Manhattan Bridge Capital, Inc: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis of our consolidated 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. All loans, except for one loan with a current outstanding principal balance of approximately $14,000, 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 12% per year, except for one loan issued in June 2024, which initially bore interest at 11.5% per annum and, effective January 2, 2025, was modified to bear interest at 7.25% per annum for an extension term of up to one year, which term was subsequently extended for an additional 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 not completed a foreclosure or taken title to any collateral property, although from time to time 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.

During the quarter ended June 30, 2026, one borrower with an aggregate outstanding principal balance of approximately $935,000 secured by two properties located in Florida became delinquent on its interest payment obligations. We delivered a notice of default and, after the borrower failed to cure the default, retained Florida foreclosure counsel to pursue available remedies, including foreclosure, if necessary. Based on management’s evaluation of the estimated value of the underlying collateral, which management believes substantially exceeds the outstanding principal balance, we concluded that no allowance for credit losses was required as of June 30, 2026. We will continue to monitor the loan, the foreclosure process, if commenced, and the value of the underlying collateral each reporting period.

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 and 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 supply-and-demand imbalance for relatively small real estate loans, present 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, have 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, 2026 and 2025, the total amounts of $29,007,320 and $23,482,540, respectively, have been lent, offset by collections received from borrowers, under our commercial loans of $27,302,347 and $23,619,317, respectively.

At June 30, 2026, we were committed to $3,927,235 in construction loans that can be drawn by our borrowers when certain conditions are met.

To date, none of the loans previously made have resulted in a credit loss or been determined to be uncollectible, although no assurances can be given that existing or future loans may not prove to be non-collectible or foreclosed in the future. As of June 30, 2026, one borrower with an outstanding principal balance of approximately $935,000 was in default, and we had retained Florida foreclosure counsel to pursue available remedies. Based on management’s assessment of the estimated value of the underlying collateral, which management believes substantially exceeds the outstanding principal balance, no allowance for credit losses was recorded as of June 30, 2026.

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, 2026 Compared to the Three Months Ended June 30, 2025

Total revenue

Total revenue for the three months ended June 30, 2026 was approximately $2,045,000 compared to approximately $2,355,000 for the same period in 2025, a decrease of approximately $310,000, or 13.2%. The decrease occurred despite increases in both the number of loans originated and the amount of capital deployed and was primarily attributable to lower interest rates and origination fees charged to borrowers as a result of increased competition in the marketplace. In addition, the Company granted approximately $85,000 of discretionary payoff and refinancing credits to certain borrowers during the quarter. These credits were provided in connection with negotiated loan payoffs and other borrower-specific business matters. For the three months ended June 30, 2026 and 2025, approximately $1,738,000 and $1,899,000, respectively, of our revenues were attributable to interest income on secured commercial loans that we offer to real estate investors, and approximately $307,000 and $456,000, 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, 2026 were approximately $399,000 compared to approximately $506,000 for the same period in 2025, representing a decrease of approximately $107,000, or 21.1%. The decrease was primarily attributable to lower interest expense resulting from lower average borrowings and lower SOFR rates (see Note 5 to the condensed consolidated financial statements).

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2026 were approximately $495,000, compared to approximately $438,000 for the same period in 2025, representing an increase of approximately $57,000, or 13.0%. The increase was primarily attributable to increases in payroll, legal, bank, appraisal, and travel expenses.

Net income

Net income for the three months ended June 30, 2026 was approximately $1,153,000 compared to approximately $1,413,000 for the same period in 2025, representing a decrease of approximately $260,000, or 18.4%. The decrease was primarily attributable to lower revenue, partially offset by reduced interest expense.

Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Total revenue

Total revenue for the six months ended June 30, 2026 was approximately $4,113,000 compared to approximately $4,629,000 for the same period in 2025, a decrease of approximately $516,000, or 11.1%. The decrease occurred despite increases in both the number of loans originated and the amount of capital deployed and was primarily attributable to lower interest rates and origination fees charged to borrowers as a result of increased competition in the marketplace. In addition, the Company granted approximately $91,000 of discretionary payoff and refinancing credits to certain borrowers during the six months. These credits were provided in connection with negotiated loan payoffs and other borrower-specific business matters. For the six months ended June 30, 2026 and 2025, revenues of approximately $3,437,000 and $3,733,000, respectively, were attributable to interest income on secured commercial loans that we offer to real estate investors, and approximately $675,000 and $896,000, 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, 2026 were approximately $762,000 compared to approximately $958,000 for the same period in 2025, representing a decrease of approximately $196,000, or 20.5%. The decrease was primarily attributable to lower interest expense resulting from lower average borrowings and lower SOFR rates (see Note 5 to the condensed consolidated financial statements).

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2026 were approximately $926,000 compared to approximately $891,000 for the same period in 2025, representing an increase of approximately $35,000, or 3.9%. The increase was primarily attributable to increases in payroll and legal expenses, partially offset by the absence of a NYSE American listing fee related to the MBC Funding II 6.00% Senior Secured Notes (the “Notes”) incurred in the prior year period.

Net income

Net income for the six months ended June 30, 2026 was approximately $2,427,000 compared to approximately $2,786,000 for the same period in 2025, representing a decrease of approximately $359,000, or 12.9%. The decrease was primarily attributable to lower revenue, partially offset by reduced interest expense.

Liquidity and Capital Resources

At June 30, 2026, we had cash of approximately $230,000, compared to approximately $205,000 at December 31, 2025, excluding restricted cash, which primarily represents collections on commercial loans pending clearance and designated for repayment of the Webster Credit Line.

For the six months ended June 30, 2026, net cash provided by operating activities was approximately $2,692,000, compared to approximately $2,407,000 for the same period in 2025. The increase was primarily attributable to a decrease in interest and other fees receivable during the 2026 period, compared with an increase in such receivables during the 2025 period, proceeds from borrower escrow deposits, and a greater increase in deferred origination and other fees, partially offset by lower net income.

For the six months ended June 30, 2026, net cash used in investing activities was approximately $1,705,000, compared to net cash provided by investing activities of approximately $136,000 for the same period in 2025. Net cash used in investing activities for the six months ended June 30, 2026 consisted of the issuance of commercial loans of approximately $29,007,000, offset by the collection on commercial loans of approximately $27,302,000. Net cash provided by investing activities for the six months ended June 30, 2025 primarily consisted of the collection on commercial loans of approximately $23,619,000, offset by the issuance of commercial loans of approximately $23,483,000.

For the six months ended June 30, 2026, net cash used in financing activities was approximately $958,000, compared to approximately $2,536,000 for the same period in 2025. Net cash used in financing activities for the six months ended June 30, 2026 consisted of dividend payments of approximately $2,572,000, deferred financing costs of approximately $65,000, and repurchases of treasury shares of approximately $30,000, partially offset by net proceeds from the Webster Credit Line of approximately $1,708,000. Net cash used in financing activities for the six months ended June 30, 2025 consisted of dividend payments of approximately $2,631,000, partially offset by net proceeds from the Webster Credit Line of approximately $95,000.

Our Amended and Restated Credit Agreement with Webster and Flushing provides for the Webster Credit Line. On March 24, 2026, we entered into an amendment to the Amended and Restated Credit Agreement that, among other things, (i) extended the maturity of the credit facility to February 28, 2029, (ii) modified certain portfolio composition requirements, including limiting mortgage loans outstanding for more than 30 months to 17.5% of the total portfolio, (iii) updated applicable interest margins, and (iv) revised certain mortgage loan eligibility criteria. Except as amended, all other material terms of the credit facility remain in full force and effect. The Webster Credit Line provides an aggregate borrowing capacity of $32.5 million, secured by assignments of mortgages and other collateral. As of June 30, 2026, borrowings under the Webster Credit Line bore interest, at our election for each drawdown, at either (i) SOFR plus an applicable premium, which was approximately 6.9%, inclusive of a 0.5% agency fee, or (ii) the Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00%, plus a 0.5% agency fee.

The Webster Credit Line contains customary covenants and restrictions, including, among others, limitations on borrowings relative to collateral value, requirements to maintain specified financial ratios, limitations on the terms of loans we make to our customers, and restrictions, under certain circumstances, on dividends and share repurchases, asset dispositions, mergers or consolidations, the granting of liens, and transactions with affiliates. The Amended and Restated Credit Agreement also contains a cross-default provision pursuant to which a default under certain indebtedness of us or our subsidiary, MBC Funding II, may constitute a default under the Webster Credit Line. Under the Amended and Restated Credit Agreement, we may repurchase, redeem or otherwise retire our equity securities in an amount not to exceed ten percent of our annual net income from the prior fiscal year. The Webster Credit Line also includes restrictions, subject to negotiated exceptions, on additional indebtedness and other restricted payments. In addition, Mr. Ran has provided a personal guaranty of up to $1.0 million, plus enforcement costs, with respect to amounts that may be owed under the Webster Credit Line.

On December 12, 2025, MBC Funding II entered into a letter agreement with Valley pursuant to which Valley agreed to provide MBC Funding II with a revolving line of credit of up to $10.0 million. In connection with the credit facility, MBC Funding II executed a Line of Credit Note evidencing the advances available under the facility and entered into an all-assets Security Agreement in favor of Valley. In addition, we and Mr. Ran provided guarantees of the obligations under the credit facility, including a limited guaranty from Mr. Ran capped at $500,000. The Valley Credit Line is secured by substantially all of the assets of MBC Funding II and is guaranteed by us. The Credit Facility matures on the earlier of December 12, 2027 or the acceleration of the obligations following an event of default. Borrowings under the Valley Credit Line are subject to a borrowing base based on eligible mortgage loans. The Valley Credit Line contains customary covenants and restrictions, including financial covenants and limitations on borrowings based on collateral values.

Outstanding borrowings under the Valley Credit Line bear interest at a floating rate equal to Term SOFR, subject to a floor of 3.00%, plus 2.95% per annum, and are subject to standard benchmark replacement provisions. The facility also requires the payment of an upfront fee equal to 0.20% of the total commitment and an unused line fee equal to 0.25% per annum on the average daily unused portion of the facility. As of June 30, 2026, borrowings under the Valley Credit Line bore interest at a floating rate equal to Term SOFR, subject to a floor, plus an applicable margin and customary fees, which rate was approximately 6.6%.

We were in compliance with all covenants under the Webster Credit Line and the Valley Credit Line as of June 30, 2026. As of that date, outstanding borrowings under the Webster Credit Line were $13,266,966 and outstanding borrowings under the Valley Credit Line were $6,042,500.

On November 20, 2025, our board of directors approved a new share repurchase program authorizing the repurchase of up to 100,000 shares of our common stock over the following 12 months. As of June 30, 2026, we had repurchased an aggregate of 13,142 shares under the program at a total cost of approximately $59,000. Of these amounts, 6,942 shares were repurchased during the six months ended June 30, 2026 at an aggregate cost of approximately $30,000.

We believe that our current cash balances, available borrowings under the Webster Credit Line and the Valley Credit Line, and cash flows from operations will be sufficient to fund our operations for at least the next 12 months. We expect, however, that our working capital requirements will increase over the next 12 months as we continue to pursue growth opportunities under favorable market conditions.

(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, 2026 (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, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.