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xbrli:pure

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________________________to _______________________________________

Commission File Number: 000-1695962

KORTH DIRECT MORTGAGE INC.

(Exact name of registrant as specified in its charter)

Florida		27-0644172
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

135 San Lorenzo Avenue, Suite 600, Coral Gables, FL 33146

(Address of principal executive offices)

(305) 668-8485

(Registrant’s telephone number, including area code)

_________________________________ ___________________________________

(Former name, former address and formal fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

The Registrant voluntarily files Exchange Act Reports and has filed all Exchange Act reports for the preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

x Yes ¨ No

The Registrant voluntarily files Exchange Act Reports and has filed all Exchange Act reports for the preceding 12 months.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller Reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of March 31, 2025, there were 5,000,000 shares of common stock of Korth Direct Mortgage Inc. outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements
	Unaudited Consolidated Statements of Financial Condition	4
	Unaudited Consolidated Statements of Operations	5
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity	6
	Unaudited Consolidated Statements of Cash Flows	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Consolidated Operations	25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	27

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

SIGNATURES		30

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

KORTH DIRECT MORTGAGE INC.

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	March 31, 2025			December 31, 2024
ASSETS
Cash and Cash Equivalents	$	6,879,240		$	2,898,659
Restricted Cash		13,083,839			15,431,460
Restricted Investment		1,204,806			1,192,510
Mortgages Owned		417,455,748			451,974,989
Mortgage Servicing Rights, at Fair Value		9,629,197			9,260,225
Portfolio Loans		3,171,468			5,161,709
Loans Held for Sale		203,603			520,215
Securities		41,991			41,991
ROU Leased Asset		210,728			270,281
Goodwill		110,000			110,000
Property and equipment, net of depreciation		66,805,174			31,922,404
Other Assets		5,639,971			3,067,100
TOTAL ASSETS	$	524,435,765		$	521,851,543

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Escrows Payable	$	13,034,579		$	15,306,451
Lease Liability		229,966			294,412
Deferred Revenue, net		1,800,193			1,958,967
Deferred Tax Liability, net		1,648,708			1,378,721
Mortgage Secured Notes Payable		453,749,757			450,264,519
Warehouse Line of Credit, net		17,297,930			17,269,278
Other Liabilities and Payables		4,897,156			4,613,539
Total Liabilities		492,658,289			491,085,887

STOCKHOLDERS' EQUITY
Accumulated Deficit		(3,066,941	)		(3,325,687	)
Additional Paid-in Capital		29,645,651			29,632,262
Common Stock, $0.001 par value, 60,000,000 shares authorized 5,000,000 shares issued and outstanding at March 31, 2025 and December 31, 2024		5,000			5,000
Series A Preferred Stock, $0.001 par value, 460,000 shares authorized, 460,000 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		460			460
Series B Preferred Stock, $0.001 par value, 20,000 shares authorized, 19,000 issued and outstanding at March 31, 2025 and December 31, 2024		19			19
Non-Controlling Interest		5,193,287			4,453,602
Total Stockholders' Equity		31,777,476			30,765,656

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	524,435,765		$	521,851,543

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

KORTH DIRECT MORTGAGE INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM JANUARY 1 THROUGH MARCH 31


	For the Three Months Ended			For the Three Months Ended
	March 31, 2025			March 31, 2024

REVENUES
Origination Revenue, Net	$	1,140,738		$	385,155
Servicing Revenue		1,095,671			1,249,346
Underwriting Income		12,750			10,000
Leasing Revenue		1,533,259			243,032
Other Revenue		915,809			174,638
Total Revenues		4,698,227			2,062,171

COST OF REVENUES
Broker Underwriting Expense		977,975			363,100
Administrative Expenses		612,330			270,232
Total Cost of Revenues		1,590,305			633,332

GROSS PROFIT		3,107,922			1,428,839

OPERATING EXPENSES
Office		794,490			130,552
Compensation and Related Benefits		771,613			1,083,407
Professional & Legal		233,089			335,072
Advertising		30,836			56,098
Depreciation		323,325			169,129
Total Expenses		2,153,353			1,774,258

Income/(Loss) From Operations		954,569			(345,419	)

Other Income/(Expense)
Unrealized Gain/(Loss) on Mortgages		368,972			(747,227	)
Unrealized Gain/(Loss) on Mortgage Secured Notes		14,858			(2,634	)
Interest Expense		(484,932	)		(694,068	)
Unrealized Gain on Investment		74,798			-
Realized Gain on Foreclosure		207,981			-
Realized Loss on Loans Held for Sale		(4,417	)		(572	)
Change in Fair Value of Mortgage Secured Notes		-			12,660,000
Loss on Foreclosures		-			(12,660,000	)
Total Other Income/(Expense)		177,260			(1,444,501	)

Income/(Loss) before provision for income taxes		1,131,829			(1,789,920	)

Provision/(Tax Benefit) for income taxes		285,731			(512,477	)

Net Income/(Loss)		846,098			(1,277,443	)
Less: Net Income/(Loss) attributable to non-controlling interest		106,102			(7,944	)

Net Income/(Loss) attributable to Korth Direct Mortgage, Inc		739,996			(1,269,499	)

Series A Preferred Dividends		172,500			172,500

Series B Preferred Dividends		308,750			308,750
Net Income/(Loss) attributable to common stockholders	$	258,746		$	(1,750,749	)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

KORTH DIRECT MORTGAGE INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THREE MONTHS ENDED MARCH 31, 2025 AND 2024


	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional Paid		Accumulated			Non-Controlling
	Shares		Amount		Shares		Amount		Shares		Amount		in Capital		Earnings/(Deficit)			Interest			Totals

Balance at January 1, 2024		460,000	$	460		19,000	$	19		5,000,000	$	5,000	$	29,578,706	$	293,220		$	191,153		$	30,068,558

Share-based compensation		-		-		-		-		-		-		13,389		-			-			13,389
Series A & Series B preferred stock dividends declared		-		-		-		-		-		-		-		(481,250	)		-			(481,250	)
Net Loss		-		-		-		-		-		-		-		(1,269,499	)		(7,944	)		(1,277,443	)

Balance at March 31, 2024		460,000	$	460		19,000	$	19		5,000,000	$	5,000	$	29,592,095	$	(1,457,529	)	$	183,209		$	28,323,254

Balance at January 1, 2025		460,000	$	460		19,000	$	19		5,000,000	$	5,000	$	29,632,262	$	(3,325,687	)	$	4,453,602		$	30,765,656

Share-based compensation		-		-		-		-		-		-		13,389		-			-			13,389
Series A & Series B preferred stock dividends declared		-		-		-		-		-		-		-		(481,250	)		-			(481,250	)
Contributions to Fund		-		-		-		-		-		-		-		-			633,583			633,583
Net Income		-		-		-		-		-		-		-		739,996			106,102			846,098

Balance at March 31, 2025		460,000	$	460		19,000	$	19		5,000,000	$	5,000	$	29,645,651	$	(3,066,941	)	$	5,193,287		$	31,777,476

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

KORTH DIRECT MORTGAGE INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Three Months Ended			For the Three Months Ended
	March 31, 2025			March 31, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	846,098		$	(1,277,443	)
Adjustments to Reconcile Net Income/(Loss) to:
Net Cash Provided by/(Used in) Operating Activities:
Unrealized (Gain)/Loss on Mortgages Owned		(368,972	)		747,227
Unrealized (Gain)/Loss on Mortgage Secured Notes		(14,852	)		2,634
Unrealized Gain on Investment		(74,798	)		-
Realized Gain on Foreclosure		(207,981	)		-
Realized Loss on LHS		4,417			572
Change in Fair Value of Mortgage Secured Notes		-			(12,660,000	)
Loss on Foreclosures		-			12,660,000
Stock Compensation Expense		13,389			13,389
Depreciation		323,325			169,129
Amortization of loan costs		29,926			662,407
Deferred rent expense from operating lease		(4,893	)		(3,064	)
Deferred income taxes		269,987			(512,477	)
Changes in Operating Assets and Liabilities:
Mortgage Secured Notes Issued		3,485,238			(17,050,033	)
Mortgage Secured Notes Purchased		-			(2,634	)
Restricted Investment		(12,296	)		-
Warehouse LOC		(1,274	)		(10,853,511	)
Portfolio Loans		(176,955	)		1,192,321
Loans Held For Sale, at Fair Value		312,195			2,876,044
Other Assets		(202,647	)		(451,732	)
Deferred Revenue, net		(158,774	)		(114,753	)
Escrow Payable		(2,271,872	)		(927,124	)
Securities Sold Short		-			(2,565,082	)
Other Liabilities and Payables		283,619			185,431
New Mortgage Lending		(1,170,000	)		25,027,727
Mortgage Loans Matured/Paid Off		589,241			-
Total Adjustments		646,023			(1,603,529	)

NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES		1,492,121			(2,880,972	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(11,494	)		(2,494	)
NET CASH USED IN INVESTING ACTIVITIES		(11,494	)		(2,494	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Series A/B preferred stock dividends		(481,250	)		(481,250	)
Contributions to Fund		633,583			-
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES		152,333			(481,250	)

NET INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		1,632,960			(3,364,716	)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH – Beginning of Period		18,330,119			21,701,808

CASH, CASH EQUIVALENTS AND RESTRICTED CASH – End of Period	$	19,963,079		$	18,337,092

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest	$	455,303		$	2,582

NON-CASH INVESTING AND FINANCING ACTIVITIES
Fair value of assets acquired through foreclosure	$	37,475,177			-

See accompanying notes to the unaudited consolidated financial statements.

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KORTH DIRECT MORTGAGE INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS

Korth Direct Mortgage Inc. (the “Company” or “KDM”) is incorporated in the State of Florida. The Company was created to originate mortgages and fund those mortgages with Notes secured by mortgage loans. J.W. Korth & Company Limited Partnership (“J.W. Korth”) is a wholly owned subsidiary of KDM.

J.W. Korth is a securities broker dealer registered with the Securities Exchange Commission (the “Commission”) and the states of Michigan, Florida, and various other states and an SEC registered investment adviser under the Investment Advisers Act of 1940. J.W. Korth is a licensed member of the Financial Industry Regulatory Authority (FINRA), the Securities Investor Protection Corporation, as well as a Municipal Securities Rulemaking Board (MSRB) registrant.

On July 28, 2022, KDM created a new wholly owned subsidiary, KDM Funding I LLC (“KDMF”), which is an additional issuer of Mortgage Secured Notes (“MSNs”). KDM is the servicer of KDMF’s loans, and all revenue and expenses are passed through to the Company and consolidated within these financial statements. Although KDMF’s deal history is broken out by KDM and KDMF as issuers in KDM’s annual reports on Form 10-K as well as its securities memoranda there are no stand-alone financial statements prepared for KDMF. See the current report Form 8-K filed with the Commission on August 5, 2022, for more information concerning the business of KDMF.

KDM also owns a controlling interest in KDM Stafford LLC and KDM Seaton Colyton Holdings LLC, owns 100% of KDM Nagog Park LLC, and KDM Cupples REO LLC, which are special purpose entities whose primary business purpose is to own and operate various commercial real estate properties. Currently, these entities own properties in Stafford, VA, Los Angeles, CA, Acton, MA, and St. Louis, MS.

KDM Capital Partners LP (the “Fund”) was formed in June 2024 as a limited partnership in the state of Delaware. The Fund’s primary business purpose is to invest in mortgages that are originated and serviced by KDM and other real estate related investments. KDM Capital, LLC serves as the Fund’s General Partner and J.W. Korth serves as the Fund’s Investment Manager. The Fund is actively raising capital.

The Fund qualifies as an investment company, as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services – Investment Companies, and, therefore, is applying the specialized accounting and reporting guidance pursuant to ASC Topic 946.

The Company may create and operate other special purpose and pass-through entities typically organized as limited liability companies in order to own real estate and issue additional securities. These entities will be consolidated into these unaudited consolidated financial statements and Notes, if and when created.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying unaudited consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly owned subsidiaries J.W. Korth, KDM MFB LLC, KDM Funding I LLC, KDM Nagog Park LLC, KDM Cupples REO LLC, KDM Capital Management LLC, KDM Capital Partners LP, KDM Capital LLC, KDM Asset Management LLC, and KDM Stafford LLC and KDM Seaton Colyton Holdings LLC, in which KDM owns a controlling interest.

BASIS OF ACCOUNTING

The accompanying unaudited consolidated financial statements have been prepared on the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”). The accompanying unaudited consolidated financial statements have also been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

USE OF ESTIMATES

The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

For purposes of the statements of cash flows, the Company considers all money market accounts, highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the unaudited consolidated statements of cash flows as of March 31, 2025, and 2024:

Schedule of cash and cash equivalents
	2025		2024
Cash and Cash Equivalents	$	6,879,240	$	3,294,832
Restricted Cash		13,083,839		15,042,260
	$	19,963,079	$	18,337,092

The Company maintains cash and restricted cash balances at financial institutions in excess of federally insured limits. The Company has not experienced any losses related to these balances. The Federal Deposit Insurance Corporation insures eligible accounts up to $250,000 per depositor at each financial institution. The Company holds cash and restricted cash at well-known banks and does not believe that it is exposed to any significant credit risk on cash and cash equivalents.

MORTGAGE VALUATION

Mortgages that are current are carried at the principal value owed by the borrower as of the date of the unaudited consolidated financial statements, according to the amortization schedule for the loans, which management believes to be the best estimate of fair value. Mortgages owned as of the date of these unaudited consolidated financial statements are current. The net present value of the servicing revenue is recorded as mortgage servicing rights at fair value on the Unaudited Consolidated Statements of Financial Condition and the change in the fair value is recognized on the Unaudited Consolidated Statements of Operations as an unrealized gain/(loss) on mortgages.

MORTGAGE SECURED NOTES

The Company primarily funds the mortgage loans (”CM Loans”) that it makes by issuing MSNs in series, each of which MSN series is secured by the mortgage or mortgages funded from proceeds of the MSN series. Our MSNs have been funded in multiple ways, including private placements, SEC registered offerings, loan participations, and Rule 144A offerings. As of March 31, 2025, the Company has issued MSNs secured by these loans in the amount of $602,721,250 since inception and has redeemed $185,265,502 of its MSNs since inception.

PORTFOLIO LOANS

The Company recognizes loans made with its own capital, or pieces of those not securitized or sold via participation, under the caption “Portfolio Loans” on the unaudited consolidated statements of financial condition. This number also includes the cash we have invested in loans on our warehouse line as “haircut capital.” As of March 31, 2025, the Company has issued Portfolio Loans in the amount of $49,589,472 and currently holds $3,171,468 of Portfolio Loans, which management believes to be the best estimate of fair value.

LOANS HELD FOR SALE

The Company purchases small balance commercial loans classified as held for sale which are carried at the lower of amortized cost basis or market value, where gains and losses are recognized upon sale as realized loss on loans held for sale on the Unaudited Consolidated Statement of Operations which is $4,417 as of March 31, 2025. We determine the fair value of mortgage loans held for sale by using a yield based pricing or discounted cash flow model.

PARTICIPATIONS

From time to time the Company sells all or part of its mortgage loans as loan participations to banks or other lending institutions that prefer to hold their mortgage investments in that manner. As of March 31, 2025, the Company had issued loan participations in the amount of $52,930,000 all of which are still outstanding. A portion of these participations are included in the Mortgages Owned number and Mortgage Secured Notes Payable.

GOODWILL

FASB ASC Section 350 requires an annual assessment of the recoverability of goodwill using a two-step process. The first step of the impairment test involves a comparison of the fair value of the reporting unit to its carrying value. If the carrying value is higher than the fair value or there is an indication that impairment may exist, a second step must be performed to compute the amount of the impairment. Management conducted its annual assessment of goodwill impairment and determined that there were no indicators of goodwill impairment and therefore did not record an impairment loss for the quarter ended March 31, 2025.

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REVENUE RECOGNITION

The Company’s primary sources of revenue are generated from origination fees, servicing fees, underwriting income, and leasing revenue.

Origination Fees

Loan origination fees represent revenue earned from originating mortgage loans; net of any credits given to the borrower. Loan origination fees generally represent flat, per-loan fee amounts and are deferred and recognized as revenue over the life of the loan. The associated loan origination costs are also deferred and recognized as expense over the life of the loan. The deferred portion of the loan origination fees is netted against the deferred portion of the loan origination costs, which include mortgage broker expenses, and reported as a net deferred revenue liability on the Company’s Consolidated Statements of Financial Condition.

Servicing Fees

Loan servicing fees represent revenue earned for servicing loans for various investors. Loan servicing fees are a percentage of the outstanding unpaid principal balance and represent the difference between the Corresponding Mortgage Loan (“CM Loan”) interest received and the MSN interest payable. Servicing Fees are recognized as revenue as the related mortgage payments are received; similarly, loan servicing expenses are charged to operations as incurred.

Underwriting Income

Underwriting income represents revenue earned by J.W. Korth for underwriting and distribution of the Company’s securities. Revenues from underwriting income are recognized on settlement date of the trades.

Leasing Revenue

Leasing revenue represents revenues generated at rental properties majority-owned and controlled by KDM through operating leases. Leasing revenues are generated through KDM Stafford and KDM Seaton Colyton Holdings, in which the Company holds a controlling interest, and the Company’s wholly-owned subsidiaries, KDM Nagog Park and KDM Cupples REO. Leasing revenue generated from operating leases are recognized over the lease term on a straight-line basis. We recorded rental revenue of $1,533,259 for the quarter ended March 31, 2025 and $243,032 for the quarter ended March 31,2024.

LEASES

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” The standard requires organizations to recognize right-of-use (“ROU”) assets and lease liabilities on the balance sheet and disclose key information about leases that were historically classified as operating leases under previous GAAP. As part of the adoption of this standard, the Company recognizes lease liabilities with a corresponding ROU leased asset of approximately the same amount based on the present value of the remaining lease payments pursuant to current leasing standards for existing operating leases.

STOCK-BASED COMPENSATION

The Company estimates the fair value of share-based payments on the date of grant using a Black-Scholes option pricing model. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. The Company’s accounting policy is to recognize forfeitures as they occur.

The Black-Scholes option pricing model requires assumptions for the expected volatility of the share price of our common stock, the expected dividend yield, and a risk-free interest rate over the expected term of the stock-based award.

Since the Company’s common stock is not publicly traded, we do not have sufficient Company specific information regarding the volatility of our share price on which to base an estimate of expected volatility. As a result, we use the historical volatilities of similar entities within our industry as the expected volatility of our share price.

The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future on its common stock.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a remaining term equal to the expected term of the stock-based award.

Since the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term, the Company utilizes the simplified method to calculate the expected term of stock-based awards based on the average of the vesting term and contractual term of the award.

The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

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Unrealized Gain on Mortgages

The net present value of the servicing income is recognized at the time the mortgage is initiated. The changes to the net present value which is determined by the determination of the fair value of the assets are recognized through an adjustment to the unrealized gain/loss in each reporting period. This value uses several inputs that are highly subjective including: discount rate, prepayment rate, the current interest rate environment, and default rate assumptions. We use a third-party to calculate this value.

DUE TO CLEARINGHOUSE BROKERS

J.W. Korth operates as an SEC and FINRA registered securities broker dealer. The securities transactions are traded through broker clearinghouses and, upon settlement, funds are transferred in and out of the Company’s bank accounts. Unsettled transactions create short-term payables and receivables due to and from the broker clearinghouses. As of March 31, 2025, the Company had a net amount due to the clearinghouse brokers of $0.

DEPRECIATION

Depreciation is provided on a straight-line basis using estimated useful lives of three to thirty-nine years.

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company’s tax returns for the years ended December 31, 2021, and after remain subject to examination by federal and state jurisdictions.

RECENT ACCOUNTING PRONOUNCEMENTS

Improvements to Credit Loss Estimates

In June 2016, the FASB issued ASU 2016-13 Financial Instruments, Measurement of Credit Losses on Financial Instruments. This ASU updates the existing incurred loss model to a current expected credit loss (“CECL”) model for financial assets and net investments in leases that are not accounted for at fair value through earnings. The amendments affect cash and cash equivalents, reverse repurchase agreements, certain loans, held-to-maturity debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures and any other financial assets not excluded from the scope. There are also limited amendments to the impairment model for available-for-sale debt securities. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022 for public smaller reporting companies, including interim reporting periods within those fiscal years. Early adoption is permitted, but not before annual reporting periods beginning after December 15, 2018. The Company adopted CECL on January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, which requires public entities to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280, Segment Reporting. The ASU does not change how a public entity identifies its operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The guidance should be applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company has adopted this ASU, which did not have a material impact on the Company's financial position, results of operations or financial statement disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, which requires entities to provide additional information about federal, state and foreign income taxes and reconciling items in the rate reconciliation table, and to disclose further disaggregation of income taxes paid (net of refunds received) by federal (national), state and foreign taxes by jurisdiction. For public business entities, the ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The guidance should be applied prospectively, but entities have the option to apply it retrospectively for each period presented. The Company has determined this ASU will not have a material impact on the Company’s financial condition, results of operations or financial statement disclosures.

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DEBT ISSUANCE COSTS

Debt issuance costs are amortized over the term of the respective obligation, using the straight-line method. Amortization expense of debt issuance costs is recorded in interest expense in the unaudited consolidated statements of operations.

NOTE 3 – CONTINGENT LIABILITY

As part of the acquisition of J. W. Korth in 2020, the Company agreed to pay (i) the Preferred Capital Interest partners of J.W. Korth accrued and unpaid 6% dividends through July 31, 2020; (ii) the J.W. Korth Preferred Capital Interest Partners quarterly dividends concurrently with its payment of the Company’s Series A Preferred Stock dividends at least annually; and (iii) in such years as it pays Series A Preferred dividends, redeem 25% annually of the J.W. Korth Preferred Capital Interest partners through a capital contribution to JW Korth. The contingent liability was paid off in July 2024.

NOTE 4 – MORTGAGE SECURED NOTES PAYABLE

As stated in Note 2 the Company funds the majority of the mortgage loans that it makes by issuing MSNs, which are secured by those same mortgages. As of March 31, 2025, and December 31, 2024, the Company had outstanding loans securing MSNs totaling $417,455,748 and $451,974,989, respectively, and issued MSNs secured by those loans in the amount of $453,749,757 and $450,264,519, respectively. The MSNs have been funded in multiple ways, including private placements, loan participations, and Rule 144A offerings exempt from registration, and through SEC registered offerings.

The MSNs are typically five-year interest-only notes with the principal balance due at maturity, but terms can vary. Interest rates on the senior MSNs have ranged from 4.25% to 10.44% and mature at various dates from June 2025 to June 2037. The MSNs are non-recourse to KDM and are payable to the extent that the Company receives payment from the borrower of the borrower’s mortgage loans. Payments made to KDM by borrowers are distributed by KDM to MSN noteholders in accordance with the terms of their MSN Notes.

The following table presents the future scheduled principal payments on the Company’s MSNs:

Scheduled of principal payments
Years ending December 31	Future Maturities of Debt

Last 9 months of 2025		68,304,575
2026		123,612,715
2027		74,839,515
2028		75,593,234
2029		37,471,774
Thereafter		73,927,944
Total	$	453,749,757

NOTE 5 - RESTRICTED CASH

The Company maintains multiple segregated accounts in trust for borrowers and investors. The value of these accounts is carried under the asset “Restricted Cash.”

The “In Trust for 1” account holds the monthly tax and insurance payments collected from borrowers and distributes payments annually, on behalf of borrowers, to the appropriate tax authorities and insurance companies. This account corresponds to the Escrow Payable liability. As of March 31, 2025, and December 31, 2024, this account had balances of $4,692,100 and $5,585,017, respectively.

The “In Trust for 2” account receives payments from borrowers, distributes payments to investors, and pays the servicing fees to the Company. This account corresponds to the Due to Investors liability, which is included in other liabilities and payables. As of March 31, 2025, and December 31, 2024, this account had balances of $936,086 and $994,858, respectively.

The Company maintains an account for payment of quarterly Preferred Series B dividends that has balances of $308,750 as of March 31, 2025, and December 31, 2024, for both periods, respectively.

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The Company maintains a cash management account that holds a portion of the restricted cash, which is swept on a regular basis. The account had balances of $2,222,114 and $2,322,094 as of March 31, 2025, and December 31, 2024, respectively. This account is included as part of the Escrow Payable liability account.

The Company invests a portion of the restricted cash collected from borrowers in U.S. Treasury Bills with maturities of twelve months or less. The Restricted Investment account had a balance of $1,204,806 and $1,192,510 as of March 31, 2025, and December 31, 2024, respectively. This account is included as part of the Escrow Payable liability account.

The Company invests a portion of restricted cash from borrowers in a savings account with a balance of $250,000 as of March 31, 2025, and December 31,2024, respectively.

The Company has opened two cash management accounts at J.W. Korth & Company that hold a portion of restricted cash. The balances as of March 31, 2025, were $2,471,844 and $2,701,997 and December 31, 2024, were $2,750,982 and $3,635,540 respectively.

NOTE 6 – ACQUISITION OF RENTAL PROPERTY

In November 2022, through a Settlement in Lieu of Foreclosure Agreement, the Company obtained majority ownership and the controlling interest in rental property located in Stafford, Virginia. As part of the agreement, a $9.5 million mortgage held by the Company was assigned to a newly created special-purpose entity, KDM Stafford LLC, which is majority-owned and controlled by the Company. The original borrower maintained a minority interest in the special-purpose entity. For the quarter ended March 31, 2025 and March 31, 2024, the Company recorded net loss attributable to the non-controlling interest of $13,615 and $7,944, respectively. In addition, a portfolio loan held by the Company in the amount of $7.5 million was classified as an investment in the special-purpose entity which is eliminated in consolidation.

In March 2024, through foreclosure and via a special-purpose entity named KDM Nagog Park LLC, a wholly owned subsidiary, KDM now owns a 3 building office park in Acton, Massachusetts. Similarly, via deed in lieu of foreclosure in April 2024, KDM took ownership of an office building in St. Louis, Missouri through a wholly owned subsidiary named KDM Cupples REO LLC. The activity of the wholly owned subsidiaries, KDM Nagog Park LLC and KDM Cupples REO LLC, are included in the Company’s consolidated financial statements beginning in the second quarter of 2024.

In March 2025, via deed in lieu of foreclosure, KDM acquired a mixed use property in Los Angeles, California, a majority-owned via a subsidiary named KDM Seaton Colyton Holdings, LLC.

As part of the deed in lieu transaction, the Company recognized a gain of $207,981 which was the difference between the fair value of the net assets acquired, the mortgage liability assumed, and the consideration paid on the transaction date. The following table summarizes the transaction:


Fair value of Net Assets Acquired:
Restricted Cash	$	17,250
Building and land		35,100,000
Acquired operating leases		2,357,927
Mortgage liability assumed		(35,100,000	)
Net Assets Acquired		2,375,177
Less: Investment in special-purpose entity		(2,167,196	)
Gain on Settlement Agreement	$	207,981

Please see Note 18 Segment Reporting.

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As of March 31, 2025, we had 23 operating leases under which we are the lessor, compared to 14 operating leases as of March 31, 2024. Leasing revenue recognized from these operating leases totaled $1,533,259 and $243,032 for the quarters ended March 31, 2025 and 2024, respectively. These leases primarily relate to retail and office space. Future undiscounted lease income from operating leases where we are the lessor were as follows as of March 31, 2025:


Summary of 5 year future rents:

Last 9 months 2025	$	3,697,623
2026		3,090,342
2027		2,863,003
2028		2,423,108
2029		1,987,230
Thereafter		14,687,584
	$	28,748,890

Property is recorded at fair market value and depreciation is recognized over a 39-year period. For these properties, we recorded depreciation expense of $206,751 and $147,985 for the three months ended March 31, 2025 and 2024, respectively.

NOTE 7 - COMMITMENTS

The Company maintains office space in Coral Gables, Florida. In November 2020, the Company signed a lease for office space in Miami, Florida, for a term of sixty-two months with the right to extend the term of the lease for two additional, successive terms of two years upon the same terms and conditions as the initial term.

The Company also maintains an office in Lansing, Michigan for J.W. Korth.

The net present value of future lease payments pursuant to the operating lease agreements are included in the ROU Leased Asset and the Lease Liability accounts on the unaudited consolidated statements of financial condition. The ROU Leased Asset represents the right to use an underlying asset for the remaining lease term. The Lease Liability represents the obligation to make lease payments pursuant to the terms of the lease agreements.

Rental expense for the three months ended March 31, 2025, was $79,703 compared to $67,614 for the three months ended March 31, 2024, this includes additional expenses for common area, direct operating expense, utilities, parking, and taxes.

As of March 31, 2025, the net present value of the future lease liabilities, using the weighted-average discount rate of 4.24%, which is commensurate with the Company’s secured borrowing rate, over the weighted average remaining life of 0.9 years was $229,966.

The following is a schedule of the maturities of future lease payments over the remaining life of the operating leases, reconciled to the net present value as of March 31, 2025:


		Future Lease Payments

2025	$	204,161
2026		30,504
Total Lease Payments		234,665
Less: Imputed Interest		(4,699	)
Present Value of Lease Liabilities	$	229,966

NOTE 8 - INDEMNIFICATIONS

The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely the Company will have to make material payments under these indemnification arrangements, and it has not recorded any contingent liability in the unaudited consolidated financial statements for these indemnifications.

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NOTE 9 – RELATED PARTY TRANSACTIONS

From time to time the Company purchases MSNs and holds them in its brokerage account. These MSNs are included on the unaudited consolidated statements of financial condition as mortgages owned. Also, from time to time second lien or balance sheet loans may be all or partially funded by entities controlled by KDM directors or employees and are serviced by KDM. In some circumstances where MSNs are in default, in the event a foreclosure becomes necessary, KDM may acquire properties as a deed in lieu of foreclosure. KDM may create special purpose entities to take title to such properties, liquidate them to satisfy any debts due under an MSN, or keep such properties and repay the MSN from its own funds. To that end, KDM created KDM Stafford LLC, KDM Nagog Park LLC, KDM Cupples REO LLC and KDM Seaton Colyton Holdings LLC, in order to acquire properties via foreclosure and in deed of lieu of foreclosure, respectively. See Note 6.

NOTE 10 – DEFERRED REVENUE, NET

Loan origination fees are deferred and recognized as revenue over the life of the respective loan. The associated loan origination costs are also deferred and recognized as expense over the life of the loan. The deferred portion of the loan origination fees is netted against the deferred portion of the loan origination costs and reported as a net deferred revenue liability on the Company’s unaudited consolidated statements of financial condition.

The following is a summary of the loan origination fees and costs deferred and amortized for the three months ended March 31, 2025:


		Deferred Origination Fees			Deferred Origination Costs			Deferred Revenue, Net

Deferred Revenue at December 31, 2024	$	4,672,221		$	(2,713,254	)	$	1,958,967

New loan deferrals		178,500			(44,625	)		133,875
								-
Amortization of deferrals		(1,122,219	)		829,570			(292,649	)

Deferred Revenue at March 31, 2025	$	3,728,502		$	(1,928,309	)	$	1,800,193

NOTE 11 – EMPLOYEE AND DIRECTOR STOCK OPTIONS

On June 28, 2019, the Company’s Board of Directors adopted the 2019 Stock Option Plan (the “Incentive Plan”). The Incentive Plan provides for the grant of both incentive and non-statutory stock options to key employees, directors or other persons having a service relationship with the Company. Effective December 8, 2022, the Incentive Plan was amended to increase the number of authorized option shares to 3,000,000 shares of the Company’s unissued, or reacquired, common stock, $0.001 par value. The Plan is administered by the Board of Directors.

During the quarter ended June 30, 2023, the Company issued options to purchase 15,000 shares of the Company’s common stock at an exercise price of $3.00 per share. The weighted-average grant date fair values of options granted during the fiscal year 2023 were $1.22992 per share. The fair values of the stock-based awards granted were calculated with the following weighted-average assumptions:


		2023
Risk-free interest rate:		3.62%
Expected term:		5.75 years
Expected dividend yield:		0%
Expected volatility:		52.17%

For the three months ended March 31, 2025, and March 31, 2024, the Company recorded $13,389 of stock-based compensation expense. Stock options vest 50% at issuance and then ratably over the remaining three years vesting period until they are fully vested. As of March 31, 2025, there were 1,905,000 shares of the Company’s common stock available to be issued pursuant to the Incentive Plan.

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Stock option activity for the three months ended March 31, 2025, is summarized as follows:

Schedule of stock option activity
2019 Stock Option Plan:	Shares		Weighted Average Exercise Price		Weighted Remaining Contractual Life (Years)
Options outstanding at January 1, 2025		1,095,000	$	1.47		6.64
Granted		-		-		-
Exercised
Expired or forfeited		-		-		-
Options outstanding at March 31, 2025		1,095,000	$	1.47		6.48

Options exercisable at March 31, 2025		960,000	$	1.13		7.3
Options expected to vest at March 31, 2025		135,000	$	3.00		9.0

NOTE 12 – PREFERRED EQUITY

On September 27, 2019, the Company issued 200,000 shares of its Series A 6% Cumulative Perpetual Convertible Preferred Stock, par value $0.001 per share, for net proceeds of $4,750,000. The Company paid $250,000 in expenses related to the preferred stock issuance to J. W. Korth as underwriter and distributor. Each share was sold for $25 and is convertible into common stock at a ratio of 5 shares of common stock for each share of Series A Preferred Stock. On September 15, 2021, June 28, 2022, and March 23, 2023, the Company sold an additional 100,000, 480,000, and 160,000 shares, respectively, of its Series A 6% Cumulative Perpetual Convertible Preferred Stock for net proceeds of $2,375,000, $11,856,480, and $3,896,000.

On August 12, 2022, the Company repurchased and retired 480,000 shares of its Series A 6% Cumulative Perpetual Convertible Preferred Stock at a price of $25.25 per share, for a total of $12,120,480. The Company paid $640,000 in interest expense.

On June 29, 2021, the Company issued 19,000 shares of its Series B 6.50% Cumulative Non-Voting Redeemable Secured Preferred Stock, with a liquidation preference of $1,000 per share, for net proceeds of $18,302,500. The Company paid $697,500 in expenses related to the preferred stock issuance to its financial advisor and placement agent.

The Series B preferred stock is non-convertible and pays cumulative dividends, if and when declared by the Company’s Board of Directors, at a rate of 6.50% per annum. Dividends declared will be payable quarterly in arrears on the 15th day of January, April, July and October of each year. The Series B preferred stock ranks senior to KDM’s common stock and Series A 6% Cumulative Preferred Stock in dividend rights and upon liquidation, winding up or dissolution, and will rank pari passu with, or senior to, all future issuances of preferred stock of KDM.

The Company is required to use commercially reasonable efforts to maintain a nationally recognized statistical ratings organization, or NRSRO, rating for so long as any shares of Series B preferred stock remain outstanding. If the Company fails to maintain an NRSRO rating for the Series B preferred stock of at least BBB (or the equivalent thereof), the dividend rate applicable to the Series B preferred stock will be increased by 25 basis points, and in the event the Company fails to maintain an NRSRO rating of at least BBB- (or the equivalent thereof), the dividend rate applicable to the Series B preferred stock will be increased by an additional 25 basis points. The Company’s current corporate rating is BBB.

The Series B preferred stock is redeemable at the Company’s option, in whole or in part, on or after June 29, 2026, at a redemption price per share equal to $1,000 per share, plus accrued and unpaid dividends, if any. Subject to applicable law, the Company is required to redeem the Series B preferred stock, in each case at a redemption price equal to $1,000 per share, plus accrued and unpaid dividends, as follows:

10% of the originally-issued shares of Series B preferred stock on June 29, 2027;

10% of the originally-issued shares of Series B preferred stock on June 29, 2028;

10% of the originally-issued shares of Series B preferred stock on June 29, 2029;

20% of the originally-issued shares of Series B preferred stock on June 29, 2030; and

50% of the originally-issued shares of Series B preferred stock on June 29, 2031.

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The Company’s obligations to redeem the Series B preferred stock are secured by a security interest on servicing fees, as specified in each mortgage secured note issued by the Company, which is the difference between the interest payable pursuant to the mortgage secured note and the interest receivable pursuant to the related commercial real estate mortgage loan. The requisite holders of Series B preferred stock will be entitled to exercise rights and remedies pursuant to such security interest in the event that the Company does not pay the relevant mandatory redemption price (inclusive of any accrued and unpaid dividends) within thirty (30) days of the applicable redemption date, except with respect to the final redemption date, which is not subject to a thirty (30)-day grace period.

NOTE 13 – FAIR VALUE

FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not assumptions specific to the entity.

ASC 820 establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Valuation Process

Cash and cash equivalents:

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Mortgages Owned and Mortgage Secured Notes Payable:

Mortgage loans for which the Company has the intention and ability to hold for the foreseeable future, or until maturity or payoff, are reported at their outstanding principal balances, net of any unearned income, premiums or discounts which management believes to be the best estimate of fair value for the asset. If a decline in fair value below the carrying balance is other-than-temporary, an impairment loss is recorded and the loan is recorded at the lower fair value at each reporting period. On March 5, 2024, through a full bid in the foreclosure auction, KDM, via its subsidiary KDM Nagog Park LLC, took ownership of the office property securing KDM2021-N015. In April 2024, via a deed in lieu of foreclosure, a wholly owned subsidiary of KDM named KDM Cupples REO LLC took title to the office property securing KDM2021-N022. Both loans went into default in late 2023 due to the departure of major tenants. During the twelve months ending December 31,2024, it was determined that the value of these two mortgages were impaired and recorded on the Statement of Operations in the amount of $12,660,000. The foreclosed properties in the amount of $15,000,000 are included in the property and equipment. The carrying value of the properties was determined by third party appraisals near the time of acquisition.

Due to the fact that the Company issues notes secured directly by underlying loans, our assets and liabilities in this category have identical values and assets have offsetting balances, net of any MSNs held by the Company.

Mortgage Servicing:

The net present value of the servicing income is recognized at the time the mortgage is initiated as an unrealized gain, which is being recognized through net income at each reporting period. This value uses several inputs that are highly subjective including: discount rate, constant prepayment rate, the current interest rate environment, and default rate assumptions. Since the Company has limited operating history and a small amount of loans outstanding, it has a limited basis to predict prepayment rates and default rates, but have engaged a third party, MIAC Analytics, to assist us in our valuation of this asset. The amount is included on the unaudited consolidated statements of financial condition as “Mortgage Servicing Rights, at Fair Value.”

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Securities

J. W. Korth owns 225,000, $1 par of defaulted Banco Cruzeiro del Sur bonds. As of March 31, 2025, the value of these bonds was $41,991, which management believes to be the fair value expected to be received from the receiver handling the liquidation of the company in Brazil. Local counsel has informed us that the bank has sufficient cash to pay off the fair value of our bonds.

KDM also holds a small amount of its own MSNs in an account which it may buy from time to time. These bonds are carried at the published statement values.

Fair Value Disclosure

The following tables display the Company’s assets and liabilities measured at fair value on a recurring basis:


	March 31, 2025

		Total		Level I		Level II		Level III
Financial Assets
Mortgages Owned	$	417,455,748	$	-	$	417,455,748	$	-
Mortgage Servicing		9,629,197		-		-		9,629,197
Portfolio Loans		3,171,468		-		3,171,468		-
Non-MSN Securities		41,991		-		-		41,991
Total Financial Assets	$	430,298,404	$	-	$	420,627,216	$	9,671,188
Financial Liabilities
Mortgage Secured Notes Payable	$	453,749,757	$	-	$	453,749,757	$	-
Warehouse Line of Credit		17,494,250		-		17,494,250		-
Total Financial Liabilities	$	471,244,007	$	-	$	471,244,007	$	-

		December 31, 2024
Financial Assets
Mortgages Owned	$	451,974,989	$	-	$	451,974,989	$	-
Mortgage Servicing		9,260,225		-		-		9,260,225
Portfolio Loans		5,161,709		-		5,161,709		-
Non-MSN Securities		41,991		-		-		41,991
Total Financial Assets	$	466,438,914	$	-	$	457,136,698	$	9,302,216
Financial Liabilities
Mortgage Secured Notes Payable	$	450,264,519	$	-	$	450,264,519	$	-
Warehouse Line of Credit		17,269,278		-		17,269,278		-
Total Financial Liabilities	$	467,533,797	$	-	$	467,533,797	$	-

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Fair Value Measurements

Changes in Fair Value Measurements for the three months ended March 31, 2025

The following table presents a reconciliation of changes in Level 3 assets and liabilities reported in the unaudited consolidated statement of financial condition for March 31, 2025:


Changes in assets:
Period ended March 31, 2025	Mortgage Servicing Value		Non-MSN Securities		Total Value
Beginning balance at January 1, 2025	$	9,260,225	$	41,991	$	9,302,216
Sales		-		-		-
Unrealized Gain from newly issued mortgages		-		-		-
Fair Value adjustment		368,972		-		368,972
Ending balance at March 31, 2025	$	9,629,197	$	41,991	$	9,671,188

The Company’s policy for recording transfers between levels of the fair value hierarchy is to recognize such transfers as of the financial statement date. For the three months ended March 31, 2025, there were no transfers between levels.

The Company has established valuation processes and policies for its Level 3 investments to ensure that the methods used are fair and consistent in accordance with ASC 820 – Fair Value Measurements and Disclosures. The Company’s valuation committee performs reviews of the Level 3 investments’ valuations, which include reviewing any significant price changes reported from the prior period. When a Level 3 investment has a significant price change, the valuation committee reviews relevant market data to substantiate the price change.

The following table presents quantitative information regarding the significant unobservable inputs the Company uses to determine the fair value of Level 3 investments held as of March 31, 2025:

Schedule of quantitative information
Investment type	Fair Value		Valuation technique	Unobservable inputs	Values

Mortgage servicing	$	9,629,197	Net Present Value	Prepayment Discount		12.00	%
				Discount rate		15.00	%

Non-MSN Securities	$	41,991	Net Present Value

NOTE 14 – INCOME TAXES

The income tax provision was $285,731 for the three months ended March 31, 2025. The effective tax rate was 25.7% of the income before income taxes of $1,111,611, which differs from the federal statutory rate of 21% due to state income taxes and certain of the Company’s expenses that are not deductible for tax purposes.

The income tax benefit was $512,477 for the three months ended March 31, 2024. The effective tax rate was 25.1% of the loss before income taxes of $1,789,921, which differs from the federal statutory rate of 21% due to state income taxes and certain of the Company’s expenses that are not deductible for tax purposes.

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NOTE 15 – PROPERTY AND EQUIPMENT

Property and Equipment are summarized as follows:


March 31, 2025

Land & Building	$	68,052,260
Equipment		327,436
Furniture and fixtures		194,045
		68,573,741

Accumulated depreciation		(1,768,567	)

Net Property Equipment	$	66,805,174

December 31, 2024

Land & Building	$	32,940,768
Equipment		327,436
Furniture and fixtures		194,046
		33,462,250

Accumulated depreciation		(1,539,846	)

Net Property Equipment	$	31,922,404

Depreciation expenses for the periods ending March 31, 2025, and March 31, 2024, were $323,325 and $169,129, respectively.

NOTE 16 – WAREHOUSE LINE OF CREDIT

On October 13, 2023, KDM MFB LLC, a Delaware limited liability company (the “KDM MFB”), a newly formed and wholly owned subsidiary of Korth Direct Mortgage Inc. (the “Company”) entered into a $100,000,000 Master Repurchase and Securities Contract credit facility with Churchill MRA Funding I LLC (the “Agreement”). The Company vis a vis KDM MFB, will use the credit facility provided by the Agreement (the “MFB Line”) to finance the Company’s expansion of its lending operations in multi-family and multifamily bridge financing. As of March 31, 2025, the Company had a balance of $17,297,930 on the MFB Line. Total amortization expense of capitalized loan fees was $28,652 for the quarter ended March 31, 2025 and recorded in interest expense.

NOTE 17 – VARIABLE INTEREST ENTITIES

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is the entity that, through its variable interests, has both the power to direct the activities that significantly impact the VIE’s economic performance and the obligations to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

KDM Capital Partners, LP (the “Fund”) is a new investment partnership over which the Company and its related parties have a controlling financial interest. The Company holds 49.7% of the equity interest in the partnership and its CEO holds a 29.6% interest. The General Partner of the Fund is a wholly owned subsidiary of the Company. The Fund invests in loans originated by the Company and the holdings of the Fund are loan participations issued by the Company. The loan participations owned by the Fund are carried on the Company’s line of credit and are guaranteed by the Company.

The Fund’s partnership agreement provides the General Partner with complete decision-making responsibilities and grants the limited partners no substantive participating or kick-out rights. Additionally, the Company guarantees the debt used to finance the Fund’s loan investments. Accordingly, the Company determined that the Fund is a VIE subject to consolidation under the guidance of FASB ASC 810.

The Company determined that it is the primary beneficiary of the VIE because as the holder of the controlling interest in the general partner, it has the power to direct the activities of the Fund that most significantly impact the Fund’s economic performance and, through the debt guarantee, has the obligation to absorb any expected losses of the Fund. Accordingly, the Company consolidates the VIE into its financials, and the Fund holdings are eliminated in consolidation. The loans are consolidated on the asset portion of the balance sheet in the Mortgages Owned caption and on the liability side in the Mortgage Secured Notes caption.

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NOTE 18 – SEGMENT REPORTING

The Company accounts for its segment information in accordance with the provisions of ASC 280-10, Segment Reporting. ASC 280-10 establishes annual and interim reporting standards for operating segments of a company. ASC 280-10 requires disclosures of selected segment-related financial information about products, major customers, and geographic areas based on the Company’s internal accounting methods. The Company has two business segments: Lending and Servicing and Asset Management. The chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, evaluates performance, makes operating decisions, and allocates resources based on the revenue and gross profit information from the different segments.

Lending and Servicing

This is KDM’s core business segment and includes consolidation of the Fund and J.W. Korth. Our management profit and loss statements look at earnings before interest, taxes, depreciation, dividends, and amortization (“EBITDDA”), as well as exclude the unrealized gain/loss from our book of MSRs. This is an operating view of the business segment, so excludes the cost of financing the business and the future cash flows from loan servicing. These numbers do include salaries from all employees, including those who work across both business segments. Below are the consolidated profit and loss statements and assets:

Schedule of business segments
	Three months ended March 31,
	2025		2024
REVENUES
Origination Revenue, Net	$	1,140,738	$	385,155
Servicing Revenue		1,095,671		1,249,346
Underwriting Income		12,750		10,000
Other Revenue		915,586		318,011
Total Revenues		3,164,745		1,962,512

COST OF REVENUES
Broker Expenses		977,975		363,100
Administrative Expenses		305,594		270,232
Total Cost of Revenues		1,283,569		633,332

GROSS PROFIT		1,881,176		1,329,180

OPERATING EXPENSES
Office		109,320		99,437
Compensation and Related Benefits		740,563		1,073,407
Professional & Legal		177,604		335,072
Advertising		30,836		56,098
Total Operating Expenses		1,058,323		1,564,014

EBITDDA	$	822,853	$	(234,834	)

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	March 31, 2025		December 31, 2024
ASSETS
Cash and Cash Equivalents	$	5,372,700	$	1,974,155
Restricted Cash		13,421,485		15,726,038
Restricted Investment		1,204,806		1,192,510
Mortgages Owned		462,055,748		461,474,989
Mortgage Servicing Rights, at Fair Value		9,629,197		9,260,225
Portfolio Loans		12,838,664		12,661,709
Loans Held for Sale		203,603		520,215
Securities		41,991		41,991
ROU Leased Asset		210,728		270,281
Goodwill		110,000		110,000
Property and equipment, net of depreciation		180,905		203,058
Other Assets		16,590,703		16,632,923
Total Assets	$	521,860,530	$	520,068,094

Below is the reconciliation of EBITDDA to income/(loss) before provision for income taxes:

	Three months ended March 31,
	2025			2024

EBITDDA	$	822,853		$	(234,834	)

Other Income/(Expenses)
Unrealized Gain/(Loss) on Mortgages		368,972			(747,227	)
Unrealized Gain/(Loss) on Mortgage Secured Notes		14,858			(2,634	)
Interest Expense		(341,559	)		(694,068	)
Unrealized Loss on Investment		74,798			-
Realized Gain on Foreclosure		207,981			-
Realized Loss on Loans Held for Sale		(4,417	)		(572	)
Change in Fair Value of Mortgage Secured Notes		-			12,660,000
Loss on Foreclosures		-			(12,660,000	)
Total Other Income/(Expenses)		320,633			(1,444,501	)

Income/(Loss) before provision for income taxes	$	1,143,486		$	(1,679,335	)

Asset Management

While we view this business segment as necessary to support the Lending and Servicing segment, it also clearly has a very different set of metrics and we look at each property’s profit and loss statement independently. The numbers we use to manage the properties are primarily driven by total occupancy, rent per square foot, and net operating income. Two out of the three properties owned as of December 31, 2024 we owned on behalf of our MSN holders, and we are managing them in the best interests of the Noteholders until we can maximize recovery by stabilizing or selling them. Below are the consolidated profit and loss statements and assets of the three properties KDM owns in Stafford, Virginia (specialty office), Acton, Massachusetts (office), St. Louis, Missouri (office) and Los Angeles, California (mixed use).

See Note 15 for total property values.

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	Three months ended March 31,
	2025		2024
REVENUES
Rental Income	$	1,533,482	$	243,032
Total Revenues		1,533,482		243,032

COST OF REVENUES
Bank Transaction Fees		312		-
Ground Rent		306,424		-
Total Cost of Revenues		306,736		-

GROSS PROFIT		1,226,746		243,032

OPERATING EXPENSES
Office		7,973		-
Compensation and Related Benefits		31,049		-
Property Taxes		102,360		-
Professional & Legal		76,478		-
Utilities		524,031		31,115
Travel & Entertainment		-		-
Business Insurance		29,814		-
Total Operating Expenses		771,705		31,115

Net Operating Income		455,041		211,917

OTHER EXPENSES
Mortgage Interest		143,373		143,373
Total Other Expenses		143,373		143,373

Net Income	$	311,668	$	68,544

	March 31, 2025		December 31, 2024
ASSETS
Cash and Cash Equivalents	$	1,506,540	$	924,504
Property and equipment, net of depreciation		66,572,009		31,719,347
Other Assets		3,699,523		1,649,071
Total Assets	$	71,778,072	$	34,292,922

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Below is a reconciliation of Segment Operations to Consolidated Statements of Operations:

Schedule of segment operations
	For the three months ended March 31, 2025

		Lending and Servicing			Asset Management			Other			Total
REVENUES
Origination Revenue, Net	$	1,140,738		$	-		$	-		$	1,140,738
Servicing Revenue		1,095,671			-			-			1,095,671
Underwriting Income		12,750			-			-			12,750
Rental Income		-			1,533,482			-			1,533,482
Other Revenue		915,586			-			-			915,586
Total Revenues		3,164,745			1,533,482			-			4,698,227

COST OF REVENUES
Broker Expenses		977,975			-			-			977,975
Bank Transaction Fees		-			312			-			312
Ground Rent		-			306,424			-			306,424
Administrative Expenses		305,594			-			-			305,594
Total Cost of Revenues		1,283,569			306,736			-			1,590,305

GROSS PROFIT		1,881,176			1,226,746			-			3,107,922

OPERATING EXPENSES
Office		109,320			7,973			-			117,293
Compensation and Related Benefits		740,563			31,049			-			771,612
Professional & Legal		177,604			76,478			-			254,082
Property Taxes		-			102,360			-			102,360
Utilities		-			524,031			-			524,031
Business Insurance		-			29,814			-			29,814
Advertising		30,836			-			-			30,836
Depreciation		-			-			323,325			323,325
Total Operating Expenses		1,058,323			771,705			323,325			2,153,353

Net Operating Income		822,853			455,041			(323,325	)		954,569

Other Income/(Expenses)
Unrealized Gain on Mortgages		368,972			-			-			368,972
Unrealized Gain on Mortgage Secured Notes		14,858			-			-			14,858
Interest Expense		(341,559	)		(143,373	)		-			(484,932	)
Unrealized Loss on Investment		74,798			-			-			74,798
Realized Gain on Foreclosure		207,981			-			-			207,981
Realized Loss on Loans Held for Sale		(4,417	)		-			-			(4,417	)
Total Other Income		320,633			(143,373	)		-			177,260

Income before provision for income taxes	$	1,143,486		$	311,668		$	(323,325	)	$	1,131,829

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Below is a reconciliation of Segment Assets to Total Assets per the Statements of Financial Condition:

			March 31, 2025

		Lending and Servicing		Asset Management		Other			Total
ASSETS
Cash and Cash Equivalents	$	5,372,700	$	1,506,540	$	-		$	6,879,240
Restricted Cash		13,421,485		-		(337,646	)		13,083,839
Restricted Investment		1,204,806		-		-			1,204,806
Mortgages Owned		462,055,748		-		(44,600,000	)		417,455,748
Mortgage Servicing Rights, at Fair Value		9,629,197		-		-			9,629,197
Portfolio Loans		12,838,664		-		(9,667,196	)		3,171,468
Loans Held for Sale		203,603		-		-			203,603
Securities		41,991		-		-			41,991
ROU Leased Asset		210,728		-		-			210,728
Goodwill		110,000		-		-			110,000
Property and equipment, net of depreciation		180,905		66,572,009		-			66,752,914
Other Assets		16,590,703		3,699,523		(14,597,995	)		5,692,231
Total Assets	$	521,860,530	$	71,778,072	$	(69,202,837	)	$	524,435,765

NOTE 19 – SUBSEQUENT EVENTS

The Company has evaluated all events or transactions for potential recognition or disclosure in the unaudited consolidated financial statements through May 15, 2025, which is the date that the unaudited consolidated financial statements were available to be issued. During this period, the following events requiring disclosure.

The Company has taken over a light industrial property in Selma, Texas by deed in lieu of foreclosure and expects to lease it back to the operator.

The Company executed an extension of its lease in its Miami office for an additional two years.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is a discussion of our historical unaudited consolidated financial condition and results of operations, and should be read in conjunction with (i) our historical consolidated financial statements and accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q; (ii) our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2025; and (iii) our management’s discussion and analysis of financial condition and results of operations included in our 2024 Form 10-K. This discussion includes forward-looking statements that are subject to risk and uncertainties. Actual results may differ substantially from the statements we make in this section due to a number of factors that are discussed in “Part I – Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024.

Overview

Korth Direct Mortgage Inc. (“KDM,” the “Company,” “we,” or “us”) began operations in October of 2016. We were founded by J. W. Korth & Company, LP, a FINRA and SEC registered broker-dealer, which is now a wholly owned subsidiary.

Our principal executive offices are located at 135 San Lorenzo Avenue, Suite 600, Coral Gables, Florida 33146, and our telephone number is (305) 668-8485. Our website address is www.korthdirect.com. We also operate under the trade name KDM Financial, and our principal subsidiary is J.W. Korth & Company, Limited Partnership (“J. W. Korth”).

We are licensed in Florida as a Mortgage Lender Servicer. Our NMLS License Number is 1579547.

We originate, fund and service loans which are made to commercial borrowers. The loans are held by KDM as the lender. We fund our loans in a variety of ways, including directly in the capital markets through issuance of Mortgage Secured Notes (“MSNs” or “Notes”), which are sold through J.W. Korth as underwriter or placement agent through exemptions from registration available under Rule 144A, Regulation D, and other exemptions from registration. We also fund loans via loan participations and direct investments as well as on our warehouse line.

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In July of 2022, we created an additional subsidiary to issue our MSNs, KDM Funding I LLC (“KDMF”). KDMF solely issues the Notes and does not have any other operations and there are no stand-alone financial statements prepared for KDMF. KDM is the servicer of the loans. The revenue and expenses associated with the Note issuance and the underlying loans are consolidated into the Company’s consolidated results of operations. However, when reporting on deal level information, we will break out the deals by issuer.

KDM has a number of special purpose entities that it manages including KDM Capital Management LLC, KDM Capital Partners LP, KDM Funding I LLC, KDM Stafford LLC, KDM Nagog Park, LLC, KDM Cupples REO, LLC, KDM Seaton Colyton Holdings LLC, KDM Asset Management, LLC, and a wholly owned subsidiary named Citrus Servicing LLC which services the loans in our small balance multifamily program.

Results of Operations for the Three Months ended March 31, 2025

The Company generated revenues of $4,698,227 for the three months ended March 31, 2025, an increase of $2,636,056, 127%, compared with revenues of $2,062,171 for the three months ended March 31, 2024. As of March 31, 2025, the Company owned mortgages of $417,455,748 compared with mortgages of $451,974,989 as of December 31, 2024, and $444,456,681 as of March 31, 2024.

Gross profit increased by $1,679,083 to $3,107,922 during the three months ended March 31, 2025, compared with gross profit of $1,428,839 during the three months ended March 31, 2024. The increase in gross profit was due to additional rental revenues from buildings acquired via workouts; however new lending declined year over year.

Operating expenses were $2,153,353 during the three months ended March 31, 2025, which was an increase of $379,095 (21%) compared with operating expenses of $1,774,258 during the three months ended March 31, 2024. The increase in operating expenses was driven primarily by the increase of $663,938 in office expenses and $154,196 in depreciation due to defaults, foreclosures, and related expenses and includes additional expenses associated with operating the properties in our REO portfolio.

Other income/(expense) increased by $1,621,761 to $177,260 during the three months ended March 31, 2025, compared with other income/(expense) of ($1,444,501) during the three months ended March 31, 2024. The increase is due to the unrealized gain on mortgages.

During the three months ended March 31, 2025, the Company recorded $285,731 in income tax expense due to increased net income compared with $512,477 of income tax benefit during the three months ended March 31, 2024.

Net income is $846,098 for the three months ended March 31, 2025, compared with net loss of $1,277,443 during the three months ended March 31, 2024.

Financial Condition for the three months Ended March 31, 2025

The Company’s Total Assets were $524,285,674 for the three months ended March 31, 2025, and $521,851,543 as of December 31, 2024.

As of March 31, 2025, we had $6,879,240 in cash, $13,083,839 in restricted cash, loans totaling $430,460,016, consisting of $417,455,748 in mortgages and participations, $3,171,468 in portfolio loans and $203,603 in loans held for sale, and Mortgage Servicing Rights with a fair value of $9,629,197 on our unaudited consolidated statement of financial condition. The decline in mortgage assets was offset by a corresponding increase in real estate assets, reflecting the transfer of certain loans to real estate owned (REO) following foreclosure activity.

Liquidity and Capital Resources

The Company closed on a $100,000,000 financing repurchase facility on October 13, 2023. From time to time, we may need additional haircut capital to use the repurchase facility, which we may fund in a variety of ways, on either a short or long-term basis. Haircut capital is the cash on hand necessary to fund the portion of the loan not funded by the facility. The Company generates servicing revenues on its Mortgages owned with maturity dates ranging from June 2025 to June 2037 as well as income from its investments and portfolio loans with maturity dates ranging from October 2025 to July 2028.

We anticipate raising additional capital to fund our lending and development in the coming months. Additionally, we are actively raising capital in KDM Capital Partners LP (the “Fund”).

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Status of KDM Loans

As of March 31, 2025, there is 1 CM Loan in payment default, and all pending foreclosures from defaults from 2023 and 2024 have been completed. The Company is actively managing these properties to maximize value on behalf of the MSN investors.

Subsequent to the date of these financial statements, KDM acquired a light industrial property via deed in lieu of foreclosure which it is in the process of leasing to the business operator.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have no material positions subject to market risk.

Item 4. Controls and Procedures.

We are responsible for establishing and maintaining adequate internal control over financial reporting as such item is defined by Securities Exchange Act Rule 13a - 15(f). Our internal controls are designed to provide reasonable assurance as to the reliability of our consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Internal control over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting as of March 31, 2025, as required by Securities Exchange Act Rule 13a- 15(c). In making our assessment, we have utilized the criteria set forth by the 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We concluded that based on our evaluation our internal control over financial reporting was effective as of March 31, 2025.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not currently subject to any material legal proceedings other than in the course of ordinary business which upon the disposition thereof, in the opinion of management are likely to have a material adverse effect on our consolidated financial condition, cash flows, or results of operations.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. Please refer to the “Risks Factors” section in our Annual Report for a discussion of risks to which our business, financial condition, results of operations and cash flows are subject.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit Number		Description

1.1		Purchase Agreement for Multiple Series of Mortgage Secured Notes between J.W. Korth & Company Limited Partnership as the initial purchaser, and Korth Direct Mortgage Inc. dated July 29, 2022. (incorporated by reference to Exhibit 1.1 to the Registrant’s report on Form 8-K filed August 4, 2022)

1.2		Purchase Agreement for Multiple Series of Mortgage Secured Notes between J.W. Korth & Company Limited Partnership as the initial purchaser, and KDM Funding I LLC dated July 29, 2022. (incorporated by reference to Exhibit 1.2 to the Registrant’s report on Form 8-K filed August 4, 2022)

3.1		Articles of Conversion, dated May 31, 2019 (incorporated by reference to Exhibit to 3.1 to the Registrant’s Report on Form 8-K filed June 28, 2019)

3.2		Articles of Incorporation of Korth Direct Mortgage Inc., dated May 31, 2019 (incorporated by reference to Exhibit to 3.2 to the Registrant’s Report on Form 8-K filed June 28, 2019)

3.3		Amendment to Articles of Incorporation of Korth Direct Mortgage Inc. and Certificate of Designation of Series A 6% Cumulative Perpetual Convertible Preferred Stock, as filed with the Florida Secretary of State on September 20, 2019 (incorporated by reference to Current Report on Form 8-K filed July 1, 2021)

3.4		Amendment to Articles of Incorporation of Korth Direct Mortgage Inc. and Amended Certificate of Designation of Series A 6% Cumulative Perpetual Convertible Preferred Stock, as filed with the Florida Secretary of State on March 20, 2020 (incorporated by reference to Current Report on Form 8-K filed July 1, 2021)

3.5		Amendment to Articles of Incorporation of Korth Direct Mortgage Inc. and Amendment to Amended Certificate of Designation of Series A 6% Cumulative Perpetual Convertible Preferred Stock, as filed with the Florida Secretary of State on June 25, 2021 (incorporated by reference to Current Report on Form 8-K filed July 1, 2021)

3.6		Articles of Amendment to Articles of Incorporation of Korth Direct Mortgage Inc. and Certificate of Designation of Series B 6.50% Cumulative Non-Voting Redeemable Secured Preferred Stock, as filed with the Florida Secretary of State on June 25, 2021 (incorporated by reference to Current Report on Form 8-K filed July 1, 2021)

3.7		Bylaws of Korth Direct Mortgage Inc., dated May 31, 2019 (incorporated by reference to Exhibit to 3.1 to the Registrant’s Report on Form 8-K filed June 28, 2019)

4.1		Trust Indenture and Security Agreement between Korth Direct Mortgage LLC, and Delaware trust Company dated November 17, 2017 (incorporated by reference to Exhibit 3.4 to registrant’s Registration Statement on Form S-1/A filed November 20, 2017)

4.2		Trust Indenture and Security Agreement (Rule 144A Offerings) between Korth Direct Mortgage LLC, and Delaware Trust Company dated September 20, 2018 (incorporated by reference to Registrant’s Report on Form 10-Q filed November 13, 2018)

4.3		Trust Indenture and Security Agreement Dated September 30, 2020, between Korth Direct Mortgage Inc. and Delaware Trust Company as Trustee (incorporated by reference to Exhibit 4.3 to the Registrant’s report on Form 8-K filed October 6, 2020)

4.4		Trust Indenture and Security Agreement (144A Private Placements) Among KDM Funding I LLC., Delaware Trust Company, and Korth Direct Mortgage Inc. (incorporated by reference to Exhibit 4.3 to the Registrant’s report on Form 8-K filed August 4, 2022)

10.1		Korth Direct Mortgage Inc. 2019 Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed June 29, 2019)

10.2		Purchase Agreement dated July 31, 2020, among Korth Direct Mortgage Inc., a Florida corporation; J.W. Korth & Company Limited Partnership, a Michigan limited partnership; and JW Korth LLC, a Florida limited liability company (incorporated by reference to Current Report on Form 8-K filed August 6, 2020)

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10.3		First Amendment to Purchase Agreement (incorporated by reference to Registrant’s Report on Form 10-Q filed August 16, 2021)

31.1		Section 302 Certificate of Chief Executive Officer and Chief Financial Officer*

32.1		Section 906 Certificate of Chief Executive Officer and Chief Financial Officer*

101		Interactive Data File

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) *

*Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	KORTH DIRECT MORTGAGE INC.

Dated: May 15, 2025	By:	/s/ Holly MacDonald-Korth
		Holly MacDonald-Korth, Chief Executive Officer and Chief Financial Officer

Korth Direct Mortgage Inc. 10-Q