v3.26.3
SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2026
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 17 – SEGMENT REPORTING

 

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

 

Lending and Servicing

 

This is KDM’s core business segment and includes consolidation of the Fund and J.W. Korth. Management evaluates the performance of this segment using earnings before interest, taxes, depreciation, dividends, and amortization (“EBITDDA”), which also excludes the unrealized gains and losses on the Company’s MSRs. This is an operating view of the business segment, so excludes the cost of financing the business and the future cash flows from loan servicing. These numbers do include salaries from all employees, including those who work across both business segments. Below are the consolidated profit and loss statements and assets:

Schedule of business segments        
   Six months ended June 30, 
   2026   2025 
REVENUES        
Origination Revenue, Net  $594,248   $1,578,779 
Servicing Revenue   1,407,393    2,263,827 
Underwriting Income   30,200    12,750 
Investment Income   1,734,082    1,564,298 
Other Revenue   333,843    253,552 
Total Revenues   4,099,766    5,673,206 
           
COST OF REVENUES          
Broker Expenses   236,430    1,289,684 
Administrative Expenses   529,206    609,347 
Total Cost of Revenues   765,636    1,899,031 
           
GROSS PROFIT   3,334,130    3,774,175 
           
OPERATING EXPENSES          
Office   248,225    236,998 
Compensation and Related Benefits   1,761,600    1,834,647 
Professional & Legal   388,322    338,123 
Advertising   61,483    62,940 
Total Operating Expenses   2,459,630    2,472,708 
           
EBITDDA  $874,500   $1,301,467 

 

 

   June 30, 2026   December 31, 2025 
ASSETS        
Cash and Cash Equivalents  $649,709   $2,265,998 
Restricted Cash   3,777,071    4,913,585 
Mortgages Owned   315,256,052    336,216,050 
Mortgage Servicing Rights, at Fair Value   8,224,732    6,108,755 
Portfolio Loans   16,893,848    15,358,180 
Loans held for Sale, at Fair Value   206,977    - 
Securities    29,437    41,991 
ROU Leased Asset   449,390    560,599 
Goodwill   110,000    110,000 
Property and equipment, net of depreciation   75,952    121,038 
Other Assets   2,809,756    1,648,778 
Total Assets  $348,482,924   $367,344,974 

 

 

Below is the reconciliation of EBITDDA to income before provision for income taxes:

 

   Six months ended June 30, 
   2026   2025 
         
EBITDDA  $874,500   $1,301,467 
           
Other Income (Expenses)          
Unrealized (Loss) Gain on Mortgages   2,115,977    (972,647)
Unrealized (Loss) Gain on Mortgage Secured Notes   (15,519)   (29,541)
Unrealized Loss on Investment   (27,605)   1,496 
Interest Income   -    13,895 
Interest Expense   (1,014,044)   (746,696)
Realized Gain on Securities   -    58,666 
Realized Gain on Foreclosure   -    5,557,032 
Realized Loss on Loans Held for Sale   -    (4,417)
Employee Retention Credit   -    45,000 
Change in Fair Value of Mortgage Secured Notes   -    9,000,000
Loss on Foreclosures   -    (9,000,000)
Total Other Income   1,058,809    3,922,788 
           
Income before provision for income taxes  $1,933,309   $5,224,255 

 

 

Asset Management

 

While we view this business segment as necessary to support the Lending and Servicing segment, it also clearly has a very different set of metrics and we look at each property’s profit and loss statement independently. The numbers we use to manage the properties are primarily driven by total occupancy, rent per square foot, and net operating income. Below are the consolidated profit and loss statements and statement of assets of the four properties KDM owns in Stafford, Virginia (specialty office), Acton, Massachusetts (office), Selma, TX (office), Los Angeles, California (mixed use), and SEH Fernley LLC and Sustainable Energy Holdings (NV) LLC,

 

See Note 14 for total property values.

 

   Six months ended June 30, 
   2026   2025 
REVENUES        
Rental Income  $2,342,697   $3,181,676 
Total Revenues   2,342,697    3,181,676 
           
COST OF REVENUES          
Bank Transaction Fees   1,054    754 

Administrative Expenses

   10,619    - 
Ground Rent   235,429    521,830 
Total Cost of Revenues   247,102    522,584 
           
GROSS PROFIT   2,095,595    2,659,092 
           
OPERATING EXPENSES          
Office   25,472    22,818 
Compensation and Related Benefits   65,979    63,453 
Property Taxes   446,727    134,976 
Professional & Legal   229,171    120,452 
Utilities   742,268    863,494 
Business Insurance   124,302    48,902 
Depreciation   875,106    871,567 
Total Operating Expenses   2,509,025    2,125,662 
           
Net Operating (Loss) Income   (413,430)   533,430 
           
OTHER EXPENSES          
Mortgage Interest   656,714    286,747 
Total Other Expenses   656,714    286,747 
           
Net (Loss) Income  $(1,070,144)  $246,683 

 

 

   June 30, 2026   December 31, 2025 
ASSETS        
Cash and Cash Equivalents  $1,540,824   $3,088,170 
Restricted Cash   

1,102,310

    - 
Property and equipment, net of depreciation   69,285,613    69,570,091 

Land - Joint Venture

   10,769,605    - 
Other Assets   3,593,408    1,317,974 
Total Assets  $86,291,760   $73,976,235 

 

 

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

                 
   For the six months ended June 30, 2026 
                 
    Lending and Servicing    Asset Management    Other    Total 
REVENUES                    
Origination Revenue, Net  $594,248   $-   $-   $594,248 
Servicing Revenue   1,407,393    -    -    1,407,393 
Underwriting Income   30,200    -    -    30,200 
Rental Income   -    2,342,697    -    2,342,697 
Investment Revenue   1,734,082    -    -    1,734,082 
Other Revenue   333,843    -    -    333,843 
Total Revenues   4,099,766    2,342,697    -    6,442,463 
                     
COST OF REVENUES                    
Broker Expenses   236,430    -    -    236,430 
Bank Transaction Fees   -    1,054    -    1,054 
Ground Rent   -    235,429    -    235,429 
Administrative Expenses   529,206    10,619    -    539,825 
Total Cost of Revenues   765,636    247,102    -    1,012,738 
                     
GROSS PROFIT   3,334,130    2,095,595    -    5,429,725 
                     
OPERATING EXPENSES                    
Office   248,225    25,472    -    273,697 
Compensation and Related Benefits   1,761,600    65,979    -    1,827,579 
Professional & Legal   388,322    229,171    -    617,493 
Property Taxes   -    446,727    -    446,727 
Utilities   -    742,268    -    742,268 
Business Insurance   -    124,302    -    124,302 
Advertising   61,483    -    -    61,483 
Depreciation   -    875,106    46,593    921,699 
Total Operating Expenses   2,459,630    2,509,025    46,593    5,015,248 
                     
Net Operating Income (Loss)   874,500    (413,430)   (46,593)   414,477 
                     
Other Income (Expenses)                    
Unrealized Gain on Mortgages   2,115,977    -    -    2,115,977 
Unrealized Loss on Mortgage Secured Notes   (15,519)   -    -    (15,519)
Interest Expense   (1,014,044)   (656,714)   -    (1,670,758)
Unrealized Loss on Investment   (27,605)   -    -    (27,605)
Total Other Income (Expenses)   1,058,809    (656,714)   -    402,095 
                     
Income (Expenses) before provision for income taxes  $1,933,309   $(1,070,144)  $(46,593)  $816,572 

 

 

   For the six months ended June 30, 2025 
                 
    Lending and Servicing    Asset Management    Other    Total 
REVENUES                    
Origination Revenue, Net  $1,578,779   $-   $-   $1,578,779 
Servicing Revenue   2,263,827    -    -    2,263,827 
Underwriting Income   12,750    -    -    12,750 
Rental Income   -    3,181,453    -    3,181,453 
Investment Revenue   1,564,298    -    -    1,564,298 
Other Revenue   253,552    223    -    253,775 
Total Revenues   5,673,206    3,181,676    -    8,854,882 
                     
COST OF REVENUES                    
Broker Expenses   1,289,684    -    -    1,289,684 
Bank Transaction Fees   -    754    -    754 
Ground Rent   -    521,830    -    521,830 
Administrative Expenses   609,347    -    -    609,347 
Total Cost of Revenues   1,899,031    522,584    -    2,421,615 
                     
GROSS PROFIT   3,774,175    2,659,092    -    6,433,267 
                     
OPERATING EXPENSES                    
Office   236,998    22,818    -    259,816 
Compensation and Related Benefits   1,834,647    63,453    -    1,898,100 
Professional & Legal   338,123    120,452    -    458,575 
Property Taxes   -    134,976    -    134,976 
Utilities   -    863,494    -    863,494 
Business Insurance   -    48,902    -    48,902 
Advertising   62,940    -    -    62,940 
Depreciation   -    871,567    44,531    916,098 
Total Operating Expenses   2,472,708    2,125,662    44,531    4,642,901 
                     
Net Operating Income   1,301,467    533,430    (44,531)   1,790,366 
                     
Other Income/(Expenses)                    
Unrealized Gain on Mortgages   (972,647)   -    -    (972,647)
Unrealized Gain on Mortgage Secured Notes   (29,541)   -    -    (29,541)
Interest Income   13,895    -    -    13,895 
Interest Expense   (746,696)   (286,747)   -    (1,033,443)
Unrealized Loss on Investment   1,496    -    -    1,496 
Realized Gain on Securities   58,666    -    -    58,666 
Realized Gain on Foreclosure   5,557,032    -    -    5,557,032 
Realized Loss on Loans Held for Sale   (4,417)   -    -    (4,417)
Employee Retention Credit   45,000    -    -    45,000 
Change in Fair Value of Mortgage Secured Notes   9,000,000   -    -    9,000,000
Loss on Foreclosures   (9,000,000)   -    -    (9,000,000)
Total Other Income (Expenses)   3,922,788    (286,747)   -    3,636,041 
                     
Income before provision for income taxes  $5,224,255   $246,683   $(44,531)  $5,426,407 

 

 

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

 

       June 30, 2026         
                 
    Lending and Servicing    Asset Management    Other    Total 
ASSETS                    
Cash and Cash Equivalents  $649,709   $1,540,824   $-   $2,190,533 
Restricted Cash   3,777,071    1,102,310    -    4,879,381 
Mortgages Owned   315,256,052    -    (50,800,000)   264,456,052 
Mortgage Servicing Rights, at Fair Value   8,224,732    -    -    8,224,732 
Portfolio Loans   16,893,848    -    (9,667,197)   7,226,651 
Loans Held for Sale   206,977    

-

    -    206,977 
Securities   29,437    -    -    29,437 
Right-of-Use "ROU" Leased Asset   449,390    -    -    449,390 
Goodwill   110,000    -    -    110,000 
Property and equipment, net of depreciation   75,952    69,285,613    -    69,361,565 

Land - Joint Venture

   -    10,769,605         10,769,605 
Other Assets   2,809,756    3,593,408    (2,468,763)   3,934,401 
Total Assets  $348,482,924   $86,291,760   $(62,935,960)  $371,838,724 

 

 

       December 31, 2025         
                 
    Lending and Servicing    Asset Management    Other    Total 
ASSETS                    
Cash and Cash Equivalents  $2,265,998   $3,088,170   $-   $5,354,168 
Restricted Cash   4,913,585    -    -    4,913,585 
Mortgages Owned   336,216,050    -    (50,800,000)   285,416,050 
Mortgage Servicing Rights, at Fair Value   6,108,755    -    -    6,108,755 
Portfolio Loans   15,358,180    -    (9,667,196)   5,690,984 
Securities   41,991    -    -    41,991 
Right-of-Use "ROU" Leased Asset   560,599    -    -    560,599 
Goodwill   110,000    -    -    110,000 
Property and equipment, net of depreciation   121,038    69,570,091    -    69,691,129 
Other Assets   1,648,778    1,317,974    -    2,966,752 
Total Assets  $367,344,974   $73,976,235   $(60,467,196)  $380,854,013