4. COMMERCIAL LOANS

Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money loans) to fund their acquisition and construction of properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers. The loans are generally for a term of one year. The short-term loans are initially recorded, and carried thereafter, in the condensed consolidated financial statements at cost, net of deferred origination and other fees, which totaled approximately $633,000 and $569,000 at June 30, 2025 and December 31, 2024, respectively. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term. At June 30, 2025, the Company was committed to $6,286,256 in construction loans that can be drawn by the borrowers when certain conditions are met.

At June 30, 2025, the Company has made loans to four different entities in the aggregate amount of $7,889,500, or 12.0% of its loan portfolio. One individual holds at least a fifty percent interest in each of the different entities. This individual is not affiliated with any officers or directors of the Company.

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

Credit Risk

Credit risk profile based on loan activity as of June 30, 2025 and December 31, 2024:

 SCHEDULE OF CREDIT RISK

At June 30, 2025, the Company’s loans receivable consisted of loans in the amount of $10,957, $1,370,250, $2,125,000, $12,108,479 and $11,365,000, originally due or committed to lend to borrowers in 2016, 2020, 2022, 2023 and 2024, respectively. The loans receivable also include loans in the amount of $12,708,765 originally due in the first six months of 2025.

Generally, borrowers are paying their interest, and the Company receives a fee in connection with the extension of the loans. In all instances, the borrowers have either signed an extension agreement or are in the process of signing an extension. Accordingly, at June 30, 2025, no loan impairments exist and there are no provisions for impairment credit losses of loans or recoveries thereof.

Subsequent to the balance sheet date, approximately $1,480,000 of the loans receivable at June 30, 2025, were paid down or paid off, including approximately $726,000 originally due on or before June 30, 2025.