Sachem Capital Corp. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of John L. Villano, our chief executive and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2020 (the “Evaluation Date”). Based upon that evaluation, Mr. Villano concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to our management, including our chief executive and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the SEC, internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of John L. Villano, our principal executive and principal financial officer, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting is supported by written policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Our internal control system was designed to provide reasonable assurances to our management and the board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations which may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, management used the framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO (the “COSO Framework”). The COSO Framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2020 . 48 Table of Contents This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Report. Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred during the fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. PART III Item 10. Directors, Executive Officers and Corporate Governance. Our directors are elected annually by our shareholders and serve for one-year terms until his/her successor is elected and qualified or until such director’s earlier death, resignation or removal. The executive officers and key personnel are appointed by and serve at the pleasure of the board of directors. Our executive officers and directors, and their respective ages as of March 25, 2021, are as follows: ​ ​ Name Age Position John L. Villano ​ 60 ​ Chairman, Chief Executive Officer, Chief Financial Officer President and Treasurer Peter J. Cuozzo ​ 60 ​ Executive Vice President and Chief Operating Officer Leslie Bernhard (1, 2) ​ 77 ​ Director Arthur L. Goldberg (1, 3) ​ 82 ​ Director Brian A. Prinz (1, 4) ​ 68 ​ Director (1) Member of the Audit, Compensation and Nominating and Corporate Governance Committees. (2) Chair of the Compensation Committee. (3) Chair of the Audit Committee. (4) Chair of the Nominating and Corporate Governance Committee. Set forth below is a brief description of the background and business experience of our executive officers and directors: John L. Villano , is Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer and Treasurer. Mr. Villano is one of our founders. At the time of our IPO, he became our Chairman, co-Chief Executive Officer, Chief Financial Officer and Secretary. In November 2019, upon the resignation of his brother, Jeffrey C. Villano, he was appointed Chairman, Chief Executive Officer, President, Chief Financial Officer and Treasurer. Mr. Villano is a certified public accountant and was engaged in the private practice of accounting and auditing for almost 30 years. He became a full-time employee and a director as of February 8, 2017. His responsibilities include overseeing all aspects of our business operations, including loan origination and servicing, investor relations, brand development and business development. He is also responsible for all our accounting and financial matters. Mr. Villano holds a bachelor’s degree in Accounting from the University of Rhode Island in 1982. We believe that Mr. Villano’s experience in managing our business for the last seven years and his professional background as a certified public accountant make him an important part of our management team and make him a worthy candidate to serve on the board of directors. 49 Table of Contents Peter J. Cuozzo , is Executive Vice President and Chief Operating Officer since July 2020. He is an experienced business executive and professional educator with nearly 40 years diverse background as a corporate officer, senior HR leader, CEO advisor, chief learning and talent officer, organization development partner, executive coach, and entrepreneur. From 2007 to June 30, 2020, Dr. Cuozzo was a managing partner of Cuozzo Enterprises LLC, a management consulting firm specializing in organizational effectiveness, executive and leadership development, talent management, and employee engagement. From 2017 to 2020, he was also serving as a vice president of TBC Corporation, one of North America’s largest marketers of automotive replacement tires. From 2013 to 2017, he was a managing partner of Americana Memories LLC, a buyer and seller of vintage memorabilia and collectibles for both the wholesale and retail marketplace. Prior to that, from 2011 to 2013, he was a managing partner of Sachem Capital Partners LLC, our predecessor. Dr. Cuozzo earned both a doctorate and masters in adult and workplace education from Columbia University’s Teachers College (USA). He also holds an MBA from the University of Bridgeport (USA) and a Bachelor of Arts degree from the University of Notre Dame (USA). Leslie Bernhard became a member of the board of directors as of February 9, 2017. She has served as the non-executive chairman of the board of directors of Milestone Scientific Inc. (NYSE American: MLSS), a developer and manufacturer of medical and dental devices, since October 2009, and an independent director of Milestone since May 2003. She also served as interim chief executive officer of Milestone from October 2017 to December 2017. From 2007 through September 2018, Ms. Bernhard has also served as an independent director of Universal Power Group, Inc., a global supplier of power solutions (“UPG”), and since September 2018 she has been serving as a consultant to UPG. In 1986 she co-founded AdStar, Inc., an electronic ad intake service to the newspaper industry, and served as its president, chief executive officer and executive director until 2012. Ms. Bernhard holds a BS Degree in Education from St. John’s University. We believe that Ms. Bernhard’s experience as an entrepreneur and her service as a director of other public corporations will enable her to make an important contribution to the board of directors. Arthur L. Goldberg became a member of the board of directors as of February 9, 2017. He has been a private accounting and business consultant since April 2012. From March 2011 through June 2015, he served as a director of Sport Haley Holdings, Inc., a manufacturer and distributor of sportswear and furniture. From January 2008 through March 2013, he served as a member of the board of directors of directors of SED International Holdings, Inc. (OTC: SEDN), a distributor of consumer electronics. From January 2008 through March 2012, he served as the chief financial officer of Clear Skies Solar, Inc., an installer of solar panels. Mr. Goldberg has held senior executive positions, including chief financial officer and chief operating officer, and served as a director of several public companies. From January 2008 through June 2008, he served as the chief financial officer of Milestone Scientific, Inc. (NYSE American: MLSS), a developer and manufacturer of medical and dental devices. From June 1999 through April 2005, Mr. Goldberg was a partner with Tatum CFO Partners, LLP which provided interim CFO staffing services for public and private companies. Mr. Goldberg is an attorney and a certified public accountant and holds a B.B.A. degree from the City College of New York, an M.B.A. from the University of Chicago and J.D. and LLM degrees from the New York University School of Law. Mr. Goldberg was selected as a director because of his experience as the senior executive, operations and financial officer of several public companies and because of his background in law and accounting. We believe that his background and experience will provide the board of directors with a perspective on corporate finance matters. Given his financial experience, the board of directors has also determined that Mr. Goldberg qualifies as the Audit Committee financial expert, pursuant to Item 407(d)(5) of Regulation S-K promulgated by the SEC. Brian A. Prinz became a member of the board of directors as of February 9, 2017. Since 1976, Mr. Prinz has been employed by Current, Inc., a leading manufacturer of laminated products including sheeting, tubes, rods, spacers and standoffs, as well as electrical grade laminates, a variety of carbon fiber products and other industrial products, which are used in various industries including construction, recreation, energy exploration and defense. Since 2011, Mr. Prinz has served as president and chief financial officer. Mr. Prinz graduated from Bryant College with a B.A. in 1976. We believe that his background and experience make him well qualified to serve as a member of the board of directors. Director Independence and Committees of the Board of Directors The members of the Board of directors are John L. Villano, Leslie Bernhard, Arthur Goldberg and Brian Prinz. The board of directors has determined, in accordance with the NYSE American LLC Company Guide, that: (i) Ms. Bernhard and Messrs. Goldberg and Prinz are independent and represent a majority of the directors; and (ii) Ms. Bernhard and Messrs. Goldberg and Prinz, as the members of the Audit Committee, the Nominating and Corporate Governance and Compensation Committee, are independent for such purposes. In determining director independence, the board of directors applies the independence standards set by NYSE American. In applying these standards, the board of directors considers all transactions with the independent directors and the impact of such transactions, if any, on any of the independent directors’ ability to continue to serve on the board of directors. 50 Table of Contents We have three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each committee is made up entirely of independent directors as defined under the NYSE American LLC Company Guide. Mr. Goldberg is the chairman of the Audit Committee and qualifies as the “audit committee financial expert” pursuant to Item 407(d)(5) of Regulation S-K; Ms. Bernhard is the chairman of the Compensation Committee; and Mr. Prinz is the chairman of the Nominating and Corporate Governance Committee. As members of the committees, independent directors meet without the presence of non-independent directors in executive session. Audit Committee. The Audit Committee oversees our accounting and financial reporting processes, internal systems of accounting and financial controls, relationships with auditors and audits of financial statements. Specifically, the Audit Committee’s responsibilities include the following: ● selecting, hiring and terminating our independent auditors; ● evaluating the qualifications, independence and performance of our independent auditors; ● approving the audit and non-audit services to be performed by the independent auditors; ● reviewing the design, implementation and adequacy and effectiveness of our internal controls and critical policies; ● overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and other accounting matters; ● with management and our independent auditors, reviewing any earnings announcements and other public announcements regarding our results of operations; and ● preparing the report that the SEC requires in our annual proxy statement. Compensation Committee. The Compensation Committee assists the board of directors in determining the compensation of our officers and directors. The Compensation Committee is comprised entirely of directors who satisfy the standards of independence applicable to compensation committee members established under 162(m) of the Code and Section 16(b) of the Exchange Act. Specific responsibilities include the following: ● approving the compensation and benefits of our executive officers; ● reviewing the performance objectives and actual performance of our officers; and ● administering our stock option and other equity and incentive compensation plans. Nominating and Corporate Governance Committee. The Corporate Governance and Nominating Committee assists the board of directors by identifying and recommending individuals qualified to become members of the board of directors. Specific responsibilities include the following: ● evaluating the composition, size and governance of our board of directors and its committees and making recommendations regarding future planning and the appointment of directors to our committees; ● establishing a policy for considering shareholder nominees to our board or directors; ● reviewing our corporate governance principles and making recommendations to the board of directors regarding possible changes; and ● reviewing and monitoring compliance with our Code of Ethics and insider trading policy. 51 Table of Contents Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent (10%) shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge, based solely on review of the copies of such forms furnished to us, or written representations that no other forms were required, we believe that all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% shareholders were complied with during the year ended December 31, 2020 except as set forth below. Delinquent Section 16(a) Reports During the year ended December 31, 2020, Brian Prinz, a director, was late in the filing of one Statements of Changes in Beneficial Ownership on Form 4. Code of Ethics We have adopted a code of ethics that applies to our directors, principal executive officer, principal financial officer and other persons performing similar functions. The Code of Ethics is posted on our web site at www.sachemcapitalcorp.com . We will also provide a copy of the Code of Ethics to any person without charge, upon written request addressed to John L. Villano at our principal executive office, located at 698 Main Street, Branford, CT 06405. Item 11. Executive Compensation. The following Summary Compensation Table sets forth all compensation earned by or paid to, in all capacities, during the years ended December 31, 2020 and 2019 (i) all individuals serving as our principal executive officer during the last completed fiscal year; (ii) our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at the end of the last completed fiscal year; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to paragraph (ii) but for the fact that the individual was not serving as an executive officer of our company at the end of the last completed fiscal year (the ‘‘Named Executives’’): ​ Summary Compensation Table ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Name and Principal Position Year Salary Bonus Total ​ ​ ​ ​ ($) ($) ($) John L. Villano ​ ​ Chairman, Chief Executive 2020 ​ $ 360,000 — ​ $ 360,000 Officer, President, Chief Financial Officer, ​ ​ ​ ​ ​ ​ ​ ​ Treasurer and Director ​ 2019 ​ $ 360,000 ​ — ​ $ 360,000 Peter J. Cuozzo* ​ ​ Executive Vice President and Chief Operating ​ ​ ​ ​ ​ ​ ​ ​ Officer 2020 ​ $ 175,000 — ​ $ 175,000 * Effective as of July 1, 2020, Mr. Cuozzo was hired as our executive vice president and chief operating officer. Employment Agreements — John L. Villano In August 2016, in anticipation of our initial public offering, we entered into an employment agreement with John L. Villano. The material terms of Mr. Villano’s employment agreement are as follows. ● Mr. Villano will serve as our co-chief executive officer, president and treasurer. In addition, Mr. Villano serves as chairman and as our chief financial officer. Upon the resignation of Jeffrey C. Villano in November 2019, he became our sole chief executive officer. 52 Table of Contents ● The term of his employment is five years, which commenced on February 9, 2017, unless terminated earlier pursuant to the terms of the agreement. The termination date will be extended one year on each anniversary date of the agreement unless either party to the agreement provides written notice at least 180 days before the next anniversary date that it is electing not to renew the agreement, in which case the agreement will terminate at the end of the fourth year from the next anniversary date. ● Initially his base compensation was $260,000. Effective as of April 1, 2018, his base compensation was increased to $360,000 per annum. ● He is entitled to incentive compensation in such amount as shall be determined by the Compensation Committee of the board of directors in its sole and absolute discretion, based on our achievement of the financial performance goals set by the board of directors. ● He is also entitled to incentive compensation for certain capital transactions in such amount as shall be determined by the Compensation Committee of the board of directors in its sole and absolute discretion. ● He has the right to participate in all retirement, pension, deferred compensation, insurance and other benefit plans adopted and maintained by us for the benefit of employees and be entitled to additional compensation in an amount equal to the cost of any such benefit plan or program if he chooses not to participate. ● He is indemnified to the full extent permitted by law against and for any claims, liabilities, losses, expenses and costs incurred that relate to any acts or omission taken in his capacity as an officer or director. ● We have the right to terminate the employment agreement at any time with or without cause and for death or disability (as defined in the employment agreement). See below for the payments due upon a termination. ● He is subject to a two-year non-competition provision if we terminate the employment agreement for cause. ● In the event any payment to the employee is subject to an excise tax under the Code, we will pay the employee an additional amount equal to the amount of the excise tax and any other taxes (whether in the nature of excise taxes or income taxes) due with respect to such payment. Termination and Change of Control Arrangement Mr. Villano’s employment agreement provides that we may terminate his employment at any time with or without cause. It also provides that his employment will terminate upon his death or disability. If we terminate his employment for cause, we are only liable for his base salary and benefits through the date of termination. In addition, he will not forfeit any rights to payments, options or benefits that have vested or have been earned or to which he is entitled as of the date of termination. If we terminate his employment without cause or the agreement terminates due to Mr. Villano’s death or disability or if Mr. Villano terminates his employment for “Good Reason” (as defined in the employment agreement), he is also entitled to receive: (i) a lump sum payment equal to 48 times his monthly salary on the date of termination; (ii) any deferred compensation or accrued vacation pay; (iii) continuation for a 12-month period after termination of health and welfare and long-term disability benefits; and (iv) a pro rata share of any incentive compensation and any other compensation or benefits to which he would have been entitled had he not been wrongfully terminated. 53 Table of Contents Good Reason includes a “change in control” with respect to us. A “change in control” means (1) if we merge into another corporation and, as a result of such merger, our shareholders immediately prior to such merger own less than 50% of the surviving corporation; (2) we sell, lease or otherwise dispose of all or substantially all of our assets; (3) the acquisition of beneficial ownership, directly or indirectly, of our common shares or any other securities having voting rights that we may issue in the future, rights to acquire our voting securities (including, without limitation, securities that are convertible into voting securities and rights, options warrants and other agreements or arrangements to acquire such voting securities) by any person, corporation or other entity or group thereof acting jointly, in such amount or amounts as would permit such person, corporation or other entity or group thereof acting jointly to elect a majority of the members of the board of directors, as then constituted; or (4) the acquisition of beneficial ownership, directly or indirectly, of voting securities and rights to acquire voting securities having voting power equal to 40% or more of the combined voting power of our then outstanding voting securities by any person, corporation or other entity or group thereof acting jointly unless such acquisition is expressly approved by resolution of the board of directors passed upon affirmative vote of not less than a majority of the board of directors and adopted at a meeting of the board of directors held not later than the date of the next regularly scheduled or special meeting held following the date we obtain actual knowledge of such acquisition (which approval may be limited in purpose and effect solely to affecting the rights of the executive under his employment agreement). Notwithstanding the preceding sentence, any transaction that involves a mere change in identity form or place of organization within the meaning of Section 368(a)(1)(F) of the Code, or a transaction of similar effect, will not constitute a “change in control.” Employment Agreement — Peter J. Cuozzo On July 7, 2020, we entered into an employment agreement with Peter J. Cuozzo, our executive vice president and chief operating officer, effective as of July 1, 2020. The material terms of the employment agreement are as follows. ● He will serve as our executive vice president and chief operating officer on a full-time basis. ● The agreement can be terminated by either party at any time upon delivery of written notice to the other party. ● His duties include overseeing, supervising and managing our business, (ii) overseeing and supervising our expansion into Florida, Texas and such other markets identified by our chief executive office and/or the Board and (iii) such other duties, responsibilities, tasks and projects as shall be determined by our chief executive officer and/or the Board, with the understanding that he shall have the customary authority and support to accomplish such assigned duties, responsibilities, tasks and projects. ● He will be based in Naples, Florida but is required to work from our principal place of business, currently in Branford Connecticut, as frequently and for such period of time as directed by our chief executive officer. ● His base compensation is $250,000 per year. ● He was paid a signing bonus of $25,000. ● He will be entitled to additional compensation in such amounts, at such times and under such circumstances as shall be determined by the Board and/or the Compensation Committee based on (i) the growth of our business; (ii) capital origination, whether via the sale by us of our equity, debt or derivative securities or via new credit facilities with traditional or non-traditional lenders and (iii) mergers and acquisitions of other entities or assets. ● He is eligible to participate in any retirement plans (qualified and non-qualified), pension, insurance, health, disability or other benefit plan or program that has been or is hereafter adopted by us (or in which we participate), according to the terms of such plan or program, on terms no less favorable than the most favorable terms granted to our senior executives. ● He is entitled to 25 vacation days per annum and severance pay equal to 18 months of his base compensation if he is terminated without cause, or if he terminates for good reason, prior to July 1, 2022. ● He is subject to a covenant not to compete that continues for 18 months after termination unless he is terminated without “cause” prior to July 1, 2022. 54 Table of Contents Outstanding Equity Awards at December 31, 2020 None. Compensation of Directors Our non-employee director compensation plan, as amended and effective on October 1, 2019 (the “Director Plan”), provides as follows: ● each non-employee director will receive cash compensation at a rate of $30,000 per year, which amount shall be paid in equal quarterly installments of $7,500 on the first day of each calendar quarter (i.e. January 1, April 1, July 1, and October 1); ● the chairman of the Audit Committee will receive additional cash compensation of $7,500 per year, payable in equal quarterly installments of $1,875 on the first day of each calendar quarter (i.e. January 1, April 1, July 1, and October 1); ● the chairman of the Compensation Committee will receive additional cash compensation of $5,000 per year, payable in equal quarterly installments of $1,250 on the first day of each calendar quarter (i.e. January 1, April 1, July 1, and October 1); ● the chairman of the Corporate Governance and Nominating Committee will receive additional cash compensation of $2,500 per year, payable in equal quarterly installments of $625 on the first day of each calendar quarter (i.e. January 1, April 1, July 1, and October 1); and ● each non-employee director will receive a grant of 2,500 common shares on the date he or she is re-elected to serve on the board of directors. The Named Executives, who are also directors, do not receive additional compensation in connection with their positions as members of the board of directors. The following table provides compensation information for the year ended December 31, 2020 for each of our non-employee directors. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fees Earned or Paid ​ ​ ​ ​ ​ ​ ​ in Cash Stock Awards Total Name ​ ($) ​ ($) (1) ​ ($) Leslie Bernhard $ 35,000 $ 10,300 $ 45,300 Arthur L. Goldberg ​ $ 37,500 ​ $ 10,300 ​ $ 47,800 Brian A. Prinz ​ $ 32,500 ​ $ 10,300 ​ $ 42,800 (1) During the year ended December 31, 2020, under the Director Plan, each of Ms. Bernhard and Messrs. Goldberg and Prinz was awarded an aggregate of 2,500 common shares, respectively. The dollar amounts reflected in the table are the aggregate grant date fair value for the common shares awarded computed in accordance with FASB ASC Topic 718. ​ 55 Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters The following table, together with the accompanying footnotes, sets forth information, as of March 25, 2021, regarding stock ownership of all persons known by us to own beneficially more than 5% of our outstanding common shares, Named Executives, all directors, and all directors and officers of Sachem Capital as a group: ​ ​ ​ ​ ​ ​ ​ ​ Number of Common ​ ​ ​ Shares Beneficially ​ Percentage of ​ Name of Beneficial Owner (1) Owned (2) Class (3) ​ Executive Officers and Directors ​ ​ ​ ​ ​ John L. Villano (4) 1,247,396 5.64 % Leslie Bernhard 4,889 * ​ Arthur L. Goldberg 17,628 * ​ Brian A. Prinz 360,237 1.63 % Peter J. Cuozzo ​ 18,594 ​ * ​ All officers and directors as a group (5 persons) 1,648,744 7.45 % Greater than 5% Shareholders ​ ​ ​ ​ ​ Jeffrey C. Villano (5) 1,477,190 6.68 % *Less than 1%. (1) Unless otherwise provided, the address of each of the individuals above is c/o Sachem Capital Corp., 698 Main Street, Branford, CT 06405. (2) A person is deemed to be a beneficial owner of securities that can be acquired by such person within 60 days upon the exercise of options and warrants or conversion of convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants and convertible securities that are held by such person (but not held by any other person) and that are exercisable or convertible within 60 days have been exercised or converted. Except as otherwise indicated, and subject to applicable community property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially owned. (3) All percentages are determined based on 22,124,801 common shares outstanding as of the March 25, 2021. (4) Includes 6,827 common shares owned by Mr. Villano’s wife. Mr. Villano disclaims beneficial ownership of the 6,827 common shares owned by his wife for the purposes of section 13(d) or 13(g) of the Exchange Act. (5) Served as our Co-Chief Executive Officer, President and Treasurer until November 20, 2019 and as a director until December 10, 2019. His holdings include 301,718 common shares owned by Ultimate Brands Inc., a corporation of which he is the founder and chief executive officer and over which he has full voting and dispositive control, and 3,251 common shares owned by his daughter. Mr. Villano disclaims beneficial ownership of the 3,251 common shares owned by his daughter for the purposes of section 13(d) or 13(g) of the Exchange Act. The foregoing is based on Mr. Villano’s Schedule 13G/A filed with the SEC on February 16, 2021, reporting beneficial ownership as of December 31, 2020. 56 Table of Contents Equity Compensation Plan Information On October 27, 2016, we adopted the 2016 Equity Compensation Plan (the “Plan), the purpose of which is to align the interests of our officers, other employees, advisors and consultants or any subsidiary, if any, with those of our shareholders and to afford an incentive to such officers, employees, consultants and advisors to continue as such, to increase their efforts on our behalf and to promote the success of our business. The basis of participation in the Plan is upon discretionary grants of awards by the board of directors. The Plan is administered by the Compensation Committee. The maximum number of common shares reserved for the grant of awards under the Plan is 1,500,000, subject to adjustment as provided in Section 5 of the Plan. Approximately fifteen individuals are eligible to participate in the Plan including, our two executive officers, ten other employees and three independent directors. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ ​ ​ ​ ​ remaining available for ​ ​ Number of securities ​ Weighted-average ​ future issuance under ​ ​ to be issued upon ​ exercise price of ​ equity compensation ​ ​ exercise of ​ outstanding ​ plans (excluding ​ ​ outstanding options, ​ options, warrants ​ securities reflected in Plan category warrants and rights and rights column (a) ​ (a) (b) (c) Equity compensation plans approved by security holders — Not applicable 1,462,116 Total — Not applicable 1,462,116 ​ During the fiscal year ended December 31, 2020, we granted an aggregate of 7,500 restricted common shares under the Plan. Types and Terms of Awards Awards under the Plan may take the form of stock options (either incentive stock options or non- qualified stock options) or restricted shares. Subject to restrictions that are set forth in the Plan, the Compensation Committee will have complete and absolute authority to set the terms, conditions and provisions of each award, including the size of the award, the exercise or base price, the vesting and exercisability schedule (including provisions regarding acceleration of vesting and exercisability) and termination and forfeiture provisions. The Compensation Committee is subject to the following specific restrictions regarding the types and terms of awards: ● The exercise price for a stock option may not be less than 100% of the fair market value of the stock on the date of grant. ● No award may be granted after the expiration of the Plan (more than ten years after the Plan adoption date). No stock option can be “repriced” without the consent of the shareholders and of the option holder if the effect would be to reduce the exercise price per share. Amendment and Termination of the Plan The Plan expires on the tenth anniversary of the date of its adoption by the board of directors. Prior to the expiration date, the board of directors may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time; provided, however, that unless otherwise determined by the board of directors, an amendment that requires shareholder approval in order for the Plan to continue to comply with Section 162(m) or any other law, regulation or stock exchange requirement shall not be effective unless approved by the requisite vote of shareholders. Notwithstanding the foregoing, no amendment to or termination of the Plan shall affect adversely any of the rights of any grantee under any outstanding award granted under the Plan without such grantee’s consent. 57 Table of Contents Exercise Price of an Option Granted Under the Plan The exercise price of an option granted under the Plan may be no less than the fair market value of a common share on the date of grant, unless, with respect to nonqualified stock options that are not intended as incentive stock options within the meaning of Section 422 of the Code from time to time, otherwise determined by the Compensation Committee. However, incentive stock options granted to a ten percent shareholder must be priced at no less than 110% of the fair market value of our common shares on the date of grant and their term may not exceed five years. All options granted under the Plan are for a term of no longer than ten years unless otherwise determined by the Compensation Committee. The Compensation Committee also determines the exercise schedule of each option grant. Federal Income Tax Consequences The following is a summary of the effect of federal income taxation upon the recipients and us with respect to the shares under the Plan and does not purport to be complete. Non-qualified Stock Options. The grant of non-qualified stock options will have no immediate tax consequences to us or the grantee. The exercise of a non-qualified stock option will require a grantee to include in his gross income the amount by which the fair market value of the acquired shares on the exercise date (or the date on which any substantial risk of forfeiture lapses) exceeds the option price. Upon a subsequent sale or taxable exchange of the shares acquired upon exercise of a non-qualified stock option, a grantee will recognize long or short-term capital gain or loss equal to the difference between the amount realized on the sale and the tax basis of such shares. We will be entitled (provided applicable withholding requirements are met) to a deduction for Federal income tax purposes at the same time and in the same amount as the grantee is in receipt of income in connection with the exercise of a non-qualified stock option. Incentive Stock Options. The grant of an incentive stock option will have no immediate tax consequences to us or our employee. If the employee exercises an incentive stock option and does not dispose of the acquired shares within two years after the grant of the incentive stock option nor within one year after the date of the transfer of such shares to him (a “disqualifying disposition”), he will realize no compensation income and any gain or loss that he realizes on a subsequent disposition of such shares will be treated as a long-term capital gain or loss. For purposes of calculating the employee’s alternative minimum taxable income, however, the option will be taxed as if it were a non-qualified stock option. Restricted Shares. Generally, unless the participant elects, pursuant to Section 83(b) of the Code to recognize income in the taxable year in which restricted shares have been awarded, the participant is required to recognize income for federal income tax purposes in the first taxable year during which the participant’s rights over the restricted shares are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier. At such time, we will be entitled (provided applicable withholding requirements are met) to a deduction for Federal income tax purposes except to the extent that such participant’s total compensation for the taxable year exceeds $1.0 million, in which case such deduction may be limited by Section 162(m) of the Code unless any such grant of restricted shares is made pursuant to a performance-based benchmark established by the Compensation Committee. As of December 31, 2020, there were no options granted under the Plan. Item 13. Certain Relationships and Related Transactions and Director Independence. In March 2019 we relocated our principal offices to 698 Main Street, Branford, Connecticut upon the completion of renovations. Prior to March 2019, our principal offices were located at 23 Laurel Street, Branford, Connecticut, a property owned by Union News of New Haven, Inc. Jeffrey C. Villano is the chief executive officer of Union News and owns 20% of its outstanding stock. The other 80% is owned by his and John L. Villano’s mother, Shirley Villano. The rent payable to Union News was $1,500 per month. 58 Table of Contents During 2019 one loan to JJV, LLC (“JJV”), the managing member of Sachem Capital Partners, LLC, the entity through which we conducted our business prior to our IPO, in the amount of $298,222 was refinanced by the borrower and the other loan was assigned from JJV to us in the amount of $581,235. The principal balance of the loans to JJV at December 31, 2020 and 2019 were $-0-, respectively. Interest paid to us by JJV for years ended December 31, 2020 and 2019 was approximately $-0- and $44,000, respectively. These loans were made in connection with JJV’s purchase of real property from third parties who, for various reasons, did not meet our loan criteria. We believe that the terms of these loans are no less beneficial to us than they would have been if we made the loans to unrelated third parties and are all properly documented. We have adopted a policy that prohibits any transaction between us and a related party unless the terms of that transaction are no less favorable to us than if we had entered into the same transaction with an unrelated party and the transaction is approved by our Audit Committee or other independent committee of the board of directors, in the case where it is inappropriate for our Audit Committee to review such a transaction due to a conflict of interest. Item 14. Principal Accounting Fees and Services The aggregate fees billed by Hoberman & Lesser, CPA’s, LLP, our principal accounting firm, for the fiscal years ended December 31, 2020 and 2019, are set forth below . ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 2019 Audit fees* ​ $ 181,500 ​ $ 168,800 Audit related fees ​ — ​ — Tax fees ​ — ​ — All other fees ​ — ​ — Total fees ​ $ 181,500 ​ $ 168,000 · In 2020, the audit fees include fees for professional services rendered for (i) the review of our quarterly financial statements, (ii) in connection with our shelf registration statement (File No. 333-236097) on Form S-3 under the Securities Act of 1933, as amended which was declared effective by the SEC on February 5, 2020, (iii) the review of three separate prospectus supplements to our shelf registration statement on Form S-3, described below, and (iv) other services that are normally provided in connection with statutory and regulatory filings. ​ · In 2019, the audit fees include fees for professional services rendered for (i) the review of our quarterly financial statements, (ii) the review of four separate prospectus supplements to our shelf registration statement on Form S-3, described below, and (iii) other services that are normally provided in connection with statutory and regulatory filings. ​ Audit Committee Pre-Approval Policies and Procedures The Audit Committee charter provides that the Audit Committee will pre-approve audit services and non- audit services to be provided by the independent auditors before the accountant is engaged to render these services. The Audit Committee may consult with management in the decision-making process but may not delegate this authority to management. The Audit Committee may delegate its authority to preapprove services to one or more committee members, provided that the designees present the pre-approvals to the full committee at the next committee meeting. All audit and non-audit services performed by the independent accountants must be pre-approved by the Audit Committee to assure that such services do not impair the auditors’ independence from us. 59 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) 1. Financial Statements — See Index to Financial Statements on page F-1. ​ 2. Financial Statement Schedules — See (c) below. ​ 3. Exhibits — See (b) below. ​ ​ ​ (b) Certain of the following exhibits were filed as Exhibits to the registration statement on Form S-11 , Registration No. 333-214323 and amendments thereto (the “Registration Statement”) filed by us under the Securities Act and are hereby incorporated by reference. ​ 60 Table of Contents Exhibit No. Description 2.1 ​ Form of Amended and Restated Exchange Agreement(1) 3.1 ​ Certificate of Incorporation(1) 3.1(a) ​ Certificate of Amendment to Certificate of Incorporation(1) 3.1(b) ​ Certificate of Amendment to Certificate of Incorporation filed on October 7, 2019(2) 3.2 ​ Amended and Restated Bylaws, effective as of November 25, 2019(3) 4.1 ​ Form of Representative’s Warrants issued on February 9, 2017 in connection with the initial public offering(1) 4.2 ​ Form of Representatives’ Warrants issued on October 27, 2017 in connection with the follow-on underwritten public offering(4) 4.3 ​ Indenture, dated as of June 21, 2019, between the Company and U.S. Bank National Association, as Trustee(5) 4.4 ​ First Supplemental Indenture, dated as of June 25, 2019, between the Company and U.S. Bank National Association, as Trustee(5) 4.5 ​ Form of 7.125% Notes due 2024(5) 4.6 ​ Second Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee(2) 4.8 ​ Form of 6.875% Notes due 2024(7) 4.9 ​ Third Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (10) 4.10 ​ Form of 7.75% Notes due 2025 (included as Exhibit A to Exhibit 4.9 above) 10.1** ​ Employment Agreement by and between John L. Villano and Sachem Capital Corp. (1) 10.2 ​ Sachem Capital Corp. 2016 Equity Compensation Plan(1) 10.3 ​ Final Form of the Restrictive Stock Grant Agreement dated July 17, 2018 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz(6) 10.4 ​ Mortgage Note made by Sachem Capital Corp to Bankwell Bank, dated as of March 29, 2019, in the principal amount of $795,000 (8) 10.5 ​ Open-End Mortgage Deed, Security Agreement and Fixture Filing, dated March 29, 2019, by Sachem Capital Corp., in connection with the New Bankwell Mortgage Loan, for the benefit of Bankwell Bank (8) 10.6 ​ Indemnity Agreement, dated as of March 29, 2019, by and among John L. Villano, Jeffrey C. Villano and Bankwell Bank (8) 10.7 ​ Final Form of the Restrictive Stock Grant Agreement dated October 4, 2019 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz(2) 10.8** ​ Employment Agreement, dated as of July 1, 2020, by and between Peter J. Cuozzo and Sachem Capital Corp. (9) 14.1 ​ Code of Ethics(11) 21.1 ​ List of Subsidiaries(12) 23.1 ​ Consent of Hoberman & Lesser CPA’s, LLP, dated March 30, 2021* 31.1 ​ Chief Executive Officer Certification as required under section 302 of the Sarbanes Oxley Act * 31.2 ​ Chief Financial Officer Certification as required under section 302 of the Sarbanes Oxley Act * 32.1 ​ Chief Executive Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act *** 101.INS ​ XBRL Instance Document * 101.SCH ​ XBRL Taxonomy Extension Schema Document * 101.CAL ​ XBRL Taxonomy Extension Calculation Linkbase Document * 101.DEF ​ XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB ​ XBRL Taxonomy Extension Label Linkbase Document * 101. PRE ​ XBRL Taxonomy Extension Presentation Linkbase Document * 104 ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* * Filed herewith. ** Compensation plan or arrangement for current or former executive officers and directors. *** Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K. (1) Previously filed as an exhibit to the Registration Statement on Form S-11, as amended, (SEC File No.: 333-214323) and incorporated herein by reference. 61 Table of Contents (2) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended September 30, 2019 and incorporated herein by reference. (3) Previously filed as an exhibit to the Current Report on Form 8-K on November 27, 2019 and incorporated herein by reference. (4) Previously filed on October 20, 2017, as Exhibit A to Exhibit 1.1 of the Registration Statement on Form S-11, as amended, (SEC File No.: 333-218954) and incorporated herein by reference. (5) Previously filed as an exhibit to the Current Report on Form 8-K on June 25, 2019 and incorporated herein by reference. (6) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended June 30, 2018 and incorporated herein by reference. (7) Previously filed as an exhibit to the Current Report on Form 8-K on November 6, 2019 and incorporated herein by reference. (8) Previously filed as an exhibit to the Current Report on Form 8-K on April 5, 2019 and incorporated herein by reference. (9) Previously filed as an exhibit to the Current Report on Form 8-K on July 8, 2020 and incorporated herein by reference. (10) Previously filed as an exhibit to the Current Report on Form 8-K on September 9, 2020 and incorporated herein by reference. (11) Previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference. (12) None. (c) No financial statement schedules are included because the information is either provided in the financial statements or is not required under the related instructions or is inapplicable and such schedules therefore have been omitted. Item 16. Form 10-K Summary None. ​ 62 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ SACHEM CAPITAL CORP. ​ By: /s/ John L. Villano ​ ​ John L. Villano, CPA ​ ​ Chief Executive Officer ​ ​ (Principal Executive Officer) ​ ​ ​ Date: March 30, 2021 ​ ​ ​ In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 30, 2021: Signature Title ​ ​ ​ /s/ John L. Villano ​ Chairman, Chief Executive Officer, President Chief John L. Villano, CPA ​ Financial Officer and Director (Principal Executive ​ ​ Officer & Principal Financial Officer) ​ ​ ​ /s/ Leslie Bernhard ​ Director Leslie Bernhard ​ ​ ​ ​ ​ /s/ Arthur L. Goldberg ​ Director Arthur L. Goldberg ​ ​ ​ ​ ​ /s/ Brian A. Prinz ​ Director Brian A. Prinz ​ ​ ​ ​ ​ 63 Table of Contents INDEX TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 Reports of Independent Registered Public Accounting Firms F-2 Financial Statements: ​ Balance Sheets F-3 Statements of Operations F-4 Statements of Changes in Shareholders’ Equity F-5 Statements of Cash Flows F-6 Notes to Financial Statements F-8 ​ ​ ​ F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders Sachem Capital Corp. Opinion on the Financial Statements We have audited the accompanying balance sheets of Sachem Capital Corp. (the “Company”) as of December 31, 2020 and 2019, and the related statements of comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, 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 the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis of 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 audits. 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 conducted our audits 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits 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 audits 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 audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2015. ​ /s/ Hoberman & Lesser CPA’s, LLP ​ Hoberman & Lesser CPA’s, LLP ​ ​ New York, New Y or k ​ March 30, 2021 ​ ​ ​ ​ F-2 Table of Contents SACHEM CAPITAL CORP BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2020 2019 Assets ​ ​ ​ Assets: ​ ​ ​ Cash and cash equivalents ​ $ 19,408,028 ​ $ 18,841,937 Short-term marketable securities ​ ​ 37,293,703 ​ ​ 15,949,802 Mortgages receivable ​ 155,616,300 ​ 94,348,689 Interest and fees receivable ​ 1,820,067 ​ 1,370,998 Other receivables ​ 67,307 ​ 141,397 Due from borrowers ​ 2,025,663 ​ 840,930 Prepaid expenses ​ 71,313 ​ 24,734 Property and equipment, net ​ 1,433,388 ​ 1,346,396 Deposits on property and equipment ​ — ​ 71,680 Real estate owned ​ 8,861,609 ​ 8,258,082 Deferred financing costs ​ 72,806 ​ 16,600 Total assets ​ $ 226,670,184 ​ $ 141,211,245 ​ ​ ​ ​ ​ ​ ​ Liabilities and Shareholders' Equity ​ ​ Liabilities: ​ ​ Notes payable (net of deferred financing costs of $ 4,886,058 and $ 2,687,190 ) ​ $ 109,640,692 ​ $ 55,475,810 Mortgage payable ​ 767,508 ​ 784,081 Line of credit ​ ​ 28,055,648 ​ ​ — Accrued dividends payable ​ ​ 2,654,977 ​ ​ — Accounts payable and accrued expenses ​ 372,662 ​ 249,879 Other loans ​ ​ 257,845 ​ ​ — Security deposits held ​ 13,416 ​ 7,800 Advances from borrowers ​ 1,830,539 ​ 848,268 Deferred revenue ​ 2,099,331 ​ 1,205,740 Notes payable ​ ​ 54,682 ​ ​ 75,433 Accrued interest ​ 3,344 ​ 3,416 Total liabilities ​ 145,750,644 ​ 58,650,427 ​ ​ ​ ​ ​ ​ ​ Commitments and Contingencies ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ Preferred shares - $ .001 par value; 5,000,000 shares authorized; no shares issued ​ — ​ ​ — Common stock - $ .001 par value; 100,000,000 shares authorized; 22,124,801 and 22,117,301 issued and outstanding ​ 22,125 ​ 22,117 Paid-in capital ​ 83,814,376 ​ 83,856,308 Accumulated other comprehensive loss ​ ​ ( 25,992 ) ​ ​ ( 50,878 ) Accumulated deficit ​ ( 2,890,969 ) ​ ( 1,266,729 ) Total shareholders' equity ​ 80,919,540 ​ 82,560,818 Total liabilities and shareholders' equity ​ $ 226,670,184 ​ $ 141,211,245 ​ The accompanying notes are an integral part of these financial statements. ​ F-3 Table of Contents SACHEM CAPITAL CORP. STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2020 2019 Revenue: ​ ​ Interest income from loans ​ $ 13,821,831 ​ $ 9,751,733 Investment income ​ ​ 399,493 ​ ​ 81,111 Gain on sale of marketable securities ​ ​ 903,257 ​ ​ — Origination fees, net ​ 1,893,143 ​ 1,519,294 Late and other fees ​ 85,469 ​ 265,310 Processing fees ​ 167,833 ​ 167,070 Rental income, net ​ 85,339 ​ 69,300 Other income ​ 1,246,530 ​ 826,688 Total revenue ​ 18,602,895 ​ 12,680,506 ​ ​ ​ ​ ​ ​ ​ Operating costs and expenses: ​ ​ Interest and amortization of deferred financing costs ​ 5,547,406 ​ 2,938,237 Compensation, fees and taxes ​ 1,799,889 ​ 1,534,447 Professional fees ​ ​ 628,797 ​ ​ 542,920 Other expenses and taxes ​ 157,194 ​ 90,412 Exchange fees ​ 49,054 ​ 44,192 Expense in connection with termination of credit facility ​ ​ — ​ ​ 340,195 Impairment loss ​ 795,000 ​ 417,094 Net loss on sale of real estate ​ ​ 7,218 ​ ​ 34,919 Depreciation ​ 61,865 ​ 63,566 General and administrative expenses ​ ​ 562,607 ​ ​ 478,513 Total operating costs and expenses ​ ​ 9,609,030 ​ ​ 6,484,495 Net income ​ 8,993,865 ​ 6,196,011 ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ Unrealized gain (loss) on investment securities ​ ​ 24,886 ​ ​ ( 50,878 ) Comprehensive income ​ $ 9,018,751 ​ $ 6,145,133 Basic and diluted net income per common share outstanding: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.41 ​ $ 0.32 Diluted ​ $ 0.41 ​ $ 0.32 Weighted average number of common shares outstanding: ​ ​ Basic ​ 22,118,522 ​ 19,415,237 Diluted ​ 22,118,522 ​ 19,415,237 ​ The accompanying notes are an integral part of these financial statements. ​ F-4 Table of Contents SACHEM CAPITAL CORP. STATEMENT OF CHANGES IN SHAREHOLDERS’/MEMBERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ Common ​ ​ ​ ​ Paid in ​ ​ Comprehensive ​ Accumulated ​ ​ ​ ​ Shares Amount Capital Loss Deficit Totals Balance, January 1, 2019 ​ 15,438,621 ​ $ 15,439 ​ $ 53,192,859 ​ ​ — ​ $ ( 405,483 ) ​ $ 52,802,815 Sale of common stock through ATM ​ ​ 4,354,773 ​ ​ 4,355 ​ ​ 19,959,990 ​ ​ — ​ ​ — ​ ​ 19,964,345 Sale of common stock ​ ​ 2,300,000 ​ ​ 2,300 ​ ​ 10,578,300 ​ ​ — ​ ​ — ​ ​ 10,580,600 Exercise of warrants ​ ​ 16,407 ​ ​ 16 ​ ​ 82,019 ​ ​ — ​ ​ — ​ ​ 82,035 Stock based compensation ​ 7,500 ​ 7 ​ 43,140 ​ — ​ ​ — ​ ​ 43,147 Unrealized loss on marketable securities ​ ​ — ​ ​ — ​ ​ — ​ $ ( 50,878 ) ​ ​ — ​ ​ ( 50,878 ) Dividends paid ​ ​ — ​ — ​ — ​ — ​ ​ ( 7,057,257 ) ​ ​ ( 7,057,257 ) Net income for the year ended December 31, 2019 ​ — ​ — ​ — ​ — ​ ​ 6,196,011 ​ ​ 6,196,011 Balance, December 31, 2019 ​ 22,117,301 ​ ​ 22,117 ​ ​ 83,856,308 ​ ​ ( 50,878 ) ​ ​ ( 1,266,729 ) ​ ​ 82,560,818 Offerings costs - ATM ​ ​ — ​ ​ — ​ ​ ( 58,353 ) ​ ​ — ​ ​ — ​ ​ ( 58,353 ) Stock based commpensation ​ 7,500 ​ ​ 8 ​ ​ 16,421 ​ ​ — ​ ​ — ​ ​ 16,429 Unrealized gain on marketable securities ​ ​ — ​ ​ — ​ ​ — ​ ​ 24,886 ​ ​ — ​ ​ 24,886 Dividends paid ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,963,128 ) ​ ​ ( 7,963,128 ) Dividends declared and payable ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,654,977 ) ​ ​ ( 2,654,977 ) Net income for the year ended December 31, 2020 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 8,993,865 ​ ​ 8,993,865 Balance, December 31, 2020 ​ 22,124,801 ​ $ 22,125 ​ $ 83,814,376 ​ $ ( 25,992 ) ​ $ ( 2,890,969 ) ​ $ 80,919,540 ​ The accompanying notes are an integral part of these financial statements. ​ F-5 Table of Contents SACHEM CAPITAL CORP. STATEMENTS OF CASH FLOW ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ Net income ​ $ 8,993,865 ​ $ 6,196,011 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Amortization of deferred financing costs ​ 601,959 ​ 722,580 Depreciation expense ​ 61,865 ​ 63,566 Stock based compensation ​ 16,429 ​ 43,147 Impairment loss ​ ​ 795,000 ​ ​ 417,094 Loss on sale of real estate ​ 7,218 ​ 34,919 Abandonment of office furniture ​ ​ — ​ ​ 12,000 Gain on sale of marketable securities ​ ​ ( 903,257 ) ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ (Increase) decrease in: ​ ​ ​ ​ Escrow deposits ​ ​ — ​ ​ 12,817 Interest and fees receivable ​ ( 504,578 ) ​ ( 154,196 ) Other receivables ​ 74,090 ​ 13,603 Due from borrowers ​ ( 1,537,768 ) ​ 385,424 Prepaid expenses ​ ( 46,579 ) ​ ( 9,868 ) Deposits on property and equipment ​ 71,680 ​ ( 59,680 ) (Decrease) increase in: ​ ​ ​ ​ ​ ​ Accrued interest ​ ( 72 ) ​ ( 173,203 ) Accounts payable and accrued expenses ​ 122,098 ​ ( 66,535 ) Deferred revenue ​ 893,591 ​ 147,334 Advances from borrowers ​ 982,271 ​ 530,944 Total adjustments ​ 633,947 ​ 1,919,946 NET CASH PROVIDED BY OPERATING ACTIVITIES ​ 9,627,812 ​ 8,115,957 ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ Purchase of investments ​ ​ ( 97,555,422 ) ​ ​ ( 16,000,680 ) Proceeds from the sale of investments ​ ​ 77,139,664 ​ ​ — Proceeds from sale of real estate owned ​ 1,816,522 ​ 1,087,004 Acquisitions of and improvements to real estate owned ​ ( 1,811,980 ) ​ ( 1,266,949 ) Purchase of property and equipment ​ ( 148,857 ) ​ ( 241,855 ) Security deposits held ​ 5,616 ​ — Principal disbursements for mortgages receivable ​ ( 117,230,923 ) ​ ( 64,742,552 ) Principal collections on mortgages receivable ​ 54,961,570 ​ 43,347,362 NET CASH USED FOR INVESTING ACTIVITIES ​ ( 82,823,810 ) ​ ( 37,817,670 ) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ Proceeds from line of credit ​ 30,055,648 ​ 42,720,829 Repayment of line of credit ​ ( 2,000,000 ) ​ ( 69,939,952 ) Proceeds from notes sold to shareholder ​ ​ — ​ ​ 1,017,000 Repayment of notes sold to shareholder ​ ​ — ​ ​ ( 2,217,000 ) Principal payments on mortgage payable ​ ( 16,573 ) ​ — Principal payments on notes payable ​ ​ ( 20,751 ) ​ ​ — Dividends paid ​ ( 7,963,128 ) ​ ( 9,681,823 ) Financing costs incurred ​ ( 114,559 ) ​ ( 2,872,774 ) Proceeds from other loans ​ ​ 257,845 ​ ​ — Proceeds from mortgage payable ​ ​ — ​ ​ 795,000 Prepayment of mortgage payable ​ ​ — ​ ​ ( 301,903 ) Proceeds from notes payable, net ​ ​ — ​ ​ 75,434 Proceeds from issuance of common stock ​ ​ — ​ ​ 30,544,945 Proceeds from exercise of warrants ​ ​ — ​ ​ 82,035 Gross proceeds from the issuance of fixed rate notes ​ ​ 56,083,750 ​ ​ 58,163,000 Financing costs incurred in connection with fixed rate notes ​ ​ ( 2,520,143 ) ​ ​ — NET CASH PROVIDED BY FINANCING ACTIVITIES ​ 73,762,089 ​ 48,384,791 NET INCREASE IN CASH AND CASH EQUIVALENTS ​ 566,091 ​ 18,683,078 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR ​ 18,841,937 ​ 158,859 CASH AND CASH EQUIVALENTS - END OF YEAR ​ $ 19,408,028 ​ $ 18,841,937 ​ The accompanying notes are an integral part of these financial statements. ​ F-6 Table of Contents SACHEM CAPITAL CORP. STATEMENTS OF CASH FLOW (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2020 2019 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION ​ ​ Taxes paid ​ $ — ​ $ — Interest paid ​ $ 4,945,448 ​ $ 2,237,240 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL INFORMATION-NON-CASH ​ ​ Original Issue Discount ​ $ 280,000 ​ $ — Dividends declared and payable ​ $ 2,654,976 ​ $ — ​ SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and and other fees receivable, during the year ended December 31, 2019 amounted to $ 5,406,477 . During the year ended December 31, 2019, mortgages receivable, affiliate in the amount of $ 879,457 were reduced to $ 0 as the underlying loans were transferred to the Company and are included in mortgages receivable. Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and and other fees receivable, during the year ended December 31, 2020 amounted to $ 1,553,103 . The accompanying notes are an integral part of these financial statements. ​ ​ ​ ​ ​ F-7 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 1. The Company Sachem Capital Corp. (the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company offers short term ( i.e. , one to three years ), secured, non-banking loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals or a pledge of the ownership interests in the borrower by the principals thereof, as well as personal guarantees by the principals of the borrower. The Company does not lend to owner occupants. The Company’s primary underwriting criteria is a conservative loan to value ratio. In addition, the Company may make opportunistic real estate purchases apart from its lending activities. ​ 2. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management will base the use of estimates on (a) various assumptions that consider its experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Cash and Cash Equivalents We consider all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. We maintain our cash and cash equivalents at financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. We believe that the risk is not significant. Allowance for Loan Loss The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio. Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required. F-8 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company can access. Level 2 Inputs to the valuation methodology include: • quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in inactive markets; • inputs other than quoted prices that are observable for the asset or liability; and • inputs that are derived principally from or corroborated by observable market data by correlation to other means. If the asset or liability has a specified ( i.e. , contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years . Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. Impairment of Long-Lived Assets The Company continually monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 8—Line of Credit and Mortgage Payable, were amortized over the term of the applicable facility using the straight-line method. Unamortized deferred financing costs relating to the Company’s $ 35 million credit facility were expensed when the facility was terminated on June 25, 2019 and the entire balance due was paid in full. Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 10–Notes Payable, are being amortized over the term of the respective Notes. F-9 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 Revenue Recognition Interest income from the Company’s loan portfolio is earned, over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears. The Company does not accrue interest income on mortgages receivable that are more than 90 days past due. Interest income not accrued at December 31, 2020 and collected prior to the issuance of this report is included in 2020 income. Origination fee revenue, generally 2 %  –  5 % of the original loan principal amount, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310. Income Taxes The Company believes it qualifies as a REIT for federal income tax purposes and operates accordingly. It made the election to be taxed as a REIT on its 2017 Federal income tax return. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company has adopted the provisions of Financial Accounting Standards Board (“FASB”) ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes.” The standard prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required. Under this standard, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense. The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of December 31, 2020 and 2019. Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260  — “Earnings Per Share.” Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. Recent Accounting Pronouncements In May 2019, the FASB issued ASU 2019-05, “Financial Instruments— Credit Losses (Topic 326): Targeted Transition Relief," which requires that entities use a new forward looking "expected loss" model that, generally, will result in the earlier recognition of an allowance for credit losses. This ASU also allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” However, after beginning to implement the various key provisions of this ASU, and recognizing the complexities and challenges required, we determined to take advantage of our status as an emerging growth company, which allows us to defer the adoption of this ASU until our year ended December 31, 2023. F-10 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 For smaller reporting companies, such as the Company, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022. As indicated in previous filings, the Company had intended to adopt ASU 2016-13 as of January 1, 2020. However, given the complexity of ASU 2016-13 and upon becoming aware that smaller reporting companies were not required to implement ASU 2-16-13 yet, the Company has decided to defer its implementation ASU 2016-13. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU modifies ASC 740 to remove certain exceptions and adds guidance to reduce complexity in certain areas. For companies that file with the Securities and Exchange Commission, the standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted but requires simultaneous adoption of all provisions of the new standard. The Company believes that the adoption of this guidance will not have a material impact on its financial statements. In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This ASU provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope." ASU 2021-01 amends ASU 2020-04 and focuses on refining accounting relief for modifications made to certain derivatives and hedging contracts, such as interest rate swaps. The Company believes that neither the adoption of ASU 2020-04 nor the adoption of ASU 2021-01 will have a material impact on its financial statements as it currently does not have any indebtedness tied to LIBOR or any other rate expected to be discontinued. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820).” ASU 2018-13 amends certain disclosure requirements regarding the fair value hierarchy of investments in accordance with GAAP, particularly the significant unobservable inputs used to value investments within Level 3 of the fair value hierarchy. The Company adopted this guidance effective on January 1, 2020. The Company's adoption of this guidance did not have a material impact on its financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements. ​ 3. Fair Value Measurement The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair market value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 Level 2 Level 3 Total Certificates of Deposit ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stocks and ETF's ​ $ 6,722,795 ​ ​ — ​ ​ — ​ $ 6,722,795 Mutual Funds ​ ​ 30,570,908 ​ — ​ — ​ ​ 30,570,908 Total Investments ​ $ 37,293,703 ​ ​ — ​ ​ — ​ $ 37,293,703 Real Estate Owned ​ ​ ​ $ 8,861,609 ​ $ 8,861,609 ​ F-11 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 Level 2 Level 3 Total Certificates of Deposit ​ ​ — ​ $ 2,999,738 ​ ​ — ​ $ 2,999,738 Stocks and ETF's ​ $ 2,990,008 ​ ​ — ​ ​ — ​ $ 2,990,008 Mutual Funds ​ ​ 12,959,794 ​ ​ — ​ ​ — ​ ​ 12,959,794 Total Investments ​ $ 15,949,802 ​ ​ — ​ ​ — ​ $ 15,949,802 Real Estate Owned ​ ​ ​ $ 8,258,082 ​ $ 8,258,082 ​ Following is a description of the methodologies used for assets measured at fair value: Certificates of deposit: Included in cash and cash equivalents and are valued at amortized cost, which approximates fair value. Stocks and ETFs: Valued at the closing price reported in the active market in which the individual securities are traded. Mutual funds: Valued at the daily closing price reported by the fund. Mutual funds held by the Company are open-end mutual funds that are registered with the U.S. Securities and Exchange Commission. These funds are required to publish their daily net asset values and to transact at that price. The mutual funds held by the Company are deemed to be actively traded. Real estate owned: The Company estimates fair values of real estate owned using market information such as recent sales contracts, appraisals, recent sales, assessed values or discounted cash value models. ​ 4. Mortgages Receivable The Company offers secured, non-banking loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. In addition, each loan is personally guaranteed by the borrower or its principals, which guarantees may be collaterally secured as well. The loans are generally for a term of one to three years . The loans are initially recorded and carried thereafter, in the financial statements, at cost. Most of the loans provide for monthly payments of interest only (in arrears) during the term of the loan and a “balloon” payment of the principal on the maturity date. For the years ended December 31, 2020 and 2019, the aggregate amounts of loans funded by the Company were $ 117,230,923 and $ 64,742,552 , respectively, offset by principal repayments of $ 54,961,570 and $ 43,347,362 , respectively. As of December 31, 2020, the Company’s mortgage loan portfolio includes loans ranging in size from $ 2,600 to $ 10,780,000 with stated interest rates ranging from 5.0 % to 13.0 % and a default interest rate for non-payment of 18 %. At December 31, 2020 and 2019, no single borrower had loans outstanding representing more than 10 % of the total balance of the loans outstanding. The Company will agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meets all the Company’s underwriting requirements. The Company treats a loan extension as a new loan. F-12 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 Credit Risk Credit risk profile based on loan activity as of December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Residential Commercial Land Mixed Use Mortgages December 31, 2019 ​ $ 71,605,920 ​ $ 16,122,990 ​ $ 5,639,979 ​ $ 979,800 ​ $ 94,348,689 December 31, 2020 ​ $ 112,240,129 ​ $ 33,548,683 ​ $ 6,111,670 ​ $ 3,715,818 ​ $ 155,616,300 ​ As of December 31, 2020, the following is the maturities of mortgages receivable for the years ending December 31: ​ ​ ​ ​ ​ 2021 $ 112,313,184 2022 ​ 33,433,297 2023 ​ 9,598,788 2024 ​ 271,031 Total ​ $ 155,616,300 ​ At December 31, 2020, of the 495 mortgage loans in the Company’s portfolio, sixteen were the subject of foreclosure proceedings. The aggregate outstanding principal balance of these and the accrued but unpaid interest and borrower charges as of December 31, 2020 was approximately $ 3.1 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan. At December 31, 2019, of the 438 mortgage loans in the Company’s portfolio, nine were the subject of foreclosure proceedings. The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of December 31, 2019 was approximately $ 2.8 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan. ​ 5. Real Estate Owned Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned. As of December 31, 2020 and 2019, real estate owned totaled $ 8,861,609 and $ 8,258,082 , respectively, with no valuation allowance in either year. During the year ended December 31, 2020 the Company recorded an impairment loss of $ 795,000 compared to an impairment loss of  $ 417,094 in 2019. As of December 31, 2020, real estate owned included $ 1,393,398 of real estate held for rental and $ 7,468,211 of real estate held for sale. As of December 31, 2019, real estate owned included $ 558,672 of real estate held for rental and $ 7,699,410 of real estate held for sale. Properties Held for Sale During the year ended December 31, 2020, the Company sold two properties held for sale and recognized an aggregate loss of $ 7,219 . During the year ended December 31, 2019, the Company sold six properties, of which three were held for sale and three were held for rental, and recognized an aggregate loss of $ 34,919 . Properties Held for Rental As of December 31, 2020, five properties, four single-family residences and one commercial building, were held for rental. Four properties are leased on a month-month basis and the other one is subject to a lease expiring in March 2022. During the year ended December 31, 2020, three purchase options expired and one property is subject to an option to purchase in favor of the current lessee. F-13 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 Rental payments due from real estate held for rental are as follows: ​ ​ ​ ​ ​ Year ending December 31, 2021 $ 20,100 Year ending December 31, 2022 ​ 5,025 Total ​ $ 25,125 ​ ​ 6. Profit Sharing Plan On April 16, 2018, the Company’s Board of Directors approved the adoption of the Sachem Capital Corp. 401(k) Profit Sharing Plan (the “401(k) Plan”). All employees, who meet the participation criteria, are eligible to participate in the 401(k) Plan. Under the terms of the 401(k) Plan, the Company is obligated to contribute 3 % of a participant’s compensation to the 401(k) Plan on behalf of an employee-participant. For the years ended December 31, 2020 and 2019, the 401(k) Plan expense was $ 47,164 and $ 36,771 , respectively. ​ 7. Line of Credit and Mortgage Payable Line of Credit Effective May 11, 2018, the Company obtained a $ 35 million credit facility (the “Webster Credit Facility”) with Webster Business Credit Corporation, Bankwell Bank and Berkshire Bank. The Webster Credit Facility was secured by a first priority lien on all the Company’s assets, including its mortgage loan portfolio. Interest on the outstanding balance accrued at a rate equal to the 30-day LIBOR rate plus 4.00 % per annum. All amounts outstanding under the Webster Credit Facility, including principal, accrued interest and other fees and charges, were to be due and payable May 11, 2022. On June 25, 2019, the entire outstanding balance of the Webster Credit Facility, including principal, accrued and unpaid interest and other fees, in the aggregate amount of $ 19.8 million was paid in full and the Webster Credit Facility was terminated. In connection with the termination of the Webster Credit Facility, the Company expensed non-recurring charges of $ 779,641 , of which $ 439,446 constituted the write-off of non-cash deferred financing costs. Amortization of all deferred financing costs for the years ended December 31, 2019 was $ 722,580 including costs of $ 439,446 incurred in connection with the termination of the Webster Credit Facility. Wells Fargo Margin Line of Credit During the year ended December 31, 2020, the Company obtained a margin loan account from Wells Fargo, which is secured by the Company's portfolio of short-term securities. The credit line bears interest at a rate equal to 1.75 % below the prime rate ( 1.5 % at December 31, 2020). As of the December 31, 2020 the total outstanding balance was $ 28,055,648 . Mortgage Payable At December 31, 2020, the Company had a mortgage loan payable of $ 767,508 . The original amount of the loan was $ 795,000 and was secured by a first mortgage loan on the Company’s property located at 698 Main Street, Branford, Connecticut. Interest on the mortgage loan accrued at the rate of 5.06 % per annum, monthly payments were $ 4,710 and the maturity date was to be March 31, 2029. On February 19, 2021 this mortgage loan was repaid in full. ​ ​ 8. Financing Transactions During the year ended December 31, 2020, the Company generated approximately $ 56.1 million (after taking into account the original issue discount) of gross proceeds from the sale of its securities as follows: (i) $ 28,363,750 from the sale of its 7.75 % unsecured, unsubordinated notes due September 30, 2025 in September and October 2020; and F-14 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 (ii) $ 27,720,000 from the sale of additional September 2025 Notes in December 2020. The net proceeds from the sale of these securities were used primarily to fund new mortgage loans and for working capital and general corporate purposes. During the year ended December 31, 2019, the Company generated approximately $ 90.3 million of gross proceeds from the sale of its securities as follows: (i) $ 20,533,208 from the sale of 4,354,773 common shares in an “at-the-market” offerings; (ii) $ 23,663,000 from the sale of its 7.125 % unsecured, unsubordinated notes due June 30, 2024; (iii) $ 82,035 from the exercise of 16,407 warrants; (iv) $ 11,500,000 from the sale of 2,300,000 common shares from an equity offering; and (v) $ 34,500,000 from the sale of its 6.875 % unsecured, unsubordinated notes due December 30, 2024. Approximately $ 31.5 million of the net proceeds from the sale of the foregoing securities were used to pay-off the Webster Credit Facility and the balance was used to fund new mortgage loans and for general corporate purposes. ​ ​ ​ 9. Notes Payable At December 31, 2020, the Company had an aggregate of $ 109,640,692 of unsecured, unsubordinated notes payable outstanding, net of $ 4,606,058 of deferred financing costs (collectively, the “Notes”). The Notes are divided into three series: (i) Notes having an aggregate principal amount of $ 23,663,000 bearing interest at 7.125 % per annum and maturing June 30, 2024 (“the June 2024 Notes”); (ii) Notes having an aggregate principal amount of $ 34,500,000 bearing interest at 6.875 % per annum and maturing December 30, 2024 (the “December 2024 Notes”); and (iii) Notes having an aggregate principal amount of $ 56,363,750 bearing interest at 7.75 % per annum and maturing December 30, 2024 (the “September 2025 Notes”) ​ The Notes were sold in underwritten public offerings, were issued in denomination of $ 25.00 each and are listed on the NYSE American and trade under the symbol “SCCB”, “SACC” and “SCCC”, respectively. All the notes were issued at par except for the last tranche of the September 2025 notes, in the original principal amount of $ 28 million, which were issued at $ 24.75 each. Interest on the Notes is payable quarterly on each March 30, June 30, September 30 and December 30 that they are outstanding. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of 90 % of its taxable income, incurring any additional indebtedness or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150 % after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after their second anniversary of issuance upon at least 30 days prior written notice to the holders of the Notes. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including the date of redemption. The June 2024 Notes will be callable any time after June 30, 2021, the December 2024 Notes will be callable at any time after November 7, 2021 and the 2025 Notes will be callable at any time after September 4, 2022. ​ F-15 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 10. Other Income Other income of the Company includes the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2020 2019 Income from borrower charges ​ $ 290,683 ​ $ 218,804 Lender, modification and extension fees ​ 672,159 ​ 451,746 In-house legal fees ​ 223,440 ​ 153,130 Other income ​ 60,248 ​ 3,008 Total ​ $ 1,246,530 ​ $ 826,688 ​ ​ 11. Commitments and Contingencies Origination Fees Loan origination fees range from 2 %- 5 % of the original loan principal and, generally, are payable at the time the loan is funded. These payments are amortized for financial statement purposes over the life of the loan and will be recorded as income as follows: Original maturities of deferred revenue are as follows as of: ​ ​ ​ ​ ​ Year ending December 31, ​ ​ 2021 ​ $ 1,679,813 2022 ​ ​ 394,925 2023 ​ 24,593 Total ​ $ 2,099,331 ​ In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is generally recognized in full at the time of repayment. If the borrower is entitled to a partial refund of the origination fee collected in connection with a prepaid loan, the Company credits the refundable portion against the balance due on the loan. For the years ended December 31, 2020 and 2019, approximately $ 55,639 and $ 40,070 of origination fees were refunded in connection with prepaid loans. Employment Agreements In February 2017, the Company entered into an employment agreement with John Villano, the material terms of which are as follows: (i) the employment term is five years commencing February 9, 2017, with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement; (ii) a base salary of $ 260,000 , which was increased in April 2018 to $ 360,000 ; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; (v) a two-year non-competition period following the termination of employment without cause; and (vi) payments upon termination of employment or a change in control. In July 2020, the Company entered into an employment agreement with Peter Cuozzo, the material terms of which are as follows: (i) the agreement can be terminated by either party at any time upon delivery of written notice to the other party; (ii) a base salary of  $ 250,000 per year; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company's Board of Directors; (iv) participation in the Company's employee benefit plans; (v) full indemnification to the extent permitted by law; (v) subject to a covenant not to compete that continues for 18 months after termination unless he is terminated without "cause" prior to July 1, 2022; and (vi) severance pay equal to 18 months of his base compensation if he is terminated without cause, or if he terminates for good reason, prior to July 1, 2022. F-16 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 Unfunded Commitments At December 31, 2020, the Company had future funding obligations totaling $ 19,601,731 , which can be drawn by the borrowers when the conditions relating thereto have been satisfied. Other In the normal course of its business, the Company is named as a party-defendant because it is a mortgagee having interests in real properties that are being foreclosed upon, primarily resulting from unpaid property taxes. The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists. At December 31, 2020, there were five such properties, representing approximately $ 276,000 of mortgages receivable. ​ 12. Related Party Transactions In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans adheres to prevailing Company policy. The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio. As of December 31, 2020, and 2019, loans to known shareholders totaled $ 9,356,336 and $ 6,159,002 , respectively. Interest income earned on these loans totaled $ 649,159 and $ 528,712 for the years ended December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and 2019, the wife of the Company’s chief executive officer was paid $ 108,000 and $ 100,000 , respectively, for accounting and financial reporting services provided to the Company. ​ 13. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and mortgage loans. The Company maintains its cash and cash equivalents with two financial institutions. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $ 250,000 . The Company makes loans that are secured by first mortgage liens on real property located primarily in Connecticut. This concentration of credit risk may be affected by changes in economic or other conditions of the geographic area. Credit risks associated with the Company's mortgage loan portfolio and related interest receivable are described in Note 4-Mortgages Receivable. ​ 14. Outstanding Warrants In 2017 the Company consummated two public offerings – the IPO in February and a follow-on offering in October-November. In connection with the IPO, the Company issued to the underwriters warrants to purchase an aggregate of 130,000 common shares at an exercise price of $ 6.25 per common share. These warrants are exercisable at any time, and from time to time, in whole or in part, commencing on February 9, 2018 and expire on February 9, 2022. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $ 114,926 . At December 31, 2020, all these warrants were outstanding . In connection with a public offering that was consummated in October 2017, the Company issued to the underwriters warrants to purchase an aggregate of 187,500 common shares at an exercise price of$ 5.00 per share. These warrants are exercisable at any time, and from time to time, in whole or in part, commencing on October 24, 2018 and expire on October 24, 2022 . The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $ 131,728 . At December 31, 2020, 171,093 of these warrants were outstanding. ​ F-17 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 15. Stock-Based Compensation On October 27, 2016, the Company adopted the 2016 Equity Compensation Plan (the “Plan”), the purpose of which is to align the interests of the Company’s officers, other employees, advisors and consultants or any subsidiary, if any, with those of the Company’s shareholders and to afford an incentive to such officers, employees, consultants and advisors to continue as such, to increase their efforts on the Company’s behalf and to promote the success of the Company’s business. The basis of participation in the Plan is upon discretionary grants of awards by the Company’s Board of Directors. The Plan is administered by the Compensation Committee. The maximum number of Common Shares reserved for the grant of awards under the Plan is 1,500,000 , subject to adjustment as provided in Section 5 of the Plan. Since the Plan was adopted, the Company has issued 37,884 shares to its directors. The number of securities remaining available for future issuance under the Plan as of December 31, 2020 was 1,462,116 . During each of the years ended December 31, 2020 and 2019, the Company granted an aggregate of 7,500 restricted Common Shares under the Plan, respectively. Stock based compensation for the years ended December 31, 2020 and 2019 was $ 16,428 and $ 43,147 ,respectively . ​ 16. Subsequent Events On January 8, 2021, the Company paid a dividend of $ 0.12 per share, or $ 2,654,976 in the aggregate, to shareholders of record as of December 31, 2020. On January 15, 2021, the Company sold a property classified as real estate held for sale at December 31, 2020 receiving $ 360,424 in net proceeds. The Company recognized an impairment loss of $ 42,067 with respect to this property as of December 31, 2020. On February 19, 2021, the Company paid off the Bankwell mortgage securing the Company’s corporate office (see Note 8). In March 2021, the Company sold an aggregate of 234,051 common shares under an at-the-market offering facility realizing gross proceeds of approximately $ 1.2 million, all of which are due to settle by March 31, 2021. Management has evaluated subsequent events through March 30, 2021 the date on which the financial statements were available to be issued. Based on the evaluation, no adjustments were required in the accompanying financial statements. ​ 17. COVID-19 The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide. In the State of Connecticut, our primary market, on March 20, 2020, Governor Ned Lamont issued an executive order requiring all “non-essential” businesses to close effective 8:00 p.m., Monday, March 23, 2020, until further notice. During the second quarter of 2020, the State of Connecticut announced plans to re-open selected businesses pursuant to a three Phase reopening plan for those businesses deemed non-essential and closed due to the March 20, 2020 executive order. On May 20, 2020, Phase 1 of the re-opening plan was put in place, on June 17, 2020 Phase 2 was put into effect and on October 8, 2020 Phase 3 was put into effect. On November 6, 2020, Connecticut rolled back its re-opening plans to Phase 2.1, a slightly modified version of the State’s Phase 2. The rollback was initiated due to a spike in cases statewide. These actions directly impacted our ability to conduct our business in the usual manner. The compliance requirements were difficult to administer, costly and in many situations not customer friendly. If left in effect for an extended period, they could have had a material adverse impact on our operations, resulting in reductions in revenues, net income, and cash flow. In addition, any disruption to the operations of a borrower could impair its ability to make monthly payments of interest, payments of insurance and/or taxes or to repay the outstanding balances on their loans at maturity. Furthermore, a liquidity crisis, would impair the ability of our borrowers to refinance their loans when due. Moreover, if our borrowers cannot sell their properties or the values of properties securing mortgage loans decline significantly, they would not be able to repay their loans when due. In addition, the filing and preparation of loan documents with the various recording offices were delayed and there was only limited access to the Connecticut court system to process foreclosures and evictions. F-18 Table of Contents SACHEM CAPITAL CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020 To address these concerns, we imposed certain policies and guidelines designed primarily to preserve our liquidity and help our borrowers. In the second quarter of 2020, we agreed to restructure twenty-three loans, having an aggregate balance of $ 6.5 million at June 30, 2020, pursuant to forbearance requests by borrowers under the program we adopted and implemented. The total amount of interest deferred under these twenty-three loans was approximately $ 200,000 . As of December 31, 2020, all these loans have moved off forbearance and no other loans were added to the forbearance program. Since December 2020, the U.S. Food and Drug Administration (“FDA”) has issued emergency use authorizations that approved the use of three different Covid-19 vaccines. Since then, over 100 million doses of vaccines have been administered. Although there are concerns regarding mutations of the virus that might not be susceptible to the existing vaccines, the prevailing view among medical experts is that the worst of the pandemic may be over and that states will soon be able to lift many of the restrictions that were imposed to slow the spread of the virus. In fact, many states have already done so. However, if there is a re-occurrence of the virus in Connecticut or the State mandates further business closures, we may be compelled to take measures to preserve our cash flow, including reducing operating expenses and dividend payments until the consequences of the outbreak subside. There may be other adverse consequences to our business, operations, and financial condition from the spread of COVID-19 that have not been considered. ​ F-19