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ZP

Zoned Properties, Inc. (ZDPY)·Q3 2021 Earnings Summary

Executive Summary

  • Q3 2021 was mixed: revenue rose 28% year over year to $387.4K on higher rent and brokerage contribution, but sequentially fell from Q2 on lower brokerage fees; the quarter swung to a net loss of $(95.5)K as operating expenses increased 77% y/y on commission splits and higher personnel/consulting costs .
  • A key positive structural catalyst is the Chino Valley expansion: base rent stepped up on Sept 1 to $55.2K/month (from $32.8K) with a second step to $79.8K/month expected upon completion of the remaining building, materially lifting 2022 run-rate property income .
  • Cash position improved to $1.09M and year-to-date cash from operations reached $388.0K, supporting service-line expansion (Advisory, Brokerage, Franchise, PropTech) and team build-out (new COO, Director of Real Estate, Designated Broker) .
  • No formal numerical guidance or Street consensus were available, so no beat/miss can be determined; near-term stock catalysts center on lease escalators from the Chino Valley expansion and conversion of brokerage/advisory pipelines to revenue .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue +28% y/y to $387,365, driven by +$29.8K rent from Significant Tenants and $69.5K brokerage revenue; management is scaling service verticals (Advisory, Brokerage, Franchise, PropTech) .
    • Structural rent uplift: Chino Valley base rent increased to $55,195/month effective 9/1, with a second step to $79,795/month expected as the remaining phase-one building becomes operational, meaningfully expanding forward property cash flows .
    • Management tone/strategy: “Our value proposition and business thesis … has never been stronger… We have successfully positioned the Company with a debt-free, cash-flowing portfolio of expanding properties…” — Bryan McLaren, CEO .

  • What Went Wrong

    • Operating leverage pressure: operating expenses rose 77% y/y to $440,816 on brokerage commission splits (~$42.5K) and higher compensation/consulting, flipping operating income from +$53.8K (Q3’20) to a $(53.5)K loss .
    • Sequential slowdown vs. Q2: revenue fell from $550,064 (Q2) to $387,365 (Q3) as brokerage fees normalized; net swung from +$112,594 in Q2 to $(95,495) in Q3 .
    • No numerical guidance; absent an earnings call, investors lacked detailed outlooks on service pipelines and timing of the next Chino rent step, increasing near‑term visibility risk .

Financial Results

MetricQ3 2020Q1 2021Q2 2021Q3 2021
Revenue ($)$302,772 $345,845 $550,064 $387,365
Operating Income (Loss) ($)$53,751 $(43,368) $139,653 $(53,451)
Other (Expense) Income, net ($)$(28,662) $(27,967) $(27,059) $(42,044)
Net (Loss) Income ($)$25,089 $(71,335) $112,594 $(95,495)
Diluted EPS ($)$0.00 $(0.01) $0.01 $(0.01)
Operating Expenses ($)$249,021 $389,213 $410,411 $440,816

Revenue breakdown

Revenue ComponentQ3 2020Q1 2021Q2 2021Q3 2021
Rental Revenues ($)$284,897 $292,189 $294,972 $314,677
Advisory Revenues ($)$17,875 $53,656 $18,500 $3,188
Brokerage Revenues ($)$0 $0 $236,592 $69,500

Balance sheet and cash flow snapshots

  • Cash and equivalents: $1,090,682 as of 9/30/21 .
  • Cash from operations (nine months): $387,999 .

KPIs and property economics

KPIPriorCurrentNext Step (Expected)
Chino Valley operational rentable SF40,000 SF (through Q2’21) 67,312 SF as of 9/1/21 97,312 SF upon completion of remaining phase-one building
Chino Valley base rent (monthly)$32,800 (pre-9/1/21) $55,195 effective 9/1/21 $79,795 when final building operational

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company guidance2021/forwardNone issuedNone issuedMaintained (no formal numerical guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2021)Trend
Property expansion (Chino Valley)Significant Tenants completed >$8M improvements; rent to increase with operational SF (Q2) Rent stepped to $55.2K/month; next step to $79.8K/month expected; phase 2 approved plan (~+60K SF) Positive – structural rent uplift underway
Brokerage/advisory revenueQ2 included $236.6K brokerage; building pipelines Q3 brokerage $69.5K; leadership hires to scale national brokerage/advisory Mixed – normalization after strong Q2, team scaling
Franchise services (Open Dør)Convertible debenture; 5% fee share; option to convert up to 33% equity (Q1/Q2) Management reiterates potential to convert for up to 33% equity stake Building optionality
PropTech (Beakon/Zoneomics “Rezone”)JV investments initiated in Q1/Q2 (Beakon, Zoneomics Green) “Rezone” platform introduction planned; PropTech positioned for national scale Advancing
Regulatory/legal backdropDetailed cannabis federal/state risk discussion (Q1/Q2 MD&A) Risk framework reiterated in Q3 MD&A Unchanged
COVID-19 impactNo material operational impact; tenants current on rent (Q1/Q2) No material impact; tenants current, liquidity adequate Stable

Note: No earnings call transcript was posted; themes draw from the Q3 press release, Q3 MD&A, and contemporaneous filings .

Management Commentary

  • Strategic posture: “Our value proposition and business thesis at Zoned Properties… has never been stronger. We have successfully positioned the Company with a debt-free, cash-flowing portfolio of expanding properties…” — Bryan McLaren, CEO .
  • Chino Valley expansion economics: operational SF rose to 67,312 with base rent at $55,195/month; at 97,312 SF base rent would be $79,795/month; a master plan also allows a further phase to 157,312 SF (not obligated) .
  • Services growth: leadership additions (COO, Director of Real Estate, Designated Broker) aim to scale Advisory, Brokerage, Franchise, and PropTech lines nationally .

Q&A Highlights

  • No earnings call transcript was available in company filings or press materials for Q3 2021; therefore, there are no Q&A highlights to report [List of available filings shows only 10‑Q/8‑Ks; Q3 press release attached to 8‑K] .

Estimates Context

  • Wall Street consensus estimates (revenue/EPS) were not available from S&P Global for this micro-cap issuer in Q3 2021; as a result, no beat/miss assessment can be made. The company also did not provide formal numerical guidance in its Q3 press release or 10‑Q .

Key Takeaways for Investors

  • Structural rent step-ups at Chino Valley (to $55.2K/month, with a second step to $79.8K/month upon final phase-one completion) should lift 2022 recurring revenue cadence independent of brokerage variability .
  • Q3 showed y/y revenue growth (+28%) but sequential normalization vs. Q2’s outsized brokerage fees; focusing on expanding brokerage/advisory capacity (new leadership) is critical to smoothening services revenue .
  • Expense discipline will be important near term: operating expenses rose 77% y/y (commission splits, comp/consulting), driving an operating loss; watch for leverage improvements as rent escalators and service pipelines convert .
  • Liquidity: $1.09M cash and $388K YTD operating cash flows provide runway to execute on services and property initiatives without near-term capital raises, though larger acquisitions would require external capital .
  • Optionality via Franchise/PropTech: rights to convert into up to 33% equity in the franchisor (Open Dør) and the “Rezone” PropTech launch provide strategic upside beyond base rent income .
  • No guidance or consensus coverage implies higher information risk; the next milestones are the finalization of Chino phase-one lease step, visibility into brokerage/advisory backlog conversion, and any capex/light M&A updates .

Citations:

  • Q3 2021 10‑Q (financials, MD&A):
  • Q2 2021 10‑Q (financials, property table):
  • Q1 2021 10‑Q (financials):
  • Q3 2021 earnings press release (8‑K Ex.99.1):
  • Chino Valley expansion press release and lease amendment (Aug 24, 2021):
  • COO appointment press (July 1, 2021):