Zoned Properties Reports First Quarter 2018 Financial Results

SCOTTSDALE, Ariz., May 10, 2018

Letter to Shareholders

Management today published a shareholder letter, designed to further elaborate on the Company's strategy and recent progress. Interested parties may view this letter here.

First Quarter 2018 Financial Results

• Revenue decreased 1% to $533,000, compared to $540,000 for the first quarter of 2017, reflecting a decrease in third party revenue due to the sale of a building in Tempe, AZ in March 2017, partially offset by an increase in rent revenues.
• Operating expenses decreased 6% to $382,000, down from $406,000 for the first quarter of 2017.
• Income from operations increased 13% to $151,000, up from $134,000 for the first quarter of 2017.
• Net income was $123,000, or $0.01 per basic and diluted share, compared to $134,000, or $0.01 per basic and diluted share, excluding a one-time gain of approximately $832,000 on the sale of a property in Tempe, Arizona, for the first quarter of 2017.
• Net cash provided by operating activities was $202,000 for the first three months of 2018 compared to $13,000 for the first three months of 2017.
• As of March 31, 2018, the Company had cash of $917,000, compared to $824,000 as of December 31, 2017.

"Our first quarter financial results met expectations from the performance of our business model prior to May 1, 2018 which consisted of a single revenue stream comprised of fixed lease payments with fixed annual escalators," commented Bryan McLaren, Chief Executive Officer of Zoned Properties. "The continued profitability, strong cash generation and improved operating income helped set the stage for a pivot to a new and exciting business model, one which we believe will enable the Company to capitalize on future growth opportunities."

"Moving forward, we are expanding our business model to include a more robust fee structure for advisory services, while maintaining the stability of our lease model," added McLaren. "As announced earlier this month, we are transitioning our business strategy to better position Zoned Properties to benefit from the growth of the medical marijuana industry by aligning our interests with our tenants and clients. We have added a second, contracted revenue stream with greater upside potential compared to our previous fixed lease payments and have introduced a new model for future client engagements. Most importantly, this new lease structure and business model lifts the ceiling on revenue growth and enables us to grow our top line more rapidly in tandem with our clients and more in line with the growth of the industry as a whole," continued McLaren. "In connection with the new business model, the Company will write off its deferred rent receivable, resulting in a one-time, non-operational charge of approximately $1.8 million in the second quarter of 2018. In addition, due to a decrease in collections of base rent of approximately $600,000, partially offset by lower operating expenses of $50,000 to $75,000, the company expects to report some net losses for the remainder of 2018. With respect to cash flow from operations, we expect the impact to be minimal."

About Zoned Properties, Inc. (ZDPY):