Korth Direct Mortgage Inc.
Korth Direct Mortgage Inc. filed its Q2 2026 10-Q, reporting total revenues of $6.4M, down 27.2% from $8.9M in the prior-year period. Net income attributable to KDM was just $215,541, but after $962,500 in preferred dividends, common stockholders absorbed a ($746,959) loss versus a $3.0M profit a year ago. The balance sheet shows $371.8M in total assets against $344.3M in liabilities, with stockholders' equity declining to $27.5M from $29.7M at year-end 2025.
- Total revenues fell 27.2% YoY to $6.4M from $8.9M, driven by declines in origination, servicing, and leasing revenue.
- Net income attributable to KDM common stockholders swung to a loss of ($746,959) from a $3.0M profit in the prior-year period.
- Preferred dividends of $962,500 consumed all GAAP net income ($215,541) and then some, leaving common equity deeply negative.
- Cash and equivalents plus restricted cash dropped to $7.1M from $10.3M at year-end, a $3.2M decline.
- The Asset Management segment posted a $1.07M net loss, dragged by $656,714 in mortgage interest expense.
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A 27% revenue decline paired with preferred dividends that structurally wipe out common equity returns signals deteriorating fundamentals for this micro-cap mortgage lender.
Small-cap mortgage originators face acute pressure from elevated rates; KDM's 27% revenue decline mirrors sector-wide origination volume compression. The shift toward asset management (commercial property ownership) via joint ventures signals a strategic pivot away from core lending.
The company carries $313.1M in mortgage secured notes payable against $264.5M in mortgages owned, creating asset-liability mismatch risk. Preferred dividends of $962,500 semi-annually consume all earnings, leaving common stockholders structurally subordinated with no path to dividends.
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