Item 1A. Risk Factors
Item 1A. Risk Factors
We have two borrowers who each account for a significant portion of our loan portfolio.
We have various policies in place to reduce the risk to the company should a borrower default on its obligations to us. One of these policies prohibits us from making loans to any single borrower or group of related borrowers if the total indebtedness of such borrower or borrowers would exceed ten percent (10%) of our mortgage loan portfolio at that time, unless otherwise approved by our Board of Directors. 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. In addition, we had a second borrower with loans having an aggregate outstanding principal amount of $10.0 million, which represented approximately 4.6% of our mortgage loan portfolio. However, our total funding obligations to this borrower is approximately $23.4 million. On a fully funded basis, the total amount outstanding to this borrower would have represented approximately 10.0% of our mortgage loan portfolio as of September 30, 2021. While neither borrower is currently in default of its obligations to us and we believe that the loans to these borrowers are adequately secured, we cannot assure you that a default by either of these borrowers would not have a material adverse impact on our business, operations and financial condition.
We have significant unfunded commitments to existing borrowers. If we are unable to fund these commitments, we may be subject to borrower legal claims .
At September 30, 2021, we had unfunded commitments under existing loans of approximately $61.7 million. We do not record these unfunded commitments as liabilities on our balance sheets as the unfunded portion of the loans are not included in the outstanding mortgage loan balances. We also have not created a reserve for these unfunded commitments. However, we try to maintain a reasonable amount of working capital at all times, although not in amounts sufficient to cover all our deferred funding obligations. In addition, we also have the ability to borrow funds against our portfolio of marketable securities, although the value of these securities in our account fluctuate regularly based on our liquidity and demand for our loans. We also can raise capital through the Churchill credit facility. Nevertheless, there is a possibility that demands for funding under existing loans could exceed our available working capital and if we fail to meet our funding obligations, we may be subject to legal claims by the borrowers. This could have a material and adverse impact on our business reputation, our operations as well as our financial condition.
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Item 6. EXHIBITS
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)
3.1(c)
Certificate of Amendment to Certificate of Incorporation filed on June 25, 2021 (11)
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 (9)
4.10
Form of 7.75% Notes due 2025 (included as Exhibit A to Exhibit 4.9 above)
4.11
Specimen 7.75% Series A Cumulative Redeemable Preferred Stock Certificate.(11)
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)
10.7
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. (8)
10.9**
Final Form of the Restrictive Stock Grant Agreement dated April 2021 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of John L., Villano and Peter J. Cuozzo. (10)
10.10
Master Repurchase Agreement and Securities Contract, dated as of July 21, 2021, between the Company and Churchill MRA Funding I LLC. (12)
10.11
Custodial Agreement, dated as of July 21, 2021, among the Company, Churchill MRA Funding I LLC. and U.S. Bank National Association. (12)
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.
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(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 July 8, 2020 and incorporated herein by reference.
(9) Previously filed as an exhibit to the Current Report on Form 8-K on September 9, 2020 and incorporated herein by reference.
(10) Previously filed as an exhibit to the Current Report on Form 8-K on April 13, 2021 and incorporated herein by reference.
(11) Previously filed as an exhibit to the Current Report on Form 8-K on June 29, 2021 and incorporated herein by reference.
(12)
Previously filed as an exhibit to the Current Report on Form 8-K on July 27, 2021 and incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements 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.
Date: November 3, 2021
By:
/s/ John L. Villano
John L. Villano, CPA
President, Chief Executive Officer (Principal Executive
Officer) and Chief Financial Officer (Principal Financial
Officer)
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.