FOR THE THREE MONTHS ENDED MARCH 31,JUNE 30, 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023

FOR THE SIX MONTHS ENDED JUNE 30, 2022

The accompanying notes are an integral part of these consolidated financial statements.

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31,JUNE 30, 2023

1. THE COMPANY

The accompanying unaudited consolidated financial statements of Manhattan Bridge Capital, Inc. (“MBC”), a New York corporation founded in 1989, and its consolidated subsidiary, MBC Funding II Corp. (“MBC Funding II”), a New York corporation formed in December 2015 (collectively referred to herein as the “Company”) have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of consolidated operations for the interim period are not necessarily indicative of the operating results to be attained in the entire fiscal year.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

The consolidated financial statements include the accounts of MBC and MBC Funding II. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company offers short-term, secured, non–banking loans to real estate investors (also known as hard money) to fund their acquisition, renovation, rehabilitation or development of residential or commercial properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida.

Interest income from commercial loans is recognized, as earned, over the loan period.

Origination fee revenue on commercial loans is amortized over the term of the respective note.

2.RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

3. COMMERCIAL LOANS

Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers. The loans are generally for a term of one year. The short term loans are initially recorded, and carried thereafter, in the financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term.

At March 31,June 30, 2023, the Company was committed to $7,000,5218,388,975 in construction loans that can be drawn by the borrowers when certain conditions are met.

At March 31,June 30, 2023, no entity had loans outstanding representing more than 10%10% of the total balance of the loans outstanding.

The Company generally grants loans for a term of one year. When a performing loan reaches its maturity and the borrower requests an extension, the Company may extend the term of the loan beyond one year. Prior to granting an extension of any loan, the Company reevaluates the underlying collateral.

Credit Risk

Credit risk profile based on loan activity as of March 31,June 30, 2023 and December 31, 2022:

 SCHEDULE OF CREDIT RISK

At March 31,June 30, 2023, the Company’s loans receivable consisted of loans in the amount of $43,45640,160, $755,636, $2,665,2502,635,250, $3,206,0002,356,000 and $15,148,00012,435,000, originally due in 2016, 2019, 2020, 2021 and 2022, respectively. The loans receivable also includes loans in the amount of $7,465,00015,429,000 originally due in the first quartersix months of 2023.

Generally, borrowers are paying their interest, and the Company receives a fee in connection with the extension of the loans. In all instances, except as described below, the borrower has either signed an extension agreement or are in the process of signing the extension. Accordingly, at March 31,June 30, 2023, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof.

During February 2023, the Company determined to, and sold, one of its loans receivable to a third-party investor at its face value of $485,000. Assaf Ran, the Company’s President and Chief Executive Officer, participated in such acquisition in the amount of $152,000. In addition, in June 2023, the Company filed a foreclosure lawsuit relating to one property, as a result of a deed transfer from the borrower to a buyer without the Company’s consent. In that instance, the buyer of a property on which the Company had a valid mortgage suffered a data breach which resulted in the failure of the buyer to remit the funds needed for the loan payoff. As a result, the Company filed the foreclosure lawsuit to assist the buyer in making a claim with its title insurer. The loan is currently performing and the mortgage is valid. The Company expects to retrieve the payoff funds either from the buyer’s title insurance or through foreclosing on the property.

Subsequent to the balance sheet date, $3,575,0002,187,000 of the loans receivable at March 31,June 30, 2023 were paid off, including $455,000152,000 originally due in or before 2022.

4. LINE OF CREDIT

The Company executed an Amended and Restated Credit and Security Agreement (as amended on January 31, 2023, the “Amended and Restated Credit Agreement”), with Webster Business Credit Corporation (“Webster”), Flushing Bank (“Flushing”) and Mizrahi Tefahot Bank Ltd (“Mizrahi” and together with Webster and Flushing, the “Lenders”), which established the Company’s credit line (the “Webster Credit Line”). Currently, the Webster Credit Line provides the Company with a credit line of $32.5 million in the aggregate until February 28, 2026, secured by assignments of mortgages and other collateral. The interest rates relating to the Webster Credit Line equal (i) the Secured Overnight Financing Rate (“SOFR”) plus a premium, which rate aggregated approximately 8.48.7%%, including a 0.50.5%% agency fee, as of March 31,June 30, 2023, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.002.00%% and a 0.50.5%% agency fee, as chosen by the Company for each drawdown.

The Webster Credit Line contains various covenants and restrictions including, among other covenants and restrictions, limiting the amount that the Company can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans the Company makes to its customers, limiting the Company’s ability to pay dividends under certain circumstances, and limiting the Company’s ability to repurchase its common shares, sell assets, engage in mergers or consolidations, grant liens, and enter into transactions with affiliates. In addition, the Webster Credit Line contains a cross default provision which will deem any default under any indebtedness owed by us or our subsidiary, MBC Funding II, as a default under the credit line. Under the Amended and Restated Credit Agreement, the Company may repurchase, redeem or otherwise retire its equity securities in an amount not to exceed ten percent of our annual net income from the prior fiscal year. Further, the Company may issue up to $20 million in bonds through its subsidiary, of which not more than $10 million of such bonds may be secured by mortgage notes receivable, and provided that the terms and conditions of such bonds are approved by Webster, subject to its reasonable discretion.discretion.

On January 31, 2023, the Company entered into another amendment, effective as of January 2, 2023, with respect to the Amended and Restated Credit Agreement with the Lenders and Mr. Ran, as guarantor, to (i) extend the maturity date of the credit line by three years to February 28, 2026; (ii) transition the applicable benchmark from LIBOR to SOFR and adjust the applicable margin with respect to Base Rate Loans and SOFR Loans; (iii) update the required calculation with respect to the fixed charge coverage ratio covenant; (iv) further increase the limit on individual loans and the concentration of any mortgagor (together with guarantors and other related entities and affiliates); and (v) eliminate the requirement to pledge additional mortgage loans as collateral for the credit line. In addition, the terms of the personal guaranty provided by Mr. Ran were amended such that the potential sums owed under such guaranty will not exceed the sum of $1,000,000 plus any costs relating to the enforcement of the personal guaranty.

The Company was in compliance with all covenants of the Webster Credit Line, as amended, as of March 31,June 30, 2023. At March 31,June 30, 2023, the outstanding amount under the Amended Credit Agreement was $22,580,27720,670,721. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.50.5%% agency fee, was approximately 8.48.7%% as of March 31,June 30, 2023.

5. SENIOR SECURED NOTES

On April 25, 2016, in an initial public offering, MBC Funding II issued 66%% senior secured notes, due April 22, 2026 (the “Notes”) in the aggregate principal amount of $6,000,000 under the Indenture, dated April 25, 2016, among MBC Funding II, as Issuer, the Company, as Guarantor, and Worldwide Stock Transfer LLC, as Indenture Trustee (the “Indenture”). The Notes, having a principal amount of $1,000 each, are listed on the NYSE American and trade under the symbol “LOAN/26”. Interest accrues on the Notes commencing on May 16, 2016. The accrued interest is payable monthly in cash, in arrears, on the 15th day of each calendar month commencing June 2016.

Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by MBC Funding II, together with MBC Funding II’s cash on hand, must always equal at least 120120%% of the aggregate outstanding principal amount of the Notes at all times. To the extent the aggregate principal amount of the mortgage loans owned by MBC Funding II plus MBC Funding II’s cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, MBC Funding II is required to repay, on a monthly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by MBC Funding II plus, MBC Funding II’s cash on hand at such time is equal to or greater than 120% of the outstanding principal amount of the Notes. For this purpose, each mortgage loan is deemed to have a value equal to its outstanding principal balance, unless the borrower is in default of its obligations.obligations.

MBC Funding II may redeem the Notes, in whole or in part, at any time after April 22, 2019 upon at least 30 days prior written notice to the Noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption, without penalty or premium. No Notes were redeemed by MBC Funding II as of March 31,June 30, 2023.

MBC Funding II is obligated to offer to redeem the Notes if there occurs a “change of control” with respect to MBC Funding II or the Company or if MBC Funding II or the Company sell any assets unless, in the case of an asset sale, the proceeds are reinvested in the business of the seller. The redemption price in connection with a “change of control” will be 101% of the principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption. The redemption price in connection with an asset sale will be the outstanding principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption.

The Company guaranteed MBC Funding II’s obligations under the Notes, which are secured by its pledge of 100100%% of the outstanding common shares of MBC Funding II that it owns.

Our principal executive officers consist of Assaf Ran, who serves as our Chief Executive Officer and President, and Vanessa Kao, who serves as our Chief Financial Officer. As of March 31,June 30, 2023, each of Mr. Ran and Ms. Kao own an aggregate of $704,000 and $288,000 of our Notes, respectively.

6.STOCKHOLDERS’ EQUITY

6.On April 11, 2023, the Company’s Board of Directors authorized a share buy back program, pursuant to which the Company may, from time to time, purchase up to 100,000 of its common shares. This program does not obligate the Company to purchase any shares and expires on April 10, 2024. The authorization for the program is able to be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. As of June 30, 2023, the Company has purchased an aggregate of 33,360 common shares under this repurchase program, at an aggregate cost of approximately $165,000.

7. EARNINGS PER COMMON SHARE

Basic and diluted earnings per share are calculated in accordance with Accounting Standards Codification (“ASC”) 260, “Earnings Per Share” (“ASC 260”). Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income.

7.8. STOCK–STOCK – BASED COMPENSATION

Stock-basedStock based compensation expense recognized under ASC 718, “Compensation-Stock“Compensation – Stock Compensation,” for each of the three-month periods ended March 31,June 30, 2023 and 2022 of $3,266 represents, and for each of the six month periods ended June 30, 2023 and 2022 of $6,532 represent the amortization of the fair value of 1,000,000 restricted shares granted to the Company’s Chief Executive Officer on September 9, 2011 of $195,968, after adjusting for the effect on the fair value of the stock options related to this transaction. The fair value is being amortized over 15 years. At March 31,June 30, 2023, all 1,000,000 shares remain restricted, and the remaining unrecognized stock-basedstock based compensation amounted to $44,63741,371.

8.9. SUBSEQUENT EVENT

In accordance with the dividend declared by the Company’s Board of Directors on March 13,April 17, 2023, a cash dividend of $0.1125 per share in an aggregate amount of $1,293,1811,289,428 werewas paid on AprilJuly 17, 2023 to all shareholders of record on AprilJuly 10, 2023.

On April 11, 2023, the Company’s Board of Directors authorized a share buy back program, pursuant to which the Company may, from time to time, purchase up to 100,000 of its common shares. This program does not obligate the Company to purchase any shares and expires on April 10, 2024. The authorization for the program is able to be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. As of April 19, 2023, 6,000 common shares were purchased under the buy back program.********

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 statementsstatements..

We are a New York-based real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. We offer short-term, secured, non-banking loans (sometimes referred to as “hard money” loans), which we may renew or extend on, before or after their initial term expires, to real estate investors to fund their acquisition, renovation, rehabilitation or development of residential or commercial properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida.

The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. Each loan is secured by a first mortgage lien on real estate. In addition, each loan is personally guaranteed by the principal(s) of the borrower, which guarantee may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The face amount of the loans we originated in the past seven years ranged from $40,000 to a maximum of $3.3 million. Our lending policy limits the maximum amount of any loan to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $3.5 million. Our loans typically have a maximum initial term of 12 months and bear interest at a fixed rate of 9% to 12% per year. In addition, we usually receive origination fees or “points” ranging from 0% to 2% of the original principal amount of the loan as well as other fees relating to underwriting and funding the loan. Interest is always payable monthly, in arrears. In the case of acquisition financing, the principal amount of the loan usually does not exceed 75% of the value of the property (as determined by an independent appraiser) and in the case of construction financing, it is typically up to 80% of construction costs.

Since commencing our business in 2007, except as set forth below, we have never foreclosed on a property, although sometimes we have renewed or extended the term of a loan to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan, we generally receive additional “points” and other fees. In June 2023, we filed a foreclosure lawsuit relating to one property, as a result of a deed transfer from the borrower to a buyer without our consent. In that instance, the buyer of a property on which we had a valid mortgage suffered a data breach which resulted in the failure of the buyer to remit the funds needed for the loan payoff. As a result, we filed the foreclosure lawsuit to assist the buyer in making a claim with its title insurer. The loan is currently performing and the mortgage is valid. We expect to retrieve the payoff funds either from the buyer’s title insurance or through foreclosing on the property.

Our primary business objective is to grow our loan portfolio while protecting and preserving capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term through dividends. We intend to achieve this objective by continuing to selectively originate and fund loans secured by first mortgages on residential and commercial real estate held for investment located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida, and to carefully manage and service our portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that current market dynamics, specifically the demand/supply imbalance for relatively small real estate loans, presents opportunities for us to selectively originate high-quality first mortgage loans and we believe that these market conditions should persist for a number of years. We have built our business on a foundation of intimate knowledge of the New York metropolitan area real estate market combined with a disciplined credit and due diligence culture that is designed to protect and preserve capital. We believe that our flexibility and ability to structure loans that address the needs of our borrowers without compromising our standards on credit risk, our expertise, our intimate knowledge of the New York metropolitan area real estate market and our focus on newly originated first mortgage loans, has defined our success until now and should enable us to continue to achieve our objectives.

A principal source of new transactions has been repeat business from prior customers and their referral of new business. We also receive leads for new business from banks, brokers and a limited amount of advertising. Finally, our Chief Executive Officer also spends a significant portion of his time on new business development. We rely on our own employees, independent legal counsel, and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers are used to assist us in evaluating the worth of collateral, when deemed necessary by management. We also use construction inspectors.

For the threesix month periodsperiod ended March 31,June 30, 2023 and 2022, the total amounts of $13,734,803$28,122,249 and $18,295,339,$37,953,007, respectively, have been lent, offset by collections received from borrowers, under our commercial loans in the amounts of $16,285,581$32,811,877 and $15,572,367,$34,364,708, respectively.

At March 31,June 30, 2023, we were committed to $7,000,521$8,388,975 in construction loans that can be drawn by ourthe borrowers when certain conditions are met.

To date, except as discussed above, none of the loans previously made have been non-collectable, although no assurances can be given that existing or future loans may not prove to be non-collectible or foreclosed in the future.

We satisfied all of the requirements to be taxed as a real estate investment trust (“REIT”) and elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014. In order to maintain our qualification for taxation as a REIT and avoid any excise tax on our net taxable income, we are required to distribute each year at least 90% of our REIT taxable income. If we distribute less than 100% of our taxable income (but more than 90%), the undistributed portion will be taxed at the regular corporate income tax rates. As a REIT, we may also be subject to federal excise taxes and minimum state taxes.

Results of Operations

Three months ended March 31,June 30, 2023 compared to three months ended March 31,June 30, 2022

Total revenue

Total revenues for the three months ended March 31,June 30, 2023 were approximately $2,398,000$2,399,000 compared to approximately $2,115,000$2,117,000 for the three months ended March 31,June 30, 2022, an increase of $283,000,$282,000, or 13.4%13.3%. The increase in revenue was due to an increase in lending operations and higher interest rates charged on our commercial loans. For the three months ended March 31,June 30, 2023 and 2022, approximately $1,954,000$1,943,000 and $1,612,000, respectively, of our revenue representsrevenues were attributable to interest income on secured commercial loans that we offer to real estate investors, compared to approximately $1,644,000 for the same period in 2022, and approximately $444,000$457,000 and $471,000,$504,000, respectively, representof our revenues were attributable to origination fees on such loans. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.

Interest and amortization of deferred financing costs

Interest and amortization of deferred financing costs for the three months ended March 31,June 30, 2023 were approximately $646,000$595,000 compared to approximately $332,000$376,000 for the three months ended March 31,June 30, 2022, an increase of $314,000,$219,000, or 94.6%58.2%. The increase is primarily attributable to the increase in interest expense due to higher LIBOR/SOFR rates relating to the use of the Webster Credit Line in order to support our ability to increase loan originations. (See Note 4 to the consolidated financial statements included elsewhere in this quarterly report on Form 10-Q).

General and administrative expenses

General and administrative expenses for the three months ended March 31,June 30, 2023 were approximately $496,000$401,000 compared to approximately $361,000$386,000 for the three months ended March 31,June 30, 2022, an increase of $135,000,$15,000, or 37.4%3.9%. The increase is primarily attributable to increases in marketing, travel and meals expenses, partially offset by a decrease in advertising expense.

Net income

Net income for the three months ended June 30, 2023 was approximately $1,422,000 compared to approximately $1,356,000 for the three months ended June 30, 2022, an increase of $66,000, or 4.9%. This increase is primarily attributable to the increase in interest income, partially offset by the increase in interest expense.

Six months ended June 30, 2023 compared to six months ended June 30, 2022

Total revenue

Total revenues for the six months ended June 30, 2023 were approximately $4,797,000 compared to approximately $4,232,000 for the six months ended June 30, 2022, an increase of $565,000, or 13.4%. The increase in revenue was due to higher interest rates charged on our commercial loans. For the six months ended June 30, 2023 and 2022, revenues of approximately $3,896,000 and $3,256,000, respectively, were attributable to interest income on secured commercial loans that we offer to real estate investors, and approximately $901,000 and $976,000, respectively, were attributable to origination fees on such loans. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.

Interest and amortization of deferred financing costs

Interest and amortization of deferred financing costs for the six months ended June 30, 2023 were approximately $1,242,000 compared to approximately $708,000 for the six months ended June 30, 2022, an increase of $534,000, or 75.4%. The increase is primarily attributable to the increase in interest expense due to higher SOFR rates relating to the use of the Webster Credit Line in order to support our ability to increase loan originations. (See Note 4 to the consolidated financial statements included elsewhere in this quarterly report on Form 10-Q).

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2023 were approximately $897,000 compared to approximately $748,000 for the six months ended June 30, 2022, an increase of $149,000, or 19.9%. The increase is primarily attributable to a special bonus to officers in 2023 for extending the Webster Credit Line, and increases in payroll, marketing, insurance, board compensation, travel and meals expenses, partially offset by a decrease in advertising expense.

Net income

Net income for the threesix months ended March 31,June 30, 2023 was approximately $1,260,000$2,681,000 compared to approximately $1,425,000$2,781,000 for the threesix months ended March 31,June 30, 2022, a decrease of $165,000,$100,000, or 11.6%3.6%. This decrease is primarily attributable to the significant increase in interest expense and thea special bonus to officers in 2023, partially offset by the increaseincreases in interest income.

Liquidity and Capital Resources

At March 31,June 30, 2023, we had cash of approximately $75,000,$249,000, compared to cash of approximately $104,000 at December 31, 2022.

For the threesix months ended March 31,June 30, 2023, net cash provided by operating activities was approximately $1,315,000,$2,717,000, compared to approximately $1,455,000$2,847,000 for the threesix months ended March 31,June 30, 2022. The decrease in net cash provided by operating activities primarily resulted from the decreasedecreases in net income and in accounts payable and accrued expenses, partially offset by athe decrease in interest receivable on loans.

For the threesix months ended March 31,June 30, 2023, net cash provided by investing activities was approximately $2,546,000,$4,685,000, compared to approximately $2,723,000$3,590,000 of net cash used in investing activities for the threesix months ended March 31,June 30, 2022. Net cash provided by investing activities for the threesix months ended March 31,June 30, 2023 mainly consisted of the collection of our commercial loans of approximately $16,286,000,$32,812,000, offset by the issuance of commercial loans of approximately $13,735,000.$28,122,000. Net cash used in investing activities for the threesix months ended March 31,June 30, 2022 mainly consisted of the issuance of commercial loans of approximately $18,295,000,$37,953,000, offset by the collection of our commercial loans of approximately $15,572,000.$34,365,000.

For the threesix months ended March 31,June 30, 2023, net cash used in financing activities was approximately $3,889,000,$7,257,000, compared to approximately $1,271,000$718,000 of net cash provided by financing activities for the threesix months ended March 31,June 30, 2022. Net cash used in financing activities for the threesix months ended March 31,June 30, 2023 reflects the repayment of the Webster Credit Line of approximately $2,414,000, a$4,324,000, dividend paymentpayments of approximately $1,437,000$2,730,000, repurchase of treasury shares of approximately $165,000 and deferred financing costs of approximately $38,000. Net cash provided by financing activities for the threesix months ended March 31,June 30, 2022 reflects the net proceeds from the Webster Credit Line of approximately $2,744,000,$3,628,000, offset by a dividend paymentpayments of approximately $1,437,000$2,874,000 and deferred financing costs of approximately $36,000.

Our Amended and Restated Credit and Security Agreement with Webster, Flushing Bank and Mizrahi provides for the Webster Credit Line. Currently, the Webster Credit Line provides us with a credit line of $32.5 million in the aggregate until February 28, 2026, secured by assignments of mortgages and other collateral. The interest rates relating to the Webster Credit Line equal (i) SOFR plus a premium, which rate aggregated approximately 8.4%8.7%, including a 0.5% agency fee, as of March 31,June 30, 2023, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00% and a 0.5% agency fee, as chosen by the Company for each drawdown.

The Webster Credit Line contains various covenants and restrictions including covenants limiting the amount that the Company can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans the Company makes to its customers, limiting the Company’s ability to pay dividends under certain circumstances, and limiting the Company’s ability to repurchase its common shares, sell assets, engage in mergers or consolidations, grant liens, and enter into transactions with affiliates. In addition, the Webster Credit Line contains a cross default provision which will deem any default under any indebtedness owed by us or our subsidiary, MBC Funding II, as a default under the credit line. Under the Amended and Restated Credit Agreement, the Company may repurchase, redeem or otherwise retire its equity securities in an amount not to exceed ten percent of our annual net income from the prior fiscal year. Further, the Company may issue up to $20 million in bonds through its subsidiary, of which not more than $10 million of such bonds may be secured by mortgage notes receivable, and provided that the terms and conditions of such bonds are approved by Webster, subject to its reasonable discretion.

On January 31, 2023, we entered into another amendment, effective as of January 2, 2023, with respect to the Amended and Restated Credit Agreement with the Lenders and Mr. Ran, as guarantor, to (i) extend the maturity date of the credit line by three years to February 28, 2026; (ii) transition the applicable benchmark from LIBOR to SOFR and adjust the applicable margin with respect to Base Rate Loans and SOFR Loans; (iii) update the required calculation with respect to the fixed charge coverage ratio covenant; (iv) further increase the limit on individual loans and the concentration of any mortgagor (together with guarantors and other related entities and affiliates); and (v) eliminate the requirement to pledge an additional mortgage loans as collateral for the credit line. In addition, the terms of the personal guaranty provided by Mr. Ran were amended such that the potential sums owed under such guaranty will not exceed the sum of $1,000,000 plus any costs relating to the enforcement of the personal guaranty.

We were in compliance with all covenants of the Webster Credit Line, as amended, as of March 31,June 30, 2023. At March 31,June 30, 2023, the outstanding amount under the Amended and Restated Credit Agreement was $22,580,277.$20,670,721. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% agency fee, was approximately 8.4%8.7% as of March 31,June 30, 2023.

MBC Funding II has $6,000,000 of outstanding principal amount of Notes. The Notes mature on April 22, 2026, unless redeemed earlier, and accrue interest at a rate of 6% per annum commencing on May 16, 2016 and will be payable monthly, in arrears, in cash, on the 15th day of each calendar month, commencing June 2016.

Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by MBC Funding II, together with its cash on hand, must always equal at least 120% of the aggregate outstanding principal amount of the Notes at all times. To the extent the aggregate principal amount of the mortgage loans owned by MBC Funding II plus its cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, MBC Funding II is required to repay, on a monthly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by it plus, its cash on hand at such time is equal to or greater than 120% of the outstanding principal amount of the Notes. For this purpose, each mortgage loan is deemed to have a value equal to its outstanding principal balance, unless the borrower is in default of its obligations.

The Notes are secured by a first priority lien on all of MBC Funding II’s assets, including, primarily, mortgage notes, mortgages and other transaction documents entered into in connection with first mortgage loans originated and funded by us, which MBC Funding II acquired from MBC pursuant to an asset purchase agreement. MBC Funding II may redeem the Notes, in whole or in part, at any time after April 22, 2019 upon at least 30 days prior written notice to the noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption, without penalty or premium. No Notes were redeemed by MBC Funding II as of March 31,June 30, 2023.

MBC Funding II is obligated to offer to redeem the Notes if there occurs a “change of control” with respect to us or MBC Funding II or if we or MBC Funding II sell any assets unless, in the case of an asset sale, the proceeds are reinvested in the business of the seller. The redemption price in connection with a “change of control” will be 101% of the principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption. The redemption price in connection with an asset sale will be the outstanding principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption.

We guarantee MBC Funding II’s obligations under the Notes, which are secured by our pledge of 100% of the outstanding common shares of MBC Funding II that we own.

On April 11, 2023, our Board of Directors authorized a share buy back program, pursuant to which we may, from time to time, purchase up to 100,000 of our common shares. This program does not obligate the Company to purchase any shares and expires on April 10, 2024. The authorization for the program is able to be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. As of April 19,June 30, 2023, 6,000we have purchased an aggregate of 33,360 common shares were purchased under the buy back program.this repurchase program, at an aggregate cost of approximately $165,000.

We anticipate that our current cash balances and the Amended and Restated Credit Agreement, as described above, together with our cash flows from operations will be sufficient to fund our operations for the next 12 months. In addition, from time to time, we receive short term unsecured loans from our executive officers and others in order to provide us with the flexibility necessary to maintain a steady deployment of capital. However, we expect our working capital requirements to increase over the next 12 months as we continue to strive for growth.

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 March 31,June 30, 2023 (the “Evaluation Date”). Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) are accumulated and communicated to our management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31,June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 11, 2023, our Board of Directors authorized a share buy back program, pursuant to which we may, from time to time, purchase up to 100,000 of our common shares. This program does not obligate us to purchase any shares and expires on April 10, 2024. The authorization for the program is able to be terminated, increased or decreased by our Board of Directors in its discretion at any time.

As set forth in the table below, during the quarter ended June 30, 2023, we repurchased 33,360 of our common shares under the stock buy-back program at an aggregate cost of $164,806.