Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A10-Q

(Mark One)

For the quarterly period ended March 31, 20172018

OR

For the transition period from ___________ to _____________

Commission file number: 001-09043

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. Yesx ☒ No¨ ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx ☒ No¨ ☐

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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). Yesx ☐ No¨ ☒

As of May 15, 2017,14, 2018, the registrant had 10,567,2352,610,568 shares of common stock, $0.01 par value per share, outstanding.

Explanatory NoteMedAmerica Properties Inc.

MedAmerica Properties Inc., formerly known as Banyan Rail Services Inc. (the“Company”), is restating its condensed consolidated balance sheet as of March 31, 2017, and the condensed consolidated statement of stockholders’ (deficit) equity for the period ended March 31, 2017. The Company has added footnote 11 to its condensed consolidated financial statements showing the as previously filed financial statements, therestatement adjustment and as restated columns for the restated financial statements.Form 10-Q

On February 1, 2010,the Company issued 10,375 sharesTable of Series A Cumulative Preferred Stock (the “Series A Preferred Stock”).The holders of the Series A Preferred Stock are entitled toreceive semiannual cumulative,non-compounded dividends on each outstanding share of Series A Preferred Stock at the rate of 10.0% of the issuance price per annum (“Series A Preferred Dividends”), which began to accumulate effective January 1, 2010, when and as declared by the Company’s board of directors. The board has not declared any cash dividends on the Series A Preferred Stock. In 2015 and 2016, the Company issued shares of common stock to preferred stockholders who agreed to accept the common stock in lieu of cash dividends on the Series A Preferred Stock.

From February 1, 2010 through December 31,2016,the Company recorded a liability for accumulated undeclared Series A Preferred Dividends and a related reduction to additional paid in capital. In its Form 10-Q for the quarter ended March 31, 2017 filed with the Securities and Exchange Commission on May 15, 2017, the Company reported the unpaid dividends in the footnotes to the condensed consolidated financial statements but not as a liability and related reduction to paid in capital as previously reported. This Form 10-Q/A to our Form 10-Q for the quarter ended March 31, 2017 includes the restated financial statements described above and related footnote disclosure and reflects a return to the reporting methodology previously utilized by the Company concerning the undeclared preferred dividends.

MEDAMERICA PROPERTIES INC. 

F/K/A BANYAN RAIL SERVICES INC.

FORM 10-Q/A

TABLE OF CONTENTSContents

Part I — Financial InformationInformation

MedAmerica Properties Inc. and Subsidiaries

f/k/a Banyan Rail Services Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (As Restated, See Note 11)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MedAmerica Properties Inc. and Subsidiaries

f/k/a Banyan Rail Services Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

See Notes to Condensed Consolidated Financial Statements

MedAmerica Properties Inc. and Subsidiaries

f/k/a Banyan Rail Services Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See Notes to Condensed Consolidated Financial Statements

MedAmerica Properties Inc. and Subsidiaries

f/k/a Banyan Rail Serivces Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity (As Restated, See Note 11)

Periods Ended March 31, 2017 and December 31, 2016

See Notes to Condensed Consolidated Financial Statements

Notes to Condensed Consolidated Financial Statements

(UNAUDITED)

Note 1. Nature of Operations

Banyan Rail ServicesMedAmerica Properties Inc. (the “Company” or “MedAmerica”), was originally organized under the laws of the Commonwealth of Massachusetts in 1985, andunder the name VMS Hotel Investment Trust, for the purpose of investing in mortgage loans. The Company was subsequently reorganized as a Delaware corporation in 1987.1987 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, our management team determinedafter exploring various industries and researching numerous companies, the board of directors elected to pursue investing in commercial real estate. The Company is pursuing the acquisition purchase and management of well-locatedstrategically located medical office buildings throughout the United States with the intention of aggregating multiple properties with strong fundamentals in certain attractive geographic locations, particularly in the sunbelt states. We believe that investing in medical office buildings will generate strong cash flow and produce significantly increased value for our stockholders. Although we believe the acquisition and ownership of medical office buildings is fundamentally sound, there is no assurance that we will be successful in this endeavor or that we can locate, acquire and finance the acquisition of these properties. For more information concerning these risks, please see Part II, Section 1A – “Risk Factors.”buildings.

In preparation for this new strategy,April 2017, our management team is focused on repositioningboard of directors and the holders of a majority of our outstanding shares of common stock approved by written consent amendments to the Company’s certificate of incorporation to (1) change the name of the Company both operationallyfrom “Banyan Rail Services Inc.” to “MedAmerica Properties Inc.,” and financially. In addition(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 split became effective with the Financial Industry Regulatory Authority, Inc. (“FINRA”) on June 20, 2017. As appropriate, all common stock share quantities have been updated to seeking equity and debt financing, we have takenreflect the actions described below under “Recent Events” to strengthen our balance sheet and pursue our new strategy.1 for 10 reverse stock split.

Note 9. Related Party TransactionsGary 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, a member of the Company's board of directors, and Mr. Donald S. Denbo, a member of the Company's board of directors, also hold membership interests in BEP.

During 2016, the Company established BMP, and certain other subsidiaries wholly-owned by BMP. The Company formed these entities to acquire medical office buildings in the United States. The Company was unable to raise the capital needed to consummate the first medical building opportunity. On March 9, 2017, the Company sold BMP and BMP’s wholly-owned subsidiaries to Patriot. The selling price was $277,756 in the form of BMP assuming a portion of the Company’s note payable balance due to BEP. The consideration of $277,756 was used to recoup the $110,000 in property deposits as of December 31, 2016 and reimbursement of $117,756 of other 2016 and 2017 expenses incurred by the Company on behalf of BMP. This reimbursement of expenses is offset in general and administrative expenses as of March 31, 2017, which caused general and administrative expenses to have a credit balance of $7,270 during that quarter.

On July 27, 2016, the Company entered into a Demand Note and Loan Agreement (the “Note”) with Boca Equity Partners LLC (“BEP”)BEP providing for draws of up to $250,000. Loans under the Note bearbore 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.BEP for $471,826. The New Note balance at March 31, 2017 was $342,536 which represents advances from BEP under the New Note, payments made since the date of the New Note and interest accrued thereon. The New Note bearsbore interest at the rate of 10% per annum and is payable upon demand. BEP may, but is not required to, make advances to the Company 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.  

Gary O. Marino,On June 8, 2017, MedAmerica entered into an office lease and administrative support agreement (the “Agreement”) with BEP. The Agreement has a month-to-month term commencing on June 1, 2017. The Agreement provides for the Company’s chairmanuse of a portion of BEP’s offices and certain overhead items at the BEP offices such as space, utilities and other administrative services for $15,000 a month. The Agreement replaces the February 3, 2017 office lease and administrative support agreement between the Company and BEP and includes additional general office and administrative staff support services. Total expense incurred under these agreements amounted to $45,000 and $19,815 for the quarters ended March 31, 2018 and 2017, respectively.

On June 14, 2017, the Company entered into a letter of intent with Patriot to reacquire all of the board,capital units of BMP from Patriot, for $9,536,582 which is the chairman,purchase price of the Medical Office Building. The letter of intent in non-binding, provides for a ninety -day exclusive diligence period, and is contingent upon the Company obtaining financing to complete the acquisition. The letter of intent was extended to December 15, 2017 at which time it expired. The Company has no current plans to further pursue this acquisition.

The Company’s directors have not received cash compensation for their services in 2017 or 2016 but were compensated with common stock and stock options. See footnote 6 Preferred Stock and Common Stock and footnote 8 Stock-Based Compensation for further discussion. In the third quarter of 2017, the Company hired a new president and chief executive officer of BEP. Mr. Marino, Mr. Paul S. Dennis, the Company’s interim chief executive officer, interim president and interima new chief financial officer who are husband and Donald S. Denbo, a member of the Company's board of directors, also hold membership interests in BEP.

During 2016, the Company established a wholly-owned subsidiary, Banyan Medical Partners, LLC (“BMP”), and certain other subsidiaries wholly-owned by BMP. The company formed these entities to acquire medical office buildingswife. Also, in the United States. The Company was unable to raise the capital needed to consummate the first medical building opportunity. On March 9,third quarter of 2017, the Company sold BMPissued 15,000 common stock options to the president and BMP’s wholly-owned subsidiariesCEO and 45,000 shares to Patriot Equity, LLC, a limited liability company owned solely by Gary O. Marino, the Company’s chairman of the board.other board members and officers. The selling pricerelated stock compensation was $277,756 in the form of BMP assuming a portion of the Company’s note payable balance due to BEP. The consideration of $277,756 was used to recoup the $110,000 in property deposits as of December 31, 2016 and other 2016 and 2017 expenses incurred by the Company on behalf of BMP. There was a gain on the sale of the subsidiary of $117,756, which primarily came from reimbursement of previously paid expenses by BEP for cost related to acquiring the property.not material.

The Company’s directors are currently not receiving cash compensation for their services, and no amounts have been recorded in the Company’s financialstatements for the value of their services asAs of March 31, 2017.

The2018, the Company’s board of directors and officers beneficially own 7,092,375828,060 shares of the Company’s common stock as of March 31, 2017 67.12%or 31.72% of the outstanding common stock. Included in the 828,060 shares is 91,348 shares owned by Banyan Rail Holdings LLC and 351,966 shares owned by Marino Family Holdings LLC, companies controlled by our chairman, Gary O. Marino.

Paul Dennis, director and previously interim president, interim chief executive officer and interim chief financial officer, participated in the 2017 Private Placement investing $150,000 for 100,000 shares of common stock.  

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

The following discussion should be read in conjunction with the accompanying unaudited Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC”).

Cautionary Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains information about the Company, some of which includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as “believes,” “contemplates,” “expects,” “may,” “will,” “could,” “should,” “would,” or “anticipates,” other similar phrases, or the negatives of these terms. We have based the forward-looking statements relating to our operations on our current expectations, estimates and projections about us and the markets we serve. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties. These statements should be considered in conjunction with the discussion in Part I, the information set forth under Item 1A, “Risk Factors” and with the discussion of the business included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2017 Annual Report on Form 10-K, filed with the SEC on April 2, 2018. We have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, the actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including the following:

You should not place undue reliance on our forward-looking statements, which reflect our analysis only as of the date of this report. The risks and uncertainties listed above and elsewhere in this report and other documents that we file with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and any current reports on Form 8-K, must be carefully considered by any investor or potential investor in the Company. We undertake no obligation to update forward-looking statements, except as required by law.

Overview

MedAmerica is a real estate management company with limited operations. After exploring various industries, in 2016, the board of directors determined to pursue the sourcing, financing, asset management and co-investment of well-located medical office buildings throughout the United States with the intention of aggregating multiple properties within certain locations allowing us to gain efficiencies and diversify risk. We will source, provide all due diligence and oversee the financing for co-investment partners to acquire medical office buildings in a price range typically too small for REIT investing. We will then asset and property manage the portfolios and determine the optimal exit strategy.

We will seek investments with strong fundamentals in the highly-desired healthcare real estate sector that continues to grow by demand that is supported by expectations of an increase in the aging baby boomer population. We are focused on opportunistic medical office real estate investments located in the sunbelt states. Management is looking in these attractive geographic locations for investments that meet its criteria. We believe that investing in medical office buildings will generate strong cash flow and produce significantly increased value for our stockholders. Although we believe the acquisition and management of medical office buildings is fundamentally sound, there is no assurance that we will be successful in this endeavor or that we can locate and finance properties meeting our criteria in locations desirable to us. For more information concerning these risks, please see Part I, Section 1A - “Risk Factors” of our 2017 Annual report on Form 10-K, filed with the SEC on April 2, 2018.

In February 2017,preparation for this new strategy, our management team is focused on repositioning the Company, both operationally and financially. As described in greater detail below, we began approaching certain accredited investors offering unregistered shareshave changed the name of the Company’s common stockCompany to identify with our new direction. In addition to seeking equity and debt financing, we have taken the actions described under “Recent Events” in our 2017 Annual report on Form 10-K to strengthen our balance sheet and pursue our new strategy.

Critical Accounting Policies and Estimates

In response to the SEC's financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its most subjective accounting estimation process for $0.15purposes of explaining the methodology used in calculating the estimate in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the Company's financial condition.  These estimates involve certain assumptions that if incorrect could create a share in order to raise working capitalmaterial adverse impact on the Company's results of operations and fundfinancial condition.  For a discussion of our operations (the “2017 Private Placement”). On May 15, 2017, we accepted subscriptions for $1,369,755significant accounting policies, See Note 4 - "Summary of Significant Accounting Policies" in the 2017 Private Placement which will result inaccompanying Notes to Financial Statements.  

There were no material changes to our principal accounting estimates during the issuance of 9,131,700 shares ofperiod covered by this report.  

Results from Operations

The following table summarizes our common stock. The issuances of common stock were made in reliance on section 4(2) of the Securities Act of 1933results for the offerthree months ended March 31, 2018 and sale of securities not involving2017:

General and Administrative Expenses

General and administrative expenses include: compensation expense, professional fees, insurance, office and rent expenses and costs related to being a public offering and rule 506 of Regulation D of the Securities Act.company.

On April 17, 2017 and May 1, 2017,For the Company paid down portions of the note payable under the New Note in the amounts of $150,000 and $100,000, respectively.

Note 11. Restatement

MedAmerica Properties Inc., formerly known as Banyan Rail Services Inc. (the “Company”), is restating its condensed consolidated balance sheet as ofthree months ended March 31, 2017,2018, general and its condensed consolidated statement of stockholders’ (deficit) equity foradministrative expenses increased $216,071 compared to the periodthree months ended March 31, 2017. The restatement showsfirst quarter of 2017 included $117,756 of prior year expenses reimbursed by a related party relative to the as previously filed, restatement adjustmentsale of BMP.

Net of the $117,756 expense reimbursement that reduced general and as restated columnsadministrative expenses during the three months ended March 31, 2017, the overall increase in general and administrative expenses is primarily due to:

Interest expense

Interest expense was $384 and $12,278 for the balance sheet asquarters ended March 31, 2018 and 2017, respectively. The decrease in interest expense was due to the repayment of March 31,a related party note payable in 2017.

On February 1, 2010,

Income tax expense

Income tax expense was $0 for the quarters ended March 31, 2018 and 2017, respectively, due to a full valuation allowance being recorded by the Company issued 10,375 sharesfor any deferred tax assets created as the result of Series any net operating losses generated by operations.

A Cumulative Preferred Stock (“Seriesvaluation allowance is evaluated by considering all positive and negative evidence about whether the deferred tax assets will be realized. At the time of evaluation, the allowance can be either increased or reduced. A Preferred Stock”). The holdersreduction could result in the complete elimination of the Series A Preferred Stock are entitled to receive cumulative, non-compounded dividends on each outstanding share of Series A Preferred Stock atallowance if positive evidence indicates that the rate of 10.0%value of the issuance price per annum (“Series A Preferred Dividends”), which shall begin to accumulate effective January 1, 2010.deferred tax assets is no longer impaired and the allowance is no longer required.

The Series A Preferred Dividends shall be payable semiannually

Net loss attributable to the holders of Series A Preferred Stock, when declared by the board of directors. From the date of the original issuance of the Series A Preferred Stock, February 1, 2010, the Company’s board of directors had not declared the payment of Series A Preferred Dividends on the issued and outstanding shares of preferred stock other than for those dividends paid with common shares. In 2015 and 2016, the board of directors declared Series A Preferred Dividends for certain Series A Preferred Stock holders had agreed to accept common stock in lieu of cash for payment of Series A Preferred Dividends.shareholders

From February 1, 2010 through December 31, 2016, the Company had been recording a liability for accumulated undeclared Series A Preferred Dividends and a related reductionNet loss attributable to additional paid-in-capital. The Company should have continued recording a liability on the Company’s balance sheet but inadvertently did not. This restatement reflects the continuation of the dividend policy.

This Amendment on Form 10-Q/A to our Form 10-Qcommon shareholders was ($0.08) per share for the quarter ended March 31, 2018 as compared to ($0.0) per share for the quarter ended March 31, 2017. The difference of ($0.08) per common share is primarily the result of a 2017 reimbursement of deal costs by a related party of approximately $118,000 and an increase in 2018 general and administrative expenses of $86,000.

Financial Condition and Liquidity

Our cash balances at May 14, 2018, March 31, 2018 and December 31, 2017 were $455,843,  $479,252 and $708,382, respectively. The following is a summary of our cash flow activity for the three months ended March 31, 2018 and 2017:

Net cash provided by (used) in operating activities

For the three months ended March 31, 2018, net cash used in operating activities was $216,630 as compared to net cash provided by operating activities of $29,161 for the three months ended March 31, 2017. The increase in cash used in operating activities was primarily due to the 2017 reimbursement of deal costs by a related party, 2018 reduction in accounts payable and accrued expenses and 2018 increase in net operating activities.

Net cash provided by (used in) investing activities

For the three months ended March 31, 2018, net cash provided by investing activities was $0 as compared to net cash provided by investing activities of $110,000 for the three months ended March 31, 2017. The decrease in cash provided by investing activities was primarily due to the decrease in property deposits.

Net cash provided by financing activities

For the three months ended March 31, 2018, net cash used in financing activities was $12,500 as compared to net cash provided by financing activities of $533,432 for the three months ended March 31, 2017. The decrease in net cash provided by financing activities was due primarily to the 2017 Private Placement which was filed withlaunched on February 2017 and raised $675,000 (net of costs) through the SEC on May 15, 2017, is being filedMarch 31, 2017. This was offset by a net decrease in the demand loan from a related party of approximately $141,568. The $12,500 used in financing activities during the three months ended March 31, 2018 related to reflectrepayments of the restatement of our condensed consolidated financial statements, the footnotes to our financial statements and other disclosures as necessary. The following statements present the effect of this restatement.note payable – insurance financing.

The following table presentsCompany recognizes that as a result of the condensed consolidated balancelack of operations, it will continue to rely upon the sale of stock or capital contributions from investors to generate cash flow and we hope to generate cash from operating medical office buildings.

As of May 14, 2018, we have cash of $455,843.  We believe that the cash and a line of credit from a related party should meet our working capital needs for at least the next 12 months.  However, as part of our business model seking to acquire medical office buildings, we intend to seek to raise equity.  We cannot assure you that we will commence this task or that we will be successful.  

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as previously reported, restatement adjustment, and as restatedamended (the “Exchange Act”) Rule 13a-15(e)) as of March 31, 2017:

2018.

Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2018. 

    Changes in Internal Control over Financial Reporting

              There have been no changes in our internal controls over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the quarter ended March 31, 2018, identified in connection with our evaluation that has materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II — Other Information

Item 1. Legal Proceedings

The Company is not a party, nor is its property the subject of, any material pending legal proceedings.

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

None.

Item 6. Exhibits

*Filed herewith

**Furnished herewith

Signatures

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.

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