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, 2024

☐ 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: 000-25991

MANHATTAN BRIDGE CAPITAL, INC.

(Exact name of registrant as specified in its charter)

New York

11-3474831

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

60 Cutter Mill Road, Great Neck, New York 11021

(Address of principal executive offices)

(516) 444-3400

(Registrant’s telephone number, including area code)

(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		Trading Symbol(s)		Name of each exchange on which registered
Common shares, par value $.001		LOAN		Nasdaq Capital Market

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 ☐ 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 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	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 July 22, 2024, the registrant had a total of 11,438,651 common shares, $.001 par value per share, outstanding.

MANHATTAN BRIDGE CAPITAL, INC.

TABLE OF CONTENTS

		Page Number
Part I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	2

	Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (audited)	2

	Consolidated Statements of Operations for the Three and Six Month Periods Ended June 30, 2024 and 2023	3

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Month Periods Ended June 30, 2024 and 2023	4

	Consolidated Statements of Cash Flows for the Six Month Periods Ended June 30, 2024 and 2023	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13

Item 4.	Controls and Procedures	13

Part II	OTHER INFORMATION

Item 6.	Exhibits	14

SIGNATURES		15

EXHIBITS

Forward Looking Statements

This report contains forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are typically identified by the words “believe,” “expect,” “intend,” “estimate” and similar expressions. Those statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations or those of our directors or officers with respect to, among other things, trends affecting our financial condition and results of operations and our business and growth strategies. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected, expressed or implied in the forward-looking statements as a result of various factors (such factors are referred to herein as “Cautionary Statements”), including but not limited to the following: (i) our loan origination activities, revenues and profits are limited by available funds; (ii) we operate in a highly competitive market and competition may limit our ability to originate loans with favorable interest rates; (iii) our Chief Executive Officer is critical to our business and our future success may depend on our ability to retain him; (iv) if we overestimate the yields on our loans or incorrectly value the collateral securing the loan, we may experience losses; (v) we may be subject to “lender liability” claims; (vi) our due diligence may not uncover all of a borrower’s liabilities or other risks to its business; (vii) borrower concentration could lead to significant losses; (viii) we may choose to make distributions in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive; and (ix) an increase in interest rates may impact our profitability. The accompanying information contained in this report, including the information set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” identifies important factors that could cause such differences. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These forward-looking statements speak only as of the date of this report, and we caution potential investors not to place undue reliance on such statements. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.

All references in this Form 10-Q to “Company,” “we,” “us,” or “our” refer to Manhattan Bridge Capital, Inc. and its wholly-owned subsidiary, MBC Funding II Corp., unless the context otherwise indicates.

PART I. FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

	June 30, 2024			December 31, 2023
	(unaudited)			(audited)
Assets
Loans receivable	$	66,859,733		$	73,048,403
Interest and other fees receivable on loans		1,488,784			1,395,905
Cash		105,929			104,222
Cash - restricted		—			1,587,773
Other assets		134,321			63,636
Right-of-use asset - operating lease, net		180,446			207,364
Deferred financing costs, net		23,101			27,583
Total assets	$	68,792,314		$	76,434,886

Liabilities and Stockholders’ Equity
Liabilities:
Line of credit	$	17,345,510		$	25,152,338
Senior secured notes (net of deferred financing costs of $134,528 and $172,069, respectively)		5,865,472			5,827,931
Deferred origination fees		646,027			719,019
Accounts payable and accrued expenses		242,248			295,292
Operating lease liability		193,800			220,527
Dividends payable		1,315,445			1,287,073
Total liabilities		25,608,502			33,502,180

Commitments and contingencies		-			-

Stockholders’ equity:
Preferred shares - $.01 par value; 5,000,000 shares authorized; none issued		—			—
Common shares - $.001 par value; 25,000,000 shares authorized; 11,757,058 issued; 11,438,651 and 11,440,651 outstanding, respectively		11,757			11,757
Additional paid-in capital		45,555,408			45,548,876
Less: Treasury stock, at cost – 318,407 and 316,407 shares, respectively		(1,070,406	)		(1,060,606	)
Accumulated deficit		(1,312,947	)		(1,567,321	)
Total stockholders’ equity		43,183,812			42,932,706

Total liabilities and stockholders’ equity	$	68,792,314		$	76,434,886

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

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	2024			2023			2024			2023
	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Interest income from loans	$	2,032,687		$	1,942,527		$	4,175,174		$	3,896,349
Origination fees		410,528			456,835			841,119			900,806
Total revenue		2,443,215			2,399,362			5,016,293			4,797,155

Operating costs and expenses:
Interest and amortization of deferred financing costs		603,230			595,427			1,293,819			1,241,690
Referral fees		500			1,000			1,000			1,292
General and administrative expenses		434,282			400,979			844,560			897,075
Total operating costs and expenses		1,038,012			997,406			2,139,379			2,140,057
Income from operations		1,405,203			1,401,956			2,876,914			2,657,098
Other income		4,500			20,380			9,000			24,880
Income before income tax expense		1,409,703			1,422,336			2,885,914			2,681,978
Income tax expense		(650	)		(650	)		(650	)		(650	)
Net income	$	1,409,053		$	1,421,686		$	2,885,264		$	2,681,328

Basic and diluted net income per common share outstanding:
—Basic	$	0.12		$	0.12		$	0.25		$	0.23
—Diluted	$	0.12		$	0.12		$	0.25		$	0.23

Weighted average number of common shares outstanding:
—Basic		11,438,651			11,475,406			11,438,662			11,485,116
—Diluted		11,438,651			11,475,406			11,438,662			11,485,116

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

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

FOR THE THREE MONTHS ENDED JUNE 30, 2024

	Shares		Amount		Paid in Capital		Shares		Cost			Deficit			Totals
	Common Shares				Additional		Treasury Stock					Accumulated
	Shares		Amount		Paid in Capital		Shares		Cost			Deficit			Totals
Balance, April 1, 2024		11,757,058	$	11,757	$	45,552,142		318,407	$	(1,070,406	)	$	(1,406,555	)	$	43,086,938
Non - cash compensation						3,266										3,266
Dividends declared and payable													(1,315,445	)		(1,315,445	)
Net income				-		-		-		-			1,409,053			1,409,053
Balance, June 30, 2024		11,757,058	$	11,757	$	45,555,408		318,407	$	(1,070,406	)	$	(1,312,947	)	$	43,183,812

FOR THE THREE MONTHS ENDED JUNE 30, 2023

	Common Shares				Additional		Treasury Stock					Accumulated
	Shares		Amount		Paid in Capital		Shares		Cost			Deficit			Totals
Balance, April 1, 2023		11,757,058	$	11,757	$	45,539,077		262,113	$	(798,939	)	$	(1,918,595	)	$	42,833,300
Purchase of treasury shares								33,360		(164,806	)					(164,806	)
Non - cash compensation						3,266										3,266
Dividends declared and payable													(1,289,428	)		(1,289,428	)
Net income				-		-		-		-			1,421,686			1,421,686
Balance, June 30, 2023		11,757,058	$	11,757	$	45,542,343		295,473	$	(963,745	)	$	(1,786,337	)	$	42,804,018

FOR THE SIX MONTHS ENDED JUNE 30, 2024

	Common Shares				Additional		Treasury Stock					Accumulated
	Shares		Amount		Paid in Capital		Shares		Cost			Deficit			Totals
Balance, January 1, 2024		11,757,058	$	11,757	$	45,548,876		316,407	$	(1,060,606	)	$	(1,567,321	)	$	42,932,706
Purchase of treasury shares								2,000		(9,800	)					(9,800	)
Non - cash compensation						6,532										6,532
Dividends paid													(1,315,445	)		(1,315,445	)
Dividends declared and payable													(1,315,445	)		(1,315,445	)
Net income				-		-		-		-			2,885,264			2,885,264
Balance, June 30, 2024		11,757,058	$	11,757	$	45,555,408		318,407	$	(1,070,406	)	$	(1,312,947	)	$	43,183,812

FOR THE SIX MONTHS ENDED JUNE 30, 2023

	Common Shares				Additional		Treasury Stock					Accumulated
	Shares		Amount		Paid in Capital		Shares		Cost			Deficit			Totals
Balance, January 1, 2023		11,757,058	$	11,757	$	45,535,811		262,113	$	(798,939	)	$	(1,885,056	)	$	42,863,573
Balance		11,757,058	$	11,757	$	45,535,811		262,113	$	(798,939	)	$	(1,885,056	)	$	42,863,573
Purchase of treasury shares								33,360		(164,806	)					(164,806	)
Non - cash compensation						6,532										6,532
Dividends paid													(1,293,181	)		(1,293,181	)
Dividends declared and payable				-		-				-			(1,289,428	)		(1,289,428	)
Net income				-		-		-		-			2,681,328			2,681,328
Balance, June 30, 2023		11,757,058	$	11,757	$	45,542,343		295,473	$	(963,745	)	$	(1,786,337	)	$	42,804,018
Balance		11,757,058	$	11,757	$	45,542,343		295,473	$	(963,745	)	$	(1,786,337	)	$	42,804,018

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

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	2024			2023
	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities:
Net income	$	2,885,264		$	2,681,328
Adjustments to reconcile net income to net cash provided by operating activities -
Amortization of deferred financing costs		44,191			49,494
Adjustment to right-of-use asset - operating lease and liability		190			1,230
Depreciation		2,209			1,946
Non-cash compensation expense		6,532			6,532
Changes in operating assets and liabilities:
Interest and other fees receivable on loans		(92,879	)		89,214
Other assets		(71,703	)		(72,115	)
Accounts payable and accrued expenses		(53,044	)		(58,132	)
Deferred origination fees		(72,992	)		17,853
Net cash provided by operating activities		2,647,768			2,717,350

Cash flows from investing activities:
Issuance of short-term loans		(19,677,520	)		(28,122,249	)
Collections received from loans		25,866,190			32,811,877
Purchase of fixed assets		(1,191	)		(5,085	)
Net cash provided by investing activities		6,187,479			4,684,543

Cash flows from financing activities:
Repayment of line of credit, net		(7,806,828	)		(4,323,513	)
Dividends paid		(2,602,518	)		(2,730,049	)
Purchase of treasury shares		(9,800	)		(164,806	)
Deferred financing costs incurred		(2,167	)		(38,191	)
Net cash used in financing activities		(10,421,313	)		(7,256,559	)

Net (decrease) increase in cash		(1,586,066	)		145,334
Cash and cash - restricted, beginning of period*		1,691,995			103,540
Cash, end of period	$	105,929		$	248,874

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for taxes	$	650		$	650
Cash paid during the period for interest	$	1,297,587		$	1,215,297
Cash paid during the period for operating leases	$	32,208		$	31,863

Supplemental Schedule of Noncash Financing Activities:
Dividend declared and payable	$	1,315,445		$	1,289,428
Loan holdback relating to mortgage receivable	$	—		$	17,500

*	At December 31, 2023, cash and restricted cash consisted of $1,587,773 of restricted cash.

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

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

1. THE DESCRIPTION OF COMPANY

The accompanying unaudited condensed consolidated financial statements of Manhattan Bridge Capital, Inc. (“MBC”), a New York corporation founded in 1989, and its consolidated subsidiary, MBC Funding II Corp. (“MBC Funding II”), a New York corporation formed in December 2015 (collectively referred to herein as the “Company”) have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended December 31, 2023 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of consolidated operations for the interim period are not necessarily indicative of the operating results to be attained in the entire fiscal year.

The Company offers short-term, secured, non–banking loans to real estate investors (also known as hard money loans) to fund their acquisition, renovation, rehabilitation or development of residential or commercial properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida.

Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

The condensed consolidated financial statements include the accounts of MBC and MBC Funding II. All significant intercompany balances and transactions have been eliminated in consolidation.

Interest income from commercial loans is recognized, as earned, over the loan period.

Origination fee revenue on commercial loans is amortized over the term of the respective note.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

3. CASH – RESTRICTED

Restricted cash mainly represents collections received, pending clearance, from the Company’s commercial loans and is primarily dedicated to the reduction of the Webster Credit Line (as defined below), established pursuant to the Amended and Restated Credit Agreement (as defined below, see Note 5).

4. COMMERCIAL LOANS

Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money loans) to fund their acquisition and construction of properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers. The loans are generally for a term of one year. The short-term loans are initially recorded, and carried thereafter, in the condensed consolidated financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term.

At June 30, 2024, the Company was committed to $9,057,307 in construction loans that can be drawn by the borrowers when certain conditions are met.

At June 30, 2024, no entity had loans outstanding representing more than 10% of the total balance of the loans outstanding.

The Company generally grants loans for a term of one year. When a performing loan reaches its maturity and the borrower requests an extension, the Company may extend the term of the loan beyond one year. Prior to granting an extension of any loan, the Company reevaluates the underlying collateral.

Credit Risk

Credit risk profile based on loan activity as of June 30, 2024 and December 31, 2023:

SCHEDULE OF CREDIT RISK

Performing loans

Developers-

Residential

Developers-

Commercial

Developers-

Mixed Use

Total outstanding

loans

June 30, 2024

57,210,156

8,204,577

1,445,000

66,859,733

December 31, 2023

(audited)

64,729,403

7,300,000

1,019,000

73,048,403

At June 30, 2024, the Company’s loans receivable consisted of loans in the amount of $26,213, $760,433, $1,760,250, $120,000, $5,265,000 and $16,615,666, originally due or committed to lend to borrowers in 2016, 2019, 2020, 2021, 2022 and 2023, respectively. The loans receivable also includes loans in the amount of $11,446,000 originally due in the first six months of 2024.

Generally, borrowers are paying their interest, and the Company receives a fee in connection with the extension of the loans. In all instances, the borrower has either signed an extension agreement or is in the process of signing the extension. Accordingly, at June 30, 2024, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof.

During February 2023, the Company sold one of its loans receivable at its face value of $485,000. Mr. Assaf Ran, the Company’s President and Chief Executive Officer, participated in such acquisition in the amount of $152,000. In addition, in June 2023, the Company filed a foreclosure lawsuit relating to one property, as a result of a deed transfer from a borrower to a buyer without the Company’s consent. In that instance, the buyer of the property on which the Company had a valid mortgage suffered a data breach which resulted in the failure of the buyer to remit the funds needed for the loan payoff. In October 2023, the Company received the entire payoff amount for the loan receivable, including all unpaid fees, to rectify the situation.

Subsequent to the balance sheet date, $600,000 of the loans receivable at June 30, 2024 were paid off.

5. LINE OF CREDIT

The Company executed an Amended and Restated Credit and Security Agreement (as amended, the “Amended and Restated Credit Agreement”), with Webster Business Credit Corporation (“Webster”), Flushing Bank (“Flushing”) and Mizrahi Tefahot Bank Ltd (“Mizrahi” and together with Webster and Flushing, the “Lenders”), which established the Company’s credit line (the “Webster Credit Line”). Currently, the Webster Credit Line provides the Company with a credit line of $32.5 million in the aggregate until February 28, 2026, secured by assignments of mortgages and other collateral. The interest rates relating to the Webster Credit Line equal (i) the Secured Overnight Financing Rate (“SOFR”) plus a premium, which rate aggregated approximately 8.9%, including a 0.5% agency fee, as of June 30, 2024, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00% and a 0.5% agency fee, as chosen by the Company for each drawdown.

The Webster Credit Line contains various covenants and restrictions including, among other covenants and restrictions, limiting the amount that the Company can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans the Company makes to its customers, limiting the Company’s ability to pay dividends under certain circumstances, and limiting the Company’s ability to repurchase its common shares, sell assets, engage in mergers or consolidations, grant liens, and enter into transactions with affiliates. In addition, the Webster Credit Line contains a cross default provision which will deem any default under any indebtedness owed by us or our subsidiary, MBC Funding II, as a default under the credit line. Under the Amended and Restated Credit Agreement, the Company may repurchase, redeem or otherwise retire its equity securities in an amount not to exceed ten percent of our annual net income from the prior fiscal year. Further, the Company may issue up to $20 million in bonds through its subsidiary, of which not more than $10 million of such bonds may be secured by mortgage notes receivable, and provided that the terms and conditions of such bonds are approved by Webster, subject to its reasonable discretion.

On January 31, 2023, the Company entered into an amendment, effective as of January 2, 2023, with respect to the Amended and Restated Credit Agreement with the Lenders and Mr. Ran, as guarantor, to (i) extend the maturity date of the credit line by three years to February 28, 2026; (ii) transition the applicable benchmark from LIBOR to SOFR and adjust the applicable margin with respect to Base Rate Loans and SOFR Loans; (iii) update the required calculation with respect to the fixed charge coverage ratio covenant; (iv) further increase the limit on individual loans and the concentration of any mortgagor (together with guarantors and other related entities and affiliates); and (v) eliminate the requirement to pledge additional mortgage loans as collateral for the credit line. In addition, the terms of the personal guaranty provided by Mr. Ran were amended such that the potential sums owed under such guaranty will not exceed the sum of $1,000,000 plus any costs relating to the enforcement of the personal guaranty.

The Company was in compliance with all covenants of the Webster Credit Line, as amended, as of June 30, 2024. At June 30, 2024, the outstanding amount under the Amended Credit Agreement was $17,345,510. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% agency fee, was approximately 8.9% as of June 30, 2024.

6. SENIOR SECURED NOTES

On April 25, 2016, in an initial public offering, MBC Funding II issued 6% senior secured notes, due April 22, 2026 (the “Notes”) in the aggregate principal amount of $6,000,000 under the Indenture, dated April 25, 2016, among MBC Funding II, as Issuer, the Company, as Guarantor, and Worldwide Stock Transfer LLC, as Indenture Trustee (the “Indenture”). The Notes, having a principal amount of $1,000 each, are listed on the NYSE American and trade under the symbol “LOAN/26”. Interest accrues on the Notes commencing on May 16, 2016. The accrued interest is payable monthly in cash, in arrears, on the 15th day of each calendar month commencing June 2016.

Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by MBC Funding II, together with MBC Funding II’s cash on hand, must always equal at least 120% of the aggregate outstanding principal amount of the Notes at all times. To the extent the aggregate principal amount of the mortgage loans owned by MBC Funding II plus MBC Funding II’s cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, MBC Funding II is required to repay, on a monthly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by MBC Funding II plus, MBC Funding II’s cash on hand at such time is equal to or greater than 120% of the outstanding principal amount of the Notes. For this purpose, each mortgage loan is deemed to have a value equal to its outstanding principal balance, unless the borrower is in default of its obligations.

MBC Funding II may redeem the Notes, in whole or in part, at any time after April 22, 2019, upon at least 30 days prior written notice to the Noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption, without penalty or premium. No Notes were redeemed by MBC Funding II as of June 30, 2024.

MBC Funding II is obligated to offer to redeem the Notes if there occurs a “change of control” with respect to MBC Funding II or the Company or if MBC Funding II or the Company sell any assets unless, in the case of an asset sale, the proceeds are reinvested in the business of the seller. The redemption price in connection with a “change of control” will be 101% of the principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption. The redemption price in connection with an asset sale will be the outstanding principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption.

The Company guaranteed MBC Funding II’s obligations under the Notes, which are secured by its pledge of 100% of the outstanding common shares of MBC Funding II that it owns.

The Company’s principal executive officers consist of Assaf Ran, who serves as its Chief Executive Officer and President, and Vanessa Kao, who serves as its Chief Financial Officer. As of June 30, 2024, each of Mr. Ran and Ms. Kao own an aggregate of $704,000 and $288,000 of our Notes, respectively.

7. EARNINGS PER COMMON SHARE

Basic and diluted earnings per share are calculated in accordance with Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share” (“ASC Topic 260”). Under ASC Topic 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income.

8. STOCK–BASED COMPENSATION

Stock-based compensation expense recognized under ASC Topic 718, “Compensation-Stock Compensation,” for each of the three-month periods ended June 30, 2024 and 2023 of $3,266, and for each of the six-month periods ended June 30, 2024 and 2023, of $6,532 represents the amortization of the fair value of 1,000,000 restricted shares granted to the Company’s Chief Executive Officer on September 9, 2011 of $195,968, after adjusting for the effect on the fair value of the stock options related to this transaction. The fair value is being amortized over 15 years. At June 30, 2024, all 1,000,000 shares remained restricted, and the remaining unrecognized stock-based compensation amounted to $28,307. One third of such restricted shares shall vest on each of September 9, 2026, September 9, 2027, and September 9, 2028, respectively.

9. STOCKHOLDERS’ EQUITY

The Company adopted a share buyback program on April 11, 2023, for the repurchase of up to 100,000 of the Company’s common shares in the next twelve months. Before this program expired on April 10, 2024, the Company had purchased an aggregate of 56,294 common shares at an aggregate cost of $271,468, including 2,000 common shares repurchased during the first quarter of 2024 at an aggregate cost of $9,800.

10. COMMITMENT

In accordance with the dividend declared by the Company’s Board of Directors on March 12, 2024, a cash dividend of $0.115 per share in an aggregate amount of $1,315,445 was paid on July 15, 2024, to all shareholders of record on July 10, 2024.

********

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The discussion and analysis contain forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements.

We are a New York-based real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. We offer short-term, secured, non-banking loans (sometimes referred to as “hard money” loans), which we may renew or extend on, before or after their initial term expires, to real estate investors to fund their acquisition, renovation, rehabilitation or development of residential or commercial properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida.

The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. Each loan is secured by a first mortgage lien on real estate. In addition, each loan is personally guaranteed by the principal(s) of the borrower, which guarantee may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The face amount of the loans we originated in the past seven years ranged from $40,000 to a maximum of $3.6 million. Our lending policy limits the maximum amount of any loan to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $4 million. Our loans typically have a maximum initial term of 12 months and bear interest at a fixed rate of 9% to 13.5% per year. In addition, we usually receive origination fees or “points” ranging from 0% to 2% of the original principal amount of the loan as well as other fees relating to underwriting and funding the loan. Interest is always payable monthly, in arrears. In the case of acquisition financing, the principal amount of the loan usually does not exceed 75% of the value of the property (as determined by an independent appraiser) and in the case of construction financing, it is typically up to 80% of construction costs.

Since commencing our business in 2007, except as set forth below, we have never foreclosed on a property, although sometimes we have renewed or extended the term of a loan to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan, we generally receive additional “points” and other fees. In June 2023, we filed a foreclosure lawsuit relating to one property, as a result of a deed transfer from the borrower to a buyer without our consent. In that instance, the buyer of the property on which we had a valid mortgage suffered a data breach which resulted in the failure of the buyer to remit the funds needed for the loan payoff. In October 2023, we received the entire payoff amount for the loan receivable, including all unpaid fees, to rectify the situation.

Our primary business objective is to grow our loan portfolio while protecting and preserving capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term through dividends. We intend to achieve this objective by continuing to selectively originate, fund loans secured by first mortgages on residential and commercial real estate held for investment located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida, and to carefully manage and service our portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that current market dynamics specifically the demand/supply imbalance for relatively small real estate loans, presents opportunities for us to selectively originate high-quality first mortgage loans and we believe that these market conditions should persist for a number of years. We have built our business on a foundation of intimate knowledge of the New York metropolitan area real estate market combined with a disciplined credit and due diligence culture that is designed to protect and preserve capital. We believe that our flexibility and ability to structure loans that address the needs of our borrowers without compromising our standards on credit risk, our expertise, our intimate knowledge of the New York metropolitan area real estate market and our focus on newly originated first mortgage loans, has defined our success until now and should enable us to continue to achieve our objectives.

A principal source of new transactions has been repeat business from prior customers and their referral of new business. We also receive leads for new business from banks, brokers and a limited amount of advertising. Finally, our Chief Executive Officer also spends a significant portion of his time on new business development. We rely on our own employees, independent legal counsel, and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers are used to assist us in evaluating the worth of collateral, when deemed necessary by management. We also use construction inspectors.

For the six month periods ended June 30, 2024 and 2023, the total amounts of $19,677,520 and $28,122,249, respectively, have been lent, offset by collections received from borrowers, under our commercial loans of $25,866,190 and $32,811,877, respectively.

At June 30, 2024, we were committed to $9,057,307 in construction loans that can be drawn by our borrowers when certain conditions are met.

To date, none of the loans previously made have been non-collectable, although no assurances can be given that existing or future loans may not prove to be non-collectible or foreclosed in the future.

We satisfied all of the requirements to be taxed as a real estate investment trust (“REIT”) and elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014. In order to maintain our qualification for taxation as a REIT and avoid any excise tax on our net taxable income, we are required to distribute each year at least 90% of our REIT taxable income. If we distribute less than 100% of our taxable income (but more than 90%), the undistributed portion will be taxed at the regular corporate income tax rates. As a REIT, we may also be subject to federal excise taxes and minimum state taxes.

Results of Operations

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Total revenue

Total revenues for the three months ended June 30, 2024 were approximately $2,443,000 compared to approximately $2,399,000 for the three months ended June 30, 2023, an increase of $44,000, or 1.8%. The increase in revenue was due to higher interest rates charged on our commercial loans, partially offset by a reduction in loans receivable, period over period, and reduced origination fees, which were impacted by a slowdown in new loan originations. For the three months ended June 30, 2024 and 2023, approximately $2,033,000 and $1,943,000, respectively, of our revenues were attributable to interest income on secured commercial loans that we offer to real estate investors, and approximately $411,000 and $457,000, respectively, of our revenues were attributable to origination fees on such loans. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.

Interest and amortization of deferred financing costs

Interest and amortization of deferred financing costs for the three months ended June 30, 2024 were approximately $603,000 compared to approximately $595,000 for the three months ended June 30, 2023, an increase of $8,000, or 1.3%. The increase is primarily due to higher interest expenses resulting from elevated interest rates, partially offset by a reduction in borrowed amounts related to the use of the Webster Credit Line. (See Note 5 to the condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q).

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2024 were approximately $434,000 compared to approximately $401,000 for the three months ended June 30, 2023, an increase of $33,000, or 8.2%. The increase is primarily due to costs related to the filing of our registration statement on Form S-3 incurred in 2024, along with higher salaries and legal fees, partially offset by reductions in marketing and banking expenses.

Net income

Net income for the three months ended June 30, 2024 was approximately $1,409,000 compared to approximately $1,422,000 for the three months ended June 30, 2023, a decrease of $13,000, or 0.9%.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

Total revenue

Total revenues for the six months ended June 30, 2024 were approximately $5,016,000 compared to approximately $4,797,000 for the six months ended June 30, 2023, an increase of $219,000, or 4.6%. The increase in revenue was due to higher interest rates charged on our commercial loans, partially offset by a reduction in loans receivable, period over period, and reduced origination fees, which were impacted by a slowdown in new loan originations. For the six months ended June 30, 2024 and 2023, revenues of approximately $4,175,000 and $3,896,000, respectively, were attributable to interest income on secured commercial loans that we offer to real estate investors, and approximately $841,000 and $901,000, respectively, were attributable to origination fees on such loans. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.

Interest and amortization of deferred financing costs

Interest and amortization of deferred financing costs for the six months ended June 30, 2024 were approximately $1,294,000 compared to approximately $1,242,000 for the six months ended June 30, 2023, an increase of $52,000, or 4.2%. The increase is primarily due to higher interest expenses resulting from elevated interest rates, partially offset by a reduction in borrowed amounts related to the use of the Webster Credit Line. (See Note 5 to the condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q).

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2024 were approximately $845,000 compared to approximately $897,000 for the six months ended June 30, 2023, a decrease of $52,000, or 5.8%. The decrease is primarily due to a special bonus awarded to officers in 2023 for extending the Webster Credit Line, partially offset by costs related to the filing of our registration statement on Form S-3 incurred in 2024.

Net income

Net income for the six months ended June 30, 2024 was approximately $2,885,000 compared to approximately $2,681,000 for the six months ended June 30, 2023, an increase of $204,000, or 7.6%. This increase is primarily attributable to the increase in interest income from loans and the decrease in general and administrative expenses, partially offset by the increase in interest expense.

Liquidity and Capital Resources

At June 30, 2024, we had cash of approximately $106,000, compared to cash of approximately $104,000 at December 31, 2023.

For the six months ended June 30, 2024, net cash provided by operating activities was approximately $2,648,000, compared to approximately $2,717,000 for the six months ended June 30, 2023. The decrease in net cash provided by operating activities primarily resulted from the increase in interest and other fees receivable on loans and the decrease in deferred origination fees, partially offset by the increase in net income.

For the six months ended June 30, 2024, net cash provided by investing activities was approximately $6,187,000, compared to approximately $4,685,000 for the six months ended June 30, 2023. Net cash provided by investing activities for the six months ended June 30, 2024 mainly consisted of the collection of our commercial loans of approximately $25,866,000, offset by the issuance of commercial loans of approximately $19,678,000. Net cash provided by investing activities for the six months ended June 30, 2023 mainly consisted of the collection of our commercial loans of approximately $32,812,000, offset by the issuance of commercial loans of approximately $28,122,000.

For the six months ended June 30, 2024, net cash used in financing activities was approximately $10,421,000, compared to approximately $7,257,000 for the six months ended June 30, 2023. Net cash used in financing activities for the six months ended June 30, 2024 reflects the partial repayment of the Webster Credit Line of approximately $7,807,000, dividend payments of approximately $2,603,000, repurchase of treasury shares of approximately $10,000 and deferred financing costs of approximately $2,000. Net cash used in financing activities for the six months ended June 30, 2023 reflects the partial repayment of the Webster Credit Line of approximately $4,324,000, dividend payments of approximately $2,730,000, repurchase of treasury shares of approximately $165,000 and deferred financing costs of approximately $38,000.

Our Amended and Restated Credit and Security Agreement with Webster, Flushing Bank and Mizrahi provides for the Webster Credit Line. Currently, the Webster Credit Line provides us with a credit line of $32.5 million in the aggregate until February 28, 2026, secured by assignments of mortgages and other collateral. The interest rates relating to the Webster Credit Line equal (i) SOFR plus a premium, which rate aggregated approximately 8.9%, including a 0.5% agency fee, as of June 30, 2024, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00% and a 0.5% agency fee, as chosen by the Company for each drawdown.

The Webster Credit Line contains various covenants and restrictions including covenants limiting the amount that the Company can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans the Company makes to its customers, limiting the Company’s ability to pay dividends under certain circumstances, and limiting the Company’s ability to repurchase its common shares, sell assets, engage in mergers or consolidations, grant liens, and enter into transactions with affiliates. In addition, the Webster Credit Line contains a cross default provision which will deem any default under any indebtedness owed by us or our subsidiary, MBC Funding II, as a default under the credit line. Under the Amended and Restated Credit Agreement, the Company may repurchase, redeem or otherwise retire its equity securities in an amount not to exceed ten percent of our annual net income from the prior fiscal year. Further, the Company may issue up to $20 million in bonds through its subsidiary, of which not more than $10 million of such bonds may be secured by mortgage notes receivable, and provided that the terms and conditions of such bonds are approved by Webster, subject to its reasonable discretion.

On January 31, 2023, we entered into an amendment, effective as of January 2, 2023, with respect to the Amended and Restated Credit Agreement with the Lenders and Mr. Ran, as guarantor, to (i) extend the maturity date of the credit line by three years to February 28, 2026; (ii) transition the applicable benchmark from LIBOR to SOFR and adjust the applicable margin with respect to Base Rate Loans and SOFR Loans; (iii) update the required calculation with respect to the fixed charge coverage ratio covenant; (iv) further increase the limit on individual loans and the concentration of any mortgagor (together with guarantors and other related entities and affiliates); and (v) eliminate the requirement to pledge an additional mortgage loans as collateral for the credit line. In addition, the terms of the personal guaranty provided by Mr. Ran were amended such that the potential sums owed under such guaranty will not exceed the sum of $1,000,000 plus any costs relating to the enforcement of the personal guaranty.

We were in compliance with all covenants of the Webster Credit Line, as amended, as of June 30, 2024. At June 30, 2024, the outstanding amount under the Amended and Restated Credit Agreement was $17,345,510. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% agency fee, was approximately 8.9% as of June 30, 2024.

MBC Funding II has $6,000,000 of outstanding principal amount of Notes. The Notes mature on April 22, 2026, unless redeemed earlier, and accrue interest at a rate of 6% per annum commencing on May 16, 2016 and will be payable monthly, in arrears, in cash, on the 15th day of each calendar month, commencing June 2016.

Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by MBC Funding II, together with its cash on hand, must always equal at least 120% of the aggregate outstanding principal amount of the Notes at all times. To the extent the aggregate principal amount of the mortgage loans owned by MBC Funding II plus its cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, MBC Funding II is required to repay, on a monthly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by it plus, its cash on hand at such time is equal to or greater than 120% of the outstanding principal amount of the Notes. For this purpose, each mortgage loan is deemed to have a value equal to its outstanding principal balance, unless the borrower is in default of its obligations.

The Notes are secured by a first priority lien on all of MBC Funding II’s assets, including, primarily, mortgage notes, mortgages and other transaction documents entered into in connection with first mortgage loans originated and funded by us, which MBC Funding II acquired from MBC pursuant to an asset purchase agreement. MBC Funding II may redeem the Notes, in whole or in part, at any time after April 22, 2019 upon at least 30 days prior written notice to the noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption, without penalty or premium. No Notes were redeemed by MBC Funding II as of June 30, 2024.

MBC Funding II is obligated to offer to redeem the Notes if there occurs a “change of control” with respect to us or MBC Funding II or if we or MBC Funding II sell any assets unless, in the case of an asset sale, the proceeds are reinvested in the business of the seller. The redemption price in connection with a “change of control” will be 101% of the principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption. The redemption price in connection with an asset sale will be the outstanding principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption.

We guarantee MBC Funding II’s obligations under the Notes, which are secured by our pledge of 100% of the outstanding common shares of MBC Funding II that we own.

On April 11, 2023, our board of directors authorized a share buyback program for the repurchase of up to 100,000 of our common shares in the next twelve months. Before this program expired on April 10, 2024, we had purchased an aggregate of 56,294 common shares at an aggregate cost of approximately $271,000.

We anticipate that our current cash balances and the Amended and Restated Credit Agreement, as described above, together with our cash flows from operations will be sufficient to fund our operations for the next 12 months. In addition, from time to time, we receive short-term unsecured loans from our executive officers and others in order to provide us with the flexibility necessary to maintain a steady deployment of capital. However, we expect our working capital requirements to increase over the next 12 months as we continue to strive for growth at the right conditions.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Item 4. CONTROLS AND PROCEDURES

(a)

Evaluation and Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2024 (the “Evaluation Date”). Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) are accumulated and communicated to our management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 6. EXHIBITS

Exhibit No.		Description

31.1		Chief Executive Officer Certification under Rule 13a-14
31.2		Chief Financial Officer Certification under Rule 13a-14
32.1*		Chief Executive Officer Certification pursuant to 18 U.S.C. section 1350
32.2*		Chief Financial Officer Certification pursuant to 18 U.S.C. section 1350
101.INS		Inline XBRL Instance Document
101.CAL		Inline XBRL Taxonomy Extension Schema Document
101.SCH		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

*	Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K.

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.

	Manhattan Bridge Capital, Inc. (Registrant)

Date: July 22, 2024	By:	/s/ Assaf Ran
		Assaf Ran, President and Chief Executive Officer
		(Principal Executive Officer)

Date: July 22, 2024	By:	/s/ Vanessa Kao
		Vanessa Kao, Chief Financial Officer
		(Principal Financial and Accounting Officer)

SEC Form 10-Q filed by Manhattan Bridge Capital Inc