What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-13 · 629 added, 526 removed, 37 unchanged (97% of the section changed)

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

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

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

and prospects.

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

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

This quarterly report

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

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

We have tried, wherever

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

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

connection with any discussion of future operating or financial performance.

In particular, these include statements relating to future

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

proceedings, and financial results.

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

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

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

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

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

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

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

the occurrence of anticipated or unanticipated events or circumstances.

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

for us to predict all of such factors.

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

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

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

elsewhere in this quarterly report on Form 10-Q.

Properties, Inc.

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

In October 2013, the Company changed its name to Zoned Properties, Inc.

and in April 2014, the Company shifted its business model

to address commercial real estate in the regulated cannabis industry.

Zoned Properties is a technology-driven property investment company

focused on acquiring value-add real estate within the regulated cannabis industry in the United States.

The Company aspires to innovate

within the real estate development sector, focusing on direct-to-consumer real estate that is leased to the best-in-class cannabis retailers.

Headquartered in Scottsdale, Arizona, Zoned Properties is redefining the approach to commercial real estate investment through its standardized

investment model backed by its proprietary property technology.

Zoned Properties has developed a national ecosystem of real estate services

to support its real estate development model, including a commercial real estate brokerage and a real estate advisory practice.

Company operates in two organized segments;

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

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

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

The Company targets commercial properties that face unique

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

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

The Company does not grow, harvest, sell or distribute cannabis

or any substances regulated under United States law such as the Controlled Substance Act of 1970, as amended.

core of our business operations involves identifying, securing, acquiring, and leasing commercial properties that intend to operate within

highly regulated industries, including the legalized cannabis industry.

Within highly regulated industries, local municipalities typically

develop strict regulations, including zoning and permitting requirements related to commercial real estate, that dictate the specific

locations and parameters under which regulated properties can operate, including cannabis properties.

We often refer to these requirements

as cannabis approvals.

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

commercial real estate and can include non-standard codes governing each location;

for example, restricting a regulated property or facility

from operating within a certain distance of any parks, schools, churches, or residential districts, or restricting a regulated property

from operating outside a defined set of hours of operation.

When an organization can collaborate with local representatives, a proactive

set of rules and regulations can be established and followed to meet the needs of both the regulated operators and the local community.

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

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

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

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

acquisition, investment, or transaction.

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

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

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

In order to deliver a successful investment property

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

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

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

lease term over 10 years.

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

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

As of September 30, 2025, the Company leases land and/or

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

regulations and zoning procedures.

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

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

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

The Company considers the two cultivation

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

availability in the future.

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

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

demand in the industry.

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

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Information

and Factors That May Affect Future Results

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

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

The Securities and Exchange Commission (the

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

future prospects and make informed investment decisions.

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

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

assumptions regarding future events or performance.

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

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

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

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

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

Factors that could cause our actual results

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

annual report on Form 10-K for the fiscal year ended December 31, 2025, as the same may be updated from time to time.

We caution that these factors could cause our

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

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

Further, any forward-looking statement speaks

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

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

or circumstances.

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

Further, we cannot

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

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

The following discussion should be read in conjunction

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

Zoned Properties, Inc.

(“Zoned Properties”

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

In October 2013, the Company changed its name

to Zoned Properties, Inc.

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

cannabis industry.

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

the regulated cannabis industry in the United States.

Headquartered in Scottsdale, Arizona, 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 core of our business operations involves identifying,

securing, acquiring, and leasing commercial properties that intend to operate within highly regulated industries, including the legalized

cannabis industry.

Within highly regulated industries, local municipalities typically develop strict regulations, including zoning and

permitting requirements related to commercial real estate, that dictate the specific locations and parameters under which regulated properties

can operate, including cannabis properties.

We often refer to these requirements as cannabis approvals.

These regulations often include

complex permitting processes that require longer development timelines than traditional commercial real estate and can include non-standard

codes governing each location;

for example, restricting a regulated property or facility from operating within a certain distance of any

parks, schools, churches, or residential districts, or restricting a regulated property from operating outside a defined set of hours

of operation.

When an organization can collaborate with local representatives, a proactive set of rules and regulations can be established

and followed to meet the needs of both the regulated operators and the local community.

Due to the complex nature of the Company’s

core business operations and target investment properties, the Company may secure dozens of potential property candidates for acquisition

and prospective tenant candidates for leasing at any given time, all in the normal course of business.

The process of securing a potential

property candidate may include completing contractual agreements such as an option agreement or a purchase agreement, which may include

various contingencies and conditions precedent related to the ultimate consummation of the acquisition, investment, or transaction.

Simultaneously

with the securing of potential property candidates, the Company will advertise and market a property to prospective tenant candidates

for a long-term, absolute-net lease agreement, which may include various contingencies and conditions precedent related to the ultimate

commencement of the lease and tenancy.

In order to deliver a successful investment property transaction, the Company must collectively

receive all cannabis approvals from state and local governing authorities that may be required at a given property, secure a qualified

tenant to lease and operate the property, and complete the acquisition of the property.

The Company’s current investment properties

are located in Arizona and Illinois with 100% occupancy and a weighted average lease term over 10 years.

Each of the Company’s leased

properties is occupied by a commercial cannabis tenant.

Zoned Properties maintains a portfolio of properties

that it owns, develops and leases.

As of May 12, 2026, the Company leases land and/or building space at the six properties in its portfolio

to licensed and regulated cannabis tenants in areas with established cannabis regulations and zoning procedures.

Three of the leased properties

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

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

retail dispensary.

Sale of Woodward Property

On May 1, 2026, the Company, through its wholly

owned subsidiary ZP Woodward entered into and closed on an Agreement of Sale and Escrow Instructions (the “Woodward Agreement”)

with Woodward RE 1 LLC, a Michigan limited liability company, or its nominee (“Woodward Buyer”).

Pursuant to the Woodward

Agreement, ZP Woodward agreed to sell to the Woodward Buyer all Michigan properties (See Note 13 – Subsequent Events).

Woodward Property for $600,000.

As of December 31, 2025, based on the potential sale of the Woodward Properties, the net carrying value

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

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, the Company recorded an impairment loss of $2,100,000.

As of May 12, 2026, a summary of rental properties

owned by us consisted of the following:

Chino Valley,

3 unchanged sentences

(special use)

Portfolio Total

Investment Portfolio Total

Date Acquired

Dec 22/Feb 23

Lease Start Date

December 2022

Lease End Date

3 unchanged sentences

Vacant Rentable (Sq.

rented as of September 30, 2025

rented as of May 12, 2026

Annual Base Rent (*,**)

rent represents amount of cash payments due from tenants.

For Tempe, AZ, table includes

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

$ per Rented Sq.

Chino Valley,

Green Valley,

Pleasant Ridge,

of Operations

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

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

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

report on Form 10-Q.

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

of Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

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

April 2026 to Dec 2026

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

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

Annualized $ per Rented Sq.

Chino Valley, AZ

Green Valley, AZ

Real Estate Purchase and Sale Agreement regarding

CGK Properties

On April 20, 2026, the Company through its wholly

owned subsidiaries, Green Valley, Kingman and Chino Valley (collectively, the “Seller”), entered into a Real Estate Purchase

and Sale Agreement (the “Purchase Agreement”) with Broken Arrow Herbal Center, Inc., an Arizona corporation (the “Purchaser”),

pursuant to which the Seller agreed to sell to the Purchaser three properties consisting of (i) property commonly known as 1732 W.

Point Place, Green Valley, Arizona 85614 (the “Green Valley Property”), (ii) property commonly known as 2095 E.

Northern Avenue,

Kingman, Arizona 86409 (the “Kingman Property”), and (iii) property commonly known as 2144-2148 N.

Road 1 East, Chino Valley,

Arizona 86323 (the “Chino Property” and together with the Green Valley Property and Kingman Property, the “Properties”).

The Purchase Agreement provides that the Purchaser is exercising purchase rights set forth in certain existing lease agreements relating

to the Properties.

The aggregate purchase price for the Properties

is $9.0 million, allocated as follows:

(i) $8.0 million for the Chino Property, (ii) $500,000 for the Kingman Property, and (iii) $500,000

for the Green Valley Property.

The Purchaser is required to deposit $400,000 into escrow.

Subject to the terms of the Purchase Agreement,

the purchase price is to be paid through a combination of (i) $4.0 million in cash and (ii) a $5.0 million promissory note to be secured

by a deed of trust.

The Purchase Agreement provides that, following closing, such seller financing is to be the only debt or lien permitted

to encumber the Properties until the note has been paid in full and the deed of trust has been released of record.

The closing is scheduled to occur on June 30,

2026, unless extended in accordance with the Purchase Agreement.

The Purchaser has the right, in its sole discretion, to extend the closing

date to August 31, 2026, by timely written notice.

If that extension right is exercised, the Purchase Agreement provides that the acquisitions

of the Green Valley Property and the Kingman Property would close on the original closing date for an aggregate cash payment of $1.0 million,

and the closing for the Chino Property would be extended to August 31, 2026.

If the first extension right is timely exercised, the Purchaser

also has a further right to extend the closing for the Chino Property to September 30, 2026, by timely written notice and by delivering

an additional $1.0 million supplemental deposit to the escrow agent, which supplemental deposit is nonrefundable except in the case of

an uncured seller default.

Except as expressly provided in connection with a timely exercised extension, the Purchase Agreement contemplates

an all-or-none closing involving all three Properties.

The Purchase Agreement contains customary provisions

regarding title review, closing deliveries, apportionments, casualty and condemnation, default remedies, confidentiality, governing law,

and other matters.

The Seller is required to remove certain monetary liens voluntarily created by the Seller, but otherwise has no general

obligation to cure title objections.

The Purchase Agreement also provides that the Purchaser is acquiring the Properties in their present

“as is,” “where is,” and “with all faults” condition, subject to limited exceptions expressly set

forth in the agreement.

In addition, effective as of closing and subject to certain carveouts described in the Purchase Agreement, the

Purchaser will release the Seller and certain related parties from claims relating to the condition of the Properties and certain other

matters described in the Purchase Agreement.

If the Purchaser fails to complete the purchase

without legal excuse and does not timely cure such default, the Seller’s sole remedy is to terminate the Purchase Agreement and

retain the deposit as liquidated damages.

If the transaction fails to close due to an uncured default by the Seller, the Purchaser’s

sole and exclusive remedies are to terminate the Purchase Agreement and receive a refund of the deposit, less the independent contract

consideration, waive the default and proceed to closing, or seek specific performance, subject to the timing limitations set forth in

the Purchase Agreement.

Management Buyout Asset Purchase Agreement

On January 15, 2026, the Company entered into

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

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

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

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

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

Berekk Blackwell, the Company’s President and Chief

Operating Officer;

and Patrick Moroney.

The Company formed a Special Transactions Committee

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

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

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

The MBO APA and the other transaction

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

Pursuant to the terms of the MBO APA, the Seller

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

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

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

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

The Assets include, among other things, (i) the real property located at 410 S.

Drive, Tempe, AZ;

(ii) the real property located at 13150 W.

Bell Road, Surprise, AZ;

(iii) the real property located at 3455 S.

Avenue, Chicago, IL;

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

ZP Ohio B, LLC, and Zoneomics Green;

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

date that is related to the Business;

(vi) all intellectual property of the Seller Parties;

(vii) all prepaid expenses, security deposits,

and certain other operational assets;

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

to the closing of the MBO, as discussed below.

Subject to adjustment as set forth in the MBO

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

The parties to the MBO APA acknowledged and agreed

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

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

Upon acquisition of or investment in the Additional Assets,

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

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

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

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

included in the assumed liabilities pursuant to the MBO APA.

The parties to the MBO APA also acknowledged and

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

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

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

In the event that the sale of the Pleasant

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

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

in the MBO APA.

The parties to the MBO APA further acknowledged

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

Chino Valley, AZ;

2095 Northern Avenue, Kingman, AZ;

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

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

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

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

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

If the sale of the CKG Properties is consummated

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

“Assets” for purposes of the MBO APA, and the Purchase Price will be increased by the principal amount of the CKG Note.

Pursuant to the terms of the MBO APA, the MBO

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

mutual agreement of the parties, each in their sole discretion;

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

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

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

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

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

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

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

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

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

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

for any reason in its sole discretion;

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

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

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

The closing of the MBO is subject to certain closing

conditions, including, but not limited to, (i) the Company and the Committee having received an opinion as to the fairness of the transactions,

from a financial point of view, to the shareholders of the Company, and such opinion remaining valid and in full force and effect as of

(ii) MBO APA and the transactions set forth therein being approved by both (1) the shareholders of the Company holding a

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

voting power of the Company, but excluding for such purposes any such shareholder, and shares or stock of the Company, held by any persons

who own, control or have any interest in the Buyer (i.e., a ‘majority of the minority’ uninterested shareholders);

(iii) receipt

of any required regulatory approvals;

(iv) raising by the Buyer of the capital required, in its sole discretion, to fund the Purchase

and (v) other customary closing conditions.

The MBO APA contains customary representations, warranties and covenants.

If the MBO APA is approved by the Company’s

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

Assuming that the MBO APA

is approved by the Company’s stockholders, as required, and the Company can successfully sell and liquidate 100% of the Company’s

assets and operations, the Company expects (i) to pay off any remaining debt, settle any remaining accounts and agreements, liquidate

the Company’s outstanding preferred shares, and then distribute the net available balance of cash to stockholders as a return of

capital through a special dividend, and (ii) to subsequently complete a reverse merger or other transaction involving the public company.

Going concern consideration

Our unaudited consolidated financial statements

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

in the normal course of business.

As reflected in our unaudited consolidated financial statements, the Company had a net loss of $54,660

and had cash provided by operations of $1,630,287 for the three months ended March 31, 2026.

Additionally, as of March 31, 2026, the Company

had cash of $2,500,758 and stockholders’ equity of $3,356,861.

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

into Amended and Restated Absolute Net Lease Agreements with certain tenants.

The Amended and Restated Absolute Net Lease Agreements include,

among other provisions, (i) a right of first refusal with a right of first refusal period of up to 60 days and (ii) a short-term exclusive

option that permits the tenant to purchase, on an all-or-none basis, three leased properties (Chino Valley, Green Valley and Kingman).

On April 20, 2026, the Company through its wholly

owned subsidiaries, Green Valley, Kingman and Chino Valley (collectively, the “Seller”), entered into a Real Estate Purchase

and Sale Agreement (the “Purchase Agreement”) with Broken Arrow Herbal Center, Inc., an Arizona corporation (the “Purchaser”),

pursuant to which the Seller agreed to sell to the Purchaser three properties consisting of (i) property commonly known as 1732 W.

Point Place, Green Valley, Arizona 85614 (the “Green Valley Property”), (ii) property commonly known as 2095 E.

Northern Avenue,

Kingman, Arizona 86409 (the “Kingman Property”), and (iii) property commonly known as 2144-2148 N.

Road 1 East, Chino Valley,

Arizona 86323 (the “Chino Property” and together with the Green Valley Property and Kingman Property, the “Properties”).

The Purchase Agreement provides that the Purchaser is exercising purchase rights set forth in certain existing lease agreements relating

to the Properties.

The aggregate purchase price for the Properties

is $9.0 million, allocated as follows:

(i) $8.0 million for the Chino Property, (ii) $500,000 for the Kingman Property, and (iii) $500,000

for the Green Valley Property.

The Purchaser is required to deposit $400,000 into escrow, of which $100 constitutes independent contract

consideration payable to the Seller.

Subject to the terms of the Purchase Agreement, the purchase price is to be paid through a combination

of (i) $4.0 million in cash and (ii) a $5.0 million promissory note to be secured by a deed of trust.

The Purchase Agreement provides

that, following closing, such seller financing is to be the only debt or lien permitted to encumber the Properties until the note has

been paid in full and the deed of trust has been released of record.

The closing is scheduled to occur on June 30,

2026, unless extended in accordance with the Purchase Agreement.

The Purchaser has the right, in its sole discretion, to extend the closing

date to August 31, 2026, by timely written notice.

If that extension right is exercised, the Purchase Agreement provides that the acquisitions

of the Green Valley Property and the Kingman Property would close on the original closing date for an aggregate cash payment of $1.0 million,

and the closing for the Chino Property would be extended to August 31, 2026.

If the first extension right is timely exercised, the Purchaser

also has a further right to extend the closing for the Chino Property to September 30, 2026, by timely written notice and by delivering

an additional $1.0 million supplemental deposit to the escrow agent, which supplemental deposit is nonrefundable except in the case of

an uncured seller default.

Except as expressly provided in connection with a timely exercised extension, the Purchase Agreement contemplates

an all-or-none closing involving all three Properties.

The Purchase Agreement contains customary provisions

regarding title review, closing deliveries, apportionments, casualty and condemnation, default remedies, confidentiality, governing law,

and other matters.

The Seller is required to remove certain monetary liens voluntarily created by the Seller, but otherwise has no general

obligation to cure title objections.

The Purchase Agreement also provides that the Purchaser is acquiring the Properties in their present

“as is,” “where is,” and “with all faults” condition, subject to limited exceptions expressly set

forth in the agreement.

In addition, effective as of closing and subject to certain carveouts described in the Purchase Agreement, the

Purchaser will release the Seller and certain related parties from claims relating to the condition of the Properties and certain other

matters described in the Purchase Agreement.

If the Purchaser fails to complete the purchase

without legal excuse and does not timely cure such default, the Seller’s sole remedy is to terminate the Purchase Agreement and

retain the deposit as liquidated damages.

If the transaction fails to close due to an uncured default by the Seller, the Purchaser’s

sole and exclusive remedies are to terminate the Purchase Agreement and receive a refund of the deposit, less the independent contract

consideration, waive the default and proceed to closing, or seek specific performance, subject to the timing limitations set forth in

the Purchase Agreement.

Additionally, on January 15, 2026, the Company

and certain of its subsidiaries entered into the MBO APA with the Buyer to sell substantially all of its properties to the Buyer, a company

owned by management.

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

stockholders and the Buyer obtaining financing.

On May 1, 2026, the Company, through its wholly

owned subsidiary ZP Woodward entered into and closed on an Agreement of Sale and Escrow Instructions (the “Woodward Agreement”)

with Woodward RE 1 LLC, a Michigan limited liability company, or its nominee (“Woodward Buyer”).

Pursuant to the Woodward

Agreement, ZP Woodward agreed to sell to the Woodward Buyer all Michigan properties (See Note 13 – Subsequent Events).

sold the Woodward Property for $600,000.

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 Quarterly Report.

There can be no assurance that the Company will

sell its properties.

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

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

to curtail its operations, or may decide the liquidate the Company.

The unaudited consolidated financial statements do not include any

adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be

necessary should the Company be unable to continue as a going concern.

Results of Operations

The following comparative analysis on results

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

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

three months ended March 31, 2026 and 2025, which are included elsewhere in this quarterly report on Form 10-Q.

The results discussed

below are for the three months ended March 31, 2026 and 2025.

Comparison of Results of Operations for the Three Months Ended

March 31, 2026 and 2025

For the three months ended March 31, 2026 and

2025, revenues by reportable business segments were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Property investment portfolio

1 unchanged sentence

Total revenues

the three months ended September 30, 2025, total revenues amounted to $1,013,133, including property investment portfolio revenues of

$765,497, which consists of rental revenues, as compared to total revenues of $1,029,630, including property investment portfolio revenues

of $750,926, for the three months ended September 30, 2024, representing an overall decrease of $16,497, or 1.6%.

This decrease was attributable

to an increase in rental revenues of $14,571, or 1.9%, primarily attributable to an increase in rental revenue from our recently acquired

properties in Chicago, IL and Surprise, AZ, and offset by net decrease in real estate services revenues of $(31,068), or (11.1%), attributable

to a decrease in advisory fees, commissions and assignment fees earned on real estate listings.

the nine months ended September 30, 2025, total revenues amounted to $2,925,459, including property investment portfolio revenues of

$2,284,015, which consists of rental revenues, as compared to total revenues of $2,559,008 including property investment portfolio revenues

of $2,121,544, for the nine months ended September 30, 2024, representing an overall increase of $366,451, or 14.3%.

This increase was

attributable to an increase in rental revenues of $162,471 or 7.7%, primarily attributable to an increase in rental revenue from our

recently acquired properties in Chicago, IL and Surprise, AZ, and a net increase in real estate services revenues of $203,980 or 46.6%,

attributable to an increase in advisory fees, commissions and assignment fees earned on real estate listings.

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

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

All of the Company’s

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

the three months ended September 30, 2025, operating expenses amounted to $645,809, as compared to $584,442 for the three months ended

September 30, 2024, representing an increase of $61,367, or 10.5%.

For the nine months ended September 30, 2025, operating expenses amounted

to $1,857,176, as compared to $1,881,773 for the nine months ended September 30, 2024, representing a decrease of $24,597, or 1.3%.

the three and nine months ended September 30, 2024 and 2023, operating expenses consisted of the following:

For the three months ended March 31, 2026, total

revenues amounted to $1,172,436, including property investment portfolio revenues of $755,730, which consists of rental revenues, as compared

to total revenues of $974,552, including property investment portfolio revenues $760,892, which consists of rental revenue, for the three

months ended March 31, 2025, representing an overall increase of $197,884, or 20.3%.

This increase was attributable to an increase in

real estate services revenues of $203,046, or 95.0%, attributable to an increase in commissions and assignment fees earned on real estate

listings, offset by a decrease in advisory fees.

This increase was offset by a decrease in properties investment portfolio revenue of

$5,162, or 0.7%.

All of the Company’s real estate properties

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

Due to the sale of our Woodward properties located in Michigan on

May 1, 2026, we expect property investment portfolio revenues to decrease.

Operating expenses

For the three months ended March 31, 2026, operating

expenses amounted to $1,045.868, as compared to $545,781 for the three months ended March 31, 2025, representing an increase of $500,087,

For the three months ended March 31, 2026 and 2025, operating expenses consisted of the following:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Compensation and benefits

4 unchanged sentences

Real estate taxes

Business development costs

For the three

months ended September 30, 2025, compensation and benefit expense increased by $145,645, or 56.2%, as compared to the three months

ended September 30, 2024.

The increase was attributable to an increase in executive and staff compensation and related benefits of

$132,035, primarily attributable to the payment of bonus splits on project fees generated by transactions to team members, an increase

in stock-based compensation of $7,877 related to accretion of stock option expense, and an increase in health insurance of $5,733.

For the nine months ended September 30, 2025, compensation and benefit expense increased by $233,440, or 29.2%, as compared to the

nine months ended September 30, 2024.

The increase was attributable to an increase in executive and staff compensation and related

benefits of $168,273, primarily attributable to the payment of bonus splits on project fees generated by transactions to team members,

an increase in stock-based compensation of $47,003 related to accretion of stock option expense, and an increase in health insurance

expense of $18,165.

For the three months ended

September 30, 2025, professional fees decreased by $18,621 or 28.5%, as compared to the three months ended September 30, 2024.

decrease was primarily attributable to a decrease in consulting fees of $15,750 and a decrease in transfer agent fees of $1,537,

offset by an increase in legal fees of $1,043.

For the nine months ended September 30, 2025, professional fees decreased by $93,982,

or 34.0%, as compared to the nine months ended September 30, 2024.

This decrease was primarily attributable to a decrease in consulting

fees of $36,750, a decrease in legal fees of $19,157 and a decrease in financial advisory fees of $10,000, offset by an increase

in accounting fees of $2,004.

For the three months ended

September 30, 2025 and 2024, we recorded brokerage fees amounting to $5,709 and $19,033, respectively, representing a decrease of

$13,324 or 70.0%.

Brokerage fees occur as the result of various percentage-based commission splits we pay to our licensed brokerage

team members who participate in various real estate listing transactions For the nine months ended September 30, 2025 and 2024, we

recorded brokerage fees amounting to $80,933 and $122,363, respectively, representing a decrease of $41,430, or 33.9%.

fees occur as the result of various percentage-based commission splits we pay to our licensed brokerage team members who participate

in various real estate listing transactions.

General and administrative

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

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

For the three months ended September

30, 2025, general and administrative expenses decreased by $21,899, or 25.9%, as compared to the three months ended September 30,

2024, primarily attributable to a decrease in advertising, travel and conference fee expenses.

For the nine months ended September

30, 2025, general and administrative expenses decreased by $79,569, or 30.3%, as compared to the nine months ended September 30,

2024, primarily attributable to a decrease in advertising, travel and conference fee expenses.

For the three

months ended September 30, 2025, depreciation expense decreased by $1,901, or 2.1%, as compared to the three months ended September

For the nine months ended September 30, 2025, depreciation expense decreased by $4,726 or 1.8%, as compared to the nine

months ended September 30, 2024.

For the three months ended

September 30, 2025, real estate taxes decreased by $11,533, or 23.3%, as compared to the three months ended September 30, 2024.

the nine months ended September 30, 2025, real estate taxes increased by $1,545, or 1.4%, as compared to the nine months ended September

Property portfolio business development costs

For the three months ended March 31, 2026, compensation and benefit expense decreased by $115,489, or 40.4%, as compared to the three months ended March 31, 2025.

The decrease was primarily attributable to an overall decrease in compensation and related benefits of $20,405 and a decrease in stock-based compensation of $95,084 related to reversal of previously recorded stock-based stock option expense due to the cancellation of unvested stock options.

For the three months ended March 31, 2026, professional fees increased by $64,749, or 83.3%, as compared to the three months ended March 31, 2025.

This increase was primarily attributable to an increase in legal fees of $52,508, an increase in consulting fees of $10,642, and an increase in other professional fees of $1,599.

For the three months ended March 31, 2026 and 2025, we recorded brokerage fees amounting to $370,617 and $0, respectively, representing an increase of $370,617, or 100.0%.

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

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

For the three months ended March 31, 2026, general and administrative expenses decreased by $5,543, or 9.9%, as compared to the three months ended March 31, 2025, primarily due to the recording of bad debt recovery of $38,016, offset by an increase in insurance expense of $38,829 related to an increase in directors and officers liability insurance premiums incurred.

For the three months ended March 31, 2026, depreciation expense decreased by $14,673, or 16.6%, as compared to the three months ended March 31, 2025 due to a decrease in depreciable rental properties.

For the three months ended March 31, 2026, real estate taxes increased by a nominal amount of $776, or 2.0%, as compared to the three months ended March 31, 2025.

For the three months ended March 31, 2026, property portfolio business development costs increased by $199,650, or 100.0%, as compared to the three months ended March 31, 2025.

Property portfolio business development costs are costs related to forfeited escrow deposits and the write off of development costs related to projects which we decided not to pursue due to the rejection of permits and licensing by local governments.

Income from operations

As a result of the factors described above, for

the three months ended March 31, 2026, income from operations amounted to $126,568, as compared to income from operations of $428,771

for the three months ended March 31, 2025, representing a decrease of $302,203, or 70.5%.

Other (expenses) income, net

Other (expense) income, net primarily includes

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

For the three months ended March 31, 2026

and 2025, total other expenses, net amounted to $181,228 and $282,913, respectively, representing a decrease of $101,685, or 35.9%.

decrease was attributable to an increase in interest expense of $16,060, primarily related to an increase in notes payable, and a positive

change in gain or loss in fair value from an interest rate swap of $115,245 and an increase in other income of $2,500.

Net (loss) income

As a result of the foregoing, for the three months

ended March 31, 2026, net loss amounted to $(54,660), or $(0.00) per common share (basic and diluted), and for the three months ended

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

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate

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

We had cash of $2,500,758 and $837,767 as of March 31, 2026 and December

31, 2025, respectively.

Our primary uses of cash have been for the acquisition

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

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

All funds received have been expended

in the furtherance of growing the business.

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

includes advisory fees and brokerage fees.

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

term to long term:

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

Addition of administrative and sales personnel as the business grows,

The cost of being a public company,

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

An increase in investments in rental properties.

We may need to raise additional funds, particularly

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

We estimate that based on current plans and assumptions,

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

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

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

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

We have used these funds to fund our operating

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

We may need to

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

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

See also “Overview—Management Buyout

Asset Purchase Agreement.”

For the Three Months Ended March 31, 2026 and

Net cash flow provided by operating activities

was $1,630,287 for the three months ended March 31, 2026, as compared to net cash flow provided by operating activities of $330,632 for

the three months ended March 31, 2025, representing an increase of $1,299,655, or 393.1%.

cash flow provided by operating activities for the three months ended March 31, 2026 primarily reflected a net loss of $54,660, adjusted

for the add-back of non-cash items consisting of depreciation of $73,835, amortization of debt discount of $6,418, stock-based compensation

expense of $56,605, net recovery of stock-based stock option expense of $93,105, loss of forfeited escrow deposits and development costs

of $199,650, bad debt recovery of $33,016, and income from the changes in fair value from an interest rate swap of $26,855, offset by

changes in operating assets and liabilities primarily consisting of a decrease in accounts receivable of $390,794, an increase in deferred

rent of $218,058 attributable to the modification of lease agreements, a decrease in lease incentive receivable of $6,880, an increase

in prepaid expenses and other current assets of $90,376, an increase in accounts payable of $13,447, an increase in accrued expenses

of $415,363, an increase in contract liabilities of $950,197, and an increase in security deposits payable of $33,333.

cash flow provided by operating activities for the three months ended March 31, 2025 primarily reflected net income of $145,858, adjusted

for the add-back of non-cash items consisting of depreciation of $88,508, amortization of debt discount of $6,418, accretion of stock-based

stock option expense of $56,606, and loss from the changes in fair value from an interest rate swap of $88,390, offset by changes in

operating assets and liabilities primarily consisting of a decrease in accounts receivable of $121,966, an increase in deferred rent

of $123,146 attributable to rent abatement on our new tenant leases at our Chicago, Illinois and Surprise, AZ properties, a decrease

in lease incentive receivable of $6,880, a decrease in prepaid expenses of $40,313, a decrease in accounts payable of $10,983, a decrease

in accrued expenses of $86,037, and a decrease in contract liabilities of $4,306.

For the three months ended March 31, 2026, net

cash flow used in investing activities amounted to $42,498, as compared to net cash used in investing activities of $648,841 for the three

months ended March 31, 2025, representing a positive increase of $691,339.

For the three months ended March 31, 2026, net cash provided

by investing activities was attributable to a decrease in escrow deposits of $32,900 and a decrease in capitalized project costs of $9,598.

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

and improvements of $450,000, an increase in investments in cost method investee of $84,110, an increase in escrow deposits of $8,681

and an increase in capitalized project costs of $106,050.

During the three months ended March 31, 2026 and

2025, net cash (used in) provided by financing activities amounted to $(9,794) and $292,147, respectively.

For the three months ended

September 30, 2025, business development costs decreased by $17,000, or 100.0%, as compared to the three months ended September 30,

For the nine months ended September 30, 2025, business development costs decreased by $39,875, or 100.0%, as compared to the

nine months ended September 30, 2024.

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

of costs related to projects which we decided not to pursue.

(loss) from operations

a result of the factors described above, for the three months ended September 30, 2025, income from operations amounted to $367,324,

as compared to income from operations of $445,188 for the three months ended September 30, 2024, a decrease of $77,864, or 17.5%.

the nine months ended September 30, 2025, income from operations amounted to $1,068,283, as compared to income from operations of $677,235

for the nine months ended September 30, 2024, representing an increase of $391,048, or 57.7%.

(expenses) income, net

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

the three months ended September 30, 2025 and 2024, total other expenses, net amounted to $210,472 and $386,316, respectively, representing

a decrease of $175,844, or 45.5%.

This decrease was attributable to a decrease in loss in fair value from an interest rate swap of $186,247,

offset by an increase in interest expense of $10,583 primarily related to an increase in notes payable.

For the nine months ended September

30, 2025 and 2024, total other expenses, net amounted to $739,247 and $554,173, respectively, representing an increase of $185,074, or

This increase was attributable to an increase in interest expense of $87,546 primarily related to an increase in notes payable

and an increase in loss in fair value from an interest rate swap of $97,528.

the three and nine months ended September 30, 2025, we incurred a loss from unconsolidated joint ventures of $1,655 and $1,655, respectively.

For the three and nine months ended September 30, 2024, we did not incur a loss from unconsolidated joint ventures.

a result of the foregoing, for the three months ended September 30, 2025 and 2024, net income amounted to $155,197, or $0.01 per common

share (basic) and $0.02 (diluted), and $58,872, or $0.00 per common share (basic and diluted), respectively.

For the nine months ended

September 30, 2025 and 2024, net income amounted to $327,381, or $0.03 per common share (basic) and $0.02 (diluted), and $123,062, or

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

and Capital Resources

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

We had cash of $1,113,900

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

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

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

lines of business.

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

We receive funds from the collection

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

The following trends are reasonably

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

in working capital requirements to finance our current business,

Addition of administrative

and sales personnel as the business grows,

being a public company,

An increase in investments

in joint ventures and other projects, and

An increase in investments

in rental properties.

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

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

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

Other than revenue received

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

source of working capital.

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

and to grow our company.

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

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

joint venture and other projects.

Property Acquisitions and Related Note Payables

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

Dysart & Bell LLC (“NWC”).

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

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

The Surprise Property was acquired

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

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

estate of $120,519.

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

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

Such agreement was subsequently amended on May

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

Pursuant to the terms of the Agreement,

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

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

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

The obligation to complete the Reimbursements was conditioned upon the

closing of the sale of the Surprise Property.

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

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

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

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

Pursuant to the terms of the PMF

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

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

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

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

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

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

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

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

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

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

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

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

prepaid in months 1-24;

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

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

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

During the year ended December 31,

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

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

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

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

March 3, 2025, ZP Dysart entered into a First Amendment with its tenant related to the Sunday Goods Lease at the Surprise Property.

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 was paid on May 1, 2025;

and (#4) the remaining $400,000 of the Allowance shall be withheld

by Landlord until completion of the Tenant’s Work on the 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

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

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

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

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

Unless PMF otherwise elects, such acceleration

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

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

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

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

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

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

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

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

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

defined) (the “Construction Advances”).

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

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

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

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

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

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

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

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

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

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

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

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

obligations of ZP Dysart in connection with the loan.

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

Financing transactions may include the issuance

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

Even if we are able to raise the funds required,

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

alternative financing.

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

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

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

the Nine Months Ended September 30, 2025 and 2024

cash flow provided by operating activities was $661,392 for the nine months ended September 30, 2025, as compared to net cash flow provided

by operating activities of $455,363 for the nine months ended September 30, 2024, representing an increase of $206,029.

Net cash flow

provided by operating activities for the nine months ended September 30, 2025 primarily reflected net income of $327,381, adjusted

for the add-back of non-cash items consisting of depreciation of $264,492, amortization of debt discount of $19,254, accretion of

stock-based stock option expense of $86,136, and loss from the changes in fair value from an interest rate swap of $150,031, offset

by changes in operating assets and liabilities primarily consisting of a decrease in accounts receivable of $70.497, an increase

in deferred rent of $293,598 attributable to rent abatement on our new tenant leases at our Chicago, Illinois and Surprise, AZ properties,

a decrease in lease incentive receivable of $20,642, a decrease in prepaid expenses of $122,348, a decrease in accounts payable of

$44,049, a decrease in accrued expenses of $91,372, a decrease in contract liabilities of $12,919, and an increase in security deposits

payable of $40,399.

Net cash flow

provided by operating activities for the nine months ended September 30, 2024 primarily reflected net income of $123,062, adjusted

for the add-back of non-cash items consisting of depreciation of $269,218, amortization of debt discount of $15,648, accretion of

stock-based stock option expense of $39,133, a loss on forfeited escrow deposit of $22,875, an increase in bad debt expense of $10,000,

and loss from the changes in fair value from an interest rate swap of $52,503, offset by changes in operating assets and liabilities

primarily consisting of an increase in deferred rent of $252,884 attributable to rent abatement on our new tenant leases at our Chicago,

Illinois and Surprise, AZ properties, a decrease in accounts payable of $73,098, an increase in accrued expenses of $174,818, and

an increase in security deposits payable of $62,645.

the nine months ended September 30 2025, net cash flow used in investing activities amounted to $785,152 as compared to net cash used

in investing activities of $3,318,916, representing a decrease of $2,533,764.

During the nine months ended September 30, 2025, net cash

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

in cost method investee of $84,110, a decrease in escrow deposits of $46,319 and an increase in capitalized project costs of $147,361.

D uring the nine months ended September 30, 2024, net cash used in investing activities was attributable

to the purchase of rental properties of $3,290,956 primarily in connection with the acquisition of properties in Chicago, IL and Surprise,

AZ, a purchase of property and equipment of $6,480, an increase in capitalized permit costs of $18,484, and an increase in escrow deposits

the nine months ended September 30 2025, net cash flow provided by financing activities amounted to $217,680 as compared to net cash

provided by financing activities of $915,848, representing a decrease of $698,168.

During the nine months ended September 30, 2025, net

cash provided by financing activities consisted of net proceeds from a note payable of $300,000, offset by cash used for the repayment

of notes payable of $55,462 and cash used for the purchase of treasury shares of $26,858.

During the nine months ended September 30,

2024, net cash provided by financing activities consisted of net proceeds from notes payable of $983,940, offset by cash used for the

repayment of notes payable of $66,107 and cash used for the purchase of treasury shares of $1,985.

Obligations and Off-Balance Sheet Arrangements

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

Changes in our business needs, cancellation

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

We cannot provide

certainty regarding the timing and amounts of payments.

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

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

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

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

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

Payments Due by Period

March 31, 2026, net cash used in financing activities consisted of cash used for the repayment of notes payable of $9,794.

three months ended March 31, 2025, net cash provided by financing activities consisted of net proceeds from a note payable of $300,000,

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

Contractual Obligations and Off-Balance Sheet

Contractual Obligations

We have certain fixed contractual obligations

and commitments that include future estimated payments.

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

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

We cannot provide certainty regarding the timing and amounts

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

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

and cash flows.

The following tables summarize our contractual

obligations as of March 31, 2026, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.

Payments Due by Period (dollars in thousands),

Contractual obligations:

Convertible notes

1 unchanged sentence

Notes payable

Sheet Arrangements

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

of any third parties.

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

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

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

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

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

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

to interest rate fluctuations.

Off-balance Sheet Arrangements

Other than discussed herein, we have not entered

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

We have not entered

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

Furthermore, we do not have

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

support to such entity.

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

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

Our off-balance sheet arrangement

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

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

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

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

rate swaps was $4,384,359.

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

be exchanged.

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

Accounting Estimates

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

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

The preparation of these consolidated

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

expenses, and related disclosure of contingent assets and liabilities.

We continually evaluate our estimates, including the critical

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

transactions.

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

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

are not readily apparent from other sources.

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

reported amounts of revenues, expenses, assets and liabilities.

Actual results may differ from these estimates under different assumptions

or conditions.

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

preparation of the financial statements.

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

to debt that accrues interest at variable rates.

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

related to derivatives and hedging activities.

We intend to fund our interest rate

swap payments utilizing cash flows from operations.

As of March 31, 2026, the notional amount of our interest rate swaps was $4,358,966.

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

The notional amount

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

Critical Accounting Estimates

Our discussion and analysis of our financial condition

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

principles generally accepted in the United States.

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

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

and liabilities.

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

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

We base our estimates on historical experience

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

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

Any future changes to

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

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

We believe the following critical accounting estimates

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

Interest rate swap

In connection with a bank loan executed in 2022,

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

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

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

The Company agrees

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

upon notional principal amount.

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

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

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

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

effective cash flow hedge.

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

income (expense) each reporting period.

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

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

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

The Company believes that the quality of the counterparty

to its swap agreement mitigates the counterparty credit risk.

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

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

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

regarding the interest rate swap is as follows:

September 30,

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

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

Interest payments receivable

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

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

Because the variable interest rates used to calculate

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

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

Accordingly, changes in the underlying market

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

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

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

of its swap agreement.

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

The estimated fair value of the interest rate

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

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

The Company uses derivative financial instruments

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

Information regarding the interest rate swap is as follows:

Fair Value of

September 30,

Fair Value of

1 unchanged sentence

December 10, 2032

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

the current expected credit loss method.

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

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

or uncollectible.

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

In accordance with ASC

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

payments (current expected losses).

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

and known financial factors regarding specific customers.

The expense associated with the allowance for doubtful accounts on accounts

receivable is recognized in general and administrative expenses.

properties are carried at cost less accumulated depreciation and amortization.

Betterments, major renovations and certain costs directly

related to the improvement of rental properties are capitalized.

Accounts receivable

We recognize an allowance for losses on accounts

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

The allowance

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

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

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.

Rental properties

Rental properties are carried at cost less accumulated

depreciation and amortization.

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

are capitalized.

Maintenance and repair expenses are charged to expense as incurred.

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

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

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

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

allocate the purchase price based on these assessments.

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

utilize appropriate discount and capitalization rates and available market information.

Estimates of future cash flows are based on a

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

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

an asset may not be recoverable.

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

flows over the anticipated holding period on an undiscounted basis.

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

carrying amount over its estimated fair value.

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

market information at the time the analyses are prepared.

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

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

financial statements.

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

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

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

For our rental property, we considered the recoverable

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

The recoverable amount is the

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

Depreciation is recognized on a straight-line basis

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

Tenant improvements are amortized on a straight-line basis

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

Upon the acquisition of real estate, we assess

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

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

these assessments.

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

rates and available market information.

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

results, known trends, and market/economic conditions.

Our properties are individually reviewed for impairment

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

An impairment exists

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

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

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

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

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

The evaluation of anticipated

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

could differ materially from actual results.

Impairment occurs when the carrying amount of

our rental properties exceeds its recoverable amount.

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

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

The recoverable amount is the higher of the asset’s

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

FVLCS and VIU as defined as follows:

Less Costs to Sell (FVLCS):

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

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

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

should be based on leases in place.

have capitalized land, which is not subject to depreciation.

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

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

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

for the award (presumptively, the vesting period).

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

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

The Company has elected to recognize forfeitures

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

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

of exercise, our discount rate and our dividend rate.

Accounting Pronouncements

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

accompanying consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk

applicable to smaller reporting companies.

Value Less Costs to Sell (FVLCS):

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

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

in Use (VIU):

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

flows should be based on leases in place.

We have capitalized land, which is not subject

to depreciation.

Stock-based compensation

Stock-based compensation is accounted for based

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

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

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

the vesting period).

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

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

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

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

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

and our dividend rate.

Recent Accounting Pronouncements

Management does not believe that recently issued,

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

Quantitative and Qualitative Disclosures

about Market Risk

Not applicable to smaller reporting companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis