Business Overview: Zoned Properties, Inc. (OTCQB: ZDPY)

---

Executive Summary

Zoned Properties, Inc. is a Scottsdale, Arizona-based commercial real estate strategist and owner-operator that specializes in properties serving regulated, non-traditional industries — most notably state-licensed cannabis cultivation, processing, and retail operations. Originally incorporated in Nevada in 2003 and renamed/repositioned in 2013-2014, the company describes itself as a "technology-driven property investment company" that is explicitly non-plant-touching: it does not grow, process, or sell cannabis itself, but instead identifies, acquires, entitles, develops, and leases the real estate that licensed operators need.

The company runs two linked lines of business: a Property Investment Portfolio of owned, triple-net-leased commercial properties, and a Real Estate Services practice that provides zoning, entitlement, brokerage, and advisory work for the same class of regulated-industry clients. As of early 2026 the portfolio held seven properties across Arizona, Illinois, and Michigan, fully leased to licensed cannabis tenants under long-term absolute-net leases.

Why it matters: ZDPY is a case study in a picks-and-shovels real estate play on cannabis legalization — it captures rent and fee income from an industry that itself often cannot access conventional bank financing or commercial leases, without taking on plant-touching legal/regulatory risk directly. In January 2026 the company agreed to sell substantially all of its property assets to an insider-owned buyer (BPB Partners, LLC) for $7.0 million, a pending transaction that is now central to the company's near-term story and makes this a company in transition rather than a steady-state landlord.

---

1. Core Business Model & How They Work

ZDPY's model is straightforward commercial real estate, applied to a tenant base — regulated cannabis operators — that mainstream landlords and lenders generally avoid. The company targets properties with unusual zoning, entitlement, or development complexity (the kind of complexity that keeps conventional investors away), resolves that complexity itself, and then leases the finished asset to a licensed operator under a long-term, absolute-net lease (tenant pays rent plus taxes, insurance, maintenance, and structural costs).

 [Target property with zoning/   [ZDPY acquires,          [Absolute-net lease to      [Rent + expense
  entitlement complexity]   -->   entitles, develops   -->  licensed cannabis     -->   reimbursements
  (retail, cultivation,           or redevelops the         operator (retail           = ZDPY revenue]
  processing sites)               asset]                    dispensary, cultivation
                                                              or processing tenant]

                     \--> Parallel fee stream: Real Estate Services
                          (zoning/entitlement advisory, brokerage, technology)
                          for third-party regulated-industry clients

Revenue is concentrated: in 2025, three tenant relationships (the Broken Arrow/Chino Valley property, the VSM/Tempe property, and the Woodward, Michigan lease) together accounted for roughly 57.8% of total revenue, with Broken Arrow/Chino Valley alone at 28.1%. That concentration is a defining structural feature of the business, not a side note — a handful of tenants effectively determine ZDPY's cash flow in any given year.

---

2. Business Segments

                        Zoned Properties, Inc.
                               |
          -----------------------------------------
          |                                       |
  Property Investment Portfolio           Real Estate Services
  (own, develop, lease                    (zoning/entitlement advisory,
   commercial real estate to              brokerage, technology services
   regulated-industry tenants)            for regulated-industry clients)

Property Investment Portfolio: The core of the business. As of April 2026, ZDPY owned seven properties — four retail dispensaries, two cultivation/processing facilities, and one land parcel under development for a future dispensary — located in Arizona, Illinois, and Michigan. The portfolio was reported at 100% occupancy with a weighted-average remaining lease term of more than 10 years, and total future minimum lease payments of approximately $42.4 million.

Real Estate Services: A smaller, fee-based advisory and brokerage line that monetizes the same zoning/entitlement expertise the company built for its own portfolio, selling it to other regulated-industry clients (and historically to ancillary technology ventures such as its Zoneomics/Anami-related investments). This segment is not separately broken out with hard revenue figures in the available disclosure, but management describes it as a complement to, not a replacement for, the owned-property business.

---

3. Key Offerings

---

4. Competitive Landscape

ZDPY does not name specific public competitors in its 10-K; instead it describes competitive categories. In practice, ZDPY competes for cannabis-tenant real estate against:

• Larger, better-capitalized cannabis REITs and net-lease landlords (e.g., Innovative Industrial Properties, NewLake Capital Partners, and similar sale-leaseback specialists), which can offer bigger balance sheets, lower costs of capital, and national portfolios versus ZDPY's seven-property, three-state footprint.
• Independent private investors, family offices, and hard-money lenders who opportunistically finance cannabis-adjacent real estate, often with different risk/return thresholds than a public, reporting company.
• Other real estate investors and hedge funds entering the space as cannabis legalization has broadened and rescheduling discussions (Schedule III) progress.
• The regulated cannabis operators themselves, some of whom now have the balance-sheet strength to buy their own real estate outright rather than lease from a specialist landlord like ZDPY, eroding the sale-leaseback opportunity set over time.

ZDPY's positioning is as a small, specialized, hands-on operator with deep zoning/entitlement expertise in specific sub-markets (Arizona, Illinois, Michigan) rather than as a scaled national player — a niche that larger cannabis REITs often skip because the deal sizes are too small for their origination machines.

---

5. Strategic Strengths & Risks

Strengths / Moat Sources:

• Specialized zoning/entitlement know-how that is genuinely hard for a generalist landlord to replicate quickly, letting ZDPY source and de-risk properties that conventional real estate investors pass on.
• Long-term absolute-net leases (10+ year weighted average) that lock in contracted rent streams and push operating costs onto tenants.
• First-mover relationships with licensed operators in specific state markets where ZDPY has operated for years.

Risks:

• Severe tenant concentration — three relationships drove ~58% of 2025 revenue, and two of ZDPY's largest tenants (Broken Arrow and the Woodward, Michigan lease) were both in payment default or near-default in late 2025 (Broken Arrow paid only ~7% of September–December 2025 rent due).
• Material impairments in 2025 totaling roughly $3.2 million (Woodward, $2.1 million; a Chicago property following vehicle damage and a demolition order, ~$1.0 million; plus smaller write-downs), which flipped the company from 2024 net income of $0.57 million to a 2025 net loss of $2.85 million.
• Federal cannabis illegality continues to constrain tenants' banking access and triggers Section 280E tax exposure for tenants, indirectly pressuring their ability to pay rent.
• Pending related-party sale transaction: the January 2026 agreement to sell substantially all assets to BPB Partners, LLC — owned by the company's own CEO, President/COO, and another insider, for $7.0 million — creates conflict-of-interest, fairness, and execution risk, and requires a majority-of-the-minority shareholder vote. If completed, ZDPY would become largely a cash shell pursuing a reverse merger, fundamentally changing the investment thesis.
• Micro-cap illiquidity: non-affiliate market value of roughly $1.75 million as of mid-2025, with ~13.2 million shares outstanding.

---

6. Financial Overview

---

7. Summary Conclusion

Zoned Properties occupies a genuine, if small, niche: a non-plant-touching landlord-developer that has built real zoning and entitlement expertise serving an industry (regulated cannabis) that mainstream commercial real estate capital still largely avoids. That expertise, combined with long-dated absolute-net leases, is a real — if narrow — moat. But the business is also a case study in concentration risk: a tiny number of tenants drive the overwhelming majority of revenue and asset value, and 2025 showed how quickly that concentration can turn a profitable year into a loss-making one when two major tenants stumble simultaneously.

The company is now at an inflection point. The pending, insider-led sale of substantially all its real estate assets to BPB Partners for $7.0 million — contingent on a majority-of-the-minority shareholder vote — would convert ZDPY from an operating landlord into largely a cash shell seeking a reverse merger. Investors and counterparties should treat the current write-up as describing a business in the process of winding down its core real estate operations, with the ultimate outcome dependent on a related-party transaction still pending shareholder approval as of this filing.