

or for no reason whatsoever, or upon the expiration date of the 2018 Employment Agreement, whichever comes first, all rights and obligations

under the 2018 Employment Agreement shall cease (i) as to the Company, except for the Company’s obligations for the payment of

applicable severance benefits thereunder, and for indemnification thereunder, and (ii) as to Mr.

McLaren, except for his obligation under

the restrictive covenants in the 2018 Employment Agreement.

The Company and Mr.

McLaren also entered into

a Golden Parachute Agreement (the “Golden Parachute Agreement”) on May 23, 2018.

No benefits shall be payable under the Golden

Parachute Agreement unless there shall have been a change in control of the Company, as set forth below.

For purposes of the Golden Parachute

Agreement, a “change in control of the Company” shall mean a change of control of a nature that would be required to be reported

in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange

Act”), whether or not the Company is in fact required to comply with that regulation, provided that, without limitation, such a

change in control shall be deemed to have occurred if (A) any “person” (as such term is used in Sections 13(d) and 14(d)

of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation

owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of

the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,

of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities;

or (B) during any period of two consecutive years (not including any period prior to the execution of the Golden Parachute Agreement),

individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person

who has entered into an agreement with the Company to effect a transaction described in clauses (A) or (D) of this paragraph) whose election

by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors

then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously

so approved, cease for any reason to constitute a majority;

result in the occurrence of a change in control of the Company;

or (D) the shareholders of the Company approve a merger or consolidation

of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company

outstanding immediately prior to it continuing to represent (either by remaining outstanding or by being converted into voting securities

of the surviving entity) of more than 50% of the combined voting power of the voting securities of the Company or such surviving entity

outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation

of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets.

For purposes of the Golden Parachute Agreement,

“Cause” means termination upon (a) the willful and continued failure to substantially perform duties with the Company after

a written demand for substantial performance is delivered by the Board, which demand specifically identifies the manner in which the

Board believes that duties have not substantially been performed, or (b) the willful engaging in conduct which is demonstrably and materially

injurious to the Company, monetarily or otherwise.

For purposes of the Golden Parachute Agreement,

“Good Reason” means, without express written consent, the occurrence after a change in control of the Company of any of the

following circumstances unless, such circumstances are fully corrected prior to the date of Termination specified in the notice of Termination:

a material diminution in

McLaren’s authority, duties or responsibility from those in effect immediately prior to the change in control of the Company;

a material diminution in

McLaren’s base compensation;

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the Company in accordance with the Company’s normal vacation policy in effect at the time of the change in control of the Company;

a change in control of the Company, upon termination of Mr.

Following a change in control of the Company,

upon termination of Mr.

McLaren’s employment or during a period of disability, Mr.

will be entitled to the following benefits:

period that Mr.

McLaren fails to perform his full-time duties with the Company as a result of incapacity due to physical or mental

McLaren will continue to receive his base salary at the rate in effect at the commencement of any such period, together

with all amounts payable to Mr.

McLaren under any compensation plan of the Company during such period, until the Golden Parachute

Agreement is terminated.

McLaren will be entitled to the following benefits:

During any period that

McLaren fails to perform his full-time duties with the Company as a result of incapacity due to physical or mental illness, Mr.

McLaren will continue to receive his base salary at the rate in effect at the commencement of any such period, together with all

amounts payable to Mr.

McLaren under any compensation plan of the Company during such period, until the Golden Parachute Agreement

is terminated.

employment is terminated by the Company for Cause or by Mr.

9 unchanged sentences

will be entitled to benefits provided below:

Company will pay Mr.

McLaren his full base salary through the date of Termination at the rate in effect at the time notice of Termination

is given, plus all other amounts and benefits to which Mr.

The Company will pay Mr.

McLaren his full base salary through the date of Termination at the rate in effect at the time notice of Termination is given, plus

all other amounts and benefits to which Mr.

McLaren is entitled under any compensation plan of the Company.

any further salary payments to Mr.

McLaren for periods subsequent to the date of Termination, the Company will pay as severance pay

McLaren a lump sum severance payment (together with the payments provided in clauses (c) and (d) below) equal to five times

the sum of Mr.

McLaren’s annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to

the notice of Termination given in respect of them.

In lieu of any further

salary payments to Mr.

McLaren for periods subsequent to the date of Termination, the Company will pay as severance pay to Mr.

a lump sum severance payment (together with the payments provided in clauses (c) and (d) below) equal to five times the sum of Mr.

McLaren’s annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the notice of

Termination given in respect of them.

The Company will pay Mr.

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McLaren as a result of such Termination.

the event that Mr.

McLaren is a “disqualified individual” within the meaning of Section 280G of the Code, the parties expressly

agree that the payments described herein and all other payments to Mr.

McLaren under any other agreements or arrangements with any persons

which constitute “parachute payments” within the meaning of Section 280G of the Code are collectively subject to an overall

maximum limit.

Such maximum limit shall be $1 less than the aggregate amount which would otherwise cause any such payments to be considered

a “parachute payment” within the meaning of Section 280G of the Code, as determined by the Company.

Additionally,

on August 16, 2024, the Company’s Compensation Committee approved a Compensation Memo whereby brokerage project team members shall

receive up to 80% bonus splits of the fees generated by transactions.

In connection with such a bonus, in 2024, the Company paid Mr.

McLaren a bonus of $56,473.

Employment Agreement

July 26, 2022, the Company entered into an employment agreement, effective July 1, 2022, with Mr.

Blackwell (the “Blackwell Employment

Pursuant to the terms of the Blackwell Employment Agreement, the Company agreed to pay Mr.

Blackwell a base annual

salary of $150,000 for his services as President and Chief Operating Officer.

In the event that Mr.

is a “disqualified individual” within the meaning of Section 280G of the Code, the parties expressly agree that the payments

described herein and all other payments to Mr.

McLaren under any other agreements or arrangements with any persons which constitute

“parachute payments” within the meaning of Section 280G of the Code are collectively subject to an overall maximum limit.

Such maximum limit shall be $1 less than the aggregate amount which would otherwise cause any such payments to be considered a “parachute

payment” within the meaning of Section 280G of the Code, as determined by the Company.

Additionally, on August 16, 2024, the Company’s

Compensation Committee approved a Compensation Memo whereby project team members may receive up to 80% bonus splits of project fees generated

by transactions.

Project fees may include Acquisition Fees, Management Fees, Disposition Fees, or Promote Fees.

Each transaction may

vary significantly in the types of fees generated and the amount of fees generated depending on project terms and conditions.

In connection

with such a bonus, in 2025 and 2024, the Company paid Mr.

McLaren a bonus of $125,563 and $56,473, respectively.

Effective January 28, 2026, the Board of Directors

of the Company approved an increase in the base salary of Bryan McLaren by 10%, such that Mr.

McLaren’s base salary was increased

Blackwell Employment Agreement

On July 26, 2022, the Company entered into an

employment agreement, effective July 1, 2022, with Mr.

Blackwell (the “Blackwell Employment Agreement”).

Pursuant to the

terms of the Blackwell Employment Agreement, the Company agreed to pay Mr.

Blackwell a base annual salary of $150,000 for his services

as President and Chief Operating Officer.

The Company may also award Mr.

Blackwell discretionary

cash and/or equity bonuses.

In April 2023, Mr.

Blackwell discretionary cash and/or equity bonuses.

Blackwells base annual salary was increased in $190,000.

Blackwell Employment Agreement has a term of one year, expiring on July 1, 2023.

During the initial term, neither party may terminate

the Blackwell Employment Agreement except for Cause (as hereinafter defined).

For purposes of the Blackwell Employment Agreement, Cause,

with respect to Mr.

The Blackwell Employment Agreement has a term

of one year, expiring on July 1, 2023.

During the initial term, neither party may terminate the Blackwell Employment Agreement except

for Cause (as hereinafter defined).

For purposes of the Blackwell Employment Agreement, Cause, with respect to Mr.

Blackwell, means:

material violation of any material written rule or policy of the Company applicable to Mr.

a material violation of

any material written rule or policy of the Company applicable to Mr.

Blackwell and which Mr.

Blackwell fails to

correct within 10 days after notice;

(ii) misconduct

Blackwell to the material and demonstrable detriment of the Company;

Blackwell’s conviction of, or pleading guilty to, a felony;

Blackwell’s material failure to perform his obligations and fulfill the covenants and agreements in the Blackwell Employment Agreement,

after notice and failure to cure, as provided in the Blackwell Employment Agreement.

respect to the Company, “Cause” means the Company’s material failure to perform the Company’s obligations and

fulfill the covenants and agreements in the Blackwell Employment Agreement, after notice and failure to cure, as provided in the Blackwell

Employment Agreement.

Blackwell Employment Agreement will continue to be in full force and effect after July 1, 2023, except that either party may terminate

the Blackwell Employment Agreement for any reason upon 30 days’ written notice.

Blackwell Employment Agreement contains representations, warranties and covenants customary for an agreement of this type.

Additionally,

on August 16, 2024, the Company’s Compensation Committee approved a Compensation Memo whereby brokerage project team members shall

receive up to 80% bonus splits of the fees generated by brokerage transactions.

In connection with such a bonus, in 2024, the Company

Blackwell a bonus of $57,473.

Equity Awards at 2024 Fiscal Year-End

following table sets forth information as options outstanding on December 31, 2024.

Blackwell fails to correct within 10

days after notice;

misconduct by Mr.

to the material and demonstrable detriment of the Company;

Blackwell’s conviction

of, or pleading guilty to, a felony;

Blackwell’s material

failure to fulfil his obligations and fulfill the covenants and agreements in the Blackwell Employment Agreement, after notice and

failure to cure, as provided in the Blackwell Employment Agreement.

With respect to the Company, “Cause”

means the Company’s material failure to perform the Company’s obligations and fulfill the covenants and agreements in the

Blackwell Employment Agreement, after notice and failure to cure, as provided in the Blackwell Employment Agreement.

The Blackwell Employment Agreement will continue

to be in full force and effect after July 1, 2023, except that either party may terminate the Blackwell Employment Agreement for any

reason upon 30 days’ written notice.

The Blackwell Employment Agreement contains representations,

warranties and covenants customary for an agreement of this type.

Additionally, on August 16, 2024, the Company’s

Compensation Committee approved a Compensation Memo whereby project team members may receive up to 80% bonus splits of project fees generated

by transactions.

Project fees may include Acquisition Fees, Management Fees, Disposition Fees, or Promote Fees.

Each transaction may

vary significantly in the types of fees generated and the amount of fees generated depending on project terms and conditions.

In connection

with such a bonus, during the years ended December 31, 2025 and 2024, the Company paid Mr.

Blackwell a bonus of $125,563 and $57,473,

respectively.

Effective January 28, 2026, the Board of Directors

of the Company approved an increase in the base salary of Mr.

Blackwell by 10%, such that Mr.

Blackwell’s base salary was increased

Effective January 28, 2026, the Company issued

shares of restricted common stock, representing compensation for services to be rendered in 2026 and 2027, to the Company’s executive

officers as follows:

Bryan McLaren

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

Berekk Blackwell

President and Chief Operating Officer

Such issuances are subject to forfeiture, depending

on continued employment with the Company.

If a recipient voluntarily resigns or is terminated for cause prior to December 31, 2027, the

recipient must return to the Company a pro-rata portion of the issued shares, calculated on a monthly basis.

If a change of control occurs

at any time prior to December 31, 2027, all clawback provisions will automatically terminate and each recipient will retain 100% of the

issued shares, free of any repayment obligation.

Additionally, the above executive officers will

receive a cash payment from the Company to cover income tax liability associated with the above stock issuances in an amount up to 35%

of the cost basis of the shares.

In the event of a change of control, the Company will pay the full 35% tax coverage amount to each of

the above executive officers prior to consummation of such change of control.

Outstanding Equity Awards at 2025 Fiscal Year-End

The following table sets forth information as options outstanding

on December 31, 2025.

OUTSTANDING EQUITY AWARDS AT 2025 FISCAL YEAR-END

OPTION AWARDS

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Berekk Blackwell

Vested annually

at 25,000 options per year through December 2024.

Vest annually at 10,000

options per year through January 1, 2031.

15,000 options vested in

2022 and remainder vest annually at 7,500 options per year through January 21, 2030.

Versus Performance (PVP)

accordance with the SEC’s disclosure requirements regarding pay versus performance (“PVP”), this section presents the

SEC-defined “Compensation Actually Paid,” or “CAP”.

Also required by the SEC, this section compares CAP to various

measures used to gauge performance at Company.

versus Performance Table - Compensation Definitions

Bonus, Stock Awards, and All Other Compensation are each calculated in the same manner for purposes of both CAP and SCT values.

difference between the calculation of CAP and SCT total compensation is “Stock Awards.”

Grant date fair value of

stock and option awards granted during the year

Year over year change in

the fair value of stock and option awards that are unvested as of the end of the year, or vested or were forfeited during the year

Pay Versus Performance Table

accordance with the SEC’s new PVP rules, the following table sets forth information concerning the compensation of our NEOs for

each of the fiscal years ended December 31, 2024, 2023 and 2022, and our financial performance for each such fiscal year:

Actually Paid

Initial Fixed

Net Income (Loss)

The principal

executive officer (“PEO”) in 2024, 2023, and 2022 is Bryan McLaren, our Chief Executive Officer and Chief Financial Officer.

The non-PEO NEOs in 2024 is Berekk Blackwell, and in 2023 and 2022 was Berekk Blackwell and Dan Gauthier.

The CAP was calculated

beginning with the PEO’s SCT total.

The following amounts were deducted from and added to the applicable SCT total compensation:

Deducted from

Average Non-PEO NEO

The fair value

of stock options reported for CAP purposes in columns (C) and (E) above was estimated using a Black-Scholes option pricing model

for the purposes of this PVP calculation in accordance with the SEC rules.

This model uses both historical data and current market

data to estimate the fair value of options and requires several assumptions.

The assumptions used in estimating fair value for awards

granted during 2024, 2023 and 2022 were as follows:

52.2 – 106.7%

106.7 – 112.3%

Expected life (in years)

Expected dividend yield

Risk-free rate

Authorized for Issuance under Equity Compensation Plans

August 9, 2016, our Board of Directors authorized the 2016 Plan and reserved 10,000,000 shares of common stock for issuance thereunder.

Effective January 19, 2026,

all unvested stock options held by Mr.

Blackwell, representing an aggregate of 97,500 stock options, were canceled.

Securities Authorized for Issuance under Equity Compensation Plans

On August 9, 2016, our Board of Directors authorized

the 2016 Plan and reserved 10,000,000 shares of common stock for issuance thereunder.

The 2016 Plan was approved by shareholders on November

The 2016 Plan’s purpose is to encourage ownership in the Company

by employees, officers, directors and consultants whose long-term service the Company considers essential to its continued progress and,

thereby, encourage recipients to act in the stockholders’ interest and share in the Company’s success.

The 2016 Plan authorizes

the grant of awards in the form of options intended to qualify as incentive stock options under Section 422 of the Code, options that

do not qualify (non-statutory stock options) and grants of restricted shares of common stock.

Restricted shares granted pursuant to the

2016 Plan are amortized to expense over the three-year vesting period.

The 2016 Plan’s purpose is to encourage ownership in the Company by employees, officers, directors and consultants whose

long-term service the Company considers essential to its continued progress and, thereby, encourage recipients to act in the stockholders’

interest and share in the Company’s success.

The 2016 Plan authorizes the grant of awards in the form of options intended to qualify

as incentive stock options under Section 422 of the Code, options that do not qualify (non-statutory stock options) and grants of restricted

shares of common stock.

Restricted shares granted pursuant to the 2016 Plan are amortized to expense over the three-year vesting period.

Options vest and expire over a period not to exceed seven years.

If any share of common stock underlying a stock option that has been granted ceases to be subject to a stock option, or if any shares

of common stock that are subject to any other stock-based award granted are forfeited or terminate, such shares shall again be available

for distribution in connection with future grants and awards under the 2016 Plan.

As of December 31, 2023, 1,012,500 stock option awards

have been granted under the 2016 Plan.

On December 31, 2023, 8,987,500 shares are available for future issuance.

Company also continues to maintain its 2014 Equity Compensation Plan (the “2014 Plan”), pursuant to which 1,250,000 previously

awarded stock options are outstanding.

If any share of common stock underlying a stock option that has been

granted ceases to be subject to a stock option, or if any shares of common stock that are subject to any other stock-based award granted

are forfeited or terminated, such shares shall again be available for distribution in connection with future grants and awards under

the 2016 Plan.

As of December 31, 2025, 1,315,000 stock option awards were outstanding and 1,206,250 options were exercisable under the

As of December 31, 2025, 8,685,000 shares were available for future issuance under the 2016 Plan.

The Company also continues to maintain its 2014

Equity Compensation Plan (the “2014 Plan”).

The 2016 Plan has superseded the 2014 Plan.

Accordingly, no additional shares subject to the existing

2014 Plan will be issued and the 1,250,000 shares issuable upon exercise of stock options will be issued pursuant to the 2014 Plan, if

As of December 31, 2024, options to purchase 1,250,000 shares of common stock are outstanding and 1,250,000 options are exercisable

pursuant to the 2014 Plan.

As of December 31, 2023, options to purchase 1,250,000 shares of common stock are outstanding and 1,225,000

options are exercisable pursuant to the 2014 Plan.

table below sets forth information as of December 31, 2024.

Accordingly, the Board does not intend

to grant any additional awards under the 2014 Plan.

As of December 31, 2025, options to purchase 250,000 shares of common stock were

outstanding and exercisable pursuant to the 2014 Plan, respectively.

The table below sets forth information as of

December 31, 2025.

Plan Category

5 unchanged sentences

future issuance

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

following table sets forth compensation paid, earned or awarded during 2024 to each of our directors, other than Bryan McLaren, whose

compensation is described above in the “2024 Summary Compensation Table”.

Equity compensation plans approved by security

Equity compensation plans not approved

by security holders

Director Compensation

Alex McLaren, MD

Derek Overstreet

required by SEC rules, the amounts in this column reflect the grant date or modification date fair value as required by FASB ASC Topic

A discussion of the assumptions and methodologies used to calculate these amounts is contained in the notes to our consolidated

financial statements under “Shareholders’ Deficit”.

On November 25, 2024, the director listed above received 105,000

stock options to purchase 105,000 shares of restricted stock with an exercise price of $0.49 per share.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information regarding beneficial ownership of our common stock and preferred stock as of March 26,

The following table sets forth compensation paid,

earned or awarded during 2025 to each of our directors, other than Bryan McLaren, whose compensation is described above in the “2025

Summary Compensation Table”.

2025 Director Compensation

Alex McLaren, MD (Former Director)

Derek Overstreet (Former Independent Director)

Jody Kane (Former Independent Director

Cole Stevens (2)

As required by SEC rules,

the amounts in this column reflect the grant date or modification date fair value as required by FASB ASC Topic 718.

of the assumptions and methodologies used to calculate these amounts is contained in the notes to our consolidated financial statements

under “Shareholders’ Deficit”.

On January 21, 2025, the director listed above received 105,000 stock options to

purchase 105,000 shares of restricted stock with an exercise price of $0.44 per share.

On April 23, 2025, 87,500 stock options issued

to Alex McLaren, MD, Derek Overstreet and Jody Kane were cancelled.

Stevens received stock

option in 2024 as part of his compensation..

Effective January 28, 2026, the Company issued

shares of restricted common stock, representing compensation for services to be rendered in 2026 and 2027, to the Company’s Board

members as follows:

Independent Director

Such issuances are subject to forfeiture, depending

on continued service with the Company.

If a recipient voluntarily resigns or is terminated for cause prior to December 31, 2027, the

recipient must return to the Company a pro-rata portion of the issued shares, calculated on a monthly basis.

If a change of control occurs

at any time prior to December 31, 2027, all clawback provisions will automatically terminate and each recipient will retain 100% of the

issued shares, free of any repayment obligation.

Additionally, the above Board members will receive

a cash payment from the Company to cover income tax liability associated with the above stock issuances in an amount up to 35% of the

cost basis of the shares.

In the event of a change of control, the Company will pay the full 35% tax coverage amount to each of the above

Board members prior to consummation of such change of control.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information

regarding beneficial ownership of our common stock and preferred stock as of April 1, 2026, by:

Each director

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to be the beneficial owner of more than 5% of our outstanding common stock.

of March 25, 2025, there were 12,087,861 shares of our

common stock outstanding and 2,000,000 shares of Preferred Stock outstanding.

number of shares of common stock beneficially owned by each person is determined under the rules of the SEC and the information is not

necessarily indicative of beneficial ownership for any other purpose.

Under such rules, beneficial ownership includes any shares as to

which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire

within 60 days after the date hereof, through the exercise of any stock option, warrant or other right.

Unless otherwise indicated, each

person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the

following table.

The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership

of those shares.

As of April 1, 2026, there were 13,180,829 shares

of our common stock outstanding and 2,000,000 shares of preferred stock outstanding.

The number of shares of common stock beneficially

owned by each person is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership

for any other purpose.

Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power

or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the

exercise of any stock option, warrant or other right.

Unless otherwise indicated, each person has sole investment and voting power (or

shares such power with his or her spouse) with respect to the shares set forth in the following table.

The inclusion herein of any shares

deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

Name and Address of Beneficial Owner

3 unchanged sentences

Berekk Blackwell

Alex McLaren, MD

1,799,167 (4)

Derek Overstreet, PhD

All executive officers and directors as a group (seven persons)

All executive officers and directors as a group (five persons)

1,055,204 (6)

Other 5% Stockholders:

Alex McLaren, MD

1,799,167 (7)

c/o Zoned Properties, Inc.

Raintree Drive #230

Scottsdale, AZ 85260

Greg Johnston

17 unchanged sentences

stock options.

Includes 1,501,667 shares

held by McLaren Family LLLP.

McLaren is the general partner of McLaren Family LLLP and has voting and dispositive power over

such shares and includes 137,500 vested stock options.

Includes 163,750 vested

3 unchanged sentences

Includes 735,000 vested

stock options and 13,175 shares owned by Diamond Bridge Capital, LP, which is 50% owned by Mr.

Kane’s shares voting

and dispositive power over these shares with the other 50% owner of Diamond Bridge Capital, LP.

Includes 8,750 vested stock

Includes 1,013,750 vested

stock options.

Includes 1,501,667 shares

held by McLaren Family LLLP.

McLaren is the general partner of McLaren Family LLLP and has voting and dispositive power over

such shares and includes 137,500 vested stock options.

Preferred Stock

Name and Address of Beneficial Owner

3 unchanged sentences

Raintree Drive #230

Scottsdale, AZ 85260

c/o Zoned Properties, Inc.

2 unchanged sentences

1,000,000 (2)

of the multiple votes afforded to holders of the preferred stock (50 votes per share), Mr.

As a result of the multiple

votes afforded to holders of the preferred stock (50 votes per share), Mr.

Johnston and Dr.

McLaren have the ability

to control the outcome of all matters submitted to a vote of stockholders, including the election of directors.

The percent of voting

power in the table gives effect to the holder’s beneficial ownership of common stock and preferred stock.

Combined with Mr.

common stockholdings, Mr.

Johnston holds 45.7% of the voting power of the Company.

McLaren have the ability to control the

outcome of all matters submitted to a vote of stockholders, including the election of directors.

The percent of voting power in the

table gives effect to the holder’s beneficial ownership of common stock and preferred stock.

Shares are held by McLaren

McLaren is the general partner of McLaren Family LLLP and has voting and dispositive power over such shares.

Combined with Dr.

common stockholdings, Dr.

McLaren holds 46.1% of the voting power of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

do not have a written policy for the review, approval or ratification of transactions with related parties or conflicted transactions.

When such transactions arise, they are referred to the audit committee for consideration for referral to our board of directors for its

consideration.

of our seven board members are independent.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

We do not have a written policy for the review,

approval or ratification of transactions with related parties or conflicted transactions.

When such transactions arise, they are referred

to the audit committee for consideration for referral to our board of directors for its consideration.

Director Independence

Three of our four board members are independent.

The Board has determined that each of Messrs.

Friedman, Honaman, Kane, Dr.

Overstreet, and

Stevens is an independent director pursuant to the NASDAQ listing standards.

Under the NASDAQ rules, no director qualifies as independent

unless the Board affirmatively determines that the director has no material relationship with us (directly, or as a partner, stockholder

or officer of an organization that has a relationship with us).

assessing the independence of our directors, the Board considers all of the business relationships between the Company and our directors

and their respective affiliated companies.

This review is based primarily on the Company’s review of its own records and on responses

of the directors to questions in a questionnaire regarding employment, business, familial, compensation and other relationships with

the Company and our management.

Where relationships exist, the Board determines whether the relationship between the Company and the

directors or the directors’ affiliated companies impairs the directors’ independence.

After consideration of the directors’

relationships with the Company, the Board has affirmatively determined that none of the individuals serving as non-employee directors

during the fiscal year ended December 31, 2022 had a material relationship with us and that each of such non-employee directors is independent.

McLaren was not considered an independent director during his service on the Board during the fiscal year ended December 31, 2022 because

of his employment as our Chairman of the Board, CEO, CFO, and Treasurer.

Alex McLaren, MD was not considered an independent director

during his service on the Board during the fiscal year ended December 31, 2022 because Dr.

McLaren is the father of Bryan.

Friedman, Honaman, and Stevens is an independent director pursuant to the NASDAQ listing

Under the NASDAQ rules, no director qualifies as independent unless the Board affirmatively determines that the director has

no material relationship with us (directly, or as a partner, stockholder or officer of an organization that has a relationship with us).

In assessing the independence of our directors,

the Board considers all of the business relationships between the Company and our directors and their respective affiliated companies.

This review is based primarily on the Company’s review of its own records and on responses of the directors to questions in a questionnaire

regarding employment, business, familial, compensation and other relationships with the Company and our management.

Where relationships

exist, the Board determines whether the relationship between the Company and the directors or the directors’ affiliated companies

impairs the directors’ independence.

After consideration of the directors’ relationships with the Company, the Board has

affirmatively determined that none of the individuals serving as non-employee directors during the fiscal year ended December 31, 2025

or 2024 had a material relationship with us and that each of such non-employee directors is independent.

Bryan McLaren was not considered an independent

director during his service on the Board during the fiscal year ended December 31, 2025 or 2024 because of his employment as our Chairman

of the Board, CEO, CFO, and Treasurer.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

following table sets forth the fees that were billed or that will be billed to our company for professional services rendered by Salberg

& Company, P.A.

for the years ended December 31, 2024 and 2023:

The following table sets forth the fees that

were billed or that will be billed to our company for professional services rendered by Salberg & Company, P.A.

for the years ended

December 31, 2025 and 2024:

Audit-Related Fees

fees were for professional services rendered for the audits of our financial statements and for review of our quarterly financial statements.

Audit-Related

2024 and 2023, our independent registered public accountants did not provide any assurance and related services that are reasonably related

to the performance of the audit or review or our financial statements that are not reported under the caption “Audit Fees”

our independent registered public accountants did not provide any services to us for tax compliance, tax advice and tax planning during

2024 and 2023, no tax fees were billed or paid during those fiscal years.

independent registered public accountants did not provide any products and services not disclosed in the table above during 2024 and

As a result, there were no other fees billed or paid during 2024 and 2023.

Policies and Procedures

Audit Committee pre-approves all services provided by our independent auditors.

All of the above services and fees were reviewed and

approved by our Audit Committee before the respective services were rendered.

board of directors has considered the nature and amount of fees billed by our independent registered public accounting firm and believe

that the provision of services for activities unrelated to the audit is compatible with maintaining their respective independence.

Audit fees were for professional services rendered

for the audits of our financial statements and for review of our quarterly financial statements.

Audit-Related Fees

During 2025 and 2024, our independent registered

public accountants did not provide any assurance and related services that are reasonably related to the performance of the audit or

review or our financial statements that are not reported under the caption “Audit Fees” above.

As our independent registered public accountants

did not provide any services to us for tax compliance, tax advice and tax planning during 2025 and 2024, no tax fees were billed or paid

during those fiscal years.

All Other Fees

Our independent registered public accountants

did not provide any products and services not disclosed in the table above during 2025 and 2024.

As a result, there were no other fees

billed or paid during 2025 and 2024.

Pre-Approval Policies and Procedures

Our Audit Committee pre-approves all services

provided by our independent auditors.

All of the above services and fees were reviewed and approved by our Audit Committee before the

respective services were rendered.

Our board of directors has considered the nature

and amount of fees billed by our independent registered public accounting firm and believe that the provision of services for activities

unrelated to the audit is compatible with maintaining their respective independence.

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

required by Item 601 of Regulation S-K:

Description of Exhibit

Exhibits required by Item 601 of Regulation S-K:

EXHIBIT INDEX

Articles of Incorporation, as amended, of Zoned Properties, Inc.

102 unchanged sentences

Unconditional Repayment Guaranty, dated as of July 8, 2024, by the registrant in favor of Private Money Funding, LLC (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on July 10, 2024).

Stock Option Agreement, dated November 25, 2024, by and between the registrant and Cole Stevens

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the

SEC on November 27, 2024).

Insider Trading Policy.

Stock Option Agreement, dated November 25, 2024, by and between the registrant and Cole Stevens (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on November 27, 2024).

Amended and Restated Absolute Net Lease Agreement, dated December 31, 2025, by and between Chino Valley Properties, LLC and Broken Arrow Herbal Center, Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Amended and Restated Absolute Net Lease Agreement, dated December 31, 2025, by and between Green Valley Group, LLC and Broken Arrow Herbal Center, Inc.

(incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Amended and Restated Absolute Net Lease Agreement, dated December 31 2025, by and between Kingman Property Group, LLC and CJK, Inc.

(incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Consent of Landlord and Agreement Regarding Lease, dated December 30, 2025, by and among Chino Valley Properties, LLC, Broken Arrow Herbal Center, Inc., AC Management Group, LLC, Elevate Holdings Group LLC, and A&R Consultants, LLC (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Asset Purchase Agreement, dated as of January 15, 2026, by and among Zoned Properties, Inc., Zoned Arizona Properties, LLC, ZP RE AZ Dysart, LLC, ZP RE Holdings, LLC, and BPB Partners, LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on January 20, 2026).

Material Event and Amendment Agreement, dated as of January 15, 2026, by and between Zoned Properties, Inc.

and Bryan McLaren (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on January 20, 2026).

Material Event Agreement, dated as of January 15, 2026, by and between Zoned Properties, Inc.

and Berekk Blackwell (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on January 20, 2026).

Material Event Agreement, dated as of January 15, 2026, by and between Zoned Properties, Inc.

and Patrick Moroney (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on January 20, 2026).

Trading Policy (incorporated by reference to Amendment No.1 to the registrant’s annual report on Form 10-K/A for the fiscal year ended December

31, 2024, filed with the SEC on March 28, 2025).

List of Subsidiaries.

5 unchanged sentences

INLINE XBRL INSTANCE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

INLINE XBRL TAXONOMY EXTENSION

SCHEMA DOCUMENT

INLINE XBRL TAXONOMY EXTENSION

CALCULATION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION

DEFINITION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION

LABEL LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION

PRESENTATION LINKBASE DOCUMENT

Cover Page Interactive

Data File (formatted as Inline XBRL and contained in Exhibit 101).

Management contract or compensatory

2 unchanged sentences

Furnished herewith.

permitted, the registrant has elected not to supply a summary of information required by Form 10-K.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

As permitted, the registrant has elected not

to supply a summary of information required by Form 10-K.

Pursuant to the requirements

of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf

by the undersigned, thereunto duly authorized.

Zoned Properties, Inc.

March 25, 2025

April 1, 2026

Bryan McLaren

Executive Officer and

Financial Officer

Chief Executive Officer and

Chief Financial Officer

POWER OF ATTORNEY

person whose signature appears below hereby appoints Bryan McLaren as attorney-in-fact with full power of substitution to execute in

5 unchanged sentences

the capacities and on the dates indicated.

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

Bryan McLaren

4 unchanged sentences

principal financial officer and principal accounting officer)

Derek Overstreet

ZONED PROPERTIES, INC.

13 unchanged sentences

Notes to Consolidated Financial Statements F-8 to F-45

Report of Independent Registered Public Accounting

To the Stockholders and the Board of Directors

Zoned Properties, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Zoned Properties, Inc.

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated

statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December

31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the

consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December

31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December

31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

of Independent Registered Public Accounting Firm

the Stockholders and the Board of Directors of:

Properties, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Zoned Properties, Inc.

and Subsidiaries (the “Company”) as of

December 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for

each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated

financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows

for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United

States of America.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 2 to the consolidated financial statements, the Company had a net loss of $2.85 million.

Furthermore, in December 2025 and January

2026 the Company entered into an agreement with a third party and with a related party management group, respectively, to sell all its

The closings are contingent on certain events occurring.

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

or no operations.

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

Plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431-7326

(561) 995-8270 ● Toll Free:

(866) CPA-8500 ● Fax:

(561) 995-1920

www.salbergco.com

● info@salbergco.com

National Association of Certified Valuation Analysts ● Registered with the PCAOB

CPAConnect with Affiliated Offices Worldwide ● Member AICPA Center for Audit Quality

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting.

our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters are matters arising

from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

/s/ SALBERG &

COMPANY, P.A.

SALBERG & COMPANY,

We have served as the

Company’s auditor since 2023 .

Boca Raton, Florida

March 25, 2025

2295 NW Corporate Blvd., Suite 240 ● Boca

Raton, FL 33431-7326

(561) 995-8270 ● Toll Free:

(866) CPA-8500

(561) 995-1920

www.salbergco.com ● info@salbergco.com

Member National Association of Certified Valuation

Analysts ● Registered with the PCAOB

Member CPAConnect with Affiliated Offices Worldwide ● Member AICPA

Center for Audit Quality

COMPANY, P.A.

have served as the Company’s auditor since 2024 .

Raton, Florida

April 1, 2026

ZONED PROPERTIES, INC.

11 unchanged sentences

Investment in unconsolidated joint ventures

Investment in equity securities

Investment in cost-method investees

Interest rate swap asset

24 unchanged sentences

Total Liabilities and Stockholders’ Equity

See accompanying notes to

consolidated financial statements.

See accompanying notes to consolidated financial statements.

ZONED PROPERTIES, INC.

13 unchanged sentences

Property portfolio business development costs

Impairment loss from buildings

Total operating expenses, net

INCOME FROM OPERATIONS

OTHER INCOME (EXPENSES):

(LOSS) INCOME FROM OPERATIONS

( 1,885,542 )

OTHER (EXPENSES) INCOME:

Interest expenses

Income (loss) from derivative - interest rate swap

Total other income (expenses), net

INCOME (LOSS) BEFORE EQUITY METHOD LOSSES

Impairment of equity securities

(Loss) income from derivative - interest rate swap

Total other expenses, net

(LOSS) INCOME BEFORE EQUITY METHOD LOSSES

( 2,851,063 )

EQUITY METHOD LOSS:

Impairment of investment in unconsolidated joint ventures

Equity method loss from unconsolidated joint ventures

Total equity method loss

NET INCOME (LOSS)

NET (LOSS) INCOME

$ ( 2,854,415 )

NET INCOME (LOSS) PER COMMON SHARE:

NET (LOSS) INCOME PER COMMON SHARE:

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

See accompanying notes to consolidated financial

See accompanying notes to consolidated financial statements.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

1 unchanged sentence

Treasury Stock

Stockholders’

Total Stockholders’

Balance, December 31, 2023

4 unchanged sentences

( 15,639,522 )

Purchase of treasury stock

Purchase of treasury shares

Accretion of stock-based compensation related to stock options issued

( 2,854,415 )

Balance, December 31, 2025

6 unchanged sentences

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Net (loss) income

$ ( 2,854,415 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization expense

3 unchanged sentences

Bad debt expense

Impairment of investment in unconsolidated joint ventures

Loss from unconsolidated joint ventures

(Income) loss from interest rate swap

Loss (income) from interest rate swap

Equity method loss from unconsolidated joint ventures

Impairment loss from equity securities

Impairment loss from buildings

Change in operating assets and liabilities:

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Increase in capitalized project costs

Decrease (increase) in escrow deposits

Cash received from investment in unconsolidated joint ventures

Investment in cost-method investees

Increase in escrow deposits

NET CASH USED IN INVESTING ACTIVITIES

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CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of treasury stock

Net proceeds from note payable

Purchase of treasury shares

Net proceeds from notes payable

Repayment of notes payable

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET DECREASE IN CASH

( 2,079,815 )

( 1,236,045 )

CASH, beginning of year

3 unchanged sentences

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Acquisition of rental properties financed through note payable

Reclassification of escrow deposits for acquisition of rental properties

Reclassification of capitalized project costs to prepaid expenses and other assets

Increase in operating lease right of use asset and lease liability

See accompanying notes to consolidated financial

See accompanying notes to consolidated financial statements.

ZONED PROPERTIES, INC.

10 unchanged sentences

cannabis industry.

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

Zoned Properties is a technology-driven property investment company focused on acquiring value-added 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.

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” segment.

The Company targets commercial properties that face unique zoning or development challenges, identifies solutions

that can potentially have a major impact on their commercial value, and then works to acquire the properties while securing long-term,

absolute-net leases.

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

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

(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.

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.

does not grow, harvest, sell or distribute cannabis or any substances regulated under United States law such as the Controlled Substance

Act of 1970, as amended (the “CSA”).

The Company has the following wholly owned subsidiaries:

16 unchanged sentences

LLC (“ZP Dysart”) was organized in the State of Arizona on May 24, 2024.

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

(see Note 5).

The Company also maintains a 50 % equity interest in two joint

ventures which are inactive as of December 31, 2025 (see Note 5).

ZONED PROPERTIES, INC.

2 unchanged sentences

DECEMBER 31, 2025 AND 2024

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 (collectively, Zoned Arizona, ZP Dysart and ZPRE Holdings, the “Real Property Sellers” and, together with the Company,

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

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.

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, as described

in the Company’s filings with the Securities and Exchange Commission (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 at 410 S.

Madison Drive, Tempe,

(ii) the real property located at 13150 W.

Bell Road, Surprise, AZ;

(iii) the real property located at 3455 S.

Ashland Avenue, Chicago,

(iv) the Company’s membership interests in ZPRE Holdings, Arizona Brokerage, Florida Brokerage, ZP Data 2, ZP Ohio B, LLC (“ZP

Ohio B”), and Zoneomics Green, LLC (“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;

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.

See Note 14—Subsequent Events.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

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upon consolidation.

As reflected in the accompanying consolidated

financial statements, the Company generated net income of $ 573,958 and cash provided by operations of $ 578,218 during the year ended December

Additionally, as of December 31, 2024, the Company had cash of $ 1,019,980 and stockholders’ equity of $ 5,860,514 .

The cash balance and positive net cash provided

by operating activities serves to mitigate the conditions that historically raised substantial doubt about the Company’s ability

to continue as a going concern.

The Company believes that the Company has sufficient cash and positive cash flows to meet its obligations

for a minimum of twelve months from the date of this filing.

Going concern consideration

These 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 these consolidated financial statements, the Company had a net loss of $ 2,854,415 and had cash

provided by operations of $ 781,476 during 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 .

Furthermore, 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).

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 its subsidiaries entered into an Asset Purchase Agreement to sell substantially all of its properties to a company owned by

management (See Note 14 – Subsequent Events).

The closing of the Asset Purchase Agreement is contingent upon the Buyer obtaining

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

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.

These 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.

Use of estimates

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Significant estimates for

the years ended December 31, 2024 and 2023 include the collectability of accounts receivable, valuation of investment in equity securities,

the useful life of rental properties and property and equipment, assumptions used in assessing impairment of long-term assets including

rental property and investment in unconsolidated joint ventures, valuation allowances for deferred tax assets, the fair value of derivative

asset or liability related to interest rate swap, and the fair value of non-cash equity transactions, including options and stock-based

compensation.

the years ended December 31, 2025 and 2024 include the collectability of accounts and other receivables, valuation of investment in equity

securities, the useful life of rental properties and property and equipment, assumptions used in assessing impairment of long-term assets

including rental property and investment in unconsolidated joint ventures, valuation of the lease liability and related right-of-use asset,

valuation allowances for deferred tax assets, the fair value of derivative asset or liability related to interest rate swap, and the fair

value of non-cash equity transactions, including options and stock-based compensation.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

Risks and uncertainties

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basis, in accordance with ASC Topic 820.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

The following table represents the Company’s

4 unchanged sentences

Interest rate swap liability

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

Interest rate swap

28 unchanged sentences

2025 Fair Value of

December 10, 2022 interest rate swap $ —

7.65 % December 10, 2032 $ 44,581 $ 122,879

December 10, 2022 interest rate swap $ 4,372,231 7.65 % December 10, 2032 $ 77,328 $ 44,581

Cash is carried at cost and represents cash on

4 unchanged sentences

To date, the Company has not experienced any losses on its invested cash.

On December 31, 2024 and 2023, the Company had approximately

As of December 31, 2025 and 2024, the Company had approximately

$ 328,000 and $ 510,000 , respectively, of cash in excess of FDIC limits of $ 250,000 .

6 unchanged sentences

well as an assessment of specific identifiable customer accounts considered at risk or uncollectible.

On January 1, 2023, the Company

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).

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.

In accordance with ASC 326, “Financial

Instruments - Credit Losses”, 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.

ZONED PROPERTIES, INC.

2 unchanged sentences

DECEMBER 31, 2025 AND 2024

Investment in unconsolidated joint ventures

Investment in equity method unconsolidated

joint ventures

The Company has equity investments in various

privately held entities.

The Company accounts for these investments either under the equity method or cost method of accounting depending

on the Company’s ownership interest and level of influence.

Investments accounted for under the equity method are recorded based

upon the amount of the Company’s investment and adjusted each period for its share of the investee’s income or loss.

are reviewed for changes in circumstance or the occurrence of events that suggest an other than temporary event where our investment may

not be recoverable.

The Company accounts for these investments either under the equity method.

Investments accounted for under the

equity method are recorded based upon the amount of the Company’s investment and adjusted each period for its share of the investee’s

income or loss.

Investments are reviewed for changes in circumstance or the occurrence of events that suggest an other than temporary

event where our investment may not be recoverable.

The Company evaluates its investments in these entities for consolidation.

It considers its percentage interest in

the joint venture, evaluation of control and whether a variable interest entity exists when determining whether or not the investment

qualifies for consolidation or if it should be accounted for as an unconsolidated investment under the equity method of accounting.

If an investment qualifies for the equity method

of accounting, the Company’s investment is recorded initially at cost, and subsequently adjusted for equity in net income (loss)

and cash contributions and distributions.

The net income or loss of an unconsolidated investment is allocated to its investors in accordance

with the provisions of the operating agreement of the entity.

The allocation provisions in these agreements may differ from the ownership

interest held by each investor.

Differences, if any, between the carrying amount of our investment in the respective joint venture and

the Company’s share of the underlying equity of such unconsolidated entity are amortized over the respective lives of the underlying

assets as applicable.

These items are reported as a single line item in the statements of operations as income or loss from investments

in unconsolidated affiliated entities.

Long-term investments

Long-term investments include investments in equity

securities of entities over which the Company does not have a controlling financial interest or significant influence and are accounted

for at fair value.

Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes

in price or impairments (referred to as the “measurement alternative”).

its percentage interest in the joint venture, evaluation of control and whether a variable interest entity exists when determining whether

or not the investment qualifies for consolidation or if it should be accounted for as an unconsolidated investment under the equity method

of accounting.

The Company’s equity method investment is

recorded initially at cost, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions.

income or loss of an unconsolidated investment is allocated to its investors in accordance with the provisions of the operating agreement

of the entity.

The allocation provisions in these agreements may differ from the ownership interest held by each investor.

if any, between the carrying amount of our investment in the respective joint venture and the Company’s share of the underlying

equity of such unconsolidated entity are amortized over the respective lives of the underlying assets as applicable.

These items are reported

as a single line item in the statements of operations as income or loss from investments in equity method unconsolidated joint ventures.

Investment in cost method investees

The Company accounts for its interests in entities

where the Company has virtually no influence over operating and financial policies under the cost method of accounting.

In such cases,

the Company’s original investments are recorded at the cost to acquire the interest and any distributions received are recorded

During the year ended December 31, 2025, through its wholly-owned subsidiary ZPRE Holdings, the Company invested $ 84,110 in

ZP Ohio B for a 5 % ownership interest in ZP Ohio B, which is accounted for under the cost method and reflected on the accompanying consolidated

balance sheet under “investment in cost-method investee.” ZP Ohio B plans on developing several projects.

This investment

is subject to the Company’s impairment review policy.

Investment in cost method investees also includes

an investment in equity securities of an entity over which the Company does not have a controlling financial interest or significant influence.

Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes in price or impairments

(referred to as the “measurement alternative”).

This equity instrument does not have a readily determinable fair value.

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

In applying the measurement alternative, the Company

performs a qualitative assessment on a quarterly basis and recognizes an impairment if there are sufficient indicators that the fair value

of the equity investments is less than carrying values.

performed a qualitative impairment assessment on a quarterly basis and shall recognize an impairment loss if there are sufficient indicators

that the fair value of the equity investment is less than carrying values.

Changes in value are recorded in non-operating income (loss).

On December 31,

2024 and 2023, long-term investments consisted of an investment in convertible preferred stock that does not have a readily determinable

fair value (see Note 5).

On December 31, 2025, based on its qualitative assessment, the Company impaired its equity investment and recorded an impairment loss

on equity securities of $ 50,000 (see Note 5).

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

Rental properties

29 unchanged sentences

from actual results.

For the years ended December 31, 2024 and 2023, the Company did not record any impairment losses.

During the year ended December 31, 2025, the Company recorded an impairment loss of $ 3,118,716 due to (1) the damage

and demolition of its building located in Chicago, IL, where a vehicle crashed into the building, causing significant structural damage,

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

During the year ended December 31, 2024, the Company did

not record any impairment losses.

The Company has land which is not subject to depreciation.

Escrow deposits

Escrow deposits and capitalized project costs

The Company is in the business of pursuing real

1 unchanged sentence

or a Purchase and Sale Agreement.

These agreements often include the requirement to make escrow deposits.

Escrow deposits include cash

deposits made by the Company for the future acquisition of properties or for the option to acquire a property.

In most cases, upon closing

of the acquisition of a property, the escrow deposit will be applied to the purchase price.

In some cases, the Company may discontinue

pursuit of an acquisition of a property and therefore terminate an existing agreement, which can cause forfeiture of escrow deposits if

those deposits are non-refundable.

During the years ended December 31, 2024 and 2023, the Company forfeited escrow deposits of $ 53,875

and $ 26,000 , respectively, which is reflected in operating expenses as part of property portfolio business development costs on the accompanying

consolidated statements of operations.

On December 31, 2024 and 2023, escrow deposits amounted to $ 169,875 and $ 177,048 , respectively.

These agreements often include the requirement to make escrow deposits and capitalized project costs.

Escrow deposits include cash deposits made by the Company for the future acquisition of properties or for the option to acquire a property.

In most cases, upon closing of the acquisition of a property, the escrow deposit will be applied to the purchase price.

Capitalized project

costs include cash invested in project-related development and due diligence costs.

In some cases, the Company may discontinue pursuit

of an acquisition of a property and therefore terminate an existing agreement, which can cause forfeiture of escrow deposits if those

deposits are non-refundable and write off capitalized project costs.

During the years ended December 31, 2025 and 2024, the Company forfeited

escrow deposits and wrote off capitalized project costs of $ 300,540 and $ 53,875 , respectively, which is reflected in operating expenses

as part of property portfolio business development costs on the accompanying consolidated statements of operations.

On December 31, 2025

and 2024, escrow deposits amounted to $ 294,169 and $ 169,875 , respectively.

ZONED PROPERTIES, INC.

43 unchanged sentences

when the Company performs services pursuant to its agreements with clients and collectability is probable.

Brokerage revenues primarily consist of real

estate sales commissions and are recognized upon the successful completion of all required services which is likely to occur upon a lease

commencement, when escrow closes on the sale of a property, or as otherwise negotiated between the Brokerage and its clients.

In accordance

with the guidelines established for reporting revenue gross as a principal versus net as an agent in ASC Topic 606, the Company records

commission revenues and expenses on a gross basis.

Of the criteria listed in ASC Topic 606, the Company is the primary obligor in the

transaction, does not have inventory risk, performs all or part of the service, has credit risk, and has wide latitude in establishing

the price of services rendered and discretion in selection of agents and determination of service specifications.

Brokerage revenues

that are payable upon payment of rent or other events beyond the Company’s control are recognized upon the occurrence of such events.

Brokerage revenues primarily consist of real estate

sales commissions and are recognized upon the successful completion of all required services which is likely to occur upon a lease commencement,

when escrow closes on the sale of a property, or as otherwise negotiated between the Brokerage and its clients.

In accordance with the

guidelines established for reporting revenue gross as a principal versus net as an agent in ASC Topic 606, the Company records commission

revenues and expenses on a gross basis.

Of the criteria listed in ASC Topic 606, the Company is the primary obligor in the transaction,

does not have inventory risk, performs all or part of the service, has credit risk, and has wide latitude in establishing the price of

services rendered and discretion in selection of agents and determination of service specifications.

Brokerage revenues that are payable

upon payment of rent or other events beyond the Company’s control are recognized upon the occurrence of such events.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

Contract liabilities

8 unchanged sentences

Accretion of contract liabilities to revenue

Customer refund

Balance at end of period

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Lease accounting

26 unchanged sentences

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

as a reduction to the lease income.

The increase in monthly rent was commensurate with the additional space being leased;

therefore, this

modification qualifies as a separate contract under ASC 842 which does not require lease classification reassessment.

The Company excludes

short-term leases having initial terms of 12-months or less as an accounting policy election and recognizes rent expense on a straight-lines

basis over the lease term.

as a reduction to the property investment portfolio revenues.

The increase in monthly rent was commensurate with the additional space

being leased;

therefore, this modification qualifies as a separate contract under ASC 842 which does not require lease classification

reassessment.

Additionally, during the year ended December 31, 2025, the Company paid $ 1,000,000 to the tenant of ZP Dysart as a tenant

improvement allowance for investment into the premises.

The $ 1,000,000 payment to the tenant was used by the tenant to construct a building

on the land as well as for the buildout of the property.

Since ZP Dysart will own the building and related improvements at the end of

the lease, the $ 1,000,000 tenant improvement allowance was capitalized to rental properties and will be depreciated on a straight-line

basis over the useful life of the building and related improvements beginning when the building and related improvements is placed in

service, which occurred in September 2025.

The Company excludes short-term leases having initial terms of 12-months or less as an accounting

policy election and recognizes rent expense on a straight-lines basis over the lease term.

The Company records revenues from rental properties

2 unchanged sentences

payment amount required on the operating lease is reflected as deferred rent.

In prior years, the Company has amended certain leases

which resulted in the abatement of rent.

Additionally, in connection with operating leases on various properties, the Company abated

certain lease payments.

These rent abatements and the effect of recording rent on a straight-line basis resulted in aggregate deferred

rent as of December 31, 2024 and 2023 of $ 747,504 and $ 371,472 , respectively (see Note 3).

Additionally, if the lease provides for tenant

improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company.

When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control

of the physical use of the leased asset until the tenant improvements are substantially completed.

When the tenant is the owner of the

tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the

tenant’s rent) that is funded is treated as a lease incentive receivable and amortized as a reduction of revenue over the lease

In prior years, the Company has amended certain leases which

resulted in the abatement of rent.

Additionally, in connection with operating leases on various properties, the Company abated certain

lease payments.

These rent abatements and the effect of recording rent on a straight-line basis resulted in aggregate deferred rent as

of December 31, 2025 and 2024 of $ 1,084,413 and $ 747,504 , respectively (see Note 3).

Additionally, if the lease provides for tenant improvements,

the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company.

When the Company

is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical

use of the leased asset until the tenant improvements are substantially completed.

When the tenant is the owner of the tenant improvements,

any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent)

that is funded is treated as a lease incentive receivable and amortized as a reduction of revenue over the lease term.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

For contracts entered into on or after the effective

17 unchanged sentences

and is included in general and administrative expenses in the consolidated statements of operations.

Basic and diluted loss per share

Basic loss per share is computed by dividing net

loss available to common shareholders by the weighted average number of shares of common stock outstanding during each period.

loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock,

common stock equivalents and potentially dilutive securities outstanding during the period using the treasury stock method and as-if converted

Potentially dilutive common shares and participating securities are excluded from the computation of diluted shares outstanding

if they would have an anti-dilutive impact on the Company’s net losses.

The Company’s preferred stock is considered a participating

security since the preferred shares are entitled to dividends equal to common share dividends and accordingly, are included in the computation

of earnings per share pursuant to the two-class method.

The two-class method of computing (loss) income per share is an earnings allocation

formula that determines (loss) income per share for common stock and any participating securities according to dividends declared (whether

paid or unpaid) and participation rights in undistributed earnings.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Basic and diluted net income (loss) per share

Basic net income (loss) per share is computed

by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during

Diluted net income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted

average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period using

the treasury stock method and as-if converted method.

Potentially dilutive common shares and participating securities are excluded from

the computation of diluted shares outstanding if they would have an anti-dilutive impact on the Company’s net income (loss).

Company’s preferred stock is considered a participating security since the preferred shares are entitled to dividends equal to common

share dividends and accordingly, are included in the computation of earnings per share pursuant to the two-class method.

The two-class

method of computing income (loss) per share is an earnings allocation formula that determines income per share for common stock and any

participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings.

The following table presents a reconciliation

of basic and diluted net income (loss) per common share:

Net income (loss) per common share - basic:

Net income (loss)

Net (loss) income per common share - basic:

Net (loss) income

$ ( 2,854,415 )

undistributed (earnings) loss allocated to participating securities

Net income (loss) allocated to common stockholders

Net (loss) income allocated to common stockholders

$ ( 2,854,415 )

Weighted average common shares outstanding – basic

Net income (loss) per common share – basic

Net income (loss) per common share - diluted:

Net income (loss) allocated to common shareholders – basic

Net (loss) income per common share – basic

Net (loss) income per common share - diluted:

Net (loss) income allocated to common shareholders – basic

$ ( 2,854,415 )

interest of convertible debt

Numerator for income (loss) per common share – basic

Numerator for net (loss) income per common share – basic

$ ( 2,854,415 )

4 unchanged sentences

Weighted average common shares outstanding – diluted

Net income (loss) per common share – diluted

Net (loss) income per common share – diluted

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

The following potentially dilutive shares have

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Currently, these reportable segments are being managed separately based on the fundamental differences in their operations.

In November 2023, the FASB issued ASU 2023-07,

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires entities to report incremental information

about significant segment expenses included in a segment’s profit or loss measure as well as the title and position of the chief operating

decision maker (“CODM”).

The new standard also requires interim disclosures related to reportable segment profit or loss and

assets that had previously only been disclosed annually.

The Company adopted ASU 2023-07 effective December 31, 2024 on a retrospective

As a result, the Company has enhanced its segment disclosures in this report to include the presentation of depreciation and amortization,

interest and joint venture expenses by segment and the disclosure of its CODM.

The adoption of this ASU only affects the Company’s disclosures

with no impact to its financial condition or results of operations

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

In November 2023, the FASB issued Accounting Standards

Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires

entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure as

well as the title and position of the chief operating decision maker (“CODM”).

The new standard also requires interim disclosures

related to reportable segment profit or loss and assets that had previously only been disclosed annually.

The Company adopted ASU 2023-07

effective December 31, 2024 on a retrospective basis.

As a result, the Company has enhanced its segment disclosures in this report to

include the presentation of depreciation and amortization, interest and joint venture expenses by segment and the disclosure of its CODM.

The adoption of this ASU only affects the Company’s disclosures with no impact to its financial condition or results of operations.

Deferred income tax assets and liabilities arise

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under ASU 2016-09 Improvements to Employee Share-Based Payment Accounting.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

Recently issued accounting pronouncements

In December 2023, the FASB issued ASU 2023-09,

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid.

2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages

and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction

to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds

received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5 % of total income tax payments,

net of refunds received.

This pronouncement is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.

The Company adopted Accounting Standards Update

(“ASU”), 2023-09, Improvements to Income Tax Disclosures in the current year.

The ASU requires greater disaggregation of information

about a reporting entity’s effective tax rate reconciliation and information on income taxes paid.

The ASU applies to all entities

subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional

tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions.

The ASU is effective

for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 203-09 during the year ended

December 31, 2025 using a retrospective approach and is complying with the related disclosure requirements in Note 13, Income Taxes.

In November 2024, the FASB issued ASU 2024-03,

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The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial

Management does not believe that any other recently

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

NOTE 3 – CONCENTRATIONS AND RISKS

Lease Agreements with Significant Tenants

Our properties located in Chino Valley and Green

Valley are leased by Broken Arrow Herbal Center, Inc.

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

Our property located in Chino Valley is leased

by Broken Arrow Herbal Center, Inc.

(“Broken Arrow”), doing business as JARS Cannabis.

Our property located in Green Valley is leased

by Broken Arrow, doing business as JARS Cannabis.

Our property located in Kingman is leased by CJK,

(“CJK”), doing business as JARS Cannabis.

Our property located in Tempe is leased by VSM,

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Our land located in Surprise, AZ is leased by

The Pharma, LLC (“Sunday Goods”), doing business as Sunday Goods.

The Pharm, LLC (“Sunday Goods”), doing business as Sunday Goods.

The Company considers a tenant whose annual base

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The Tempe Lease (leased by VSM), the Chino

Valley Lease and Green Valley Lease (leased by Broken Arrow), and the Woodward Lease (leased by Rapid Fish) are considered significant

and the tenants are referred to as the Significant Tenants.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Valley Lease and Green Valley Lease (leased by Broken Arrow), and the Woodward Lease located in Pleasant Ridge (leased by Rapid Fish)

are considered significant and the tenants are referred to as the Significant Tenants.

Chino Valley, AZ

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Except for the increase in base rent, the terms of the 2018 Chino Valley Lease remain in full force and effect.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

On May 29, 2020, Chino Valley and Broken Arrow

entered into a Second Amendment to the 2018 Chino Valley Lease, as amended (the “2020 Chino Valley Amendment”), effective

May 31, 2020 (“Effective Date”).

Pursuant to the terms of the 2020 Chino Valley Amendment, among other things, the base rent

was adjusted to $ 32,800 per month, and the base rent was abated from June 1, 2020 to July 31, 2020.

Any increase in the rentable area

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

Pursuant to the terms of the 2020 Chino Valley Amendment, the parties agreed that if there is any change in laws such that the dispensing,

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

by Chino Valley and Broken Arrow, Broken Arrow may terminate the 2018 Chino Valley Lease, as amended, by delivering written notice to

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

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

In addition, the parties agreed that from the period

from the Effective Date to June 30, 2022 (the “Improvement Period”), Broken Arrow or its affiliate, CJK, will invest a combined

total of at least $ 8,000,000 of improvements (“Investment by Tenants”) in and to the property that is the subject of the Chino

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

The Company’s Significant Tenants completed the Investment by Tenants to the Facilities totaling in excess of $ 8,000,000 and have

satisfied the contractual obligations related to the same.

May 31, 2020.

Pursuant to the terms of the 2020 Chino Valley Amendment, among other things, the base rent was adjusted to $ 32,800 per

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

Any increase in the rentable area of the leased premises will

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

Pursuant to the terms of

the 2020 Chino Valley Amendment, the parties agreed that if there is any change in laws such that the dispensing, sale or cultivation

of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Chino Valley

and Broken Arrow, Broken Arrow may terminate the 2018 Chino Valley Lease, as amended, by delivering written notice to Chino Valley, together

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

been earned after termination for the balance of the term.

In addition, the parties agreed that from the period from May 31, 2020 to June

30, 2022 (the “Improvement Period”), Broken Arrow or its affiliate, CJK, will invest a combined total of at least $ 8,000,000

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

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

The Company’s

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

obligations related to the same.

On August 23, 2021, Chino Valley and Broken Arrow

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

Valley Lease”), effective September 1, 2021.

The parties previously agreed that the base rental payments under the Chino Valley

Lease would increase commensurate to any and all expanded and operational square footage on the premises by calculating the fixed rate

of $ 0.82 per square foot per month by the new operational square footage.

Accordingly, in the Third Chino Valley Amendment, the parties

agreed that, as of September 1, 2021, the rental payment is increased to $ 55,195 per month base rental payment, plus additional rental

payments, as a result of the increase in the square footage to 67,312 square feet of operational space.

This lease modification qualified

as a separate contract as the modification grants the tenant additional right of use not included in the original lease, as amended, and

the increase in monthly rent payments is commensurate with the standalone price for the additional square footage being leased.

entered into the Third Amendment (the “Third Chino Valley Amendment”) to the 2018 Chino On August 23, 2021, Chino Valley and

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

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

The parties previously agreed that the base rental payments under

the Chino Valley Lease would increase commensurate to any and all expanded and operational square footage on the premises by calculating

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

Accordingly, in the Third Chino Valley Amendment,

the parties agreed that, as of September 1, 2021, the rental payment is increased to $ 55,195 per month base rental payment, plus additional

rental payments, as a result of the increase in the square footage to 67,312 square feet of operational space.

This lease modification

qualified as a separate contract as the modification grants the tenant additional right of use not included in the original lease, as

amended, and the increase in monthly rent payments is commensurate with the standalone price for the additional square footage being leased.

On January 24, 2022 and effective on March 1,

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

as a reduction to the lease revenue.

Pursuant to the terms of the Fourth Chino Valley Amendment, effective March 1, 2022, the monthly

base rent was increased to $ 87,581 , representing an increase from $ 0.82 per square foot to $ 0.90 per square foot, for all current and

future operational square footage that may be developed as the premises continues to expand.

as a reduction to the property investment portfolio revenues.

Pursuant to the terms of the Fourth Chino Valley Amendment, effective March

1, 2022, the monthly base rent was increased to $ 87,581 , representing an increase from $ 0.82 per square foot to $ 0.90 per square foot,

for all current and future operational square footage that may be developed as the premises continue to expand.

During 2025, Broken Arrow faced operational challenges

that impaired their ability to meet contractual rent obligations.

As of December 31, 2025, Broken Arrow remitted approximately 7 % of the

September to December 2025 rent due.

On September 29, 2025, the Company delivered a notice of default to Broken Arrow.

The Company and

Broken Arrow have entered into a Consent Agreement (see Note 14 – Subsequent Events) providing for an agreement by Broken Arrow

to complete payment of the full rent amount outstanding.

The Company received the full rent amount outstanding on March 31, 2026.

On December 31, 2025, Chino Valley entered into

an Amended and Restated Absolute Net Lease Agreements with Broken Arrow Inc.

with an effective date of January 1, 2026 (see Note 14 –

Subsequent Events).

Green Valley, AZ

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DECEMBER 31, 2025 AND 2024

On December 31, 2025, Green Valley entered into

an Amended and Restated Absolute Net Lease Agreements with Broken Arrow, with an effective date of January 1, 2026 (see Note 14).

On May 1, 2018, and amended on May 29, 2020, Zoned

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

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

balance of the term.

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

In addition, under the Tempe Amendment the parties

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to $ 246,890 and $ 264,115 , respectively, which has been included in contract liabilities on the accompanying consolidated balance sheets.

As of March 01, 2025, the Company’s new

tenant, VSM, has completed more than $ 10,000,000 worth of improvements to the Tempe property.

Additionally, on the Tempe property, the Company

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

ZONED PROPERTIES, INC.

2 unchanged sentences

DECEMBER 31, 2025 AND 2024

As of June 1, 2025, VSM has satisfied the Capital

Commitment and completed more than $ 3,000,000 worth of improvements to the Tempe property.

Additionally, on the Tempe property, the Company

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

On May 1, 2018, Kingman and CJK entered into a

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which is the subject of the Kingman Lease.

On August 2, 2023, the Company entered into a

On August 2, 2023, the Company consented to a

Sublease Agreement (the “Sublease”) with CJK and a subtenant in connection with the Company’s Kingman property.

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the Sublease was not renewed and the Sublease expired.

Pursuant to the Kingman Lease, if pursuant to

any assignment or sublease, CJK receives rent, either initially or over the Term of the assignment or sublease, in excess of the Rent

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

after appropriate adjustments to assure that all other payments called for hereunder are appropriately taken into account, CJK shall pay

to the Company, as Additional Rent hereunder, 50 % of the excess of each such payment of rent received by CJK.

Accordingly, the Company

receives additional rent of $ 3,500 per month during the term of the sublease.

Additionally, the subtenant paid a security deposit

of $ 22,000 per the terms of the sublease.

The Company and CJK have agreed to split the Security Deposit at 68 % (the Company received $ 14,960

of the $ 22,000 Security Deposit, which $ 14,960 was included in security deposits payable on the accompanying consolidated balance sheet

as of December 31, 2023.

Upon expiration of the Sublease, the Security Deposit of $ 14,960 was refunded to the subtenant.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Upon expiration of the Sublease, the Security Deposit of $ 14,960 was refunded to

the subtenant.

The Kingman Lease remains in place;

however, the Kingman property is currently non-operational.

On December 31, 2025, Kingman entered into an

Amended and Restated Absolute Net Lease Agreements with CJK, Inc., with an effective date of January 1, 2026 (see Note 14 – Subsequent

Pleasant Ridge, MI

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

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

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

options to extend the term, exercisable by the Woodward Tenant by written notice to ZP Woodward given not later than 180 days prior to

the expiration of the then current term on the same terms and conditions as provided in this Lease.

The Woodward Lease contains customary

obligations of the Woodward Tenant consistent with an absolute triple net lease agreement, including (i) the payment of real property

taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or estate taxes), (ii) payment

of insurance premiums and operating costs of ZP Woodward related to the operation of the Woodward Property, and (iii) maintenance and

repair obligations to maintain the Woodward Property in first-class retail condition.

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

the Woodward Tenant.

The Woodward Lease commenced on December 1, 2022 and had a term of 14 years and 4 months through March 1, 2037, with

two 5-year options to extend the term, exercisable by the Woodward Tenant by written notice to ZP Woodward given not later than 180 days

prior to the expiration of the then current term on the same terms and conditions as provided in this Lease.

The Woodward Lease contains

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

property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or estate taxes),

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

and repair obligations to maintain the Woodward Property in first-class retail condition.

The Woodward Lease includes a Guaranty of Payment

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levied upon or assessed against the Company.

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

maintain insurance in full force during the term of the Woodward Lease and any other period of occupancy of the premises by the tenant.

In addition, pursuant to the terms of the Woodward Lease, the Woodward Tenant agreed to maintain

insurance in full force during the term of the Woodward Lease and any other period of occupancy of the premises by the tenant.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

On May 14, 2023, ZP Woodward entered into an Assignment

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the following changes have been agreed to by the Parties:

Amended Rental Payment

Amended Rental Payment Schedule

The First Amendment provides that as long as the

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documentation reasonably acceptable to the Company, Tenant’s failure shall constitute an Event of Default under the Lease.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Renovation Completion Commitment

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upon request, so long as at the time of the extension the site is conducting inspections toward certificate of occupancy.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

The First Amendment also provides that if within

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In consideration of the First Amendment, the Guarantors

executed and delivered a Reaffirmation of Guaranty (the “Reaffirmation of Guaranty”) effective as of the First Amendment Effective

Date, May 3, 2024.

Related to the Guaranty and the Original Guarantors, the Company agreed, that so long as there are no uncured Events

of Default and Tenant remains in good standing under the Lease, then the Original Guarantors shall be released of their guarantees following

the original lease term of fourteen and a half (14.5) years.

The Company also agreed that, provided the Company has given written approval,

at its discretion, which shall not be unreasonably withheld, then the Original Guarantors may be permitted to transfer the obligations

under their Guarantees in the event of a Permitted Transfer, on to a new Guarantor(s) that are of at least equal or greater credit than

the Original Guarantors, to be determined by the Company in its discretion, which shall not be unreasonably withheld.

On December 15, 2023, ZPRE Holdings entered into

an Agreement Regarding Purchase and Sale Contract (the “Agreement”), effective as of December 15, 2023, by and between Keystone,

as assignor, and ZPRE Holdings as assignee.

Pursuant to the terms of the Agreement, Keystone agreed to assign to ZPRE Holdings its right,

title and interest in that certain Purchase and Sale Agreement dated May 5, 2022, by and between the Seller and Keystone, as amended (the

“Original PSA”).

Pursuant to the terms of the Original PSA, the Seller agreed to sell to Keystone certain real property located

at 3499, 3451, and 3455 South Ashland Avenue, Chicago, Illinois, 60608 (the “Ashland Avenue Property”) in exchange for a purchase

price of $ 1,250,000 , to be paid by Keystone (the “Purchase Price”).

Pursuant to the terms of the Agreement, ZPRE Holdings

agreed to deposit the following amounts into escrow:

(i) $ 40,000 , representing reimbursement to Keystone or its designee for the earnest

money deposit paid under the terms of the Original PSA, (ii) assignment fees of $ 185,000 , and (iii) $ 1,210,000 , representing the Purchase

Price less the $ 40,000 earnest money payment.

On January 19, 2024, the Company paid these funds in the aggregate amount $ 1,435,000 .

executed and delivered a Reaffirmation of Guaranty (the “Reaffirmation of Guaranty”) effective as of May 3, 2024.

to the Guaranty and the Original Guarantors, the Company agreed, that so long as there are no uncured Events of Default and Tenant remains

in good standing under the Lease, then the Original Guarantors shall be released of their guarantees following the original lease term

of 14.5 years.

The Company also agreed that, provided the Company has given written approval, at its discretion, which shall not be unreasonably

withheld, then the Original Guarantors may be permitted to transfer the obligations under their Guarantees in the event of a Permitted

Transfer, on to a new Guarantor(s) that are of at least equal or greater credit than the Original Guarantors, to be determined by the

Company in its discretion, which shall not be unreasonably withheld.

During the third quarter of 2025, New Tenant faced

operational challenges that impaired its ability to meet contractual rent obligations.

Beginning in July 2025, New Tenant remitted approximately

50 % of the rent then due.

In August 2025, the Company sent a demand notice to New Tenant to remit full payment of outstanding rent.

September 2025, New Tenant remitted full payment of all outstanding rent that was previously due and the Company has received all rent

payments due through December 31, 2025.

Subsequent to year-end 2025, the Company sent New Tenant at the Woodward Property a written notice

default related to the New Tenant’s failure to i) make timely rental payments and ii) fulfill its obligations related to non-monetary

terms under the Woodward Lease.

As of the date of this filing, the Company remains in discussions with New Tenant about curing these events

of default and regarding future operations at the Woodward Property.

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 .

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

On January 19, 2024, ZPRE Holdings and Keystone

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right, title and interest in and to the Original PSA to purchase the “Ashland Avenue Property”.

On January 19, 2024, the transactions contemplated

by the Agreement and Assignment and Assumption Agreement closed and ZPE Holdings completed the acquisition of the Ashland Avenue Property

under the Original PSA, as assigned.

The completed transactions were subject to closing costs, commissions, and fees customary to the

acquisition of real estate, including a $ 65,000 commission payable and a $ 79,634 sponsor fee payable.

On January 19, 2024, the transactions

contemplated by the Agreement and Assignment and Assumption Agreement closed and ZPE Holdings completed the acquisition of the Ashland

Avenue Property under the Original PSA, as assigned.

The completed transactions were subject to closing costs, commissions, and fees customary

to the acquisition of real estate, including a $ 65,000 commission payable and a $ 79,634 sponsor fee payable.

On January 18, 2024, ZPRE Holdings entered into

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DECEMBER 31, 2025 AND 2024

Under the Justice Grown Lease, the Company’s

tenant is responsible for constructing a new retail dispensary building on the Ashland Avenue Property.

In 2025, the Company was notified

that a vehicle crashed into the building at the Ashland Avenue Property, causing significant structural damage.

The City of Chicago declared

the building unsafe and ordered its demolition (See Note 4).

As such, the Ashland Avenue Property remains a vacant lot of land.

upon the most recent information received by the Company from Justice Grown, the Company believes that the development of the new retail

dispensary building will still be completed, and the tenant will open for business in late 2027;

however, challenges related to the ongoing

permitting and development process required through the City of Chicago may continue to cause delays.

The Company’s tenant is expected

to continue to pay full rent pursuant to the Justice Grown Lease.

If Justice Grown does not construct the new building, the Company may

need to pursue recovery through legal claims.

In connection with the damage and demolition of the building, during the year ended December

31, 2025, the Company recorded an impairment loss of $ 1,018,716 .

On January 2, 2024, ZPRE Holdings entered into

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Sunday Goods, as tenant.

Pursuant to the terms of the Sunday Goods Lease, ZPRE Holdings agreed to lease the Surprise Property to Sunday

Goods for use as a licensed medical and adult use marijuana retail dispensary in accordance with the laws of Arizona.

The Sunday Goods

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

Pursuant to the Sunday Goods Lease, ZPRE Holdings has agreed to provide

a tenant improvement allowance for up to $ 1,000,000 to Sunday Goods to be reimbursed in tranches following completion of tenant’s

Pursuant to the terms of the Contingent Lease, on February 27, 2024, Sunday Goods executed a guaranty (the “Guaranty”)

in favor of ZP Holdings, guaranteeing the prompt and complete payment and performance of all of Sunday Goods’ obligations to ZPRE

Holdings arising under the Contingent Lease.

As of July 8, 2024, all contingencies were satisfied and the Contingent Lease commenced on

July 13, 2024.

Pursuant to the Sunday Goods Lease, beginning in July 2025, Sunday Goods shall pay monthly base rent of $ 25,000 through

June 2026, with an annual increase of 3 % per annum through June 2040.

Pursuant to the terms of the Sunday Goods Lease, ZPRE Holdings agreed to lease the “Surprise Property”

to Sunday Goods for use as a licensed medical and adult use marijuana retail dispensary in accordance with the laws of Arizona.

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

Pursuant to the Sunday Goods Lease, ZPRE Holdings has agreed to

provide a tenant improvement allowance for up to $ 1,000,000 to Sunday Goods to be reimbursed in tranches following completion of tenant’s

During the year ended December 31, 2025, the Company paid $ 1,000,000 to Sunday Goods as a tenant improvement allowance.

The $ 1,000,000

payment to the tenant were used by the tenant to construct a building on the land as well as for the buildout of the property.

Dysart will own the building and related improvements at the end of the lease, the $ 1,000,000 tenant improvement allowance was capitalized

to rental properties and are being depreciated on a straight-line basis over the useful life of the building and related improvements

beginning in September 2025.

In September 2025, Sunday Goods completed the construction of a new retail dispensary building on the Surprise

Property and opened for business.

Pursuant to the terms of the Contingent Lease, on February 27, 2024, Sunday Goods executed a guaranty

(the “Guaranty”) in favor of ZP Holdings, guaranteeing the prompt and complete payment and performance of all of Sunday Goods’

obligations to ZPRE Holdings arising under the Contingent Lease.

As of July 8, 2024, all contingencies were satisfied and the Contingent

Lease commenced on July 13, 2024.

Pursuant to the Sunday Goods Lease, beginning in July 2025, Sunday Goods began paying monthly base

rent of $ 25,000 which shall be paid through June 2026, with an annual increase of 3 % per annum through June 2040.

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) $ 300,000 was paid upon the full

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,

and (#4) the remaining $ 400,000 of the Allowance was paid on October 21, 2025 upon completion of the Tenant’s Work on

the Property;

provided however, Landlord’s obligation to disburse the final $ 400,000 (Payment #4 of the Allowance Payments)

is expressly conditioned upon Landlord’s receipt of the following “Allowance Deliverables”:

(i) Tenant has furnished

to Landlord a copy of a commercially reasonably detailed final cost breakdown for Tenant’s Work and Landlord has inspected the Premises

to confirm that Tenant’s Work has been completed in a good and workmanlike manner according to the Tenant’s Approved Plans;

(ii) Tenant has furnished to Landlord commercially reasonable final affidavits and final lien releases from Tenant’s general contractor,

and if any, all subcontractors and all material suppliers for all labor and materials performed or supplied as part of Tenant’s

Work (whether or not the Allowance is applicable thereto);

and (iii) a copy of the certificate of occupancy from the governmental authority

having jurisdiction has been delivered to Landlord.

Throughout the project, Tenant shall be required to provide Landlord with ongoing

accounting reflecting a commercially reasonable breakdown of the Tenant’s Work paid for with the Allowance Payments, and also a

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

As of December 31, 2025 and 2024, security deposits

10 unchanged sentences

For the Year Ended

Woodward lease *

Further, as of December 31, 2025 and 2024, deferred

rent of $ 747,504 and $ 371,472 is due collectively from the tenants due to the abatement of rent under the lease agreements discussed above,

respectively, and as of December 31, 2024 and 2023, a lease incentive receivable of $ 422,018 and $ 449,541 is due from one of the Significant

Tenants, respectively, in connection with the $ 500,000 tenant improvement allowance provided to tenant pursuant to the Chino Valley amendment

executed during the year ended December 31, 2022 (see above).

Additionally, as discussed above, VSM paid Zoned Arizona the $ 300,000 Assignment

The Company considers the assignment fee paid as a part of the lease payments for the modified lease and shall amortize the $ 300,000

assignment fees into rental revenue on a straight-line basis over the remaining term of the modified lease through April 2040.

31, 2024 and 2023, deferred revenue related to this lease modification amounted to $ 264,115 and $ 281,340 , respectively, and is included

in contract liabilities on the accompanying consolidated balance sheets.

rent of $ 1,084,413 and $ 747,504 was due collectively from the tenants due to the abatement of rent under the lease agreements discussed

above, respectively, and as of December 31, 2025 and 2024, a lease incentive receivable of $ 394,495 and $ 422,018 was due from one of the

Significant Tenants, respectively, in connection with the $ 500,000 tenant improvement allowance provided to tenant pursuant to the Chino

Valley amendment executed during the year ended December 31, 2022.

Additionally, as discussed above, VSM paid Zoned Arizona the $ 300,000

Assignment Price.

The Company considers the assignment fee paid as a part of the lease payments for the modified lease and shall amortize

the $ 300,000 assignment fees into rental revenue on a straight-line basis over the remaining term of the modified lease through April

On December 31, 2025 and 2024 deferred revenue related to this lease modification amounted to $ 246,890 and $ 264,115 , respectively,

and is included in contract liabilities on the accompanying consolidated balance sheets.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

Asset concentration

10 unchanged sentences

Additionally, the Company had an asset concentration

related its Surprise, AZ property, which leased approximately 10.6 % of the Company’s total assets of the Company.

Through December

31, 2024, all rental payments have been made on a timely basis.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

related its Surprise, AZ property, which leased approximately 19.4 % of the Company’s total assets as of December 31, 2025.

Industry risk

21 unchanged sentences

Rental properties, net

Property Acquisitions

Property Acquisitions and Impairments

Pursuant to the terms of the Agreement Regarding

3 unchanged sentences

acquisition of real estate of $ 150,878 , which includes a $ 65,000 commission expense, a $ 79,634 sponsor fee, and other costs of $ 6,244 .

On July 8, 2024 (the “Closing”), ZP

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

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) reimbursement 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 .

For the years ended December 31, 2024 and 2023,

depreciation of rental properties amounted to $ 352,351 and $ 375,553 , respectively.

In 2025, the Company was notified that a vehicle crashed into the building, causing significant structural damage.

The City of Chicago

declared the building unsafe and ordered its demolition.

As such, the Ashland Avenue Property remains a vacant lot of land.

the most recent information received by the Company from Justice Grown, the Company believes that the development of the new retail dispensary

building will still be completed, and the tenant will open for business in late 2027;

however, challenges related to the ongoing permitting

and development process required through the City of Chicago may continue to cause delays.

The Company’s tenant is expected to continue

to pay full rent pursuant to the Justice Grown Lease.

If Justice Grown does not construct the new building, the Company may need to pursue

recovery through legal claims.

In connection with the damage and demolition of the building, during the year ended December 31, 2025,

the Company recorded an impairment loss of $ 1,018,716 .

On July 8, 2024, 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) reimbursement 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 .

ZONED PROPERTIES, INC.

2 unchanged sentences

DECEMBER 31, 2025 AND 2024

NOTE 5 – INVESTMENT IN UNCONSOLIDATED

JOINT VENTURE AND EQUITY SECURITIES

Investment in unconsolidated joint venture

During the year ended December 31, 2025, the Company

paid $ 1,000,000 to Sunday Goods as a tenant improvement allowance.

The $ 1,000,000 payment to the tenant was used by the tenant to construct

a building on the land as well as for the buildout of the property.

Since ZP Dysart will own the building and related improvements at

the end of the lease, the $ 1,000,000 tenant improvement allowance was capitalized to rental properties and is being depreciated on a straight-line

basis over the useful life of the building and related improvements beginning when the building and related improvements was placed in

service, beginning in September 2025.

In September 2025, Sunday Goods completed the construction of a new retail dispensary building on

the Surprise Property and opened for business.

During the third quarter of 2025, New Tenant faced

operational challenges that impaired its ability to meet contractual rent obligations.

Beginning in July 2025, New Tenant remitted approximately

50 % of the rent then due.

In August 2025, the Company sent a demand notice to New Tenant to remit full payment of outstanding rent.

September 2025, New Tenant remitted full payment of all outstanding rent that was previously due and has received all rent payments due

through December 31, 2025.

Subsequent to year-end 2025, the Company sent New Tenant at the Woodward Property a written notice default

related to the New Tenant’s failure to i) make timely rental payments and ii) fulfill its obligations related to non-monetary terms

under the Woodward Lease.