What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-04 compared with 2021-08-16 · 157 added, 135 removed, 340 unchanged (46% of the section changed)

2 unchanged sentences

BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

10 unchanged sentences

Other deposits

Deferred financing costs

Deferred financing costs, net

Liabilities and Shareholders’ Equity

28 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest income from loans

18 unchanged sentences

Total operating costs and expenses

Preferred stock dividend

Net income attributable to common shareholders

Other comprehensive (loss) gain

6 unchanged sentences

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2021

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

Preferred Stock

Comprehensive

Beginning balance, April 1, 2021

Issuance of Series A Preferred Stock, net of expenses

Issuance of common shares, net of expenses

Beginning balance, July 1, 2021

Issuance of Preferred Stock, net of expenses

Issuance of Common Stock, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid

Dividends paid on Common Stock

( 3,336,756 )

Net income for the period ended June 30, 2021

Balance, June 30, 2021

FOR THE THREE MONTHS ENDED JUNE 30, 2020

Dividends paid on Preferred Stock

Net income for the period ended September 30, 2021

Balance, September 30, 2021

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

Preferred Stock

Comprehensive

(Loss) Income

Deficit) Retained Earnings

Beginning balance, April 1, 2020

( 1,682,191 )

Beginning balance, July 1, 2020

Stock based compensation

Unrealized loss on marketable securities

Net income for the period ended June 30, 2020

Balance, June 30, 2020

Dividends Paid

( 2,654,076 )

Net income for the period ended September 30, 2020

Balance, September 30, 2020

The accompanying notes are an integral part of these financial statements.

FOR THE SIX MONTHS ENDED JUNE 30, 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

Preferred Stock

2 unchanged sentences

( 2,890,969 )

Issuance of Series A Preferred Stock, net of expenses

Issuance of common shares, net of expenses

Issuance of Preferred Stock, net of expenses

Issuance of Common Stock, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid

Dividends paid on Common Stock

( 6,123,415 )

Net income for the period ended June 30, 2021

Balance, June 30, 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Dividends paid on Preferred Stock

Net income for the period ended September 30, 2021

Balance, September 30, 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Preferred Stock

Comprehensive

(Loss) Income

Deficit) Retained Earnings

Beginning balance, January 1, 2020

( 1,266,729 )

Issuance of common shares, net of expenses

Issuance of Common Stock, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Dividends paid

1 unchanged sentence

( 5,308,152 )

Net income for the period ended June 30, 2020

Balance, June 30, 2020

Net income for the period ended September 30, 2020

Balance, September 30, 2020

The accompanying notes are an integral part of these financial statements.

1 unchanged sentence

STATEMENTS OF CASH FLOW

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

6 unchanged sentences

Loss on sale of real estate

Loss (gain) on sale of marketable securities

Gain on sale of marketable securities

Debt Forgiveness

4 unchanged sentences

Due from borrowers

( 1,405,352 )

Prepaid expenses

12 unchanged sentences

Proceeds from the sale of investment securities

Purchase of interest in investment partnership

Purchase of interest in investment partnership, net

( 1,804,217 )

13 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from line of credit

Net proceeds from line of credit

Repayment of mortgage payable

Principal payments on notes payable

Dividends paid

Dividends paid on Common Stock

( 8,778,392 )

( 5,308,152 )

Dividends paid on Preferred Stock

Financings costs incurred

2 unchanged sentences

Proceeds from issuance of Series A Preferred Stock, net of expenses

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

( 2,472,796 )

NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS

Gross proceeds from issuance of fixed rate notes

Financings costs incurred in connection with fixed rate notes

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET DECREASE IN CASH AND CASH EQUIVALENTS

( 13,457,864 )

1 unchanged sentence

CASH AND CASH EQUIVALENTS - END OF PERIOD

The accompanying notes are an integral part of these financial statements.

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

Nine Months Ended

September 30,

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Interest paid

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended September 30, 2020 amounted to $ 170,383 .

The accompanying notes are an integral part of these financial statements.

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

SEPTEMBER 30, 2021

Sachem Capital Corp.

2 unchanged sentences

, 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.

The properties securing the Company’s loans are generally classified as residential or commercial real estate and 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.

9 unchanged sentences

Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year.

Consolidations

The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity.

All intercompany accounts and transactions have been eliminated.

Use of Estimates

12 unchanged sentences

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

SEPTEMBER 30, 2021

Fair Value Measurements

1 unchanged sentence

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:

The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“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.

15 unchanged sentences

Deferred Financing Costs

Costs incurred by the Company in connection with public offerings of its unsecured, unsubordinated notes, described in Note 6 - Notes Payable -- are being amortized over the term of the respective Notes.

Costs incurred by the Company in connection with public offerings of its unsecured, unsubordinated notes, described in Note 6 - Notes Payable and Line of Credit-- are being amortized over the term of the respective Notes.

Revenue Recognition

1 unchanged sentence

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 June 30, 2021 and collected prior to the issuance of these financial statements is included in June 30, 2021 income.

The Company does not accrue interest income more than 90 days in arrears.

Interest income not accrued at September 30, 2021 and collected prior to the issuance of these financial statements is included in September 30, 2021 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.

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and made the election to be taxed as a REIT when it filed its 2017 federal income tax return.

SEPTEMBER 30, 2021

The Company elected to be taxed as a Real Estate Investment Trust (REIT) for federal income tax purposes when it filed its 2017 federal income tax return.

As a REIT, the Company is required to distribute at least 90% of its taxable income to its shareholders on an annual basis.

7 unchanged sentences

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 June 30, 2021.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of September 30, 2021.

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.

Basic and diluted earnings per share are calculated in accordance with FASB ASC 260 “Earnings Per Share”.

Under FASB 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.

1 unchanged sentence

Recent Accounting Pronouncements

Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on the Company’s financial statements.

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements.

Fair Value Measurement

1 unchanged sentence

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 June 30, 2021:

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2021:

Stocks and ETFs

2 unchanged sentences

Real Estate Owned

Investment in Partnership

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

SEPTEMBER 30, 2021

Following is a description of the methodologies used for assets measured at fair value:

Stocks and ETFs:

Valued at the closing price reported in the active market in which the individual securities are traded.

Valued at the closing price reported in the active market on which the individual securities are traded.

Fixed and Preferred Securities:

16 unchanged sentences

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 six-month periods ended June 30 , 2021 and 2020, the aggregate amounts of loans funded by the Company were $ 75,190,172 and $ 42,303,747 , respectively, offset by principal repayments of $ 58,012,498 and $ 25,417,062 , respectively.

At June 30 , 2021, the Company’s portfolio included loans with outstanding principal balances up to approximately $ 9.8 million, with stated interest rates ranging from 5.0 % to 13.0 % and a default interest rate for non-payment of 18 % .

At June 30 , 2021, no single borrower had loans outstanding representing more than 10 % of the total balance of the loans outstanding.

For the nine-month periods ended September 30 , 2021 and 2020, the aggregate amounts of loans funded by the Company were $ 154,810,007 and $ 68,029,798 , respectively, offset by principal repayments of $ 90,463,016 and $ 37,859,270 , respectively.

At September 30 , 2021, the Company’s portfolio included loans with outstanding principal balances up to approximately $ 16.7 million, with stated interest rates ranging from 5.0 % to 14.2 % and a default interest rate for non-payment of 18 % .

The Company will extend the term of a loan if, at the time of the extension, the loan and the borrower satisfy the Company’s underwriting requirements at the time of the extension.

The Company treats a loan extension as a new loan.

Credit risk profile based on loan activity as of June 30, 2021 and December 31, 2020:

Credit risk profile based on loan activity as of September 30, 2021 and December 31, 2020:

Mortgages Receivable

June 30, 2021

September 30, 2021

December 31, 2020

The following are the maturities of mortgages receivable as of September 30:

2025 and thereafter

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

The following are the maturities of mortgages receivable as of June 30:

2024 and thereafter

At June 30, 2021, of the 477 mortgage loans in the Company’s portfolio, 12 were the subject of foreclosure proceedings.

The aggregate outstanding balances due on these loans as of June 30, 2021, including unpaid principal, accrued but unpaid interest and borrower fees, was approximately $ 2.63 million.

SEPTEMBER 30, 2021

At September 30, 2021, of the 493 mortgage loans in the Company’s portfolio, 17 were the subject of foreclosure proceedings.

The aggregate outstanding balances due on these loans as of September 30, 2021, including unpaid principal, accrued but unpaid interest and borrower fees, was approximately $ 6.2 million.

In the case of each of these loans, the Company believes the value of the collateral exceeds the total amount due.

At September 30, 2021, we had one borrower whose outstanding loans, in the aggregate principal amount of $ 22.3 million, represented 10.2 % of our mortgage loan portfolio.

Real Estate Owned

Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned.

As of June 30, 2021, and December 31, 2020, real estate owned totaled $ 7,892,845 and $ 8,861,609 , respectively, with no valuation allowance.

As of June 30, 2021, real estate owned included $ 986,975 of real estate held for rental and $ 6,905,870 of real estate held for sale.

In the first six-months of 2021, the Company recorded an impairment loss of $ 319,000 compared to an impairment loss of $ 495,000 in the first six-months of 2020.

For the three-months ended June 30, 2021 and 2020, the impairment loss was $ 294,000 and $ 245,000 , respectively.

Properties Held for Sale

On April 30, 2021, the Company sold a property classified as real estate held for sale, receiving approximately $ 280,000 in gross proceeds.

A loss of $ 14,962 was recognized on the sale.

As of September 30, 2021, and December 31, 2020, real estate owned totaled $ 6,774,522 and $ 8,861,609 , respectively.

As of September 30, 2021, real estate owned included $ 916,325 of real estate held for rental and $ 5,858,197 of real estate held for sale.

In the first nine-months of 2021, the Company recorded an impairment loss and loss on sale of real estate of $ 469,000 and $ 111,545 , respectively, compared to an impairment loss and loss on sale of real estate of $ 495,000 and $ 7,276 , respectively, in the first nine-months of 2020.

For the three-months ended September 30, 2021 and 2020, the impairment loss was $ 150,000 and $ 0 , respectively, and loss on sale of real estate was $ 94,450 and $ 2,816 , respectively.

Notes Payable and Line of Credit

At June 30, 2021, the Company had an aggregate of $ 110,143,564 of unsecured, unsubordinated notes payable outstanding, net of $ 4,383,186 of deferred financing costs (collectively, the “Notes”).

At September 30, 2021, the Company had an aggregate of $ 110,394,395 of unsecured, unsubordinated notes payable outstanding, net of $ 4,112,355 of deferred financing costs (collectively, the “Notes”).

The Notes are divided into three series:

1 unchanged sentence

(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”);

(iii) Notes having an aggregate principal amount of $ 56,363,750 bearing interest at 7.75 % per annum and maturing December 30, 2024 (the “2025 Notes”).

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

(iii) Notes having an aggregate principal amount of $ 56,363,750 bearing interest at 7.75 % per annum and maturing September 30, 2025 (the “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.

6 unchanged sentences

Wells Fargo Margin Line of Credit

At June 30, 2021, the Company had a total outstanding balance of $ 34,276,418 under the 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 June 30, 2021).

For the three and six-month periods ended June 30, 2021 and 2020, other income consists of the following:

ended June 30,

At September 30, 2021, the Company had a total outstanding balance of $ 30,056,159 under the 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 September 30, 2021).

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

Churchill MRA Funding I LLC Repurchase Financing Facility

On July 21, 2021, the Company consummated a $ 200 million master repurchase financing facility (“Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York.

Under the terms of the Master Repurchase Agreement entered into in connection with the Facility (the “MRA”), the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans.

In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill.

The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other circumstances.

The repurchase price is calculated by applying an interest factor to the purchase price of the mortgage loan.

The Company has also granted Churchill a first priority security interest on the mortgage loans sold to Churchill to secure its repurchase obligation.

The cost of capital under the Facility is equal to the sum of (a) the greater of (i) 0.25 % and (ii) the 30-day LIBOR plus (b) 3 %- 4 %, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time.

The MRA contains other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements.

In addition, the Company has agreed that it will not (A) (i) pay any dividends or make distributions in excess of 90% of its taxable income, (ii) incur any indebtedness or (iii) purchase any of its capital stock, unless, in any case, it has an asset coverage ratio of at least 150 %;

and (B) has unencumbered cash and cash equivalents in an amount equal to or greater than 2.50 % of the amount of its repurchase obligations.

Churchill has the right to terminate the Facility at any time upon 180 days prior notice to the Company.

The Company then has an additional 180 days after termination to repurchase all the mortgage loans held by Churchill.

The Company intends to use the proceeds from the Facility to finance the continued expansion of its lending business and for general corporate purposes.

At September 30, 2021, the Company had not pledged any of its loans to Churchill.

For the three and nine-month periods ended September 30, 2021 and 2020, other income consists of the following:

ended September 30,

Income on borrower charges

5 unchanged sentences

These payments are amortized over the life of the loan for financial statement purposes.

Original maturities of deferred revenue are as follows as of:

In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

SEPTEMBER 30, 2021

Original maturities of deferred revenue are as follows as of:

September 30,

In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment.

Unfunded Commitments

1 unchanged sentence

However, where all or a portion of the loan proceeds are to be used to fund the costs of renovating or constructing improvements on the property, only a portion of the loan may be funded at closing.

At June 30, 2021, the Company’s mortgage loan portfolio included 130 loans with future funding obligations, in the aggregate principal amount of $ 31,845,533 .

Advances under these loans are funded against requests supported by all required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction.

At September 30, 2021, the Company’s mortgage loan portfolio included 157 loans with future funding obligations, in the aggregate principal amount of $ 61,707,185 .

Advances under these loans are funded against requests supported by required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction.

Management estimates that these commitments will be funded over the next 12 months.

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, usually because the owner failed to pay 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 June 30, 2021, there were 7 such properties, representing approximately $ 834,000 in mortgages receivable.

At September 30, 2021, there were eight such properties, representing approximately $ 810,000 in mortgages receivable.

Related Party Transactions

2 unchanged sentences

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 June 30, 2021, and 2020, loans to known shareholders totaled $ 10,153,291 and $ 6,141,356 , respectively.

Interest income earned on these loans for the six months ended June 30, 2021 and 2020 totaled $ 416,965 and $ 344,385 , respectively, and for the three months ended June 30, 2021 and 2020 totaled $ 246,006 and $ 168,414 , respectively.

For the six-month periods ended June 30, 2021 and 2020, the wife of the Company’s chief executive officer was paid $ 56,385 and $ 50,000 , respectively, for accounting and financial reporting services provided to the Company.

For the three months ended June 30, 2021 and 2020, the corresponding amounts were $ 28,206 and $ 25,000 , respectively.

As of September 30, 2021, and 2020, loans to known shareholders totaled $ 13,200,972 and $ 4,626,665 , respectively.

Interest income earned on these loans for the nine months ended September 30, 2021 and 2020 totaled $ 573,446 and $ 397,293 , respectively, and for the three months ended September 30, 2021 and 2020 totaled $ 252,050 and $ 129,956 , respectively.

The wife of the Company’s chief executive officer is employed by the Company in the accounting and finance department.

For the nine-month periods ended September 30, 2021 and 2020, she received $ 85,634 and $ 75,000 , respectively, as compensation from the Company.

For the three months ended September 30, 2021 and 2020, the corresponding amounts were $ 29,250 and $ 25,000 , respectively.

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.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments in securities and mortgage loans.

The Company maintains its cash and cash equivalents with various financial institutions.

Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $ 250,000 .

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

The Company is potentially subject to concentration of credit risk in its investment securities.

2 unchanged sentences

SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules.

The Company makes loans that are secured by first mortgage liens on real property located primarily (approximately 66.75 %) in Connecticut.

This concentration of credit risk may be affected by changes in economic or other conditions of the geographic area.

The Company makes loans that are secured by first mortgage liens on real property located primarily in Connecticut (approximately 59.51 %), Florida (approximately 21.09 %) and New York (approximately 10.69 %).

This concentration of credit risk may be affected by changes in economic or other conditions of the particular geographic area.

Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

Equity Offerings

On April 9, 2021, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 43,636,250 of its common shares in an at-the-market offering.

During the six-month period ended June 30, 2021, the Company sold an aggregate of 4,513,731 common shares and realized net proceeds of $ 22,878,849 .

On April 9, 2021, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 43,636,250 of its common shares in an “at-the market” offering, which is ongoing.

During the nine-month period ended September 30, 2021, the Company sold an aggregate of 6,096,448 common shares and realized net proceeds of $ 30,884,022 in its at-the-market offering.

On June 23, 2021, the Company entered into an underwriting agreement with respect to a firm commitment underwritten public offering of up to 1,955,000 shares (including 255,000 shares to cover overallotments) of the Company’s 7.75 % Series A Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series A Preferred Stock”), at a public offering price of $ 25.00 per share, equal to the liquidation preference (the “Series A Offering”).

3 unchanged sentences

Another 203,000 shares were sold on July 2, 2021 after the Underwriters exercised their over-allotment option.

Total gross proceeds from the offering were $ 47.6 million and net proceeds from the sale, after paying underwriting discounts and commissions and other offering expenses, were approximately $ 45.4 million (See Notes 14 and 15.)

(See Note 14.)

Partnership Investment

On February 22, 2021, the Company committed to $ 3 million in an investment partnership, or approximately a 7.6 % ownership interest in the partnership as of the commitment date.

The partnership is a commercial real estate finance company with a focus on providing debt capital solutions to local and regional commercial real estate owners in the Northeastern United States.

As of June 30, 2021, the Company’s outstanding investment totaled approximately $ 1.8 million.

On February 22, 2021, the Company committed to a $ 3 million investment, representing approximately a 7.6 % ownership interest as of the commitment date, in a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States.

As of September 30, 2021, the Company’s outstanding investment totaled approximately $ 1.8 million.

The Company’s withdrawal from the partnership may only be granted by the manager.

As of June 30, 2021, the Company earned approximately $ 54 ,000 on the investment.

For the nine months ended September 30, 2021, the Company earned approximately $ 90 ,000 on the investment.

The Company uses the cost method of accounting to account for this investment.

1 unchanged sentence

On March 24, 2021, the Company loaned $ 25,000 to its wholly-owned subsidiary, Sachem Sponsor LLC.

Sachem Sponsor used those funs to purchase 1,437,500 shares of Class B common stock of Sachem Acquisition Corp., a newly organized blank check company formed under the laws of Maryland in February 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

As of June 30, 2021, the Company had incurred approximately $ 190,000 of costs related to the the preparation and filing of the registration statement, including legal fees, accounting fees and filing fees as well organizational costs and an expense advance to the underwriter.

Sachem Sponsor LLC used those funds to purchase 1,437,500 shares of Class B common stock of Sachem Acquisition Corp., a newly organized blank check company formed under the laws of Maryland in February 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

As of September 30, 2021, the Company had incurred approximately $ 281,000 of costs related to the the preparation and filing of the registration statement, including legal fees, accounting fees and filing fees as well organizational costs and an expense advance to the underwriter.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

On July 14, 2021, Sachem Acquisition Corp.

filed a registration statement on Form S-1 registering the sale of 5,750,000 units at $ 10.00 per unit, or $ 57,500,000 in the aggregate.

Each unit consists of one share of Class A common stock and one -half of a warrant to purchase one share of Class A common stock.

The registration statement is currently under SEC review.

Series A Preferred Stock

1 unchanged sentence

The Certificate of Amendment provides that the Company will pay quarterly cumulative dividends on the Series A Preferred Stock, in arrears, on the 30th day of each of September, December, March and June from, and including, the date of original issuance of the Series A Preferred Stock at 7.75 % of the $ 25.00 per share liquidation preference per annum (equivalent to $ 1.9375 per annum per share).

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

The Series A Preferred Stock will not be redeemable before June 29, 2026, except upon the occurrence of a Change of Control (as defined in the Certificate of Amendment).

5 unchanged sentences

Subsequent Events

On July 1, 2021, the Underwriters partially exercised their overallotment option to purchase an additional 203,000 shares of Series A Preferred Stock, which was consummated on July 2, 2021, raising an additional approximately $ 5.1 million in gross proceeds and additional approximately $ 4.9 million in net proceeds (after deducting underwriting discounts and commissions and offering expenses).

The aggregate net proceeds from the Series A Offering, including the proceeds from the Overallotment Option exercise was approximately $ 45.4 million.

Under the terms of the Facility between the Company and Churchill, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans.

The Company intends to use the proceeds from the Facility to finance the continued expansion of its lending business and for general corporate purposes.

On July 14, 2021, Sachem Acquisition Corp.

filed a registration statement on Form S-1 registering the sale of 5,750,000 units at $ 10.00 per unit, or $ 57,500,000 in the aggregate.

Each unit consists of one share of Class A common stock and one-half of a warrant to purchase one share of Class A common stock.

The registration statement is currently under SEC review.

(See Note 13.)

On July 30, 2021, the Company sold a property classified as real estate held for sale at June 30, 2021 receiving $ 180,491 in net proceeds.

The Company had previously recorded an impairment loss of $ 62,000 .

From July 1, 2021 through August 9, 2021, the Company sold 1,582,717 of its common shares in an at-the-market offering which raised $ 8,014,203 in net proceeds.

From October 1, 2021 through November 1, 2021, the Company sold 968,779 of its common shares in an at-the-market offering which raised $ 5,411,273 in net proceeds.

(See Note 11.)

On October 13, 2021, the board of directors declared a dividend of $ 0.12 per common share payable on October 29, 2021 to shareholders of record as of October 25, 2021.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2021

The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide and has materially and adversely affected many businesses.

In response to the onset of the COVID-19 pandemic and the restrictions imposed by various states, including the State of Connecticut, to prevent, or at least reduce the risk of the spread of the virus, at the end of the first quarter of 2020 the Company adopted certain temporary programs, policies and guidelines designed primarily to preserve its liquidity, help its borrowers and protect its employees.

In particular, the Company adopted a “forbearance” program to help borrowers that were unable to meet their financial obligations due to COVID-19.

In addition, to preserve its capital, the Company imposed a moratorium on funding new loans other than from proceeds generated from pay-offs of existing loans.

Finally, the Company imposed stricter lending criteria on new loans.

By the beginning of the third quarter of 2020, it appeared that economic conditions had stabilized to the point that the Company was able to cancel the forbearance program, restart its lending operations and return to its normal underwriting criteria.

SEPTEMBER 30, 2021

The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide and has materially and adversely affected many businesses and as of September 30, 2021, the COVID-19 pandemic is ongoing.

In response to the onset of the COVID-19 pandemic and the restrictions imposed by various states, including the States of Connecticut, Florida and New York to prevent, or at least reduce the risk of the spread of the virus, at the end of the first quarter of 2020 the Company adopted certain temporary programs, policies and guidelines designed primarily to preserve its liquidity, help its borrowers and protect its employees.

In particular, the Company invested capital into its technology infrastructure over the course of 2020 and into 2021 to allow its employees to work remotely and remain effective in the event of office shutdowns.

Over the course of 2020 and into early 2021, the U.S.

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Food and Drug Administration (“FDA”) has issued emergency use authorizations for three COVID-19 vaccines.

As of July 24, 2021, approximately 342 million doses of vaccines have been administered in the United States and over 163 million (or 49.7 percent) of people in the United States are fully vaccinated.

In Connecticut, approximately 4.6 million doses of vaccines have been administered and over 2.2 million (or 62.9 percent) of the state's population are fully vaccinated.

As a result, many states have issued new orders relaxing or even eliminating many of the restrictions on social gatherings and businesses that were intended to stem the spread of the virus.

The combination of these factors – stimulus, monetary easing and vaccination roll-out, appears to be having a positive impact on general economic conditions.

In addition, interest rates remain low and markets are liquid.

The combination of these factors – stimulus, monetary easing and vaccination roll-out, appears to have had positive impact on general economic conditions.

As a result, real estate values have stabilized and the Company has not experienced any significant increase in defaults.

Notwithstanding the foregoing, there are still concerns regarding mutations of the virus that might not be susceptible to the existing vaccines and there is still a significant portion of the worldwide population, including in the U.S., that is not vaccinated.

In addition, the COVID-19 pandemic has exposed certain vulnerabilities in the U.S.

economy that could materially and adversely impact our borrowers and, by extension the Company.

These vulnerabilities include a labor shortage and supply chain disruptions, particularly with respect to building materials and appliances.

If continuing concerns relating to the COVID-19 pandemic limit our ability to have meetings with potential borrowers, or our borrower’s ability to source materials and services to complete construction in process, the Company’s business and operations could be adversely impacted.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements