Power REIT

Item 1A. Risk Factors.

Our results of operations and financial condition are subject to numerous risks and uncertainties as described in the 20245 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 20245 10-K. You should carefully consider the risks set forth in the 20245 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 20245 10-K.

We have identified ncurred a loss for the quarter ended March 31, 2026 and may be unable to generate sufficient revenue to cover expenses or generate net income.

For the quarter ended March 31, 2026, we had a net loss attributable to common shareholders of approximately $1.1 million, compared to a net loss of approximaterial wealy $1.6 million for the quarter ended March 31, 2025. There can be no assurance that we will be able to generate sufficient revenue to pay our expenses or generate net income. As of March 31, 2026, we had an accumulated deficit of approximately $52.8 million. On a consolidated basis, the Trusts cash and cash equivalents totaled approximately $2.0 million as of March 31, 2026, a decrease of approximately $200,000 from March 31, 2025.

We may need to raise additional capital or sell additional properties to fund our operations.

As of March 31, 2026, we had an accumulated deficit of approximately $52.8 million and a net loss attributable to common shareholders of approximately $1.1 million. As of March 31, 2026, the Trust had approximately $2.0 million of cash and cash equivalents and approximately $290,000 of accounts payable and approximately $1.4 million of liabilities for assets held for sale.

It is the Trusts plan to focus on selling properties, entering into new leases, improving cash collections from existing tenants and the raising capital in the form of debt or equity is effectively implemented, the Trusts plan could potentially provide enough liquidity to fund its operations. However, the Trust cannot predict, with certainty, the outcome of its actions to generate liquidity, including its ability to sell properties, and the failure to do so could negatively impact its future operations.

On January 24, 2025, the Trust entered into the Sales Agreement with AGP pursuant to which it may, from time to time, issue and sell its common shares in an at the marknesses in our internal controls, and we cannot provet offering, however, AGP 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 Trusts 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 through the Sales Agreement, 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 Trusts voting securities held by non-affiliates is $75 million or more. As of March 31, 2026, 282,613 common shares have been sold pursuant to the Sales Agreement for gross proceeds of approximately $300,000. During the three months ended March 31, 2026, the Trust sold 10,781 common shares pursuant to the Sales Agreement for net proceeds of $10,945.

We have ide assurancesntified 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 relin the quarterly period ended June 30, 2024 relating to accounting for complex transactions, which has not been remediated as of September 30March 31, 20256. 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 ninethree months ended September 30March 31, 20256, we collected approximately 936% of our consolidated revenue from two properties. The tenants were NSC and Regulus Solar, LLC which represent 501% and 435% 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 30March 31, 20256, the balance under the 2015 PWRS Loan Agreement was approximately $6,0195,972,000 (net of unamortized debt costs of approximately $19685,000).

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 30March 31, 20256 is $14,0313,917,000 (net of approximately $26056,000 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 servihave substantial debt and preferred shares outstanding with substantial liquidation preference. 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 30March 31, 20256, the amount of unpaid, undeclared dividends on the outstanding shares of Series A Preferred Stock is approximately $1,9582,285,000.

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 30March 31, 20256, we had outstanding debt in the principal amount of $20.019.9 million and we have issued approximately $8.5 million (par value) of Series A Preferred Stock not including dividends which are cumulative and have not been declared. 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 REITs 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.