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 |