Summary of MANHATTAN BRIDGE CAPITAL, INC

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The discussion and analysis contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements.

We offer short-term secured commercial loans to small businesses. Loans are secured by collateral such as real estate, receivables, and marketable securities and, generally, accompanied by personal guarantees from the principals of the businesses. The loans are generally for a term of one year. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term. For the three and nine months ended September 30, 2009 the total amounts of $929,426 and $4,988,030, respectively, have been lent, offset by collections received from borrowers, under the short term commercial loans in the amount of $860,976 and $3,585,463, respectively. Loans ranging in size from $50,000 to $1,020,000 were concluded at stated interest rates of 12% to 16%, but often at higher effective rates based upon points or other up-front fees. We use our own employees, outside lawyers and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers are also employed to assist our officials in evaluating the worth of collateral.

To date, we have not experienced any defaults and none of the loans previously made have been non-collectable, although no assurances can be given that existing or future loans may not go into default or prove to be non-collectable in the future.

At September 30, 2009, we were committed to an additional $1,343,000 in construction loans that can be drawn by the borrower when certain conditions are met.

Results of Operations

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

Revenue

Total revenues for the three month period ended September 30, 2009 were approximately $289,000 compared to approximately $200,000 for the three month period ended September 30, 2008, an increase of $89,000 or 44.5%. The increase in revenue represents an increase in lending operations. For the three month period ended September 30, 2009, $235,000 of our revenue represents interest income on the short term secured commercial loans that we offer to small businesses compared to $178,000 for the same period in 2008, and $54,000 represents origination fees on such loans compared to $22,000 for the same period in 2008. Loans are secured by collateral such as real estate, receivables, and marketable securities and generally are accompanied by personal guarantees from the principals of the businesses.

Web development costs

Web development costs for the three month period ended September 30, 2008 were $12,336. These costs are attributable to the amortization of Nextyellow.com's capitalized web development costs. There were no web development costs during the three month period ended September 30, 2009 due to the fact that as of December 31, 2008 we decided that these web development costs were not recoverable and therefore wrote off the remaining unamortized balance as of that date.

General and administrative costs

General and administrative expenses for the three month period ended September 30, 2009 were approximately $148,000 compared to approximately $144,000 for the three month period ended September 30, 2008. This increase is primarily attributable to an increase in payroll expenses of approximately $14,000, offset by a decrease in stock based compensation expenses of approximately $11,000, mainly due to a decline in the share price and a decline in the risk free interest rate in connection with non-cash compensation.

Other income

For the three month period ended September 30, 2009 we had net other expenses in the amount of approximately $4,000, consisting mainly of dividend and interest income of approximately $4,000, offset by a realized loss on the sale of marketable securities that were previously marked down of approximately $4,000, offset by realized losses on marketable securities in the amount of approximately $8,000, compared to other income of approximately $18,000 for the three month period ended September 30, 2008 which consisted of dividend and interest income.

Income tax expense

For the three month period ended September 30, 2009 we had income tax expense of approximately $52,000.

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Revenue

Total revenues for the nine month period ended September 30, 2009 were approximately $770,000 compared to approximately $544,000 for the nine month period ended September 30, 2008, an increase of $226,000, or 41.5%. The increase in revenue represents an increase in lending operations since the formation of the lending business. Revenue of approximately $633,000 for the nine month period ended September 30, 2009, compared to approximately $489,000 for the same period in 2008, represents interest income on the short and long term secured commercial loans that we offer to small businesses, and $137,000 represents origination fees on such loans compared to $55,000 for the same period in 2008. Loans are secured by collateral such as real estate, receivables, and marketable securities and generally are accompanied by personal guarantees from the principals of the businesses.

Web development costs

Web development costs for the nine month period ended September 30, 2008 were $37,008. These costs are attributable to the amortization of Nextyellow.com's capitalized web development costs. There were no web development costs during the nine month period ended September 30, 2009 due to the fact that as of December 31, 2008 we decided that these web development costs were not recoverable and therefore wrote off the remaining unamortized balance as of that date.

General and administrative costs

General and administrative expenses for each of the nine month periods ended September 30, 2009 and 2008 were approximately $453,000. The differences between the periods are primarily attributable to a decrease in stock based compensation expenses of approximately $18,000 mainly due to a decline in the share price and a decline in the risk free interest rate in connection with non-cash compensation expenses, a decrease in professional fees of approximately $8,000, mainly due to a decrease in legal expenses and accounting expenses, and a decrease of approximately $9,000 in public relations expenses, offset by an increase in payroll expenses of approximately $34,000.

Other income

For the nine month period ended September 30, 2009 we had other income in the amount of approximately $24,000, which consisted mainly of dividend and interest income of approximately $19,000, a realized gain on the sale of marketable securities that were previously marked down of approximately $11,000, offset by realized losses on marketable securities in the amount of approximately $6,000, compared to other income of approximately $116,000 for the nine month period ended September 30, 2008, which consisted mainly of dividend and interest income of approximately $59,000, realized gains on marketable securities of approximately $18,000, a referral fee of $29,000 and $10,000 in connection with the sale of a listing of potential customers of the Nextyellow website.

Income tax expense

For the nine month period ended September 30, 2009 we had income tax expense of approximately $112,000 and for the nine month period ended September 30, 2008 we had income tax expense of approximately $3,000.

Discontinued operations

On April 20, 2006, we sold our remaining directories business for (i) $291,667 paid in cash at closing; (ii) a promissory note in the amount of $613,333 payable in 24 consecutive monthly installments of $25,556 each bearing interest, at 5% per annum; and (iii) the Buyer's assumption of liabilities relating to the directories business. We have been recording gains on the 2006 sale of the directories business under the installment method in proportion to the payments received. Therefore we have recorded gains on this sale in the amount of $0 and $72,917 for the nine month periods ended September 30, 2009 and 2008, respectively.

Liquidity and Capital Resources

At September 30, 2009, we had cash and cash equivalents and marketable securities of approximately $601,000 and working capital of approximately $7,268,000 as compared to cash and cash equivalents and marketable securities of approximately $1,384,000 and working capital of $6,663,000 at December 31, 2008. The decrease in cash and cash equivalents and marketable securities primarily reflects the making of short term commercial loans in the total amount of $4,988,030, offset by collections received from borrowers, under the short term commercial loans in the amount of $3,585,463. The increase in working capital is primarily attributable to the net income of $229,203, a long term loan in a prior period becoming due in the current period, offset by an increase in income tax payable.

For the nine month periods ended September 30, 2009 and 2008, net cash provided by operating activities were approximately $348,000 and $302,000, respectively. The increase in net cash provided by operating activities primarily results from the increase in income from continuing operations and an increase in income tax payable, offset by a decrease in amortization of Nextyellow.com's capitalized web development costs.

Net cash used in investing activities was approximately $1,149,000 for the nine months ended September 30, 2009, compared to net cash used in investing activities of approximately $611,000 for the period ended September 30, 2008. Net cash used in investing activities consisted primarily of the issuance of the our short term commercial loans in the amount of $4,988,000, offset by collection of these loans in the amount of $3,585,000 and proceeds from sale of marketable securities in the amount of approximately 254,000. In the period ended September 30, 2008 net cash used in investing activities consisted primarily of the issuance of short term commercial loans in the amount of $4,544,000, offset by collection of these loans in the amount of $3,167,000, an investment in an insurance annuity contract in the amount of $1,175,000, offset by proceeds from the sale of an annuity contract and auction rate securities in the amount of $1,844,000 and installment payments received in connection with the 2006 sale of the directories business in the amount of $97,000.

Net cash provided by financing activities for the nine months ended September 30, 2009 was approximately $157,000 as compared to $0 for the period ended September 30, 2008. This increase in net cash provided by financing activities reflects the use of our credit line.

We have not entered into any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of our requirements for capital resources.

We anticipate that our current cash balances will be sufficient to fund our operations for the next 12 months. However, we expect our working capital requirements to increase over the next 12 months as we continue to strive for growth.

Changes to Critical Accounting Policies and Estimates

Our critical accounting polices and estimates are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Forward Looking Statements

This report contains forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are typically identified by the words "believe," "expect," "intend," "estimate" and similar expressions. Those statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations or those of our directors or officers with respect to, among other things, trends affecting our financial conditions and results of operations and our business and growth strategies. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected, expressed or implied in the forward-looking statements as a result of various factors (such factors are referred to herein as "Cautionary Statements"), including but not limited to the following: (i) the successful integration of new businesses that we may acquire; (ii) the success of new operations which we have commenced and of our new business strategy;
(iii) our limited operating history in our new business; (iv) potential fluctuations in our quarterly operating results; and (v) challenges facing us relating to our growth. The accompanying information contained in this report, including the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations", identifies important factors that could cause such differences. These forward-looking statements speak only as of the date of this report, and we caution potential investors not to place undue reliance on such statements. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.