What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-15 compared with 2022-11-10 · 427 added, 292 removed, 356 unchanged (67% of the section changed)

1 unchanged sentence

SACHEM CAPITAL CORP.

BALANCE SHEETS

September 30, 2022

CONSOLIDATED BALANCE SHEETS

March 31, 2023

December 31, 2022

1 unchanged sentence

Investment securities

Mortgages receivable

Interest and fees receivable

Due from borrowers

Mortgages receivable, net

Interest and fees receivable, net

Due from borrowers, net

Real estate owned

15 unchanged sentences

5,000,000 shares authorized;

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

2,903,000 shares designated as Series A Preferred Stock;

1,909,187 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Common shares - $ 0.001 par value;

200,000,000 shares authorized;

40,080,672 and 32,730,004 issued and outstanding

43,756,724 and 41,093,536 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Paid-in capital

7 unchanged sentences

SACHEM CAPITAL CORP.

STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Nine Months Ended

September 30,

Interest income from loans

Investment gains, net

Investment gain, net

Income from partnership investments

1 unchanged sentence

Fee and other income

Unrealized losses on investment securities

( 1,076,836 )

Unrealized gain (loss) on investment securities

( 1,052,230 )

3 unchanged sentences

Compensation, fees and taxes

Other expenses

General and administrative expenses

Loss (Gain) on sale of real estate

Other expenses

(Gain) Loss on sale of real estate

Allowance for credit losses

Impairment loss

Total operating costs and expenses

Preferred stock dividend

( 2,765,297 )

Series A Preferred Stock dividend

Net income attributable to common shareholders

Other comprehensive loss

Unrealized gain (loss) on investment securities

Unrealized gain on investment securities

Comprehensive income

3 unchanged sentences

SACHEM CAPITAL CORP.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Preferred Stock

Comprehensive

Balance, July 1, 2022

( 1,583,202 )

Issuance of common shares, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid on Series A Preferred Stock

Dividends paid on common shares

Balance, January 1, 2023

( 7,995,143 )

Cumulative effect of change in

accounting principle - Adoption of ASU 2016-13 (Note 2)

( 2,489,574 )

Net income for the period ended September 30, 2022

Balance, September 30, 2022

( 2,489,574 )

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

Preferred Stock

Comprehensive

Beginning balance, July 1, 2021

Issuance of Series A Preferred Stock, net of expenses

1 unchanged sentence

Stock based compensation

Unrealized loss on marketable securities

Dividends paid common shares

( 3,336,756 )

Unrealized gain on investments

Dividends paid on Series A Preferred Stock

Net income for the period ended September 30, 2021

Balance, September 30, 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

Net income for the period ended March 31, 2023

Balance, March 31, 2023

( 6,289,257 )

FOR THE THREE MONTHS ENDED MARCH 31, 2022

Preferred Stock

5 unchanged sentences

Stock based compensation

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Dividends paid on Series A Preferred Stock

( 2,765,297 )

Dividends paid on common shares

( 9,580,187 )

Net income for the period ended September 30, 2022

Balance, September 30, 2022

( 2,705,252 )

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

Preferred Stock

Comprehensive

Beginning balance, January 1, 2021

( 2,890,969 )

Issuance of Series A Preferred Stock, net of expenses

Issuance of common shares, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Dividends paid on common shares

( 6,123,415 )

Net income for the period ended March 31, 2022

Balance, March 31, 2022

( 1,562,750 )

Dividends paid on Series A Preferred Stock

Net income for the period ended September 30, 2021

Balance, September 30, 2021

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

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

Nine Months Ended

September 30,

CONSOLIDATED STATEMENTS OF CASH FLOW

Three Months Ended

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

Write-off of deferred financing costs

Depreciation expense

Stock based compensation

Allowance for credit losses

Impairment loss

(Gain) loss on sale of real estate

Unrealized loss on investment securities

Loss on sale of investment securities

Debt Forgiveness

Unrealized(gain) loss on investment securities

(Gain) loss on sale of investment securities

Changes in operating assets and liabilities:

1 unchanged sentence

Interest and fees receivable

( 2,154,704 )

Other assets - other receivables

Other assets - miscellaneous

Due from borrowers

( 1,505,785 )

( 1,405,352 )

Other assets - prepaid expenses

4 unchanged sentences

Advances from borrowers

( 5,129,286 )

Total adjustments

( 2,227,013 )

NET CASH PROVIDED BY OPERATING ACTIVITIES

10 unchanged sentences

Purchase of property and equipment

( 1,292,160 )

Security deposits held

Principal disbursements for mortgages receivable

2 unchanged sentences

Principal collections on mortgages receivable

Other assets - costs in connection with SPAC offering

Other assets – pre-offering costs

NET CASH USED FOR INVESTING ACTIVITIES

5 unchanged sentences

Net proceeds from repurchase facility

Repayment of mortgage payable

Proceeds from mortgage

Accounts payable and accrued liabilities - principal payments on other notes

Dividends paid on common shares

Dividends paid on Common Stock

( 5,342,160 )

1 unchanged sentence

Dividends paid on Series A Preferred Stock

( 2,765,297 )

Financings costs incurred

Proceeds from issuance of common shares, net of expenses

10 unchanged sentences

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

Nine Months Ended

September 30,

CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)

Three Months Ended

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Interest paid

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

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the three months ended March 31, 2023 amounted to $ 1,186,663 .

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

Sachem Capital Corp.

1 unchanged sentence

The Company offers short term ( i.e.

, one to three years ), secured, non-bank loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut, New York and Florida.

The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment.

1 unchanged sentence

The Company does not lend to owner occupants.

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

The Company’s primary underwriting criteria is a conservative loan to value ratio.

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

1 unchanged sentence

Unaudited Financial Statements

The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information.

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K.

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

The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022 and the notes thereto included in the Company’s Annual Report on Form 10-K.

Results of operations for the three months ended March 31, 2023, are not necessarily indicative of the operating results to be attained in the entire fiscal year, or for any subsequent period.

Use of Estimates

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

Management bases its estimates on (a) various assumptions that consider its experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions.

Management bases its estimates on (a) various assumptions that are based on experience, (b) projections regarding future operations and (c) general financial market and local and general economic conditions.

Actual amounts could materially differ from those estimates.

4 unchanged sentences

The Company does not believe that the risk is significant.

Allowance for Loan Loss

The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, 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.

Investment Securities

The Company considers 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, the Company evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost.

If qualitative factors indicate an available for sale debt security may be credit impaired the loss is measured as the excess of carrying value over the present value of expected cash flows, limited to the excess of carrying value over fair value.

To determine credit losses, the Company may employ a systematic

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

methodology that considers available quantitative and qualitative evidence.

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

If the Company has plans to sell the security or it is more likely than not that the Company 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, the Company 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 impairments (referred to as the measurement alternative).

The Company performs 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.

Current Expected Credit Losses Allowance

The Company adopted the current expected credit loss (“CECL”) standard effective January 1, 2023 in accordance with ASU No.

The initial CECL allowance adjustment of $ 2,489,574 was recorded effective January 1, 2023 as a cumulative-effect of change in accounting principle through a direct charge to accumulated deficit on the consolidated statements of shareholders’ equity;

however, subsequent changes to the CECL allowance will be recognized in the consolidated statements of comprehensive income.

The Company records an allowance for credit losses in accordance with the CECL standard on the Company’s loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics.

This methodology replaces the probable incurred loss impairment methodology.

In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with the CECL standard, as they represent a financial asset that is subject to credit risk.

As allowed under the CECL standard the Company uses, as a practical expedient, the fair value of the collateral at the reporting date when recording the net carrying amount of the loan and determining the allowance for credit losses for loans in pending/pre-foreclosure status, as defined.

Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold.

The amount of loans in pending/pre-foreclosure as of March 31, 2023 and December 31, 2022 was approximately $ 40.6 million and $ 24.0 million, respectively.

As of March 31, 2023 and December 31, 2022, there were no such loans in pending/pre-foreclosure that required an allowance for credit loss.

The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment.

The Company utilizes a loss-rate method for estimating current expected credit losses.

The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans.

In determining the CECL allowance, the Company considers various factors including (1) historical loss experience in its portfolio, (2) loan specific losses for loans deemed collateral dependent based on excess amortized cost over the fair value of the underlying collateral, and (3) its current and future view of the macroeconomic environment.

The Company utilizes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans.

Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loans based on evaluating historical credit loss experience and making adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio.

The CECL allowance related to the principal outstanding is presented within “Mortgages receivable, net” and for unfunded commitments is within accounts payable and accrued liabilities in the Company’s consolidated balance sheets.

The CECL allowance related to the late payment fees are presented in “Interest and fees receivable” and “Due from borrowers” in the Company’s consolidated balance sheets.

As of March 31, 2023 and January 1, 2023, the CECL allowance for mortgages receivable was approximately $ 2.0 million and approximately $ 1.9 million, respectively, an increase of approximately $ 55,000 .

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

As of March 31, 2023 and January 1, 2023, the CECL allowance for interest and fees receivable was approximately $ 30,100 and approximately $ 26,100 , respectively, an increase of $ 4,000 .

As of March 31, 2023 and January 1, 2023, the CECL allowance for due from borrower was approximately $ 22,300 and $ 19,900 , respectively, an increase of approximately $ 2,400 .

As of March 31, 2023 and January 1, 2023, the CECL allowance for unfunded commitments was $ 562,000 , and approximately $ 522,000 , respectively, an increase of approximately $ 40,000 .

Fair Value Measurements

16 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 is being depreciated using the straight-line method over its estimated useful life of 40 years .

The new building was placed in service during the three months ended March of 2023.

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

MARCH 31, 2023

Consolidations

3 unchanged sentences

The Company monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.If the undiscounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

If the undiscounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets.

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

Goodwill at March 31, 2023 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, the Company follows 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 the Company chooses not to perform the qualitative assessment, then the Company compares the fair value of that reporting unit with its carrying value, including goodwill.

Deferred Financing Costs

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

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

Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 9 - Notes Payable, are being amortized over the term of the respective Notes.

3 unchanged sentences

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

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

However, interest income not accrued at March 31, 2023 but collected prior to the issuance of this report is included in income for the period ended March 31, 2023.

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

1 unchanged sentence

It made the election to be taxed as a REIT on its 2017 Federal income tax return.

The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock.

The Company’s qualification as a REIT

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock.

So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S.

2 unchanged sentences

federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification.

The Company 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 it believes it has maintained its qualification as a REIT.

During the three months ended March 31, 2023 and 2022, 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 three months ended March 31, 2023 and 2022, 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 September 30, 2022 and 2021.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying consolidated financial statements as of March 31, 2023 and 2022.

Earnings Per Share

3 unchanged sentences

The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

Investment Transactions and Related Income.

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

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

Investment securities are marked-to-market.

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

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

Recent Accounting Pronouncements

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

In June 2016, the FASB issued ASU No.

2016-13, “Measurement of Credit Losses on Financial Instruments”, (ASU 2016-13), which changes accounting requirements for the measurement and recognition of expected credit losses from an incurred or probable methodology to a current expected credit loss methodology.

Mortgages receivable, unfunded loan commitments, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are the only items currently held by the Company that are within the scope of ASU 2016-13.

The Company adopted this ASU effective January 1, 2023 and applied a modified retrospective approach through a cumulative-effect adjustment to retained earnings upon adoption.

At transition on January 1, 2023, the cumulative effect of adopting this ASU resulted in a decrease in retained earnings of $ 2,489,574 and an increase in the allowance for credit losses.

The increase in the allowance is driven by the fact that the allowance under CECL covers expected credit losses over the full expected life of the loan portfolios and also takes into account forecasts of expected future economic conditions.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments-Credit Losses” (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings (“TDR”) for creditors that have adopted the CECL standard and requires enhanced disclosures for loan modifications made to borrowers experiencing financial difficulty in the form of interest rate reductions, principal forgiveness, other-than-insignificant payment delays, or term extensions.

In addition, the new guidance requires presentation in the vintage disclosures of current-period gross write-offs by year of origination.

The amendments in this update became effective for fiscal years beginning after December 15, 2022.

This update did not have a material effect on the Company’s 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.

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

Certain amounts included in the March 31, 2022 and December 31, 2022 consolidated financial statements have been reclassified to conform to the March 31, 2023 presentation.

Fair Value Measurement

1 unchanged sentence

Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

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

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of March 31, 2023:

Stocks and ETFs

Debt securities

Total liquid investments

Real estate owned

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

Stocks and ETF’s

Debt securities

Total liquid investments

Real estate owned

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

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

Stocks and ETFs:

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.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

Impact of Fair Value of AFS Securities on OCI

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

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

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

Pursuant to ASC 326-30-50-4 and 50-5 the Company is required to disclose investment securities that have been in a continuous unrealized loss position for 12 months or more as of the balance sheet date.

As of March 31, 2023 and December 31, 2022, the Company had a continuous unrealized losses over 12 months in Available-For-Sale debt securities of approximately $ 517,000 and approximately $ 531,000 , respectively.

The Company reviewed a number of factors to assess the credit quality of the debt instruments including, but not limited to, current cash position, operating cash flow, and corporate earnings as of the most recently filed financial statements.

As such, as of March 31, 2023, the Company has concluded no such allowance for credit losses in regards to Available-For-Sale debt securities was deemed necessary.

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 three months ended March 31, 2023:

Three months Ended

Nine months Ended

September 30,

OCI from AFS securities:

Unrealized (losses) on AFS securities at beginning of period

Unrealized (losses) on securities available-for-sale

Change in OCI from AFS securities

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

Unrealized gain on securities available-for-sale – debt securities

Change in OCI from AFS securities – debt securities

Balance at end of period

Mortgages Receivable

The Company offers secured, non-bank loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut, New York and Florida.

The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties.

The Company’s lending standards typically require that the original principal amount of all mortgage receivable notes be secured by first mortgage liens on one or more properties owned by the borrower or related parties and that the maximum LTV be no greater than 70% of the appraised value of the underlying collateral, as determined by an independent appraiser at the time of the loan origination.

The Company considers the maximum LTV as an indicator for the credit quality of a mortgage note receivable.

In the case of properties undergoing renovation, the loan-to-value ratio is calculated based on the estimated fair market value of the property after the renovations have been completed.

However, the Company makes exceptions to this guideline if the facts and circumstances support the incremental risk.

These factors include the additional collateral provided by the borrower, the

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

credit profile of the borrower, the Company’s previous relationship, if any, with the borrower, the nature of the property, the geographic market in which the property is located and any other information the Company deems appropriate.

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

1 unchanged sentence

Most of the loans provide for monthly payments of interest only (in arrears) during the term of the loan and a “balloon” payment of the principal on the maturity date.

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

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

The default interest rate is generally 18 % .

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

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

At September 30, 2021, we had one borrower whose outstanding loans represented 10.2 % of the total balance of loans outstanding.

Allowance for credit losses are charged to income in amounts sufficient to maintain an allowance for credit losses inherent in the loans which are established systematically by management as of the reporting date.

Management’s estimate of expected credit losses is based on an evaluation of relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the future collectability of the reported amounts.

The Company uses static pool modeling techniques to determine the allowance for loan losses expected over the remaining life of the loans, which is supplemented by management judgment.

Expected losses are estimated for groups of accounts aggregated by geographical location.

The Company’s estimate of expected credit losses includes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans.

The Company reviews charge-off experience factors, contractual delinquency, historical collection rates, the value of underlying collateral and other information to make the necessary judgments as to credit losses expected in the portfolio as of the reporting date.

While management utilizes the best information available to make its evaluations, changes in macroeconomic conditions, interest rate environments, or both, may significantly impact the assumptions and inputs used in determining the allowance for credit losses.

The Company’s charge-off policy is based on a loan by loan review of delinquent loans.

The Company has an accounting policy to not place loans on nonaccrual status unless they are greater than 90 days delinquent.

Accrual of interest income is generally resumed when delinquent contractual principal and interest is paid or when a portion of the delinquent contractualy payments are made and the ongoing required contractual payments have been made for an appropriate period.

As of March 31, 2023 and December 31, 2022, the Company had an outstanding principal balance of $ 97,106,984 and $ 55,691,857 of loans on nonaccrual status, respectively.

The nonaccrual loans are inclusive of loans pending foreclosure.

For the three months ended March 31, 2023, $ 649,347 of interest income was recorded on nonaccrual loans.

For the three months ended March 31, 2023 and 2022, the aggregate amounts of loans funded by the Company were $ 58,883,818 and $ 88,735,230 , respectively, offset by principal repayments of $ 39,884,300 and $ 27,106,768 , respectively.

As of March 31, 2023, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 29,919,097 with stated interest rates ranging from 5.0 % to 14.2 % .

The default interest rate is generally 18 %, but could be more or less depending on state usury laws.

At March 31, 2023, and December 31, 2022, no single borrower or group of related borrowers had loans outstanding representing more than 10 % of the total balance of the loans outstanding.

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

The Company treats a loan extension as a new loan.

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

If an interest reserve is established at the time a loan is funded, accrued interest is paid out of the interest reserve and recognized as interest income at the end of each month.

If no reserve is established, the borrower is required to pay the interest monthly from its own funds.

The deferred origination, loan servicing and amendment fee income represents amounts that will be recognized over the contractual life of the underlying mortgage notes receivable.

Allowance for Credit Loss

In assessing the Allowance for Credit Losses (“CECL Allowance”), the Company considers historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment.

The Company derived an annual historical loss rate based on its historical loss experience in its portfolio, adjusted to incorporate the risks of construction lending and to reflect the Company’s expectations of the macroeconomic environment.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

The following table summarizes the activity in the CECL Allowance from adoption on January 1, 2023:

CECL Allowance

Provision for

as of December

Adoption of ASU

Allowance as of

(dollars in thousands)

March 31, 2023

Geographical Location

(1) As of December 31, 2022, amounts represent probable loan loss provisions recorded before the adoption of the ASU 2016-13.

(2) As a component of the adoption of ASU 2016-13, $ 562,000 of the CECL allowance is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable and accrued liabilities in the Company’s consolidated balance sheet.

Presented below is the Company’s loan portfolio by geographical location:

March 31, 2023

December 31, 2022

September 30, 2022

(dollars in thousands)

Carrying Value

% of Portfolio

Carrying Value

% of Portfolio

Geographical Location

Less, CECL Allowance

Carrying value, net

Presented below are the carrying values by Property Type:

March 31, 2023

December 31, 2022

(dollars in thousands)

% of Portfolio

Property Type

Less, CECL Allowance

Carrying value, net

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

The following tables allocate the carrying value of the Company’s loan portfolio based on internal credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated:

March 31, 2023

Year Originated (1)

FICO Score (2) (dollars in thousands)

Less, CECL Allowance

Carrying value, net

Represents the year of origination or amendment where the loan was subject to a full re-underwriting.

The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis.

December 31, 2022

Year Originated (1)

FICO Score (2) (dollars in thousands)

Less, CECL Allowance

Carrying value, net

Represents the year of origination or amendment where the loan was subject to a full re-underwriting.

The FICO Scores are calculated at the inception of a loan and are updated if the loan is modified or on an as needed basis.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

The following table sets forth the maturities of mortgages receivable as of March 31, 2023 and December 31, 2022:

As of March 31, 2023

As of December 31, 2022

2023 and prior

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

Of the 477 mortgage loans in the Company’s portfolio, 44 were the subject of foreclosure proceedings.

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

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

Less, CECL Allowance

At March 31, 2023, of the 406 mortgage loans included in the Company’s loan portfolio, 128 , or approximately 31.5 %, representing approximately $ 81.4 million of mortgage receivables have matured but have not been repaid in full or extended.

The 128 aforementioned loans are inclusive of loans in pending/pre-foreclosure status.

These loans are in the process of modification and will be extended if the borrower can satisfy the Company’s underwriting criteria, including the proper loan-to-value ratio, at the time of renewal.

The Company treats renewals and extensions of existing loans as new loans.

At March 31, 2023, of the 406 mortgage loans in the Company’s loan portfolio, 52 were the subject of foreclosure proceedings.

The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of March 31, 2023 was approximately $ 40.6 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, 2022, of the 444 mortgage loans included in the Company’s loan portfolio, 105 , or approximately 23.6 %, representing approximately $ 61.7 million of mortgage receivables had matured but have not been repaid in full or extended.

The Company treats renewals and extensions of existing loans as new loans.

At December 31, 2022, of the 444 mortgage loans in the Company’s loan 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 believed the value of the collateral exceeded the outstanding balance on the loan.

Real Estate Owned

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

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

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

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

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

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

As of March 31, 2023 and March 31, 2022, real estate owned totaled $ 6,138,912 and $ 6,312,818 , respectively, with no valuation allowance.

During the three months ended March 31, 2023, the Company recorded an impairment loss of $- 0 - compared to an impairment loss of $ 155,500 during the three months ended March 31, 2022.

As of March 31, 2023, real estate owned included $ 813,090 of real estate held for rental and $ 5,325,822 of real estate held for sale.

As of March 31, 2022, real estate owned included $ 799,533 of real estate held for rental and $ 5,513,285 of real estate held for sale.

Properties Held for Sale

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

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

During the three months ended March 31, 2023, the Company sold two properties held for sale and recognized an aggregate gain of $ 148,100 .

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

Properties Held for Rental

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

As of March 31, 2023, one property, a commercial building, was held for rental.

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

4 unchanged sentences

Year ending December 31, 2026

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

September 30, 2022

As of March 31, 2023 and December 31, 2022, other assets consists of the following:

March 31, 2023

December 31, 2022

1 unchanged sentence

Other receivables

Intangible asset – trade name

Deferred financing costs, net

Line of Credit, Mortgage Payable, and Churchill Facility

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

Line of Credit, Mortgage Payable, Churchill Facility, Credit Facility

Wells Fargo Margin Line of Credit

During the year ended December 31, 2020, the Company established a margin loan account at Wells Fargo Advisors that is secured by the Company’s portfolio of short-term securities.

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

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

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

The credit line bears interest at a rate equal to 1.75 % below the prime rate ( 6.25 % at March 31, 2023, 6.50 % as of May 11, 2023).

As of March 31, 2023 the total outstanding balance on the Wells Fargo credit line was $ 13,673,930 .

Mortgage Payable

In 2021, the Company obtained a new adjustable-rate mortgage loan from New Haven Bank (“NHB”) for up to a maximum principal amount of $ 1.4 million (the “NHB Mortgage”) of which $ 750,000 was outstanding at September 30, 2022.

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

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

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

Payments of principal under the NHB Mortgage are amortized based on a 20 -year amortization schedule.

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

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

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

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

On February 28, 2023, the Company refinanced the NHB Mortgage with a new $ 1.66 million adjustable-rate mortgage loan from New Haven Bank (the “New NHB Mortgage”).

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.

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.

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

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 March 31, 2023 the effective rate charged under the Facility was 9.09 %.

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

3 unchanged sentences

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

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

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

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

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

Financing Transactions

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

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

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

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

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

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

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

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

At March 31, 2023, the total amount outstanding under the Facility was $ 54,055,815 .

The collateral pledged to Churchill at March 31, 2023 was 31 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 87.9 million.

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

Needham Bank Credit Facility

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 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.

The Credit Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that requires the Company to maintain:

(A) a ratio of Adjusted EBITDA (as defined in the Credit Agreement) to Debt Service (as defined in the Credit Agreement) of less than 1.40 to 1.0, tested on a trailing-twelve-month basis at the end of each fiscal quarter, commencing with the quarter ending June 30, 2023;

(B) a sum of cash, cash equivalents and availability under the facility equal to or greater than $ 10 million;

and (C) an asset coverage ratio of at least 150 %.

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

Notes Payable

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

At March 31, 2023, the Company had an aggregate of $ 280,608,110 of unsecured, unsubordinated notes payable outstanding, net of $ 7,793,640 of deferred financing costs (collectively, the “Notes”).

Currently, the Company has seven series of Notes outstanding:

Notes having an aggregate principal amount of $ 23,663,000 bearing interest at 7.125 % per annum and maturing June 30, 2024 (“the June 2024 Notes”);

Notes having an aggregate principal amount of $ 34,500,000 bearing interest at 6.875 % per annum and maturing December 30, 2024 (the “December 2024 Notes”);

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

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

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

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

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

(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”);

(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.

6 unchanged sentences

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.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

The following are the future principal payments on the notes payable as of March 31, 2023:

Year ending December 31,

Remainder of 2023

Total principal payments

Deferred financing costs

( 7,793,640 )

Total notes payable, net of deferred financing costs

The estimated amortization of the deferred financing costs as of March 31, 2023 is as follows:

Year ending December 31,

Remainder of 2023

Total deferred costs

Accounts Payable and Accrued Liabilities

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

September 30, 2022

As of March 31, 2023 and December 31, 2022, accounts payable and accrued liabilities include the following:

March 31, 2023

December 31, 2022

Accounts payable and accrued expenses

CECL - allowance for unfunded contractual obligation credit losses

Accrued interest

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

Fee and Other Income

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

ended September 30,

For the three month periods ended March 31, 2023 and 2022, fee and other income consists of the following:

ended March 31,

Late and other fees

2 unchanged sentences

Extension fees

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

Commitments and Contingencies

1 unchanged sentence

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

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

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

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

At March 31, 2023, deferred revenue was $ 4,681,060 , which will be recorded as income as follows:

Year ending December 31, 2023

2 unchanged sentences

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

Employment Agreements

8 unchanged sentences

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

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 March 31, 2023, 226,483 restricted common shares remain unvested.

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

6 unchanged sentences

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.

As of March 31, 2023, 5,333 restricted common shares remain unvested.

Warch’s employment with the Company was terminated effective May 4, 2023.

Unfunded Commitments

At September 30, 2022, the Company had future funding obligations totaling $ 118,103,785 , which can be drawn by the borrowers when the conditions relating thereto have been satisfied.

At March 31, 2023, the Company had future funding obligations totaling $ 114,851,913 , 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.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

In the normal course of its business, the Company is named as a party-defendant in connection with tax foreclosure proceedings against properties on which it holds a first mortgage lien.

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

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

At March 31, 2023, there were three such proceedings.

The unpaid principal balances on the properties that are the subject of these proceedings was approximately $ 631,000 .

In accordance with the asset purchase agreement with Urbane New Haven, LLC in October 2022 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.

Related Party Transactions

2 unchanged sentences

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

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

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

As of March 31, 2023, and 2022, loans to known shareholders totaled $ 25,436,352 and $ 15,594,572 , respectively.

Interest income earned on these loans for the three months ended March 31, 2023 and 2022 totaled $ 506,093 and $ 347,638 , respectively.

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

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

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

For the three month periods ended March 31, 2023 and 2022, she was paid $ 0 and $ 27,500 , respectively, as compensation from the Company.

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

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

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

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

For the three month period ended March 31, 2023 and 2022, she received compensation of $ 43,000 and $ 27,500 , respectively.

Concentration of Credit Risk

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

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

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

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

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

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

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

3 unchanged sentences

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

Outstanding Warrants

In 2017, the Company consummated two public offerings – an initial public offering (“IPO”) in February and a follow-on offering in October-November.

In connection with the IPO, the Company issued to the underwriters warrants to purchase an aggregate of 130,000 common shares at an exercise price of $ 6.25 per common share (“IPO Warrants”).

The IPO Warrants expired unexercised on February 9, 2022.

In connection with a public offering that was consummated in October 2017, the Company issued to the underwriters warrants to purchase an aggregate of 187,500 common shares at an exercise price of $ 5.00 per share.

2 unchanged sentences

As such, they received 19,658 common shares.

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

All the unexercised warrants expired on October 24, 2022.

All the remaining unexercised warrants expired on October 24, 2022.

Stock-Based Compensation and Employee Benefits

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.

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

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

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

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

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

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

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

The number of securities remaining available for future issuance under the Plan as of March 31, 2023 was 1,005,078 .

During the three months ended March 31, 2023 and 2022, the Company granted an aggregate of 183,390 and 33,500 restricted common shares under the Plan, respectively with a fair value of $ 709,719 and $ 183,915 , respectively.

With respect to the restricted common shares granted during the three months ended March 31, 2023, (i) an aggregate of 17,500 shares vested immediately on the date of grant, an additional aggregate of 17,500 shares will vest on each of the first and second anniversaries of the date of grant and (ii) 43,630 shares will vest on January 1, 2024, and an additional 43,630 shares will vest on January 1, 2025 and 2026, respectively.

Stock based compensation for the three months ended March 31, 2023 and 2022 was $ 173,132 and $ 106,879 , respectively.

As of March 31, 2023, there was unrecorded stock-based compensation expense of $ 1,384,043 .

Employee Benefits

3 unchanged sentences

Under the terms of the 401(k) Plan, the Company is obligated to contribute 3 % of a participant’s compensation to the 401(k) Plan on behalf of an employee-participant.

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

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

For the three months ended March 31, 2023 and 2022, the 401(k) Plan expense was $ 44,696 and $ 19,993 , respectively.

Equity Offerings

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

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

On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 75,000,000 of its common shares and its Series A Preferred Stock (as defined in Note 19 below) with an aggregate liquidation preference of up to $ 25,000,000 in an “at-the market” offering, which is ongoing.

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

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

During the three months ended March 31, 2023, under this offering, the Company sold an aggregate of 2,479,798 common shares, realizing gross proceeds of approximately $ 9.4 million and sold shares of its Series A Preferred Stock having an aggregate liquidation preference of $ 154,675 , realizing gross proceeds of $ 139,500 representing a discount of approximately 10% from the liquidation preference.

Partnership Investments

As of September 30, 2022, the Company had invested an aggregate of approximately $ 22.5 million in four limited liability companies managed by a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States.

The Company’s ownership interest in the four limited liability companies ranges up to 49 %.

As of March 31, 2023, the Company had invested an aggregate of approximately $ 35.3 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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

companies ranges up to 49 %.

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

1 unchanged sentence

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

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

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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.

For the three months ended March 31, 2023 and 2022, the partnerships generated $ 549,723 and $ 272,488 , respectively, of income for the Company.

At March 31, 2023, the Company had unfunded partnership commitments totaling approximately $ 573,000 .

Special Purpose Acquisition Corporation

1 unchanged sentence

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

As of September 30, 2022, the Company had incurred approximately $ 472,800 of costs related to the preparation and filing of the registration statement, including legal fees, accounting fees and filing fees as well organizational costs and an expense advance to the underwriter.

As of March 31, 2023, 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 as 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”).

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).

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

The Company has designated 2,903,000 shares of its 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 in an Amended and Restated Certificate of Designation (the “Series A Designation Certificate”).

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

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

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

1 unchanged sentence

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

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

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

consideration as described in the Series A Designation Certificate.

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

Charter Amendments

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

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

The Company has reserved 72,575,000 common shares for issuance upon conversion of the Series A Preferred Stock.

Subsequent Events

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

SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

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

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

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

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

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

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

Accordingly, these amounts are not included.

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

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

Ladenburg Thalmann & Co.

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

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

(See Note 15, above.)

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

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

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

The dividend is payable November 14, 2022.

Management has evaluated subsequent events through November 10, 2022 the date on which the financial statements were available to be issued.

From April 1, 2023 through May 12, 2023, the Company sold an aggregate of 136,356 common shares under its at-the-market offering facility, realizing gross proceeds of approximately $ 510,000 .

On April 4, 2023, the Company’s Board of Directors declared a dividend of $ 0.13 per share payable to shareholders of record as of April 17, 2023.

The dividend was paid April 24, 2023.

Management has evaluated subsequent events through May 12, 2023 the date on which the financial statements were available to be issued.

Based on the evaluation, no adjustments were required in the accompanying financial statements.

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

What changed 10-Q

Item 1. Financial Statements