MANHATTAN BRIDGE CAPITAL INC
For the period ended Dec 31, 2024. Filed Mar 12, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 12, 2025
LOAN$3.34+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-11.
0001493152-24-009478
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-12.
0001493152-25-009931
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 47 previous paragraphs and 43 current paragraphs.
24 unchanged; 18 reworded; 1 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
General and administrative expenses for the year ended December 31, 2024, were approximately $1,776,000, compared to approximately $1,825,000 for the year ended December 31, 2023, a decrease of $49,000, or 2.7%. The decrease is primarily due to a special bonus awarded to officers in 2023 for extending the Webster Credit Line and a reduction in marketing expenses, partially offset by higher salaries and costs related to the filing of our registration statement on Form S-3 incurred in 2024.
Removed paragraphs (5)
Previous report
General and administrative expenses for the year ended December 31, 2023, were approximately $1,825,000, compared to approximately $1,549,000 for the year ended December 31, 2022, an increase of $276,000, or 17.8%. This increase is primarily attributable to a special bonus to officers for extending the Webster Credit Line as well as an annual bonus in 2023, totaling approximately $195,000, and increases in marketing, insurance, travel and meals expenses, partially offset by a decrease in advertising expense.
Previous report
On January 31, 2023, we entered into another 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.
Previous report
Each Noteholder had the right to cause MBC Funding II to redeem his, her or its Notes on April 22, 2021 by notifying MBC Funding II in writing, no earlier than November 22, 2020 and no later than January 22, 2021. No Noteholder exercised such right during the required time frame and as such the Notes are no longer redeemable by the Noteholders.
Previous report
Outlook
Previous report
The interest rate on the Notes is fixed and the interest rate under the Webster Credit Line is adjustable. The high level of SOFR rates adversely impacts our interest costs. We have experienced a slowdown in the deployment of capital and lower demand for new loans. We are increasing the interest rates charged on our commercial loans in order to offset our increased interest costs. In addition, most of our loans contain an adjustable interest rate clause allowing us to charge no less than the prime rate plus 3% on the outstanding loans. We also believe that we benefit from our low equity-to-debt ratio in the current market condition.
Reworded paragraphs (18)
Previous wording
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 $3.3 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) $3.5 million. Our loans typically have a maximum initial term of 12 months bearing 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.
Current wording
The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. All loans, except for one with a face value of approximately $47,000, are 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 bearing interest at a fixed rate of 9% to 13% per year, except for one loan issued in June 2024, which had an initial interest rate of 11.5% that was reduced to 7.25% on January 2, 2025, for a period of up to one 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.
Previous wording
Since commencing this business in 2007, we have made over 1,220 loans and never foreclosed on a property, except as set forth below, although sometimes we have renewed or extended our loans to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan, we receive additional “points” and other fees.
Current wording
Since commencing this business in 2007, we have made over 1,280 loans and never foreclosed on a property, except as set forth below, although sometimes we have renewed or extended our loans to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan, we receive additional “points” and other fees.
Previous wording
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 loans and carefully manage our portfolio of first mortgage real estate loans in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that the demand for relatively small loans secured by residential and commercial real estate held for investment around the New York metropolitan market, including New Jersey and Connecticut, and in the Florida market remains relatively strong, but weakened due to the continued increase in interest-rates. In that regard, we have observed a steady increase in interest rates on our debt which, if it continues, may have an impact on our income, as well as may impact the rate of our dividends. Our ability to close deals fast has created an opportunity for non-bank “hard money” real estate lenders like us to selectively originate high-quality first mortgage loans and this condition should persist for a number of years.
Current wording
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 loans and carefully manage our portfolio of first mortgage real estate loans in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that the demand for relatively small loans secured by residential and commercial real estate held for investment around the New York metropolitan market, including New Jersey and Connecticut, and in the Florida market remains relatively strong, but weakened due to high interest rates. Our ability to close deals fast has created an opportunity for non-bank “hard money” real estate lenders like us to selectively originate high-quality first mortgage loans and this condition should persist for a number of years.
Previous wording
As of December 31, 2023, we were committed to $7,978,089 in construction loans that can be drawn by our borrowers when certain conditions are met.
Current wording
As of December 31, 2024, we were committed to $7,203,418 in construction loans that can be drawn by our borrowers when certain conditions are met.
Previous wording
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Management will base the use of estimates on (a) a preset number of assumptions that consider past experience, (b) future projections, and (c) general financial market conditions. Actual amounts could differ from those estimates.
Current wording
The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Management will base the use of estimates on (a) a preset number of assumptions that consider past experience, (b) future projections, and (c) general financial market conditions. Actual amounts could differ from those estimates.
Previous wording
Effective January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). The ASU introduced a new credit loss methodology, Current Expected Credit Losses (“CECL”), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Management estimates our CECL reserve primarily using the Weighted Average Remaining Maturity (“WARM”) method, which requires reference to historic loss data taking into consideration expected economic conditions over the relevant timeframe. Application of the WARM method to estimate a CECL reserve requires judgment, including (i) the appropriate historical loan loss reference data, (ii) the expected timing and amount of future loan fundings and repayments, and (iii) the current credit quality of our loan portfolio and expectations of performance and market conditions over the relevant time period. In addition, management reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value ratio. Failure to properly measure an allowance for credit losses could result in the overstatement of earnings and the carrying value of the loans receivable. Actual losses, if any, could differ significantly from estimated amounts.
Current wording
Effective January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (ASU Topic 326). The ASU introduced a new credit loss methodology, Current Expected Credit Losses (“CECL”), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Management estimates our CECL reserve primarily using the Weighted Average Remaining Maturity (“WARM”) method, which requires reference to historic loss data taking into consideration expected economic conditions over the relevant timeframe. Application of the WARM method to estimate a CECL reserve requires judgment, including (i) the appropriate historical loan loss reference data, (ii) the expected timing and amount of future loan fundings and repayments, and (iii) the current credit quality of our loan portfolio and expectations of performance and market conditions over the relevant time period. In addition, management reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value ratio. Failure to properly measure an allowance for credit losses could result in the overstatement of earnings and the carrying value of the loans receivable. Actual losses, if any, could differ significantly from estimated amounts.
Previous wording
Total revenue for the year ended December 31, 2023, was approximately $9,796,000, compared to approximately $8,571,000 for the year ended December 31, 2022, an increase of $1,225,000, or 14.3%. The increase in revenue was due to higher interest rates charged on our commercial loans. In 2023, approximately $7,976,000 of our revenue represents interest income on secured, real estate loans that we offer to real estate investors compared to approximately $6,773,000 in 2022, and approximately $1,820,000 represents origination fees on such loans, compared to approximately $1,798,000 in 2022. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.
Current wording
Total revenue for the year ended December 31, 2024, was approximately $9,689,000, compared to approximately $9,796,000 for the year ended December 31, 2023, a decrease of $107,000, or 1.1%. The decrease in revenue was due to a reduction in loans receivable, period over period, and reduced origination fees, which were impacted by a slowdown in new loan originations, partially offset by higher interest rates charged on our commercial loans. In 2024, approximately $8,047,000 of our revenue represents interest income on secured, real estate loans that we offer to real estate investors, compared to approximately $7,976,000 in 2023, and approximately $1,642,000 represents origination fees on such loans, compared to approximately $1,820,000 in 2023. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.
Previous wording
Interest and amortization of deferred financing costs for the year ended December 31, 2023, were approximately $2,526,000, compared to approximately $1,823,000 for the year ended December 31, 2022, an increase of $703,000, or 38.6%. The increase is primarily attributable to the increase in interest expense due to higher interest rates and increases in amounts borrowed relating to the use of the Webster Credit Line. (See Note 5 to the financial statements included elsewhere in this Report).
Current wording
Interest and amortization of deferred financing costs for the year ended December 31, 2024, were approximately $2,337,000, compared to approximately $2,526,000 for the year ended December 31, 2023, a decrease of $189,000, or 7.5%. The decrease is primarily attributable to the decrease in interest expense due to a reduction in borrowed amounts related to the use of the Webster Credit Line. (See Note 5 to the financial statements included elsewhere in this Report).
Previous wording
Net income for the year ended December 31, 2023, was approximately $5,476,000, compared to approximately $5,212,000 for the year ended December 31, 2022, an increase of $264,000, or 5.1%. This increase is primarily attributable to the increase in interest income from loans, partially offset by the increases in interest expense and in general and administrative expenses.
Current wording
Net income for the year ended December 31, 2024, was approximately $5,591,000, compared to approximately $5,476,000 for the year ended December 31, 2023, an increase of $115,000, or 2.1%. This increase is primarily attributable to the decrease in interest expense, partially offset by the decrease in origination fees.
Previous wording
As of December 31, 2023 and 2022, we had cash of approximately $104,000, not including restricted cash, which mainly represents collections received, pending clearance, from the Company’s commercial loans and is primarily dedicated to the reduction of the Webster Credit Line.
Current wording
As of December 31, 2024, we had cash of approximately $178,000, compared to cash of approximately $104,000 at December 31, 2023.
Previous wording
For the year ended December 31, 2023, net cash provided by operating activities was approximately $5,608,000, compared to approximately $5,167,000 of net cash provided by operating activities for the year ended December 31, 2022. The increase in net cash provided by operating activities primarily resulted from the increases in net income and deferred origination fees, partially offset by the changes in interest receivable on loans as well as accounts payable and accrued expenses.
Current wording
For the year ended December 31, 2024, net cash provided by operating activities was approximately $4,932,000, compared to approximately $5,395,000 of net cash provided by operating activities for the year ended December 31, 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 decreases in deferred origination fees and in accounts payable and accrued expenses, partially offset by the increase in net income.
Previous wording
For the year ended December 31, 2023, net cash provided by investing activities was approximately $1,430,000, compared to approximately $8,771,000 of net cash used in investing activities for the year ended December 31, 2022. Net cash provided by investing activities for the year ended December 31, 2023, mainly consisted of collection of our commercial loans of approximately $57,736,000, offset by the issuance of our short-term commercial loans of approximately $56,301,000. Net cash used in investing activities for the year ended December 31, 2022, mainly consisted of the issuance of our short-term commercial loans of approximately $60,916,000, offset by collection of our commercial loans of approximately $52,147,000.
Current wording
For the year ended December 31, 2024, net cash provided by investing activities was approximately $7,548,000, compared to approximately $1,643,000 of net cash provided by investing activities for the year ended December 31, 2023. Net cash provided by investing activities for the year ended December 31, 2024, mainly consisted of collection of our commercial loans of approximately $49,090,000, offset by the issuance of our short-term commercial loans of approximately $41,538,000. Net cash provided by investing activities for the year ended December 31, 2023, mainly consisted of collection of our commercial loans of approximately $57,736,000, offset by the issuance of our short-term commercial loans of approximately $56,088,000.
Previous wording
For the year ended December 31, 2023, net cash used in financing activities was approximately $5,450,000, compared to approximately $3,565,000 of net cash provided by financing activities for the year ended December 31, 2022. Net cash used in financing activities for the year ended December 31, 2023, reflects dividend payments of approximately $5,308,000, purchase of treasury shares of approximately $262,000 and cash paid for deferred financing costs of approximately $38,000, offset by proceeds from the Webster Credit Line of approximately $158,000. Net cash provided by financing activities for the year ended December 31, 2022, reflects net proceeds from the Webster Credit Line of an aggregate of approximately $9,348,000, offset by dividend payments of approximately $5,747,000 and cash paid for deferred financing costs of approximately $36,000.
Current wording
For the year ended December 31, 2024, net cash used in financing activities was approximately $13,970,000, compared to approximately $5,450,000 of net cash used in financing activities for the year ended December 31, 2023. Net cash used in financing activities for the year ended December 31, 2024, reflects repayment of the Webster Credit Line of approximately $8,724,000, dividend payments of approximately $5,233,000, purchase of treasury shares of approximately $10,000 and cash paid for deferred financing costs of approximately $2,000. Net cash used in financing activities for the year ended December 31, 2023, reflects dividend payments of approximately $5,308,000, purchase of treasury shares of approximately $262,000 and cash paid for deferred financing costs of approximately $38,000, offset by proceeds from the Webster Credit Line of approximately $158,000.
Previous wording
Our Amended and Restated Credit and Security Agreement with Webster, Flushing Bank and Mizrahi (the “Lenders”), 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 8.96%, including a 0.5% agency fee, as of December 31, 2023, 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.
Current wording
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 8.0%, including a 0.5% agency fee, as of December 31, 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.
Previous wording
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.
Current wording
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. In addition, Mr. Rand provides a personal guaranty of the potential amounts owed under the Webster Credit Line, with such guaranty not to exceed $1,000,000 plus any costs relating to the enforcement of the personal guaranty.
Previous wording
We were in compliance with all covenants of the Webster Credit Line, as amended, as of December 31, 2023. At December 31, 2023, the outstanding amount under the Amended and Restated Credit Agreement was $25,152,338. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% agency fee, as of December 31, 2023 was approximately 8.96%.
Current wording
We were in compliance with all covenants of the Webster Credit Line, as amended, as of December 31, 2024. At December 31, 2024, the outstanding amount under the Amended and Restated Credit Agreement was $16,427,874. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% agency fee, as of December 31, 2024 was approximately 8.0%.
Previous wording
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. As of December 31, 2023, we have purchased an aggregate of 54,294 common shares under this repurchase program, at an aggregate cost of approximately $262,000.
Current wording
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. 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.
Previous wording
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 condition.
Current wording
We expect that our current cash balances, the Amended and Restated Credit Agreement, as described above, and cash flows from operations will be sufficient to fund our operations over the next 12 months. We currently do not believe there will be any issues in extending the Webster Credit Line or securing a similar line from another bank before its expiration, and we plan to refinance the Notes prior to their maturity, though we cannot assure you that we will be successful in doing so on favorable terms or at all. From time to time, we also receive short-term unsecured loans from our executive officers and others, providing the flexibility needed for the steady deployment of capital. However, we anticipate that our working capital requirements will increase in the coming 12 months as we continue to pursue growth under favorable conditions.