Manhattan Bridge Capital(LOAN) - 2024 Q3 - Quarterly Report

Part I Financial Information This section presents the company's comprehensive financial data, including statements of financial position, operations, equity changes, and cash flows, along with explanatory notes Condensed Consolidated Financial Statements (Unaudited) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with related notes, detailing financial position as of September 30, 2024, and December 31, 2023, and operating results and cash flows for the three and nine months ended September 30, 2024, and 2023 Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 This section presents the company's consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of September 30, 2024, and December 31, 2023 | Metric | September 30, 2024 (Unaudited, USD) | December 31, 2023 (Audited, USD) | | :------------------------------------ | :----------------------- | :---------------------- | | Assets | | | | Loans Receivable | $68,711,438 | $73,048,403 | | Cash | $167,863 | $104,222 | | Restricted Cash | — | $1,587,773 | | Total Assets | $70,702,003 | $76,434,886 | | Liabilities | | | | Line of Credit | $19,170,268 | $25,152,338 | | Senior Secured Notes (Net) | $5,884,244 | $5,827,931 | | Dividends Payable | $1,315,445 | $1,287,073 | | Total Liabilities | $27,431,084 | $33,502,180 | | Stockholders' Equity | | | | Common Stock | $11,757 | $11,757 | | Additional Paid-in Capital | $45,558,674 | $45,548,876 | | Accumulated Deficit | $(1,229,106) | $(1,567,321) | | Total Stockholders' Equity | $43,270,919 | $42,932,706 | | Total Liabilities and Stockholders' Equity | $70,702,003 | $76,434,886 | - As of September 30, 2024, the company's total assets were $70,702,003, a decrease from $76,434,886 as of December 31, 2023, primarily due to reductions in loans receivable and line of credit balances[5] Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 This section details the company's consolidated operating results, including revenue, operating costs, and net income for the three and nine months ended September 30, 2024, and 2023 | Metric | Three Months Ended September 30, 2024 (USD) | Three Months Ended September 30, 2023 (USD) | Nine Months Ended September 30, 2024 (USD) | Nine Months Ended September 30, 2023 (USD) | | :------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Revenue | | | | | | Loan Interest Income | $1,952,957 | $1,992,495 | $6,128,131 | $5,888,843 | | Loan Origination Fees | $360,376 | $441,271 | $1,201,494 | $1,342,077 | | Total Revenue | $2,313,333 | $2,433,766 | $7,329,625 | $7,230,920 | | Operating Costs and Expenses | | | | | | Interest and Amortization of Deferred Financing Costs | $537,218 | $614,389 | $1,831,037 | $1,856,079 | | General and Administrative Expenses | $380,482 | $377,192 | $1,225,041 | $1,274,267 | | Total Operating Costs and Expenses | $918,547 | $991,942 | $3,057,925 | $3,131,998 | | Operating Income | $1,394,786 | $1,441,824 | $4,271,700 | $4,098,922 | | Net Income | $1,399,286 | $1,446,324 | $4,284,550 | $4,127,652 | | Basic and Diluted Net Income Per Share | $0.12 | $0.13 | $0.37 | $0.36 | - For the three months ended September 30, 2024, total revenue decreased by 5.0% to $2,313,333 year-over-year, with net income decreasing by 3.3% to $1,399,286; for the nine months ended September 30, 2024, total revenue increased by 1.4% to $7,329,625 year-over-year, and net income increased by 3.8% to $4,284,550[6][7] Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2024 and 2023 This section outlines the changes in the company's consolidated stockholders' equity, reflecting the impact of net income, dividends, and stock transactions for the three and nine months ended September 30, 2024, and 2023 | Metric | Nine Months Ended September 30, 2024 (USD) | | :------------------------------------ | :----------------------- | | Balance as of January 1, 2024 | $42,932,706 | | Repurchase of Treasury Stock | $(9,800) | | Non-Cash Compensation | $9,798 | | Dividends Paid | $(2,630,890) | | Dividends Declared and Payable | $(1,315,445) | | Net Income | $4,284,550 | | Balance as of September 30, 2024 | $43,270,919 | - As of September 30, 2024, total stockholders' equity increased to $43,270,919 from $42,932,706 as of January 1, 2024, primarily driven by net income contributions, partially offset by dividend payments and treasury stock repurchases[10] Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 This section presents the company's consolidated cash flow activities, categorizing cash generated from or used in operating, investing, and financing activities for the nine months ended September 30, 2024, and 2023 | Cash Flow Activity | Nine Months Ended September 30, 2024 (USD) | Nine Months Ended September 30, 2023 (USD) | | :------------------------------------ | :----------------------- | :----------------------- | | Net Cash Provided by Operating Activities | $4,004,921 | $4,136,768 | | Net Cash Provided by Investing Activities | $4,382,947 | $3,697,339 | | Net Cash Used in Financing Activities | $(9,912,000) | $(7,804,500) | | Net (Decrease) Increase in Cash | $(1,524,132) | $29,607 | | Cash at End of Period | $167,863 | $133,147 | - For the nine months ended September 30, 2024, net cash provided by operating activities was $4,004,921, net cash provided by investing activities was $4,382,947, and net cash used in financing activities was $9,912,000, resulting in a net cash decrease of $1,524,132[13] Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the condensed consolidated financial statements, offering additional context and disclosures for various accounts and transactions 1. Company Description This note describes Manhattan Bridge Capital, Inc. and its subsidiary, outlining their business of providing short-term, secured non-bank loans to real estate investors - Manhattan Bridge Capital, Inc. (MBC) and its subsidiary MBC Funding II Corp. (collectively, the "Company") provide short-term, secured non-bank loans primarily to real estate investors in the New York metropolitan area (including New Jersey and Connecticut) and Florida, for the acquisition, renovation, conversion, or development of residential or commercial properties[14][15] - The Company's financial statements are prepared in accordance with U.S. GAAP and consolidate the accounts of MBC and its subsidiaries, with all significant intercompany balances and transactions eliminated[14][15] 2. Recently Issued Accounting Pronouncements This note addresses the impact of recently issued accounting standards on the company's condensed consolidated financial statements - Management believes that any recently issued accounting pronouncements not yet effective would not have a material impact on the Company's condensed consolidated financial statements if adopted currently[16] 3. Restricted Cash This note explains the nature and purpose of the company's restricted cash balance - Restricted cash primarily represents commercial loan collections received and awaiting clearance, mainly designated for reducing the Webster Line of Credit[17] 4. Commercial Loans This note details the company's commercial loan portfolio, including loan types, terms, and collateral - The Company provides short-term, secured non-bank loans to real estate investors for property acquisition and construction, primarily in the New York metropolitan area and Florida, with typical one-year terms secured by real estate mortgages and personal guarantees from borrowers' principals[18] | Loan Type | September 30, 2024 (USD) | December 31, 2023 (Audited, USD) | | :------------------- | :------------- | :---------------------- | | Developer Residential Loans | $59,886,438 | $64,729,403 | | Developer Commercial Loans | $7,380,000 | $7,300,000 | | Developer Mixed-Use Loans | $1,445,000 | $1,019,000 | | Total Loans Outstanding | $68,711,438 | $73,048,403 | - As of September 30, 2024, the Company had committed to provide $8,147,338 in construction loans, available for borrower drawdowns upon meeting specific conditions, with no current loan impairments or provisions for loan losses or recoveries[19][21] 5. Line of Credit This note describes the company's credit facilities, including terms, interest rates, and covenants - The Company maintains a revised and restated credit and security agreement (the "Webster Line of Credit") with banks like Webster Business Credit Corporation, providing a $32.5 million credit facility valid until February 28, 2026, secured by mortgage loans and other collateral[23] - The Webster Line of Credit bears interest at SOFR plus a premium, approximately 8.4% (including a 0.5% agency fee) as of September 30, 2024, with the Company in compliance with all covenants and $19,170,268 outstanding[23][26] - The line of credit includes various covenants and restrictions, such as limits on borrowing amounts, maintenance of financial ratios, restrictions on loan terms, and limitations on dividend payments and stock repurchases[25] 6. Senior Secured Notes This note provides details on the company's senior secured notes, including issuance, maturity, and collateral requirements - MBC Funding II issued 6% Senior Secured Notes ("Notes") with a total principal of $6 million on April 25, 2016, maturing on April 22, 2026, and listed on NYSE American under the ticker "LOAN/26"[27] - Per covenant terms, the aggregate outstanding principal balance of mortgage loans held by MBC Funding II plus its cash on hand must always be at least 120% of the aggregate outstanding principal balance of the Notes[28] - The Company guarantees MBC Funding II's obligations under the Notes and pledges its 100% issued and outstanding common stock of MBC Funding II as collateral[30] 7. Stockholders' Equity This note describes activities related to stockholders' equity, including stock repurchase programs - The Company adopted a stock repurchase program on April 11, 2023, authorizing the repurchase of up to 100,000 shares of common stock, with 56,294 shares repurchased at a total cost of $271,468 before the program's expiration on April 10, 2024[31] 8. Earnings Per Common Share This note explains the calculation methodology for basic and diluted earnings per common share - Basic and diluted earnings per share are calculated according to ASC Topic 260, with basic EPS determined by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding[32] 9. Stock-Based Compensation This note details the company's stock-based compensation expenses and outstanding restricted stock awards - Stock-based compensation expense was $3,266 for the three months ended September 30, 2024, and 2023, and $9,798 for the nine months ended September 30, 2024, and 2023, representing the fair value amortization of 1,000,000 restricted shares granted to the CEO[33] - As of September 30, 2024, all 1,000,000 shares remain restricted, with $25,040 in unrecognized stock-based compensation expense, and these restricted shares will vest one-third on September 9, 2026, 2027, and 2028, respectively[33] 10. Commitments This note outlines the company's significant financial commitments, specifically regarding dividend payments - A cash dividend of $0.115 per share, totaling $1,315,445, declared by the Board on July 29, 2024, was paid on October 15, 2024, to all shareholders of record as of October 8, 2024[34] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and operating results for the three and nine months ended September 30, 2024, covering business overview, revenue and expense changes, net income performance, and liquidity and capital resources Business Overview This section provides an overview of the company's business model, lending activities, strategic objectives, and REIT election status - The Company is a New York-based real estate finance firm specializing in providing short-term, secured non-bank loans ("hard money loans") to real estate investors in the New York metropolitan area (including New Jersey and Connecticut) and Florida, for the acquisition, renovation, conversion, or development of residential or commercial properties[35] - Loans are typically secured by a first mortgage on real estate and personal guarantees from the borrower's principals, with terms usually 12 months, fixed interest rates from 9% to 13.5%, and loan origination fees ranging from 0% to 2%[36] - The Company's primary business objective is to provide attractive risk-adjusted returns to shareholders through dividends, achieved by selectively originating first mortgage loans and prudently managing its investment portfolio[38] - Since 2014, the Company has elected to be taxed as a Real Estate Investment Trust (REIT), requiring it to distribute at least 90% of its REIT taxable income annually to maintain REIT qualification[41] Results of Operations - Three Months Ended September 30, 2024 vs 2023 This section analyzes the company's operating performance, comparing key financial metrics for the three months ended September 30, 2024, against the same period in 2023 | Metric | Three Months Ended September 30, 2024 (USD) | Three Months Ended September 30, 2023 (USD) | Change (USD) | Change (%) | | :------------------------------------ | :----------------------- | :----------------------- | :------- | :------- | | Total Revenue | $2,313,000 | $2,434,000 | $(121,000) | -5.0% | | Loan Interest Income | $1,953,000 | $1,992,000 | $(39,000) | -2.0% | | Loan Origination Fees | $360,000 | $441,000 | $(81,000) | -18.4% | | Interest and Amortization of Deferred Financing Costs | $537,000 | $614,000 | $(77,000) | -12.5% | | General and Administrative Expenses | $380,000 | $377,000 | $3,000 | 0.8% | | Net Income | $1,399,000 | $1,446,000 | $(47,000) | -3.3% | - The total revenue decrease was primarily due to reduced loans receivable and slower new loan originations leading to lower origination fees, partially offset by higher commercial loan interest rates[41][42] - The reduction in interest and amortization of deferred financing costs was mainly attributable to a decrease in the Webster Line of Credit borrowing amount[41][42] Results of Operations - Nine Months Ended September 30, 2024 vs 2023 This section analyzes the company's operating performance, comparing key financial metrics for the nine months ended September 30, 2024, against the same period in 2023 | Metric | Nine Months Ended September 30, 2024 (USD) | Nine Months Ended September 30, 2023 (USD) | Change (USD) | Change (%) | | :------------------------------------ | :----------------------- | :----------------------- | :------- | :------- | | Total Revenue | $7,330,000 | $7,231,000 | $99,000 | 1.4% | | Loan Interest Income | $6,128,000 | $5,889,000 | $239,000 | 4.1% | | Loan Origination Fees | $1,201,000 | $1,342,000 | $(141,000) | -10.5% | | Interest and Amortization of Deferred Financing Costs | $1,831,000 | $1,856,000 | $(25,000) | -1.3% | | General and Administrative Expenses | $1,225,000 | $1,274,000 | $(49,000) | -3.8% | | Net Income | $4,285,000 | $4,128,000 | $157,000 | 3.8% | - The total revenue growth was primarily driven by higher commercial loan interest rates, partially offset by reduced loans receivable and slower new loan originations leading to lower origination fees[44][45] - The decrease in general and administrative expenses was mainly due to reduced special bonuses for executives in 2023 and lower marketing expenses, partially offset by increased salaries and costs related to the 2024 S-3 registration statement[44][45] Liquidity and Capital Resources This section discusses the company's liquidity position, cash flow activities, and capital resources, including its ability to meet future operational needs | Metric | As of September 30, 2024 (USD) | As of December 31, 2023 (USD) | | :------------------- | :---------------- | :------------------ | | Cash | $168,000 | $104,000 | | Net Cash Provided by Operating Activities (Nine Months) | $4,005,000 | $4,137,000 | | Net Cash Provided by Investing Activities (Nine Months) | $4,383,000 | $3,697,000 | | Net Cash Used in Financing Activities (Nine Months) | $9,912,000 | $7,805,000 | | Webster Line of Credit Outstanding | $19,170,268 | N/A | | Senior Secured Notes Outstanding Principal | $6,000,000 | N/A | - As of September 30, 2024, the company's cash balance was $168,000[47] - Net cash provided by operating activities decreased, primarily due to increased interest and other fees receivable on loans and reduced deferred origination fees[47][48] - Net cash provided by investing activities increased, mainly from the collection of commercial loans[47][49] - Net cash used in financing activities increased, primarily reflecting partial repayment of the Webster Line of Credit and dividend payments[47][49] - The Company anticipates that its current cash balance, the Webster Line of Credit, and operating cash flows will be sufficient to meet working capital needs for the next 12 months, with expected increases in working capital requirements as the business grows[56] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is exempt from providing the information required by this item - As a smaller reporting company, the Company is exempt from providing quantitative and qualitative disclosures about market risk as per regulations[58] Controls and Procedures Management assessed the effectiveness of the company's disclosure controls and procedures as of September 30, 2024, concluding they are effective, with no significant changes in internal control over financial reporting during the quarter - As of September 30, 2024, the Company's management, including the Chief Executive Officer and Chief Financial Officer, assessed and determined that its disclosure controls and procedures are effective[59] - There were no significant changes in the Company's internal control over financial reporting during the fiscal quarter ended September 30, 2024[60] Part II Other Information This section contains additional information not covered in the financial statements, including a list of exhibits filed with the report Exhibits This section lists the exhibits accompanying this 10-Q report, including certifications from the CEO and CFO and XBRL-related documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 and 18 U.S.C. section 1350, as well as Inline XBRL instance documents and taxonomy extension files[61] Signatures This section contains the official signatures of the company's authorized officers, affirming the submission of the report - This report was duly signed by Assaf Ran, President and Chief Executive Officer, and Vanessa Kao, Chief Financial Officer, of Manhattan Bridge Capital, Inc. on October 23, 2024[63][64]