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 $606,000 and $455,000 at June 30, 2026 and December 31, 2025, 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, 2026, the Company was committed to $3,927,235 in construction loans that can be drawn by the borrowers when certain conditions are met.

At June 30, 2026, no borrower or group of affiliated borrowers, including entities under common ownership or control, had loans outstanding representing more than 10% of the Company’s total outstanding loan portfolio.

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, 2026 and December 31, 2025:

 SCHEDULE OF CREDIT RISK

At June 30, 2026, the Company’s loans receivable consisted of loans in the amount of $920,250, $1,500,000, $4,155,144, $6,426,620 and $11,179,765, originally due or committed to lend to borrowers in 2020, 2022, 2023, 2024 and 2025, respectively. The loans receivable also include loans in the amount of $7,640,000 originally due in the first six months of 2026.

Generally, borrowers are paying their interest, and the Company receives a fee in connection with the extension of the loans. Based on management’s evaluation of the collectability of its loan portfolio, including the estimated fair value of the collateral securing the Florida loan discussed below, management concluded that no allowance for credit losses was required as of June 30, 2026.

During the quarter ended June 30, 2026, one borrower with an aggregate outstanding principal balance of approximately $935,000 secured by two properties located in Florida became delinquent on its interest payment obligations. The borrower has not made interest payments for approximately three months and has not responded to the Company’s notice of default. The Company has engaged Florida foreclosure counsel to pursue available remedies, including foreclosure, if necessary. Management believes the estimated fair value of the collateral substantially exceeds the outstanding principal balance. Based on its evaluation of the collateral, expected recovery and other relevant facts and circumstances, management concluded that no impairment or allowance for credit losses was required as of June 30, 2026. The Company will continue to monitor the loan and reassess collectability and collateral value each reporting period.

Subsequent to the balance sheet date, approximately $3,701,000 of the loans receivable at June 30, 2026, were paid down or paid off, including $506,000 originally due on or before June 30, 2026.