Korth Direct Mortgage 10-Q 13 May 22 2022 Q3 Quarterly report Financial data

Cover

Cover	3 Months Ended
	Mar. 31, 2022shares
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	000-1695962
Entity Registrant Name	KORTH DIRECT MORTGAGE INC.
Entity Central Index Key	0001695963
Entity Tax Identification Number	27-0644172
Entity Incorporation, State or Country Code	FL
Entity Address, Address Line One	135 San Lorenzo Avenue
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Coral Gables
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33146
City Area Code	(
Local Phone Number	668-8485
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	5,000,000
Entity Information, Former Legal or Registered Name	_________________________________ ___________________________________

UNAUDITED CONSOLIDATED STATEMEN

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($)	Mar. 31, 2022	Dec. 31, 2021
ASSETS
Cash and Cash Equivalents	$ 9,100,306	$ 9,137,672
Restricted Cash	7,501,098	10,343,671
Mortgages Owned	362,172,539	326,312,345
Mortgage Servicing Rights, at Fair Value	10,468,042	9,616,357
Portfolio Loans	9,111,152	14,749,862
Securities	225,000	225,006
ROU Leased Asset	882,995	935,323
Goodwill	110,000	110,000
Property and equipment, net of depreciation	297,536	304,203
Other Assets	1,882,964	312,019
TOTAL ASSETS	401,751,632	372,046,458
LIABILITIES
Escrows Payable	6,730,514	9,613,634
Lease Liability	929,528	981,418
Deferred Revenue, net	1,406,167	1,157,672
Deferred Tax Liability	2,164,979	2,050,220
Contingent Liability, net	489,952	489,952
Mortgage Secured Notes Payable	356,883,064	326,212,364
Other Liabilities and Payables	2,530,195	931,102
Total Liabilities	371,134,399	341,436,362
STOCKHOLDERS' EQUITY
Accumulated Earnings	4,886,129	4,885,445
Additional Paid-in Capital	25,725,785	25,719,332
Common Stock, $0.001 par value, 60,000,000 shares authorized 5,000,000 shares issued and outstanding at March 31, 2022 and December 31, 2021	5,000	5,000
Total Stockholders' Equity	30,617,233	30,610,096
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	401,751,632	372,046,458
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock value	300	300
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock value	$ 19	$ 19

UNAUDITED CONSOLIDATED STATEM_2

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Common stock, authorized	60,000,000	60,000,000
Common stock, issued	5,000,000	5,000,000
Common stock, outstanding	5,000,000	5,000,000
Series A Preferred Stock [Member]
Common stock, outstanding	300,000	300,000
Series B preferred stock, par value (in dollar per share)	$ 0.001	$ 0.001
Series B preferred stock, authorized	400,000	400,000
Series A preferred stock, outstanding	300,000	300,000
Series B preferred stock, issued	300,000	300,000
Series B Preferred Stock [Member]
Common stock, outstanding	19,000	19,000
Series B preferred stock, par value (in dollar per share)	$ 0.001	$ 0.001
Series B preferred stock, authorized	20,000	20,000
Series B preferred stock, issued	19,000	19,000
Series B preferred stock, outstanding	19,000	19,000

UNAUDITED CONSOLIDATED STATEM_3

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
REVENUES
Total Revenues	$ 2,038,328	$ 1,585,580
COST OF REVENUES
Broker Underwriting Expense	443,498	196,211
Administrative Expenses	217,185	123,394
Total Cost of Revenues	660,683	319,605
GROSS PROFIT	1,377,645	1,265,975
OPERATING EXPENSES
Office	116,297	133,835
Compensation and Related Benefits	1,058,733	938,905
Professional & Legal	149,179	107,030
Advertising	83,372	5,507
Depreciation	16,837	7,977
Total Expenses	1,424,418	1,193,254
Net Income/(Loss) From Operations	(46,773)	72,721
Other Income / (Expenses/Loss)
Unrealized Gain on Mortgages	851,685	783,823
Unrealized Loss on Mortgage Secured Notes	(155,506)	(886)
Interest Expense	(4,856)	(10,444)
Interest Income		9,888
Total Other Income	691,323	782,381
Net income before provision for income taxes	644,550	855,102
Provision for income taxes	167,717	224,655
Net Income	476,833	630,447
Series A Preferred Dividends	112,500	75,000
Series B Preferred Dividends	308,750
Net income attributable to common stockholder	55,583	555,447
Origination Revenue [Member]
REVENUES
Total Revenues	245,473	158,173
Service [Member]
REVENUES
Total Revenues	1,105,947	478,822
Underwriting Income [Member]
REVENUES
Total Revenues	240,000	224,639
Other Revenue [Member]
REVENUES
Total Revenues	$ 446,908	$ 723,946

UNAUDITED CONSOLIDATED STATEM_4

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Series A Preferred Stock [Member]	Series B Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2020	$ 200		$ 5,000	$ 5,016,139	$ 1,365,653	$ 6,386,992
Balance at beginning (in shares) at Dec. 31, 2020	200,000		5,000,000
Share-based compensation				6,453		6,453
Series A & Series B preferred stock dividends declared					(75,000)	(75,000)
Net income					630,447	630,447
Ending balance, value at Mar. 31, 2021	$ 200		$ 5,000	5,022,592	1,921,100	6,948,892
Balance, end (in shares) at Mar. 31, 2021	200,000		5,000,000
Beginning balance, value at Dec. 31, 2021	$ 300	$ 19	$ 5,000	25,719,332	4,885,445	$ 30,610,096
Balance at beginning (in shares) at Dec. 31, 2021	300,000	19,000	5,000,000			5,000,000
Share-based compensation				6,453		$ 6,453
Series A & Series B preferred stock dividends declared					(476,149)	(476,149)
Net income					476,833	476,833
Ending balance, value at Mar. 31, 2022	$ 300	$ 19	$ 5,000	$ 25,725,785	$ 4,886,129	$ 30,617,233
Balance, end (in shares) at Mar. 31, 2022	300,000	19,000	5,000,000			5,000,000

UNAUDITED CONSOLIDATED STATEM_5

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ 476,833	$ 630,447
Adjustments to Reconcile Net Income to Net Cash (Used In)/Provided by Operating Activities:
Unrealized Gain on Mortgages Owned	(851,685)	(783,823)
Unrealized Loss on Mortgage Security Notes	155,506	886
Stock Compensation	6,453	6,453
Depreciation	16,837	7,977
Deferred rent expense from operating lease	438	35,540
Deferred income taxes	114,759	205,737
Changes in Operating Assets and Liabilities:
Mortgage Secured Notes Issued	30,670,700	27,016,742
Mortgage Secured Notes Purchased	(155,500)	(98,014)
Portfolio Loans	5,638,710	(81,481)
Other Assets	(1,570,945)	(228,181)
Deferred Revenue, net	248,495	154,586
Escrow Payable	(2,883,120)	1,644,689
Other Liabilities and Payables	1,544,194	1,473,777
New Mortgage Lending	(35,860,194)	(24,859,532)
Total Adjustments	(2,925,352)	4,495,356
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES	(2,448,519)	5,125,803
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(10,170)	(97,948)
NET CASH (USED IN) INVESTING ACTIVITIES	(10,170)	(97,948)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Series A preferred stock dividends	(112,500)	(75,000)
Payment of Series B preferred stock dividends	(308,750)
NET CASH (USED IN) FINANCING ACTIVITIES	(421,250)	(75,000)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS	(2,879,939)	4,952,855
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – Beginning of Period	19,481,343	8,642,465
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – End of Period	16,601,404	13,595,320
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the period for interest	$ 4,856	$ 10,444

NATURE OF BUSINESS

NATURE OF BUSINESS	3 Months Ended
	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF BUSINESS	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 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.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and J.W. Korth, its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated upon consolidation. BASIS OF ACCOUNTING The accompanying financial statements have been prepared on the accrual basis of accounting, in accordance with Generally Accepted Accounting Principles (“GAAP”). The accompanying financial statements have also been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). BASIS OF PRESENTATION Beginning in the first quarter of 2022, we have condensed certain categories of information in our financial statements to enhance the readability and understanding of those statements by making them more succinct. As a result, certain footnote disclosures we normally include in our annual consolidated financial statements have been omitted, but remain prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our unaudited consolidated statements of financial condition, income, changes in stockholders’ equity, and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 31, 2022. USE OF ESTIMATES The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the consolidated statements of cash flows as of March 31, 2022 and 2021: 3/31/2022 3/31/2021 Cash and Cash Equivalents $ 9,100,306 $ 1,638,276 Restricted Cash 7,501,098 11,957,044 Total Cash, Cash Equivlents and Restricted Cash $ 16,601,404 $ 13,595,320 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 MORTGAGE VALUATION Mortgages that are current are carried at the principal value owed by the borrower, as of the date of the financial statements, according to the amortization schedule for the loan. Mortgages owned as of the date of these financial statements are current. The net present value of the servicing revenue is recorded as mortgage servicing rights, at fair value on the consolidated Statements of Financial Condition, and is recognized on the consolidated Statements of Income as an unrealized gain on mortgages. MORTGAGE SECURED NOTES The Company funds the mortgage loans (”CM Loans”) that it makes by issuing Mortgage Secured Notes (“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, and Rule 144A offerings. As of March 31, 2022, the Company has funded loans totaling $369,812,345 since inception and it issued MSNs secured by those loans in the amount of $369,712,364. PORTFOLIO LOANS The Company recognizes loans made with its own capital, or those not securitized, under the caption “Portfolio Loans” on the statement of financial position. As of March 31, 2022, the Company had issued Portfolio Loans in the amount of $11,535,000 and currently holds $9,111,152. These loans were funded by the Company, as well as affiliates. GOODWILL Financial Accounting Standards Board Accounting Standards Codification (“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 period ending March 31, 2022. REVENUE RECOGNITION The Company’s primary sources of revenue are origination fees, servicing fees, processing fees, underwriting income, trading profits, and interest income. 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 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 interest received from our CM Loans 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. Processing Fees Processing fees are collected from the borrower at the time the commitment letter is signed and cover a variety of expenses during the underwriting process. If the Company cancels the transaction, then unused fees are refunded. If the transaction is unable to proceed for any reason not the fault of the Company, then the Company keeps the full processing fee. Revenues from processing fees are recognized at closing or at the time a transaction is canceled. 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 the settlement date of the trades. Trading Profits Trading profits represent revenue generated through the trading of securities either for its own account or on behalf of J.W. Korth’s clients. Revenue from trading profits is recognized upon settlement of the securities transactions. Interest Income Interest Income is primarily derived from interest earned on Portfolio Loans and includes interest earned on cash and securities. 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 statement of financial position 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 values 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. 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. Unrealized Gain on Mortgages OWNED The net present value of the servicing income is recognized at the time the mortgage is initiated. This value uses several inputs that are highly subjective including: discount rate, prepayment rate, the current interest rate environment, and default rate assumptions. Since the Company has a short operating history and a small number of loans outstanding, we have a limited basis to predict prepayment rates and default rates. DEPRECIATION Depreciation is provided on a straight-line basis using estimated useful lives of three seven INCOME TAXES 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. RECENT ACCOUNTING PRONOUNCEMENTS 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. Management is currently evaluating the impact that the adoption of ASU 2016-13 will have on the Company’s consolidated financial statements.

CONTINGENT LIABILITY

CONTINGENT LIABILITY	3 Months Ended
	Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]
CONTINGENT LIABILITY	NOTE 3 – CONTINGENT LIABILITY As part of the acquisition of J. W. Korth, the Company agreed to pay (i) the Preferred Capital Interest partners of J.W. Korth accrued and unpaid dividends of 6 July 31, 2020 25 The following table summarizes the unpaid Contingent Liability outstanding as of March 31, 2022 and December 31, 2021 Contingent liability to redeem J.W. Korth Preferred Capital Interest Partners 696,253 Contingent liability payment (215,502 ) Accrued quarterly dividends recorded as interest expense through March 31, 2022 9,201 Contingent Liability, net $ 489,952

MORTGAGE SECURED NOTES PAYABLE

MORTGAGE SECURED NOTES PAYABLE	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
MORTGAGE SECURED NOTES PAYABLE	NOTE 4 – MORTGAGE SECURED NOTES PAYABLE As stated above in Note 2, the Company funds mortgage loans that it makes by issuing Mortgage Secured Notes (“MSNs”), which are secured by those same mortgages. As of March 31, 2022 and December 31, 2021, the Company has funded loans totaling $ 362,172,539 326,312,345 The MSNs are typically five-year interest-only notes with the principal balance due at maturity, but terms can vary. Interest rates on the MSNs range from 4.25 6.50 The following table presents the future scheduled principal payments on the Company’s MSNs: Future Last 9 months of 2022 $ 356,914 2023 10,968,185 2024 108,727,917 2025 102,247,523 2026 118,372,000 Thereafter 16,210,525 Total $ 356,883,064

RESTRICTED CASH

RESTRICTED CASH	3 Months Ended
	Mar. 31, 2022
Disclosure Restricted Cash Abstract
RESTRICTED CASH	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 authority and insurance companies. This account corresponds to the Escrow Payable liability. As of March 31, 2022, and December 31, 2021, this account has a balance of $ 6,684,743 9,519,859 The “In Trust for 2” account receives payments from borrowers, distributes payments to investors, and pays the servicing fee to the Company. This account corresponds to the Due to Investors liability, which is included in other liabilities and payables. As of March 31, 2022 and December 31, 2021, this account has a balance of $ 461,834 421,286 The Company also maintains multiple lockbox accounts that collect rental payments directly from tenants on the borrowers’ behalf. These accounts typically net out funds monthly. The lockbox account balances as of March 31, 2022 and December 31, 2021 were $ 45,771 93,775 The Company maintains an account for payment of quarterly Preferred Series B dividends that has a balance of $ 308,750

COMMITMENTS

COMMITMENTS	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS	NOTE 6 - COMMITMENTS 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 periods of two years upon the same terms and conditions as the initial term. In December 2020, the Company entered into a Sublease Agreement to sublet a portion of the office space described above. The subtenant has agreed to cover the proportionate amount of the lease costs associated with the office space based on essentially the same terms as the lease described above, including the rights to extend for two successive two-year periods. 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 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 quarter ended March 31, 2022 was $ 62,640 86,160 As of March 31, 2021, the net present value of the future lease liabilities, using the weighted-average discount rate of 4.24 3.8 929,528 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 of as of March 31, 2022: Future Lease 2022 $ 187,978 2023 256,920 2024 264,087 2025 271,470 2026 30,504 Total Lease Payments 1,010,959 Less: Imputed Interest (81,431 ) Present Value of Lease Liabilities $ 929,528

INDEMNIFICATIONS

INDEMNIFICATIONS	3 Months Ended
	Mar. 31, 2022
Indemnifications
INDEMNIFICATIONS	NOTE 7 - 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 it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2022
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 8 – RELATED PARTY TRANSACTIONS From time to time, the Company purchases MSNs and holds them in its brokerage account. These MSNs are included on the 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; such loans are serviced by KDM. In some circumstances, in the event a foreclosure becomes necessary, KDM may acquire properties where MSNs are in default as a deed in lieu of foreclosure, KDM may create single purpose entities to take title to such properties and liquidate them to satisfy any debts due under an MSN.

DEFERRED REVENUE, NET

DEFERRED REVENUE, NET	3 Months Ended
	Mar. 31, 2022
Revenue from Contract with Customer [Abstract]
DEFERRED REVENUE, NET	NOTE 9 – 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 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, 2022: Deferred Deferred Origination Origination Deferred Fees Costs Revenue, net Deferred Revenue at January 1, 2022 $ 4,226,325 ($ 3,068,653 ) $ 1,157,672 New loan deferrals 725,000 (438,890 ) 286,110 Amortization of deferrals (245,473 ) 207,858 (37,615 ) Deferred Revenue at March 31, 2022 $ 4,705,852 ($ 3,299,685 ) $ 1,406,167

EMPLOYEE AND DIRECTOR STOCK OPT

EMPLOYEE AND DIRECTOR STOCK OPTIONS	3 Months Ended
	Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]
EMPLOYEE AND DIRECTOR STOCK OPTIONS	NOTE 10 – 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 for the purchase of up to an aggregate of 1,000,000 0.001 In June 2019, the Company issued options to purchase 835,000 1.00 0.1855 Schedule of estimated fair value of stockoptions weighted-average assumptions Risk-free interest rate: 1.76 Expected term: 5.75 years Expected dividend yield: 0 Expected volatility: 35.01 For the three months ended March 31, 2022, and March 31, 2021, the Company recorded $ 6,453 6,453 Stock option activity for the three months ended March 31, 2022, is summarized as follows: 2019 Stock Option Plan: Shares Weighted Weighted Options outstanding at January 1, 2022 835,000 $ 1.00 7.50 Granted - Exercised - Expired or forfeited - Options outstanding at March 31, 2022 835,000 $ 1.00 7.25 Options exercisable at March 31, 2022 417,500 $ 1.00 7.25 Options expected to vest at March 31, 2022 417,500 $ 1.00 7.25

PREFERRED EQUITY

PREFERRED EQUITY	3 Months Ended
	Mar. 31, 2022
Equity [Abstract]
PREFERRED EQUITY	NOTE 11 – PREFERRED EQUITY On September 27, 2019, the Company issued 200,000 4,750,000 250,000 25 convertible into common stock at a ratio of 5 shares of common stock for each share of Series A Preferred Stock On June 29, 2021, the Company issued 19,000 18,302,500 697,500 The Series B preferred stock is non-convertible and will pay cumulative dividends, if and when declared by the Company’s board of directors, at a rate of 6.50 0.001 pari passu 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 Series B preferred stock is redeemable at the Company’s option, in whole or in part, on or after June 29, 2026 1,000.00 1,000.00 · 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. The Company’s obligations to redeem the Series B preferred stock will be 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.

FAIR VALUE

FAIR VALUE	3 Months Ended
	Mar. 31, 2022
Fair Value Disclosures [Abstract]
FAIR VALUE	NOTE 12 – FAIR VALUE FASB ASC 820, Fair Value Measurements and Disclosures 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 Level II Level III 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. If a decline in fair value below the carrying balance is other-than-temporary, an unrealized impairment loss is recorded and the loan is recorded at the lower fair value at each reporting period. To date, the Company has not recorded any impairment losses related to the mortgage loans. 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. Mortgage Servicing: The net present value of the servicing income is recognized at the time the mortgage is initiated as an unrealized gain. 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, we have 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 Statement of Financial Condition as “Mortgage Servicing Rights, at Fair Value.” Mortgage Secured Notes Receivable: From time to time the Company may buy-back mortgage secured notes previously issued to investors. These securities are available for sale, but may be held until maturity. These securities are recorded at fair value each quarter with the change in fair value recognized as an unrealized gain or loss each reporting period. The fair value estimate 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, we have 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. Securities J. W. Korth holds $ 225,000 KDM also holds a small amount of its own MSNs in an account which it may buy from time to time to provide liquidity to clients of J.W. Korth. 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, 2022 Total Level I Level II Level III Financial Assets Mortgages Owned $ 362,172,539 $ - $ 362,172,539 $ - Mortgage Servicing 10,468,042 - - 10,468,042 Portfolio Loans 9,111,152 9,111,152 Non-MSN Securities 225,000 - - 225,000 Total Financial Assets $ 381,976,733 $ - $ 371,283,691 $ 10,693,042 Financial Liabilities Mortgage Secured Notes Payable $ 356,883,064 $ - $ 356,883,064 $ - December 31, 2021 Financial Assets Mortgages Owned $ 326,312,345 $ - $ 326,312,345 $ - Mortgage Servicing 9,616,357 - - 9,616,357 Portfolio Loans 14,749,862 14,749,862 Non- MSN Securities 225,006 - - 225,006 Total Financial Assets $ 350,903,570 $ - $ 341,062,207 $ 9,841,363 Financial Liabilities Mortgage Secured Notes Payable $ 326,212,364 $ - $ 326,212,364 $ - Fair Value Measurements Changes in Fair Value Measurements for the three months ended March 31, 2022 The following table presents a reconciliation of changes in Level 3 assets and liabilities reported in the Statements of Financial Condition for March 31, 2022: Changes in assets: Period ended March 31, 2022 Mortgage Servicing Non- MSN Total Value Beginning balance at January 1, 2022 $ 9,616,357 $ 225,006 $ 9,841,363 Purchases - - - Trades - - - Sales - (6 ) (6 ) Issues - - - Settlements - - - Net realized gain/loss or Interest income - - - Unrealized Gain from newly issued mortgages 480,376 - 480,376 Fair Value adjustment 371,309 - 371,309 Transfers into Level 3 - - - Transfers out of Level 3 - - - Ending balance at March 31, 2022 $ 10,468,042 $ 225,000 $ 10,693,042 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, 2022, 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 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, 2022: 3/31/2022 Investment type Fair Value Valuation technique Unobservable inputs Values Mortgage servicing $ 10,468,042 Net Present Value Prepayment Discount 13.54 % Discount rate 15.00 % Non-MSN Securities $ 225,000 Net Par Value

INCOME TAXES

INCOME TAXES	3 Months Ended
	Mar. 31, 2022
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 13 – INCOME TAXES The provision for income taxes was $ 167,717 26 644,550 21 The provision for income taxes was $ 224,655 26 855,102 21

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	3 Months Ended
	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	NOTE 14 – PROPERTY AND EQUIPMENT Property and Equipment are summarized as follows: Schedule of property and equipment March 31, 2022 Equipment $ 217,553 Furniture and fixtures 182,242 399,795 Accumulated depreciation (102,259 ) Net Property Equipment $ 297,536 December 31, 2021 Equipment $ 210,953 Furniture and fixtures 178,672 389,625 Accumulated depreciation (85,422 ) Net Property Equipment $ 304,203 Depreciation expense for the periods ending March 31, 2022 and March 31, 2021 was $ 16,837 7,977

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS	3 Months Ended
	Mar. 31, 2022
Financing Arrangements
FINANCING ARRANGEMENTS	NOTE 15 – FINANCING ARRANGEMENTS On March 31, 2022, The Company entered into a Master Repurchase Agreement and Securities Contract (the “ Agreement Signature 100,000,000 Line The Agreement provides that from time to time the Company may receive proceeds under the Line to originate first priority lien mortgages on real property. Signature will purchase the first lien commercial real estate mortgage loans (the “ Loans The Line has a back-up security interest grant secured by collateral specified in the Agreement in the event the Agreement is recharacterized as a secured loan. The Agreement contains financial covenants of the Company, including limitations on the Company’s incurrence of certain debt and requirements that the Company maintain certain financial ratios and minimum net worth. The Company is in compliance with these covenants as of and for the quarter ended March 31, 2022. In connection with entering into the Line, the Company incurred loans fees of approximately $ 1,500,000

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
SUBSEQUENT EVENTS	NOTE 16 – SUBSEQUENT EVENTS The Company has evaluated all events or transactions that occurred after March 31, 2022, through the date of these financial statements, which is the date that the consolidated financial statements were available to be issued. During this period, there were no material subsequent events requiring disclosure, other than those noted below. KDM closed a loan for $33,000,000. See “Status of KDM Loans” for updates on our loans.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
PRINCIPLES OF CONSOLIDATION	PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and J.W. Korth, its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated upon consolidation.
BASIS OF ACCOUNTING	BASIS OF ACCOUNTING The accompanying financial statements have been prepared on the accrual basis of accounting, in accordance with Generally Accepted Accounting Principles (“GAAP”). The accompanying financial statements have also been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
BASIS OF PRESENTATION	BASIS OF PRESENTATION Beginning in the first quarter of 2022, we have condensed certain categories of information in our financial statements to enhance the readability and understanding of those statements by making them more succinct. As a result, certain footnote disclosures we normally include in our annual consolidated financial statements have been omitted, but remain prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our unaudited consolidated statements of financial condition, income, changes in stockholders’ equity, and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 31, 2022.
USE OF ESTIMATES	USE OF ESTIMATES The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS	CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the consolidated statements of cash flows as of March 31, 2022 and 2021: 3/31/2022 3/31/2021 Cash and Cash Equivalents $ 9,100,306 $ 1,638,276 Restricted Cash 7,501,098 11,957,044 Total Cash, Cash Equivlents and Restricted Cash $ 16,601,404 $ 13,595,320 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
MORTGAGE VALUATION	MORTGAGE VALUATION Mortgages that are current are carried at the principal value owed by the borrower, as of the date of the financial statements, according to the amortization schedule for the loan. Mortgages owned as of the date of these financial statements are current. The net present value of the servicing revenue is recorded as mortgage servicing rights, at fair value on the consolidated Statements of Financial Condition, and is recognized on the consolidated Statements of Income as an unrealized gain on mortgages.
MORTGAGE SECURED NOTES	MORTGAGE SECURED NOTES The Company funds the mortgage loans (”CM Loans”) that it makes by issuing Mortgage Secured Notes (“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, and Rule 144A offerings. As of March 31, 2022, the Company has funded loans totaling $369,812,345 since inception and it issued MSNs secured by those loans in the amount of $369,712,364.
PORTFOLIO LOANS	PORTFOLIO LOANS The Company recognizes loans made with its own capital, or those not securitized, under the caption “Portfolio Loans” on the statement of financial position. As of March 31, 2022, the Company had issued Portfolio Loans in the amount of $11,535,000 and currently holds $9,111,152. These loans were funded by the Company, as well as affiliates.
GOODWILL	GOODWILL Financial Accounting Standards Board Accounting Standards Codification (“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 period ending March 31, 2022.
REVENUE RECOGNITION	REVENUE RECOGNITION The Company’s primary sources of revenue are origination fees, servicing fees, processing fees, underwriting income, trading profits, and interest income. 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 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 interest received from our CM Loans 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. Processing Fees Processing fees are collected from the borrower at the time the commitment letter is signed and cover a variety of expenses during the underwriting process. If the Company cancels the transaction, then unused fees are refunded. If the transaction is unable to proceed for any reason not the fault of the Company, then the Company keeps the full processing fee. Revenues from processing fees are recognized at closing or at the time a transaction is canceled. 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 the settlement date of the trades. Trading Profits Trading profits represent revenue generated through the trading of securities either for its own account or on behalf of J.W. Korth’s clients. Revenue from trading profits is recognized upon settlement of the securities transactions. Interest Income Interest Income is primarily derived from interest earned on Portfolio Loans and includes interest earned on cash and securities.
LEASES	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 statement of financial position 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	STOCK-BASED COMPENSATION The Company estimates the fair values 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. 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.
Unrealized Gain on Mortgages OWNED	Unrealized Gain on Mortgages OWNED The net present value of the servicing income is recognized at the time the mortgage is initiated. This value uses several inputs that are highly subjective including: discount rate, prepayment rate, the current interest rate environment, and default rate assumptions. Since the Company has a short operating history and a small number of loans outstanding, we have a limited basis to predict prepayment rates and default rates.
DEPRECIATION	DEPRECIATION Depreciation is provided on a straight-line basis using estimated useful lives of three seven
INCOME TAXES	INCOME TAXES 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.
RECENT ACCOUNTING PRONOUNCEMENTS	RECENT ACCOUNTING PRONOUNCEMENTS 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. Management is currently evaluating the impact that the adoption of ASU 2016-13 will have on the Company’s consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the consolidated statements of cash flows as of March 31, 2022 and 2021:	The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the consolidated statements of cash flows as of March 31, 2022 and 2021: 3/31/2022 3/31/2021 Cash and Cash Equivalents $ 9,100,306 $ 1,638,276 Restricted Cash 7,501,098 11,957,044 Total Cash, Cash Equivlents and Restricted Cash $ 16,601,404 $ 13,595,320

CONTINGENT LIABILITY (Tables)

CONTINGENT LIABILITY (Tables)	3 Months Ended
	Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]
The following table summarizes the unpaid Contingent Liability outstanding as of March 31, 2022 and December 31, 2021	The following table summarizes the unpaid Contingent Liability outstanding as of March 31, 2022 and December 31, 2021 Contingent liability to redeem J.W. Korth Preferred Capital Interest Partners 696,253 Contingent liability payment (215,502 ) Accrued quarterly dividends recorded as interest expense through March 31, 2022 9,201 Contingent Liability, net $ 489,952

MORTGAGE SECURED NOTES PAYABLE

MORTGAGE SECURED NOTES PAYABLE (Tables)	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
The following table presents the future scheduled principal payments on the Company’s MSNs:	The following table presents the future scheduled principal payments on the Company’s MSNs: Future Last 9 months of 2022 $ 356,914 2023 10,968,185 2024 108,727,917 2025 102,247,523 2026 118,372,000 Thereafter 16,210,525 Total $ 356,883,064

COMMITMENTS (Tables)

COMMITMENTS (Tables)	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
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 of as of March 31, 2022:	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 of as of March 31, 2022: Future Lease 2022 $ 187,978 2023 256,920 2024 264,087 2025 271,470 2026 30,504 Total Lease Payments 1,010,959 Less: Imputed Interest (81,431 ) Present Value of Lease Liabilities $ 929,528

DEFERRED REVENUE, NET (Tables)

DEFERRED REVENUE, NET (Tables)	3 Months Ended
	Mar. 31, 2022
Revenue from Contract with Customer [Abstract]
The following is a summary of the loan origination fees and costs deferred and amortized for the three months ended March 31, 2022 :	The following is a summary of the loan origination fees and costs deferred and amortized for the three months ended March 31, 2022: Deferred Deferred Origination Origination Deferred Fees Costs Revenue, net Deferred Revenue at January 1, 2022 $ 4,226,325 ($ 3,068,653 ) $ 1,157,672 New loan deferrals 725,000 (438,890 ) 286,110 Amortization of deferrals (245,473 ) 207,858 (37,615 ) Deferred Revenue at March 31, 2022 $ 4,705,852 ($ 3,299,685 ) $ 1,406,167

EMPLOYEE AND DIRECTOR STOCK O_2

EMPLOYEE AND DIRECTOR STOCK OPTIONS (Tables)	3 Months Ended
	Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]
Schedule of estimated fair value of stockoptions weighted-average assumptions	In June 2019, the Company issued options to purchase 835,000 1.00 0.1855 Schedule of estimated fair value of stockoptions weighted-average assumptions Risk-free interest rate: 1.76 Expected term: 5.75 years Expected dividend yield: 0 Expected volatility: 35.01
Stock option activity for the three months ended March 31, 2022, is summarized as follows:	Stock option activity for the three months ended March 31, 2022, is summarized as follows: 2019 Stock Option Plan: Shares Weighted Weighted Options outstanding at January 1, 2022 835,000 $ 1.00 7.50 Granted - Exercised - Expired or forfeited - Options outstanding at March 31, 2022 835,000 $ 1.00 7.25 Options exercisable at March 31, 2022 417,500 $ 1.00 7.25 Options expected to vest at March 31, 2022 417,500 $ 1.00 7.25

FAIR VALUE (Tables)

FAIR VALUE (Tables)	3 Months Ended
	Mar. 31, 2022
Fair Value Disclosures [Abstract]
The following tables display the Company’s assets and liabilities measured at fair value on a recurring basis:	The following tables display the Company’s assets and liabilities measured at fair value on a recurring basis: March 31, 2022 Total Level I Level II Level III Financial Assets Mortgages Owned $ 362,172,539 $ - $ 362,172,539 $ - Mortgage Servicing 10,468,042 - - 10,468,042 Portfolio Loans 9,111,152 9,111,152 Non-MSN Securities 225,000 - - 225,000 Total Financial Assets $ 381,976,733 $ - $ 371,283,691 $ 10,693,042 Financial Liabilities Mortgage Secured Notes Payable $ 356,883,064 $ - $ 356,883,064 $ - December 31, 2021 Financial Assets Mortgages Owned $ 326,312,345 $ - $ 326,312,345 $ - Mortgage Servicing 9,616,357 - - 9,616,357 Portfolio Loans 14,749,862 14,749,862 Non- MSN Securities 225,006 - - 225,006 Total Financial Assets $ 350,903,570 $ - $ 341,062,207 $ 9,841,363 Financial Liabilities Mortgage Secured Notes Payable $ 326,212,364 $ - $ 326,212,364 $ -
The following table presents a reconciliation of changes in Level 3 assets and liabilities reported in the Statements of Financial Condition for March 31, 2022:	The following table presents a reconciliation of changes in Level 3 assets and liabilities reported in the Statements of Financial Condition for March 31, 2022: Changes in assets: Period ended March 31, 2022 Mortgage Servicing Non- MSN Total Value Beginning balance at January 1, 2022 $ 9,616,357 $ 225,006 $ 9,841,363 Purchases - - - Trades - - - Sales - (6 ) (6 ) Issues - - - Settlements - - - Net realized gain/loss or Interest income - - - Unrealized Gain from newly issued mortgages 480,376 - 480,376 Fair Value adjustment 371,309 - 371,309 Transfers into Level 3 - - - Transfers out of Level 3 - - - Ending balance at March 31, 2022 $ 10,468,042 $ 225,000 $ 10,693,042
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, 2022:	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, 2022: 3/31/2022 Investment type Fair Value Valuation technique Unobservable inputs Values Mortgage servicing $ 10,468,042 Net Present Value Prepayment Discount 13.54 % Discount rate 15.00 % Non-MSN Securities $ 225,000 Net Par Value

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	3 Months Ended
	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	Property and Equipment are summarized as follows: Schedule of property and equipment March 31, 2022 Equipment $ 217,553 Furniture and fixtures 182,242 399,795 Accumulated depreciation (102,259 ) Net Property Equipment $ 297,536 December 31, 2021 Equipment $ 210,953 Furniture and fixtures 178,672 389,625 Accumulated depreciation (85,422 ) Net Property Equipment $ 304,203

The following table provides a

The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the consolidated statements of cash flows as of March 31, 2022 and 2021: (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Cash and Cash Equivalents	$ 9,100,306	$ 9,137,672	$ 1,638,276
Restricted Cash	7,501,098	10,343,671	11,957,044
Total Cash, Cash Equivlents and Restricted Cash	$ 16,601,404	$ 19,481,343	$ 13,595,320	$ 8,642,465

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended
	Mar. 31, 2022USD ($)
Property, Plant and Equipment [Line Items]
FDIC Insured Amount	$ 250,000
Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years

The following table summarizes

The following table summarizes the unpaid Contingent Liability outstanding as of March 31, 2022 and December 31, 2021 (Details)	3 Months Ended
	Mar. 31, 2022USD ($)
Business Combination and Asset Acquisition [Abstract]
Contingent liability to redeem J.W. Korth Preferred Capital Interest Partners	$ 696,253
Contingent liability payment	(215,502)
Accrued quarterly dividends recorded as interest expense through March 31, 2022	9,201
Contingent Liability, net	$ 489,952

CONTINGENT LIABILITY (Details N

CONTINGENT LIABILITY (Details Narrative) - Michigan Limited Partnership [Member]	3 Months Ended
	Mar. 31, 2022
Business Acquisition [Line Items]
Dividend rate	6.00%
Dividends payable, date to be paid	Jul. 31, 2020
Series A Preferred Stock [Member]
Business Acquisition [Line Items]
Dividend rate	25.00%

The following table presents th

The following table presents the future scheduled principal payments on the Company’s MSNs: (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Last 9 months of 2022	$ 356,914
2023	10,968,185
2024	108,727,917
2025	102,247,523
2026	118,372,000
Thereafter	16,210,525
Long-Term Debt	$ 356,883,064	$ 326,312,345

MORTGAGE SECURED NOTES PAYABL_2

MORTGAGE SECURED NOTES PAYABLE (Details Narrative) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Funded loans	$ 356,883,064	$ 326,312,345
Minimum [Member]
Debt Instrument [Line Items]
Interest Percentage	4.25%
Maximum [Member]
Debt Instrument [Line Items]
Interest Percentage	6.50%

RESTRICTED CASH (Details Narrat

RESTRICTED CASH (Details Narrative) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Mortgage second secured notes funded	$ 6,684,743	$ 9,519,859
Account balance	45,771	93,775
Series B Preferred Stock [Member]
Deposits	308,750	308,750
Actual Basis [Member]
Due to investors liability including commitment fees and accrued interest	$ 461,834	$ 421,286

The following is a schedule of

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 of as of March 31, 2022: (Details) - USD ($)	Mar. 31, 2022	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, Future Minimum Payments, Due in Two Years	$ 187,978
Operating Leases, Future Minimum Payments, Due in Three Years	256,920
Operating Leases, Future Minimum Payments, Due in Four Years	264,087
Operating Leases, Future Minimum Payments, Due in Five Years	271,470
Operating Leases, Future Minimum Payments, Due Thereafter	30,504
Operating Leases, Future Minimum Payments Due	1,010,959
[custom:OperatingLeasesFutureMinimumPaymentsDueImputedInterest-0]	(81,431)
Finance Lease, Liability	$ 929,528	$ 929,528

COMMITMENTS (Details Narrative)

COMMITMENTS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 62,640	$ 86,160
Weighted-average discount rate		4.24%
Weighted-average remaining life		3 years 9 months 18 days
Present value of lease liabilities	$ 929,528	$ 929,528

The following is a summary of t

The following is a summary of the loan origination fees and costs deferred and amortized for the three months ended March 31, 2022 : (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Jan. 02, 2022
Deferred origination fees, begnning	$ 4,226,325
Deferred origination cost, beginning	3,068,653
Deferred origination cost	1,406,167	$ 1,157,672
Deferred origination fees ,ending	4,705,852
Deferred origination cost, ending	3,299,685
Deferred revenue net, ending	1,406,167
New Loan Deferrals [Member]
Deferred origination fees	725,000
Deferred origination cost	(438,890)
Deferred origination cost	286,110
Deferred revenue net, ending	286,110
Amortization Of Deferrals [Member]
Deferred origination fees	(245,473)
Deferred origination cost	(37,615)
Deferred revenue net	207,858
Deferred revenue net, ending	$ (37,615)

Schedule of estimated fair valu

Schedule of estimated fair value of stockoptions weighted-average assumptions (Details)	3 Months Ended
	Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]
Risk-free interest rate:	1.76%
Expected term	5 years 9 months
Expected dividend yield:	0.00%
Expected volatility:	35.01%

Stock option activity for the t

Stock option activity for the three months ended March 31, 2022, is summarized as follows: (Details)	3 Months Ended
	Mar. 31, 2022$ / sharesshares
Share-Based Payment Arrangement [Abstract]
Shares outstanding, beginning	835,000
Weighted average, beginning | $ / shares	$ 1
Weighted contractual life, beginning	7 years 6 months
Granted
Exercised
Expired or forfieted
Shares outstanding, ending	835,000
Weighted average, ending | $ / shares	$ 1
Weighted contractual life, ending	7 years 2 months 30 days
Options exercisable, ending	417,500
Weighted average options exercisable, ending | $ / shares	$ 1
Weighted contractual life options exercisable, ending	7 years 2 months 30 days
Options expected to vest, ending	417,500
Weighted average options expected to vest, ending | $ / shares	$ 1
Weighted contractual life options expected to vest, ending	7 years 2 months 30 days

EMPLOYEE AND DIRECTOR STOCK O_3

EMPLOYEE AND DIRECTOR STOCK OPTIONS (Details Narrative) - USD ($)	Jun. 28, 2019	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock, par value (in dollars per share)		$ 0.001		$ 0.001
Share based payment non cash expense		$ 6,453	$ 6,453
Stock Option Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based payment non cash expense		$ 6,453
Stock Option Plan [Member] | Director [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares purchase	1,000,000
Common stock, par value (in dollars per share)	$ 0.001

PREFERRED EQUITY (Details Narra

PREFERRED EQUITY (Details Narrative) - USD ($)	Jun. 29, 2021	Sep. 27, 2019	Mar. 31, 2022
Series A Cumulative Perpetual Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, New Issues		200,000
Net proceeds from issuance of shares		$ 4,750,000
Conversion description		convertible into common stock at a ratio of 5 shares of common stock for each share of Series A Preferred Stock
Preferred Stock, Par or Stated Value Per Share			$ 0.001
Series A Cumulative Perpetual Convertible Preferred Stock [Member] | Subsidiaries [Member]
Class of Stock [Line Items]
Prepaid Expenses		$ 250,000
Conversion of Stock, Amount Converted		$ 25
Series B Cumulative Perpetual Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, New Issues	19,000
Net proceeds from issuance of shares	$ 18,302,500
Prepaid Expenses	$ 697,500
Stock redeemable terms			in whole or in part, on or after June 29, 2026
Preferred Stock, Redemption Price Per Share			$ 1,000
Series B Preferred Stock Non Convertible [Member]
Class of Stock [Line Items]
Percentage of dividend payable if and when declared			6.50%

The following tables display th

The following tables display the Company’s assets and liabilities measured at fair value on a recurring basis: (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Dec. 30, 2021
Financial Assets
Non- MSN Securities	$ 225,000	$ 225,006
Fair Value, Recurring [Member]
Financial Assets
Mortgages Owned	362,172,539	326,312,345
Mortgage Servicing	10,468,042	9,616,357
Portfolio Loans	9,111,152	14,749,862
Non- MSN Securities	225,000	225,006
Total Financial Assets	381,976,733	350,903,570
Financial Liabilities
Mortgage Secured Notes Payable	356,883,064	326,212,364
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets
Mortgages Owned
Mortgage Servicing
Non- MSN Securities
Total Financial Assets
Financial Liabilities
Mortgage Secured Notes Payable
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets
Mortgages Owned	362,172,539	326,312,345
Mortgage Servicing
Portfolio Loans	9,111,152	14,749,862
Non- MSN Securities
Total Financial Assets	371,283,691	341,062,207
Financial Liabilities
Mortgage Secured Notes Payable	356,883,064	326,212,364
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets
Mortgages Owned
Mortgage Servicing	10,468,042	9,616,357
Non- MSN Securities	225,000	225,006
Total Financial Assets	10,693,042	9,841,363
Financial Liabilities
Mortgage Secured Notes Payable

The following table presents a

The following table presents a reconciliation of changes in Level 3 assets and liabilities reported in the Statements of Financial Condition for March 31, 2022: (Details)	3 Months Ended
	Mar. 31, 2022USD ($)
Debt Instrument [Line Items]
Beginning balance at January 1, 2022	$ 9,841,363
Purchases
Trades
Sales	(6)
Issues
Settlements
Net realized gain/loss or Interest income
Unrealized Gain from newly issued mortgages	480,376
Fair Value adjustment	371,309
Transfers into Level 3
Transfers out of Level 3
Ending balance at March 31, 2022	10,693,042
Mortgages [Member]
Debt Instrument [Line Items]
Beginning balance at January 1, 2022	9,616,357
Purchases
Trades
Sales
Issues
Settlements
Net realized gain/loss or Interest income
Unrealized Gain from newly issued mortgages	480,376
Fair Value adjustment	371,309
Transfers into Level 3
Transfers out of Level 3
Ending balance at March 31, 2022	10,468,042
Securities [Member]
Debt Instrument [Line Items]
Beginning balance at January 1, 2022	225,006
Purchases
Trades
Sales	(6)
Issues
Settlements
Net realized gain/loss or Interest income
Unrealized Gain from newly issued mortgages
Fair Value adjustment
Transfers into Level 3
Transfers out of Level 3
Ending balance at March 31, 2022	$ 225,000

The following table presents qu

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, 2022: (Details) - Fair Value, Recurring [Member]	3 Months Ended
	Mar. 31, 2022USD ($)	Dec. 31, 2021USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 10,468,042	$ 9,616,357
Mortgage Servicing [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 10,468,042
Valuation technique	Net Present Value
Unobservable inputs	Prepayment Discount
Value	0.1354
Mortgage Servicing 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unobservable inputs	Discount rate
Value	0.1500
Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 225,000
Valuation technique	Net Par Value

FAIR VALUE (Details Narrative)

FAIR VALUE (Details Narrative)	Mar. 31, 2022USD ($)
J W Korth [Member] | Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Default bonds amount	$ 225,000

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 167,717	$ 224,655
Effective tax rate	26.00%	26.00%
Income before income taxes	$ 644,550	$ 855,102
Statutory corporate tax rate	21.00%	21.00%

Schedule of property and equipm

Schedule of property and equipment (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Total	$ 399,795	$ 389,625
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(102,259)	(85,422)
Property, Plant and Equipment, Net	297,536	304,203
Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	217,553	210,953
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total	$ 182,242	$ 178,672

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation Expense	$ 16,837	$ 7,977

FINANCING ARRANGEMENTS (Details

FINANCING ARRANGEMENTS (Details Narrative)	3 Months Ended
	Mar. 31, 2022USD ($)
Financing Arrangements
Repurchase of agreeement	$ 100,000,000
Loans fees	$ 1,500,000