Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31,June 30, 2019

OR

For the transition period from ___________ to _____________

Commission file number: 001-09043

(Registrant's telephone number, including area code)

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

Indicate by a 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 ☒ 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 ☒ No ☐

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

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 ☒

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

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

As of May 9August 8 , 2019, the registrant had 2,610,568 shares of common stock, $0.01 par value per share, outstanding.

MedAmerica Properties Inc.

Form 10-Q

Table of Contents

Note 1. Nature of Operations

MedAmerica Properties Inc. (the “Company” or “MedAmerica”) was originally organized under the laws of the Commonwealth of Massachusetts in 1985, under the name VMS Hotel Investment Trust, for the purpose of investing in mortgage loans. The Company was subsequently reorganized as a Delaware corporation in 1987 and changed its name to B.H.I.T. Inc. In 2010, the Company changed its name from B.H.I.T. Inc. to Banyan Rail Services Inc. From 2009 to 2012, the Company experienced severe losses from an operating subsidiary in the rail services sector. In 2016, after exploring various industries and researching numerous companies, the board of directors elected to pursue investing in commercial real estate. In 2018, the Company began negotiating a transaction with a sponsor of real estate properties located in the United States. The Company entered into a letter of intent with the sponsor in September 2018, which was amended in November 2018 and April 2019. As

On May 28, 2019, the Company and certain of May 9, 2019, no definitive agreement has been executed. Itits newly formed subsidiaries described further below entered into 19 separate agreements and plans of merger (collectively, the “Merger Agreements” and the “Transaction”) with each of Broad Street Realty, LLC (the “BSR”), Broad Street Ventures, LLC (“BSV”) and each of BSV Avondale LLC, BSV Colonial Investors LLC, BSV Coral Hills Investors LLC, BSV Crestview Square LLC, BSV Cromwell Parent LLC, BSV Cypress Point Investors LLC, BSV Dekalb LLC, BSV Greenwood Investors LLC, BSV Highlandtown Investors LLC, BSV Hollinswood LLC, BSV Lamont Investors LLC, BSV Lamonticello Investors LLC, BSV LSP East Investors LLC, BSV Patrick Street Member LLC, BSV Premier Brookhill LLC, BSV Spotswood Investors LLC and BSV West Broad Investors LLC (collectively, the “Broad Street Entities”). Pursuant to the Merger Agreements, in a series of 19 mergers, BSR, BSV and each Broad Street Entity will merge with and into a subsidiary of the Company (the “Merger Subs”) with BSR, BSV and each Broad Street Entity surviving (collectively, the “Mergers”). MedAmerica following the completion of the Mergers is currently estimated thatreferred to herein as the transaction would be expected“Combined Company.” Pursuant to be consummated late in the second quarterMerger Agreements, the name of 2019, but there can be no assurance that there will not be delays or that the TransactionCombined Company will be successfully completed. changed to “Broad Street Realty, Inc.” prior to the closing of the Mergers.

InOn April 2017,9, 2019, our board of directors approved a proposed amendment to our bylaws to remove Section 2.2 of our bylaws, which prohibited the Company from compensating our directors (the “bylaw amendment”) and recommended to our stockholders adoption of the bylaw amendment and ratification of past compensation paid by MedAmerica to our directors (the “board compensation”). Delaware law permits the holders of a majority of our outstanding shares of common stock approvedto approve the bylaw amendment and ratify the board compensation by written consent amendmentswithout holding a meeting. The amendment to the Company’s certificate of incorporation to (1) change the name of the Company from “Banyan Rail Services Inc.” to “MedAmerica Properties Inc.,” and (2) effect a 1 for 10 reverse stock split of the issued and outstanding shares of common stock of the Company. On June 15, 2017, the Company filed these amendments with the Secretary of State of the State of Delaware and the name change and reverse stock splitBy-laws became effective with the Financial Industry Regulatory Authority, Inc. (“FINRA”)May 17, 2019.  This amendment had no impact on June 20, 2017. As appropriate, all common stock share quantities have been updated to reflect the 1 for 10 reverse stock split.previously reported results of operations.

Note 2. Basis of Presentation

The accompanying Financial Statements give effect to all adjustments necessary to present fairly the financial position and results of operations and cash flows of the Company.  In January 2019 the Company dissolved all of its pre-merger subsidiaries and is no longer presenting consolidated financial statements.  All subsidiarieswhich were inactive. In May 2019 the Company formed various subsidiaries which are inactive except for the execution of the Merger Agreements referenced above.

Note 3. Liquidity and Profitability

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements donot include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company management believes that cash on hand and a line of credit from a related party will be adequate to fund its limited overhead and other cash requirements for the next twelvemonths.

During 2017 the Company completed a private placement of its common stock, raising $1,940,005. As of March 31,June 30, 2019, the Company had a cash balance of approximately $76,000$4,745 and negative working capital of approximately $99,000..$243,000.

We have undertaken, and will continue to implement, various measures to address our financial condition, including:

If the Transaction is not consummated:

The Company management believes that these measures, coupled with cash on hand, the $25,000 per month payment from BSR and a line of credit from a related party (see Note 9) will be adequate to fund its limited overhead and other cash requirements for the nexttwelve months. There can beno assurance that we will be able to consummate the Transaction or secure the additional funding we need. If our efforts to do so are unsuccessful, we will be required to further reduce or eliminate our operations. However, Boca Equity Partners LLC (“BEP”), an entity controlled by our chairman, has committed to funding operations through May,August 2020 in the event the Transaction does not close.

Note 4.4. Summary of Significant Accounting Policies

Unaudited InterimUnaudited Interim Condensed Consolidated Financial Information

The unaudited interim condensed consolidated financial statements of the Company as of March 31,June 30, 2019 for the three and six months ended March 31,June 30, 2019 and 2018 included herein have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended, and Article 8 of Regulation S-X under the Securities Act of 1933, as amended. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations relating to interim condensed financial statements.

In the opinion of management, the accompanying unaudited interim condensed financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company at March 31,June 30, 2019 and the results of its operations and its cash flow for the three and six months ended March 31,June 30, 2019 and 2018. The results of operations and cash flows for such periods are not necessarily indicative of results expected for the full year or for any future period.

Use of Estimates

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"), requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenues and expenses and disclosures of contingent assets and liabilities at the date and period ending of the financial statements. Actual results could differ from those estimates.

Cash

The Company considers all cash, bank deposits and highly liquid investments with an original maturity of three months or less to be cash equivalents. From time to time our cash deposits exceed federally insured limits.

Equipment and Furnishings

Equipment and furnishings are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 to 7 years. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in income for the period statement of operations.

Fair Value of Financial Instruments

Recorded financial instruments as of March 31,June 30, 2019, consist of cash and cash equivalents, accounts payable, accrued liabilities and short-term obligations. The related fair values of these financial instruments approximated their carrying values due to either the short-term nature of these instruments or based on the interest rates currently available to the Company.

Income (Loss) Per Common Share

The Company computes net income (loss) per common share in accordance with the provision included in Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 260, Earnings per Share. Under ASC 260, basic and diluted income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares and common share equivalents outstanding during the period. Basic income (loss) per common share excludes the effect of potentially dilutive securities, while diluted income (loss) per common share reflects the potential dilution that would occur if securities or other contracts to issue common shares were exercised for, converted into or otherwise resulted in the issuance of common shares. The Company’s potentially dilutive securities are not included in the computation of diluted loss per share because their impact is anti-dilutive due to the net loss.

Income Taxes

The Company accounts for our income taxes using FASB ASC Topic 740, "Income Taxes", which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The Company follows the provisions regarding Accounting for Uncertainty in Income Taxes, which require the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We applied these changes to tax positions for our fiscal years ending December 31, 2018 and December 31, 2017. We had no material unrecognized tax benefits and no adjustments to our financial position, results of operations or cash flows that were required. Generally, federal, state and local authorities may examine the Company's tax returns for three years from the date of filing. We do not expect that unrecognized tax benefits will increase within the next twelve months. We recognize accrued interest and penalties related to uncertain tax positions as income tax expense. 

Retained Earnings Distributions

The Company’s preferred stockholders are entitled to receive payment before any of the common stockholders upon a liquidation of the Company, and we cannot pay dividends on our common stock unless we first pay dividends required by our preferred stock.

Preferred Stock Dividends

The holder of Series A Cumulative Preferred Stock (“Preferred Stock”) are entitled to receive cumulative, non-compounded, cash dividends on each outstanding share of Preferred Stock at the rate of 10.0% of the issuance price per annum (“Preferred Dividends”), which began accumulating on January 1, 2010. The Preferred Dividends are payable semiannually to the holder of Preferred Stock, when and as declared by the Board of Directors.

Recently Issued Accounting Pronouncements

Management has determined that all recently issued accounting pronouncements will not have a material impact on the Company’s financial statements or do not apply to the Company’s operations.

Note 5.5. Equipment and Furnishings

Note 6. Preferred Stock and Common Stock

Stock Split

In April 2017, the board of directorsJune 30, 2019 and the then majority shareholder approved a 1 for 10 reverse stock split (“Stock Split”) of the issuedthree and outstanding shares of common stock of the Company. On June 15, 2017, the Company filed an amendment to its articles of incorporation with the Delaware Secretary of State effecting the Stock Split. The Stock Split became effective with the Financial Industry Regulatory Authority, Inc. (“FINRA”) on June 20, 2017.

Pursuant to the Stock Split, each outstanding share of the Company’s common stock was automatically exchanged for one - tenth of a share. As a result, each stockholder now owns a reduced number of shares of the Company’s common stock. The Stock Split affects all stockholders uniformly and does not affect any stockholder’s percentage ownership in the Company or the proportionate voting rights and other rights and preferences of the stockholders, except for adjustments that may result from the treatment of fractional shares, which have been rounded to the nearest whole share. The number of the Company’s authorized shares of common stock was not affected by the Stock Split.

Private Placement

From February 10, 2017 through December 31, 2017, the Company accepted subscriptions of $1,940,005 for unregistered shares of the Company’s common stock for $1.50 a share (the “2017 Private Placement”). The issuances of common stock were made in reliance on Section 4(a)(2) of the Securities Act of 1933 for the offer and sale of securities not involving a public offering and Rule 506(b) under the Securities Act. The proceeds from the 2017 Private Placement are being used for working capital and to fund operations. In 2017, the Company issued 1,293,334 shares of common stock under the 2017 Private Placement, along with 2,500 shares of common stock under a prior private placement.

Preferred Stock Exchange

In April 2017, the Company offered our preferred shareholders shares of our common stock in exchange for their Series A cumulative preferred stock (“Preferred Stock”) and accumulated preferred dividends outstanding as of December 31, 2016. Pursuant to the offer, each share of Preferred Stock would be exchanged for 20 shares of (post-split) common stock and each dollar of preferred dividend would be exchanged for 0.2 shares of common stock. All preferred shareholders, except one, accepted the offer resulting in the conversion of 9,875 shares of Preferred Stock and $301,656 of accumulated preferred dividends into 257,831 shares of common stock, which were issued in the third quarter of 2017. The effective date of the exchange wassix months ended June 30, 2017. This exchange resulted in deemed dividends on preferred stock conversion of $148,125.2018.

Subsequent to the reverse stock split, the private placement and the preferred stock exchange, there are 2,610,568 shares of common stock issued and outstanding, consisting of 1,056,903 shares after the reverse stock split, 1,293,334 shares from the private placement, 2,500 shares from a prior year private placement and 257,831 shares from the preferred stock and preferred dividend exchange.

Note 6. Preferred Stock and Common Stock

Preferred Stock Dividends

The holder of Preferred Stock is entitled to receive cumulative, non-compounded cash dividends on each outstanding share of Preferred Stock at the rate of 10% of the Issuance Price per annum (“Preferred Dividends”), which began to accrue on January 1, 2010. Preferred Dividends are payable semiannually to the holder of Preferred Stock. Any Preferred Dividends due and unpaid on any Payment Date, whether or not declared by the board of directors, shall accrue with any other due and unpaid Preferred Dividends, regardless of whether there are profits, surplus or other funds of the Company legally available for payment of dividends.

Substantially all the Preferred stockholders had previously agreed to accept common stock in lieu of cash for payment of Preferred Dividends. In February 2016, the Company issued 29,856 shares of common stock in lieu of $29,249 of Preferred Dividends for those Preferred stockholders who accepted the common stock in lieu of the cash offer. The total accrued but unpaid Preferred Dividends is $27,361 as of March 31,June 30, 2019 and December 31, 2018. An additional $11,250$12,500 and $10,000 of cumulative Preferred Dividends are undeclared and unaccrued as of March 31,June 30, 2019 and December 31, 2018, respectively, and are not included in the balance sheet.

Common Stock

As of March 31,June 30, 2019 the Company’s board of directors and officers beneficially own 838,060 shares of the Company’s common stock or 32.10% of the outstanding common stock. Included in the 838,060 shares are 351,966475,314 shares owned by Marino Family Holdings LLC which is controlled by our chairman, Gary O. Marino. 79,703 shares are held by the Marino and 91,348 shares owned by Banyan Rail Holdings LLC, of which Mr. Marino is the president and significant stockholder.Family Dynasty Trust.            

Note 7.7. Earnings (Loss) per Share

The Company excluded from its diluted earnings per share calculation 500 common shares issuable upon conversion of shares of convertible preferred stockPreferred Stock that were outstanding March 31,June 30, 2019 and 2018 as well as 70,000 and 60,00070,000 options that were outstanding as of March 31,June 30, 2019 and 2018, respectively, as their inclusion would be anti-dilutive.

Note 8.8. Stock-Based Compensation

On August 23, 2017, the Company issued an aggregate of 60,000 stock options to its directors and officers. The related stock compensation expense was not material.

On June 11, 2018, the Company issued an aggregate of 10,000 stock options to a director as compensation for board services. The related stock compensation expense was not material.

The Company previously had stock option agreements with its directors and officers. Details of options activity is as follows:

Note 9.9. Related Party Relations and Transactions

Gary O. Marino, the Company’s chairman of the board, is the chairman, president, and chief executive officer of Boca Equity Partners LLC (“BEP”), Patriot Equity LLC (“Patriot”), Banyan Medical Partners LLC (“BMP”), and Banyan Surprise Plaza LLC (“BSP”). Mr. Marino owns 100% of Patriot, Patriot owns 100% of BMP and BSP through and along with other wholly owned subsidiaries. Mr. Marino, Mr. Paul S. Dennis, Mr. Donald Denbo and Mr. Bennett Marks, members of the Company's board of directors, Mr. Joseph Bencivenga, a member of the Company’s board of directors and the Company’s President and Chief Executive Officer, and Ms. Patricia Sheridan, the Company’s Chief Financial Officer also hold membership interests in BEP.

On July 27, 2016, the Company entered into a Demand Note and Loan Agreement (the “Note”) with BEP providing for draws of up to $250,000. Loans under the Note bore interest at an annual rate of 10% and outstanding principal and interest were due on demand. This Note was cancelled and terminated on December 31, 2016 when the Company entered into a new Demand Note and Loan Agreement (the “New Note”) with BEP for $471,826. The New Note representsrepresented advances from BEP under the New Note, payments made since the date of the New Note and interest accrued thereon. The New Note bore interest at the rate of 10% per annum and iswas payable upon demand. BEP is committed to making advances to the Company under the New Note as the Company may from time to time request. The balance drawn on the New Note including accrued interest was paid in full May 31, 2017. The Note remains available to the Company to draw upon and the balance as of the date of this report due under the New Note is $0.$0 as of June 30, 2019 and December 31, 2018.

On September 13, 2018, the Company entered into an office lease and administrative support agreement (the “2018 Lease Agreement”) with BEP. The 2018 Lease Agreement has a month-to-month term commencing on September 1, 2018. The 2018 Lease Agreement provides for the Company’s use of a portion of BEP’s offices and certain overhead items at the BEP offices such as space, utilities and other administrative services for $5,000 a month. The 2018 Lease Agreement replaces the June 8, 2017 office lease and administrative support agreement between the Company and BEP. Total expense incurred under these agreements amounted to $15,000$30,000 and $45,000$90,000 for the quarterssix months ended March 31,June 30, 2019 and 2018, respectively.

During 2018 the Company's President and CEO performed work for International Rail Partners LLC (“IRP”), an entity controlled by the Company’s Chairman. The Company billed back IRP for compensation and expenses in the amount of $125,090 for the year ended December 31, 2018 of which $57,244$35,000 related to compensation and expenses for the quartersix months ended March 31, 2018.  Compensation to the president ended July 31,June 30, 2018.   

The Company’s directors have not received cash compensation for their services in 20182019 or 20172018 but were compensated with stock options. See footnoteNote 8 Stock-Based Compensation for further discussion.

As of December 31, 2018 and March 31,June 30, 2019, the Company’s board of directors and officers beneficially own 838,060 shares of the Company’s common stock or 32.10% of the outstanding common stock. Included in the 838,060 shares are 351,966475,314 shares owned by Marino Family Holdings LLC which is controlled by our chairman, Gary O. Marino. 79,703 shares are held by the Marino and 91,348 shares owned by Banyan Rail Holdings LLC, of which Mr. Marino is the president and significant stockholder.Family Dynasty Trust

Note 10.10. Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued for potential recognition or disclosure. Other than the following, theThe Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

In April 2019, our board of directors and the holders of a majority of our outstanding shares of common stock approved by written consent an amendment to the Company’s Bylaws allowing for the compensation of its directors and officers serving as directors. This amendment is expected to be effective in May 2019.