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, 2020



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)





Securities
registered pursuant to Section 12(b) of the Act:



|Title
    of each class                                                                                                                                                       |  | Name
    of each exchange on which registered         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------
|Shares
                                         of Beneficial Interest, $0.001 par value                                                                                      |  | NYSE
                                         American
|7.75%
                                         Series A Cumulative Redeemable
        Perpetual
        Preferred Stock,
        Liquidation
        Preference $25 per Share |  | NYSE
                                         American



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 every Interactive Data File required to be submitted 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 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
[X] No [  ]



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



1,912,939
common shares, $0.001 par value, outstanding at July 29, 2020.




















TABLE
OF CONTENTS



|                                                                                              |    | Page
    No.
|--------------------------------------------------------------------------------------------- | -- | ------------
|                                                                                              |    |             
|PART
    I – FINANCIAL INFORMATION                                                            |   
|                                                                                              |    |             
|Item 1– Financial Statements (Unaudited)                                                      | 3 
|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 | 15
|                                                                                              |   
|Item 3 – Quantitative and Qualitative Disclosures About Market Risk                           | 18
|                                                                                              |    |             
|Item 4– Controls and Procedures                                                               | 18
|                                                                                              |    |             
|PART
    II – OTHER INFORMATION                                                               | 19
|                                                                                              |    |             
|Item 1 – Risk Factors                                                                         | 19
|                                                                                              |    |             
|Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                          | 19
|                                                                                              |    |             
|Item 3 – Defaults Upon Senior Securities                                                      | 19
|                                                                                              |    |             
|Item 4 – Mine Safety Disclosures                                                              | 19
|                                                                                              |    |             
|Item 5 – Other Information                                                                    | 19
|                                                                                              |    |             
|Item 6 – Exhibits                                                                             | 19
|                                                                                              |    |             
|SIGNATURE                                                                                     | 20





2







PART
I. FINANCIAL INFORMATION

Item
1. Financial Statements.



POWER
REIT AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS



|                                                                                                                                                                                              |  | (Unaudited)       |            |   |                       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | --------------------- | -
|                                                                                                                                                                                              |  | June
    30, 2020 |            |   | December
    31, 2019 |  
|ASSETS                                                                                                                                                                                        |  |                   |            |   |                       |  
|Land                                                                                                                                                                                          |  | $                 | 7,778,644  |   |                       | $
|Greenhouse
    cultivation facilities, net of accumulated depreciation                                                                                                                        |  |                   | 2,315,080  |   |                       |  
|Construction
    in progress - greenhouse cultivation facilities                                                                                                                              |  |                   | 4,842,686  |   |                       |  
|Net
    investment in direct financing lease - railroad                                                                                                                                       |  |                   | 9,150,000  |   |                       |  
|Total
    real estate assets                                                                                                                                                                  |  |                   | 24,086,410 |   |                       |  
|                                                                                                                                                                                              |  |                   |            |   |                       |  
|Cash
    and cash equivalents                                                                                                                                                                 |  |                   | 10,219,212 |   |                       |  
|Prepaid
    expenses                                                                                                                                                                          |  |                   | 79,205     |   |                       |  
|Intangible
    assets, net of accumulated amortization                                                                                                                                        |  |                   | 3,470,884  |   |                       |  
|Deferred
    rent receivable                                                                                                                                                                  |  |                   | 997,380    |   |                       |  
|Other
    assets                                                                                                                                                                              |  |                   | 16,975     |   |                       |  
|TOTAL
    ASSETS                                                                                                                                                                              |  | $                 | 38,870,066 |   |                       | $
|                                                                                                                                                                                              |  |                   |            |   |                       |  
|LIABILITIES
    AND EQUITY                                                                                                                                                                    |  |                   |            |   |                       |  
|Deferred
    revenue                                                                                                                                                                          |  | $                 | 106,660    |   |                       | $
|Tenant
    security deposit                                                                                                                                                                   |  |                   | 691,872    |   |                       |  
|Accounts
    payable                                                                                                                                                                          |  |                   | 73,238     |   |                       |  
|Accrued
    interest                                                                                                                                                                          |  |                   | 80,895     |   |                       |  
|Current
    portion of long-term debt, net of unamortized discount                                                                                                                            |  |                   | 594,389    |   |                       |  
|Long-term
    debt, net of unamortized discount                                                                                                                                               |  |                   | 23,545,095 |   |                       |  
|TOTAL
    LIABILITIES                                                                                                                                                                         |  |                   | 25,092,149 |   |                       |  
|                                                                                                                                                                                              |  |                   |            |   |                       |  
|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, 2020 and December 31, 2019) |  |                   | 3,492,149  |   |                       |  
|                                                                                                                                                                                              |  |                   |            |   |                       |  
|Equity:                                                                                                                                                                                       |  |                   |            |   |                       |  
|Common
    Shares, $0.001 par value (100,000,000 shares authorized; 1,912,939 shares issued and outstanding at June 30, 2020 and 1,872,939
    at December 31, 2019)                          |  |                   | 1,913      |   |                       |  
|Additional
    paid-in capital                                                                                                                                                                |  |                   | 11,944,737 |   |                       |  
|Accumulated
    deficit                                                                                                                                                                       |  |                   | (1,660,882 | ) |                       |  
|Total
    Equity                                                                                                                                                                              |  |                   | 10,285,768 |   |                       |  
|                                                                                                                                                                                              |  |                   |            |   |                       |  
|TOTAL
    LIABILITIES AND EQUITY                                                                                                                                                              |  | $                 | 38,870,066 |   |                       | $



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, |  
|------------------------------------------------------- |  | ------------------------------- | --------- | - | ----------------------------- | -
|                                                        |  | 2020                            |           |   | 2019                          |  
|REVENUE                                                 |  |                                 |           |   |                               |  
|Lease
    income from direct financing lease – railroad |  | $                               | 228,750   |   |                               | $
|Rental
    income                                       |  |                                 | 735,441   |   |                               |  
|Misc.
    income                                        |  |                                 | 10,931    |   |                               |  
|TOTAL
    REVENUE                                       |  |                                 | 975,122   |   |                               |  
|                                                        |  |                                 |           |   |                               |  
|EXPENSES                                                |  |                                 |           |   |                               |  
|Amortization
    of intangible assets                   |  |                                 | 59,284    |   |                               |  
|General
    and administrative                          |  |                                 | 104,166   |   |                               |  
|Property
    tax                                        |  |                                 | 10,105    |   |                               |  
|Depreciation
    Expense                                |  |                                 | 29,612    |   |                               |  
|Interest
    expense                                    |  |                                 | 292,202   |   |                               |  
|TOTAL
    EXPENSES                                      |  |                                 | 495,369   |   |                               |  
|                                                        |  |                                 |           |   |                               |  
|NET
    INCOME                                          |  |                                 | 479,753   |   |                               |  
|                                                        |  |                                 |           |   |                               |  
|Preferred
    Stock Dividends                           |  |                                 | (70,058   | ) |                               |  
|                                                        |  |                                 |           |   |                               |  
|NET
    INCOME ATTRIBUTABLE TO COMMON SHARES            |  | $                               | 409,695   |   |                               | $
|                                                        |  |                                 |           |   |                               |  
|Income
    Per Common Share:                            |  |                                 |           |   |                               |  
|Basic                                                   |  | $                               | 0.21      |   |                               | $
|Diluted                                                 |  |                                 | 0.21      |   |                               |  
|                                                        |  |                                 |           |   |                               |  
|Weighted
    Average Number of Shares Outstanding:      |  |                                 |           |   |                               |  
|Basic                                                   |  |                                 | 1,912,939 |   |                               |  
|Diluted                                                 |  |                                 | 1,976,050 |   |                               |  
|                                                        |  |                                 |           |   |                               |  
|Cash
    dividend per Series A Preferred Share          |  | $                               | 0.48      |   |                               | $



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 Six Months Ended June 30, 2020 and 2019

(Unaudited)



|                                      |  |                   |           |  |         |   |       | Additional  |  |   |               |  |  | Total  |           
|------------------------------------- |  | ----------------- | --------- |  | ------- | - | ----- | ----------- |  | - | ------------- |  |  | ------ | ----------
|                                      |  | Common
    Shares |           |  | Paid-in |   |       | Accumulated |  |   | Shareholders’ | 
|                                      |  | Shares            |           |  | Amount  |   |       | Capital     |  |   | Deficit       |  |  | Equity |           
|                                      |  |                   |           |  |         |   |       |             |  |   |               |  |  |        |           
|Balance
    at December 31, 2019      |  |                   | 1,872,939 |  |         | $ | 1,873 |             |  | $ | 11,821,486    |  |  | $      | (2,252,606
|Net
    Income                        |  |                   | -         |  |         |   | -     |             |  |   | -             |  |  |        | 252,087   
|Cash
    Dividends on Preferred Stock |  |                   | -         |  |         |   | -     |             |  |   | -             |  |  |        | (70,058   
|Stock-Based
    Compensation          |  |                   | 40,000    |  |         |   | 40    |             |  |   | 75,118        |  |  |        | -         
|Balance
    at March 31, 2020         |  |                   | 1,912,939 |  |         | $ | 1,913 |             |  | $ | 11,896,604    |  |  | $      | (2,070,577
|Net
    Income                        |  |                   | -         |  |         |   | -     |             |  |   | -             |  |  |        | 479,753   
|Cash
    Dividends on Preferred Stock |  |                   | -         |  |         |   | -     |             |  |   | -             |  |  |        | (70,058   
|Stock-Based
    Compensation          |  |                   | -         |  |         |   | -     |             |  |   | 48,133        |  |  |        | -         
|Balance
    at June 30, 2020          |  |                   | 1,912,939 |  |         | $ | 1,913 |             |  | $ | 11,944,737    |  |  | $      | (1,660,882



|                                      |  |                   |           |         |        |   |             | Additional |  |               |            |  |  | 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
|Net
    Income                        |  |                   | -         |         |        |   | -           |            |  |               | -          |  |  |        | 197,245   
|Cash
    Dividends on Preferred Stock |  |                   | -         |         |        |   | -           |            |  |               | -          |  |  |        | (70,058   
|Stock-Based
    Compensation          |  |                   | -         |         |        |   | -           |            |  |               | 63,954     |  |  |        | -         
|Balance
    at March 31, 2019         |  |                   | 1,870,139 |         |        | $ | 1,870       |            |  | $             | 11,680,108 |  |  | $      | (2,792,081
|Net
    Income                        |  |                   | -         |         |        |   | -           |            |  |               | -          |  |  |        | 213,458   
|Cash
    Dividends on Preferred Stock |  |                   | -         |         |        |   | -           |            |  |               | -          |  |  |        | (70,058   
|Stock-Based
    Compensation          |  |                   | 2,800     |         |        |   | 3           |            |  |               | 47,124     |  |  |        | -         
|Balance
    at June 30, 2019          |  |                   | 1,872,939 |         |        | $ | 1,873       |            |  | $             | 11,727,232 |  |  | $      | (2,648,681



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, |           
|------------------------------------------------------------------------------------- |  | ----------------------------- | ----------
|                                                                                      |  | 2020                          |           
|Operating
    activities                                                              |  |                               |           
|Net
    Income                                                                        |  | $                             | 731,840   
|                                                                                      |  |                               |           
|Adjustments
    to reconcile net income to net cash provided by operating activities: |  |                               |           
|Amortization
    of intangible assets                                                 |  |                               | 118,569   
|Amortization
    of debt costs                                                        |  |                               | 17,055    
|Stock-based
    compensation                                                          |  |                               | 123,291   
|Depreciation                                                                          |  |                               | 56,262    
|                                                                                      |  |                               |           
|Changes
    in operating assets and liabilities                                       |  |                               |           
|Accounts
    payable, related party                                                   |  |                               | -         
|Other
    assets                                                                      |  |                               | (275      
|Deferred
    rent receivable                                                          |  |                               | (451,193  
|Prepaid
    expenses                                                                  |  |                               | (64,579   
|Accounts
    payable                                                                  |  |                               | 18,245    
|Security
    deposit                                                                  |  |                               | 577,494   
|Accrued
    interest                                                                  |  |                               | (3,418    
|Deferred
    revenue                                                                  |  |                               | 77,318    
|Net
    cash provided by operating activities                                         |  |                               | 1,200,609 
|                                                                                      |  |                               |           
|Investing
    activities                                                              |  |                               |           
|Cash
    paid for land and greenhouse cultivation facilities                          |  |                               | (1,601,655
|Cash
    paid for construction in progress                                            |  |                               | (4,842,686
|                                                                                      |  |                               |           
|Net
    cash used in investing activities                                             |  | $                             | (6,444,341
|                                                                                      |  |                               |           
|Financing
    Activities                                                              |  |                               |           
|Principal
    payment on long-term debt                                               |  |                               | (239,444  
|Cash
    dividends paid on preferred stock                                            |  |                               | (140,116  
|Net
    cash used in financing activities                                             |  |                               | (379,560  
|                                                                                      |  |                               |           
|Net
    increase (decrease) in cash and cash equivalents                              |  |                               | (5,623,292
|                                                                                      |  |                               |           
|Cash
    and cash equivalents, beginning of period                                    |  |                               | 15,842,504
|                                                                                      |  |                               |           
|Cash
    and cash equivalents, end of period                                          |  | $                             | 10,219,212
|                                                                                      |  |                               |           
|Supplemental
    disclosure of cash flow information:                                 |  |                               |           
|Interest
    paid                                                                     |  | $                             | 568,987   



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 30, 2020.



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,
alternative energy infrastructure and Controlled Environment Agriculture (CEA) in the United States.



The
Trust is structured as a holding company and owns its assets through eleven 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, 2020, 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”), approximately 601 acres of fee simple land leased to a number
of utility scale solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (“MW”)
and approximately 26 acres of land with approximately 131,000 sf of existing or under construction greenhouses leased to five
separate medical cannabis operators. Power REIT is actively seeking to grow its portfolio of real estate related to CEA for food
and cannabis production.



During
the quarter ended June 30, 2020, the Trust paid a quarterly dividend of approximately $140,000 ($0.484375 per share) 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.



7







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



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”).”



Reclassifications



Certain
prior period amounts have been reclassified to conform to the current period presentation.



Principles
of Consolidation



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



Income
per Common Share



Basic
net income per common share is computed by dividing net income available to common stockholders by the weighted average number
of common shares outstanding. Diluted net income per common share is computed similar to basic net income per common share except
that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Company’s options
is computed using the treasury stock method.



The
following table sets forth the computation of basic and diluted Income per Share:



|                                                                                  |  | For
    the three months ended |           |  | For
    the six months ended |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | --------- |  | ---------------------------- | -
|                                                                                  |  | June
    30                    |           |  | June
    30                  |  
|                                                                                  |  | 2020                           |           |  | 2019                         |  
|                                                                                  |  |                                |           |  |                              |  
|Numerator:                                                                        |  |                                |           |  |                              |  
|Net
    Income                                                                    |  | $                              | 409,695   |  |                              | $
|                                                                                  |  |                                |           |  |                              |  
|Numerator
    for basic and diluted EPS - income available to common Shareholders |  | $                              | 409,695   |  |                              | $
|                                                                                  |  |                                |           |  |                              |  
|Denominator:                                                                      |  |                                |           |  |                              |  
|Denominator
    for basic EPS - Weighted average shares                           |  |                                | 1,912,939 |  |                              |  
|Dilutive
    Effect of Options                                                    |  |                                | 63,111    |  |                              |  
|Denominator
    for diluted EPS - adjusted Weighted average shares                |  |                                | 1,976,050 |  |                              |  
|                                                                                  |  |                                |           |  |                              |  
|Basic
    income per common share                                                 |  | $                              | 0.21      |  |                              | $
|Diluted
    income per common share                                               |  | $                              | 0.21      |  |                              | $



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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



| | ○ | 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ○ | 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, 2020 and December 31, 2019.



3.
ACQUISITIONS



On
January 30, 2020, through a newly formed wholly owned subsidiary, PW CO CanRe Mav 14, LLC, Power REIT completed the acquisition
of a greenhouse property in southern Colorado (“Maverick 14”). Maverick 14 was acquired for $850,000 and is 5.54 acres
with an existing greenhouse and processing facility totaling approximately 8,300 square feet approved for medical cannabis cultivation.
The purchase price plus acquisition expenses of $10,424 was paid with existing working capital. As part of the transaction, the
Trust agreed to fund the construction of 15,120 square feet of greenhouse space for $1,058,400 and the tenant has agreed to fund
the construction of approximately 2,520 additional square feet of head-house/processing space on the property. Accordingly, Power
REIT’s total capital commitment is $1,908,400 plus acquisition expenses. As of June 30, 2020, the total construction in
progress that was funded by Power REIT is approximately $846,200.



On
February 20, 2020, through a newly formed wholly owned subsidiary, PW CO CanRE Sherman 6, LLC, Power REIT completed the acquisition
of a property in southern Colorado (“Sherman 6”). Sherman 6 was acquired for $150,000 plus $724 in acquisition expenses
and is 5.0 acres of vacant land approved for medical cannabis cultivation. As part of the transaction, the Trust agreed to fund
the construction of 15,120 square feet of greenhouse space and 7,520 square feet of head-house/processing space on the property
for $1,693,800. Accordingly, Power REIT’s total capital commitment is $1,843,800 plus acquisition costs. As of June 30,
2020, the total construction in progress that was funded by Power REIT is approximately $1,114,600.



On
March 19, 2020, Power REIT, through a newly formed wholly owned subsidiary, PW CO CanRE Mav 5, LLC completed the acquisition of
a property in southern Colorado (“Maverick 5”). Maverick 5 was acquired for $150,000 and is 5.2 acres of vacant land
approved for medical cannabis cultivation. As part of the transaction, the Trust has agreed to fund the construction of 5,040
square feet of greenhouse space and 4,920 square feet of head-house/processing space on the property for $868,125.On
May 1, 2020, Power REIT amended the lease with a Maverick 5, making an additional $340,000 available in funding for land improvements
at the property. The amended lease results in additional straight-line annual rent of approximately $63,000. Accordingly,
Power REIT’s total capital commitment is $1,358,125. As of June 30, 2020, the total construction in progress that was funded
by Power REIT is approximately $708,900.



9







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



On
May 15, 2020, through a newly formed wholly owned subsidiary, PW ME CanRE SD, LLC, Power REIT completed the acquisition of a 3.04
acre property in York County, Maine for $1,000,000. The property includes a 32,800 square-foot greenhouse and 2,800 square foot
processing/distribution building that are both under active construction. As part of the acquisition, Power REIT reimbursed Sweet
Dirt $950,000 related to the partially built greenhouse and fund up to approximately $2.97 million of additional costs to complete
the construction. Accordingly, Power REIT’s total investment in the property is approximately $4.92 million plus acquisition
expenses of $45,500. As of June 30, 2020, the total construction in progress that was funded by Power REIT is approximately $335,000.



The
acquisitions described above are accounted for as asset acquisitions under ASC 805-50. Power REIT has established a depreciable
life for the property improvements of 20 years.



Concurrent
with the closing on the acquisitions, Power REIT entered into leases with tenants that are licensed for the production of medical
cannabis cultivation at the facilities. The combined straight-line annual rent from these four acquisitions is approximately $1,877,000.
Each tenant is responsible for paying all expenses related to the properties including maintenance, insurance and taxes. The term
of each lease 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
following table summarized the allocation of the purchase consideration for Maverick 14 based on the fair values of the assets
acquired:



|Land                                                 |  | $ | 150,000 | 
|---------------------------------------------------- |  | - | ------- | 
|Assets
    subject to depreciation:                  |  |   |         | 
|Improvements
    (Greenhouses / Processing Building) |  |   | 710,424 | 
|                                                     |  |   |         | 
|Total
    Assets Acquired                            |  | $ | 860,424 | 



10







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



The
following table summarizes the allocation of the purchase consideration for Sweet Dirt based on the fair values of the assets
acquired:



|Land                         |  | $ | 400,000   | 
|---------------------------- |  | - | --------- | 
|                             |  |   |           | 
|Construction
    in Progress |  |   | 1,550,000 | 
|                             |  |   |           | 
|Total
    Assets Acquired    |  | $ | 1,950,000 | 



4.
LONG-TERM DEBT



On
November 6, 2015, PWRS, one of the subsidiaries of the Trust, 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, 2020, and December 31, 2019, the balance
of the PWRS Bonds was approximately $8,421,000 (net of unamortized debt costs of approximately $314,000) and $8,538,000 (net of
unamortized debt costs of approximately $325,000), respectively.



On
July 5, 2013, PWSS, one of the subsidiaries of the Trust, 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, 2020 and December 31, 2019 is approximately $565,000 (net of approximately
$8,000 of capitalized debt costs which are being amortized over the life of the financing) and $579,000 (net of approximately
$9,500 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 11 years remaining. The Municipal Debt has a simple interest rate of 5.0% that is paid annually,
with the next payment due February 1, 2021. The balance of the Municipal Debt as of June 30, 2020 and December 31, 2019 is approximately
$70,000 and $77,000 respectively.



On
November 25, 2019, Power REIT, through a newly formed wholly owned subsidiary, completed a financing that is intended to provide
capital for acquisition of additional properties on an accretive basis. The financing is in the form of long-term fixed rate bonds
with gross proceeds of $15,500,000. The bonds carry a fixed interest rate of 4.62% and fully amortize over the life of the financing
which matures in 2054 (35 years). The bonds are fully secured by the equity interest in Power REIT’s indirect wholly owned
subsidiary – PWV. The total debt issuance costs of approximately $312,200 are amortized over the life of the financing.
The balance of the loan as of June 30, 2020 and December 31, 2019 is $15,082,000 (net of approximately $307,000 of capitalized
debt costs) and 15,168,000 (net of approximately $311,000 of capitalized debt costs).



11







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



The
approximate amount of principal payments remaining on Power REIT’s long-term debt as of June 30, 2020 is as follows for
the subsequent years ended December 31:



|                                |  | Total
    Debt |           
|------------------------------- |  | -------------- | ----------
|2020
    (six months remaining) |  | $              | 364,934   
|2021                            |  |                | 635,502   
|2022                            |  |                | 675,374   
|2023                            |  |                | 1,168,297 
|2024                            |  |                | 715,777   
|Thereafter                      |  |                | 21,208,698
|Long
    term debt              |  | $              | 24,768,582



5.
LEASES



Information
as Lessor Under ASC Topic 842



To
generate positive cash flow, as a lessor, the Trust leases its facilities to tenants in exchange for monthly payments. The Trust’s
leases for its railroad, solar farms and greenhouse cultivation facilities have an average lease term of ranging between 20 and
99 years. Payments from the Trust’s leases are recognized on a straight-line basis over the terms of the respective leases.
Rental revenue recognized for the six months ended June 30, 2020 is approximately $1,696,000.



The
aggregate annual cash to be received by the Trust on all leases related to its portfolio as of June 30, 2020 is as follows for
the subsequent years ended December 31:



|                                |  | Total |            
|------------------------------- |  | ----- | -----------
|2020
    (six months remaining) |  | $     | 1,493,876  
|2021                            |  | $     | 5,921,568  
|2022                            |  | $     | 6,275,144  
|2023                            |  | $     | 5,819,737  
|2024                            |  | $     | 3,633,474  
|Thereafter                      |  | $     | 79,275,779 
|Total                           |  | $     | 102,419,578



12







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



6.
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, 2020, with respect to the Trust’s stock options,
was as follows:



|Summary
    of Activity - Options   |  |               |         |  |                    |  |      |           | 
|----------------------------------- |  | ------------- | ------- |  | ------------------ |  | ---- | --------- | 
|                                    |  |               |         |  | Weighted           |  |      | Aggregate | 
|                                    |  | Number
    of |         |  | Average            |  |      | Intrinsic | 
|                                    |  | Options       |         |  | Exercise
    Price |  |      | Value     | 
|Balance
    as of December 31, 2019 |  |               | 106,000 |  |                    |  | 7.96 |           | 
|Plan
    Awards                     |  |               | -       |  |                    |  | -    |           | 
|Options
    Exercised               |  |               | -       |  |                    |  | -    |           | 
|Balance
    as of June 30, 2020     |  |               | 106,000 |  |                    |  | 7.96 |           | 
|Options
    vested at June 30, 2020 |  |               | 106,000 |  |                    |  | 7.96 |           | 



The
weighted average remaining term of the options is approximately 2.12 years.



Summary
of Plan Activity – Restricted Stock



The
summary of Plan activity for the six months ended June 30, 2020, with respect to the Trust’s restricted stock, was as follows:



|                                    |  | Number
    of |         |   | Weighted       | 
|----------------------------------- |  | ------------- | ------- | - | -------------- | 
|                                    |  | Shares
    of |         |   | Average        | 
|                                    |  | Restricted    |         |   | Grant
    Date | 
|                                    |  | Stock         |         |   | Fair
    Value | 
|Balance
    as of December 31, 2019 |  |               | 24,033  |   |                | 
|Plan
    Awards                     |  |               | 40,000  |   |                | 
|Restricted
    Stock Vested         |  |               | (17,367 | ) |                | 
|Balance
    as of June 30, 2020     |  |               | 46,666  |   |                | 



Stock-based
Compensation



During
the first six months of 2020, the Trust recorded approximately $123,000 of non-cash expense related to restricted stock and options
granted compared to approximately $111,000 for the first six months of 2019. As of June 30, 2020, there was approximately $360,000
of total unrecognized share-based compensation expense, which expense will be recognized through the third quarter of 2022. 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.



13







POWER
REIT AND SUBSIDIARIES

Notes
to Unaudited Consolidated Financial Statements



Power
REIT’s 2020 Equity Incentive Plan was adopted by the Board on May 27, 2020 and approved by the shareholders on June 24,
2020. The plan is the successor of the prior 2012 Equity Incentive Plan. It provides for the grant of the following Awards: (i)
Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance
Awards; and (vii) Other Awards. The Plan’s purpose is to secure and retain the services of Employees, Directors and Consultants,
to provide incentives for such persons to exert maximum efforts for the success of the Trust and to provide a means by which such
persons may be given an opportunity to benefit from increases in value of the common Stock through the granting of Awards. The
aggregate number of shares of Common Stock that may be issued pursuant to Awards is currently 239,117.



Preferred
Stock Dividends



During
the first six months of 2020, the Trust paid a total of approximately $140,000 of dividends to holders of Power REIT’s Series
A Preferred Stock.



7.
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, 2020, Power REIT (on a consolidated basis) did not pay any legal fees
and costs to Morrison Cohen.



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. Effective January 1, 2020, the Board of Directors approved increasing the
amount paid to HBP to $1,750 per month based on an increased work level and the conclusion that it would pay more for such support
from an unaffiliated third party for the same functions. A total of $10,500 was paid pursuant to this arrangement during the first
six months ended June 30, 2020 compared to $6,000 paid during the first six months of 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.



8.
SUBSEQUENT EVENTS



On
July 28, 2020, 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, 2020 to shareholders of record on August 15, 2020.



14







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 owns a portfolio of real estate assets related to transportation, energy infrastructure
and Controlled Environment Agriculture (CEA) in the United States. Power REIT is focused on making new acquisitions of real estate
within the CEA sector related to food and cannabis production.



Power
REIT is structured as a holding company and owns its assets through eleven 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, Controlled
Environment Agriculture 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.



As
previously disclosed in a Form 8-K and accompanying Press Release dated July 15, 2019, Power REIT has expanded its focus on real
estate acquisitions to include Controlled Environment Agriculture. CEA is an innovative method of growing plants that involves
creating optimized growing environments for a given crop indoors. Power REIT intends to focus on CEA related real estate for growing
food as well as cannabis.



On
May 15, 2020, Power REIT (the “Trust”) added to its portfolio of CEA properties by acquiring one property located
in York County, ME (the “Property”) through a newly formed wholly owned subsidiary of the Trust (“PropCo”).



The
Property was acquired for $1,000,000 and is 3.04 acres with an existing 32,800 square-foot greenhouse and 2,800 square foot processing/distribution
building that are both under active construction. The approximate 35,600 square foot facility is approved for medical cannabis
cultivation. As part of the transaction, the Trust agreed to reimburse tenant $950,000 of the approximate $1.5 million construction
expenses that have been incurred to date and will fund an additional $2.97 million of costs to complete the construction. Accordingly,
Power REIT’s total capital commitment totals $4.92 million which translates to approximately $138 per square foot for a
state of the art Controlled Environment Agriculture Greenhouse (“CEAG”). This plus acquisition expenses will be funded
entirely from existing working capital. Propco has entered into a triple-net lease with an operator such that the tenant is responsible
for paying all expenses related to the property, including maintenance expenses, insurance and taxes. The lease is structured
to provide a straight-line annual rent of approximately $920,000, representing an estimated yield of over 18.5%. The term of the
lease is 20 years and provides two options to extend for additional five-year periods. The lease also hasfinancial
guarantees from affiliates of the tenants. The tenant intends to operate as a licensed cannabis
cultivation and processing facility.



15







The
rent for the Lease is structured whereby after a six month deferred-rent period, the rental payment provides Power REIT a full
return of invested capital over the next three years in equal monthly payments. After the deferred-rent period, rent is structured
to provide a 12.9% return based on the original invested capital amount with annual rent increases of 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.



The
lease requires the Tenant to maintain a medical cannabis license and operate in accordance with all Maine and state and local
regulations with respect to its operations. The lease prohibits the retail sale of the Tenant’s cannabis and cannabis-infused
products from the Property.



The
acquisition is accounted for as an asset acquisition under ASC 805-50. Power REIT has established a depreciable life for the greenhouse
of 20 years.



On
May 1, 2020, Power REIT amended the lease with a Maverick 5 in southern Colorado, making an additional $340,000 available in funding
for land improvements at the property. The amended lease results in additional straight-line annual rent of approximately $63,000,
which translate to a greater than an 18% yield.



As
of June 30, 2020, 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”),
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 and approximately 26 acres of land with 131,000 square feet of existing or under construction
greenhouses leased to medical cannabis operators. Power REIT is actively seeking to grow its portfolio of Controlled Environment
Agriculture for food and cannabis production.



Revenue
during the first six months of 2020 and 2019 was approximately $1,763,000 and $990,000 respectively. Net income attributable to
Common Shares during the first six months of 2020 and 2019 was approximately $592,000 and 271,000, respectively. The difference
between our 2020 and 2019 results were principally attributable to the following: a $714,000 increase in of rental income from
newly acquired properties, a $59,000 increase in miscellaneous income, offset by a $56,000 increase in depreciation expense, a
$35,000 increase in general and administrative expenses and a $356,000 increase in interest expense.



The
Trust’s cash outlays, other than acquisitions, property improvements, dividend payments and interest expense, are for general
and administrative (“G&A”) expenses, which consist principally of legal and other professional fees, consultant
fees, trustees’ fees, NYSE American listing fees, insurance, shareholder service company fees and auditing costs.



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.



16







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 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.



|CORE
    FUNDS FROM OPERATIONS (FFO)
|------------------------------------
|(Unaudited)                         



|                                                |  | Three
    Months Ended June 30, |           |  | Six
    Months Ended June 30, |  
|----------------------------------------------- |  | ------------------------------- | --------- |  | ----------------------------- | -
|                                                |  | 2020                            |           |  | 2019                          |  
|                                                |  |                                 |           |  |                               |  
|Core
    FFO Available to Common Shares         |  | $                               | 555,252   |  |                               | $
|                                                |  |                                 |           |  |                               |  
|Core
    FFO per Common Share                   |  |                                 | 0.29      |  |                               |  
|                                                |  |                                 |           |  |                               |  
|Weighted
    Average Shares Outstanding (basic) |  |                                 | 1,912,939 |  |                               |  



|RECONCILIATION
    OF NON-GAAP FINANCIAL MEASURES
|-------------------------------------------------
|(Unaudited)                                      



|                                                  |  | Three
    Months Ended June 30, |         |  | Six
    Months Ended June 30, |  
|------------------------------------------------- |  | ------------------------------- | ------- |  | ----------------------------- | -
|                                                  |  | 2020                            |         |  | 2019                          |  
|Net
    Income Attributable to Common Shares      |  | $                               | 409,695 |  |                               | $
|Stock-Based
    Compensation                      |  |                                 | 48,133  |  |                               |  
|Interest
    Expense - Amortization of Debt Costs |  |                                 | 8,528   |  |                               |  
|Amortization
    of Intangible Asset              |  |                                 | 59,284  |  |                               |  
|Depreciation
    on Land Improvements             |  |                                 | 29,612  |  |                               |  
|Core
    FFO Available to Common Shares           |  | $                               | 555,252 |  |                               | $



17







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, 2020 were effective.



Changes
in Internal Control over Financial Reporting:



During
the fiscal quarter ended June 30, 2020, 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.



18







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 June 30, 2020, 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.



During
2020, a global COVID 19 pandemic emerged which has had broad financial impact on most industries and countries. To date, the Trust
has not experienced any direct impact from the COVID 19 crisis. The Trust continues to monitor COVID 19 and the potential financial
implications on its assets and business plans as well as on its tenants and their ability to pay rent. There can be no assurance
what ultimate impact COVID 19 will have on Power REIT on a going forward basis.



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 June 30, 2020: (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, 2020                              | 



20