What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2021-11-04 · 292 added, 240 removed, 257 unchanged (67% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Investment securities

Investment in partnership

Mortgages receivable

5 unchanged sentences

Real estate owned

Other deposits

Investments in partnerships

Deferred financing costs, net

1 unchanged sentence

Notes payable (net of deferred financing costs of $ 7,226,079 and $ 5,747,387 )

Repurchase facility

Mortgage payable

2 unchanged sentences

Accounts payable and accrued expenses

Security deposits held

Advances from borrowers

Deferred revenue

Notes payable

Accrued interest

12 unchanged sentences

( 1,562,750 )

( 4,992,450 )

Total shareholders’ equity

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Interest income from loans

Investment income

Income from partnership investment

Gain (loss) on sale of investment securities

Origination fees

Income from partnership investments

Loss on sale of investment securities

Origination fees, net

Late and other fees

Processing fees

Rental income (loss), net

Debt Forgiveness

Rental income, net

Unrealized losses on investment securities

( 1,052,230 )

Total revenue

2 unchanged sentences

Professional fees

Compensation, fees and taxes

Compensation, fees and payroll taxes

Exchange fees

Other expenses and taxes

Other expenses and other taxes

General and administrative expenses

4 unchanged sentences

Net income attributable to common shareholders

Other comprehensive (loss) gain

Unrealized (loss) gain on investment securities

Other comprehensive loss

Unrealized gain (loss) on investment securities

Comprehensive income

4 unchanged sentences

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2022

Preferred Stock

Comprehensive

Beginning balance, July 1, 2021

Issuance of Preferred Stock, net of expenses

Balance, January 1, 2022

( 4,992,450 )

Issuance of Common Stock, net of expenses

Exercise of warrants

Stock based compensation

Unrealized loss on marketable securities

Dividends paid on Common Stock

( 3,336,756 )

Unrealized gain on marketable securities

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

Beginning balance, July 1, 2020

Stock based compensation

Unrealized loss on marketable securities

Dividends Paid

( 2,654,076 )

Net income for the period ended March 31, 2022

Balance, March 31, 2022

( 1,562,750 )

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 NINE MONTHS ENDED SEPTEMBER 30, 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Preferred Stock

2 unchanged sentences

( 2,890,969 )

Issuance of Preferred Stock, net of expenses

Issuance of Common Stock, net of expenses

1 unchanged sentence

Unrealized loss on marketable securities

Dividends paid on Common Stock

( 6,123,415 )

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

Beginning balance, January 1, 2020

( 1,266,729 )

Issuance of Common Stock, net of expenses

Stock based compensation

Unrealized gain on marketable securities

Dividends paid

( 5,308,152 )

Net income for the period ended September 30, 2020

Balance, September 30, 2020

Net income for the period ended March 31, 2021

Balance, March 31, 2021

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

1 unchanged sentence

STATEMENTS OF CASH FLOW

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

6 unchanged sentences

Loss on sale of real estate

Gain on sale of marketable securities

Debt Forgiveness

Unrealized loss on investment securities

Loss on sale of investment securities

Changes in operating assets and liabilities:

3 unchanged sentences

Due from borrowers

( 1,405,352 )

Prepaid expenses

Deposits on property and equipment

(Decrease) increase in:

10 unchanged sentences

Proceeds from the sale of investment securities

Purchase of interest in investment partnership, net

Purchase of interests in investment partnerships, net

( 11,358,017 )

( 1,843,398 )

Proceeds from sale of real estate owned

Acquisitions of and improvements to real estate owned

( 1,584,300 )

Purchase of property and equipment

Security deposits held

Principal disbursements for mortgages receivable

8 unchanged sentences

Net proceeds from line of credit

Net proceeds from repurchase facility

Repayment of mortgage payable

Repayment of line of credit

( 9,898,667 )

Principal payments on notes payable

3 unchanged sentences

Dividends paid on Preferred Stock

Financings costs incurred

Proceeds from other loans

Proceeds from issuance of common shares, net of expenses

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

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

( 1,839,034 )

NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

( 1,780,312 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 1,062,374 )

CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR

3 unchanged sentences

STATEMENTS OF CASH FLOW (Continued)

Nine Months Ended

September 30,

Three Months Ended

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 .

SCHEDULE OF NON-CASH 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 March 31, 2022 amounted to $ 420,547 .

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

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

Sachem Capital Corp.

1 unchanged sentence

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 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.

, one to three years ), secured, non-bank 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 the Northeastern United States and Florida.

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, a pledge of the ownership interests in the borrower by the principals thereof, and/or 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.

The Company’s primary underwriting criteria is a conservative loan to value ratio evaluated on each transaction.

In addition, the Company may make opportunistic real estate purchases apart from its lending activities or enter into other transactions with third parties involving real estate financing transactions.

Significant Accounting Policies

5 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

The preparation of financial statements in conformity with GAAP 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.

Management bases its 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 materially differ from those estimates.

Cash and Cash Equivalents

The Company considers 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.

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

The Company maintains its 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.

1 unchanged sentence

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 and 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.

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

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 Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820 are described as follows:

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

3 unchanged sentences

● inputs other than quoted prices that are observable for the asset or liability;

● inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● 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.

4 unchanged sentences

Expenditures for repairs and maintenance are charged to expense as incurred.

The Company relocated its entire operations to this property in March 2019.

Land and building acquired in 2021 to serve as the Company’s future corporate headquarters is stated at cost.

The building is not currently being depreciated as it is undergoing renovations.

Real Estate Owned

Real estate owned by the Company is stated at cost and is tested for impairment quarterly.

Consolidations

All intercompany accounts and transactions have been eliminated.

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.

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.

The Company 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 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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2022

Deferred Financing Costs

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.

Costs incurred in connection with the Company’s revolving credit facilities, described in Note 7-Line of Credit, Mortgage Payable and Churchill Facility are amortized over the term of the applicable facility using the straight-line method.

Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 9 - Notes Payable, 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 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.

The Company, generally, does not accrue interest income on mortgages receivable that are more than 90 days past due.

Interest income not accrued at March 31, 2022 and collected prior to the issuance of this report is included in income for the period ended March 31, 2022.

Origination fee revenue, generally 1 % – 3 % 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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

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.

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 common shares.

The Company believes it qualifies as a real estate investment trust (“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 (the “Code”), 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.

2 unchanged sentences

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 follows the provisions of FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes”, which 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.

FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes ” 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 September 30, 2021.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of March 31, 2022 and 2021.

Earnings Per Share

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.

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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2022

Investment Transactions and Related Income.

Investment transactions are accounted for on a trade-date basis.

Dividends are recorded on the ex-dividend date and interest is recognized on the accrual basis.

Investment securities are marked-to-market.

Unrealized gains and losses on investment securities with a stated maturity date are included in other comprehensive income (loss).

All other unrealized gains and losses on investment securities are included in net income (loss).

Recent Accounting Pronouncements

3 unchanged sentences

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 September 30, 2021:

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of March 31, 2022:

Stocks and ETFs

Fixed and Preferred Securities

Total Investments

Total liquid investments

Real estate owned

Investment in Partnership

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

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 on which the individual securities are traded.

Fixed and Preferred Securities:

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

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

Mutual funds:

1 unchanged sentence

Mutual funds held by the Company are open-end mutual funds that are registered with the U.S.

Securities and Exchange Commission (SEC).

Securities and Exchange Commission.

These funds are required to publish their daily net asset values and to transact at that price.

1 unchanged sentence

Real estate owned :

The Company estimates fair values of real estate owned using market information such as recent sales contracts, appraisals, recent sales offers, assessed values or discounted cash value models.

Mortgages Receivable

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.

Mortgages Receivable

The Company offers short-term secured, non-bank 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 Company offers secured, non-bank 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 the Northeastern United States and Florida.

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 for a term of one to three years .

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 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 September 30, 2021 and December 31, 2020:

Mortgages Receivable

September 30, 2021

December 31, 2020

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

2025 and thereafter

For the three months ended March 31 , 2022 and 2021, the aggregate amounts of loans funded by the Company were $ 88,735,230 and $ 31,661,577 , respectively, offset by principal repayments of $ 27,304,218 and $ 30,506,173 , respectively.

As of March 31, 2022, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 20,753,028 with stated interest rates ranging from 5.0 % to 14.2 % , and a default interest rate for non-payment of 18 % .

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

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.

MARCH 31, 2022

As of March 31, 2022 and 2021, the Company’s mortgage loan portfolio had an impairment loss of $ 105,000 and $ 0 , respectively.

At March 31, 2022 and 2021, no single borrower or group of related borrowers had loans outstanding representing more than 10 % of the total balance of the loans outstanding.

The Company may agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meet all the Company’s then underwriting requirements.

The Company treats a loan extension as a new loan.

Credit risk profile based on loan activity as of March 31, 2022 and December 31, 2021:

December 31, 2021

March 31, 2022

As of March 31, 2022, the following is the maturities of mortgages receivable as of March 31:

At March 31, 2022, of the 520 mortgage loans in the Company’s portfolio, 20 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 March 31, 2022 was approximately $ 6.3 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 March 31, 2022 approximately $ 27.2 million of mortgages receivable is past maturity and in the process of being extended.

Real Estate Owned

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

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 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:

(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”);

(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.

All the notes were issued at par except for the last tranche of the 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 are currently callable, 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.

Wells Fargo Margin Line of Credit

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).

As of March 31, 2022 and March 31, 2021, real estate owned totaled $ 6,312,818 and $ 8,624,044 , respectively , with no valuation allowance.

For the three months ended March 31, 2022, the Company recorded an impairment loss of $ 155,500 compared to an impairment loss of $ 25,000 in 2021.

As of March 31, 2022, real estate owned included $ 799,533 of real estate held for rental and $ 5,513,285 of real estate held for sale.As of March 31, 2021, real estate owned included $ 1,381,687 of real estate held for rental and $ 7,242,357 of real estate held for sale.

Properties Held for Sale

During the three months ended March 31, 2022, the Company sold a property held for sale and recognized an aggregate loss of $ 65,838 .

During the three months ended March 31, 2021, the Company sold a property classified as real estate held for sale, receiving approximately $ 371,000 in gross proceeds.

The Company recognized a loss of $ 2,134 on the sale.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

Properties Held for Rental

As of March 31, 2022, one property, a commercial building, was held for rental.

The tenant signed a 5 year lease that commenced on August 1, 2021.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2022

Rental payments due from real estate held for rental are as follows:

Year ending December 31, 2022

Year ending December 31, 2023

Year ending December 31, 2024

Year ending December 31, 2025

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 three month ended March 31, 2022 and 2021, the 401(k) Plan expense was $ 19,993 and $ 12,744 , respectively.

Line of Credit, Mortgage Payable, and Churchill Facility

Wells Fargo Margin Line of Credit

During the year ended December 31, 2020, the Company established a margin loan account at Wells Fargo Advisors that 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 ( 1.75 % at March 31, 2022).

As of March 31, 2022 the total outstanding balance was $ 23,279,364 .

Mortgage Payable

In 2021, the Company obtained a new adjustable-rate mortgage loan from New Haven Bank (“NHB”) for up to a maximum principal amount of $ 1.4 million (the “NHB Mortgage”) of which $ 750,000 is outstanding as of March 31, 2022.

The NHB Mortgage accrues interest at an initial rate of 3.75 % per annum for the first 72 months and is due and payable in full on December 1, 2037.

During the first 12 months , from December 1, 2021 to November 30, 2022, only interest is due and payable.

Beginning on December 1, 2022 and through December 1, 2037, principal and interest on the NHB Mortgage will be due and payable on a monthly basis.

All payments under the NHB Mortgage are amortized based on a 20 -year amortization schedule.

The interest rate will be adjusted on each of December 1, 2027 and 2032 to the then published 5 -year Federal Home Loan Bank of Boston Classic Advance Rate, plus 2.60 %.

The NHB Mortgage is a non-recourse loan, secured by a first mortgage lien on the Company’s current corporate headquarters, located at 698 Main Street, Branford, Connecticut, and future corporate headquarters, located at 568 East Main Street, Branford, Connecticut.

The first $ 750,000 of proceeds from the NHB Mortgage were used to reimburse the Company for out-of-pocket costs relating to the acquisition of the East Main Street property.

The balance of the loan will be used to reimburse the Company for the out-of-pocket costs incurred to renovate the East Main Street property.

Upon completion of the renovation, and assuming the Company can provide NHB with an appraisal that the East Main Street property has a value of not less than $ 1.4 million, the first mortgage lien on the current corporate headquarters will be released.

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.

Under the terms of the Facility, 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.

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

The Company has also pledged 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 %

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2022

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.

As of March 31, 2022 the effective rate charged under the Facility was 4.70 %.

The Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements.

Under one such covenant, the Company (A) is prohibited from (i) paying any dividends or making distributions in excess of 90% of its taxable income, (ii) incurring any indebtedness or (iii) purchasing any of its capital stock, unless, it has an asset coverage ratio of at least 150 %;

and (B) must maintain 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,

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

At March 31, 2022, the total amount outstanding under the Facility was $ 26,945,149 and the Company estimates that it had approximately $ 6.3 million of additional availability under the Facility.

The collateral pledged to Churchill at March 31, 2022, was 25 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 57.3 million.

The NHB Mortgage and the Churchill Facility contain cross-default provisions.

Financing Transactions

During the three month period ended March 31, 2022, the Company generated approximately $ 66.0 million of gross proceeds from the sale of its securities as follows:

(i) $ 50,000,000 from the sale of its 6.0 % unsecured, unsubordinated notes due March 30, 2027 (the “March 2027 Note Offering”);

(ii) $ 15,958,899 from the sale of 2,730,725 common shares in an “at-the-market” offering.

The net proceeds from the sale of these securities were used primarily to fund new mortgage loans, for working capital and general corporate purposes.

During the three month period ended March 31, 2021, the Company sold 303,407 common shares in an at-the-market offering.

Net proceeds to the Company from the sale of these shares were $ 1,542,465 .

Notes Payable

At March 31, 2022, the Company had an aggregate of $ 209,050,671 of unsecured, unsubordinated notes payable outstanding, net of $ 7,226,079 of deferred financing costs (collectively, the “Notes”).

The Notes were issued in five 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”);

(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”);

(iv) Notes having an aggregate principal amount of $ 51,750,000 bearing interest at 6.0 % per annum and maturing December 30, 2026 (the “December 2026 Notes”);

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2022

(v) Notes having an aggregate principal amount of $ 50,000,000 bearing interest at 6.0 % per annum and maturing March 30, 2027 (the “March 2027 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 symbols “SCCB”, “SACC”,“SCCC”, “SCCD” and “SCCE”, 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.

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 and the December 2024 Notes are callable at any time.

The September 2025 Notes will be callable at any time after September 4, 2022, the December 2026 Notes will be callable at any time after December 30, 2023 and the March 2027 Notes will be callable at any time after March 9, 2024.

For the three months ended March 31, 2022 and 2021, other income consists of the following:

Income on borrower charges

3 unchanged sentences

Origination Fees

Loan origination fees consist of points, generally 2 %- 5 % of the original loan principal.

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

Loan origination fees generally range from 1 %- 3 % 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:

Year ending December 31, 2022

Year ending December 31, 2023

Year ending December 31, 2024

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

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.

MARCH 31, 2022

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 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, and increased again in April 2021 to $500,000;

(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;

(vi) a two-year non-competition period following the termination of employment without cause;

and (vii) payments upon termination of employment or a change in control.

In April 2022, the Compenstion Committee increased Mr.

Villano’s base salary to $750,000.

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;

(vi) 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 (vii) 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.

Cuozzo retired in January 2022 and waived all future benefits under his employment agreement and the Company agreed to pay on his behalf or reimburse him for the cost of health insurance for him and his spouse through September 30, 2025 and to accelerate the vesting of 4,753 common shares previously awarded to Mr.

Unfunded Commitments

Most loans are funded in full at closing.

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 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.

At March 31, 2022, the Company had future funding obligations totaling $ 115,441,853 , which can be drawn by the borrowers when the conditions relating thereto have been satisfied.

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

At March 31, 2022, there were nine such properties, representing approximately $ 810,000 of mortgages receivable.

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 is consistent with Company policy.

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 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.

As of March 31, 2022, and 2021, loans to known shareholders totaled $ 15,594,572 and $ 10,589,641 , respectively.

Interest income earned on these loans totaled $ 347,638 and $ 231,609 for the three months ended March 31, 2022 and 2021, respectively.

The wife of the Company’s chief executive officer is employed by the Company as its director of finance.

For the three months ended March 31, 2022 and 2021, she received $ 27,500 and $ 28,206 , respectively, as compensation from the Company.

In December 2021, the Company hired the daughter of the Company’s chief executive officer to perform certain internal audit and compliance services.

For the three month period ended March 31, 2022, she received compensation of $ 27,500 .

Concentration of Credit Risk

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 .

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

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 .

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

5 unchanged sentences

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

Outstanding Warrants

In 2017 the Company consummated two public offerings – an initial public offering (“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 (“IPO Warrants”).

The fair value of the IPO Warrants, using the Black-Scholes option pricing model, on the date of issuance was $ 114,926 .

The IPO Warrants expired unexercised on February 9, 2022.

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 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 .

In Janaury 2022, warrants to purchase 93,750 of the Company’s common shares were exercised.

The holders of those warrants elected to use the cashless exercise option available to them under the terms of the warrants.

As such, they received 19,658 common shares.

At March 31, 2022, 49,219 warrants were outstanding.

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 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.

The number of securities remaining available for future issuance under the Plan as of March 31, 2022 was 1,318,935 .

In February 2022, the Company issued an aggregate of 33,500 restricted common shares under the Plan to 20 of its employees.

One-third of such shares vested immediately upon issuance, and an additional one-third of such shares will vest on each of the first and second anniversaries of the date of grant.

Stock based compensation for the three months ended March 31, 2022 and 2021 was $ 106,845 and $ 4,107 , respectively.

As of March 31, 2022, there was unrecorded stock based compensation expense $ 732,928 .

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2022

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, 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”).

The Series A Offering was made pursuant to a prospectus supplement, dated June 23, 2021, to the Company’s shelf registration statement on Form S-3 declared effective by the U.S.

Securities and Exchange Commission (the “SEC”) on June 17, 2021, and the base prospectus included in such registration statement.

On June 29, 2021, the Company consummated the sale of 1,700,000 shares of Series A Preferred Stock for an aggregate purchase price of $ 42.5 million.

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 $ 45.5 million.

(See Note 14.)

Partnership Investment

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.

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.

On December 6, 2021, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 44,925,000 of its common shares in an “at-the market” offering, which is ongoing.

During the three months ended March 31, 2022, the Company sold an aggregate of 2,730,725 common shares under this prospectus and realized net proceeds of $ 15,547,815 in connection therewith.

At March 31, 2022, $ 22,118,520 of common shares were available for future sale under the ongoing “at-the market” offering.

Partnership Investments

As of March 31, 2022, the Company had invested an aggregate of approximately $ 17.4 million in four limited liability companies managed by a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States.

The Company’s ownership interest in the four limited liability companies and the investment partnership ranges from 7.6 % - 49 %.

The Company accounts for these investments at cost because the Company does not control or have significant influence over the investments.

The Company’s withdrawal from each limited liability company may only be granted by the manager of such entity.

Each limited liability company has elected to be treated as a partnership for income tax purposes.

For the three months ended March 31, 2022, the partnerships generated $ 272,489 of income for the Company.

At March 31, 2022, the Company had unfunded partnership commitments totaling approximately $ 3.7 million.

Special Purpose Acquisition Corporation

1 unchanged sentence

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

As of March 31, 2022, the Company had incurred approximately $ 364,000 of costs related to 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.

On July 14, 2021, Sachem Acquisition Corp.

1 unchanged sentence

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

3 unchanged sentences

On or after June 29, 2026, the Company may, at its option, redeem any or all of the shares of the Series A Preferred Stock at $ 25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date.

Also, upon the occurrence of a Change of Control, the Company may, at its option, redeem any or all of the shares of Series A Preferred Stock within 120 days after the first date on which such Change of Control occurred at $ 25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date.

The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into common shares in connection with a Change of Control by the holders of Series A Preferred Stock.

Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right (subject to the Company’s election to redeem the Series A Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date (as defined in the Certificate of Amendment) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of the common shares per share of Series A Preferred Stock determined by formula, in each case, on the terms and subject to the conditions described in the Certificate of Amendment, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Certificate of Amendment.

Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights.

Subsequent Events

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.

Upon the occurrence of a Change of Control, the Company may, at its option, redeem any or all of the shares of Series A Preferred Stock within 120 days after the first date on which such Change of Control occurred at $ 25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

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.

MARCH 31, 2022

Date as defined in the Certificate of Amendment) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of the common shares determined by formula, in each case, on the terms and subject to the conditions described in the Certificate of Amendment, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Certificate of Amendment.

Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights.

Subsequent Events

On April 4, 2022, the Company sold an additional $ 1,875,000 principal amount of the March 2027 Notes pursuant to a partial exercise of the underwriter’s over-allotment option in the March 2027 Note Offering and realized net proceeds of approximately $ 1.8 million, after payment of underwriting discounts and commissions and estimated offering expenses.

In April 2022, the Company granted (i) 98,425 restricted common shares (having a market value of approximately $ 500,000 ) to its chief executive officer.

One-third of such shares will vest on January 1, 2023, and an additional one-third will vest on each of January 1, 2024 and 2025 and (ii) 7,042 restricted common shares (having a market value of approximately $ 35,000 ) to its vice president of finance and operations.

One-third of such shares vested on the date of grant, and an additional one-third will vest on each of April 7, 2023 and 2024.

In addition, the Company increased the annual base salary of its chief executive officer to $ 750,000 .

On April 1, 2022, the board of directors declared a dividend of $ 0.12 per common share payable on April 18, 2022 to shareholders of record as of April 11, 2022.

From April 1, 2022 through May 3, 2022, the Company sold an aggregate of 663,765 common shares under its at-the-market offering facility realizing gross proceeds of approximately $ 3.4 million.

On April 6, 2022, the Company received a term sheet for another note offering up to a maximum of $ 75 million aggregate principal amount.

The Company expects that the offering will be made in May 2022.

Management has evaluated subsequent events through May 3, 2022 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.

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.

Congress has authorized over $ 4.0 trillion of stimulus payments to small businesses and individuals adversely impacted by COVID-19.

In addition, the Federal Reserve Board has maintained its accommodative monetary policy.

Finally, since December 2020, the U.S.

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

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.

The extent to which COVID-19 impacts the Company’s business and operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, the Company’s business, operations and financial condition may be materially adversely affected.

In the event the Company is forced to close its physical office, it is likely that there would be some adverse impact.

For example, the underwriting process would continue to function but would take longer to complete without immediate access to background and credit profiles.

Loan committee meetings would continue to be held virtually (as they are under normal conditions) but the loan approval process may incur delay or not be as thorough and efficient as in the past.

In addition, Company personnel may not be able to meet with borrowers or potential borrowers, including physical property inspections, which could adversely impact its ability to service loans, monitor compliance and originate new loans.

Finally, the filing of loan documents with the various recording offices may be delayed.

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