Zoned Properties, Inc., is a publicly traded corporation (symbol ZDPYD) that claims to “focus on properties in the medical marijuana industry.” See page 8 of ZPI’s April 15, 2014, Company Information & Disclosure Statement.  ZDPYD stock price per share in the last six months went from $.0754 on November 8, 2013, to a high of $21.98 on March 5, 2014, and down to $.68 on May 12, 2014.  On May 13, 2014, ZDPYD did a 1:120 reverse stock split.

The purpose of this article is to help people in the Arizona medical marijuana industry learn about Zoned Properties, Inc., a company that purchased its first of two Arizona real estate properties on January 20, 2014, and is now involved in three lawsuits in Arizona Superior Court with three medical marijuana dispensary clients of mine: Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC. To learn more about the Zoned Properties, Inc., lawsuits read “Zoned Properties, Inc. & Duke Rodriguez Lawsuits.”

The text inside quotes below was taken from ZDPYD’s public disclosures and press releases.  Text inside brackets

[ ] and outside of quotation marks was written by the author of this article.

1.  November 8, 2013, Company Information & Disclosure Statement

  • “The Company is a strategic real estate investment firm whose primary focus is acquiring commercial properties that face unique zoning challenges in the medical marijuana industry. The Company acquires commercial properties zoned within a variety of usage types such as industrial, agricultural, as well as mixed use. . . . The Company also manages a portfolio of properties that it owns and leases. The Company provides oversight on each and every property it manages”  Page 3.  [Emphasis added.  ZDPYD’s total assets as of 12/31/13 was $11,965. Page F-3 of the December 31, 2013, Financial Statement.]
  • “In September of 2013, Marc Brannigan, an individual resident of the State of Arizona, acquired 15,000,000 shares of common stock of the Company, representing approximately 91.54% of the issued and outstanding voting power of the Company.”  Page 4.
  • “On September 16, 2013, the Board of Directors of the Company appointed Marc Brannigan as President and Chief Executive Officer of the Company and Chairman of Board of Directors (sole director).”  Page 5.
  • “The Company also manages a portfolio of properties that it owns and leases.”  Page 6.
  • “The company’s initial holdings and acquisition targets are in the state of Arizona.”  Page 7.
  • “Additionally, the company has acquired a note for a medical marijuana dispensary located in Safford, Arizona. ZPI will soon foreclose on the building and own the property outright.”  Page 8.  [See the March 12, 2014, Press Release.]
  • “Once a property is acquired and re-zoned for a medical marijuana cultivation or dispensary location, ZPI can charge in some cases three to five times more than market value for rent”  Page 8.
  • “The Company currently has 5 full time employees.”  Page 9.
  • “We are a leader in our industry.”  Page 10.  [Emphasis added.  See the December 31, 2013, Financial Statement, which says ZDPYD’s only assets as of 12/31/13 was $11,965 cash & cash equivalent and it had no income in 2012 and 2013.]
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [2003].”  Page 10.  Emphasis added.
  • “Item X: The nature and extent of the issuer’s facilities.”  [This is question on Page 10, but ZDPYD did not answer it.]
  • “President, Chief Executive Officer and Director” is Marc Brannigan, owner of 15,000,000 shares of Common Stock.  Page 11.
  • “Conviction in a criminal proceeding or named as a defendant in a criminal proceeding: None”  Page 11.
  • “the Company borrowed funds to cover its daily operation, including but not limited to, consulting and advising fees, accounting fees, legal fees, compliance fees and others, from MAC CAM LLC, a related party owned by the Company’s President. As of September 30, 2013, the balance of notes payable to MAC CAM LLC was $25,000, which was evidenced by a convertible promissory note, dated on September 30, 2013, bearing interest at an interest rate of 8% per annum and due on demand (the “Note”). The holder of the Note has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Note into the common stock of the Company or his successors, at a price of $0.05 per share.”  Page 11.
  • “Provide a list of the name, address and shareholdings of all persons beneficially owning more than five percent (5%) of any class of the issuer’s equity securities.  As of November 5, 2013: . . . Marc Brannigan . . . 15,000,000 Common Shares 91.54%.”  Page 12.
  • “The Company also manages a portfolio of properties that it owns and leases.”  Page 13.  [See the December 31, 2013, Financial Statement, which says ZDPYD’s only assets as of 12/31/13 was $11,965 cash & cash equivalent and it had no income in 2012 and 2013.]
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [in 2003].”  Page 13.  Emphasis added.
  • “There can be no assurance that revenues will be sufficient to cover future operating costs, and it may be necessary to continuously raise additional capital to sustain operations.”  Page 13.
  • “Material Contracts:  None.”  Page 15.

2.  December 31, 2013, Financial Statement

  • Total assets = $11,965 cash & cash equivalents. page F-3.  Emphasis added.
  • Revenue years 2012 + 2013 = $0.  page F-4.  Emphasis added.
  • Expenses 2013 = $336,547 & 2012 = $248,432. page F-4.  Emphasis added.

3.  February 5, 2014, Press Release

  • “Zoned Properties[SM], Inc. closes on site for 8th largest medical marijuana dispensary in the state of Arizona.” [Emphasis added.  As of May 4, 2014, no dispensary has ever operated on the Gilbert property.]
  • “ZDPY . . . announces that it has closed on all of the real estate associated with the approved site for a medical marijuana dispensary located in Gilbert, Arizona for $1.115 million.”  [“the Company acquired the land located in Gilbert, Arizona, for a total payment of $300,000.  April 15, 2014, Company Information & Disclosure Statement, Page 6.]
  • “Zoned Properties[SM], Inc. is in advanced discussions with the dispensary license holder who intends to occupy the facility”

4.  February 19, 2014, Press Release

  • “Zoned Properties, Inc. . . . has entered into a definitive agreement and opened escrow on a multi-tenant industrial complex in Tempe, Arizona.”
  • “The facility has several tenants including a state licensed Arizona medical marijuana cultivator.”

5.  March 7, 2014 Deed from Maryland, LLC, to Zoned Properties, Inc.

  • Special Warranty Deed
  • This is the first property acquired by ZDPYD that has a tenant (Holistic Patient Wellness Group, LLC, a client of my law firm) that is a licensed Arizona medical marijuana dispensary.  A co-tenant on the lease is Healing Healthcare 3, Inc.  The property is located at 410 S. Madison, Tempe, Arizona (the “Madison Property”).

6.  March 12, 2014, Press Release

  • “Monetizing Note for $210,500 Books First Profit of 2014”
  • “Zoned Properties, Inc. . . . announced that it has monetized the note on the Safford, Arizona dispensary location.”

7.  March 17, 2014, Deed from Zoned Properties, Inc., to Tempe Industrial Properties, LLC

  • Special Warranty Deed
  • ZDPYD transferred title of the Madison Property to its wholly owned subsidiary.

8.  March 17, 2014, Deed from Zoned Properties, Inc., to Gilbert Property Management, LLC

  • Special Warranty Deed
  • ZDPYD transferred title of the Gilbert real property to its wholly owned subsidiary.

9.  March 19, 2014, Tempe Industrial Properties, Inc. sues to Evict Holistic Patient Wellness Group, LLC, & Healing Healthcare 3, Inc.

  • The new landlord, a subsidiary of ZDPYD, which claims to “focus on properties in the medical marijuana industry.” started an eviction proceeding to evict its first and only medical marijuana dispensary tenant 12 days after ZDPY purchased the Madison Property.

10.  March 31, 2014 Press Release

  • ZDPYD “announced that after careful consideration, the board has recommended that Marc Brannigan should step down as acting CEO and board member of the company. As such, effective immediately, Marc Brannigan has resigned as the company’s CEO.”

11.  April 11, 2014, Arizona Corporation Commission Authorizes ZDPYD to Do Business in Arizona

12.  April 15, 2014, Press Release

  • ZDPYD ” is pleased to announce that Irvin Rosenfeld has joined their board of directors.”

13.  April 15, 2014, Company Information & Disclosure Statement

  • “The Company manages a portfolio of properties that it owns and leases and provides direct development on each and every property it acquires.”  Page 5.
  • On January 24, 2014, Zoned Properties, Inc., issued 100,000 shares to Cumbre Investment, LLC.  Page 6.
  • “During the first quarter of 2014, the Company issued 5,857,000 shares of restricted common stock at a price of $1.00 per share to approximately 28 accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended. The total proceeds the Company received from this private placement were approximately $5,857,000.”  Page 7.
  • “The Company manages a portfolio of properties that it owns and leases and provides direct development on each and every property it acquires. This can include complete architectural design and subsequent build-outs, general support, landscaping, general up-keep, and state of the art security systems.”  Page 8.
  • “Arizona offers opportunities in addition to acquiring . . . water rights and assured water supply credits (“Water”). Water is a strong focus of ZPI.”  Page 10.
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [in 2003]”  Page 10.  Emphasis added.
  • “Zoned Properties is the sole member of two established Limited Liabilities Companies: Tempe Industrial Properties LLC, which is the owner of one real estate asset managed by the Company, and Gilbert Property Management LLC, which has no operating activities as of the date of this Report.”  Page 11.  Emphasis added.
  • “The Company currently has 3 full-time employees.”  Page 12.
  • “We are a leader in our industry.”  Page 12.  Emphasis added.
  • “Item X: The nature and extent of the issuer’s facilities.”  [This is question on Page 13, but ZDPY did not answer it.]
  • “President, Treasurer and Secretary . . . Bryan McLaren . . . Number and class of issuer’s securities beneficially owned: Bryan McLaren 700,000 shares of Common Stock.”  Page 13.
  • “Former President, Chief Executive Officer, Secretary and Director* . . .  Marc Brannigan . . . Number and class of issuer’s securities beneficially owned: 1,500,000 shares of Common Stock.  * Mr. Brannigan resigned from all his positions and directorship of the Company on March 31, 2014.
  • “The Company borrowed funds to cover its daily operations, including but not limited to, consulting and advisory fees, accounting fees, legal fees, compliance fees and others, from MAC CAM LLC, a related party partially owned by the Company’s President.”  Page 14.
  • “Provide a list of the name, address and shareholdings of all persons beneficially owning more than five percent (5%) of any class of the issuer’s equity securities as of April 15, 2014.”  [The shareholders listed are:  Duke Rodriguez (2,200,000 shares – 9.29%), Marc Brannigan (1,500,000 shares – 6.34%), Alan Abrams (3,200,000 shares – 13.51%), Christopher Carra (2,200,000 shares – 9.29%), Greg Johnson (1,500,000 shares – 6.34%), MJ Trust (1,200,000 shares – 5.07%).  MAC CAM, LLC is listed as owning 700,000 shares of preferred stock.]  Page 16.
  • “The Company manages a portfolio of properties that it owns and leases and provides direct development on each and every property it acquires.”  Page 17. [Emphasis added.  According to its Press Releases and documents recorded with the Maricopa County Recorder ZDPY owns two parcels of land in Maricopa County, Arizona: the Madison Property leased to Holistic Patient Wellness Group, LLC, and Healing Healthcare 3, Inc., and the Gilbert property.]
  • “There was no cash flow from investing activities during the years ended December 31, 2013 and 2012, respectively.”  Page 18.
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [in 2003]”  Page 18. Emphasis added.  [See the March 12, 2014, Press Release that states: “Monetizing Note for $210,500 Books First Profit of 2014”]
  • “We had operating expenses of $336,547 and $248,432 for the years ended December 31, 2013 and 2012, respectively.”  Page 18.
  • “Net loss for the year ended December 31, 2013 was $387,316, increased by $180,030 compared to net loss of $207,286 for the year ended December 31, 2012.”  Page 18.
  • “There was no cash flow from investing activities during the years ended December 31, 2013 and 2012, respectively.”  Page 18.  Emphasis added.
  • “We had cash of $11,965 on hand as of December 31, 2013. On the short-term basis, we will be required to raise a significant amount of additional funds over the next 12 months to sustain operations. On the long-term basis, we will potentially need to raise capital to grow and develop our business.”  Page 19.  Emphasis added.

14.  April 24, 2014, Deed from Tempe Industrial Properties, LLC, to Zoned Properties, LLC

  • Quit Claim Deed
  • The subsidiary conveyed the Madison Property back to ZDPYD after holding title for 36 days.

15.  April 25, 2014, Officer/Director Change Form Filed with the Arizona Corporation Commission

  • ZDPYD notifies the Arizona Corporation Commission that Irvin Rosenfeld and Bryan McLaren became members of its Board of Directors.

16.  April 28, 2014, Officer/Director Change Form Filed with the Arizona Corporation Commission

  • ZDPYD notifies the Arizona Corporation Commission that Irvin Rosenfeld and Bryan McLaren ceased to be members of its Board of Directors.

17.  May 1, 2014 Court Hearing in Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC vs. Duke Rodriguez, Zoned Properties, Inc., Cumbre Investment, LLC, and Ultra Health, LLC.

This lawsuit was filed on April 25, 2014.  It is Maricopa County Superior Court case number CV2014-007302.  The lawsuit involves real property in Clifton, Arizona, in which Holistic Patient Wellness Group, LLC,, operated a medical marijuana dispensary until the dispensary was locked out of the premises by Duke Rodriguez’ company called Cumbre Investments, LLC.  Attorney Jeffrey Kaufman appeared at a hearing before Maricopa County Superior Court Judge Brain and told to the court that he represents Zoned Properties, Inc., and that Cumbre Investment, LLC, assigned the Clifton lease to Zoned Properties.  Zoned Properties, Inc., which focuses “on properties in the medical marijuana industry” now owns two parcels of Arizona real estate, is a tenant on a third parcel and is involved in three eviction related lawsuits.

Pleadings