{"url_path":"/sec/cik-0001695963/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-01","source_url":"https://www.sec.gov/Archives/edgar/data/1695963/0001214659-26-006969-index.html","accession_number":"0001214659-26-006969","cik":"0001695963","ticker":null,"issuer_name":"Korth Direct Mortgage Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1695963/0001214659-26-006969-index.html","primary_entity_key":"0001695963","primary_entity_name":"Korth Direct Mortgage Inc."},"word_count":3618,"has_tables":true,"body_markdown":"** **\n\n**Item 7. Management’s Discussion and Analysis\nof Financial Condition and Results of Operations**\n\n \n\n*You should read the following discussion in\nconjunction with our historical financial statements, which are included elsewhere in this Form 10-K. Management’s Discussion\nand Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based\non current expectations and assumptions, which are subject to risk, uncertainties and other factors, including, but not limited to, those\ndescribed in the subsection titled “Risk Factors,” located in Part I, Item 1A, of this Form 10-K.*\n\n \n\n**Overview**\n\n \n\nKDM was organized as a Florida limited liability\ncompany on July 24, 2009, under the name HCMK Consulting, LLC. We changed our name to J. W. Korth & Company, LLC, in November 2010,\nand then to Korth Direct Mortgage, LLC, on August 24, 2016. KDM converted into a Florida corporation, Korth Direct Mortgage Inc., on June\n6, 2019. Our principal executive offices are located at 135 San Lorenzo Avenue Suite 600, Coral Gables, Florida 33146, and our telephone\nnumber is (305) 668-8485. Our website address is www.korthdirect.com. We also operate under the trade name KDM Financial, as well as via\nour subsidiary, J. W. Korth & Company Limited Partnership, a Michigan limited partnership.\n\n \n\n 16 \n\n [Table of Contents](#toc)\n\n \n\nKorth Direct Mortgage began its formal operations\nin October of 2016 when we engaged our Chief Lending Officer. KDM is a licensed Mortgage Lender Servicer with the State of Florida. Our\nNMLS License Number is 1579547.\n\n \n\nWe were wholly owned by J. W. Korth until July\n31, 2020, when we acquired all of the equity of J.W. Korth, making it a subsidiary.\n\n \n\nWe originate, fund, and service loans which are\nmade to commercial borrowers. The loans are held by KDM as the lender. We fund our loans in a variety of ways, including selling loan\nparticipations, via a warehouse line, and directly in the capital markets through issuance of Mortgage Secured Notes (“MSNs”\nor “Notes”), which are sold through J.W. Korth as initial purchaser through exemptions from registration available under Rule\n144A, Regulation D, and other exemptions from registration. We also own and operate commercial property acquired via foreclosure or deed\nin lieu of foreclosure. We may also issue second lien loans using KDM’s own assets, in which case these loans will be junior to\nthe CM Loans where they are secured by the same property, or issue first mortgages with our own funds, which may or may not use additional\nfinancing.\n\n \n\nKDM also operates its business through a variety\nof subsidiaries. KDM MFB LLC, a Delaware limited liability company was formed to issue multi-family bridge loans, and KDM Funding I LLC,\na Florida limited liability company was formed to issue additional MSNs. These companies are wholly owned by KDM. Our REO portfolio is\nheld in the name of KDM Asset Management LLC, a wholly owned subsidiary of KDM, and each property is held in a special purpose entity\nowned by KDM Asset Management, LLC.\n\n \n\n**Results of Operations for Year Ended December\n31, 2025**\n\n \n\nThe Company generated revenues of $17,235,522 for the year ended December\n31, 2025, an increase of $5,167,865 or 43% compared with revenues of $12,067,657 for the year ended December 31, 2024, due to large increases\nin Origination and Leasing Revenue of revenues from our Asset Management segment. As of December 31, 2025, the Company owned mortgages\nof $285,416,050 compared with mortgages of $451,974,989 as of December 31, 2024, a decrease of 36.85%.\n\n \n\nSimilarly, gross profits increased by $4,704,605,\nor 55% to $13,220,244 during the year ended December 31, 2025, compared with gross profits of $8,515,639 during the year ended December\n31, 2024.\n\n \n\nOperating expenses were $10,533,839 during the\nyear ended December 31, 2025, an increase of $1,000,724 compared with operating expenses of $9,533,115 during the year ended December\n31, 2024. The increase in operating expenses was primarily the result of an increase of $745,944 in office expenses and an increase of\n$564,275 in depreciation related to the properties in our REO Portfolio.\n\n \n\nThe Unrealized (Loss)Gain on Mortgages caption is the net present value\nof our mortgage servicing rights. The balance sheet caption Mortgage Servicing Rights (“MSRs”) takes our expected future servicing\nrevenues from our entire book of loans and discounts it to present value. Due to approximately $125 million loans being paid off in 2025,\nServicing Revenue fell year over year by $914,377, or a decline of 18.10%.\n\n \n\nFor the year ended December 31, 2025, the\nCompany recorded an income tax provision of $126,363 compared with an income tax benefit of $633,698 for the year ended December 31, 2024.\n\n \n\nThe Company pared Net Loss from $3,618,907\nfor the year ended December 31, 2024 to $2,344,108 net loss for the year ended December 31, 2025. Our Net Loss was 49% lower than\nthe prior year, primarily due to a 73% increase in Origination Revenue at $2.918 million and a 94.3% increase in Leasing Revenue due\nto additional properties added to our REO Properties. See Segment Reporting for more information on our Asset Management segment.\nOur Operating Profit improved by 364% to $2,686,405 from ($1,017,406).\n\n \n\nAlthough the benchmark interest rates dropped 75 bps in 2025, the commercial\nreal estate landscape continued to present challenges. While growing additional relationships to fund lending for our primary segment\nof Lending and Servicing, we also made significant progress in our Asset Management division bringing one property back to performing\nand negotiating additional tenants and possible sale contract on another. With the MSN market stalled for 2025, KDM was unable to add\nsignificantly to its servicing portfolio which has resulted in a net decline of approximately $125 million of loans serviced. Additionally\nnew loans closed were at traditional servicing rates, rather than at net interest margin rates, resulting in less unrealized gain added\nto the balance sheet. We are hopeful that the MSN market investors will return for 2026, as this is a critical piece of our business model\nas well as the net margin from those loans is the security interest underlying our preferred stock payments. KDM continues to explore\nadditional avenues in its business and expects 2026 to present new opportunities for the Company and its investors.\n\n \n\n**Financial Condition for the year ended December\n31, 2025**\n\n \n\nAs of December 31, 2025, we had $5,354,168 in\ncash, $5,732,975 in portfolio loans and securities, as well as $285,416,050 of loans securitized or participated out to investors. Total\nKDM originations stood at $672,267,797 as of December 31, 2025. As of December 31, 2025, our property and equipment net of depreciation\nis valued at $69,691,129. The Company also has invested approximately $1,084,050 in KDM Capital Partners, LP, which makes bridge loans\non multifamily properties.\n\n \n\n 17 \n\n [Table of Contents](#toc)\n\n \n\nThe fair value of our Mortgage Servicing Rights fell by 34%, falling\nproportionally to the MSN loans that have paid off and not been replaced. Our MSRs are the net present value of the future servicing income\nwe receive from loans made to date. This value is highly subjective and includes such variables as constant prepayment rate (CPR), discount\nrate, and market pricing data. Please see the explanation of this change in value above in “Results of Operations.” The current\nvalue was provided by a third-party consulting firm and uses 15.0% for the discount rate and includes a 14.25% CPR, along with other assumptions\ncustomary to the industry.\n\n \n\nTotal assets declined by 27% to $380,854,013 at December 31, 2025 due\nto $166,558,939 book value of loans paying off or otherwise being disposed. This includes $50,800,000 moved out of the mortgage book and\ninto REO at fair value upon acquisition through foreclosure or deed in lieu of foreclosure.\n\n \n\n**Capital and Liquidity Needs**\n\n \n\nWith the decline in the MSN market,\nand KDM just beginning to ramp business with some new lending partners at lower net profit to the Company than the MSN program, KDM’s\nbalance sheet and ongoing monthly revenue from servicing has declined significantly. We are optimistic that in 2026 the MSN market will\nrecover and we will add additional assets to our MSRs and recurring revenue streams.\n\n \n\nIn the Asset management segment\nof the business, KDM may need to access financing in order to improve or reposition properties it owns. Including, in particular, a development\nproject on its LA Arts District property to convert it to multi-family.\n\n \n\nKDM continues\nto work to raise capital for its nascent fund, KDM Capital Partners, LP (the “Fund”), currently targeting high net worth investors,\nRIAs, and family offices. The Company is actively looking to repackage some of its existing loans into an alternative structure or may\notherwise access the capital markets or private credit markets as we deem necessary for our business in forms that will allow us the flexibility\nto grow our business again.\n\n \n\n**Status of our CM Loans**\n\n \n\nAs of year-end 2025, KDM had 4 loans in payment default and outstanding,\nfor a total of $8,156,973, of which $4,656,977 is KDM’s portfolio capital. Two of these loans are fully funded by KDM and two are\npartially funded by investors. We believe the outstanding balances on these loans represent an approximate 72% loan to value, and that\nwe are reasonably secured versus stabilized value of the properties, but they will take time to resolve the foreclosure actions.\n\n \n\nIn total, KDM has had payment defaults on 11 loans out of the 118 loans\nwe have originated on 167 properties, representing a default rate of 9.3% of loans, or 6.6% of properties lent on. Of these, 64% were\noffice defaults, 3 of the 11 were sold at or near par, with investors experiencing only minor losses. However, one office did not have\nsufficient cash flow to pay its ground lease once it was acquired and investors were unwilling to put in additional capital due to the\ndistressed capital structure, and that loan was a total loss. Of the remaining seven defaults, as of year end 2025, three are in our REO\nportfolio, and four are in various stages of the foreclosure process.\n\n \n\nOf the approximately $673,567,197 in loans originated\nby the Company, $322,769,453 of principal has been returned to investors, representing approximately 48% of total funds invested. Additionally,\nthe Company has paid out a total of $114,103,957 in MSN interest to investors since inception, representing a 16.9% interest return based\non the total amount of loans originated. In aggregate, the Company has returned $463,874,410 to investors through its Mortgage Secured\nNote program.\n\n \n\nCM Loans may from time to time be in a state of\ntechnical default. Such defaults arise out of a breach of one or more covenants or obligations of the loan, other than those for the repayment\nof principal or interest. KDM as the Servicer may elect to trigger default conditions where it feels that the underlying loan agreements\nprovide for such default and that the triggering of default remedies is in the best interest of protecting the value of the underlying\ncollateral and the repayment of the loan. Where KDM believes that a technical default would create a material risk to the CM Investors,\nKDM will provide notice to the CM Investors of the default and its risks.\n\n** **\n\n**Real Estate**\n\n \n\nIn November 2022, KDM acquired a majority interest in a specialty office\nbuilding in Stafford, Virginia after the borrower defaulted on its second lien mortgage. The first lien mortgage is in KDM2021-N011 and\nthe property continues to cash flow the first lien. KDM is planning a specialty buildout of the third floor for a new tenant and may continue\nto operate the property or sell it to investors.\n\n \n\n 18 \n\n [Table of Contents](#toc)\n\n \n\nIn the beginning of 2024, KDM acquired two properties on behalf of are\nMSN Noteholders in Acton, MA and St. Louis, MS via foreclosure and deed in lieu of foreclosure, respectively. The properties were currently\nsecuritized in KDM2021-N015 and KDM2021-N022, respectively. Both properties had high vacancy at the point of acquisition and the Company\nis working to stabilize the properties prior to sale in order to maximize recovery for the MSN Noteholders.\n\n \n\nAfter taking the office building in April 2024, in May 2025, KDM Cupples\nREO LLC defaulted on the ground lease of the property it owned in St. Louis, Missouri. After a meeting with the bondholders, where KDM\ninformed all bondholders that capital would need to be raised to pay the taxes, insurance, and ground rent, in order to not default, with\nadditional funds in order to stabilize the property, the bondholders chose to let the property go. The ground lessor terminated the ground\nlease and KDM Cupples REO LLC no longer owns the leasehold estate. On June 23, 2025, KDM removed the $9,000,000 asset from its balance\nsheet and canceled the related outstanding bonds. The transaction is reflected in the consolidated statements of operations as a loss\non foreclosures and change in fair value of mortgage secured notes.\n\n \n\nIn March 2025 and April 2025, via deed in lieu\nof foreclosure, KDM acquired a mixed use property in Los Angeles, California, a majority-owned via a subsidiary named KDM Seaton Colyton\nHoldings, LLC and an owner-occupied building in Selma, TX.\n\n \n\nWe have future expected rents from the above properties\nof approximately $43,171,046, approximately $14M of which is expected before 2030, and the remaining $29.1M from 2031 and beyond.\n\n \n\n**Map of Current Loans**\n\n \n\n \n\n \n\n 19 \n\n [Table of Contents](#toc)\n\n \n\n**Loan Information as of March 31,\n2025**\n\n \n\n \nNumber \n#\nof\nBuildings \nTicker \nProperty \nProperty\n\nType \nEJ\nRating \nIssue\nDate \nMaturity\n\n Date \nStatus \nOriginal\nBalance \nOriginal\nAppraisal \nOriginal\nLTV  \nAppraisal\nDate \nCurrent\nBalance \n\n \n1 \n2 \nKDM2017-N001 \nPinellas Park, FL \nMulti-family \nA+ \n4/20/2017 \n5/1/2027 \nPaid-in-Full \n$1,059,000 \n$1,920,000 \n55.16% \n03/2017 \n$- \n\n \n2 \n3 \nKDM2017-N002 \nMiami, FL \nMulti-family \nA \n12/21/2017 \n12/21/2020 \nPaid-in-Full \n$950,000 \n$1,605,000 \n59.19% \n03/2018 \n$- \n\n \n3 \n1 \nKDM2018-N001 \nMiami, FL \nWarehouse \nA- \n10/11/2018 \n3/13/2023 \nPaid-in-Full \n$1,850,000 \n$2,775,000 \n66.7% \n02/2018 \n$- \n\n \n4 \n1 \nKDM2018-N002 \n St Petersburg, FL \nMulti-family \nNR \n2/14/2018 \n2/14/2021 \nPaid-in-Full \n$341,250 \n$570,000 \n59.9% \n12/2017 \n$- \n\n \n5 \n1 \nKDM2018-N003 \nPerrysburg, OH \nWarehouse \nA+ \n4/27/2018 \n5/25/2023 \nPaid-in-Full \n$6,300,000 \n$10,500,000 \n60.0% \n1/18/2018 \n$- \n\n \n6 \n1 \nKDM2018-N005 \nNorthwood,  Ohio \n Warehouse \nA+ \n9/25/2018 \n9/25/2023 \nPaid-in-Full \n$2,700,000 \n$4,155,000 \n64.98% \n06/2018 \n$- \n\n \n7 \n1 \nKDM2018-N007 \n Vicksburg, MS \nMulti-family \nA \n1/15/2019 \n1/15/2024 \nPaid-in-Full \n$4,850,000 \n$8,100,000 \n59.9% \n12/2018 \n$- \n\n \n8 \n3 \nKDM2019-N001 \nHammonton, NJ \nOffice \nA- \n3/22/2019 \n3/22/2022 \nPaid-in-Full \n$9,690,000 \n$14,250,000 \n68.00% \n02/2019 \n$- \n\n \n9 \n2 \nKDM2019-N002 \nBirmingham & Center Point, AL \nMulti-family \nA- \n5/3/2019 \n5/3/2024 \nPaid-in-Full \n$4,400,000 \n$6,875,000 \n64.0% \n04/2019 \n$- \n\n \n10 \n2 \nKDM2019-N003 \nSprings Global SC and PA \nIndustrial \nBBB+ \n7/31/2019 \n8/25/2024 \nPaid-in-Full \n$9,700,000 \n$14,220,000 \n68.2% \n06/2019 \n$- \n\n \n11 \n3 \nKDM2019-N004 \nMasco Springs - OH, OK, GA \nIndustrial \nA- \n10/10/2019 \n11/25/2029 \nPerforming \n$37,000,000 \n$56,960,000 \n65.0% \n09/2019 \n$31,449,588 \n\n \n12 \n2 \nKDM2019-N005 \n Capitol Heights, MD \nIndustrial \nA- \n9/30/2019 \n10/25/2024 \nPaid-In-Full \n$4,200,000 \n$9,360,000 \n44.87% \n09/2019 \n$- \n\n \n13 \n2 \nKDM2019-N008 \n Cleveland, Ohio \nRetail \nA- \n12/18/2019 \n12/18/2024 \nPaid-in-Full \n$3,300,000 \n$9,850,000 \n33.5% \n11/2019 \n$- \n\n \n14 \n1 \nKDM2020-N001 \nWoodbridge, VA \nIndustrial \nA- \n2/27/2020 \n3/25/2025 \nPerforming \n$5,000,000 \n$9,240,000 \n54.11% \n11/2019 \n$5,000,000 \n\n \n15 \n8 \nKDM2020-N002 \nCleveland, OH \nOffice \nA- \n3/31/2020 \n5/25/2025 \nPaid-in-Full \n$8,500,000 \n$23,000,000 \n37.0% \n10/2019 \n$- \n\n \n16 \n1 \nKDM2020-N003 \nCarrollton, GA \nData Center \nA- \n4/23/2020 \n4/23/2025 \nPaid-In-Full \n$4,000,000 \n$7,100,000 \n56.34% \n03/2020 \n$- \n\n \n17 \n1 \nKDM2020-N007 \nStuart, FL \nOffice \nA- \n7/27/2020 \n8/25/2025 \nPaid-in-Full \n$1,650,000 \n$2,600,000 \n63.5% \n03/2020 \n$- \n\n \n18 \n1 \nKDM2020-N006 \nWater's Edge, Trenton, NJ \nSkilled Nursing Facility \nA+ \n7/31/2020 \n8/25/2025 \nPaid-In-Full \n$9,500,000 \n$19,500,000 \n48.72% \n05/2020 \n$- \n\n \n19 \n1 \nKDM2020-N009 \nLa Grange, IL \nIndustrial \nA- \n9/17/2020 \n10/25/2025 \nPaid-in-Full \n$2,308,000 \n$3,550,000 \n65.0% \n07/2020 \n$- \n\n \n20 \n1 \nKDM2020-N008 \nLoves Park, IL \nIndustrial \nA- \n9/25/2020 \n10/25/2023 \nPaid-in-Full \n$7,765,000 \n$13,170,000 \n58.96% \n09/2020 \n$- \n\n \n21 \n3 \nKDM2020-N010 \nMultifamily in AL, NY, FL \nMulti-family \nA- \n9/30/2020 \n10/25/2025 \nPerforming \n$8,684,000 \n$13,660,000 \n63.6% \n08/2020 \n$1,099,395 \n\n \n22 \n1 \nKDM2020-N012 \nHampton, VA \nOffice \nA \n10/30/2020 \n11/25/2025 \nPerforming \n$44,000,000 \n$74,900,000 \n58.74% \n10/2020 \n$44,000,000 \n\n \n23 \n2 \nKDM2020-N011 \nStamford, CT \nOffice \nA- \n1/8/2021 \n2/25/2026 \nPerforming \n$12,000,000 \n$19,100,000 \n62.8% \n08/2020 \n$12,000,000 \n\n \n24 \n3 \nKDM2021-N001 \nNJ, CA, TX \nMixed-use \nA- \n2/12/2021 \n3/25/2026 \nPerforming \n$9,062,000 \n$14,910,000 \n60.78% \n11/20,12/20,\n\n and 01/21 \n$9,062,000 \n\n \n25 \n1 \nKDM2021-N002 \nBellingham, WA \nOffice \nBBB+ \n3/18/2021 \n4/25/2026 \nPerforming \n$7,240,000 \n$12,090,000 \n59.9% \n01/2021 \n$7,240,000 \n\n \n26 \n1 \nKDM2021-N004 \nRonkonkoma, NY \nWarehouse \nBBB/BBB+ \n3/31/2021 \n4/25/2026 \nPerforming \n$2,179,000 \n$3,800,000 \n57.3% \n01/2021 \n$2,179,000 \n\n \n27 \n1 \nKDM2021-N005 \nLos Angeles, CA \nIndustrial \nA-/ WD \n4/23/2021 \n5/25/2024 \nREO \n$35,100,000 \n$61,200,000 \n57.4% \n03/2021 \n$35,100,000 \n\n \n28 \n1 \nKDM2021-N006 \nFL and SC \nOffice \nA-/A \n4/30/2021 \n5/25/2026 \nPerforming \n$4,380,000 \n$8,080,000 \n54.2% \n03/2021 \n$1,980,000 \n\n \n29 \n1 \nKDM2021-N007 \nCheyenne, WY \nIndustrial \nA- \n5/21/2021 \n6/25/2026 \nPaid -In-Full \n$7,100,000 \n$12,200,000 \n58.2% \n04/2021 \n$- \n\n \n30 \n2 \nKDM2021-N008 \nCovina, CA &  Las Cruces, NM \nRetail \nA-/A \n6/25/2021 \n6/25/2024 \nPaid-in-Full \n$10,400,000 \n$16,000,000 \n65.0% \n04/2021 \n$- \n\n \n31 \n1 \nKDM2021-N011 \nStafford, VA \nOffice \nA-/A \n5/28/2021 \n6/25/2026 \nREO \n$9,500,000 \n$15,000,000 \n63.3% \n04/2021 \n$9,500,000 \n\n \n32 \n1 \nKDM2021-N013 \nEast Orange, NJ \nEducation Center \nA- \n7/22/2021 \n8/25/2026 \nPerforming \n$5,253,000 \n$9,550,000 \n55.0% \n04/2021 \n$5,253,000 \n\n \n33 \n2 \nKDM2021-N014 \nMount Prospect, IL \nRetail \nA \n7/23/2021 \n8/25/2025 \nPaid -In-Full \n$5,850,000 \n$9,306,765 \n62.9% \n04/2021 \n$- \n\n \n34 \n3 \nKDM2021-N015 \n Acton, MA \nOffice \nA-/ WD \n8/25/2021 \n9/25/2026 \nREO \n$9,660,000 \n$18,700,000 \n51.7% \n06/2021 \n$9,660,000 \n\n \n35 \n3 \nKDM2021-N018 \nColumbus, Toledo, Alliance & Mansfield, OH \nSkilled Nursing Facility \nA \n10/29/2021 \n11/25/2026 \nPaid -In-Full \n$23,000,000 \n$35,400,000 \n65.0% \n09/2021 \n$- \n\n \n36 \n4 \nKDM2021-N020 \nWashington, PA  & Goreville &  Marion,\nIL \nFuneral Homes & Office \nA- \n11/10/2021 \n12/25/2026 \nPaid off 89.90% \n$4,750,000 \n$8,791,000 \n54.0% \n09/2021 \n$- \n\n \n37 \n1 \nKDM2021-N021 \nKentucky \nOffice \nA- \n11/19/2021 \n12/25/2026 \nPerforming \n$8,500,000 \n$17,300,000 \n49.1% \n10/2021 \n$8,500,000 \n\n \n38 \n1 \nKDM2021-N022 \nSt. Louis, Missouri \nOffice \nBBB+ \n12/8/2021 \n1/25/2027 \nCharge-Off \n$18,000,000 \n$24,450,000 \n73.6% \n11/2021 \n$- \n\n \n39 \n1 \nKDM2022-N001 \nAllentown, PA \nOffice \nA- \n1/31/2022 \n2/25/2025 \nPerforming \n$24,000,000 \n$34,600,000 \n69.4% \n12/2021 \n$24,120,000 \n\n \n40 \n2 \nKDM2022-N002 \nNorth Carolina & Virginia \nRetail \nA- \n2/3/2022 \n2/25/2025 \nPerforming \n$5,500,000 \n$9,160,000 \n60.0% \n11/2021 \n$5,500,000 \n\n \n41 \n4 \nKDM2022-N003 \nOhio \nSkilled Nursing Facility \nA- \n2/14/2022 \n3/25/2027 \nPaid -In-Full \n$16,500,000 \n$33,100,000 \n49.8% \n12/2021 \n$- \n\n \n42 \n1 \nKDM2022-N006 \nHonolulu, HI \nSpecial Use \nA- \n4/8/2022 \n5/25/2027 \nPerforming \n$33,000,000 \n$52,000,000 \n63.5% \n01/2022 \n$24,306,660 \n\n \n43 \n4 \nKDM2022-N007 \nCalifornia and Texas \nRetail \nA- \n6/22/2022 \n7/25/2027 \nPerforming \n$11,720,000 \n$18,610,000 \n63.0% \n12/2021 \n$6,201,217 \n\n \n44 \n1 \nKDM2022-N009 \nBenton, Washington \nOffice \nA+ \n8/12/2022 \n8/25/2027 \nPerforming \n$44,880,000 \n$78,300,000 \n57.3% \n07/2022 \n$39,262,886 \n\n \n45 \n1 \nKDM2022-N010 \nWashington D.C. \nOffice \nBBB+ \n8/18/2022 \n9/25/2027 \nPerforming \n$3,850,000 \n$8,200,000 \n47.0% \n04/2022 \n$3,850,000 \n\n \n46 \n1 \nKDM2022-N011 \nSelma, Texas \nWarehouse \nA-/WD \n6/28/2022 \n6/28/2027 \nREO \n$6,200,000 \n$10,000,000 \n62.0% \n05/2022 \n$6,200,000 \n\n \n47 \n1 \nKDM2022-N014 \nCoral Gables, Florida \nOffice \nA- \n12/9/2022 \n12/9/2027 \nPaid-in-Full \n$11,500,000 \n$18,500,000 \n62.2% \n11/2022 \n$- \n\n \n48 \n1 \nKDM2023-N001 \n Long Beach, CA \nRetail \nA/A-/BBB \n3/23/2023 \n4/25/2028 \nPaid-in-Full \n$55,000,000 \n$86,900,000 \n63.3% \n01/2023 \n$- \n\n \n49 \n1 \nKDM2023-N002 \nHomewood, AL \nOffice \nA- \n7/11/2023 \n7/11/2028 \nPerforming \n$11,500,000 \n$19,600,000 \n58.7% \n05/2023 \n$11,500,000 \n\n \n50 \n2 \nKDM2023-N003 \nMurray, Kentucky &  Kingsport, Tennesseee \nMultisecuritization \nA- \n7/28/2023 \n8/25/2028 \nPerforming \n$6,200,000 \n$10,700,000 \n50.5% \n05/2023 \n$5,400,000 \n\n \n51 \n1 \nKDM2023-N006 \nWorcester, MA \nRetail \nBBB+ \n11/29/2023 \n12/25/2028 \nPerforming \n$4,500,000 \n$8,750,000 \n51.4% \n07/2023 \n$4,500,000 \n\n \n52 \n1 \nKDM2023-N008 \nFt Myers, FL \nSFR \nNR \n12/20/2023 \n12/20/2025 \nDefault \n$750,000 \n$1,140,000 \n65.8% \n11/2023 \n$750,000 \n\n \n53 \n2 \nKDM2024-N001 \nPembroke Pines, FL \nMedical Office \nNR \n3/5/2024 \n3/5/2034 \nPerforming \n$1,333,368 \n$1,400,000 \n95.2% \n11/2023 \n$724,389 \n\n \n54 \n1 \nKDM2024-N002 \nMiami, FL \nIndustrial \nNR \n3/7/2024 \n3/7/2034 \nPerforming \n$3,550,000 \n$6,500,000 \n54.6% \n11/2023 \n$3,506,194 \n\n \n55 \n2 \nKDM2024-N003 \nSan Diego, CA \nMixed-use \nNR \n5/3/2024 \n6/1/2034 \nPerforming \n$4,300,000 \n$7,050,000 \n61.0% \n11/2023 \n$4,252,599 \n\n \n56 \n2 \nKDM2019-N005 \n Capitol Heights, MD \nIndustrial \nA- \n12/5/2024 \n10/10/2029 \nPerforming \n$5,250,000 \n$9,000,000 \n58.3% \n11/2024 \n$5,250,000 \n\n \n57 \n1 \nKDM2025-N001 \nSan Diego, CA \nMulti-Family \nNR \n1/17/2025 \n2/25/2027 \nPerforming \n$2,900,000 \n$19,900,000 \n62.8% \n06/2024 \n$2,900,000 \n\n \nMFB\n1 \n1 \nKDM2024-N004 \nClute, TX \nMulti-family \nNR \n6/28/2024 \n7/1/2026 \nPerforming \n$9,440,000 \n$13,500,000 \n69.9% \n04/2024 \n$9,440,000 \n\n \nMFB\n2 \n1 \nKDM2024-N005 \nAtlanta, GA \nMulti-family \nNR \n6/7/2024 \n7/1/2026 \nDefault \n$3,400,000 \n$4,250,000 \n80.0% \n04/2024 \n$3,400,000 \n\n \nMFB\n3 \n1 \nKDM2024-N007 \nSan Diego, CA \nMulti-family \nNR \n8/14/2024 \n9/1/2026 \nPerforming \n$12,500,000 \n$19,900,000 \n62.8% \n06/2024 \n$12,500,000 \n\n \n  \n  \n  \n  \n  \n  \n  \n  \n  \n   \n   \n   \n  \n   \n\n \n  \n  \n  \n  \n  \n  \n  \n  \n  \n$627,494,618 \n$1,064,797,765 \n61% \n  \n$355,586,927 \n\n** Ratings are the original and current ratings received from Egan-Jones Ratings Agency* \n\n \n\n*** NR means the loan has not been rated and was either sold as a participation or an unrated bond.*\n\n \n\n**** Non-sequential loan numbers are due to some loans having been issued a file number, but the transaction was not closed, or is waiting to be closed*\n\n \n\n 20 \n\n [Table of Contents](#toc)\n\n \n\n**Sales, Marketing and Customer Service**\n\n \n\nOur marketing efforts are designed to attract\nborrowers and brokers to solicit us for lending opportunities. Our origination team primarily does this through the substantial network\nof commercial mortgage brokers we have assembled, as well as through correspondent and wholesale relationships. We employ primarily email\ncorrespondence to mortgage brokers, banks, real estate agents, and commercial property owners to encourage them to present CM Loans to\nus for possible funding through the issuance of corresponding Notes. We attend trade shows, subscribe to lead generation databases, and\nloan and property platforms to find loans. We contact other financial institutions, directly and through brokers, that may own commercial\nmortgages, and may attempt to purchase mortgages for KDM.\n\n \n\n**Fraud detection**\n\n \n\nWe consider fraud detection to be of utmost importance to the successful\noperation of our business. We employ a combination of proprietary technologies and commercially available licensed technologies and solutions\nto prevent and detect fraud. We use services from third-party vendors for user identification and Office of Foreign Assets Control (“OFAC”)\ncompliance.\n\n \n\nNotwithstanding KDM’s due diligence examination\nof the information provided to KDM by a borrower, there can be no assurance that the information provided to us, and on which we rely,\nis true, accurate, and complete.\n\n \n\n**Competition**\n\n \n\nThe market for mortgage lending is competitive and rapidly evolving.\nWe believe the following are the principal competitive factors in the lending market:\n\n \n\n·pricing and fees;\n\n·experience, including borrower full funding rates and investor returns;\n\n·branding; and\n\n·ease of use.\n\n \n\nWe face competition from major banking institutions,\nnon-bank lenders, local banks, other private credit groups, as well as smaller private lenders.\n\n \n\n Our success depends on further developing\nour network of transaction referral sources and broadening our distribution of our CM Investments.\n\n \n\nWe may also face future competition from new companies\nentering our market. If one or more of our competitors were to merge or partner with another of our competitors or a new market entrant,\nthe change in competitive landscape could adversely affect our ability to compete effectively."}