What changed in this filing

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Item 1A. Risk Factors

2026-03-13 compared with 2025-03-31 · 199 added, 146 removed, 545 unchanged (39% of the section changed)

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Risks Related to Our Current Financial Condition

We incurred a net loss attributable to common shareholders for 2024 and we cannot assure you that we will be profitable for 2025.

For the year ended December 31, 2024, we reported a net loss of $43.9 million compared to net income of $12.1 million for the year ended December 31, 2023.

This is the first annual net loss that we reported since we became a publicly traded company in 2017.

We incurred a net loss attributable to common shareholders for 2024 but returned to profitability in 2025.

We cannot assure you that we will be profitable for 2026.

For the year ended December 31, 2025, we reported net income attributable to common shareholders of $1.8 million compared to a net loss attributable to common shareholders of $43.9 million for the year ended December 31, 2024.

2024 was the first annual net loss that we reported since we became a publicly traded company in 2017.

There were a number of factors that contributed to this result.

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Second, top-line revenue for 2024 declined 11.2% compared to 2023, after we had delivered solid growth every year from 2017 through 2023.

This decrease was due to the unavailability of capital required to grow our business.

This decrease was due to the unavailability of capital required to grow our business after revenues decreased due to increases in nonperforming loans and distress in the lending markets.

Historically, we relied on the capital markets to provide us with the bulk of our growth capital.

Given the interest rate environment in 2023 and 2024 and the state of the real estate market in general, we were unable to access the capital markets and our existing credit facilities were not robust enough to fill the gap.

The effects of this lack of growth was compounded by the fact that two tranches of outstanding Notes, having an aggregate principal amount of $58.2 million came due in 2024 and were repaid from cash flow from operations or drawdowns on our credit facilities.

We cannot assure you that any of these structural issues adversely impacting our operational performance will ease or resolve in 2025.

If they do not, and we are not able to find suitable solutions to address these issues, we may continue to incur losses in 2025.

On top of that, two tranches of outstanding unsecured public notes, having an aggregate principal amount of $58.2 million came due in 2024 and were repaid from cash flow from operations or drawdowns on our credit facilities.

We were able to improve our results of operations in 2025 by obtaining new debt financing and amending existing credit facilities.

In addition, we were able to significantly reduce the losses and other charges that we reported in 2024 related to loan sales, valuation allowances and credit losses.

For 2025, gains on loan sales were $0.1 million, valuations allowances were $1.0 million and credit losses were $3.3 million.

Nonetheless, we cannot assure you that we will continue to be profitable in 2026.

Concurrently with the decline in our operational performance, we have reduced the dividend payable to shareholders.

As a real estate investment trust (REIT), to maintain our REIT status for income tax purposes, we are required to distribute at least 90% of our taxable income to our shareholders.

To maintain our REIT status for income tax purposes, we are required to distribute at least 90% of our taxable income to our shareholders.

As a practical matter, since we started to operate as a REIT in 2017 through the end of 2023, we distributed 100% of our GAAP income to shareholders, in cash.

However, in 2024, primarily because we did not have access to growth capital, we reduced the dividend payable to shareholders.

However, in 2024 and 2025, primarily because we did not have access to growth capital, we reduced the dividend payable to shareholders.

The reduction in the dividend payment does not jeopardize our REIT election because our taxable income has decreased as well.

Despite the decrease in taxable income, the Company continued to pay dividends, which were in excess of our taxable income for 2024 and 2025.

Any distributions we make to our shareholders, the amount of such dividend and whether such dividend is payable in cash, our Common Shares or other property, or a combination thereof, is at the discretion of the Board and will depend on, among other things, our actual results of operations and liquidity.

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The price of our publicly traded securities has declined significantly.

Primarily because of our operating performance and the dividend cuts, in 2024 we experienced a steep decline in the trading price of all our securities.

For example, the opening price of our Common Shares on January 2, 2024, as reported on the New York Stock Exchange, was $3.73 per share.

The closing price on December 31, 2024, as reported by the New York Stock Exchange, was $1.35 per share.

Similarly, the opening price of our Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) on January 2, 2024, as reported on the New York Stock Exchange, was $20.00 per share.

The closing price on December 31, 2024, as reported by the New York Stock Exchange, was $15.49 per share.

Primarily because of our operating performance and the reduced dividend payments, in 2024 and 2025, we experienced a steep decline in the trading price of all our equity and debt securities.

For example, the opening price of our Common Shares on January 2, 2024, as reported on the NYSE American, was $3.73 per share.

The closing price on December 31, 2024, as reported by the NYSE American, was $1.35 per share.

The closing price on December 31, 2025, as reported by the NYSE American, was $1.04 per share.

Similarly, the opening price of our 7.75% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) on January 2, 2024, as reported on the NYSE American, was $20.00 per share.

The closing price on December 31, 2024, as reported by the NYSE American, was $15.49 per share.

The closing price on December 31, 2025, as reported by the NYSE American, was $17.75 per share.

Similar declines were recorded for the price of our Notes.

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Thus, issuing more securities increases our costs, which, in turn, means we have to raise more money to cover the costs, which means we have to sell more securities.

Therefore, during the second half of 2024, we did not sell Common Shares, shares of our Series A Preferred Stock, or debt securities to raise capital.

Therefore, during the second half of 2024 and in 2025, we did not sell Common Shares or debt securities to raise capital.

However, we did sell an immaterial amount of shares of our Series A Preferred Stock in December 2025.

We believe it is imperative for us to increase the value of our securities, both debt and equity, and for us to do so, we must improve our operating performance and increase our dividend.

We are currently in the market for accretive working capital and working through opportunities to do so.

We are currently in the market for accretive working capital.

However, we cannot assure you that capital will be available to us or, if it is, what will be the cost of such capital.

As of December 31, 2024, we were not in compliance with one of our loan covenants.

Under the Credit and Security Agreement, dated as of March 2, 2023, that governed our $65 million revolving credit facility with Needham Bank (“Needham”), we were required to maintain a debt service coverage ratio of 1.4-to-1.0 throughout the entire term of that facility.

A default under the Needham Credit Facility could have significant adverse consequences on our business, operations, and financial condition.

Under our new $50 million revolving credit facility (the “Needham Credit Facility”) with Needham Bank (“Needham”), we are required to maintain a debt service coverage ratio of 1.4-to-1.0 throughout the entire term of that facility.

In other words, our operating cash flow must be equal to or greater than 1.4 times the interest payable on all our outstanding indebtedness.

An identical covenant is contained in the Credit, Security and Guaranty Agreement, dated as of March 20, 2025, that governs our new $50 million revolving credit facility with Needham that replaced the 2023 $65 million credit facility with Needham.

(The term “Needham Credit Facility” refers to either the $65 million credit facility or the $50 million credit facility, as applicable depending on the context.) Since September 30, 2024 we were not been in compliance with this covenant, which constituted an “Event of Default” under the $65 million Needham Credit.

Since the $65 million Needham Credit Facility has now been terminated and replaced by the $50 million Needham Credit Facility, our failure to comply with this covenant is no longer an issue.

However, under the terms of the new $50 million Needham Credit Facility, we are required to provide Needham with a certificate no later than May 15, 2025 that we were in compliance with the covenant at March 31, 2025, which we believe we will be to deliver.

If we cannot deliver that compliance certificate we will be in default of the covenant under the new $50 million credit facility, and if Needham issues a notice of default, it could have significant adverse consequences on our business, operations, and financial condition.

First, Needham could declare the entire outstanding balance on its credit facility, which at the time of this report was $36.1 million, immediately due and payable.

We have maintained compliance with that covenant as well as the other covenants governing the Needham Credit Facility.

However, we cannot assure you that we will continue to remain in compliance with any of these covenants during the remainder of the term.

If we were in default of the covenant under the Needham Credit Facility, and if Needham issues a notice of default, it could have significant adverse consequences on our business, operations, and financial condition.

First, Needham could declare the entire outstanding balance on the facility immediately due and payable.

Alternatively, it could look to execute on the collateral securing the loan, which would deprive us of a significant portion of our working capital and cash flow.

In addition, a default under the Needham credit facility would trigger a default under the terms of the $200 million master repurchase financing facility (the “Churchill Credit Facility”) with Churchill MRA Funding I LLC (“Churchill”) as well as our $1.1 million mortgage with New Haven Bank (the “NHB Mortgage”).

Notes having an aggregate outstanding principal amount of $56.4 million are due and payable in full on September 30, 2025.

Notes having an outstanding principal balance of $56.4 million are due and payable in full on September 30, 2025.

If we cannot repay these Notes and the holders of these Notes call a default, it may trigger defaults under our other obligations and impair our ability to raise capital from other sources.

As previously noted, a default under the Notes would also trigger a default under the Master Purchase Agreement with Churchill and under the term of the NHB Mortgage.

In addition, a default under the Needham Credit Facility would trigger a default under the terms of our $0.9 million mortgage with New Haven Bank (the “NHB Mortgage”).

Notes having an aggregate outstanding principal amount of $173.3 million are due and payable in full between December 2026 and September 2027.

Notes having an aggregate outstanding principal amount of $173.3 million mature between December 2026 and September 2027, including $51.8 million on December 30, 2026, $51.7 million on March 30, 2027, $29.7 million on June 30, 2027 and $40.1 million on September 30, 2027.

If we cannot repay any of these Notes and the holders of such Notes call a default, it may trigger defaults under our other obligations and impair our ability to raise capital from other sources.

As previously noted, a default under the Notes would also trigger a default under the terms of the NHB Mortgage.

This could have a material adverse impact on our operations, financial condition and business.

We believe we will have the ability to repay those notes on the due date from a combination of cash flow from operations and borrowings under our various credit facilities.

We are subject to the “baby shelf” rules, which limits the amount of securities we can sell pursuant to an S-3 Registration Statement.

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That Registration Statement expired on February 25, 2025.

We filed a new S-3 Registration Statement that was declared effective on May 30, 2025.

Given the fact that our public float is currently less than $75 million and for so long as the “public float” remains under $75 million, we are limited as to the amount of securities we can sell during any 12-month period.

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Although alternative public and private transaction structures may be available, these may require additional time and cost, may impose operational restrictions on the Company, and may not be available on attractive terms.

The Company’s inability to continue to raise capital when needed will harm its business, financial condition and results of operations, and will likely cause the Company’s stock value to decline further, which could have a material adverse impact on the Company’s business, operations and financial condition.

Our inability to continue to raise capital when needed will harm our business, financial condition and results of operations, and will likely cause our stock value to decline further, which could have a material adverse impact on our business, operations and financial condition.

The illiquidity of our loan portfolio could significantly impede our ability to respond to adverse changes in economic, financial, investment and other conditions.

In December 2024, we consummated the sale of 32 mortgage loans in our portfolio, having an aggregate unpaid principal balance of $55.8 million to various buyers.

The aggregate net proceeds from the sale of these mortgages was $36.1 million, or 64.7% of the unpaid principal balances.

Most of the loans that were sold were designated as pending/pre-foreclosure.

The purpose of the sale was (i) to raise working capital, (ii) to eliminate the need to provide for future credit losses with respect to these loans, and (iii) to utilize the proceeds towards the repayment of the Notes that matured on December 30, 2024.

Despite the loss on the sale, both for GAAP purposes and tax purposes, we consider the transaction to be a success.

Due to the relative illiquidity of our loan portfolio, our ability to promptly sell all or a portion of the portfolio in response to changing economic, financial, investment or other conditions is limited.

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Any impairment or credit losses could have a material adverse effect on our financial condition.

We have experienced a significant increase in the number of non-performing loans.

We have experienced a significant increase in the balance of non-performing loans.

We define loans that are more than 90 days in arrears as non-performing status and stop accruing interest on such loans.

Over the past two years, we have experienced a significant increase in the outstanding balance of loans in this category as well as the number of loans in foreclosure.

For example, at December 31, 2022, the number of loans in non-performing status was 72 and the number of loans in foreclosure was 40.

The aggregate outstanding balance on these loans was $45.9 million and $22.6 million, respectively.

At December 31, 2023, the comparable numbers were 71 and 56.

The aggregate outstanding balance on these loans was $84.6 million and $55.7 million, respectively.

At December 31, 2024 the comparable numbers were 35 and 34.

The aggregate outstanding balance on these loans was $87.0 million and $52.1 million, respectively.

Of the $52.1 million of loans in foreclosure for the year ended December 31, 2024, $15.9 million was held for sale.

Over the past two years, we have experienced a significant increase in the outstanding balance of loans in this category.

At December 31, 2022, loans in non-performing status had an aggregate outstanding balance of $45.9 million.

At December 31, 2023, the comparable balance increased to $84.6 million.

At December 31, 2024, loans in non-performing status had an aggregate outstanding balance of $87.0 million.

At December 31, 2025, the comparable balance increased to $117.6 million.

This has had a material adverse impact on our operational performance and financial condition.

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At December 31, 2024, we had 88 loans, 52.4% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million.

At December 31, 2023, we had 113 loans, 36.3% of the loans in our

portfolio, with an outstanding principal balance exceeding $1 million.

If this trend continues, it could have a material adverse impact on our business, operations and financial condition.

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Increases in interest rates could adversely affect our ability to generate income and pay dividends.

Although the Fed cut interest rates in 2024 and the rate of inflation has decreased as well, the economic data is still not conclusive to support the continuation of these trends.

Thus, there is still the possibility of interest rate increases in the future, especially if there is a recurrence of inflation.

Moreover, notwithstanding the reduction in the federal funds rate in 2024, mortgage rates continue to increase raising the concern that residential real estate values will begin to decline.

Rising interest rates adversely impacts our business in several ways.

Although the Federal Reserve Board (the "Fed") reduced the federal funds rate in 2025 and the rate of inflation has decreased as well, inflation still remains above the Fed's target of 2% and the data on the labor market continues to be volatile.

Accordingly, it is clear that the Fed will continue to reduce interest rates in 2026.

In addition, commercial lending rates remain relatively high, adversely impacting our ability to refinance our existing indebtedness at lower rates and obtain growth capital.

High interest rates adversely impacts our business in several ways.

First, it makes it more difficult for us to borrow money to sustain our growth.

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If the borrower is unable to repay the loan, together with all the accrued interest, at maturity, our operating results and cash flows would be materially and adversely affected.

Many of the properties securing our mortgage loans are not income producing, thus increasing the risks of delinquency and foreclosure.

Most of our loans are secured by properties, whether residential or commercial, that are under construction or renovation and are not income producing.

Most of the properties securing our mortgage loans are not income producing, thus increasing the risks of delinquency and foreclosure.

Most of our loans, by both number of loans and aggregate principal amount, are secured by properties, whether residential or commercial, that are under construction or renovation and are not income producing.

The risks of delinquency and foreclosure on these properties may be greater than similar risks associated with loans made on the security of single- family, owner-occupied, residential property.

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The frequency of default and the loss severity on loans upon default may be greater than we anticipate.

If properties securing our mortgage loans become real estate owned because of foreclosure, we bear the risk of not being able to sell the property and recovering our investment and of being exposed to the risks attendant to the ownership of real property.

If properties securing our mortgage loans become real estate owned because of foreclosure, we bear the risk of not being

able to sell the property and recovering our investment and of being exposed to the risks attendant to the ownership of real property.

Before approving and funding a mortgage loan, we undertake extensive due diligence of the borrower, its principals (if the borrower is not an individual) and the property that will be mortgaged to secure the loan.

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Residential mortgage loans are subject to increased risks.

At December 31, 2024, 56.2% of the loans in our loan portfolio (representing 49.4% of our outstanding mortgage loans receivable) are secured by residential real property.

While we are not a traditional long term mortgage lender, we do lend on commercial use of transitional residential property.

At December 31, 2025, 53.6% of our outstanding mortgage loans receivable are secured by residential real property.

None of these loans are guaranteed by the U.S.

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and 14.8% (representing 8.2% of the aggregate outstanding principal balance of our loans held for investment portfolio) were secured by property located in New York.

As a result, we are subject to the general economic and market conditions in those markets as well as in other markets where we lend.

As a result, we are particularly subject to the general economic and market conditions in those markets.

For example, other geographic markets in neighboring states could become more attractive for developers, investors and owners based on favorable costs and other conditions to construct or improve or renovate real estate properties.

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Accordingly, our failure or inability to provide products and services to our customers in a timely and efficient manner may result in significant liability, a loss of customers and damage to our reputation, which could have a material adverse effect on us.

The occurrence of cyber incidents, or a deficiency in our cybersecurity or in those of any of our third-party service providers, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information or damage to our business relationships or reputation, all of which could negatively impact our business and results of operations.

of our confidential information or damage to our business relationships or reputation, all of which could negatively impact our business and results of operations.

In general, any adverse event that threatens the confidentiality, integrity, or availability of our information resources or the information resources of our third-party service providers is considered a cyber incident.

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Villano terminates his employment with us or is unable to carry out his duties, our business and operations will be adversely impacted.

In December 2024, our Chief Financial Officer, Nicholas Marcello resigned.

Marcello had been involved in almost all aspects of our business, including administration, operations and finance.

We immediately commenced a search to find a replacement for Mr.

Until then, Jeffery Walraven, a member of our Board, is serving as our Interim Chief Financial Officer.

If we do not appoint a full-time Chief Financial Officer or find the right candidate in a timely manner, it could have an adverse effect on financial management, growth, and stability.

Effective September 1, 2025, Jeffery Walraven was appointed Executive Vice President and Chief Financial Officer.

While we have entered into an employment agreement with Mr.

Walraven, he can terminate his employment with us at any time, for any reason.

In the event Mr.

Walraven terminates his employment with us or is unable to carry out his duties, it could have an adverse effect on our financial management, growth, and stability.

Our inability to recruit or retain qualified personnel or maintain access to key third-party service providers and software developers, could have a material adverse effect on us.

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To help ensure that we meet these tests, our charter restricts the acquisition and ownership of shares of our capital stock.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and provides that, unless exempted by the Board, no person may own more than 4.99% in value of the aggregate of the outstanding shares of our capital stock or more than 4.99% in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of our Common Shares.

Our founder John L.

Villano, is exempt from this provision.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our

qualification as a REIT and provides that, unless exempted by the Board, no person may own more than 4.99% in value of the aggregate of the outstanding shares of our capital stock or more than 4.99% in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of our Common Shares.

The ownership limits contained in our charter could delay or prevent a transaction or a change in control of our company under circumstances that otherwise could provide our shareholders with the opportunity to realize a premium over the then current market price for our Common Shares or would otherwise be in the best interests of our shareholders.

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In order to raise working capital, we may sell or transfer mortgage loans to a third party, including a securitization entity.

In December 2024, we consummated the sale of 32 mortgage loans, having an aggregate outstanding principal balance of $55.8 million to a number of buyers, all of whom specialize in distressed debt.

Most of the loans sold were designated as pending/pre-foreclosure by us.

In connection with these sales, we were required to make certain representations and warranties to the buyers that are typical in these types of transactions.

If there is a material breach in any of theses representations and warranties, we may be liable for any damages incurred by the buyer as a result of such breach or we may be obligated to repurchase one or more of the sold loans that is directly impacted by the breach or replace the impacted loan with another loan.

In connection with these sales, we may be required to make certain representations and warranties to the buyers that are typical in these types of transactions.

If there is a material breach in any of these representations and warranties, we may be liable for any damages incurred by the buyer as a result of such breach or we may be obligated to repurchase one or more of the sold loans that is directly impacted by the breach or replace the impacted loan with another loan.

Any remedy, whether we have to pay damages or repurchase or replace a loan, could have a material adverse impact on our business, operations and financial condition.

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If we cannot access external sources of capital on favorable terms or at all, our ability to execute our business and growth strategies will be impaired.

In addition to the usual operating expenses, we have significant other cash requirements, notably interest and dividend payments (to maintain our REIT status, we are required to distribute at least 90% of our taxable income on a annual basis) and loan repayments ($56.4 million principal amount of Notes will become due in September of 2025 and another $51.8 million principal amount of Notes will become due in December of 2026.) Consequently, we rely on third-party sources of capital to fund a substantial amount of our working capital needs.

In addition to the usual operating expenses, we have significant other cash requirements, notably interest and dividend payments (to maintain our REIT status, we are required to distribute at least 90% of our taxable income on a annual basis) and loan repayments ($51.8 million principal amount of Notes will become due in December 2026 and an aggregate of an additional $121.5 million principal amount of Notes will become at various due dates in 2027.) Consequently, we rely on third-party sources of capital to fund a substantial amount of our working capital needs.

Our access to third-party sources of capital depends, in part, on general market conditions, the market’s perception of our growth potential, leverage, current and expected results of operations, liquidity, financial condition and cash distributions to shareholders and the market price of our equity securities.

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Our organizational documents contain no limitations regarding the maximum level of indebtedness, whether as a percentage of our market capitalization or otherwise, that we may incur.

The amount of leverage that we employ depends on managements assessment of market and other factors at the time of any proposed borrowing.

The amount of leverage that we employ depends on management's assessment of market and other factors at the time of any proposed borrowing.

As our capital needs continue to grow, we anticipate increasing our overall indebtedness.

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• our cash flow may be insufficient to meet our required principal and interest payments;

● we may use a substantial portion of our cash flows to make principal and interest payments and we may be unable to obtain additional financing as needed or on favorable terms, which could, among other things, have a material adverse effect on our ability to capitalize upon acquisition opportunities, fund working capital, make capital expenditures, make cash distributions to our shareholders, or meet our other business needs;

• we may use a substantial portion of our cash flows to make principal and interest payments and we may be unable to obtain additional financing as needed or on favorable terms, which could, among other things, have a material adverse effect on our ability to capitalize upon acquisition opportunities, fund

working capital, make capital expenditures, make cash distributions to our shareholders, or meet our other business needs;

• we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

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If we default on our obligations, we may suffer adverse consequences.

Borrowings, also known as leverage, magnify the potential for income gain or loss on amounts invested in loans and, therefore, increase the risks associated with investing in us.

Indebtedness for borrowed money, also known as "leverage", magnify the potential for income gain or loss on amounts invested in loans and, therefore, increase the risks associated with investing in us.

We borrow from and issue senior debt securities to banks and other lenders that are secured by liens on our assets.

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Our outstanding indebtedness imposes, and additional debt we may incur in the future will likely impose, financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a REIT.

Total outstanding indebtedness at December 31, 2024 was $304.9 million, which included $230.2 million aggregate outstanding principal balance of Notes, $40 million outstanding on the Needham Credit Facility (since reduced to $36.1 million), $33.7 million outstanding on the Churchill Credit Facility, and $1.0 million outstanding on the NHB Mortgage.

All amounts borrowed under the Needham Credit Facility are secured by a first priority lien on virtually all our assets excluding real estate owned by us (other than real estate acquired pursuant to foreclosure) and mortgages sold under the Churchill Credit Facility.

To secure our obligations under the Churchill Credit Facility, we grant Churchill a first priority security interest on the mortgage loans that are that are sold to Churchill under that facility.

Total outstanding indebtedness at December 31, 2025 was $277.8 million, which included $171.3 million aggregate outstanding principal balance of Notes, $86.6 million of senior secured notes payable, $19.0 million outstanding on the Needham Credit Facility, and $0.9 million outstanding on the NHB Mortgage.

The NHB Mortgage is secured by a first mortgage lien on the property located at 568 E.

Main Street, Branford Connecticut, which we own and which is our principal place of business.

In addition, the Churchill Credit Facility and the NHB Mortgage have cross default provisions, which means that a default under the terms of any other indebtedness, would also be an event of default under the Churchill Credit Facility and the NHB Mortgage as well.

Thus, any default under the Needham Credit or the Churchill Credit Facility or the NHB Mortgage could have a material adverse effect on our business, financial condition and results of operations, cash flows, our ability to make distributions to shareholders and make the interest payment on the Notes.

In addition, the NHB Mortgage has cross default provisions, which means that a default under the terms of any other indebtedness, would also be an event of default under the NHB Mortgage as well.

Thus, any default under the Needham Credit or the NHB Mortgage could have a material adverse effect on our business, financial condition and results of operations, cash flows, our ability to make distributions to shareholders and make the interest payment on the Notes.

Under the Indenture governing the Notes, as well as the agreements relating to our various credit facilities, we are generally required to meet an asset coverage ratio at least equal to 150%, respectively, of total assets to total borrowings and other senior securities, which include all our borrowings and any redeemable preferred stock we may issue in the future.

In addition, we cannot pay dividends to our shareholders to the extent such dividends would cause us to fall below the 150% asset coverage ratio.

If this ratio declines below 150%, we may not be able to incur additional debt and may need to sell a portion of our investments to repay some debt when it is disadvantageous to do so, and we may not be able to make distributions to our shareholders.

If this ratio declines below 150%, we may not be able to incur additional debt and may need

to sell a portion of our investments to repay some debt when it is disadvantageous to do so, and we may not be able to make distributions to our shareholders.

Any default under the agreements governing our existing indebtedness, or other indebtedness that we may incur in the future that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal and interest on the Notes and substantially decrease the market value of the Notes.

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If we are unable to repay indebtedness, lenders having secured obligations could proceed against the collateral securing the debt.

Because the Churchill Credit Facility and the NHB Mortgage have, and any future credit facilities may have, customary cross-default provisions, if repayment of any outstanding indebtedness, such as the Notes, the Churchill Facility, the NHB Mortgage, the Needham Credit Facility or any future credit facility, is accelerated, we may be unable to repay or finance the amounts due.

Because the NHB Mortgage have, and any future credit facilities may have, customary cross-default provisions, if repayment of any outstanding indebtedness, such as the Notes, the NHB Mortgage, the Needham Credit Facility or any future credit facility, is accelerated, we may be unable to repay or finance the amounts due.

Despite our current debt levels, we may incur substantially more debt or take other actions which could have the effect of diminishing our ability to make payments on our indebtedness when due and distributions to our shareholders.

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The Notes are unsecured.

As a result, they are effectively subordinated to all our existing and future secured indebtedness, such as the Churchill Credit Facility ($33.7 million outstanding balance at December 31, 2024), the Needham Credit Facility, ($40.0 million outstanding balance at December 31, 2024), and the NHB Mortgage, ($1.0 million outstanding balance at December 31, 2024) as well as any secured indebtedness that we may incur in the future, or any indebtedness that is initially unsecured to which we subsequently grant a security interest, to the extent of the value of the assets securing such indebtedness.

As a result, they are effectively subordinated to all our existing and future secured indebtedness, such as the Senior Secured Notes Payable ($90.0 million outstanding principal balance at December 31, 2025), the Needham Credit Facility ($19.0 million outstanding balance at December 31, 2025), and the NHB Mortgage, ($0.9 million outstanding balance at December 31, 2025) as well as any secured indebtedness that we may incur in the future, or any indebtedness that is initially unsecured to which we subsequently grant a security interest, to the extent of the value of the assets securing such indebtedness.

In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes.

The Needham Credit Facility is secured by a first priority lien on virtually all our assets excluding real estate owned by us (other than real estate acquired pursuant to foreclosure) and mortgages sold under the Churchill Credit Facility.

The Churchill Credit Facility is secured by a first priority security interest on the mortgage loans pledged as collateral under the facility.

The NHB Mortgage is secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut.

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Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default.

For example, the indenture under which the Notes are issued does not contain cross-default provisions.

The issuance or incurrence of any indebtedness with incremental protections could affect the market for, trading volume and prices of the Notes.

For example, the indenture under which the Notes are issued

does not contain cross-default provisions.

The issuance of any indebtedness with incremental protections could adversely affect the market for, trading volume and prices of the Notes.

An increase in market interest rates could result in a decrease in the value of the Notes.

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We cannot predict the future level of market interest rates.

Although the Notes are listed on the NYSE American, an active trading market for the Notes may not develop, which could limit the ability of Noteholders to sell the Notes and/or the market price of the Notes.

Although the Notes are listed on the NYSE American, an active trading market for the Notes may not develop, which could limit a noteholder's ability to sell the Notes and/or the market price of the Notes.

Although the Notes are listed on the NYSE American, there is limited trading of the Notes on the exchange and we cannot assure holders of the Notes that an active trading market will develop or be maintained for the Notes.

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To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed.

Accordingly, the Noteholders may be required to bear the financial risk of an investment in the Notes indefinitely.

Accordingly, the holders of Notes may be required to bear the financial risk of an investment in the Notes indefinitely.

We may choose to redeem the Notes when prevailing interest rates are relatively low.

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The Series A Preferred Stock effectively ranks junior to all our indebtedness and other liabilities and of our subsidiaries.

In the event of our bankruptcy, liquidation, dissolution or winding up of our affairs, our assets will be available to pay obligations on the Series A Preferred Stock only after all of our indebtedness and other liabilities have been paid.

At December 31, 2024, our total outstanding indebtedness, including the aggregate outstanding principal amount of the Notes (net of deferred financing costs), amounts due under the Churchill Credit Facility, the NHB Mortgage and the Needham Credit Facility, totaled $301.2 million, and total liabilities were $310.3 million.

In the event of a bankruptcy, liquidation, dissolution or winding up of our affairs, our assets will be available to pay obligations on the Series A Preferred Stock only after all our indebtedness and other liabilities and that of our subsidiaries have been paid in full.

At December 31, 2025, the aggregate liquidation preference of the issued and outstanding shares Series A Preferred Stock was $57.8 million and our total liabilities on a consolidated basis were $285.1 million.

The rights of holders of the Series A Preferred Stock to participate in the distribution of our assets will rank junior to the prior claims of our current and future creditors and any future series or class of preferred stock we may issue that ranks senior to the Series A Preferred Stock.

In addition, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries in that the Series A Preferred Stock is structurally subordinated to these types of indebtedness and other liabilities.

Similarly, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries.

Our existing subsidiaries are, and any future subsidiaries would be, separate legal entities and have no legal obligation to pay any amounts to us in respect of dividends due on the Series A Preferred Stock.

If we are forced to liquidate our assets to pay our creditors, we may not have sufficient assets to pay amounts due with respect to the outstanding shares of the Series A Preferred Stock.

If we are forced to liquidate our assets to pay our creditors, we may not have sufficient assets to pay amounts due with respect to the outstanding shares of Series A Preferred Stock.

We and our subsidiaries have incurred and may in the future incur substantial amounts of debt and other obligations that will rank senior to the Series A Preferred Stock.

Certain of our existing or future debt instruments may restrict the authorization, payment or setting apart of dividends on the Series A Preferred Stock.

Future offerings of debt or senior equity securities may adversely affect the market price of the Series A Preferred Stock.

If we decide to issue debt or senior equity securities in the future, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility.

Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the Series A Preferred Stock and may result in dilution to owners of the Series A Preferred Stock.

We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities.

Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.

As a result, future offerings of debt or senior equity securities may adversely affect the market price of the Series A Preferred Stock.

In addition, if we issue debt or senior equity securities in the future, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility, including the ability to pay dividends.

Furthermore, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the Series A Preferred Stock and may dilute the ownership interest of the holders of the Series A Preferred Stock.

We and, indirectly, our shareholders, including holders of the Series A Preferred Stock will bear the cost of issuing and servicing such securities.

Thus, holders of the Series A Preferred Stock will bear the risk of our future offerings reducing the market price of the Series A Preferred Stock and diluting the value of their holdings in us.

We may issue additional shares of Series A Preferred Stock and additional series of preferred shares that rank on parity with the Series A Preferred Stock as to dividend rights, rights upon liquidation or voting rights.

We are allowed to issue additional shares of Series A Preferred Stock and additional series of preferred shares that would rank equally to the Series A Preferred Stock as to dividend payments and rights upon our liquidation, dissolution or winding up of our affairs pursuant to our certificate of incorporation, as amended, including the certificate of amendment creating the Series A Preferred Stock without any vote of the holders of the Series A Preferred Stock.

The issuance of additional shares of Series A Preferred Stock and additional series of parity preferred stock could have the effect of reducing the amounts available to the holders of the Series A Preferred Stock issued in this offering upon our liquidation or dissolution or the winding up of our affairs.

It also may reduce dividend payments on the Series A Preferred Stock issued in this offering if we do not have sufficient funds to pay dividends on all Series A Preferred Stock outstanding and other classes of stock with equal priority with respect to dividends.

In addition, although holders of shares of Series A Preferred Stock are entitled to limited voting rights, the Series A Preferred Stock will vote separately as a class together with all other classes or series of our preferred shares that we may issue upon which like voting rights have been conferred and are exercisable.

We may issue additional shares of Series A Preferred Stock in the future and may create new classes or series of preferred shares that would rank equal or senior to the Series A Preferred Stock with respect to dividend payments and rights upon liquidation, dissolution or winding up of our affairs.

The issuance of additional shares of Series A Preferred Stock and additional series of parity preferred stock may reduce amounts available to the holders of the Series A Preferred Stock upon our liquidation or dissolution or the winding up of our affairs.

It also may reduce dividend payments on the Series A Preferred Stock if we do not have sufficient funds to pay dividends on all Series A Preferred Stock outstanding and other classes of stock with equal priority with respect to dividends.

Although holders of shares of Series A Preferred Stock are entitled to limited voting rights, the Series A Preferred Stock will vote separately as a class together with all other classes or series of our preferred shares that we may issue upon which like voting rights have been conferred.

As a result, the voting rights of holders of shares of Series A Preferred Stock may be significantly diluted, and the holders of such other series of preferred shares that we may issue may be able to control or significantly influence the outcome of any vote.

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One of the factors that will influence the price of the Series A Preferred Stock will be the dividend yield on the Series A Preferred Stock (as a percentage of the market price of the Series A Preferred Stock) relative to market interest rates.

Dividends on the Series A Preferred Stock are payable at the rate of 7.75% per annum.

An increase in market interest rates may lead prospective purchasers of the Series A Preferred Stock to expect a higher dividend yield (and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for dividend payments).

Thus, higher market interest rates could cause the market price of the Series A Preferred Stock to materially decrease.

Thus, higher market interest rates could cause the market price of the Series A Preferred Stock to materially decrease and reduce the amount of funds available and that may be used to make dividend payments.

Our ability to pay dividends is limited by the requirements of New York law.

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Accordingly, we may not make a distribution on the Series A Preferred Stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or, except in limited circumstances, our total assets would be less than the sum of our total liabilities plus, unless the charter provides otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of shares of any class or series of preferred shares then outstanding, if any, with preferences senior to those of the Series A Preferred Stock.

Our cash available for distribution may not be sufficient to pay dividends on the Series A Preferred Stock at the stated dividend rate.

Dividends on the Series A Preferred Stock are payable quarterly subject to being authorized by the Board in its sole discretion out of assets legally available therefor and will depend on a number of factors, including our earnings, our financial condition, restrictions under applicable law, our need to comply with the terms of our existing financing arrangements, our capital requirements and such other factors as the Board may deem relevant from time to time.

To the extent, earnings and/or cash flow from operations are insufficient to fund dividend payments, we may make up the shortfall from working capital, proceeds from the sale of securities, other financing facilities or from the sale of assets.

Funding dividend payments from working capital could restrict our operations.

If we are required to sell assets, such sales may occur at a time or in a manner that does not allow us to realize the full extent of the value of those assets.

If we borrow funds to pay dividends, our leverage ratios and interest expense would increase thereby reducing our earnings and cash flow and making it more difficult for us to obtain additional financing to fund our growth.

Accordingly, we cannot assure you that we will be able to pay dividends in the future.

The change of control conversion rights may not adequately compensate the holders of Series A Preferred Stock in the event we undergo a change of control.

The change of control conversion rights may also make it more difficult for a party to acquire us or discourage a party from acquiring us.

Upon the occurrence of a Change of Control, each holder of shares of Series A Preferred Stock will have the right (unless, prior to the Change of Control Conversion Date (as defined in our certificate of incorporation, as amended), we have provided notice of our election to redeem some or all of the shares of Series A Preferred Stock held by such holder, in which case such holder will have the right only with respect to shares of Series A Preferred Stock that are not called for redemption) to convert some or all of such holder’s shares of Series A Preferred Stock into our Common Shares (or under specified circumstances certain alternative consideration).

Upon the occurrence of a “Change of Control” (as defined in our certificate of incorporation, as amended), each holder of shares of Series A Preferred Stock will have the right (unless, prior to the Change of Control Conversion Date (as defined in our certificate of incorporation, as amended), we have provided notice of our election to redeem some or all of the shares of Series A Preferred Stock held by such holder in which case such holder will have the right only with respect to shares of Series A Preferred Stock that are not called for redemption) to convert some or all of such holder’s shares of Series A Preferred Stock into our Common Shares (or under specified circumstances certain alternative consideration).

Notwithstanding that we generally may not redeem the Series A Preferred Stock prior to June 29, 2026, we have a special optional redemption right to redeem the Series A Preferred Stock in the event of a Change of Control, and holders of the Series A Preferred Stock will not have the right to convert any shares that we have elected to redeem prior to the Change of Control Conversion Date.

If we do not elect to redeem the Series A Preferred Stock prior to the Change of Control Conversion Date, then upon an exercise of their conversion rights, the holders of Series A Preferred Stock will be limited to a maximum number of our Common Shares (or, if applicable, the Alternative Conversion Consideration (as defined in our certificate of incorporation, as amended)) equal to the lesser of (a) the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of Series A Preferred Stock plus the amount of any accumulated and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Series A Preferred Stock, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price (as defined in our certificate of incorporation, as amended);

incorporation, as amended)) equal to the lesser of (a) the quotient obtained by dividing (i) the sum of (A) the $25.00 liquidation preference per share of Series A Preferred Stock plus (B) the amount of any accumulated and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Series A Preferred Stock, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price (as defined in our certificate of incorporation, as amended);

and (b) 25.00, multiplied by the number of shares of Series A Preferred Stock converted.

In addition, the Change of Control conversion feature of the Series A Preferred Stock may have the effect of discouraging a third party from making an acquisition proposal for us or of delaying, deferring or preventing certain of our change of control transactions under circumstances that otherwise could provide the holders of our Common Shares and Series A Preferred Stock with the opportunity to realize a premium over the then-current market price of such stock or that shareholders may otherwise believe is in their best interests.

An increase in the market price of our Common Shares will not necessarily result in an increase in the market price of the Series A Preferred Stock

Since an increase in the market price of our Common Shares will not necessarily result in an increase in the market price of the Series A Preferred Stock, which depends more on the dividend yield relative to other investment opportunities, we cannot assure you that a holder will benefit from an increase in the market price of our Common Shares even upon a conversion.

If we redeem your shares of the Series A Preferred Stock, you will no longer receive dividends.

On or after June 29, 2026, we may, from time to time, at our option redeem, in whole or in part, the outstanding shares of the Series A Preferred Stock.

We may have an incentive to redeem the Series A Preferred Stock if market conditions allow us to issue other preferred stock or debt securities at a rate that is lower than the dividend rate on the Series A Preferred Stock.

If we redeem the Series A Preferred Stock, from and after the redemption date, dividends will cease to accrue on the shares that are redeemed and all your rights as a holder of such shares will terminate except the right to receive the redemption price plus accrued but unpaid dividends, if any.

You should not expect us to redeem shares of the Series A Preferred Stock on or after the date they become redeemable.

The Series A Preferred Stock is a perpetual security, meaning that it has no maturity or mandatory redemption date and is not redeemable at the option of the holders.

Those shares may only be redeemed by us after June 29, 2026 or following a Change in Control (as defined in our certificate of incorporation, as amended).

Our decision to redeem the Series A Preferred Stock will depend on, among other things, our evaluation of our capital position and structure and general market conditions.

The trading price of the Series A Preferred Stock could be substantially affected by various factors.

During the year ended December 31, 2024, the price for our Series A Preferred Stock on the NYSE American has ranged from a high of $24.70 to a low of $15.39.

We cannot assure you that the market price of the Series A Preferred Stock will not fluctuate or decline significantly.

The trading price of the Series A Preferred Stock will depend on many factors, which may change from time to time, including the following:

During the year ended December 31, 2025, the closing price for our Series A Preferred Stock on the NYSE American ranged from a high of $18.99 to a low of $12.54.

The market price of the Series A Preferred Stock in the future may be higher or lower than the limits reflected in the prior sentence depending on many factors, many of which are beyond our control and may not be directly related to our operating performance.

These factors include, but are not limited to, the following:

• increases in prevailing interest rates, which may have an adverse effect on the market price of the Series A Preferred Stock;

• market prices of common and preferred equity securities issued by REITs and other real estate companies;

• our history of timely dividend payments;

• the annual yield from distributions on the Series A Preferred Stock as compared to yields on other financial instruments;

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• actual or anticipated variations in quarterly operating results of us and our competitors.

The market price and trading volume of the Series A Preferred Stock may be volatile and you could experience a loss if you sell your shares.

Even if an active trading market develops for the Series A Preferred Stock, the market price for the shares may be volatile.

Also, the trading volume may fluctuate and cause significant price variations.

If the market price for the Series A Preferred Stock declines significantly, you may not be able to sell your shares at or above the price that you paid for those shares.

Some of the factors that could negatively impact share price or cause fluctuations in price or trading volume include, but are not limited to, the following:

• actual or anticipated variations in our quarterly results of operations;

• changes in our cash flow, earnings estimates or recommendations by securities analysts;

• publication of research report about us or the real estate sector in general;

the extent of investor interest;

increases in market interest rates;

• changes in market valuations of other companies in our peer group;

• strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or business strategy;

• the reputation of REITs generally and specifically of those with portfolios similar to ours,

• the attractiveness of securities of REITs in comparison to securities issued by other entities;

• adverse market reaction to any additional debt that we incur, or acquisitions that we make in the future;

• additions or departures of key management personnel;

• future issuances by us of equity securities;

• actions by institutional or activist investors;

speculation in the press or investment community;

• the realization of any risk factors discussed herein;

• general market and economic conditions.

In sum, we cannot assure you that the market price of the Series A Preferred Stock will not fluctuate significantly in the future.

Our certificate of incorporation, as amended, including the certificate of amendment establishing the terms of the Series A Preferred Stock, contains restrictions upon ownership and transfer of the Series A Preferred Stock, which may impair the ability of holders to convert Series A Preferred Stock into our Common Shares.

Our certificate of incorporation, as amended, including the certificate of amendment creating the Series A Preferred Stock, contains restrictions on ownership and transfer of the Series A Preferred Stock intended, among other things, to assist us in maintaining our qualification as a REIT for federal income tax purposes.

For example, our charter provides that no person may own, or be deemed to own by virtue of applicable attribution provisions of the Code, more than 4.99% (by value or by number of shares, whichever is more restrictive) of our outstanding Common Shares or 4.99% by value of our outstanding shares of capital stock, subject to certain exceptions.

Our certificate of incorporation, as amended, including the certificate of amendment creating the Series A Preferred Stock, contains restrictions on ownership and transfer of the Series A Preferred Stock intended to assist us in maintaining our qualification as a REIT for federal income tax purposes.

Specifically, our charter provides that no person may own, or be deemed to own by virtue of applicable constructive ownership rules of the Code, more than 4.99% (by value or by number of shares, whichever is more restrictive) of our outstanding Common Shares or 4.99% by value of our outstanding shares of capital stock, subject to certain exceptions.

Notwithstanding any other provision of the Series A Preferred Stock, no holder of shares of Series A Preferred Stock will be entitled to convert such stock into our Common Shares to the extent that receipt of our Common Shares would cause the holder to exceed the ownership limitations contained in our certificate of incorporation, as amended, including the certificate of amendment creating the Series A Preferred Stock.

In addition, these restrictions could have takeover defense effects and could reduce the possibility that a third party will attempt to acquire control of us, which could adversely affect the market price of the Series A Preferred Stock.

The Series A Preferred Stock shareholders has extremely limited voting rights.

Our Common Shares are the only class of our securities that carry full voting rights.

Voting rights for holders of shares of Series A Preferred Stock exist primarily with respect to the ability to elect, voting together as a single class with the holders of any other class or series of our preferred shares having similar voting rights, two additional directors to the Board, in the event that six quarterly dividends (whether or not consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to our charter, including the certificate of amendment creating the Series A Preferred Stock, that materially and adversely affect the rights of the holders of shares of Series A Preferred Stock or authorize, increase or create additional classes or series of our stock that are senior to the Series A Preferred Stock.

The Series A Preferred Stock shareholders have limited voting rights.

Generally, the holders of the Series A Preferred Stock have no voting rights.

There are, however, two exceptions.

Holders of shares of Series A Preferred Stock have the right to elect, voting together as a single class with the holders of any other class or series of our preferred shares having similar voting rights, two additional directors to the Board, in the event that six quarterly dividends (whether or not consecutive) payable on the Series A Preferred Stock are in arrears, and the right to vote on amendments to our charter, including amendments to the certificate of amendment creating the Series A Preferred Stock, that materially and adversely affect the rights of the holders of shares of Series A Preferred Stock or that authorize, increase or create additional classes or series of our stock that are senior to the Series A Preferred Stock.

Other than the limited circumstances described in our certificate of incorporation, as amended, holders of shares of Series A Preferred Stock will not have any voting rights.

Future sales of substantial amounts of Series A Preferred Stock, or the possibility that such sales could occur, could adversely affect the market price of the Series A Preferred Stock.

We cannot predict the effect, if any, that future issuances or sales of our securities or the availability of our securities for future issuance or sale, will have on the market price of the Series A Preferred Stock.

Issuances or sales of substantial amounts of our securities, including sales of shares of the Series A Preferred Stock or the perception that such issuances or sales might occur, could negatively impact the market price of the Series A Preferred Stock and the terms upon which we may obtain additional equity financing in the future.

Although the Series A Preferred Stock received a private credit rating of BBB from Egan-Jones Ratings Company at the time of issuance, the Series A Preferred Stock may be downgraded, suspended or withdrawn as a result of the offering of additional shares of Series A Preferred Stock.

At the time of issuance, the Series A Preferred Stock has a private credit rating of BBB from Egan-Jones Ratings Company.

Future sales of substantial amounts of the Series A Preferred Stock, or the possibility that such sales could occur, could adversely affect the market price of the Series A Preferred Stock.

We cannot predict the effect, if any, that future issuances or sales of our securities including sales of the Series A Preferred Stock pursuant to the At Market Issuance Sales Agreement with Ladenburg Thalmann & Co.

and Lucid Capital Markets, LLC, as sales agents (the “Sales Agreement”) or the availability of our securities for future issuance or sale, will have on the market price of the Series A Preferred Stock.

Issuances or sales of substantial amounts of our securities, including sales of shares of the Series A Preferred Stock pursuant to the Sales Agreement or the perception that such issuances or sales might occur, could negatively impact the market price of the Series A Preferred Stock and the terms upon which we may obtain additional equity financing in the future.

Although the Series A Preferred Stock currently has a private credit rating of BBB from Egan-Jones Ratings Company, the Series A Preferred Stock may be downgraded, suspended or withdrawn as a result of the offering of additional shares of Series A Preferred Stock.

The Series A Preferred Stock has a private credit rating of BBB from Egan-Jones Ratings Company.

An explanation of the significance of ratings may be obtained from the rating agency.

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If it is, the liquidity or market value of the Series A Preferred Stock could be adversely affected.

If we are unable to comply with the continued listing requirements of the NYSE American, our Common Shares could be delisted, which could adversely affect the listing of the Series A Preferred Stock.

Currently, our Common Shares and the Series A Preferred Stock are listed on the NYSE American.

In order to maintain this listing, we required to meet certain qualitative tests.

We cannot assure that we will be able to maintain our listing on the NYSE American.

If we fail to do so, it would adversely impact your ability to sell these securities and to obtain accurate pricing information.

It would also make it more difficult for us to raise capital.

Listing on NYSE American does not guarantee an active trading market for the Series A Preferred Stock.

Although the Series A Preferred Stock is currently listed on the NYSE American, there is no guarantee that an active and liquid trading market to sell these shares can be sustained.

If an active trading market cannot be sustained, the market price and liquidity of the Series A Preferred Stock may be adversely affected.

Even if an active trading market is sustained, we cannot assure you that the market price for those shares will equal or exceed the price you paid for your shares.

If the Series A Preferred Stock or our Common Shares are delisted, your ability to transfer or sell your shares of the Series A Preferred Stock may be limited and the market value of the Series A Preferred Stock will likely be materially adversely affected.

Other than in connection with a Change of Control, the Series A Preferred Stock does not contain rights that are intended to protect you if our Common Shares are delisted from the NYSE American.

Because the Series A Preferred Stock has no stated maturity date, you may be forced to hold your shares of the Series A Preferred Stock and receive stated dividends on the Series A Preferred Stock when, as and if authorized by the Board and paid by us with no assurance as to ever receiving the liquidation value thereof.

In addition, if our Common Shares are delisted from the NYSE American, it is likely that the Series A Preferred Stock will be delisted from the NYSE American as well.

Accordingly, if our Common Shares are delisted from the NYSE American, your ability to transfer or sell your shares of the Series A Preferred Stock may be limited and the market value of the Series A Preferred Stock will likely be materially adversely affected.

Risks Relating to our Common Shares

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The stock markets, including the NYSE American, which is the exchange on which we list our Common Shares, have experienced significant price and volume fluctuations.

During the year ended December 31, 2024, the price for our Common Shares on the NYSE American has ranged from a high of $4.54 to a low of $1.17.

We cannot assure you that the market price of our Common Shares will not fluctuate or decline significantly.

Some of the factors that could negatively affect our stock price or result in fluctuations in the price or trading volume of our Common Shares are the following:

During the year ended December 31, 2025, the closing price for our Common Shares on the NYSE American ranged from a high of $1.33 to a low of $0.80.

The market price of our Common Shares may be higher or lower than the limits reflected in the prior sentence depending on many factors, many of which are beyond our control and may not be directly related to our operating performance.

These factors include, but are not limited to, the following:

• our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects;

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If we fail to comply with the continued listing standards of the NYSE American, all or some of our securities that currently are listed on the NYSE American could be delisted.

This would have a material adverse impact on the holders of that security and as us.

The continued listing of our common stock on the NYSE American is contingent on our continued compliance with the listing standards of the exchange.

This would have a material adverse impact on the holders of that security and us.

The continued listing of our Common Shares on the NYSE American is contingent on our continued compliance with the listing standards of the exchange.

The NYSE American retains substantial discretion to, at any time and without notice, suspend dealings in or remove from any security from listing.

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There is no assurance that we will remain in compliance with these standards.

Delisting from the NYSE American would adversely affect our ability to raise additional financing through the public or private sale of equity securities, significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our common stock.

Delisting also could limit our strategic alternatives and attractiveness to potential counterparties and have other negative results, including the potential loss of employee confidence, decreased analyst coverage of our securities, the loss of institutional investors or interest in business development opportunities.

Moreover, we committed in connection with the sale of securities to use commercially reasonable efforts to maintain the listing of our common stock during such time that certain warrants are outstanding.

Moreover, we committed in connection with the sale of securities to use commercially reasonable efforts to maintain the listing of our Common Shares during such time that certain warrants are outstanding.

Risks Related to Regulatory Matters

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Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, which could depress the market price of our Common Shares if it is perceived as a less attractive investment.

The maximum tax rate applicable to income from “qualified dividends” payable by non-REIT “C” corporations to U.S.

stockholders that are individuals, trusts and estates generally is 20% (excluding the 3.8% net investment income tax).

Dividends payable by REITs, however, generally are not eligible for the current reduced rate, except to the extent that certain holding requirements have been met and a REIT’s dividends are attributable to dividends received by a REIT from taxable corporations (such as a “taxable REIT subsidiary”), to income that was subject to tax at the REIT/corporate level, or to dividends properly designated by the REIT as “capital gains dividends.” Effective for taxable years beginning after December 31, 2017, and before January 1, 2026, those U.S.

stockholders may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends).

For those U.S.

stockholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective income tax rate of 29.6% on REIT dividends, which is higher than the 20% tax rate on qualified dividend income paid by non- REIT “C” corporations.

Although the reduced rates applicable to dividend income from non-REIT “C” corporations do not adversely affect the taxation of REITs or dividends payable by REITs, it could cause investors who are non-corporate taxpayers to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT “C” corporations that pay dividends, which could depress the market price of the stock of REITs, including our Common Shares.

Under current tax law, "qualified dividends" are taxed at a 20% rate (excluding the 3.8% net investment income tax) to individuals, trusts and estates.

Distributions from REITs, are not deemed "qualified dividends", except to the extent that certain holding requirements have been met and the dividends are attributable to dividends received by a REIT from taxable corporations (such as a “taxable REIT subsidiary”), or to income that was subject to tax at the REIT/corporate

level, or to dividends properly designated by the REIT as “capital gains dividends.” However, pursuant to the One Big Beautiful Bill Act of 2025 (the "OBBBA"), the deduction previously established under Section 199A of the Code, which allows U.S.

stockholders (other than corporations) to deduct 20% of distributions received from REITs (to the extent such distributions are not "qualified dividends"), has been made permanent.

Thus, despite the permanence of this deduction under the OBBBA, those U.S.

stockholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective income tax rate of 29.6% on REIT dividends, which is still higher than the 20% tax rate on "qualified dividends".

Thus, investors who are non-corporate taxpayers may perceive investments in REITs as less attractive than investments in the stock of non-REIT “C” corporations that pay dividends, which could depress the market price of the stock of REITs, including our Common Shares.

We may in the future choose to pay dividends in the form of Common Shares, in which case shareholders may be required to pay income taxes in the absence of cash dividends.

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We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our Common Shares.

Effective July 4, 2025, the OBBBA was signed into law.

Certain provisions of OBBBA impact us and our shareholders.

Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) permanently reinstates 100% bonus depreciation for certain property acquired after January 19, 2025, (iii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31,

2025, and (iv) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” (i.e.

based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.

The IRS, the U.S.

Treasury Department and Congress frequently review U.S.

federal income tax legislation, regulations and other guidance.

At any time, the U.S.

federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended.

We cannot predict when or if any new U.S.

federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S.

federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively.

We and our shareholders could be adversely affected by any such change in, or any new, U.S.

federal income tax law, regulation or administrative interpretation.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) made significant changes to the U.S.

federal income tax rules for taxation of individuals and corporations.

In the case of individuals, the tax brackets have been adjusted, the top federal income rate has been reduced to 37%, special rules reduce taxation of certain income earned through pass-through entities and reduce the top effective rate applicable to ordinary dividends from REITs to 29.6% (through a 20% deduction for ordinary REIT dividends received) and various deductions have been eliminated or limited, including limiting the deduction for state and local taxes to $10,000 per year.

Most of the changes applicable to individuals are temporary and apply only to taxable years beginning after December 31, 2017 and before January 1, 2026.

The top corporate income tax rate has been reduced to 21%.

There were only minor changes to the REIT rules (other than the 20% deduction applicable to individuals for ordinary REIT dividends received).

The TCJA made numerous other large and small changes to the tax rules that do not affect REITs directly but may affect our shareholders and may indirectly affect us.

For example, the TCJA amends the rules for accrual of income so that income is taken into account no later than when it is taken into account on applicable financial statements, even if financial statements take such income into account before it would accrue under the original issue discount rules, market discount rules or other Code rules.

Such rule may cause us to recognize income before receiving any corresponding receipt of cash.

In addition, the TCJA reduces the limit for individuals’ mortgage interest expense to interest on $750,000 of mortgages and does not permit deduction of interest on home equity loans (after grandfathering all existing mortgages).

Such change, and the reduction in deductions for state and local taxes (including property taxes), may adversely affect the residential mortgage markets in which we invest.

Prospective shareholders are urged to consult with their tax advisors with respect to the status of the TCJA and any other regulatory or administrative developments and proposals and their potential effect on investment in our Common Shares.

federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified.

We cannot predict whether, when or to what extent new U.S.

federal tax laws, regulations, interpretations or rulings will be adopted or modified.

Changes to the tax laws, including the possibility of major tax legislation, possibly with retroactive application, may adversely affect how we or our shareholders are taxed.

We urge our shareholders and prospective shareholders to consult with their tax advisors with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our Common Shares.

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What changed 10-K

Item 1A. Risk Factors