Q - Power REIT

Previous wording

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 Annual Report on Form 10-K for the year ended December 31, 2024 that we filed with the Securities and Exchange Commission on March 31, 2025 (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.

Current wording

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.

Previous wording

We are structured as a holding company and owns our assets through twenty-four 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 March 31, 2025, our assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by its 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 237 acres of land with approximately 2,053,000 square feet of existing or under construction CEA properties in the form of greenhouses (which amounts include certain properties that have been transferred to the lender under a loan secured by our Greenhouse Portfolio (the “Greenhouse Loan”), as described below).

Current wording

We are structured as a holding company and owns our assets through twenty-four 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 June 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)

Previous wording

During the three months ended March 31, 2025, we did not declare a quarterly dividend of approximately $163,000 ($0.484375 per share per quarter) on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock.

Current wording

During the three and six months ended June 30, 2025, we did not declare a quarterly dividend of approximately $163,000 and $326,000, 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”).

Previous wording

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.

Current wording

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.

Previous wording

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 shares of Common Stock and there are limits on the dollar amount of shares of common stock 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 the market value of our voting securities held by non-affiliates is $75 million or more.

Current wording

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.

Previous wording

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 $2.1 million of seller financing provided to the buyers. We also have several properties that we are marketing for sale and/or lease which have been classified as “Assets Held for Sale.”

Current wording

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.”

Previous wording

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. A loan secured by the greenhouse portfolio was in default as of March 31, 2025. As of March 31, 2025, the previously disclosed forbearance agreement with the lender for the Greenhouse Loan had terminated and the Greenhouse Portfolio was subject to foreclosure. Effective April 11, 2025, we entered into a settlement agreement with the lender under the Greenhouse Loan. See “Settlement of Greenhouse Loan,” above, for more information.

Current wording

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.

Previous wording

The transaction related to the Greenhouse Loan closed on April 11, 2025 and will result 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. We 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 (see Subsequent Events).

Current wording

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.

Previous wording

We may continue to 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.

Current wording

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.

Previous wording

The consolidated financial statements are prepared in conformity with U.S. 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.

Current wording

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.

Previous wording

Revenue during the three months ended March 31, 2025 and 2024 was $485,794 and $534,612, respectively. Revenue during the three months ended March 31, 2025, consisted of revenue from lease income from direct financing lease of $228,750, total rental income of $210,779, and other income of $46,265. The decrease in total revenue was primarily related to a $49,860 decrease in rental income from the cannabis tenants due to defaulted leases related to the challenges within the cannabis industry and an increase in other income of $1,042. Expenses for the three months ended March 31, 2025 compared to 2024 decreased by $1,136,168 primarily due to no impairment expense in 2025 and a decrease in depreciation expense of $485,495 as several properties are considered held for sale. The difference is also due to a decrease in general and administrative expenses of $126,725 and a decrease in interest expense of $16,254 offset by an increase of property expense of $34,520, an increase of property tax of $7,343. Other income decreased by $394,394 due to no gain on sale on the disposal of the one property in the first quarter of 2025. Net loss attributable to common shares during the three months ended March 31, 2025 and 2024 was 1,576,319 and $2,240,205, respectively. Net loss attributable to common shares decreased by $663,886.

Current wording

Revenue during the six months ended June 30, 2025 and 2024 was $992,577 and $1,053,961, respectively. Revenue during the six months ended June 30, 2025, consisted of revenue from lease income from direct financing lease of $457,500, rental income of $446,918, and other income of $88,159. The decrease in total revenue was primarily related to a $43,500 decrease in rental income from the cannabis tenants due to defaulted leases related to the challenges within the cannabis industry and decrease in other income of $17,884. Expenses for the six months ended June 30, 2025 compared to the same period in 2024 decreased by $19,546,587 primarily due to a substantial lower impairment expense in 2025 of $17,985,381, decreased property expenses of $235,145, and a decrease in depreciation expense of $648,622 as several properties are considered held for sale. The difference is also due to a decrease in general and administrative expenses of $144,826 and a decrease in interest expense of $588,689 offset by an increase of property tax expense of $56,076. Other income increased by $644,765 primarily due to the gain on extinguishment of debt of $1,092,670 offset by a loss of the sale of a property of $402,022 and an unrealized loss on marketable securities of $45,883. Net loss attributable to common shares during the six months ended June 30, 2025 and 2024 was 1,418,613 and $21,548,581, respectively, a decrease of $20,129,968.

Previous wording

Our cash and cash equivalents and restricted cash totaled $2,033,211 as of March 31, 2025, a decrease of $198,375 from December 31, 2024. During the three months ended March 31, 2025 and 2024, cash used in operating activities was $436,648 and $402,163, respectively. The increase is due to changes in operating assets and liabilities in the current period. Cash provided by investing a smaller net loss in 2025, offset by reduced non-cash expenses of depreciation and impairment. Investing activities during the three months ended March 31, 2025 and 2024 were $92,260 and $795,642, respectively. The difference is due to reduced proceeds from property sales and a new investment in marketable securities. Cash provided by financing activities during the three months ended March 31, 2025 was $146,013 and cash used by financing activities during the three months ended March 31, 2025 was $76,575, respectively. The difference is due to new debt proceeds in 2025 offset by higher principal payments on the Greenhouse Loan. offset by new debt proceeds in 2025. Of the total amount of cash as of March 31, 2025, approximately $2 million is non-restricted cash available for general corporate purposes and approximately $14,000 is restricted cash related to the Greenhouse Loan.

Current wording

Our cash and cash equivalents totaled $1,481,349 as of June 30, 2025, a decrease of $750,237 from December 31, 2024. During the six months ended June 30, 2025 and 2024, cash used in operating activities was $677,137 and $943,652, 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 an increase in accrued expenses. This is partially offset by lower non-cash expenses, including depreciation, impairment expense and share-based compensation. Investing activities during for the six months ended June 30, 2025 and 2024 were $9,822 and $870,642, respectively. The decrease is mainly due to lower proceeds from property sales and a new investment in marketable securities in 2025. Cash used in financing activities during the six months ended June 30, 2025 was $82,922, compared to $1,096,246 in the prior year. The difference is due to lower principal payments on long-term debt, partially offset by new debt proceeds in 2025.

Previous wording

Our current loan liabilities totaled approximately $18.4 million as of March 31, 2025. The current loan liabilities include approximately $17.6 million of the Greenhouse Loan, a bank loan secured by most of the Greenhouse Portfolio and which was in default and non-recourse to us. Effective April 11, 2025, we entered into a settlement agreement with the lender under the Greenhouse Loan. See “Settlement of Greenhouse Loan”, above, for more information. 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 $1,175,000. Of this amount, approximately $178,000 relates to the Michigan and Nebraska properties and the balance relates to properties that will be retained by our subsidiaries after the resolution of the Greenhouse Loan. If the property taxes remain delinquent, the Greenhouse Portfolio will be subject to tax foreclosure actions starting in the first quarter of 2026.

Current wording

Our current loan liabilities totaled approximately $738,000 as of June 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 $1,119,000. If the property taxes remain delinquent, the Greenhouse Portfolio will be subject to tax foreclosure actions starting in the first quarter of 2026.

Previous wording

On a consolidated basis, our current liabilities far exceed current assets as of March 31, 2025. Effective April 11, 2025, we entered into a settlement agreement with the lender under the Greenhouse Loan. See “Settlement of Greenhouse Loan,” above, for more information. Following the resolution of the Greenhouse Loan, our management believes that the going concern doubt discussed in our 2024 10-K and previous quarterly reports on Form 10-Q has been alleviated, and that our non-restricted cash should provide greater than twelve months of liquidity for our capital needs.

Current wording

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.

Previous wording

The transaction related to the Greenhouse Loan closed on April 11, 2025 and will result 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. 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 (see Subsequent Events).

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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 stock-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.

Current wording

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.

Previous wording

A reconciliation of our Core FFO to net income for the three months ended March 31, 2025, and 2024 is included in the table below:

Current wording

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