S-1/A

As filed with the Securities and Exchange Commission on March 27, 2018

Registration No. 333-222928

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 Korth Direct Mortgage, LLC

(Exact Name of Registrant as Specified in Its Charter)

Florida

(State of Incorporation)

6500

(Primary Standard Industrial Classification Code No.)

27-0644172

(I.R.S. Employer Identification Number)

Korth Direct Mortgage, LLC

2937 SW 27^th Avenue, Suite 307

Miami, FL 33133

(305) 668-8485

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

James W. Korth, Chief Executive Officer

Korth Direct Mortgage, LLC

2937 SW 27^th Avenue, Suite 307

Miami, FL 33133

(305) 668-8485

(Name, address, including zip code, and telephone number, including area code, of agent for service)

As soon as practicable after this Registration Statement is declared effective.

(Approximate date of commencement of proposed sale to the public)

If any of the securities being registered on this form are offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller Reporting Company	☑
		Emerging Growth Company	☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.  ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class ofSecurities to be Registered	Amount to be Registered	Proposed MaximumOffering Price PerUnit (1)	Proposed MaximumOffering Price(1)	Amount ofRegistration Fee (2)
Mortgage Secured Notes (“Notes”) Series KDM2018-N001	$1,850,000	100%	$1,850,000	$230.33

(1) Estimated solely for the purpose of computing the registration fee.

(2) Calculated pursuant to Rule 457(a) of the Securities Act of 1933. Previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine.

^SM Mortgage Secured Notes and MSN are Service Marks of Korth Direct Mortgage, LLC.

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The information contained in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated March 27 2017

PROSPECTUS

$1,850,000

KORTH DIRECT MORTGAGE, LLC

5.25%

Mortgage Secured Notes

Dependent Upon and Secured by

KDM 2018-L001

A Warhouse/Office Flex Space First Mortgage Loan

Korth Direct Mortgage, LLC (“KDM”) is issuing Mortgage Secured Notes Series KDM 2018-N001 (the “Notes”).  The offering will commence on the effective date of the registration statement of which this prospectus is a part. The Notes are limited obligations of KDM and are secured by, and dependent upon, KDM’s receipts from a corresponding first mortgage commercial loan titled KDM 2018-L001 owned and serviced by KDM (the “CM Loan”).

The Notes will have a stated interest rate of 5.25%. The Notes will be interest only until maturity. Interest on the Notes will be paid monthly and the Notes will mature on April 1, 2023. See “Description of the Notes.”  The Notes are subject to immediate prepayment by KDM in the event the CM Loan is prepaid. Proceeds of the sale of Notes offered hereby will be used to redeem notes designated KDM 2018-N001PP that were sold to a KDM affiliate on a private placement basis as a bridge loan for purposes of funding the CM Loan on March 13, 2018. The notes to be redeemed have no prepayment penalty. The KDM affiliates that purchased the notes will receive cash of 100% of the outstanding principal amount, plus any accrued interest, for their privately placed notes.

We will offer the Notes through the Underwriter referred to below.  The Underwriter may offer all or a portion the Notes through other broker-dealers (the “Selling Group.”) The Underwriter and Selling Group members will offer and sell Notes on a “best efforts, all or none” basis.

The Notes will settle through the facilities of Depository Trust. Interest on the Notes will accrue from the date of funding.

The Underwriter has advised us it may purchase and sell Notes in the secondary market, but it is not obligated to make a market in the Notes.

Investing in Notes has certain risks.  See “Risk Factors.”

	Price to Public	UnderwritingDiscounts and Commission	Proceeds to KDM
Per Note	$1,000.00	$10.00	$990.00
Total	$ 1,850,000.00	$18,500.00	1,831,500.00

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.

J W KORTH & COMPANY

The date of this Prospectus is March 27, 2018.

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TABLE OF CONTENTS

TABLE OF CONTENTS	2
ABOUT THIS PROSPECTUS	2
WHERE YOU FIND MORE INFORMATION	2
FORWARD-LOOKING STATEMENTS	2
SUMMARY OF TERMS	4
RISK FACTORS	6
CONFLICTS OF INTEREST	11
FIDUCIARY RESPONSIBILITY OF KDM	12
INDEMNIFICATION OF OFFICERS OF KDM	12
ABOUT KDM’S CM LOANS	12
CM LOAN ISSUANCE PROCESS	13
SUMMARY OF THE TERMS OF THE CM LOAN	19
USE OF PROCEEDS	28
PLAN OF DISTRIBUTION	28
DESCRIPTION OF THE NOTES	28
THE KDM CM LOAN RATING PROGRAM	33
RATINGS FOR CM LOAN COVERED BY THIS PROSPECTUS	35
REGISTRATION AND SETTLEMENT	36
ABOUT KDM	36
TRANSACTIONS WITH RELATED PERSONS	43
PRINCIPAL SECURITYHOLDERS	43
LEGAL MATTERS	43
REPORT ON FINANCIAL STATEMENTS	F-1
PART II	45
INFORMATION NOT REQUIRED IN PROSPECTUS	45

ABOUT THIS PROSPECTUS

This prospectus describes our offering of our Mortgage Secured Notes, Series KDM2018-N001, which we refer to in this prospectus as the “Notes.” This prospectus is part of a registration statement filed with the Securities and Exchange Commission (the “SEC”). This prospectus, and the registration statement of which it forms a part, speak only as of the date of this prospectus.

Unless the context otherwise requires, we use the terms “KDM,” the “Company,” “our company,” “we,” “us” and “our” in this prospectus to refer to Korth Direct Mortgage, LLC, a Florida limited liability company.

The Notes might not be offered or sold to residents of every state. Our Placement Agent will inform all Selling Group members the states where Notes are available.

WHERE YOU FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC in connection with this offering. You may read and copy the registration statement and any other documents we have filed at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our SEC filings are also available to the public at the SEC’s internet site at http://www.sec.gov.

This prospectus is part of the registration statement and does not contain all of the information included in the registration statement and the exhibits, schedules and amendments to the registration statement. Some items are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and the Notes, we refer you to the registration statement and to the exhibits and schedules to the registration statement filed as part of the registration statement or incorporated therein by reference. Whenever a reference is made in this prospectus to any of our contracts or other documents, the reference may not be complete and, for a copy of the contract or document, you should refer to the exhibits that are a part of the registration statement.

You may request a copy of any or all of the reports or documents that are described in this prospectus.  They will be provided to you at no cost, by writing, telephoning or emailing us. Requests should be directed to Customer Support, 2937 SW 27^th Avenue, Suite 307, Miami, Florida 33133; telephone number (786) 567-3117; or emailed to info@KDMinvestor.com.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this prospectus regarding KDM borrowers, credit scoring, FICO scores, our strategy, future operations, future financial position, future revenue, projected costs, prospects, property values, plans, objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements may include, among other things, statements about:

· the status of borrowers, the ability of borrowers to repay CM Loans, and the plans of borrowers;

· expected rates of return and interest rates;

· mortgage default rates;

· property values;

· the commercial real estate market;

· the attractiveness of our CM Loan and Notes;

· our financial performance;

· the availability of a secondary market for our Notes;

· our ability to retain and hire competent employees and appropriately staff our operation; and

· government regulation.

We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We have included important factors in the cautionary statements included in this prospectus, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from forward-looking statements contained in this prospectus.

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You should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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SUMMARY OF TERMS

Issuer	Korth Direct Mortgage, LLC
CM Loan Borrower	MIS NW 345 LLC
Designation of Mortgage Secured Note	KDM2018-N001 (“Notes”)
Designation of Corresponding CM Loan	KDM2018-L001 (“CM Loan”)
CM Loan Amount	$1,850,000
Notes Amount	$1,850,000
No Listing	KDM does not anticipate that the Notes will be listed on any securities exchange or that the Note will be traded on any other trading platform.
Offering Price	100%
Denominations	$1,000 and multiples of $1,000
CUSIP Number	50067AAE2
Settlement Date	April 15, 2018
First Coupon Date	May 25, 2018 - Short First Coupon – The first coupon will include interest accruing from settlement date through April 30, 2018.
Maturity	April 25, 2023– On the maturity date, investors will be paid a return of principal, plus a short final interest payment of interest accruing from March 1, 2023 through March 13, 2023.
Interest and Repayment of Principal	The Notes are interest only. Principal will be paid at the maturity date or an earlier redemption of the Notes. Interest on the Notes will be paid monthly on the twenty-fifth day of each month or the next business day. Such payment will depend upon, and be subject to, receipt of CM Loan proceeds received at least four business days prior to the payment date.
Interest on the Notes	5.25% 1
Redemption and Prepayment	Notes will be redeemed immediately if the CM Loan is redeemed. The CM Loan borrower has the option to prepay the CM Loan, subject to a penalty.  Subject to the following sentence, should the borrower prepay the CM Loan prior to maturity, in addition to principal the borrower must pay all the amount of interest that would have been paid through March 31, 2021 (the “Interest Guarantee”). There is no prepayment penalty if the borrower prepays the CM Loan on or after April 1, 2021. Please “Summary of Terms- Call Schedule.” The prepayment  interest penalty is payable  to the Noteholders when received by KDM.
Security for the Notes	Pursuant to the Trust Indenture and Security Agreement, KDM  Mortgage Secured Notes (sometimes referred to in this prospectus as “MSN Notes”) will be senior to all other indebtedness of KDM and separate and distinct from each other. MSN Notes are secured special obligations of KDM. The security for each series of Notes is the mortgage, the loan, and the proceeds that KDM receives from the corresponding note and first mortgage obligation of a borrower. The Notes are not directly secured by a property; rather, they are secured  by a CM Loan, which is secured by real property. This security interest is made pursuant Section 3.8 of the Indenture under the heading “Security Interest.” Under the Indenture, each series of notes is separately secured by the CM Loan that corresponds to that series. Therefore, the Notes are secured specifically by the CM Loan described herein.

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Assignment of Rents	Should the CM Loan borrower default, KDM, as lender and pursuant to an Assignment of Rents, will require that the renters of the CM Loan properties pay their rents directly to KDM.  In these cases KDM will pay each Noteholder its pro-rata share of the rents collected less any out-of-pocket costs, such as legal expenses. Any assignment of rents should not curtail or delay a foreclosure and subsequent sale of the property to recover the principal on the CM Loan. KDM’s Service Fee applies to payments on Notes distributed from an Assignment of Rents.
Ratings	Egan-Jones has given the Note a rating of “A-”. Egan Jones is a Nationally Recognized Statistical Rating Organization. KDM has rated this loan “A.” See “The KDM CM Loan Rating Program.”
KDM Debt	As of the date of this prospectus, KDM had no outstanding debt other than Mortgage Secured Notes. The Indenture specifies that KDM may not incur debt other than the Mortgage Secured Notes except compensation owed to employees, rent for offices, or obligations to utility and informational services, and any other services which assist it in carrying out its mortgage lending, mortgage servicing, and MSN Note servicing functions. KDM intends to offer more MSN Notes in the future. There are no other financial covenants limiting KDM’s activities.
KDM Right to Adjust the CM Loan	KDM has the right to make adjustments to the terms of the CM Loan in order to help prevent a foreclosure if it believes those adjustments to be in the best interest of the Noteholders. Such changes may reduce interest payments, suspend interest payments, lengthen the time when principal may be received or change other terms of the CM Loan which could reduce the expected benefits of the CM Loan to the Noteholders
Servicing Fee	Our Servicing Fee is the difference between the interest rate received on the CM Loan and the interest rate stated for the Notes. The Servicing Fee for the Notes is 1.25%.
Underwriting Fee	The Underwriter will earn discounts or commissions of 1.00% of the Notes.
Call Schedule	Pursuant to the Interest Guarantee provision of the CM Loan, the call schedule is as follows:

5/1/2018	118.96%	5/1/2019	112.46%	5/1/2020	105.96%
6/1/2018	118.42%	6/1/2019	111.92%	6/1/2020	105.42%
7/1/2018	117.88%	7/1/2019	111.38%	7/1/2020	104.88%
8/1/2018	117.33%	8/1/2019	110.83%	8/1/2020	104.33%
9/1/2018	116.79%	9/1/2019	110.29%	9/1/2020	103.79%
10/1/2018	116.25%	10/1/2019	109.75%	10/1/2020	103.25%
11/1/2018	115.71%	11/1/2019	109.21%	11/1/2020	102.71%
12/1/2018	115.17%	12/1/2019	108.67%	12/1/2020	102.17%
1/1/2019	114.63%	1/1/2020	108.13%	1/1/2021	101.63%
2/1/2019	114.08%	2/1/2020	107.58%	2/1/2021	101.08%
3/1/2019	113.54%	3/1/2020	107.04%	3/1/2021	100.54%
4/1/2019	113.00%	4/1/2020	106.50%	4/1/2021	100.00%

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RISK FACTORS

An investment in the Notes involves risks. Before making an investment decision, you should carefully consider the risks and uncertainties described in this prospectus and the registration statement of which this prospectus is a part. The underlying loan upon which your payment depends, as well as our business, financial condition, operating results and cash flows can be impacted by these factors, any one of which could have a material adverse effect on the value of the Notes you purchase and could cause you to lose all or part of your initial purchase price or adversely affect future principal and interest payments you expect to receive.

You may lose some or all of your investment in the Notes.

The regular payment of the Notes depends entirely on payments to KDM of the borrower’s CM Loan. The Notes are special, limited obligations of KDM payable only from KDM’s receipts of CM Loan proceeds, net of KDM’s servicing Fee and cost of collection. If the borrower defaults on the CM Loan, Noteholders will be dependent on proceeds from the Assignment of Rents held by KDM and on the proceeds if any, from foreclosure of the CM Loan mortgage for payments on the Notes.  The failure of the borrower to repay the CM Loan is not an event of default by KDM.  Notes are suitable purchases only for investors of adequate financial means who, in the event of a default on the underlying CM Loan, may have to wait for a foreclosure to recover some or all of the principal invested in their Note.

We rely on third-party appraisals to value the property securing the CM Loan, and information from the borrower on cash flow and profitability of the income property.

While we make every effort to engage responsible licensed third-party appraisers, we cannot be certain that the information and presentations they make are reliable. Appraisals are subject to mistakes that could affect the value of a property. Further, appraisers may make judgments of value based on cash flow presented by borrowers. If a borrower were to falsify its cash flow, it could affect the value shown in the appraisal. To verify cash flows, we receive bank statements from borrowers. KDM is not responsible for mistakes or fraudulent activities of borrowers or appraisers.

We rely on industry default and recovery rates for underwriting our CM Loans.  Our default rates are untested against industry rates and may be higher.

Due to our limited operational and origination history, we do not have significant historical performance data regarding borrower performance and we do not yet know what our long-term CM Loan loss experience may be. It is possible that our default rates may be higher than the industry averages and our recovery rates may be lower than the industry averages.

If we believe it is in the best interest of the Noteholders, we have the right to adjust the terms of a CM Loan.

It is possible that due to natural disasters, local disruption of services, political unrest, changes in local laws, market competition or disruptions and other unforeseen events that affect the property pledged under a CM Loan or affect the borrower’s ability to make its CM Loan payments, it might be in the best interest of the Noteholders to provide a borrower with an accommodation regarding loan terms rather than be forced to foreclose on a loan. If we adjust a CM Loan, it may reduce interest payments, suspend interest payments, lengthen the time when principal may be received or change other terms of the CM Loan which could reduce the expected benefits of the CM Loan to the Noteholders.

There may be a default on the CM Loan.

CM Loan default rates may be significantly affected by general economic conditions beyond our control and beyond the control of the individual borrower. Default on the CM Loan is subject to many factors, such as prevailing interest rates, the rate of unemployment, the level of consumer confidence, residential or commercial real estate values, the value of the U.S. dollar, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets, and other factors, none of which can be predicted with certainty.

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The credit information we use may be inaccurate or may not accurately reflect the creditworthiness of the person whose credit information we use, which may cause you to lose part or all of the purchase price of the Notes.

While we primarily focus on the underlying property and its cash flow to repay Notes, we may obtain borrower credit information from consumer reporting agencies, such as TransUnion, Experian, or Equifax. A credit score may not reflect the actual creditworthiness of the borrower  or individual on whose credit we rely (whom we refer to below as the “Principal”) because the credit score may be based on outdated, incomplete or inaccurate consumer reporting data, and we do not verify the information obtained from the borrower’s credit report. Additionally, there is a risk that, following the date of the credit report that we obtain and review, a borrower or Principal may have:

· become delinquent in the payment of an outstanding obligation;

· defaulted on a pre-existing debt obligation;

· taken on additional debt; or

· sustained other adverse financial events.

Investors in the Notes will not have access to financial statements of the borrower or Principal or to other detailed financial information about the borrower or Principal. Accordingly, prospective investors will not be able to assess the creditworthiness of the CM Loan borrower or Principal.  See “The credit rating that we use in our rating system for our mortgages may not be the credit rating of the borrower, any guarantor, or anyone having personal liability for payment of the mortgage loan,“ below.

Information supplied by the borrower could be inaccurate or intentionally false.

While we perform due diligence on each borrower, receive credit reports, and verify property ownership, rent collections, property values, coverage ratios and other appropriate due diligence materials, a borrower could present us with false information which we may not discovered through our due diligence process.

We do not monitor our borrowers’ use of funds.

It is possible the borrower may not use the funds for the purposes it has asserted, for example, to improve the property. Additionally, the borrower could potentially misuse the proceeds it receives from the loan in a way that negatively impacts their ability to make timely payments on the CM Loan, their credit, or the value of the underlying property.

The credit rating that we use in our rating system for our mortgages may not be the credit rating of the borrower, any guarantor, or anyone having personal liability for payment of the mortgage loan.

KDM includes a credit score in our internal rating system. The credit score we use may not be the credit score of the borrower or, if the loan is guaranteed, of the guarantor, or of any individual who is personally liable for the payment of the CM Loan. Our borrowers are typically single-purpose entities created to own the mortgaged property. Some single-purpose entities may in turn be owned by a trust, a partnership, or another form of entity. If a loan is guaranteed, the credit score we use may not be that of the guarantor, as the guarantor be an entity and not an individual.

The person whose credit score we use to rate a CM Loan (whom we refer to as the “Principal”) is the individual that we consider most responsible for the mortgaged property, collection of rents and making payments to KDM on the CM Loan. We consider the credit score of the Principal as a measure personal responsibility and financial experience. The Principal may not be personally liable for payment of the CM Loan.

CM Loan Guarantees May Not Be Collectable

Some CM Loans may have a personal guarantee. We may ask for guarantees from the owners, or the owners of the owner, if the owner is not an individual. Because we primarily focus our underwriting on the value of the mortgaged property, the loan to value ratio, and the debt service coverage ratio, we generally do not investigate the net worth of the borrowers, and therefore, the ultimate value of the guarantee on a CM Loan, if any. In the event a CM Loan goes into foreclosure and the money realized in the foreclosure does not pay off the entire principal owed on the CM Loan, investors should not count on the guarantee being collectible. Should such a situation arise, investors may not see repayment of the entire principal amount of their Notes.

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If payments on the CM Loan become more than 30 days overdue, you may not receive the full principal and interest payments that you expect to receive on the Notes.

Payment to holders of the Notes is completely dependent on payments received from the CM Loan. If the borrower fails to make a required payment on the CM Loan within 30 days of a due date, we will pursue reasonable collection efforts in respect of the CM Loan. Referral of a delinquent CM Loan to an attorney on the 31st day of its delinquency will be considered reasonable collection efforts. If we refer a CM Loan to an attorney, we will monitor that CM Loan until the property is foreclosed and resold and investors are paid. We may also handle collection efforts in respect of a delinquent CM Loan directly. In the case of collection efforts, the costs of attorney fees will be charged against the CM Loan and will reduce your net payments on your Note.

The CM Loan underlying the Notes is payable on an interest-only basis until maturity, at which time the entire principal balance is due. Therefore, borrowers may have to refinance to pay off a balloon payment on the CM Loan.

If a borrower must refinance to pay off a CM Loan, such refinancing could be impossible due to market conditions or other factors. In such a case, the CM Loan would default. Such a default could reduce or eliminate principal payment of the Notes.

The CM Loan may be prepaid at any time.  Borrower CM Loan prepayments will reduce payments of interest on the Notes.

The borrower may prepay some or all of the principal amount of the CM Loan. A borrower may decide to prepay all, or a portion of, the remaining principal at any time. Notwithstanding the prepayment of all or a portion of the CM Loan, the borrower must pay all of the interest that would be due on the principal amount of the CM Loan until the expiration of the Interest Guarantee.  Noteholders will receive such prepayment, net of our servicing fee. Interest will not accrue after the date on which the CM Loan is paid in full.  If the borrower prepays a portion of the remaining unpaid principal balance on the CM Loan, we will reduce the outstanding principal amount and interest will cease to accrue on the prepaid portion. On an amortizing loan, we will require the borrower to pay the same amount on the CM Loan as the borrower paid prior to any partial repayment of principal. As a result of the combination of the reduced principal amount and the unchanged monthly payment, the effective term of the CM Loan will decrease. On an interest only CM Loan, the monthly payment you receive will be reduced proportionally by the amount of principal repaid. If the borrower prepays the CM Loan in full or in part, you will, in all probability, not receive all the interest payments that you expected to receive on the Notes.

Prevailing interest rates may change during the term of the CM Loan on which your Note is dependent.

If the CM Loan is prepaid, Noteholders may be unable to invest prepaid Note proceeds at a rate comparable to the interest payable on the Notes.  Further, if interest rates rise, there is a market for the Notes, and a Noteholder decides to sell a Note prior to maturity, the Noteholder may receive a discounted return on the Note.

Investor funds in a KDM segregated account do not earn interest.

Proceeds of the sale of the Notes will be held in a non-interest bearing segregated account pending completion of the Note Offering and investment in the Notes.  Further, we place borrower loan payments in a segregated account under our control and pay all loan payments collected from the prior payment date at least four business days prior to the payment date on the twenty-fifth day of each month, with an extension to the next business day if required. Funds held in segregated accounts do not earn interest. These segregated accounts are held at JP Morgan Chase and are managed by KDM. There is no escrow agreement with the bank

The Notes will not be listed on any securities exchange, and it is unlikely that a trading market for the Notes will develop.  The Underwriter may make a market in the Notes, but is not obligated to do so.

There can be no assurance that a market for Notes will develop or that there will be a buyer for any particular Notes offered for resale. Therefore, investors must be prepared to hold their Notes to maturity.

We have a limited operating history.

Our operating history is very limited and there can be no assurance that we will remain in business for the full term of the Notes.  Should we cease operations, we expect that our Notes would be serviced by another company, but there is no assurance that another real estate and mortgage servicer will agree to service the Notes and the CM Loan. In this unlikely event, there could be delays in payments of interest and principal on your Notes.

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We may have to constrain our business activities to avoid being deemed an investment company under the Investment Company Act.

In general, a company that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities may be deemed to be an investment company under the Investment Company Act of 1940, as amended (Investment Company Act). The Investment Company Act contains substantive legal requirements that regulate the manner in which “investment companies” are permitted to conduct their business activities. We believe we are excluded from registration by Section 3(c)(5)(c) of the Investment Company Act and have conducted, and we intend to continue to conduct, our business in a manner that does not result in our company being characterized as an investment company. This section of the Investment Company Act contains an exemption for companies that make mortgages and do not issue redeemable shares. To avoid being deemed an investment company, we may not be able to broaden our offerings, which could require us to forego attractive opportunities. If we are ever deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which could materially adversely affect our business, financial condition, and results of operations.

Funds Received for all CM Loans are commingled in a Segregated Account.

We hold all funds received from CM Loans in a segregated account title In-Trust For 2 at JP Morgan Chase bank. We then use our internal accounting system to determine which funds are applied to which Note investors. While our internal accounting system is backed up into separate record keeping systems managed by service providers, should our systems fail and the back-up systems fail for any reason we may have difficulty determining which payments are to be applied to which Note holder and your payments could be delayed until such a determination is made. We also could make an accounting error that would send too much money to one Note holder and leave other Noteholders short of funds until we could recover the erroneous payments through the payment systems we utilize to distribute funds to investors. In such a case, recovery of over payments may not be achieved and it would leave the account permanently short for investors who did not receive the over payments.

KDM deposits all interest and principal payments which it receives on CM Loans in a single segregated bank account, and payments on real tax and insurance escrows in another segregated account, which accounts and the funds deposited in them may be subject to claims of general creditors of KDM in the event of a KDM bankruptcy.

In the event that of a KDM bankruptcy, general creditors of KDM may assert a claim that funds on deposit in the segregated account maintained by KDM for the benefit of Noteholders, and the separate segregated account maintained by KDM for real estate tax and insurance payments, are subject to the claims of general creditors. Principal and interest payments on CM Loans are deposited in a segregated bank account, and payments of real estate taxes and insurance on mortgaged properties are deposited in another segregated account, when and as received by KDM.  Receipts deposited in those accounts are disbursed to Noteholders monthly and annually to property insurers and taxing authorities. KDM performs all accounting for these accounts, including sub-accounts for each Noteholder and property, and maintains all accounting records at its principal office. Under the Trust Indenture, the Trustee will have a first lien on the principal and interest account for the benefit of Noteholders. If the bankruptcy court were to determine that the funds in the account were subject to claims of creditors other than Noteholders or the Trustee acting on their behalf, the amount that Noteholders would receive from the account could be adversely affected. Further, amounts on deposit to pay real estate taxes and insurance could be reduced or entirely eliminated if paid to general creditors of KDM in the bankruptcy proceeding. The bankruptcy court could temporarily stay disbursements to Noteholders, taxing authorities and insurers even if the court were ultimately to determine that the funds in the account should be distributed to the Noteholders, the Trustee acting on their behalf, and, also, as appropriate, to taxing authorities and property insurers, resulting in delays to Noteholders in the receipt of payments on their Notes and penalties imposed by insurers and taxing authorities.

If we are unable to increase transaction volumes, our business and results of operations will be affected adversely.

To succeed, we must increase transaction volumes by attracting a large number of borrowers and be able to raise the capital to fund CM Loans through issuance of Notes to investors, in a cost-effective manner. We intend to attract borrowers through a network of mortgage brokers and real estate agents. We will rely on our parent company, J W Korth & Company, to raise capital. It is possible that we will not develop enough of a following either by CM Loan brokers or securities brokers to sell enough CM Loans or Notes to make KDM profitable. Should this occur, we may assign servicing of the CM Loans and Notes to a third-party servicer.

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The market in which we participate is competitive and, if we do not compete effectively, our operating results could be harmed.

The commercial mortgage market is competitive and rapidly changing. We expect competition to persist and intensify in the future, which could harm our ability to increase volume.

Our principal competitors include major banking institutions, credit unions, credit card issuers and other consumer finance companies. It is possible that one or more of these companies decide to compete directly with us. The results of such competition could harm our operating results and, in that event, our ability to continue to service the CM Loan and Notes could be adversely affected.

We rely on third-party banks to disburse CM Loan proceeds and process CM Loan payments, and we rely on third-party computer hardware and software. If we are unable to continue utilizing these services, our business and ability to service the CM Loans on which the Notes are dependent may be adversely affected.

We rely on a third-party bank to disburse CM Loan amounts. Additionally, because we are not a bank, we cannot belong to and directly access the ACH payment network, and we must rely on an FDIC-insured depository institution to process our transactions, including CM Loan payments and remittances to holders of the Notes. We currently use J P Morgan Chase for these purposes. We also rely on computer hardware purchased and software licensed from third parties. This purchased or licensed hardware and software may not continue to be available on commercially reasonable terms, or at all. If we cannot continue to obtain such services from this institution or elsewhere, or if we cannot transition to another processor quickly, our ability to process payments will suffer and your ability to receive principal and interest payments on the Notes will be delayed or impaired.

Competition for our employees is intense, and we may not be able to attract and retain the highly skilled employees who we need to support our business.

Competition for highly skilled technical and financial personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.

In addition, we invest significant time and expense in training our employees, which increases their value to competitors that may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements and the quality of our services and our ability to service the CM Loans could diminish, resulting in a material adverse effect on our business and our ability to service the Notes.

If we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends, in part, on our ability to attract and retain key personnel. Our future also depends on the continued contributions of our executive officers and other key technical personnel, each of whom would be difficult to replace. The loss of the services of any of the executive officers or key personnel, and the process to replace any of our key personnel would involve significant time and expense and may significantly delay or prevent the achievement of our business objectives.

Purchasers of Notes will have no control over KDM and will not be able to influence KDM corporate matters.

Our Notes grant no equity interest in KDM to the purchaser nor grant the purchaser the ability to vote on or influence our management decisions, including forbearance or foreclosure. As a result, our members will continue to exercise 100% voting control over all our company operations, including the election of managers and officers and the approval of significant transactions, such as a merger or other sale of our Company or its assets.  Any such actions which we take may adversely affect our business and our ability to service the CM Loan and Notes.

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Events beyond our control may damage our ability to maintain adequate records, or perform our servicing obligations.  If such events result in a system failure, your ability to receive principal and interest payments on the Notes would be substantially harmed.

If a catastrophic event resulted in an outage and physical data loss, our ability to perform our servicing obligations would be materially and adversely affected. Such events include, but are not limited to, fires, earthquakes, hurricanes, terrorist attacks, natural disasters, computer viruses and telecommunications failures. We store back-up records via cloud storage services via several different companies. If our electronic data storage and back-up storage system are affected by such events, we cannot guarantee that you would be able to recoup your investment in the Notes.

Federal and State regulatory bodies may create new rules and regulations that could adversely affect our business.

In the wake of the last financial crisis, banking and finance regulation continues to evolve, increasing regulation by federal and state governments become more likely. Our business could be negatively affected by the application of existing laws and regulations or the enactment of new laws applicable to lending, mortgages, mortgage servicing, or securities distribution. The cost to comply with such laws or regulations could be significant and would increase our operating expenses, and we may be unable to pass along those costs to our investors in the form of increased fees.

If we discover a material weakness in our internal control over financial reporting, which we are unable to remedy, or otherwise fail to maintain effective internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely affected.

Should our auditors discover a material weakness in our internal controls, our ability to report our financial results on a timely and accurate basis may be adversely affected.

New Government Regulation may limit our ability to make CM Loans

We do not believe that we are subject to Risk Retention under RR (17 CFR 246), as our entity type is not within scope of the rule according to 12 CFR 244.1(c). However, if we become subject to risk retention rules, we could be required to raise significant capital in order to continue doing business.

Our Proprietary Ratings System is untested and based on broad assumptions for which we have no statistical basis

We created the KDM Ratings System internally, and based it on very broad assumptions and experience of staff members.  Our staff members have no experience in creating a ratings system. We are not affiliated with nor do we have experience in creating ratings of debt or mortgage securities. The Ratings have no track record and have not been tested against any known data set. The System is still evolving, and we add items as we add property types. It should not be relied upon as a predictable measure of performance of the underlying CM Loan at this time. We also have conflicts of interest with respect to our Ratings System. Please see “Conflicts of Interest Regarding Our Proprietary Ratings System.”

CONFLICTS OF INTEREST

General

KDM earns money by making and servicing loans. Our parent company, J W Korth & Company (“JWK”), is a broker-dealer that makes money by selling securities. JWK will make money by selling KDM Mortgage Secured Notes as our Underwriter.

KDM has a financial incentive to make CM loans and distribute Notes based on CM Loans.  This incentive may influence its judgment as to the quality of CM Loans it will make. To help control this conflict, KDM has created a rating system for CM Loans and has written underwriting standards. Further our parent company, JWK, will distribute KDM Notes to retail customers and other dealers. Accordingly, JWK has a financial incentive which may influence the underwriting and due diligence required for originating CM Loans.

Some members of the loan origination team are also registered brokers with JWK. Such employees may be paid for both origination and sales of a loan and a Note, respectively. We will mitigate these conflicts of interest with compliance oversight and review of such transactions and compensation.

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Conflicts of Interest Specific to the CM Loan

An affiliate of KDM will receive substantially all of the proceeds of the sale of the Notes.  A KDM affiliate bought KDM2018-N001PP, which was a private placement version of this Note in order to provide bridge financing at the time of closing of the CM Loan.  The proceeds from this Note issuance will be used to redeem their private notes.

Conflicts of Interest Regarding our Proprietary Ratings System

We have a conflict of interest regarding our proprietary ratings system. The same people doing our ratings may also benefit from the sales of Notes and making new CM Loans. Further we are 100% owned by JWK, which will distribute our Notes and may make a market in them. Ratings will be reviewed periodically and changed as necessary for each CM Loan and the corresponding Notes. If a secondary market were to develop, secondary market prices for our Notes may move up or down if the rating is changed. Therefore, to limit the effect of the conflict of interest between traders making markets and changes in ratings it shall be a strict policy of the Company that the people reviewing ratings may not communicate or socialize with the traders making markets in our Notes and that all changes in ratings will be published as promptly as possible. Another mitigating factor regarding these conflicts of interest is that our ratings are most generally based on verifiable numbers.

We may change any of our procedures regarding managing our conflicts of interest at any time. We also may amend our rating procedure at any time.

FIDUCIARY RESPONSIBILITY OF KDM

KDM as lender to the borrower and issuer of the Mortgage Secured Notes must exercise good faith and integrity in handling all its affairs especially as they relate to collection of CM Loan payments and distribution of those payments to investors in the Notes. Investors who may have questions as to the duties of KDM should consult their counsel.

INDEMNIFICATION OF OFFICERS OF KDM

The KDM Operating Agreement provides for indemnification of the officers for liabilities they may incur in dealings with third parties on behalf of KDM. To the extent that the indemnification provisions may purport to include indemnification for liabilities arising under the Securities Act of 1933, in the opinion of the Securities and Exchange Commission, such indemnification is contrary to public policy and therefore unenforceable.

ABOUT KDM’S CM LOANS

Overview

KDM originates and funds CM Loans made to individual borrowers and are held by KDM as lender.

Our lending program operates primarily by email and telephone. Our website is only informational in nature.  We encourage the use of electronic payments as the preferred means to disburse CM Loan proceeds and remit cash payments on outstanding CM Loans.

We have positioned ourselves in the lending market as a source for commercial real estate loans of higher quality borrowers, and borrowers who may not qualify or may not want to go through the process for bank loans, but whose loans have strong property and mortgage-related metrics. Property metrics depend on the type of CM Loan being offered and are described below.

KDM is currently focused on the market for loans secured by mortgages on apartment buildings, and offices but may fund other types of commercial real estate.

KDM uses email, telephone, advertising and mail and industry sources to identify commercial borrowers who have mortgages with above-market interest rates and who may meet our loan parameters. We believe there are many thousands of apartment buildings which may qualify and desire this type of CM Loan. In addition to this market we believe there are many apartment buildings which may need new financing because their current loans are maturing.    Additionally, we seek to identify borrowers who may desire funding to purchase apartment buildings.

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CM Loans are secured obligations of individual borrowers that are a single-purpose entity formed to hold the underlying property to be financed.

The KDM Process

When KDM identifies a property proposed for financing, it is screened by KDM’s origination underwriting team. If the proposed financing passes underwriting, KDM creates a summary sheet which it sends to the Underwriter to gauge an indication of interest. When the Underwriter believes it has sufficient interest to move forward, it will notify KDM and KDM will complete the loan underwriting and file a registration statement for the series of notes which will fund the CM Loan. The Underwriter will take orders on a “when, as and if issued” basis. Once the registration statement is effective, KDM will contemporaneously close the loan, orders will be executed and funds will transfer on the settlement date to one of KDM’s segregated accounts. KDM will then fund the CM Loan and issue the notes.

KDM receives monthly interest and principal payments from CM loan borrowers. These payments are generally made by check or Automated Clearing House (“ACH”) collection from the borrower’s account(s).  KDM collects its service fee (annualized) of the interest portion of the payment and then disburses the remaining interest and principal via wire transfer or ACH   to DTC to credit to investors’ accounts at their respective DTC member or those brokerage firms corresponding with DTC members.

We verify the identity of borrowers, obtain borrowers’ credit characteristics from a consumer reporting agency such as TransUnion, Experian or Equifax, and screen borrowers for eligibility. When dealing with a new loan, we also verify the income from the underlying property by comparing the bank account statements of borrowers with the incoming rents received, the debt service coverage and the loan to value using independent appraisers. We service CM loans on an ongoing basis.

We may offer CM loans to borrowers throughout the United States. As of the date of this prospectus, we were not dependent on any single party for a material amount of our revenue.

Borrowers who use us must identify their intended use of CM Loan proceeds in their initial CM Loan request. We do not verify or monitor a borrower’s actual use of funds following the funding of a CM Loan.

CM LOAN ISSUANCE PROCESS

Step One: Identify Loan Parameters

KDM, through market research, identifies CM loan parameters and related investor parameters that it expects will be of value to both borrowers and investors. It then uses its network of mortgage brokers, real estate agents, and lending platforms to identify properties that potentially meet these parameters. The parameters identified will include the loan type, expected interest rate, maturity, pre-payment terms, loan-to-value, minimum debt service coverage ratio, borrower credit score, and basic loan structure.

Step Two: Identify and Screen Property

The KDM origination team works to bring in leads on new properties on which KDM can potentially lend. The team has a network of mortgage brokers, real estate agents, lending platforms, as well as lead generation databases that it uses on a daily basis to identify potential loans. Once the team finds a potential property it creates a deal scorecard that identifies critical preliminary underwriting information, including potential loan value-to-cost ratio, debt service coverage of the proposed loan, borrower credit score, real estate comparison prices, last appraised value, and estimated current value, along with information about the property and location, including city, neighborhood, number of units, and use of proceeds.

Step Three: Create a Summary Sheet

KDM creates a deal summary sheet for the Underwriter to use to gauge interest from selling group members. The Underwriter uses its network of selling group members to assess whether there is adequate investor appetite for the terms of a proposed note. If there appears to be sufficient interest, then the Underwriter will communicate that to KDM.

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Step Four: Complete Underwriting and File Registration Statement

Once KDM reasonably believes that the CM loan can be funded by the proceeds of a note, it will execute a commitment letter with a borrower (subject to funding). When the borrower executes the commitment letter, it pays KDM a processing fee, KDM then orders an appraisal and a subsequent appraisal review.  Simultaneously, we will prepare and file a registration statement for Notes that we will issue to fund the CM loan.

Step Five: Underwriter and Effective Order

The Underwriter takes “when, as and if issued” orders for a series of our MSN Notes. Once the SEC declares the registration statement for a series of MSN Notes effective, the Underwriter will distribute the offering prospectus and confirm final orders with other dealers and clients. The Underwriter will then execute orders according to a mutually agreed upon trade date with KDM.

Step Six: Funding the Note, Closing the CM Loan

KDM will schedule closing for the CM Loan on or before the trade date of the Notes. Within one business day of the settlement date, funds, net of selling concession, will be wired by the Underwriter to KDM’s segregated account for loan funding. KDM will schedule wire funds for the CM Loan closing as soon as practicable after receipt.

Once funds are collected, the CM Loan will be closed with documents filed in the proper jurisdiction showing KDM as mortgagee.  At the same time, KDM will create and execute a physical Note for issuance to Cede & Company and delivery to Depository Trust Company (“DTC”), or its agent. DTC will credit each participating dealer with the appropriate face amount of the Note for further credit to each of its participating client accounts.  Also, as soon as possible, but in no case more than five business days, copies of the loan closing documents will be filed with the Trustee.

How KDM operates if KDM Acquires Existing CM Loans and Issues Corresponding Notes 

When KDM acquires an existing CM Loan and issues corresponding Notes, the Notes sale and CM Loan closing process is the same as above, except that KDM will purchase the CM Loan from a third party. Information about the borrower of an existing loan may be more limited and appraisals may be less current than for a loan originated by KDM. In such instances, an estimate of value from a local expert may be required to bolster an appraisal. A history of CM Loan payments will be included in the registration statement for the notes to be issued to purchase an existing CM Loan.  It is possible that existing CM loans may be purchased by KDM directly and that KDM will subsequently file a registration statement for the principal amount of notes necessary to purchase the loan from KDM.  In this case the price and yield of the CM Loan at acquisition by KDM as well as the net mark-up of the CM Loan in the form of the corresponding Notes will be disclosed in the registration statement.

CM Loans may also be acquired by purchasing a participation in CM Loans from another lending institution. In these cases, the pricing of the participation and the net mark-up or down of the CM Loan in the form of the corresponding Note will be fully described to investors as well as a detailed description of the financial institution selling the participation interest(s).

How KDM Prices CM Loans and Corresponding Notes

Note maturities and yields to investors must be competitive with other options they have for secured investments. Notes are not guaranteed by any federal agency, so they must be competitively priced when compared with other types of lower-risk debt, such as lower investment grade corporate bonds or other mortgage loans. Borrowers may have other options for acquiring new mortgage funding.  KDM must be competitive with these options in order to acquire new CM Loans. The dynamic between these two marketplaces is a principal factor in the determination of the terms of the KDM notes.

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How our Servicing Fee Applies

KDM services the underlying CM Loans and manage the distribution and payment of interest and principal on the corresponding Notes. For these services it charges an annual fee targeted at 1.00%; but it could be lower or higher for a given CM Loan based on that CM Loan and the corresponding Note’s terms, as disclosed in the prospectus for each Note. The Servicing Fee accrues to KDM, and is paid by the borrower from the mortgage CM Loan interest payments. It therefore creates a lower net interest on the underlying note to the investor. The Servicing Fee is applied to every interest payment received on the underlying CM Loan. Therefore, if we receive 7.00% interest annually from the underlying CM Loan and the Servicing Fee is 1%, your payments will be 6.00% annually, barring any other expenses.

Verification of Property and Investor Information

Notwithstanding KDM’s due diligence examination of the information provided to KDM by a borrower, there can be no assurance that the information provided to us, and, on which we rely, could accordingly be false.

CM Loan Servicing

KDM is responsible for servicing all the loans it makes to mortgage borrowers and collecting payments from those borrowers and delivering payments to investors on its Notes. KDM has limited experience in loan servicing but has staff with extensive back office and accounting experience and has purchased servicing software. Personnel at KDM and its parent also have extensive experience in management of property loans.

KDM does not plan to make advances of funds to any party as a servicer.

KDM has custodial responsibility for the CM Loans and pursuant to the Trust Indenture for the Notes must provide electronic copies of all CM Loan documents to the Trustee.

There are no limitations in KDM’s liability as servicer of its loans.

KDM retains a Servicing Fee for each CM Loan and this charge is described in “About the CM Loan Covered by this Prospectus.” Should KDM cease operations as Servicer, it is highly likely that a new Servicer could be engaged using the Servicing proceeds provided by the Servicing Fee for each loan. Currently there are no specific arrangements for a back-up servicer.

KDM or its affiliates may retain an interest in a CM Loan pursuant to compliance with applicable law.

CM Loan payments are deposited or transmitted via ACH to the KDM In Trust For 2 Segregated Account. This segregated account collects payments from all CM Loans, and is segregated from the KDM operating funds. Individual loan payment receipts are commingled in the segregated account and this account disburses the respective payment on the Notes to DTC for credit to each participating broker dealer’s account. Broker-dealer participants then make further credit to customer accounts of Note holders. We also debit this account for our Servicing Fee as described above.

CM Loans may also have retention of an impound amount for taxes and insurance and a replacement reserve for roof repairs or other items necessary to the proper functioning of the property. These impounded funds are currently in the KDM In Trust For 1 Segregated account.

In the event it becomes necessary to expend funds for the collection or protection of the CM Loan, or for the preservation or protection of the Property, including the institution of foreclosure proceedings, such expenses will initially be covered by (to a maximum of $10,000), from funds provided from the Servicing Fee, or from J. W. Korth & Company, pursuant to the Support Agreement. After discussions with attorneys we believe $10,000 is sufficient to engage a counsel who will pursue a foreclosure to its end and defer his final payments to the proceeds received at the ultimate disposition of the property. Ultimately, all costs and expenses will be funded (or reimbursed to us) from the proceeds of any foreclosure or settlement. Including reimbursement to us of any expenses we have disbursed toward collection of the CM Loan. These expenses may reduce your interest payments or principal payments on your Note. See “Risk Factors.”

We disclose on our website regarding borrowers’ payment performance on our CM Loans. We have also made arrangements for collection procedures in the event of borrower default. When a CM Loan is past due and payment has not been received, we contact the borrower to request payment. After a 10-day grace period, we may, in our discretion, assess a late payment fee.  This fee may be charged only once per late payment. Amounts equal to any late payment fees we receive are paid to holders of the Notes. We may not assess a late payment fee when a borrower promises to return a delinquent CM Loan to current status and fulfills that promise. Each time a payment request is denied due to insufficient funds in the borrower’s account or for any other reason, we may assess an unsuccessful payment fee to the borrower in an amount of $35.00 per unsuccessful payment, or such lesser amount as may be provided by applicable law. We retain 100% of this unsuccessful payment fee to cover our costs incurred due to the denial of the payment.

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If the CM Loan becomes 31 days overdue, we will identify the CM Loan as “Late (31-120),” and we may refer the CM Loan to a real estate attorney for foreclosure proceedings. In these cases, the interest rate on the CM Loan is increased to the highest legal rate in the state in which the property is located. The costs from a foreclosure and resale of a defaulted CM Loan and mortgaged property against the proceeds to Noteholders. If funds remain after the property is resold and all expenses are paid, they will be distributed to Noteholders on a pro-rata basis.

Definition of Accounts

Delinquent Accounts are defined as more than 31 days overdue. Charge Offs are defined as the unpaid principal balance of a specific CM Loan minus the expected recovery based on current market conditions for the foreclosed property. Uncollectable Accounts are defined as those CM Loans where no recovery is expected to be made. These definitions are regardless of any grace period, re-aging, restructure, or partial payments received. A CM Loan that was categorized as a Delinquent Account could be re-categorized as current if the borrower brought all payments up to date. Charge offs will be adjusted for properties in foreclosure based on an annual review of the current market conditions for the geography of the property. Uncollectable Accounts will be reviewed quarterly and could be reclassified as Collectible if market conditions changed for the property subject to the mortgage and foreclosure.

Material Information Regarding Delinquencies by Pool Asset Type

As of the date of this prospectus we have no delinquent CM Loans and therefore nothing material to report.

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Summary of How KDM Fees Affect Return on the Notes

The following table summarizes the fees that we charge and how these fees affect Noteholders:

Description of Fee	Servicing Fee Amount	When Fee is Charged	Effect on Investors
Servicing Fee on CM Loan	A percent 1of the interest and late fees received by KDM from borrowers in respect of each corresponding CM Loan.	At the time of any payments on the Notes, including Note payments resulting from prepayments or partial payments on corresponding CM Loans.	Noteholders will be paid the interest paid on the CM Loan minus KDM’s servicing fee.
CM Loan late fee	Assessed at our discretion; if assessed, the late fee is specific to each CM Loan.	At our discretion, when a CM Loan is past due and payment has not been received after a 15-day grace period	Distributed on a pro-rata basis to holders of the Note corresponding to the CM Loan
CM Loan unsuccessful payment fee	$35.00 per unsuccessful payment, or such lesser amount as may be provided by applicable law	May be assessed each time a payment request is denied, due to insufficient funds in the borrower’s account or for any other reason	Noteholders do not share in this fee
CM Loan collection fee	Only charged after a CM Loan becomes 31 days overdue if the collection agency or KDM is able to collect an overdue payment; collection fee is up to 35%, excluding litigation.	At the time of successful collection after a CM Loan becomes 31 days overdue	Foreclosure fees charged by us or independent attorneys will reduce payments and the effective yield on the related Notes; Foreclosure fees will be retained by us or the independent attorney as additional servicing compensation
Check processing fee	$15.00 per check processed for any payments made by check	At the time a payment by check is processed	We retain 100% of this check processing fee to cover our costs
Default Interest Servicing	Proportional share of interest equal to the same proportion of Servicing Fee on the CM Loan to Stated Interest paid on the Notes.	Upon collection of default interest, before such interest is paid to Noteholders.	Noteholders will receive the interest paid on the CM Loan less the default interest servicing fee
Foreclosure Fees	Legal fees will be charged at cost. KDM will charge a fee of eight times the Servicing Fee on the CM Loan balance, if any, received in foreclosure after payment to Noteholders.	Upon completion of foreclosure in the event that there is profit after liquidation of the property.	This fee will reduce the total cash distributed to investors in a profitable foreclosure. This will only reduce a premium earned, as this fee will not be charged until after investors are made whole.

 

¹ Servicing Fee can range from 0.25% to 1.50% and will depend on factors such as the size and complexity of the CM Loan.   The Servicing fee for the Notes is stated Summary of Terms. For this Note, the Servicing Fee is 1.25%; higher Servicing Fees may apply to offerings in the future.

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Participation in the Funding of CM Loans by KDM and Its Affiliates

From time to time, qualified CM Loan requests may not be fully committed to by investors. To address these situations, KDM may fund portions of certain CM Loan requests.  If we fund CM Loans, we will issue Notes to KDM for that portion of the CM Loan we fund.

Our affiliates, including our executive officers and members, may fund portions of CM Loan requests from time-to-time. Since inception, these affiliates have funded $3,250,000 in the form of privately placed notes and bridge funding.

Historical Information about our CM Loans

Multi-Family

Total Loans	Loans 31 Days Delinquent Total Dollars	Loans 31 DaysDelinquent Number of Accounts	Loans 31 Days Delinquent as % of Total Assets	Total Charge Offs	Total Charge Offs Percentage of Total Assets
3	0	0	0	0	0

Gross Real Losses	Number of Assets Experiencing a Loss	Number of AssetsExperiencing a Recovery	Ratio of aggregate Losses to Average Portfolio Balance	Average Net Loss on Assets that have Experienced a Loss
0	0	0	n/a	n/a

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SUMMARY OF THE TERMS OF THE CM LOAN

The following summary sets forth the principal terms of the CM Loan underlying the Notes.

Loan Designation	KDM2018-L001
Property and Area Description	This is a warehouse/office flex space. There are 10 individual units that can be used a showroom, warehouse, or office space. It is located in the “Little River” neighborhood of Miami, Florida, an area experiencing urban renewal, with a new train line and multiple new mixed use projects being built in the area.
Issue Date	March 13, 2018
Maturity	March 13, 2023
Interest	6.50%
Interest Guarantee	36 Months
Amortization	None.  This is an interest-only loan. Entire principal is due as a balloon payment at maturity.
Prepayment and Penalty Interest	If the CM Loan is prepaid in whole or in part before April 1, 2021, the borrower must pay the difference between 36 months of interest and the total interest paid as of the payoff date (“Penalty Interest”). Should the borrower prepay all or a portion of its loan, then the amount pre-paid and the penalty will be paid on the next payment date to the Noteholders.
Redemption	Inception through April 1, 2021: $1,850,000 plus Penalty Interest. April 1, 2021, through April 1, 2023: $1,850,000
CM Loan Payment Dates	Payments of interest are due on the first day of each month.
Ratings	Egan Jones: “A-”   KDM Rating: “A”
Real Property Collateral	The building is comprised of a total of 10 units. The overall occupancy is 90%.  There is one vacancy
Year Constructed	1973
Property Stabilization	The owner spent $618,056.82 improving the property in 2017.
Credit Score of Principal	727.* This is not the credit rating of the borrower. It is the credit score of the sole member of the borrower, who is not directly responsible for performance of the loan.
Appraised Value of  Property	$2,775,000

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Debt Service Coverage Ratio	1.71       (See Debt Service Coverage Analysis below)
Occupancy	The building is comprised a total of 10 units. The overall occupancy is 90%.
Rent Payments	Rents are paid monthly and are collected in the checking account of the manager. KDM acquired the checking account statements and verified the rents
Loan to Appraised Value	66.67%
Experience of Property Manager	The borrower is a limited liability company. The principal and sole member of the borrower, Ofer Mizrahi, has over 10 years’ experience owning and managing income-producing investment properties.  He currently has 5 commercial real estate properties in his real estate portfolio of commercial real estate investment properties.  Each one of these 5 properties he self-manages and he holds each property under a different LLC.  He is the 100% beneficial owner of each of these properties.
Appraisals of Value	KDM received an independent appraisal for the property. The appraisal was provided by a licensed appraiser chosen by KDM.
Review of Appraisals	KDM also received a review of each appraisal provided by a second licensed appraiser chosen by KDM.

*The Principal may not be the borrower, a guarantor of the CM Loan, or have any personal liability for the CM Loan. See “Risk Factors-The credit rating that we use in our rating system for our mortgages may not be the credit rating of the borrower, any guarantor, or anyone having personal liability for payment of the mortgage loan.”

CURRENT STATUS OF CM LOAN

The loan was closed on March 13, 2018.

DIRECTORY FOR LOAN

Mortgaged Property	345 NE 80 St, Miami, FL 33138-4412
Borrower	MIS NW 345 LLC
Borrower Controlled by	Ofer Mizrahi
Lender	Korth Direct Mortgage, LLC 2937 SW 27th Avenue Miami Florida 33133 Contact: James W. Korth Tel: 305-668-8485 Email:          jwkorth@jwkorth.com
Underwriter	J.W. Korth & Company Limited Partnership 6500 Centurion Drive, Suite 200 Lansing, Michigan 48917 Website: www.jwkorth.com Contact: James W. Korth, Holly MacDonald-Korth Tel: 305 668 8485 Email: info@jwkorth.com

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Appraiser	BBG, LLC
Appraisal Reviewer	Guerra Group Valuation & Consulting Inc.

CM Loan Underwriting

Property and Operational Analysis

Unaudited profit and loss statements were received from, and signed by, the borrower. Data from these statements were used to complete KDM’s debt service coverage and operating analysis. Rent rolls were also submitted along with checking account statements from the borrower. Rent rolls were verified by analyzing the checking account statements of the borrower

From these statements we created the following tables and calculated the debt service coverage ratio (“DSCR”) for the properties using the formula below.

Net Operating Income / Debt Service  =  Debt Service Coverage Ratio

The debt service is equal to the mortgage payment for the CM Loan. The Net Operating Income is derived from the profit and loss and detailed in the tables below.

CM Loan Property Specifics: the DSCR for the CM Loan is 1.71.

Unaudited Profit and Loss Information

As part of the CM Loan underwriting process, KDM collects profit and loss information via a form provided to the borrower. This form collects both per-unit rental information (referred to as the “rent roll”) as well as a detailed list of expenses for the prior two years as well as the current partial year, if applicable. The borrower signs and certifies the accuracy of the information. We also request  any accountant or company prepared profit and loss statements that are available for the same periods. Data from the form is used to create an unaudited profit and loss statement if accountant prepared forms are not available.

CM Loan Property Specifics:The borrower purchased the property in November 2015 and has invested $618,056.82 into the property to increase its marketability to the rental market.  The information provided below is from the 2017 calendar year. The property was in transition during 2016 while the landlord made upgrades and installed new tenants. For this reason, our calculations are based on the 2017 numbers. We have included the full profit and loss statements received from the borrower below.  Due to the extensive upgrades and renovations to the property we have deemed the subject property as up-to-date and not needing new major repairs.  All of the numbers below are actual numbers.  The Debt Service Coverage Ratio as calculated below used actual numbers.

Expenses

A table of monthly expenses appears below. The tax and insurance expenses were verified by the tax and insurance bills. All of the other expenses were provided by the borrower.  The property appraisals use market-based estimates of standard expense categories. The expense information provided by the borrower is compared to the appraisal expense categories and if, in our judgement, there is no significant deviation, the borrower expenses are accepted for the calculation of the net operating income and presentation in the tables below.

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Reserves for Capital Expenditures

Some borrowers include a replacement and repair reserve in their profit and loss statements. If we receive such numbers from a borrower, then actual reserve numbers will be included. Otherwise, replacement reserve is generally estimated at $200-$300 per unit per year for multifamily properties, or 2-3% of revenue for other rental properties.

CM Loan Property Specifics: Up to 12/08/2017 the borrower had invested $618,053.82 into the subject property.  The $618,053.82 invest was intended to update the driveway, electrical wiring, doors, plumbing, painting the property, and the roof.  Due to the extensive recent property upgrades detailed below, we have not included an additional capital expenditure reserve at this time.

Vacancy Rate Estimate

Based on various real estate industry information sources vacancy rates range from 4% to 7%. The vacancy rate shown in the Debt Service Coverage Ratio analysis below was calculated by using the actual vacancy rate at the time the loan was underwritten plus an additional rate that is determined by the property type and area.

CM Loan Property Specifics: The vacancy rate for this property type in this area, as recommended by the appraisal is 5%. The vacancy rate on the CM Loan property is currently 1 of 10 units or 10%. The Gross Income number reflected in our DSCR analysis below reflects the 10% vacancy; there is an additional line for the additional vacancy factor.

Property Management

If there is a property manager, we include the actual management fee in our analysis. If the property does not currently have a property manager, we include a property management fee estimate as part of our underwriting analysis to conservatively estimate the debt service coverage should the owner/borrower decide to hire a property manager during the life of the loan.

CM Loan Property Specifics: The sole member of the borrower has over 10 years’ experience owning and managing income- producing investment properties.  He currently has 5 commercial real estate properties in his real estate portfolio of commercial real estate investment properties.  Each one of these 5 properties he self- manages and he holds each property under a different LLC of which he is the sole owner.  For this property we have used actual management fee expense as detailed in the profit and loss statement received from the borrower.

Verification of Rent Payments

Rent payments in the tables below were verified by matching individual deposits in the Borrower’s checking accounts and to the rent roll. This also allowed KDM to verify the on-time payment history for the tenants for the most recent month at the time of CM Loan underwriting.

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Table of Current Lease Terms (Rent Roll)

MIS NW 345 LLC
Rent Roll
April 01, 2018
				Gross Price			BASE RENT		RE TAX	CAM	TOTAL CONTRACTED RENT		VACANT UNITS	TOTAL
Suite			% of	Per Sq Ft	Lease									Contracted +
No.	Tenant Name	Area	Total	Start	Exp	EX YR	PSF	Annual	Annual	Annual	PSF	Annual	Annual	Market	Business
312	Carlos Talavera	1,400	9.15%	07/18/13	12/31/17	M2M	$17.14	24,000.00	0.00	0.00	$17.14	$24,000.00		$24,000.00	Commercial
314	ConKreto Inc dba Top Cement USA	1,600	10.46%	11/10/15	11/09/20	2020	11.58	18,522.00	1,890.00	3,150.00	14.73	$23,562.00		$23,562.00	Showroom
316	Krome Construction	1,400	9.15%	01/01/18	12/31/19	2019	23.57	33,000.00	2,750.00	0.00	25.54	$35,750.00		$35,750.00	Retail
318	Lualdi	1,400	9.15%	03/01/17	02/28/21	2021	27.00	37,800.00	0.00	0.00	27.00	$37,800.00		$37,800.00	Showroom
320	Lualdi	1,400	9.15%	03/01/17	02/28/21	2021	27.00	37,800.00	0.00	0.00	27.00	$37,800.00		$37,800.00	Showroom
322	Vacant	1,600	10.46%				0.00	0.00	0.00	0.00	0.00	$0.00	$30,608.00	$30,608.00	Vacant
324	Rey Marine Air Corp	1,400	9.15%	03/09/15	03/08/18	2018	13.11	18,357.84	0.00	0.00	13.11	$18,357.84		$18,357.84	Commercial
326	Sleep on Green	1,750	11.44%	10/01/16	09/30/19	2019	12.60	22,050.00	3,150.00	3,150.00	16.20	$28,350.00		$28,350.00	Showroom
328	Capture Events	1,750	11.44%	08/01/16	07/31/21	2021	15.12	26,460.00	3,150.00	1,890.00	18.00	$31,500.00		$31,500.00	Office
330	Oscar Ono/Sagewood	1,600	10.46%	04/01/16	03/31/19	2019	14.18	22,680.00	1,134.00	1,134.00	15.59	$24,948.00		$24,948.00	Office
		15,300	100%					$240,669.84	$12,074.00	$9,324.00	$17.13	$262,067.84	$30,608.00	$292,675.84

2017 Profit and Loss Statement, Received from Borrower

	MIS NW 345 LLC
03/23/18	Profit & Loss

Accrual Basis January through December 2017

Jan - Dec 17
Ordinary Income/Expense
Income
Late Fee Income	75.00
Rent Income	229,762.43
Tax Income - RE Tax	11,560.71
Utilities & CAM Income	13,909.46
Total Income	255,307.60
Cost of Goods Sold
Rent-Discounts & Allowances	7.60
Total COGS	7.60
Gross Profit	255,300.00
Expense
Bank Service Charges	829.69
Dues and Subscriptions	130.00
Insurance Expense	5,872.21
Management Fee Expense	9,400.90
Professional Fees
Legal Fees	487.50
Total Professional Fees	487.50
Taxes - Property	22,659.91
Utilities	6,184.50
Waste Cleaning	2,005.26
Total Expense	47,569.97
Net Ordinary Income	207,730.03
Other Income/Expense
Other Income
Other Income	381.62
Sales Tax Adjustment	272.77
Total Other Income	654.39
Other Expense
Amortization Expense	32,429.67
Broker Commissions	13,924.59
Financing Costs	14,817.11
Interest Expense	100,532.00
Owner Promote	12,893.66
Total Other Expense	174,597.03
Net Other Income	-173,942.64
Net Income	33,787.39

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Historical Profit and Loss Statements, Received from Borrower

	Dec 15		2016 TOTAL
Ordinary Income/Expense
Income
Rental Income		11,474.26		116,874.87
Utilities & Cam Income		0.00		3,250.00
RE Tax Income		0.00		2,850.00
Late Fee Income		0.00		0.00
Total Income		11,474.26		122,974.87
Cost of Goods Sold
Discounts & Allowances		0.00		0.00
Bad Debt		0.00		1,200.01
Total COGS		0.00		1,200.01
Gross Profit		11,474.26		121,774.86
Expense
Advertising & Promotion
Bank Service Charges		15.00		514.00
Closing Costs		30,388.66		0.00
Contract Labor		0.00		0.00
Dues and Subscriptions
Insurance		0.00		5,794.34
Management Fees
Meals & Entertainment
Merchant Deposit Fees		0.00		3.50
Office Supplies		0.00		1,181.10
Professional Fees
Accounting		360.00		2,600.00
Legal		0.00		0.00
Other Professional Fees		0.00		0.00
Repairs & Maintenance		0.00		857.89
Taxes - Intangible				1,200.00
Taxes - Property		0.00		23,091.26
Telephone		0.00		658.00
Utilities		0.00		1,361.01
Waste Removal/Cleaning		0.00		903.21
Total Expense		30,763.66		38,164.31
Net Ordinary Income (EBITDA)		-19,289.40		83,610.55

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List of Capital Improvements to Subject Property, Received from Borrower

Debt Service Coverage Analysis

The following information is calculated by KDM using the current rent roll for gross rental income and actual 2017 values for all other numbers. Vacancy rate is estimated by KDM at 5%, please see discussion of vacany rate, above.

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DSCR Calculated using Year to Date Rent Roll and 2017 Expenses
Ordinary Income	Monthly
Gross Rental Income (based on Rent Roll at 10% current  vacancy)	$	20,055.82
Late Fee Income		6.25
Tax Income - RE Tax		963.39
Utilities & CAM Income		1,159.12
Rents-Discounts & Allowances		(0.63	)
5% Additional Estimated Vacancy Rate		(1,103.07	)
Effective Gross Income	$	21,080.88
Operating Expenses
Bank Service Charges	$	(69.13	)
Dues & Subscriptions	$	(10.83	)
Insurance Expense	$	(489.35	)
Actual Management Fee Expense	$	(783.41	)
Professional Fees - Legal Fees	$	(40.63	)
Property Taxes	$	(1,888.33	)
Utilites	$	(515.38	)
Waste Cleaning	$	(167.11	)
Total Expenses from 2017 P&L	$	(3,964.16	)
Net Operating Income (NOI)	$	17,116.72
Less Debt Service	$	(10,020.83	)
Net Profit after Debt Service	$	7,095.89
DSCR = Net Operating Income / Interest Only Payment		1.71

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Location of Mortgaged Property

The following map shows the location of the property known as 345 NE 80 St, Miami, FL 33138-4412

Copies of the following documents are available upon request to KDM at info@KDMinvestor.com.

· Appraisals

· Appraisal Reviews

· Deeds of Mortgage

· Promissory Note

RATINGS FOR CM LOAN COVERED BY THIS PROSPECTUS

For KDM 2018-L001, we have scored the CM Loan as follows:

Category	Score
CM Loan to Value	5
Credit Score of Borrower	4
Debt Service Coverage	4
Property Type	4
Property Improvement/Age	4
Property Demand	5
Building Condition	3
Total	29

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Consequently, pursuant to our formula, we have assigned a KDM Rating of “A” to CM Loan KDM2018-L001.

Egan-Jones Ratings Company, an NRSRO, was also engaged by KDM to rate this CM Loan and has assigned a rating of        .  We are not an NRSRO and we do have a conflict of interest in issuing our own ratings. Please see a discussion of our rating process in the section titled “The KDM CM Loan Rating Program”.

USE OF PROCEEDS

The proceeds from the sale of the Notes will be used to redeem the $1,850,000 of Mortgage Secured Notes purchased by an affiliate as bridge financing.

 PLAN OF DISTRIBUTION

The Notes will be distributed by the Underwriter and members of the Selling Group on a best efforts basis at a commission of 1.00% of the dollar amount of Notes sold by them.  KDM has agreed to indemnify the Underwriter and the Selling Group and against liabilities under the Securities Act of 1933, or to contribute to payments that the brokers or dealers may be required to make in respect of these liabilities.

DESCRIPTION OF THE NOTES

The following is a summary of particular terms and conditions of the Notes and is not complete.  Additional terms of the Notes may be found in the indenture referred to below.

General

The Notes will be issued under a Trust Indenture and Security Agreement dated November 17, 2017, as amended or supplemented (the “Indenture”), between KDM and Delaware Trust Company. The following statements are summaries of the material provisions of the Indenture and the Notes.

The Company will issue notes in a series, including the KDM2018-N001 Mortgage Secured Notes described in this prospectus. There is no limitation on the amount of MSN Notes which may be issued. The outstanding Mortgage Secured Notes on the date of this prospectus are:

Each MSN Note corresponds to a CM Loan. All MSN Notes are  U.S. dollar denominated. Each MSN Note will have a stated interest rate that is the same as the interest rate for the corresponding CM Loan less the Servicing Fee and an aggregate stated principal amount equal to the corresponding CM Loan. Other terms, such as pre-payment penalties, amortization schedules, and maturity date will be the same as the corresponding CM Loan.

Notwithstanding the foregoing, KDM has no obligation to make any payments on the MSN Notes unless, and then only to the extent that, KDM has received payments on the corresponding CM Loan, as described under “Payments and Paying Agents” and “Limitations on Payments.” The MSN Notes are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other U.S. or foreign governmental agency or instrumentality.

MSN Notes of each series will have a stated term. The Indenture does not limit the aggregate principal amount of MSN Notes that KDM can issue under the Indenture or the size of any series. KDM may fund some or all of a CM Loan itself. MSB Notes will be issued to KDM for the amount of the CM Loan that KDM determines to fund itself or which are funded by affiliates. These MSN Notes may be redeemed from the proceeds of sale of notes or resold by KDM or affiliates in secondary market transactions, as may be available for transactions of that kind, KDM will not notify Noteholders if it sells notes it has purchased.

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MSN Notes and CM Loans receive a designated number, as follows: KDM and four-digit year, a hyphen, then a letter and number series of three digits beginning 001. The three digits will be identical for CM Loans and their corresponding MSN Notes. CM Loans will have the letter “L” before the three digits and corresponding Notes will have the letter “N”. Accordingly, as an example, CM Loan Number KDM 2017-L031 will correspond directly to Note Number KDM 2017-N031.

We may at any time purchase MSN Notes at any price or prices, in the open market or otherwise. MSN Notes so purchased by us may, at our discretion, be held, resold or surrendered to the Trustee for cancellation.

Security for the Notes

Pursuant to the Indenture, the MSN Notes will be senior to all other indebtedness of KDM and separate and distinct from each other. The MSN Notes will be secured special obligations of KDM. The security for each series of MSN Notes will be the mortgage, the loan and the proceeds that KDM receives from the corresponding note and first mortgage obligation of a borrower. This security is made under the caption “Security Agreement” in Section 3.8 of the Indenture. A key part of the security arrangement under the Indenture is that each series of MSN Notes is separately secured by the CM Loan that corresponds to that series. Therefore, the security for the Notes offered herein is specifically the CM Loan described herein.

KDM will be obligated to pay on each MSN Note in a series only if, and to the extent that, KDM receives principal, interest, or late fee payments from the borrower on the corresponding CM Loan funded by the proceeds of that series, and such borrower CM Loan payments will be distributed ratably among all MSN Notes of the series after deduction of KDM’s Servicing Fee.

Financial Covenant

The Indenture specifies that KDM may not incur debt other than the MSN Notes except compensation owed to employees, rent for offices or obligations to utility and informational services and any other services which assist it in carrying out its mortgage lending, mortgage servicing, and Note servicing functions. There are no other financial covenants limiting KDM’s activities.

Payments and Paying Agents

Subject to the limitations described under “Limitations on Payments,” KDM will make payments of principal and interest on the Notes on the twenty-fifth day of each month or the next business day, provided we have received payments on the CM Loan within four business days prior to the Payment Date. If payments are received after the twenty-first day of the month, KDM will pay investors the following month.  The four business day margin will allow us to assure the finality of the transfer of funds under the ACH rules after we receive payments from borrowers.

The stated interest rate on each MSN Note, including the Notes offered by this prospectus, will be the same as the interest rate on the corresponding CM Loan, less the Servicing Fee. Interest will be computed and will accrue on Notes in the same manner as the interest on the corresponding CM Loan is computed and accrues.

All payments received from CM Loans with corresponding Notes will be collected in a special segregated account named “In Trust For 2” Segregated Account. KDM will make all required payments on each Note via wire transfer to  DTC and its participants as described under “Registration and Settlement” on the record date for the relevant payment date. The record date for each payment date shall be the second business day prior to the actual payment date. If a payment date falls on a date that is not a business day, then such payment will be made on the next succeeding business day.

Principal of and interest on the Notes will be paid to owners of a beneficial interest in the Notes in accordance with the arrangements then in place between the paying agent and DTC and its participants as described under “Registration and Settlement.” We will irrevocably deliver no later than 1:00 p.m. New York time on each Interest Payment Date, Maturity Date or the date of earlier redemption or repayment (if the Notes are to be redeemed or repaid prior to a stated maturity date), to DTC, funds sufficient to make payments of the amount payable in respect of the Notes on such date, or such lesser amount as we have received on a CM Loan. We will give DTC irrevocable instructions and authority to pay such amount to the holders of the Notes entitled thereto.

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In the event that any Interest Payment Date, Stated Maturity Date or date of earlier redemption or repayment for any fixed rate note is not a Business Day (as defined below), principal and/or interest on such fixed rate note will be paid on the next succeeding Business Day; however, we will not pay any additional interest due to the delay in payment. If an Interest Payment Date, Stated Maturity Date or date of earlier redemption or repayment for any floating rate note based on LIBOR falls on a day that is not a Business Day, it will be postponed to the following Business Day and no additional interest will accrue as a result of the delay in payment, except that if that Business Day would fall in the next calendar month, the Interest Payment Date, Stated Maturity Date or date of earlier redemption or repayment will be the immediately preceding Business Day.

Unless we specify otherwise in the prospectus, “Business Day” means any day, other than a Saturday or a Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in The City of New York. With respect to MSN Notes as to which LIBOR is an applicable interest rate basis, the day also must be a London Business Day in order to be a Business Day. “London Business Day” means a day on which commercial banks are open for business (including dealings in U.S. dollars) in London.

Any tax, assessment or governmental charge imposed upon payments, including, without limitation, any withholding tax, is the responsibility of the holders of a beneficial interest in the Notes in respect of which such payments are made.

Limitations on Payments

To the extent that anticipated CM Loan payments from a CM Loan are not received by KDM, no payments will be due and payable by KDM on the MSN Notes related to that CM Loan unless KDM receives payments under an assignment of rents or a foreclosure is completed and the property has been sold by KDM.

Assignment of Rents

For all CM Loans, should the borrower default KDM, as lender, pursuant to an assignment of rents, will require the renters of the property pay their rents directly to KDM. In these cases, KDM will forward each Noteholder’s pro-rata share of the rents collected less any out of pocket costs, such as legal fees, for executing an assignment. In such cases, an assignment of rents should not curtail or delay a foreclosure and subsequent sale on the property to recover the principal on the CM Loan.

Prepayments

To the extent that a borrower prepays a CM Loan, MSN Noteholders will be entitled to receive their pro-rata share of the prepayment and any penalty that is owed by the borrower on the next payment date for the MSN Notes. In the case of a partial prepayment of a corresponding CM Loan, we automatically reduce the outstanding principal and the term of the CM Loan is reduced, but the monthly payment amount remains unchanged.

Servicing Covenant

Under the Trust Indenture, KDM is obligated to use commercially reasonable efforts to service and collect CM Loans, in good faith, accurately and in accordance with industry standards customary for servicing loans such as the CM Loans. If KDM refers a delinquent CM Loan to a licensed attorney for collection, that referral shall be deemed to constitute commercially reasonable servicing and collection efforts. Furthermore, without the consent of the corresponding Noteholders, KDM may, at any time and from time to time, amend or waive any term of a CM Loan if it believes it is in the best interests of the Note holders. The Indenture contains financial covenants or other covenants limiting KDM’s operations or activities, including the incurrence of indebtedness.

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Consolidation, Merger, Sale of Assets

The Indenture prohibits KDM from consolidating with or merging into another business entity or conveying, transferring or leasing our properties and assets substantially as an entirety to any business entity, unless:

· the surviving or acquiring entity is a U.S. corporation, limited liability company, partnership, or trust, and it expressly assumes our obligations with respect to the outstanding Notes by executing a supplemental Indenture;

· immediately after giving effect to the transaction, no default shall have occurred or be continuing; and

· we have delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that the transaction, and if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the Indenture and all conditions precedent relating to such transaction have been complied with.

Denominations, Form and Registration

Except as may be provided otherwise for a particular series of Notes, we will issue Notes in denominations of $1000 or integral multiples of $1000. The Notes will be issued only in registered form and only in a single master note in the name of\Cede & Company and delivered to the facilities of Depository Trust Company for credit to each broker dealer member and further credit to their affiliated broker dealers and the clients of those broker dealers who own Notes. We will not issue certificates for the Notes. Investors will be required to hold their Notes through their broker dealer.

The laws of some states in the United States require that certain persons take physical delivery in definitive, certificated form, of securities that they own. This may limit or curtail the ability of such persons to purchase Notes.

We reserve the right to issue certificated Notes only if we determine not to have the Notes held solely in electronic form.

Amortization

The amortization of the MSN Notes will be the same as the amortization requirements of the corresponding first mortgage CM Loan and described in the prospectus for each series of MSN Notes.

Events of Default

Under the terms of the Indenture, any of the following events will constitute an event of default on a series of MSN Notes:

· failure by KDM to make required payments on the MSN Notes for 30 days past the applicable due date, when payments have been received for a corresponding CM Loan;

· failure by KDM to perform, or the breach of, any other covenant for the benefit of the holders of the MSN Notes of such series which continues for 90 days after written notice from the Trustee or holders of 25% of the outstanding principal amount of the notes of any series for which such default exists as provided in the Indenture, subject to an additional 90 day cure period; or

· specified events relating to KDM’s bankruptcy, insolvency or reorganization.

It is not a default or event of default under the terms of the Indenture if we do not make payments when a borrower does not make payments to us on the CM Loan corresponding with the particular series of MSN Notes. In that  case, KDM is not required to make payments on Notes, and is accordingly not in default.

An event of default with respect to one series of MSN Notes is not automatically an event of default for any other series.

If an event of default occurs due to bankruptcy, insolvency, or reorganization as provided in the Indenture, then the stated principal amount of the Notes shall not become due and payable immediately without any act by the Trustee or any holder of Notes. Notes shall continue to be due and payable only if the corresponding CM Loan has made payments.

The holders of a majority in aggregate principal amount of the outstanding Notes of any series, by notice to the Trustee (and without notice to any other holder of MSN Notes), may, on behalf of the holders of all such MSN Notes, waive an existing default with respect to such MSN Notes and its consequences except (1) a default in the payment of amounts due in respect of such MSN Notes or (2) a default in respect of a provision of the Indenture that cannot be amended without the consent of each holder affected by such waiver. When a default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other default or impair any consequent right.

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If an Event of Default shall have occurred and be continuing with respect to any Series of Notes, the Holders of at least a majority in aggregate principal amount of the outstanding MSN Notes of such series for which a Default exists may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to the MSN Notes. If the series of MSN Notes includes more than one class, the holders of MSN Notes of all classes shall vote together, without distinction among the classes.  Such direction shall not be in conflict with any rule of law or with the Indenture, and could not involve the Trustee in personal liability in circumstances where indemnity would not in the Trustee’s reasonable discretion be adequate.  Before proceeding to exercise any right or power hereunder at the direction of such Holders, the Trustee shall be entitled to receive from such holders reasonable security or indemnity, against the costs, expenses and liabilities, which might be incurred by it in compliance with any such direction.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Noteholders or would involve the Trustee in personal liability.

A holder of any MSN Note of any series may not institute a suit against us for enforcement of such holder’s rights under the Indenture or pursue any other remedy with respect to the Indenture or the MSN Notes unless:

· the holder gives to the trustee written notice stating that an event of default with respect to the Notes is continuing;

· the holders of at a majority in aggregate principal amount of the outstanding Notes of that series make a written request to the trustee to pursue the remedy;

· such holder or holders offer to the trustee security or indemnity satisfactory to it against any loss, liability or expense satisfactory to the trustee;

· the trustee does not comply with the request within 60 days after receipt of the notice, the request and the offer of security or indemnity; and

· the holders of a majority in aggregate principal amount of the outstanding MSN Notes of that series do not give the trustee a direction inconsistent with such request during such 60-day period.

The Indenture requires us every year to deliver to the Trustee a statement as to performance of our obligations under the Indenture and as to any defaults.

Clearance and Settlement

Unless we specify otherwise, the MSN Notes will be issued only in book entry form through the facilities of DTC and will be represented by the single master note. The master note will be registered in the name of the nominee of DTC. Transfers or exchanges of the MSN Notes may only be effected through a participating member of DTC. So long as DTC or its nominee is the registered owner of a MSN Note, DTC or its nominee, as the case may be, will be considered the sole owner or holder of the MSN Note for all purposes under the Indenture. No MSN Note issued in book-entry form will be issuable in certificated form.

Satisfaction and Discharge of the Indenture

The Indenture will generally cease to be of any further effect with respect to a MSN Note if the MSN Note has been fully satisfied with all payments due (either according to its schedule or through foreclosure and sale of the related property) from the underlying CM Loan being made and such MSN  Note has been delivered for cancellation.

Governing Law

The Indenture and the MSN Notes will be governed by the laws of the State of New York without regard to any principle of conflict of laws that would require or permit the application of the laws of any other jurisdiction.

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Information Concerning the Trustee

Delaware Trust Company is the trustee under the Indenture. From time to time, we may maintain deposit accounts and conduct other banking transactions with the Trustee and its affiliates in the ordinary course of business. If and when the trustee becomes a creditor of ours, the trustee will be subject to the provisions of the Trust Indenture Act regarding the collection of claims against us. The trustee and its affiliates will be permitted to engage in other transactions; however, if they acquire any conflicting interest, the conflict must be eliminated or the Trustee must resign.

THE KDM CM LOAN RATING PROGRAM

We may require a rating from a National Recognized Statistical Rating Organization (“NRSRO”). An NRSRO is registered with the SEC and has done so by achieving a set of application standards. NRSRO ratings are often acceptable to regulated organizations such as banks, insurance companies and pension funds.

We also may give each of our CM Loans or CM Loan groups a rating. Ratings are disclosed on our website for each CM Loan and corresponding Note. CM Loans and corresponding Notes are reviewed periodically and ratings may expire or be changed at any time.

We are not a Nationally Recognized Statistical Rating Agency (NRSRO) as defined by the Securities and Exchange Commission. We have certain conflicts of interest in producing our ratings. We discuss management of these conflicts of interest below. We have no history of performance under our ratings categories. The ratings categories are based on the judgment of experienced mortgage lenders and investment bankers. As we develop a history we will publish our track record in various future filings and on our website.

KDM ratings and ratings of NRSRO are generally effective for one year from the closing date of the loan. There is no obligation by us or any NRSRO to extend that period. However, it may be extended on request from an investor. Should an extension be required we and an NRSRO may charge a fee to update the rating.

Our transactions are generally single borrower or single asset transactions. The first has a CM Loan secured by one or multiple properties and the second are by grouping of CM Loans to one borrower. In these group CM Loans, they are often cross-collateralized and have cross-default terms. Credit risk for these transactions is identified at several levels – the sponsor, property type, property age, property count, geographic location, CM Loan to value, debt service coverage ratio. To account for these risks as we analyze and rate potential CM Loans, we look separately at each of these factors and weight each with a score for each factor. Our scoring matrix is below:

Score Categories	Possible Maximum
CM Loan to Value	7
Credit Score of Principal	5
Debt Service Coverage	4
Property Type	4
Property Age	5
Property Demand	5
Building Condition	3
Total	33

CM Loan to Value – KDM CM Loan to Value, LTV, is based off of the appraised value of the property. In a foreclosure scenario, we believe basing our CM Loan.  Any LTV of 54.99% or less will receive a maximum rating score of 7 and any CM Loan with an LTV of no greater than 80% will receive a 1.

Credit Score of Principal – Our borrowers are single-purpose entities and not individuals. Nevertheless, wherever possible, we analyze the credit score from the controlling owner of the single purpose entity. If it is another entity we will look back to the owner of that entity until we identify an individual. In some cases, the individual may be the attorney in fact for the beneficial owner. We seek to measure the credit of the individual most responsible for the performance of the loan, and refer to this individual as the “Principal” for the loan. The Principal may not be liable as a borrower or guarantor of the CM Loan. See “Risk Factors-The credit rating that we use in our rating system for our mortgages may not be the credit rating of the borrower, any guarantor, or anyone having personal liability for payment of the mortgage loan.” Credit Score category values range from 1-5 with the anything above 740 receiving a 5 and less than 660 receiving a 1.

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Debt Service Coverage Ratio – For us, DSCR is monthly net operating income (“NOI”) divided by the monthly loan payment amount. NOI is the estimated net cash flow of the property after all management expenses, replacement reserve, vacancy estimate, taxes, and insurance. The DSCR rating score is broken down as follows:

DSCR > 1.35 = A maximum score of 4

DSCR > 1.30 = 3

DSCR > 1.25 = 2

DSCR > 1.20 = A minimum score of 1

Property Type – Using historical commercial Loan performance data we have developed a rating system based on property type.  KDM believes historical commercial Loan performance is one of the strongest indicators currently available to us as a measure of risk.  The scoring system is as follows:

Multifamily          4

Mixed-use          3

Self-Storage /Warehouse          2

Retail          1

Property Improvement/Age – KDM believes there will generally be stronger demand for a newer property than for an older property. Similarly, recently improved and updated properties receive preferential scoring.  Major interior improvements include interior upgrades like new flooring, kitchens, appliances, or bathrooms. Major structural and exterior improvements include new roofing or major upgrades to common areas. The scoring system is as follows for age of building or latest major improvements:

Age  < 9            = 5Age > 10 = 4Age > 20 = 3Age > 30 = 2Age > 40 = 1

Property Demand – KDM’s property demand scoring is based off of the growth of the metropolitan statistical area (“MSA”) over the last two censuses for the MSA in which the subject property is located.  Historical data has shown a strong correlation between population growth and local economic strength.  KDM will still make the necessary adjustments to large metropolitan statistical areas that may not look as strong as a small community with a sudden population growth.  The scoring system is as follows:

Growth > 5% = 5Growth > 4% = 4Growth > 3% = 3Growth > 2% = 2Growth > 1% = 1

Building Condition – For all property types, KDM believes property condition is a strong indicator of the property’s potential.  A property in excellent condition is going to have the opportunity to attract more customers and potential to produce more income than a merely serviceable property.  The scoring system is as follows:

Excellent          3Average          2Serviceable     1

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Once the scoring system is completed for each CM Loan and its corresponding Note, we then apply a standard statistical rating letter formula. This formula is as follows:

Rating	Composite Score
AAA	33
AA	31
A	27
BBB	22
BB	18
B	13

Obligations rated:

AAA are judged to be highest quality, subject to the lowest level of credit risk.

AA are judged to be of high quality and are subject to very low credit risk.

A are judged to be upper-medium grade and are subject to low credit risk.

BBB are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

BB are judged to be speculative and are subject to substantial credit risk.

B are considered speculative and are subject to high credit risk.

A plus or minus sign may be added when a loan score falls between two letter categories and depending on which letter category is nearest to the score. If the score is the mid-point between two letter categories then the CM loan will go to the highest letter score and receive a minus sign.

Conflicts of Interest Regarding our Ratings

We have a conflict of interest regarding our ratings. Currently, the same people doing our ratings may also benefit from the sales of Notes and making new CM Loans. Further, we are 100% owned by J. W. Korth & Company which may be distributing our Notes and making a market in our Notes. Ratings will be reviewed periodically and changed as necessary for each CM Loan and the corresponding Notes. The secondary market prices for our Notes may move up or down if the rating is changed. Therefore, to limit the effect of the conflict of interest between traders making markets and changes in ratings, it shall be a strict policy of the company that the people reviewing ratings may not communicate or socialize with the traders making markets in our Notes and that all changes in ratings will be published as promptly as possible. Another mitigating factor regarding these conflicts of interest is that our ratings are most generally based on verifiable numbers and metrics.

We may change any of our procedures regarding managing our conflicts of interest at any time. We also may amend our rating procedure at any time.

RATINGS FOR CM LOAN COVERED BY THIS PROSPECTUS

For KDM 2018-L001, we have scored the CM Loan as follows:

Category	Score
CM Loan to Value	5
Credit Score of Borrower	4
Debt Service Coverage	4
Property Type	4
Property Improvement/Age	4
Property Demand	5
Building Condition	3
Total	27

Consequently, pursuant to our formula, we have assigned a KDM Rating of “A” to CM Loan KDM2018-L001.

Egan-Jones Ratings Company, an NRSRO, was also engaged by KDM to rate this CM Loan and has assigned a rating of        .

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REGISTRATION AND SETTLEMENT

The Depository Trust Company

Unless we specify otherwise, all the Notes we offer will be issued in book-entry form only. This means that we will not issue certificates for Notes. Instead, we will issue a single Master Note in registered form. The Master Note will be held through DTC. Accordingly, Cede & Co., as nominee of DTC, will be the holder of record of the Notes. Each Note represents a beneficial interest in the Master Note. For purposes of this section, “Note” refers to a tranche of Notes.

Beneficial interests in a Note will be shown on, and transfers are effected through, records maintained by DTC or its Participants. In order to own a beneficial interest in a Note, you must be an institution that has an account with DTC or have a direct or indirect account with such an institution. Transfers of beneficial interests in the Notes will be accomplished by making entries in DTC Participants’ books acting on behalf of beneficial owners.

So long as DTC or its nominee is the registered owner of the Master Note, DTC or its nominee will be the sole holder of the Notes represented thereby for all purposes, including payment of principal and interest, under the Indenture. Except as otherwise provided below, you will not be entitled to receive physical delivery of certificated notes (“Certificated Notes”) and will not be considered a holder for any purpose under the Indenture. Accordingly, you must rely on the procedures of DTC and the procedures of the DTC Participant through which you own your Note in order to exercise any rights of a holder of a Note under the Indenture. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in certificated form. Those limits and laws may impair the ability to transfer beneficial interests in the Notes.

The Master Note representing Notes will be exchangeable for Certificated Notes in fully-registered form of like tenor and terms and of differing authorized denominations in a like aggregate principal amount only if (1) DTC notifies us that it is unwilling or unable to continue as depository; (2) DTC ceases to be a clearing agency registered under applicable law and a successor depository is not appointed by us within 90 days; or (3) we instruct the Trustee that the Master Note is exchangeable for Certificated Notes. Upon any such exchange, the Certificated Notes shall be registered in the names of the owners of beneficial interests in the Master Note representing the Notes and the appropriate reduction shall be reflected in the records evidencing the tranche of Notes held in book-entry form.

Registration and Transfer of Certificated Notes

If we ever issue Notes in certificated form, those Notes may be presented for registration of transfer or exchange and for payment at the office or agency of the Company, or a transfer agent that may elect.

We will not be required to (1) issue, register the transfer of or exchange any Note to be redeemed for a period of 15 days preceding the day of mailing of the relevant notice of redemption; or (2) register the transfer of or exchange any Note that was selected for redemption, except the unredeemed portion of any Note being redeemed in part.

Delaware Trust is the FAST Transfer Agent chosen by KDM for the Notes.

ABOUT KDM

Management’s Discussion and Analysis of Operations

Overview

Korth Direct Mortgage, LLC, was organized in Florida on July 24, 2009, under the name HCMK Consulting, LLC.  We changed our name to J. W. Korth & Company, LLC, in November 2010, and then to Korth Direct Mortgage, LLC, on August 24, 2016. Our principal executive offices are located at 2937 SW 27^th Avenue Suite 307, Miami, Florida 33133, and our telephone number is (305) 668-8485. Our website address is www.kdminvestor.com.

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Korth Direct Mortgage, LLC, began its formal operations in October of 2016 when we engaged our Chief Lending Officer. KDM is a licensed Mortgage Lender Servicer with the State of Florida. Our NMLS License Number is 1579547. Our operating history is limited. We are primarily supported by our parent company, J. W. Korth & Company Limited Partnership, a FINRA and SEC registered broker-dealer founded in 1982. We believe we will continue to be supported by our parent company through 2018.  Over this period, we believe that we will achieve adequate revenue and cash-flow through making and servicing CM Loans to make us self-sufficient. We do not anticipate the need to raise any funds to finance our operating expenses during this period. During this period, any staffing requirements will be supplied by our parent company. These services and office space are provided free of charge in anticipation of the future success of KDM by the owners of the parent. During this period, we anticipate no research and development expenses and no expenses for plant and equipment, and that office space will be provided by J. W. Korth & Company. We intend to rent space and hire employees or assign employees, from J. W. Korth & Company to KDM as business development requires. As we hire or are assigned employees the expenses of those employees will accrue to us.

The total support we have received from J. W. Korth & Company through December 31, 2017 is $334,324. The Support  Agreement provides support that is at the discretion of J. W. Korth & Company, and could be ended at any time for any reason. However, J. W. Korth & Company expects to continue to provide approximately another $200,000 to support KDM after which it is expected to be self-supporting.

Results of Operations for Year Ended December 31, 2017

Although revenue for 2017 was minimal at $46,032, we are optimistic about future revenues. Servicing was 9.5% of revenue while origination fees accounted for 87% of revenue. Underwriting expense consumes approximately half (49.7%) of origination revenue; both of these are variable revenue and expense proportional to loan size and we expect their relationship to remain approximately the same. On the other hand, ratings and licensing fees, which account for 38% of expenses, are fixed costs whose proportion of overall expenses becomes de minimus as loan amounts increase.

We expect to become cash flow positive by year end if we meet projections of closing $75 million in loans. We do not expect to increase staff by a material amount until we have sufficient pipeline and servicing to warrant additional outlay. Our liquidity needs in the meantime will be met by our parent company, J. W. Korth & Company, which has sufficient capital to support our operations.

We have received strong demand for the Notes. The biggest risk to our business model is the rate at which we are able to close loans. We are in the process of obtaining a warehouse line of credit to help cover the gap between closings and when the SEC grants an effective date to the deals to become effective. Accelerating that timeline will be key to profitability.

Financial Condition for Year Ended December 31, 2017

At year end 2017, we had two loans on the balance sheet for a total of $1,999,132 at fair value. The original loan amounts totaled $2,009,000; however, one loan is amortizing, which we carry at its remaining principal balance. We have offsetting liabilities of MSNs payable that pair off the asset of mortgages owned.

Annually, near the anniversary of each loan, we will obtain an updated appraised value for the property. Since no loan has yet met its anniversary, we do not have updated appraisals for either of these loans.

Each borrower is required to provide us with year end financial statements for the property. We provide the loan level information below.

KDM 2017-001

Property Address: 4771 78^th Avenue and 14120 Palm St Principal Balance:  $1,049,132 Current Appraised Value:  $1,920,000 (as of March, 2018) LTV: 54.64% Loan Status: Current   Current Interest Rate:  5.25% Maturity: 5/1/2027 Interest Covenant: 3 years  

This loan is performing. All payments have been made timely since inception.

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Profit and Loss Statement – Full Year 2017 (Provided by Borrower)

January 2017 – December 2017
PROFIT & LOSS STATEMENT
INCOME (Both Properties)
RENTAL PROPERTIES	$	235,680
14120 Palm Street. Madeira Beach, FL 33708
4771 78th Avenue N. Pinellas Park, FL 33781
EXPENSES (Both Properties)
TAXES		21,945
INSURANCE		15,176
MAINTENANCE		7,200
INTEREST EXPENSE		53,280
TOTAL EXPENSES		97,601
NET INCOME	$	138,079

KDM 2017-002

Property Address: 8400 Grand Canal Drive,                                  445/447 SW 78^th Pl, 7992 SW 4^th St Principal Balance:  $950,000 Current Appraised Value:  $1,605,000 (as of November, 2017) LTV: 59.19% Loan Status: Current Current Interest Rate: 6.50% Maturity: 12/12/2020 Interest Covenant: 2 years    

This loan is performing; timely payments have been received since it closed. Below is the actual profit and loss statement received from the borrower. Rental revenue in the profit and loss statement below is less than in KDM’s debt service analysis because the properties were under renovation for part of the year leading up to KDM’s funding of the loan. Also, one-time expenses from obtaining the loan and associated fees incurred are included for the full year 2017.

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Profit and Loss Statement – Full Year 2017 (Provided by Borrower)

	12 Months Ended
	Dec.31 2017
Revenue
Rental Income - Duplex 445	$	20,900.00
Rental Income - Duplex 447		33,000.00
Rental Income - 7992 SW 4ST		27,500.00
Rental Income - 8400 Grand		30,000.00
Returns and Allowances		(5,600.00	)
Total Revenue		105,800.00
Cost of Sales		-
Total Cost of Sales		-
Gross Profit		105,800.00
Operating Expenses
Alarm		731.91
Appraisal Fees		475.00
Auto and Truck Expense		1,001.10
Bank Charges		170.00
Closing Cost		1,433.00
Cleaning Services		750.00
Cleaning Supplies		137.89
Course Fee		72.00
Depreciation		35,959.00
Amortization Expense		1,056.00
Entertainment		3,368.97
Escrow Mtg - 8400 Grand Canal		7,348.50
Freight & Courier		53.75
Houses Insurance		13,814.00
Insurance - Hazard		13,947.00
Insurance - Comm/Liability		3,167.00
Insurance - Flood		907.82
Interest - Korth Direct Mtgt		1,792.45
Interest - Fuse Funding LLC		16,764.33
Interest - Intercorp MS		41,101.69
Landscaping		420.00
Legal		7,600.00
Licenses and Fees		820.50
Loan Fees		5,050.00
Maintenance - Pool		1,177.00
Marketing		1,265.22
Office Expense		668.20
Parking Expense		9.00
Property Taxes - 8400 Grand		1,892.04
Property Taxes - 445/447		7,429.69
Property Taxes - 7992 SW 4ST		6,327.43
Repairs and Maintenance		16,227.07
Secretarial Help		3,000.00
Settlement Charges		45,351.50
State Taxes		3,325.00
Telephone		146.35
Title Insurance		2,880.00
Utilities		2,832.43
Total Operating Expenses		250,472.84
Operating Income		(144,672.84	)
Total Other Income		-
Net Income (Loss)		(144,672.84	)

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Significant Pending Transactions

After completing our first two loans in December 2017, we have an additional approximately $9M deals in our pipeline across 3 additional properties – one multifamily, one warehouse/showroom space, and one warehouse distribution center. We expect these loans to close in 2018-Q2 and be distributed once effective.

Sales, Marketing and Customer Service

Our marketing efforts are designed to attract borrowers to contact us and to enroll them as clients, and to close transactions with them. We employ primarily email correspondence to mortgage brokers, banks, real estate agents, and commercial property owners to encourage them to present CM Loans to us for possible funding through the issuance of corresponding Notes. We subscribe to lead generation databases and loan and property platforms to find loans. We are also contacting other financial institutions directly and through brokers who may own commercial mortgages, and will attempt to purchase mortgages for KDM.

Fraud detection

We consider fraud detection to be of utmost importance to the successful operation of our business. We employ a combination of proprietary technologies and commercially available licensed technologies and solutions to prevent and detect fraud. We use services from third-party vendors for user identification, credit checks and OFAC compliance.

Competition

The market for mortgage lending is competitive and rapidly evolving. We believe the following are the principal competitive factors in the lending market:

· pricing and fees;

· experience, including borrower full funding rates and investor returns;

· branding; and

· ease of use.

We face competition from major banking institutions, credit unions, credit card issuers and other consumer finance companies as well as smaller private lenders.

We may also face future competition from new companies entering our market. These companies may have significantly greater financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their consumer lending programs. These potential competitors may be in a stronger position to respond quickly to new technologies and may be able to undertake more extensive marketing campaigns. These potential competitors may have more extensive potential borrower bases than we do. In addition, these potential competitors may have longer operating histories and greater name recognition than we do. Moreover, if one or more of our competitors were to merge or partner with another of our competitors or a new market entrant, the change in competitive landscape could adversely affect our ability to compete effectively.

Our success depends on developing the network of referral sources, described above, who will refer transactions to us and working with a Underwriter that simultaneously builds a ready market for our Notes to finance our lending. We believe both the mortgage broker network and the distribution network for Notes is accessible through email and direct contacts and advertising in key spots. We have ascertained that there is a large niche for small, competitive single asset mortgage securities in the $2-$20 million range.

It is highly likely that another brokerage firm or mortgage company may use our program as a model and attempt to execute it in a similar fashion. The market for commercial CM Loans is more than $5 trillion and the market for retail securities is estimated by us to be about 3 times that. This makes room for competitors. We, as a first mover, can be expected to benefit as others enter the marketplace and market saturation can be expected to be several years in the future.

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Intellectual Property

We have intellectual property that is our process, our ratings system, and our internal systems. While we do not have extensive intellectual property, we believe our strengths lie in our knowledge of how to access the network of CM Loan brokers, our human capital, and the distribution network.

Employees

As of the date of this prospectus we employed two full-time employees and five J. W. Korth & Company employees are devoting partial time to developing the business. Our full-time employees include our Chief Lending Officer and an account executive responsible for developing the mortgage broker and the network for origination of CM Loans.

Facilities

As of the date of this prospectus, we maintained offices within the office of J. W. Korth & Company at 2937 SW 27^th Avenue, Suite 307, Miami, Florida 33133. This office is provided free of charge until we become profitable under a Support Agreement between J. W. Korth & Company and us.

Subsidiaries

As of the date of this prospectus we had no subsidiaries.

Legal Proceedings

We are not currently subject to any material legal proceedings. We are not aware of any litigation matters which have had, or are expected to have, a material adverse effect on us or our parent, J. W. Korth & Company.

Prior Operation of the KDM Program

KDM began operations in late 2016 and did its first CM Loan in April 2017, KDM2017-L001. As of the date of this filing, we have made four CM Loans, one pursuant to an effective registration statement, and three more, two of which are currently in the registration process, that were funded by affiliates or non-affiliated accredited investors.

Our current monthly expenses are approximately $16,000 and are primarily supported by J. W. Korth & Company, our parent.

Government Regulation

Regarding CM Loans. We intend to focus our efforts in the commercial mortgage industry. Mortgages for commercial properties are lightly regulated and we believe there are generally minimal restrictions to our creating CM Loans for borrowers of a commercial variety. An area of regulatory concern is anti-money laundering and anti-terrorism federal statutes and we will use all means required to comply.

SEC Rule AB and Risk Retention Rules

We believe we are not an Asset Backed Issuer as defined in SEC Rule AB (17 CFR 229.1101 (c) (2)(ii) and therefore our securities are not subject to the “asset-backed security” regulations as defined in that rule. Further, we do not believe that we are subject to Risk Retention under RR (17 CFR 246), as our entity type is not in scope of the rule according to 12 CFR 244.1(c). However, should we be subject to any or all of these rules, we would be at risk as having to raise significant capital in order to continue doing business and our business accordingly may otherwise be adversely affected.

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Investment Company Act

In general, a company that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities may be deemed to be an investment company under the Investment Company Act of 1940, as amended (Investment Company Act). The Investment Company Act contains substantive legal requirements that regulate the manner in which “investment companies” are permitted to conduct their business activities. We believe we are excluded from registration by Section 3(c)(5)(c) of the Investment Company Act and  have conducted, and we intend to continue to conduct, our business in a manner that does not result in our company being characterized as an investment company. This section of the Investment Company Act excludes businesses that make mortgages. To avoid being deemed an investment company, we may not be able to broaden our offerings, which could require us to forego attractive opportunities. If we are ever deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which would materially adversely affect our business, financial condition and results of operations.

Bank Secrecy Act

In cooperation with our mortgage broker CM Loan originators, we implement the various anti-money laundering and screening requirements of applicable federal law. With respect to new borrowers, we apply the customer verification rules and screen names against the list of Specially Designated Nationals maintained by OFAC pursuant to the USA PATRIOT Act amendments to the Bank Secrecy Act (“BSA”) and its implementing regulation. We also have an anti-money laundering policy and procedures in place to voluntarily comply with the anti-money laundering requirements of the USA PATRIOT Act and the BSA.

New Laws and Regulations

From time to time, various types of federal and state legislation are proposed and new regulations are introduced that could result in additional regulation of, and restrictions on, the business of commercial mortgage lending. We cannot predict whether any such legislation or regulations will be adopted or how this would affect our business or our important relationships with third parties. In addition, the interpretation of existing legislation may change or may prove different than anticipated when applied to our business model. Compliance with such requirements could involve additional costs, which could have a material adverse effect on our business.

In addition, see “Risk Factors” regarding the risks of government financial regulatory reform plans.

Foreign Laws and Regulations

We do not permit non-U.S. residents to register as borrowers and we do not operate outside the United States. Our business, therefore, is not subject to foreign laws or regulations.

Management

Executive Officers and Key Employees

The following table sets forth information regarding our executive officers and key employees as of the date of this prospectus:

Name	Age	Position(s)
James Korth*	67	Chief Executive Officer
Holly MacDonald-Korth*	42	Chief Financial Officer
Daniel Llorente	39	Chief Lending Officer

*Employed by J. W. Korth & Company

James W. Korth has been the Chief Executive Officer of KDM since its organization. He is the Managing Partner of J W Korth & Company, LP, which he started in 1982.  Mr. Korth has spent his business career as an investment banker in all manner of debt securities, including brokered CDs, and Certificates of Accrual on Treasury Securities (“CATS”), and has advised the US Treasury Department in the creation of the STRIPS program, and corporate General Term Notes, a Medium Term Note program emulated across the industry. Mr. Korth also manages several securities portfolios for clients of J W Korth & Company and holds his Series 4, 7, 24, 53, 66, and 79 licenses. He received his Master of Science from Michigan State University.

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Holly MacDonald-Korth is the Chief Financial Officer of KDM since 2016. Since 2006, she has been the Managing Director and Chief Financial Officer of J W Korth & Company, where she oversees all operations, finance, and business development for the firm. Prior to joining J W Korth, Ms. MacDonald-Korth was Senior Vice President at Overstock.com and a financial systems analyst at the Board of Governors of the Federal Reserve. Ms. MacDonald-Korth is the daughter of James W. Korth. She received a Bachelor of Business Administration with Honors in Finance from University of Miami. She holds her Series 7, 24, 27, and 66 licenses.

Daniel Llorente is the Chief Lending Officer of KDM since 2016.  Mr. Llorente has over fourteen years of commercial and residential real estate financing experience at a variety of mortgage banks. Prior to joining KDM, Mr. Llorente was a Mortgage Loan Originator at Lakeview Loan Servicing. In 2013 and 2014 he served as an Associate Portfolio Manager at Bayview Loan Servicing. From 2012 -2013 he served as Assistant Vice President and Portfolio Manager at Intercredit Bank. From 2009 to 2012 he was Senior Loan Analyst at LNR Property LLC. Prior to that time he held positions at Regions Bank, Silver Hill Financial, and Lincoln Road Funding. All positions were in Miami, Florida and related to real estate financing. He is an ABA Certified Credit Analyst.  Mr. Llorente graduated from Florida State University with a degree in finance and received an MBA from Nova Southeastern University.

Executive Compensation

For the years ended December 31, 2016 and 2017, our Chief Lending Officer, Daniel Llorente, was  the only employee to receive compensation from us, received compensation of $120,000 from money transferred from J. W. Korth & Company pursuant to the Support Agreement.

TRANSACTIONS WITH RELATED PERSONS

Since our inception, J. W. Korth & Company has paid all of  KDM’s expenses pursuant to the Support Agreement executed between KDM and J. W. Korth & Company. KDM is a wholly-owned subsidiary of J. W Korth & Company. Under the Support Agreement, J. W. Korth & Company has the option of not continuing to support KDM at any time. J.W. Korth is providing the services of Holly MacDonald-Korth as Chief Financial Officer and James W. Korth as Chief Executive officer free of charge to KDM, in anticipation of future value of KDM for the owners of J. W. Korth.

Indemnification Agreements

Our Operating Agreement provides that we will indemnify our Members and officers to the fullest extent permitted by Florida law.

PRINCIPAL SECURITYHOLDERS

J. W. Korth & Company owns 100% of the outstanding equity of KDM. James Korth is the Managing Partner of J. W. Korth & Company, Limited Partnership and through his limited liability company, J W Korth LLC, he owns the majority of the common capital interests of J. W. Korth & Company and controls J. W. Korth & Company; he is therefore also the controlling person for KDM. Holly MacDonald-Korth, the daughter of James Korth, owns more than 10% of J. W. Korth & Company.

LEGAL MATTERS

Legal matters relating to the validity of the Notes will be passed upon by Jonathan Shepard Law PLLC.

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KORTH DIRECT MORTGAGE LLC

REPORT ON FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2017

AND FOR THE PERIOD FROM

OCTOBER 1, 2016 (COMMENCEMENT OF OPERATIONS)

THROUGH DECEMBER 31, 2016

9605 S. Kingston Ct. Suite 200 Englewood, CO 80112 303-721-6131 www.richeymay.com Assurance | Tax | Advisory  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Member of Korth Direct Mortgage LLC

Opinion on the Financial Statements

We have audited the accompanying financial statements of Korth Direct Mortgage LLC, (the “Company”), which comprise the statements of financial condition as of December 31, 2017 and 2016, and the related statements of operations, changes in members’ equity, and cash flows for the year ended December 31, 2017 and for the period from October 1, 2016 (commencement of operations) through December 31, 2016, and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of Korth Direct Mortgage LLC as of December 31, 2017 and 2016, and the results of its operations, changes in its members’ equity and its cash flows for the year ended December 31, 2017 and for the period from October 1, 2016 (commencement of operations) through December 31, 2016 in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the Company’s financial statements based on our audit.  We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conduct our audit in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audit provides a reasonable basis for our opinion.

/s/ Richey May & Co., LLP

We have served as the Company’s auditor since 2016.

Englewood, Colorado

March 9, 2018

F-1

KORTH DIRECT MORTGAGE LLC

TABLE OF CONTENTS

FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2017

AND FOR THE PERIOD FROM

OCTOBER 1, 2016 (COMMENCEMENT OF OPERATIONS)

THROUGH DECEMBER 31, 2016

	PAGE(S)
REPORT OF INDEPENDENT AUDITORS	F-1
FINANCIAL STATEMENTS
Statements of Financial Condition	F-3
Statements of Operations	F-4
Statements of Changes in Members’ Equity (Deficit)	F-5
Statements of Cash Flows	F-6
Notes to Financial Statements	F-7 – F-10

F-2

KORTH DIRECT MORTGAGE LLC

 STATEMENTS OF FINANCIAL CONDITION

	December 31, 2017			December 31, 2016
ASSETS
Cash and Cash Equivalents	$	19,844		$	7,290
Restricted Cash		55,487			-
Mortgages Owned, at Fair Value		1,999,132			-
Prepaid Expenses		11,332			-
TOTAL ASSETS	$	2,085,795		$	7,290
LIABILITIES AND MEMBERS’ DEFICIT
LIABILITIES
Due to Parent	$	334,324		$	73,061
Taxes Payable		-			8,213
Escrow Payable		46,579			-
Due to Investors		8,908			-
Accrued Expenses		15,000			-
Mortgage Secured Notes Payable, at Fair Value		1,999,132			-
Total Liabilities		2,403,943			81,274
MEMBERS’ DEFICIT
Accumulated Deficit		(321,670	)		(77,506	)
Capital		3,522			3,522
Total Members’ Deficit		(318,148	)		(73,984	)
TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$	2,085,795		$	7,290

See accompanying notes to the financial statements.

F-3

KORTH DIRECT MORTGAGE LLC

 STATEMENTS OF OPERATIONS

	Year Ended December 31, 2017			For the period from October 1, 2016 (commencement of operations) through December 31, 2016
REVENUES
Origination Revenue	$	40,180		$	-
Servicing Revenue		4,352			-
Processing Revenue		1,500			-
Total Revenues		46,032			-
COST OF REVENUES
Bank Fees		275			15
Appraisal Costs		950			-
Marketing		6,720			1,557
License and Registration		11,398			717
Underwriter Expense		19,990
Ratings		10,000			-
Technology Fees		6,967			-
Total Cost of Revenues		56,300			2,289
GROSS PROFIT (LOSS)		(10,268	)		(2,289	)
OPERATING EXPENSES
Office Supplies		1,551			713
Salaries		129,061			21,092
Payroll Taxes		9,411			8,213
Professional & Legal		91,480			45,199
SEC Filings Expense		258			-
Travel & Entertainment		2,135			-
Total Expenses		233,896			75,217
Net Loss From Operations		(244,164	)		(77,506	)
NET LOSS	$	(244,164	)	$	(77,506	)

See accompanying notes to the financial statements.

F-4

KORTH DIRECT MORTGAGE LLC

 STATEMENTS OF CHANGES IN MEMBERS’ EQUITY (DEFICIT)

	For the ended December 31, 2017			For the period from October 1, 2016 (commencement of operations) through December 31, 2016
Members’ Equity – October 1, 2016	$	(73,984	)	$	-
Member Contributions		-			3,522
Net Loss		(244,164	)		(77,506	)
MEMBERS’ DEFICIT – December 31, 2017	$	(318,148	)	$	(73,984	)

See accompanying notes to the financial statements.

F-5

KORTH DIRECT MORTGAGE LLC

STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2017			For the period from October 1, 2016 (commencement of operations) through December 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(244,164	)	$	(77,506	)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operating Activities:
Changes in Operating Assets and Liabilities:
Restricted Cash		(55,487	)		-
New Mortgage Lending		(1,999,132	)		-
Prepaid Expenses		(11,332	)		-
Due to Parent		261,263			73,061
Taxes Payable		(8,213	)		8,213
Escrow Payable		46,579			-
Due to Investors		8,908			-
Accrued Expenses		15,000			-
Mortgage Secured Notes Issued		1,999,132			-
Total Adjustments		256,718			81,274
NET CASH PROVIDED BY OPERATING ACTIVITIES		12,554			3,768
NET CASH USED IN INVESTING ACTIVITIES					-
CASH FLOW FROM FINANCING ACTIVITIES
Member Contributions		-			3,522
NET CASH PROVIDED BY FINANCING ACTIVITIES		-			3,522
NET DECREASE IN CASH AND CASH EQUIVALENTS		12,554			7,290
CASH AND CASH EQUIVALENTS – Beginning of Period		7,290			-
CASH AND CASH EQUIVALENTS – End of Period	$	19,844		$	7,290

See accompanying notes to the financial statements

F-6

KORTH DIRECT MORTGAGE LLCNOTES TO FINANCIAL STATEMENTS

NOTE 1 -   NATURE OF BUSINESS

     Korth Direct Mortgage, LLC (“the Company”) is a limited liability company formed in the State of Florida. The Company is a wholly owned subsidiary of J. W. Korth & Company, L.P. an SEC and FINRA registered broker dealer. The Company was created to sell Notes payable by and secured by mortgage CM Loans. The Company may not incur any debt other than support provided by its owner J. W. Korth & Company.

The Company and J. W. Korth & Company executed a support agreement that provides financial, managerial, and office support to the Company until it is fully operational and a going concern. Pursuant to this agreement, for any moneys owed by the Company to J. W Korth, J. W. Korth may not seek reimbursement from the Company until the Company shall maintain a liquid net worth of at least $1,000,000 for a minimum period of 90 days.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying financial statements are solely for the Company. The financial statements of the parent company, J. W. Korth & Company, have these accounts consolidated within them.

BASIS OF ACCOUNTING

The accompanying financial statements have been prepared on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America.

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.

MORTGAGE VALUATION

Mortgages that are current are carried at the principal value owed by borrower, as of the date of the financial statements, according to the amortization schedule for the loan. All mortgages owned as of the date of these financial statements are current.

MORTGAGE SECURED NOTES

The Company funds the mortgage loans that it makes by issuing Mortgage Secured notes “MSNs”, which are secured by those same mortgages. As of the date of these financial statements, the Company has funded CM Loans totaling $2,009,000, and it issued MSNs secured by those loans, also in the amount of $2,009,000. The first MSN that was issued was via a private placement to Company affiliates. That note was redeemed on December 29, 2017 when a new publicly traded note was issued pursuant to a registration statement with the SEC.

REVENUE RECOGNITION

The Company has three primary sources of revenue: origination fees, servicing fees, and processing fees.

Origination Fees

                              Loan origination fees represent revenue earned from originating mortgage loans. Loan origination fees generally represent flat, per-loan fee amounts and, are recognized as revenue at the time the loans are funded.

F-7

KORTH DIRECT MORTGAGE LLCNOTES TO FINANCIAL STATEMENTS

Servicing Fees

Loan servicing fees represent revenue earned for servicing loans for various investors. Loan servicing fees are based on a contractual percentage of the outstanding unpaid principal balance and are recognized into revenue as therelated mortgage payments are received. 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.

ESTIMATES

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

DUE TO PARENT AND PAYABLES

Items due to parent are operating expenses due to the parent company, J. W. Korth & Company, L.P. pursuant to the support agreement. The date such payments are due has not yet been determined since revenue generating operations are minimal at the current time. A repayment plan for operating expenses will be created once KDM is an independently going concern.

INCOME TAXES

The Company is a limited liability company which is treated as a partnership for federal and state income tax. Accordingly, no provision for federal income taxes is required since the members report their proportionate share of company taxable income or loss on their respective income tax returns. Such income or losses are proportionately allocated to the members based upon their ownership interests.

In accordance with FASB ASC 740, management has evaluated uncertain tax positions taken or expected to be taken in the Company’s tax returns. In order for a benefit to be recognized, a tax position must be more-likely-than-not to be sustained when challenged or examined by the applicable taxing authority. For the period ended December 31, 2017, the Company has no material uncertain tax positions to be accounted for in the financial statements.

NOTE 3 - RESTRICTED CASH

The Company maintains two 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 to annually on behalf of borrowers to the appropriate tax authority and insurance companies. This account corresponds to the Escrow Payable liability. As of December 31, 2017, this account had a balance of $46,579.

F-8

KORTH DIRECT MORTGAGE LLC NOTES TO FINANCIAL STATEMENTS

The “In Trust for 2” account receives payments from borrowers and distributes payments to investors, and pays the servicing fee to KDM. This account corresponds to the Due to Investors liability. As of December 31, 2017, this account had a balance of $8,908.

NOTE 4 - COMMITMENTS

The Company relies entirely on its parent, J. W. Korth & Company, L.P. to provide office space, internet connectivity, phone service, and incidentals for the foreseeable future.

NOTE 5 - 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.

NOTE 6 - CUSTOMERS

As of December 31, 2017, the Company has two customers. These two customers provided 100% of the Company’s revenue during the year and period ended December 31, 2017 and 2016; however, this is due to the business being in its infancy. The Company does not expect to rely on these two customers for all of its revenue going forward. Currently, our customers are geographically concentrated in the state of Florida.

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company is currently supported by its parent company, J. W. Korth & Company, L.P. This support is expected to be repaid once the Company is cash flow positive. The Company records this value as a liability on its balance sheet. The Company owed J. W. Korth & Company $314,334 and $73,061 as of December 31, 2017 and 2016, respectively. Pursuant to the Support Agreement between the Company and J. W. Korth & Company, J. W. Korth & Company may not seek reimbursement from the Company until the Company shall maintain a liquid net worth of at least $1,000,000 for a minimum of 90 days.

The Company paid underwriting fees of $19,990 to J. W. Korth & Company.

NOTE 8 – FAIR VALUE

GAAP 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—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

F-9

Valuation Process

Cash and cash equivalents: 

The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2.

Mortgages Owned and Mortgage Secured Notes Payable:

Both of the loans on the balance as of December 31, 2017, were either sold or securitized in December 2017. Due to the recency of issue and the securitization and sale of these loans, both priced at par, the Company has determined that the fair values were determined by the market at the time of sale and should be classified as Level II of the fair value hierarchy. The carrying amounts for these items approximate the fair value. For amortizing loans, the Company discounts those to remaining principal value.

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.

Fair Value on a Recurring Basis

The Company determines the fair value of our financial assets and liabilities measured at fair value on an annual basis.

Fair Value Disclosure

On December 31, 2016 the Company had no financial assets. Accordingly, the Company only displays our disclosure as of December 31, 2017.

	December 31, 2017
	Total		Level I		Level II		Level III
Financial Assets
Mortgages Owned	$	1,999,132	$	-	$	1,999,132	$	-
Financial Liabilities								-
Mortgage Secured Notes Payable	$	1,999,132	$	-	$	1,999,132	$	-

NOTE 9 – SUBSEQUENT EVENTS

The Company has evaluated all events or transactions that occurred after December 31, 2017 through the date of these financial statements, which is the date that the financial statements were available to be issued. During this period, there were no material subsequent events requiring disclosure.

F-10

PROSPECTUS OUTSIDE BACK COVER

$1,850,000

KORTH DIRECT MORTGAGE, LLC

5.25%

KDM 2018-N001

Mortgage Secured Notes^SM

Dependent Upon and Secured by

KDM 2018-L001

Dealer Prospectus Delivery Obligation

Until July 20, 2018, 90 DAYS AFTER EFFECTIVE DATE all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

44

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Other Expenses of Issuance and Distribution

The following table indicates the expenses to be incurred in connection with the offering described in this Registration Statement, all of which will be paid by J. W. Korth & Company under the Support Agreement. All amounts are estimated except the Securities and Exchange Commission registration fee.

	Amount
Securities and Exchange Commission registration fee	$	125
Accountants’ fees and expenses	$	1,000
Legal fees and expenses	$	2,500
Ratings  expenses	$	10,000
Miscellaneous	$	5,000
Total Expenses	$	18,625

Indemnification of Members and Officers

Our Operating Agreement provides that the liability of the Members and officers of KDM for monetary damages shall be eliminated to the fullest extent under applicable law.

Recent Sales of Unregistered Securities

The Company sold $950,000 of notes to accredited investors on December 21, 2017, $340,000 notes to an affiliate on February 14, 2018, as well as $1,850,000 notes, to be redeemed with the proceeds of this offering, under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

Exhibits

The exhibits to the registration statement are listed in the Exhibit Index to this registration statement and are incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly caused Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Miami, Florida on March 27, 2018.

Signature	Title
/s/ James W. Korth	Chief Executive Officer	3/27/2018
	(Principal Executive Officer)
/s/ Holly MacDonald-Korth	Chief Financial Officer
Holly MacDonald-Korth	(Principal Financial & Accounting Officer)	3/27/2018

45

Exhibit Index

Exhibit Number	Description
1.1	Underwriting Agreement
3.	Articles of Organization
3.1	Members Operating Agreement of Korth Direct Mortgage, LLC, a Florida Limited Liability Company
3.2	Articles of Organization for HCMK Consulting LLC filed on July 24, 2009
3.3	Articles of Amendment to Articles of Organization Changing Name from HCMK Consulting LLC to J W Korth & Company LLC filed on November 18, 2010
3.4	Articles of Amendment to Articles of Organization Changing Name from J W Korth & Company LLC to Korth Direct Mortgage, LLC, filed August 24, 2016
4.1	Trust Indenture and Security Agreement between Korth Direct Mortgage, LLC, and Delaware Trust Company
5.	Opinion as to Legality*
10.0	Support Agreement
10.1	Mortgage Note*
10.2	Promissory Note*
23.	Consent of Experts and Counsel
23.1	Consent of Auditor*
23.2	Consent of Jonathan Shepard Law PLLC (included in Exhibit 5.)
23.3	Consent of Appraiser*
23.4	Consent of Nationally Recognized Statistical Ratings Organization*
23.5	Consent of Appraisal Reviewer*
25.	Statement of Eligibility of Trustee

* Filed herewith.

46

EX-5.1

Exhibit 5.1

JONATHAN SHEPARD LAW PLLC

5500 N. Military Trail #474

Boca Raton, FL 33496

Direct: (561) 306-2909

Office: (561) 609-2896

March 16, 2018

Korth Direct Mortgage, LLC

2937 SW 27^th Avenue, Suite 307

Miami, FL 33133

Re:          Korth Direct Mortgage, LLC

Registration Statement on Form S-1 (Registration No. 333-222928)

Ladies and Gentlemen: 

 At your request, we have examined the Registration Statement on Form S-1 (No. 333-222928), including Amendment No. 1 thereto (the "Registration Statement"), filed or to be filed by Korth Direct Mortgage, LLC, a Florida limited liability company (the “Company”), with the Securities and Exchange Commission in connection with the registration pursuant to the Securities Act of 1933, as amended (the "Act"), of the Company's mortgage notes (the “Debt Securities”), with an aggregate offering price of $1,850,000. 

 We have examined instruments, documents and records which we deemed relevant and necessary for the basis of our opinion hereinafter expressed. In such examination, we have assumed (a) the authenticity of original documents and the genuineness of all signatures, (b) the conformity to the originals of all documents submitted to us as copies and (c) the truth, accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed.  As to all matters of fact, we have relied on the representations and statements of fact made in the documents so reviewed, and we have not independently established the facts so relied on. 

For purposes of this opinion letter, we have assumed that (i) at the time of offer, issuance and sale of the Debt Securities, the Registration Statement will have been declared effective under the Act, and no stop order suspending its effectiveness will have been issued and remain in effect; (ii) the Debt Securities will be issued pursuant to the Indenture, which Indenture is filed as Exhibit 4.1 to the Registration Statement; (iii) the Indenture will be qualified under the Trust Indenture Act of 1939, as amended; (iv) the Debt Securities will be delivered against payment of valid consideration therefor and in accordance with the terms of the applicable actions of the Company’s members and managers authorizing such sale and any applicable underwriting agreement or purchase agreement and as contemplated by the Registration Statement; and (v) the Company will remain a Florida limited liability company.

Korth Direct Mortgage LLC

March 16, 2018

Page 2

We assume for purposes of this opinion that the Indenture Trustee is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; that the Indenture Trustee is duly qualified to engage in the activities contemplated by the Indenture; that the Indenture Trustee has been duly authorized, executed and delivered by the Indenture Trustee and constitutes the legal, valid and binding obligation of the Indenture Trustee enforceable against the Indenture Trustee in accordance with its terms; that the Indenture Trustee is in compliance, with respect to performance of its obligations under the Indenture, with all applicable laws and regulations; and that the Indenture Trustee has the requisite organizational and legal power and authority to perform its obligations under the Indenture. 

 This opinion letter is based as to matters of law solely on the applicable provisions, as currently in effect, of the Florida Revised Limited Liability Company Act, as amended (but not including any laws, statutes, ordinances, administrative decisions, rules or regulations of any political subdivision below the state level). We express no opinion herein as to any other laws, statutes, ordinances, rules, or regulations (and in particular, we express no opinion as to any effect that such other laws, statutes, ordinances, rules, or regulations may have on the opinions expressed herein). 

Based upon, subject to and limited by the foregoing, we are of the opinion that the issuance of the Debt Securities has been duly authorized by appropriate  action of the Company’s managers and members and when the Debt Securities, in the form included in the Indenture filed as an exhibit to the Registration Statement, have been duly completed, executed, authenticated and delivered in accordance with the Indenture and sold and delivered as described in the Registration Statement and the prospectus contained therein, the Debt Securities will be legal, valid and binding obligations of the Company, entitled to the benefits of the Indenture. 

We hereby consent to the filing of this opinion as an exhibit to the above-referenced Registration Statement and the use of our name wherever it appears in the Registration Statement, the prospectus, and in any amendment thereto. In giving such consent, we do not believe that we are "experts" within the meaning of such term used in the Act or the rules and regulations of the Securities and Exchange Commission issued thereunder with respect to any part of the Registration Statement, including this opinion as an exhibit or otherwise.

Very truly yours,

JONATHAN SHEPARD LAW PLLC

By: /s/ Jonathan L. Shepard

JLS/bjp

EX-10.1

Exhibit 10.1

This  Instrument  Prepared  By:   JORGE  A.  FERNANDEZ,  ESQ. Jorge  A.  Fernandez,  P.A.  2600  Douglas  Road  Penthouse  8 Coral  Gables,  Florida  33134       THIS  IS  A  BALLOON  MORTGAGE  SECURING  A  FIXED  RATE  OBLIGATION  WITH A  BALLOON  PAYMENT  DUE  ON  THE  60^TH  MONTH.  THE  FINAL  PRINCIPAL PAYMENT  OR  THE  PRINCIPAL  BALANCE  DUE  UPON  MATURITY  WILL  BE APPROXIMATELY  $1,850,000.00,  TOGETHER  WITH  ACCRUED  INTEREST,  IF  ANY, AND  ALL  ADVANCEMENTS  MADE  BY  THE  MORTGAGEE  UNDER  THE  TERMS OF  THIS  MORTGAGE.  THE  BANK  APPLIES  ALL  PAYMENTS  RECEIVED  FIRST TO   THE   INTEREST  AND   THEN  TO   THE  PRINCIPAL.   IN   CASE   OF  LATE PAYMENTS  PRINCIPAL  MAY  NOT  AMORTIZE  ACCORDING  TO  SCHEDULE  AND THE  BALLOON  PAYMENT  WILL  BE  INCREASED  ACCORDINGLY.   FLORIDA  REAL  ESTATE  MORTGAGE,  ASSIGNMENT  OF  LEASES  AND  RENTS  AND  SECURITY  AGREEMENT     TS  AND  SECURITY  AGREEMENT  (the  "Mortgage")  is  made  and  entered  into  as  of  the  13th day  of  March,  2018,  by  MIS  NW  345  LLC  a  Florida  Limited  Liability  Company  hereinafter ("Mortgagor")  and  KORTH  DIRECT  MORTGAGE,  LLC,  a  Florida  Limited  Liability Company  hereinafter  ("Mortgagee"),  having  offices  at  2937  SW  27th  Avenue  Suite  307,  Miami, Florida  33133.     WITNESSETH:   WHEREAS,  Mortgagor  is  justly  and  lawfully  indebted  to  Mortgagee  in-the  sum  of  One Million  Eight  Hundred  Fifty  Thousand  Dollars  ($1,850,000.00)  (the  "Loan"),  as  evidenced  by  a Promissory  Note  executed  by  Mortgagor  payable  to  the  order  of  Mortgagee  (the  "Note"),  bearing the  same  date  as  this  Mortgage  and  to  be  paid  according  to  its-teams;  and   WHEREAS,  Mortgagor  and  all  makers,  endorsers,  sureties,  guarantors,  accommodation parties  and  all  persons  liable  or  to  become  liable  with  respect  to  the  Loan  are  each  included  in the-term  "Obligor"  as  used  in-this  Mortgage;     NOW,  THEREFORE,  to  secure  the  payment  of  the  Loan  and  such  future  or  additional advances  as  may  be  made  by  Mortgagee,  at  its  option  and  for  any  purpose,  to  Mortgagor  or Mortgagor's  permitted  successor(s)  in  title,  provided  that  all  those  advances  are  to  be  made within  twenty  (20)  years  from  the  date  of   this  Mortgage (the  total  amount  of  indebtedness secured  by  this  Mortgage  may  decrease  or  increase  from  time  to  time,  but  the  total  unpaid balance  so  secured  at  any  one  time  shall  not  exceed  three  times  the  original  principal  amount  of the  Loan,  plus  interest  and  any  disbursements  made  for  the  payment  of  taxes,  levies  or  insurance on  the  property  covered  by  the  lien  of  this  Mortgage  with  interest  on  those  disbursements),  and    to  secure  the  full  and  faithful  performance  of  the  covenants  and  agreements  contained  in  the Note,  this  Mortgage  and  all  other  instruments  and  documents  executed  in  connection  with  the Loan  by  Mortgagor  and/or  any  other  Obligor  (the  "Loan  Documents"),  Mortgagor  hereby grants,  bargains,  sells,  conveys,  assigns,  transfers,  mortgages,  pledges,  delivers,  sets  over, warrants  and  confirms  to  Mortgagee,  and  grants  Mortgagee  a  security  interest  in:     All  those  certain  lots,  pieces,  or  parcels  of  land  lying  and  being  in  Miami-Dade  County, State  of  Florida (the  "Property"),  together  with  the  buildings  and  improvements  now  or hereafter  situated  thereon,  said  land  being  legally  described  as  follows:     See  Exhibit  "A"  attached  hereto  and  made  a  part  hereof.     TOGETHER  WITH  all  and  singular  the  tenements,  hereditaments,  easements,  riparian rights  and  other  rights  now  or  hereafter  belonging  or  appurtenant  to  the  Property,  and  the  rights (if  any)  in  all  adjacent  roads,  ways,  streams,  alleys,  strips  and  gores,  and  the  reversion  or reversions,  remainder  and  remainders,  rents,  issues  and  profits  thereof,  and  all  the  estate,  right, title,  interest,  property,  claim  and  demand  whatsoever  of  Mortgagor,  in  and  to  the  same  and every  part  and  parcel  thereof;     TOGETHER  WITH  any  and  all  tangible  property  (collectively,  the  "Equipment")  now  or hereafter  owned  by  Mortgagor  and  now  or  hereafter  located  at,  affixed  to,  placed  upon  or  used  in connection  with  the  Property  or  any  present  or  future  improvements  thereon,  including  without limitation:  all  machinery,  equipment,  appliances,  fixtures,  conduits  and  systems  for  generating  or distributing  air,  water,  heat,  air  conditioning,  electricity,  light,  fuel  or  refrigeration,  or  for ventilating  or  sanitary  purposes,  or  for  the  exclusion  of  vermin  or  insects,  or  for  the  removal  of dust,  refuse,  sewage  or  garbage,  or  for  fire  prevention  or  extinguishing;  all  elevators,  escalators, lifts  and  dumbwaiters;  all  motors,  engines,  generators,  compressors,  pumps,  lift  stations,  tanks, boilers,  water  heaters,  furnaces  and  incinerators;  all  furniture,  furnishings;  fixtures,  appliances, installations,  partitions,  shelving,  cabinets,  lockers,  vaults  and   wall  safes;  all  carpets,  carpeting, rugs,  under  padding,  lino  leum,  tiles,  mirrors,  wall  coverings,  windows,  storm  doors,  awnings, canopies,  shades,  screens,  blinds,  draperies  and  related  hardware,  chandeliers  and  light  fixtures; all  plumbing,  sinks,  basins,  toilets,  faucets,  pipes,  sprinklers,  disposals,  laundry  appliances  and equipment,  and  kitchen  appliances  and  equipment;  all  alarm,  safety,  electronic,  telephone,  music, entertainment  and  communications  equipment  and  systems;  all  janitorial,  maintenance,  cleaning, window  washing,  vacuuming,  landscaping,  pool  and  recreational  equipment  and  supplies;  and any  other  items  of  property,  wherever  kept  or  stored,  if  acquired  by  Mortgagor  with  the  intent  of incorporating  them  in  and/or  using  them  in  connection  with  the  Property  or  any  improvements  to the  Property;  together  also  with  all  additions  thereto  and  replacements  and  proceeds  thereof (Mortgagor  hereby  agreeing,  with  respect  to  all  additions  and  replacements   and  proceeds,  to execute  and  deliver  from  time  to  time  such  further  instruments  as  may  be  requested  by Mortgagee  to  confirm  their  inclusion  herein);  all  of  which  foregoing  items  described  in  this paragraph  are  hereby  declared  to  be  part  of  the  real  estate  and  encumbered  by  this  Mortgage;   TOGETHER  WITH  (a)  any  and  all  awards  or  payments,  including  interest  thereon  and the  right  to  receive  the  same,  growing  out  of  or  resulting  from  any  exercise  of  the  power  of eminent  domain  (including  the  taking  of  all  or  any  part  of  the  Premises,  as  defined  hereinafter), or  any  alteration  of  the  grade  of  any  street  upon  which  the  Property  abuts,  or  any  other  injury  to, taking  of,  or  decrease  in  the  value  of  the  Premises  or  any  part  thereof; (b)  any  unearned premiums  on  any  hazard,  casualty,  liability,  or  other  insurance  policy  carried  for  the  benefit  of    Mortgagor  and/or  Mortgagee  with  respect  to  the  Premises  (as  defined  hereinafter);  (c)  all  rights of  Mortgagor  in  and  to  all  supplies  and  materials  delivered  to  or  located  upon  the  Property  or elsewhere  and  used  or  usable  in  connection  with  the  construction  or  refurbishing  of improvements  on  the  Property;  and  (d)  all  rights  of  Mortgagor  in,  to,  under,  by  virtue  of,  arising from  or  growing  out  of  any  and  all  present  or  future  contracts,  instruments,  accounts,  insurance policies,  permits,  licenses,  trade  names,  plans,  appraisals,  reports,  paid  fees,  choses  in  action, subdivision  restrictions  or  declarations  or  other  intangibles  whatsoever  now  or  hereafter  dealing with,  affecting  or  concerning  the  Property,  the  improvements  thereto,  or  any  portion  thereof  or interest  therein,  including  but  not  limited  to:  (i)  all  contracts,  plans  and  permits  for  or  related  to the  Property  or  its  development  or  the  construction  or  refurbishing  of  improvements  on  -the Property, (ii)  any  agreements  for  the  provision  of  utilities-to  the  Property, (iii)  all  payment, performance  and/or  other  bonds,  (iv)  any  contracts  now  existing  or  hereafter  made  for  the  sale  by Mortgagor  of  all  or  any  portion  of  the  Property,  including  any  deposits  paid  by  any  purchasers (howsoever  such   deposits  may  be  held)  and  any  proceeds  of  such  sales  contracts,  including  any purchase-money  notes  and  mortgages  made  by  such  purchasers,  and  (v)  any  declaration  of condominium,  restrictions,  covenants,  easements  or  similar  documents  now  or  hereafter  recorded against  the  title  to  all  or  any  portion  of  the  Property;  and     TOGETHER  WITH  all  of  Mortgagor's  rights  to  enter  into  any  lease  or  lease  agreement regarding  all  or  any  part  of  the  Property,  and  all  of  Mortgagor's  rights  to  encumber  the  Property further  for  debt,  Mortgagor  hereby  (a)  representing  as  a  special  inducement  to  Mortgagee  to make  the  Loan  that,  as  of  the  date  hereof,  there  are  no  encumbrances  to  secure  debt  prior  or junior  to  this  Mortgage,  and  (b)  covenanting  that  there  are  to  be  none  as  of  the  date  when  this Mortgage  is  recorded;     PROVIDED,  HOWEVER,  that  these  presents  are  upon  the  condition  that  if  Mortgagor   (a)  shall  pay  or  cause  to  be  paid  to  Mortgagee  the  principal  and  all  interest  payable  in  respect  of the  Loan  and  any  future  advance  made  under  this  Mortgage  and  any  other  sums  secured  by  this Mortgage,  at  the  time  and  in  the  manner  stipulated  in  the  Note  or  this  Mortgage  or  any  other Loan  Document,  all  without  any  deduction  or  credit  for  taxes  or  other  similar  charges  paid  by Mortgagor,  (b)  shall  punctually  perform,  keep  and  observe  all  and  singular  the  covenants  and promises  in  the  Note  and  any  future  advance  agreement(s),  in  any  renewals,  extensions  or modifications  thereof,  and  in  this  Mortgage  or  any  other  Loan  Document  expressed  to  be performed,  kept  and  observed  by  and  on  the  part  of  Mortgagor,  and  (c)  shall  not  permit  or  suffer to  occur  any  default  under  this  Mortgage  or  any  other  Loan  Document,  then  this  Mortgage  and all  the  interests  and  rights  hereby  granted,  bargained,  sold,  conveyed,  assigned,  transferred, mortgaged,  pledged,  delivered,  set  over,  warranted  and  confirmed  shall  cease,  terminate  and  be void,  but  shall  otherwise  remain  in  lull  force  and  effect.     Mortgagor  covenants  with  and  warrants  to  Mortgagee:  (a)  that  Mortgagor  has  good  and marketable  title  to  the  Property,  is  lawfully  seized  and  possessed  of  the  Property  in  fee  simple and  has  good  right  to  sell  and  convey  the  same;  (b)  that  the  Premises  are  unencumbered   except for  tenants  under  written  leases  and  those  encumbrances  identified  on  the  title  policy  and  survey and  approved  by  Lender  as  permitted  encroachments  (the  "Permitted  Encroachments");  and  (c) that  Mortgagor  shall  forever  warrant  and  defend  the  Premises  unto  Mortgagee  against  the  lawful claims  and  demands  of  all  persons  whomsoever,  and  shall  make  such  further  assurances  to perfect  fee  simple  title  to  the  Property  in  Mortgagee  as  Mortgagee  may  reasonably  require. Mortgagor  further  covenants  and  agrees  with  Mortgagee  as  follows:    1.        Mortgagor  shall  pay  all  sums  due  Mortgagee  at  the  time  and  in  the  manner  provided  in the  Note,  this  Mortgage,  any  other  Loan  Document  or  any  instrument  evidencing  a  future advance,  and  Mortgagor  shall  otherwise  perform,  comply  with  and  abide  by  each  and  every  one of  the  stipulations,  agreements,  conditions  and  covenants  contained  in  the  Note,  this  Mortgage  or any  other  Loan  Document.   2. Mortgagor  shall  pay  all  taxes,  assessments  (whether  general  or  special)  and  other  charges whatsoever  levied,  assessed,  placed  or  made  against  all  or  any  part  of  the  Premises  or  any interest  of  Mortgagee  therein,  or  against  the  Note,  this  Mortgage,  any  Loan  Document  or  any obligation  there  under.  Mortgagor  shall  make  such  payment  in  full (and  shall  deliver  to Mortgagee  the  paid  receipts)  upon  the  same  first  becoming  due  and  payable.  If  Mortgagor  shall fail,  neglect  or  refuse  to  pay  any  such  taxes,  assessments  or  other  charges  as  aforesaid,  then Mortgagee  at  its  option  may  pay  the  same,  and  any  funds  so  advanced  by  Mortgagee  shall  bear interest,  shall  be  paid  and  shall  be  secured  as  provided  in  paragraph  14.   3.        (a)  Mortgagor  shall  maintain  property  insurance  with  a  reputable  and  highly  rated insurance  company  or  companies  licensed  in  Florida  and  reasonably  acceptable  to  Mortgagee, covering  all  buildings  and  improvements  now  or  hereafter  located  on  the  Property  and  all  the Equipment  and  all  tangible  personal  property  encumbered  by  this  Mortgage,  for  an  amount  not less  than  their  full  insurable  value  on  a  replacement  cost  basis,  without  contribution  or coinsurance (or  with  coinsurance  and  an  agreed  amount  endorsement),  for  the  benefit  of Mortgagor  and  Mortgagee  as  their  interests  may  appear,  by  policies  on  such  terms,  in  such  form and  for  such  periods  as  Mortgagee  shall  require  or  approve  from  time  to  time,  insuring  with extended  coverage  and  broad  form  coverage  against  loss  or  damage  by  fire,  lightning,  flood, windstorm,  hail,  aircraft,  riot,  vehicles,  explosion,  smoke,  falling  objects,  weight  of  ice  or  snow or  sleet,  collapse,  sudden  tearing  asunder,  breakage  of  glass,  freezing,  electricity,  sprinkler leakage,  water  damage,  earth-quake,  vandalism  and  malicious  mischief,  theft,  riot  attending  a strike,  civil  commotion,  war  risks  (when  and  if  war  risk  coverage  is  available),  and  when  and  to the  extent  required  by  Mortgagee,  against  any  other  risks.  Regardless  of  the  types  or  amounts  of insurance  required  and  approved  by  Mortgagee,  Mortgagor  shall  assign  and  deliver  to  Mortgagee all  policies  of  insurance  which  insure  against  any  loss  or  damage  to  the  Premises  or  any  part thereof,  as  collateral  and  further  security  for  the  payment  of  the  Loan,  with  loss  payable  to Mortgagee   pursuant  to  a  standard  mortgagee  clause  acceptable  to  Mortgagee.  (b)  If  Mortgagor defaults  in  so  insuring  the  Premises  or  any  part  thereof  or  in  so  assigning  and  delivering  the policies,  at  its  option  Mortgagee  may  affect  such  insurance  from  year  to  year  and  pay  the premiums  therefore,  and  any  such  sums  advanced  by  Mortgagee  shall  bear  interest,  shall  be  paid and  shall  be  secured  as  provided  in  paragraph  14.  (c)  If  Mortgagee  receives  any  money  for  loss or  damage  by  reason  of  such  insurance,  then  Mortgagee  at  its  option  may  retain  such  proceeds and  apply  them  toward  the  payment  of  the  Loan  (in  any  order  of  priority  Mortgagee  may  deem appropriate  in  its  sole  discretion),  or  Mortgagee  may  disburse  them  to  Mortgagor,  under  such safeguards  as  Mortgagee  shall  deem  appropriate  in  its  sole  discretion,  for  the  reconstruction  or restoration  or  repair  of  the  damaged  Premises,  but  Mortgagee  shall  not  be  obligated  to  seek  to  the proper  application  by  Mortgagor  of  any  such  disbursement.  (d)  Mortgagor  shall  obtain  and  carry general  comprehensive  liability  insurance  with  a  reputable  and  highly  rated  insurance  company or  companies  licensed  in  Florida  and  reasonably  acceptable  to  Mortgagee,  which  policy  shall name  both  Mortgagor  and  Mortgagee  as  insured,  with  initial  limits  of  not  less  than  One  Million Eight  Hundred  Fifty  Thousand  Dollars  ($1,850,000)  per  occurrence  as  to  personal  injury  or death,  (or  such  greater  or  different  limits  which  Mortgagee  may  require  from  time  to  time)  and on  such  terms,  in  such  form  and  for  such  periods  as  Mortgagee  shall  approve  from  time  to  time.    (e)  Mortgagor  shall  obtain  and  carry  rent  insurance  in  favor  of  Mortgagee  as  loss  payee  covering against  the  loss  of  rents  in  the  event  the  improvements  on  the  Property  are  damaged,  in  an amount  equal  to  or  exceeding  the  annual  rent  roll  for  the  insured  improvements.  (f)  In  the  event of  a  foreclosure  of  this  Mortgage,  the  purchaser  of  the  Premises  shall  succeed  to  all  the  rights  of Mortgagor  in  and  to  all  policies  of  insurance  required  under  this  Mortgage,  including  any  right  to unearned  premiums.  (g)  Not  less  than  thirty  (30)  days  prior  to  the  expiration  date  of  each  policy required  under  this  Mortgage,  Mortgagor  shall  deliver  to  Mortgagee  a  renewal  policy  or  policies marked  "premium  paid"  or  accompanied  by  other  evidence  of  payment  satisfactory  to Mortgagee.  (h)  Each  policy  of  insurance  required  under  this  Mortgage  shall  be  non-cancelable without  at  least  thirty  (30)  days'  advance  written  notice  to  Mortgagee.   4. At  closing  Mortgagee  shall  withhold  $23,264.66  to  open  an  escrow  account  to  pay  the properties'  real  estate  taxes  and  insurance  when  they  become  due  plus  prepaid  interest  from March  13,  2018  through  March  31,  2018.  At  Mortgagee's  option,  Mortgagor  shall  pay  to Mortgagee,  together  with  and  in  addition  to  each  regular  installment  of  interest  payable  under  the Note,  an  amount  deemed  sufficient  by  Mortgagee  to  provide  Mortgagee  with  funds  sufficient  to pay  the  taxes,  assessments,  insurance  premiums  and  other  charges  next  due   at  least  thirty  (30) days  before  the  date  the  same  are  due.  In  no  event  shall  Mortgagee  be  liable  for  any  interest  on any  such  funds  and,  in  Mortgagee's  discretion,  such  funds  may  be  commingled  with  the Mortgagee's  general  funds  and  no  interest  shall  be  payable  in  respect  thereof.  At  least  thirty  (30) days  before  the  date  the  same  are  due,  Mortgagor  shall  furnish  to  Mortgagee  an  official  statement of  the  amount  of  said  taxes,  assessments,  insurance  premiums  and  other  charges,  and  Mortgagee shall  pay  the  same,  but  only  if  sufficient  funds  have  been  paid  by  Mortgagor  pursuant  hereto.  In the  event  of  any  deficiency  in  the  amounts  paid  by  Mortgagor  pursuant  hereto,  Mortgagor  shall upon  notice  from  Mortgagee  immediately  deposit  with  Mortgagee  such  additional  funds  as Mortgagee  may  deem  necessary  to  cure  the  deficiency,  in  its  sole  discretion.  If  Mortgagee  elects to  pay  any  such  taxes,  assessments,  insurance  premiums  or  other  charges  notwithstanding  the deficiency,  then  all  sums  advanced  by  Mortgagee  in  excess  of  the  funds  paid  theretofore  by Mortgagor  shall  bear  interest,  shall  be  paid  and  shall  be  secured  as  provided   in  paragraph  14.  An official  receipt  for  such  sums  shall  be  conclusive  evidence  of  Mortgagee's  payment  and  of  the validity  of  the  tax,  assessment,  insurance  premium  or  other  charge  so  paid.  In  the  event  of  any default  under  the  Note  or  this  Mortgage  or  any  other  Loan  Document,  Mortgagee  at  its   option may  apply  any  or  all  funds  paid  by  Mortgagor  pursuant  to  this  paragraph  against  the  Loan  or  any other  sums  secured  by  this  Mortgage,  in  any  order  of  priority  Mortgagee  may  deem  appropriate in  its  sole  discretion.  At  the  time  of  any  permitted  transfer  of  the  title  to  all  of  the  Premises  then encumbered  by  this  Mortgage,  any  balance  of  said  sums  paid  pursuant  hereto  shall  inure  to  the benefit  of  such  transferee  without  any  specific  assignment  of  such  funds.  Upon  payment  in  full of  the  Loan  and  all  other  sums  secured  by  this  Mortgage,  the  funds  paid  pursuant  to  this paragraph  then  remaining (if  any)  shall  be  paid  over  to  the  record  owner  of  the  Premises encumbered  by  this  Mortgage  as  of  the  date  of  such  full  payment.     5. Without  the  prior  written  consent  of  Mortgagee,  which  Mortgagee  may  grant  or  withhold in  its  sole  discretion,  other  than  specifically  contemplated  in  the  Loan  Documents,  no  building  or other  improvements  covered  by  the  lien  of  this  Mortgage  shall  be  removed,  demolished  or materially  altered  or  enlarged (except  as  required  in  the  event  of  fire,  other  casualty  or condemnation).  Notwithstanding  the  foregoing,  Mortgagor  shall  have  the  right  to  remove  and dispose  of,  free  from  the  lien  of  this  Mortgage,  such  Equipment  as  from  time  to  time  may become  worn  out  or  obsolete,  provided  that,  simultaneously  with  or  prior  to  such  removal, Mortgagor  shall  have  replaced  any  such  Equipment  with  new  Equipment  (of  at  least  the  same    quality  as  that  of  the  replaced  Equipment  when  it  was  new)  which  shall  be  free  from  any  title retention  or  other  security  agreement  or  other  encumbrance,  and,  by  such  removal  and replacement,  Mortgagor  shall  be  deemed  to  have  subjected  such  new  Equipment  to  the  lien  of this  Mortgage.  Without  the  prior  written  consent  of  Mortgagee,  which  Mortgagee  may  grant   or withhold  in  its   sole  discretion,  Mortgagor   shall  not  undertake  any  development  of  the  Property  or any  adjoining  land  owned  or  controlled  by  Mortgagor,  nor  construct  any  new  improvements thereon,  nor  initiate  or  join  in  or  consent  to  any  new  (or  any  change  in  any  existing)  private restrictive  covenant,  zoning  ordinance,  master  plan,  site  plan,  easement,  or  other  public  or  private restrictions  limiting  or  defining  the  uses  which  may  be  made   of  the  Property,  said  adjoining  land or  any  part  thereof.  Mortgagor  shall  complete  and  pay  for  any  permitted  development  and/or improvements  undertaken  on  the  Property  within  a  reasonable  time  after  commencing  the  same.     6. Mortgagor  shall  do  everything  necessary  to  maintain  the  Premises  in  good  condition  and repair,  shall  operate  the  Premises  in  a  first  class  manner,  shall  not  commit  or  suffer  any  waste, impairment,  abandonment  or  deterioration  of  the  Premises,  shall  promptly  pay  all  utility  fees  for services  provided  to  the  Premises,  and  shall  comply  with (or  cause  compliance  with)  all applicable  restrictive   covenants   and   all   statutes,   ordinances   and   requirements   of  any governmental  authorities  having  jurisdiction  over  the  Premises  or  the  use  thereof.  In  the  event  of any  fire  or  other  casualty  loss  or  damage  to  all  or  any-part  of  the  Premises,  Mortgagor  shall notify  Mortgagee  within  forty-eight  (48)  hours  of  such  occurrence.  Mortgagor  shall  promptly repair,  restore,  replace  or  rebuild  any  part  of  the  Premises  which  may  be  damaged  or  destroyed by  any  casualty  whatsoever  or  which  may  be  affected  by  any  condemnation,  alteration  of  grade, or  other  public  or  quasi-public  taking  or  injury.  If  Mortgagor  shall  fail,  neglect  or  refuse  to  repair or  maintain  the  Premises  as  aforesaid,  then  Mortgagee  may  at  its  option  undertake  such  repairs  or maintenance,  and  any  funds  advanced  therefore  by  Mortgagee  shall  bear  interest,  shall  be  paid and  shall  be  secured  as

provided  in  paragraph  14.  Notwithstanding  anything  to  the  contrary  in this  paragraph,  Mortgagor  may  use  up  to  $25,000.00  to  make  repairs  to  the  property  without  the need  of  approval  by  the  Mortgagee.     7.          a.  As  further  security  for  the  repayment  of  the  Loan,  Mortgagor  hereby  assigns  and transfers  to  Mortgagee  all  rents,  income,  issues  and  profits  of  the  Premises  and  all  right,  title   and interest  of  Mortgagor  in  and  under  all  leases  and  tenancies  and  occupancy  agreements  of   any nature  whatsoever  (and  any  extensions  and  renewals  thereof)  now  or  hereafter  affecting  the Premises  (the  "Leases").  Mortgagor  hereby  empowers  Mortgagee,  its  agents  or  attorneys,  to demand,  collect,  sue  for,  receive,  settle,  compromise  and  give  acquitances  for  all  of  the  rents  that may  become  due  under  the  Leases  and  to  avail  itself  of  and  pursue  all  remedies  for  the enforcement  of  the  Leases  and  Mortgagor's  rights  there  under  that  Mortgagor  could  have  pursued but  for  this  assignment.  Mortgagee  is  hereby  vested  with  full  power  and  authority  to  use  all measures,  legal  and  equitable,  deemed  necessary  or  proper  by  Mortgagee  to  enforce  this assignment,  to  collect  the  rents  so  assigned,  and/or  to  cure  any  default  and  perform  any  covenant of  Mortgagor  as  the  landlord  under  any  Leases,  including  without  limitation  the  right  to  enter upon  all  or  any  part  of  the  premises  and  to  take  possession  thereof  to  the  extent  necessary  to exercise  such  powers.  Mortgagee  shall  have  the  right  (but  not  the  obligation)  to  advance  any sums  necessary  to  exercise  such  powers,  which  sums  shall  bear  interest,  shall  be  paid  and  shall be  secured  as  provided  in  paragraph  14.  Mortgagor  hereby  empowers  Mortgagee  to  use  and apply  all  such  rents  and  other  income  of  the  Premises  to  the  payment  of  the  Loan  and  all  interest thereon  and  any  other  indebtedness  or  liability  of  Mortgagor  to  Mortgagee,  and  to  the  payment  of the  costs  of  managing  and  operating  the  Premises,  including  without  limitation:  (i)  taxes,  special assessments,  insurance  premiums,  damage  claims,  and  the  costs  of  maintaining,  repairing,    rebuilding,  restoring  and  making  rentable  any  or  all  of  the  Premises;  (ii)  all  sums  advanced  by Mortgagee  (with  interest  thereon)  for  the  payment  of  such  costs  or  for  any  other  reason  permitted by  this  Mortgage  or  any  other  Loan  Document;  and  (iii)  all  costs,  expenses  and  attorney's  fees incurred  by  Mortgagee  in  connection  with  the  enforcement  of  this  Mortgage  and/or  any  Lease; all  in  such  order  of  priority  as  Mortgagee  may  deem  appropriate  in  its  sole  discretion. Notwithstanding  anything  to  the  contrary  in  this  paragraph  it  is  agreed  that  the  Mortgagee  shall only  be  entitled  to  collect  the  rents,  income,  issues,  and  profits  upon  the  occurrence  of  an  event of  default  by  the  Mortgagor  under  the  Loan  Documents.     b. Mortgagee  shall  not  be  obliged  to  press  any  of  the  rights  or  claims  of  Mortgagor assigned  hereby,  nor  to  perform  or  carry  out  any  of  the  obligations  of  the  landlord  under  any Lease,  and  Mortgagee  assumes  no  duty  or  liability  whatsoever  in  connection  with  or  arising  from or  growing  out  of  the  covenants  of  Mortgagor  in  any  Lease.  This  Mortgage  shall  not  operate  to make  Mortgagee  responsible  for  the  control,  care,  management  or  repair  of  all  or  any  part  of  the Premises,  nor  shall  it  operate  to  make  Mortgagee  liable  for  (i)  the  performance   or  carrying  out  of any  of  the  terms  or  conditions  of  any  Lease,  (ii)  any  waste  of  the  Premises  by  any  tenant  or  any other  person,  (iii)  any  dangerous  or  defective  condition  of  the  Premises,  nor  (iv)  any  negligence in  the  management,  upkeep,  repair  or  control  of  all  or  any  part  of  the  Premises  resulting  in  loss  or injury  or  death  to  any  tenant,  licensee,  employee  or  stranger.  Mortgagor  hereby  indemnifies  and holds  Mortgagee  harmless  against  any  and  all  liability,  loss,  claim,  damage,  costs  and  attorney's fees  whatsoever  which  Mortgagee  may  or  might  incur  under  any  Lease  or  by  reason  of  this assignment,  and  against  any  and  all  claims  or  demands  whatsoever  (and  any  related  costs  and attorney's  fees)  which  may  be  asserted  against  Mortgagee  by  reason  of  any  alleged  obligations  or undertakings  on  its  part  to  perform  or  discharge  any  of  the  terms,  covenants  or  agreements contained  in  any  Lease.  Nothing  herein  contained  shall  be  construed  as  constituting  Mortgagee  a trustee  or  mortgagee  in  possession.       c.        Mortgagor  shall  promptly  deliver  to  Mortgagee  a  true,  correct  and  complete  copy of  each  Lease  as  and  when  Mortgagor  shall  enter  into  the  same,  and  Mortgagor  shall  procure  and deliver  to  Mortgagee  estoppel  letters  or  certificates  from  each  tenant,  in  form  and  substance satisfactory  to  Mortgagee,  within  thirty  (30)  days  after  Mortgagee's  request  therefore.  Mortgagor hereby  represents  and  warrants  to  Mortgagee  (and  shall  be  deemed  to  have  represented  and warranted  to  Mortgagee  upon  and  as  of  the  date  of  delivering  to  Mortgagee  a  copy  of  each Lease),  except  as  previously  or  concurrently  disclosed  to  and  approved  by  Mortgagee  in  writing:   (i)  that  each  such  copy  delivered  (or  to  be  delivered)  to  Mortgagee  is  true,  correct  and  complete;   (ii)  that  Mortgagor  is  the  sole  owner  of  the  entire  landlord's  interest  in  each  Lease  and  has  not previously  assigned  or  pledged  any  Lease  or  any  interest  therein  to  any  person  other  than Mortgagee;  (iii)  that  all  the  Leases  are  in  full  force  and  effect  and  have  not  been  altered, modified  or   amended  in  any  manner  whatsoever;  (iv)  that  each  tenant  there  under  has  accepted that  tenant's  respective  premises  and  is  paying  rent  on  a  current  basis;  (v)  that  no  default  exists on  the  part  of  such  tenants  or  on  the  part  of  Mortgagor  as  landlord  in  their  respective performances  of  the  terms,  covenants,  provisions  and  agreements  contained  in  the  Leases;  (vi) that  no  rent  has  been  paid  by  any  of  the  tenants  for  more  than  two  (2)  months  in  advance;  (vii) that  Mortgagor  is  not  indebted  to  any  tenant  in  any  manner  whatsoever  so  as  to  give  rise  to  any right  of  set  off  against  or  reduction  of  the  rents'  payable  under  any  Lease;  and  (viii)  that  no payments  of  rents  to  accrue  under  any  Lease  has  been  or  will  be  waived,  released,  reduced, discounted  or  otherwise  discharged  or  compromised  by  Mortgagor  directly  or  indirectly,  whether by  assuming  any  tenant's  obligations  with  respect  to  other  premises  or  otherwise.    d. Mortgagor  covenants  and  agrees  with  Mortgagee:  (i)  that  each  Lease  shall  remain in  full  force  and  effect  irrespective  of  any  merger  of  the  interests  of  the  landlord  and  tenant  there under;  (ii)  that  without  the  prior  written  consent  of  Mortgagee,  which  it  may  grant  or  withhold  in its  sole  discretion,  Mortgagor  shall  not  terminate,  modify  or  amend  any  Lease  or  any  guaranty thereof,  nor  grant  any  concessions  in  connection  therewith  (either  orally  or  in  writing)  nor  accept any  surrender  or  cancellation  thereof,  and  that  any  attempted  termination,  modification, amendment,  concession,  surrender  or  cancellation  without  such  written  consent  shall  be  null  and void;  (iii)  that  Mortgagor  shall  not  collect  more  than  two  (2)  months'  rent,  income  and/or  profits arising  or  accruing  under  any  Lease  in  advance  of  the  due  date  for  the  same,  nor  discount  any future  accruing  rents,  nor  suffer  or  permit  to  arise  in  favor  of  any  tenant  any  release  of  liability  or any  right  to  withhold  payment  of  rent,  nor  take  any  action  or  pennit  any  omission  or  exercise  any right  of  election  which  would  in  any  way  impair  the  value  of  any  Lease  or  diminish  any  tenant's liability  there  under  or  have  the  effect  of  terminating  or  shortening  the  stated  term  of  any  Lease;   (iv)  that  Mortgagor  shall  perform  all  of  Mortgagor's  covenants  and  agreements  as  landlord  under each  Lease  and  shall  promptly  send  Mortgagee  copies  of  any  notice  of  alleged  default  on  the  part of  Mortgagor  as  landlord  received  from  any  tenant  there  under; (v)  that  if  requested  by Mortgagee,  Mortgagor  shall  expeditiously  and  in  good  faith  enforce  the  Leases  and  all  remedies available  to  Mortgagor  in  case  of  default  by  the  tenants  there  under;  and  (vi)  that  Mortgagor  shall not  execute  any  other  assignment  or  pledge  of  any  Lease  or  any  interest  therein  or  any  of  the rents  thereunder,  nor  consent  to  any  tenant's  assignment  of  any  Lease  or  any  subletting thereunder,  nor  request,  accept,  consent  to  or  agree  to  any  subordination  of  any  Lease  to  any mortgage  other  than  this  Mortgage  now  or  hereafter  affecting  the  Premises.   e.        Although  Mortgagor  and  Mortgagee  intend  that  this  instrument  shall  be  a  present assignment,  it  is  expressly  understood  and  agreed  that  so  long  as  no  default  shall  exist  under  the Note,  this  Mortgage  or  any  other  Loan  Document,  Mortgagor  may  collect  assigned   rents  and profits  for  not  more  than  two (2)  months  in  advance  of  the  accrual  thereof,  but  upon  the occurrence  of  any  such  default,  or  at  any  time  during  its  continuance,  all   rights  of  Mortgagor  to collect  or  receive  rents  or  profits  shall  wholly  terminate  up"on  notice  from  Mortgagee.  The tenants  under  all  the  Leases  are  hereby  irrevocably  authorized  to  rely  upon  and  comply  with  (and shall  be  fully  protected  in  so  doing)  any  notice  or  demand  by  Mortgagee  for  the  payment  to Mortgagee  of  any  rental  or  other  sums  which  may  be  or  thereafter  become  due  under  the  Leases, or  for  the  performance  of  any  of  the  tenants'  undertakings  under  the  Leases,  and  none  of  them shall  have  any  right  or  duty  to  inquire  as  to  whether  any  default  hereunder  or  under  the  Note  or any  Loan  Document  shall  have  actually  occurred  or  is  then  existing.     f.        As  further  security  for  the  repayment  of  the  Loan,  Mortgagor  hereby  assigns  and transfers  to  Mortgage:  i)  all  franchise,  license  and  concession  agreements  related  to  the  property or  the  operation  thereof  for  which  the  Mortgagor  or  an  operating  affiliate  is  a  lessor,  licensor, concession  grants  or  similar  party  and  all  payments  under  such  assignments,  whether  the assignments  described  in  this  paragraph  are  absolute  or  are  stated  to  be  made  to  the  extent permitted  by  the  agreements  governing  the  applicable  franchise,  license  or  concession agreement;  and  ii)  All  other  payments  due  to  the  Mortgage  or  due  to  any  operating  affiliate  in connection  with  the  operation  of  the  property;  and  iii)  The  right  to  enforce  the  assignments   of rents  and  leases  described  herein  and  the  right  to  enforce  the  assignments  described  in  i)  and  ii) above,  and  to  collect  amounts  due  from  each  lessee,  occupant  or  other  obligor  whose  payments were  assigned  pursuant  to  this  mortgage,  assignment  of  leases  and  rent  and  security  agreement    upon  a  breach  by  the  Mortgagor  of  any  of  the  teiriis,  or  the  occurrence  of  any  other  event  of default  under  any  of  the  loan  documents.   8.  Except  for  permitted  encumbrances  under  the  Loan  Documents  Mortgagor  shall  not grant  any  other  lien  or  mortgage  on  all  or  any  part  of  the  Premises  or  any  interest  therein,  nor make  any  further  assignment  of  the  leases  and  rentals  of  the  Premises,  without  the  prior  written consent  of  Mortgagee,  which  Mortgagee  may  grant  or  withhold  in  its  sole  discretion;  any  such unpermitted  lien  or  mortgage  or  assignment  by  Mortgagor  shall  entitle  Mortgagee  to  accelerate the  maturity  of  the  Loan  and  foreclose  this  Mortgage.  Any  such  other  lien  or  mortgage  or assignment  shall  be  junior  to  this  Mortgage  and  to  all  permitted  tenancies  now  or  hereafter affecting  the  Premises  or  any  portion  thereof  and  shall  be  subject  to  all  renewals,  extensions, modifications,  releases,  interest  rate  increases,  future  advances,  changes  or  exchanges  permitted by  this  Mortgage,  all  without  the  joinder  or  consent  of  such  junior  lien  holder  or  mortgagee  or assignee  and  without  any  obligation  on  Mortgagee's  part  to  give  notice  of  any  kind  thereto. Mortgagor  shall  maintain  in  good  standing  any  other  mortgage  or  encumbrance  to  secure  debt affecting  any  part  of  the  Premises  from  time  to  time  and  shall  not  commit  or  permit  or  suffer  to occur  any  default  there  under,  nor  shall  Mortgagor  accept  any  future  advance  under  or  modify the  terms  of  any  such  mortgage  or  encumbrance  which  may  then  be  superior  to  the  lien  of  this Mortgage.  Except  for  encumbrances  permitted  by  Mortgagee,  Mortgagor  shall  not  commit  or permit  or  suffer  to  occur  any  act  or  omission  whereby  any  of  the  security  represented  by  this Mortgage  shall  be  impaired  or  threatened,  or  whereby  any  of  the  Premises  or  any  interest  therein shall  become  subject  to  any  attachment,  judgment,  lien,   charge  or  other  encumbrance whatsoever,  and  Mortgagor  shall  immediately  cause  any  such  attachment,  judgment,  lien,  charge or  other  encumbrance  to  be  discharged  or  otherwise  bonded  or  transferred  to  other  security. Mortgagor  shall  not  directly  or  indirectly  do  anything  or  take  any   action  which  might  prejudice any  of  the  right,  title  or  interest  of  Mortgagee  in  or  to  any  of  the  Premises  or  impose  or  create any  direct  or  indirect  obligation  or  liability  on  the  part  of  Mortgagee  with  respect  to  any  of  the Premises.     9.       Mortgagor  shall  not  cause  or  permit  or  suffer  to  occur  any  of  the  following  events without  the  prior  written  consent  of  Mortgagee,  which  Mortgagee  may  grant  or  withhold  in  its sole  discretion,  and  if  any  of  the  same  shall  occur  without  such  consent,  then  Mortgagee  shall have  the  right  to  accelerate  the  maturity  of  the  Loan  and  foreclose  this  Mortgage:  (a)  if  all  or  any portion  of  the  legal  or  equitable  title  to  all  or  any  portion  of  the  Premises  or  any  interest  therein shall  in  any  manner  whatsoever  be  sold,  conveyed  or  transferred,  either  voluntarily  or  by operation  of  law;  (b)  if  Mortgagor  shall  enter  into  any  lease  or  other  arrangement  with  any  third party  regarding  the  use  or  possession  by  such  third  party  of  all  or  any  portion  of  the  Premises (regardless  of  whether  such  lease  or  arrangement  includes  an  option  to  purchase);  (c)  if  any stock,  partnership  interest  (including,  without  limitation,  any  transfer  of  stock  in  a  corporate partner)  or  joint  venture  interest  or  beneficial  interest  mortgagor  shall  be  transferred  in  any manner,  or  if  such  stock  or  partnership  interest  or  joint  venture  interest  or  beneficial  interest  shall be  assigned,  pledged,  hypothecated,  mortgaged  or  otherwise  encumbered;  or  (d)  there  by  any change  in  the  management  or  control  of  Borrower  without  the  Mortgagee's  prior  written approval,  (e)  if  Mortgagor  shall  pay,  repay  or  distribute  any  funds  to  any  guarantor  of  the  Loan or  any  other  person  directly  or  indirectly  related  to  Mortgagor  (including,  without  limitation,  any stockholder,  partner,  member  or  beneficiary).  Notwithstanding  anything  in  this  paragraph  to  the contrary  the  Mortgagor  shall  be  allowed  to  enter  into  a  lease  with  third  parties  in  the  ordinary course  of  business  provided  that  the  teinis  of  such  leases  are  consistent  with  the  terms  of  other leases  within  the  property  and  reasonable  with  prevailing  market  rates.    10. From  time  to  time  and  on  demand,  Mortgagor  shall  execute  and  deliver  to Mortgagee  (and  pay  the  costs  of  preparing  and  recording)  any  further  instruments  required  by Mortgagee  to  reaffirm,  correct  or  perfect  the  evidence  of  the  obligations  secured  hereby  and  the security  interest  of  Mortgagee  in  all  the  property  intended  to  be  mortgaged  hereby,  including  but not  limited  to  mortgages,  security  agreements,  financing  statements,  assignments  and  renewal and  substitution  notes.   11. Upon  request  made  either  personally  or  by  mail,  upon  10  days  notice  Mortgagor shall  certify,  by  a  duly  acknowledged  writing,  to  Mortgagee  or  to  any  proposed  assignee  of  this Mortgage,  the  amount  of  principal  and  interest   and  other  sums  then  owing  on  the  Loan  and whether  any  offsets  or  defenses  exist  against  the  payment  of  the  Loan.  Mortgagor  shall  provide such  estoppel  certificate  within  five  (5)  days  in  the  case  of  a  personal  request  and  within  ten  (10) days  after  Mortgagor's  receipt  of  a  mailed  request.  Mortgagor  shall  furnish  to  Mortgagee,  within sixty  (60)  days  after  the  close  of  each  fiscal  year  of  Mortgagor,  an  unaudited  financial  statement of  Mortgagor  and  of  the  income  and  expenses  of  the  Premises  (which  shall  include  financial information  regarding  (i)  the  conduct  of  any  business  on  the  Premises,  (ii)  the  operation  of  the Premises,  and  (iii)  the  leasing  of  the  Premises),  in  such  reasonable  detail  as  Mortgagee  may request,  accompanied  by  an  original  certification  signed  by  a  certified  public  accountant  stating whether  the  financial  statements  have  been  reviewed  or  compiled.  Compiled  statements  shall  be signed  by  the  Managing  Member  of  the  Mortgagor  or  by  a  duly  appointed  officer  or representative  satisfactory  to  Mortgagee.  Mortgagor  shall  also  cause   each  guarantor  to  furnish  to Mortgagee,  within  sixty  (60)  days  after  the  close  of  each  fiscal  year  of  Mortgagor,  an  unaudited financial  statement  of  said,  guarantor,  in  such  reasonable  detail  as  Mortgagee  may  request,  on  the Mortgagees  Personal  Financial  Statement  form,  accompanied  by  all  supporting  schedules  and personal  information  requested  in  Mortgagee's  Personal  Financial  Statement  form,  as  well  as  a copy  of  each  guarantors  federal  income  tax  return  within  fifteen  (15)  days  of  the  filing  thereof All  financial  statements  submitted  to  Mortgagee  shall  be  originals  and  shall  be  certified  to Mortgagee.  On  demand,  Mortgagor  shall  provide  to  Mortgagee  executed  counterparts  of  any such  leases  and  convenient  facilities  for  the  audit  and  verification  of  any  such  statement. Mortgagor  shall  also  promptly  furnish  to  Mortgagee  any  financial  or  other  information  regarding Mortgagor  or  the  Premises  required  by  any  Loan  Document  or  which  Mortgagee  may  reasonably request  from  time  to  time.  Mortgagor  shall  also  deliver  to  Mortgagee  complete  copies  of  all  of  its federal  income  tax  returns,  accompanied  by  all  forms  and  supporting  schedules  as  actually submitted  to  the  United  States  Internal  Revenue  Service,  within  fifteen  (15)  days  of  the  filing thereof  by  Mortgagor.  The  Mortgagee  shall  have  full  and  complete  access  to  the  books  and records  of  the  Mortgagee  during  regular  business  hours.  During  any  period  that  Mortgagor  fails to  comply  with  the  provisions  of  this  paragraph,  or  any  guarantor  of  the  Loan  fails  to  deliver  any financial  documents  required  by  the  terms  of  the  guaranty  executed  by  such  guarantor  in  favor  of Mortgagee  in  connection  with  the  Loan,  and  regardless  of  whether  Mortgagee  declares  this Mortgage  to  be  in  default,  the  Note,  without  notice  to  Mortgagor,  shall  automatically  bear interest  at  an  augmented  rate  equal  to  four  percent  (4%)  above  the  interest  accrual  rate  which would  otherwise  then  be  in  effect  under  the  Note.     12.  Whenever  Mortgagor  or  Mortgagee  are  obliged  to  give  notice  to  the  other,  such notice  shall  be  in  writing  and  shall  be  given  personally  or  by  prepaid  certified  mail  (return  receipt requested),  in  which  latter  case  notice  shall  be  deemed  effectively  made  when  the  receipt  is signed  or  when  the  attempted  initial  delivery  is  refused  or  cannot  be  made  because  of  a  change  of address  of  which  the  sending  party  has  not  been  notified.  Any  notice  to  Mortgagee  shall  be    addressed  to  the  attention  of  a  senior  vice-president  or  higher  officer.  Until  the  designated addresses  are  changed  by  notice  given  in  accordance  with  this  paragraph,  notice  to  either  party shall  be  sent  to  the  respective  address  set  forth  on  the  first  page  of  this  Mortgage.   13.  At  Mortgagee's  option,  all  of  the  principal  and  interest  and  other  sums  secured  by  this Mortgage  shall  immediately  or  at  any  time  thereafter   become  due  and  payable  without  notice  to any  Obligor,  and  Mortgagee  shall  immediately  have  all  the  rights  accorded  Mortgagee  by  law and   hereunder  to  foreclose  this  Mortgage  or  otherwise  to  enforce  this  Mortgage,  the  Note  and any   other  Loan  Document,   upon  the  occurrence  of  any  of  the  following  defaults:  (a)  failure  to pay  any  sum  due  under  the  Note  and  the  expiration  of  the  grace  period  (if  any)  provided  in  the Note  for  such  payment;  or  (b)  failure  to  repay  any  sum  paid  or  advanced  by  Mortgagee  under  the terms  of  this  Mortgage  or  any  other  Loan  Document  (with  interest  thereon),  as  provided  in paragraph  14;  or  (c)  failure  to  pay  any  tax,  assessment,  utility  charge,  or  other  charge  against  the Premises  or  any  part  thereof  as  and  when  required  by  this  Mortgage;  or  (d)  actual  or  threatened waste,  impairment,  abandonment,  deterioration,  removal,  demolition,  material  alteration  or enlargement  of  any  building  or  other  improvements  on  the  Property,  or  the  commencement  of construction  of  any  new  building  or  other  improvements  on  any  part  of  the  Property  other  than  as specifically  contemplated  in  the  Loan  Documents,  in  either  case  without  the  prior  written  consent of  Mortgagee,  which  Mortgagee  may  grant  or  withhold  in  its  sole  discretion;  or  (e)  failure  to obtain,  assign,  deliver  or  keep  in  force  the  policies  of  insurance  required  by  this  Mortgage  or  any other  Loan  Document;  or  (f)  Mortgagor's  failure  or  refusal  to  certify,  within  the  time  required  by this  Mortgage,  the  amount  due  under  the  Loan  and  whether  any  offsets  or  defenses  exist  against payment  of  the  Loan;  or  (g)  Mortgagor's  filing  for  record,  without  the  prior  written  consent  of Mortgagee,  which  Mortgagee  may  grant  or  withhold  in  its  sole  discretion,  of  any  notice  limiting the  maximum  principal  amount  that  may  be  secured  by  this  Mortgage  to  an  amount  less  than  the limit  set  forth  in  the-future  advance  clause  of  this  Mortgage;  or  (h)  any  sale,  transfer  (whether voluntary  or  by  operation  of  law),  pledge,  hypothecation  or  further  encumbrancing  of  all  or  any part  of  the  Premises  or  any  interest  therein  or  any  interest  in  Mortgagor,  or  the  additional assignment  of  all  or  any   part  of  the  rents,  income  or  profits  arising  there  from,  in  either  case without  the  prior  written  consent  of  Mortgagee,  which  Mortgagee  may  grant  or  withhold  in  its sole  discretion;  or  (i)  Mortgagor's  failure  to  remove  any  lien  on  the  Premises  or  any  part  thereof within  ten  (10)  days  after  its  filing,  or  the  filing  of  any  suit  against  the  Premises  upon  any  claim or  lien

other  than  this  Mortgage  (whether  superior  or  inferior  to  this  Mortgage);  or  w  Mortgagor's failure  to  comply  within  ten  (10)  days  with  a  requirement,  order  or  notice  of  violation  of  a  law, ordinance,  or  regulation  issued  or  promulgated  by  any  political  subdivision  or  governmental department  claiming  jurisdiction  over  the  Premises  or  any  operation  conducted  on  the  Property (or,  if  such  order  or  notice  provides  a  time  period  for  compliance,  Mortgagor's  failure  to  comply within  such  period),  or,  in  the  case  of  a  curable  noncompliance  requiring  longer  than  the applicable  time  period  for  its  cure,  Mortgagor's  failure  to  commence  to  comply  with  said  order  or notice  within  said  period  or  failure  thereafter  to  pursue  such  cure  diligently  to  completion;  or  (k) the  issuance  of  any  order  by  the  State  of  Florida,  or  any  subdivision,  instrumentality, administrative  board  or  department  thereof,  declaring  unlawful  or  suspending  any  operation conducted  on  the  Premises;  or (I)  the  filing  by  the  United  States  of  America  or  any instrumentality  thereof  in  any  court  of  competent  jurisdiction  of  any  notice  of  intention  to acquire  under  the  power  of  eminent  domain  any  estate  less  than  an  estate  in  fee  simple  in  the entire  Property,  or  the  recording  by  the  State  of  Florida,  any  instrumentality  thereof  or  any  other person  with  eminent  domain  powers,  of  a  notice  of  taking  of  any  estate  less  than  an  estate  in  fee simple  in  the  entire  Property;  or  (m)  if  any  representation,  warranty,  affidavit,  certificate  or statement  made  or  delivered  to  Mortgagee  by  or  on  behalf  of  any  Obligor  from  time  to  time  in    connection  with  the  Loan  or  this  Mortgage  or  any  other  Loan  Document  shall  prove  false, incorrect  or  misleading  in  any  respect  deemed  material  by  Mortgagee;  or  (n)  the  death  or  mental or  physical  incapacity  of  any  Obligor  who  is  a  natural  person,  or  the  dissolution  or  merger  or   consolidation  or  termination  of  existence  of  any  other  Obligor,  or  the  failure  or  cessation  or liquidation  of  the  business  of  any  Obligor,  or  if  the  person(s)  controlling  any  Obligor  which  is  a business  entity  shall  take  any  action  authorizing  or  leading  to  the  same;  or  (o)  or  any  other   default  by  any  Obligor  in  the  payment  of  any  indebtedness  for  borrowed  money  (whether  direct or  contingent  and  whether  matured  or  accelerated)  to  Mortgagee  or  to  any  person  whomsoever,   or  if  any  Obligor  shall  become  insolvent  or  unable  to  pay  such  Obligor's  debts  as  they  become due;  or  (p)  the  disposition  or  transfer  or  exchange  of  all  or  substantially  all  of  any  Obligor's assets  for  less  than  fair  market  value,  or  the  issuance  of  any  levy,  attachment,  charging  order, garnishment  or  other  process  against  any  property  of  any  Obligor,  or  the  filing  of  any  lien  against any  such  property  (and  the  expiration  of  any  grace  period  provided  in  any  Loan  Document  for the  discharge  of  such  lien);  or  (q)  if  any  Obligor  shall  make  an  assignment  for  the  benefit  of creditors,  file  a  petition  in  bankruptcy,  apply  to  or  petition  any  tribunal  for  the  appointment  of  a custodian,  receiver,  intervenor  or  trustee  for  such  Obligor  or  a  substantial  part  of  such  Obligor's assets,  or  if  any  Obligor  shall  commence  any  proceeding  under  any  bankruptcy,  arrangement, readjustment  of  debt,  dissolution  or  liquidation  law  or  statute  of  any  jurisdiction,  whether  now  or hereafter  in  effect,  or   if  any  Obligor  shall  by  act  or  omission  approve,  consent  to  or  acquiesce  in the  filing  of  any  such  petition  or  application  against  such  Obligor  or  the  appointment  of  any  such custodian,  receiver,  intervenor  or  trustee  or  the  commencement  of  any   such  proceeding  against such  Obligor  or  the  entry  of  an  order  for  relief  with  respect  to  such  Obligor,  or  if  any  such petition  or  application  shall  have  been  filed  or  proceeding  commenced  against  any  Obligor which  remains  un  dismissed  for  thirty  (30)  days  or  more  or  in  which  an  order  for  relief  is entered,  or  if  any  Obligor  shall  suffer  any  such  appointment  of  a  custodian,  receiver,  intervenor or  trustee  to  continue  un  discharged  for  thirty  (30)  days  or  more;  or  (r)  if  any  Obligor  shall  have concealed,  transferred,  removed,  or  permitted  to  be  concealed  or  transferred  or  removed,  any  part of  such  Obligor's  property  with  intent  to  hinder,  delay  or  defraud  any  of  such  Obligor's  creditors, or  if  any  Obligor  shall  have  made  or  suffered  a  transfer  of  any  of  such  Obligor's  properties  which may  be  invalid  under  any  bankruptcy,  fraudulent  conveyance,  preference  or  similar  law,  or  if  any Obligor  shall  have  made  any  transfer  of  such  Obligor's  properties  to  or  for  the  benefit  of  any creditor  at  a  time  when  other  creditors  similarly  situated  have  not  been  paid;  or  (s)  the  failure  to obtain  any  permit,  license,  approval  or  consent  from,  or  to  make  any  filing  with,  any governmental  authority  (or  the  lapse  or  revocation  or  rescission  thereof  once  obtained  or  made) which  is  necessary  in  connection  with  the  Loan,  any  Loan  Document  or  the  enforcement  thereof, or  if  it  shall  become  unlawful  for  Mortgagee  to  make  or  maintain  the  Loan  or  for  any  Obligor  to perform  any  of  such  Obligor's  obligations  under  any  Loan  Document;  or  (t)  the  existence  of  any uncured  default  under  any  other  mortgage  or  encumbrance  affecting  any  part  of  the  Premises then  encumbered  by  this  Mortgage,  or  Mortgagor's  acceptance  of  any  future  advance  under,  or modification  of  the  terms  of,  any  such  other  mortgage  or  encumbrance  which  may  then  be superior  to  the  lien  of  this  Mortgage;  or  (u)  Mortgagee's  election  to  accelerate  the  maturity  of  the Loan  under  the  provisions  of  any  other  Loan  Document;  or  (v)  if  Mortgagor  or  any  other  Obligor shall  fail  to  pay  when  due  any  indebtedness  for  borrowed  money  owing  by  Mortgagor  or  such other  Obligor;  or (w)  if  any  change  or  event  shall  occur  which  in  Mortgagee's  exclusive judgment  impairs  any  security  for  the  Loan,  increases  Mortgagee's  risk  in  connection  with  the Loan,  or  indicates  that  any  Obligor  may  be  unable  to  perform  such  Obligor's  obligations  under any  Loan  Document  including,  but  not  limited  to,  any  material  adverse  change  in  the  financial condition  of  Mortgagor  or  any  guarantor  in  Mortgagee's  sole  judgment;  or  (x)  any  default  in  the observance  or  performance  of  any  other  covenant  or  agreement  of  any  Obligor  in  this  Mortgage    or  any  other  Loan  Document,  the  occurrence  of  any  other  event  prohibited  by  the  terms  of  this Mortgage  or  any  other  Loan  Document,  or  the  violation  of  any  other  provision  of  this  Mortgage or  any  other  Loan  Document,  or  (y)  any  default  in  any  other  mortgage  or  Loan  Document  made to  secure  the  Loan.  No  consent  or  waiver  expressed  or  implied  by  Mortgagee  with  respect  to  any default  under  this  Mortgage  shall  be  construed  as  a  consent  or  waiver  with  respect  to  any  further default  of  the  same  or  a  different   nature;  and  no  consent  or  waiver  shall  be  deemed  or  construed to  exist  by  reason  of  any  curative  action  initiated  by  Mortgagee  or  any  other  course  of  conduct  or in  any  other  manner  whatsoever  except  by  a  writing  duly  executed  by  Mortgagee,  and  then  only for  the  single  occasion  to  which  such  writing  is  addressed.  In  order  to  accelerate  the  maturity  of the  Loan  because  of  Mortgagor's  failure  to  pay  any  tax,  assessment,  insurance  premium,  charge, liability,  obligation  or  encumbrance  upon  the  Premises  as  required  by  this  Mortgage,  or  in  order to  accelerate  because  of  any  other  default,  Mortgagee  shall  not  be  required  to  pay  the  same  or  to advance  funds  to  cure  the  default,  notwithstanding  Mortgagee's  option  under  this  Mortgage  or any  other  Loan  Document  to  do  so;  no  such  payment  or  advance  by  Mortgagee  shall  be  deemed or  construed  a  waiver  of  Mortgagee's  right  to  accelerate  the  maturity  of  the  Loan  on  account  of such  failure  or  other  default.  Notwithstanding  anything  in  this  paragraph  to  the  contrary  the Mortgagor  is  allowed  to  make  reasonable  improvements  to  the  property  without  Mortgagee's approval.     14. In  the  event  of  any  default  in  the  performance  of  any  of  Mortgagor's  covenants  or agreements  contained  in  this  Mortgage  or  any  other  Loan  Document  or  the  violation  of  any  term thereof,  Mortgagee  shall  have  the  right  (but  in  no  event  the  obligation)  at  its  option  to  cure  the default  or  take  any   other  action  Mortgagee  deems  necessary  or  desirable  to  protect  its  security (including  without  limitation  the  payment  of  any  taxes,  assessments,  insurance  premiums, charges,  liens  or  encumbrances  required  of  Mortgagor  under  this  Mortgage),  without  thereby waiving  any  rights  or  remedies  otherwise  available  to  Mortgagee.  If  Mortgagee  shall  elect  to advance  at  any  time  any  sum(s)  for  the  protection  of  its  security  or  for  any  other  reason  permitted or  provided  by  any  of  the  terms  of  this  Mortgage  or  any  other  Loan  Document,  then  such  sum(s) shall  be  deemed  Loan  funds,  shall  be  secured  by  this  Mortgage  and  shall  bear  interest  until  paid at  the  "Default  Rate"  provided  in  the  Note  commencing  on  the  date  they  are  advanced  by Mortgagee.  If  advanced  by  Mortgagee  before  the  (natural  or  accelerated)  maturity  date  of  the Loan,  such  sum(s)  shall  be  due  and  payable  by  Mortgagor  on  such  maturity  date  or  ten  (10)  days after  Mortgagor  first  learns  of  the  advance,  whichever  is  earlier,  but  if  advanced  after  the  (natural or  accelerated)  maturity  date,  such  sum(s)  shall  be  due  and  payable  immediately.  Mortgagee's lien  on  the  Premises  for  such  advances  shall  be  superior  to  any  right  or  title  to,  interest  in,  or claim  upon  all  or  any  portion  of  the  Premises  junior  to  the  lien  of  this  Mortgage.  Without  the prior  written  consent  of  Mortgagee,  which  Mortgagee  may  grant  or  withhold  in  its  sole discretion,  Mortgagor  shall  not  file  for  record  any  notice  limiting  the  maximum  principal  amount that  may  be  secured  by  this  Mortgage  to  an  amount  less  than  the  limit  set  forth  in  the  future advance  clause  contained  within  this  Mortgage.   15. In  any  action  to  foreclose  this  Mortgage,  or  upon  the  actual  or  threatened  waste  to any  part  of  the  Premises,  Mortgagee  shall  have  the  right  to  apply  without  notice  for  the appointment  of  a  receiver  of  the  Premises  and  the  rents  and  profits  thereof,  and  Mortgagee  shall be  entitled  to  the  appointment  of  such  a  receiver  as  a  matter  of  right,  without  consideration  of  the value  of  the  Premises  as  security  for  the  amounts  due  Mortgagee  or  the  solvency  of  any  Obligor. To  the  extent  permitted  by  law,  Mortgagor  hereby  waives  any  right  to  object  to  the  appointment of  a  receiver  as  aforesaid  and  expressly  consents  that  such  appointment  shall  be  made  as  an admitted  equity  and  as  a  matter  of  absolute  right  to  Mortgagee.    16. The  rights  and  remedies  of  Mortgagee  under  this  Mortgage  or  any  other  Loan Document  or  applicable  law  shall  be  cumulative  and  concurrent  and  may  be  pursued  separately, successively  or  together  against  any  Obligor(s),  the  Premises,  any  other  collateral  for  the  Loan, or  any  one  or  more  of  the  foregoing,  all  at  the  sole  discretion  of  Mortgagee,  and  may  be exercised  as   often  as  occasion  therefore  shall  arise,  all  to  the  maximum  extent  permitted  by  law. Mortgagee's  pursuit  of  any  remedy  shall  not  preclude  pursuit  of  any  other  remedy  until Mortgagee  shall  have  recovered  all  sums  due  Mortgagee,  together  with  the  appropriate  interest thereon  and  all  costs  of  collection,  including  attorney's  fees  and  appellate  attorney's  fees,  with interest  thereon.  Neither   Mortgagor  nor  anyone  claiming  through  or  under  Mortgagor  shall  set up,  claim  or  seek  to  take  advantage  of  any  appraisement,  valuation,  stay,  moratorium,  extension, exemption  or  redemption  laws,  now  or  hereafter  in  force,  in  order  to  prevent  or  hinder  the enforcement  or  foreclosure  of  this  Mortgage  or  the  sale  of  the  Premises.  To  the  maximum  extent permitted  by  law,  the  Obligors,  for  themselves  and  all  who  may  claim  through  or  under  any  of them,  hereby  severally  waive  the  benefit  of  all  such  laws  and  waive  any  and  all  rights  to  have  the Premises  or  any  other  collateral  for  the  Loan  marshaled  upon  any  foreclosure  of  this  Mortgage  or any  other  instrument  securing  the  Loan,  and  hereby  severally  agree  that  the  Premises  and  any such  other  collateral  may  be  sold  as  an  entirety  or  in  such  parcels,  in  such  manner  and  in  such order  as  Mortgagee  in  its  sole  discretion  may  elect.  In  the  event  that  Mortgagor  should  seek protection  under  the  U.S.  Bankruptcy  Code,  or  should  Mortgagor  be  adjudicated  a  Debtor thereunder,  Mortgagor  hereby  consents  to  relief  from  the  automatic  stay  pursuant  to 11  USC §362(d)  to  allow  Mortgagee  to  proceed  to,  and  obtain,  a  final  judgment  of  foreclosure  of  this Mortgage,  to  complete  a  foreclosure  sale  pursuant  thereto,  to  cause  the  issuance  of  a  certificate of  title  pursuant  thereto,  and  to  otherwise  take  all  such  actions  as  Mortgagee  may  elect  in  its  sole discretion  in  pursuance  of  the  other  rights  and  remedies  available  to  Mortgagee  in  the  case  of  a default  under  this  Mortgage.  Mortgagor  hereby  waives  any  protection  under  11  U.S.C.  §362(a).     17. Mortgagor  shall  pay  any  and  all  costs,  expenses  and  attorney's  fees  incurred  by Mortgagee  (regardless  of  whether  in  connection  with  any  action,  proceeding  or  appeal)  to  sustain the  lien  of  this  Mortgage  or  its  priority,  to  protect  or  enforce  any  of  Mortgagee's  rights  under  this Mortgage  or  under  any  other  Loan  Document,  to  recover  any  indebtedness  secured  hereby,  to contest  or  collect  any  award  or  payment  in  connection  with  the  taking  or  condemnation  of  all  or any  part  of  the  Premises,  or  for  any  title  examination  or  abstract  preparation  or  title  insurance policy  relating  to  the  Property,  and  all  such  sums  shall  bear  interest,  shall  be  paid  and  shall  be secured  as  provided  in  paragraph  14.   18. Notwithstanding  any  taking  by  eminent  domain,  ,any  alteration  of  the  grade  of  any street,  or  any  other  injury  to  or  decrease  in  value  of  the  Premises  or  any  portion  thereof  caused by  any  public  or  quasi-public  authority  or  person,  Mortgagor  shall  continue  to  pay  interest  on  the Loan  and  all  other  sum(s)  secured  hereby  until  Mortgagee  shall  have  actually  received  the  award or  payment  for  such  taking  or  alteration  or  injury  and  shall  have  applied  the  same  against  the Loan.  Mortgagee  at  its  option  may  retain  any  such  award  or  payment  and  apply  all  or  part  of  the same  toward  payment  of  the  Loan  (in  any  order  of  priority  Mortgagee  may  deem  appropriate  in its  sole  discretion),  or  Mortgagee  may  disburse  all  or  part  of  such  award  or  payment  to Mortgagor  for  the  purpose  of  altering,  restoring  or  rebuilding  any  part   of  the  Premises  which may  have  been  altered,  damaged  or  destroyed  as  a  result  of  any  such  taking  or  alteration  or injury,  or  for  any  other  purpose  or  object  satisfactory  to  Mortgagee  in  its  sole  discretion.  If  all  of the  Property  is  so  taken  but  the  award  or  payment  therefore  received  by  Mortgagee  is  insufficient    to  pay  in  full  all  sums  then  secured  by  this  Mortgage,  then  at  Mortgagee's  option  the  unpaid balance  shall  be  immediately  due  and  payable.     19. If  at  any  time  the  State  of  Florida  shall  determine  that  the  intangible  tax  paid  in connection  with  this  Mortgage  is  insufficient  or  that  the  documentary  stamps  affixed  hereto  are insufficient,  and  that  additional  intangible  tax  should  be  paid  or  that  additional  stamps  should  be affixed,  then  Mortgagor  shall  pay  for  the  same,  together  with  any  interest  or  penalties  imposed  in connection  with  such  determination,  and  Mortgagor  hereby  agrees  to  indemnify  and  hold Mortgagee  harmless  there  from.  If  any  such  sums  shall  be  advanced  by  Mortgagee,  they  shall bear  interest,  shall  be  paid  and  shall  be  secured  as  provided  in  paragraph  14.   20. If  any  federal,  state  or  local  law  shall  hereafter  be  enacted  which  (a)  for  the purpose  of  ad  valorem  taxation  shall  deduct  the  amount  of  any  lien  from  the  value  of  real property,  or (b)  shall  impose  on  Mortgagee  the  payment  of  all  or  any  part  of  the  taxes  or assessments  or  charges  required  to  be  paid  hereunder  by  Mortgagor,  or  (c)  shall  change  in  any way  the  laws  for  the  taxation  of  mortgages  or  debts  secured  thereby  or  Mortgagee's  interest  in the  Premises,  or  shall  change  the  manner  of  collecting  such  taxes,  so  as  to  affect  this  Mortgage  or the  debt  secured  hereby  or  the  holder  thereof,  then  upon  demand  Mortgagor  shall  pay  such  taxes or  assessments  or  charges  imposed  on  Mortgagee  or  shall  reimburse  Mortgagee  therefore; provided,  however,  that  if  in  the  opinion  of  Mortgagee's  counsel  the  requirement  that  Mortgagor make  such  payments  might  be  unlawful  or  might  result  in  the  imposition  of  interest  in  excess  of the  maximum  lawful  rate,  then  Mortgagee  shall  have  the  right  to  declare  the  Loan  and  all  other sums  secured  hereby  to  be  due  and  payable  thirty  (30)  days  after  notice  thereof  to  Mortgagor.     21.  This  Mortgage  is  a  "security  agreement"  and  creates  a  "security  interest"  in  favor  of Mortgagee  as  a  "secured  party"  with  respect  to  all  property  included  in  the  Premises  which  is covered  by  the  Uniform  Commercial  Code.  Including,  but  not  limited  to,  all  leases,  rents,  and personal  or  intangible  property  located  in  affixed  to  the  Premises  or  used  in  the  operation  of  the Premises,  and  all  rentals,  profits,  accounts,  general  intangibles,  and  all  other  personal  property  of the  Mortgagor  wherever  located.  Upon  an  event  of  default  under  the  Note,  this  Mortgage  or  any other  Loan  Document,  Mortgagee  may  at  its  option  pursue  any  and  all  rights  and  remedies available  to  a  secured  party  with  respect  to  any  portion  of  the  Premises  or  the  property  generally described  above  so  covered  by  the  Uniform  Commercial  Code,  and  Mortgagee  may  at  its  option proceed  as  to  all  or  any  part  of  the  Premises  or  the  property  in  accordance  with  Mortgagee's rights  and  remedies  in  respect   of  real  property.  Mortgagor  and  Mortgagee  agree  that  the  mention of  any  portion  of  the  Premises  in  a  financing  statement  filed  in  the  records  normally  pertaining  to personal  property  shall  never  derogate  from  or  impair  in  any  way  their  declared  intention  that  all items  of  collateral  described  in  this  Mortgage  are  part  of  the  real  estate  encumbered  hereby  to  the fullest  extent  permitted  by  law,  regardless  of  whether   any  such  item  is  physically  attached  to  the improvements  or  whether  serial  numbers  are  used  for  the  better  identification  of  certain  items  of Equipment.  Specifically,  the  mention  in  any  such  financing  statement  of  (a)  the  rights  in  or  the proceeds  of  any  insurance  policy,  (b)  any  award  in  eminent  domain  proceedings  for  a  taking  or for  loss  of  value, (c)  Mortgagor's  interest  as  lessor  in  any  present  or  future  lease  or  right  to income  growing  out  of  the  use  or  occupancy  of  the  Property  or  improvements  thereto,  whether pursuant  to  lease  or  otherwise,  or  (d)  any  other item  included  in  the  definition  of  the  Premises, shall  never  be  construed  to  alter  any  of  the  rights  of  Mortgagee  as  determined  by  this   Mortgage or  to  impugn  the  priority  of  Mortgagee's  lien  and  security  interest  with  respect  to  the  Premises; such  mention  in  a  financing  statement  is  declared  to  be  for  the  protection  of  Mortgagee  in  the event  any  court  shall  hold  that  notice  of  Mortgagee's  priority  of  interest  with  respect  to  any  such    portion  of  the  Premises  must  be  filed  in  the  Uniform  Commercial  Code  records  in  order  to  be effective  against  or  to  take  priority  over  any  particular  class  of  persons,  including  but  not  limited to  the  federal  government  and  any  subdivision  or  instrumentality  of  the  federal  government.  This Mortgage  or  a  carbon,  photographic  copy  or  other  reproduction  hereof  or  of  any  financing statement  shall  be  sufficient  as  a  financing  statement.   22.  Any  payment  made  in  accordance  with  the  terms  of  the  Note  or  this  Mortgage  by  any person  at  any  time  liable  for  the  payment  of  the  whole  or  any  part  of  the  sums  now  or  hereafter secured  by  this  Mortgage,  by  any  subsequent  owner  of  the  Premises,  or  by  any  other  person whose  interest  in  the  Premises  might  be  prejudiced  in  the  event  of  a  failure  to  make  such payment  (or  by  any  partner,  stockholder,  officer  or  director  of  any  such  person),  shall  be  deemed, as  between  Mortgagee  and  all  such  persons  who  at  any  time  may  be  so  liable  or  may  have  an interest  in  the  Premises,  to  have  been  made  on  behalf  of  all  such  persons.  Mortgagee's acceptance  of  any  payment  which  is  less  than  full  payment  of  all  amounts  then  due  and  payable to  Mortgagee,  even  if  made  by  one  other  than  the  person  liable  therefore,  shall  not  constitute  a waiver  of  any  rights  or  remedies  of  Mortgagee.     23.  Mortgagor  consents  and  agrees  that,  at  any  time  and  from  time  to  time  without  notice,   (a)  Mortgagee  and  the  owner(s)  of  any  collateral  then  securing  the  Loan  may  agree  to  release, increase,  change,  substitute  or  exchange  all  or  any  part  of  such  collateral,  and  (b)  Mortgagee  and any  person(s)  then  primarily  liable  for  the  Loan  may  agree  to  renew,  extend  or  compromise  the Loan  in  whole  or  in  part  or  to  modify  the  terms  of  the  Loan  in  any  respect  whatsoever. Mortgagor  agrees  that  no  such  release,  increase,  change,  substitution,  exchange,  renewal, extension,  compromise  or  modification,  no  sale  of  the  Premises  or  any  part  thereof,  no forbearance  on  the  part  of  Mortgagee,  nor  any  other  indulgence  given  by  Mortgagee  (whether with  or  without  consideration)  shall  relieve  or  diminish  in  any  manner  the  liability  of  any Obligor,  nor  adversely  affect  the  priority  of  this  Mortgage,  nor  limit  or  prejudice  or  impair  any right  or  remedy  of  Mortgagee.  All  Obligors  and  all  those  claiming  by,  through  or  under  any  of them  hereby  jointly  and  severally  waive  any  and  all  right  to  prior  notice  of,  and  any  and  all defenses  or  claims  based  upon,  any  such  release,  increase,  change,  substitution,  exchange, renewal,  extension,  compromise,  modification,  sale,  forbearance  or  indulgence.   24.  This  Mortgage  shall  be  governed  by,  and  construed  and  enforced  in  accordance  with, the  laws  of  the  State  of  Florida,  excepting  only  that  federal  law  shall  govern  to  the  extent  it  may penult  Mortgagee  to  charge,  from  time  to  time,  interest  on  the  Loan  at  a  rate  higher  than  may  be permissible  under  applicable  Florida  law.     25.  In  no  event  shall  any  agreed  to  or  actual  exaction  charged,  reserved  or  taken  as  an advance  or  forbearance  by  Mortgagee  as  consideration  for  the  Loan  exceed  the  limits  (if  any) imposed  or  provided  by  the  law  applicable  from  time  to  time  to  the  Loan  for  the  use  or  detention of  money

or  for  forbearance  in  seeking  its  collection;  Mortgagee  hereby  waives  any  right  to demand  any  such  excess.  In  the  event  that  the  interest  provisions  of  the  Note  or  any  exactions provided  for  in  the  Note,  this  Mortgage  or  any  other  Loan  Document  shall  result  at  any  time  or for  any  reason  in  an  effective  rate  of  interest  that  transcends  the  maximum  interest  rate  permitted by  applicable  law  (if  any),  then  without  further  agreement  or  notice  the  obligation  to  be  fulfilled shall  automatically  be  reduced  to  such  limit  and  all  sums  received  by  Mortgagee  in  excess  of those  lawfully  collectible  as  interest  shall  be  applied  against  the  principal  of  the  Loan immediately  upon  Mortgagee's  receipt  thereof,  with  the  same  force  and  effect  as  though  the    payor  had  specifically  designated  such  extra  sums  to  be  so  applied  to  principal  and  Mortgagee had  agreed  to  accept  such  extra  payment(s)  as  a  premium-free  prepayment  or  prepayments.     26.  Any  provision  of  this  Mortgage  which  is  prohibited  or  unenforceable  in  any jurisdiction  shall,  as  to  such  jurisdiction  only,  be  ineffective  only  to  the  extent  of  such prohibition  or  unenforceability  without  invalidating  the  remaining  provisions  hereof  or  affecting the  validity  or  enforceability  of  such  provision  in  any  other  jurisdiction.     27.  Mortgagee  and  any  persons  authorized  by  Mortgagee  shall  have  the  right,  from  time to  time  at  the  discretion  of  Mortgagee,  to  enter  and  inspect  the  Premises.  At  any  time  after default  under  the  terms  of  the  Note,  this  Mortgage  or  any  other  Loan  Document,  if  any  of  the buildings,  improvements  or  Equipment  now  or  hereafter  located  on  or  in  the  Property  shall  be unprotected  or  unguarded,  or  if  any  improved  portion  of  the  Property  shall   be  allowed  to  remain vacant  or  deserted,  then  at  its  option  Mortgagee  may  employ  watchmen  for  the  Property  and expend  any  monies  deemed  necessary  by  Mortgagee  to  protect  the  Property  and  the  buildings, improvements  and  Equipment  thereon  from  waste,  vandalism  and  other  hazards,  depredation  or injury,  and  any  sums  expended  by  Mortgagee  for  such  purpose  shall  bear  interest,  shall  be  paid and  shall  be  secured  as  provided  in  paragraph  14.   28.  Mortgagor  agrees  that  the  management  of  the  Premises  shall  be  conducted  at  all  times by  Mortgagor  or  by  such  other  professional  property  management  organization  as  Mortgagee shall  approve  in  writing,  which  Mortgagee  may  grant  or  withhold  in  its  sole  discretion.  At  any time  after  default  under  the  Note,  this  Mortgage  or  any  other  Loan  Document,  if  Mortgagee  shall determine  in  its  sole  discretion  that  the  management  or  maintenance  of  the  Premises  is unsatisfactory,  then  Mortgagor  shall  employ  as  managing  agent  of  the  Premises  such  person(s)  as Mortgagee  may  designate  from  time  to  time,  at  Mortgagor's  sole  expense  and  for  the  duration  of the  default.  Any  sums  advanced  by  Mortgagee  in  connection  with  such  managing  agent  shall bear  interest,  shall  be  paid  and  shall  be  secured  as  provided  in  paragraph  14.     29.  Mortgagor  shall  deliver  to  Mortgagee  or  its  designated  agent  any  abstract  or  abstracts of  title  now  owned  or  hereafter  acquired  by  Mortgagee  covering  the  Property  as  further  security for  the  Loan,  which  abstract(s)  shall  remain  in  the  possession  of  Mortgagee  or  its  agent  at  all times  until  all  sums  secured  by  this  Mortgage  are  paid  in  full.  In  the  event  of  a  foreclosure  of  this Mortgage  or  other  transfer  of  title  to  the  Premises,  all  right,  title  and  interest  of  Mortgagor  in  and to  such  abstract(s)  of  title  shall  pass  to  the  foreclosure  purchaser  or  other  transferee.     30.  Unless  in  events  where  the  Mortgagee  is  found  to  be  grossly  negligent  or  of  willful misconduct,  if  the  Mortgagee  shall  be  named  as  a  party  to  any  lawsuit  brought  at  any  time involving  any  Obligor  or  with  respect  to  the  Premises,  this  Mortgage  or  the  Loan,  or  if Mortgagee  shall  incur  any  costs  or  expenses  in  connection  with  any  lawsuit  involving  any Obligor  or  the  Premises  in  which  Mortgagee  is  not  a  party  (i.e.  if  Mortgagee  is   called  upon  to produce  documentation,  information,  or  to  provide  testimony),  then  regardless  of  the  type  or merits  of  such  lawsuit,  Mortgagor  shall  defend  Mortgagee  and  indemnify  and  hold  Mortgagee fully  harmless  from,  and  shall  reimburse  Mortgagee  for  any  and  all  claims,  demands,  damages, liabilities,  judgments,  losses,  costs,  expenses  and  attorney's  fees  incurred  by  Mortgagee  and arising  out  of  or  resulting  from  any  such  lawsuit  or  any  appeal  in  connection  therewith,  including all  internal  costs  for  time  incurred  by  Mortgagee's  officers  and  other  employees  calculated  at Mortgagee's  standard  rates  (which  are  available  to  Mortgagor  upon  Mortgagor's  request).  This provision  shall  survive  the  satisfaction  or  other  termination  of  this  Mortgage.   oY'    31.  Mortgagee  is  hereby  subrogated  (a)  to  the  lien(s)  of  each  and  every  mortgage,  lien  or other  encumbrance  on  all  or  any  part  of  the  Premises  which   is  fully  or  partially  paid  or  satisfied out  of  the  proceeds  of  the  Loan,  and  (b)  to  the  rights  of  the  owner(s)  and  holder(s)  of  any  such mortgage,  lien  or  other  encumbrance.   32.  In  order  to  induce  Mortgagee  to  make  the  Loan,  Mortgagor  represents  and  warrants that: (a)  except  as  previously  or  concurrently  disclosed  in  writing  to  Mortgagee,  there  are  no actions,  suits  or  proceedings  pending  or  threatened  against  or  affecting  any  Obligor  or  any portion  of  the  Premises,  or  involving  the  validity  or  enforceability  of  this  Mortgage  or  the priority  of  its  lien,  before  any  court  of  law  or  equity  or  any  tribunal,  administrative  board  or governmental  authority,  and  no  Obligor  is  in  default  under  any  other  indebtedness  or  with respect  to  any  order,  writ,  injunction,  decree,  judgment  or  demand  of  any  court  or  any governmental  authority;  (b)  the  execution  and  delivery  of  the  Note,  this  Mortgage  and  all  other Loan  Documents  do  not  and  shall  not  (i)  violate  any  provisions  of  any  law,  rule,  regulation, order,  writ,  judgment,  injunction,  decree,  determination  or  award  applicable  to  any  Obligor,  nor   (ii)  result  in  a  breach  of,  or  constitute  a  default  under,  any  indenture,  bond,  mortgage,  lease, instrument,  credit  agreement,  undertaking,  contract  or  other  agreement  to  which  any  Obligor  is  a party  or  by  which  any  of  them  or  their  respective  properties  may  be  bound  or  affected;  (c)  the Note,  this  Mortgage  and  all  other  Loan  Documents  constitute  valid  and  binding  obligations  of the  Obligor(s)  executing  the  same,  enforceable  against  such  Obligor(s)  in  accordance  with  their respective  terms;  (d)  all  financial  statements  of  the  Obligors  previously  delivered  to  Mortgagee have  been  prepared  in  accordance  with  generally  accepted  accounting  principles  consistently applied  and  fairly  present  the  correct  respective  financial  conditions  of  the  Obligors  as  of  their respective  dates,  and  the  foregoing  shall  be  true  with  respect  to  all  financial  statements  of  the Obligors  delivered  to  Mortgagee  hereafter; (e)  there  is  no  fact  that  the  Obligors  have  not disclosed  to  Mortgagee  in  writing  that  could  materially  adversely  affect  their  respective properties,  businesses  or  financial  conditions  or  the  Premises  or  any  other  collateral  for  the  Loan;   (f)  the  Obligors  have  duly  obtained  all  permits,  licenses,  approvals  and  consents  from,  and  made all  filings  with,  any  governmental  authority  (and  the  same  have  not  lapsed  nor  been  rescinded  or revoked)  which  are  necessary  in  connection  with  the  execution  or  delivery  or  enforcement  of  this Mortgage  or  any  other  Loan  Document  or  the  performance  of  any  Obligor's  obligations  there under;  (g)   the  proceeds  of  the  Loan  are  not  being  used  to  purchase  or  carry  any  "margin  stock" within  the  meaning  of  Regulation  "U"  of  the  Board  of  Governors  of  the  Federal  Reserve  System, nor  to  extend  credit  to  others  for  that  purpose;  and  (h)  each  extension  of  credit  secured  by  this Mortgage  is  exempt  from  the  provisions  of  the  Federal  Consumers  Credit  Protection  Act  (Truthin-Lending  Act)  and  Regulation  "Z"  of  the  Board  of  GoVernors  of  the.  Federal  Reserve  System, because  Mortgagor  is  a  person  fully  excluded  there  from,  and/or  because  said  extension  of  credit is  only  for  business  or  commercial  purposes  of  Mortgagor  and  is  not  being  used  for  personal, family,  household  or  agricultural  purposes.  Mortgagor  acknowledges  and  agrees  that  Mortgagee is  relying  on  the  representations  and  warranties  in  this  Mortgage  and  all  other  Loan  Documents as  a  precondition  to  making  the  Loan,  and  that  all  such  representations  and  warranties  shall survive  the  closing  of  the  Loan  and  any  bankruptcy  proceedings.   33.  Mortgagor  hereby  represents  and  warrants,  in  order  to  induce  Mortgagee  to  make  the Loan,  that:  (a)  Mortgagor  is  duly  organized,  validly  existing  and  in  good  standing  under  the  laws of  the  State  of  Florida; (b)  Mortgagor  has  all  requisite  power  and  authority (corporate  or otherwise)  to  conduct  its  business,  to  own  its  properties,  to  execute  and  deliver  the  Note  and  this Mortgage  and  all  other  Loan  Documents,  and  to  perform  its  obligations  under  the  same;  (c)  the    execution,  delivery  and  performance  of  the  Note,  this  Mortgage  and  all  other  Loan  Documents have  been  duly  authorized  by  all  necessary  actions  (corporate  or  otherwise)  and  do  not  require- the  consent  or  approval  of  any  other  person  or  entity  whose  consent  has  not  been  obtained;  and   (d)  the  execution,  delivery  and  performance  of  the  Note,  this  Mortgage  and  all  other  Loan Documents  do  not  and  shall  not  conflict  with  any  provision  of  Mortgagor's,  Operating Agreement,  or  other  document  pursuant  to  which  Mortgagor  was  created  and  exists.     34. a.  Hazardous  Waste.  "Hazardous  Waste"  as  used  herein  shall  mean  and  include those  elements  or  compounds  which  are  contained  in  the  list  of  hazardous  substances  adopted  by the  United  States  Environmental  Protection  Agency (EPA)  and  the  list  of  toxic  pollutants designated  by  Congress  or  the  EPA  or  defined  by  any  other  federal,  state  or  local  statute,  law, ordinance,  code,  rule,  regulation,  order  or  decree  regulating,  relating  to  or  imposing  liability  or standards  of  conduct  concerning  any  hazardous,  toxic  or  dangerous  waste,  substance  or  material as  now  or  at  any  time  in  effect.   b. Representations  and  Warranties.  Mortgagor  specifically  represents  and  warrants that  the  use  and  operation  of  the  Premises  comply  with  all  applicable  environmental  laws,  rules and  regulations,  including,  without  limitation,  the  Federal  Resource  Conservation  and  Recovery Act   and  the  Comprehensive  Environmental  Response  Compensation  and  Liability  Act  of  1980 and  all  amendments  and  supplements  thereto  and  Mortgagor  shall  continue  to  comply  therewith at  all  times.  Specifically,  and  without  limiting  the  generality  of  the  foregoing,  there  are  not  now and  there  shall  not  in  the  future  be  any  Hazardous  Waste  located  or  stored  in,  upon  or  at  the Premises,  and  there  are  not  now  nor  shall  there  be  at  any  time  any  releases  or  discharges  from  the Premises.   c.        Indemnification. (i)  Mortgagor  hereby  agrees  to  indemnify  Mortgagee  and  hold Mortgagee  harmless  from  and  against  any  and  all  losses,  liabilities,  including  strict  liability, damages,  injuries,  expenses,  including  attorneys'  fees  for  attorneys  of  Mortgagee's  choice,  costs of  any  settlement  or  judgment  and  claims  of  any  and  every  kind  whatsoever  paid,  incurred  or suffered  by,  or  asserted  against,  Mortgagee  by  any  person  or  entity  or  governmental   agency  for, with  respect  to,  or  as  a  direct  or  indirect  result  of,  the  presence  on  or  under,  or  the  escape, seepage,  leakage,  spillage,  discharge,  emission  or  release  from  the  Premises  of  any  Hazardous Waste  (including,  without  limitation,  any  losses,  liabilities,  including  strict  liability,  damages, injuries,  expenses,  including  attorney's  fees  for  attorneys  of  Mortgagee's  choice,  costs  of  any settlement  or  judgment  or  claims  asserted  or  arising  under  the  Comprehensive  Environmental Response,  Compensation  and  Liability  Act,  any  federal,  state  or  local  "Superfund"  or  "Superlien" laws,  and  any  and  all  other  statutes,  laws,  ordinances,  codes,  rules,  regulations,  orders  or  decrees regulating,  with  respect  to  or  imposing  liability,  including  strict  liability,  substances  or  standards of  conduct  concerning  any  hazardous  waste),  regardless  of  whether  within  Mortgagor's  control.   (ii)  The  aforesaid  indemnification  and  hold  harmless  agreement  shall  benefit  Mortgagee  from  the date  hereof  and  shall  continue  notwithstanding  payment,  release  or  discharge  of  this  Mortgage  or the  indebtedness,  and,  without  limiting  the  generality  of  the  foregoing  such  obligations  shall continue  for  the  benefit  of  Mortgagee  and  any  subsidiary  of  Mortgagee  during  and  following  any possession  of  the  Premises  hereby  or  any  ownership  of  the  Premises  thereby,  whether  arising  by foreclosure  or  deed  in  lieu  of  foreclosure  or  otherwise,  such  indemnification  and  hold  harmless agreement  to  continue  forever.   d. Notice  of  Environmental  Complaint.  If  Mortgagor  shall  receive  any  notice  of:  (i) the  happening  of  any  material  event  involving  the  spill,  release,  leak,  seepage,  discharge  or    cleanup  of  any  Hazardous  Waste  on  the  Land  or  Premises  in  connection  with  Mortgagor's operations  thereon;  or  (ii)  any  complaint,  order,  citation  or  material  notice  with  regard  to  air emissions,  water  discharges  or  any  other  environmental,  health  or  safety  matter  affecting Mortgagor (an  "Environmental  Complaint")  from  any  person  or  entity,  then  Mortgagor immediately  shall  notify  Mortgagee  orally  and  in  writing  of  said  notice.   e.        Mortgagee's  Reserved  Rights.  In  the  event  of  receipt  of  an  Environmental Complaint,  Mortgagee  shall  have  the  right,  but  not  the  obligation  (and  without  limitation  of Mortgagee's  rights  under  this  Mortgage)  to  enter  onto  the  Premises  or  to  take  such  other  actions as  it  shall  deem  necessary  or  advisable  to  clean  up,  remove,  resolve  or  minimize  the  impact  of,  or otherwise  deal  with,  any  such  Hazardous  Waste  or  Environmental  Complaint  following  receipt of  any  notice  from   any  person  or  entity  having  jurisdiction  asserting  the  existence  of  any Hazardous  Waste  or  an  Environmental  Complaint  pertaining  to  the  Premises  or  any  part  thereof which,  if  true,  could  result  in  an  order,  suit  or  other  action  against  Mortgagor  and/or  which,  in Mortgagee's  sole  opinion,  could  jeopardize  its  security  under  this  Mortgage.  All  reasonable  costs and  expenses  incurred  by  Mortgagee  in  the  exercise  of  any  such  rights  shall  be  secured  by  this Mortgage  and  shall  be  payable  by  Mortgagor  upon  demand.     f.        Environmental  Audits.  If  Mortgagee  shall  have  reason  to  believe  that  Hazardous Waste  has  been  discharged  on  the  Premises,  Mortgagee  shall  have  the  right,  in  its  sole  discretion, to  require  Mortgagor  to  perform  periodically  to  Mortgagee's  satisfaction  (but  not  more  frequently than  annually  unless  an  Environmental  Complaint  shall  be  then  outstanding),  at  Mortgagor's expense,  an  environmental  audit  and,  if  deemed  necessary  by  Mortgagee,  an  environmental  risk assessment  of: (i)  the  Premises; (ii)  hazardous  waste  management  practices  and/or (iii) Hazardous  Waste  disposal  sites  used  by  Mortgagor.  Said  audit  and/or  risk  assessment  must  be  by an  environmental  consultant  satisfactory  to  Mortgagee.  Should  Mortgagor  fail  to  perfoiiii  any such  environmental  audit  or   risk  assessment  within  thirty  (30)  days  after  Mortgagee's  request, Mortgagee  shall  have  the  right  to  retain  an  environmental  consultant  to  perform  such environmental  audit  or   risk  assessment.  All  costs  and  expenses  incurred  by  Mortgagee  in  the exercise  of  such  rights  shall  be  secured  by  this  Mortgage  and  shall  be  payable  by  Mortgagor upon  demand.     g.        Breach.  Any  breach  of  any  warranty,  representation  or  agreement  contained  in this  Section  shall  be  an  Event  of  Default  and  shall  entitle  Mortgagee  to  exercise  any  and  all   remedies  provided  in  this  instrument,  or  otherwise  permitted  by  law.     35. In  addition  to  the  Loan,  this  Mortgage  is  given  to  secure  any  and  all  obligations and  liabilities  of  Mortgagor  and/or  any  other  Obligor,  to  Mortgagee,  including  but  not  limited  to any  obligations  and/or  liabilities  arising  by  virtue  of  any  security  agreement,  promissory  note  or other  agreement  between  Mortgagor  and/or  any  other  Obligor  and  Mortgagee,  and  for  all  other obligations  of  said  parties  to  Mortgagee,  whether  contingent  or  absolute,  direct  or  indirect, whether  joint  or  several  and  regardless  of  however  or  whenever  created.  At  the  option  of Mortgagee  at  any  time,  any  or  all  of  such  indebtedness  may  be  deemed  a  future  advance  made under  this  Mortgage.     36. Whenever  the  context  of  any  provision  of  this  Mortgage  shall  so  require,  words  in the  singular  shall  include  the  plural,  words  in  the  plural  shall  include  the  singular,  and  pronouns of  any  gender  shall  include  the  other  genders.  Captions  and  headings  in  this  Mortgage  are  for convenience  only  and  shall  not  affect  its  interpretation.  All  references  in  this  Mortgage  to    exhibits,  schedules,  paragraphs  and  subparagraphs  refer  to  the  respective  subdivisions  of  this Mortgage,  unless  the  reference  expressly  identifies  another  document.  Wherever  used  in  this Mortgage,  unless  the  context  clearly  indicates  a  contrary  intention  or  unless  this  Mortgage specifically  provides  otherwise: (a)  the  term  "Mortgagor"  shall  mean  "Mortgagor  or  any subsequent  owner  or  owners  of  the  Premises";  (b)  the  teirii  "Mortgagee"  shall  mean  "Mortgagee or  any  subsequent  holder(s)  of  this  Mortgage";  (c)  the  term  "Note"  shall  mean  "the  Note,  any renewal  notes  and  any  additional  notes  hereafter  to  be  issued  and  secured  by  this  Mortgage pursuant  to  the  future  advance  provision  hereof';  (d)  the  term  "Loan"  shall  mean  "the  Loan  and any  future  or  additional  advances  made  by  Mortgagee  from  time  to  time  for  any  reason  permitted or  provided  by  the  terms  of  this  Mortgage  or  any  other  Loan  Document";  and  (e)  the  term "person"  shall  mean  "an  individual,  corporation,  partnership,  limited  partnership,  unincorporated association,  joint  stock  corporation,  joint  venture  or  other  legal  entity".     37. Time  is  of  the  essence  of  all  provisions  of  this  Mortgage.  Mortgagor  hereby waives  all  right  of  homestead  exemption  (if  any)  in  the  Premises.  If  Mortgagor  consists  of  more than  one  person,  the  obligations  and  liabilities  of  each  such  person  hereunder  shall  be  joint  and several,  and  wherever  the  teim  "Mortgagor"  is  used  it  shall   be  deemed  to  refer  to  such  persons jointly  and  severally.  If  Mortgagor  is  a  partnership,  then  all  general  partners  in  Mortgagor  shall be  liable  jointly  and  severally  for  the  covenants,  agreements,  undertakings  and  obligations  of Mortgagor  in  connection  with  the  Loan,  notwithstanding  any  contrary  provision  of  the partnership  laws  of  the  State  of  Florida.  This  Mortgage  shall  be  binding  upon  the  parties  hereto and  their  respective  heirs,  personal  representatives,  successors  and  assigns,  and  it  shall  inure  to the  benefit  of  Mortgagee  and  its  successors  and  assigns  and  to  the  benefit  of  Mortgagor  and Mortgagor's  heirs,  personal  representatives  and  permitted  successors  and  assigns.  This  Mortgage may  be  executed  in  any  number  of  counterparts,  each  of  which  shall  be  deemed  an  original,  but all  of  which,  together,  shall  constitute  but  one  instrument.  This  Mortgage  cannot  be  changed except  by  an  agreement  in  writing,  signed  by  the  party  against  whom  enforcement  of  the  change is  sought.     38. MORTGAGOR    AND    MORTGAGEE    HEREBY    KNOWINGLY, VOLUNTARILY  AND  INTENTIONALLY  WAIVE  THE  RIGHT  EITHER  MAY  HAVE TO  TRIAL  BY  JURY  IN  RESPECT  TO  ANY  LITIGATION  BASED  HEREON,  OR ARISING  OUT  OF,  UNDER  OR  IN  CONNECTION  WITH  THIS  MORTGAGE  AND ANY  AGREEMENT  CONTEMPLATED  TO  BE  EXECUTED  IN  CONJUNCTION HEREWITH,    OR   ANY   COURSE   OF   CONDUCT,   COURSE   OF   DEALING, STATEMENTS  (WHETHER  VERBAL  OR  WRITTEN)  OR  ACTIONS  OF  EITHER PARTY.  MORTGAGOR  ACKNOWLEDGES  THAT  THIS  WAIVER  OF  JURY  TRIAL IS  A  MATERIAL  INDUCEMENT  TO  THE  MORTGAGEE  IN  EXTENDING  CREDIT TO   THE   MORTGAGOR,   THAT   THE   MORTGAGEE   WOULD   NOT   HAVE EXTENDED  SUCH  CREDIT  WITHOUT  THIS  JURY  TRIAL  WAIVER,  AND  THAT MORTGAGOR  HAS  BEEN  REPRESENTED  BY  AN  ATTORNEY  OR  HAS  HAD  AN OPPORTUNITY  TO  CONSULT  WITH  AN  ATTORNEY  IN  CONNECTION  WITH THIS  JURY  TRIAL  WAIVER  AND  UNDERSTANDS  THE  LEGAL  EFFECT  OF  THIS WAIVER.   THE  PROMISSORY  NOTE  SECURED  BY  THIS  MORTGAGE  IS  FOR  $1,850,000.00 AND  IS  PAYABLE  TO  KORTH  DIRECT  MORTGAGE,  LLC.    THIS  IS  A  BALLOON  MORTGAGE  SECURING  A  FIXED  RATE  OBLIGATION  WITH A  BALLOON  PAYMENT  DUE  ON  THE  60^TH  MONTH.  THE  FINAL  PRINCIPAL PAYMENT  OR  THE  PRINCIPAL  BALANCE  DUE  UPON  MATURITY  WOULD  BE APPROXIMATELY  $1,850,000.00,  TOGETHER  WITH  ACCRUED  INTEREST,  IF  ANY, AND  ALL  ADVANCEMENTS  MADE  BY  THE  MORTGAGEE  UNDER  THE  TERMS OF  THIS  MORTGAGE.  THE  BANK  APPLIES  ALL  PAYMENTS  RECEIVED  FIRST TO   THE  INTEREST   AND   THEN   TO   THE   PRINCIPAL.   IN   CASE   OF   LATE PAYMENTS  PRINCIPAL  MAY  NOT  AMORTIZE  ACCORDING  TO  SCHEDULE  AND THE  BALLOON  PAYMENT  WILL  BE  INCREASED  ACCORDINGLY.     WITNESS  the  due  execution  hereof  as  of  the  date  first  above  written.     Signed,  sealed  and  delivered  in   the  presence  of  these  witnesses:   MIS  NW  314iLC,   a  Florida  li   tied  liability  co   p     By:      r,   OFER  MIZRAHI,  Manager   Print:4561449-  Vo.)        Print:       STATE  OF  FLORIDA   SS   COUNTY  OF  MIAMI-DADE     The  foregoing  instrument  was  acknowledged  before  me  this  13th  day  of  March,  2018  by Ofer  Mizrahi,  Manager  of  MIS  NW  345  LLC.  Who  personally  appeared  before  me,  [ ]  is     personally    known    to       me       or]  has    produced    Florida    Drivers    License    #%COO-  (AD-V/10,  as  identification.    My  commission  expires:   Print  Name:    Mon  tow I  11 yarn   Notary  Public,  State  of  Florida   AGAI N   Notary Public  State  of  Florida,   N'    Moniq^{ue  Ullivarri}  lz       My  Com^{mission  GG  124327 v.,    Expires  09/17/2021}   [NOTARY  SEAL]

EX-10.2

Exhibit 10.2

PROMISSORY  NOTE   $1,850,000.00          Miami,  Florida  March  13,  2018    FOR  VALUE  RECEIVED,  the  undersigned  ("Borrower")  promises  to  pay  to  the  order  of KORTH  DIRECT  MORTGAGE,  LLC  ("Lender"),  at  the  office  of  the  Lender  at  2937  SW  27th Avenue  Suite  307,  Miami,  FL  33133  or  at  such  other  place  as  the  holder  hereof  may  from  time  to time  designate  in  writing,  the  principal  sum  of  One  Million  Eight  Hundred  Fifty  Thousand  and 00/100  dollars, ($1,850,000.00),  together  with  a  rate  of  interest  thereon  of  six  and  one  half (6.50%)  ("Interest  Rate"),  during  the  five  year  term  of  the  loan,  both  principal  and  interest payable  in  lawful  Money  of  the  United  States.  Such  principal  sum  and  interest  to  be  payable  as follows.  THIS  IS  A  FIVE  (5)  YEAR  NOTE  calling  for  Fifty  Nine  (59)  consecutive  monthly  payments  of interest  in  the  amount  of  $10,020.83  plus  escrows  for  taxes  and  insurances,  commencing  on  May 1,  2018  and  ending  on  March  1,  2023,  and  a  final  balloon  payment  on  March  13,  2023  (defined as  the  "Maturity  Date")  consisting  of  the  principal  then  outstanding  together  with  accrued  interest from  March 1,  2023  through  March 13, 2023.  Monthly  payments  are  computed  on  an "actual/360  day"  basis.  The  Actual/360   day  computation  determines  the  annual  effective  yield by  taking  the  stated  (nominal)  rate  for  a  year's  period  and  then  dividing  said  rate  by  360  to determine  the  daily  periodic  rate  to  be  applied  for  each  day  in  the  applicable  period.  Application of  the  Actual/360  computation  produces  an  annualized  effective  interest  rate  exceeding  that  of the  nominal  rate.  The  Lender  applies  all  payments  received  first  to  interest  and  then  to  principal. In  case  of  late  payments  principal  may  not  amortize  according  to  schedule  and  the  final  payment will  be  increased  accordingly.  At  closing  the  Borrower  shall  pay  the  interest  accruing  through March  31,  2018.   Borrower  shall  pay  to  Lender  a  late  charge  of  five  percent  (5%)  of  any  payment  not  received  by Lender  within  ten  (10)  days  of  its  due  date;  provided,  however,  if  said  ten  (10)  day  period  ends on  a  day  other  than  a  day  on  which  Lender  is  open  for  business  (a  "Business  Day"),  then  the  a fore  described  late  charge  shall  be  payable  if  the  payment  is  not  received  by  the  last  Business Day  within  said  ten  (10)  day  period.   If  this  Note  is  prepaid  in  whole  or  in  part  within  the  first  thirty  six  (36)  months  of  the  loan,  the Borrower  shall  pay  a  prepayment  penalty  equal  to  the  amount  of  interest  that  the  prepayment amount  would  have  earned  the  Lender  in  thirty  six  (36)  months  less  the  amount  of  interest  the prepayment  has  already  earned  the  Lender  at  the  time  it  is  made,  but  thereafter  may  be  prepaid  in whole  or  in  part  at  any  time  without  penalty.   Borrower  shall  pay  all  amounts  owing  under  this  Note  in  full  when  due  without  set-off, counterclaim,  deduction  or  withholding  for  any  reason  whatsoever.  If  any  payment  falls  due  on a  day  other  than  a  Business  Day,  then  such  payment  shall  instead  be  made  on  the  next succeeding  Business  Day,  and  interest  shall  accrue  accordingly.  Any  payment  received  by Lender  after  1:00  p.m.  shall  not  be  credited  against  the  indebtedness  under  this  Note  until  at  least the  next  succeeding  Business  Day.   Default  shall  occur  in  the  event  that  any  amount  due  under  this  Note  is  not  paid  within  ten  (10) days  of  its  due  date.  If  default  be  made  in  the  payment  of  any  sums  payable  pursuant  to  the  terms of  this  Note,  or  if  default  or  other  event  causing  the  acceleration  of  this  Note  occur  under  either of  the  Florida  Real  Estate  Mortgage,  Assignment  of  Leases  and  Rents  and  Security  Agreement securing  this  Note  (the  "Mortgage"),  or  any  other  instrument  or  document  executed  in  connection with  the  Loan  (this  Note,  the  Mortgage,  and  all  such  instruments  and  documents,  including, without  limitation,  any  guaranties,  agreements,  mortgages,  security  agreements,  assignments  and other  documents  securing  this  Note,  are  referred  to  in  this  Note  as  the  "Loan  Documents")  (an "Event  of  Default"),  then  or  at  any  time  thereafter  at  the  option  of  Lender,  the  whole  of  the principal  sum  then  remaining  unpaid  hereunder,  together  with  all  interest  accrued  thereon  and  all other  sums  owing  under  the  Loan  Documents,  shall  immediately  become  due  and  payable without  notice  and  Lender  shall  be  entitled  to  pursue  any  and  all  rights  and  remedies  provided  by applicable  law  and/or  under  the  terms  of  this  Note  or  any  other  Loan  Document,  all  of  which shall  be  cumulative  and  may  be  exercised  successively  or  concurrently.   Upon  the  occurrence and  during  the  continuation  of  any  Event  of  Default,  Lender,  at  its  option,  may  at  any  time declare  any  or  all  other  liabilities  of  any  Borrower  and/or  Guarantor  hereinafter  jointly ("Obligor")  to  Lender  immediately  due  and  payable  (notwithstanding  any  contrary  provisions thereof)  without  demand  or  notice  of  any  kind.  In  addition,  Lender  shall  have  the  right  to  set  off any  and  all  sums  owed  to  any  Obligor  by  Lender  in  any  capacity  (whether  or  not  then  due) against  the  Loan  and/or  against  any  other  liabilities  of  any  Obligor  to  Lender.  From  and  after  an  Event  of  Default,  and  regardless  of  whether  the  Lender  also  elects  to accelerate  the  maturity  of  this  Note,  the  entire  principal  remaining  unpaid  hereunder  shall  bear  an augmented  annual  interest  rate  equal  to  the  highest  applicable  lawful  rate  (the  "Default  Rate"). Failure  to  exercise  any  and  all  rights  or  remedies  Lender  may  in  the  event  of  any  such  default  be entitled  to  shall  not  constitute  a  waiver  of  the  right  to  exercise  such  rights  or  remedies  in  the event  of  any  subsequent  default,  whether  of  the  same   or  different  nature.  No  waiver  of  any  right or  remedy  by  Lender  shall  be  effective  unless  made  in  writing  and  signed  by  Lender,  nor  shall any  waiver  on  one  occasion  apply  to  any  future  occasion.  In  no  event  shall  any  agreed  or  actual  exaction  charged,  reserved  or  taken  as  an  advance  or forbearance  by  Lender  as  consideration  for  the  Loan  exceed  the  limits (if  any)  imposed  or provided  by  the  law  applicable  from  time  to  time  to  the  Loan  for  the  use  or  detention  of  money or  for  forbearance  in  seeking  its  collection,  and  Lender  hereby  waives  any  right  to  demand  such excess.  In  the  event  that  the  interest  provisions  of  this  Note  or  any  exactions  provided  for  in  this Note  or  any  other  Loan  Document  shall  result  at  any  time  or  for  any  reason  in  an  effective  rate  of interest  that  transcends  the  maximum  interest  rate  permitted  by  applicable  law  (if  any),  then without  further  agreement  or  notice  the  obligation  to  be  fulfilled  shall  be  automatically  reduced to  such  limit  and  all  sums  received  by  Lender  in  excess  of  those  lawfully  collectible  as  interest shall  be  applied  against  the  principal  of  the  Loan  immediately  upon  Lender's  receipt  thereof,  with the  same  force  and  effect  as  though  the  payor  had  specifically  designated  such  extra  sums  to  be so  applied  to  principal  and  Lender  had  agreed  to  accept  such  extra  payment(s)  as  a  premium-free prepayment  or  prepayments.   During  any  time  that  the  Loan  bears  interest  at  the  maximum lawful  rate (whether  by  application  of  this  paragraph,  the  default  provisions  of  this  Note  or otherwise),  interest  shall  be  computed  on  the  basis  of  the  actual  number  of  days  elapsed  and  the actual  number  of  days  in  the  respective  calendar  year.   Pursuant  to  Florida  Statutes,  Section 687.12,  the  interest  rate  charged  is  authorized  by  Florida  Statutes,  Chapter  665.   The  Obligors  hereby  severally: (a)  waive  demand,  presentment,  protest,  notice  of  dishonor,  suit against  or  joinder  of  any  other  person,  and  all  other  requirements  necessary  to  charge  or  hold  any   Obligor  liable  with  respect  to  the  Loan;  (b)  waive  to  the  extent  lawfully  waivable  all  defenses  for the  benefit  of  any  Obligor  now  or  hereafter  in  force;  (c)  submit  to  the  jurisdiction  of  the  state  and federal  courts  in  the  State  of  Florida  for  purposes  of  any  such  action  or  proceeding;  (d)  agree  that the  venue  of  any  such  action  or  proceeding  may  be  laid  in  Miami-Dade  County,  Florida  (in addition  to  any  county  in  which  any  collateral  for  the  Loan  is  located),  and  waive  any  claim  that the  same  is  an  inconvenient  forum;  (e)  stipulate  that  service  of  process  in  any  such  action  or proceeding  shall  be  properly  made  if  mailed  by  any  form  of  registered  or  certified  mail  (airmail if  international),  postage  prepaid,  to  the  address  then  registered  in  Lender's  records  for  the Obligor(s)  so  served,  and  that  any  process  so  served  shall  be  effective  ten  (10)  days  after mailing;  and  (f)  agree  that  the  death  or  mental  or  physical  incapacity  of  any  Obligor  who  is  a natural  person,  or  the  dissolution  or  merger  or  consolidation  or  termination  of  the  existence  of any  Obligor  that  is  a  business  entity  (or  if  any  person  controlling  such  Obligor  shall  take  any action  authorizing  or  leading  to  the  same),  shall  at  Lender's  option,  which  option  may  be exercised  then  or  at  any  time  thereafter,  result  in  the  Loan  being  then  due  and  payable  in  full.  No provision  of  this  Note  shall  limit  Lender's  right  to  serve  legal  process  in  any  other  manner permitted  by  law  or  to  bring  any  such  action  or  proceeding  in  any  other  competent  jurisdiction. The  Obligors  hereby  severally  consent   and  agree  that,  at  any  time  and  from  time  to  time  without notice, (i)  Lender  and  the  owners(s)  of  any  collateral  then  securing  the  Loan  may  agree  to release,  increase,  change,  substitute  or  exchange  all  or  any  part  of  such  collateral,  and  (ii)  Lender and  any  person(s)  then  primarily  liable  for  the  Loan  may  agree  to  renew,  extend  or  compromise the  Loan  in  whole  or  in  part  or  to  modify  the   terms  of  the  Loan  in  any  respect  whatsoever;  no such  release,  increase,  change,  substitution,  exchange,  renewal,  extension,  compromise  or modification  shall  release  or  affect  in  any  way  the  liability  of  any  Obligor,  unless  otherwise agreed  to  between  the  parties  and  the  Obligors  hereby  severally  waive  any  and  all  defenses  and claims  whatsoever  based  thereon.   Until  Lender  receives  all  sums  due  under  this  Note  and  all other  Loan  Documents  in  immediately  available  funds,  no  Obligor  shall  be  released  from liability  with  respect  to  the  Loan  unless  Lender  expressly  releases  such  Obligor  in  a  writing signed  by  Lender,  and  Lender's  release  of  any  Obligor(s)  shall  not  release  any  other  person  liable with  respect  to  the  Loan.   The  Obligors  jointly  and  severally  agree  to  pay  all  filing  fees  and  similar  charges  and  all  costs incurred  by  Lender  in  collecting  or  securing  or  attempting  to  collect  or  secure  the  Loan, including  attorney's  fees,  whether  or  not  involving  litigation  and/or  appellate,  administrative  or Bankruptcy  proceedings.   The  Obligors  jointly  and  severally  agree  to  pay  any  documentary stamp  taxes,  intangible  taxes  or  other  taxes  (except  for  federal  or  Florida  franchise  or  income taxes  based  on  Lender's  net  income)  which  may  now  or  hereafter  apply  to  this  Note  or  the  Loan or  any  security  therefore,  and  the  Obligors  jointly  and  severally  agree  to  indemnify  and  hold Lender  harmless  from  and  against  any  liability,  costs,  attorney's  fees,  penalties,  interest  or expenses  relating  to  any  such  taxes,  as  and  when  the  same  may  be  incurred.  The  Obligors  jointly and  severally  agree  to  pay  on  demand,  and  to  indemnify  and  hold  Lender  harmless  from  and against,  any  and  all  present  or  future  taxes,  levies,  imposts,  deductions,  charges  and  withholdings imposed  in  connection  with  the  Loan  by  the  laws  or  governmental  authorities  of  any  jurisdiction other  than  the  State  of  Florida  or  the  United  States  of  America,  and  all  payments  to  Lender  under this  Note  shall  be  made  free  and  clear  thereof  and  without  deduction  therefore.   This  Note  shall  be  governed  by,  and  construed  and  enforced  in  accordance  with,  the  laws  of  the State  of  Florida,  except  that  federal  law  shall  govern  to  the  extent  that  it  may  permit  Lender  to charge,  from  time  to  time,  interest  on  the  Loan  at  a  rate  higher  than  may  be  permissible  under applicable  Florida  law.   Any  provision  of  this  Note  which  is  prohibited  or  unenforceable  in  any  jurisdiction  shall,  as  to such  jurisdiction  only,  be  ineffective  only  to  the  extent  of  such  prohibition  or  unenforceability without  invalidating  the  remaining  provisions  hereof  or  affecting  the  validity   or  enforceability  of such  provision  in  any  other  jurisdiction.  To  the  extent  that  the  Obligors  may  lawfully  waive  any law  that  would  otherwise  invalidate  any  provision  of  this  Note,  each  of  them  hereby  waives  the same,  to  the  end  that  this  Note  shall  be  valid  and  binding  and  enforceable  against  each  of  them  in accordance  with  all  its  terms.  If  this  Note  is  signed  by  more  than  one  person,  then  the  term  "Borrower"  as  used  in  this  Note shall  refer  to  all  such  persons  jointly  and  severally,  and  all  promises,  agreements,  covenants waivers,  consents,  representations,  warranties  and  other  provisions  in  this  Note  are  made  by  and shall  be  binding  upon  each  and  every  undersigned  person,  jointly  and  severally.   The  term "Lender"  shall  be  deemed  to  include  any  subsequent  holder(s)  of  this  Note.  Whenever  used  in this  Note,  the  term  "person"  means  any  individual,  firm,  corporation,  trust  or  other  organization or  association  or  other  enterprise  or  any  governmental  or  political  subdivision,  agency, department  or  instrumentality  thereof.  Whenever  used  in  this  Note,  words  in  the  singular  include the  plural,  words  in  the  plural  include  the  singular,  and  pronouns  of  any  gender  include  the  other genders,  all  as  may  be  appropriate.   Time  shall  be  of  the  essence  with  respect  to  the  terms  of  this  Note.  This  Note  cannot  be  changed or  modified  orally.  In  the  event  that  the  Borrower  refuses  to  do  it,  the  Lender  shall  have  the  right unilaterally  to  correct  scrivener  errors  or  omissions  in  this  Note   or  any  other  Loan  Document. Except  as  otherwise  required  by  law  or  by  the  provisions  of  this  Note  or  any  other  Loan Document,  payments  received  by  Lender  hereunder  shall  be  applied  first  against  expenses  and indemnities,  next  against  interest  accrued  on  the  Loan,  and  next  in  reduction  of  the  outstanding principal  balance  of  the  Loan,  except  that  from  and  after  any  default  under  this  Note,  Lender  may apply  such  payments  in  any  order  of  priority  determined  by  Lender  in  its  exclusive  judgment. Borrower  shall  receive  immediate  credit  on  payments  only  if  made  in  the  form  of  either  a  federal wire  transfer  of  cleared  funds  or  a  check  drawn  on  an  account  maintained  with  Lender  containing sufficient  available  funds.  Otherwise,  Borrower  shall  receive  credit  on  payments  after  clearance, which  shall  be  no  sooner  than  the  first  Business  Day  after  receipt  of  payment  by  Lender.  For purposes  of  determining  interest  accruing  under  this  Note,  principal  shall  be  deemed  outstanding on  the  date  payment  is  credited  by  Lender.  If  any  payment  required  to  be  made  pursuant  to  this Note  is  not  received  on  the  due  date,  Lender  shall  have  the  right,  at  its  election,  to  charge  any  of Borrower's  accounts  at  Lender  with  the  amount  of  such  payment.  Except  as  otherwise  required by  the  provisions  of  this  Note  or  any  other  Loan  Document,  any  notice  required  to  be  given  to any  Obligor  shall   be  deemed  sufficient  if  made  personally  or  if  mailed,  postage  prepaid,  to  such Obligor's  address  as  it  appears  in  this  Note  (or,  if  none  appears,  to  any  address  for  such  Obligor then  registered  in  Lender's  records).  Lender  may  grant  participations  in  all  or  any  portion  of,  and may  sell  or  assign  all  or  any  part  of  Lender's  rights  under,  this  Note.  Lender  may  disclose  to   any such  participant  or  buyer  or  assignee  any  and  all  information  held  by  or  known  to  Lender  at  any time  with  respect  to  any  Borrower  or  Obligor  as  long  as  such  participant  or  buyer  keeps  the information  confidential  , (except  if  such  information  is  provided  to  a  Court  pursuant  to  a litigation  between  the  Parties.  If  Borrower  or  any  other  Obligor  is  a  partnership,  then  all  general partners  thereof  shall  be  liable  jointly  and  severally  for  all  obligations  under  this  Note  and  for  all other  covenants,  agreements,  undertakings  and  obligations  of  Borrower  in  connection  with  the Loan,  notwithstanding  any  contrary  provision  of  the  partnership  laws  of  the  State  of  Florida.  All of  the  terms  of  this  Note  shall  inure  to  the  benefit  of  Lender  and  its  successors  and  assigns  and shall  be  binding  upon  each  and  every  one  of  the  Obligors  and  their  respective  heirs,  executors, administrators,  personal  representatives,  successors  and  assigns,  jointly  and  severally.  o  r\  The  Mortgage  encumbers  real  and  personal  property  located  in  Miami-Dade  County,  Florida, and  is  intended  to  be  recorded  amongst  the  Public  Records  of  said  County.   LENDER    OR    BORROWER    HEREBY    KNOWINGLY,    VOLUNTARILY    AND INTENTIONALLY  WAIVE  THE  RIGHT  EITHER  MAY  HAVE  TO  TRIAL  BY  JURY IN  RESPECT  TO  ANY  LITIGATION  BASED  HEREON,  OR  ARISING  OUT  OF, UNDER  OR  IN  CONNECTION  WITH  THIS  NOTE,  THE  LOAN  DOCUMENTS  AND ANY  AGREEMENT  CONTEMPLATED  TO  BE  EXECUTED  IN  CONJUNCTION HEREWITH,    OR   ANY   COURSE    OF    CONDUCT,    COURSE    OF   DEALING, STATEMENTS,  (WHETHER  VERBAL  OR  WRITTEN)  OR  ACTIONS  OF  EITHER PARTY.  BORROWER  ACKNOWLEDGES  THAT  THIS  WAIVER  OF  JURY  TRIAL  IS A  MATERIAL  INDUCEMENT  TO  THE  LENDER  IN  EXTENDING  CREDIT  TO  THE BORROWER,  THAT  THE  LENDER  WOULD  NOT  HAVE  EXTENDED  SUCH  CREDIT WITHOUT  THIS  JURY  TRIAL  WAIVER,  AND  THAT  BORROWER  HAS  BEEN REPRESENTED   BY   AN   ATTORNEY   OR  HAS   HAD   AN   OPPORTUNITY   TO CONSULT  WITH  AN  ATTORNEY  IN  CONNECTION  WITH  THIS  JURY  TRIAL WAIVER  AND  UNDERSTANDS  THE  LEGAL  EFFECT  OF  THIS  WAIVER.   WITNESS  the  due  execution  hereof  as  of  the  date  first  above  written.   BORROWER   MIS  NW  345/L  r  C  a  Florida  Limite  s  Liability  Co   By:/7 OFER  MIZRAHI,  Manager     DOCUMENTARY  STAMPS  IN  THE  AMOUNT  OF  $6,475.00  AND  INTANGIBLE  TAX  IN THE  AMOUNT  OF  $3,700.00  HAVE  BEEN  PAID  UPON  AND  AFFIXED  TO  THE MORTGAGE  SECURING  THIS  PROMISSORY  NOTE.

EX-23.1

Exhibit 23.1

9605 S Kingston Ct. Suite 200 Englewood, CO 80112 303-721-6131 www.richeymay.com Assurance | Tax | Advisory

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use of our report dated March 9, 2018 on the financial statements of Korth Direct Mortgage, LLC as of December 31, 2017 and 2016, and the related statements of operations, changes in member’s equity and cash flows for the year ended December 31, 2017 and for the period from October 1, 2016 (commencement of operations) through December 31, 2016, included herein on the registration statement of Korth Direct Mortgage, LLC on Form S-1, SEC file number 333-222928. We also consent to the reference to our Firm under the heading “Experts” in such registration statement.

/s/ Richey May & Co., LLP

Englewood, Colorado

March 13, 2018

EX-23.3

Exhibit 23.3

GUERRA GROUP VALUATION & CONSULTING INC 9120 SW 103 Avenue, Miami, FL 33176 March 16, 2018 Mr. Danny Llorente Chief Lending Officer 2937 SW 27 Avenue, #207 Miami, FL 33133 RE: Letter of Consent Appraisal Review of 345 NE 80 Street Miami, FL 33138 Dear Mr. Llorente: We hereby consent to the quotation and summarization of our appraisal review of 345 NE 80 Street in registration Statement on Form S-1 (No. 333-222928) of "Korth Direct Mortgage, LLC." Sincerel Ivansident State Certieneral Real Estateraiser RZ 3359 Guerra Group Valuation & Consulting, Inc. Direct: 786-208-4041 Email: guerragroupvc@gmail.com

EX-23.4

Exhibit 23.4

Founded  1995     CONSENT  OF  NATIONALLY  RECOGNIZED  STATISTICAL  RATINGS          ORGANIZATION   We  hereby  consent  to  the  use  of  our  rating  on  the  Mortgage  Secured  Notes ("KDM2018-N001")  and  the  First  Mortgage  Loan  ("KDM  2018-L001")  regarding  345  NE          80  St,  Miami,  FL33138,  a  Florida  limited  liability  companies,  this Registration  Statement  on  Form  S-1  (No.  333-222928)  and  of  our  Firm  under  the caption  Ratings  in  such  Registration  Statement  of  Korth  Direct  Mortgage  LLC. ,2)1AL)6741._ Saul  Grossel,  Chief  Operating  Officer Egan-Jones  Ratings  Company    2-  I Date  61  Station  Road  li  Haverfotd,  Pennsylvania  19041 610.642,2411  n  ratingsdesk@egan-jones.corn

EX-23.5

Exhibit 23.5

BBG    March  16,  2018   Mr.  Danny  Llorente  Chief  Lending  Officer  2937  SW  27  Avenue,  #207 Miami,  FL  33133   RE:        Letter  of  Consent  Appraisal  of  345  NE  80  Street Miami,  FL  33138   Dear  Mr.  Llorente:  We  hereby  consent  to  the  quotation  and  summarization  of  our  appraisal  of  345  NE  80  Street  in registration  Statement  on  Form  S-1  (No.  333-222928)  of  "Korth  Direct  Mortgage,  LLC."   Sincerely,        BBG,  LLC  Lee  Smalley,  MAI Managing  Director Cert.  Gen.  RZ  2727  1600  Ponce  De  Leon  Boulevard,  #908 Coral  Gables,  FL  33134  C  305-298-9388  F  786-522-3451  E  lsmalley@bbgres.com bbgres.com                      MIAMI   P  +  305.298.9388     BBGRES.COM