ZDPY 10-K & 10-Q changes, risk factors and insider trading

There is substantial doubt as to our ability to continue as a going concern.

Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in elsewhere and in our consolidated financial statements, we had a net loss of $2,854,415 and had cash provided by operations of $781,476 during the year ended December 31, 2025. Additionally, as of December 31, 2025, we had cash of $837,767 and stockholders’ equity of $3,067,626. Furthermore, on December 31, 2025 and effective January 1, 2026, we entered into Amended and Restated Absolute Net Lease Agreements with certain tenants (See elsewhere in this Form10-K and Note 14 – Subsequent Events). The Amended and Restated Absolute Net Lease Agreements include, among other provisions, (i) a right of first refusal with a right of first refusal period of up to 60 days and (ii) a short-term exclusive option that permits the tenant to purchase, on an all-or-none basis, three leased properties (Chino Valley, Green Valley and Kingman). The Purchase Option originally stated that the Purchase Option may be exercised during an option period ending March 30, 2026; however, the parties have subsequently agreed that optionee will have until April 10, 2026 to exercise the Purchase Option, and if exercised, requires a closing no later than June 30, 2026. Additionally, on January 15, 2026, the Company and its subsidiaries entered into an Asset Purchase Agreement to sell substantially all of its properties to a company owned by management (See elsewhere in this Form 10-K and Note 14 – Subsequent Events on our consolidated financial statements and MBO risk factor below). The closing of the Asset Purchase Agreement is contingent upon the Buyer obtaining financing. If the Company sells some or all of its properties, it will have minimal or no operations. These factors raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the issuance date of this Annual Report. There can be no assurance that we will sell our properties. If we sell our properties, our cash flow provided by operating activities would decrease substantially and we may need to raise capital through debt and/or equity financings to fund any ongoing operations, we may need to curtail our operations, or we may decide to liquidate the Company. Our consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Our properties may be subject to impairment charges.

We routinely evaluate our real estate assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and lease structure. For example, the early termination of, or default under, a lease by a tenant may lead to an impairment charge. The financial failure of, or other default by, a single tenant under its lease may result in a significant impairment loss. If we determine that an impairment has occurred, we would be required to make a downward adjustment to the net carrying value of the property, which could have a material adverse effect on our results of operations in the period in which the impairment charge is recorded. We recorded an impairment charge related to our Woodward Property in the year ended December 31, 2025, and may record future impairments based on actual results and changes in circumstances. Negative developments in the real estate market may cause management to reevaluate assumptions used in its impairment analysis. Changes in management’s assumptions based on actual results may have a material impact on our financial statements. See also “—We may be unable to sell the Woodward Property for its carrying value, or at all” below, Note 2—Summary of Significant Accounting Policies—Rental Properties, and Note 14—Subsequent Events to our consolidated financial statements in this Annual Report on Form 10-K for additional information.

We may be unable to sell the Woodward Property for its carrying value, or at all.

During the third quarter of 2025, New Tenant, our current tenant in the Woodward Property, faced operational challenges that impaired its ability to meet contractual rent obligations. Beginning in July 2025, New Tenant remitted approximately 50% of the rent then due. In August 2025, the Company sent a demand notice to New Tenant to remit full payment of outstanding rent. In September 2025, New Tenant remitted full payment of all outstanding rent that was previously due and has received all rent payments due through December 31, 2025. Subsequent to year-end 2025, the Company sent New Tenant at the Woodward Property a written notice default related to the New Tenant’s failure to (i) make timely rental payments and (ii) fulfill its obligations related to non-monetary terms under the Woodward Lease. As of the date of this filing, the Company remains in discussions with New Tenant about curing these events of default and regarding future operations at the Woodward Property.

In an effort to avoid litigation related to the defaults under the lease, the Company is currently in negotiations to sell the Woodward Property to the New Tenant for approximately $600,000 in cash plus the assumption of the notes payable outstanding on the Woodward Property. If the Company sells the Woodward Property for $600,000, the net carrying value of the Woodward Property of approximately $2,700,000 would exceed the $600,000 sale price by $2,100,000.

While the Company believes the sale is likely to occur, there is a possibility that the sale will fail to occur, in which case there is a strong likelihood that the New Tenant will be unable to continue paying rent, causing an ongoing default under the lease. Based on these conditions, our projected future cash flows, anticipated holding periods, and market conditions have changed. Accordingly, during the year ended December 31, 2025, we recorded an impairment loss of $2,100,000.

Risks Related to the Proposed MBO

The MBO transaction is a “related party transaction,” which may lead to actual or perceived conflicts of interest.

The Buyer, BPB Partners, LLC, is owned by our Chairman and CEO, our President and COO, and another member of the Company’s management. Because our executive leadership is on both sides of the transaction, there is an inherent risk of conflicts of interest regarding the negotiation of the purchase price and terms.

Although a Special Transactions Committee of independent directors overseen the process, dissatisfied stockholders may still challenge the fairness of the transaction. Legal challenges or proxy contests related to these conflicts could delay the closing, result in significant legal costs, or prevent the MBO from being consummated.

The transaction is subject to a “majority of the minority” stockholder approval, which may be difficult to obtain.

A condition to closing the MBO is the approval by a majority of the voting power held by “uninterested” stockholders (excluding shares held by the Buyer’s principals). If our non-management stockholders do not perceive the purchase price or the transaction terms as favorable, they may vote against the proposal. Failure to obtain stockholder approval would prevent the closing of the MBO, even if a simple majority of total voting power is achieved.

The final Purchase Price is subject to significant adjustments based on interim real estate transactions, which creates uncertainty.

The $7.0 million base Purchase Price is not fixed and will fluctuate based on several factors before closing:

These variables make it difficult for stockholders to value the total consideration of the deal at the time of voting and may impact our final liquidity position.

The Buyer must raise sufficient capital to fund the Purchase Price, and there is no guarantee they will be able to do so.

The MBO APA includes a closing condition that the Buyer must raise the capital required, in its sole discretion, to fund the Purchase Price. The Buyer does not currently have a committed financing arrangement disclosed in the APA. If capital markets tighten or if the Buyer’s creditworthiness is questioned, the Buyer may be unable to secure funding, leading to a termination of the agreement.

The Company retains the right to terminate the MBO APA if it receives a proposal on terms more favorable to stockholders than the MBO.

While this is intended to maximize stockholder value, it creates uncertainty regarding the finality of the deal. If a superior proposal is pursued, we may owe the Buyer termination fees (if applicable) or suffer from prolonged operational distraction and potential loss of our current executive leadership.

The Buyer has a broad right to terminate the MBO APA based on due diligence.

Pursuant to the MBO APA, the Buyer has a 180-day due diligence period (expiring July 14, 2026) during which the Buyer can terminate the MBO APA for any reason in its sole discretion. If the Buyer terminates during this period, our stock price may decline significantly as the market reacts to the failed MBO.

Failure to complete the MBO could negatively impact our business and financial results.

If the MBO is not completed for any reason, we will have incurred substantial costs without realizing the benefits. In addition, we may face a management void or decreased morale if our top executives, who own the Buyer, remain in their roles after a failed transaction. Our ability to pursue alternative strategic transactions may be limited by the time and resources already expended on the MBO.

If the MBO closes, following the closing, we will be a “shell company” with no remaining operations, which may limit the liquidity of our common stock.

If and when the MBO closes, we will have sold substantially all of our operating assets and intellectual property to the Buyer. We would then be classified as a “shell company” under SEC rules, which carries significant regulatory burdens. We will no longer have an active business to generate revenue, and our sole remaining assets will likely be the cash proceeds (net of transaction costs and liabilities) and potentially the CKG Note. Additionally, the availability of Rule 144 for resales of our securities by stockholders will be significantly limited.

Our Board may elect to liquidate and dissolve the Company, and the timing and amount of any distributions are uncertain.

If the Board determines that it is in the best interest of stockholders to liquidate the Company following the MBO, if consummated, rather than pursuing a reverse takeover (“RTO”):

We may seek a RTO or a new business activity, which involves significant risks and uncertainty. The Board may choose to use the remaining public shell to acquire a new, unrelated business through an RTO.

Any such transaction would likely involve the issuance of a significant number of new shares, which would substantially dilute the ownership of our existing stockholders. We may be unable to identify a suitable target, or we may acquire a business with undisclosed liabilities or a failing business model. An RTO typically results in a change of control where our current stockholders would no longer hold a majority interest in the combined entity.

Stockholders may be required to approve a change in our primary business purpose or a formal plan of liquidation.

Under Nevada law and our governing documents, the sale of all or substantially all of our assets requires a stockholder vote. If the MBO is approved but a subsequent liquidation or RTO is not, we may continue to incur the high costs of being a public company without any operational revenue to offset those costs. This could rapidly deplete the $7.0 million (as adjusted) Purchase Price, leaving little to no value for stockholders.

The loss of our executive leadership team upon closing of the proposed MBO will leave the Company without experienced management.

Since the Buyer is comprised of our CEO, COO, and other key personnel, these individuals will likely focus their efforts on the newly acquired private business (BPB Partners, LLC) after the closing. The remaining public shell will be left without its primary leadership team to manage the transition, liquidation, or search for an RTO target. Hiring a new management team to oversee a shell company would incur significant additional administrative expenses.

Marijuana remains illegal under federal law, and the ongoing transition to Schedule III, along with the new restrictions on hemp-derived products, creates significant regulatory uncertainty that could disrupt our business plan.

While cannabis is in the final stages of reclassification from Schedule I to Schedule III under the CSA following a December 2025 executive order, it remains a controlled substance. The possession, distribution, cultivation, and use of cannabis continue to be violations of federal law. Even if reclassified to Schedule III, cannabis will remain subject to strict FDA oversight and the CSA’s registration requirements. Any failure by our tenants to comply with these evolving federal standards, or a decision by the federal government to strictly enforce remaining prohibitions, would materially and adversely affect our ability to execute our business plan.

The shift in federal enforcement priorities and the absence of a formal Cole Memo reinstatement create unpredictability.

In January 2018, the DOJ rescinded the Cole Memo, and as of March 2026, Attorney General Pamela Bondi has not formally reinstated it. While the current administration has signaled a focus on “states’ rights” and the illicit market, federal prosecutors maintain broad discretion to prosecute state-legal cannabis activities. Although Attorney General Bondi has historically overseen a well-regulated medical market in Florida, her national enforcement priorities remain subject to change. Any shift toward a more aggressive enforcement posture against state-licensed operators would jeopardize our real estate investments and could subject the Company to criminal prosecution, fines, or asset forfeiture.

New federal “Total THC” limits on hemp products may force tenants into more restrictive regulatory regimes or out of business.

The Continuing Appropriations and Extensions Act of 2026, effective November 12, 2026, imposes a strict cap of 0.4 mg of “total THC” per container for finished hemp products. This change effectively reclassifies many previously legal hemp-derived products (such as Delta-8 and THCA flower) as “marijuana” under the CSA. Tenants currently operating in the hemp space may be forced to obtain more costly cannabis licenses or cease operations entirely. Failure of our tenants to adapt to these new “total THC” restrictions by the late-2026 deadline could result in lease defaults and a loss of rental income for the Company.

The Rohrabacher-Farr Amendment provides limited protection and must be renewed annually.

The Rohrabacher-Farr Amendment, which prohibits the DOJ from using federal funds to interfere with state-legal medical marijuana programs, has been renewed through the 2026 appropriations cycle. However, this protection is temporary and notably does not extend to adult-use (recreational) programs. If Congress fails to renew this amendment, or if our tenants transition to adult-use operations not covered by the rider, the risk of federal prosecution increases significantly.

On December 31, 2025, the Company, through its wholly owned subsidiaries Chino Valley, Green Valley, and Kingman (collectively, the “Landlords”), entered into Amended and Restated Absolute Net Lease Agreements (the “A&R Leases”) with the respective tenant entities Broken Arrow Herbal Center, Inc. (Chino Valley and Green Valley) and CJK, Inc. (Kingman) (each, a “Tenant”), each with an effective date of January 1, 2026. Each A&R Lease provides for an initial term of 14 years commencing January 1, 2026 and ending December 31, 2039, unless earlier terminated pursuant to its terms. The A&R Leases were contingent upon, among other conditions, the consummation of a change of control transaction involving the Tenant(s), including the transfer of majority ownership and control of the applicable Tenant to A&R Consultants, LLC (or its designee) and the transfer of the applicable cannabis license to A&R Consultants, LLC (or its designee). These contingencies were resolved on March 31, 2026. Pursuant to the A&R Leases, A&R Consultants, LLC provided a guaranty of payment and performance in favor of each Landlord. Base rent under the A&R Leases varies by property and is set forth in the respective rent schedules (including, for example, monthly base rent of $3,500 for the Green Valley property and $4,000 for the Kingman property, and a step-up schedule for the Chino Valley property). The A&R Leases include, among other provisions, (i) a right of first refusal with a right of first refusal period of up to 60 days and (ii) a short-term exclusive option that permits the Tenant to purchase, on an all-or-none basis, the three leased properties (Chino Valley, Green Valley and Kingman) for an aggregate purchase price of $9.0 million (the “Purchase Option”). The Purchase Option originally stated that the Purchase Option may be exercised during an option period ending March 30, 2026; however, the parties have subsequently agreed that optionee will have until April 10, 2026 to exercise the Purchase Option, and if exercised, requires a closing no later than June 30, 2026. The Purchase Option contemplates (a) a $400,000 non-refundable earnest money deposit to be applied toward the down payment, (b) a $4.0 million cash down payment at closing, and (c) $5.0 million of seller financing. The seller financing would bear interest at 7% per annum over a 36-month term with payments calculated on a 15-year amortization schedule and a balloon payment at maturity, and would be secured by loan documentation (including a loan agreement, promissory note and deeds of trust) against all three properties. The properties would be conveyed on an as-is/where-is basis without representations or warranties from the applicable landlord/seller. In connection with the anticipated change of control transaction for the Chino Valley Tenant, on December 30, 2025, the Company, through Chino Valley Properties, LLC, entered into a Consent of Landlord and Agreement Regarding Lease (the “Consent Agreement”) with Broken Arrow Herbal Center, Inc., AC Management Group, LLC (the existing guarantor), A&R Consultants, LLC (the new guarantor) and Elevate Holdings, Group, LLC. The Consent Agreement provided, among other things, that the Landlord’s consent to the sale transaction is conditioned on the payment to Landlord at closing of (i) $389,984 for past due rent, additional rent and late charges and (ii) $965,000 as compensation for rent concessions reflected in the A&R Lease, both of which were received by the Company on March 31, 2026. Upon receipt of such amounts, the Consent Agreement provided for the release of the existing guarantor from liability for periods after closing and A&R Consultants, LLC executed a new guaranty of the A&R Lease.

Management Buyout Asset Purchase Agreement

On January 15, 2026, the Company entered into an Asset Purchase Agreement (the “MBO APA”) by and among the Company, Zoned Arizona, ZP Dysart, ZPRE Holdings and collectively with Zoned Arizona and ZP Dysart, the “Real Property Sellers” and, together with the Company, the “Seller Parties” and each, a “Seller Party”, and BPB Partners, LLC (the “Buyer”). The Buyer is owned by Bryan McLaren, the Company’s Chairman of the Board, Chief Executive Officer and Chief Financial Officer; Berekk Blackwell, the Company’s President and Chief Operating Officer; and Patrick Moroney.

The Company formed a Special Transactions Committee of the Board of Directors (the “Committee”), consisting of its three independent directors, that has reviewed, negotiated and overseen the MBO APA and the other transaction documents and the transactions contemplated by the MBO APA (the “MBO”). The Committee approved the MBO APA, the other transaction documents and the MBO, prior to its execution. The MBO APA and the other transaction documents and the MBO were also approved by the full Board of Directors prior to its execution.

Pursuant to the terms of the MBO APA, the Seller Parties agreed to sell to the Buyer, and the Buyer agreed to purchase from the Seller Parties, subject to the terms of the MBO APA, all of the Seller Parties’ rights, title and interest in and to the Company’s business (the “Business”), and the assets, properties and rights of the Seller Parties, subject to modification as set forth in the MBO APA, and other than the Excluded Assets (as defined in the MBO APA) (the “Assets”). The Assets include, among other things, (i) the real property located at 410 S. Madison Drive, Tempe, AZ; (ii) the real property located at 13150 W. Bell Road, Surprise, AZ; (iii) the real property located at 3455 S. Ashland Avenue, Chicago, IL; (iv) the Company’s membership interests in ZPRE Holdings, Arizona Brokerage, Florida Brokerage, ZP Data 2, ZP Ohio B, LLC, and Zoneomics Green; (v) all rights under all contracts to which any Seller Party is a party or is bound as of the closing date that is related to the Business; (vi) all intellectual property of the Seller Parties; (vii) all prepaid expenses, security deposits, and certain other operational assets; and (vii) potentially certain additional assets that may be acquired by the Seller Parties prior to the closing of the MBO, as discussed below.

Subject to adjustment as set forth in the MBO APA, the purchase price for the Assets will be $7,000,000, less the Assumed Indebtedness (as defined in the MBO APA) (the “Purchase Price”).

The parties to the MBO APA acknowledged and agreed that between January 15, 2026 and the date of the closing of the MBO, the Company or one or more affiliates of the Company may acquire or invest in additional real estate assets (“Additional Assets”). Upon acquisition of or investment in the Additional Assets, (i) such Additional Assets shall be deemed included in the “Assets” for purposes of the MBO APA, (ii) the Purchase Price will be increased by the amount of the cash purchase price paid therefor by the Company or its affiliate, (iii) the Purchase Price will be decreased by the amount of any cash and/or debt instruments issued by the Company or its affiliate to the seller of such Additional Assets (the “Additional Asset Acquisition Indebtedness”), and (iv) such Additional Asset Acquisition Indebtedness will be deemed included in the assumed liabilities pursuant to the MBO APA.

The parties to the MBO APA also acknowledged and agreed that between January 15, 2026 and the closing of the MBO, the Company may sell the real estate assets located at 23622-23634 Woodward Avenue, Pleasant Ridge, MI (the “Pleasant Ridge Assets”) to a third party for a purchase price to be determined. The Pleasant Ridge Assets are not currently included in the “Assets” for purposes of the MBO APA. In the event that the sale of the Pleasant Ridge Assets is not consummated prior to the closing, then the Pleasant Ridge Assets will be deemed included in the “Assets” and the Purchase Price will be increased by the amount of the appraisal value of the Pleasant Ridge Assets, as determined as set forth in the MBO APA.

The parties to the MBO APA further acknowledged and agreed that between January 15, 2026 and the closing, the Company may sell the real estate assets located at 2144 N. Road 1 East, Chino Valley, AZ; 2095 Northern Avenue, Kingman, AZ; and 1732 W. Commerce Point Place, Green Valley, AZ (collectively, the “CKG Properties”) to a third party for a total purchase price of $9,000,000 (the “CKG Purchase Price”), of which $4,000,000 is expected to be paid in cash and $5,000,000 is expected to be paid via a promissory note payable to the Company (the “CKG Note”). In the event that the sale of the CKG Properties is not consummated prior to the closing, then the CKG Properties will be deemed included in the “Assets” and the Purchase Price will be increased by the amount of the CKG Purchase Price.

If the sale of the CKG Properties is consummated prior to the closing, then the CKG Properties will not be included in the “Assets,” but the CKG Note will be included in the “Assets” for purposes of the MBO APA, and the Purchase Price will be increased by the principal amount of the CKG Note.

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

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

(b) The Company or by Buyer if there shall be in effect a final non-appealable order, judgment, injunction or decree entered by or with a governmental entity restraining, enjoining or otherwise prohibiting the consummation of the MBO;

(c) The 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;

(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; or (h) The Company, in the event it receives a proposal on terms more favorable to the Company’s stockholders than those set forth in the MBO APA, subject to the terms of the MBO APA, prior to the date that is the later of (i) the date on which the Company receives stockholder approval as set forth in the MBO APA, and July 14, 2026 (the date on which the Buyer’s due diligence period expires).

The closing of the MBO is subject to certain closing conditions, including, but not limited to, (i) the Company and the Committee having received an opinion as to the fairness of the transactions, from a financial point of view, to the shareholders of the Company, and such opinion remaining valid and in full force and effect as of the closing; (ii) MBO APA and the transactions set forth therein being approved by both (1) the shareholders of the Company holding a majority of the voting power of the Company, as required by Nevada law, and (2) shareholders of the Company holding a majority of the voting power of the Company, but excluding for such purposes any such shareholder, and shares or stock of the Company, held by any persons who own, control or have any interest in the Buyer (i.e., a ‘majority of the minority’ uninterested shareholders); (iii) receipt of any required regulatory approvals; (iv) raising by the Buyer of the capital required, in its sole discretion, to fund the Purchase Price; and (v) other customary closing conditions. The MBO APA contains customary representations, warranties and covenants.

If the MBO APA is approved by the Company’s stockholders, as required, the Company expects that the closing of the MBO will take place by the end of 2026. Assuming that the MBO APA is approved by the Company’s stockholders, as required, and the Company can successfully sell and liquidate 100% of the Company’s assets and operations, the Company expects (i) to pay off any remaining debt, settle any remaining accounts and agreements, liquidate the Company’s outstanding preferred shares, and then distribute the net available balance of cash to stockholders as a return of capital through a special dividend, and (ii) to subsequently complete a reverse merger or other transaction involving the public company.

Going concern consideration

Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our consolidated financial statements, the Company had a net loss of $2,854,415 and had cash provided by operations of $781,476 for the year ended December 31, 2025. Additionally, as of December 31, 2025, the Company had cash of $837,767 and stockholders’ equity of $3,067,626. On December 31, 2025 and effective January 1, 2026, the Company entered into Amended and Restated Absolute Net Lease Agreements with certain tenants (See Note 14 – Subsequent Events). The Amended and Restated Absolute Net Lease Agreements include, among other provisions, (i) a right of first refusal with a right of first refusal period of up to 60 days and (ii) a short-term exclusive option that permits the tenant to purchase, on an all-or-none basis, three leased properties (Chino Valley, Green Valley and Kingman). The Purchase Option originally stated that the Purchase Option may be exercised during an option period ending March 30, 2026; however, the parties have subsequently agreed that optionee will have until April 10, 2026 to exercise the Purchase Option, and if exercised, requires a closing no later than June 30, 2026. Additionally, on January 15, 2026, the Company and certain of its subsidiaries entered into the MBO APA with the Buyer to sell substantially all of its properties to the Buyer, a company owned by management (See Note 14 – Subsequent Events). The closing of the MBO is subject to certain closing conditions, including, but not limited to, approval by the Company’s stockholders and the Buyer obtaining financing. If the Company sells some or all of its properties, it will have minimal or no operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this Annual Report. There can be no assurance that the Company will sell its properties. If the Company sells its properties, the Company’s cash flow provided by operating activities would decrease substantially and the Company may need to raise capital through debt and/or equity financings to fund any ongoing operations, may need to curtail its operations, or may decide the liquidate the Company. The consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

See also “Item 1. Business—Our Business—Management Buyout Asset Purchase Agreement.”

During the year ended December 31, 2025, the Company paid $1,000,000 to Sunday Goods as a tenant improvement allowance. The $1,000,000 payment to the tenant was used by the tenant to construct a building on the land as well as for the buildout of the property. Since ZP Dysart will own the building and related improvements at the end of the lease, the $1,000,000 tenant improvement allowance was capitalized to rental properties and is being depreciated on a straight-line basis over the useful life of the building and related improvements beginning when the building and related improvements was placed in service, beginning in September 2025. In September 2025, Sunday Goods completed the construction of a new retail dispensary building on the Surprise Property and opened for business.

For the year ended December 31, 2025, we recorded an impairment loss of $3,118,716 due (1) to the damage and demolition of its building located in Chicago, IL, where a vehicle crashed into the building, causing significant structural damage, and the City of Chicago declared the building unsafe and ordered its demolition, and (2) to the write down of our Michigan property to net realizable value. For the year ended December 31, 2024, we did not record any impairment losses.

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. 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.

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.

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.

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.