New York
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11-3474831
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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60 Cutter Mill Road, Great Neck, New York 11021
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(Address of principal executive offices)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Page
Number
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Part I FINANCIAL INFORMATION
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Item 1.
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Consolidated Financial Statements (unaudited)
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Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010
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2
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Consolidated Statements of Operations for the Three and Six Month Periods Ended June 30, 2011 and 2010
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3
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Consolidated Statements of Cash Flows for the Six Month Periods Ended June 30, 2011 and 2010
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4
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Notes to Consolidated Financial Statements
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5
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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12
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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16
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Item 4.
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Controls and Procedures
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16
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Part II
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OTHER INFORMATION
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Item 6.
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Exhibits
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16
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SIGNATURES
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17
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EXHIBITS
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E-1
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June 30, 2011
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December 31,2010
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||||||
(Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 8,446 | $ | 386,023 | ||||
Short term loans
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9,040,839 | 8,156,293 | ||||||
Interest receivable on short term loans
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117,028 | 91,593 | ||||||
Other current assets
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45,912 | 13,427 | ||||||
Total current assets
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9,212,225 | 8,647,336 | ||||||
Investment in real estate
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675,000 | — | ||||||
Long term loan receivable
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73,391 | — | ||||||
Property and equipment, net
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909 | 2,425 | ||||||
Security deposit
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23,864 | 17,515 | ||||||
Investment in privately held company, at cost
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100,000 | 100,000 | ||||||
Deferred financing costs
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90,986 | 109,183 | ||||||
Total assets
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$ | 10,176,375 | $ | 8,876,459 | ||||
Liabilities and Shareholders’ Equity
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||||||||
Current liabilities:
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||||||||
Short term loans and line of credit
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$ | 1,359,465 | $ | 300,000 | ||||
Accounts payable and accrued expenses
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53,761 | 56,405 | ||||||
Deferred origination fees
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104,850 | 76,428 | ||||||
Income taxes payable
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196,512 | 180,513 | ||||||
Total current liabilities
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1,714,588 | 613,346 | ||||||
Long term liabilities:
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||||||||
Senior secured notes
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500,000 | 500,000 | ||||||
Total liabilities
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2,214,588 | 1,113,346 | ||||||
Commitments and contingencies
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||||||||
Shareholders’ equity:
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||||||||
Preferred shares - $.01 par value; 5,000,000 shares authorized; no shares issued
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— | — | ||||||
Common shares - $.001 par value; 25,000,000 authorized; 3,405,190 issued and 3,324,459 outstanding
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3,405 | 3,405 | ||||||
Additional paid-in capital
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9,619,604 | 9,588,849 | ||||||
Treasury stock, at cost- 80,731 shares
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(241,400 | ) | (241,400 | ) | ||||
Accumulated deficit
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(1,419,822 | ) | (1,587,741 | ) | ||||
Total shareholders’ equity
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7,961,787 | 7,763,113 | ||||||
Total liabilities and shareholders’ equity
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$ | 10,176,375 | $ | 8,876,459 |
Three Months
Ended June 30,
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Six Months
Ended June 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Interest income from short term loans
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$ | 276,037 | $ | 259,661 | $ | 558,402 | $ | 495,864 | ||||||||
Origination fees
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65,572 | 55,368 | 122,009 | 110,339 | ||||||||||||
Total Revenue
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341,609 | 315,029 | 680,411 | 606,203 | ||||||||||||
Operating costs and expenses:
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Interest expense on loans and line of credit
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28,289 | 9,593 | 44,965 | 14,727 | ||||||||||||
General and administrative expenses
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203,809 | 182,451 | 390,529 | 324,527 | ||||||||||||
Total operating costs and expenses
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232,098 | 192,044 | 435,494 | 339,254 | ||||||||||||
Income from operations
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109,511 | 122,985 | 244,917 | 266,947 | ||||||||||||
Interest and dividend income
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— | 824 | — | 4,167 | ||||||||||||
Realized gain on marketable securities that were previously marked down
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— | 96,132 | — | 151,419 | ||||||||||||
Other income
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31,590 | — | 39,000 | — | ||||||||||||
Total other income
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31,590 | 96,956 | 39,000 | 155,586 | ||||||||||||
Income from operations before
income tax expense
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141,101 | 219,941 | 283,917 | 422,533 | ||||||||||||
Income tax expense
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(54,000 | ) | (65,000 | ) | (116,000 | ) | (127,000 | ) | ||||||||
Net Income
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$ | 87,101 | $ | 154,941 | $ | 167,917 | $ | 295,533 | ||||||||
Basic and diluted net income per common share outstanding:
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||||||||||||||||
—Basic
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$ | 0.03 | $ | 0.05 | $ | 0.05 | $ | 0.09 | ||||||||
—Diluted
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$ | 0.03 | $ | 0.05 | $ | 0.05 | $ | 0.09 | ||||||||
Weighted average number of common shares outstanding
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||||||||||||||||
—Basic
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3,324,459 | 3,324,459 | 3,324,459 | 3,324,459 | ||||||||||||
—Diluted
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3,397,597 | 3,370,329 | 3,396,873 | 3,368,096 |
Six Months
Ended June 30,
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||||||||
2011
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2010
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Cash flows from operating activities:
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Net Income
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$ | 167,917 | $ | 295,533 | ||||
Adjustments to reconcile net income to net cash provided by operating activities -
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||||||||
Amortization of deferred financing costs
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18,197 | —- | ||||||
Depreciation
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1,516 | 1,516 | ||||||
Non cash compensation expense
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30,755 | 45,754 | ||||||
Realized gain on sale of marketable securities that were previously marked down
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— | (151,419 | ) | |||||
Changes in operating assets and liabilities:
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||||||||
Interest receivable on short term loans
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(25,435 | ) | (8,865 | ) | ||||
Other current and non current assets
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(38,833 | ) | (85,151 | ) | ||||
Accounts payable and accrued expenses
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(2,643 | ) | (8,888 | ) | ||||
Deferred origination fees
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28,422 | (45,859 | ) | |||||
Income taxes payable
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15,999 | 26,560 | ||||||
Net cash provided by operating activities
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195,895 | 69,181 | ||||||
Cash flows from investing activities:
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||||||||
Proceeds from sale of marketable securities
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— | 431,864 | ||||||
Investment in real estate
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(675,000 | ) | —- | |||||
Issuance of short term loans
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(3,270,800 | ) | (2,936,500 | ) | ||||
Collections received from loans
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2,312,863 | 1,706,421 | ||||||
Net cash used in investing activities
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(1,632,937 | ) | (798,215 | ) | ||||
Cash flows from financing activities:
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Proceeds from loans and line of credit
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1,059,465 | 300,000 | ||||||
Net cash provided by financing activities
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1,059,465 | 300,000 | ||||||
Net decrease in cash
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(377,577 | ) | (429,034 | ) | ||||
Cash and cash equivalents, beginning of the year
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386,023 | 707,449 | ||||||
Cash and cash equivalents, end of period
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$ | 8,446 | $ | 278,415 | ||||
Supplemental Cash Flow Information:
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Taxes paid during the period
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$ | 100,001 | $ | 100,440 | ||||
Interest paid during the period
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$ | 44,965 | $ | 14,727 | ||||
Non-Cash Investing and Financing Activities:
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Forgiveness of debt
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— | $ | 27,961 |
1.
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THE COMPANY
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2.
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RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS
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3.
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SHORT TERM COMMERCIAL LOANS
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Developers-
Residential
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Developers-
Commercial
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Developers Mixed
Used
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Total outstanding
loans
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|||||||||||||
Performing loans
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$ | 8,814,230 | $ | 0 | $ | 300,000 | $ | 9,114,230 |
5.
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LONG TERM LOAN RECEIVABLE
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6.
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EARNINGS PER SHARE OF COMMON STOCK
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Three Months
Ended June 30,
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Six Months
Ended June 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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Basic
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3,324,459 | 3,324,459 | 3,324,459 | 3,324,459 | ||||||||||||
Incremental shares for assumed conversion of options
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73,138 | 45,870 | 72,414 | 43,637 | ||||||||||||
Diluted
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3,397,597 | 3,370,329 | 3,396,873 | 3,368,096 |
Shares
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Weighted
Average
Exercise
Price
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Weighted
Average
Remaining
Contractual
Term (in
years)
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Aggregate
Intrinsic
Value
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|||||||||||||
Outstanding at December 31, 2010
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631,000 | $ | 1.41 | |||||||||||||
Granted
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140,000 | 1.61 | ||||||||||||||
Exercised
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— | — | ||||||||||||||
Forfeited
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(166,000 | ) | 2.20 | |||||||||||||
Outstanding at June 30, 2011
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605,000 | $ | 1.24 | 2.94 | $ | 398,152 | ||||||||||
Vested and exercisable at June 30, 2011
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487,333 | $ | 1.16 | 2.56 | $ | 300,452 |
8.
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LOANS AND LINE OF CREDIT
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9.
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SENIOR SECURED NOTES
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10.
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Commitments and Contingencies
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(a)
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Evaluation and Disclosure Controls and Procedures
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(b)
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Changes in Internal Control Over Financial Reporting
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Exhibit No.
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Description
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31.1
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Chief Executive Officer Certification as required under section 302 of the Sarbanes Oxley Act (filed herewith)
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31.2
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Chief Financial Officer Certification as required under section 302 of the Sarbanes Oxley Act (filed herewith)
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32.1*
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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)
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32.2*
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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)
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* Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K.
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Date: August 10, 2011
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By: /s/ Assaf Ran | |
Assaf Ran, President and Chief Executive Officer
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(Principal Executive Officer)
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Date: August 10, 2011
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By: /s/ Vanessa Kao |
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Vanessa Kao, Chief Financial Officer
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(Principal Financial and Accounting Officer)
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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a)
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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
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b)
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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.
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Date: August 10, 2011
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/s/ Assaf Ran
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Assaf Ran
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President and Chief Executive Officer
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(principal executive officer)
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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a)
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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
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b)
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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.
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Date: August 10, 2011
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/s/ Vanessa Kao
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Vanessa Kao
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Chief Financial Officer
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(principal financial and accounting officer)
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/s/ Assaf Ran*
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Assaf Ran
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President and Chief Executive Officer
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(principal executive officer)
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/s/ Vanessa Kao*
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Vanessa Kao
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Chief Financial Officer
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(principal financial and accounting officer)
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CONSOLIDATED BALANCE SHEET [Parenthetical] (USD $)
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Jun. 30, 2011
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Dec. 31, 2010
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---|---|---|
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 3,405,190 | 3,405,190 |
Common stock, shares outstanding | 3,324,459 | 3,324,459 |
Treasury stock, shares | 80,731 | 80,731 |
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Interest income from short term loans | $ 276,037 | $ 259,661 | $ 558,402 | $ 495,864 |
Origination fees | 65,572 | 55,368 | 122,009 | 110,339 |
Total Revenue | 341,609 | 315,029 | 680,411 | 606,203 |
Operating costs and expenses: | Â | Â | Â | Â |
Interest expense on loans and line of credit | 28,289 | 9,593 | 44,965 | 14,727 |
General and administrative expenses | 203,809 | 182,451 | 390,529 | 324,527 |
Total operating costs and expenses | 232,098 | 192,044 | 435,494 | 339,254 |
Income from operations | 109,511 | 122,985 | 244,917 | 266,947 |
Interest and dividend income | 0 | 824 | 0 | 4,167 |
Realized gain on marketable securities that were previously marked down | 0 | 96,132 | 0 | 151,419 |
Other income | 31,590 | 0 | 39,000 | 0 |
Total other income | 31,590 | 96,956 | 39,000 | 155,586 |
Income from operations before income tax expense | 141,101 | 219,941 | 283,917 | 422,533 |
Income tax expense | (54,000) | (65,000) | (116,000) | (127,000) |
Net Income | $ 87,101 | $ 154,941 | $ 167,917 | $ 295,533 |
Basic and diluted net income per common share outstanding: | Â | Â | Â | Â |
-Basic (in dollars per share) | $ 0.03 | $ 0.05 | $ 0.05 | $ 0.09 |
-Diluted (in dollars per share) | $ 0.03 | $ 0.05 | $ 0.05 | $ 0.09 |
Weighted average number of common shares outstanding | Â | Â | Â | Â |
-Basic (in shares) | 3,324,459 | 3,324,459 | 3,324,459 | 3,324,459 |
-Diluted (in shares) | 3,397,597 | 3,370,329 | 3,396,873 | 3,368,096 |
DOCUMENT AND ENTITY INFORMATION
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6 Months Ended | |
---|---|---|
Jun. 30, 2011
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Aug. 08, 2011
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Entity Registrant Name | MANHATTAN BRIDGE CAPITAL, INC | Â |
Entity Central Index Key | 0001080340 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Trading Symbol | loan | Â |
Entity Common Stock, Shares Outstanding | Â | 3,324,459 |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Period Focus | Q2 | Â |
Document Fiscal Year Focus | 2011 | Â |
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STOCK BASED COMPENSATION
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
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.
Share based compensation expense recognized under ASC 718 for the three and six months ended June 30, 2011 were $19,505 and $30,755, respectively. Share based compensation expense recognized under ASC 718 for the three and six months ended June 30, 2010 were $36,147 and $45,755, respectively.
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 2011 and 2010, respectively: (1) expected life of 5 years; (2) no annual dividend yield; (3) expected volatility 62% to 73%; and (4) risk free interest rate of 1.5% to 2.7%.
The following summarizes stock option activity for the six month period ended June 30, 2011:
The weighted-average fair value of each option granted during the three month periods ended June 30, 2011 and 2010, estimated as of the grant date using the Black-Scholes option valuation model, was $0.85 per option and $0.78 per option, respectively.
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SHORT TERM COMMERCIAL LOANS
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6 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | Â | ||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
At June 30, 2011, we were committed to an additional $2,115,900 in construction loans that can be drawn by the borrower when certain conditions are met.
Some of the loans in the Company’s portfolio at June 30, 2011, were jointly funded by the Company and unrelated entities, for aggregate loans of $1,105,600. The accompanying balance sheet includes the Company’s portion of the loans in the amount of $552,800.
At June 30, 2011, the Company had made loans to seven borrowers in the aggregate amount of $1,564,000. One individual holds a fifty percent interest in each of the borrowers. The Company also had made loans to five borrowers in the aggregate amount of $1,040,000. Two individuals hold one hundred percent interest in each of the borrowers. The Company also had made loans to three borrowers in the aggregate amount of $1,015,000. One individual holds one hundred percent interest in each of the borrowers. The Company also had made loans to four borrowers in the aggregate amount of $965,000. One individual holds one hundred percent interest in each of the borrowers. All individuals have no relationship to any of the officers or directors of the Company.
The Company generally grants loans for a term of one year. In certain situations the Company and its borrowers have mutually agreed to the extension of the loans as a result of the downturn in the economy and the real estate industry in the New York metropolitan area. Potential buyers of the real estate serving as collateral for the short-term loans may have difficulty securing financing due to restrictions imposed by financial institutions resulting from the recent mortgage crisis. In addition, the Company’s borrowers may be having difficulty securing permanent financing. Prior to the Company granting an extension of any loan, it reevaluates the underlying collateral. At June 30, 2011, the Company’s short-term and long term loans include loans in the amount of $250,000, $535,100, $3,125,200, and $510,000, originally due in 2008, 2009, 2010 and 2011, 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 June 30, 2011, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations. Subsequent to the balance sheet date $1,320,000 of the extended loans outstanding at June 30, 2011 have been partially or fully paid off.
Credit risk profile based on loan activity as of June 30, 2011:
|
SENIOR SECURED NOTES
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
|||
Senior Secured Notes Disclosure [Abstract] | Â | ||
Senior Secured Notes Disclosure [Text Block] |
On December 28, 2010, MBC Funding completed a $500,000 private placement of three-year 6.63% senior secured notes. In connection therewith, MBC assigned approximately $750,000 of its short-term loans to MBC Funding to use as collateral for the notes. 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.
Financing costs incurred in connection with the agreement totaled $109,183, including five year warrants (the “warrants”) to purchase 20,000 shares of the Company’s 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 six month periods ended June 30, 2011 were $9,099 and $18,197, respectively.
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Commitments and Contingencies
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6 Months Ended | ||
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Jun. 30, 2011
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Commitments and Contingencies Disclosure [Abstract] | Â | ||
Commitments and Contingencies Disclosure [Text Block] |
Office Space
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 5 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 $3,200 per month during the fifth year.
Restricted Stock Grant
On June 29, 2011, the Company’s Board of Directors authorized, subject to shareholder approval, the grant of 1,000,000 restricted common shares (the “Restricted Shares”) to Assaf Ran, the Company’s President and Chief Executive Officer. Under the terms of the applicable restricted shares agreement (the “Restricted Shares Agreement”), Mr. Ran has agreed to the termination and cancellation of 210,000 options with exercise prices above $1.50 per share that he currently holds and further agreed that he will not exercise an additional 280,000 options with exercise prices below $1.50 per share. If Mr. Ran exercises any of the 280,000 options that are not being terminated and cancelled, he will forfeit approximately 3.5 Restricted Shares for each such option exercised. Under the Restricted Shares Agreement 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) June 30, 2026, with respect to 1/3 of the Restricted Shares, June 30, 2027 with respect to an additional 1/3 of the Restricted Shares and June 30, 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 the Company 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; (B) his disability, which, in the opinion of his personal physician and a physician selected by the Company, prevents him from being employed by 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 either the Company terminates Mr. Ran’s employment for Cause or Mr. Ran voluntarily terminates his employment with the Company 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.
Under the existing program of annual option grants to Mr. Ran, the Company incurred amortization charges of $46,920 in 2010. Assuming the continuation of this program into the future and the trading of the Common Stock at an assumed price of $1.50 per share, future amortization charges would range from $68,044 in 2011 to $122,136 in 2015 and thereafter. Under this grant of Restricted Shares, which is subject to shareholder approval, and related option forfeitures, Management anticipates that future annual amortization charges will decline substantially.
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LOANS AND LINE OF CREDIT
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6 Months Ended | ||
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Jun. 30, 2011
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Loans and Line Of Credit [Abstract] | Â | ||
Loans and Line Of Credit [Text Block] |
In September 2009 the Company established a secured line of credit with Valley National Bank. The line of credit provides for maximum borrowings in the amount of up to $300,000, which may be prepaid by the Company at any time without penalty. The line requires monthly payments of interest only at the rate of 9%, per annum, with borrowings still outstanding due in October, 2012. Pursuant to a security agreement, the line of credit is secured by the Company’s short term loans. As of both June 30, 2011 and December 31, 2010, $300,000 is outstanding under this line.
In March 2011, the Company received three separate short-term loans from three different entities, in the aggregate amount of $603,845, bearing interest at rates ranging from 8% to 14%, per annum. On April 18, 2011, one of the loans in the amount of $170,000 was repaid in full by the Company. In June 2011, the Company received two additional short-term loans from two different entities, in the aggregate amount of $525,620, bearing interest at rates ranging from 8% to 10%, per annum. Four of the short-term loans payable are secured by the Company’s short term loans, pursuant to a security agreement and three of the loans are also personally guaranteed by our CEO.
On June 30, 2011, the Company also received a short-term loan from its CEO, Assaf Ran, in the amount of $100,000, bearing interest at the rate of 12%, per annum. The loan was repaid in full on July 6, 2011.
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THE COMPANY
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6 Months Ended | ||
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Jun. 30, 2011
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Organization, Consolidation and Presentation Of Financial Statements [Abstract] | Â | ||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
The accompanying unaudited consolidated financial statements of Manhattan Bridge Capital, Inc., a New York corporation, (referred to herein as “Manhattan Bridge Capital” “we”, “MBC”, “us” or “our” have been prepared by the Company in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles 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, 2010 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 generally accepted accounting principles 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 Company provides short term secured non–banking commercial 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) collectibility is reasonably assured.
Interest income from short term commercial loans is recognized, as earned, over the loan period.
Origination fee revenue on short term 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.
Effective January 1, 2008, the Company adopted ASC 820, Fair Value Measurements,
which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1—Quoted prices in active markets.
Level 2—Observable inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3—Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Cash equivalents and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy.
The Company’s Level 1 investments are valued using quoted market prices in active markets.
As of June 30, 2011 and December 31, 2010 the Company’s Level 1 investments consisted of cash and money market accounts in the amount of approximately $8,000 and $386,000, respectively, and were recorded as cash and cash equivalents in the Company’s consolidated balance sheets.
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INVESTMENT IN REAL ESTATE
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6 Months Ended | ||
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Jun. 30, 2011
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Property, Plant and Equipment [Abstract] | Â | ||
Property, Plant and Equipment Disclosure [Text Block] |
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. 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. We believe that the option holder will exercise the buy back option within the next 9 months.
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LONG TERM LOAN RECEIVABLE
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6 Months Ended | ||
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Jun. 30, 2011
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Debt Disclosure [Abstract] | Â | ||
Long-term Debt [Text Block] |
One of the Company’s borrowers with a short-term loan originally due in 2009 has agreed to repay the loan over a period of two years. The principal in the amount of $73,391 which will be repaid after twelve months from June 30, 2011 is reclassified to long term loan receivables.
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EARNINGS PER SHARE OF COMMON STOCK
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Jun. 30, 2011
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Earnings Per Share [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] |
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:
For the three and six month periods ended June 30, 2011, 414,195, and 414,919, stock options were not included in the diluted earnings per share calculation, respectively, as their effect would have been anti-dilutive.
For the three and six month periods ended June 30, 2010, 584,797, and 587,030, stock options were not included in the diluted earnings per share calculation, respectively, as their effect would have been anti-dilutive.
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RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS
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6 Months Ended | ||
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Jun. 30, 2011
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Accounting Changes and Error Corrections [Abstract] | Â | ||
Accounting Changes and Error Corrections [Text Block] |
In February 2010, FASB issued ASU 2010-9 as an amendment to ASC 855. This update eliminates the requirement to provide a specific date through which subsequent events were evaluated. This update was issued to alleviate potential conflicts between ASC 855 and SEC reporting requirements. The update was effective upon issuance and has no impact on the Company’s consolidated financial statements. In July 2010, FASB issued ASU 2010-20, entitled “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,”
which is effective for public entities interim and annual financial statements ending after December 15, 2010. The objective of this amended guidance is for an entity to provide disclosures that facilitate financial statement users’ evaluation of; the nature of credit risk inherent in the entities portfolio of financing receivables; how risk is analyzed and assessed in arriving at the allowance for credit losses; and the changes and reasons for those changes in the allowance for credit losses. Existing guidance has been amended to provide enhanced disaggregated disclosures in situations involving impairments or troubled loan restructurings, with the guidance for trouble debt restructuring disclosures delayed pursuant to ASU 2011-01. Company disclosures herein are based on the Company’s adoption of ASU 2010-20, and providing disclosures there under that apply to its short term loan portfolio in the current circumstances. In April 2011, FASB issued ASU 2011-02, "Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring." ASU 2011-02 provides amendments to Topic 310 to clarify which loan modifications constitute troubled debt restructurings. It is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. Early adoption is permitted. The Company believes that the adoption of ASU No. 2011-02 will not have a material effect on its 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.
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