Power REIT: Form 10-Q for the period ended Sep 30, 2025

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2024, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on March 31, 2025 (the “2024 10-K”) with the U.S. Securities and Exchange Commission (the “SEC”). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy, plans and objectives for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. You should review the disclosure under Part 1, Item 1A of the 2024 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. References in this Quarterly Report on Form 10-Q to the “Registrant” or the “Trust” refer to Power REIT and “we,” “us,” “our” and “Power REIT” refer to Power REIT, together with its consolidated subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words “believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,” “plan,” “assume” or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words. All statements contained in this Report regarding our future strategy, future operations, projected financial position, estimated future revenues, projected costs, future prospects, the future of our industries and results that might be obtained by pursuing management’s current or future plans and objectives are forward-looking statements.

You should not place undue reliance on any forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control, including those identified below, under Part II, Item 1A. “Risk Factors” and elsewhere in this Report, and those identified under Part I, Item 1A of the 2024 10-K. Our forward-looking statements are based on the information currently available to us and speak only as of the date of the filing of this Report. New risks and uncertainties arise from time to time, and it is impossible for us to predict these matters or how they may affect us. Over time, our actual results, performance, financial condition or achievements may differ from the anticipated results, performance, financial condition or achievements that are expressed or implied by our forward-looking statements, and such differences may be significant and materially adverse to our security holders. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

Overview

We are a Maryland-domiciled, internally-managed real estate investment trust (a “REIT”) that owns a portfolio of real estate assets related to transportation, energy infrastructure and Controlled Environment Agriculture (“CEA”) in the United States.

We are structured as a holding company and owns our assets through nineteen direct and indirect wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue. As of September 30, 2025, our assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by our subsidiary Pittsburgh & West Virginia Railroad (“P&WV”), approximately 447 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 82 Megawatts (“MW”) and approximately 82 acres of land with approximately 357,000 square feet of CEA properties in the form of greenhouses (the “Greenhouse Portfolio)

During the three and nine months ended September 30, 2025, we did not declare a quarterly dividend of approximately $163,000 and $490,000, respectively, ($0.484375 per share per quarter) on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”).

Our primary objective is to maximize the long-term value for our shareholders. To that end, our business goals are to obtain the best possible rental income at our properties in order to maximize our cash flows, net operating income, funds from operations, funds available for distribution to shareholders and other operating measures and results, and ultimately to maximize the values of our properties.

To achieve this primary goal, we have developed a business strategy focused on increasing the values of our properties, and ultimately of the Trust, which includes:

• Raising capital by monetizing the embedded value in our portfolio to improve our liquidity position and, as appropriate reducing debt levels to strengthen our balance sheet;
• Selling off non-core properties and underperforming assets;
• Seeking to re-lease properties that are vacant or have non-performing tenants
• Raising the overall level of quality of our portfolio and of individual properties in our portfolio;
• Improving the operating results of our properties; and
• Taking steps to position ourselves for future growth opportunities.

Recent Events

On June 9, 2025 a wholly owned subsidiary of Power REIT, PW CO CanRE MF LLC, sold a cannabis related greenhouse cultivation property located in Ordway, Colorado. The property was described in prior filings as Tam 13 and was vacant. The purchaser was an unaffiliated third party who had previously acquired two adjacent properties from subsidiaries of the Trust and the price was established based on an arm’s length negotiation. The sale price was $125,000 and the subsidiary of the Trust provided $105,000 of seller financing which amortizes over a 60-month period at an interest rate of 11% per annum. There was a nominal loss on sale based on previous impairments.

On January 31, 2025 a wholly owned subsidiary of Power REIT, PW CO CanRE JAB LLC, sold one of its interests in a cannabis related greenhouse cultivation property located in Ordway, Colorado. The property was described in prior filings as Tam 18 and was vacant. The purchaser was an unaffiliated third party and the price was established based on an arm’s length negotiation. The sale price was $200,000 and the net proceeds were used to pay down the Greenhouse Loan and pay other accrued expenses related to the property. There was no gain/loss on sale recognized based on previous impairments.

On January 24, 2025 we entered into a sales agreement (the “Sales Agreement”), with A.G.P./Alliance Global Partners pursuant to which we may, from time to time, issue and sell our common shares, however, the Sales Agent is not obligated to sell any common shares and there are limits on the dollar amount of common shares we can sell pursuant to the Sales Agreement. In addition, our ability to raise capital through the sale of securities may be limited by the rules of the SEC and NYSE American LLC (“NYSE American”) that place limits on the number and dollar amount of securities that may be sold. There can be no assurances that we will be able to raise the funds needed, especially in light of the fact that our ability to sell securities registered on our registration statement on Form S-3 will be limited until such time as the market value of our voting securities held by non-affiliates is $75 million or more. To date, no common shares have been sold pursuant to the Sales Agreement.

Settlement of Greenhouse Loan

The Greenhouse Loan was secured by most of the Greenhouse Portfolio. The Greenhouse Loan was non-recourse to the Trust and in default and the lender had initiated litigation including foreclosure actions. On April 11, 2025, we resolved issues with its lender concerning the Greenhouse Loan by providing deeds-in-lieu of foreclosure for greenhouse properties in Michigan and Nebraska. In return, the lender released the remaining collateral back to our subsidiaries and released obligations related to the Greenhouse Loan. We will seek to realize value from the retained assets by leasing and/or selling. The transaction related to the Greenhouse Loan resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. It will also relieve the ongoing costs associated with maintaining the Nebraska and Michigan properties. The balance of the Greenhouse Loan as of September 30, 2025 and December 31, 2024 was approximately $0 and $16,720,000 (approximately $13.3 million of principal, $2.1 million of interest and default interest and $1.3 million of loan expenses). During the nine months ended September 30, 2025 and 2024, we recognized approximately $554,000 and $739,000, respectively, of late charges, forbearance fees, legal fees, foreclosure fees and appraisal fees which is included in interest expense in Consolidated Statements of Operations. During the three months ended September 30, 2025 and 2024, we recognized approximately $0 and $116,000, respectively of late charges, forbearance fees, legal fees, foreclosure fees and appraisal fees which is included in interest expense in the Consolidated Statements of Operations. As a result of settling the Greenhouse Loan obligations through a deed-in-lieu of foreclosure for the Nebraska and Michigan properties, we recognized a non-cash gain of approximately $1,093,000. This gain arose from the write-off of both the properties with a combined book value of approximately $17,083,000 and the associated loan obligations which totaled approximately $17,997,000, including accrued interest, default interest, and loan modification expenses (late charges, forbearance fees, legal fees, foreclosure fees and appraisal fees) and the write off of accrued property tax of approximately $179,000.

Improving Our Balance Sheet by Reducing Debt and Leverage; Maintaining Liquidity

Leverage

We continue to seek ways to reduce our debt and debt leverage by improving our operating performance and through a variety of other means available to us. These means might include leasing vacant properties, selling properties, raising capital or through other actions.

Capital Recycling

In the later part of 2022, we commenced property reviews to establish a plan for the portfolio and, where appropriate, have been disposing of and seeking to dispose of properties that we do not believe meet financial and strategic criteria given economic, market and other circumstances. Disposing of these properties can enable us to redeploy or recycle our capital to other uses, such as to repay debt, to reinvest in other real estate assets and development and redevelopment projects, and for other corporate purposes. Along these lines, in 2023 and 2024 we completed sales of assets for total gross proceeds of approximately $9.81 million which included approximately $2.1 million of seller financing provided to the buyers. During 2025, we completed sales of assets for total gross proceeds of approximately $325,000 which included approximately $105,000 of seller financing provided to a buyer. We also have several properties that we are marketing for sale and/or lease which have been classified as “Assets Held for Sale.”

Improving Our Portfolio

We are currently seeking to refine our property holdings by selling greenhouse properties and/or re-leasing them in an effort to improve the overall performance going forward. Effective April 11, 2025, we closed on a settlement agreement with the lender for the Greenhouse Loan. See “Settlement of Greenhouse Loan,” above, for more information.

The transaction related to the Greenhouse Loan closed on April 11, 2025 and resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. The transaction also relieves the ongoing costs associated with maintaining the Nebraska and Michigan properties. We will continue to seek to realize value from the retained assets and are exploring a shift in focus and are evaluating real estate distressed situations including properties, loans and companies.

Taking Steps to Position the Company for Future Growth Opportunities

We are taking steps designed to position ourselves to create shareholder value. In connection therewith, we have implemented processes designed to ensure strong internal discipline in the use, harvesting and recycling of our capital, and these processes will be applied in connection with seeking to reposition properties.

We may seek to acquire, in an opportunistic, selective and disciplined manner, properties that have operating metrics that are better than or equal to our existing portfolio averages, and that we believe have strong potential for increased cash flows and appreciation in value. Taking advantage of any acquisition opportunities would likely involve some use of debt or equity capital. We will pursue transactions that we expect can meet the financial and strategic criteria we apply, given economic, market and other circumstances. In addition, we are exploring the potential to use our existing corporate structure for strategic transactions including potentially merging assets or companies with us. The Trust is also exploring strategic alternatives that may or may not include real estate investments in an effort to increase shareholder value.

The following table is a summary of our properties as of September 30, 2025:

1 Solar Farm Land size represents Megawatts and CEA property size represents greenhouse square feet

2 Gross Book Value for our Greenhouse Portfolio represents purchase price (excluding capitalized acquisition costs) plus improvements costs

3Property is vacant

4Tenant is not current on rent/in default

5An impairment has been taken against this asset

6Asset held for sale

Critical Accounting Estimates

The consolidated financial statements are prepared in conformity with accounting principles and generally accepted in the United States of America (“GAAP”), which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of the 2024 10-K.

Results of Operations

Three Months Ended September 30, 2025 and 2024

Revenue during the three months ended September 30, 2025 and 2024 was $513,110 and $1,426,112, respectively. Revenue during the three months ended September 30, 2025, consisted of revenue from lease income from direct financing lease of $228,750, rental income of $245,729, and other income of $38,631. The decrease in total revenue was primarily driven by a $785,000 reduction in rental income from related parties, a $107,775 decline in other rental income (which in total includes approximately $925,000 recognized from non-refundable security deposits related to defaulted leases as allowed per the terms of the lease and based on the determination that these defaults will be not be cured), and a decrease in other income of $20,227. Expenses for the three months ended September 30, 2025 compared to the same period in 2024 decreased by $1,338,361, primarily due to a decrease in impairment expense of $163,599, a decrease in interest expense of $627,800 due to the settlement of the Greenhouse Loan, a decrease in depreciation expense of $131,775 as several properties are considered held for sale, a decrease in property expenses of $393,177, and a decrease in general and administrative expense of $72,010. Other income increased by $73,207 primarily due to a realized gain on marketable securities of $377,499 and an unrealized gain on marketable securities of $46,412, offset by a decrease of forgiveness of accounts payable of $350,704. Net income (loss) attributable to common shares during the three months ended September 30, 2025 was a gain of $60,344 compared to a net loss of $488,222 for the three months ended September 30, 2024, an increase of $548,566.

Nine Months Ended September 30, 2025 and 2024

Revenue during the nine months ended September 30, 2025 and 2024 was $1,505,687 and $2,480,073, respectively. Revenue during the nine months ended September 30, 2025, consisted of revenue from lease income from direct financing lease of $686,250, rental income of $692,647, and other income of $126,790. The decrease in total revenue was primarily driven by a $785,000 reduction in rental income from related parties, a $151,275 decline in other rental income (which in total includes approximately $925,000 recognized from non-refundable security deposits related to defaulted leases as allowed per the terms of the lease and based on the determination that these defaults will be not be cured), and a decrease in other income of $38,111. Expenses for the nine months ended September 30, 2025 compared to the same period in 2024 decreased by $20,934,948 primarily due to a substantial lower impairment expense in 2025 of $18,148,980, decreased interest expense of $1,216,489 due to the settlement of the Greenhouse Loan, a decrease in depreciation expense of $780,397 as several properties are considered held for sale, a decrease in general and administrative expenses of $216,836 and a decrease in property expenses of $572,246. Other income increased by $717,972 primarily due to the gain on extinguishment of debt of $1,092,670, an increase in realized gain of marketable securities of $377,499, an increase in unrealized gain of marketable securities of $529 offset by a decrease in gain on sale of a property of $402,022 and a decrease in forgiveness of accounts payable of $350,704. Net loss attributable to common shares during the nine months ended September 30, 2025 and 2024 was 1,358,269 and $22,036,803, respectively, a decrease of $20,678,534.

Liquidity and Capital Resources

Our cash, cash equivalents and restricted cash totaled $1,993,495 as of September 30, 2025, a decrease of $238,091 from December 31, 2024. During the nine months ended September 30, 2025 and 2024, cash used in operating activities was $200,693 and $1,105,439, respectively. The decrease in cash used is primarily due to a smaller net loss in 2025, as well as favorable changes in working capital, including a decrease in prepaid expense and a decrease in accrued expenses. This is partially offset by lower non-cash expenses, including depreciation, impairment expense and share-based compensation. Cash provided from investing activities during for the nine months ended September 30, 2025 and 2024 were $600,113 and $915,642, respectively. The decrease is mainly due to lower proceeds from property sales offset by investment in marketable securities in 2025. Cash used in financing activities during the nine months ended September 30, 2025 was $637,511, compared to $1,519,445 in the prior year. The difference is due to lower principal payments on long-term debt, partially offset by new debt proceeds in 2025.

Our current loan liabilities totaled approximately $750,000 as of September 30, 2025. We are not current on payment of property taxes for the Greenhouse Portfolio. These taxes are included on the Balance Sheet as accrued expenses and liabilities held for sale for approximately $1,220,000. If the property taxes remain delinquent, the Greenhouse Portfolio will be subject to tax foreclosure actions starting in the first quarter of 2026.

On January 24, 2025, the Trust entered into a sales agreement (the “Sales Agreement”), with A.G.P./Alliance Global Partners pursuant to which it may, from time to time, issue and sell its common shares, however, the Sales Agent is not obligated to sell any common shares and there are limits on the dollar amount of common shares it can sell pursuant to the Sales Agreement. In addition, the Trust’s ability to raise capital through the sale of securities may be limited by the rules of the SEC and NYSE American LLC (“NYSE American”) that place limits on the number and dollar amount of securities that may be sold. There can be no assurances that the Trust will be able to raise the funds needed, especially in light of the fact that its ability to sell securities registered on its registration statement on Form S-3 will be limited until such time as the market value of the Trust’s voting securities held by non-affiliates is $75 million or more. To date, no common shares have been sold pursuant to the Sales Agreement.

Effective April 11, 2025, we entered into a settlement agreement with the lender under the Greenhouse Loan that resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. The transaction also relieves the ongoing costs associated with maintaining the Nebraska and Michigan properties. Following the resolution of the Greenhouse Loan, our management believes that the going concern doubt in our 2024 10-K and previous quarterly reports on Form 10-Q has been alleviated, and that our cash should provide greater than twelve months of liquidity for our capital needs.

Power REIT will continue to seek to realize value from the retained assets and is exploring a shift in focus and is evaluating real estate distressed situations including properties, loans and companies.

During the nine months ended September 30, 2025, we generated approximately $185,000 of cash from debt service related to the seller financing provided in 2024 and we sold two properties, one of which produced another seller finance agreement for $105,000, which amortizes over a 60- month period at an interest rate of 11% per annum. The seller financing agreements have a combined remaining balance of $1,604,265 as of September 30, 2025.

Our cash outlays at Power REIT (parent company) consist principally of professional fees, consultant fees, NYSE American listing fees, legal, insurance, shareholder service company fees, auditing costs and general and administrative expenses. Our cash outlays related to our various property-owning subsidiaries consist principally of principal and interest expense on debts, property maintenance, property taxes, insurance, legal as well as other property related expenses that are not covered by tenants. To the extent we need to raise additional capital to meet our obligations, there can be no assurance that financing on favorable terms will be available when needed. Although we entered into the Sales Agreement the rules of the SEC and NYSE American place limits on the number and dollar amount of securities that may be sold. There can be no assurances that we will be able to raise the funds needed. If we are unable to sell certain assets when anticipated at prices anticipated, we may not have sufficient cash to fund operations and commitments beyond the next twelve months.

FUNDS FROM OPERATIONS – NON-GAAP FINANCIAL MEASURES

We assess and measure our overall operating results based upon an industry performance measure referred to as Core Funds From Operations (“Core FFO”) which our management believes to be a useful indicator of our operating performance. Core FFO is a non-GAAP financial measure. Core FFO should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Core FFO is not defined by GAAP. The following is a definition of this measure, an explanation as to why we present it and, at the end of this section, a reconciliation of Core FFO to the most directly comparable GAAP financial measure.

Our management believes that Core FFO is a useful supplemental measure of our operating performance. Our management believes that alternative measures of performance, such as net income computed under GAAP, or Funds From Operations computed in accordance with the definition used by the National Association of Real Estate Investment Trusts (“NAREIT”), include certain financial items that are not indicative of the results provided by our asset portfolio and inappropriately affect the comparability of our period-over-period performance. These items include non-recurring expenses, such as one-time upfront acquisition expenses that are not capitalized under ASC-805 and certain non-cash expenses, including share-based compensation expense, amortization and certain up front financing costs. Therefore, management uses Core FFO and defines it as net income excluding such items. We believe that Core FFO is a useful supplemental measure for the investing community to employ, including when comparing us to other REITs that disclose similarly computed Core FFO figures, and when analyzing changes in our performance over time. Readers are cautioned that other REITs may use different adjustments to their GAAP financial measures than we use, and that as a result, our Core FFO may not be comparable to the FFO measures used by other REITs or to other non-GAAP or GAAP financial measures used by REITs or other companies.

A reconciliation of our Core FFO to net income for the nine months ended September 30, 2025, and 2024 is included in the table below:

CORE FUNDS FROM OPERATIONS (FFO)

(Unaudited)

During the nine months ended September 30, 2025, the Trust did not declare a quarterly dividend of approximately $490,000 to holders of Power REIT’s Series A Preferred Stock in order to preserve liquidity. As of October 15, 2025, the amount of unpaid dividends on the outstanding shares of Series A Preferred Stock is approximately $1,958,000.

Evaluation of Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate disclosure controls and procedures (as defined Rules 13a-15(e) and 15d-15(e) under the Exchange Act) (to provide reasonable assurance regarding the reliability of our financial reporting and preparation of financial statements for external purposes in accordance with GAAP. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. A control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Because of the inherent limitations in all control systems, internal controls over financial reporting may not prevent or detect misstatements. The design and operation of a control system must also reflect that there are resource constraints and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls.

During the quarter ended September 30, 2025, we analyzed accounting policies and procedures. In addition, management concluded that material weaknesses previously disclosed in the 2024 10-K regarding accounting for complex transactions still exist and that such controls are not effective. This material weakness could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan

To address the material weakness described above, we engaged an independent third party to enhance our analysis of accounting policies.

Limitations on the Effectiveness of Controls.

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Trust have been detected. The design and operation of a control system must also reflect that there are resource constraints and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls.

Our management assessed the effectiveness of the design and operation of our disclosure controls and procedures. Based on our evaluation, we have concluded that the historical treatment of our Series A Preferred Stock and the requirement for the restatement thereof, represents a material weakness in our procedures and internal controls over financial reporting and that we had ineffective disclosure control and procedures related thereto. This material weakness relates to the accounting treatment of complex transactions. As part of our process related to the treatment of the Series A Preferred Stock, we retained a third-party consultant that specializes in accounting treatment and SEC reporting.

Changes in Internal Control over Financial Reporting:

Other than as discussed above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our results of operations and financial condition are subject to numerous risks and uncertainties as described in the 2024 10-K, which risk factors are incorporated herein by reference. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, “Risk Factors,” contained in the 2024 10-K. You should carefully consider the risks set forth in the 2024 10-K and the following risks, together with all the other information in this Report, including our consolidated financial statements and notes thereto. If any of the risks actually materialize, our operating results, financial condition and liquidity could be materially adversely affected. Except as disclosed below, there have been no material changes from the risk factors disclosed in the 2024 10-K.

We have identified material weaknesses in our internal controls, and we cannot provide assurances that these material weaknesses will be effectively remediated or that additional weaknesses will not occur in the future.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a- 15(f) under the Exchange Act. We identified a material weakness in our controls relating to accounting for complex transactions which has not been remediated as of September 30, 2025. Specifically, our Series A Preferred Stock was historically classified as mezzanine equity instead of being classified as equity.

While we have hired outside consultants to aid in our accounting for complex transactions and plan to take remedial action to address the material weakness in our internal controls, we cannot provide any assurance that such remedial measures, or any other remedial measures we take, will be effective. In addition, a material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operate effectively. Although management believes that the material weakness in our internal controls will be remediated, there can be no assurance that the deficiencies will be remediated in the near future or that the internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in our internal controls in the future.

As a result of our failure to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, security holders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common shares.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Our failure to maintain an effective system of internal controls, and any failure by us to implement required new or improved internal controls or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act, or Section 404, or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. As a growing company, implementing and maintaining effective controls may require more resources, and we may encounter internal control integration difficulties. Our failure to maintain effective internal controls over financial reporting, may result in us not being able to accurately report our financial results, detect or prevent fraud, or file our periodic reports in a timely manner, which may, among other adverse consequences, cause investors to lose confidence in our reported financial information and lead to a decline in the trading price of our common shares.

The investment portfolio is, and in the future may continue to be, concentrated in its exposure to a relatively few numbers of investments, industries and lessees.

Historically, our revenue has been concentrated to a relatively limited number of investments, industries and lessees. During the nine months ended September 30, 2025, we collected approximately 93% of our consolidated revenue from two properties. The tenants were NSC and Regulus Solar, LLC which represent 50% and 43% of consolidated revenue respectively.

We are exposed to risks inherent in this sort of investment concentration. Financial difficulty or poor business performance on the part of any single lessee or a default on any single lease will expose us to a greater risk of loss than would be the case if we were more diversified and holding numerous investments, and the underperformance or non-performance of any of its assets may severely adversely affect our financial condition and results from operations. Our lessees could seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of our lease agreements and could cause a reduction in our cash flows. Furthermore, we may continue to concentrate our investment activities in the CEA and cannabis sectors, which subjects us to more risks than if we were diversified across many sectors. At times, the performance of the CEA and infrastructure sectors may lag the performance of other sectors or the broader market as a whole.

If our acquisitions or our overall business performance fail to meet expectations, the amount of cash available to us to pay dividends may decrease and we could default on our loans, which are secured by collateral in our properties and assets.

We may not be able to achieve operating results that will allow us to pay dividends at a specific level or to increase the amount of these dividends from time to time. Also, restrictions and provisions in any credit facilities we enter into or any debt securities we issue may limit our ability to pay dividends. We cannot assure you that you will receive dividends at a particular time, or at a particular level, or at all.

Unfortunately, our tenants related to the Greenhouse Portfolio have failed to perform on their lease obligations which has created a significant liquidity issue related to this portfolio of assets. A portion of the properties included in the Greenhouse Portfolio secure the Greenhouse Loan which was non-recourse to us and the lender under the Greenhouse Loan has liens against such properties. On April 11, 2025, Power REIT resolved issues with its lender concerning the Greenhouse Loan by providing deeds-in-lieu of foreclosure for greenhouse properties in Michigan and Nebraska. In return, the lender released the remaining collateral back to subsidiaries of Power REIT and released obligations related to the Greenhouse Loan. Power REIT will continue to seek to realize value from these retained assets by leasing and/or selling.

PW Regulus Solar, LLC (“PWRS”), one of our subsidiaries, entered into a loan agreement (the “2015 PWRS Loan Agreement”) that is non-recourse to us and secured by all of PWRS’ interest in the land and intangibles. As of September 30, 2025, the balance under the 2015 PWRS Loan Agreement was approximately $6,019,000 (net of unamortized debt costs of approximately $196,000).

Pittsburgh & West Virginia Railroad (“PWV”), one of our subsidiaries, entered into a Loan Agreement in the amount of $15,500,000 that is non-recourse to Power REIT and secured by our equity interest in our subsidiary PWV which is pledged as collateral. The balance of the loan as of September 30, 2025 is $14,031,000 (net of approximately $260,000 of capitalized debt costs).

We have substantial debt and preferred shares outstanding with substantial liquidation preference, which could adversely affect our overall financial health and our operating flexibility.

We require cash flows to satisfy our debt service. These obligations may prevent us from using our cash flows for other purposes. If we are unable to satisfy these obligations, we might default on our debt and our financial condition and results of operations would be adversely affected.

In an effort to conserve liquidity and create financial flexibility, we have not declared dividends on our Series A Preferred Stock since the fourth quarter of 2022. As a result, unpaid dividends increase the liquidation preference for our Series A Preferred Stock. As of September 30, 2025, the amount of unpaid, undeclared dividends on the outstanding shares of Series A Preferred Stock is approximately $1,958,000.

Since a significant percentage of our assets are used to secure our debt, this reduces the amount of collateral available for future secured debt or credit support and reduces our flexibility in how we handle these secured assets. This level of debt and related security could also limit our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our business strategy or other purposes and could limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt.

In addition to our current debt, we might incur additional debt in the future in order to finance improvement or development of properties, acquisitions or for other general corporate purposes, which could exacerbate the risks described above. These consequences could have a material adverse effect on our business, financial condition and results of operations.

The issuance of securities with claims that are senior to those of our common shares, including our Series A Preferred Stock, may limit or prevent us from paying dividends on our common shares. There is no limitation on our ability to issue securities senior to our common shares or incur indebtedness.

Our common shares are equity interests that rank junior to our indebtedness and other non-equity claims with respect to assets available to satisfy claims against us, and junior to our preferred securities that by their terms rank senior to our common shares in our capital structure, including our Series A Preferred Stock. As of September 30, 2025, we had outstanding debt in the principal amount of $20.0 million and $8.5 million (par value) of Series A Preferred Stock. This debt and these preferred securities rank senior to our common shares in our capital structure. We expect that in due course we may incur more debt, and issue additional preferred securities as we pursue our business strategy.

In the case of indebtedness, specified amounts of principal and interest are customarily payable on specified due dates. In the case of preferred securities, such as our Series A Preferred Stock, holders are provided with a senior claim to distributions, according to the specific terms of the securities. In contrast, however, in the case of common shares, dividends are payable only when, as and if declared by our board of trustees and depend on, among other things, our results of operations, financial condition, debt service requirements, obligations to pay distributions to holders of preferred securities, such as the Series A Preferred Stock, other cash needs and any other factors that the board of trustees may deem relevant or that they are required to consider as a matter of law. Incurring additional debt, or issuing of additional preferred securities, may limit or eliminate the amounts available to pay dividends on our Series A Preferred Stock and common shares.

From time to time, our management team may own interests in our lessees or other counterparties, and may thereby have interests that conflict or appear to conflict with our interests.

On occasion, our management may have financial interests that conflict or appear to conflict with our interests. For example, four of our properties were leased by tenants in which Millennium Sustainable Ventures Corp., formerly Millennium Investment & Acquisition Company (ticker: MILC) had controlling interests. David H. Lesser, Power REIT’s Chairman and CEO, is also Chairman and CEO of MILC. MILC established cannabis cultivation projects in Colorado (through a loan), Oklahoma, and Michigan which are related to our May 21, 2021, June 11, 2021, and September 3, 2021 acquisitions and a food crop cultivation project in Nebraska related to our March 31, 2022 acquisition. Total rental income recognized for the three months ended September 30, 2025 and 2024 from the affiliated tenants in Colorado, Oklahoma, Michigan and Nebraska was $0. The above leases are currently in default and the tenants have vacated the properties and the leases have terminated.

Although our Declaration of Trust permits this type of business relationship and a majority of our disinterested trustees must approve, and in those instances did approve, our involvement in such transactions, in any such circumstance, there may be conflicts of interest between us on one hand, and subsidiaries of MILC, Mr. Lesser and his affiliates and interests on the other hand, and such conflicts may be unfavorable to us.