Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 20, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | MANHATTAN BRIDGE CAPITAL, INC | |
Entity Central Index Key | 0001080340 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
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 Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,619,945 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Loans receivable | $ 57,883,068 | $ 53,485,014 |
Interest receivable on loans | 809,975 | 675,996 |
Cash | 156,715 | 118,407 |
Other assets | 88,554 | 53,218 |
Operating lease right-of-use asset, net | 52,627 | 87,754 |
Deferred financing costs | 29,917 | 22,637 |
Total assets | 59,020,856 | 54,443,026 |
Liabilities: | ||
Line of credit | 19,779,851 | 15,232,993 |
Senior secured notes (net of deferred financing costs of $416,099 and $472,413, respectively) | 5,583,901 | 5,527,587 |
Deferred origination fees | 452,914 | 322,119 |
Accounts payable and accrued expenses | 132,582 | 151,823 |
Operating lease liability | 55,566 | 91,025 |
Other liabilities | 15,000 | |
Dividends payable | 1,159,061 | |
Total liabilities | 26,004,814 | 22,499,608 |
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 issued; 9,619,945 and 9,658,844 outstanding, respectively | 9,882 | 9,882 |
Additional paid-in capital | 33,153,830 | 33,144,032 |
Treasury stock, at cost - 262,113 and 223,214 shares | (798,939) | (619,688) |
Retained earnings (accumulated deficit) | 651,269 | (590,808) |
Total stockholders' equity | 33,016,042 | 31,943,418 |
Total liabilities and stockholders' equity | $ 59,020,856 | $ 54,443,026 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Senior secured notes, deferred financing costs | $ 416,099 | $ 472,413 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 9,882,058 | 9,882,058 |
Common stock, shares outstanding | 9,619,945 | 9,658,844 |
Treasury stock, shares | 262,113 | 223,214 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Interest income from loans | $ 1,521,474 | $ 1,618,735 | $ 4,485,414 | $ 4,608,936 |
Origination fees | 264,878 | 298,222 | 753,111 | 875,449 |
Total revenue | 1,786,352 | 1,916,957 | 5,238,525 | 5,484,385 |
Operating costs and expenses: | ||||
Interest and amortization of debt service costs | 337,901 | 454,307 | 1,016,590 | 1,220,700 |
Referral fees | 1,641 | 861 | 3,569 | 3,569 |
General and administrative expenses | 305,407 | 314,820 | 968,914 | 913,175 |
Total operating costs and expenses | 644,949 | 769,988 | 1,989,073 | 2,137,444 |
Income from operations | 1,141,403 | 1,146,969 | 3,249,452 | 3,346,941 |
Other income | 9,500 | 3,000 | 15,500 | 9,000 |
Income before income tax expense | 1,150,903 | 1,149,969 | 3,264,952 | 3,355,941 |
Income tax expense | (645) | (572) | ||
Net income | $ 1,150,903 | $ 1,149,969 | $ 3,264,307 | $ 3,355,369 |
Basic and diluted net income per common share outstanding: | ||||
-Basic | $ 0.12 | $ 0.12 | $ 0.34 | $ 0.35 |
-Diluted | $ 0.12 | $ 0.12 | $ 0.34 | $ 0.35 |
Weighted average number of common shares outstanding | ||||
-Basic | 9,625,140 | 9,658,608 | 9,635,107 | 9,657,911 |
-Diluted | 9,625,140 | 9,659,764 | 9,635,107 | 9,659,012 |
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, 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 | |||
Exercise of options and warrants | $ 8 | 20,432 | 20,440 | ||
Exercise of options and warrants, shares | 7,867 | ||||
Purchase of treasury shares | $ (29,454) | (29,454) | |||
Purchase of treasury shares, shares | 5,000 | ||||
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 | |||
Beginning balance at Dec. 31, 2019 | $ 9,882 | 33,144,032 | $ (619,688) | (590,808) | 31,943,418 |
Beginning balance, shares at Dec. 31, 2019 | 9,882,058 | 223,214 | |||
Purchase of treasury shares | $ (179,251) | (179,251) | |||
Purchase of treasury shares, shares | 38,899 | ||||
Non - cash compensation | 9,798 | 9,798 | |||
Dividends paid | (2,022,230) | (2,022,230) | |||
Net income | 3,264,307 | 3,264,307 | |||
Ending balance at Sep. 30, 2020 | $ 9,882 | 33,153,830 | $ (798,939) | 651,269 | 33,016,042 |
Ending balance, shares at Sep. 30, 2020 | 9,882,058 | 262,113 | |||
Beginning balance at Jun. 30, 2020 | $ 9,882 | 33,150,564 | $ (771,559) | 463,050 | 32,851,937 |
Beginning balance, shares at Jun. 30, 2020 | 9,882,058 | 255,213 | |||
Purchase of treasury shares | $ (27,380) | (27,380) | |||
Purchase of treasury shares, shares | 6,900 | ||||
Non - cash compensation | 3,266 | 3,266 | |||
Dividends paid | (962,684) | (962,684) | |||
Net income | 1,150,903 | 1,150,903 | |||
Ending balance at Sep. 30, 2020 | $ 9,882 | $ 33,153,830 | $ (798,939) | $ 651,269 | $ 33,016,042 |
Ending balance, shares at Sep. 30, 2020 | 9,882,058 | 262,113 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 3,264,307 | $ 3,355,369 |
Adjustments to reconcile net income to net cash provided by operating activities - | ||
Amortization of deferred financing costs | 76,136 | 70,867 |
Adjustment to operating lease right-of-use asset and liability | (333) | |
Depreciation | 744 | 1,157 |
Non-cash compensation expense | 9,798 | 9,798 |
Changes in operating assets and liabilities: | ||
Interest receivable on loans | (163,650) | (167,194) |
Other assets | (35,156) | (26,209) |
Accounts payable and accrued expenses | (19,241) | (19,134) |
Deferred origination fees | 130,795 | (461) |
Net cash provided by operating activities | 3,263,400 | 3,224,193 |
Cash flows from investing activities: | ||
Issuance of short term loans | (35,410,076) | (38,246,965) |
Collections received from loans | 31,041,693 | 33,375,420 |
Release of loan holdback relating to mortgage receivable | (15,000) | |
Purchase of fixed assets | (923) | |
Net cash used in investing activities | (4,384,306) | (4,871,545) |
Cash flows from financing activities: | ||
Proceeds from line of credit, net | 4,546,858 | 5,241,895 |
Dividends paid | (3,181,291) | (3,477,112) |
Purchase of treasury shares | (179,251) | (29,454) |
Deferred financing costs incurred | (27,102) | |
Proceeds from exercise of stock options | 20,440 | |
Net cash provided by financing activities | 1,159,214 | 1,755,769 |
Net increase in cash | 38,308 | 108,417 |
Cash, beginning of period | 118,407 | 355,057 |
Cash, end of period | 156,715 | 463,474 |
Supplemental Cash Flow Information: | ||
Taxes paid during the period | 645 | 572 |
Interest paid during the period | 954,622 | 1,144,425 |
Operating leases paid during the period | 40,973 | 39,628 |
Non-cash Investing Activities: | ||
Establishment of right-of-use asset and operating lease liability | 135,270 | |
Interest receivable converted to loans receivable in connection with forbearance agreements | 29,671 | |
Loan holdback relating to mortgage receivable | $ 15,000 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2020 | |
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”), 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, 2019 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. 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. |
Recent Technical Accounting Pro
Recent Technical Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Technical Accounting Pronouncements | 2. RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS In May 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief,” which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of an allowance for credit losses. This ASU also 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 adopted both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in the ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of this guidance did not 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, 2020 | |
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 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 short term 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, 2020, the Company was committed to $5,191,959 in construction loans that can be drawn by the borrowers when certain conditions are met. At September 30, 2020, 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, 2020 and December 31, 2019: Performing loans Developers- Residential Developers- Commercial Developers- Mixed Used Total outstanding loans September 30, 2020 $ 54,494,205 $ 1,564,863 $ 1,824,000 $ 57,883,068 December 31, 2019 $ 48,395,014 $ 1,975,000 $ 3,115,000 $ 53,485,014 At September 30, 2020, the Company’s loans receivable consisted of loans in the amount of $367,500, $1,594,463, $1,520,000 and $5,883,071, originally due in 2016, 2017, 2018 and 2019, respectively. During the second quarter of 2020, the Company agreed to grant forbearances, due to the COVID-19 pandemic, in an aggregate amount of approximately $30,000 to two of its long term borrowers deferring two to three months of interest payments to the scheduled payoff date. Since the date of the forbearance agreements, such borrowers have paid monthly interest. 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, 2020, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof. Subsequent to the balance sheet date, $2,534,425 of the loans receivable at September 30, 2020 were paid off, including $1,005,000 originally due on or before September 30, 2020. |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Line of Credit | 4. LINE OF CREDIT The Company has executed an Amended and Restated Credit and Security Agreement, as amended (the “Amended and Restated Credit Agreement”), with Webster Business Credit Corporation (“Webster”), Flushing Bank (“Flushing”) and Mizrahi Tefahot Bank Ltd (“Mizrahi”), which established the Company’s credit line (the “Webster Credit Line”). Currently, the Webster Credit Line provides the Company with a credit line of $32.5 million in the aggregate, 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 and Restated Credit Agreement (“Amendment No. 1”) with Webster, Flushing and Mr. Assaf Ran, the Company’s President and Chief Executive Officer, as guarantor. Pursuant to the terms of Amendment No. 1, 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 the Webster Credit Line were amended such that the interest rates now equal (i) LIBOR plus a premium, which rate aggregated approximately 4.15%, including a 0.5% agency fee, as of September 30, 2020, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.25% plus a 0.5% agency fee, as chosen by the Company for each drawdown. Amendment No. 1 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. Furthermore, on December 31, 2019, the Company entered into Amendment No. 2 to the Amended and Restated Credit and Security Agreement with Webster and Flushing to amend certain required fixed charge coverage requirements. On February 25, 2020, the Company entered into Amendment No. 3 to the Amended and Restated Credit and Security Agreement (“Amendment No. 3”) with Webster, Flushing, Mizrahi, and Mr. Ran, as guarantor. Pursuant to the terms of Amendment No. 3, the Company’s existing Webster Credit Line was increased by $7.5 million to $32.5 million in the aggregate and the term of the Webster Credit Line was extended to February 28, 2023. Amendment No. 3 also provides that the Company may issue up to $20 million in bonds through its subsidiary, of which not more than $10 million of such notes 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. The costs to establish and 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 months ended September 30, 2020 and 2019 were $19,822 and $14,552, respectively. The Company was in compliance with all covenants of the Webster Credit Line, as amended, as of September 30, 2020. At September 30, 2020, the outstanding amount under the Amended Credit Agreement was $19,779,851. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% Agency Fee, at September 30, 2020 was approximately 4.15%. |
Senior Secured Notes
Senior Secured Notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Senior Secured Notes | 5. 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. No Notes were redeemed prior to April 22, 2020. 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. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 6. STOCKHOLDERS’ EQUITY The Company adopted a share buy back program on February 26, 2020 for the repurchase of up to 100,000 of the Company’s common shares in the next twelve months. The Company has purchased an aggregate of 38,899 common shares under this repurchase program, at an aggregate cost of approximately $179,000, as of September 30, 2020. |
Earnings Per Share of Common Sh
Earnings Per Share of Common Share | 9 Months Ended |
Sep. 30, 2020 | |
Basic and diluted net income per common share outstanding: | |
Earnings Per Share of Common Share | 7. EARNINGS PER SHARE OF COMMON SHARE 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 Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic weighted average common shares outstanding 9,625,140 9,658,608 9,635,107 9,657,911 Incremental shares for assumed exercise of warrants — 1,156 — 1,101 Diluted weighted average common shares outstanding 9,625,140 9,659,764 9,635,107 9,659,012 For each of the three and nine months ended September 30, 2020, vested warrants to purchase 33,612 common shares were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. For the three and nine months 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. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 8. STOCK–BASED COMPENSATION Stock based compensation expense recognized under ASC 718, “Compensation-Stock Compensation,” for each of the nine months ended September 30, 2020 and 2019 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 is being amortized over 15 years. 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, 2020 all of the August 2016 Representative Warrants were outstanding. |
Covid-19
Covid-19 | 9 Months Ended |
Sep. 30, 2020 | |
Covid-19 | |
Covid-19 | 9. COVID-19 As a result of the COVID-19 pandemic, the Company may experience difficulties collecting monthly interest on time from its borrowers, property values may decline and certain of its originated loans may need to be extended. For example, during the second quarter of 2020, two of our long term borrowers requested forbearance agreements, due to the impact of the COVID-19 pandemic, deferring two to three months of interest payments to the scheduled payoff date, and we agreed to accommodate the request. Since the date of the forbearance agreements, such borrowers have paid monthly interest. Since the onset of the COVID-19 pandemic, the Company has continued to originate loans as well as continued to service its existing loans, though the Company has observed lower demand for new loans. The Company has also held discussions with its borrowers and they have expressed their general concern about the uncertain economic condition, though these concerns have been partially alleviated due to lowered interest rates. To date, the Company has not been materially impacted by the COVID-19 pandemic and will continue to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. If the COVID-19 pandemic worsens in the geographic areas in which the Company operates, the pandemic could materially affect its financial and operational results. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | 10. SUBSEQUENT EVENT In accordance with the dividend declared by the Company’s Board of Directors on July 30, 2020, a cash dividend of $0.10 per share in an aggregate amount of $961,995 was paid on October 15, 2020 to all shareholders of record on October 9, 2020. |
Commercial Loans (Tables)
Commercial Loans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Credit Risk | Credit risk profile based on loan activity as of September 30, 2020 and December 31, 2019: Performing loans Developers- Residential Developers- Commercial Developers- Mixed Used Total outstanding loans September 30, 2020 $ 54,494,205 $ 1,564,863 $ 1,824,000 $ 57,883,068 December 31, 2019 $ 48,395,014 $ 1,975,000 $ 3,115,000 $ 53,485,014 |
Earnings Per Share of Common _2
Earnings Per Share of Common Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic weighted average common shares outstanding 9,625,140 9,658,608 9,635,107 9,657,911 Incremental shares for assumed exercise of warrants — 1,156 — 1,101 Diluted weighted average common shares outstanding 9,625,140 9,659,764 9,635,107 9,659,012 |
Commercial Loans (Details Narra
Commercial Loans (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Loan term | 1 year |
Loan outstanding percentage | 10.00% |
Long term borrowings | $ 30,000 |
Subsequent Balance Sheet Date [Member] | |
Loans paid off | 2,534,425 |
Originally Due in 2016 [Member] | |
Loans receivable | 367,500 |
Originally Due in 2017 [Member] | |
Loans receivable | 1,594,463 |
Originally Due in 2018 [Member] | |
Loans receivable | 1,520,000 |
Originally Due in 2019 [Member] | |
Loans receivable | 5,883,071 |
Originally Due on or Before September 2020 [Member] | Subsequent Balance Sheet Date [Member] | |
Loans paid off | 1,005,000 |
Construction Loans [Member] | |
Principal amount committed in construction loans | $ 5,191,959 |
Commercial Loans - Schedule of
Commercial Loans - Schedule of Credit Risk (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Total outstanding loans | $ 57,883,068 | $ 53,485,014 |
Developers Residential [Member] | ||
Total outstanding loans | 54,494,205 | 48,395,014 |
Developers Commercial [Member] | ||
Total outstanding loans | 1,564,863 | 1,975,000 |
Developers Mixed Used [Member] | ||
Total outstanding loans | $ 1,824,000 | $ 3,115,000 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Feb. 25, 2020 | Jul. 11, 2018 | Sep. 30, 2020 | Sep. 30, 2019 |
Amortization of financing costs | $ 76,136 | $ 70,867 | ||
Amended and Restated Credit Agreement [Member] | ||||
Maximum borrowing capacity | $ 25,000,000 | |||
Line of credit facility, interest rate description | The interest rates relating to the Webster Credit Line were amended such that the interest rates now equal (i) LIBOR plus a premium, which rate aggregated approximately 4.15%, including a 0.5% agency fee, as of September 30, 2020, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.25% plus a 0.5% agency fee, as chosen by the Company for each drawdown. | The rate, including a 0.5% Agency Fee, at September 30, 2020 was approximately 4.15%. | ||
Line of credit facility, interest rate at period end | 4.15% | |||
Percentage of agency fee | 0.50% | |||
Line of credit, current | $ 19,779,851 | |||
Amended and Restated 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 and Restated Credit Agreement [Member] | Minimum [Member] | ||||
Credit line increased value | $ 5,000,000 | |||
Amended and Restated Revolving Credit Note [Member] | ||||
Maximum borrowing capacity | $ 32,500,000 | |||
Amended and Restated Revolving Credit Note [Member] | Minimum [Member] | ||||
Credit line increased value | $ 7,500,000 | |||
Webster Credit Line [Member] | ||||
Maximum borrowing capacity | 32,500,000 | |||
Line of credit, expiration date | Feb. 28, 2023 | |||
Amortization of financing costs | $ 19,822 | $ 14,552 | ||
Webster Credit Line [Member] | Amended and Restated Credit Agreement [Member] | Mr. Ran [Member] | ||||
Debt guaranteed amount | $ 500,000 | |||
Webster Credit Line [Member] | Amended and Restated Credit and Security Agreement [Member] | ||||
Mortgage notes receivable, description | The Company may issue up to $20 million in bonds through its subsidiary, of which not more than $10 million of such notes may be secured by mortgage notes receivable, and provided that the terms and conditions of such bonds are approved by Webster, subject to its reasonable discretion. |
Senior Secured Notes (Details N
Senior Secured Notes (Details Narrative) | Apr. 25, 2016USD ($) | 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 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Sep. 30, 2020 | Feb. 26, 2020 |
Stock repurchase program, number of common stock repurchased, shares | 38,899 | |
Stock repurchase program, number of common stock, aggregate cost | $ 179,000 | |
Maximum [Member] | ||
Stock repurchase program, number of common stock repurchased, shares | 100,000 |
Earnings Per Share of Common _3
Earnings Per Share of Common Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Vested Warrants [Member] | ||||
Anti-dilutive earning per share common shares | 33,612 | 33,612 | ||
Exercisable Warrants [Member] | ||||
Anti-dilutive earning per share common shares | 42,106 | 42,161 |
Earnings Per Share of Common _4
Earnings Per Share of Common Share - Schedule of Weighted Average Number of Common Shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Basic weighted average common shares outstanding | 9,625,140 | 9,658,608 | 9,635,107 | 9,657,911 |
Incremental shares for assumed exercise of warrants | 1,156 | 1,101 | ||
Diluted weighted average common shares outstanding | 9,625,140 | 9,659,764 | 9,635,107 | 9,659,012 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | Aug. 15, 2016 | Sep. 09, 2011 | Sep. 30, 2020 | Sep. 30, 2019 |
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 | |||
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 |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - Board of Directors [Member] - USD ($) | Oct. 15, 2020 | Jul. 30, 2020 |
Cash dividend per share | $ 0.10 | |
Subsequent Event [Member] | ||
Aggregate amount of dividend | $ 961,995 |