What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-15 · 227 added, 212 removed, 454 unchanged (49% of the section changed)

86 unchanged sentences

Zoned Properties maintains a portfolio of properties

that it owns, develops and leases.

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

that it owns and leases.

As of August 14, 2026, the Company leases land and/or building space at the four properties in its portfolio

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

Three of the leased properties

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

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

retail dispensary.

Sale of Woodward Property

One of the leased properties

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

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

Sale of Rental Properties

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

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31, 2025, the Company recorded an impairment loss of $2,100,000.

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

owned by us consisted of the following:

Chino Valley,

Green Valley,

(special use)

Investment Portfolio Total

Date Acquired

Lease Start Date

Lease End Date

Undeveloped Land Area (Sq.

Developed Land Area (Sq.

Total Rentable Building Sq.

Vacant Rentable (Sq.

rented as of May 12, 2026

Annual Base Rent (*,**)

April 2026 to Dec 2026

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

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

Annualized $ per Rented Sq.

Chino Valley, AZ

Green Valley, AZ

Real Estate Purchase and Sale Agreement regarding

CGK Properties

On April 20, 2026, the Company through its wholly

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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,

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.

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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.

As of June 30, 2026, a summary of rental properties

owned by us consisted of the following:

Chino Valley,

(special use)

Portfolio Total

Date Acquired

Lease Start Date

Lease End Date

Undeveloped Land Area (Sq.

Developed Land Area (Sq.

Total Rentable Building Sq.

Vacant Rentable (Sq.

rented as of June 30, 2026

Annual Base Rent (*,**)

July 2026 to Dec 2026

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

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

Annualized $ per Rented Sq.

Chino Valley,

Management Buyout Asset Purchase Agreement

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

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

In the event that the sale of the Pleasant

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

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

in the MBO APA.

2026, THE {Pleasant Ridger Assets were sold and accordingly, will not be included in the “Assets” for purposes of the MBO

The parties to the MBO APA further acknowledged

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

If the sale of the CKG Properties is consummated

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

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

On June 30, 2026, the Green

Valley and Kingman properties were sold and accordingly, the Green Valley and Kingman properties will not be included in the “Assets,”

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

the principal amount of the CKG Note.

Pursuant to the terms of the MBO APA, the MBO

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

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

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

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

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

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

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

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

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

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

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

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

for any reason in its sole discretion;

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

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

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

(a) The mutual agreement of the parties, each in their sole discretion;

(b) The Company or by Buyer if there shall be in effect a final

non-appealable order, judgment, injunction or decree entered by or with a governmental entity restraining, enjoining or otherwise prohibiting

the consummation of the MBO;

respect of any representation, warranty, covenant or agreement on the part of any Seller Party, which breach has not been cured within

10 days after receipt of notice of such breach by the Company;

(d) The Company if there shall have been a breach in any material

respect of any representation, warranty, covenant or agreement on the part of Buyer, which breach has not been cured within 10 days after

receipt of notice of such breach by Buyer;

(e) Any party in the event that the closing has not occurred by

September 30, 2026, which date may be extended by 90 days as set forth in the MBO APA;

(f) Written notice by Buyer to the Company, if there shall have

been a “Seller Material Adverse Effect” (as defined in the MBO APA) following the Effective Date which is uncured for at

least 20 business days after written notice by the Buyer;

(g) The Buyer, during the 180-day period following the Effective

Date, if the Buyer determines that its due diligence review is not satisfactory for any reason in its sole discretion;

(h) The Company, in the event it receives a proposal on terms more

favorable to the Company’s stockholders than those set forth in the MBO APA, subject to the terms of the MBO APA, prior to the

date that is the later of (i) the date on which the Company receives stockholder approval as set forth in the MBO APA, and July 14, 2026

(the date on which the Buyer’s due diligence period expires).

The closing of the MBO is subject to certain closing

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The MBO APA contains customary representations, warranties and covenants.

If the MBO APA is approved by the Company’s

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

Assuming that the MBO APA

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

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

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

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

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, 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.

Assuming that the MBO APA is approved

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

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

outstanding preferred shares, and then distribute the net available balance of cash to stockholders as a return of capital through a

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

Going concern consideration

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in the normal course of business.

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

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

Additionally, as of March 31, 2026, the Company

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

and had cash provided by operations of $1,041,428 for 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.

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

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

The Amended and Restated Absolute Net Lease Agreements include,

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

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

On April 20, 2026, the Company through its wholly

9 unchanged sentences

to the Properties.

The aggregate purchase price for the Properties

is $9.0 million, allocated as follows:

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

for the Green Valley Property.

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

consideration payable to the Seller.

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

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

The Purchase Agreement provides

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

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

The closing is scheduled to occur on June 30,

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

escrow, of which $100 constitutes independent contract consideration payable to the Seller.

Subject to the terms of the Purchase Agreement,

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

by a deed of trust.

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

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

The closing was scheduled to occur on June 30,

2026, unless extended in accordance with the Purchase Agreement.

28 unchanged sentences

the Purchase Agreement.

Additionally, on January 15, 2026, the Company

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

owned by management.

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

stockholders and the Buyer obtaining financing.

On 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.

There can be no assurance as to when or whether the closing conditions with respect to the Asset Sale and the MBO APA 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.

This Quarterly Report on Form 10-Q does not constitute a solicitation of any vote or approval.

Shareholders and investors

are urged to read the definitive proxy statement and other relevant documents filed with the SEC carefully and in their entirety because

they contain important information about the proposed transaction.

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.

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

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sold the Woodward Property for $600,000.

If the Company sells some or all of its properties,

it will have minimal or no operations.

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

concern for a period of twelve months from the issuance date of this Quarterly Report.

There can be no assurance that the Company will

sell its properties.

If the Company sells some or all of its remaining

properties, it will have minimal or no operations.

These factors raise substantial doubt about the Company’s ability to continue

as a going concern for a period of twelve months from the issuance date of this Quarterly Report.

There can be no assurance that the Company

will sell its properties.

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

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

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

The results discussed

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

Comparison of Results of Operations for the Three Months Ended

March 31, 2026 and 2025

For the three months ended March 31, 2026 and

2025, revenues by reportable business segments were as follows:

three months ended June 30, 2026 and 2025, which are included elsewhere in this quarterly report on Form 10-Q.

The results discussed below

are for the three and six months ended June 30, 2026 and 2025.

Comparison of Results of Operations for the Three and Six Months

Ended June 30, 2026 and 2025

For the three and six months ended June 30, 2026

and 2025, revenues by reportable business segments were as follows:

Three Months Ended

Six Months Ended

Property investment portfolio

1 unchanged sentence

Total revenues

For the three months ended March 31, 2026, total

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

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

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

This increase was attributable to an increase in

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

listings, offset by a decrease in advisory fees.

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

$5,162, or 0.7%.

All of the Company’s real estate properties

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

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

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

Due to the sale of our Green Valley, Kingman and Woodward properties

during May and June 2026, our property investment portfolio revenues decreased during the three and six months ended June 30, 2026 as

compared to the three and six months ended June 30.

2025, and we expect property investment portfolio revenues to decrease subsequent

to June 30, 2026.

Operating expenses

For the three months ended March 31, 2026, operating

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

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

For the three months ended June 30, 2026, operating

expenses amounted to $820,213, as compared to $665,586 for the three months ended June 30, 2025, representing an increase of $154,627,

For the six months ended June 30, 2026, operating expenses amounted to $1,866,081, as compared to $1,211,367 for the six months

ended June 30, 2025, representing an increase of $654,714, or 54.1%.

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

expenses consisted of the following:

Three Months Ended

Six Months Ended

Compensation and benefits

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Property portfolio business development costs

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

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

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

For the three months ended June 30, 2026, compensation and benefit expense decreased by $75,911, or 22.2%, as compared to the three months ended June 30, 2025.

The decrease was primarily attributable to an overall decrease in compensation and related benefits of $118,506, offset by an increase in stock-based compensation of $42,595 related to accretion of stock-based compensation incurred from the issuance of common shares for services rendered.

For the six months ended June 30, 2026, compensation and benefit expense decreased by $191,400, or 30.5%, as compared to the six months ended June 30, 2025.

The decrease was primarily attributable to an overall decrease in compensation and related benefits of $138,909 and a decrease in stock-based compensation of $52,491 attributable to (a) the reversal of previously recorded stock-based stock option expense of $161,741 due to the cancellation of unvested stock options and b) an increase in stock-based compensation of $109,250 from the issuance of common shares for services rendered.

For the three months ended June 30, 2026, professional fees increased by $229,552, or 395.7%, as compared to the three months ended June 30, 2025.

This increase was primarily attributable to an increase in legal fees of $204,262, an increase in consulting fees of $25,143, and an increase in other professional fees of $147.

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

For the six months ended June 30, 2026, professional fees increased by $294,301, or 216.7%, as compared to the six months ended June 30, 2025.

This increase was primarily attributable to an increase in legal fees of $256,770, an increase in consulting fees of $35,785, and an increase in other professional fees of $1,746.

The increase in legal for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025 was primarily attributable to activity incurred in connection with the sale of rental properties and the management buyout agreement.

For the three months ended June 30, 2026 and 2025, we recorded brokerage fees amounting to $62,086 and $75,224, respectively, representing a decrease of $13,138, or 17.5%.

For the six months ended June 30, 2026 and 2025, we recorded brokerage fees amounting to $432,703 and $75,224, respectively, representing an increase of $357,479, or 475.2%.

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

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

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

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

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

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

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

Income from operations

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

For the three months ended June 30, 2026, general and administrative expenses increased by $28,973, or 44.7%, as compared to the three months ended June 30, 2025, primarily due to an increase in insurance expense of $38,829 related to an increase in directors and officers liability insurance premiums incurred, offset by a decrease in other general and administrative expenses of $9,856.

For the six months ended June 30, 2026, general and administrative expenses increased by $23,430, or 19.47%, as compared to the six months ended June 30, 2025, primarily due to an increase in insurance expense of $77,658 related to an increase in directors and officers liability insurance premiums incurred, offset by the recording of bad debt recovery of $33,015 during the 2026 period and a decrease in other general and administrative expenses of $21,213.

For the three months ended June 30, 2026, depreciation expense decreased by $13,557, or 15.4%, as compared to the three months ended June 30, 2025 due to a decrease in depreciable rental properties.

For the six months ended June 30, 2026, depreciation expense decreased by $28,230, or 16.0%, as compared to the six months ended June 30, 2025 due to a decrease in depreciable rental properties.

For the three months ended June 30, 2026, real estate taxes decreased by $6,292, or 16.6%, as compared to the three months ended June 30, 2025.

For the six months ended June 30, 2026, real estate

taxes decreased by $5,516, or 7.3%, as compared to the six months ended June 30, 2025.

The decrease was attributable to the sale of our

Woodward properties.

For the three months ended June 30, 2026, property portfolio business development costs increased by $5,000, or 100.0%, as compared to the three months ended June 30, 2025.

For the six months ended June 30, 2026, property portfolio business development costs increased by $204,650, or 100.0%, as compared to the six months ended June 30, 2025.

Income (loss) from operations

As a result of the factors described above, for

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

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

the three months ended June 30, 2026, (loss) income from operations amounted to $(46,236), as compared to income from operations of $272,188

for the three months ended June 30, 2025, representing a decrease of $318,424, or 117.0%.

As a result of the factors described above,

for the six months ended June 30, 2026, income from operations amounted to $80,332, as compared to income from operations of $700,959

for the six months ended June 30, 2025, representing a decrease of $620,627, or 88.5%.

Other (expenses) income, net

1 unchanged sentence

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

For the three months ended March 31, 2026

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

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

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

Net (loss) income

For the three months ended June 30, 2026

and 2025, total other income (expenses), net amounted to $120,023 and $(245,862), respectively, representing a positive change of $365,885,

This positive change was attributable to a decrease in interest expense of $24,751, primarily related to a decrease in notes

payable, and a positive change in gain or loss in fair value from an interest rate swap of $101,319, the recording of a gain from the

sale of rental properties of $237,815, and an increase in other income of $2,000.

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

other expenses, net amounted to $61,205 and $528,775, respectively, representing a decrease of $467,570, or 88.4%.

This decrease was attributable

to a decrease in interest expense of $8,691, primarily related to a decrease in notes payable, and a positive change in gain or loss in

fair value from an interest rate swap of $216,564, the recording of a gain from the sale of rental properties of $237,815, and an increase

in other income of $4,500.

As a result of the foregoing, for the three months

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

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

ended June 30, 2026, net income amounted to $73,787, or $0.01 per common share (basic and diluted), and for the three months ended June

30, 2025, net income amounted to $26,326, or $0.00 per common share (basic) and $0.01 per common share (diluted).

As a result of the foregoing,

for the six months ended June 30, 2026, net income amounted to $19,127, or $0.00 per common share (basic and diluted), and for the six

months ended June 30, 2025, net income amounted to $172,184, or $0.01 per common share (basic and diluted).

Liquidity and Capital Resources

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

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

We had cash of $2,446,418 and $837,767 as of June 30, 2026 and December

31, 2025, respectively.

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

All funds received have been expended

in the furtherance of growing the business.

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

includes advisory fees and brokerage fees.

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

term to long term:

Additionally, our cash decreased due

to the sale of revenue producing properties.

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

funds from the collection of rental income, and real estate services, which primarily includes advisory fees and brokerage fees.

The following

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

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

Addition of administrative and sales personnel as the business grows,

The cost of being a public company,

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

An increase in investments in rental properties.

A decrease in property investment portfolio revenues due to the sale of rental properties, and

A decrease in investments in rental properties.

We may need to raise additional funds, particularly

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Asset Purchase Agreement.”

For the Three Months Ended March 31, 2026 and

For the Six Months Ended June 30, 2026 and

Net cash flow provided by operating activities

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For the three months ended March 31, 2026, net

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

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

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

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

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

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

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

During the three months ended March 31, 2026 and

was $1,041,428 for the six months ended June 30, 2026, as compared to net cash flow provided by operating activities of $569,790 for the

six months ended June 30, 2025, representing an increase of $471,638, or 82.8%.

Net cash flow provided by operating activities for the six months ended June 30, 2026 primarily reflected net income of $19,127, adjusted for the add-back of non-cash items consisting of depreciation of $148,462, amortization of debt discount of $12,836, stock-based compensation expense of $109,250, net recovery of stock-based stock option expense of $93,105, loss of forfeited escrow deposits and development costs of $199,650, a gain on sale of rental properties of $237,815, bad debt recovery of $33,016, and income from the changes in fair value from an interest rate swap of $79,255, offset by changes in operating assets and liabilities primarily consisting of a decrease in accounts receivable of $322,583, an increase in deferred rent of $419,553 attributable to the modification of lease agreements, a decrease in lease incentive receivable of $13,761, an increase in prepaid expenses and other current assets of $20,321, an increase in accounts payable of $16,080, an increase in accrued expenses of $129,541, an increase in contract liabilities of $920,200, and an increase in security deposits payable of $33,333.

Net cash flow provided by operating activities for the six months ended June 30, 2025 primarily reflected net income of $172,184, adjusted for the add-back of non-cash items consisting of depreciation of $176,692, amortization of debt discount of $12,836, accretion of stock-based stock option expense of $68,636, and loss from the changes in fair value from an interest rate swap of $137,309, offset by changes in operating assets and liabilities primarily consisting of a decrease in accounts receivable of $152,676, an increase in deferred rent of $239,805 attributable to rent abatement on our new tenant leases at our Chicago, Illinois and Surprise, AZ properties, a decrease in lease incentive receivable of $13,761, a decrease in prepaid expenses of $150,957, a decrease in accounts payable of $63,080, a decrease in accrued expenses of $21,264, a decrease in contract liabilities of $6,840, and an increase in security deposits payable of $15,399.

For the six months ended June 30, 2026, net cash

flow provided by investing activities amounted to $604,573, as compared to net cash used in investing activities of $845,652 for the six

months ended June 30, 2025, representing a positive increase of $1,450,225.

For the six months ended June 30, 2026, net cash provided

by investing activities was attributable to the receipt of proceeds from the sale of rental properties of $562,075, a decrease in escrow

deposits of $32,900 and a decrease in capitalized project costs of $9,598.

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

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

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

During the six months ended June 30, 2026 and

2025, net cash (used in) provided by financing activities amounted to $(37,350) and $241,729, respectively.

For the three months ended

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

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

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

For the six months ended June

30, 2026, net cash used in financing activities consisted of cash used for the repayment of notes payable of $37,350.

During the six months

ended June 30, 2025, net cash provided by financing activities consisted of net proceeds from a note payable of $300,000, offset by cash

used for the repayment of notes payable of $31,413 and cash used for the purchase of treasury shares of $26,858.

Contractual Obligations and Off-Balance Sheet

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The following tables summarize our contractual

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

obligations as of June 30, 2026, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.

Payments Due by Period (dollars in thousands),

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swap payments utilizing cash flows from operations.

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

As of June 30, 2026, the notional amount of our interest rate swaps was $4,347,283.

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

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FVLCS and VIU as defined as follows:

Value Less Costs to Sell (FVLCS):

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

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

in Use (VIU):

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

flows should be based on leases in place.

Fair Value Less Costs to Sell (FVLCS):

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

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

Value in Use (VIU):

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

Cash flows should be based on leases in place.

We have capitalized land, which is not subject

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis