What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-10 · 246 added, 190 removed, 402 unchanged (52% of the section changed)

2 unchanged sentences

BALANCE SHEETS

June 30, 2022

September 30, 2022

December 31, 2021

3 unchanged sentences

Interest and fees receivable

Other receivables

Due from borrowers

Prepaid expenses

Property and equipment, net

Real estate owned

Investments in partnerships

Deferred financing costs, net

Property and equipment, net

Liabilities and Shareholders’ Equity

4 unchanged sentences

Accrued dividends payable

Accounts payable and accrued expenses

Accounts payable and accrued liabilities

Advances from borrowers

Deferred revenue

Accrued interest

Total liabilities

4 unchanged sentences

1,903,000 shares of Series A Preferred Stock issued and outstanding

Common stock - $ .001 par value;

Common shares - $ .001 par value;

200,000,000 shares authorized;

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest income from loans

Investment income

Investment gains, net

Income from partnership investments

Gain (loss) on sale of investment securities

Origination fees, net

Late and other fees

Processing fees

Rental income (loss), net

Origination and modification fees, net

Fee and other income

Unrealized losses on investment securities

4 unchanged sentences

Interest and amortization of deferred financing costs

Professional fees

Compensation, fees and taxes

Exchange fees

Other expenses and taxes

Other expenses

General and administrative expenses

(Gain) Loss on sale of real estate

Loss (Gain) on sale of real estate

Impairment loss

11 unchanged sentences

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2022

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

Preferred Stock

Comprehensive

Balance, April 1, 2022

Balance, July 1, 2022

( 1,583,202 )

Issuance of Common Stock, net of expenses

Issuance of common shares, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid on Preferred Stock

Dividends paid on Common Stock

Dividends paid on Series A Preferred Stock

Dividends paid on common shares

( 5,253,923 )

Net income for the period ended June 30, 2022

Balance, June 30, 2022

Net income for the period ended September 30, 2022

Balance, September 30, 2022

( 2,705,252 )

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 Preferred Stock, net of expenses

Issuance of Common Stock, net of expenses

Beginning balance, July 1, 2021

Issuance of Series A Preferred Stock, net of expenses

Issuance of common shares, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid

Dividends paid common shares

( 3,336,756 )

Net income for the period ended June 30, 2021

Balance, June 30, 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022

Dividends paid on Series A Preferred Stock

Net income for the period ended September 30, 2021

Balance, September 30, 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

Preferred Stock

2 unchanged sentences

( 4,992,450 )

Issuance of Common Stock, net of expenses

Issuance of common shares, net of expenses

Exercise of warrants

Stock based compensation

Unrealized gain on marketable securities

Dividends paid on Preferred Stock

Unrealized loss on marketable securities

Dividends paid on Series A Preferred Stock

( 2,765,297 )

Dividends paid on Common Stock

Dividends paid on common shares

( 9,580,187 )

Net income for the period ended June 30, 2022

Balance, June 30, 2022

Net income for the period ended September 30, 2022

Balance, September 30, 2022

( 2,705,252 )

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 Preferred Stock, net of expenses

Issuance of Common Stock, net of expenses

Issuance of Series A Preferred Stock, net of expenses

Issuance of common shares, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid

Dividends paid on common shares

( 6,123,415 )

Net income for the period ended June 30, 2021

Balance, June 30, 2021

Dividends paid on Series A Preferred Stock

Net income for the period ended September 30, 2021

Balance, September 30, 2021

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

14 unchanged sentences

( 2,154,704 )

Other receivables

Other assets - other receivables

Due from borrowers

( 1,505,785 )

Prepaid expenses

( 1,405,352 )

Other assets - prepaid expenses

(Decrease) increase in:

Accrued interest

Accounts payable and accrued expenses

Accounts payable and accrued liabilities - accrued interest

Accounts payable and accrued liabilities - accounts payable and accrued expenses

Deferred revenue

15 unchanged sentences

Purchase of property and equipment

( 1,292,160 )

Security deposits held

Principal disbursements for mortgages receivable

2 unchanged sentences

Principal collections on mortgages receivable

Costs in connection with investment activities

Other assets - costs in connection with SPAC offering

NET CASH USED FOR INVESTING ACTIVITIES

6 unchanged sentences

Repayment of mortgage payable

Principal payments on other notes

Dividends paid on Common Stock

Accounts payable and accrued liabilities - principal payments on other notes

Dividends paid on common shares

( 13,507,787 )

( 8,778,392 )

Dividends paid on Preferred Stock

Dividends paid on Series A Preferred Stock

( 2,765,297 )

13 unchanged sentences

STATEMENTS OF CASH FLOW (Continued)

Six Months Ended

Nine Months Ended

September 30,

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Interest paid

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended June 30, 2022 amounted to $ 1,091,348 .

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended September 30, 2022 amounted to $ 1,091,348 .

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

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

Sachem Capital Corp.

1 unchanged sentence

The Company offers short term ( i.e.

, 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.

24 unchanged sentences

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

Fair Value Measurements

24 unchanged sentences

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.

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 are 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

JUNE 30, 2022

SEPTEMBER 30, 2022

Deferred Financing Costs

5 unchanged sentences

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

Interest income not accrued at June 30, 2022 and collected prior to the issuance of this report is included in income for the period ended June 30, 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.

However, interest income not accrued at September 30, 2022 but collected prior to the issuance of this report is included in income for the period ended September 30, 2022.

Origination and modification fee revenue, generally 1 % – 3 % of either the original loan principal or the modified loan balance, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310.

The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly.

8 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, 2022 and 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, 2022 and 2021.

Earnings Per Share

5 unchanged sentences

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

Investment Transactions and Related Income.

7 unchanged sentences

Reclassifications

Certain amounts included in the June 30, 2021 financial statements have been reclassified to conform to the June 30, 2022 presentation.

Certain amounts included in the September 30, 2021 and December 31, 2021 financial statements have been reclassified to conform to the September 30, 2022 presentation.

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, 2022:

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2022:

Stocks and ETFs

12 unchanged sentences

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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

Impact of Fair Value of AFS Securities on OCI

The following table presents the impact of the Company's Available-For-Sale (AFS) securities on its Other Comprehensive Income (OCI) for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended

Nine months Ended

September 30,

OCI from AFS securities:

Unrealized (losses) on AFS securities at beginning of period

Unrealized (losses) on securities available-for-sale

Change in OCI from AFS securities

Balance at end of period

Mortgages Receivable

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.

The loans are generally for a term of one to three years .

The loans are initially recorded and carried thereafter, in the financial

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

statements, at cost.

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 six months ended June 30 , 2022 and 2021, the aggregate amounts of loans funded by the Company were $ 191,971,926 and $ 75,190,172 , respectively, offset by principal repayments of $ 60,895,362 and $ 58,012,498 , respectively.

As of June 30, 2022, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 22,122,500 with stated interest rates ranging from 5.0 % to 14.2 % , and a default interest rate for non-payment of 18 % .

As of June 30, 2022 and 2021, the Company’s mortgage loan portfolio had an impairment loss of $ 105,000 and $ 0 , respectively.

At June 30, 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.

For the nine months ended September 30 , 2022 and 2021, the aggregate amounts of loans funded by the Company were $ 252,370,675 and $ 154,810,007 , respectively, offset by principal repayments of $ 95,173,969 and $ 90,463,016 , respectively.

As of September 30, 2022, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 26,117,118 with stated interest rates ranging from 5.0 % to 14.2 % .

The default interest rate is generally 18 % .

As of September 30, 2022 and 2021, the Company’s mortgage loan portfolio had an impairment loss of $ 105,000 and $ 0 , respectively.

At September 30, 2022, no single borrower or group of related borrowers had loans outstanding representing more than 10 % of the total balance of the loans outstanding.

At September 30, 2021, we had one borrower whose outstanding loans represented 10.2 % of the total balance of 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 June 30, 2022 and December 31, 2021:

Credit risk profile based on loan activity as of September 30, 2022 and December 31, 2021:

December 31, 2021

June 30, 2022

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

At June 30, 2022 approximately $ 46.2 million of mortgages receivable were past maturity and either in foreclosure or in the process of being extended.

September 30, 2022

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

2022 and prior

At September 30, 2022 there were 92 loans having an aggregate unpaid principal balance of approximately $ 45.0 million that were past maturity and either in foreclosure or in the process of being extended.

Of the 477 mortgage loans in the Company’s portfolio, 44 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 June 30, 2022 was approximately $ 9.1 million.

The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of September 30, 2022 was approximately $ 21.4 million.

In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan plus accrued interest and borrower charges.

1 unchanged sentence

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

As of June 30, 2022 and June 30, 2021, real estate owned totaled $ 5,904,614 and $ 7,892,845 , respectively , with no valuation allowance.

For the six months ended June 30, 2022, the Company recorded an impairment loss of $ 490,500 compared to an impairment loss of $ 319,000 for the same period in 2021.

For the three-months ended June 30, 2022 and 2021, the impairment loss was $ 335,000 and $ 294,000 , respectively.

As of June 30, 2022, real estate owned included $ 800,949 of real estate held for rental and $ 5,103,685 of real estate held for sale.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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

As of September 30, 2022 and 2021, real estate owned totaled $ 5,615,940 and $ 6,774,522 , respectively, with no valuation allowance.

For the nine months ended September 30, 2022, the Company recorded an impairment loss of $ 685,500 compared to an impairment loss of $ 469,000 for the same period in 2021.

For the three-months ended September 30, 2022 and 2021, the impairment loss was $ 195,000 and $ 150,000 , respectively.

As of September 30, 2022, real estate owned included $ 800,053 of real estate held for rental and $ 4,815,887 of real estate held for sale.

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.

Properties Held for Sale

During the three and six months ended June 30, 2022, the Company sold two properties held for sale and recognized an aggregate gain of $ 188,182 and $ 122,343 , respectively.

During the three and six months ended June 30, 2021, the Company sold a property classified as real estate held for sale, and recognized an aggregate loss of $ 14,962 and $ 17,096 , respectively.

During the three and nine months ended September 30, 2022, the Company sold two properties held for sale and recognized an aggregate loss of $ 962 and five properties for an aggregate gain of $ 121,381 , respectively.

During the three and nine months ended September 30, 2021, the Company sold four properties held for sale, and recognized an aggregate loss of $ 94,450 and six properties for an aggregate loss of $ 111,545 , respectively.

Properties Held for Rental

As of June 30, 2022, one property, a commercial building, was held for rental.

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

As of September 30, 2022, one property, a commercial building, was held for rental.

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

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

3 unchanged sentences

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 six months ended June 30, 2022 and 2021, the 401(k) Plan expense was $ 50,001 and $ 32,462 , respectively.

For the three month ended June 30, 2022 and 2021, the 401(k) Plan expense was $ 30,008 and $ 12,744 , respectively.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

As of September 30, 2022 and December 31, 2021, other assets consists of the following:

September 30, 2022

December 31, 2021

Prepaid expenses

Other receivables

Deferred financing costs, net

Line of Credit, Mortgage Payable, and Churchill Facility

2 unchanged sentences

The credit line bears interest at a rate equal to 1.75 % below the prime rate.

At June 30, the rate on the Wells Fargo credit line was 3.00 %.

As of June 30, 2022 the total outstanding balance on the Wells Fargo credit line was $ 23,406,655 .

At September 30, 2022 the rate on the Wells Fargo credit line was 4.50 %.

As of September 30, 2022 the total outstanding balance on the Wells Fargo credit line was $ 3,542,853 .

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 was outstanding at June 30, 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.

5 unchanged sentences

The $ 750,000 of proceeds funded at closing 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

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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

Company for the out-of-pocket costs incurred to renovate the East Main Street property.

SEPTEMBER 30, 2022

Churchill MRA Funding I LLC Repurchase Financing Facility

6 unchanged sentences

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.

As of June 30, 2022 the effective rate charged under the Facility was 5.44 %.

As of September 30, 2022 the effective rate charged under the Facility was 6.99 %.

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

4 unchanged sentences

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

At June 30, 2022, the total amount outstanding under the Facility was $ 39,372,430 and the Company estimates that it had approximately $ 5.2 million of additional availability under the Facility.

The collateral pledged to Churchill at June 30, 2022, was 31 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 73.9 million.

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

At September 30, 2022, the total amount outstanding under the Facility was $ 43,100,146 and the Company estimates that it had approximately $ 2.1 million of additional availability under the Facility.

The collateral pledged to Churchill at September 30, 2022, was 32 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 80.4 million.

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

Financing Transactions

During the six month period ended June 30, 2022, the Company generated approximately $ 103.7 million of gross proceeds from the sale of its securities as follows:

(i) $ 51,875,000 from the sale of its 6.0 % unsecured, unsubordinated notes due March 30, 2027;

(ii) $ 30,000,000 from the sale of its 7.125 % unsecured, unsubordinated notes due June 30, 2027;

(iii) $ 21,780,906 from the sale of 3,867,157 common shares in an “at-the-market” offering.

The net proceeds from the sale of these securities, approximately $ 100.0 million, were used primarily to fund new mortgage loans, for working capital and general corporate purposes.

During the six month period ended June 30, 2021, the Company sold 4,513,731 common shares in an at-the-market offering.

During the nine month period ended September 30, 2022, the Company generated approximately $ 159.7 million of gross proceeds from the sale of its securities as follows:

$ 51,875,000 from the sale of its 6.0 % unsecured, unsubordinated notes due March 30, 2027;

$ 30,000,000 from the sale of its 7.125 % unsecured, unsubordinated notes due June 30, 2027;

$ 40,250,000 from the sale of its 8.00 % unsecured, unsubordinated notes due September 30, 2027;

$ 37,602,871 from the sale of 7,177,043 common shares in an “at-the-market” offering.

The net proceeds from the sale of these securities, approximately $ 154,300,000 , were used primarily to fund new mortgage loans, for working capital and general corporate purposes.

During the nine month period ended September 30, 2022, the Company sold an aggregate of 7,177,043 common shares in an at-the-market offering.

Net proceeds to the Company from the sale of these shares were $ 36,654,419 .

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

Notes Payable

At June 30, 2022, the Company had an aggregate of $ 240,212,509 of unsecured, unsubordinated notes payable outstanding, net of $ 7,939,241 of deferred financing costs (collectively, the “Notes”).

The Notes were issued in six 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”);

(v) Notes having an aggregate principal amount of $ 51,875,000 bearing interest at 6.0 % per annum and maturing March 30, 2027 (the “March 2027 Notes”);

(vi) Notes having an aggregate principal amount of $ 30,000,000 bearing interest at 7.125 % per annum and maturing June 30, 2027 (the “June 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”, “SCCE” and “SCCF”, respectively.

At September 30, 2022, the Company had an aggregate of $ 279,557,613 of unsecured, unsubordinated notes payable outstanding, net of $ 8,844,137 of deferred financing costs (collectively, the “Notes”).

Currently, the Company has seven series of Notes outstanding:

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”);

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”);

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

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”);

Notes having an aggregate principal amount of $ 51,875,000 bearing interest at 6.0 % per annum and maturing March 30, 2027 (the “March 2027 Notes”);

Notes having an aggregate principal amount of $ 30,000,000 bearing interest at 7.125 % per annum and maturing June 30, 2027 (the "June 2027 Notes");

Notes having an aggregate principal amount of $ 40,250,000 bearing interest at 8.00 % per annum and maturing September 30, 2027 (the “September 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,” “SCCE,” “SCCF” and “SCCG,” 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.

3 unchanged sentences

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, the March 2027 Notes will be callable at any time after March 9, 2024 and the June 2027 Notes will be callable at any time after May 11, 2024.

For the three and six-month periods ended June 30, 2022 and 2021, other income consists of the following:

ended June 30,

Income on borrower charges

Modification and extension fees

In-house legal fees

Miscellaneous

Currently, the June 2024 Notes, December 2024 Notes and the September 2025 Notes are callable at any time.

The December 2026 Notes will be callable at any time after December 30, 2023, the March 2027 Notes will be callable at any time after March 9, 2024, the June 2027 Notes will be callable at any time after May 11, 2024, and the September 2027 Notes will be callable at any time after August 23, 2024.

Accounts Payable and Accrued Liabilities

As of September 30, 2022 and December 31, 2021, accounts payable and accrued liabilities include the following:

September 30, 2022

December 31, 2021

Accounts payable and Accrued expenses

Accrued interest

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

Fee and Other Income

For the three and nine-month periods ended September 30, 2022 and 2021, fee and other income consists of the following:

ended September 30,

Late and other fees

Processing fees

Rental income, net

Extension fees

Commitments and Contingencies

Origination Fees

Loan origination fees generally range from 1 %- 3 % of the original loan principal and, generally, are payable at the time the loan is funded.

Origination and Modification Fees

Loan origination and modification fees generally range from 1 % - 3 % each of the original loan principal or the modified loan balance and, generally, are payable at the time the loan is funded or modified.

The unamortized portion is recorded as deferred revenue on the balance sheet.

At June 30, 2022, Deferred revenue was $ 4,627,997 , which will be recorded as income as follows:

At September 30, 2022, deferred revenue was $ 4,471,800 , which will be recorded as income as follows:

Year ending December 31, 2022

2 unchanged sentences

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, 2022

Employment Agreements

9 unchanged sentences

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 .

In July 2022, the Company entered into an employment agreement with John E.

Warch, the material terms of which are as follows:

(i) the employment term commenced on August 1, 2022 and will continue until terminated by either party;

(ii) a base salary of $ 325,000 ;

(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;

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

Unfunded Commitments

At June 30, 2022, the Company had future funding obligations totaling $ 119,108,255 , 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.

At September 30, 2022, the Company had future funding obligations totaling $ 118,103,785 , 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 in connection with tax foreclosure proceedings against properties on which it holds a first mortgage lien.

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, 2022, there were eight such properties, representing approximately $ 594,000 of mortgages receivable.

At September 30, 2022, there were four such proceedings.

The unpaid principal balances on the properties that are the subject of these proceedings was approximately $ 236,000 .

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, 2022, and 2021, loans to known shareholders totaled $ 18,409,255 and $ 10,153,291 , respectively.

Interest income earned on these loans for the six months ended June 30, 2022 and 2021 totaled $ 666,584 and $ 416,965 , respectively, and for the three months ended June 30, 2022 and 2021 totaled $ 312,546 and $ 246,006 , respectively.

As of September 30, 2022, and 2021, loans to known shareholders totaled $ 20,932,994 and $ 13,200,972 , respectively.

Interest income earned on these loans for the nine months ended September 30, 2022 and 2021 totaled $ 1,248,826 and $ 573,446 , respectively, and for the three months ended September 30, 2022 and 2021 totaled $ 416,275 and $ 252,050 , respectively.

The wife of the Company’s chief executive officer was employed by the Company as its director of finance until the third quarter of 2022 when she retired.

For the nine month periods ended September 30, 2022 and 2021, she was paid $ 62,865 and $ 85,634 , respectively, as compensation from the Company.

For the three months ended September 30, 2022 and 2021, the corresponding amounts were $ 2,115 and $ 29,250 , respectively.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

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

For the six-month periods ended June 30, 2022 and 2021, the wife of the Company’s chief executive officer was paid $ 60,394 and $ 56,385 , respectively, as compensation from the Company.

For the three months ended June 30, 2022 and 2021, the corresponding amounts were $ 34,247 and $ 28,206 , respectively.

She retired from the company on June 30, 2022.

SEPTEMBER 30, 2022

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 and six month periods ended June 30, 2022, she received compensation of $ 36,704 and $ 62,850 , respectively.

For the three and nine month periods ended September 30, 2022, she received compensation of $ 35,727 and $ 106,327 , respectively.

In January 2022, the Company hired the step-daughter of the Company’s chief executive officer to perform executive assistant and administrative services.

For the three and six month periods ended June 30, 2022, she received compensation of $ 19,570 and $ 27,716 , respectively.

For the three and nine month periods ended September 30, 2022, she received compensation of $ 8,313 and $ 43,929 , respectively.

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 , investments in partnerships, 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 .

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

Currently, all of its investment securities, which include common stocks, preferred stock, corporate bonds and mutual funds, are held at Wells Fargo Advisors.

Currently, all of the Company’s investment securities, which include common stocks, preferred stock, corporate bonds and mutual funds, are held at Wells Fargo Advisors.

Wells Fargo Advisors is a member of the Securities Investor Protection Corporation (SIPC).

8 unchanged sentences

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.

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

In January 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 June 30, 2022, 49,219 warrants were outstanding.

At September 30, 2022, 49,219 warrants were outstanding.

All the unexercised warrants expired on October 24, 2022.

Stock-Based Compensation and Employee Benefits

Stock-Based Compensation

2 unchanged sentences

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 June 30, 2022 was 1,213,468 .

The number of securities remaining available for future issuance under the Plan as of September 30, 2022 was 1,198,468 .

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

During the six months ended June 30, 2022 and 2021, the Company granted an aggregate of 138,967 and 94,681 restricted common shares under the Plan, respectively.

With respect to the restricted common shares granted in 2022, (i) 13,514 shares vested immediately on the date of grant, an additional 13,514 shares will vest on each of the first and second anniversaries of the date of grant, and (ii) 32,808 shares will vest on January 1, 2023, 32,808 shares will vest on January 1, 2024 and 32,809 shares will vest on January 1, 2025.

SEPTEMBER 30, 2022

During the nine months ended September 30, 2022 and 2021, the Company granted an aggregate of 153,967 and 94,681 restricted common shares under the Plan, respectively.

During the three months ended September 30, 2022 and 2021, the Company granted an aggregate of 15,000 and - 0 - restricted common shares under the Plan, respectively.

With respect to the restricted common shares granted in 2022, (i) 17,264 shares vested immediately on the date of grant, an additional 17,264 shares will vest on each of the first and second anniversaries of the date of grant and 3,750 shares will vest on the fourth anniversary of the date of grant, and (ii) 32,808 shares will vest on January 1, 2023, 32,808 shares will vest on January 1, 2024 and 32,809 shares will vest on January 1, 2025.

With respect to the restricted common shares granted in 2021, (i) 29,976 shares vested on January 1, 2022 and an additional 29,976 shares will vest on each January 1, 2023 and January 1, 2024, and (ii) 4,753 shares became fully-vested when the Company waived the restrictions on such shares upon the retirement of its then executive vice president and chief operating officer in January 2022.

Stock based compensation for the three months ended June 30, 2022 and 2021 was $ 123,428 and $ 58,306 , respectively.

Stock based compensation for the six months ended June 30, 2022 and 2021 was $ 230,167 and $ 62,413 , respectively.

As of June 30, 2022, there was unrecorded stock based compensation expense $ 969,604 .

Stock based compensation for the three months ended September 30, 2022 and 2021 was $ 127,000 and $ 64,219 , respectively.

Stock based compensation for the nine months ended September 30, 2022 and 2021 was $ 357,167 and $ 126,538 , respectively.

As of September 30, 2022, there was unrecorded stock-based compensation expense of $ 842,604 .

Employee Benefits

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 nine months ended September 30, 2022 and 2021, the 401(k) Plan expense was $ 71,925 and $ 46,276 , respectively.

For the three months ended September 30, 2022 and 2021, the 401(k) Plan expenses were $ 21,924 and $ 13,814 , respectively.

Equity Offerings

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 six months ended June 30, 2022, the Company sold an aggregate of 3,867,157 common shares under this prospectus and realized net proceeds of $ 21,345,265 in connection therewith.

At June 30, 2022, $ 14,812,843 of common shares were available for future sale under the ongoing “at-the market” offering.

During the nine months ended September 30, 2022, the Company sold an aggregate of 7,177,043 common shares under this prospectus and realized net proceeds of $ 36,654,419 in connection therewith.

On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 75,000,000 of its common shares and its Series A Preferred Stock (as defined in Note 20 below) with an aggregate liquidation preference of up to $ 25,000,000 in an “at-the market” offering, which is ongoing.

During the nine months ended September 30, 2022, the Company did not sell any shares of Series A Preferred Stock nor any shares under this prospectus.

At September 30, 2022, approximately $ 75 million of common shares and $ 25,000,000 of Series A Preferred Stock were available for future sale under the ongoing “at-the market” offering.

Partnership Investments

As of June 30, 2022, the Company had invested an aggregate of approximately $ 19.6 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 ranges from 7.6 % to 49 %.

As of September 30, 2022, the Company had invested an aggregate of approximately $ 22.5 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 ranges up to 49 %.

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

1 unchanged sentence

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

For the three and six months ended June 30, 2022, the partnerships generated $ 317,004 and $ 589,493 of income for the Company.

At June 30, 2022, the Company had unfunded partnership commitments totaling approximately $ 2.7 million.

For the three and nine months ended September 30, 2022, the partnerships generated $ 523,067 and $ 1,112,560 of income for the Company.

At September 30, 2022, the Company had unfunded partnership commitments totaling approximately $ 3.6 million.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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 June 30, 2022, the Company had incurred approximately $ 421,000 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.

As of September 30, 2022, the Company had incurred approximately $ 472,800 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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

Series A Preferred Stock

7 unchanged sentences

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

Charter Amendments

On July 19, 2022, after shareholders approved an amendment to the Company’s charter at its 2022 Annual Meeting of Shareholders held on July 19, 2022, the Company filed a Certificate of Amendment of the Certificate of Incorporation to increase the number of authorized common shares available for issuance from 100,000,000 to 200,000,000 .

On August 23, 2022, in connection with the ongoing “at-the market” offering, the Company filed a Certificate of Amendment with the Department of State of the State of New York to increase the number of authorized shares of Series A Preferred Stock from 1,955,000 to 2,903,000 and to fix the number of common shares to be reserved upon conversion of the Series A Preferred Stock at 72,575,000 .

Subsequent Events

From July 1, 2022 through August 8, 2022, the Company sold an aggregate of 2,265,841 common shares under its at-the-market offering facility realizing gross proceeds of approximately $ 10.8 million.

On July 8, 2022, the board of directors declared a dividend of $ 0.14 per common share payable on July 28, 2022 to shareholders of record as of July 21, 2022.

On July 19, 2022, after shareholders approved an amendment to the Company’s charter at its 2022 Annual Meeting of Shareholders, the Company filed a Certificate of Amendment of the Certificate of Incorporation to increase the number of authorized common shares available for issuance from 100,000,000 to 200,000,000 .

On July 19, 2022, the Company issued an aggregate of 15,000 restricted common shares to its three independent directors (i.e., 5,000 shares each), of which 3,750 shares vested immediately upon issuance and 3,750 shares will vest on each of July 19, 2023, 2024 and 2025.

On July 26, 2022, the Company entered into an agreement with John E.

Warch pursuant to which it will employ Mr.

Warch as its Chief Financial Officer and Executive Vice President.

Warch’s employment term commenced August 1, 2022 and will continue until terminated by either party.

His annual base compensation is $ 325,000 .

In connection with this hire, John L.

Villano resigned as the Company’s Chief Financial Officer but will continue to serve as its Chief Executive Office and President.

Management has evaluated subsequent events through August 9, 2022 the date on which the financial statements were available to be issued.

From October 1, 2022 through November 9, 2022, the Company sold an aggregate of 405,037 common shares under its at-the-market offering facility realizing gross proceeds of approximately $ 1.6 million.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

On October 6, 2022, the Company acquired substantially all the business assets of Urbane New Haven, LLC (“Urbane”), a real estate firm specializing in all phases of real estate development and construction, including architecture, design, contracting and marketing.

The purchase price for the assets was 300,000 common shares, or approximately $ 1.1 million based on the closing price of $ 3.68 per share on October 5, 2022.

The issuance of the shares to Urbane was exempt from the registration requirements of the Securities Act of 1933, as amended (the "Act"), pursuant to Sections 4(a)(2) and/or 4(a)(5) thereunder.

A legend restricting resale, transfer, or other disposition of these shares other than in compliance with the Act was placed on such shares.

In connection with the acquisition, Eric O’Brien, one of the owners of Urbane, has been hired by the Company as its new Senior Vice President, Asset Management.

O’Brien’s primary responsibilities include construction management oversight and real estate development.

The Company is currently in the process of determining it’s potential contingent liability, if any, for the purchase, as well as its allocation of the purchase price amongst the assets purchased, intangible assets, goodwill and liabilities assumed.

Accordingly, these amounts are not included.

Effective on October 7, 2022, the Company’s Board of Directors adopted a stock repurchase plan pursuant to which the Company may repurchase up to an aggregate of $ 7.5 million of its outstanding common shares in the open market at prevailing market prices or in negotiated transactions off the market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Plan”).

The Plan is expected to continue through September 30, 2023, unless extended or shortened by the Company’s Board of Directors.

Ladenburg Thalmann & Co.

will act as the Company’s exclusive purchasing agent under the Plan.

On October 24, 2022, all of the remaining outstanding underwriters’ warrants expired without being exercised.

(See Note 15, above.)

On October 26, 2022, the Company issued 10,000 restricted common shares to an employee, of which 3,334 shares vest immediately upon issuance and 3,333 shares will vest on each of October 26, 2023 and 2024.

The closing price of a common share on October 26, 2022 was $ 3.83 .

On October 27, 2022, the Company’s Board of Directors declared a dividend of $ 0.13 per share payable to shareholders of record as of November 7, 2022.

The dividend is payable November 14, 2022.

Management has evaluated subsequent events through November 10, 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.

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