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Zoned Properties Reports Profitable First Quarter of 2017, Generates Positive Cash from Operations

SCOTTSDALE, Ariz., May 11, 2017 /PRNewswire/ -- Zoned Properties, Inc. (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 medical marijuana industry, today announced its financial results for the first quarter ended March 31, 2017.

Recent Achievements

  • Amended lease agreement with tenant at the Company's Medical Marijuana Cultivation Facility located in Chino Valley, Ariz. to expand operations to 35,000 square feet of leased space.
  • Completed the construction of an expansion for its tenant at the Company's Medical Marijuana Business Park in Tempe Ariz., enabling a significant increase in rental payments that began February 2017.
  • Issued $2.02 million in five-year convertible notes paying quarterly interest at a rate of 6.0% per annum and convertible at $5 per share in a private placement transaction.
  • Completed sale of non-core, non-marijuana related property located in Tempe, Ariz. for a total cash sale price of $2.125 million and repaid a mortgage payable of $2.1 million.
  • Retired $1 million of 7.0% convertible notes due to mature in August 2017.

First Quarter 2017 Financial Results

  • Revenue increased 33% to $540,000 compared to $406,000 for the first quarter of 2016.
  • Operating expenses decreased 31% to $406,000 from $586,000 for the first quarter of 2016.
  • Income from operations, which excludes the one-time gain of approximately $832,000 on the sale of a property in Tempe, Arizona, was $134,000 for the first quarter of 2017, compared to a loss from operations of $180,000 for the first quarter last year.
  • Net income was $889,000, or $0.05 per basic and diluted share, inclusive of the $832,000 one-time gain, compared to a net loss of $237,000, or $0.01 per basic and diluted share, for the first quarter of 2016.
  • As of March 31, 2017, the Company had cash and cash equivalents of $2.1 million compared to $366,000 as of December 31, 2016.
  • Net cash provided by operating activities was $13,000 for the first three months of 2017 compared to net cash used in operating activities of $22,000 for the first three months of 2016.

"We achieved profitability as measured by bottom-line, GAAP net income in the first quarter of 2017 by establishing and following a methodical and disciplined approach to property development," commented Bryan McLaren, Chief Executive Officer of Zoned Properties. "Even excluding the one-time gain from the sale of a non-core property we achieved profitability, demonstrating that the Company's operations have reached an important growth milestone. At the start of 2016, we expressly stated that we were taking actions that would lead to achieving profitability in 2017, and we have accomplished that objective. Since the acquisition of our first property in 2014, we have sought to establish the Company as a community partner that develops commercial projects for the mutual benefit of those who are involved and impacted by our business. This quarter we generated positive cash from operations and achieved profitability as a direct result of that strategy. More importantly, since our lease agreements are structured with increasing rental payments over a long period of time and supported by a mostly fixed operating cost structure, we believe these results are not only achievable in future quarters, but we expect our profitability and cash flow generation to continually increase as we grow our portfolio. We have a solid earnings and cash flow generating engine that we believe will power additional growth and expansion in the future."

"Our team has established a protocol for advisory and consulting services for sophisticated projects that we view as possible future growth opportunities," continued McLaren. "By establishing a consultative relationship focused on real estate development with licensed operators developing their own facilities, we are able to more thoroughly vet the operators and their businesses over a longer period of time, contribute to the strategic growth of their facilities and create a pipeline of potential property acquisitions as our capital funding sources increase. We have been exploring these types of relationships with a number of operators across the country and expect to proceed with several by the end of 2017."

"Our portfolio of properties is comprised of approximately 102,937 total square feet of constructed, rentable space with 42,937 square feet currently leased," added McLaren. "With over 50,000 additional square feet vacant, we have a great opportunity to lease additional space as the industry grows and complete cost-effective expansion leading to increased rental revenues. Over the next three quarters, we are targeting developed expansion that will increase our total leased space to 57,937 square feet. We plan to accomplish this by continuing to expand developed space within our property portfolio as our tenants' businesses grow. Zoned Properties owns over 2.3 million square feet across five properties that are protected by long-term development deals with the local municipalities. We have great opportunity to grow with the marketplace in Arizona."

McLaren concluded, "Through a series of financing transactions over the last several months, we have effectively reduced our financial leverage, lowered our quarterly cost of debt service and established a capital reserve to fund property development and growth for the near future. Given the profit and cash flow generating abilities of our portfolio, our cash reserves and our pipeline of potential new projects, we are highly optimistic about our ability to further expand our business and deliver consistent returns for our shareholders."

Supplemental Information Regarding Current Portfolio of Rental Properties


At March 31, 2017



Tempe, AZ (410)

Gilbert, AZ

Green Valley, AZ

Chino Valley, AZ

Kingman, AZ

Total

Total Rentable Sq. Ft.

60,000

N/A

1,440

40,000

1,497

102,937

Sq. Ft. Rented

15,000

N/A

1,440

25,000

1,497

42,937

Vacant Rentable Sq. Ft.

45,000

N/A

0

15,000

0

60,000

Total # of Tenants

1

0

1

1

1


Annual Base Rent (2017) (a)

$349,500

$0

$95,835

$530,000

$121,055

$1,096,390

Annual Base Rent (2018) (a)

$609,000

$0

$133,619

$796,250

$168,782

$1,707,651


(a)

Annual base rent represents amount of cash payments due from tenants and differs from revenues to be recognized on our consolidated financial statements. 2017 numbers represent base rent due for the remainder of 2017 and exclude first quarter base revenue.

Conference Call:

The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on May 11, 2017. To participate in the live conference call, please dial 1-866-682-6100 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1-862-255-5401. Please reference Zoned Properties.

A replay will be available until May 25, 2017. To access the replay, dial 1-877-481-4010 or 1-919-882-2331. When prompted, enter Conference Passcode 10367.

The call will also be available live by webcast over the Internet and accessible at: http://www.investorcalendar.com/IC/CEPage.asp?ID=175902.

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, including the licensed medical marijuana industry. 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 property value. Zoned Properties targets commercial properties that can be acquired and 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.

Tables Follow

ZONED PROPERTIES, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS








As of


As of







 March 31,


 December 31,







2017


2016







 (Unaudited)



 ASSETS






 Cash




$          2,131,685


$                    366,024


 Rental properties, net (See Note 3)


6,975,143


6,878,584


 Rental property held for sale, net (See Note 4)


-


1,140,891


 Deferred rent receivable


-


16,462


 Deferred rent receivable - related parties


1,186,139


1,006,171


 Real estate tax escrow


-


39,487


 Note receivable



58,258


-


 Prepaid expenses and other current assets


117,074


140,010


 Property and equipment, net


41,073


40,212


 Security deposits



9,474


8,158










 Total Assets



$        10,518,846


$                 9,635,999










 LIABILITIES AND STOCKHOLDERS' EQUITY














 LIABILITIES:







 Mortgage payable



$                        -


$                 2,100,000


 Convertible note payable


500,000


500,000


 Convertible note payable - related party


2,520,000


500,000


 Accounts payable 



5,740


78,311


 Accrued expenses



77,205


96,748


 Accrued expenses - related parties


121,984


85,541


 Deferred revenues



4,500


4,750


 Security deposits payable - related parties


70,000


70,000


 Security deposits payable


3,364


21,964










 Total Liabilities



3,302,793


3,457,314










 Commitments and Contingencies (See Note 10)














 STOCKHOLDERS' EQUITY:






Preferred stock, $.001 par value, 5,000,000 shares authorized; 2,000,000 shares issued and outstanding at March 31, 2017 and December 31, 2016 ($1.00 per share liquidation preference)  







2,000


2,000


Common stock: $.001 par value, 100,000,000 shares authorized;  17,286,034 and 17,210,318 issued and outstanding at March 31, 2017 and December 31, 2016, respectively







17,286


17,210


Additional paid-in capital


20,501,153


20,352,528


Accumulated deficit


(13,304,386)


(14,193,053)










 Total Stockholders' Equity


7,216,053


6,178,685










 Total Liabilities and Stockholders' Equity


$        10,518,846


$                 9,635,999



















 

ZONED PROPERTIES, INC. AND SUBSIDIARIES


 CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited)












 For the Three Months Ended





 March 31,





2017


2016








 REVENUES:






 Rental revenues


$               50,073


$         60,880


 Rental revenues - related parties


490,194


352,043









 Total revenues


540,267


412,923








 OPERATING EXPENSES:






 Compensation and benefits


218,293


179,824


 Professional fees


38,478


276,522


 General and administrative expenses


45,374


51,621


 Depreciation and amortization


58,680


41,098


 Property operating expenses


21,273


15,460


 Real estate taxes


24,076


28,178









 Total operating expenses


406,174


592,703








 INCOME (LOSS) FROM OPERATIONS


134,093


(179,780)








 OTHER INCOME (EXPENSES):





    Interest expenses


(41,039)


(48,123)

    Interest expenses - related parties


(36,444)


(8,750)

    Gain on sale of property and equipment


831,753


-

    Interest income


304


-









 Total other income (expenses), net


754,574


(56,873)








 INCOME (LOSS) BEFORE INCOME TAXES


888,667


(236,653)








 PROVISION FOR INCOME TAXES


-


-








 NET INCOME (LOSS)


$             888,667


$      (236,653)








 NET INCOME (LOSS) PER COMMON SHARE:






 Basic


$                  0.05


$           (0.01)


 Diluted


$                  0.05


$           (0.01)








 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:






 Basic


17,267,943


17,112,141


 Diluted


18,460,567


17,112,141








 

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