MBC Funding II Net Income Dips Amid Loan Portfolio Shrink

TL;DR

**MBC Funding II's declining loan portfolio and net income make its 6% Notes a hold, but watch for the planned early redemption.**

AI Summary

MBC FUNDING II CORP. reported a net income of $112,670 for the three months ended September 30, 2025, a decrease of 3.16% from $116,352 in the same period of 2024. For the nine months ended September 30, 2025, net income was $321,331, down 9.32% from $354,375 in 2024. Total revenue, primarily interest income from loans, slightly increased to $230,312 for the three months ended September 30, 2025, from $228,985 in 2024, but decreased to $674,875 for the nine months ended September 30, 2025, from $693,385 in 2024. Operating costs and expenses rose to $117,642 for the three months ended September 30, 2025, up from $112,633 in 2024, largely due to an increase in general and administrative expenses from $3,862 to $8,871. The company's loans receivable decreased to $8,034,000 as of September 30, 2025, from $8,774,250 at December 31, 2024, and the number of loans in the pool decreased from 16 to 12. MBC FUNDING II CORP. maintains its 6% Senior Secured Notes, due April 22, 2026, with a net balance of $5,959,328, and plans to redeem them prior to maturity using proceeds from a replacement or MBC's existing credit facility.

Why It Matters

This filing reveals a slight decline in MBC FUNDING II CORP.'s profitability, with net income down 9.32% year-over-year for the nine-month period, which could signal reduced returns for investors in its 6% Senior Secured Notes. The shrinking loan portfolio, from 16 to 12 loans and a decrease in loans receivable from $8,774,250 to $8,034,000, suggests a potential challenge in maintaining its asset base, which serves as collateral for the Notes. For noteholders, the company's stated plan to redeem the Notes prior to their April 22, 2026 maturity, using proceeds from a replacement or MBC's existing credit facility, introduces refinancing risk and competitive pressure from other lenders. Employees and customers of its parent, Manhattan Bridge Capital, Inc., might see this as a sign of tightening operations or a strategic shift in capital allocation.

Risk Assessment

Risk Level: medium — The company's loans receivable decreased by $740,250 from December 31, 2024, to September 30, 2025, and the number of loans in the pool dropped from 16 to 12. This shrinking asset base, which serves as collateral for the 6% Senior Secured Notes, could increase risk if the company struggles to maintain the required 120% collateral coverage ratio, although the current ratio is not explicitly stated as being in breach. Furthermore, the reliance on a replacement or MBC's existing credit facility for early redemption of the Notes introduces refinancing risk.

Analyst Insight

Investors holding MBC FUNDING II CORP.'s 6% Senior Secured Notes (LOAN/26) should monitor the company's progress on its stated plan to redeem the Notes prior to their April 22, 2026 maturity. Evaluate the parent company's (Manhattan Bridge Capital, Inc.) credit facility and overall financial health, as it is crucial for the planned redemption. Consider the declining loan portfolio as a potential long-term risk to collateral coverage if not reversed.

Financial Highlights

debt To Equity

1.45

revenue

$674,875

operating Margin

47.70%

total Assets

$10,103,864

total Debt

$5,974,328

net Income

$321,331

eps

N/A

gross Margin

N/A

cash Position

$62,575

revenue Growth

-2.67%

Revenue Breakdown

Key Numbers

• $112,670 — Net Income (Q3 2025) (Decreased from $116,352 in Q3 2024, a 3.16% decline.)
• $321,331 — Net Income (YTD Q3 2025) (Decreased from $354,375 in YTD Q3 2024, a 9.32% decline.)
• $8,034,000 — Loans Receivable (As of September 30, 2025, down from $8,774,250 at December 31, 2024.)
• $674,875 — Total Revenue (YTD Q3 2025) (Decreased from $693,385 in YTD Q3 2024, a 2.67% decline.)
• $5,959,328 — Senior Secured Notes (net) (As of September 30, 2025, representing the primary liability.)
• 120% — Collateral Coverage Requirement (Aggregate principal balance of mortgage loans plus cash must equal at least 120% of outstanding Notes.)
• 12 — Number of Mortgage Loans (As of September 30, 2025, down from 16 at December 31, 2024.)
• $704,000 — Assaf Ran's Note Holdings (CEO's personal investment in the Notes as of September 30, 2025.)
• $288,000 — Vanessa Kao's Note Holdings (CFO's personal investment in the Notes as of September 30, 2025.)
• 6% — Interest Rate on Notes (Fixed interest rate on the Senior Secured Notes due April 22, 2026.)

Key Players & Entities

• MBC FUNDING II CORP. (company) — registrant
• Manhattan Bridge Capital, Inc. (company) — parent company and guarantor
• Assaf Ran (person) — Chief Executive Officer and President of MBC Funding II Corp. and MBC, owns $704,000 of Notes
• Vanessa Kao (person) — Chief Financial Officer of MBC Funding II Corp. and MBC, owns $288,000 of Notes
• ClearTrust LLC (company) — Indenture Trustee for the 6% Senior Secured Notes
• NYSE American LLC (regulator) — exchange where 6% Senior Secured Notes are listed
• $6,000,000 (dollar_amount) — aggregate principal amount of 6% Senior Secured Notes issued in IPO
• $8,034,000 (dollar_amount) — aggregate outstanding principal balance of mortgage loans as of September 30, 2025
• $8,774,250 (dollar_amount) — aggregate outstanding principal balance of mortgage loans as of December 31, 2024
• $112,670 (dollar_amount) — net income for the three months ended September 30, 2025

FAQ

Risk Factors

• Declining Loan Portfolio [medium — financial]: Loans receivable decreased by $740,250, or 8.44%, from $8,774,250 at December 31, 2024, to $8,034,000 as of September 30, 2025. The number of loans in the pool also reduced from 16 to 12, indicating a contraction in the core business asset.
• Decreasing Net Income [medium — financial]: Net income for the nine months ended September 30, 2025, was $321,331, a decrease of 9.32% from $354,375 in the prior year. The third quarter also saw a 3.16% decline in net income.
• Rising Operating Expenses [medium — financial]: Total operating costs and expenses increased to $352,894 for the nine months ended September 30, 2025, up from $338,360 in 2024. A significant driver was the jump in general and administrative expenses from $12,046 to $26,580 year-to-date.
• Senior Secured Notes Maturity [medium — financial]: The company has $5,959,328 in Senior Secured Notes due April 22, 2026. While the company plans to redeem them prior to maturity, the execution of this plan introduces refinancing risk.
• Concentration of Note Holdings [low — operational]: A significant portion of the Senior Secured Notes is held by key executives, with Assaf Ran holding $704,000 and Vanessa Kao holding $288,000. While this indicates confidence, it also represents a concentration risk.

Industry Context

MBC Funding II Corp. operates in the niche sector of asset-backed lending, specifically focusing on mortgage loans. This sector is sensitive to interest rate fluctuations and real estate market conditions. The company's strategy appears to involve managing a portfolio of loans to generate interest income and service its debt obligations.

Regulatory Implications

As a financial entity, MBC Funding II Corp. is subject to various financial regulations. The company's primary regulatory concern would likely revolve around compliance with debt covenants related to its Senior Secured Notes and any reporting requirements for its lending activities.

What Investors Should Do

1. Monitor loan portfolio performance and growth.
2. Evaluate the company's plan for redeeming Senior Secured Notes.
3. Analyze the trend in operating expenses, particularly G&A.

Key Dates

• 2026-04-22: Senior Secured Notes Maturity — The company plans to redeem these notes prior to this date, indicating a potential refinancing event or use of existing credit facilities.

Glossary

Loans receivable

The total amount of money owed to the company from loans that have been issued to borrowers. (Represents the primary asset of the company and the source of its interest income.)

Senior Secured Notes

Debt instruments that are backed by specific collateral and have priority over other unsecured debt in the event of bankruptcy or liquidation. (Represents the company's primary source of long-term debt financing.)

Deferred financing costs

Costs incurred by a company when issuing debt, such as legal fees and underwriting fees, which are amortized over the life of the debt. (Reduces the net carrying value of the Senior Secured Notes on the balance sheet.)

Retained earnings

The cumulative amount of net income that a company has kept over time, rather than distributing it to shareholders as dividends. (Represents the accumulated profits of the company and contributes to its equity.)

Year-Over-Year Comparison

Compared to the prior year, MBC Funding II Corp. has experienced a decline in both total revenue and net income for the nine-month period ended September 30, 2025. Total revenue decreased by 2.67%, while net income saw a more substantial drop of 9.32%. Operating expenses have risen, driven by increased general and administrative costs. The company's loan portfolio has also contracted, with a decrease in both the total value of loans receivable and the number of loans in the pool.

Key Financial Figures

• $6,000,000 — ibed below). On April 25, 2016, we sold $6,000,000 aggregate principal amount of our 6% Se
• $5,200,000 — Notes"), in our IPO for net proceeds of $5,200,000, after deducting the underwriting disco
• $8,034,000 — regate outstanding principal balance of $8,034,000. Prior to the consummation of the IPO
• $230,000 — mber 30, 2025 and 2024 of approximately $230,000 and $229,000, respectively, represent i
• $229,000 — and 2024 of approximately $230,000 and $229,000, respectively, represent interest incom
• $109,000 — mber 30, 2025 and 2024 of approximately $109,000 are attributable to the issuance of the
• $9,000 — mber 30, 2025 and 2024 of approximately $9,000 and $4,000, respectively, are comprised
• $4,000 — 25 and 2024 of approximately $9,000 and $4,000, respectively, are comprised of fees pa
• $675,000 — mber 30, 2025 and 2024 of approximately $675,000 and $693,000, respectively, represent i
• $693,000 — and 2024 of approximately $675,000 and $693,000, respectively, represent interest incom
• $326,000 — mber 30, 2025 and 2024 of approximately $326,000 are attributable to the issuance of the
• $27,000 — mber 30, 2025 and 2024 of approximately $27,000 and $12,000, respectively, are comprise
• $12,000 — 5 and 2024 of approximately $27,000 and $12,000, respectively, are comprised of fees pa
• $63,000 — 30, 2025, we had cash of approximately $63,000 compared to cash of approximately $50,0
• $50,000 — 3,000 compared to cash of approximately $50,000 at December 31, 2024. Net cash provide

Filing Documents

• form10-q.htm (10-Q) — 323KB
• ex31-1.htm (EX-31.1) — 14KB
• ex31-2.htm (EX-31.2) — 15KB
• ex32-1.htm (EX-32.1) — 6KB
• ex32-2.htm (EX-32.2) — 6KB
• 0001493152-25-019312.txt ( ) — 1734KB
• loan26-20250930.xsd (EX-101.SCH) — 15KB
• loan26-20250930_cal.xml (EX-101.CAL) — 23KB
• loan26-20250930_def.xml (EX-101.DEF) — 39KB
• loan26-20250930_lab.xml (EX-101.LAB) — 124KB
• loan26-20250930_pre.xml (EX-101.PRE) — 93KB
• form10-q_htm.xml (XML) — 148KB

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 11 Item 4.

Controls and Procedures

Controls and Procedures 11 Part II OTHER INFORMATION Item 6. Exhibits 12

SIGNATURES

SIGNATURES 13 EXHIBITS 1

Forward Looking Statements

Forward Looking Statements This report contains forward-looking and similar expressions. Those statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations or those of our directors or officers with respect to, among other things, trends affecting our financial condition and results of operations and our business and growth strategies. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected, expressed or implied in the forward-looking not limited to that we may be unsuccessful in our efforts to redeem our Notes (as defined below), and the risk factors discussed in more detail in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as may be supplemented or amended from time to time, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2 in this report. The accompanying information contained in this report, including the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations", identifies important factors that could cause such differences. These forward-looking statements speak only as of the date of this report, and we caution potential investors not to place undue reliance on such statements. We undertake no obligation to update or revise any forward-looking

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONDENSED FINANCIAL STATEMENTS

Item 1. CONDENSED FINANCIAL STATEMENTS MBC FUNDING II CORP. BALANCE SHEETS September 30, 2025 December 31, 2024 (unaudited) (audited) Assets Loans receivable $ 8,034,000 $ 8,774,250 Cash 62,575 50,393 Interest receivable on loans 68,676 80,965 Due from parent company 1,911,276 820,612 Prepaid expenses 27,337 — Total assets $ 10,103,864 $ 9,726,220 Liabilities and Stockholder's Equity Liabilities: Senior secured notes (net of deferred financing costs of $ 40,672 and $ 96,985 , respectively) $ 5,959,328 $ 5,903,015 Accrued interest payable 15,000 15,000 Total liabilities 5,974,328 5,918,015 Stockholder's equity: Common shares - $ .001 par value; 100 authorized, issued and outstanding — — Additional paid-in capital 100 100 Retained earnings 4,129,436 3,808,105 Total stockholder's equity 4,129,536 3,808,205 Total liabilities and stockholder's equity $ 10,103,864 $ 9,726,220 The accompanying notes are an integral part of these condensed financial statements. 3 MBC FUNDING II CORP. (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue: Interest income from loans $ 230,312 $ 228,985 $ 674,875 $ 693,385 Total revenue 230,312 228,985 674,875 693,385 Operating costs and expenses: Interest and amortization of deferred financing costs 108,771 108,771 326,314 326,314 General and administrative expenses 8,871 3,862 26,580 12,046 Total operating costs and expenses 117,642 112,633 352,894 338,360 Income before income tax expense 112,670 116,352 321,981 355,025 Income tax expense — — ( 650 ) ( 650 ) Net income $ 112,670 $ 116,352 $ 321,331 $ 354,375 The accompanying notes are an integral part of these condensed financial statements. 4 MBC FUNDING II CORP. EQUITY (unaudited) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 202

QUANTITATIVE AND QUALITATIVE DISCLOSURES

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide the information required by this Item.

CONTROLS AND PROCEDURES

Item 4. CONTROLS AND PROCEDURES (a) Evaluation and Disclosure Controls and Procedures Our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025 (the "Evaluation Date"). Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) are accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. (b) Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting (as defined in Rules 13

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