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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): January 24, 2022
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Zoned
Properties, Inc.
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(Exact
Name of Registrant as Specified in its Charter)
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Nevada
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(State
or Other Jurisdiction of Incorporation)
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000-51640
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46-5198242
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(Commission File Number)
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(IRS Employer Identification
No.)
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14269
N. 87th Street, #205
Scottsdale, AZ
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85260
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(Address of Principal Executive
Offices)
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(Zip Code)
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(Registrant’s
telephone number, including area code): (877) 360-8839
N/A
(Former
name, former address and former fiscal year, if changed since last report)
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.)
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☐
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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N/A
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N/A
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N/A
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405)
or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01. Entry into Material Definitive Agreement.
Effective
January 24, 2022, Chino Valley Properties, LLC (“Chino Valley”), a wholly owned subsidiary of Zoned Properties, Inc. (the
“Company”), and Broken Arrow Herbal Center, Inc. (“Broken Arrow”) entered into the Fourth Amendment (the “Fourth
Chino Valley Amendment”) to the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018, between
Chino Valley and CJK, Inc. (“CJK”), as amended (the “Chino Valley Lease”).
Pursuant
to the terms of the Fourth Chino Valley Amendment, the parties acknowledge that an additional 30,000 square feet have become operational,
increasing the premises to a total of 97,312 square feet of operational space. Chino Valley agreed to provide Broken Arrow with $500,000
as an initial tenant improvement allowance for investment into the premises.
Pursuant
to the terms of the Fourth Chino Valley Amendment, effective March 1, 2022, the monthly base rent was increased to $87,581, representing
an increase from $0.82 per square foot to $0.90 per square foot, for all current and future operational square footage that may be developed
as the premises continues to expand. In addition, Broken Arrow agreed that it would provide audited financial statements to Chino Valley
on an annual basis no later than March 20th of each calendar year.
Also,
in the Fourth Chino Valley Amendment, the parties acknowledged that the premises had received approval for a plan that authorizes additional
operational square footage that can be constructed. If built to full capacity, the rental payments would increase to $141,580 base rental
payment monthly, plus additional rental payments. Broken Arrow is under no contractual obligation to complete this additional expansion,
however.
The
foregoing description of the Fourth Chino Valley Amendment is qualified in its entirety by reference to the complete terms and conditions
of the Fourth Chino Valley Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated
by reference into this Item 1.01.
Item 7.01.
Regulation FD Disclosure.
On
January 25, 2022, the Company issued a press release announcing completion of expansion at the Chino Valley cultivation facility and
entry into the Fourth Chino Valley Amendment. The press release is attached hereto as Exhibit 99.1.
The
information included in this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that
section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or
the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth under this
Item 7.01 shall not be deemed an admission as to the materiality of any information herein.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits.
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.
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ZONED PROPERTIES, INC.
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Dated: January 25, 2022
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/s/ Bryan
McLaren
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Bryan McLaren
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Chief Executive Officer & Chief Financial Officer
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2
Exhibit 10.1
FOURTH AMENDMENT TO LICENSED
REGULATED MARIJUANA FACILITY
TRIPLE NET (NNN) LEASE AGREEMENT
This Fourth
Amendment to the Licensed Regulated Marijuana Facility Triple Net (NNN) Lease Agreement (the “Fourth Amendment”) is made this
24th day of January, 2022 (the “Effective Date”), by and between Chino Valley Properties, LLC (“Landlord”)
and Broken Arrow Herbal Center, Inc. (“Tenant”), collectively (the “Parties”).
RECITALS
A. The
Parties previously entered into a Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018, as amended by
that certain First Amendment to Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated January 1, 2019, that certain
Second Amendment to Licensed Medical Marijuana Facility Triple Net (NNN) dated May 31, 2020, and that certain Third Amendment to Licensed
Regulated Marijuana Facility Triple Net (NNN) dated September 1, 2021 (the “Lease”) for the premises commonly known as 2144
and 2148 North Road 1 East Chino Valley, Arizona 83462 (the “Premises”).
B. The
Parties previously agreed that the Tenant would invest no less than eight million dollars ($8,000,000) of capital improvements into the
Premises. The Tenant has satisfied its contractual obligation having invested more than eight million dollars ($8,000,000) of capital
improvements into the Premises.
C. The
Parties previously agreed that Base Rental Payments would increase commensurate to any and all expanded and operational square footage
on the Premises by calculating the Base Rent Rate of $0.82 per square foot per month by the new operational square footage (the “Base
Rent Rate”).
D. The
Parties acknowledge that as of the Effective Date an additional 30,000 square feet have become operational, in addition to the existing
67,312 square feet of existing operational space, increasing the Premises to a total of 97,312 square feet of operational space.
E. As
of the Effective Date of this Fourth Amendment, Landlord agrees to provide Tenant with $500,000 (FIVE HUNDRED THOUSAND) as an Initial
Tenant Improvement Allowance for investment into the Premises (the “Initial Tenant Improvement Allowance”). As consideration
for this Initial Tenant Improvement Allowance, the Parties agree to adjust the Base Rent Rate from $0.82 to $0.90 per square foot monthly.
Beginning in March 01, 2022, the new operational square footage of 97,312 and new Base Rent Rate of $0.90 shall cause Base Rental Payments
to increase to $87,580.80 monthly plus additional rental payments under the Lease. See attached; Exhibit B: Rental Payment Schedule
2022.
F. The
Parties agree that Landlord may elect to, but is under no obligation to, provide further investment capital for future Tenant Improvements.
If the Landlord elects to provide any additional investment capital for Tenant Improvements, then the Parties will adjust the Base Rent
Rate to a new mutually agreeable rate.
G. The
Parties acknowledge that the Premises has received approval for its Master Plan that currently authorizes an additional 60,000 square
feet of operational square footage that can be constructed, which would increase the total operational square footage to 157,312 square
feet if built to full capacity, causing the rental payments to increase to $141,580 base rental payment monthly plus additional rental
payments. The Parties acknowledge that the Tenant is under no contractual obligation to complete this additional expansion; however, if
they choose to do so, any increased operational square footage would be subject to the new Base Rent Rate of
$0.90 per square foot monthly in base
rental payments as noted above.
H. The
Tenant agrees that it will continue to provide Audited Financial Statements to Landlord on an annual basis through the remainder of the
Lease, to be delivered to Landlord no later than March 20th of each calendar year. The Parties acknowledge that the Audited
Financial Statements may become subject to public disclosure.
I. The
Parties hereto desire to amend the Lease Agreement in accordance with the terms herein and below as of the Effective Date.
NOW, THEREFORE,
in consideration of the mutual covenants herein contained, and for good and valuable consideration, the sufficiency and receipt of which
are acknowledged, the Parties agree as follows to take place immediately as of the Effective Date:
FOURTH AMENDMENT
1. Defined
Terms. Terms in this Fourth Amendment shall have the same meaning as such terms have in the Lease Agreement unless otherwise noted
in this Fourth Amendment.
2.
Amendment.
a. Base
Rent Rate: The current Base Rent Rate of $0.82 per square foot monthly is deleted in its entirety and replaced with $0.90 per square
foot monthly as the new Base Rent Rate through the remainder of the Lease. The new Base Rent Rate shall apply to all current and future
operational square footage that may be developed as the Premises continues to expand.
b. 17.30
Tenant Audit Delivery: Section 17.30 is hereby added to the Lease: The Tenant agrees that it will provide Audited Financial
Statements to Landlord on an annual basis through the remainder of the Lease, to be delivered to Landlord no later than March 20th
of each calendar year. The Parties acknowledge that the Audited Financial Statements may become subject to public disclosure
c. Exhibit
B: Rental Payment Schedule to the Lease Agreement is deleted in its entirety and replaced with Exhibit B: Rental Payment
Schedule 2022 attached to this Fourth Amendment. The new Exhibit B: Rental Payment Schedule 2022 reflects both
an increase in operational square footage to a total of 97,312 and an increase in Base Rental Rate to $0.90 per square foot as
consideration for the Initial Tenant Improvement Allowance.
3. Ratification.
Landlord and Tenant each hereby reaffirm its rights and obligations under the Lease, Guarantee, and all Exhibits. In the event of a conflict
or ambiguity between the Lease and this Amendment, the terms and provisions of this Amendment shall control.
4. Counterparts.
This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts
shall constitute one Amendment. Execution copies of this Amendment may be delivered by email, and the parties hereto agree to accept and
be bound by scanned signatures transmitted via email hereto, which signatures shall be considered as original signatures with the transmitted
Amendment having the same binding effect as an original signature on an original Amendment.
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LANDLORD:
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TENANT:
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Chino Valley Properties, LLC
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Broken Arrow Herbal Center, Inc.
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By:
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/s/ Bryan McLaren
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By:
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/s/ Delano Phillips
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Name:
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Bryan McLaren
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Name:
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Delano Phillips
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Title:
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Authorized Agent
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Title:
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Authorized Agent
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EXHIBIT B:
RENTAL PAYMENT SCHEDULE
2022
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Monthly Base Rent:
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Updated to $87,580.80 Monthly Base
Rent
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03/01/22-4/30/40
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Base Rent Rate to be $0.90 monthly per square foot of operational space of the Premises ($87,580.80 monthly based on the new Base Rent
Rate and 97,312 operational square feet per Master Plan), plus all other amounts due under the Lease, including, without limitation, Rent
Tax and Property Taxes (NOTED Below).
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4
Exhibit
99.1
Zoned
Properties Announces Final Completion of Expansion at Chino Valley Cultivation Facility
167%
Increase to Year-Over-Year Chino Valley Rental Revenue Effective March 1, 2022
SCOTTSDALE,
Ariz., January 25, 2022 /BusinessWire/ -- Zoned Properties®, Inc. (“Zoned Properties” or the “Company”) (OTCQB:
ZDPY), a leading real estate development firm for emerging and highly regulated industries including legalized cannabis, today announced
an amendment to the lease agreement with its significant tenant related to its cultivation facility located in Chino Valley, Arizona.
“The
final completion of this phase of expansion at Chino Valley marks a multi-year accomplishment our team has been working towards. Not
only does the completion and concurrent amendment to the lease agreement significantly increase our rental revenue, but it also positions
Zoned Properties to explore providing tenant improvement capital for the project in the future to even further increase our revenue potential
from the facility,” said Bryan McLaren, Chief Executive Officer of Zoned Properties.
Transaction
Highlights
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●
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Over
$8 Million of capital has been invested by the Company’s significant tenant at the
Chino Valley Cultivation Facility. The Company’s significant tenant will maintain the
master rights to the property and facilities through the remainder of the lease agreement.
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●
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Zoned
Properties has provided the Company’s significant tenant with an initial tenant improvement
allowance of $500,000 to advance the project toward the next phase of expansion. In exchange
for this initial tenant improvement allowance, the base rent rate under the lease agreement
will increase from $0.82 per square foot monthly to $0.90 per square foot monthly.
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●
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Effective
March 1st, 2022, operational square footage will increase from 67,312 square feet
to 97,312 square feet, and the new base rental payments at the facility will increase 59%
from $55,195 per month to $87,580 per month reflecting both the increase in operational square
footage and the increase to the base rent rate.
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●
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The
final completion of this phase of expansion represents a year-over-year annualized base rental
revenue increase from $393,600 to $1,050,970, reflecting a 167% increase for the property.
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●
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The
Chino Valley Cultivation Facility also includes an approved master plan for additional future
expansion that is construction ready. If completed in its entirety, the additional square
footage of operational and rentable building space would increase another 60,000 square feet
for a total of 157,312 square feet of operational and rentable space at the facility. This
would equate to an annualized base rental revenue of $1,698,970 plus additional rental payments
under the triple-net lease, reflecting an additional 62% increase.
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About
Zoned Properties, Inc. (OTCQB: ZDPY):
Zoned
Properties is a leading real estate development firm for emerging and highly regulated industries, including regulated cannabis. The
company is redefining the approach to commercial real estate investment through its integrated growth services.
Headquartered
in Scottsdale, Arizona, Zoned Properties has developed a full spectrum of integrated growth services to support its real estate development
and investment model; Advisory Services, Brokerage Services, Franchise Services, and PropTech Data Services each cross-pollinate within
the model to drive project value associated with complex real estate projects. With national experience and a team of experts devoted
to the emerging cannabis industry, Zoned Properties is addressing the specific needs of a modern market in highly regulated industries.
Zoned
Properties is an accredited member of the Better Business Bureau, the U.S. Green Building Council, and the Forbes Real Estate Council.
Zoned Properties does not grow, harvest, sell or distribute cannabis or any substances regulated under United States law such as the
Controlled Substance Act of 1970, as amended (the “CSA”). Zoned Properties corporate headquarters are located at 14269 N.
87th Street, Suite 205, Scottsdale, Arizona. For more information, call 877-360-8839 or visit www.ZonedProperties.com.
Twitter:
@ZonedProperties
LinkedIn:
@ZonedProperties
Safe
Harbor Statement
This
press release contains forward-looking statements. 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.
COVID-19
Statement
In
March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide.
We are monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak to date, the ultimate
duration and severity of the outbreak and its impact on the economic environment and our business is uncertain. Currently, all of the
properties in our portfolio are open to our Significant Tenants and their customers and will remain open pursuant to state and local
government requirements. We did not experience in 2021, and to date have not experienced in 2022, any material changes to our operations
from COVID-19. We do not anticipate any such material changes for the remainder of 2022. Our tenants are continuing to generate revenue
at these properties and they have continued to make rental payments in full and on time and we believe the tenants’ liquidity position
is sufficient to cover its expected rental obligations. Accordingly, while we do not anticipate an impact on our operations, we cannot
estimate the duration of the pandemic and potential impact on our business if the properties must close or if the tenants are otherwise
unable or unwilling to make rental payments. In addition, a severe or prolonged economic downturn could result in a variety of risks
to our business, including weakened demand for our properties and a decreased ability to raise additional capital when needed on acceptable
terms, if at all. At this time, the Company is unable to estimate the impact of this event on its operations.
Media
Relations
Proven
Media
Neko
Catanzaro
Tel
(401) 484-4980
neko@provenmediaservices.com
Investor
Relations
Zoned
Properties, Inc.
Bryan
McLaren
Tel
(877) 360-8839
Investors@zonedproperties.com
www.zonedproperties.com