Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 21, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | MANHATTAN BRIDGE CAPITAL, INC | |
Entity Central Index Key | 0001080340 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,658,844 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Loans receivable | $ 59,722,672 | $ 54,836,127 |
Interest receivable on loans | 763,971 | 596,777 |
Cash | 125,962 | 203,682 |
Cash - restricted | 337,512 | 151,375 |
Other assets | 98,182 | 73,131 |
Operating lease right-of-use asset, net | 102,466 | |
Deferred financing costs | 27,488 | 42,040 |
Total assets | 61,178,253 | 55,903,132 |
Liabilities: | ||
Line of credit | 21,864,042 | 16,622,147 |
Senior secured notes (net of deferred financing costs of $491,185 and $547,499, respectively) | 5,508,815 | 5,452,501 |
Deferred origination fees | 404,215 | 404,676 |
Accounts payable and accrued expenses | 164,582 | 183,716 |
Operating lease liability | 102,466 | |
Other liabilities | 15,000 | |
Dividends payable | 1,158,717 | |
Total liabilities | 28,059,120 | 23,821,757 |
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; 9,882,058 and 9,874,191 issued, respectively; 9,658,844 and 9,655,977 outstanding, respectively | 9,882 | 9,874 |
Additional paid-in capital | 33,140,766 | 33,110,536 |
Treasury stock, at cost - 223,214 and 218,214 shares | (619,688) | (590,234) |
Retained earnings (accumulated deficit) | 588,173 | (448,801) |
Total stockholders' equity | 33,119,133 | 32,081,375 |
Total liabilities and stockholders' equity | $ 61,178,253 | $ 55,903,132 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Debt issuance costs, net (deferred financing costs) | $ 491,185 | $ 547,499 |
Preferred stock, par value | $ .01 | $ .01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 9,882,058 | 9,874,191 |
Common stock, shares outstanding | 9,658,844 | 9,655,977 |
Treasury stock, shares | 223,214 | 218,214 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Interest income from loans | $ 1,618,735 | $ 1,616,518 | $ 4,608,936 | $ 4,469,118 |
Origination fees | 298,222 | 274,936 | 875,449 | 754,510 |
Total revenue | 1,916,957 | 1,891,454 | 5,484,385 | 5,223,628 |
Operating costs and expenses: | ||||
Interest and amortization of debt service costs | 454,307 | 429,421 | 1,220,700 | 1,240,199 |
Referral fees | 861 | 250 | 3,569 | 667 |
General and administrative expenses | 314,820 | 272,321 | 913,175 | 862,994 |
Total operating costs and expenses | 769,988 | 701,992 | 2,137,444 | 2,103,860 |
Income from operations | 1,146,969 | 1,189,462 | 3,346,941 | 3,119,768 |
Other income | 3,000 | 9,000 | ||
Income before income tax expense | 1,149,969 | 1,189,462 | 3,355,941 | 3,119,768 |
Income tax expense | (642) | (572) | (642) | |
Net income | $ 1,149,969 | $ 1,188,820 | $ 3,355,369 | $ 3,119,126 |
Basic and diluted net income per common share outstanding: | ||||
-Basic | $ 0.12 | $ 0.13 | $ 0.35 | $ 0.37 |
-Diluted | $ 0.12 | $ 0.13 | $ 0.35 | $ 0.37 |
Weighted average number of common shares outstanding | ||||
-Basic | 9,658,608 | 9,266,962 | 9,657,911 | 8,499,967 |
-Diluted | 9,659,764 | 9,274,822 | 9,659,012 | 8,507,724 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit (Retained Earnings) [Member] | Total |
Beginning balance at Dec. 31, 2017 | $ 8,319 | $ 23,167,511 | $ (541,491) | $ (387,666) | $ 22,246,673 |
Beginning balance, shares at Dec. 31, 2017 | 8,319,036 | 210,102 | |||
Public Offering | $ 1,546 | 9,881,234 | 9,882,780 | ||
Public Offering, shares | 1,545,786 | ||||
Exercise of warrants | $ 9 | 48,726 | 48,735 | ||
Exercise of warrants, shares | 8,881 | ||||
Non cash compensation | 9,798 | 9,798 | |||
Dividends paid | (1,947,211) | (1,947,211) | |||
Net income | 3,119,126 | 3,119,126 | |||
Ending balance at Sep. 30, 2018 | $ 9,874 | 33,107,269 | $ (541,491) | 784,249 | 33,359,901 |
Ending balance, shares at Sep. 30, 2018 | 9,873,703 | 210,102 | |||
Beginning balance at Jun. 30, 2018 | $ 8,328 | 23,222,769 | $ (541,491) | 569,568 | 23,259,174 |
Beginning balance, shares at Jun. 30, 2018 | 8,327,917 | 210,102 | |||
Public Offering | $ 1,546 | 9,881,234 | 9,882,780 | ||
Public Offering, shares | 1,545,786 | ||||
Non cash compensation | 3,266 | 3,266 | |||
Dividends paid | (974,139) | (974,139) | |||
Net income | 1,188,820 | 1,188,820 | |||
Ending balance at Sep. 30, 2018 | $ 9,874 | 33,107,269 | $ (541,491) | 784,249 | 33,359,901 |
Ending balance, shares at Sep. 30, 2018 | 9,873,703 | 210,102 | |||
Beginning balance at Dec. 31, 2018 | $ 9,874 | 33,110,536 | $ (590,234) | (448,801) | 32,081,375 |
Beginning balance, shares at Dec. 31, 2018 | 9,874,191 | 218,214 | |||
Purchase of treasury shares | $ (29,454) | (29,454) | |||
Purchase of treasury shares, shares | 5,000 | ||||
Exercise of options and warrants | $ 8 | 20,432 | 20,440 | ||
Exercise of options and warrants, shares | 7,867 | ||||
Non cash compensation | 9,798 | 9,798 | |||
Dividends paid | (2,318,395) | (2,318,395) | |||
Net income | 3,355,369 | 3,355,369 | |||
Ending balance at Sep. 30, 2019 | $ 9,882 | 33,140,766 | $ (619,688) | 588,173 | 33,119,133 |
Ending balance, shares at Sep. 30, 2019 | 9,882,058 | 223,214 | |||
Beginning balance at Jun. 30, 2019 | $ 9,881 | 33,137,501 | $ (619,688) | 597,161 | 33,124,855 |
Beginning balance, shares at Jun. 30, 2019 | 9,881,191 | 223,214 | |||
Exercise of warrants | $ 1 | (1) | 0 | ||
Exercise of warrants, shares | 867 | ||||
Non cash compensation | 3,266 | 3,266 | |||
Dividends paid | (1,158,957) | (1,158,957) | |||
Net income | 1,149,969 | 1,149,969 | |||
Ending balance at Sep. 30, 2019 | $ 9,882 | $ 33,140,766 | $ (619,688) | $ 588,173 | $ 33,119,133 |
Ending balance, shares at Sep. 30, 2019 | 9,882,058 | 223,214 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 3,355,369 | $ 3,119,126 |
Adjustments to reconcile net income to net cash provided by operating activities - | ||
Amortization of deferred financing costs | 70,867 | 75,073 |
Depreciation | 1,157 | 3,287 |
Non cash compensation expense | 9,798 | 9,798 |
Changes in operating assets and liabilities: | ||
Interest receivable on loans | (167,194) | (107,088) |
Other assets | (26,209) | (48,052) |
Accounts payable and accrued expenses | (19,134) | (15,166) |
Deferred origination fees | (461) | 199,381 |
Net cash provided by operating activities | 3,224,193 | 3,236,359 |
Cash flows from investing activities: | ||
Issuance of short term loans | (38,246,965) | (42,417,500) |
Collections received from loans | 33,375,420 | 29,030,264 |
Net cash used in investing activities | (4,871,545) | (13,387,236) |
Cash flows from financing activities: | ||
Proceeds from line of credit, net | 5,241,895 | 4,802,752 |
Proceeds from public offering, net | 9,882,780 | |
Proceeds from exercise of stock options and warrants | 20,440 | 48,735 |
Dividends paid | (3,477,112) | (2,839,193) |
Purchase of treasury shares | (29,454) | |
Deferred financing costs | (20,380) | |
Net cash provided by financing activities | 1,755,769 | 11,874,694 |
Net increase in cash and restricted cash | 108,417 | 1,723,817 |
Cash and restricted cash, beginning of period | 355,057 | 136,441 |
Cash and restricted cash, end of period | 463,474 | 1,860,258 |
Supplemental Cash Flow Information: | ||
Taxes paid during the period | 572 | 642 |
Interest paid during the period | 1,144,425 | 1,142,341 |
Non-cash Investing Activities: | ||
Loan holdback relating to mortgage receivable | $ 15,000 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | 1. THE COMPANY The accompanying unaudited 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 (“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 GAAP for complete 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 consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 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 preparation of consolidated financial statements in conformity with 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 amount of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The consolidated financial statements include the accounts of MBC and MBC Funding II. All significant intercompany balances and transactions have been eliminated in consolidation. The Company offers short-term, secured, non–banking loans to real estate investors (also known as hard money) 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. 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. The Company presents deferred financing costs, excluding those incurred in connection with its line of credit, in the balance sheet as a direct reduction from the related debt liability rather than an asset, in accordance with Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. These costs, incurred in connection with the issuance of the Company’s senior secured notes, are being amortized over ten years, using the straight-line method, as the difference between use of the effective interest method is not material. The Company initially established a credit line pursuant to the Credit and Security Agreement with Webster Business Credit Corporation (“Webster”) dated February 27, 2015 (the “Webster Credit Line”), which was subsequently amended and restated on August 8, 2017 (“Amended Credit Agreement”) with Webster and Flushing Bank (“Flushing”). Deferred financing costs in connection with the Webster Credit Line and the Amended Credit Agreement, as discussed in Note 5, are presented as an asset in the balance sheet, in accordance with ASU 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line of Credit Arrangements”. These costs are being amortized over the term of the respective agreement, using the straight-line method. |
Recent Technical Accounting Pro
Recent Technical Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Technical Accounting Pronouncements | 2. RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance, including industry specific guidance. Several ASUs expanding and clarifying the initial guidance issued in ASU 2014-09 have been released since May 2014. Exclusions from the scope of this guidance include revenue resulting from loans, investment securities (available-for-sale and trading), investments in unconsolidated entities and leases. The Company adopted the ASU effective January 1, 2018. The Company evaluated the applicability of this guidance and concluded that the adoption did not have an effect on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which amends the existing accounting standards for leases. This ASU requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet for the obligation to make payments for all leases, with the exception of those leases with a term of 12 months or less. This ASU also requires expanded disclosures regarding leasing arrangements. The Company adopted the ASU effective January 1, 2019, and concluded that the adoption did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company plans to adopt both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements. |
Commercial Loans
Commercial Loans | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Commercial Loans | 3. COMMERCIAL LOANS Loans Receivable The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) 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 first mortgage positions on real estate and, generally, accompanied by personal guarantees from the principals of the borrowers. The loans are generally for a term of one year. The loans are initially recorded, and carried thereafter, in the 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 September 30, 2019, the Company was committed to $7,188,035 in construction loans that can be drawn by the borrowers when certain conditions are met. At September 30, 2019, no one entity has 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 September 30, 2019 and December 31, 2018: Performing loans Developers- Residential Developers- Commercial Developers- Mixed Used Total outstanding loans September 30, 2019 $ 53,457,672 $ 2,350,000 $ 3,915,000 $ 59,722,672 December 31, 2018 $ 47,301,127 $ 3,660,000 $ 3,875,000 $ 54,836,127 At September 30, 2019, the Company’s loans receivable includes loans in the amount of $360,000, $3,960,000 and $4,362,000 originally due in 2016, 2017 and 2018, respectively. In all instances the borrowers are currently paying their interest and, generally, the Company receives a fee in connection with the extension of the loans. Accordingly, at September 30, 2019, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof. Subsequent to the balance sheet date, $1,960,000 of the loans receivable at September 30, 2019 were paid off. |
Cash - Restricted
Cash - Restricted | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Cash - Restricted | 4. CASH - RESTRICTED Restricted cash mainly represents collections received, pending check clearance, from the Company’s commercial loans and is primarily dedicated to the reduction of the Company’s credit line established pursuant to the Amended Credit Agreement (see Note 5). |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit | 5. LINE OF CREDIT The Company maintains the Webster Credit Line which currently provides it with a credit line of $25 million in the aggregate secured by assignments of mortgages and other collateral. 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, as a default under the credit line. Effective July 11, 2018, the Company entered into a Waiver and Amendment No. 1 to the Amended Credit Agreement (“Amendment II”) with Webster, Flushing and Mr. Ran, as guarantor. In conjunction with the execution of Amendment II, the Company also entered into an Amended and Restated Revolving Credit Note in the principal aggregate amount of $10,000,000 with Flushing (the “Amended Flushing Note”) and a Second Amended and Restated Fee Letter with Webster and Flushing, each dated July 11, 2018. Pursuant to the terms of Amendment II, the Company’s existing Webster Credit Line was increased by $5 million to $25 million in the aggregate. In addition, the interest rates relating to Webster Credit Line were amended such that the interest rates now equal (i) LIBOR plus a premium, which rate aggregated approximately 6.02% as of September 30, 2019, or (ii) a Base Rate (as defined in the Amended Credit Agreement) plus 2.25% plus a 0.5% agency fee, as chosen by the Company for each drawdown. Amendment II also permits the Company to 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. In addition, Mr. Ran has provided a personal guaranty to the Webster Credit Line, which shall not exceed the sum of $500,000 plus any costs relating to the enforcement of the personal guaranty. The costs to establish and to amend the Webster Credit Line are being amortized over the term of the respective agreement, using the straight-line method. The amortization costs for the nine month periods ended September 30, 2019 and 2018 were $14,552 and $18,759, respectively. The Webster Credit Line expires February 28, 2021, unless sooner terminated, and contains a provision that permits a Company option for a further extension until February 28, 2022, subject to Webster’s consent. The Company was in compliance with all covenants of the Webster Credit Line, as amended, as of September 30, 2019. The Company received a one-time waiver by Webster for the need by the Company to comply with the Fixed Charge Ratio (as defined in the Webster Credit Line) provision as of September 30, 2019. At September 30, 2019, the outstanding amount under the Amended Credit Agreement was $21,864,042. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% Agency Fee, at September 30, 2019, was approximately 6.02%. |
Senior Secured Notes
Senior Secured Notes | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Senior Secured Notes | 6. SENIOR SECURED NOTES On April 25, 2016, in an initial public offering, MBC Funding 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, 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, together with MBC Funding’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 plus MBC Funding’s cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, MBC Funding 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 plus, MBC Funding’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 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; provided that (i) if the Notes are redeemed on or after April 22, 2019 but prior to April 22, 2020, the redemption price will be 103% of the principal amount of the Notes redeemed and (ii) if the Notes are redeemed on or after April 22, 2020 but prior to April 22, 2021, the redemption price will be 101.5% of the principal amount of the Notes redeemed plus, in either case, the accrued but unpaid interest on the Notes redeemed up to, but not including, the date of redemption. Each Noteholder has the right to cause MBC Funding to redeem his, her or its Notes on April 22, 2021. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest up to, but not including, the date of redemption, without penalty or premium. In order to exercise this right, the Noteholder must notify MBC Funding, in writing, no earlier than November 22, 2020 and no later than January 22, 2021. All Notes that are subject to a properly and timely notice will be redeemed on April 22, 2021. Any Noteholder who fails to make a proper and timely election will be deemed to have waived his, her or its right to have his, her or its Notes redeemed prior to the maturity date. MBC Funding is obligated to offer to redeem the Notes if there occurs a “change of control” with respect to MBC Funding or the Company or if MBC Funding 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. |
Earnings Per Share of Common St
Earnings Per Share of Common Stock | 9 Months Ended |
Sep. 30, 2019 | |
Basic and diluted net income per common share outstanding: | |
Earnings Per Share of Common Stock | 7. EARNINGS PER SHARE OF COMMON STOCK Basic and diluted earnings per share are calculated in accordance with Accounting Standards Codification (“ASC”) 260, “Earnings Per Share” (“ASC 260”). Under ASC 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. The denominator is based on the following weighted average number of common shares: Three Months Nine Months 2019 2018 2019 2018 Basic weighted average common shares outstanding 9,658,608 9,266,962 9,657,911 8,499,967 Incremental shares for assumed exercise of options and warrants 1,156 7,860 1,101 7,757 Diluted weighted average common shares outstanding 9,659,764 9,274,822 9,659,012 8,507,724 For the three and nine month periods ended September 30, 2019, 42,106 and 42,161, exercisable warrants were not included in the diluted earnings per share calculation, respectively, because their effect would have been anti-dilutive. For the three and nine month periods ended September 30, 2018, 46,902 and 47,005, exercisable stock options and warrants were not included in the diluted earnings per share calculation, respectively, because their effect would have been anti-dilutive. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 8. STOCK–BASED COMPENSATION The Company measures and recognizes compensation awards for all stock option grants made to employees and directors, based on their fair value in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”), which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. A key provision of ASC 718 is to measure the cost of employee services received in exchange for an award of equity instruments (including stock options) based on the grant-date fair value of the award. The cost will be recognized over the service period during which an employee is required to provide service in exchange for the award (i.e., the requisite service period or vesting period). The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 718 and ASC 505-50. All transactions with non-employees, in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more appropriately measurable. Stock based compensation expense recognized under ASC 718 for each of the nine months ended September 30, 2019 and 2018 of $9,798 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 will be amortized over 15 years. On July 31, 2014, in connection with the Company’s public offering in July 2014, the Company issued warrants to purchase up to 87,719 common shares, with an exercise price of $3.5625 per common share, to the representative of the underwriters of the offering (the “July 2014 Representative Warrants”). These warrants are exercisable at any time, and from time to time, in whole or in part, commencing on July 28, 2015 and expire on July 28, 2019. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $42,224. At September 30, 2019, all of the July 2014 Representative Warrants were exercised or expired. On May 29, 2015, in connection with the Company’s public offering in May 2015, the Company issued warrants to purchase up to 50,750 common shares, with an exercise price of $5.4875 per common share, to the representative of the underwriters of the offering (the “May 2015 Representative Warrants”). These warrants are exercisable at any time, and from time to time, in whole or in part, commencing on May 22, 2016 and expire on May 22, 2020. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $54,928. At September 30, 2019, May 2015 Representative Warrants to purchase up to 9,650 common shares were outstanding. On August 15, 2016, in connection with a public offering of the Company’s common shares, the Company issued warrants to purchase up to 33,612 common shares, with an exercise price of $7.4375 per common share, to the representative of the underwriters of the offering (the “August 2016 Representative Warrants”). The warrants are exercisable at any time, and from time to time, in whole or in part, commencing on August 9, 2017 and expire on August 9, 2021. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $47,020. At September 30, 2019, all of the August 2016 Representative Warrants were outstanding. |
Commercial Loans (Tables)
Commercial Loans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Credit Risk | Credit risk profile based on loan activity as of September 30, 2019 and December 31, 2018: Performing loans Developers- Residential Developers- Commercial Developers- Mixed Used Total outstanding loans September 30, 2019 $ 53,457,672 $ 2,350,000 $ 3,915,000 $ 59,722,672 December 31, 2018 $ 47,301,127 $ 3,660,000 $ 3,875,000 $ 54,836,127 |
Earnings Per Share of Common _2
Earnings Per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Basic and diluted net income per common share outstanding: | |
Schedule of Weighted Average Number of Common Shares | The denominator is based on the following weighted average number of common shares: Three Months Nine Months 2019 2018 2019 2018 Basic weighted average common shares outstanding 9,658,608 9,266,962 9,657,911 8,499,967 Incremental shares for assumed exercise of options and warrants 1,156 7,860 1,101 7,757 Diluted weighted average common shares outstanding 9,659,764 9,274,822 9,659,012 8,507,724 |
Commercial Loans (Details Narra
Commercial Loans (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Loan term | 1 year |
Subsequent Balance Sheet Date [Member] | |
Loans paid off | $ 1,960,000 |
Originally Due in 2016 [Member] | |
Loans receivable | 360,000 |
Originally Due in 2017 [Member] | |
Loans receivable | 3,960,000 |
Originally Due in 2018 [Member] | |
Loans receivable | 4,362,000 |
Construction Loans [Member] | |
Principal amount committed in construction loans | $ 7,188,035 |
Commercial Loans - Schedule of
Commercial Loans - Schedule of Credit Risk (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Performing loans | $ 59,722,672 | $ 54,836,127 |
Developers Residential [Member] | ||
Performing loans | 53,457,672 | 47,301,127 |
Developers Commercial [Member] | ||
Performing loans | 2,350,000 | 3,660,000 |
Developers Mixed Used [Member] | ||
Performing loans | $ 3,915,000 | $ 3,875,000 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Jul. 11, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Amortization of financing costs | $ 70,867 | $ 75,073 | |
Amended Credit Agreement [Member] | |||
Maximum borrowing capacity | $ 25,000,000 | ||
Line of credit facility, interest rate description | The interest rates relating to Webster Credit Line were amended such that the interest rates now equal (i) LIBOR plus a premium, which rate aggregated approximately 6.02% as of September 30, 2019, or (ii) a Base Rate (as defined in the Amended Credit Agreement) plus 2.25% plus a 0.5% agency fee | The rate, including a 0.5% Agency Fee, at September 30, 2019, was approximately 6.02%. | |
Line of credit facility, interest rate at period end | 6.02% | ||
Percentage of agency fee | 0.50% | ||
Line of credit, current | $ 21,864,042 | ||
Amended Credit Agreement [Member] | Base Rate Plus [Member] | |||
Line of credit facility, interest rate at period end | 2.25% | ||
Percentage of agency fee | 0.50% | ||
Amended Credit Agreement [Member] | Minimum [Member] | |||
Credit line increased value | $ 5,000,000 | ||
Amended Credit Agreement [Member] | Flushing [Member] | |||
Debt instrument face amount | 10,000,000 | ||
Webster Credit Line [Member] | |||
Maximum borrowing capacity | 25,000,000 | ||
Amortization of financing costs | $ 14,552 | $ 18,759 | |
Line of credit, expiration date | Feb. 28, 2021 | ||
Line of credit , expiration date description | The Webster Credit Line expires February 28, 2021, unless sooner terminated, and contains a provision that permits a Company option for a further extension until February 28, 2022, subject to Webster's consent. | ||
Webster Credit Line [Member] | Amended Credit Agreement [Member] | Mr. Ran [Member] | |||
Debt guaranteed amount | $ 500,000 |
Senior Secured Notes (Details N
Senior Secured Notes (Details Narrative) | Apr. 25, 2016USD ($) | Apr. 25, 2016USD ($) |
After April 22, 2019 But Prior to April 22, 2020 [Member] | ||
Debt instrument, redemption price, percentage | 103.00% | |
After April 22, 2020 But Prior to April 22, 2021 [Member] | ||
Debt instrument, redemption price, percentage | 101.50% | |
MBC Funding II Corp [Member] | ||
Debt instrument description | Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by MBC Funding, together with MBC Funding'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 plus MBC Funding's cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, MBC Funding 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 plus, MBC Funding'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 Corp [Member] | Change of Control [Member] | ||
Debt instrument, redemption price, percentage | 101.00% | |
Senior Secured Notes [Member] | ||
Principal amount of each note | $ 1,000 | $ 1,000 |
Debt instrument collateral, percentage | 120.00% | 120.00% |
Senior Secured Notes [Member] | Indenture [Member] | ||
Debt instrument interest rate | 6.00% | 6.00% |
Debt instrument maturity date | Apr. 22, 2026 | |
Debt instrument face amount | $ 6,000,000 | $ 6,000,000 |
Earnings Per Share of Common _3
Earnings Per Share of Common Stock (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic and diluted net income per common share outstanding: | ||||
Earnings per share, exercisable options and warrants | 42,106 | 46,902 | 42,161 | 47,005 |
Earnings Per Share of Common _4
Earnings Per Share of Common Stock - Schedule of Weighted Average Number of Common Shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic and diluted net income per common share outstanding: | ||||
Basic weighted average common shares outstanding | 9,658,608 | 9,266,962 | 9,657,911 | 8,499,967 |
Incremental shares for assumed exercise of options and warrants | 1,156 | 7,860 | 1,101 | 7,757 |
Diluted weighted average common shares outstanding | 9,659,764 | 9,274,822 | 9,659,012 | 8,507,724 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | Aug. 15, 2016 | May 29, 2015 | Jul. 31, 2014 | Sep. 09, 2011 | Sep. 30, 2019 | Sep. 30, 2018 |
Share-based compensation expense | $ 9,798 | $ 9,798 | ||||
August 2016 Representative Warrants [Member] | ||||||
Warrants to purchase common shares | 33,612 | |||||
Warrant exercise price | $ 7.4375 | |||||
Warrant expire date | Aug. 9, 2021 | |||||
Fair value of warrant issuance | $ 47,020 | |||||
Number of warrants outstanding | 33,612 | |||||
July 2014 Representative Warrants [Member] | ||||||
Warrants to purchase common shares | 87,719 | |||||
Warrant exercise price | $ 3.5625 | |||||
Warrant expire date | Jul. 28, 2019 | |||||
Fair value of warrant issuance | $ 42,224 | |||||
May 2015 Representative Warrants [Member] | ||||||
Warrants to purchase common shares | 50,750 | |||||
Warrant exercise price | $ 5.4875 | |||||
Warrant expire date | May 22, 2020 | |||||
Fair value of warrant issuance | $ 54,928 | |||||
Number of warrants outstanding | 9,650 | |||||
Chief Executive Officer [Member] | ||||||
Share based compensation expense of restricted, shares | 1,000,000 | |||||
Share based compensation expense of restricted, value | $ 195,968 | |||||
Fair value of restricted shares amortization period | 15 years |