UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

001-36312

(Commission File Number)

POWER REIT

(Exact name of registrant as specified in its charter)

Maryland	45-3116572
(State of Organization)	(I.R.S. Employer Identification No.)
301 Winding Road, Old Bethpage, NY	11804
(Address of principal executive offices)	(Zip Code)

(212) 750-0371

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

1,872,939 common shares, $0.001 par value, outstanding at July 29, 2019.

TABLE OF CONTENTS

	Page No.
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements (Unaudited)
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Operations (Unaudited)	4
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	5
Consolidated Statements of Cash Flows (Unaudited)	6
Notes to Unaudited Consolidated Financial Statements	7
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	14
Item 4 – Controls and Procedures	14
PART II – OTHER INFORMATION
Item 1 – Risk Factors	15
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3 – Defaults Upon Senior Securities	15
Item 4 – Mine Safety Disclosures	15
Item 5 – Other Information	15
Item 6 – Exhibits	15
SIGNATURE	16

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

POWER REIT AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	June 30, 2019			December 31, 2018
ASSETS
Land	$	6,788,067		$	6,788,067
Net investment in capital lease - railroad		9,150,000			9,150,000
Total real estate assets		15,938,067			15,938,067
Cash and cash equivalents		2,133,793			1,771,011
Prepaid expenses		51,749			16,795
Intangible assets, net of accumulated amortization		3,708,025			3,826,595
Other assets		414,098			342,668
TOTAL ASSETS	$	22,245,732		$	21,895,136
LIABILITIES AND EQUITY
Deferred revenue	$	109,740		$	32,851
Accounts payable		41,729			24,828
Accounts payable - Related party		-			1,374
Accrued interest		84,392			87,846
Current portion of long-term debt		406,043			389,996
Long-term debt		9,031,255			9,167,336
TOTAL LIABILITIES		9,673,159			9,704,231
Series A 7.75% Cumulative Redeemable Perpetual Preferred Stock Par Value $25.00 (175,000 shares authorized; 144,636 issued and outstanding as of June 30, 2019 and December 31, 2018)		3,492,149			3,492,149
					--
Commitments and Contingencies
Equity:
Common Shares, $0.001 par value (100,000,000 shares authorized; 1,872,939 shares issued and outstanding at June 30, 2019 and 1,870,139 at December 31, 2018)		1,873			1,870
Additional paid-in capital		11,727,232			11,616,154
Accumulated deficit		(2,648,681	)		(2,919,268	)
Total Equity		9,080,424			8,698,756
TOTAL LIABILITIES AND EQUITY	$	22,245,732		$	21,895,136

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

POWER REIT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
REVENUE
Lease income from capital lease – railroad, net	$	228,750		$	228,750		$	457,500		$	457,500
Rental income		262,528			262,528			525,055			525,055
Misc. income		4,333			2,364			7,649			3,690
TOTAL REVENUE		495,611			493,642			990,204			986,245
EXPENSES
Amortization of intangible assets		59,285			59,285			118,570			118,570
General and administrative		102,273			105,039			218,048			197,828
Property tax		5,557			2,782			11,113			8,269
Interest expense		115,038			119,044			231,770			239,439
TOTAL EXPENSES		282,153			286,150			579,501			564,106
NET INCOME		213,458			207,492			410,703			422,139
Preferred Stock Dividends		(70,058	)		(70,058	)		(140,116	)		(140,116	)
NET INCOME ATTRIBUTABLE TO COMMON SHARES	$	143,400		$	137,434		$	270,587		$	282,023
Income Per Common Share:
Basic and diluted	$	0.08		$	0.08		$	0.14		$	0.15
Weighted Average Number of Shares Outstanding:
Basic and diluted		1,870,192			1,827,338			1,870,165			1,827,338
Cash dividend per Series A Preferred Share	$	0.48		$	0.48		$	0.97		$	0.97

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

POWER REIT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Quarters Ended June, 30, 2018 and 2019

							Retained
					Additional		Earnings/			Total
	Common Shares				Paid-in		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2017		1,827,338	$	1,827	$	11,393,476	$	(3,477,847	)	$	7,917,456
Net Income		-		-		-		214,647			214,647
Cash Dividends on Preferred Stock		-		-		-		(70,058	)		(70,058	)
Stock-Based Compensation		-		-		47,363		-			47,363
Balance at March 31, 2018		1,827,338	$	1,827	$	11,440,839	$	(3,333,258	)	$	8,109,408
Net Income		-		-		-		207,492			207,492
Cash dividends on Preferred Stock		-		-		-		(70,058	)		(70,058	)
Stock-based compensation		-		-		43,229		-			43,229
Balance at June 30, 2018		1,827,338	$	1,827	$	11,484,068	$	(3,195,824	)	$	8,290,071

							Retained
					Additional		Earnings/			Total
	Common Shares				Paid-in		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2018		1,870,139	$	1,870	$	11,616,154	$	(2,919,268	)	$	8,698,756
Net Income		-		-		-		197,245			197,245
Cash Dividends on Preferred Stock		-		-		-		(70,058	)		(70,058	)
Stock-Based Compensation		-		-		63,954		-			63,954
Balance at March 31, 2019		1,870,139	$	1,870	$	11,680,108	$	(2,792,081	)	$	8,889,897
Net Income								213,458			213,458
Cash dividends on Preferred Stock								(70,058	)		(70,058	)
Stock-based compensation		2,800		3		47,124					47,127
Balance at June 30, 2019		1,872,939	$	1,873	$	11,727,232	$	(2,648,681	)	$	9,080,424

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

POWER REIT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2019			2018
Operating activities
Net Income	$	410,703		$	422,139
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		118,570			118,570
Amortization of debt costs		12,595			12,595
Stock-based compensation		111,081			90,592
Changes in operating assets and liabilities
(Decrease)/Increase in accounts payable related party		(1,374	)		99
(Decrease) in other assets		(71,430	)		(74,408	)
(Decrease) in prepaid expenses		(34,954	)		(16,346	)
(Decrease)/Increase in accounts payable		16,901			(640	)
(Decrease) in accrued interest		(3,454	)		(3,721	)
Increase in deferred revenue		76,889			76,464
Net cash provided by operating activities		635,527			625,344
Financing Activities
Principal payment on long-term debt		(132,629	)		(117,315	)
Cash dividends paid on preferred stock		(140,116	)		(140,116	)
Net cash used in financing activities		(272,745	)		(257,431	)
Net increase in cash and cash equivalents		362,782			367,913
Cash and cash equivalents, beginning of period		1,771,011			1,146,730
Cash and cash equivalents, end of period	$	2,133,793		$	1,514,643
Supplemental disclosure of cash flow information:
Interest paid	$	222,629		$	236,439

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

POWER REIT AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

1. GENERAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company, as defined below, these unaudited consolidated financial statements include all adjustments necessary to present fairly the information set forth herein. All such adjustments are of a normal recurring nature. Results for interim periods are not necessarily indicative of results to be expected for a full year.

These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes included in our latest Annual Report on Form 10-K filed with the SEC on March 25, 2019.

Power REIT (the “Registrant” or the “Trust”, and together with its consolidated subsidiaries, “we”, “us”, the “Company” or “Power REIT”, unless the context requires otherwise) is a Maryland-domiciled real estate investment trust (a “REIT”) that holds, develops, acquires and manages real estate assets related to transportation and energy infrastructure in the United States. Within the transportation and energy infrastructure sectors, Power REIT is focused on making new acquisitions of real estate that are or will be leased to renewable energy generation projects, such as utility-scale solar farms and wind farms that have low or minimal technology risk.

The Trust is structured as a holding company and owns its assets through four 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, 2019, the Trust’s 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”) and approximately 601 acres of fee simple land leased to a number of solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (“MW”). Power REIT is actively seeking to expand its portfolio of real estate related to renewable energy generation projects and is pursuing investment opportunities that qualify for REIT ownership within solar, wind, hydroelectric, geothermal, transmission and other infrastructure projects.

During the six months ended June 30, 2019, the Trust paid quarterly dividends totaling approximately $140,000 ($0.484375 per share per quarter) on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock.

The Trust was formed as part of a reorganization and reverse triangular merger of P&WV that closed on December 2, 2011. P&WV survived the reorganization as a wholly-owned subsidiary of the Trust.

The Trust has elected to be treated for tax purposes as a REIT, which means that it is exempt from U.S. federal income tax if a sufficient portion of its annual income is distributed to its shareholders, and if certain other requirements are met. In order for the Trust to maintain its REIT qualification, at least 90% of its ordinary taxable annual income must be distributed to shareholders.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).”

7

POWER REIT AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No 2016-02 “Leases” (Topic 842). The standard requires companies that lease valuable assets like aircraft, real estate, and heavy equipment to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. The standard also requires companies to disclose in the footnotes to their financial statements information about the amount, timing, and uncertainty for the payments they make for the lease agreements. This standard is effective for fiscal years and interim periods beginning after December 15, 2018, and the Company adopted the standard using the modified retrospective approach effective January 1, 2019. The lessor accounting model under ASC 842 is similar to existing guidance, however, it limits the capitalization of initial direct leasing costs, such as internally generated costs.

The Company elected all practical expedients permitted under ASC 842, other than the hindsight practical expedient. Accordingly, the Company will retain distinction between a finance lease (i.e., capital leases under existing guidance) and an operating lease and account for its existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease under ASC 842, (b) whether classification of the operating leases would be different in accordance with ASC 842c or (c) whether the unamortized initial direct costs before transition adjustments would have met the definition of initial direct costs in ASC 842 at lease commencement. The Company does not have a cumulative effect adjustment to retained earnings upon adoption.

In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718),” which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The adoption of ASU 2018-07 on January 1, 2019, did not have a significant impact on our Consolidated Financial Statements.

Principles of Consolidation

The accompanying consolidated financial statements include Power REIT and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.

Fair Value

Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Trust measures its financial assets and liabilities in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

○

Level 1 – valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow a company to sell its ownership interest back at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities or funds.

○

Level 2 – valuations for assets and liabilities traded in less active dealer, or broker markets, such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active. Level 2 includes U.S. Treasury, U.S. government and agency debt securities, and certain corporate obligations. Valuations are usually obtained from third party pricing services for identical or comparable assets or liabilities.

8

POWER REIT AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

○ Level 3 – valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

In determining fair value, the Trust utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considering counterparty credit risk.

The carrying amounts of Power REIT’s financial instruments, including cash and cash equivalents, deposits, and accounts payable approximate fair value because of their relatively short-term maturities. The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. There are no financial assets and liabilities carried at fair value on a recurring basis as of June 30, 2019 and December 31, 2018.

3. LONG-TERM DEBT

On November 6, 2015, PWRS borrowed $10,150,000 pursuant to a bond offering (the “PWRS Bonds”). The PWRS Bonds are secured by land and intangibles owned by PWRS and have a total obligation of $10,150,000. The PWRS Bonds carry a fixed annual interest rate of 4.34% and matures in 2034. During 2015, the Trust capitalized approximately $441,000 of expenses related to the PWRS Bonds of which approximately $97,000 was paid in cash and approximately 344,000 was incurred through issuance of debt. This amount is amortized over the life of the PWRS Bonds. As of June 30, 2019 and December 31 2018, the balance of the PWRS Bonds was approximately $8,768,000 (net of unamortized debt costs of approximately $337,000) and $8,870,000 (net of unamortized debt costs of approximately $348,000), respectively.

On July 5, 2013, PWSS borrowed $750,000 from a regional bank (the “PWSS Term Loan”). The PWSS Term Loan carries a fixed interest rate of 5.0%, a term of 10-years and amortizes based on a twenty-year principal amortization schedule. In addition to being secured by PWSS’ real estate assets, the term loan is secured by a parent guarantee from the Trust. The balance of the PWSS Term Loan as of June 30, 2019 and December 31, 2018 is approximately $592,000 (net of approximately $11,000 of capitalized debt costs which are being amortized over the life of the financing) and $605,000 (net of approximately $12,000 of capitalized debt costs which are being amortized over the life of the financing), respectively.

On December 31, 2012, as part of the Salisbury land acquisition, PWSS assumed existing municipal financing (“Municipal Debt”). The Municipal Debt has approximately 15 years remaining. The Municipal Debt has a simple interest rate of 5.0% that is paid annually, with the next payment due February 1, 2020. The balance of the Municipal Debt as of June 30, 2019 and December 31, 2018 is approximately $77,000 and $83,000 respectively.

9

POWER REIT AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

4. EQUITY AND LONG-TERM COMPENSATION

Summary of Stock Based Compensation Activity – Options

The summary of stock based compensation activity for the six months ended June 30, 2019, with respect to the Trust’s stock options, was as follows:

Summary of Activity - Options

			Weighted
	Number of		Average		Aggregate
	Options		Exercise Price		Intrinsic Value
Balance as of December 31, 2018		106,000		7.96		-
Plan Awards		-		-		-
Options Exercised		-		-		-
Balance as of June 30, 2019		106,000		7.96		-
Options vested at June 30, 2019		106,000		7.96		-

The weighted average remaining term of the options is approximately 3.12 years.

Summary of Plan Activity – Restricted Stock

The summary of Plan activity for the six months ended June 30, 2019, with respect to the Trust’s restricted stock, was as follows:

Summary of Activity - Restricted Stock

	Number of			Weighted
	Shares of			Average
	Restricted			Grant Date
	Stock			Fair Value
Balance as of December 31, 2018		54,033			6.23
Plan Awards		2,800			-
Restricted Stock Vested		(18,066	)		6.15
Balance as of June 30, 2019		38,767			6.24

Stock-based Compensation

During the first six months of 2019, the Trust recorded approximately $111,000 of non-cash expense related to restricted stock and options granted compared to approximately $91,000 for the first six months of 2018. As of June 30, 2019 there was approximately $242,000 of total unrecognized share-based compensation expense, which expense will be recognized through the second quarter of 2021 equating to a weighted average amortization period of approximately 2 years from the issuance date. The Trust does not currently have a policy regarding the repurchase of shares on the open market related to equity awards and does not currently intend to acquire shares on the open market.

10

POWER REIT AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

Preferred Stock Dividends

During the first six months of 2019, the Trust paid a total of approximately $140,000 of dividends to holders of Power REIT’s Series A Preferred Stock.

5. RELATED PARTY TRANSACTIONS

The Trust and its subsidiaries have hired Cohen, LLP (“Morrison Cohen”) as their legal counsel with respect to general corporate matters and the litigation with NSC. The spouse of the Trust’s Chairman, CEO, Secretary and Treasurer is a partner at Morrison Cohen. During the six months ended June 30, 2019, Power REIT (on a consolidated basis) did not pay any legal fees and costs to Morrison Cohen in connection with various legal matters, including the litigation with NSC.

A wholly-owned subsidiary of Hudson Bay Partners, LP (“HBP”), an entity associated with the CEO of the company, David Lesser, provides the Trust and its subsidiaries with office space at no cost. Effective September 2016, the Board of Directors approved reimbursing an affiliate of HBP $1,000 per month for administrative and accounting support based on a conclusion that it would pay more for such support from a third party. A total of $6,000 was paid pursuant to this arrangement during the six months ended June 30, 2019.

Under the Trust’s Declaration of Trust, the Trust may enter into transactions in which trustees, officers or employees have a financial interest, provided however, that in the case of a material financial interest, the transaction is disclosed to the Board of Trustees or the transaction shall be fair and reasonable. After consideration of the terms and conditions of the retention of Morrison Cohen described herein, and the reimbursement to HBP described herein, the independent trustees approved such arrangements having determined such arrangement are fair and reasonable and in the interest of the Trust.

David Lesser, CEO, paid expenses on behalf of the Company in the amount of $1,374 during 2018 which is disclosed as accounts payable – related party in the consolidated balance sheets. The amount is non-interest bearing, unsecured, and due on demand. During the quarter ended June 30, 2019, the accounts payable – related party was repaid.

6. SUBSEQUENT EVENTS

On July 12, 2019, Power REIT (the “Trust”) acquired two properties located in southern Colorado (the “Properties”) through a newly formed wholly owned subsidiary of a newly formed wholly owned subsidiary of the Trust (the “PropCo”). The properties were acquired for a combined total of $1,770,000 and is comprised of 7.31 acres. The properties have 2 existing greenhouses and processing facilities totaling 18,612 square feet. The purchase price of $1,770,000 plus acquisition expenses was paid with existing working capital.

Propco has entered into two cross-collateralized and cross-defaulted triple-net leases (the “Leases”) with JAB Industries Ltd. (“Tenant”) for the Properties. The leases provide that Tenant is responsible for paying all expenses related to the Properties, including maintenance expenses, insurance and taxes. The term of each of the leases is 20 years and provides two options to extend for additional five-year periods. The leases also have financial guarantees from affiliates of the Tenant. The Tenant intends to operate the Properties as licensed cannabis cultivation and processing facilities.

The rent for each of the leases is structured whereby after a six-month free-rent period, the rental payments provide Power REIT a full return of invested capital over the next three years in equal monthly payments. After the 42nd month, rent is structured to provide a 12.5% return on the original invested capital amount which will increase at a 3% rate per annum. At any time after year six, if cannabis is legalized at the federal level, the rent will be readjusted down to an amount equal to a 9% return on the original invested capital amount and will increase at a 3% rate per annum based on a starting date of the start of year seven.

On July 23, 2019, the Registrant declared a quarterly dividend of $0.484375 per share on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock payable on September 15, 2019 to shareholders of record on August 15, 2019.

11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

You should not place undue reliance on any forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. 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.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Power REIT is a Maryland-domiciled REIT that holds, develops, acquires and manages real estate assets related to transportation and energy infrastructure in the United States. Within the transportation and energy infrastructure sectors, Power REIT is focused on making new acquisitions of real estate that are or will be leased to renewable energy generation projects, such as utility-scale solar farms and wind farms that have low or minimal technology risk.

Power REIT is structured as a holding company and owns its assets through four wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue. Power REIT was formed as part of a reorganization and reverse triangular merger of P&WV that closed on December 2, 2011. P&WV survived the reorganization as a wholly-owned subsidiary of the Registrant. The Company’s investment strategy, which is focused on transportation and energy infrastructure-related real estate, builds upon its subsidiary P&WV’s historical ownership of railroad real estate assets, which are currently triple-net leased to NSC.

12

As of June 30, 2019, the Trust’s assets consisted of approximately 112 miles of railroad infrastructure and related real estate leased to a railway company which is owned by its subsidiary Pittsburgh & West Virginia Railroad (“P&WV”) and approximately 601 acres of fee simple land leased to a number of solar power generating projects with an aggregate generating capacity of approximately 108 MW. Power REIT is actively seeking to expand its portfolio of real estate related to renewable energy generation projects and is pursuing investment opportunities that qualify for REIT ownership within solar, wind, hydroelectric, geothermal, transmission and other infrastructure projects.

Revenue during the first six months of 2019 and 2018 was approximately $990,000 and $986,000 respectively. Net income attributable to Common Shares during the first six months of 2019 and 2018 was approximately $271,000 and 282,000. The difference between our 2019 and 2018 results were principally attributable to the following: an approximately $4,000 increase in Misc. income, 20,000 increase in general and administrative expenses and an 8,000 decrease in interest expense.

The Trust’s cash outlays, other than acquisitions and dividend payments, are for general and administrative (“G&A”) expenses, which consist principally of legal and other professional fees, consultant fees, trustees’ fees, NYSE MKT listing fees, shareholder service company fees and auditing costs. During the four years ended 2016, the Trust (on a consolidated basis) incurred substantial litigation expenses related to its ongoing litigation related to P&WV.

To meet its working capital and longer-term capital needs, Power REIT relies on cash provided by its operating activities, proceeds received from the issuance of equity securities and proceeds received from borrowings, which are typically secured by liens on acquired assets.

FUNDS FROM OPERATIONS – NON GAAP FINANCIAL MEASURES

We assess and measure our overall operating results based upon an industry performance measure referred to as Core Funds From Operations (“Core FFO”) which management believes is a useful indicator of our operating performance. This report contains supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”), including the measure identified by us as Core FFO. Following is a definition of this measure, an explanation as to why we present it and, at the end of this section, a reconciliation of Core FFO to the most directly comparable GAAP financial measure.

Core FFO: Management believes that Core FFO is a useful supplemental measure of the Company’s operating performance. 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 the Company’s asset portfolio and inappropriately affect the comparability of the Company’s period-over-period performance. These items include non-recurring expenses, such as those incurred in connection with litigation, 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. Management believes that, for the foregoing reasons, these adjustments to net income are appropriate. The Company believes that Core FFO is a useful supplemental measure for the investing community to employ, including when comparing the Company to other REITs that disclose similarly adjusted FFO figures, and when analyzing changes in the Company’s performance over time. Readers are cautioned that other REITs may use different adjustments to their GAAP financial measures than we do, and that as a result, the Company’s 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.

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CORE FUNDS FROM OPERATIONS (FFO)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Core FFO Available to Common Shares	$	256,110	$	246,243	$	512,833	$	503,780
Core FFO per common share		0.14		0.13		0.27		0.28
Weighted Average shares outstanding (basic)		1,870,192		1,827,338		1,870,165		1,827,338

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Net income Attributable to Common Shares	$	143,400	$	137,434	$	270,587	$	282,023
Stock-based compensation		47,127		43,229		111,081		90,592
Interest Expense - Amortization of Debt Costs		6,298		6,295		12,595		12,595
Amortization of Intangible Asset		59,285		59,285		118,570		118,570
Core FFO Available to Common Shares	$	256,110	$	246,243	$	512,833	$	503,780

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, the Trust is not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Our management assessed the effectiveness of the design and operation of our disclosure controls and procedures. Based on our evaluation, we believe that our disclosure controls and procedures as of June 30, 2019 were effective.

Changes in Internal Control over Financial Reporting:

During the six months ended June 30, 2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Risk Factors.

The Trust’s results of operations and financial condition are subject to numerous risks and uncertainties as described in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2019, which risk factors are incorporated herein by reference. You should carefully consider these risk factors in conjunction with the other information contained in this report. Should any of these risks materialize, the Trust’s business, financial condition and future prospects could be negatively impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

Not Applicable.

Item 6. Exhibits.

Exhibit Number
Exhibit 31.1	Section 302 Certification for David H. Lesser
Exhibit 32.1	Section 906 Certification for David H. Lesser
Exhibit 101	Interactive data files pursuant to Rule 405 of Regulation S-T, for the quarter ended March 31, 2018: (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows and (iv) Notes to the Consolidated Financial Statements

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

POWER REIT

/s/ David H. Lesser

David H. Lesser

Chairman of the Board &

Chief Executive Officer, Secretary and Treasurer

Date: July 29, 2019

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