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MANHATTAN BRIDGE CAPITAL, INC

MANHATTAN BRIDGE CAPITAL, INCLOAN财报

Nasdaq · 金融 · 房地产投资信托

Manhattan Bridge Capital, Inc. is a U.S.-based real estate finance firm that provides short-term asset-backed secured loans primarily to real estate investors. Its core offerings include bridge loans for residential and commercial property acquisitions, rehabilitation, and refinancing, serving clients across key U.S. real estate markets.

What changed in MANHATTAN BRIDGE CAPITAL, INC's 10-K — 2024 vs 2025

Top changes in MANHATTAN BRIDGE CAPITAL, INC's 2025 10-K

204 paragraphs added · 228 removed · 156 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

34 edited+7 added−3 removed69 unchanged
We also believe that we benefit from our low equity-to-debt ratio in the current market condition.
We also believe that we benefit from our low debt-to-equity ratio in the current market condition.
In this environment, characterized by a supply-demand imbalance for financing and increasing asset values, we believe we are well positioned to capitalize and profit from these industry trends. 5 We believe there is a significant market opportunity for a well-capitalized “hard money” real estate finance company to originate attractively priced loans with strong credit fundamentals.
In this environment, characterized by a supply-demand imbalance for financing and increasing asset values, we believe we are well positioned to capitalize and profit from these industry trends. We believe there is a significant market opportunity for a well-capitalized “hard money” real estate finance company to originate attractively priced loans with strong credit fundamentals.
In conducting our due diligence, we rely, in part, on third party professionals and experts including appraisers, title insurers and attorneys. 11 Before a loan commitment is issued, the loan must be reviewed and approved by our Chief Executive Officer.
In conducting our due diligence, we rely, in part, on third party professionals and experts including appraisers, title insurers and attorneys. Before a loan commitment is issued, the loan must be reviewed and approved by our Chief Executive Officer.
Our lending policy limits the maximum loan amount to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $4 million. Loan-to-Value Ratio - Up to 75%, and/or up to 80% of construction costs.
Our lending policy limits the maximum loan amount to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $4 million. 8 Loan-to-Value Ratio - Up to 75%, and/or up to 80% of construction costs.
Our ability to customize financing structures to meet borrowers’ needs is one of our key business strengths. ● No legacy issues. Unlike many of our competitors, we are not burdened by distressed legacy real estate assets.
Our ability to customize financing structures to meet borrowers’ needs is one of our key business strengths. 7 ● No legacy issues. Unlike many of our competitors, we are not burdened by distressed legacy real estate assets.
We also engage with third parties in order to support sales and marketing efforts as needed. Intellectual Property Our business does not depend on exploiting or leveraging any intellectual property rights.
We also engage with third parties in order to support sales and marketing efforts as needed. 12 Intellectual Property Our business does not depend on exploiting or leveraging any intellectual property rights.
However, there have been a few instances where we have either used loans as collateral, or sold participating interests in loans. At December 31, 2024, most of our loans are secured by properties located around the New York metropolitan area. Most of the properties we finance are residential, although on occasion they are classified as commercial.
However, there have been a few instances where we have either used loans as collateral, or sold participating interests in loans. At December 31, 2025, most of our loans are secured by properties located around the New York metropolitan area. Most of the properties we finance are residential, although on occasion they are classified as commercial.
In addition, during 2024 we used outside lawyers and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers were used to assist management in evaluating the worth of collateral, when deemed necessary by management. We also used construction inspectors as well as mortgage brokers and deal initiators.
In addition, during 2025 we used outside lawyers and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers were used to assist management in evaluating the worth of collateral, when deemed necessary by management. We also used construction inspectors as well as mortgage brokers and deal initiators.
Our financing strategies at this time are limited to equity and debt offerings, as well as lines of credit from banks. Our principal capital raising transactions have consisted of the following: Credit line .
Our financing strategies at this time are limited to equity and debt offerings, as well as lines of credit from banks. Our principal capital raising transactions have consisted of the following: Credit facilities .
The information on our website is not incorporated by reference into this Report. 15
The information on our website is not incorporated by reference into this Report.
However, our loan portfolio includes a number of construction loans, which are only partially funded at closing. At December 31, 2024 and 2023, our unfunded commitment was approximately $7.2 million and $7.98 million, respectively. Advances under construction loans are funded against requests supported by all required documentation as and when needed to pay contractors and other costs of construction.
However, our loan portfolio includes a number of construction loans, which are only partially funded at closing. At December 31, 2025 and 2024, our unfunded commitment was approximately $4.4 million and $7.2 million, respectively. Advances under construction loans are funded against requests supported by all required documentation as and when needed to pay contractors and other costs of construction.
We entertain requests for granting extensions under certain conditions. 8 Prepayments - Borrower may prepay the loan at any time beginning three months after the funding date and in some instances, we waive prepayment fees. Covenants - To timely pay all interest on the loan and to maintain hazard insurance with respect to the property.
Prepayments - Borrower may prepay the loan at any time beginning three months after the funding date and in some instances, we waive prepayment fees. Covenants - To timely pay all interest on the loan and to maintain hazard insurance with respect to the property.
Government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test. 14 We rely on the exception set forth in Section 3(c)(5)(C) of the Investment Company Act which excludes from the definition of investment company “[a]ny person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses...
We rely on the exception set forth in Section 3(c)(5)(C) of the Investment Company Act which excludes from the definition of investment company “[a]ny person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses...
Our strategy to achieve our objective includes the following: ● capitalize on opportunities created by the long-term structural changes in the real estate lending market and the continuing demand for liquidity in the real estate market; ● take advantage of the prevailing economic environment as well as economic, political and social trends that may impact real estate lending currently and in the future as well as the outlook for real estate in general and particular asset classes; ● remain flexible in order to capitalize on changing sets of investment opportunities that may be present in the various points of an economic cycle; and ● operate so as to qualify for taxation as a REIT and for an exemption from registration under the Investment Company Act. 6 In furtherance of these strategies, we have a credit line agreement with Webster Business Credit Corporation (“Webster”), Flushing Bank (“Flushing”), and Mizrahi Tefahot Bank Ltd.
Our strategy to achieve our objective includes the following: ● capitalize on opportunities created by the long-term structural changes in the real estate lending market and the continuing demand for liquidity in the real estate market; ● take advantage of the prevailing economic environment as well as economic, political and social trends that may impact real estate lending currently and in the future as well as the outlook for real estate in general and particular asset classes; ● remain flexible in order to capitalize on changing sets of investment opportunities that may be present in the various points of an economic cycle; and 6 ● operate so as to qualify for taxation as a REIT and for an exemption from registration under the Investment Company Act.
The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. All loans, except for one with a face value of approximately $47,000, are secured by a first mortgage lien on real estate.
The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. All loans, except for one loan with a current outstanding principal balance of approximately $22,000, are secured by a first mortgage lien on real estate.
These claims, if meritorious, could require us to license other rights or subject us to damages and, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part. Employees As of December 31, 2024, we employed six employees.
The protective steps we have taken may not deter misappropriation of our proprietary information. These claims, if meritorious, could require us to license other rights or subject us to damages and, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part. Employees As of December 31, 2025, we employed six employees.
Available information We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (Exchange Act), as amended, free of charge on our website at www.manhattanbridgecapital.com, as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission.
However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on the properties owned by our borrowers. 14 Available information We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (Exchange Act), as amended, free of charge on our website at www.manhattanbridgecapital.com, as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission.
The following table sets forth information regarding the types of properties securing our mortgage loans outstanding at December 31, 2024 and 2023, and the interest earned, on the active loans, in each category (dollars in thousands): 2024 2023 Number of Loans Interest Earned Percentage Number of Loans Interest Earned Percentage Residential 85 $ 4,515 85 % 111 $ 4,504 84 % Commercial 6 801 11 % 6 768 14 % Mixed Use 4 161 4 % 3 90 2 % Total 95 $ 5,477 100 % 120 $ 5,362 100 % Our Origination Process and Underwriting Criteria We primarily rely on our relationships with existing and former borrowers, real estate investors, real estate brokers, loan initiators, and mortgage brokers to originate loans.
The following table sets forth information regarding the types of properties securing our mortgage loans outstanding at December 31, 2025 and 2024, and the interest earned, on the active loans, in each category (dollars in thousands): 2025 2024 Number of Loans Interest Earned Percentage Number of Loans Interest Earned Percentage Residential 79 $ 4,904 86 % 85 $ 4,515 85 % Commercial 7 724 12 % 6 801 11 % Mixed Use 2 89 2 % 4 161 4 % Total 88 $ 5,717 100 % 95 $ 5,477 100 % 10 Our Origination Process and Underwriting Criteria We primarily rely on our relationships with existing and former borrowers, real estate investors, real estate brokers, loan initiators, and mortgage brokers to originate loans.
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.
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. 5 The Market Opportunity Real estate investment is a capital-intensive business that relies heavily on debt capital to acquire, develop, improve, construct, renovate and maintain properties.
We do not have any adverse credit exposure to, and we do not anticipate that our performance will be negatively impacted by, previously purchased assets. 7 Our Real Estate Lending Activities Our real estate lending activities involve originating, funding, servicing and managing short-term loans (i.e.: loans with an initial term of not more than one year), secured by first mortgage liens on real estate property located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida, held for investment or resale.
Our Real Estate Lending Activities Our real estate lending activities involve originating, funding, servicing and managing short-term loans (i.e.: loans with an initial term of not more than one year), secured by first mortgage liens on real estate property located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida, held for investment or resale.
Interest rate - Most of the loans in our portfolio have a fixed rate of typically 9% to 13%. Term - Generally, one year with early termination in the event of a sale of the property or a refinancing.
Interest rate - Most of the loans in our portfolio have a fixed rate of typically 9% to 12.5%. Term - Generally, one year with early termination in the event of a sale of the property or a refinancing. We entertain requests for granting extensions under certain conditions.
To date, our borrowers’ compliance with existing laws has not had a material adverse effect on our earnings and we do not have reason to believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on the properties owned by our borrowers.
To date, our borrowers’ compliance with existing laws has not had a material adverse effect on our earnings and we do not have reason to believe it will have such an impact in the future.
To the extent we own any rights to intellectual property, we rely on a combination of federal, state and common law trademarks, service marks and trade names, copyrights and trade secret protection.
To the extent we own any rights to intellectual property, we rely on a combination of federal, state and common law trademarks, service marks and trade names, copyrights and trade secret protection. We have registered some of our trademarks and service marks in the United States Patent and Trademark Office including “Manhattan Bridge Capital”.
We also are required to comply with certain provisions of, among other statutes and regulations, certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans, The USA PATRIOT Act, regulations promulgated by the Office of Foreign Asset Control and federal and state securities laws and regulations.
We also are required to comply with certain provisions of, among other statutes and regulations, certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans, The USA PATRIOT Act, regulations promulgated by the Office of Foreign Asset Control and federal and state securities laws and regulations. 13 Investment Company Act Exemption Although we reserve the right to modify our business methods at any time, we are not currently required to register as an investment company under the Investment Company Act.
As of December 31, 2024, the interest rates under the Webster Credit Line equaled (i) the Secured Overnight Financing Rate (“SOFR”) plus a premium, which rate aggregated 8.0%, including a 0.5% agency fee, or (ii) a Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00% plus a 0.5% agency fee, as chosen by the Company for each drawdown.
As of December 31, 2025, borrowings under the Webster Credit Line bore interest, at the Company’s election for each drawdown, at either (i) the Secured Overnight Financing Rate (“SOFR”) plus an applicable premium, which rate was 7.3%, inclusive of a 0.5% agency fee, or (ii) the Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00%, plus a 0.5% agency fee.
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) $4 million. Our loans typically have a maximum initial term of 12 months and bear interest at a fixed rate of 9% to 13% per year.
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) $4 million.
One individual holds at least a fifty percent interest in each of the different entities. This individual is not affiliated with any of our officers or directors.
A single individual owns at least 50% interest in each of these entities and is not affiliated with any of our officers or directors.
In addition, most of our loans contain an adjustable interest rate clause allowing us to charge no less than the prime rate plus 3% on the outstanding loans. 9 Our loan portfolio The following table highlights certain information regarding our real estate lending activities for the periods indicated: Year Ended December 31, ($ in thousands) 2024 2023 Loans originated $ 41,966 $ 56,301 Loans repaid $ 49,090 $ 57,736 Mortgage lending revenues $ 9,689 $ 9,796 Mortgage lending expenses $ 2,339 $ 2,528 Number of loans outstanding 95 120 Principal amount of loans earning interest $ 65,974 $ 73,048 Average outstanding loan balance $ 694 $ 609 Percent of loans secured by New York metropolitan area properties, including in New Jersey and Connecticut (1) 95.80 % 97.50 % Weighted average contractual interest rate 11.36 % 11.49 % Weighted average term to maturity (in months) (2) 6.35 6.77 (1) Calculated based on the number of loans.
Although loan origination activity slowed during 2025, we have recently experienced improved demand for new loans and faster portfolio turnover. 9 Our loan portfolio The following table highlights certain information regarding our real estate lending activities for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 Loans originated $ 35,336 $ 41,966 Loans partially or fully repaid $ 40,637 $ 49,090 Mortgage lending revenues $ 8,666 $ 9,689 Mortgage lending expenses $ 1,759 $ 2,339 Number of loans outstanding 88 95 Principal amount of loans earning interest $ 60,674 $ 65,974 Average outstanding loan balance $ 689 $ 694 Percent of loans secured by New York metropolitan area properties, including in New Jersey and Connecticut (1) 93.18 % 95.80 % Weighted average contractual interest rate 11.12 % 11.36 % Weighted average term to maturity (in months) (2) 5.52 6.35 (1) Calculated based on the number of loans.
(“Mizrahi”) whereby Webster, Flushing and Mizrahi have extended us a $32.5 million credit line. Our Competitive Strengths We believe our competitive strengths include: ● Experienced management team. Our management team has successfully originated and serviced a portfolio of real estate mortgage loans generating attractive annual returns under varying economic and real estate market conditions.
Our management team has successfully originated and serviced a portfolio of real estate mortgage loans generating attractive annual returns under varying economic and real estate market conditions.
The following table shows our capitalization, including our financing arrangements, and our loan portfolio as of December 31, 2024: Capitalization ($ in thousands): Debt: Line of credit $ 16,428 Senior secured notes (net of deferred financing costs of $97) 5,903 Total debt 22,331 Other liabilities 2,333 Capital (equity) 43,265 Total sources of capital $ 67,929 Assets: Loans $ 65,974 Other assets 1,955 Total assets $ 67,929 12 Competition The real estate finance market around the New York metropolitan area is highly competitive.
The following table shows our capitalization, including our financing arrangements, and our loan portfolio as of December 31, 2025: Capitalization ($ in thousands): Sources of capital: Lines of credit $ 17,601 Other liabilities, net of deferred origination and other fees 1,650 Capital (equity) 43,100 Total sources of capital $ 62,351 Assets: Loans, net of deferred origination and other fees $ 60,219 Other assets 2,132 Total assets $ 62,351 11 Competition The real estate finance market around the New York metropolitan area is highly competitive.
Currently, we have a credit line with Webster, Flushing, and Mizrahi pursuant to which we are eligible to borrow up to $32.5 million against assignments of mortgages and other collateral (the “Webster Credit Line”), as described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - “Liquidity and Capital Resources” below.
We currently maintain a credit facility with Webster and Flushing pursuant to which are eligible to borrow up to $32.5 million, secured by assignments of mortgages and other collateral (the “Webster Credit Line”), and a credit facility with Valley pursuant to which MBC Funding II is eligible to borrow up to $10.0 million, secured by assignments of mortgages (the “Valley Credit Line”), each as described in Item 7.
We have increased the interest rates charged on our commercial loans in order to offset our increased interest costs.
We have increased the interest rates charged on our commercial loans in order to offset our increased interest costs. In addition, most of our loans contain an adjustable interest rate clause allowing us to charge no less than the prime rate plus 3% on the outstanding loans.
(2) Without giving effect to extension options. 10 At December 31, 2023, no single loan, borrower or group of affiliated borrowers accounted for more than 10% of our loan portfolio. At December 31, 2024, we have made loans to four different entities in the aggregate amount of $7,225,000, or representing 11.0% of our loan portfolio.
(2) Without giving effect to extension options. As of December 31, 2024, we had made loans to four separate entities with an aggregate principal balance of $7,225,000, representing 11.0% of our loan portfolio, and as of December 31, 2025, we had made loans to three separate entities with an aggregate principal balance of $6,245,000, representing 10.3% of our loan portfolio.
(See Note 5 to the financial statements included elsewhere in this Report.) As of December 31, 2024 and March 4, 2025, $16,427,874 and $14,929,239, respectively, was outstanding under the Webster Credit Line.
As of December 31, 2025, borrowings under the Valley Credit Line bore interest at the forward-looking term rate based on SOFR for the applicable interest period (“Term SOFR”), subject to a floor, plus an applicable margin and customary fees, which rate was 6.7%. See Note 5 to the financial statements included elsewhere in this Report.
Removed
The Market Opportunity Real estate investment is a capital-intensive business that relies heavily on debt capital to acquire, develop, improve, construct, renovate and maintain properties.
Added
Most of the loans we make have a stated fixed interest rate, typically ranging from 9% to 12.5% per annum; however, a substantial portion of our loan agreements also include a provision that permits us to charge interest at a rate equal to the greater of (i) the stated loan rate and (ii) the prime rate plus 3.0% on the outstanding principal balance.
Removed
We have registered some of our trademarks and service marks in the United States Patent and Trademark Office including “Manhattan Bridge Capital”. 13 The protective steps we have taken may not deter misappropriation of our proprietary information.
Added
In furtherance of these strategies, we are party to a credit line agreement with Webster Bank, N.A (as successor to Webster Business Credit Corporation) (“Webster”) and Flushing Bank (“Flushing”), pursuant to which Webster and Flushing have provided us with a $32.5 million credit line.
Removed
Investment Company Act Exemption Although we reserve the right to modify our business methods at any time, we are not currently required to register as an investment company under the Investment Company Act.
Added
We are also party to a letter agreement with Valley National Bank (“Valley”), pursuant to which Valley has provided MBC Funding II with a $10.0 million credit line. Our Competitive Strengths We believe our competitive strengths include: ● Experienced management team.
Added
We do not have any adverse credit exposure to, and we do not anticipate that our performance will be negatively impacted by, previously purchased assets.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations – under “Liquidity and Capital Resources”, below.
Added
As of December 31, 2025 and March 24, 2026, $11,558,632 and $13,825,320, respectively, were outstanding under the Webster Credit Line. As of December 31, 2025 and March 24, 2026, an aggregate of $6,042,500 was outstanding under the Valley Credit Line.
Added
Government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

80 edited+22 added−51 removed178 unchanged
Accordingly, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits. 32 Our failure to remain qualified for taxation as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of cash available for distribution to our shareholders.
Accordingly, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits. 32 Our failure to remain qualified for taxation as a REIT would subject us to U.S. federal income tax and applicable state and local income taxes, which would reduce the amount of cash available for distribution to our shareholders.
Other factors that could negatively affect the market price of our common shares include: ● our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; 44 ● actual or perceived conflicts of interest with individuals, including our executive officers; ● equity issuances by us, or share resales by our shareholders, or the perception that such issuances or resales may occur; ● actual or anticipated accounting problems; ● changes in our earnings estimates or publication of research reports about us or the real estate industry; ● changes in market valuations of similar companies; ● adverse market reaction to any increased indebtedness we incur in the future; ● additions to or departures of our key personnel; ● speculation in the press or investment community; ● our failure to meet, or the lowering of, our earnings’ estimates or those of any securities analysts; ● increases in market interest rates, which may lead investors to demand a higher distribution yield for our common shares, would result in increased interest expenses on our debt; ● decreases in market interest rates, which will increase competition in the market for loans and may require use to lower our interest rates and fees for loans we originate; ● changes in the credit markets; ● failure to maintain our qualification for taxation as a REIT or exemption from the Investment Company Act; ● actions by our shareholders; ● price and volume fluctuations in the stock market generally; ● general market and economic conditions, including the current state of the credit and capital markets; ● sales of large blocks of our common shares; ● sales of our common shares by our executive officers, directors and significant shareholders; and ● restatements of our financial results and/or material weaknesses in our internal controls.
Other factors that could negatively affect the market price of our common shares include: ● our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; 41 ● actual or perceived conflicts of interest with individuals, including our executive officers; ● equity issuances by us, or share resales by our shareholders, or the perception that such issuances or resales may occur; ● actual or anticipated accounting problems; ● changes in our earnings estimates or publication of research reports about us or the real estate industry; ● changes in market valuations of similar companies; ● adverse market reaction to any increased indebtedness we incur in the future; ● additions to or departures of our key personnel; ● speculation in the press or investment community; ● our failure to meet, or the lowering of, our earnings’ estimates or those of any securities analysts; ● increases in market interest rates, which may lead investors to demand a higher distribution yield for our common shares, would result in increased interest expenses on our debt; ● decreases in market interest rates, which will increase competition in the market for loans and may require use to lower our interest rates and fees for loans we originate; ● changes in the credit markets; ● failure to maintain our qualification for taxation as a REIT or exemption from the Investment Company Act; ● actions by our shareholders; ● price and volume fluctuations in the stock market generally; ● general market and economic conditions, including the current state of the credit and capital markets; ● sales of large blocks of our common shares; ● sales of our common shares by our executive officers, directors and significant shareholders; and ● restatements of our financial results and/or material weaknesses in our internal controls.
A default could also significantly limit our financing alternatives such that we would be unable to pursue our leverage strategy, which could adversely affect our returns. Under the terms of the agreement governing the Webster Credit Line, our borrowing capacity is limited to 70% of Eligible Mortgage Loans (as defined). Moreover, Webster, in its discretion, may reduce this percentage.
A default could also significantly limit our financing alternatives such that we would be unable to pursue our leverage strategy, which could adversely affect our returns. 30 Under the terms of the agreement governing the Webster Credit Line, our borrowing capacity is limited to 70% of Eligible Mortgage Loans (as defined). Moreover, Webster, in its discretion, may reduce this percentage.
To date, the cybersecurity incident has not had any effect on our ability to meet our financial obligations, including our ability to carry out our operations and business activities. We are constantly exploring new and advanced security protection measures to prevent future cybersecurity incidents. These steps may include working with a cybersecurity consultant as well as potential additional measures.
To date, the cybersecurity incident has not had any effect on our ability to meet our financial obligations, including our ability to carry out our operations and business activities. 21 We are constantly exploring new and advanced security protection measures to prevent future cybersecurity incidents. These steps may include working with a cybersecurity consultant as well as potential additional measures.
We cannot assure you that such claims will not arise or that we will not be subject to significant liability if a claim of this type did arise. 24 An increase in the rate of prepayment of outstanding loans may have an adverse impact on the value of our portfolio as well as our revenue and income.
We cannot assure you that such claims will not arise or that we will not be subject to significant liability if a claim of this type did arise. An increase in the rate of prepayment of outstanding loans may have an adverse impact on the value of our portfolio as well as our revenue and income.
To date, we have not experienced any material impact to the business or operations resulting from information or cybersecurity attacks, including the incident mentioned above; however, because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks, there is the potential for us to be adversely impacted.
To date, we have not experienced any material impact to our business or operations resulting from information or cybersecurity attacks, including the incident mentioned above; however, because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks, there is the potential for us to be adversely impacted.
The percentage of leverage we employ will vary depending on our assessment of a variety of factors, which may include the anticipated liquidity and price volatility of our existing portfolio, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, the availability and cost of financing, our opinion as to the creditworthiness of our financing counterparties, the health of the U.S. economy and commercial mortgage markets, our outlook for the level, slope, and volatility of interest rates, the credit quality of our borrowers and the collateral underlying our assets. 43 Our access to financing will depend upon a number of factors, over which we have little or no control, including: ● general market conditions; ● the market’s view of the quality of our assets; ● the market’s perception of our growth potential; ● our eligibility to participate in and access capital from programs established by the U.S.
The percentage of leverage we employ will vary depending on our assessment of a variety of factors, which may include the anticipated liquidity and price volatility of our existing portfolio, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, the availability and cost of financing, our opinion as to the creditworthiness of our financing counterparties, the health of the U.S. economy and commercial mortgage markets, our outlook for the level, slope, and volatility of interest rates, the credit quality of our borrowers and the collateral underlying our assets. 40 Our access to financing will depend upon a number of factors, over which we have little or no control, including: ● general market conditions; ● the market’s view of the quality of our assets; ● the market’s perception of our growth potential; ● our eligibility to participate in and access capital from programs established by the U.S.
This impact could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action. See Item 1C. “ Cybersecurity ”, for additional information. 22 Risks Related to Our Portfolio Interest rate fluctuations could reduce our ability to generate income and may cause losses.
This impact could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action. See Item 1C. “ Cybersecurity ”, for additional information. Risks Related to Our Portfolio Interest rate fluctuations could reduce our ability to generate income and may cause losses.
In either case, this could adversely impact the performance of the loan and our operating results. Our loans are usually made to entities to enable them to acquire, develop or renovate residential or commercial property, which may involve a greater risk of loss than loans to individual owners of residential real estate.
In either case, this could adversely impact the performance of the loan and our operating results. 26 Our loans are usually made to entities to enable them to acquire, develop or renovate residential or commercial property, which may involve a greater risk of loss than loans to individual owners of residential real estate.
These changes may increase our exposure to interest rate risk, default risk, financing risk and real estate market fluctuations, which could adversely affect our business, operations and financial conditions as well as the value of our securities and our ability to make distributions to our shareholders. Management has broad authority to make lending decisions.
These changes may increase our exposure to interest rate risk, default risk, financing risk and real estate market fluctuations, which could adversely affect our business, operations and financial conditions as well as the value of our securities and our ability to make distributions to our shareholders. 18 Management has broad authority to make lending decisions.
A portion of our loan portfolio requires prepayment fees if a loan is prepaid. However, there can be no assurance that these fees will make us whole for the detriment incurred by virtue of the prepayment. The lack of liquidity in our portfolio may adversely affect our business.
A portion of our loan portfolio requires prepayment fees if a loan is prepaid. However, there can be no assurance that these fees will make us whole for the detriment incurred by virtue of the prepayment. 24 The lack of liquidity in our portfolio may adversely affect our business.
Even if an active trading market develops, the market price of our common shares may be highly volatile and could be subject to wide fluctuations. 38 Risks Related to Our Organization and Structure Certain provisions of New York law could inhibit changes in control.
Even if an active trading market develops, the market price of our common shares may be highly volatile and could be subject to wide fluctuations. Risks Related to Our Organization and Structure Certain provisions of New York law could inhibit changes in control.
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay our loans, which could also cause us to suffer losses. 27 Our inability to promptly foreclose on defaulted loans could increase our costs and/or losses.
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay our loans, which could also cause us to suffer losses. Our inability to promptly foreclose on defaulted loans could increase our costs and/or losses.
The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to shareholders. Defaults on our loans may cause declines in revenues and net income.
The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to shareholders. 28 Defaults on our loans may cause declines in revenues and net income.
In such circumstances, we may be required to: (i) sell assets in adverse market conditions, (ii) borrow on unfavorable terms, (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, (iv) make a taxable distribution of our shares as part of a distribution in which shareholders may elect to receive shares or (subject to a limit measured as a percentage of the total distribution) cash or (v) use cash reserves, in order to comply with the REIT distribution requirements and to avoid corporate income tax and the 4% nondeductible excise tax.
In such circumstances, we may be required to: (i) sell assets in adverse market conditions, (ii) borrow on unfavorable terms, (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, (iv) make a taxable distribution of our shares as part of a distribution in which shareholders may elect to receive shares or (subject to a limit measured as a percentage of the total distribution) cash or (v) use cash reserves, in order to comply with the REIT distribution requirements and to avoid federal income tax and the 4% nondeductible excise tax.
This concentration of ownership could have an adverse impact on the market price of our common shares. There is limited trading in our common shares, which could make it difficult for you to sell your common shares. Our common shares are listed on The Nasdaq Capital Market.
This concentration of ownership could have an adverse impact on the market price of our common shares. 38 There is limited trading in our common shares, which could make it difficult for you to sell your common shares. Our common shares are listed on The Nasdaq Capital Market.
We believe that a change in any one of the following factors could adversely affect our results of operations and impair our ability to pay distributions to our shareholders: ● how we deploy the net proceeds from the sale of securities; ● our ability to make loans at favorable interest rates; ● expenses that reduce our cash flow; ● defaults in our asset portfolio or decreases in the value of our portfolio; and ● the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.
We believe that a change in any one of the following factors could adversely affect our results of operations and impair our ability to pay distributions to our shareholders: ● how we deploy the net proceeds from the sale of securities; ● our ability to make loans at favorable interest rates; ● expenses that reduce our cash flow; ● defaults in our asset portfolio or decreases in the value of our portfolio; and ● the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates. 36 A change in any of these factors could affect our ability to make distributions.
We may incur additional debt, which could exacerbate the risks associated with our leverage. We and our subsidiary may incur substantial additional indebtedness in the future. The covenants in the agreement governing the Webster Credit Line may limit our ability and the ability of our subsidiary to incur additional indebtedness.
We may incur additional debt, which could exacerbate the risks associated with our leverage. We and our subsidiary may incur substantial additional indebtedness in the future. The covenants in the agreement governing the Webster Credit Line and the Valley Credit Line may limit our ability and the ability of our subsidiary to incur additional indebtedness.
To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we are subject to U.S. federal corporate income tax on our undistributed income.
To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we are subject to U.S. federal income tax on our undistributed income.
For example, it could: ● make it more difficult for us to satisfy our obligations; ● increase our vulnerability to adverse changes in general economic, industry and competitive conditions; ● require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; 21 ● limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; ● limit our ability to make material acquisitions or take advantage of business opportunities that may arise; ● expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest; ● expose us to higher costs or interest rates if we extend or refinance such indebtedness and the risk that we will not be able to extend the Webster Credit Line or refinance the Notes on favorable terms or at all; ● place us at a competitive disadvantage compared to our competitors that have less debt; ● limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business plan or other general corporate purposes on reasonable terms or at all; ● reduce the amount of surplus funds distributable by our subsidiary to us for use in our business, such as for the payment of indebtedness and dividends to our shareholders; and ● lead us to elect to make additional investments in our subsidiary if their cash flow from operations is insufficient for them to make payments on their indebtedness.
For example, it could: ● make it more difficult for us to satisfy our obligations; 20 ● increase our vulnerability to adverse changes in general economic, industry and competitive conditions; ● require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; ● limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; ● limit our ability to make material acquisitions or take advantage of business opportunities that may arise; ● expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest; ● expose us to higher costs or interest rates if we extend or refinance such indebtedness and the risk that we will not be able to extend the Webster Credit Line or the Valley Credit Line; ● place us at a competitive disadvantage compared to our competitors that have less debt; ● limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business plan or other general corporate purposes on reasonable terms or at all; ● reduce the amount of surplus funds distributable by our subsidiary to us for use in our business, such as for the payment of indebtedness and dividends to our shareholders; and ● lead us to elect to make additional investments in our subsidiary if their cash flow from operations is insufficient for them to make payments on their indebtedness.
Risks Related to Our Common Shares Our largest shareholder’s interests may not always be aligned with the interests of our other shareholders. As of December 31, 2024, Assaf Ran, our Chief Executive Officer, beneficially owned 22.8% of our outstanding shares. Thus, Mr. Ran currently has and will continue to exercise significant control over all corporate actions.
Risks Related to Our Common Shares Our largest shareholder’s interests may not always be aligned with the interests of our other shareholders. As of December 31, 2025, Assaf Ran, our Chief Executive Officer, beneficially owned 22.8% of our outstanding shares. Thus, Mr. Ran currently has and will continue to exercise significant control over all corporate actions.
Under our current business model, we have one asset class — mortgage loans that we originate, service and manage — and we have no current plans to diversify. Moreover, most of our collateral is located in a limited geographic area. At December 31, 2024, most of our outstanding loans are secured by properties located in the New York metropolitan area.
Under our current business model, we have one asset class — mortgage loans that we originate, service and manage — and we have no current plans to diversify. Moreover, most of our collateral is located in a limited geographic area. At December 31, 2025, most of our outstanding loans are secured by properties located in the New York metropolitan area.
Sales of substantial amounts of common shares or the perception that such sales could occur may adversely affect the prevailing market price for our common shares. 45 We may, from time-to-time, issue common shares and securities convertible into, or exchangeable or exercisable for, common shares to attract or retain key employees or in public offerings or private placements to raise capital.
Sales of substantial amounts of common shares or the perception that such sales could occur may adversely affect the prevailing market price for our common shares. 42 We may, from time-to-time, issue common shares and securities convertible into, or exchangeable or exercisable for, common shares to attract or retain key employees or in public offerings or private placements to raise capital.
Acceleration of our debt to Webster, Flushing and/or Mizrahi could also make it difficult for us to satisfy the requirements necessary to maintain our qualification for taxation as a REIT, significantly reduce our liquidity or require us to sell our assets to repay amounts due and outstanding.
Acceleration of our debt to Webster, Flushing and/or Valley could also make it difficult for us to satisfy the requirements necessary to maintain our qualification for taxation as a REIT, significantly reduce our liquidity or require us to sell our assets to repay amounts due and outstanding.
While we believe that we qualified for taxation as a REIT for the taxable year ended December 31, 2024, we have not requested and do not intend to request a ruling from the IRS that we so qualified in 2023 or that we will qualify in future years.
While we believe that we qualified for taxation as a REIT for the taxable year ended December 31, 2025, we have not requested and do not intend to request a ruling from the IRS that we so qualified in 2024 or that we will qualify in future years.
As of December 31, 2024, Mr. Ran owns 22.8% of our outstanding common shares. In addition, our board of directors may grant such an exemption to such limitations in its sole discretion, subject to such conditions, representations and undertakings as it may determine.
As of December 31, 2025, Mr. Ran owns 22.8% of our outstanding common shares. In addition, our board of directors may grant such an exemption to such limitations in its sole discretion, subject to such conditions, representations and undertakings as it may determine.
We may suffer losses as a result of the adverse impact of any future terrorist attacks and these losses may adversely impact our results of operations. 20 The enactment of the Terrorism Risk Insurance Act of 2002, or the TRIA, and the subsequent enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, which extended TRIA through the end of 2020, which in turn was extended by the Terrorism Risk Insurance Program Reauthorization Act of 2019 through the end of 2027 requires insurers to make terrorism insurance available under their property and casualty insurance policies in order to receive federal compensation under TRIA for insured losses.
We may suffer losses as a result of the adverse impact of any future terrorist attacks and these losses may adversely impact our results of operations. 19 The enactment of the Terrorism Risk Insurance Act of 2002 (the “TRIA”), and the subsequent enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, which extended TRIA through the end of 2020, which in turn was extended by the Terrorism Risk Insurance Program Reauthorization Act of 2019 through the end of 2027 requires insurers to make terrorism insurance available under their property and casualty insurance policies in order to receive federal compensation under TRIA for insured losses.
Concentration of loans to one borrower or a group of affiliated borrowers poses a significant risk, as default would have a material adverse impact on our operating results, cash flow, financial condition and our ability to service our debt. Risks Related to Financing Transactions Our existing credit line has numerous covenants with which we must comply.
Concentration of loans to one borrower or a group of affiliated borrowers poses a significant risk, as default would have a material adverse impact on our operating results, cash flow, financial condition and our ability to service our debt. 29 Risks Related to Financing Transactions Our existing credit lines have numerous covenants with which we must comply.
If property owners are unable to obtain affordable insurance coverage, the value of their properties could decline and in the event of an uninsured loss, we could lose all or a portion of our investment. Our existing credit line has numerous covenants.
If property owners are unable to obtain affordable insurance coverage, the value of their properties could decline and in the event of an uninsured loss, we could lose all or a portion of our investment. Our existing credit lines have numerous covenants.
Average daily trading volume in our common shares was approximately 22,000 and 21,000 shares in 2023 and in 2024, respectively. The lack of liquidity may make it more difficult for you to sell your common shares when you wish to do so.
Average daily trading volume in our common shares was approximately 21,000 and 24,000 shares in 2024 and in 2025, respectively. The lack of liquidity may make it more difficult for you to sell your common shares when you wish to do so.
Thus, changes in interest rates will affect our revenue and net income in one or more of the following ways: ● an increase or continued high level in the SOFR rate impacts our cost of borrowing under the Webster Credit Line and may impact any replacement thereof or refinancing of the Notes; ● our operating expenses may increase; ● our ability to originate loans may be adversely impacted; ● to the extent we use our credit line or other forms of debt financing to originate loans, our borrowing costs would rise, reducing the “spread” between our cost of funds and the yield on our outstanding mortgage loans, which tend to be fixed rate obligations; ● a rise in, or high level of, interest rates may discourage potential borrowers from refinancing existing loans or defer plans to renovate or improve their properties; ● a drop in interest rates may reduce our revenues by requiring us to reduce the interest rates we charge potential borrowers; ● borrower default rates may increase; ● property values may be negatively impacted, making our existing loans riskier and new loans that we originate smaller; and ● rising or continued high interest rates could also result in reduced turnover of properties which may reduce the demand for new mortgage loans.
Thus, changes in interest rates will affect our revenue and net income in one or more of the following ways: ● an increase or continued high level in the SOFR rate impacts our cost of borrowing under the Webster Credit Line and the Valley Credit Line; ● our operating expenses may increase; ● our ability to originate loans may be adversely impacted; ● to the extent we use our credit lines or other forms of debt financing to originate loans, our borrowing costs would rise, reducing the “spread” between our cost of funds and the yield on our outstanding mortgage loans, which tend to be fixed rate obligations; ● a rise in, or high level of, interest rates may discourage potential borrowers from refinancing existing loans or defer plans to renovate or improve their properties; ● a drop in interest rates may reduce our revenues by requiring us to reduce the interest rates we charge potential borrowers; ● borrower default rates may increase; ● property values may be negatively impacted, making our existing loans riskier and new loans that we originate smaller; and ● rising or continued high interest rates could also result in reduced turnover of properties which may reduce the demand for new mortgage loans. 22 Rising, declining, or volatile interest rates may reduce our profitability and may cause losses.
If we are unable to comply with these covenants, or obtain necessary waivers, the outstanding amount of the loan could become due and payable.
If we are unable to comply with these covenants, or obtain necessary waivers, the outstanding amount of our loans could become due and payable.
In addition, distributions that we make to our shareholders will generally be taxable to our shareholders as ordinary income (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the Code, which is generally available to our noncorporate U.S. shareholders that meet specified holding requirement for taxable years before 2026).
In addition, distributions that we make to our shareholders will generally be taxable to our shareholders as ordinary income (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the Code, which is generally available to our noncorporate U.S. shareholders that meet specified holding requirements).
Risks Related to Our Business Our loan origination activities, revenues and profits are limited by available funds. If we do not increase our working capital, we will not be able to grow our business. As a real estate finance company, our revenue and net income is limited to interest and other fees received or accrued on our loan portfolio.
Risks Related to Our Business Our loan origination activities, revenues and profits are limited by available funds. If we do not increase our working capital, we will not be able to grow our business. As a real estate finance company, our revenues and net income are derived primarily from interest and fees received or accrued on our loan portfolio.
However, for tax years beginning before 2026, REIT dividends paid to noncorporate U.S. shareholders that meet specified holding requirement are generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction under the Code for specified forms of income from passthrough entities.
However, REIT dividends paid to noncorporate U.S. shareholders that meet specified holding requirements are generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction under the Code for specified forms of income from passthrough entities.
The price of our common shares is volatile, and purchasers of our common shares could incur substantial losses. Historically, the price at which our common shares trade on The Nasdaq Capital Market has been volatile and seemingly unrelated to our operating performance. In 2023, the range was $4.27 to $5.91. In 2024, the range was $4.60 to $5.90.
The price of our common shares is volatile, and purchasers of our common shares could incur substantial losses. Historically, the price at which our common shares trade on The Nasdaq Capital Market has been volatile and seemingly unrelated to our operating performance. In 2024, the range was $4.60 to $5.90. In 2025, the range was $4.29 to $6.05.
If any of these or similar events occur, the amount of coverage may not be sufficient to replace a damaged or destroyed property and/or to repay in full the amount due on loans collateralized by such property.
If any of these or similar events occur, the amount of coverage may not be sufficient to replace a damaged or destroyed property and/or to repay in full the amount due on loans collateralized by such property. As a result, our returns and the value of our investment may be reduced.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks Relating to Our Business ● our loan origination activities, revenues and profits are limited by available funds; ● the competitive real estate lending market and competition; ● our investment, leverage and financing strategies; ● the broad authority of our management team in making lending decisions and their importance to our business; ● the impact of potential security breaches; Risks Related to Our Portfolio ● the impact of interest rates on our borrowing and business and the requirement to meet covenants contained in our credit line facility; ● the impact of overestimating loan yields or the value of collateral and interest rate fluctuations; ● market conditions for mortgages and mortgage-related assets; ● extension of existing loans; ● potential lender liability claims; ● the impact of the timing of prepayment of loans; ● the liquidity of our loan portfolio; 16 ● the geographic concentration of our loan portfolio; ● our exposure to economic slowdowns or recessions; ● our ability to foreclose as promptly as may be necessary; ● potential liability relating to environmental matters; ● loan defaults; ● casualty events occurring on properties securing our loans; ● borrower concentration; Risks Related to Financing Transactions ● complying with covenants in our existing credit line; ● our use of leverage; Risks Related to REIT Status and Investment Company Act Exemption ● potential challenges by the Internal Revenue Service (the “IRS”); ● compliance with REIT requirements, including REIT distribution requirements; ● potential tax liabilities and our reliance on tax and legal advice on our REIT status; ● the impact of our distributions and the tax impact of our dividend payments; ● the impact of the liquidation of our assets; ● the ownership restrictions set forth in our restated certificate of incorporation; ● our ability to generate sufficient cash flow to make distributions; ● the impact of being deemed an investment company under the Investment Company Act; Risks Related to Our Common Shares ● the potential for our largest shareholder’s interests not aligning with those of our other shareholders; Risks Related to Our Organization and Structure ● the impact of certain provisions of New York law; ● our capital structure may prevent a change in control and the limited rights of shareholders to take action against our officers and directors; Risks Related to the Notes issued by MBC Funding II ● our shareholders and noteholders may not have aligned interests; ● the restrictive covenants in the indenture (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 Trustee”) relating to the Notes issued to certain noteholders (the Noteholders”); 17 ● the potential lack of protection against certain events that may impact the obligations under the Notes; ● our inherent conflict of interest with MBC Funding II; ● the potential lack of ability of the Indenture Trustee and Noteholders to enforce their rights; ● the impact of bankruptcy on us or MBC Funding II; ● the ability to make the required payments of interest and principal on the Notes or to refinance the Notes before their maturity; General Risk Factors ● access to financing; ● the limited trading and volatility in our common stock; ● future events that may impact the price of our common stock; and ● future offerings may adversely affect the market and our stockholders.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks Relating to Our Business ● our loan origination activities, revenues and profits are limited by available funds; ● the competitive real estate lending market and competition; ● our investment, leverage and financing strategies; 15 ● the broad authority of our management team in making lending decisions and their importance to our business; ● the impact of potential security breaches; Risks Related to Our Portfolio ● the impact of interest rates on our borrowing and business and the requirement to meet covenants contained in our credit line facilities; ● the impact of overestimating loan yields or the value of collateral and interest rate fluctuations; ● market conditions for mortgages and mortgage-related assets; ● extension of existing loans; ● potential lender liability claims; ● the impact of the timing of prepayment of loans; ● the liquidity of our loan portfolio; ● the geographic concentration of our loan portfolio; ● our exposure to economic slowdowns or recessions; ● our ability to foreclose as promptly as may be necessary; ● potential liability relating to environmental matters; ● loan defaults; ● casualty events occurring on properties securing our loans; ● borrower concentration; Risks Related to Financing Transactions ● complying with covenants in our existing credit lines; ● our use of leverage; Risks Related to REIT Status and Investment Company Act Exemption ● potential challenges by the Internal Revenue Service (the “IRS”); ● compliance with REIT requirements, including REIT distribution requirements; ● potential tax liabilities and our reliance on tax and legal advice on our REIT status; ● the impact of our distributions and the tax impact of our dividend payments; ● the impact of the liquidation of our assets; ● the ownership restrictions set forth in our restated certificate of incorporation; ● our ability to generate sufficient cash flow to make distributions; ● the impact of being deemed an investment company under the Investment Company Act; 16 Risks Related to Our Common Shares ● the potential for our largest shareholder’s interests not aligning with those of our other shareholders; Risks Related to Our Organization and Structure ● the impact of certain provisions of New York law; ● our capital structure may prevent a change in control and the limited rights of shareholders to take action against our officers and directors; General Risk Factors ● access to financing; ● the limited trading and volatility in our common stock; ● future events that may impact the price of our common stock; and ● future offerings may adversely affect the market and our stockholders.
As a result, our returns and the value of our investment may be reduced. 29 Borrower concentration could lead to significant losses, which could have a material adverse impact on our operating results and financial condition. A single borrower or a group of affiliated borrowers may account for more than 10% of our loan portfolio.
Borrower concentration could lead to significant losses, which could have a material adverse impact on our operating results and financial condition. A single borrower or a group of affiliated borrowers may account for more than 10% of our loan portfolio.
Our restated certificate of incorporation authorizes us to issue up to 25,000,000 common shares and 5,000,000 preferred shares. As of March 4, 2025, we had 11,757,058 common shares issued and 11,438,651 common shares outstanding and no preferred shares issued or outstanding.
Our restated certificate of incorporation authorizes us to issue up to 25,000,000 common shares and 5,000,000 preferred shares. As of March 24, 2026, we had 11,757,058 common shares issued and 11,429,351 common shares outstanding and no preferred shares issued or outstanding.
A default by one borrower in a group is likely to result in a default by the other borrowers in the group. At December 31, 2024, we have made loans to four different entities in the aggregate amount of $7.2 million or representing 11.0% of our loan portfolio.
A default by one borrower in a group is likely to result in a default by the other borrowers in the group. At December 31, 2025, we have made loans to three different entities in the aggregate amount of $6.2 million or representing 10.3% of our loan portfolio.
More favorable rates will nevertheless continue to apply to regular corporate “qualified” dividends, which may cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends.
More favorable rates will nevertheless continue to apply to regular corporate “qualified” dividends, which may cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends. This could have an adverse impact on the market price of our common shares.
These factors include, without limitation, state foreclosure timelines and deferrals associated therewith (including with respect to litigation); unauthorized occupants living in the property; federal, state or local legislative action or initiatives designed to provide residential property owners with assistance in avoiding foreclosures and that serve to delay the foreclosure process; government programs that require specific procedures to be followed to explore the refinancing of a residential mortgage loan prior to the commencement of a foreclosure proceeding; and continued declines in real estate values and sustained high levels of unemployment that increase the number of foreclosures and place additional pressure on the already overburdened judicial and administrative systems.
These factors include, without limitation, state foreclosure timelines and deferrals associated therewith (including with respect to litigation); unauthorized occupants living in the property; federal, state or local legislative action or initiatives designed to provide residential property owners with assistance in avoiding foreclosures and that serve to delay the foreclosure process; government programs that require specific procedures to be followed to explore the refinancing of a residential mortgage loan prior to the commencement of a foreclosure proceeding; and continued declines in real estate values and sustained high levels of unemployment that increase the number of foreclosures and place additional pressure on the already overburdened judicial and administrative systems. 27 Our loans are typically not funded with interest reserves and our borrowers may be unable to pay the interest accruing on the loans when due, which could have a material adverse impact on our financial condition.
Our use of leverage may adversely affect the return on our assets and may reduce cash available for distribution to our shareholders, as well as increase losses when economic conditions are unfavorable.
Any such actions could adversely affect our liquidity, financial condition, and ability to grow our business. Our use of leverage may adversely affect the return on our assets and may reduce cash available for distribution to our shareholders, as well as increase losses when economic conditions are unfavorable.
A default could also significantly limit our financing alternatives such that we would be unable to pursue our leverage strategy, which could adversely affect our returns. Our indebtedness could adversely affect our financial flexibility and our competitive position. We have, and expect that we will continue to have a significant amount of indebtedness.
A default could also materially limit our financing alternatives, impair our ability to execute our leverage strategy and adversely affect our returns. Our indebtedness could adversely affect our financial flexibility and our competitive position. We have, and expect that we will continue to have a significant amount of indebtedness.
To the extent that our portfolio is concentrated in one region and/or one type of asset, downturns relating generally to such region or type of asset may result in defaults on a number of our assets within a short time period, which may reduce our net income and the value of our securities and accordingly reduce our ability to make distributions to our shareholders. 25 A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could impair our investments and harm our operations.
To the extent that our portfolio is concentrated in one region and/or one type of asset, downturns relating generally to such region or type of asset may result in defaults on a number of our assets within a short time period, which may reduce our net income and the value of our securities and accordingly reduce our ability to make distributions to our shareholders.
We may also be required to register as an investment company if we are unable to dispose of the disqualifying assets, which could have a material adverse effect on us. 37 Registration under the Investment Company Act would require us to comply with a variety of substantive requirements that impose, among other things: ● limitations on capital structure; ● restrictions on specified investments; ● restrictions on leverage or senior securities; ● restrictions on unsecured borrowings; ● prohibitions on transactions with affiliates; and ● compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.
Registration under the Investment Company Act would require us to comply with a variety of substantive requirements that impose, among other things: ● limitations on capital structure; ● restrictions on specified investments; ● restrictions on leverage or senior securities; ● restrictions on unsecured borrowings; ● prohibitions on transactions with affiliates; and ● compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.
Difficult conditions in the markets for mortgages and mortgage-related assets as well as the broader financial markets have resulted in a significant contraction in liquidity for mortgages and mortgage-related assets, which may adversely affect the value of the assets that we intend to originate.
Losses and write-offs could materially and adversely affect our business, operations and financial condition and the market price of our securities. 23 Difficult conditions in the markets for mortgages and mortgage-related assets as well as the broader financial markets have resulted in a significant contraction in liquidity for mortgages and mortgage-related assets, which may adversely affect the value of the assets that we intend to originate.
If we fail to meet or satisfy any of these covenants, or fail to obtain a waiver in the event we do fail to meet or satisfy any of these covenants, we would be in default under our agreement with Webster, Flushing and Mizrahi, and Webster, Flushing and/or Mizrahi could elect to declare outstanding amounts due and payable, terminate its commitments to us, require us to post additional collateral and/or enforce their interests against existing collateral.
If we fail to meet or satisfy any of these covenants, we would be in default under the terms of the Webster Credit Line or the Valley Credit Line and the lenders could elect to declare outstanding amounts due and payable, terminate the commitments to us, require us to post additional collateral and/or enforce their interests against existing collateral.
In conducting periodic reviews, our board of directors will rely primarily on information provided to them by management. 19 Our Chief Executive Officer and Chief Financial Officer are each critical to our business and our future success may depend on our ability to retain them. In addition, as our business grows we will need to hire additional personnel.
Our Chief Executive Officer and Chief Financial Officer are each critical to our business and our future success may depend on our ability to retain them. In addition, as our business grows we will need to hire additional personnel.
Thus, we rely on the borrowers to make interest payments as and when due from other sources of cash.
Our loans are typically not funded with an interest reserve. Thus, we rely on the borrowers to make interest payments as and when due from other sources of cash.
These estimates and judgments are based on a number of factors, including projected cash flows from the collateral securing our mortgage loans, if any, loan structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, the relative strength or weakness of the refinancing market and expected market discount rates for varying property types.
Our evaluation of expected credit losses and collectability is based on a number of factors, which may include projected cash flows from collateral securing our loans (if any), loan structure (including the availability of reserves and recourse guarantees), the borrower’s ability and willingness to repay, the likelihood of repayment or refinancing at maturity, the relative strength or weakness of the refinancing market, and expected market discount rates for varying property types.
The Webster Credit Line contains various covenants and restrictions that are typical for these kinds of credit facilities, including limiting the amount that we can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans we make to our customers.
We have a $32.5 million credit line with Webster and Flushing that expires on February 28, 2029 and a $10.0 million credit line with Valley that expires on December 12, 2027, The Webster Credit Line and the Valley Credit Line contain various covenants and restrictions that are typical for these kinds of credit facilities, including limiting the amount that we can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans we make to our customers.
The Webster Credit Line imposes certain restrictions which may adversely impact our ability to grow and/or maintain our qualification for taxation as a REIT.
The Webster Credit Line and the Valley Credit Line impose certain restrictions which may adversely impact our ability to grow and/or maintain our qualification for taxation as a REIT. Certain of these restrictions apply to both facilities, while others apply only to specific facilities.
The ownership restrictions set forth in our restated certificate of incorporation may not prevent five or fewer shareholders from owning 50% or more of our outstanding shares of capital stock causing us to lose our status as a REIT, which may inhibit market activity in our common shares and restrict our business combination opportunities.
In addition, we may be subject to a 100% tax on any gain realized from the sale of assets that are treated as inventory or property held primarily for sale to customers in the ordinary course of business. 35 The ownership restrictions set forth in our restated certificate of incorporation may not prevent five or fewer shareholders from owning 50% or more of our outstanding shares of capital stock causing us to lose our status as a REIT, which may inhibit market activity in our common shares and restrict our business combination opportunities.
Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to originate new loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to make distributions to our shareholders.
Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to originate new loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to make distributions to our shareholders. 25 We evaluate expected credit losses under Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (ASU Topic 326), and our allowance for credit losses was zero as of December 31, 2025.
This could have an adverse impact on the market price of our common shares. 35 Liquidation of our assets may jeopardize our qualification for taxation as a REIT. To qualify for taxation as a REIT, we must comply with requirements regarding our assets and our sources of income.
Liquidation of our assets may jeopardize our qualification for taxation as a REIT. To qualify for taxation as a REIT, we must comply with requirements regarding our assets and our sources of income.
If our estimates and judgments are not correct, our results of operations and financial condition could be severely impacted. 26 Our due diligence may not reveal all of a borrower’s liabilities and may not reveal other weaknesses in its business.
If our estimates and judgments are incorrect, or if economic and market conditions deteriorate, we could experience losses on our loan portfolio and our results of operations and financial condition could be adversely impacted. Our due diligence may not reveal all of a borrower’s liabilities and may not reveal other weaknesses in its business.
Any significant acquisition by us of non-real estate assets without the acquisition of substantial real estate assets could cause us to meet the definitions of an “investment company.” If we are deemed to be an investment company, we could be required to dispose of non-real estate assets or a portion thereof, potentially at a loss, in order to qualify for the Section 3(c)(5)(C) exception.
Such changes may prevent us from operating our business successfully. 37 If we are deemed to be an investment company, we could be required to dispose of non-real estate assets or a portion thereof, potentially at a loss, in order to qualify for the Section 3(c)(5)(C) exception.
If we are unable to comply with these covenants, the outstanding amount of the loan could become due and payable and we may have to sell off a portion of our loan portfolio to pay off the debt. We have a $32.5 million credit line with Webster, Flushing and Mizrahi that expires on February 28, 2026.
If we are unable to comply with these covenants, the outstanding amounts of our loans could become due and payable and we may have to sell off a portion of our loan portfolio to pay off the debt.
In addition, in the event of the bankruptcy of the borrower, we may not have full recourse to the assets of the borrower, or the assets of the borrower or the guarantor may not be sufficient to satisfy the debt. 28 Liability relating to environmental matters may impact the value of properties that we may acquire or the properties underlying our investments.
In addition, in the event of the bankruptcy of the borrower, we may not have full recourse to the assets of the borrower, or the assets of the borrower or the guarantor may not be sufficient to satisfy the debt.
Our board of directors may periodically review our underwriting guidelines but will not, and will not be required to, review all of our proposed loans.
Our board of directors may periodically review our underwriting guidelines but will not, and will not be required to, review all of our proposed loans. In conducting periodic reviews, our board of directors will rely primarily on information provided to them by management.
New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to remain qualified for taxation as a REIT or the tax consequences of such qualification. 36 We may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future.
We cannot predict how changes in the tax laws might affect us or our shareholders. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to remain qualified for taxation as a REIT or the tax consequences of such qualification.
We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. 18 We may change our investment, leverage, financing and operating strategies, policies or procedures without shareholder consent, which may adversely affect the market value of our common shares and our ability to make distributions to shareholders.
We may change our investment, leverage, financing and operating strategies, policies or procedures without shareholder consent, which may adversely affect the market value of our common shares and our ability to make distributions to shareholders.
Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
Liability relating to environmental matters may impact the value of properties that we may acquire or the properties underlying our investments. Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property.
These limitations include the following: ● limit our ability to pay dividends under certain circumstances; ● limit our ability to make certain investments or acquisitions; ● limit our ability to reduce liquidity below certain levels; ● limit our ability to redeem debt or equity securities; ● limit our ability to determine our operating policies and investment strategies; and ● limit our ability to repurchase our common shares, sell assets, engage in mergers or consolidations, grant liens and enter into transactions with affiliates. 30 If we fail to meet or satisfy any of these covenants, we would be in default under our agreement with Webster, Flushing and Mizrahi and they could elect to declare outstanding amounts due and payable, terminate its commitments to us, require us to post additional collateral and/or enforce their interests against existing collateral.
These limitations include the following: ● limit our ability to pay dividends under certain circumstances; ● limit our ability to make certain investments or acquisitions; ● limit our ability to reduce liquidity below certain levels; ● limit our ability to redeem debt or equity securities; ● limit our ability to determine our operating policies and investment strategies; and ● limit our ability to repurchase our common shares, sell assets, engage in mergers or consolidations, grant liens and enter into transactions with affiliates.
The presence of hazardous substances may adversely affect an owner’s ability to sell real estate or borrow using real estate as collateral.
These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances may adversely affect an owner’s ability to sell real estate or borrow using real estate as collateral.
Our ability to make distributions may be adversely affected by a number of factors, including the risk factors described in this Report.
We intend to satisfy this requirement through quarterly distributions of all or substantially all of our REIT taxable income in such year, subject to certain adjustments. Our ability to make distributions may be adversely affected by a number of factors, including the risk factors described in this Report.
This level of indebtedness and the pending maturity of such indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of the indebtedness. Our indebtedness could have other important consequences to you and significantly impact our business.
As of March 24, 2026, we have approximately $22.6 million available under the credit lines. This level of indebtedness and the pending maturity of such indebtedness increase the risk that we may be unable to generate sufficient cash to pay amounts due in respect of our indebtedness.
These requirements make it more difficult to change our management by removing and replacing directors and may prevent a change in control of our company that is in the best interests of our shareholders. Risks Related to the Notes issued by MBC Funding II Shareholders’ interests may not always be aligned with the interests of the Noteholders.
These requirements make it more difficult to change our management by removing and replacing directors and may prevent a change in control of our company that is in the best interests of our shareholders. General Risk Factors Our access to financing may be limited and, thus, our ability to maximize our returns may be adversely affected.
As of December 31, 2024, we had approximately $22.4 million of debt outstanding, consisting of the amounts outstanding under the Webster Credit Line and the balance of the Notes. The Webster Credit Line expires in 2026, and the Notes mature in April 2026. As of March 4, 2025, another $17.6 million was available under the Webster Credit Line.
As of December 31, 2025, we had approximately $17.6 million of debt outstanding, consisting of the amounts outstanding under the Webster Credit Line and Valley Credit Line. The Webster Credit Line expires on February 28, 2029, and the Valley Credit Line expires on December 12, 2027.
Our ability to originate real estate loans is limited by the funds at our disposal. As of March 4, 2025, we had approximately $17.6 million of borrowing availability under the Webster Credit Line that expires on February 28, 2026.
Our ability to originate real estate loans depends on the funds available to us. As of March 24, 2026, we had approximately $22.6 million of aggregate available borrowing capacity under the Webster Credit Line and the Valley Credit Line, which mature on February 28, 2029 and December 12, 2027, respectively.
This would significantly harm our business, financial condition, results of operations and ability to make distributions and could result in the foreclosure of our assets which secure our obligations, which could cause the value of our outstanding securities to decline.
Any such action could materially reduce our liquidity, require us to sell assets to repay outstanding indebtedness, materially and adversely affect our business, financial condition, results of operations and ability to make distributions, and cause the value of our outstanding securities to decline.
We operate in a highly competitive market and competition may limit our ability to originate loans with favorable interest rates.
However, if demand for our mortgage loans increases, we cannot assure you that we will be able to meet that demand in light of the limited funds available to us for loan originations. 17 We operate in a highly competitive market and competition may limit our ability to originate loans with favorable interest rates.
As a REIT, we are required to distribute to our shareholders at least 90% of our REIT taxable income each year. We intend to satisfy this requirement through quarterly distributions of all or substantially all of our REIT taxable income in such year, subject to certain adjustments.
We may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future. As a REIT, we are required to distribute to our shareholders at least 90% of our REIT taxable income each year.
We do not carry any loan loss reserves. If we are required to write-off all or a portion of any loan in our portfolio, our net income will be adversely impacted. Loan loss reserves are particularly difficult to estimate in a turbulent economic environment.
If we are required to record credit losses or write off all or a portion of any loan in our portfolio, our net income will be adversely impacted. We evaluate expected credit losses on our loans receivable in accordance with ASU Topic 326. Our allowance for credit losses was zero as of December 31, 2025.
The Webster Credit Line contains various covenants and restrictions that are typical for these kinds of credit facilities, including limiting the amount that we can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans we make to our customers.
The Webster Credit Line and the Valley Credit Line contain customary covenants and restrictions, including limitations on borrowings based on the value of the underlying collateral, requirements to maintain specified financial ratios and restrictions on the terms of loans we may originate.
In addition, in the future we may enter into financing arrangements that may be determined by reference to floating rates, such as SOFR or a Treasury index, and the amount of the cost of borrowing may depend on the level and movement of interest rates. The U.S. Federal Reserve had raised interest rates significantly since March 2022.
Our borrowings under the Webster Credit Line and the Valley Credit Line are based on SOFR and therefore expose us to changes in short-term interest rates. In addition, we may enter into other financing arrangements that reference floating-rate benchmarks such as SOFR or a Treasury index.
However, in the event of additional increases in, or sustained high levels of, interest rates, our borrowing costs would increase further or remain elevated which would adversely affect our results of operations and financial condition and may negatively impact our distributions to shareholders. 23 If we overestimate the yields on our loans or incorrectly value the collateral securing the loan, we may experience losses.
If interest rates rise, decline further, or continue to be volatile, we may experience reduced loan originations, increased delinquencies or defaults, or losses, and our earnings and cash available for distribution to shareholders may be adversely affected. If we overestimate the yields on our loans or incorrectly value the collateral securing the loan, we may experience losses.
We do not believe there will be any issues in extending the Webster Credit Line or securing a similar line from another bank before its expiration, and we plan to refinance the Notes prior to their maturity, though we cannot assure you that we will be successful in doing so on favorable terms or at all.
Although we do not currently anticipate any difficulty in extending these credit lines or obtaining a comparable credit facility from another lender prior to their respective maturities, there can be no assurance that we will be able to do so on acceptable terms, or at all.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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In addition, we regularly review cybersecurity trends and, partially as a result of our prior cybersecurity exposure, have moved some of our internal servers to off-site locations. 46 Risk Management and Strategy As one of the critical elements of our overall ERM approach, our cybersecurity efforts are focused on the following key areas: ● Governance: Management oversees cybersecurity risk mitigation and reports to the board of directors any cybersecurity incidents.
In addition, we regularly review cybersecurity trends and, partially as a result of our prior cybersecurity exposure, have moved some of our internal servers to off-site locations. 43 Risk Management and Strategy As one of the critical elements of our overall ERM approach, our cybersecurity efforts are focused on the following key areas: ● Governance: Management oversees cybersecurity risk mitigation and reports to the board of directors any cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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We believe this facility is adequate to meet our requirements at our current level of business activity. Item 3. Legal Proceedings None. Item 4. Mine Safety Disclosure Not applicable. PART II
We believe this facility is adequate to meet our requirements at our current level of business activity. Item 3. Legal Proceedings None. Item 4. Mine Safety Disclosure Not applicable. 44 PART II
Item 2. Properties Our executive and principal operating office is located in Great Neck, New York. We use this space for all of our operations. This space is occupied under a lease, as amended, that expires November 30, 2027. The current monthly rent is $5,330, including electricity and real estate taxes.
Item 2. Properties Our executive and principal operating office is located in Great Neck, New York. We use this space for all of our operations. This space is occupied under a lease, as amended, that expires November 30, 2027. The current monthly rent is $5,475, including electricity and real estate taxes.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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As a REIT, our distributions generally will be taxable as ordinary income to our shareholders (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the Code, which is generally available to our noncorporate U.S. shareholders that meet specified holding requirement for taxable years before 2026), although we may designate a portion of the distributions as qualified dividend income or capital gain or a portion of the distributions may constitute a return of capital.
As a REIT, our distributions generally will be taxable as ordinary income to our shareholders (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the Code, which is generally available to our noncorporate U.S. shareholders that meet specified holding requirements), although we may designate a portion of the distributions as qualified dividend income or capital gain or a portion of the distributions may constitute a return of capital.
For tax reporting purposes, taxable income dividends/distributions and non-taxable return of capital distributions may result and will be reported as such to U.S. individual taxpayers on Form 1099-DIV. For the tax year of 2024, 100% of our total distributions are characterized as non-qualified dividends (Section 199A). Item 6. [Reserved.]
For tax reporting purposes, taxable income dividends/distributions and non-taxable return of capital distributions may result and will be reported as such to U.S. individual taxpayers on Form 1099-DIV. For the tax year of 2025, 100% of our total distributions are characterized as non-qualified dividends (Section 199A).
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. Holders As of March 4, 2025, the number of registered holders of our common shares was 10 and the estimated number of beneficial owners of our common shares was approximately 6,400.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. Holders As of March 24, 2026, the number of registered holders of our common shares was 10 and the estimated number of beneficial owners of our common shares was approximately 6,000. Equiniti Trust Company, LLC serves as transfer agent for our common shares.
Equiniti Trust Company, LLC serves as transfer agent for our common shares. 47 Dividends We elected to be taxed as a REIT commencing with our year ended December 31, 2014.
Dividends We elected to be taxed as a REIT commencing with our year ended December 31, 2014.
Added
Issuer Purchases of Equity Securities On November 20, 2025, our board of directors authorized a share repurchase program authorizing the repurchase of up to 100,000 shares of our common stock in the next twelve months. As of December 31, 2025, we repurchased an aggregate of 6,200 shares under this repurchase program, at an aggregate cost of approximately $29,000.
Added
An additional 3,100 shares were repurchased between January 1, 2026 and March 24, 2026, in the aggregate cost of approximately $14,000. As set forth in the table below, during the quarter ended December 31, 2025, we repurchased 6,200 of our common shares under the share buyback program at an aggregate cost of $28,558.
Added
ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 2025 — $ — — — November 2025 5,200 $ 4.58 5,200 94,800 December 2025 1,000 $ 4.76 1,000 93,800 Total 6,200 $ 4.61 6,200 93,800 45 Item 6. [Reserved.]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Actual losses, if any, could differ significantly from estimated amounts. We continually monitor events and changes in circumstances that could indicate that the carrying amounts of long-lived assets, including intangible assets, may not be recoverable.
Actual losses, if any, could differ significantly from estimated amounts. 48 We continually monitor events and changes in circumstances that could indicate that the carrying amounts of long-lived assets, including intangible assets, may not be recoverable.
As a REIT, we are required to distribute at least 90% of our REIT taxable income to our shareholders on an annual basis. 48 In order to maintain our qualification for taxation as a REIT, we are required to distribute at least 90% of our REIT taxable income to our shareholders each year.
As a REIT, we are required to distribute at least 90% of our REIT taxable income to our shareholders on an annual basis. In order to maintain our qualification for taxation as a REIT, we are required to distribute at least 90% of our REIT taxable income to our shareholders each year.
The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. All loans, except for one with a face value of approximately $47,000, are secured by a first mortgage lien on real estate.
The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. All loans, except for one loan with a current outstanding principal balance of approximately $22,000, are secured by a first mortgage lien on real estate.
In 2024, approximately $8,047,000 of our revenue represents interest income on secured, real estate loans that we offer to real estate investors, compared to approximately $7,976,000 in 2023, and approximately $1,642,000 represents origination fees on such loans, compared to approximately $1,820,000 in 2023.
In 2025, approximately $7,175,000 of our revenue represented interest income on secured, real estate loans that we offer to real estate investors, compared to approximately $8,047,000 in 2024, and approximately $1,491,000 represented origination fees on such loans, compared to approximately $1,642,000 in 2024.
We believe that our flexibility in terms of meeting the needs of 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.
We believe that our flexibility in terms of meeting the needs of 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. 47 A principal source of new transactions has been repeat business from prior customers and their referral of new business.
Results of operations Years ended December 31, 2024 and 2023 Total revenue Total revenue for the year ended December 31, 2024, was approximately $9,689,000, compared to approximately $9,796,000 for the year ended December 31, 2023, a decrease of $107,000, or 1.1%.
Results of operations Years ended December 31, 2025 and 2024 Total revenue Total revenue for the year ended December 31, 2025, was approximately $8,666,000, compared to approximately $9,689,000 for the year ended December 31, 2024, a decrease of $1,023,000, or 10.6%.
Critical Accounting Policies and Use of Estimates The preparation of financial statements in conformity with U.S. 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 amounts of revenues and expenses during the reporting period.
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 amounts of revenues and expenses during the reporting period.
Our loans typically have a maximum initial term of 12 months bearing interest at a fixed rate of 9% to 13% per year, except for one loan issued in June 2024, which had an initial interest rate of 11.5% that was reduced to 7.25% on January 2, 2025, for a period of up to one year.
Our loans typically have a maximum initial term of 12 months bearing interest at a fixed rate of 9% to 12.5% per year, except for one loan issued in June 2024, which initially bore interest at 11.5% per annum and, effective January 2, 2025, was modified to bear interest at 7.25% per annum for an extension term of up to one year, which term was subsequently extended for an additional year.
General and administrative expenses General and administrative expenses for the year ended December 31, 2024, were approximately $1,776,000, compared to approximately $1,825,000 for the year ended December 31, 2023, a decrease of $49,000, or 2.7%.
General and administrative expenses General and administrative expenses for the year ended December 31, 2025, were approximately $1,814,000, compared to approximately $1,776,000 for the year ended December 31, 2024, an increase of approximately $38,000, or 2.1%.
In that instance, the buyer of the 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.
In that instance, the buyer of the 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. In October 2023, we received the entire payoff amount for the loan receivable, including all unpaid fees, to rectify the situation.
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.
Under the Amended and Restated Credit Agreement, we may repurchase, redeem or otherwise retire our equity securities in an amount not to exceed ten percent of our annual net income from the prior fiscal year. The Webster Credit Line also includes restrictions, subject to negotiated exceptions, on additional indebtedness and other restricted payments. In addition, Mr.
The ASU introduced a new credit loss methodology, Current Expected Credit Losses (“CECL”), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Management estimates our CECL reserve primarily using the Weighted Average Remaining Maturity (“WARM”) method, which requires reference to historic loss data taking into consideration expected economic conditions over the relevant timeframe.
Management estimates our CECL reserve primarily using the Weighted Average Remaining Maturity (“WARM”) method, which requires reference to historic loss data taking into consideration expected economic conditions over the relevant timeframe.
The interest rates relating to the Webster Credit Line equal (i) SOFR plus a premium, which rate aggregated approximately 8.0%, including a 0.5% agency fee, as of December 31, 2024, 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.
As of December 31, 2025, borrowings under the Webster Credit Line bore interest, at our election for each drawdown, at either (i) SOFR plus an applicable premium, which rate was approximately 7.3%, inclusive of a 0.5% agency fee, or (ii) the Base Rate (as defined in the Amended and Restated Credit Agreement) plus 2.00%, plus a 0.5% agency fee.
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.
When we renew or extend a loan, we 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 October 2023, the Company received the entire payoff amount for the loan receivable, including all unpaid fees, to rectify the situation. 49 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.
In September 2025, we sold one of our loans receivable at its face value of $250,000. 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.
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 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.
Since commencing this business in 2007, we have made over 1,280 loans and never foreclosed on a property, except as set forth below, although sometimes we have renewed or extended our loans to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan, we receive additional “points” and other fees.
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. 46 Since commencing this business in 2007, we have made over 1,340 loans and never foreclosed on a property, except as set forth below, although sometimes we have renewed or extended our loans to enable the borrower to avoid premature sale or refinancing of the property.
The decrease is primarily attributable to the decrease in interest expense due to a reduction in borrowed amounts related to the use of the Webster Credit Line. (See Note 5 to the financial statements included elsewhere in this Report).
The decrease was primarily attributable to lower interest expense resulting from lower SOFR rates and lower average borrowings under the Webster Credit Line. (See Note 5 to the financial statements included elsewhere in this Report).
Net cash provided by investing activities for the year ended December 31, 2024, mainly consisted of collection of our commercial loans of approximately $49,090,000, offset by the issuance of our short-term commercial loans of approximately $41,538,000.
Investing cash flows in 2024 primarily reflected collections of commercial loans of approximately $49,090,000, partially offset by the origination of short-term commercial loans of approximately $41,538,000. Net cash used in financing activities was approximately $10,216,000 for the year ended December 31, 2025, compared to approximately $13,970,000 for the year ended December 31, 2024.
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.
The Amended and Restated Credit Agreement also contains a cross-default provision pursuant to which a default under certain indebtedness of us or our subsidiary, MBC Funding II, may constitute a default under the Webster Credit Line.
For the year ended December 31, 2024, net cash provided by investing activities was approximately $7,548,000, compared to approximately $1,643,000 of net cash provided by investing activities for the year ended December 31, 2023.
Net cash provided by investing activities was approximately $5,313,000 for the year ended December 31, 2025, compared to approximately $7,548,000 for the year ended December 31, 2024. Investing cash flows in 2025 primarily reflected collections of commercial loans of approximately $40,637,000, partially offset by the origination of short-term commercial loans of approximately $35,323,000.
Origination fee revenue on commercial loans is amortized over the term of the respective note. 50 Effective January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (ASU Topic 326).
Origination fee revenue on commercial loans is amortized over the term of the respective note. Effective January 1, 2020, we adopted ASU Topic 326. The ASU introduced a new credit loss methodology, Current Expected Credit Losses (“CECL”), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk.
The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers. 51 Interest and amortization of deferred financing costs Interest and amortization of deferred financing costs for the year ended December 31, 2024, were approximately $2,337,000, compared to approximately $2,526,000 for the year ended December 31, 2023, a decrease of $189,000, or 7.5%.
Interest and amortization of deferred financing costs Interest and amortization of deferred financing costs for the year ended December 31, 2025, were approximately $1,755,000, compared to approximately $2,337,000 for the year ended December 31, 2024, a decrease of approximately $582,000, or 24.9%.
The decrease in revenue was due to a reduction in loans receivable, period over period, and reduced origination fees, which were impacted by a slowdown in new loan originations, partially offset by higher interest rates charged on our commercial loans.
The decrease in revenue was primarily attributable to lower interest income, resulting from a period-over-period decrease in loans receivable, and lower origination fees, reflecting a slowdown in new loan originations.
As of December 31, 2024, we were committed to $7,203,418 in construction loans that can be drawn by our borrowers when certain conditions are met. To date, 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.
To date, 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. Critical Accounting Policies and Use of Estimates The preparation of financial statements in conformity with U.S.
Net cash used in financing activities for the year ended December 31, 2024, reflects repayment of the Webster Credit Line of approximately $8,724,000, dividend payments of approximately $5,233,000, purchase of treasury shares of approximately $10,000 and cash paid for deferred financing costs of approximately $2,000.
Financing cash flows in 2024 primarily reflected net repayments under the credit lines of approximately $8,724,000, dividend payments of approximately $5,233,000, purchases of treasury shares of approximately $10,000 and deferred financing costs of approximately $2,000. Our Amended and Restated Credit and Security Agreement (as amended) with Webster, Flushing and Mizrahi Tefahot Bank Ltd. (“Mizrahi”) provides for the Webster Credit Line.
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.
The Webster Credit Line contains customary covenants and restrictions, including, among others, limitations on borrowings relative to collateral value, requirements to maintain specified financial ratios, limitations on the terms of loans we make to our customers, and restrictions, under certain circumstances, on dividends and share repurchases, asset dispositions, mergers or consolidations, the granting of liens, and transactions with affiliates.
From time to time, we also receive short-term unsecured loans from our executive officers and others, providing the flexibility needed for the steady deployment of capital. However, we anticipate that our working capital requirements will increase in the coming 12 months as we continue to pursue growth under favorable conditions. 54
We expect, however, that our working capital requirements will increase over the next 12 months as we continue to pursue growth opportunities under favorable market conditions.
Liquidity and Capital Resources As of December 31, 2024, we had cash of approximately $178,000, compared to cash of approximately $104,000 at December 31, 2023. For the year ended December 31, 2024, net cash provided by operating activities was approximately $4,932,000, compared to approximately $5,395,000 of net cash provided by operating activities for the year ended December 31, 2023.
This decrease was primarily due to lower interest income, partially offset by lower interest expense. Liquidity and Capital Resources As of December 31, 2025, we had cash of approximately $205,000, compared to approximately cash of $178,000 as of December 31, 2024.
Net income Net income for the year ended December 31, 2024, was approximately $5,591,000, compared to approximately $5,476,000 for the year ended December 31, 2023, an increase of $115,000, or 2.1%. This increase is primarily attributable to the decrease in interest expense, partially offset by the decrease in origination fees.
For the year ended December 31, 2025, net cash provided by operating activities was approximately $4,929,000, compared to approximately $4,932,000 for the year ended December 31, 2024. The slight decrease was primarily attributable to lower net income, largely offset by a smaller increase in interest and other fees receivable on loans.
Rand provides a personal guaranty of the potential amounts owed under the Webster Credit Line, with such guaranty not to exceed $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 December 31, 2024.
We were in compliance with all covenants under the Webster Credit Line, as amended, as of December 31, 2025 and 2024. MBC Funding II was in compliance with all covenants under the Valley Credit Line as of December 31, 2025.
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.
Outside appraisers are used to assist us in evaluating the worth of collateral, when deemed necessary by management. We also use construction inspectors. As of December 31, 2025, we were committed to $4,402,556 in construction loans that can be drawn by our borrowers when certain conditions are met.
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 December 31, 2024.
Pursuant to a notice of redemption delivered on November 26, 2025, MBC Funding II redeemed all outstanding Notes on December 15, 2025 at a redemption price equal to 100% of principal plus accrued and unpaid interest to, but excluding, the redemption date.
Before this program expired on April 10, 2024, we had purchased an aggregate of 56,294 common shares at an aggregate cost of approximately $271,000. We expect that our current cash balances, the Amended and Restated Credit Agreement, as described above, and cash flows from operations will be sufficient to fund our operations over the next 12 months.
In addition, during the first quarter of 2026, we repurchased 3,100 shares for an aggregate purchase price of approximately $14,000. We believe that our current cash balances, available borrowings under the Webster Credit Line and the Valley Credit Line, and cash flows from operations will be sufficient to fund our operations for at least the next 12 months.
Net cash used in financing activities for the year ended December 31, 2023, reflects dividend payments of approximately $5,308,000, purchase of treasury shares of approximately $262,000 and cash paid for deferred financing costs of approximately $38,000, offset by proceeds from the Webster Credit Line of approximately $158,000.
Financing cash flows in 2025 primarily reflected the repayment of the $6,000,000 principal amount of the Notes, dividend payments of approximately $5,262,000, purchases of treasury shares of approximately $29,000 and deferred financing costs of approximately $99,000, partially offset by net borrowings under the credit lines of approximately $1,173,000.
Removed
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.
Added
The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.
Removed
During February 2023, the Company sold one of its loans receivable to a third-party investor at its face value of $485,000. Mr. Assaf Ran, the Company’s President and Chief Executive Officer, participated in such acquisition in the amount of $152,000.
Added
The increase is primarily attributable to higher payroll and appraisal expenses, as well as a NYSE American listing fee related to the MBC Funding II 6.00% Senior Secured Notes (the “Notes”), partially offset by lower bank charges, travel and meal expenses as well as costs related to the filing of our registration statement on Form S-3 incurred in 2024. 49 Net income Net income for the year ended December 31, 2025, was approximately $5,111,000, compared to approximately $5,591,000 for the year ended December 31, 2024, a decrease of approximately $480,000, or 8.6%.
Removed
The decrease is primarily due to a special bonus awarded to officers in 2023 for extending the Webster Credit Line and a reduction in marketing expenses, partially offset by higher salaries and costs related to the filing of our registration statement on Form S-3 incurred in 2024.
Added
On February 24, 2026, we entered into an amendment to that agreement which, among other things, extended the maturity date of the Webster Credit Line to March 31, 2026, provided for the departure of Mizrahi as a lender and reallocated the revolving commitments of the remaining lenders.
Removed
The decrease in net cash provided by operating activities primarily resulted from the increase in interest and other fees receivable on loans, and the decreases in deferred origination fees and in accounts payable and accrued expenses, partially offset by the increase in net income.
Added
On March 24, 2026, we entered into an amendment to the Amended and Restated Credit Agreement that, among other things, (i) extended the maturity of the credit facility to February 28, 2029, (ii) modified certain portfolio composition requirements, including limiting mortgage loans outstanding for more than 30 months to 17.5% of the total portfolio, (iii) updated applicable interest margins, and (iv) revised certain mortgage loan eligibility criteria.
Removed
Net cash provided by investing activities for the year ended December 31, 2023, mainly consisted of collection of our commercial loans of approximately $57,736,000, offset by the issuance of our short-term commercial loans of approximately $56,088,000. 52 For the year ended December 31, 2024, net cash used in financing activities was approximately $13,970,000, compared to approximately $5,450,000 of net cash used in financing activities for the year ended December 31, 2023.
Added
In connection with the amendment, we paid a non-refundable amendment fee of $20,000. Except as amended, all other material terms of the credit facility remain in full force and effect. 50 The Webster Credit Line continues to provide an aggregate borrowing capacity of $32.5 million, secured by assignments of mortgages and other collateral.
Removed
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.
Added
Ran has provided a personal guaranty of up to $1.0 million, plus enforcement costs, with respect to amounts that may be owed under the Webster Credit Line.
Removed
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. In addition, Mr.
Added
On December 12, 2025, MBC Funding II entered into a letter agreement with Valley pursuant to which Valley agreed to provide MBC Funding II with a revolving line of credit of up to $10.0 million.
Removed
At December 31, 2024, the outstanding amount under the Amended and Restated Credit Agreement was $16,427,874. The interest rate on the amount outstanding fluctuates daily. The rate, including a 0.5% agency fee, as of December 31, 2024 was approximately 8.0%. MBC Funding II has $6,000,000 of outstanding principal amount of Notes.
Added
In connection with the credit facility, MBC Funding II executed a Line of Credit Note evidencing the advances available under the facility and entered into an all-assets Security Agreement in favor of Valley. In addition, we and Mr. Assaf Ran provided guaranties of the obligations under the credit facility, including a limited guaranty from Mr. Ran capped at $500,000.
Removed
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 15 th day of each calendar month, commencing June 2016. 53 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.
Added
The Valley Credit Line is secured by substantially all of the assets of MBC Funding II and is guaranteed by us. The Credit Facility matures on the earlier of December 12, 2027 or the acceleration of the obligations following an event of default. Borrowings under the Valley Credit Line are subject to a borrowing base based on eligible mortgage loans.
Removed
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.
Added
The Valley Credit Line contains customary covenants and restrictions, including financial covenants and limitations on borrowings based on collateral values. We used borrowings under the Valley Credit Line, together with other available funds, to redeem MBC Funding II’s outstanding Notes in December 2025.
Removed
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.
Added
Following the redemption, no Notes remained outstanding and trading of the Notes were suspended prior to market open on the redemption date. Outstanding borrowings under the Valley Credit Line bear interest at a floating rate equal to Term SOFR, subject to a floor of 3.00%, plus 2.95% per annum, and are subject to standard benchmark replacement provisions.
Removed
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.
Added
The facility also requires the payment of an upfront fee equal to 0.20% of the total commitment and an unused line fee equal to 0.25% per annum on the average daily unused portion of the facility. 51 As of December 31, 2025, borrowings under the Valley Credit Line bore interest at a floating rate equal to Term SOFR, subject to a floor, plus an applicable margin and customary fees, which rate was approximately 6.7%.
Removed
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.
Added
As of December 31, 2025, outstanding borrowings under the Webster Credit Line were $11,558,632 and outstanding borrowings under the Valley Credit Line were $6,042,500. On April 11, 2023, our board of directors approved a share repurchase program authorizing the repurchase of up to 100,000 shares of our common stock. The program expired on April 10, 2024.
Removed
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.
Added
Prior to its expiration, we repurchased 56,294 shares for an aggregate purchase price of $271,468, including 2,000 shares repurchased during the first quarter of 2024 for an aggregate purchase price of $9,800.
Removed
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.
Added
On November 20, 2025, our board of directors approved a new share repurchase program authorizing the repurchase of up to 100,000 shares of our common stock over the following 12 months. As of December 31, 2025, we had repurchased 6,200 shares under the program for an aggregate purchase price of approximately $29,000.
Removed
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.
Added
We do not currently expect any difficulty in extending these credit facilities or obtaining a comparable facility from another lender prior to their respective maturities. From time to time, we also obtain short-term unsecured loans from our executive officers and others, which provide us with additional flexibility to support the ongoing deployment of capital.
Removed
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 buyback program for the repurchase of up to 100,000 of our common shares.
Removed
We currently do not believe there will be any issues in extending the Webster Credit Line or securing a similar line from another bank before its expiration, and we plan to refinance the Notes prior to their maturity, though we cannot assure you that we will be successful in doing so on favorable terms or at all.

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