1. PURPOSE

The purpose of the Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of Manhattan Bridge Capital, Inc. (the “Company”)  is to assist the Board in overseeing the Company’s accounting and financial reporting processes, the audits of the Company’s financial statements and internal control over financial reporting.  The Audit Committee shall also assist the Board in overseeing the Company’s compliance with legal and regulatory requirements and the Company’s internal audit function generally.

 

The Audit Committee is by this charter (the “Charter”) delegated the powers of the Board necessary to carry out its purpose and responsibilities as provided in this Charter or reasonably related to such purpose and responsibilities.

 

2. STRUCTURE AND MEMBERSHIP

The Audit Committee shall be comprised of three or more members of the Board, each of whom: (1) satisfies the independence standards and audit committee composition requirements pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, by the Public Company Accounting Oversight Board (the “PCAOB”) and by the Nasdaq Stock Market (the “Nasdaq”) or any other exchange or national quotation system upon which securities of the Corporation may in the future be listed, as in effect from time to time, and each shall be free from any relationship that, in the opinion of the Board, would interfere with the exercise of their independent judgment as a member of the Audit Committee; (2) is able to read and understand fundamental financial statements, including a balance sheet, income statement and cash flow statement.In addition, at least one member must have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background, which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilitiesin accordance with the applicable rules of Nasdaq; and (3) has not participated in the preparation of the Company’s or any of its subsidiaries’ financial statements at any time during the past three years.

In addition, at least one member of the Audit Committee must qualify as an “audit committee financial expert”,as defined in the rules of the Securities and Exchange Commission (the “SEC”);

The Audit Committee may form and delegate authority to subcommittees of one or more members when appropriate.  Any subcommittee shall be subject to this Charter.  The decisions or other actions of any subcommittees to which authority is delegated under this paragraph shall be presented to the full Audit Committee at its next regularly scheduled meeting.

Chair

The Board shall appoint the members of the Audit Committee, and elect the Chair of the Committee. The members of the Audit Committee shall serve until their successors are appointed and qualify and shall designate the Chairman of the Audit Committee.

Compensation

Members of the Audit Committee may receive compensation for their service as Audit Committee members, as determined by the Board.

 

Selection and Removal

Members of the Audit Committee shall be appointed by the Board, upon the recommendation of the Corporate Governance and Nominating Committee. The Board may remove members of the Audit Committee from such committee, with or without cause.

3. RESPONSIBILITIES AND AUTHORITY

General

The Audit Committee shall discharge its responsibilities, and shall assess the information provided by the Company’s management and the independent auditor, in accordance with its business judgment. Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Company. The independent auditors are responsible for auditing the Company’s financial statements and for reviewing the Company’s unaudited interim financial statements. The authority and responsibilities set forth in this Charter do not reflect or create any duty or obligation of the Audit Committee to plan or conduct any audit, to determine or certify that the Company’s financial statements are complete, accurate, fairly presented, or in accordance with generally accepted accounting principles or applicable law, or to guarantee the independent auditor’s report.

It is not the duty of the Audit Committee to prepare the Company’s financial statements, to plan or conduct audits of those financial statements or to determine that those financial statements are complete and accurate and in accordance with generally accepted accounting principles; rather, such actions and determinations are the responsibility of management and the independent auditor.  Similarly, it is not the responsibility or duty of the Audit Committee directly to conduct investigations or to directly assure compliance with applicable laws and regulations, but the Audit Committee may direct such investigations and order such assurances and rely upon reports of such activities.

Independent Auditor

The Audit Committee shall:

1. Be directly responsible for the appointment, evaluation, compensation, retention, and, when necessary, terminationof the engagement of the independent auditor.The Audit Committee shall oversee the work of the independent auditor in preparing or issuing an audit report or related work or performing other audit, review or attest services for the Company (including resolution of any disagreements between management and the independent auditor).  The independent auditor shall report directly to the Audit Committee;
2. Review and preapprove all audit and permissible non-audit services provided by the independent auditor or other registered public accounting firm and consider whether the independent auditor’s provision of permissible non-audit services is compatible with the independence of the independent auditor.  The AuditCommittee may delegate to one or more of its members the authority to grant preapproval, provided such preapprovals are presented to the full Audit Committee at its next regularly scheduled meeting;
3. Review and approve the proposed scope, approach and staffing of the independent auditor’s annual audit plan; and
4. Evaluate the independent auditor’s qualifications, performance and independence, and take appropriate actions to ensure the independence of the independent auditor.  As part of such evaluation, the Audit Committee shall:

1. Obtain and review, at least annually: (1) a report from the independent auditor describing the firm’s internal quality control procedures and any material issues raised by the most recent internal quality control review or peer review of the firm or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, with respect to one or more independent audits carried out by the firm and any steps taken to address such issues; and (2) a written statement from the independent auditor delineating all relationships between the independent auditor and the Company;
2. Engage in dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditor; and
3. Review and evaluate the lead partner of the independent auditor, assure the regular rotation of audit partners as may be required under the rules of the SEC and consider actions required to assure continuing auditor independence.

Processes, Controls and Risk Management

The Audit Committee shall:

1. 1. Review periodically the Company’s financial reporting processes and disclosure controls and procedures, and the adequacy and effectiveness of the Company’s internal control over financial reporting, including, to the extent applicable, the responsibilities, budget, staffing and effectiveness of the Company’s internal audit function;
   2. Review reports prepared by Company management and the independent auditor assessing the adequacy and effectiveness of the Company’s internal control over financial reporting, prior to the inclusion of such reports in the Company’s periodic filings with the SEC;
   3. Review any disclosure from the Chief Executive Officer and Chief Financial Officerof the Company made in connection with the certification of the Company’s annual reports on Form 10-K and quarterly reports on Form 10-Q of significant deficiencies and material weaknesses in the design or operation of the Company’s internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial data and any fraud, whether or not material, that involves management or other individuals who have a significant role in the Company’s internal controls;
   4. Discuss policies relating to risk assessment and risk management, as well as the Company’s major financial risk exposures and the steps taken to monitor and control such exposures; and
   5. Consult periodically with the independent auditor out of the presence of Company management about internal controls, the quality, acceptability, fullness and accuracy of the Company’s financial statements, and other matters that the Audit Committee determines it wishes to consult the independent auditor about.

Financial Reporting and Disclosure

The Audit Committee shall:

0. 1. Review with Company management, the independent auditor and the Director of Internal Audit, if any, as applicable:
1. The results of the annual audit of the Company and the independent auditor’s procedures with respect to interim periods, including any significant findings, comments or recommendations of the independent auditor and, to the extent applicable, the Director of Internal Audit, together with management’s responses thereto;
2. Any significant changes in the Company’s accounting principles or the methods of applying the Company’s accounting principles;
3. All critical accounting policies and practices used by the Company;
4. The independent auditor’s judgments as to the qualityof the Company’s accounting principles and such matters as are required to be discussed with the Audit Committee under generally accepted auditing standards;
5. Alternative accounting treatments within generally accepted accounting principles related to material items that have been discussed with management, including the ramifications of the use of the alternative treatments;
6. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q;
7. All “related person transactions” (defined as transactions required to be disclosed pursuant to Item 404 of Regulation S-K);
8. Any significant deficiency in the design or the operation of the Company’s internal accounting controls and any resulting recommendations;
9. Any other matters required to be discussed by PCAOB auditing standards;
10. Other material written communications between the independent auditor and Company management; and
11. any material cybersecurity breaches.

2. Recommend to the Board whether the audited financial statements should be included in the Company’s annual report on Form 10-K;
3. Prepare any reports required to be prepared by audit committees under the rules of the SEC or the Nasdaq, including the report of the Audit Committee required to be included in the Company’s proxy statement for its annual meetings of shareholders;
4. Oversee compliance with the disclosure requirements of the SEC, including disclosure of information regarding auditors’ services and audit committee members, member qualifications and activities; and
5. Discuss periodically earnings press releases, as well as financial information and earnings guidance, if any, provided to analysts and rating agencies.

Internal Audit Function

The Audit Committee shall review and approve the Company’s annual internal audit plan, including the scope, staffing and timing of each internal audit activity, and shall meet periodically with the Director of Internal Audit, if any, to review the status of the internal audit plan and the results of internal audits. The Audit Committee may direct that the Director of Internal Audit, if any, and staff be authorized to have such full, free and unrestricted access to all the functions, records, property and personnel of the Company in order to carry out the duties prescribed by the Audit Committee.

Other Responsibilities and Authority

The Audit Committee shall:

1. 1. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters;
2. Review hiring policies for employees or former employees of the independent auditor;
3. Review and assess, at least annually, the adequacy of this Charter and the structure, processes and membership requirements of the Audit Committee, and recommend any appropriate changes to the Board; and
4. Review and assess, at least annually, the Audit Committee’s own performance, and report that it has done so to the Board.

 

The Audit Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee or adviser of the Corporation to meet with the Audit Committee or any advisers engaged by the Audit Committee.

The Audit Committee shall meet as often as it deems necessary in order to perform its responsibilities. The Audit Committee may also act by unanimous written consent in lieu of a meeting. The Committee shall keep such records of its meetings as it shall deem appropriate.

4. ADVISERS

The Audit Committee shall have the authority, in its sole discretion, to retain and terminate (or obtain advice from) advisers to assist it in the performance of its responsibilities under this Charter.  The Audit Committee shall be directly responsible for the appointment, compensation and oversight of the work of any adviser retained by the Audit Committee, and shall have sole authority to approve the adviser’s fees and the other terms and conditions of the adviser’s retention.

The Audit Committee shall have available appropriate funding from the Company for compensation of any adviser engaged by the Audit Committee and payment of ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its responsibilities.

5. GENERAL PROVISIONS

While the members of the Audit Committee have the duties and responsibilities set forth in this Charter, nothing contained herein is intended to create, or should be construed as creating for the members of the Audit Committee any responsibility or liability, except to the extent otherwise provided under applicable federal or state law.

This Charter amends in its entirety and replaces the charter of the Audit Committee as heretofore in effect.