Zoned Properties' Net Income Soars 166% on Strong Revenue Growth

TL;DR

**ZDPY is crushing it in cannabis real estate, buy the dip if you can find one.**

AI Summary

Zoned Properties, Inc. (ZDPY) reported a significant increase in net income for the nine months ended September 30, 2025, reaching $327,381, up from $123,062 in the prior year, representing a 166% increase. Total revenues also grew to $2,925,459 for the nine-month period, compared to $2,559,008 in 2024, driven by a 7.6% increase in Property Investment Portfolio revenues to $2,284,015 and a substantial 46.6% increase in Real Estate Services revenues to $641,444. The company's cash position improved to $1,113,900 as of September 30, 2025, from $1,019,980 at December 31, 2024. Operating expenses saw a slight decrease for the nine-month period, totaling $1,857,176 in 2025 compared to $1,881,773 in 2024, despite a rise in compensation and benefits by $233,440. A key risk highlighted is the significant reliance on 'Significant Tenants,' which accounted for 60.4% of total revenues ($1,768,371) for the nine months ended September 30, 2025. The strategic outlook remains focused on acquiring value-add real estate within the regulated cannabis industry and expanding its real estate services.

Why It Matters

ZDPY's impressive 166% net income growth and robust revenue increases signal strong operational execution in the niche cannabis real estate market, which could attract more institutional investors looking for exposure to this high-growth sector. For employees, this financial health suggests stability and potential for expansion. Customers, particularly cannabis retailers, benefit from ZDPY's specialized real estate solutions, which are critical in a highly regulated industry. The company's focus on 'value-add' properties and proprietary technology positions it competitively against general real estate firms, potentially driving further market share in this specialized segment.

Risk Assessment

Risk Level: medium — The company faces a medium risk level due to its significant reliance on 'Significant Tenants,' which generated 60.4% of total revenues ($1,768,371) for the nine months ended September 30, 2025. Additionally, its operations are heavily concentrated in the regulated cannabis industry, making it vulnerable to changes in federal and state cannabis laws, as explicitly stated in the filing.

Analyst Insight

Investors should consider ZDPY's strong financial performance, particularly its net income growth and increased cash position. Monitor regulatory developments in the cannabis industry and the company's tenant diversification efforts to assess long-term stability. This could be an attractive opportunity for investors seeking exposure to the cannabis real estate sector.

Financial Highlights

debt To Equity

N/A

revenue

$2,925,459

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

$327,381

eps

N/A

gross Margin

N/A

cash Position

$1,113,900

revenue Growth

+14.3%

Revenue Breakdown

Key Numbers

• $327,381 — Net Income (for the nine months ended September 30, 2025, a 166% increase from $123,062 in 2024)
• $2,925,459 — Total Revenues (for the nine months ended September 30, 2025, up from $2,559,008 in 2024)
• $1,113,900 — Cash (as of September 30, 2025, an increase from $1,019,980 at December 31, 2024)
• $661,392 — Net Cash Provided by Operating Activities (for the nine months ended September 30, 2025, up from $455,363 in 2024)
• 60.4% — Revenue from Significant Tenants (representing $1,768,371 of total revenues for the nine months ended September 30, 2025)
• $641,444 — Real Estate Services Revenues (for the nine months ended September 30, 2025, a 46.6% increase from $437,464 in 2024)
• $2,284,015 — Property Investment Portfolio Revenues (for the nine months ended September 30, 2025, a 7.6% increase from $2,121,544 in 2024)
• $1,857,176 — Total Operating Expenses (for the nine months ended September 30, 2025, a decrease from $1,881,773 in 2024)
• $1,031,887 — Compensation and Benefits (for the nine months ended September 30, 2025, an increase from $798,447 in 2024)
• $150,031 — Loss from Interest Rate Swap (for the nine months ended September 30, 2025, an increase from $52,503 in 2024)

Key Players & Entities

• Zoned Properties, Inc. (company) — registrant
• SEC (regulator) — Securities and Exchange Commission
• Chino Valley Properties, LLC (company) — wholly owned subsidiary
• Kingman Property Group, LLC (company) — wholly owned subsidiary
• Green Valley Group, LLC (company) — wholly owned subsidiary
• Zoned Advisory Services, LLC (company) — wholly owned subsidiary
• Zoned Properties Brokerage, LLC (company) — wholly owned subsidiary
• FASB (regulator) — Financial Accounting Standards Board
• ASC Topic 820 (regulator) — Fair Value Measurement
• Nevada (regulator) — State of incorporation

FAQ

Risk Factors

• Reliance on Significant Tenants [high — financial]: The company's revenues are heavily concentrated, with 60.4% ($1,768,371) of total revenues for the nine months ended September 30, 2025, coming from 'Significant Tenants'. A loss of one or more of these key tenants could materially impact financial performance.
• Cannabis Industry Volatility [high — market]: ZDPY's strategy focuses on acquiring real estate within the regulated cannabis industry. This sector is subject to evolving regulations, market fluctuations, and potential federal prohibition, posing inherent risks to property values and tenant stability.
• Interest Rate Swap Losses [medium — financial]: The company experienced an increase in losses from interest rate swaps, totaling $150,031 for the nine months ended September 30, 2025, up from $52,503 in the prior year. This indicates increased exposure to interest rate fluctuations.
• Increased Compensation Costs [medium — operational]: Despite a slight overall decrease in operating expenses, compensation and benefits increased by $233,440 to $1,031,887 for the nine months ended September 30, 2025. This rise may impact future profitability if not matched by revenue growth.

Industry Context

Zoned Properties operates within the regulated cannabis industry, a sector characterized by rapid growth potential but also significant regulatory uncertainty and evolving market dynamics. The company's focus on acquiring 'value-add' real estate in this niche suggests a strategy to capitalize on specific market opportunities while navigating inherent risks.

Regulatory Implications

The company's operations are subject to the complex and often changing regulatory landscape of the cannabis industry. Compliance with state and local regulations is critical, and any shifts in policy could materially affect property values, tenant operations, and ZDPY's business model.

What Investors Should Do

1. Monitor tenant concentration: Closely track the revenue contribution from 'Significant Tenants' and assess the risk of tenant default or lease non-renewal.
2. Evaluate cannabis industry regulatory changes: Stay informed about legislative developments impacting the cannabis sector, as these can directly affect ZDPY's assets and operations.
3. Analyze growth drivers: Understand the sustainability of the rapid growth in Real Estate Services and the continued performance of the Property Investment Portfolio.
4. Assess interest rate risk management: Review the company's strategy for managing interest rate fluctuations, given the increased losses on interest rate swaps.

Glossary

Property Investment Portfolio

The collection of real estate assets owned and managed by the company, intended to generate rental income and capital appreciation. (Represents a core revenue stream for ZDPY, showing steady growth.)

Real Estate Services

Services offered by the company related to real estate, such as property management, leasing, or consulting. (A rapidly growing segment for ZDPY, indicating successful diversification or expansion of its business model.)

Significant Tenants

Key lessees whose rental payments constitute a substantial portion of the company's total rental income. (Highlights a significant concentration risk for ZDPY's revenue.)

Interest Rate Swap

A financial derivative contract where two parties exchange interest rate payments, often used to hedge against interest rate risk. (Losses on these instruments indicate potential hedging ineffectiveness or increased market volatility impacting ZDPY.)

Year-Over-Year Comparison

Zoned Properties has demonstrated strong performance compared to the prior year, with a significant 166% increase in net income and a 14.3% rise in total revenues for the nine-month period. While operating expenses saw a slight decrease, compensation and benefits costs increased substantially. A key risk remains the high concentration of revenue from significant tenants, although the company's cash position has improved.

Key Financial Figures

• $0.0001 — er of shares of common stock, par value $0.0001 per share, outstanding as of November 1
• $1.00 — ptember 30, 2025 and December 31, 2024 ($1.00 per share liquidation preference or $ 2

Filing Documents

• ea0264699-10q_zoned.htm (10-Q) — 1363KB
• ea026469901ex31-1_zoned.htm (EX-31.1) — 16KB
• ea026469901ex31-2_zoned.htm (EX-31.2) — 16KB
• ea026469901ex32-1_zoned.htm (EX-32.1) — 7KB
• image_001.jpg (GRAPHIC) — 2KB
• 0001213900-25-109626.txt ( ) — 7745KB
• zdpy-20250930.xsd (EX-101.SCH) — 61KB
• zdpy-20250930_cal.xml (EX-101.CAL) — 52KB
• zdpy-20250930_def.xml (EX-101.DEF) — 315KB
• zdpy-20250930_lab.xml (EX-101.LAB) — 616KB
• zdpy-20250930_pre.xml (EX-101.PRE) — 340KB
• ea0264699-10q_zoned_htm.xml (XML) — 1031KB

Financial Information

Part I. Financial Information 1

Financial Statements

Item 1. Financial Statements 1 Consolidated Balance Sheets – September 30, 2025 (unaudited) and December 31, 2024 1 Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2025 and 2024 (unaudited) 2 Consolidated Statements of Changes in Stockholders' Equity – Three and Nine Months Ended September 30, 2025 and 2024 (unaudited) 3 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2025 and 2024 (unaudited) 4 Notes to Unaudited Consolidated Financial Statements 5

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 46

Controls and Procedures

Item 4. Controls and Procedures 46

Other Information

Part II. Other Information 47

Legal Proceedings

Item 1. Legal Proceedings 47

Risk Factors

Item 1A. Risk Factors 47

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 47

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 47

Other Information

Item 5. Other Information 47

Exhibits

Item 6. Exhibits 48

Signatures

Signatures 49 i PART I. FINANCIAL INFORMATION Item 1. Financial Statements ZONED PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31, 2025 2024 (Unaudited) ASSETS Cash $ 1,113,900 $ 1,019,980 Accounts receivable 299,613 370,110 Deferred rent 1,041,102 747,504 Lease incentive receivable 401,376 422,018 Rental properties, net 13,362,535 13,024,936 Prepaid expenses and other assets 52,065 32,101 Escrow deposits 123,556 169,875 Capitalized project costs 212,049 207,000 Property and equipment, net 6,493 8,584 Operating lease right of use asset, net 49,219 78,255 Investment in unconsolidated joint ventures and cost-method investee 87,378 4,923 Investment in equity securities 50,000 50,000 Interest rate swap asset - 44,581 Security deposits 2,272 2,272 Total Assets $ 16,801,558 $ 16,182,139 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Convertible note payable $ 2,000,000 $ 2,000,000 Notes payable, net 7,275,466 7,011,674 Accounts payable 73,176 117,225 Accrued expenses 342,416 433,788 Lease liability 49,769 78,310 Contract liabilities 306,032 318,951 Derivative liability - interest rate swap, at fair value 105,450 - Security deposits payable 402,076 361,677 Total Liabilities 10,554,385 10,321,625 Commitments and Contingencies (Note 10) STOCKHOLDERS' EQUITY: Preferred stock, $ 0.001 par value, 5,000,000 shares authorized; 2,000,000 shares issued and outstanding on September 30, 2025 and December 31, 2024 ($1.00 per share liquidation preference or $ 2,000,000 ) 2,000 2,000 Common stock: $ 0.001 par value, 100,000,000 shares authorized; 12,201,516 and 12,201,516 shares issued on September 30, 2025 and December 31, 2024, respectively, and 12,030,829 and 12,087,829 shares outstanding on September 30, 2025 and December 31, 2024, respectively 12,202 12,202 Additional paid-in capital 21,594,980 21,508,844

View Full Filing

View this 10-Q filing on SEC EDGAR