Broad Street Realty, Inc. - Quarter Report: 2018 June (Form 10-Q)

 

 

Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒

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

 

For the quarterly period ended June 30, 2018

 

OR

 

☐

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

 

For the transition period from ___________ to _____________

 

Commission file number: 001-09043

 

MedAmerica Properties Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		36-3361229
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

Boca Center, Tower 1, 5200 Town Center Circle, Suite 550, Boca Raton, Florida 33486

(Address of principal executive offices) (Zip Code)

 

561-617-8050

(Registrant’s telephone number, including area code)

 

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

 

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

 

Large accelerated filer   ☐	Accelerated filer   ☐
Non-accelerated filer   ☐ (Do not check if a smaller reporting company)	Smaller reporting company   ☒
	Emerging growth company   ☐

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of August 3, 2018, the registrant had 2,610,568 shares of common stock, $0.01 par value per share, outstanding.

 

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MedAmerica Properties Inc.

 

Form 10-Q

 

Table of Contents

 

Part I — Financial Information		1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Cautionary Statement Concerning Forward-Looking Statements		10
Overview		10
Recent Events
Critical Accounting Policies and Estimates		11
Results from Operations		11
General and Administrative Expenses		11
Interest Expense		12
Net (Loss) Income Attributable to Common Shareholders		12
Financial Condition and Liquidity		12
Off-Balance Sheet Arrangements		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	14
Part II — Other Information		14
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Mine Safety Disclosures	14
Item 5.	Other Information	14
Item 6.	Exhibits	15
Signatures		16

 

 

 

		June 30, 2018				December 31, 2017
		(Unaudited)
ASSETS
Current assets
Cash and Equivalents		$	357,903			$	708,382
Prepaid insurance and other assets			18,190				38,191
Total current assets			376,093				746,573
Other assets
Equipment & furnishings, net			20,192				21,808
Due from related party			34,614				-
Total other assets			54,806				21,808
Total assets		$	430,899			$	768,381
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses		$	50,147			$	66,319
Accrued dividends			27,361				27,361
Loan payable - insurance financing			8,191				33,191
Total current liabilities			85,699				126,871
Total liabilities			85,699				126,871
Stockholders' equity (deficit)
Series A Preferred stock, $0.01 par value, 20,000 shares authorized, 500 issued at June 30, 2018 and December 31, 2017			5				5
Common stock, $0.01 par value, 50,000,000 shares authorized, 2,610,568 issued at June 30, 2018 and December 31, 2017			26,105				26,105
Additional paid-in capital			111,861,799				111,861,799
Accumulated deficit			(111,542,709	)			(111,246,399	)
Total stockholders' equity (deficit)			345,200				641,510
Total liabilities and stockholders' equity (deficit)		$	430,899			$	768,381

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		Six months ended June 30,								Three months ended June 30,
		2018				2017				2018				2017
General & administrative expenses		$	295,542			$	106,870			$	86,741			$	114,140
Loss from operations			(295,542	)			(106,870	)			(86,741	)			(114,140	)
Interest expense			(768	)			(15,388	)			(384	)			(3,110	)
Net loss		$	(296,310	)		$	(122,258	)		$	(87,125	)		$	(117,250	)
Dividends for the benefit of preferred stockholders:
Preferred stock dividends		$	(2,500	)		$	(2,500	)		$	(1,250	)		$	(1,250	)
Deemed dividends on preferred stock conversion			0				(148,125	)			0				(148,125	)
Net loss attributable to common stockholders		$	(298,810	)		$	(272,883	)		$	(88,375	)		$	(266,625	)
Basic and diluted average number of common shares outstanding:			2,610,568				1,056,724				2,610,568				1,056,724
Net loss per common share basic and diluted		$	(0.11	)		$	(0.26	)		$	(0.03	)		$	(0.25	)

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		Six months ended June 30,
		2018				2017
Cash flows used in operating activities:
Net loss		$	(296,310	)		$	(122,258	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			1,616				-
Changes in assets and liabilities:
Increase in receivable - related party			(34,614	)			-
Increase/(Decrease) in prepaid expenses and other assets			20,000				17,471
Decrease/(Increase) in accounts payable and accrued expenses			(16,171	)			56,345
Decrease in accrued interest - related party			-				(13,208	)
Net cash used in operating activities			(325,479	)			(61,650	)
Cash flows provided by investing activities:
Proceeds from property deposits			-				110,000
Net cash provided by investing activities			-				110,000
Cash flows provided by financing activities:
Payment of demand loan & accrued interest - related party			-				(627,756	)
Proceeds on demand loan - related party			-				169,138
Payment of note payable - insurance financing			(25,000	)
Proceeds from common stock subscribed, net of expenses			-				1,733,928
Net cash provided by (used in) financing activities			(25,000	)			1,275,310
Net increase (decrease) in cash			(350,479	)			1,323,660
Cash at beginning of period			708,382				450
Cash at end of period		$	357,903			$	1,324,110
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest		$	768			$	15,388
Franchise taxes		$	5,650			$	-
Non cash financing activities:
Preferred stock dividend		$	-			$	25,945

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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. The Company is pursuing the acquisition and management of strategically located medical office buildings.

 

In April 2017, our board 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 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 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 reflect the 1 for 10 reverse stock split.

 

 

 

Note 2. Principles of Consolidation and Basis of Presentation

 

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany account balances have been eliminated in consolidation. 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 and its subsidiaries.

 

 

Note 3. Immaterial Error Correction

 

The Company has corrected an immaterial error in its previously filed Form 10-Q as amended, for the quarter ended June 30, 2017.  Net loss attributable to common stockholders increased by $148,125 for the six and three months ended June 30, 2017 and net loss per common share basic and diluted increased by $(0.14) for the six and three months ended June 30, 2017 to reflect the deemed dividend on preferred stock exchange which was effective June 30, 2017 and not reported until September 30, 2017 (See Note 7).  

 

 

 

Note 4. Liquidity and Profitability

 

The accompanying condensed consolidated 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 consolidated financial statements do not 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 (see Note 10) will be adequate to fund its limited overhead and other cash requirements for the next twelve months.

 

During 2017 the Company completed a private placement of its common stock, raising $1,940,005. At June 30, 2018, the Company had a cash balance of approximately $358,000 and working capital of approximately $290,000.

 

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

 

●

Curtailing costs and consolidating operations, where feasible.

●

Seeking debt, equity and other forms of financing, including funding through strategic partnerships.

●

Reducing operations to conserve cash.

●

Investigating and pursuing transactions with third parties, including strategic partnerships.

●

Adding board member and senior advisor with extensive real estate experience.

 

The Company management believes that these measures, coupled with 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 twelve months. However, there can be no assurance that we will be able to 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.

 

 

 

Note 5. Summary of Significant Accounting Policies

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

The unaudited interim condensed consolidated financial statements of the Company as of June 30, 2018 for the three and six months ended June 30, 2018 and 2017 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 10 of Regulation S-X under the Securities Act of 1933, as amended. Certain information and note disclosures normally included in consolidated 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 consolidated financial statements.

  

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2018 and the results of its operations and its cash flow for the three and six months ended June 30, 2018 and 2017. 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 June 30, 2018, 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, 2017 and December 31, 2016. We had no material unrecognized tax benefits and no adjustments to our financial position; results of operations or cash flows 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”) shall be 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 shall be 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 6. Equipment and Furnishings

 

The amount of equipment and furnishings as of June 30, 2018, is as follows:

 

 

 

Depreciation expense related to equipment and furnishings amounted to $808 and $1,616 for the three and six months ended June 30, 2018.

 

 

 

Note 7. Preferred Stock and Common Stock

 

Stock Split

 

In April 2017, the board of directors and the then majority shareholder approved a 1 for 10 reverse stock split (“Stock Split”) of the issued and outstanding shares of common stock of the Company. On June 15, 2017, the Company filed an amendment to its certificate 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 will be used for working capital and to fund operations. 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 is June 30, 2017. This exchange resulted in deemed dividends on preferred stock conversion of $148,125.

 

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 1,059,581 shares after the reverse stock split, 1,293,156 shares from the private placement and 257,831 shares from the preferred stock and preferred dividend exchange

 

 

Preferred Stock Dividends

 

The holder of Preferred Stock shall be 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 to accrue on January 1, 2010. Preferred Dividends shall be 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 June 30, 2018 and December 31, 2017, respectively. An additional $7,500 of cumulative Preferred Dividends are undeclared and unaccrued as of June 30, 2018 and are not included in the balance sheet.

 

 

Common Stock

 

As of June 30, 2018, 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 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.

           

            

 

 

Note 8. Earnings (Loss) per Share

 

The Company excluded from its diluted earnings per share calculation 500 and 10,375 common shares issuable upon conversion of shares of convertible preferred stock that were outstanding at June 30, 2018 and 2017, respectively, as their inclusion would be anti-dilutive.

 

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Note 9. 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. 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:

 

 

 

The fair values of stock options are estimated using the Black-Scholes method, which takes into account variables such as estimated volatility, expected holding period, dividend yield, and the risk-free interest rate. The risk-free interest rate is the five-year treasury rate at the date of grant. The expected life is based on the contractual life of the options at the date of grant. All 70,000 options were fully vested at grant date. The intrinsic value is not material.

 

 

  

 

Note 10. 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, 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 June 30, 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 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 represents 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 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.  

 

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 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 $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 $90,000 and $48,025 for the six months ended June 30, 2018 and 2017, respectively and $45,000 and $28,210 for the three months ended June 30, 2018 and 2017, respectively.

 

On June 14, 2017, the Company entered into a letter of intent with Patriot to reacquire all of the capital units of BMP from Patriot, for $9,536,582 which is the purchase price of the Medical Office Building. The letter of intent is 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.

 

During 2018 the Company's President and CEO performed work for International Rail Partners LLC (“IRP”), an entity majority owned and controlled by the Company’s Chairman. The Company billed back IRP for compensation and expenses in the amount of $111,879 and received payment of $77,265 during the quarter ended June 30, 2018. The outstanding amount of $34,614 is shown as a due from related party.

 

The Company’s directors have not received cash compensation for their services in 2018 or 2017 but were compensated with stock options. See footnote 9 Stock-Based Compensation for further discussion. In the third quarter of 2017, the Company hired a new president and chief executive officer and a new chief financial officer who are husband and wife. Also, in the third quarter of 2017, the Company issued 15,000 common stock options to the president and CEO and 45,000 shares to other board members and officers. The related stock compensation was not material.

 

As of June 30, 2018, 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 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.  

 

 

 

Note 11. 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. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

 

 

 

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