UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
 
FORM 10-Q
 
( Mark One)
 
x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2013
or
 
¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________________________________ to __________________________________
 
Commission File Number: 000-25991
 
MANHATTAN BRIDGE CAPITAL, INC.
(Exact name of registrant as specified in its charter)
 
New York
 
11-3474831
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
 
60 Cutter Mill Road , Great Neck, New York 11021
(Address of principal executive offices)
(516) 444-3400
(Registrant’s telephone number, including area code)
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes     ¨ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes     ¨ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
    Large accelerated filer     ¨
 
Accelerated filer     ¨
    Non-accelerated filer     ¨     (Do not check if a smaller reporting company)
  
Smaller reporting company     x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      ¨ Yes     x No
 
As of October 30, 2013, the registrant had a total of 4,256,190 shares of Common Stock, $.001 par value per share, outstanding.
 
MANHATTAN BRIDGE CAPITAL, INC.
TABLE OF CONTENTS
 
 
 
Page
 
 
Number
 
 
 
Part I
FINANCIAL INFORMATION
 
Item 1.
Consolidated Financial Statements (unaudited)
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012
2
 
 
 
 
Consolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 2013 and 2012
3
 
 
 
 
Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2013 and 2012
4
 
 
 
 
Notes to Consolidated Financial Statements
5
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
13
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
17
 
 
 
Item 4.
Controls and Procedures
17
 
 
 
Part II
OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
18
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
18
 
 
 
Item 6.
Exhibits
19
 
 
 
SIGNATURES
 
20
 
Forward Looking Statements
 
This report contains forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are typically identified by the words “believe,” “expect,” “intend,” “estimate” and similar expressions. Those statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations or those of our directors or officers with respect to, among other things, trends affecting our financial condition and results of operations and our business and growth strategies. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected, expressed or implied in the forward-looking statements as a result of various factors (such factors are referred to herein as “Cautionary Statements”), including but not limited to the following: (i) the successful integration of new businesses that we may acquire; (ii) the success of new operations which we have commenced and of our new business strategy; (iii) our limited operating history in our new business; (iv) potential fluctuations in our quarterly operating results; and (v) challenges facing us relating to our growth. The accompanying information contained in this report, including the information set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, identifies important factors that could cause such differences. These forward-looking statements speak only as of the date of this report, and we caution potential investors not to place undue reliance on such statements. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements
(i)

PART I.       FINANCIAL INFORMATION
 
Item 1.       CONSOLIDATED FINANCIAL STATEMENTS
 
MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
September 30, 2013
December 31,2012
(Unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents
$
69,045
$
240,693
Short term loans receivable
11,363,000
11,022,866
Interest receivable on loans
173,208
160,342
Other current assets
35,057
18,903
Total current assets
11,640,310
11,442,804
Investment in real estate
146,821
146,821
Long term loans receivable
4,037,000
2,601,500
Security deposit
6,637
6,491
Investment in privately held company, at cost
100,000
100,000
Deferred financing costs
9,099
41,735
Total assets
$
15,939,867
$
14,339,351
Liabilities and Shareholders’ Equity
Current liabilities:
Short term loans
$
1,319,465
$
1,399,465
Line of credit
4,800,000
3,500,000
Senior secured notes
500,000
500,000
Accounts payable and accrued expenses
16,048
70,403
Deferred origination fees
160,392
122,242
Income taxes payable
280,219
268,256
Total liabilities, all current
7,076,124
5,860,366
Commitments and contingencies
Stockholders’ equity:
Preferred shares - $.01 par value; 5,000,000 shares authorized; no shares issued
Common shares - $.001 par value; 25,000,000 authorized; 4,433,190 and 4,405,190 issued; 4,256,190 and 4,298,059 outstanding
4,433
4,405
Additional paid-in capital
9,731,718
9,687,159
Treasury stock, at cost – 177,000 and 107,131 shares
(369,335)
(269,972)
Accumulated deficit
(503,073)
(942,607)
Total stockholders’ equity
8,863,743
8,478,985
Total liabilities and stockholders’ equity
$
15,939,867
$
14,339,351
 
The accompanying notes are an integral part of these consolidated financial statements.
 
- 2 -

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
Three Months
Nine Months
Ended September 30,
Ended September 30,
2013
2012
2013
2012
Interest income from loans
$
479,118
$
402,119
$
1,371,420
$
1,042,183
Origination fees
105,920
89,191
301,775
255,514
Total Revenue
585,038
491,310
1,673,195
1,297,697
Operating costs and expenses:
Interest and amortization of debt service costs
119,272
86,779
323,478
186,851
Referral fees
312
1,232
1,242
4,891
General and administrative expenses
172,420
183,586
550,145
547,769
Total operating costs and expenses
292,004
271,597
874,865
739,511
Income from operations
293,034
219,713
798,330
558,186
Other income (Note 4)
6,887
6,887
20,661
20,661
Income before income tax expense
299,921
226,600
818,991
578,847
Income tax expense
(106,000)
(65,000)
(294,000)
(222,200)
Net Income
$
193,921
$
161,600
$
524,991
$
356,647
Basic and diluted net income per common share outstanding:
—Basic
$
0.05
$
0.04
$
0.12
$
0.08
—Diluted
$
0.05
$
0.04
$
0.12
$
0.08
Weighted average number of common shares outstanding
—Basic
4,263,194
4,324,258
4,273,544
4,324,392
—Diluted
4,287,698
4,327,305
4,289,225
4,330,435
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
- 3 -

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
Nine Months Ended September 30,
2013
2012
Cash flows from operating activities:
Net Income
$
524,991
$
356,647
Adjustments to reconcile net income to net cash provided by operating activities -
Amortization of deferred financing costs
32,636
17,948
Depreciation
482
Non cash compensation expense
22,048
19,304
Changes in operating assets and liabilities:
Interest receivable on loans
(12,866)
(34,841)
Other current and non current assets
(16,300)
(37,770)
Accounts payable and accrued expenses
(54,355)
(46,362)
Deferred origination fees
38,150
15,993
Income taxes payable
11,963
21,470
Net cash provided by operating activities
546,267
312,871
Cash flows from investing activities:
Issuance of short term loans
(12,020,500)
(11,148,500)
Collections received from loans
10,244,866
7,874,691
Net cash used in investing activities
(1,775,634)
(3,273,809)
Cash flows from financing activities:
Proceeds from loans and line of credit, net
1,220,000
2,950,000
Purchase of treasury shares
(99,363)
(2,607)
Proceeds from exercise of stock options
22,540
Dividend paid ($0.01 per share)
(85,458)
Net cash provided by financing activities
1,057,719
2,947,393
Net decrease in cash and cash equivalents
(171,648)
(13,545)
Cash and cash equivalents, beginning of period
240,693
221,905
Cash and cash equivalents, end of period
$
69,045
$
208,360
Supplemental Cash Flow Information:
Taxes paid during the period
$
282,037
$
200,730
Interest paid during the period
$
290,840
$
152,879
 
The accompanying notes are an integral part of these consolidated financial statements.
 
- 4 -

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2013
 
1.
THE COMPANY
  
The accompanying unaudited consolidated financial statements of Manhattan Bridge Capital, Inc. (“MBC”), a New York corporation, and its wholly-owned subsidiaries DAG Funding Solutions, Inc.(“DAG Funding”), MBC Funding I, Inc. (“MBC Funding”) and 1490-1496 Hicks, LLC (“Hicks LLC”) (collectively MBC, DAG Funding, MBC Funding and Hicks LLC are 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, 2012 and the notes thereto included in the Company’s 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, DAG Funding, MBC Funding, and Hicks LLC. 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 and construction of properties located in the New York Metropolitan area.
 
The Company recognizes revenues in accordance with ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery of the product has occurred or services have been rendered, (iii) the sales price charged is fixed or determinable, and (iv) collectability is reasonably assured.
 
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.
 
Costs incurred in connection with the Company’s senior secured notes are being amortized over the term of the notes, using the straight-line method. Costs incurred in connection with the Company’s line of credit are being amortized over one year, using the straight-line method.
 
 
- 5 -

2.
RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS
 
In July 2012, the FASB issued ASU 2012-02, “Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a "qualitative" assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
 
In February 2013, the FASB issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” The ASU is intended to improve the transparency of reporting reclassifications out of accumulated other comprehensive income. This guidance adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (AOCI). It does not amend any existing requirements for reporting net income or OCI in the financial statements. The standard is effective prospectively for public entities for annual and interim reporting periods beginning after December 15, 2012. Private companies may adopt the standard one year later but early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
 
In February 2013, the FASB issued ASU 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.” The main objective of this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in GAAP. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
 
In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The objective of this guidance is to clarify the balance sheet presentation of an unrecognized tax benefit and to resolve the diversity in practice that had developed in the absence of any on-point GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. For public entities, ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. 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 effected, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements.
 
 
- 6 -

3.
COMMERCIAL LOANS
 
Short Term 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. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the businesses. 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, 2013, we were committed to an additional $ 1,546,950 in construction loans that can be drawn by the borrower when certain conditions are met.
 
At September 30, 2013, the Company had made loans to nine borrowers in the aggregate amount of $ 2,214,000 , of which $ 724,000 is included in long-term loans receivable. One individual holds at least a sixty percent interest in each of the borrowers. The Company also had made loans to seven borrowers in the aggregate amount of $ 1,898,000 , of which $ 400,000 is included in long-term loans receivable. One individual holds at least a twenty-five percent interest in each of the borrowers. The aggregate loans to all these entities totaled $ 4,112,000 or 26.7 % of our loan portfolio. There are no family relationships between any of the borrowers with any of the officers or directors of the Company.
 
At September 30, 2013 , no one entity has loans outstanding representing more than 10% of the total balance of the loans outstanding.
 
At September 30, 2013, three of the loans in the Company’s portfolio were jointly funded by the Company and one to three unrelated entities, for aggregate loans of $ 2,400,000 . The accompanying balance sheet includes the Company’s portion of the loans in the amount of $ 1,650,000 .
 
The Company generally grants loans for a term of one year.   In some cases, the Company has agreed to extend the term of the loans beyond one year.   This was mainly due to the additional lending conditions generally imposed by traditional lenders and financial institutions as a result of the mortgage crisis, which has made it more difficult overall for borrowers, including the Company’s borrowers, to secure long term financing.   Prior to the Company granting an extension of any loan, it reevaluates the underlying collateral.
 
Subsequent to September 30, 2013, $ 845,000 of the Company’s commercial loans have been paid off.
 
Long Term Loans Receivable
 
Long term loans receivable comprise the loans that were extended beyond the original maturity dates, unless it is clear that the loan will be paid back by September 30, 2014. At September 30, 2013, the Company’s loan portfolio consists of $ 11,363,000 short term loans receivable and $ 4,037,000 long term loans receivable.
 
 
- 7 -
 
Credit Risk
 
Credit risk profile based on loan activity as of September 30, 2013 and 2012:
 
Developers-
Residential
Developers-
Commercial
Developers Mixed
Used
Total outstanding
loans
September 30, 2013
$
13,175,000
$
1,525,000
$
700,000
$
15,400,000
September 30, 2012
$
10,997,866
$
405,294
$
1,285,000
$
12,688,160
  
At September 30, 2013, the Company’s commercial loans include loans in the amount of $ 330,000 , $ 167,000 , $ 150,000 and $ 715,000 , originally due in 2009, 2010, 2011 and 2012, 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, 2013, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations.  

4.            INVESTMENT IN REAL ESTATE
 
On March 21, 2011, the Company purchased three 2-family buildings located in the Bronx, New York for $ 675,000 , including related costs, and sold to the seller a one year option to buy back the properties for the same price (the “Buy Back Option”). The Buy Back Option was sold for $ 3,900 , plus a monthly fee of $ 10,530 payable to the Company by the option holder for the life of the option. On September 28, 2011, the option holder partially exercised the Buy Back Option with respect to one of the properties for $ 380,679 . The Company had received an aggregate of $ 70,590 from the sale of the option prior to the partial exercise and, on October 1, 2011, issued a new one year option for the two remaining properties at an aggregate exercise price of $ 294,321 with a monthly option fee of $ 4,591 (the “New Option”).
 
On October 21, 2011, the option holder partially exercised the New Option to buy back one of the two remaining properties for $ 147,500 and had a continuing option, though October 1, 2012, to purchase the one remaining property at an exercise price of $ 146,821 with a monthly option fee of $ 2,296 . Subsequently, the New Option’s expiration date was extended twice, on October 1, 2012, which extended the expiration date through March 30, 2013, and again on April 1, 2013, which extended the expiration date through September 30, 2013.
 
The New Option expired on September 30, 2013, although the option holder had tendered, and the Company deposited, the monthly option fee of $2,296. In anticipation of this option expiration, on August 23, 2013, the Company entered into a Contract of Sale for this property with a third-party for a purchase price of $ 430,000 , which Contract of Sale is scheduled to close in November 2013. If the sale is consummated, there is a risk that the holder of the expired option may assert that it was renewed and seek to recover some or all of the proceeds of sale in excess of the option price of $ 146,821 .
Other income for each of the nine month periods ended September 30, 2013 and 2012 in the amount of $ 20,661 represents the fees generated from the seller buy back options.
- 8 -

5.              EARNINGS PER SHARE OF COMMON STOCK
 
Basic and diluted earnings per share are calculated in accordance with ASC 260 “Earnings Per Share.” 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
Ended September 30,
Ended September 30,
2013
2012
2013
2012
Basic
4,263,194
4,324,258
4,273,544
4,324,392
Incremental shares for assumed conversion of options
24,504
3,047
15,681
6,043
Diluted
4,287,698
4,327,305
4,289,225
4,330,435
 
For the three and nine month periods ended September 30, 2013, 257,496 and 266,319 , stock options were not included in the diluted earnings per share calculation, respectively, either because their effect would have been anti-dilutive, or because they are in escrow (See note 7). 
 
For the three and nine month periods ended September 30, 2012, 347,953 and 344,957 , stock options were not included in the diluted earnings per share calculation, respectively, either because their effect would have been anti-dilutive, or because they are in escrow (See note 7).

6.            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”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. A key provision of this statement 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, “Equity Based Payment to Non-Employees”. 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.
 
The share based compensation expense included the amortization of the fair value of the restricted shares granted on September 9, 2011, 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 (See note 7).
Share based compensation expense recognized under ASC 718 for the three and nine months ended September 30, 2013 were $ 13,530 and $ 22,048 , respectively. Share based compensation expense recognized under ASC 718 for the three and nine months ended September 30, 2012 were $ 11,575 and $ 19,304 , respectively.
- 9 -
 
The exercise price of options granted under our stock option plan may not be less than the fair market value on the date of grant.  The options may vest over a period not to exceed ten years. Stock options under our stock option plan may be awarded to officers, key-employees, consultants and non-employee directors of the Company. Under our stock option plan, every non-employee director of the Company is granted 7,000 options upon first taking office, and then 7,000 upon each additional year in office. The objectives of our stock option plan include attracting and retaining key personnel, providing for additional performance incentives and promoting the success of the Company by increasing the efforts of such officers, employees, consultants and directors. Our stock option plan is the only plan that the Company has adopted with stock options available for grant.
The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average share assumptions used for grants in 2013 and 2012, respectively: (1) expected life of 5 years; (2) annual dividend yield of 0 % to 2.61 %; (3) expected volatility 74.6 % to 75 %; and (4) risk free interest rate of 0.73 % to 1.07 %.
 
The following summarizes stock option activity for the nine month period ended September 30, 2013:
 
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (in
years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2012
355,000
$
0.92
Granted
28,000
1.53
Exercised
(28,000)
0.81
Forfeited or expired
(70,000)
1.01
Outstanding at September 30, 2013
285,000
$
0.97
1.68
$
147,656
Vested and exercisable at September 30, 2013
282,000
$
0.97
1.66
$
145,858
 
The weighted-average fair value of each option granted during the nine month periods ended September 30, 2013 and 2012, estimated as of the grant date using the Black-Scholes option valuation model, was $ 0.78 per option and $ 0.61 per option, respectively.

7.            RESTRICTED STOCK GRANT
 
On September 9, 2011, upon stockholders approval at the 2011 annual meeting of stockholders, the Company granted 1,000,000 shares of its restricted common stock (the “Restricted Shares”) to Mr. Ran, the Company’s chief executive officer. Under the terms of the restricted shares agreement (the “Restricted Shares Agreement”), Mr. Ran agreed to forfeit options held by him exercisable for an aggregate of 280,000 shares of common stock of the Company (“Common Stock”) with exercise prices above $1.21 per share and agreed not to exercise additional options held by him for an aggregate of 210,000 shares of Common Stock with exercise prices below $ 1.21 per share (the “Remaining Options”). Until their expiration, Mr. Ran will be required to forfeit approximately 4.76 Restricted Shares for each share of Common Stock issued upon any exercise of the Remaining Options. In addition, Mr. Ran may not sell, convey, transfer, pledge, encumber or otherwise dispose of the Restricted Shares until the earliest to occur of the following: (i) September 9, 2026, with respect to 1/3 of the Restricted Shares, September 9, 2027 with respect to an additional 1/3 of the Restricted Shares and September 9, 2028 with respect to the final 1/3 of the Restricted Shares; (ii) the date on which Mr. Ran’s employment is terminated by the Company for any reason other than for “Cause” (i.e., misconduct that is materially injurious to us monetarily or otherwise, including engaging in any conduct that constitutes a felony under federal, state or local law); or (iii) the date on which Mr. Ran’s employment is terminated on account of (A) his death; or (B) his disability, which, in the opinion of his personal physician and a physician selected by the Company prevents him from being employed with the Company on a full-time basis (each such date being referred to as a “Risk Termination Date”). If at any time prior to a Risk Termination Date Mr. Ran’s employment is terminated by the Company for Cause or by Mr. Ran voluntarily for any reason other than death or disability, Mr. Ran will forfeit that portion of the Restricted Shares which have not previously vested. Mr. Ran will have the power to vote the Restricted Shares and will be entitled to all dividends payable with respect to the Restricted Shares from the date the Restricted Shares are issued.
- 10 -
In connection with the Compensation Committee’s approval of the foregoing grant of Restricted Shares, the Compensation Committee consulted with and obtained the concurrence of independent compensation experts and informed Mr. Ran that it had no present intention of continuing its prior practice of annually awarding stock options to Mr. Ran as CEO. Also Mr. Ran, advised the Compensation Committee that he would not seek future stock option grants.
 
The grant of Restricted Shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The stock certificates for the Restricted Shares were imprinted with restrictive legends and are held in escrow until vesting occurs.

8.   LOANS AND LINE OF CREDIT
 
Short Term Loans
 
In September 2013, the Company received a short-term loan in the amount of $ 160,000 , from a parent of a member of the board of directors, bearing interest at the rate of 10 % per annum. At September 30, 2013, the Company owed an aggregate of $ 1,319,465 under six separate short term loans, bearing interest at rates ranging from 8 % to 10 % per annum. The loans are secured by certain of the Company’s short term loans pursuant to a security agreement, and two of the loans are also personally guaranteed by the Company’s CEO.
 
In January 2013, Mr. Ran, made two bridge loans to the Company in the aggregate amount of $ 175,000 , at an interest rate of 6 %, per annum. In June 2013, Mr. Ran, made another bridge loan to the Company in the amount of $ 64,500 , at an interest rate of 6 %, per annum. All loans were repaid in full by the Company as of September 30, 2013.
 
Line of Credit
 
On May 2, 2012, the Company entered into a one-year revolving Line of Credit Agreement with Sterling National Bank pursuant to which the Bank agreed to advance up to $ 3.5 million (the “Sterling Credit Line”) against assignments of mortgages and other collateral. The Sterling Credit Line was conditioned on an unlimited personal guarantee from Assaf Ran, the Company’s CEO, and requires the maintenance of certain non-financial covenants including limitations on the percentage of loans outstanding in excess of one year, loans made to affiliated groups and the extent of construction loans made by the Company. The interest rate on the Sterling Credit Line is 2% in excess of the Wall Street Journal prime rate (3.25% at September 30, 2013), but in no event less than 6%, per annum, on the money in use. Total initiation costs for the Sterling Credit Line were approximately $ 16,000 . These costs are being amortized over one year, using the straight-line method. The amortization costs for the three and nine month periods ended September 30, 2013 were $ 0 and $ 5,341 , respectively.
 
On January 31, 2013, the Company entered into an amendment to the Line of Credit Agreement with Sterling National Bank to increase the Sterling Credit Line from $3.5 million to $ 5 million, under the same terms as the original line of credit (the “Amendment”). In connection with the Amendment, Mr. Ran agreed to increase his personal guaranty to $ 5 million. Effective on May 1, 2013 and July 1, 2013, the term of the Sterling Credit Line was extended through July 1, 2013 and July 1, 2014, respectively. At September 30, 2013, the outstanding balance of the Sterling Credit Line was $ 4,800,000 .
- 11 -

9.            SENIOR SECURED NOTES
 
On December 28, 2010, MBC Funding completed a $ 500,000 private placement of three-year 6.63 % senior secured notes. As collateral for these notes, MBC agreed to assign to MBC Funding the mortgages and related notes that it holds as a creditor in the aggregate amount of no less than $ 750,000 . Pursuant to the agreement, MBC has also guaranteed the repayment of the notes. The notes require quarterly payments of interest only through the expiration date in December 2013 , at which time the notes become due. The private placement was the initial tranche of a $ 5,000,000 offering which expired on March 31, 2011 and is no longer being marketed by the placement agent (Paulson).
 
Financing costs incurred in connection with the agreement totaled $ 109,183 , including five year warrants (the “warrants”) to purchase 20,000 shares of Common Stock issued to the underwriter at $ 2.50 per share, which were valued at $ 11,683 . These costs are amortized over the life of the senior secured notes. The amortization costs for the three and nine month periods ended September 30, 2013 were $ 9,099 and $ 27,296 , respectively.

10.         COMMITMENTS AND CONTINGENCIES
 
Operating Lease
 
On June 9, 2011, the Company entered into a new lease agreement (the “Lease’) to relocate its corporate headquarters to 60 Cutter Mill Road, Great Neck, New York.  The Lease is for a term of five years and two months commencing June 2011 and ending August 2016.  The rent increases annually during the term and ranges from approximately $ 2,800 per month during the first year to approximately $ 3,200 per month during the fifth year.
 
Derivative Action
 
The Company was sued in 2011 as a nominal defendant in a stockholder derivative action, Alan R. Kahn v. Assaf Ran, et al., Supreme Court of the State of New York, County of Nassau, filed against the members of its Board of Directors. The plaintiff, who asserted that he was a stockholder of the Company at all pertinent times, alleged wrongdoing by the Board in a transaction in which Director and Chief Executive Officer, Assaf Ran, was granted certain shares of the Company’s restricted stock in exchange for giving up his rights in certain options that he had held at the time of the transaction. Plaintiff contended that the Company was harmed by the transaction. The Directors disagreed with the plaintiff’s position that the transaction involved any wrongful conduct or that it harmed the Company in any way. The court dismissed the original complaint, but gave plaintiff leave to file an amended complaint, which the plaintiff did. The defendants moved to dismiss the amended complaint, but before the court ruled on that motion, the parties reached an agreement to settle the action, subject to approval of the court. The terms of the settlement include the Company’s agreement to continue utilizing certain corporate governance matters that the Company had already implemented before the lawsuit was filed and would continue to implement regardless of the settlement agreement, and to pay Plaintiff’s counsel’s fees and expenses in an amount to be determined by the court, which amount shall not exceed $ 80,000 . In addition, Assaf Ran will reiterate his commitment to extend his personal guarantee to the Company for up to $ 5,000,000 . This commitment was available to the Company prior to the settlement agreement. After the court preliminarily approved the settlement, the Company provided notice of the settlement to stockholders, in order to provide them with an opportunity to object to the settlement if they choose to do so. No stockholders submitted any objections to the settlement. At a final hearing to address the fairness and reasonableness of the settlement held on April 2, 2013, the court approved the settlement, dismissed the action, and awarded plaintiff $ 80,000 in fees and costs. The fee award has been paid by an officers’ and directors’ liability insurance policy, rather than by the Company. As a result of the court’s ruling, the litigation has been concluded.
- 12 -

Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The discussion and analysis contains 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 offer 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. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the businesses. The loans are generally for a term of one year. 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. For the nine month periods ended September 30, 2013 and 2012 the total amounts of $12,020,500 and $11,148,500 have been lent, offset by collections received from borrowers, under the Company’s commercial loans in the amount of $10,244,866 and $7,874,691, respectively. Loans ranging in size from $50,000 to $1,000,000 were concluded at stated interest rates of 12% to 15%, but often at higher effective rates based upon points or other up-front fees.
 
We use our own employees, outside lawyers 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 independent construction inspectors as well as mortgage brokers and deal initiators.
 
We generally grant loans for a term of one year. In some cases, we have agreed to extend the term of the loans beyond one year. This was mainly due to the additional lending conditions generally imposed by traditional lenders and financial institutions as a result of the mortgage crisis, which has made it more difficult for borrowers, including our borrowers, to secure long term financing. Prior to our granting an extension of any loan, we reevaluate the underlying collateral.
 
To date, we have not experienced any defaults and none of the loans previously made have been non-collectable, although no assurances can be given that existing or future loans may not go into default or prove to be non-collectable in the future.
 
At September 30, 2013, we were committed to an additional $1,546,950 in construction loans that can be drawn by the borrower when certain conditions are met.
 
On March 21, 2011, we purchased three 2-family buildings located in the Bronx, New York for $675,000, including related costs, and sold to the seller a one year option to buy back the properties for the same price (the “Buy Back Option”). The Buy Back Option was sold for $3,900, plus a monthly fee of $10,530 payable to the Company by the option holder for the life of the option. On September 28, 2011, the option holder partially exercised the Buy Back Option with respect to one of the properties for $380,679. On October 1, 2011, we issued a new one year option for the two remaining properties at an aggregate exercise price of $294,321 with a monthly option fee of $4,591 (the “New Option”). On October 21, 2011, the option holder partially exercised the New Option to buy back one of the two remaining properties for $147,500 and had a continuing option, though October 1, 2012, to purchase the one remaining property at an exercise price of $146,821 with a monthly option fee of $2,296. Subsequently, the New Option’s expiration date was extended twice, on October 1, 2012, which extended the expiration date through March 30, 2013, and again on April 1, 2013, which extended the expiration date through September 30, 2013.
 
 
- 13 -
 
The New Option expired on September 30, 2013, although the option holder had tendered, and we deposited, the monthly option fee of $2,296. In anticipation of this option expiration, on August 23, 2013, we entered into a Contract of Sale for this property with a third-party for a purchase price of $430,000, which Contract of Sale is scheduled to close in November 2013. If the sale is consummated, there is a risk that the holder of the expired option may assert that it was renewed and seek to recover some or all of the proceeds of sale in excess of the option price of $146,821. (See Note 4 to the consolidated financial statements which appear elsewhere in this quarterly report.)
 
Results of Operations
 
Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012

   

Revenue
 
Total revenues for the three month period ended September 30, 2013 were approximately $585,000 compared to approximately $491,000 for the three month period ended September 30, 2012, an increase of $94,000 or 19.1%. The increase in revenue represents an increase in lending operations. For the three month periods ended September 30, 2013 and 2012, approximately $479,000 and $402,000, respectively, of our revenues were attributable to interest income on the secured commercial loans that we offer to small businesses, and approximately $106,000 and $89,000, respectively, of our revenues were attributable to origination fees on such loans. Our loans are principally secured by collateral consisting of real property and, generally, accompanied by personal guarantees.

   

Interest and amortization of debt service costs
Interest and amortization of debt service costs for the three month period ended September 30, 2013 was approximately $119,000 compared to approximately $87,000 for the three month period ended September 30, 2012, an increase of $32,000. The increase in interest and amortization of debt service costs was primarily attributable to our use of the Sterling Credit Line and the Company’s receipt of short term loans to increase our lending capacity. (See Notes 8 and 9 to the financial statements included elsewhere in this report.)
General and administrative expenses
General and administrative expenses for the three month period ended September 30, 2013 were approximately $172,000 compared to approximately $184,000 for the three month period ended September 30, 2012, a decrease of $12,000. This decrease is primarily attributable to a decrease in legal fees resulting from the settlement of the derivative action. (See Note 10 to the financial statements included elsewhere in this report.)

 

Other income
Other income for each of the three month periods ended September 30, 2013 and 2012 was approximately $7,000, which represents the fees generated from the seller buy back options. (See Note 4 to the financial statements included elsewhere in this report.)

 

Income tax expense
For the three month period ended September 30, 2013 we had income tax expense of $106,000 compared to $65,000 for the three month period ended September 30, 2012.
 
- 14 -
 
Nine Months Ended September 30, 2013 Compared to Nine Months Ended September 30, 2012

 

Revenue
Total revenues for the nine month period ended September 30, 2013 were approximately $1,673,000 compared to approximately $1,298,000 for the nine month period ended September 30, 2012, an increase of $375,000, or 28.9%. The increase in revenue represents an increase in lending operations. For the nine month periods ended September 30, 2013 and 2012, revenues of approximately $1,371,000 and $1,042,000, respectively, were attributable to interest income on the secured commercial loans that we offer to small businesses, and approximately $302,000 and $256,000, respectively, were attributable to origination fees on such loans. Our loans are principally secured by collateral consisting of real property and, generally, accompanied by personal guarantees.

 

Interest and amortization of debt service costs
Interest and amortization of debt service costs for the nine month period ended September 30, 2013 was approximately $323,000 compared to approximately $187,000 for the nine month period ended September 30, 2012, an increase of $136,000. The increase in interest and amortization of debt service costs was primarily attributable to our use of the Sterling Credit Line and the Company’s receipt of short term loans to increase our lending capacity. (See Notes 8 and 9 to the financial statements included elsewhere in this report.)

 

Referral fees
Referral fees for the nine month period ended September 30, 2013 were approximately $1,000 compared to approximately $5,000 for the nine month period ended September 30, 2012. The referral fees represent fees paid on such loans which amortize over the life of the loan.

 

General and administrative expenses
General and administrative expenses for the nine month period ended September 30, 2013 were approximately $550,000 compared to approximately $548,000 for the nine month period ended September 30, 2012. The decrease is primarily attributable to a decrease in legal fees resulting from the settlement of the derivative action (See Note 10 to the financial statements included elsewhere in this report.), offset by increases in travel and meal expenses for meeting with prospective investors, joint venture partners and borrowers.

 

Other income
 Other income for each of the nine month periods ended September 30, 2013 and 2012 was approximately $21,000, which represents the fees generated from the seller buy back options. (See Note 4 to the financial statements included elsewhere in this report.)

   

 Income tax expense
 For the nine month period ended September 30, 2013 we had income tax expense of $294,000 compared to approximately $222,000 for the nine month period ended September 30, 2012.
 
- 15 -
 
Liquidity and Capital Resources
 
At September 30, 2013, we had cash and cash equivalents of approximately $69,000 and working capital of approximately $4,564,000 as compared to cash and cash equivalents of approximately $241,000 and working capital of approximately $5,582,000 at December 31, 2012. The decrease in cash and cash equivalents primarily reflects the increase in lending operations. The decrease in working capital is primarily attributable to the reclassification of a portion of the Company’s short-term loans to long-term loans receivable.
 
For the nine month periods ended September 30, 2013 and 2012, net cash provided by operating activities were approximately $546,000 and $313,000, respectively. The increase in net cash provided by operating activities primarily results from increases in net income and in deferred origination fees, offset by a decrease in accounts payable and accrued expenses.
 
Net cash used in investing activities for the nine month period ended September 30, 2013 was approximately $1,776,000 as compared to approximately $3,274,000 for the period ended September 30, 2012. Net cash used in investing activities for the nine month period ended September 30, 2013 consisted of the issuance of our short term commercial loans in the amount of approximately $12,021,000, offset by collection of these loans in the amount of approximately $10,245,000. In the period ended September 30, 2012 net cash used in investing activities consisted of the issuance of our short term commercial loans in the amount of approximately $11,149,000, offset by collection of these loans in the amount of approximately $7,875,000.
 
Net cash provided by financing activities for the nine month period ended September 30, 2013 was approximately $1,058,000 as compared to approximately $2,947,000 for the period ended September 30, 2012. Net cash provided by financing activities for the nine month period ended September 30, 2013 reflects the use of the Sterling Credit Line of $1,300,000, the proceeds of short a term loan of $160,000 received by the Company, and the proceeds from exercise of stock options of approximately $23,000, offset by the repayment of one of the Company’s short term loans of $240,000, the purchase of treasury shares of approximately $99,000 and the dividend payment of approximately $85,000. In the period ended September 30, 2012, net cash provided by financing activities reflects the use of the Sterling Credit Line of $3,150,000, offset by the repayment of one of the Company’s short term loans of $200,000 and the purchase of treasury shares of approximately $3,000.
 
On May 2, 2012, we entered into a 1-year revolving Line of Credit Agreement with Sterling National Bank (“Sterling”) pursuant to which the Bank agreed to advance up to $3.5 million against assignments of mortgages and other collateral (the “Sterling Credit Line”). On January 31, 2013, the Sterling Credit Line was increased from $3.5 million to $5 million under the same terms as the original line of credit (the “Amendment”). Effective on May 1, 2013 and July 1, 2013, the term of the Sterling Credit Line was extended through July 1, 2013 and July 1, 2014, respectively. (See Note 8 to the consolidated financial statements which appear elsewhere in this quarterly report.)
 
We have not entered into any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of our requirements for capital resources.  
 
We anticipate that our current cash balances will be sufficient to fund our operations for the next 12 months.   However, we expect our working capital requirements to increase over the next 12 months as we continue to strive for growth.
 
 
- 16 -
Changes to Critical Accounting Policies and Estimates
  Our critical accounting policies and estimates are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
 
  Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  
As a smaller reporting company, we are not required to provide the information required by this Item.
 
Item 4.
CONTROLS AND PROCEDURES
 
 
(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 September 30, 2013 (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 SEC’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) identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred during the fiscal quarter ended September 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
- 17 -
   
PART II                OTHER INFORMATION
 
Item 1.
LEGAL PROCEEDINGS
 
The Company was sued in 2011 as a nominal defendant in a stockholder derivative action, Alan R. Kahn v. Assaf Ran, et al., Supreme Court of the State of New York, County of Nassau, filed against the members of its Board of Directors. The plaintiff, who asserted that he was a stockholder of the Company at all pertinent times, alleged wrongdoing by the Board in a transaction in which Director and Chief Executive Officer, Assaf Ran, was granted certain shares of the Company’s restricted stock in exchange for giving up his rights in certain options that he had held at the time of the transaction. Plaintiff contended that the Company was harmed by the transaction. The Directors disagreed with the plaintiff’s position that the transaction involved any wrongful conduct or that it harmed the Company in any way. The court dismissed the original complaint, but gave plaintiff leave to file an amended complaint, which the plaintiff did. The defendants moved to dismiss the amended complaint, but before the court ruled on that motion, the parties reached an agreement to settle the action, subject to approval of the court. The terms of the settlement include the Company’s agreement to continue utilizing certain corporate governance matters that the Company had already implemented before the lawsuit was filed and would continue to implement regardless of the settlement agreement, and to pay Plaintiff’s counsel’s fees and expenses in an amount to be determined by the court, which amount shall not exceed $80,000. In addition, Assaf Ran will reiterate his commitment to extend his personal guarantee to the Company for up to $5 million. This commitment was available to the Company prior to the settlement agreement. After the court preliminarily approved the settlement, the Company provided notice of the settlement to stockholders, in order to provide them with an opportunity to object to the settlement if they choose to do so. No stockholders submitted any objections to the settlement. At a final hearing to address the fairness and reasonableness of the settlement held on April 2, 2013, the court approved the settlement, dismissed the action, and awarded plaintiff $80,000 in fees and costs. The fee award has been paid by an officers’ and directors’ liability insurance policy, rather than by the Company. As a result of the court’s ruling, the litigation has been concluded.
 
Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
In September 2012, the Company adopted a stock buy-back program for the repurchase of up to 100,000 shares of the Company's common stock over the next twelve months.   As set forth in the table below, during the quarter ended September 30, 2013, the Company repurchased 14,000 shares of the Company's common stock under the stock buy-back program at a cost of $23,310.
 
ISSUER PURCHASES OF EQUITY SECURITIES
 
Period
(a)  
Total 
Number  
of Shares  
(or Units)  
Purchased
(b)  
Average  
Price Paid  
per Share  
(or Unit)
(c)  
Total Number  
of Shares (or  
Units)  
Purchased as  
Part of Publicly  
Announced  
Plans or  
Programs
(d)  
Maximum Number  
(or Approximate  
Dollar Value) of  
Shares (or Units)  
that May Yet Be  
Purchased Under  
the Plans or  
Programs
July 1-31, 2013
3,000
$
1.64
3,000
14,731
August 1-31, 2013
3,800
$
1.73
3,800
10,931
September 1-30, 2013
7,200
$
1.64
7,200
3,731
Total
14,000
$
1.67
14,000
0
 
- 18 -
 
Item 6.
  EXHIBITS
 
Exhibit No.
Description
31.1
 
Chief Executive Officer Certification as required under section 302 of the Sarbanes Oxley Act (filed herewith)
31.2
 
Chief Financial Officer Certification as required under section 302 of the Sarbanes Oxley Act (filed herewith)
32.1*
 
Chief Executive Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act (furnished herewith)
32.2*
 
Chief Financial Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act (furnished herewith)
101.INS
 
XBRL Instance Document
101.CAL
 
XBRL Taxonomy Extension Schema Document
101.SCH
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
*
Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K.
- 19 -
 
  SIGNATURES  
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  
 
 
Manhattan Bridge Capital, Inc. (Registrant)
Date: October 30, 2013
By: /s/ Assaf Ran
 
Assaf Ran, President and Chief Executive Officer
 
(Principal Executive Officer)
Date: October 30, 2013
By: /s/ Vanessa Kao
 
Vanessa Kao, Chief Financial Officer
 
(Principal Financial and Accounting Officer)
 
- 20 -
EXHIBIT 31.1
CERTIFICATION
I, Assaf Ran, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Manhattan Bridge Capital, Inc.;
2.   Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 30, 2013
/s/ Assaf Ran
Assaf Ran
President and Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
CERTIFICATION
I, Vanessa Kao, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Manhattan Bridge Capital, Inc.;
2.   Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 30, 2013
/s/ Vanessa Kao
Vanessa Kao
Chief Financial Officer
(Principal Financial and Accounting Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Manhattan Bridge Capital, Inc. (the "Company") for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Assaf Ran, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to § 906 of the Sarbanes Oxley Act, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Assaf Ran*
Assaf Ran
President and Chief Executive Officer
(Principal Executive Officer)
October 30, 2013

* A signed original of this written statement required by Section 906 has been provided to us and will be retained by us and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Manhattan Bridge Capital, Inc. (the "Company") for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Vanessa Kao, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to § 906 of the Sarbanes Oxley Act, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ Vanessa Kao*
 
Vanessa Kao
Chief Financial Officer
(Principal Financial and Accounting Officer)
October 30, 2013
 
* A signed original of this written statement required by Section 906 has been provided to us and will be retained by us and furnished to the Securities and Exchange Commission or its staff upon request.