What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 649 added, 648 removed, 1685 unchanged (43% of the section changed)

13 unchanged sentences

Investment in cost-method investees

Interest rate swap asset

Security deposits

12 unchanged sentences

Preferred stock, $ 0.001 par value, 5,000,000 shares authorized;

2,000,000 shares issued and outstanding on March 31, 2026 and December 31, 2025 ($ 1.00 per share liquidation preference or $ 2,000,000 )

2,000,000 shares issued and outstanding on June 30, 2026 and December 31, 2025 ($ 1.00 per share liquidation preference or $ 2,000,000 )

Common stock:

$ 0.001 par value, 100,000,000 shares authorized;

13,351,516 and 12,201,516 shares issued on March 31, 2025 and December 31, 2025, respectively, and 13,180,829 and 12,030,829 shares outstanding on March 31, 20256 and December 31, 2025, respectively

13,351,516 and 12,201,516 shares issued on June 30, 2026 and December 31, 2025, respectively, and 13,180,829 and 12,030,829 shares outstanding on June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

Treasury stock, at cost ( 170,687 and 170,687 shares on March 31, 2026 and December 31, 2025, respectively)

Treasury stock, at cost ( 170,687 and 170,687 shares on June 30, 2026 and December 31, 2025, respectively)

Accumulated deficit

8 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Property investment portfolio revenues

13 unchanged sentences

Interest expenses

Gain from sale of rental properties, net

Income (loss) from derivative - interest rate swap

Total other expenses, net

NET (LOSS) INCOME

NET (LOSS) INCOME PER COMMON SHARE:

Total other income (expenses), net

NET INCOME PER COMMON SHARE:

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

Preferred Stock

7 unchanged sentences

( 18,548,597 )

Balance, June 30, 2026

$ ( 18,474,810 )

Preferred Stock

6 unchanged sentences

( 15,493,664 )

Purchase of treasury stock

Accretion of stock-based compensation related to stock options issued

Balance, June 30, 2025

$ ( 15,467,338 )

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

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

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

2 unchanged sentences

Stock option (recovery) expense

Loss on property portfolio business development costs

Loss on forfeited escrow deposit

Gain on sales of rental properties, net

Bad debt recovery

12 unchanged sentences

Purchases of rental properties and improvements

Proceeds from sale of rental properties

Decrease (increase) in capitalized project costs

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of treasury stock

Net proceeds from notes payable

9 unchanged sentences

Common stock issued for future services

SALE OF RENTAL PROPERTIES:

Accounts receivable, net

Deferred rent receivable

Rental properties, net

Total decrease in assets from sale of rental properties

liabilities assumed by buyers:

Accrued expenses

Notes payable

Security deposits payable

Total liabilities assumed by buyers

Decrease in net assets from sale of rental properties

( 1,318,311 )

Increase in escrow deposits due from sale of rental properties

Cash received from sale of rental properties

Gain from sale of rental properties

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

22 unchanged sentences

Chino Valley Properties, LLC (“Chino Valley”) was organized in the State of Arizona on April 15, 2014.

Kingman Property Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014.

Green Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

Kingman Property Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014, and was dissolved on July 20, 2026, after sale of all net assets as discussed below.

Green Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014, and was dissolved on July 20, 2026, after sale of all net assets as discussed below.

Zoned Arizona Properties, LLC (“Zoned Arizona”) was organized in the State of Arizona on June 2, 2017.

2 unchanged sentences

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

ZP Data Platform 2, LLC

(“ZP Data 2”) was organized in the State of Arizona on June 21, 2022 (inactive).

ZP Data Platform 2, LLC (“ZP Data 2”) was organized in the State of Arizona on June 21, 2022 (inactive).

ZP RE Holdings, LLC (“ZPRE Holdings”) was organized in the State of Arizona on September 20, 2022.

ZP Brokerage FL, LLC (“Florida Brokerage”) was organized in the State of Florida on October 20, 2022.

ZP RE MI Woodward, LLC (“ZP Woodward”) was organized in the State of Michigan on November 22, 2022.

ZP RE MI Woodward, LLC (“ZP Woodward”) was organized in the State of Michigan on November 22, 2022 and dissolved on May 18, 2026, after sale of all net assets as discussed below.

ZP RE IL Ashland, LLC (“ZP Ashland”) was organized in the State of Illinois on February 14, 2024.

1 unchanged sentence

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

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

which are inactive as of March 31, 2026 (see Note 5).

The Company also maintains a 50 % equity interest

in one joint venture which is inactive as of June 30, 2026 (see Note 5).

Asset Purchase Agreement Related to Management

On January 15, 2026, the Company entered into

2 unchanged sentences

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;

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

22 unchanged sentences

assets that may be acquired by the Seller Parties prior to the closing of the MBO.

On April 20, 2026, the Company through its wholly owned subsidiaries, Green Valley, Kingman and Chino Valley entered into a Real Estate

Purchase and Sale Agreement with Broken Arrow Herbal Center, Inc., an Arizona corporation, pursuant to which the Company agreed to sell

three properties (see Note 13 - Subsequent Events).

In connection with the potential sale of the above properties, the sale process is

ongoing and is subject to shareholder approval and other contingencies, and accordingly, not all the requirements under ASC 360-45-9 related

to long-lived assets held for sale have been met including the need for shareholder approval and certain contingencies exists such as

local government approvals and the attainment of financing.

The Company will reassess the classification of these assets during each subsequent

On May 1, 2026, ZP Woodward sold its property

located in Michigan (See Note 13- Subsequent Events).

The MBO has not closed as of the date of this Quarterly Report on Form 10-Q.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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.

Real Estate Purchase and Sale Agreement Related

to Chino Valley, Green Valley and Kingman 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.

Pursuant to the terms of the Purchase Agreement,

the aggregate purchase price for the Properties was $ 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

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 was 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.

On June 30, 2026, the closing with respect to

the Green Valley Property and the Kingman Property was effectuated, and the Purchaser timely exercised its right under the Purchase Agreement

to extend the closing date with respect to the Chino Property to August 31, 2026, subject to the Purchaser’s right to extend such

closing date to September 30, 2026, on the terms and conditions set forth in the Purchase Agreement.

Accordingly, on June 30, 2026, the

Purchaser delivered a cash payment of $ 1.0 million, representing the portion of the aggregate purchase price for the Properties allocated

to these two properties under the Purchase Agreement ($ 0.5 million for the Green Valley Property and $ 0.5 million for the Kingman Property).

The net cash of $ 994,051 was received on July 1, 2026 and included in escrow deposits on the accompanying unaudited balance sheet as of

June 30, 2026.

In connection with the potential sale of the Chino Valley property and the Assets pursuant to the MBO APA, the sale process is ongoing

and is subject to shareholder approval and other contingencies, and accordingly, not all the requirements under ASC 360-45-9 related to

long-lived assets held for sale have been met including the need for shareholder approval and certain contingencies exists such as local

government approvals and the attainment of financing.

The Company has scheduled a special meeting of shareholders for September 11, 2026.

At the special meeting, stockholders will be asked to consider and vote on a proposal to approve the Asset Sale and adopt the MBO APA.

There can be no assurance as to when or whether the closing conditions will be satisfied or waived, as to whether shareholders will approve

the Asset Sale and adopt the MBO APA, or as to when or whether the Asset Sale will be consummated.

Assuming receipt of shareholder approval

at the special meeting, Zoned Properties expects to consummate the Asset Sale in the third quarter of 2026, but it cannot be certain when

or if the conditions to the Asset Sale will be satisfied or, to the extent permitted, waived.

The Company will reassess the classification

of these assets during each subsequent period.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Agreement of Sale and Escrow Instructions related

to ZP Woodward Properties

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

owned subsidiary ZP Woodward entered into and closed on the Woodward Agreement with the Woodward Buyer.

Pursuant to the Woodward Agreement,

ZP Woodward agreed to sell to the Woodward Buyer:

(i) ZP Woodward’s fee interest in the real estate property located at 23600 Woodward

Avenue, Ferndale, Michigan APN No.

24-25-27-181-006 (the “Fee Property”);

(ii) ZP Woodward’s vendee interest in that

certain the Land Contract dated November 30, 2022 related to APNs 25-27-181-004 & 25-27-181-005, with a commonly known address of

23622 & 23616 Woodward Avenue, Pleasant Ridge, Michigan with The Thomas A.

Pearlman Revocable Trust U/A/D 6/13/2005, as vendor (the

“Pearlman Land Contract”);

(iii) ZP Woodward’s vendee interest in that certain Land Contract dated February 23, 2023

related to APN 25-27-181-003, with a commonly known address of 23634 Woodward Avenue, Pleasant Ridge, Michigan with Gangnier Investments

LLC, a Michigan limited liability company, as vendor (the “Gangnier Land Contract”);

and (iv) ZP Woodward’s interest

in that certain Licensed Cannabis Facility Absolute Net Lease Agreement dated December 1, 2022 with respect to the Fee Property and the

(the “Woodward Lease,” and collectively with the Fee Property and land contract interests, the “Woodward Property”).

The aggregate purchase price for the Woodward Property was $ 600,000 , plus Woodward Buyer’s assumption of all obligations and outstanding

balances under the Pearlman Land Contract and Gangnier Land Contract (being $ 1,327,606 and $ 375,002 , respectively).

At closing, ZP Woodward

conveyed the Fee Property by covenant deed and assigned its interests in the Pearlman Land Contract.

Gangnier Land Contract, and Lease

to the Woodward Buyer, and the Woodward Buyer assumed the related obligations.

The Woodward Agreement contains customary representations

and warranties of Seller, including with respect to authority, absence of conflicting agreements, and certain matters relating to litigation,

environmental conditions, and the land contracts, subject to knowledge qualifiers.

Except as expressly set forth in the Woodward Agreement

and related closing documents, the Woodward Property is being sold on an “as is, where is, with all faults” basis.

Agreement includes provisions allocating prorations of taxes, rent, land contract payments, utilities and other customary items as of

Certain closing costs, including escrow fees, owner’s title insurance premiums, and transfer taxes, are to be shared equally

by the Woodward Buyer and Seller, with the Woodward Buyer responsible for additional title coverage and any lender’s policy.

In connection with the closing, the parties have

entered into (i) an Assignment and Assumption of Land Contract with respect to the Pearlman Land Contract among Seller, the Woodward Buyer,

and Thomas A.

Pearlman, Trustee of the Thomas A.

Pearlman Revocable Trust u/a/d 6/13/2005 (the “Pearlman Land Contract Assignment”);

(ii) an Assignment and Assumption of Land Contract with respect to the Gangnier Land contract among Seller, the Woodward Buyer, and Gangnier

Investment, LLC (the “Gangnier Land Contract Assignment”);

and (iii) an Assignment and Assumption of Lease among ZP Woodward,

the Woodward Buyer, and Rapid Fish 2, LLC, as tenant (the “Lease Assignment” and together with the Pearlman Land Contract

Assignment and Gangnier Land Contract Assignment, the “Assignment Agreements”).

Each of the Assignment Agreements became automatically

effective upon the consummation of the closing of the transaction contemplated by the Woodward Agreement.

From and after the effective

time of such closing, (i) ZP Woodward assigned to the Woodward Buyer all of its right, title, and interest in and to the applicable land

contract or Lease, as applicable, and (ii) the Woodward Buyer assumed and agreed to perform all obligations of ZP Woodward arising under

such agreements from and after the effective date thereof.

Under the Assignment Agreements, the Woodward Buyer did not assume a liability

for obligations arising prior to the effective time of the assignments, and Seller retained such pre-closing liabilities, if any.

each applicable counterparty (including the land contract sellers and the tenant under the Lease) has consented to the applicable assignment

and has agreed to release Seller from liabilities arising under the assigned agreements from and after the effective time of such assignment.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

6 unchanged sentences

The unaudited consolidated financial statements

for the three months ended March 31, 2026 and 2025 have been prepared by the Company without audit, pursuant to the rules and regulations

for the six months ended June 30, 2026 and 2025 have been prepared by the Company without audit, pursuant to the rules and regulations

of the Securities and Exchange Commission (the “SEC”).

In the opinion of management, all adjustments necessary to present

fairly our consolidated financial position, results of operations, and cash flows as of March 31, 2026 and 2025, and for the periods then

fairly our consolidated financial position, results of operations, and cash flows as of June 30, 2026 and 2025, and for the periods then

ended, have been made.

10 unchanged sentences

in the normal course of business.

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

and had cash provided by operations of $ 1,630,287 during 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 .

Furthermore, 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).

As reflected in these unaudited consolidated financial statements, the Company had net income of $ 19,127 ,

including a gain from the sale of the Green Valley, Kingman and ZP Woodward properties of $ 237,815 , and had cash provided by operations

of $ 1,041,428 during the six months ended June 30, 2026.

Additionally, as of June 30, 2026, the Company had cash of $ 2,446,418 and stockholders’

equity of $ 3,430,648 .

ZONED PROPERTIES, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

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,

and Sale Agreement (the “Purchase Agreement”) with the Purchaser, pursuant to which the Seller agreed to sell to the Purchaser

three properties consisting of (i) the Green Valley Property, (ii) the Kingman Property, and (iii) 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.

Pursuant to the terms of the Purchase Agreement,

the aggregate purchase price for the Properties was $ 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

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 was scheduled to occur on June 30,

2026, unless extended in accordance with the Purchase Agreement.

1 unchanged sentence

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.

As discussed in Note 1, the sale of the Green Valley Property and the Kingman Property

closed on the original closing date of June 30, 2026 for an aggregate cash payment of $ 1.0 million, which was received on July 1, 2026,

net of certain costs, and the closing for the Chino Property was extended to August 31, 2026.

The Purchaser 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.

The Purchase Agreement contains customary provisions

32 unchanged sentences

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Use of estimates

5 unchanged sentences

Significant estimates for

the three months ended March 31, 2026 and 2025 include the collectability of accounts and other receivables, valuation of investment in

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

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

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

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

the six months ended June 30, 2026 and 2025 include the collectability of accounts and other receivables, valuation of investment in equity

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

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

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

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Risks and uncertainties

9 unchanged sentences

(each, a “Significant Tenant” and collectively, the “Significant Tenants”).

For the three months ended March 31,

2026 and 2025, revenues associated with Significant Tenants amounted to $ 584,633 and $ 587,418 , respectively, which represents 49.8 % and

60.3 % of the Company’s total revenues, respectively (see Note 3).

For the six months ended June 30,

2026 and 2025, revenues associated with Significant Tenants amounted to $ 1,069,870 and $ 1,174,835 , respectively, which represents 55.0 %

and 61.4 % of the Company’s total revenues, respectively (see Note 3).

Fair value of financial instruments

11 unchanged sentences

Unobservable inputs that are not corroborated by market data.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Other than the interest rate swap, the Company

2 unchanged sentences

The following table represents the Company’s

fair value hierarchy of its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December

March 31, 2026

fair value hierarchy of its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December

June 30, 2026

December 31, 2025

Interest rate swap asset

Interest rate swap liability

24 unchanged sentences

to manage interest rate risks and not as investment vehicles.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Information regarding the interest rate swap is

7 unchanged sentences

or less as of the purchase date of such investments.

The Company had no cash equivalents on March 31, 2026 and December 31, 2025.

Company’s cash is held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”)

The Company had no cash equivalents on June 30, 2026 and December 31, 2025.

The Company’s

cash is held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit.

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

As of March 31, 2026 and December 31, 2025, the Company

had approximately $ 1,681,000 and $ 328,000 , respectively, of cash in excess of FDIC limits of $ 250,000 .

Any loss incurred or a lack of

access to such funds above the FDIC limit could have a significant adverse impact on the Company’s financial condition, results

of operations and cash flows.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

As of June 30, 2026 and December 31, 2025, the Company had approximately

$ 1,887,000 and $ 328,000 , respectively, of cash in excess of FDIC limits of $ 250,000 .

Any loss incurred or a lack of access to such funds

above the FDIC limit could have a significant adverse impact on the Company’s financial condition, results of operations and cash

Accounts receivable

42 unchanged sentences

investment is subject to the Company’s impairment review policy.

Investment in cost method investees also includes

Investment in cost method investees also included

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

1 unchanged sentence

(referred to as the “measurement alternative”).

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

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

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

8 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

Rental properties

33 unchanged sentences

defaults under the lease, on May 1, 2026, the Company sold the Woodward Property to the New Tenant for approximately $ 600,000 in cash

plus the assumption of the notes payable outstanding on the Woodward Property (see Note 13 – Subsequent Events).

As of December

31, 2025, if the Company sold the Woodward Property for $ 600,000 , the net carrying value of the Woodward Property of approximately $ 2,700,000

would exceed the $ 600,000 sale price by $ 2,100,000 .

Accordingly, during the year ended December 31, 2025, we recorded an impairment loss

of $ 2,100,000 .

During the three months ended March 31, 2026 and 2025, the Company did not record any impairment losses.

plus the assumption of the notes payable outstanding on the Woodward Property (see Note 1).

As of December 31, 2025, if the Company sold

the Woodward Property for $ 600,000 , the net carrying value of the Woodward Property of approximately $ 2,700,000 would exceed the $ 600,000

sale price by $ 2,100,000 .

Accordingly, during the year ended December 31, 2025, the Company recorded an impairment loss of $ 2,100,000 .

During the six months ended June 30, 2026 and 2025, the Company did not record any impairment losses.

On June 30, 2026, the Company sold its Green Valley

and Kingman Property (See Note 1)

The Company has land which is not subject to depreciation.

11 unchanged sentences

deposits are non-refundable and write off capitalized project costs.

During the three months ended March 31, 2026 and 2025, the Company

forfeited escrow deposits and wrote off capitalized project costs of $ 199,650 and $0 , respectively, which is reflected in operating expenses

as part of property portfolio business development costs on the accompanying unaudited consolidated statements of operations.

31, 2026 and December 31, 2025, escrow deposits amounted to $ 106,269 and $ 294,169 , respectively.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

During the six months ended June 30, 2026 and 2025, the Company forfeited

escrow deposits and wrote off capitalized project costs of $ 199,650 and $0 , respectively, which is reflected in operating expenses as

part of property portfolio business development costs on the accompanying unaudited consolidated statements of operations.

2026, escrow deposits amounted to $ 1,100,320 , which includes $ 994,051 received on July 1, 2026 from the sale of the Green Valley and Kingman

On December 31, 2025, escrow deposits amounted to $ 294,169 .

Property and equipment

8 unchanged sentences

in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Revenue recognition

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of rent or other events beyond the Company’s control are recognized upon the occurrence of such events.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Contract liabilities

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have been met for revenue to be recognized in conformity with GAAP.

During the three months ended March 31, 2026 and 2025, contract liabilities

During the six months ended June 30, 2026 and 2025, contract liabilities

activities were as follows:

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into revenue over the remaining lease term on a straight-line basis.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Balance at beginning of period

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policy election and recognizes rent expense on a straight-lines basis over the lease term.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The Company records revenues from rental properties

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These rent abatements and the effect of recording rent on a straight-line basis resulted in aggregate deferred rent as

of March 31, 2026 and December 31, 2025 of $ 1,302,471 and $ 1,084,413 , respectively (see Note 3).

of June 30, 2026 and December 31, 2025 of $ 1,059,523 and $ 1,084,413 , respectively (see Note 3).

Additionally, if the lease provides for

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and is included in general and administrative expenses in the consolidated statements of operations.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Basic and diluted net income (loss) per share

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participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The following table presents a reconciliation

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Three Months Ended

Net (loss) income per common share - basic:

Net (loss) income

Six Months Ended

Net income per common share - basic:

undistributed (earnings) loss allocated to participating securities

Net (loss) income allocated to common stockholders

Net income allocated to common stockholders

Weighted average common shares outstanding – basic

Net (loss) income per common share – basic

Net (loss) income per common share - diluted:

Net (loss) income allocated to common shareholders – basic

Net income per common share – basic

Net income per common share - diluted:

Net income allocated to common shareholders – basic

interest on convertible debt

Numerator for net (loss) income per common share – basic

Numerator for income per common share – basic

Weighted average common shares outstanding – basic

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Weighted average common shares outstanding – diluted

Net (loss) income per common share – diluted

Net income per common share – diluted

The following potentially dilutive shares have

been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive for the three months ended March

been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive for the six months ended June

30, 2026 and 2025.

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Currently, these reportable segments are being managed separately based on the fundamental differences in their operations.

In November 2023, the FASB issued Accounting Standards

Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires

entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure as

well as the title and position of the chief operating decision maker (“CODM”).

The new standard also requires interim disclosures

related to reportable segment profit or loss and assets that had previously only been disclosed annually.

The Company adopted ASU 2023-07

effective December 31, 2024 on a retrospective basis.

As a result, the Company has enhanced its segment disclosures in this report to

include the presentation of depreciation and amortization, interest and joint venture expenses by segment and the disclosure of its CODM.

The adoption of this ASU only affects the Company’s disclosures with no impact on its financial condition or results of operations.

ZONED PROPERTIES, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

In November 2023, the FASB issued Accounting

Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which

requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure

as well as the title and position of the chief operating decision maker (“CODM”).

The new standard also requires interim

disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually.

The Company adopted

ASU 2023-07 effective December 31, 2024 on a retrospective basis.

As a result, the Company has enhanced its segment disclosures in this

report to include the presentation of depreciation and amortization, interest and joint venture expenses by segment and the disclosure

The adoption of this ASU only affects the Company’s disclosures with no impact on its financial condition or results

of operations.

Deferred income tax assets and liabilities arise

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An entity may only recognize or continue to recognize tax positions that meet a “more-likely-than-not”

The Company does not believe it has any uncertain tax positions as of March 31, 2026 and December 31, 2025 that would require

The Company does not believe it has any uncertain tax positions as of June 30, 2026 and December 31, 2025 that would require

either recognition or disclosure in the accompanying unaudited consolidated financial statements.

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financial statements.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

NOTE 3 – CONCENTRATIONS AND RISKS

Lease Agreements with Significant Tenants

Our property located in Chino Valley is leased

Lease Agreements with Tenants

Our property located in Chino Valley, AZ is leased

by Broken Arrow Herbal Center, Inc.

(“Broken Arrow”), doing business as JARS Cannabis.

Our property located in Green Valley is leased

Our property located in Green Valley, AZ was leased

by Broken Arrow, doing business as JARS Cannabis.

Our property located in Kingman is leased by CJK,

The Green Valley property was sold on June 30, 2026.

Our property located in Kingman, AZ was leased

(“CJK”), doing business as JARS Cannabis.

Our property located in Tempe is leased by VSM,

LLC (“VSM”), doing business as Green Dot Labs.

Our property located in Pleasant Ridge is leased

by Rapid Fish, LLC (“Rapid Fish”), doing business as NOXX Cannabis.

Our property located in Chicago is leased by JG

IL LLC (“Justice Grown”), doing business as Justice Cannabis Co.

The Kingman property was sold on June 30, 2026.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Our property located in Tempe, AZ is leased by

VSM, LLC (“VSM”), doing business as Green Dot Labs.

Our properties located in Pleasant Ridge, MI was

leased by Rapid Fish, LLC (“Rapid Fish”), doing business as NOXX Cannabis.

These properties were sold on May 1, 2026.

Our property located in Chicago, IL is leased

by JG IL LLC (“Justice Grown”), doing business as Justice Cannabis Co.

Our property located in Surprise, AZ is leased

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The Company considers a tenant whose annual base

rent exceeds over 10 % of the Company’s annual rental income to be a significant tenant.

The Tempe Lease (leased by VSM), the Chino

Valley Lease and Green Valley Lease (leased by Broken Arrow), and the Woodward Lease located in Pleasant Ridge (leased by Rapid Fish)

are considered significant and the tenants are referred to as the Significant Tenants.

rent exceeds over 10 % of the Company’s annual rental income to be a significant tenant (“Significant Tenants”).

June 30, 2026, the Tempe Lease (leased by VSM), the Chino Valley Lease and Green Valley Lease (leased by Broken Arrow), and the Woodward

Lease located in Pleasant Ridge (leased by Rapid Fish) were considered significant and the tenants are referred to as the Significant

Subsequent to June 30, 2026, the Company shall have no revenues from the Green Valley, Kingman and Pleasant Ridge leases.

Chino Valley, AZ

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entered into a Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Chino Valley and Broken

Arrow (the “2018 Chino Valley Lease”), with a term of 22 years, expiring April 30, 2040 .

The 2018 Chino Valley Lease provided

for payment by Broken Arrow of a fixed monthly base rent of $ 35,000 , as well as real property taxes, personal property taxes, privilege,

sales, rental, excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against Chino Valley.

pursuant to the terms of the 2018 Chino Valley Lease, Broken Arrow agreed to maintain insurance in full force during the term of the 2018

Chino Valley Lease and any other period of occupancy of the premises by Broken Arrow.

On January 1, 2019, Chino Valley and Broken Arrow

entered into the First Amendment to the 2018 Chino Valley Lease, pursuant to which the monthly base rent was increased from $ 35,000 to

Except for the increase in base rent, the terms of the 2018 Chino Valley Lease remain in full force and effect.

Arrow (the “2018 Chino Valley Lease”), with a term of 22 years, expiring April 30, 2040 and a fixed monthly base rent of $35,000 ,

as well as real property taxes and other taxes levied upon or assessed against Chino Valley.

In addition, pursuant to the terms of the

2018 Chino Valley Lease, Broken Arrow agreed to maintain insurance in full force during the term of the 2018 Chino Valley Lease and any

other period of occupancy of the premises by Broken Arrow.

On January 1, 2019, Chino Valley and Broken Arrow entered into the First Amendment

to the 2018 Chino Valley Lease, pursuant to which the monthly base rent was increased from $ 35,000 to $ 40,000 .

Except for the increase

in base rent, the terms of the 2018 Chino Valley Lease remain in full force and effect.

On May 29, 2020, Chino Valley and Broken Arrow

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obligations related to the same.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

On August 23, 2021, Chino Valley and Broken Arrow

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(the “Chino Valley Lease”), effective September 1, 2021.

The parties previously agreed that the base rental payments under

the Chino Valley Lease would increase commensurate to any and all expanded and operational square footage on the premises by calculating

the fixed rate of $ 0.82 per square foot per month by the new operational square footage.

Accordingly, in the Third Chino Valley Amendment,

the parties agreed that, as of September 1, 2021, the rental payment is increased to $ 55,195 per month base rental payment, plus additional

rental payments, as a result of the increase in the square footage to 67,312 square feet of operational space.

This lease modification

qualified as a separate contract as the modification grants the tenant additional right of use not included in the original lease, as

amended, and the increase in monthly rent payments is commensurate with the standalone price for the additional square footage being leased.

In the Third Chino Valley Amendment, the parties agreed that, as

of September 1, 2021, the rental payment is increased to $ 55,195 per month base rental payment, plus additional rental payments, as a

result of the increase in the square footage to 67,312 square feet of operational space.

This lease modification qualified as a separate

contract as the modification grants the tenant additional right of use not included in the original lease, as amended, and the increase

in monthly rent payments is commensurate with the standalone price for the additional square footage being leased.

On January 24, 2022 and effective on March 1,

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rent amount outstanding.

The Company received the full rent amount outstanding on March 31, 2026.

The Company received the full rent amount outstanding on June 30, 2026.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

On December 31, 2025, the Company, through its

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The Purchase Option was exercised

on April 20, 2026 (see Note 13 – Subsequent Events).

In connection with the anticipated change of control transaction for the

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

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

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

The Consent Agreement provided, among other things, that

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

rent, additional rent and late charges and (ii) $ 965,000 as compensation for rent concessions reflected in the A&R Lease, both of

which were received by the Company on March 31, 2026.

Upon receipt of such amounts, the Consent Agreement provided for the release of

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Green Valley, AZ

On May 1, 2018, Green Valley and Broken Arrow

entered into a Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Green Valley and Broken

Arrow (the “Green Valley Lease”), with a term of 22 years, expiring April 30, 2040 .

The Green Valley Lease provided for payment

by Broken Arrow of a fixed monthly base rent of $ 3,500 , as well as real property taxes, personal property taxes, privilege, sales, rental,

excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against Chino Valley.

In addition, pursuant

to the terms of the Green Valley Lease, Broken Arrow agreed to maintain insurance in full force during the term of the Green Valley Lease

and any other period of occupancy of the premises by Broken Arrow.

On May 29, 2020, Green Valley and Broken Arrow

entered into the First Amendment (the “Green Valley Amendment”) to the Green Valley Lease, effective May 31, 2020.

Valley Amendment provides that any increase in the rentable area of the leases premises will result in an increase in all amounts calculated

based on the same, including, without limitation, base rent.

The parties also agreed that if there is any change in laws such that the

dispensing, sale or cultivation of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably

determined by Green Valley and Broken Arrow, Broken Arrow may terminate the Green Valley Lease by delivering written notice to Green Valley,

together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5 % of the base rent which would

have been earned after termination for the balance of the term.

On December 31, 2025, Green Valley entered into

an Amended and Restated Absolute Net Lease Agreements with Broken Arrow, with an effective date of January 1, 2026 (see Chino Valley above).

on April 20, 2026 (see Note 1).

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

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

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

new guarantor) and Elevate Holdings, Group, LLC.

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

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

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

on March 31, 2026.

Upon receipt of such amounts, the Consent Agreement provided for the release of the existing guarantor from liability

for periods after closing and A&R Consultants, LLC executed a new guaranty of the A&R Lease.

On May 1, 2018, and amended on May 29, 2020, Zoned

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Investment by Tenants to the Facilities totaling in excess of $ 8,000,000 and have satisfied the contractual obligations related to the

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

In connection with a promissory note (See Note

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Arizona $ 300,000 (the “Assignment Fee”), (ii) VSM agreed to commit at least $ 3,000,000 to be spent toward capital improvements

to the Premises within two years after the effective date of the Tempe Second Amendment (the “Capital Commitment”), (iii)

VSM agreed to deposit an additional security deposit (the “Additional Security Deposit”) of $ 147,600 to be held by Zoned Arizona

per the terms of the Tempe Lease, and (iv) VSM agreed to cause its affiliate, GDL Inc.

(doing business as Green Dot Labs) (“GDL”)

to execute and deliver to Zoned Arizona that Guaranty of Payment and Performance dated on the same date as the Tempe Amendment, which

Guaranty of Payment and Performance requires GDL to guarantee and be liable for VSM’s compliance with and performance under the

to the Premises within two years after the effective date of the Tempe Second Amendment (the “Capital Commitment”), which

was satisfied as of June 1, 2025.

(iii) VSM agreed to deposit an additional security deposit (the “Additional Security Deposit”)

of $ 147,600 to be held by Zoned Arizona per the terms of the Tempe Lease, and (iv) VSM agreed to cause its affiliate, GDL Inc.

business as Green Dot Labs) (“GDL”) to execute and deliver to Zoned Arizona that Guaranty of Payment and Performance dated

on the same date as the Tempe Amendment, which Guaranty of Payment and Performance requires GDL to guarantee and be liable for VSM’s

compliance with and performance under the Tempe Lease.

The Guaranty of Payment and Performance was entered into on November 30, 2022.

If VSM fails to deliver to Zoned Arizona invoices

or other documentation acceptable to Zoned Arizona showing the Capital Commitment has been satisfied in a timely manner, VSM will be in

default under the Tempe Lease.

VSM will be in default under the Tempe Lease.

No other terms of the Tempe Lease were modified.

Therefore, the Company’s accounting for the lease

remained unchanged subsequent to the Tempe Second Amendment and Assignment.

Therefore, the Company’s accounting

for the lease remained unchanged subsequent to the Tempe Second Amendment and Assignment.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Pursuant to ASC 842-10-25, the lease modification

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remaining term of the lease through April 2040.

On March 31, 2026 and December 31, 2025, contract liability related to this lease modification

On June 30, 2026 and December 31, 2025, contract liability related to this lease modification

amounted to $ 238,278 and $ 246,890 , respectively, which has been included in contract liabilities on the accompanying unaudited consolidated

balance sheets.

As of June 1, 2025, VSM satisfied the Capital

Commitment and completed more than $ 3,000,000 worth of improvements to the Tempe property.

Additionally, on the Tempe property, the Company

leases parking lot space for an antenna location to a third party.

Green Valley, AZ

On May 1, 2018, Green Valley and Broken Arrow

entered into a Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Green Valley and Broken

Arrow (the “Green Valley Lease”), with a term of 22 years, expiring April 30, 2040 .

On May 29, 2020, Green Valley and Broken

Arrow entered into the First Amendment (the “Green Valley Amendment”) to the Green Valley Lease, effective May 31, 2020.

December 31, 2025, Green Valley entered into an Amended and Restated Absolute Net Lease Agreements with Broken Arrow, with an effective

date of January 1, 2026 (see Chino Valley above).

On June 30, 2026, the Company sold the Green Valley Property and the Amended and Restated

Absolute Net Lease Agreements with Broken Arrow related to Green Valley was assigned to the buyer (see Note 1).

On May 1, 2018, Kingman and CJK entered into a

1 unchanged sentence

with a term of 22 years, expiring April 30, 2040 .

The Kingman Lease provides for payment by CJK of a fixed monthly base rent of $ 4,000 ,

as well as real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or

estate taxes) levied upon or assessed against Kingman.

In addition, pursuant to the terms of the Kingman Lease, CJK agreed to maintain

insurance in full force during the term of the Kingman Lease and any other period of occupancy of the premises by CJK.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

On May 29, 2020, Kingman and CJK entered into

the First Amendment (the “Kingman Amendment”) to the Kingman Lease, effective May 31, 2020.

The Kingman Amendment provides

that any increase in the rentable area of the leases premises will result in an increase in all amounts calculated based on the same,

including, without limitation, base rent.

The parties also agreed that if there is any change in laws such that the dispensing, sale or

cultivation of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by

Kingman and CJK, CJK may terminate the Kingman Lease by delivering written notice to Kingman, together with a termination payment which

shall be the sum of (i) any unpaid rent and interest, plus (ii) 5 % of the base rent which would have been earned after termination for

the balance of the term.

On November 30, 2022, Kingman and CJK entered

into the Second Amendment (the “Kingman Second Amendment”) to the Licensed Medical Marijuana Facility Triple Net (NNN) Lease

Agreement dated May 1, 2018 between Kingman and CJK.

Pursuant to the terms of the Kingman Second Amendment, CJK agreed to grant Kingman

a right to terminate the Kingman Lease upon 15 days’ prior written notice in Kingman’s sole discretion, without any obligation

to do so, provided that Kingman may not exercise this right to terminate if CJK is operating its business as a going concern at the premises

which is the subject of the Kingman Lease.

On August 2, 2023, the Company consented to a

Sublease Agreement (the “Sublease”) with CJK and a subtenant in connection with the Company’s Kingman property.

to the Sublease, the Sublease shall be effective on August 2, 2023 and end on the one year anniversary, or (ii) the last day of the Term

of the Master Lease (whether due to expiration or termination thereof by the Company, whichever is earlier (the “Sublease Expiration

Date”), such period being referred to herein as the “Sublease Term”, unless terminated earlier pursuant to the terms

of this Sublease or otherwise by consent of the Company, CJK and Subtenant.

The subtenant had two options to extend the Sublease Term

by one-year periods each (each a “Sublease Term Extension” and collectively the “Sublease Term Extensions”), which

were exercisable by Subtenant no later than 90 days prior to the expiration of the Sublease Term, as may be extended.

In August 2024,

the Sublease was not renewed and the Sublease expired.

Upon expiration of the Sublease, the Security Deposit of $ 14,960 was refunded to

the subtenant.

The Kingman Lease remains in place;

however, the Kingman property is currently non-operational.

On December 31, 2025, Kingman entered into an

Amended and Restated Absolute Net Lease Agreements with CJK, Inc., with an effective date of January 1, 2026 (see Chino Valley above).

On May 29, 2020, Kingman and CJK entered into the First Amendment (the “Kingman

Amendment”) to the Kingman Lease, effective May 31, 2020.

On November 30, 2022, Kingman and CJK entered into the Second Amendment

(the “Kingman Second Amendment”) to the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1,

2018 between Kingman and CJK.

Pursuant to the terms of the Kingman Second Amendment, CJK agreed to grant Kingman a right to terminate

the Kingman Lease upon 15 days’ prior written notice in Kingman’s sole discretion, without any obligation to do so, provided

that Kingman may not exercise this right to terminate if CJK is operating its business as a going concern at the premises which is the

subject of the Kingman Lease.

On December 31, 2025, Kingman entered into an Amended and Restated Absolute Net Lease Agreements with CJK,

Inc., with an effective date of January 1, 2026 (see Chino Valley above).

On June 30, 2026, the Company sold the Kingman Property and

the Amended and Restated Absolute Net Lease Agreements with CJK, Inc.

related to Kingman was assigned to the buyer (see Note 1).

Pleasant Ridge, MI

5 unchanged sentences

Woodward Lease contained customary obligations of the Woodward Tenant consistent with an absolute triple net lease agreement, including

(i) the payment of real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income

or estate taxes), (ii) payment of insurance premiums and operating costs of ZP Woodward related to the operation of the Woodward Property,

and (iii) maintenance and repair obligations to maintain the Woodward Property in first-class retail condition.

The Woodward Lease contained

an abatement of the full or partial rent that would otherwise have been due for the months from December 2022 to March 2023.

to the abatement period, the Woodward Lease provided for payment by the tenant of monthly base rent beginning at $ 40,319 per month and

increasing by 3 % per year over the term of the lease, as well as real property taxes, personal property taxes, privilege, sales, rental,

excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against the Company.

In addition, pursuant to

the terms of the Woodward Lease, the Woodward Tenant maintained insurance in full force during the term of the Woodward Lease and any

other period of occupancy of the premises by the tenant.

(i) the payment of real property taxes and other taxes, (ii) payment of insurance premiums and operating costs of ZP Woodward related

to the operation of the Woodward Property, and (iii) maintenance and repair obligations to maintain the Woodward Property in first-class

retail condition.

The Woodward Lease contained an abatement of the full or partial rent that would otherwise have been due for the months

from December 2022 to March 2023.

Subsequent to the abatement period, the Woodward Lease provided for payment by the tenant of monthly

base rent beginning at $ 40,319 per month and increasing by 3 % per year over the term of the lease, as well as real property taxes and

other taxes levied upon or assessed against the Company.

In addition, pursuant to the terms of the Woodward Lease, the Woodward Tenant

maintained insurance in full force during the term of the Woodward Lease and any other period of occupancy of the premises by the tenant.

On May 14, 2023, ZP Woodward entered into an Assignment

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Old Tenant and New Tenant share common ownership.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

During the third quarter of 2025, New Tenant faced

7 unchanged sentences

Pursuant to the Woodward

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

Agreement, ZP Woodward sold to the Woodward Buyer all Michigan properties (See Note 1).

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

On January 19, 2024, ZPRE Holdings and Keystone

32 unchanged sentences

31, 2025, the Company recorded an impairment loss of $ 1,018,716 .

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

On January 2, 2024, ZPRE Holdings entered into

48 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, security

As of June 30, 2026 and December 31, 2025, security

deposits payable to the Company’s tenants amounted to $ 316,704 and $ 339,471 , respectively.

4 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

Future minimum lease payments to be received,

on all leased properties, for each of the five succeeding calendar years and thereafter as of March 31, 2026, consists of the following:

on all remaining leased properties, for each of the five succeeding calendar years and thereafter as of June 30, 2026, consists of the

Future annual base rent:

1 unchanged sentence

Revenues – Significant Tenants

For the three months ended March 31, 2026 and

For the six months ended June 30, 2026 and 2025,

revenues associated with Significant Tenant leases described above are summarized as follows:

Three Months Ended

Further, as of March 31, 2026 and December 31,

Further, as of June 30, 2026 and December 31,

2025, deferred rent of $ 1,059,523 and $ 1,084,413 was due collectively from the tenants due to the abatement of rent under the lease agreements

discussed above, respectively, and as of March 31, 2026 and December 31, 2025, a lease incentive receivable of $ 387,615 and $ 394,495 was

discussed above, respectively, and as of June 30, 2026 and December 31, 2025, a lease incentive receivable of $ 380,734 and $ 394,495 was

due from one of the Significant Tenants, respectively, in connection with the $ 500,000 tenant improvement allowance provided to tenant

10 unchanged sentences

term of the modified A&R Lease.

On March 31, 2026 and December 31, 2025 deferred revenue related to this lease modification amounted

On June 30, 2026 and December 31, 2025 deferred revenue related to this lease modification amounted

to $ 1,167,090 and $ 246,890 , respectively, and is included in contract liabilities on the accompanying unaudited consolidated balance sheets.

6 unchanged sentences

upon request, and (2) monitoring the timeliness of rent collections.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

As of March 31, 2026 and December 31, 2025, the

As of June 30, 2026 and December 31, 2025, the

Company had an asset concentration related to its Significant Tenants.

As of March 31, 2026 and December 31, 2025, the Significant Tenants

As of June 30, 2026 and December 31, 2025, the Significant Tenants

collectively leased approximately 29.9 % and 47.2 % of the Company’s total assets, respectively.

1 unchanged sentence

asset concentration related to its Surprise, AZ property, which leased approximately 20.0 % and 19.4 % of the Company’s total assets

as of March 31, 2026 and December 31, 2025, respectively.

as of June 30, 2026 and December 31, 2025, respectively.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Industry risk

12 unchanged sentences

NOTE 4 – RENTAL PROPERTIES

On March 31, 2026 and December 31, 2025, rental

On June 30, 2026 and December 31, 2025, rental

properties, net consisted of the following:

5 unchanged sentences

Rental properties, net

Property Acquisitions and Impairments

Property Acquisitions, Impairments, and Sales

Pursuant to the terms of the Agreement Regarding

17 unchanged sentences

the Company recorded an impairment loss of $ 1,018,716 .

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

On July 8, 2024, ZP Dysart acquired a property

16 unchanged sentences

the Surprise Property and opened for business.

During the third quarter of 2025, New Tenant faced

operational challenges that impaired its ability to meet contractual rent obligations.

On February 13, 2026, the Company sent New Tenant

at the Woodward Property a written notice default related to the New Tenant’s failure to i) make timely rental payments and ii)

fulfill its obligations related to non-monetary terms under the Woodward Lease.

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

subsidiary ZP Woodward entered into and closed on the Woodward Agreement with the Woodward Buyer.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

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

owned subsidiary ZP Woodward entered into and closed on the Woodward Agreement with the Woodward Buyer.

Pursuant to the Woodward Agreement,

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

The Company sold the

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 .

For the three months ended March 31, 2026 and

ZP Woodward sold to the Woodward Buyer all Michigan properties (See Note 1).

The Company sold the Woodward Property for $ 600,000 .

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, the Company’s projected future cash flows,

anticipated holding periods, and market conditions changed.

Accordingly, during the year ended December 31, 2025, the Company recorded

an impairment loss of $ 2,100,000 .

During May and June 2026, the Company sold its

Green Valley, Kingman and ZP Woodward Properties (See Note 1).

In connection with the sale of these properties, during the three and six

months ended June 30, 2026, the Company recorded a gain on sale of rental properties of $ 237,815 .

the three and six months ended June 30, 2026, gain on sale of rental properties consisted of the following:

from sale of rental properties, net of costs

in escrow deposits for net proceeds due to the sale of rental properties

of notes payable by buyer

liabilities assumed by buyer

of rental properties, net

( 2,632,500 )

of deferred rent receivable

from sale of rental properties, net

For the six months ended June 30, 2026 and 2025,

depreciation of rental properties amounted to $ 147,067 and $ 176,692 , respectively.

3 unchanged sentences

joint venture

On March 31, 2026 and December 31, 2025, the Company

held an investment with carrying values of $ 0 in Zoneomics Green, a Delaware limited liability company formed on May 1, 2021 and owned

50 % by the Company.

The Company accounts for this investment under the equity method of accounting as the Company exercises significant

influence but does not exercise financial and operating control over this entity.

Investments are reviewed for changes in circumstance

or the occurrence of events that suggest an other than temporary event where the Company’s investment may not be recoverable.

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

Green to launch in the cannabis industry;

however, the project has stalled over the past year.

In order to successfully launch, the technology

platform needs to rely upon a required merchant banking component, which is has been unable to identify.

The Company does not currently

know when an appropriate merchant banking solution will become available given the federal status of regulated cannabis and specifically

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

The regulatory status

related to cannabis banking reform and regulation at the federal level remains uncertain and the Company believes it is appropriate to

cause an impairment of the Zoneomics Green investment at this time.

The Company has no further financial or investment obligations at

Zoneomics Green in inactive.

During the three months ended March 31, 2026 and

2025, the Company recorded a loss from unconsolidated joint ventures of $ 0 .

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Through June 12, 2026, the Company held an investment

with carrying values of $ 0 in Zoneomics Green, a Delaware limited liability company formed on May 1, 2021 and owned 50 % by the Company.

The Company accounted for this investment under the equity method of accounting as the Company exercised significant influence but did

not exercise financial and operating control over this entity.

Investments were reviewed for changes in circumstance or the occurrence

of events that suggested an other than temporary event where the Company’s investment may not be recoverable.

The Zoneomics Green

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

in the cannabis industry;

however, the project stalled.

In June 2026, the Company and joint venture partner determined that there was

no viable future for this project and as such Zoneomics Green was dissolved on June 12, 2026..

the Company has no further

financial or investment obligations.

During the three and six months ended June 30,

2026 and 2025, the Company recorded no loss from unconsolidated joint ventures.

Investments in cost method investees

8 unchanged sentences

This investment is subject to the Company’s impairment review policy.

During the three months ended March 31, 2026 and 2025, the

Company received distribution income of $ 2,500 and $0 .

During the three and six months ended June 30, 2026, the Company

received distribution income of $ 2,000 and $ 4,500 .

respectively.

The Company did not receive any distribution income during the six months

ended June 30, 2025.

On June 24, 2022, the Company’s wholly-owned

16 unchanged sentences

loss on equity securities of $ 50,000 .

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

NOTE 6 – NOTES PAYABLE

On March 31, 2026 and December 31, 2025, notes

On June 30, 2026 and December 31, 2025, notes

payable consisted of the following:

20 unchanged sentences

(the “Note”).

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The Loan Agreement contains representations, warranties

22 unchanged sentences

The Amended Note requires Zoned Arizona to pay monthly principal and interest payments to the Bank at

an interest rate equal to the prime rate plus 0.75 % ( 7.50 % and 7.50 % as of March 31, 2026 and December 31, 2025, respectively).

an interest rate equal to the prime rate plus 0.75 % ( 7.50 % and 7.50 % as of June 30, 2026 and December 31, 2025, respectively).

Note matures 10 years after its effective date and payments are calculated based on a 30 -year amortization schedule.

23 unchanged sentences

variability in interest payments on its variable-rate debt.

On March 31, 2026, principal and interest due

on the East West Bank Swap Note amounted to $ 4,344,775 and $ 13,631 , respectively.

On December 31, 2025, principal and interest due on

the East West Bank Swap Note amounted to $ 4,358,038 and $ 10,092 , respectively.

ZONED PROPERTIES, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

On June 30, 2026, principal and interest due on

the East West Bank Swap Note amounted to $ 4,333,090 and $ 13,994 , respectively.

On December 31, 2025, principal and interest due on the

East West Bank Swap Note amounted to $ 4,358,038 and $ 10,092 , respectively.

23616 Land Contract Note Payable

2 unchanged sentences

(the “23616 Land Contract Note Payable”).

The 23616 Land Contract Note Payable bears interest at 9 % per annum and is due in

The 23616 Land Contract Note Payable bore interest at 9 % per annum and was due in

full as follows:

1) 60 monthly payments of principal and interest of $ 12,821 beginning on January 1, 2023, and

balloon payment of $ 1,274,117 including the remaining principal and interest on or before December 1, 2028.

On March 31, 2026, principal and interest due

on the 23616 Land Contract Note Payable amounted to $ 1,339,861 and $ 0 , respectively.

On December 31, 2025, principal and interest due

on the 23616 Land Contract Note Payable amounted to $ 1,335,322 and $ 0 , respectively.

On May 1, 2026, the Woodward properties were

sold and this loan was assigned to the new owner (See Note 13 – Subsequent Events).

2) A balloon payment of $ 1,274,117 including the remaining principal and interest on or before December 1, 2028.

On May 1, 2026, in connection with the sale of

the ZP Woodward properties (see Note 1), the 23616 Land Contract Note Payable was assigned to the new owner.

On June 30, 2026, principal

and interest due on the 23616 Land Contract Note Payable amounted to $ 0 .

On December 31, 2025, principal and interest due on the 23616

Land Contract Note Payable amounted to $ 1,335,322 and $ 0 , respectively.

23634 Land Contract Note Payable

2 unchanged sentences

Land Contract Note Payable”).

The 23634 Land Contract Note Payable accrues interest at the rate of 7 % and is payable in 48 monthly

The 23634 Land Contract Note Payable accrued interest at the rate of 7 % and was payable in 48 monthly

installments of $ 3,865 , beginning April 1, 2023, until the purchase price and interest are fully paid, provided that such purchase price

and all interest will be fully paid on or before March 31, 2027.

On March 31, 2026, principal and interest due on the 23634 Land Contract

Note Payable amounted to $ 378,618 and $ 0 , respectively.

On December 31, 2025, principal and interest due on the 23634 Land Contract Note

Payable amounted to $ 379,688 and $ 0 , respectively.

On May 1, 2026, the Woodward properties were sold and this loan was assigned to the

new owner (See Note 13 – Subsequent Events).

On May 1, 2026, in connection with the sale of the ZP Woodward properties

(see Note 1), the 23634 Land Contract Note Payable was assigned to the new owner.

On June 30, 2026, principal and interest due on the

23634 Land Contract Note Payable amounted to $ 0 .

On December 31, 2025, principal and interest due on the 23634 Land Contract Note Payable

amounted to $ 379,688 and $ 0 , respectively.

Surprise, AZ Construction Loan Agreement

23 unchanged sentences

borrowed an additional $ 600,000 of the Maximum Amount and received net proceeds of $ 600,000 .

As of March 31, 2026 and December 31, 2025,

As of June 30, 2026 and December 31, 2025,

the principal amount of the loan was $ 1,620,000 and $ 1,620,000 , respectively, and accrued interest payable amounted to $ 16,200 and $ 16,200 ,

respectively.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

During the existence of any event of default,

10 unchanged sentences

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Pursuant to the terms of the PMF Loan Agreement,

21 unchanged sentences

with the loan.

During the three months ended March 31, 2026 and

During the six months ended June 30, 2026 and

2025, amortization of debt discount related to notes payable amounted to $ 12,836 and $ 12,836 , respectively, which is included in interest

expense on the accompanying unaudited consolidated statements of operations.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

On March 31, 2026, future annual principal payments

On June 30, 2026, future annual principal payments

under the above notes payable were as follows:

Years ending March 31,

Total principal payments due on March 31, 2026

Year ending June 30,

Total principal payments due on June 30, 2026

NOTE 7 – CONVERTIBLE DEBENTURE

26 unchanged sentences

of any covenant or agreement contained in the Abrams Debenture and proceed to enforce the payment thereof or any other legal or equitable

As of March 31, 2026 and December 31, 2025, the

As of June 30, 2026 and December 31, 2025, the

principal balance due under the Abrams Debenture is $ 2,000,000 .

As of March 31, 2026 and December 31, 2025, accrued interest payable due

As of June 30, 2026 and December 31, 2025, accrued interest payable due

under the Abrams Debenture amounted to $ 0 and $ 0 , respectively, which is included in accrued expenses on the accompanying unaudited consolidated

balance sheets.

For the three months ended March 31, 2026 and 2025, interest expense related to the Abrams Debenture amounted to $ 30,000 .

For the three months ended June 30, 2026 and 2025, interest expense related to the Abrams Debenture amounted to $ 30,000 .

For the six months ended June 30, 2026 and 2025, interest expense related to the Abrams Debenture amounted to $ 60,000 .

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

NOTE 8 – RELATED PARTY TRANSACTION

7 unchanged sentences

against them as to which they could be indemnified.

From August 2021 through December 2025, the Company did not maintained a directors’ and officers’ insurance policy.

in December 2025, the Company entered into a new directors’ and officers’ insurance policy with an annual term through December

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

From August 2021 through December 2025, the Company did not maintained a directors’

and officers’ insurance policy.

Starting in December 2025, the Company entered into a new directors’ and officers’ insurance

policy with an annual term through December 2026.

On January 15, 2026, the Company entered into

56 unchanged sentences

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The closing of the MBO is subject to certain closing

9 unchanged sentences

and (v) other customary closing conditions.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

NOTE 9 – STOCKHOLDERS’ EQUITY

11 unchanged sentences

The holders of the shares are entitled to dividends equal to common share dividends.

As of March 31, 2026 and December 31, 2025, there were 2,000,000 shares of preferred stock outstanding.

As of June 30, 2026 and December 31, 2025, there were 2,000,000 shares of preferred stock outstanding.

Once any shares of preferred stock

17 unchanged sentences

Independent Director

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Such issuances are subject to forfeiture, depending

25 unchanged sentences

Moroney prior to consummation of such change of control.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

The common shares issued above were valued at

1 unchanged sentence

which will be amortized into stock-based compensation expense over the services period.

During the three months ended March 31, 2026,

the Company recorded stock-based compensation of $ 54,625 , and as of March 31, 2026, the Company recorded prepaid expenses of $ 382,375 ,

which will be amortized over the remaining service period through December 31, 2027.

During the six months ended June 30, 2026, the

Company recorded stock-based compensation of $ 109,250 , and as of June 30, 2026, the Company recorded prepaid expenses of $ 327,750 , which

will be amortized over the remaining service period through December 31, 2027.

Additionally, in connection with the obligation

1 unchanged sentence

which is equal to 35 % of the cost-basis of the shares issued to cover the Payroll Tax Liability associated with the above stock issuances.

During the three months ended March 31, 2026, the Company recorded compensation expense of $ 19,119 , and as of March 31, 2026, the Company

recorded prepaid expenses of $ 133,381 , which will be amortized over the remaining service period through December 31, 2027.

31, 2026, the amount due to cover the respective Payroll Tax Liability for each recipient of $ 152,500 is included in accrued expenses

During the six months ended June 30, 2026, the Company recorded compensation expense of $ 38,238 , and as of June 30, 2026, the Company

had remaining prepaid expenses of $ 114,712 , which will be amortized over the remaining service period through December 31, 2027.

June 30, 2026, the amount due to cover the respective Payroll Tax Liability for each recipient of $ 152,500 is included in accrued expenses

on the accompanying unaudited consolidated balance sheet.

15 unchanged sentences

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

As of March 31, 2026, 956,250 stock

As of June 30, 2026, 956,250 stock

option awards were outstanding and 956,250 options were exercisable under the 2016 Plan.

1 unchanged sentence

awards were outstanding and 1,206,250 options were exercisable under the 2016 Plan.

As of March 31, 2026 and December 31, 2025, 9,043,750

As of June 30, 2026 and December 31, 2025, 9,043,750

and 8,685,000 shares, respectively, were available for future issuance under the 2016 Plan.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The Company maintained its 2014 Equity Compensation

2 unchanged sentences

no additional shares subject to the existing 2014 Plan will be issued.

As of March 31, 2026 and December 31, 2025, options to purchase

As of June 30, 2026 and December 31, 2025, options to purchase

250,000 and 250,000 shares of common stock were outstanding and exercisable pursuant to the 2014 Plan, respectively.

28 unchanged sentences

Moroney is a non-executive officer member of the Company’s management team.

For the three months ended March 31, 2026 and

2025, in connection with the reversal of previously recorded stock-based option expense from the cancellation on unvested stock options,

and accretion of stock-based option expense, the Company recorded stock option (recovery) expense of $( 93,105 ) and $ 56,606 , respectively.

As of March 31, 2026, there was $ 0 of unvested stock-based compensation expense.

The aggregate intrinsic value on March 31, 2026 was $ 0

and was calculated based on the difference between the quoted share price on March 31, 2026 of $ 0.40 and the exercise price of the underlying

Stock option activities for the three months ended

March 31, 2026 are summarized as follows:

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

For the six months ended June 30, 2026 and 2025,

in connection with the reversal of previously recorded stock-based option expense from the cancellation on unvested stock options, and

accretion of stock-based option expense, the Company recorded stock option (recovery) expense of $( 93,105 ) and $ 56,606 , respectively.

As of June 30, 2026, there was $ 0 of unvested stock-based compensation expense.

The aggregate intrinsic value on June 30, 2026 was $ 1,850

and was calculated based on the difference between the quoted share price on June 30, 2026 of $ 0.455 and the exercise price of the underlying

Stock option activities for the six months ended

June 30, 2026 are summarized as follows:

Options Weighted

Price Weighted Average

Price Weighted

(Years) Aggregate

1 unchanged sentence

Forfeited ( 358,750 ) 0.69 -

Balance outstanding at March 31, 2026 1,206,250 $ 0.82 4.87 $ -

Exercisable, March 31, 2026 1,206,250 $ 0.82 4.87 $ -

Balance outstanding at June 30, 2026 1,206,250 $ 0.82 4.62 $ 1,850

Exercisable, June 30, 2026 1,206,250 $ 0.82 4.62 $ 1,850

Balance non-vested on December 31, 2025 358,750 $ 0.69 7.45 $ -

1 unchanged sentence

Vested during the period -

Balance non-vested on March 31, 2026 -

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Balance non-vested on June 30, 2026 -

NOTE 10 – COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

in litigation related to claims arising out of its operations in the normal course of business.

As of March 31, 2026, the Company is not

As of June 30, 2026, the Company is not

involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect

23 unchanged sentences

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

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

In the event of a Termination for any reason or

4 unchanged sentences

covenants in the 2018 Employment Agreement.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The Company and Mr.

37 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

Following a change in control of the Company,

10 unchanged sentences

McLaren will be entitled to benefits provided below:

Company will pay Mr.

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

is given, plus all other amounts and benefits to which he is entitled under any compensation plan of the Company.

lieu of any further salary payments to Mr.

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

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

the sum of his annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the notice of Termination

given in respect of them.

Company will pay to Mr.

The Company will pay Mr.

McLaren his full base salary through the date of Termination at the rate in effect at the time notice of Termination is given, plus all other amounts and benefits to which he is entitled under any compensation plan of the Company.

In lieu of any further salary payments to Mr.

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

McLaren a lump sum severance payment (together with the payments provided in clause I(c) and (d) below) equal to five times the sum of his annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the notice of Termination given in respect of them.

The Company will pay to Mr.

McLaren any deferred compensation allocated or credited to him or his account as of the date of Termination.

lieu of shares of common stock of the Company issuable upon exercise of outstanding options, if any, granted to Mr.

McLaren under the

Company’s stock option plans (which options shall be cancelled upon the making of the payment referred to below), Mr.

receive an amount in cash equal to the product of (i) the excess of the closing price of the Company’s common stock as reported

on or nearest the date of Termination (or, if not so reported, on the basis of the average of the lowest asked and highest bid prices

on or nearest the date of Termination), over the per share exercise price of each option held by Mr.

McLaren (whether or not then fully

exercisable) plus the amount of any applicable cash appreciation rights, times (ii) the number of the Company’s common stock covered

by each such option.

Company will also pay Mr.

In lieu of shares of common stock of the Company issuable upon exercise of outstanding options, if any, granted to Mr.

McLaren under the Company’s stock option plans (which options shall be cancelled upon the making of the payment referred to below), Mr.

McLaren will receive an amount in cash equal to the product of (i) the excess of the closing price of the Company’s common stock as reported on or nearest the date of Termination (or, if not so reported, on the basis of the average of the lowest asked and highest bid prices on or nearest the date of Termination), over the per share exercise price of each option held by Mr.

McLaren (whether or not then fully exercisable) plus the amount of any applicable cash appreciation rights, times (ii) the number of the Company’s common stock covered by each such option.

The Company will also pay Mr.

McLaren all legal fees and expenses incurred by him as a result of such Termination.

6 unchanged sentences

In connection

with such a bonus, during the three months ended March 31, 2026 and 2025, the Company incurred a bonus to Mr.

with such a bonus, during the six months ended June 30, 2026 and 2025, the Company incurred a bonus to Mr.

McLaren of $ 100,000 and $ 0 ,

7 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

JUNE 30, 2026

Berekk Blackwell

22 unchanged sentences

In connection

with such a bonus, during the three months ended March 31, 2026 and 2025, the Company incurred a bonus to Mr.

with such a bonus, during the six months ended June 30, 2026 and 2025, the Company incurred a bonus to Mr.

Blackwell of $ 100,000 and $ 0 ,

9 unchanged sentences

plan compensation.

For the three months ended March 31, 2026 and 2025, the Company contributed $ 4,744 and $ 5,782 to the Plan, respectively.

For the six months ended June 30, 2026 and 2025, the Company contributed $ 9,594 and $ 11,602 to the Plan, respectively.

Loan Guarantees

15 unchanged sentences

of the guarantee is nominal since the fair value of the property exceeds the loan amount.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

On March 12, 2025, ZP Antwerp entered into an

17 unchanged sentences

covenants and other provisions for a transaction of this type.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

On June 30, 2025, ZP Columbus and First Fidelity

entered into a Business Loan Agreement (the “Columbus Loan Agreement”), pursuant to which First Fidelity agreed to lend to

ZP Columbus $ 1,500,000 (the “Columbus Loan”) for purchase of the Columbus Property, to be evidenced by a promissory note,

dated as of March 31, 2025, in the principal amount of $ 1,500,000 , issued by ZP Columbus in favor of First Fidelity (the “Columbus

ZP Columbus $ 1,500,000 (the “Columbus Loan”) for purchase of the Columbus Property, to be evidenced by a promissory

note, dated as of March 31, 2025, in the principal amount of $ 1,500,000 , issued by ZP Columbus in favor of First Fidelity (the “Columbus

The Columbus Loan Agreement and the Columbus Note were entered into in the ordinary course of the Company’s business.

2 unchanged sentences

pursuant to the Columbus Guaranty.

The Company believes that the fair value of the Columbus Guaranty is nominal since the fair value of

the Columbus Property exceeds the amount of the Columbus Loan.

Pursuant to the terms of the mortgage on the Columbus Property, ZP Columbus

agreed to grant to First Fidelity all of ZP Columbus’ right, title and interest in and to all present and future leases of the Columbus

Property and all rents from the Columbus Property to secure the payment by ZP Columbus when due of indebtedness evidenced by the Columbus

Note, and performance of obligations under the Columbus Note, the Columbus Loan Agreement and the related transaction documents.

The Company believes that the fair value of the Columbus Guaranty is nominal since the fair value

of the Columbus Property exceeds the amount of the Columbus Loan.

Pursuant to the terms of the mortgage on the Columbus Property, ZP

Columbus agreed to grant to First Fidelity all of ZP Columbus’ right, title and interest in and to all present and future leases

of the Columbus Property and all rents from the Columbus Property to secure the payment by ZP Columbus when due of indebtedness evidenced

by the Columbus Note, and performance of obligations under the Columbus Note, the Columbus Loan Agreement and the related transaction

NOTE 11 – SEGMENT REPORTING

10 unchanged sentences

basis over the non-cancellable term of the lease, which includes the effects of rent abatements under the leases.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

The Company’s Real Estate Services segment

14 unchanged sentences

Information with respect to these reportable business

segments for the three months ended March 31, 2026 and 2025 was as follows:

Three Months Ended March 31, 2026

Corporate and Unallocated

segments for the three and six months ended June 30, 2026 and 2025 was as follows:

Three Months Ended June 30, 2026

Corporate and

Operating expenses (excluding depreciation and amortization)

2 unchanged sentences

Interest expense

Gain on sale of rental properties, net

Income from derivative – interest rate swap

3 unchanged sentences

$ ( 718,017 )

$ ( 209,802 )

ZONED PROPERTIES, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

Three Months Ended March 31, 2025

Corporate and Unallocated

JUNE 30, 2026

Three Months Ended June 30, 2025

Corporate and

Operating expenses (excluding depreciation and amortization)

7 unchanged sentences

$ ( 314,777 )

Total assets by segment on March 31, 2026 and

December 31, 2025 were as follows:

$ ( 216,294 )

Six Months Ended June 30, 2026

Corporate and

Operating expenses (excluding depreciation and amortization)

Depreciation and amortization

Income (loss) from operations

Interest expense

Gain on sale of rental properties, net

Loss from derivative – interest rate swap

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

$ ( 927,819 )

Six Months Ended June 30, 2025

Corporate and

Operating expenses (excluding depreciation and amortization)

Depreciation and amortization

Income (loss) from operations

Interest expense

Loss from derivative – interest rate swap

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

$ ( 120,784 )

$ ( 496,478 )

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

Total assets by segment on June 30, 2026 and December

31, 2025 were as follows:

Property investment portfolio

24 unchanged sentences

right of use assets and lease liabilities associated with the March 2022 lease, which amounted to $ 90,710 .

For the six months ended June 30, 2026 and 2025,

in connection with its operating leases, the Company recorded rent expense of $ 22,827 and $ 22,812 , respectively, which is included in

operating expenses on the accompanying unaudited consolidated statements of operations.

The significant assumption used to determine the

present value of the lease liability in December 2024 was a discount rate of 9 % which was based on the Company’s incremental borrowing

ZONED PROPERTIES, INC.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

For the three months ended March 31, 2026 and 2025, in connection with

its operating leases, the Company recorded rent expense of $ 11,413 and $ 11,406 , respectively, which is included in operating expenses

on the accompanying unaudited consolidated statements of operations.

The significant assumption used to determine the

present value of the lease liability in December 2024 was a discount rate of 9 % which was based on the Company’s incremental borrowing

As of March 31, 2026 and December 31, 2025, ROU

assets were summarized as follows:

JUNE 30, 2026

As of June 30, 2026 and December 31, 2025,

ROU assets were summarized as follows:

Office lease right of use asset

1 unchanged sentence

Balance of ROU assets

As of March 31, 2026, future minimum base lease

As of June 30, 2026, future minimum base lease

payments due under a non-cancelable operating lease were as follows:

Year ending March 31,

Year ending June 30,

Total minimum non-cancelable operating lease payments

discount to fair value

Total lease liability on March 31, 2026

Total lease liability on June 30, 2026

NOTE 13 – SUBSEQUENT EVENTS

Real Estate Purchase and Sale Agreement

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.

ZONED PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026

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.

Agreement of Sale and Escrow Instructions

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

owned subsidiary ZP Woodward entered into and closed on the Woodward Agreement with the Woodward Buyer.

Pursuant to the Woodward Agreement,

ZP Woodward agreed to sell to the Woodward Buyer:

(i) ZP Woodward’s fee interest in the real estate property located at 23600 Woodward

Avenue, Ferndale, Michigan APN No.

24-25-27-181-006 (the “Fee Property”);

(ii) ZP Woodward’s vendee interest in that

certain the Land Contract dated November 30, 2022 related to APNs 25-27-181-004 & 25-27-181-005, with a commonly known address of

23622 & 23616 Woodward Avenue, Pleasant Ridge, Michigan with THE THOMAS A.

PEARLMAN REVOCABLE TRUST U/A/D 6/13/2005, as vendor (the

“Pearlman Land Contract”);

(iii) ZP Woodward’s vendee interest in that certain Land Contract dated February 23, 2023

related to APN 25-27-181-003, with a commonly known address of 23634 Woodward Avenue, Pleasant Ridge, Michigan with GANGNIER INVESTMENTS

LLC, a Michigan limited liability company, as vendor (the “Gangnier Land Contract”);

and (iv) ZP Woodward’s interest

in that certain Licensed Cannabis Facility Absolute Net Lease Agreement dated December 1, 2022 with respect to the Fee Property and the

(the “Woodward Lease,” and collectively with the Fee Property and land contract interests, the “Woodward Property”).

The aggregate purchase price for the Woodward Property was $ 600,000 , plus Woodward Buyer’s assumption of all obligations and outstanding

balances under the Pearlman Land Contract and Gangnier Land Contract (being $ 1,327,371 and $ 374,826 , respectively).

At closing, ZP Woodward

conveyed the Fee Property by covenant deed and assigned its interests in the Pearlman Land Contract.

Gangnier Land Contract, and Lease

to the Woodward Buyer, and the Woodward Buyer assumed the related obligations.

The Woodward Agreement contains customary representations

and warranties of Seller, including with respect to authority, absence of conflicting agreements, and certain matters relating to litigation,

environmental conditions, and the land contracts, subject to knowledge qualifiers.

Except as expressly set forth in the Woodward Agreement

and related closing documents, the Woodward Property is being sold on an “as is, where is, with all faults” basis.

Agreement includes provisions allocating prorations of taxes, rent, land contract payments, utilities and other customary items as of

Certain closing costs, including escrow fees, owner’s title insurance premiums, and transfer taxes, are to be shared equally

by the Woodward Buyer and Seller, with the Woodward Buyer responsible for additional title coverage and any lender’s policy.

In connection with the closing, the parties have

entered into, or will enter into (i) and Assignment and Assumption of Land Contract with respect to the Pearlman Land Contract among Seller,

the Woodward Buyer, and Thomas A.

Pearlman, Trustee of the Thomas A.

Pearlman Revocable Trust u/a/d 6/13/2005 (the “Pearlman Land

Contract Assignment”);

(ii) an Assignment and Assumption of Land Contract with respect to the Gangnier Land contract among Seller,

the Woodward Buyer, and Gangnier Investment, LLC (the “Gangnier Land Contract Assignment”);

and (iii) an Assignment and Assumption

of Lease among ZP Woodward, the Woodward Buyer, and Rapid Fish 2, LLC, as tenant (the “Lease Assignment” and together with

the Pearlman Land Contract Assignment and Gangnier Land Contract Assignment, the “Assignment Agreements”).

Each of the Assignment Agreements became automatically

effective upon the consummation of the closing of the transaction contemplated by the Woodward Agreement.

From and after the effective

time of such closing, (i) ZP Woodward assigned to the Woodward Buyer all of its right, title, and interest in and to the applicable land

contract or Lease, as applicable, and (ii) the Woodward Buyer assumed and agreed to perform all obligations of ZP Woodward arising under

such agreements from and after the effective date thereof.

Under the Assignment Agreements, the Woodward Buyer does not assume liability

for obligations arising prior to the effective time of the assignments, and Seller retains such pre-closing liabilities.

each applicable counterparty (including the land contract sellers and the tenant under the Lease) has consented to the applicable assignment

and has agreed to release Seller from liabilities arising under the assigned agreements from and after the effective time of such assignment.

Special Meeting

On July 30, 2026, the Company filed a definitive proxy statement with the SEC and distributed the proxy statement to shareholders relating

to a special meeting of shareholders to be held on September 11, 2026.

At the special meeting, shareholders will be asked to consider

and vote on a proposal to approve the Asset Sale and adopt the MBO APA.

There can be no assurance as to when or whether the closing conditions

will be satisfied or waived, as to whether shareholders will approve the Asset Sale and adopt the MBO APA, or as to when or whether the

Asset Sale will be consummated.

Assuming receipt of shareholder approval at the special meeting, the Company expects to consummate the

Asset Sale in the third quarter of 2026, but it cannot be certain when or if the conditions to the Asset Sale will be satisfied or, to

the extent permitted, waived.

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.

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 1. Financial Statements