What changed in this filing

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Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-31 · 544 added, 342 removed, 752 unchanged (54% of the section changed)

2 unchanged sentences

Our management, with the participation of John L.

Villano, our chief executive and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021 (the “Evaluation Date”).

Based upon that evaluation, Mr.

Villano concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to our management, including our chief executive and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Villano and John E.

Warch, our chief executive and chief financial officer, respectively, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022 (the “Evaluation Date”).

Based upon that evaluation, Messrs.

Villano and Warch concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to our management, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

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As defined by the SEC, internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of John L.

Villano, our principal executive and principal accounting officer, and effected by the Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Villano and John E.

Warch, our principal executive and principal accounting officer, respectively, and effected by the Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting is supported by written policies and procedures that:

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance.

Our directors are elected annually by our shareholders and serve for one-year terms until his/her successor is elected and qualified or until such director’s earlier death, resignation or removal.

The executive officers and key personnel are appointed by and serve at the pleasure of the Board.

The executive officers are appointed by and serve at the pleasure of the Board.

Our executive officers and directors, and their respective ages as of March 30, 2023, are as follows:

Chairman, Chief Executive Officer, Chief Financial

Officer, President and Treasurer

Chief Investment Officer and Director of Investor Relations

Chairman of the Board, Chief Executive Officer and President

Executive Vice President and Chief Financial Officer

Leslie Bernhard (1, 2)

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Set forth below is a brief description of the background and business experience of our executive officers and directors:

Villano , is Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer and Treasurer.

Villano , is Chairman of the Board, Chief Executive Officer and President.

He has also been designated as our principal executive officer.

Villano also served as our Chief Financial Officer until August 2022 and our Treasurer until July 2022.

Villano is one of our founders.

At the time of our IPO, he was appointed Chairman, co-Chief Executive Officer, Chief Financial Officer and Secretary.

At the time of our IPO, he was appointed Chairman of the Board, Co-Chief Executive Officer, Chief Financial Officer and Secretary.

In November 2019, upon the resignation of his brother, Jeffrey C.

Villano, he was appointed Chairman, Chief Executive Officer, President, Chief Financial Officer and Treasurer.

Villano, he became our sole Chief Executive Officer and was appointed Treasurer in addition to his then current positions with our company and resigned as Secretary.

Villano is a certified public accountant and was engaged in the private practice of accounting and auditing for almost 30 years.

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His responsibilities include overseeing all aspects of our business operations, including loan origination and servicing, investor relations, brand development and business development.

He is also responsible for all our accounting and financial matters.

Villano holds a bachelor’s degree in Accounting from the University of Rhode Island in 1982.

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Villano’s experience in managing our business since its inception and his professional background as a certified public accountant make him an important part of our management team and make him a worthy candidate to serve on the Board.

Haydon was appointed as our chief investment officer and director of investor relations in May 2021.

Haydon has more than 25 years of experience in financial services and investment banking.

He brings us expertise in areas such as lending, securities asset management, initial public offerings, investment banking, financial strategy and long-term planning.

Haydon is responsible for managing our liquid reserves and securities portfolio and he oversees our underwriting team.

Prior to joining Sachem, Mr.

Haydon served as a portfolio manager and branch manager at Wells Fargo Advisors Financial Network from 2011.

From 2008 to 2011, he served as a vice president within the Wealth Management division of UBS Financial Services.

From 1999 to 2006 Mr.

Haydon was a Managing Director of Northern Mortgage Company, LLC, a firm which he successfully merged into a division of Indy Mac Bank in 2006.

From 1996 to 1999, Mr.

Haydon was a regional lending officer at Dime Bank of New York, focusing on commercial and residential lending.

Haydon has held numerous FINRA securities registration designations including series 65, 7, and a Series 24 General Securities Principal registration.

He holds a Master of Business Administration from the Isenberg School of Management at the University of Massachusetts Amherst and a Bachelor of Science in Business from Skidmore College in Saratoga Springs, New York.

Warch , was appointed to serve as our Executive Vice President and Chief Financial Officer beginning on August 1, 2022.

He has also been designated as our principal accounting officer.

From September 2013 until July 2022, Mr.

Warch was the Senior Vice President, Chief Financial Officer of Four Springs Capital Trust, a real estate investment trust focused on acquiring, owning, and managing retail, industrial, medical, and other office properties.

Since April 2015, he was also the Treasurer of Four Springs.

From August 2012 until September 2013, Mr.

Warch was a Senior Consultant at David Landau & Associates, LLC, responsible for, among other things, Sarbanes-Oxley 404 compliance testing of real estate clients.

From November 2006 until March 2012, Mr.

Warch served as Senior Vice President and Chief Accounting Officer of CapLease, Inc.

(previously NYSE:

LSE), where he was responsible for all aspects of the financial infrastructure of a publicly-held real estate investment trust, managed financial and SEC reporting and compliance, oversaw Sarbanes-Oxley 404 compliance and coordinated audits and reviews with independent accountants.

Warch is a Certified Public Accountant and earned a B.S.

in Accounting and an M.B.A.

in Finance from St.

John’s University.

Leslie Bernhard became a member of the Board as of February 9, 2017.

She has served as the non-executive chairman of the board of directors of Milestone Scientific Inc.

She served as an independent director of Milestone Scientific Inc.

(NYSE American:

MLSS), a developer and manufacturer of medical and dental devices, since October 2009, and an independent director of Milestone since May 2003.

She also served as interim chief executive officer of Milestone from October 2017 to December 2017.

MLSS), a developer and manufacturer of medical and dental devices, from May 2003 until January 4, 2023 and as the non-executive chairman of the Milestone board of directors from October 2009 through January 4, 2023.

served as interim chief executive officer of Milestone from October 2017 to December 2017.

From 2007 through September 2018, Ms.

Bernhard also served as an independent director of Universal Power Group, Inc., a global supplier of power solutions (“UPG”), and since September 2018 she has been serving as a consultant to UPG.

In 1986 she co-founded AdStar, Inc., an electronic ad intake service to the newspaper industry, and served as its president, chief executive officer and executive director until 2012.

Bernhard served as an independent director of Universal Power Group, Inc., a global supplier of power solutions (“UPG”), and since September 2018 she has been serving as a consultant to UPG.

Bernhard co-founded AdStar, Inc., an electronic ad intake service to the newspaper industry, and served as its president, chief executive officer and executive director until 2012.

Bernhard holds a BS Degree in Education from St.

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Since 2011, Mr.

Prinz has served as president and chief financial officer of Current, Inc.

Prinz has served as its president and chief financial officer.

Prinz graduated from Bryant College with a B.A.

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Delinquent Section 16(a) Reports

During the year ended December 31, 2021, Brian Prinz, a director, was late in the filing of two Statements of Changes in Beneficial Ownership on Form 4.

Code of Ethics

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Name and Principal Position

Stock Awards (1)

Chairman, Chief Executive Officer, President,

Chief Financial Officer,

Treasurer and Director

Executive Vice President and Chief Operating Officer

Chief Investment Officer and Director of

Investor Relations

Chairman of the Board, Chief Executive Officer, President and Director

Executive Vice President and Chief Financial Officer

Chief Credit Officer, Chief Investment Officer and Director of Investor Relations

* Effective August 1, 2022, Mr.

Warch was hired as our executive vice president and chief financial officer.

** Effective January 10, 2023, Mr.

Cuozzo retired from all of his positions with the company.

** Effective May 1, 2021, Mr.

Haydon was hired as our chief investment officer and director of investor relations.

Haydon resigned from his position as our chief investment officer, chief credit officer and director of investor relations.

(1) Represents the aggregate grant-date fair value of the awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codified Topic 718 (“FASB ASC Topic 718”).

(2) Represents the grant-date fair value on an aggregate of 89,928 Common Shares awarded on April 8, 2021.

(3) Represents the grant-date fair value on an aggregate of 4,753 Common Shares awarded on April 12, 2021.

(2) Represents the grant-date fair value on an aggregate of 130,890 Common Shares awarded on February 17, 2023, computed in accordance with FASB ASC Topic 718.

(3) Represents the grant-date fair value on an aggregate of 89,928 Common Shares awarded on April 8, 2021 , computed in accordance with FASB ASC Topic 718.

(4) Represents the grant-date fair value on an aggregate of 8,000 Common Shares awarded on February 9, 2023 , computed in accordance with FASB ASC Topic 718.

Employment Agreements — John L.

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Villano’s employment agreement are as follows.

Villano serves as our chairman, chief executive officer, president, chief financial officer and treasurer.

Villano serves as our chairman, chief executive officer and president

● The term of his employment, which commenced in February 2017, is five years, unless terminated earlier in accordance with his employment agreement.

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Villano’s base salary was $500,000 per annum.

In April 2021, his base salary was increased to $500,000 per annum, retroactive to January 1, 2021.

Villano is entitled to incentive compensation in such amount as shall be determined by the Compensation Committee of the Board in its sole and absolute discretion, based on our achievement of the financial performance goals set by the Board of directors and capital transactions.

● For 2019 and 2020, Mr.

Villano did not receive any bonus or incentive compensation.

In April 2021, he received a one-time cash bonus of $250,000, of which $125,000 was paid immediately, $62,500 was paid on July 1 and $62,500 was paid on October 1, 2021.

In addition, for the year ended December 31, 2021, he was entitled to a one-time cash bonus of $250,000, which was paid in 2021.

He was also entitled to a “target bonus” of up to $250,000, as determined by the Compensation Committee, which would have been payable in 2022.

Villano waived his right to receive the target bonus.

● In April 2022, Mr.

Villano received a grant of 89,928 restricted Common Shares (based on the closing price of $5.56 per Common Share on April 8, 2021) vesting in three equal installments on each of January 1, 2022, 2023 and 2024, which are subject to forfeiture, to the extent unvested, if he voluntary resigns as an employee of the Company without “Good Reason” or if his employment is terminated for “Cause.”

Villano’s base salary was increased to $750,000 per annum, retroactive to January 1, 2022.

Villano has the right to participate in all retirement, pension, deferred compensation, insurance and other benefit plans adopted and maintained by us for the benefit of employees and be entitled to additional compensation in an amount equal to the cost of any such benefit plan or program if he chooses not to participate.

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Villano an additional amount equal to the amount of the excise tax and any other taxes (whether in the nature of excise taxes or income taxes) due with respect to such payment.

In April 2021, Mr.

In April 2022, Mr.

Villano received a grant of 98,425 restricted Common Shares (based on the closing price of $5.08 per Common Share on April 5, 2022) vesting in three equal installments on each of January 1, 2023, 2024 and 2025, which are subject to forfeiture under the same terms and conditions as the 2021 grant.

In February 2023, Mr.

Villano received a grant of 130,890 restricted Common Shares (based on the closing price of $3.82 per Common Share on February 16, 2023) vesting in three equal installments on each of January 1, 2024, 2025 and 2026, which are subject to forfeiture under the same terms and conditions as the 2021 grant.

For the year ended December 31, 2022, Mr.

Villano was entitled to a “target bonus” of $250,000 as determined by the Compensation Committee, which was paid in March 2023.

In addition, for 2023, he is entitled to a “target bonus” of up to $375,000, as determined by the Compensation Committee, which would be payable in 2024.

Termination and Change of Control Arrangement

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Notwithstanding the preceding sentence, any transaction that involves a mere change in identity form or place of organization within the meaning of Section 368(a)(1)(F) of the Code, or a transaction of similar effect, will not constitute a “change in control.”

Employment Agreement — Peter J.

In July 2020, we entered into an employment agreement with Peter J.

Cuozzo, our former executive vice president and chief operating officer.

Employment Agreement — John E.

Effective August 2022, we entered into an employment agreement with John E.

Warch, our executive vice president and chief financial officer.

The material terms of his agreement are described below.

Cuozzo retired from all his positions with the company on January 14, 2022.

● He served as our executive vice president and chief operating officer on a full-time basis.

● The agreement was terminable by either party at any time upon delivery of written notice to the other party.

● His duties included overseeing, supervising and managing our business, (ii) overseeing and supervising our expansion into Florida, Texas and such other markets identified by our chief executive officer and/or the Board and (iii) such other duties, responsibilities, tasks and projects as shall be determined by our chief executive officer and/or the Board, with the understanding that he shall have the customary authority and support to accomplish such assigned duties, responsibilities, tasks and projects.

● He was based in Naples, Florida but required to work from our principal place of business, in Branford Connecticut, as frequently and for such period of time as directed by our chief executive officer.

● His base compensation was $250,000 per year.

● He will serve as our executive vice president and chief financial officer on a full-time basis.

● The agreement can be terminated by either party at any time upon delivery of written notice to the other party.

● His duties and responsibilities include the following:

compliance with the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”) to which the Company is subject, including, but not limited to, the preparation and filing of all reports, schedules and other forms required under the Securities and Exchange Act of 1934, as amended, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and Schedule 14A;

such duties and responsibilities as are customary for his positions;

and other executive, managerial or administrative duties, functions or responsibilities as are from time to time delegated to him by the CEO, the Board or the Audit Committee.

● His base compensation is $325,000 per year.

● He was paid a signing bonus of $25,000.

● He was be entitled to additional compensation in such amounts, at such times and under such circumstances as shall be determined by the Board and/or the Compensation Committee based on (i) the growth of our business;

(ii) capital origination, whether via the sale by us of our equity, debt or derivative securities or via new credit facilities with traditional or non-traditional lenders and (iii) mergers and acquisitions of other entities or assets.

In April 2021, he was paid a one-time cash bonus of $25,000 and received a grant of 4,753 restricted Common Shares (based on the closing price of $5.26 per Common Share on April 12, 2021) vesting in three equal installments on each of January 1, 2022, 2023 and 2024, which are subject to forfeiture, to the extent unvested, if he voluntary resigns as an employee of the Company without “Good Reason” or if his employment is terminated for “Cause.”

● He was eligible to participate in any retirement plans (qualified and non-qualified), pension, insurance, health, disability or other benefit plan or program that has been or subsequently adopted by us (or in which we participate), according to the terms of such plan or program, on terms no less favorable than the most favorable terms granted to our senior executives.

● He was entitled to 25 vacation days per annum and severance pay equal to 18 months of his base compensation if he is terminated without cause, or if he terminates for good reason, prior to July 1, 2022.

● He is subject to a covenant not to compete that continues for 18 months after termination.

● He is entitled to an annual cash bonus of up to 50% of his base salary and benefits such as health insurance, vacation and expense reimbursement, in accordance with prevailing Company policy.

The amount of the cash bonus and the factors to be considered in connection therewith are in the discretion of the Company’s Chief Executive Officer (the “CEO”) and

the Compensation Committee (the “Compensation Committee”).

He may also receive equity incentive compensation at the discretion of the Compensation Committee.

● He is entitled to severance pay equal to one year’s base salary, except if the termination occurs on or before August 1, 2023, in which case the severance amount will be three months of his base salary, if he is terminated without cause, or if he terminates for good reason.

● If he is terminated without cause in connection with a “Sale” (as defined in the Agreement), his severance payment will be equal to 18 months of his base salary.

● He is subject to a covenant not to compete that continues for 12 months after termination unless heis terminated without “Cause,” in which event this covenant will not apply.

In February 2023, Mr.

Warch received a grant of 8,000 restricted Common Shares (based on the closing price of $3.78 per Common Share on February 9, 2023), vesting in three equal installments on each of Febuary 9, 2023, 2024 and 2025, which are subject to forfeiture, to the extent unvested, if he voluntary resigns as an employee of our company without “Good Reason” or if his employment is terminated for “Cause.” In addition, for the year ended December 31, 2022, Mr.Warch was entitled to a “prorated target bonus” of $70,000 as determined by the Compensation Committee, which was paid in March 2023.

Outstanding Equity Awards at December 31, 2022

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units of stock that have not vested

(1) Calculated based on the closing market price of $5.84 at the end of the last completed fiscal year on December 31, 2021.

(2) One-third of these restricted Common Shares vest on each of January 1, 2022, 2023 and 2024.

(1) Calculated based on the closing market price of $3.30 on December 30, 2022.

(2) 62,785 of these restricted Common Shares vest on January 1, 2024, 62,784 of these restricted Common Shares vest on January 1, 2025 and 32,808 of these restricted Common Shares vest on January 1, 2026.

Unvested shares may not be transferred, sold, pledged, hypothecated or assigned, and are subject to forfeiture.

12 unchanged sentences

Leslie Bernhard

(1) During the year ended December 31, 2022, each of Ms.

Bernhard and Messrs.

Goldberg and Prinz was awarded a bonus of $30,000 which is included in their respective amount.

(2) During the year ended December 31, 2022, under the Director Plan, each of Ms.

12 unchanged sentences

*Less than 1%.

(1) Unless otherwise provided, the address of each of the individuals above is c/o Sachem Capital Corp., 698 Main Street, Branford, CT 06405.

(1) Unless otherwise provided, the address of each of the individuals above is c/o Sachem Capital Corp., 568 East Main Street, Branford, CT 06405.

(2) A person is deemed to be a beneficial owner of securities that can be acquired by such person within 60 days upon the exercise of options and warrants or conversion of convertible securities.

Each beneficial owner’s percentage ownership is determined by assuming that options, warrants and convertible securities that are held by such person (but not held by any other person) and that are exercisable or convertible within 60 days have been exercised or converted.

Except as otherwise indicated, and subject to

applicable community property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially owned.

Except as otherwise indicated, and subject to applicable community property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially owned.

(3) All percentages are determined based on 43,756,724 Common Shares outstanding as of March 30, 2023.

(4) Includes 89,928 restricted Common shares that were issued in 2021.

One-third of these shares vest on each of January 1, 2022, 2023 and 2024.

(4) Includes 226,483 restricted Common Shares which are subject to vesting including:

(i) 106,414 shares vest on January 1, 2024;

(ii) 76,439 shares vest on January 1, 2025;

and (iii) 43,630 shares vest on January 1, 2025.

Also includes 6,827 Common Shares owned by Mr.

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(5) Includes 6,875 restricted Common Shares that vest as follows:

(i) 625 shares vest on October 4, 2022;

(i) 1,250 shares vest on July 19, 2023;

(ii) 1,250 shares vest on October 13, 2023;

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(iv) 2,500 shares vest on October 13, 2024;

(v) 625 shares vest on October 15, 2023;

and (vi) 1,250 shares vest on October 13, 2023.

(6) Includes 4,753 restricted Common Shares issued in 2021 that were to vest one-third on each of January 1, 2022, 2023 and 2024.

Cuozzo retired from the Company effective January 14, 2022.

In connection therewith, the Company agreed to lift the restrictions on these shares.

and (v) 1,250 shares vest on October 13, 2025.

(6) Includes 8,000 restricted Common Shares that vest as follows:

(i) 2,667 shares vest on February 9, 2023;

(ii) 2,667 shares vest on February 9, 2024;

and (iii) 2,666 shares vest on February 9, 2025.

Equity Compensation Plan Information

3 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.

Approximately fifteen individuals are eligible to participate in the Plan including, our two executive officers, ten other employees and three independent directors.

Approximately 37 individuals are eligible to participate in the Plan including, our two executive officers, 32 other employees and our three independent directors.

Number of securities

18 unchanged sentences

Awards under the Plan may take the form of stock options (either incentive stock options or non- qualified stock options) or restricted shares.

Subject to restrictions that are set forth in the Plan, the Compensation Committee will have complete and absolute authority to set the terms, conditions and provisions of each award, including the size of the award, the exercise or base price, the vesting and exercisability schedule (including provisions regarding acceleration of vesting and exercisability) and termination and forfeiture provisions.

Subject to restrictions that are set forth in the Plan, the Compensation Committee has complete and absolute authority to set the terms, conditions and provisions of each award, including the size of the award, the exercise or base price, the vesting and exercisability schedule (including provisions regarding acceleration of vesting and exercisability) and termination and forfeiture provisions.

The Compensation Committee is subject to the following specific restrictions regarding the types and terms of awards:

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Certain Relationships and Related Transactions and Director Independence.

During the years ended December 31, 2021 and 2020, the wife of our chief executive officer was paid $120,000 and $108,000, respectively, for accounting and financial reporting services provided to us.

During the year ended December 31, 2021 the daughter of our chief executive officer was paid $10,962 for internal audit and compliance services provided to us.

We have adopted a policy that prohibits any transaction between us and a related party unless the terms of that transaction are no less favorable to us than if we had entered into the same transaction with an unrelated party and the transaction is approved by our Audit Committee or other independent committee of the board of directors, in the case where it is inappropriate for our Audit Committee to review such a transaction due to a conflict of interest.

During the years ended December 31, 2022 and 2021:

(i) the wife of our chief executive officer was paid $63,168 and $120,000, respectively, for accounting and financial reporting services provided to us;

and (ii) the daughter of our chief executive officer was paid $141,652 and $10,962, respectively, for internal audit and compliance services provided to us.

The chief executive officer’s wife retired in the third quarter of 2022.

Principal Accounting Fees and Services

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● In 2022, the audit fees include fees for professional services rendered for (i) the review of our quarterly financial statements, (ii) the review of our shelf registration statement (File No.

333-256940) on Form S-3 under the Securities Act of 1933, as amended, which was declared effective by the SEC on June 17, 2021, (iii) the review of three separate prospectus supplements to the aforementioned shelf registration statement on Form S-3 and (iv) other services that are normally provided in connection with statutory and regulatory filings.

333-262859) on Form S-3 under the Securities Act of 1933, as amended, which was declared effective by the SEC on February 25, 2022, (iii) the review of four separate prospectus supplements to the aforementioned shelf registration statement on Form S-3 and (iv) other services that are normally provided in connection with statutory and regulatory filings.

● In 2021, the audit fees include fees for professional services rendered for (i) the review of our quarterly financial statements, (ii) the review of our shelf registration statement (File No.

333-236097) on Form S-3 under the Securities Act of 1933, as amended, which was declared effective by the SEC on February 5, 2020, (iii) the review of three separate prospectus supplements to the aforementioned shelf registration statement on Form S-3 and (iv) other services that are normally provided in connection with statutory and regulatory filings.

Audit Committee Pre-Approval Policies and Procedures

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Certificate of Amendment to Certificate of Incorporation filed on June 25, 2021(9)

Certificate of Amendment to Certificate of Incorporation filed on July 19, 2022 (19)

Certificate of Amendment to Certificate of Incorporation filed on August 23, 2022 (20)

Amended and Restated Bylaws, effective as of November 25, 2019(3)

Form of Representatives’ Warrants issued on October 27, 2017 in connection with the follow-on underwritten public offering(4)

Indenture, dated as of June 21, 2019, between the Company and U.S.

Indenture, dated as of June 21, 2019, between Sachem Capital Corp.

Bank National Association, as Trustee (4)

First Supplemental Indenture, dated as of June 25, 2019, between the Company and U.S.

First Supplemental Indenture, dated as of June 25, 2019, between Sachem Capital Corp.

Bank National Association, as Trustee (4)

Form of 7.125% Notes due 2024(4)

Second Supplemental Indenture between the Company and U.S.

Second Supplemental Indenture between Sachem Capital Corp.

Bank National Association, as Trustee (2)

Form of 6.875% Notes due 2024(6)

Third Supplemental Indenture between the Company and U.S.

Third Supplemental Indenture between Sachem Capital Corp.

Bank National Association, as Trustee (7)

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Specimen 7.75% Series A Cumulative Redeemable Preferred Stock Certificate.(9)

Fourth Supplemental Indenture between the Company and U.S.

Fourth Supplemental Indenture between Sachem Capital Corp.

Bank National Association, as Trustee (10)

Form of 6.00% Note due 2026 (attached as Exhibit A to Exhibit 4.9 above).

Fifth Supplemental Indenture between the Company and U.S.

Bank National Association, as Trustee(15)

Fifth Supplemental Indenture between Sachem Capital Corp.

Bank Trust Company, National Association, as Trustee (14)

Form of 6.00% Note due 2027 (attached as Exhibit A to Exhibit 4.11 above)

Sixth Supplemental Indenture between Sachem Capital Corp.

Bank Trust Company, National Association, as Trustee (16)

Form of 7.125% Note due 2027 (attached as Exhibit A to Exhibit 4.13 above)

Seventh Supplemental Indenture between Sachem Capital Corp.

Bank Trust Company, National Association, as Trustee (21)

Form of 8.00% Note due 2027 (attached as Exhibit A to Exhibit 4.16 above)

Revolving Credit Note, dated March 2, 2023, in the principal amount of $45 million in favor of Needham Bank, as lender (22)

Employment Agreement by and between John L.

3 unchanged sentences

Final Form of the Restrictive Stock Grant Agreement dated July 17, 2018 under the Sachem Capital Corp.

2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz(6)

2016 Equity Compensation Plan between Sachem Capital Corp.

and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz(5)

Final Form of the Restrictive Stock Grant Agreement dated October 4, 2019 under the Sachem Capital Corp.

2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz(2)

2016 Equity Compensation Plan between Sachem Capital Corp.

and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz(2)

Final Form of the Restrictive Stock Grant Agreement dated April 2021 under the Sachem Capital Corp.

2016 Equity Compensation Plan between the Company and each of John L., Villano and Peter J.

2016 Equity Compensation Plan between Sachem Capital Corp.

Master Repurchase Agreement and Securities Contract, dated as of July 21, 2021, between Sachem Capital Corp.

3 unchanged sentences

Agreement and General Release, dated as of January 14, 2022, between Sachem Capital Corp.

Final Form of the Restrictive Stock Grant Agreement dated April 2022 under the Sachem Capital Corp.

2016 Equity Compensation Plan between Sachem Capital Corp.

Final Form of the Restrictive Stock Grant Agreement dated October 15, 2020 under the Sachem Capital Corp.

2016 Equity Compensation Plan between Sachem Capital Corp.

and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (19)

Final Form of the Restrictive Stock Grant Agreement dated October 13, 2021 under the Sachem Capital Corp.

2016 Equity Compensation Plan between Sachem Capital Corp.

and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (19)

Final Form of the Restrictive Stock Grant Agreement dated July 19, 2022 under the Sachem Capital Corp.

2016 Equity Compensation Plan between Sachem Capital Corp.

and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (19)

Employment Agreement, dated July 26, 2022, by and between John E.

Warch and Sachem Capital Corp.(18)

Credit and Security Agreement, dated as of March 2, 2023, among Sachem Capital Corp., the lenders party thereto and Needham Bank, as administrative agent (22)

Code of Ethics(8)

5 unchanged sentences

section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act ***

Open-End Construction Mortgage, Security Agreement and Assignment of Leases and Rents, dated November 12, 2021, by Sachem Capital Corp., in connection with the New Haven Bank Mortgage Loan *

Term Note made by Sachem Capital Corp to New Haven Bank, dated November 17, 2021, in the principal amount of $1,400,000 (attached as Exhibit B to Exhibit 99.1 above)

Chief Financial Officer Certification pursuant to 18 U.S.C.

section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act ***

Open-End Construction Mortgage, Security Agreement and Assignment of Leases and Rents, dated February 28, 2023, by Sachem Capital Corp., in connection with the New Haven Bank Mortgage refinancing (22)

Commercial Term Note made by Sachem Capital Corp to New Haven Bank, dated February 28, 2023, in the principal amount of $1,660,000 (attached as Exhibit B to Exhibit 99.1 above)

Loan Agreement between Sachem Capital Corp.

and New Haven Bank, dated as of November 17, 2021*

and New Haven Bank, dated as of February 28, 2023 (22)

Mortgage Release releasing Sachem Capital Corp.

from the $1.4 million NHB Mortgage (22)

XBRL Instance Document *

12 unchanged sentences

(3) Previously filed as an exhibit to the Current Report on Form 8-K on November 27, 2019 and incorporated herein by reference.

(4) Previously filed on October 20, 2017, as Exhibit A to Exhibit 1.1 of the Registration Statement on Form S-11, as amended (SEC File No.:

333-218954) and incorporated herein by reference.

(4) Previously filed as an exhibit to the Current Report on Form 8-K on June 25, 2019 and incorporated herein by reference.

8 unchanged sentences

(14) Previously filed as an exhibit to the Current Report on Form 8-K on March 9, 2022 and incorporated herein by reference.

(c) No financial statement schedules are included because the information is either provided in the financial statements or is not required under the related instructions or is inapplicable and such schedules therefore have been omitted.

(15) Previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.

(16) Previously filed as an exhibit to the Current Report on Form 8-K on May 12, 2022 and incorporated herein by reference.

(17) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended March 31, 2022 and incorporated herein by reference.

(18) Previously filed as an exhibit to the Current Report on Form 8-K on July 27, 2022 and incorporated herein by reference.

(19) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended June 30, 2022 and incorporated herein by reference.

(20) Previously filed as an exhibit to the Current Report on Form 8-K on August 24, 2022 and incorporated herein by reference.

(21) Previously filed as an exhibit to the Current Report on Form 8-K on August 23, 2022 and incorporated herein by reference.

(22) Previously filed as an exhibit to the Current Report on Form 8-K on March 3, 2023 and incorporated herein by reference

No financial statement schedules are included because the information is either provided in the financial statements or is not required under the related instructions or is inapplicable and such schedules therefore have been omitted.

Form 10-K Summary

4 unchanged sentences

March 30, 2023

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 30, 2022:

Chairman, Chief Executive Officer, President Chief

Financial Officer and Director (Principal Executive

Officer & Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 30, 2023:

Chairman, Chief Executive Officer, President

and Director (Principal Executive Officer)

Executive Vice President and Chief Financial Officer

(Principal Accounting and Financial Officer)

/s/ Leslie Bernhard

Leslie Bernhard

/s/ Arthur L.

INDEX TO FINANCIAL STATEMENTS

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Reports of Independent Registered Public Accounting Firms ( PCAOB ID 694 )

Financial Statements:

Balance Sheets

Statements of Operations

Statements of Changes in Shareholders’ Equity

Statements of Cash Flows

Notes to Financial Statements

Consolidated Financial Statements:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

MGI Worldwide is a network of independent audit, tax, accounting and consulting firms.

MGI Worldwide does not provide any services and its member firms are not an international partnership.

Each member firm is a separate entity and neither MGI Worldwide nor any member firm accepts responsibility for the activities, work, opinions or services of any other member firm.

For more information visit www.mgiworld.com/legal

Allowance for Loan Losses

As discussed in Note 2 to the financial statements, the Company estimates its allowance for loan losses by evaluating each loans borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio.

Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required.

Based on these assessments, the Company determined that no allowance for loan losses is required.

The allowance for loan losses was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the subjective and complex judgments made by management in determining whether any of its loans receivable are impaired and/or require an allowance for credit losses.

Addressing the critical audit matter involved performing procedures and evaluating audit evidence in connection with our overall opinion on the financial statements.

These procedures included;

We evaluated the appropriateness of the method and other variables used, tested the application of the method and other variables used, as well as tested the accuracy of data used with respect to the method and other variables;

We obtained and evaluated valuations from the Company’s paid third-party valuation specialists, as well obtained and evaluated other publicly available market data, and compared said values to the aggregate amounts owed by borrows, for indication of loan losses;

We evaluated managements significant judgments applied in determining whether indicators of impairment were present, with respect to the Company’s loan portfolio and the underlying collateral, by obtaining evidence to corroborate such judgments and searching for evidence contrary to such judgments, which included consideration of evidence obtained after the balance sheet date but before the issuance of the report.

We have served as the Company’s auditor since 2015.

/s/ Hoberman & Lesser CPA’s, LLP

Hoberman & Lesser CPA’s, LLP

New York , New Y or k

New York , New York

March 30, 2023

SACHEM CAPITAL CORP.

BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

December 31, 2022

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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

Security deposits held

Accounts payable and accrued liabilities

Advances from borrowers

Deferred revenue

Notes payable

Accrued interest

Total liabilities

16 unchanged sentences

SACHEM CAPITAL CORP.

STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Interest income from loans

Investment income

Investment gain (loss), net

Income from partnership investments

Gain on sale of investment securities

Origination fees, net

Late and other fees

Processing fees

Rental income, net

Origination and modification fees, net

Fee and other income

Unrealized losses on investment securities

( 2,963,760 )

Total revenue

1 unchanged sentence

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

Loss on sale of real estate

Loss (Gain) on sale of real estate

Impairment loss

2 unchanged sentences

( 3,687,062 )

( 1,853,855 )

Net income attributable to common shareholders

Other comprehensive (loss) income

Unrealized (loss) gain on investment securities

Other comprehensive loss

Unrealized gain (loss) on investment securities

Comprehensive income

3 unchanged sentences

SACHEM CAPITAL CORP.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

3 unchanged sentences

( 2,890,969 )

Offering costs - ATM

Issuance of Preferred Stock, Net of expenses

Issuance of Common Stock, Net of expenses

Exercise of warrants

Stock based compensation

Unrealized gain on marketable securities

Dividends paid on Common Stock

Unrealized loss on investments

Dividends paid on Common shares

( 9,638,722 )

Dividends paid on Series A Preferred Stock

( 1,853,855 )

Dividends declared and payable

6 unchanged sentences

Issuance of Common Stock, net of expenses

Acquisition of Urbane New Haven assets

Exercise of warrants

Stock based compensation

Unrealized loss on marketable securities

Dividends paid on Common Stock

Unrealized loss on investments

Dividends paid on Common shares

( 14,882,122 )

Dividends declared and payable

( 14,882,122 )

Dividends paid on Series A Preferred Stock

( 3,687,062 )

Dividends paid on Preferred Stock

( 3,687,062 )

Accrued Dividends

( 5,342,160 )

Net income for the year ended December 31, 2022

3 unchanged sentences

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

CONSOLIDATED STATEMENTS OF CASH FLOW

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net

cash provided by operating activities:

Amortization of deferred financing costs and bond discount

3 unchanged sentences

Impairment loss

Loss on sale of real estate

Gain on sale of marketable securities

(Gain) Loss on sale of real estate

Unrealized loss on investment securities

Gain on sale of investment securities

Changes in operating assets and liabilities:

2 unchanged sentences

( 2,616,200 )

Other receivables

( 1,873,578 )

Other assets - miscellaneous

( 3,599,779 )

Due from borrowers

1 unchanged sentence

( 1,645,353 )

Prepaid expenses

Deposits on property and equipment

Accrued dividends payable

( 1,414,560 )

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

Advances from borrowers

( 5,173,950 )

Total adjustments

( 7,760,291 )

NET CASH PROVIDED BY OPERATING ACTIVITIES

6 unchanged sentences

( 24,775,342 )

Proceeds from sale of real estate owned

Acquisitions of and improvements to real estate owned

( 6,055,838 )

( 1,811,980 )

Proceeds from sale of real estate owned

Acquisitions of and improvements to real estate owned, net

Purchase of property and equipment

( 1,581,350 )

Security deposits held

3 unchanged sentences

Principal collections on mortgages receivable

Costs in connection with investment activities

Other assets - pre-offering costs

NET CASH USED FOR INVESTING ACTIVITIES

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from line of credit

Net proceeds from (repayment of) line of credit

( 29,590,137 )

Net proceeds from repurchase facility

1 unchanged sentence

Repayment of mortgage payable

Principal payments on mortgage payable

Principal payments on notes payable

Accounts payable and accrued liabilities - principal payments on other notes

Dividends paid on Common Stock

3 unchanged sentences

( 3,687,062 )

( 1,853,855 )

Financings costs incurred

Proceeds from other loans

Repayment of other loans

5 unchanged sentences

( 1,879,463 )

NET CASH PROVIDED BY IN FINANCING ACTIVITIES

NET INCREASE IN CASH AND CASH EQUIVALENTS

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 18,225,800 )

CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS - END OF YEAR

CASH AND CASH EQUIVALENTS - END OF PERIOD

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

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

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Dividends declared and payable

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the year ended December 31, 2020 amounted to $ 1,553,103 .

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the year ended December 31, 2021 amounted to $ 685,763 .

Gain on real estate acquired in lieu of foreclosure during the year ended December 31, 2021 amounted to $ 273,610 .

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the years ended December 31, 2022 and 2021 amounted to $ 1,376,733 and $ 685,700 , respectively.

Additionally, property and equipment, goodwill, and intangibles acquired in connection with the acquisition from Urbane New Haven, LLC’s assets for a purchase price of 300,000 common shares of the Company during the period ended December 31, 2022 amounted to $ 996,000 .

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

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Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation of the consolidated 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 prior reporting results, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions.

1 unchanged sentence

Cash and Cash Equivalents

We consider all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents.

We maintain our cash and cash equivalents at financial institutions.

The 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 combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit.

We believe that the risk is not significant.

The Company does not believe that the risk is significant.

Investment Securities

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents.

The fair values of these investments approximate their carrying values.

Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method.

Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income.

Fair value is calculated based on publicly available market information or other estimates determined by management.

If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost.

To determine credit losses, we may employ a systematic methodology that considers available quantitative and qualitative evidence.

In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee.

If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in net income and a new cost basis in the investment is established.

If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

Equity investments with readily determinable fair values are measured at fair value.

Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

impairments (referred to as the measurement alternative).

We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.

Changes in value are recorded in net income.

Allowance for Loan Loss

9 unchanged sentences

● quoted prices for identical or similar assets or liabilities in inactive markets;

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

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

8 unchanged sentences

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.

Renovation of the building was completed in the first quarter of 2023 and the Company relocated its operations to the new building in March 2023.

The building was not being depreciated in 2022.

Real Estate Owned

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Consolidations

5 unchanged sentences

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.

Goodwill is not amortized, but rather tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment.

Goodwill at December 31, 2022 represents the excess of the consideration paid over the fair value of net assets acquired from Urbane New Haven, LLC in October 2022.

In testing goodwill for impairment, we follow FASB ASC 350, “Intangibles—Goodwill and Other”, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill.

If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit.

However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill.

Deferred Financing Costs

4 unchanged sentences

Generally, the Company’s loans provide for interest to be paid monthly in arrears.

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

Interest income not accrued at December 31, 2021 and collected prior to the issuance of this report is included in 2021 income.

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.

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.

However, interest income not accrued at December 31, 2022, but collected prior to the issuance of this report is included in income for the year ended December 31, 2022.

Origination, modification fee and other 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 FASB ASC 310.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

6 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 has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”).

In general, a TRS may hold assets that the company cannot hold directly and generally may engage in any real estate or non-real estate related business.

The TRSs generate income, resulting in federal and state income tax liability for these entities.

The Company does not expect to incur any corporate federal income tax liability outside of the TRSs, as we believe we have maintained our qualification as a REIT.

During the year ended December 31, 2022 and 2021, the Company’s TRSs recognized no provisions for federal income tax or state, local and franchise taxes on the Company’s consolidated statements of operations.

During the year ended December 31, 2022 and 2021, there were no recognized provisions for federal income tax nor state, local and franchise tax.

The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting.

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.

1 unchanged sentence

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of December 31, 2021 and 2020.

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

Earnings Per Share

4 unchanged sentences

Recent Accounting Pronouncements

In May 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-05, “ Financial Instruments— Credit Losses (Topic 326):

Targeted Transition Relief, ” which requires that entities use a new forward looking “ expected loss ” model that, generally, will result in the earlier recognition of an allowance for credit losses.

This ASU also allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments.

” However, after beginning to implement the various key provisions of this ASU, and recognizing the complexities and challenges required, we determined to take advantage of our status as an emerging growth company, which allows us to defer the adoption of this ASU until our year ended December 31, 2023.

In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

” This ASU modifies ASC 740 to remove certain exceptions and adds guidance to reduce complexity in certain areas.

For companies that file with the Securities and Exchange Commission, the standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The adoption of this guidance did not have a material impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform:

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying U.S.

GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848):

Scope.” ASU 2021-01 amends ASU 2020-04 and focuses on refining accounting relief for modifications made to certain derivatives and hedging contracts, such as interest rate swaps.

The Company believes that neither the adoption of ASU 2020-04 nor the adoption of ASU 2021-01 will have a material impact on its financial statements as it does not have any hedging relationships with respect to its LIBOR referenced credit facility.

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments-Credit Losses (FASB ASC Topic 326), Troubled Debt Restructurings and Vintage Disclosures."

ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the current expected credit loss ("CECL") model.

The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty.

In addition, the amendments require a public business entity to disclose current-period gross writeoffs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

This guidance is effective for fiscal years

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

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

beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

The Company plans to adopt this new guidance by the required date and does not anticipate that this update will have a material impact on its consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 was issued to (1) to clarify the guidance in FASB ASC Topic 820, “Fair Value Measurement”, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with FASB ASC Topic 820.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is evaluating the accounting and disclosure requirements of ASU 2022-03 and plans to adopt this new guidance on January 1, 2023.

The Company does not anticipate that this update will have a material impact on its consolidated financial statements.

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

Reclassifications

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

Fair Value Measurement

3 unchanged sentences

Stocks and ETF's

Debt securities

Total liquid investments

2 unchanged sentences

Stocks and ETF's

Debt securities

Total liquid investments

1 unchanged sentence

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

Stocks and ETFs:

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Stocks and ETFs(level 1 and 2):

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

Mutual funds:

Mutual funds(level 1 and 2):

Valued at the daily closing price reported by the fund.

3 unchanged sentences

The mutual funds held by the Company are deemed to be actively traded.

Debt securities :

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

Real estate owned:

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

See Note 5 for the roll forward of real estate owned – level 3 assets.

Impact of Fair Value of AFS Securities on OCI

The carrying value of the Company’s financial instruments approximates fair value genrally due to the relative short-term nature of such instruments.

Our other financial assets and financial liabilities have fair value that approximate their carrying value.

The following table presents the impact of the Company's Available-For-Sale (AFS) securities - debt securities on its Other Comprehensive Income (OCI) for the years ended December 31, 2022 and 2021:

OCI from AFS securities – debt securities:

Unrealized (losses) on AFS-debt securities at beginning of period

Reversal of losses from unrealized to realized

Unrealized (losses) on securities available-for-sale – debt securities

Change in OCI from AFS securities – debt securities

Balance at end of period

Mortgages Receivable

5 unchanged sentences

For the years ended December 31, 2022 and 2021, the aggregate amounts of loans funded by the Company were $ 300,277,303 and $ 251,832,318 , respectively, offset by principal repayments of $ 131,840,244 and $ 115,147,409 , respectively.

As of December 31, 2022, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 27,315,000 with stated interest rates ranging from 5.0 % to 14.2 %, and a default interest rate for non-payment of up to 18 %.

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

As of December 31, 2021, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 19,535,000 with stated interest rates ranging from 5.0 % to 14.2 %, and a default interest rate for non-payment of 18 %.

At December 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.

4 unchanged sentences

December 31, 2022

As of December 31, 2021, the following is the maturities of mortgages receivable for the years ending December 31:

At December 31, 2021, of the 520 mortgage loans in the Company’s portfolio, sixteen were the subject of foreclosure proceedings.

The following is the maturities of mortgages receivable as of December 31:

2022 and prior

At December 31, 2022, of the 444 mortgage loans in the Company’s portfolio, 40 were the subject of foreclosure proceedings.

The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of December 31, 2022 was approximately $ 24.0 million.

In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan.

At December 31, 2020, of the 495 mortgage loans in the Company’s portfolio, sixteen were the subject of foreclosure proceedings.

The aggregate outstanding principal balance of these and the accrued but unpaid interest and borrower charges as of December 31, 2020 was approximately $ 3.1 million.

At December 31, 2021, of the 520 mortgage loans in the Company’s portfolio, 16 were the subject of foreclosure proceedings.

The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of December 31, 2021 was approximately $ 4.4 million.

In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan.

2 unchanged sentences

As of December 31, 2022 and 2021, real estate owned totaled $ 5,216,149 and $ 6,559,010 , respectively, with no valuation allowance in either year.

During the year ended December 31, 2021 the Company recorded an impairment loss of $ 719,000 compared to an impairment loss of $ 795,000 in 2020.

As of December 31, 2021, real estate owned included $ 786,302 of real estate held for rental and $ 5,772,708 of real estate held for sale.

As of December 31, 2020, real estate owned included $ 1,393,398 of real estate held for rental and $ 7,468,211 of real estate held for sale.

During the year ended December 31, 2022, the Company’s real estate owned portfolio recorded an impairment loss of $ 799,909 compared to an impairment loss of $ 719,000 in 2021.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

The following table presents the activity of the Company’s real estate owned for the years ended December 31, 2022 and 2021:

Real estate owned at beginning of period

Transfers to real estate owned

Charges and improvements to real estate owned

Proceeds from sale of real estate owned

( 2,090,879 )

( 2,399,557 )

Impairment of real estate owned

Gain (Loss) on sale of real estate owned

Balance at end of period

As of December 31, 2022, real estate owned included $ 801,394 of real estate held for rental and $ 4,414,755 of real estate held for sale.

As of December 31, 2021, real estate owned included $ 786,302 of real estate held for rental and $ 5,772,708 of real estate held for sale.

Properties Held for Sale

During the year ended December 31, 2022, the Company sold five properties held for sale and recognized an aggregate gain of $ 44,752 .

During the year ended December 31, 2021, the Company sold ten properties held for sale and recognized an aggregate loss of $ 165,915 .

During the year ended December 31, 2020, the Company sold two properties held for sale and recognized an aggregate loss of $ 7,218 .

Properties Held for Rental

6 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 years ended December 31, 2021 and 2020, the 401(k) Plan expense was $ 64,322 and $ 47,164 , respectively.

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

December 31, 2022

December 31, 2021

Prepaid expenses

Other receivables

Intangible asset - trade name

Deferred financing costs, net

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Line of Credit, Mortgage Payable, and Churchill Facility

4 unchanged sentences

Mortgage Payable

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

The New Haven 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 New Haven Mortgage will be due and payable on a monthly basis.

All payments under the New Haven 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 New Haven Mortgage is a non-recourse loan, secured by a first mortgage lien on each of our current corporate headquarters, located at 698 Main Street, Branford, Connecticut, and our future corporate headquarters, located at 568 East Main Street, Branford, Connecticut.

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

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

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

In 2021, the Company obtained a $ 1.4 million adjustable-rate mortgage loan from New Haven Bank (the “NHB Mortgage”) of which $ 750,000 was funded at closing and remained outstanding as of December 31, 2022.

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

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

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

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

The interest rate was to 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 was a non-recourse loan, secured by a first mortgage lien on each of the properties, located at 698 Main Street, Branford, Connecticut, and 568 East Main Street, Branford, Connecticut.

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

The NHB Mortgage was refinanced on February 28, 2023.

See note 22 – Subsequent Events.

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 90-day LIBOR plus (b) 3 %- 4 %, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time.

On November 18, 2022, the Facility was amended to replace the 90-day LIBOR with the 90-day SOFR as the new benchmark rate.

As of December 31, 2022 the effective rate charged under the Facility was 8.52 %.

5 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 December 31, 2021, the total amount outstanding under the Facility was $ 19,087,189 and the Company estimates that it had approximately $ 6.3 million of additional availability under the Facility.

At December 31, 2022, the total amount outstanding under the Facility was $ 42,533,466 .

The collateral pledged to Churchill at December 31, 2022 was 32 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 77.8 million.

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Each of the NHB Mortgage and the Facility contain cross-default provisions, as defined.

Financing Transactions

During the year ended December 31, 2022, the Company generated approximately $ 162,419,000 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) $ 40,250,000 from the sale of its 8.00 % unsecured, unsubordinated notes due September 30, 2027;

(iv) approximately, $ 40,294,000 from the sale of 7,879,907 common shares in “at-the-market” offerings.

The net proceeds from the sale of these securities, approximately $ 157.6 million, were used primarily to fund new mortgage loans, for working capital and general corporate purposes.

During the year ended December 31, 2021, the Company generated approximately $ 156.8 million of gross proceeds from the sale of its securities as follows:

3 unchanged sentences

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 year ended December 31, 2020, the Company generated approximately $ 56.1 million (after taking into account the original issue discount) of gross proceeds from the sale of its securities as follows:

(iv) $ 28,363,750 from the sale of its 7.75 % unsecured, unsubordinated notes due September 30, 2025 in September and October 2020;

(v) $ 27,720,000 from the sale of additional September 2025 Notes in December 2020.

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

Notes Payable

At December 31, 2022, the Company had an aggregate of $ 288,401,750 of unsecured, unsubordinated notes payable outstanding, net of $ 8,352,597 of deferred financing costs (collectively, the “Notes”).

The Notes were issued in four series:

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 December 30, 2024 (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").

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”, and “SCCD”, respectively.

(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 “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”);

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(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");

(vii) 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 and the December 2026 Notes will be callable at any time after December 30, 2023.

Other income of the Company includes the following:

Income from borrower charges

Lender, modification and extension fees

In-house legal fees

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.

The following are the future principal payments on the notes payable as of December 31, 2022:

Year ending December 31,

Total principal payments

Deferred financing costs

( 8,352,597 )

Total notes payable, net of deferred financing costs

The estimated amortization of the deferred financing costs as of December 31, 2022 is as follows:

Year ending December 31,

Total deferred costs

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Accounts Payable and Accrued Liabilities

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

December 31, 2022

December 31, 2021

Accounts payable and accrued expenses

Accrued interest

Fee and Other Income

For the years ended December 31, 2022 and 2021, fee and other income consists of the following:

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.

These payments are amortized for financial statement purposes over the life of the loan and will be recorded as income as follows:

Origination, Modification Fees and other

Loan origination, modification and other fees generally range from 1 %- 3 % 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 December 31, 2022, deferred revenue was $ 4,360,452 , which will be recorded as income as follows:

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 generally recognized in full at the time of repayment.

If the borrower is entitled to a partial refund of the origination fee collected in connection with a prepaid loan, the Company credits the refundable portion against the balance due on the loan.

For the years ended December 31, 2021 and 2020, approximately $ 930 and $ 55,639 of origination fees were refunded in connection with prepaid loans.

For the years ended December 31, 2022 and 2021, approximately $- 0 - and $ 930 of origination fees were refunded in connection with prepaid loans, respectively.

Employment Agreements

1 unchanged sentence

(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;

(ii) a base salary of $ 260,000 ,

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

which was increased in April 2018, April 2021 and April 2022 to $ 360,000 , $ 500,000 and $ 750,000 , respectively;

(iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors;

3 unchanged sentences

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

In July 2020, the Company entered into an employment agreement with Peter Cuozzo, the material terms of which are as follows:

(i) the agreement can be terminated by either party at any time upon delivery of written notice to the other party;

(ii) a base salary of $ 250,000 per year;

In April 2021, the Company granted 89,928 restricted common shares (having a market value of approximately $ 500,000 ) to Mr.

One -third of such shares vested on each of January 1, 2022 and 2023 , and the remaining one -third will vest on January 1, 2024.

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

One -third of such shares vested on January 1, 2023, and an additional one -third will vest on each of January 1, 2024 and 2025 .

In February 2023, the Company granted 130,890 restricted common shares (having a market value of approximately $ 500,000 ) to Mr.

One -third of such shares will vest on each of January 1, 2024, 2025 and 2026 .

As of December 31, 2022, there were 158,377 restricted common shares that remain unvested.

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;

1 unchanged sentence

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

In February 2023, the Company granted 8,000 restricted common shares (having a market value of approximately $ 30,000 ) to Mr.

One -third of such shares vested on February 9, 2023, and an additional one -third will vest on each of Febuary 9, 2024 and 2025 .

Unfunded Commitments

At December 31, 2022, the Company had future funding obligations totaling $ 114,556,794 , which can be drawn by the borrowers when the conditions relating thereto have been satisfied.

The unfunded commitments will be will be funded from loan payoffs and additional drawdowns under existing and future credit facilities and proceeds from sale of debt and equity securities.

In the normal course of its business, the Company is named as a party-defendant because it is a mortgagee having interests in real properties that are being foreclosed upon, primarily resulting from unpaid property taxes.

The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists.

At December 31, 2021, there were nine such properties, representing approximately $ 810,000 of mortgages receivable.

At December 31, 2022, there was one such property.

The unpaid principal balance on the property that is subject to this proceeding was approximately $ 105,000 .

Related Party Transactions

1 unchanged sentence

The underwriting process on these loans adheres to prevailing Company policy.

The terms of such loans, including the interest rate,

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio.

The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio.

As of December 31, 2022, and 2021, loans to known shareholders totaled $ 23,545,094 and $ 16,629,844 , respectively.

1 unchanged sentence

During the years ended December 31, 2022 and 2021, the wife of the Company’s chief executive officer was employed by the Company as its director of finance.

She received a salary of $ 120,000 for 2021 and $ 108,000 for 2020.

During the year ended December 31, 2021, the Company hired the daughter of the Company’s chief executive officer to perform certain internal audit and compliance services.

For 2021, she received compensation of $ 10,962 .

For 2022 and 2021, she received compensation of $ 63,168 and $ 120,000 , respectively.

She retired in the third quarter of 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 2022 and 2021, she received compensation of $ 141,652 and $ 10,962 , respectively.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Concentration of Credit Risk

12 unchanged sentences

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 .

At December 31, 2021, all of the IPO Warrants were outstanding .

The IPO Warrants expired 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 .

At December 31, 2021 and 2020, 142,969 and 171,093 warrants were outstanding, respectively.

In October 2021, warrants to purchase 28,124 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.

On October 24, 2022, all the unexercised warrants expired.

Stock-Based Compensation and Employee Benefits

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

Compensation Committee.

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 December 31, 2022 was 1,188,468 .

In 2020, the Company issued 7,500 restricted common shares to its independent directors.

One-third of such shares ( i.e ., 2,500 ) vested immediately upon issuance;

one-third vested in 2021;

and one third will vest in 2022.

No other awards were made under the Plan in 2020.

In 2021, the Company issued 15,000 restricted common shares to its independent directors.

One-third of such shares ( i.e.

, 5,000 ) vested immediately upon issuance;

one-third will vest in 2022;

and one third will vest in 2023.

Also in 2021, the Company granted 89,928 restricted common shares (having a market value of approximately $ 500,000 ) to its chief executive officer and 4,753 restricted common shares (having a market value of approximately $ 25,000 ) to its then executive vice president and chief operating officer.

None of the restricted shares granted to the Company’s officers vested in 2021.

One-third of such shares vested on January 1, 2022, and one-third will vest on each of January 1, 2023 and 2024.

However, in connection with his retirement from the Company in 2022, the Company waived the restrictions on the 4,753 common shares granted to its executive vice president and chief operating officer.

Stock based compensation for the years ended December 31, 2021 and 2020 was $ 191,428 and $ 16,429 , respectively .

During the years ended December 31, 2022 and 2021, the Company granted an aggregate of 163,967 and 109,681 restricted common shares under the Plan, respectively.

With respect to the restricted common shares granted in 2022, (i) 20,598 shares vested immediately on the date of grant, an additional 20,597 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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

granted in 2021, (i) 29,976 shares vested on each of January 1, 2022 and January 1, 2023 and an additional 29,976 shares will vest on January 1, 2024, (ii) 3,750 shares vested immediately on the date of grant, an additional 3,750 shares will vest on each of the first, second and third anniversaries of the date of grant and (iii) 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.

As of December 31, 2022, there were 47,788 restricted common shares that remain unvested, not including the unvested shares disclosed in footnote 12.

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 years ended December 31, 2022 and 2021, the 401(k) Plan expense was $ 92,831 and $ 47,164 , respectively.

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.

On December 6, 2021, the Company filed a second 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 year ended December 31, 2021, the Company sold an aggregate of 10,490,188 common shares under these prospectuses and realized net proceeds of $ 56,003,751 in connection therewith.

At December 31, 2021, no common shares were available for sale under the first prospectus supplement and $ 38,017,386 of common shares were available for future sale under the second prospectus supplement.

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 19.)

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.

During the year ended December 31, 2022, the Company sold an aggregate of 7,879,907 common shares under this prospectus and realized net proceeds of $ 39,487,960 in connection therewith.

In 2021, the Company sold an aggregate of 10,490,188 common shares and realized net proceeds of approximately $ 56.0 million.

The shares were sold to the public pursuant to at-the-market offerings.

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 year ended December 31, 2022, the Company did not sell any shares of Series A Preferred Stock and sold approximately $ 2.0 million of its common shares under this prospectus.

At December 31, 2022, approximately $ 71.3 million of common shares and $ 25 million of Series A Preferred Stock were available for future sale under the ongoing “at-the market” offering.

Partnership Investments

As of December 31, 2021, the Company had invested $ 6.7 million in three limited liability companies managed by a 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 December 31, 2022, the Company had invested an aggregate of approximately $ 30.8 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.

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.

The Company invested $ 4 million in one partnership, for which it received a membership interest.The Company’s withdrawal from the partnership may only be granted by the manager.

For the year ended December 31, 2021, the Company received distributions of $142,000 from this partnership.

The Company’s partnership investments can be categorized into two fund structures, fund investments and direct loan investments.

The fund investments primarily include investments in two funds that invest in mortgage loans to borrowers.

The direct loan investments are through two partnerships whereby the Company directly invests in the participation of individual loans to borrowers.

Both the fund and direct loan structure primarily invest in mortgage loans to borrowers with a majority of the deals being leveraged by a bank.

These loans are primarily two to three year collateralized mortgage loans, often with contractual extension options for the borrowers of an additional year.

The Company receives quarterly dividends from the partnerships that are composed of a preferred return, return of capital and promote depending on each loans waterfall calculation, as defined by the loan agreements.

The Company cannot redeem its fund investment at any time, its investment will be repaid as the underlying loans are repaid.

The Company expects to be repaid on its current investments by December 31, 2026.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

In December 2021, the Company invested an aggregate of $ 2.7 million in two additional investment partnerships, which are managed by an affiliate of the manager of the partnership described in the paragraph above.

In connection therewith, the Company received a 49 % membership interest in each entity.

The Company accounts for these investments at cost.

For the year ended December 31, 2022 and 2021, the partnerships generated $ 1,809,564 and $ 142,026 , respectively, of income for the Company.

At December 31, 2022, the Company had unfunded partnership commitments totaling approximately $ 4.0 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 December 31, 2021, the Company had incurred approximately $ 306,000 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.

As of December 31, 2022, the Company had incurred approximately $ 452,000 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.

2 unchanged sentences

Series A Preferred Stock

On June 25, 2021, the Company filed a Certificate of Amendment with the Department of State of the State of New York to designate 1,955,000 shares of the Company’s authorized preferred shares, par value $ 0.001 per share, as shares of Series A Preferred Stock with the powers, designations, preferences and other rights as set forth therein (the “Certificate of Amendment”).

On June 25, 2021, the Company filed a Certificate of Amendment with the Department of State of the State of New York to designate 1,955,000 shares of the Company’s authorized preferred shares, par value $ 0.001 per share, as shares of Series A Preferred Stock (the “Series A Preferred Stock”) with the powers, designations, preferences and other rights as set forth therein (the “Certificate of Amendment”).

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

5 unchanged sentences

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

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 .

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

Acquisition of Urbane New Haven, LLC Assets

In October 2022, the Company acquired substantially all the business assets of Urbane New Haven, LLC, a premier real estate firm specializing in all phases of development and construction, including architecture, design, contracting, and marketing.

The purchase price for the Urbane New Haven, LLC’s assets was 300,000 of the Company’s common shares.

An independent third-party valuation was performed in accordance with FASB ASC 805 and the fair value of the shares was deemed to be $ 996,000 .

The fair value was allocated $ 474,600 to fixed assets, $ 391,000 to goodwill (which is deductible for tax purposes) and $ 130,400 to the trade name.

In accordance with the asset purchase agreement, under certain circumstances the Company will be required to pay the seller 20 % of the net proceeds, as defined, of certain real estate development projects completed by the Company until such time that the principal former owner is no longer employed by the Company.

Any future payments will be expensed and included in net income.

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 .

Subsequent Events

On January 10, 2023, the Company paid a dividend of $ 0.13 per share, or $ 5,342,160 in the aggregate, to common shareholders of record as of December 31, 2022.

On January 14, the Company’s executive vice president and chief operating officer retired.

On March 14, 2022, the Company sold a property classified as real estate held for sale at December 31, 2021 receiving $ 622,737 in net proceeds.

From January 3, 2022 through March 2, 2022, the Company sold an aggregate of 2,730,725 common shares under its at-the-market offering facility realizing gross proceeds of approximately $ 16.0 million, all of which settled by March 4, 2022.

On January 10, 2023, William C.

Haydon, resigned from his position as the Chief Investment Officer, Chief Credit Officer and Director Investor Relations of the Company.

From January 3, 2023 through March 30, 2023, the Company sold an aggregate of 2,479,798 common shares under its at-the-market offering facility, realizing gross proceeds of approximately $ 9.4 million.

Additionally, over the same period, the Company sold shares of its Series A Preferred Stock having an aggregate liquidation preference of $ 154,675 under its at-the-market offering facility.

The gross proceeds from the sale of these shares were $ 139,500 representing a discount of approximately 10 % from the liquidation preference.

In February 2023, the Company granted an aggregate of 44,500 restricted common shares (having a market value of approximately $ 141,000 ) to its employees.

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

On February 28, 2023, the Company refinanced its then existing $ 1.4 million adjustable-rate mortgage loan, obtained in November 2021 from New Haven Bank with a new $ 1.66 million adjustable-rate mortgage loan from New Haven Bank.

The new loan accrues interest at an initial rate of 5.75 % per annum for the first 60 months .

The interest rate will be adjusted on each of March 1, 2028 and March 1, 2033 to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 1.75 %.

Beginning on April 1, 2023 and through March 1, 2038, principal and interest will be due and payable on a monthly basis.

All payments under the new loan are amortized based on a 20-year amortization schedule.

The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038.

The new loan is a non-recourse obligation, secured primarily by a first mortgage lien on the properties located 698 Main Street, Branford, Connecticut and 568 East Main Street, Branford, Connecticut, which are owned by the Company.

On March 2, 2023, the Company entered into a Credit and Security Agreement (the “Credit Agreement”), with Needham Bank, a Massachusetts co-operative bank, as the administrative agent (the “Administrative Agent”) for the lenders party thereto (the “Lenders”) with respect to a $ 45 million revolving credit facility (the “Credit Facility”).

Under the Credit Agreement, the Company also has the right to request an increase in the size of the Credit Facility up to $ 75 million, subject to certain conditions, including the approval of the Lenders.

Loans under the Credit Facility accrue interest at the greater of (i) the annual rate of interest equal to the “prime rate,” as published in the “Money Rates” column of The Wall Street Journal minus one-quarter of one percent ( 0.25 %), and (ii) four and one-half percent ( 4.50 %).

All amounts borrowed under the Credit Facility are secured by a first priority lien on virtually all

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

On March 9, 2022, the Company sold $ 50,000,000 aggregate principal amount of 6.00 % notes due March 30, 2027 (the “2027 Notes”) and realized net proceeds of approximately $ 48.2 million.

The 2027 Notes are unsecured, unsubordinated obligations and rank equally in right of payment with all our existing and future senior unsecured and unsubordinated indebtedness, including the Notes (see Note 9 – Notes Payable) but are effectively subordinated in right of payment to all our existing and future secured indebtedness (including indebtedness that is initially unsecured but to which we subsequently grant a security interest), and trade on the NYSE American under the ticker symbol “SCCE.” The 2027 Notes bear interest at the rate of 6.00 % per annum beginning on March 9, 2022, which will be payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year they are outstanding.

The first interest payment date will be June 30, 2022.

The unpaid principal balance of the 2027 Notes and all accrued but unpaid interest thereon is payable in full on March 30, 2027.

On February 9, 2022, all the outstanding warrants expired without being exercised.

On March 30, 2022, the Company was notified that the underwriter of the 2027 Notes offering is exercising its over-allotment option in part, and will purchase an additional $ 1,875,000 principal amount of the 2027 Notes.

Closing is scheduled for April 4, 2022.

Management has evaluated subsequent events through March 30, 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.

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 December 31, 2021, the COVID-19 pandemic is ongoing.

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

In 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.

Company’s assets.

Assets excluded from the lien include real estate owned by the Company (other than real estate acquired pursuant to foreclosure) and mortgages sold to Churchill under the Facility.

The Credit Facility expires March 2, 2026 but the Company has a right to extend the term for one year upon the consent of the Administrative Agent and the Lenders, which consent cannot be unreasonably withheld, and so long as it is not in default and satisfies certain other conditions.

All outstanding revolving loans and accrued but unpaid interest are due and payable on the expiration date.

The Company may terminate the Credit Facility at any time without premium or penalty by delivering written notice to the Administrative Agent at least ten ( 10 ) days prior to the proposed date of termination.

Management has evaluated subsequent events through March 30, 2023 the date on which the consolidated financial statements were available to be issued.

Based on the evaluation, no adjustments were required in the accompanying consolidated 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-K

Item 9A. Controls and Procedures