UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 10, 2016
| Zoned Properties, Inc. |
| (Exact Name of Registrant as Specified in its Charter) |
| Nevada |
| (State or Other Jurisdiction of Incorporation) |
| 000-51640 | 46-5198242 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
|
14300 N. Northsight Blvd., #208 Scottsdale, AZ |
85260 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number, including area code): 407-257-0400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.)
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
Effective October 10, 2016, Chino Valley Properties, LLC (the “Landlord”), a wholly owned subsidiary of Zoned Properties, Inc. (the “Company”), entered into a third amendment to commercial lease agreement (the “Amendment”) with C3C3 Group, LLC (“C3C3”) and Alan Abrams. Pursuant to the terms of the Amendment, the size of the leased property was expanded and the monthly rental rate was increased, such that the monthly rent for the leased premises will be as follows:
| Month 1 | - | Waived | ||||||
| Months 2-6 | - | $ | 30,000.00 | |||||
| Months 7-12 | - | $ | 40,000.00 | |||||
| Months 13-15 | - | $ | 42,000.00 | |||||
| Months 16-24 | - | $ | 55,000.00 | |||||
| Months 25-36 | - | $ | 57,750.00 | |||||
| Months 37-48 | - | $ | 60,637.50 | |||||
| Months 49-60 | - | $ | 63,669.38 | |||||
| Months 61-72 | - | $ | 66,852.84 | |||||
| Months 73-84 | - | $ | 60,775.31 | |||||
| Months 85-96 | - | $ | 70,195.49 | |||||
| Months 97-108 | - | $ | 73,705.26 | |||||
| Months 109-120 | - | $ | 77,390.52 | |||||
| Months 121-132 | - | $ | 81,260.05 | |||||
| Months 133-144 | - | $ | 81,260.05 | |||||
| Months 145-156 | - | $ | 81,260.05 | |||||
| Months 157-168 | - | $ | 81,260.05 | |||||
| Months 169-180 | - | $ | 81,260.05 | |||||
| Months 181-192 | - | $ | 81,260.05 | |||||
| Months 193-204 | - | $ | 81,260.05 | |||||
| Months 205-216 | - | $ | 81,260.05 | |||||
| Months 217-228 | - | $ | 81,260.05 | |||||
| Months 229-240 | - | $ | 81,260.05 |
In November 2016, the lease will begin month 16 of the lease.
C3C3 is owned by Mr. Abrams, a significant stockholder of the Company. Christopher Carra, a significant stockholder of the Company, is president of C3C3.
The foregoing description of the Amendment is not a complete description of all of the parties’ rights and obligations under the Amendment and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K and incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On October 13, 2016, the Company issued a press release regarding certain business updates, including entry into the Amendment. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the website is not a part of this current report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
The exhibits listed in the following Exhibit Index are furnished as part of this current report on Form 8-K.
| Exhibit No. | Description | |
| 10.1 | Third Amendment to Commercial Lease by and between Chino Valley Properties, LLC, C3C3 Group, LLC and Alan Abrams. | |
| 99.1 | Press release of Zoned Properties, Inc. dated October 13, 2016. |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ZONED PROPERTIES, INC. | |
| Dated: October 13, 2016 | /s/ Bryan McLaren |
| Bryan McLaren | |
| Chief Executive Officer |
3
Exhibit 10.1
THIRD AMENDMENT TO COMMERCIAL LEASE AGREEMENT
This Third Amendment to the Commercial Lease Agreement (the "Third Amendment") is made this 10th day of October, 2016, (the "Effective Date") by and between Chino Valley Properties, LLC (the "Landlord") and C3C3 Group, LLC (the "Tenant"), collectively (the “Parties”).
WITNESSETH:
WHEREAS, Landlord and Tenant heretofore entered into a Commercial Lease Agreement (the "Lease") executed and effective as of August 6, 2015 for the lease on the premises commonly known as 2144 & 2148 N. Road 1 East Chino Valley, AZ 83462; and
WHEREAS, The Landlord has invested capital into the property for expansion of the facilities for use by the Tenant, including by not limited to an expansion of utilities and an expansion of operational space; and
WHEREAS, The parties hereto desire to change the rental rate of the monthly rental payment and the size of the operating premises to reflect the expanded facilities; and
WHEREAS, all defined terms used in the Lease shall have the same meaning herein as therein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for good and valuable consideration, the sufficiency and receipt of which is acknowledged, the Parties agree to the following amendment to the language of the Lease:
| 1. | 2.01 Premises: The Premises shall be amended as per the Premises Description attached as an updated “ Amended Exhibit C ” to the original Lease Agreement. |
| 2. | 5.01 Base Rent: The Base Rent shall be amended as per the Rental Schedule attached as an updated “ Amended Exhibit B ” to the original Lease Agreement. |
Your signature below will indicate that you agree to the terms and conditions as set forth herein dated October 10, 2016:
| Chino Valley Properties, LLC. | C3C3 Group, LLC. | |||
| By: | /s/ Bryan McLaren | By: | /s/ Christopher Carra | |
| Name: | Bryan McLaren | Name: | Christopher Carra | |
| Title: | CEO | Title: | President | |
| Alan Abrams, Individually. | ||||
| By: | /s/ Alan Abrams | |||
| Name: | Alan Abrams | |||
| Title: | Personal Guarantor | |||
AMENDED EXHIBIT B: Rental Payment Schedule
| Year | Commencement | Months | Monthly Payment | Annual Rental Rate | Base Rental Rate | Rentable Area | ||||||||||||||||||||
| 1 | 1-Aug-15 | 01 | Waived | Waived | Waived | Waived | ||||||||||||||||||||
| 1 | 1-Sep-15 | 02-06 | $ | 30,000.00 | $ | 360,000.00 | $ | 24.00 | 15,000 | |||||||||||||||||
| 1 | 1-Feb-16 | 07-12 | $ | 40,000.00 | $ | 480,000.00 | $ | 32.00 | 15,000 | |||||||||||||||||
| 2 | 15-Aug-16 | 13-15 | $ | 42,000.00 | $ | 504,000.00 | $ | 33.60 | 15,000 | |||||||||||||||||
| 2 | 15-Nov-16 | 16-24 | $ | 55,000.00 | $ | 660,000.00 | $ | 26.40 | 25,000 | |||||||||||||||||
| 3 | 15-Aug-17 | 25-36 | $ | 57,750.00 | $ | 693,000.00 | $ | 27.72 | 25,000 | |||||||||||||||||
| 4 | 15-Aug-18 | 37-48 | $ | 60,637.50 | $ | 727,650.00 | $ | 29.11 | 25,000 | |||||||||||||||||
| 5 | 15-Aug-19 | 49-60 | $ | 63,669.38 | $ | 764,032.50 | $ | 30.56 | 25,000 | |||||||||||||||||
| 6 | 15-Aug-20 | 61-72 | $ | 66,852.84 | $ | 802,234.13 | $ | 32.09 | 25,000 | |||||||||||||||||
| 7 | 15-Aug-21 | 73-84 | $ | 70,195.49 | $ | 842,345.83 | $ | 33.69 | 25,000 | |||||||||||||||||
| 8 | 15-Aug-22 | 85-96 | $ | 73,705.26 | $ | 884,463.12 | $ | 35.38 | 25,000 | |||||||||||||||||
| 9 | 15-Aug-23 | 97-108 | $ | 77,390.52 | $ | 928,686.28 | $ | 37.15 | 25,000 | |||||||||||||||||
| 10 | 15-Aug-24 | 109-120 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 11 | 15-Aug-25 | 121-132 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 12 | 15-Aug-26 | 133-144 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 13 | 15-Aug-27 | 145-156 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 14 | 15-Aug-28 | 157-168 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 15 | 15-Aug-29 | 169-180 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 16 | 15-Aug-30 | 181-192 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 17 | 15-Aug-31 | 193-204 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 18 | 15-Aug-32 | 205-216 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 19 | 15-Aug-33 | 217-228 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
| 20 | 15-Aug-34 | 229-240 | $ | 81,260.05 | $ | 975,120.59 | $ | 39.00 | 25,000 | |||||||||||||||||
*Annual Rental Rate escalates at 5% per annum through year 10
AMENDED EXHIBIT C: PROPERTY SITE AND LEGAL DESCRIPTION
| Parcel ID: | 306-14-008-M | |
| Property Address: | 2144 & 2148 N. Road 1 East Chino Valley, AZ 83462 | |
| Building and Premises: | Chino Valley Cultivation Site; approximately 10,000 square feet of completed Greenhouse, 10,000 square feet of completed Hoop House and approximately 5,000 square feet of existing office & garage space existing within the currently fenced in area. Approximately 11 acres. | |
| Legal Description: | An irregular portion of the SE4 the SE parcel corner lying approximately 686'N and 50'W from the SE corner of said section 19 |
Exhibit 99.1
Zoned Properties Announces Expansion of Leased Space at Chino Valley Cultivation Facility
Medical Marijuana Tenant Expands Operations from 15,000 to 25,000 square feet
SCOTTSDALE, Ariz., October 13, 2016 /PRNewswire/ -- Zoned Properties, Inc. (OTCQX: ZDPY), a strategic real estate development firm whose primary mission is to identify, develop, and lease sophisticated, safe, and sustainable properties in emerging industries, including the licensed marijuana industry, today announced that it has signed an amendment to the existing Lease Agreement with its tenant at the company’s Chino Valley Cultivation Facility in Chino Valley, Arizona. The amendment increases the monthly rent for the property by more than 30% effective in November of 2016.
The licensed medical marijuana cultivator is expanding its current operation from 15,000 to 25,000 square feet of operational space. The tenant plans to use the additional 10,000 square feet of space for additional cultivation and processing. The facility is located within an 11 acre developed area on a larger 50-acre site owned by Zoned Properties. The lease terms are Triple Net (NNN) and the expanded development will utilize Zoned Properties’ Triple-Set (SSS) development and design model. Zoned Properties continues to proceed with the next phases of the project, which include expanding the facility to up to 45,000 square feet of operational space.
Bryan McLaren, Chief Executive Officer of Zoned Properties, stated, “This expansion is part of a master plan designed in partnership with our tenant to facilitate a timely and strategic expansion of their business operations while creating solid investment returns for our shareholders. Our critical selection of properties and tenants combined with our methodical approach to property development supports our strategy for sustainable value creation and optimal utilization of our assets.”
Zoned Properties completed a previously approved and announced power expansion at the facility for an additional 3,000 amps of electric service through the local utility company. Monthly rental payments will increase from the current $42,000 to $55,000 beginning in November 2016. Terms of the amended lease agreement preserve the annual rent escalator of 5% through the first ten years of the amended lease.
Zoned Properties has invested approximately two-thirds of the construction budget, which was estimated at approximately $950,000 at the start of the project.
“In the last 45 days, we have signed agreements with existing tenants to increase the leased space at our properties in Tempe, Arizona and Chino Valley, Arizona by a total of 20,000 square feet, significantly increasing the monthly rental potential as properties are developed and improved,” continued Mr. McLaren. “Our diverse portfolio has the potential for meaningful expansion as we continue our measured efforts to fully develop the existing land, utilizing our innovative Triple-Set (SSS) development and design model to ensure sustainable tenant success.”
About Zoned Properties, Inc. (ZDPY):
Zoned Properties is a strategic real estate development firm whose primary mission is to identify, develop, and lease sophisticated, safe, and sustainable properties in emerging industries. The Company acquires commercial properties that face unique zoning challenges and identifies solutions that can potentially have a major impact on the cash flow and value generated. Zoned Properties targets commercial properties that can be acquired and potentially re-zoned for specific purposes. Zoned Properties does not grow, harvest, sell or distribute cannabis or any substances regulated under United States law such as the Controlled Substances Act.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "believe," "expect," "anticipate," "plan," "potential," "continue" or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond the Company's control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Investor Relations
Brett
Maas
Managing Partner
Hayden IR
Tel (646) 536-7331
brett@haydenir.com