What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-13 · 486 added, 541 removed, 418 unchanged (71% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2023

March 31, 2024

December 31, 2023

Cash and cash equivalents

Investment securities

Mortgages receivable, net

Investment securities (at fair value)

Mortgages receivable

Allowance for credit losses

( 8,053,252 )

( 7,523,160 )

Mortgages receivable, net of allowance for credit losses

Investments in rental real estate, net

Interest and fees receivable

Due from borrowers

Interest and fees receivable, net

Due from borrowers, net

Real estate owned

2 unchanged sentences

Liabilities and Shareholders’ Equity

Unsecured notes payable (net of deferred financing costs of $ 6,641,817 and $ 8,352,597 )

Notes payable (net of deferred financing costs of $ 5,443,237 and $ 6,048,490 , respectively)

Repurchase facility

Mortgage payable

Line of credit

Lines of credit

Accrued dividends payable

9 unchanged sentences

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

1,996,000 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at September 30, 2023 and December 31, 2022, respectively

2,108,957 and 2,029,923 shares of Series A Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Common shares - $ 0.001 par value;

200,000,000 shares authorized;

45,364,429 and 41,093,536 issued and outstanding at September 30, 2023 and December 31, 2022, respectively

47,446,051 and 46,765,483 issued and outstanding at March 31, 2024 and December 31, 2023

Paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income

Accumulated deficit

3 unchanged sentences

Total liabilities and shareholders’ equity

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

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

SACHEM CAPITAL CORP.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Interest income from loans

3 unchanged sentences

Fee and other income

Unrealized gain (loss) on investment securities

( 1,076,836 )

( 3,607,498 )

Unrealized gain on equity securities

Total revenue

4 unchanged sentences

Other expenses

(Gain) Loss on sale of real estate

(Recovery of) provision for loan losses

Impairment loss

(Gain) Loss on sale of real estate and property and equipment, net

Provision for credit losses related to loans

Total operating costs and expenses

Dividends paid on Series A Preferred Stock

( 2,816,279 )

Preferred stock dividend

( 1,021,526 )

Net income attributable to common shareholders

Other comprehensive loss

Unrealized gain (loss) on investment securities

Comprehensive income

Other comprehensive income (loss)

Unrealized (loss) gain on debt securities

Total comprehensive income

Basic and diluted net income per common share outstanding:

Weighted average number of common shares outstanding:

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

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

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Shares

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Preferred Stock

Common Shares

Comprehensive

Balance, July 1, 2023

Income (Loss)

Balance, January 1, 2024

( 20,115,496 )

2 unchanged sentences

Stock-based compensation

Unrealized gain (loss) on investments

Dividends paid on Series A Preferred Stock

Dividends paid on common shares

( 5,895,035 )

Net income for the period ended September 30, 2023

Balance, September 30, 2023

( 7,893,673 )

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

Preferred Shares

Common Shares

Comprehensive

Balance, July 1, 2022

( 1,583,202 )

Issuance of common shares, net of expenses

Stock based compensation

Unrealized loss on marketable securities

Unrealized loss on debt securities

Dividends paid on Series A Preferred Stock

Dividends paid on common shares

( 1,021,526 )

Net income for the period ended September 30, 2022

Balance, September 30, 2022

Balance, March 31, 2024

( 16,466,797 )

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Shares

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Preferred Stock

Common Shares

2 unchanged sentences

( 7,995,143 )

Adoption of ASU 2016-13

Cumulative effect of adoption of new accounting principle (ASU 2016-13)

( 2,489,574 )

2 unchanged sentences

Issuance of Common Shares, net of expenses

Repurchase of common shares

Stock-based compensation

Unrealized loss on investments

Dividends paid on Series A Preferred Stock

( 2,816,279 )

Dividends paid on common shares

( 11,601,133 )

Net income for the period ended September 30, 2023

Balance, September 30, 2023

( 7,893,673 )

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

Preferred Shares

Common Shares

Comprehensive

Balance, January 1, 2022

( 4,992,450 )

Issuance of common shares, net of expenses

Exercise of warrants

Stock based compensation

Unrealized gain on marketable securities

Unrealized gain on debt 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

Balance, March 31, 2023

( 6,289,257 )

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

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

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

2 unchanged sentences

Depreciation expense

Write-off of other assets - pre-offering costs

Stock-based compensation

Provision for credit losses

Impairment loss

(Gain) Loss on sale of real estate

Unrealized (gain) loss on investment securities

Provision for credit losses related to loans

Loss (Gain) on sale of real estate and equipment, net

Unrealized gain on equity securities

Gain on sale of investment securities

Changes in operating assets and liabilities:

(Increase) decrease in:

Interest and fees receivable

( 1,641,747 )

( 2,154,704 )

Other assets - miscellaneous

( 1,235,523 )

Due from borrowers

( 2,170,729 )

Interest and fees receivable, net

Due from borrowers, net

( 1,037,945 )

Other assets - prepaid expenses

(Decrease) increase in:

Accrued Interest

Accounts payable and accrued liabilities

3 unchanged sentences

Total adjustments

( 2,227,013 )

NET CASH PROVIDED BY OPERATING ACTIVITIES

9 unchanged sentences

Acquisitions of and improvements to real estate owned, net

Proceeds from sale (purchases) of property and equipment, net

( 1,292,160 )

Investment in rental real estate, net

( 10,725,237 )

Purchases of property and equipment

Purchases of rental real estate

Principal disbursements for mortgages receivable

3 unchanged sentences

Other assets – pre-offering costs

NET CASH USED FOR INVESTING ACTIVITIES

( 67,579,926 )

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

( 33,955,046 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from (repayment of) line of credit

( 29,635,178 )

Net proceeds from repurchase facility

Proceeds from mortgage

Net proceeds from lines of credit

Net proceeds from (repayment of) repurchase facility

Proceeds from (repayment of) mortgage

Accounts payable and accrued liabilities – principal payments on other notes

4 unchanged sentences

( 1,021,526 )

( 2,765,297 )

Proceeds from issuance of common shares, net of expenses

Repurchase of common shares

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

Gross proceeds from issuance of fixed rate notes

Financings costs incurred in connection with fixed rate notes

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

( 2,720,574 )

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 3,380,581 )

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS – END OF PERIOD

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

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

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)

Nine Months Ended

September 30,

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Interest paid

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the nine months ended September 30, 2023 and 2022 totaled to $ 1,186,663 and $ 1,091,348 , respectively.

Increase in mortgage receivable from sale of real estate owned during the nine months ended September 30, 2023 totaled to $ 2,487,568 .

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

Three Months Ended

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION

Cash paid during the period for interest

SUPPLEMENTAL INFORMATION OF NON-CASH INVESTING ACTIVITIES:

Real estate acquired in connection with the foreclosure of certain mortgages during the three months ended March 31, 2024 and 2023 was $ 374,000 and $ 1,186,663 , respectively.

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Sachem Capital Corp.

(the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans.

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 Company operates its business as one segment.

The Company offers short-term (i.e., one to three years ), secured, non-bank loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States.

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

Each loan is secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower.

The Company does not lend to owner occupants.

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

In addition, the Company may participate in real estate loans made by third parties or invest in third parties that make real estate loans.

The Company does not lend to owner occupants of residential real estate.

The Company’s primary underwriting criteria is a conservative loan-to-value (“LTV”) ratio.

In addition, the Company may make opportunistic real estate purchases apart from its lending activities.

Significant Accounting Policies

Unaudited Financial Statements

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.

Unaudited Consolidated Financial Statements

The accompanying unaudited consolidated financial statements (“the 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.

1 unchanged sentence

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, 2023 and the notes thereto included in the Company’s Annual Report on Form 10-K.

Results of operations for the three months and nine month periods ended September 30, 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 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.

Results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results to be attained in the entire fiscal year, or for any subsequent period.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with 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 bases the use of estimates on (a) various assumptions that consider prior reporting results, (b) projections regarding future operations and (c) general financial market and local and general economic conditions.

Actual amounts could differ from those estimates.

The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

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

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

The aggregate amounts held at each institution typically exceeds the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit.

The Company does not believe that the risk is significant.

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.

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.

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

1 unchanged sentence

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

If the cost of an investment exceeds its fair value, management 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.

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

In addition, management may consider specific adverse conditions related to the financial health of, and business outlook for, the issuer of the debt security.

If the Company plans to

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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 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 person or entity for which it is providing credit.

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 there are adverse changes in the markets or industries in which the borrower operates, or there is a deterioration in the financial health, business outlook or other conditions of the person or entity to which it provided credit, the Company may incur future impairments.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

sell the security or it is more likely than not that it 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 business and/or financial conditions relating to the issuer deteriorate, the Company may incur future losses and/or 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 recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.

Management performs a qualitative assessment on a periodic basis and recognizes 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

Allowance for Current Expected Credit Losses

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.

Subsequent changes to the CECL allowance will be recognized in the consolidated statements of comprehensive income.

The initial CECL allowance (”Allowance for credit losses”) 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 in “Provision for credit losses related to loans”.

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.

This methodology, known as the “static pool 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.

1 unchanged sentence

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 including unpaid interest and other charges as of September 30, 2023 and December 31, 2022 was approximately $ 68.1 million and $ 24.0 million, respectively.

As of September 30, 2023 and December 31, 2022, none of those loans required an allowance for credit loss.

The amount of loans in pending/pre-foreclosure as of March 31, 2024 and December 31, 2023 was approximately $ 72.9 million and $ 68.1 million, respectively.

As of March 31, 2024 and December 31, 2023, the Company has taken reserves against loans subject to foreclosure of approximately $ 7.3 million and $ 6.2 million, respectively, which is included in “Allowance for credit losses” on the accompanying balance sheets.

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

2 unchanged sentences

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.

The Company utilizes a forecast of three years which approximates its longer-term loans, which are often the 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 to make 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.

The Allowance for credit losses 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 Allowance for credit losses related to the late payment fees are presented in “Interest and fees receivable, net”, and “Due from borrowers, net” in the Company’s consolidated balance sheets.

Lastly, the allowance related to unfunded commitments for construction loans is presented in “Accounts payable and accrued liabilities” in the Company’s consolidated balance sheets.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

As of September 30, 2023, the CECL allowance for mortgages receivable was approximately $ 2.1 million compared to approximately $ 2.0 million at January 1, 2023, an increase of approximately $ 0.1 million.

As of September 30, 2023, the CECL allowance for interest and fees receivable was approximately $ 23,400 compared to approximately $ 26,100 at January 1, 2023, a decrease of approximately $ 2,700 .

As of September 30, 2023, the CECL allowance for amounts due from borrowers was approximately $ 24,400 compared to approximately $ 19,900 at January 1, 2023, an increase of approximately $ 4,500 .

As of September 30, 2023, the CECL allowance for unfunded commitments was approximately $ 498,600 compared to approximately $ 522,000 at January 1, 2023, a decrease of approximately $ 23,400 .

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The below table represents the financial statement line items that are impacted by the Allowance for credit losses:

Provision for credit

Balance as of December 31, 2023

losses related to loans

Balance as of March 31, 2024

Mortgages receivable

Interest receivable

Due from borrower

Unfunded commitments

Total Allowance for credit losses

As of March 31, 2024 and December 31, 2023 the Company had an allowance for credit losses on debt securities of approximately $ 0.8 million for each year, which is presented in “Investment securities (at fair value)” on the Company’s consolidated balance sheets.

As of March 31, 2024 and 2023, fair market value of these securities was $ 821,052 and $ 1,130,518 , respectively.

The cost basis of these securities were $ 1,647,841 .

Fair Value Measurements

1 unchanged sentence

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 are described as follows:

The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820 are described as follows:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company can access.

7 unchanged sentences

Property and Equipment

Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost.

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

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

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

On August 14, 2023 this property was sold.

The Company realized a loss of approximately $ 184,600 on the sale, which is included in (gain) loss on sale of real estate in the consolidated statements of comprehensive income, for the three and nine months ended September 30, 2023.

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

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

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 in March 2023 when the Company received the Certificate of Occupancy.

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Investment in real estate

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The following tables represent the Company’s Property and Equipment, Net as of March 31, 2024 and December 31, 2023:

March 31, 2024

Accumulated Depreciation

Property and Equipment, Net

Furniture and fixtures

Computer hardware and software

Total property and equipment, net

December 31, 2023 (Audited)

Accumulated Depreciation

Property and Equipment, Net

Furniture and fixtures

Computer hardware and software

Total property and equipment, net

Investment in Rental Real Estate

Real estate is carried at cost, net of accumulated depreciation and amortization.

Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized.

Maintenance and repairs are expensed as incurred.

For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment, including interest and debt expense, are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete.

If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of the redeveloped property, the excess is charged to expense.

Depreciation is recognized on a straight-line basis over the estimated useful lives of these assets which range from 7 to 40 years .

Tenant allowances are amortized on a straight-line basis over the shorter of the lives of the related leases, or the useful lives of the assets.

Upon the acquisition of real estate, the Company assesses whether the transaction should be accounted for as an asset acquisition or as a business combination.

Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions.

Acquisitions of real estate generally will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related identified intangible assets).

The Company allocates the purchase price of real estate to land and building (inclusive of site and tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases.

4 unchanged sentences

The determined and allocated fair values to the real estate acquired will affect the amount of depreciation and amortization we record over the respective estimated useful lives or term of the lease.

2023 Acquisition

On June 23, 2023, the Company entered into a purchase and sale contract for $ 10,600,000 to acquire a commercial building in Westport, CT.

On June 23, 2023, the Company entered into a purchase and sale contract (the “Westport Purchase Agreement”) to acquire a commercial office building in Westport, CT (the “Westport Asset”) for $ 10,600,000 .

The transaction was completed on August 31,

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

In connection with this transaction, which was accounted for as an asset acquisition, the Company allocated the purchase price and acquisition-related costs to the tangible and intangible assets acquired based on fair value.

1 unchanged sentence

Total consideration, including capitalized acquisition-related costs, was $ 10,725,237 .

The following table summarizes the allocation for the acquisition:

Site improvements

Tenant improvements

Below-market lease intangible

Lease in-place intangible (included in Other assets)

Deferred leasing costs (included in Other assets)

Building and site improvements are being depreciated using the straight-line method over its estimated useful life of 40 years and 15 years , respectively.

Tenant improvements are amortized over the life of the respective lease using the straight-line method.

For the three and nine months ended September 30, 2023, depreciation and amortization was nominal.

Lease in-place intangible assets, deferred leasing costs and acquired below market leases are amortized on a straight-line basis over the respective life of the lease For the three and nine months ended September 30, 2023, amortization of each of the lease-in place intangible assets, deferred leasing costs and acquired below market leases was nominal.

The Company leases space to a tenant under a ten year operating lease.

The lease provides for the payment of fixed base rent payable monthly in advance that ranges from approximately $ 834,000 in lease year one with escalations up to approximately $ 996,000 in lease year ten.

Additionally, the lease allows the Company to pass through to tenants their share of increases in real estate taxes and operating expenses over a base year, as defined.

The lease also provides for one year of rent concessions and a tenant improvement allowance funded by the Company.

Commencement of the lease is anticipated in 2024 once tenant improvements are completed.

The Company anticipates payments on the lease to begin in 2025 after the rent concession period has ended.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Estimated annual amortization of acquired in-place lease intangible is as follows:

2023 (3 months)

Estimated annual amortization of acquired below-market leases is as follows:

2023 (3 months)

Real Estate Owned

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

Consolidations

All intercompany accounts and transactions have been eliminated.

See Note 5 – Investment in Rental Real Estate, net for further details surrounding the above acquisition as of March 31, 2024.

Real Estate Owned (“REO”)

REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis.

After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators including listing data may signal a decline in the liquidation value.

REO is evaluated for recoverability when impairment indicators are identified.

Any impairment losses are included in the consolidated statements of comprehensive income.

Impairment of Long-Lived Assets

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

The Company continually 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.

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

Goodwill at September 30, 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 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 value of the assets.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment.

Goodwill at March 31, 2024 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 adheres to ASC Topic 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.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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 it compares the fair value of that reporting unit with its carrying value, including goodwill.

As of March 31, 2024 and 2023, goodwill was approximately $ 0.4 million, which is presented in other assets on the Company’s consolidated balance sheets.

There was no impairment to goodwill during the three months ended March 31, 2024 and 2023.

Deferred Financing Costs

Costs incurred in connection with the Company’s revolving credit facilities, described in Note 8 – Lines of Credit, Mortgage Payable, and Churchill Facility, are amortized over the term of the applicable facility using the straight-line method.

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

Costs incurred in connection with the Company’s revolving credit facilities, described in Note 8-Lines of Credit, Mortgage Payable Churchill Facility are amortized over the term of the applicable facility using the straight-line method.

Costs incurred by the Company in connection with the issuance of unsecured, unsubordinated notes, described in Note 9 – Unsecured Notes Payable, are being amortized over the term of the respective unsecured, unsubordinated notes.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Revenue Recognition

1 unchanged sentence

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

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

However, interest income not accrued at September 30, 2023 but collected prior to the issuance of this report is included in income for the period ended September 30, 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.

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 March 31, 2024 but collected prior to the issuance of this report is included in income for the three-month period ended March 31, 2024.

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

5 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.

Other than taxes incurred by TRSs (see below), 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.

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”).

1 unchanged sentence

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 and nine months ended September 30, 2023 and 2022, neither the Company nor any of its TRSs, recognized any provisions for federal income tax or state, local and franchise taxes on the Company’s consolidated statements of operations.

The income tax provision for the Company differs from the amount computed by 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.

During the three months ended March 31, 2024, the Company’s TRSs recognized provisions for federal and state income tax of $ 190,025 , which is represented in other expenses on the Company’s consolidated statements of comprehensive income.

During the three months ended March 31, 2023, there were no recognized provisions for federal income tax nor state 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.

ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes ” prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required.

Under this standard, an entity may only recognize or continue to recognize tax positions that meet a “ more likely than not ” threshold.

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

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying consolidated financial statements as of September 30, 2023 and 2022.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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, 2024 and 2023.

Earnings Per Share

Basic and diluted earnings per share are calculated in accordance with ASC 260 — “ Earnings Per Share.

” Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.

The computation of diluted earnings per share is identical to the computation of basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method.

Basic and diluted earnings per share are calculated in accordance with ASC Topic 260 — “Earnings Per Share.” Under ASC Topic 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.

The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method.

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

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

As of March 31, 2024, the Company had basic and diluted weighted average shares of 47,326,384 outstanding , resulting in basic and diluted earnings per share of $ 0.08 , respectively.

As of March 31, 2023, the Company had basic weighted averages shares of 42,792,509 outstanding resulting in basic and diluted earnings per share were $ 0.10 .

Recent Accounting Pronouncements

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 takes into account forecasts of expected future economic conditions.

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, except for requiring additional disclosure relating to loan modifications to borrowers experiencing financial difficulty.

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.

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

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (FASB ASC Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment.

This standard is effective for the Company beginning with its 2024 annual reporting.

ASU 2023-07 is to be adopted retrospectively to all prior periods presented.

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

1 unchanged sentence

Reclassifications

Certain amounts included in the September 30, 2022 and December 31, 2022 consolidated financial statements have been reclassified to conform to the September 30, 2023 presentation.

Certain amounts included in the March 31, 2024 and December 31, 2023 consolidated financial statements have been reclassified to conform to the March 31, 2024 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.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2023:

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of March 31, 2024:

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:

Total investment securities

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

Stocks and ETF’s

Debt securities

Total liquid investments

Real estate owned

Total investment securities

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

Stocks and ETFs (level 1 and 2):

Stocks and ETFs (Levels 1 and 2):

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

Mutual funds (level 1 and 2):

Mutual funds (Levels 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 (level 2) :

Debt securities :

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

Real estate owned (level 3) :

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 6 for the roll forward of real estate owned – Level 3 assets.

Impact of Fair Value of AFS Securities on OCI

Impact of Fair Value of Available-for-sale Securities on Other Comprehensive Income

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

1 unchanged sentence

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 September 30, 2023 and December 31, 2022, the Company had a continuous unrealized losses over 12 months in Available-For-Sale debt securities (AFS’s) of approximately $ 834,000 and approximately $ 531,000 , respectively.

The Company reviewed several 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 September 30, 2023, the Company has concluded no such allowance for credit losses regarding AFS’s debt securities was deemed necessary.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The following table presents the impact of the Company’s AFS’s - debt securities included in Other Comprehensive Income (OCI) for the three and nine months ended September 30, 2023:

As of March 31, 2024 and December 31, 2023, the Company had a continuous unrealized losses over 12 months in Available-For-Sale (“AFS”) debt securities of approximately $ 826,789 and approximately $ 808,561 , 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 and the impending maturity date of said securities, as of the most recently filed financial statements.

As such, at March 31, 2024 and December 31, 2023, the Company has an allowance for credit losses regarding AFS debt securities totaling approximately $ 0.8 million, of which is included in investment securities (at fair value) on the accompanying consolidated balance sheets.

There was no such related provision of credit losses for the three-month periods ended March 31, 2024 and 2023.

The remaining AFS debt securities with a fair value of $ 19.2 million had an unrealized gain of $ 190,328 at March 31, 2024.

The following table presents the impact of the Company’s AFS securities - debt securities on its Other Comprehensive Income (“OCI”) for the three months ended March 31, 2024:

Three Months Ended

Nine months Ended

September 30,

OCI from AFS securities:

Unrealized (losses) on AFS securities at beginning of period

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

Change in OCI from AFS securities

Balance at end of period

The following table presents the Company’s Level 3 Investments of Real Estate Owned as of September 30, 2023 and December 31, 2022:

Nine Months Ended

Twelve Months Ended

September 30, 2023

December, 31, 2022

Real Estate Owned at the beginning of period

Principal basis transferred to Real Estate Owned

Charges and/or improvements

Proceeds from sale of Real Estate Owned

( 2,636,410 )

( 2,090,880 )

Gain on sale of Real Estate Owned

OCI from AFS securities – debt securities:

Unrealized (losses) on debt securities at beginning of period

Reversal of losses from unrealized to realized

Unrealized (losses) gain on debt securities

Change in OCI from AFS 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.

As of March 31, 2024 and 2023, the investment securities cost basis were approximately $ 41.1 million and $ 38.6 million, respectively.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Mortgages Receivable, net

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.

In the case of properties undergoing renovation, the LTV 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.

3 unchanged sentences

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.

Allowance for credit losses is charged to income in amounts sufficient to maintain an allowance for credit losses inherent in the loans that 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’s 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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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 determined by a review of each delinquent loans.

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

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

As of September 30, 2023 and December 31, 2022, loans on nonaccrual status had an outstanding principal balance of $ 82,913,227 and $ 55,691,857 , respectively.

As of March 31, 2024 and December 31, 2023, loans on nonaccrual status had an outstanding principal balance of approximately $ 85.7 million and approximately $ 84.6 million, respectively.

The nonaccrual loans are inclusive of loans pending foreclosure.

For the three and nine months ended September 30, 2023, $ 61,718 and $ 394,909 of interest income, respectively, was recorded on nonaccrual loans due to payments received.

For the nine months ended September 30, 2023 and 2022, the aggregate amounts of loans funded by the Company were $ 159,678,482 and $ 252,370,675 , respectively, offset by principal repayments of $ 123,495,534 and $ 95,173,969 , respectively.

As of September 30, 2023, the Company’s mortgage loan portfolio includes loans ranging in size up to approximately $ 36.1 million with stated interest rates ranging from 5.0 % to 15.0 % .

For the three months ended March 31, 2024 and 2023, approximately $ 0.3 million and approximately $ 0.6 million of interest income was recorded on nonaccrual loans due to payments received, respectively.

For the three months ended March 31, 2024 and 2023, the aggregate amounts of loans funded by the Company were approximately $ 42.7 million and approximately $ 58.9 million, respectively, offset by principal repayments of approximately $ 51.4 million and approximately $ 39.9 million, respectively.

As of March 31, 2024, the Company’s mortgage loan portfolio includes loans ranging in size up to approximately $ 38.1 million with stated interest rates ranging from 5.0 % to 15.0 %, compared to loans ranging in size of up to approximately $ 29.9 million with stated interest rates ranging from 5.0 % to 14.2 % for the period ended March 31, 2023.

The default interest rate is generally 18 %, but could be more or less depending on state usury laws and other considerations deemed relevant by the Company.

At September 30, 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.

As of March 31, 2024, and December 31, 2023, the Company had one borrower representing 10.8 % and 10.1 % of the outstanding mortgage loan portfolio, or approximately $ 53.2 million and approximately $ 50.4 million, respectively.

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.

4 unchanged sentences

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.

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

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

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’s judgment.

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

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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 Allowance for credit losses expected in the portfolio as of the reporting date.

The Company’s charge-off policy is determined by a review of each delinquent loan.

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

In assessing the Allowance for credit losses, 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, other specific circumstances, and to reflect the Company’s expectations of the macroeconomic environment.

The following table summarizes the activity in the mortgages receivable Allowance for credit losses from December 31, 2023 through March 31, 2024:

Allowance for credit losses

Allowance for credit losses as of

Provision for credit losses

as of March 31,

(dollars in thousands)

September 30, 2023

December 31, 2023 (Audited)

related to loans

Geographical Location

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

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(2) As a component of the adoption of ASU 2016-13, $ 498,600 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:

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023 (Audited)

(dollars in thousands)

4 unchanged sentences

Geographical Location

Less, CECL and Direct Allowances

Allowance for credit losses

Carrying value, net

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Presented below are the carrying values by property type:

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023 (Audited)

(dollars in thousands)

2 unchanged sentences

Property Type

Less, CECL and Direct Allowances

Pre-Development Land

Allowance for credit losses

Carrying value, net

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:

September 30, 2023

March 31, 2024

Year Originated (1)

FICO Score (2) (dollars in thousands)

Less, CECL and Direct Allowances

Allowance for credit losses

Carrying value, net

1 unchanged sentence

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.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

December 31, 2022

December 31, 2023 (Audited)

Year Originated (1)

FICO Score (2) (dollars in thousands)

Less, CECL and Direct Allowances

Allowance for credit losses

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.

The following table sets forth the maturities of mortgages receivable as of September 30, 2023 and December 31, 2022:

As of September 30, 2023

As of December 31, 2022

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.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The following table sets forth the maturities of mortgages receivable as of March 31, 2024 and December 31, 2023:

As of March 31, 2024

As of December 31, 2023 (Audited)

(Dollars in thousands)

2024 and prior

Less, CECL and Direct Allowances

At September 30, 2023, of the 327 mortgage loans included in the Company’s loan portfolio, 95 , having an aggregate outstanding principal balance of approximately $ 84.8 million, or approximately 17.0 %, of mortgage receivables, have matured but have not been repaid in full or extended.

Of these 95 loans, 64 are in foreclosure status, which have an aggregate principal balance of approximately $ 63.5 million.

At December 31, 2022, of the 444 mortgage loans included in the Company’s loan portfolio, 105 loans having an aggregate outstanding principal balance of approximately $ 61.6 million, or approximately 13.4 %, of mortgage receivables, had matured but have not been repaid in full or extended.

Of these 105 loans, 40 were in foreclosure status, which had an aggregate principal balance of approximately $ 22.6 million.

All loans in maturity default and not in foreclosure are subject to 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.

In the case of each of the loans in foreclosure, the Company believed the value of the collateral exceeded the outstanding balance on the loan.

Allowance for credit losses

At March 31, 2024, of the 273 mortgage loans included in the Company’s loan portfolio, 72 , or approximately 26.4 %, representing approximately $ 140.7 million of mortgage receivables have matured but have not been repaid in full or extended.

The 72 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 LTV ratio, at the time of renewal.

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

At December 31, 2023, of the 311 mortgage loans in the Company’s portfolio, 89 , or approximately 28.6 %, representing approximately $ 123.8 million of mortgage receivables, had matured in 2023 but were not repaid in full or extended.

Loan modifications made to borrowers experiencing financial difficulty

1 unchanged sentence

These modifications may include term extensions, and adding unpaid interest, charges and taxes to the principal balance intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral.

The Company generally receives additional collateral as part of extending the terms of the loan.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The Company generally receives additional collateral as part of extending the terms of the loan for loans experiencing financial difficulty.

The table below presents loan modifications made to borrowers experiencing financial difficulty:

Three Months Ended September 30, 2023

% of Total Carrying Value of

Three Months Ended March 31, 2024

Carrying Value of

(in thousands)

4 unchanged sentences

A weighted average of 8.5 months were added to the life of the loans

Nine Months Ended September 30, 2023

% of Total Carrying Value of

Unpaid interest/taxes/charges added to principal balance

The Company monitors the performance of loans modified to borrowers experiencing financial difficulty.

The table below presents the performance of loans that have been modified in the last three months to borrowers experiencing financial difficulty.

The Company considers loans that are 90 days past due to be in payment default.

Three Months Ended March 31, 2024

(in thousands)

90-119 days past due

120+ days past due

Loans modified during the period ended

Term extension

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Three Months Ended March 31, 2023

(in thousands)

Carrying Value

5 unchanged sentences

The Company monitors the performance of loans modified to borrowers experiencing financial difficulty.

The table below presents the performance of loans that have been modified in the last 12 months to borrowers experiencing financial difficulty.

The table below presents the performance of loans that have been modified in the last three months to borrowers experiencing financial difficulty.

The Company considers loans that are 90 days past due to be in payment default.

Three Months Ended September 30, 2023

Three Months Ended March 31, 2023

(in thousands)

3 unchanged sentences

Term extension

Nine Months Ended September 30, 2023

90-119 days past due

120+ days past due

Loans modified during the period ended

Term extension

The Company has committed to lend additional amounts totaling $ 23.2 million to borrowers experiencing financial difficulty.

Investment in Real Estate

At September 30, 2023, investment in real estate consisted of the following:

As of March 31, 2024 and 2023, the Company has committed to lend additional amounts totaling approximately $ 26.1 million and approximately $ 24.0 million to borrowers experiencing financial difficulty, respectively.

Investment in Rental Real Estate, net

As of March 31, 2024 and December 31, 2023, investment in rental real estate, net consist of the following:

Three months ended March 31, 2024

Accumulated Depreciation

Investment in Rental Real Estate, Net

Site improvements

Tenant improvements

Construction in progress

Year ended December 31, 2023 (Audited)

Accumulated Depreciation

Investment in Rental Real Estate, Net

Site improvements

Tenant improvements

Construction in progress

Building and site improvements are being depreciated using the straight-line method over its estimated useful life of 40 years and 15 years , respectively.

Tenant improvements are amortized over the life of the respective lease using the straight-line method.

Lease in-place intangible assets, deferred leasing costs and acquired below-market leases are amortized on a straight-line basis over the respective life of the lease.

For the three months ended March 31, 2024, depreciation and amortization related to the asset was $ 73,673 .

Tenant improvements and other intangibles associated with the tenant are not being amortized until the commencement of the lease which is not until 2025.

Additionally, the Company leases space to a tenant under an operating lease.

The lease provides for the payment of fixed base rent payable monthly in advance and periodic step-ups in rent over the term of the lease and a pass through to tenants their share of increases in real estate taxes and operating expenses over a base year.

The lease also provides for free rent and a tenant

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Real Estate Owned

Property acquired through foreclosure are included on the balance sheet as real estate owned and further categorized as held for sale or held for rental, described in detail below.

As of September 30, 2023 and December 31, 2022, the fair value of real estate owned totaled $ 3,481,177 and $ 5,216,149 , respectively, with no valuation allowance.

For the three months ended September 30, 2023 and 2022, the Company recorded an impairment loss of $ 400,000 and $ 195,000 , respectively.

For the nine months ended September 30, 2023 and 2022, the Company recorded an impairment loss of $ 612,500 and $ 685,500 , respectively.

As of September 30, 2023, real estate owned included $ 825,963 of real estate held for rental and $ 2,655,214 of real estate held for sale.

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.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

improvement allowance of approximately $ 2.7 million.

The rent concession period, or beginning of the lease term, begins January 2025 with a rent abatement period of 425 days.

As of March 31, 2024, future minimum rents under non-cancelable operating leases were as follows:

Years Ending December 31,

2024 (9 months)

Estimated annual amortization of acquired below-market lease intangible is as follows:

Years Ending December 31,

2024 (9 months)

Estimated annual amortization of acquired in-place lease intangible is as follows:

Years Ending December 31,

2024 (9 months)

Estimated annual amortization of deferred leasing costs is as follows:

Years Ending December 31,

2024 (9 months)

In addition, the Westport Purchase Agreement contains a provision requiring the payment of an Additional Purchase Price, as defined, upon the earlier to occur of:

● The Company closing on any construction financing on the Project, as defined, or

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

● Twelve months following receipt of all zoning and other State and municipal permits and approvals necessary to construct certain residential units, as defined.

These payments represent contingent consideration in connection with this acquisition, requiring accrual when the payments are deemed probable and reasonably estimable.

In January 2024, the Company submitted a proposal to the town of Westport for eight market rate residential units and two affordable rate units.

Those units were approved in March of 2024, subject to a 30 day appeal period.

In April 2024, the 30 day appeal period for the Westport Asset land approval expired, and the Company deemed these events which would give rise to a payment of Additional Purchase Price allocated to land to be considered probable.

Accordingly, the agreed payment of $ 75,000 per approved and sold or permitted market rate residential units has been recognized.

The expected payment, of which is $ 600,000 , has been accrued as of March 31, 2024.

Real Estate Owned (REO)

Property acquired through foreclosure are included on the consolidated balance sheet as real estate owned and further categorized as held for sale or held for rental, described in detail below.

As of March 31, 2024 and December 31, 2023, REO totaled $ 3,703,519 and $ 3,461,519 , respectively.

The Company recorded no impairment losses during the three months ended March 31, 2024 and 2023.

The following table presents the Company’s REO as of March 31, 2024 and December 31, 2023:

March 31, 2024

December 31, 2023 (Audited)

Real estate owned at the beginning of year

Principal basis transferred to real estate owned

Charges and building improvements

Proceeds from sale of real estate owned

( 3,039,749 )

Impairment loss

Gain (loss) on sale of real estate owned

Balance at end of year

As of March 31, 2024, REO included $ 800,000 of real estate held for rental and $ 2,903,519 of real estate held for sale.

As of December 31, 2023, REO included $ 800,000 of real estate held for rental and $ 2,661,519 of real estate held for sale.

Properties Held for Sale

During the three months ended September 30, 2023, the Company sold one ( 1 ) property held for sale and recognized a loss of $ 14,229 .

During the nine months ended September 30, 2023, the Company sold six ( 6 ) properties held for sale and recognized an aggregate net gain of $ 112,633 .

During the three months ended September 30, 2022, the Company sold two ( 2 ) properties held for sale and recognized an aggregate net loss of $ 962 .

During the nine months ended September 30, 2022, the Company sold five ( 5 ) properties held for sale and recognized an aggregate net gain of $ 121,381 .

During the three months ended March 31, 2024, the Company sold one property held for sale and recognized an aggregate loss of $ 10,854 .

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

Properties Held for Rental

As of September 30, 2023, one property, a commercial building, was held for rental.

As of March 31, 2024, one property, a commercial building, was held for rental.

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

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

Year ending December 31, 2023

Year ending December 31, 2024

Year ending December 31, 2025

Year ending December 31, 2026

As of September 30, 2023 and December 31, 2022, other assets consists of the following:

September 30, 2023

December 31, 2022

As of March 31, 2024, future minimum rents under this lease were as follows:

Years Ending December 31,

2024 (9 months)

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

As of March 31, 2024 and December 31, 2023, other assets consists of the following:

March 31, 2024

December 31, 2023 (Audited)

Prepaid expenses

Other receivables

Intangible asset – trade name

Intangible asset – lease

Notes receivable

Deferred financing costs, net

Deferred leasing cost

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Leases in place intangible

Intangible asset – trade name

Lines of Credit, Mortgage Payable and Churchill Facility

1 unchanged sentence

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 ( 6.75 % at September 30, 2023, 6.75 % as of November 10, 2023).

As of September 30, 2023 the total outstanding balance on the Wells Fargo credit line was $ 26.3 million.

The credit line bears interest at a rate equal to 1.75 % below the prime rate ( 7.01 % at March 31, 2024 and 6.77 % at December 31, 2023).

As of March 31, 2024 and December 31, 2023, the total outstanding balance on the Wells Fargo credit line was approximately $ 27.3 million and approximately $ 26.8 million, respectively.

Line of Credit – Needham Bank

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 “Needham Credit Facility”).

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

As of September 8, 2023, the Needham Credit Facility was increased to $ 65 million.

Loans under the Needham 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 Needham 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 Needham 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 Needham 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 Needham 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;

(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 %.

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

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

At March 31, 2024, the total amount outstanding under the Needham Credit Facility was $ 35.0 million, and the interest rate was 8.25 %.

Mortgage Payable

7 unchanged sentences

The $ 750,000 of proceeds funded at closing were used to reimburse the Company for out-of-pocket costs relating to the acquisition of the East Main Street property.

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”).

On February 28, 2023, the Company refinanced the NHB Mortgage with a new adjustable-rate mortgage loan from New Haven Bank (the “New NHB Mortgage”) in the original principal amount of $ 1,660,000 .

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

2 unchanged sentences

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

Over the next five years, the Company is scheduled to make principal payments ranging from approximately $ 47,000 to approximately $ 59,000 annually, with the remaining balance due thereafter.

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

1 unchanged sentence

Churchill MRA Funding I LLC Repurchase Financing Facility

On July 21, 2021, the Company consummated a $ 200 million master repurchase financing facility (“Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York.

Under the terms of the Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans.

On July 21, 2021, the Company consummated a $ 200 million master repurchase financing facility (“Churchill Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York.

Under the terms of the Churchill Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans.

In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill.

2 unchanged sentences

The Company has also pledged the mortgage loans sold to Churchill to secure its repurchase obligation.

The cost of capital under the Facility is equal to the sum of (a) the greater of (i) 0.25 % and (ii) the 90 -day SOFR (which replaced the 90-day LIBOR) plus (b) 3 %- 4 %, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time.

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

The cost of capital under the Churchill Facility is equal to the sum of (a) the greater of (i) 0.25 % and (ii) the 90 -day SOFR (which replaced the 90 -day LIBOR) plus (b) 3 %- 4 %, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time.

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

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

and (B) must maintain unencumbered cash and cash equivalents in an amount equal to or greater than 2.50 % of the amount of its repurchase obligations.

Churchill has the right to terminate the Facility at any time upon 180 days prior notice to the Company.

Churchill has the right to terminate the Churchill Facility at any time upon 180 days prior notice to the Company.

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

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

At March 31, 2024, the total amount outstanding under the Churchill Facility was approximately $ 25.9 million.

The collateral pledged to Churchill at March 31, 2024 was 12 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 44.6 million.

At December 31, 2023, the total amount outstanding under the Churchill Facility was $ 26,461,098 .

The collateral pledged to Churchill at December 31, 2023 was 14 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 50.6 million.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 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, 2023, the total amount outstanding under the Facility was $ 47.9 million.

The collateral pledged to Churchill at September 30, 2023 was 22 mortgage loans that in the aggregate had unpaid principal balance of approximately $ 79.9 million.

As of September 30, 2023 the effective rate charged under the Facility was 9.47 %.

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

Line of Credit – Needham Bank

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:

(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 %.

Effective as of September 8, 2023, in accordance with the terms of the Credit Agreement, the Credit Agreement was amended to increase the Maximum Revolving Loan Commitment (as defined in the Credit Agreement) to $ 65 million.

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

At September 30, 2023, the total amount outstanding under the Credit Facility was $ 25.0 million, and the interest rate was 8.25 %.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

Unsecured Notes Payable

At September 30, 2023, the Company had an aggregate of $ 281,759,933 of unsecured, unsubordinated notes payable outstanding, net of $ 6,641,817 of deferred financing costs (collectively, the “Notes”).

At March 31, 2024, the Company had an aggregate of approximately $ 283.0 million of unsecured, unsubordinated notes payable outstanding, net of approximately $ 5.4 million of deferred financing costs (collectively, the “Notes”).

Currently, the Company has seven series of Notes outstanding:

(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”);

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(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”).

(i) Notes having an aggregate principal amount of approximately $ 23.7 million bearing interest at 7.125 % per annum and maturing June 30, 2024 (“the June 2024 Notes”);

(ii) Notes having an aggregate principal amount of $ 34.5 million bearing interest at 6.875 % per annum and maturing December 30, 2024 (the “December 2024 Notes”);

(iii) Notes having an aggregate principal amount of approximately $ 56.4 million bearing interest at 7.75 % per annum and maturing September 30, 2025 (the “September 2025 Notes”);

(iv) Notes having an aggregate principal amount of approximately $ 51.8 million bearing interest at 6.0 % per annum and maturing December 30, 2026 (the “December 2026 Notes”);

(v) Notes having an aggregate principal amount of approximately $ 51.9 million bearing interest at 6.0 % per annum and maturing March 30, 2027 (the “March 2027 Notes”);

(vi) Notes having an aggregate principal amount of $ 30.0 million bearing interest at 7.125 % per annum and maturing June 30, 2027 (the “June 2027 Notes”);

(vii) Notes having an aggregate principal amount of approximately $ 40.3 million 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.

4 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.

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.

As of the date of this report, the Company is actively pursuing strategies to address the 2024 maturities including, but not limited to, refinancing, extending, or paying off in full.

The following are the future principal payments on the notes payable as of September 30, 2023:

Year ending December 31,

Remainder of 2023

Currently, the June 2024 Notes, December 2024 Notes, the September 2025, the December 2026 Notes, the March 2027 Notes and the June 2027 Notes are callable at any time.

The September 2027 Notes will be callable at any time after August 23, 2024.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The following are the future principal payments on the notes payable as of March 31, 2024:

Years ending December 31,

2024 (9 months)

Total principal payments

2 unchanged sentences

Total notes payable, net of deferred financing costs

The estimated amortization of the deferred financing costs as of September 30, 2023 is as follows:

Year ending December 31,

Remainder of 2023

The estimated amortization of the deferred financing costs as of March 31, 2024 is as follows:

Years ending December 31,

2024 (9 months)

Total deferred costs

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Accounts Payable and Accrued Liabilities

As of September 30, 2023 and December 31, 2022, accounts payable and accrued liabilities include the following:

September 30, 2023

December 31, 2022

As of March 31, 2024 and December 31, 2023, accounts payable and accrued liabilities include the following:

March 31, 2024

December 31, 2023 (Audited)

Accounts payable and accrued expenses

CECL - allowance for unfunded contractual obligation credit losses

Allowance for credit losses on unfunded commitments

Accrued interest

Fee and Other Income

For the three and nine month periods ended September 30, 2023 and 2022, fee and other income consists of the following:

ended September 30,

For the three month periods ended March 31, 2024 and 2023, fee and other income consists of the following:

Ended March 31,

Late and other fees

2 unchanged sentences

Extension fees

Construction management fee

Construction servicing fees

Inspection fees

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Commitments and Contingencies

Origination, Modification, and Construction Servicing Fees

Loan origination, modification, and construction servicing 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.

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 consolidated balance sheet.

At September 30, 2023, deferred revenue was approximately $ 5.0 million, which will be recorded as income as follows:

Year ending December 31, 2023

Year ending December 31, 2024

Year ending December 31, 2025

At March 31, 2024, deferred revenue was $ 4,356,605 , which will be recorded as income as follows:

Years ending December 31,

2024 (9 months)

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.

4 unchanged sentences

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

(iv) participation

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

in the Company’s employee benefit plans;

(iv) participation in the Company’s employee benefit plans;

(v) full indemnification to the extent permitted by law;

6 unchanged sentences

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

In March 2024, the Company granted 111,857 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, 2025, 2026 and 2027 .

As of September 30, 2023, 226,483 restricted common shares remain unvested.

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

Warch, the Company’s former chief financial officer, the material terms of which were as follows:

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

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

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

(iv) participation in the Company’s employee benefit plans;

(v) full indemnification to the extent permitted by law;

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

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 were to vest on each of February 9, 2024 and 2025.

In connection with the termination of Mr.

Warch’s employment effective May 4, 2023, the 5,333 unvested restricted common shares were forfeited to the Company.

All shares granted under John Villano’s employment contract are restricted until the respective vesting periods lapse.

As of March 31, 2024, 231,926 restricted common shares remain unvested reflecting $ 1,011,885 of future stock compensation expense.

Unfunded Commitments

At September 30, 2023, the Company had future funding obligations totaling approximately $ 107.7 million, which can be drawn by the borrowers when the conditions relating thereto have been satisfied.

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

At March 31, 2024, the Company had future funding obligations totaling $ 95,457,791 , 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 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, 2023, there was one such proceeding pending.

The unpaid principal balances on the properties that are the subject of these proceedings was approximately $ 0.1 million.

At March 31, 2024, there were five such properties.

The unpaid principal balance on the properties that are subject to this proceeding was approximately $ 4.0 million.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

In accordance with the asset purchase agreement with Urbane New Haven, LLC (“Urbane”) in October 2022, under certain circumstances the Company will be required to pay Urbane 20 % of the net proceeds, as defined, of certain real estate development projects completed by the Company until such time that the former principal owner of Urbane, who is currently employed by the Company, is no longer employed by the Company.

4 unchanged sentences

The balance of the purchase price is due at closing.

The closing occurred in April 2024.

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, 2023 and December 31, 2022, loans to known shareholders totaled approximately $ 28.9 million and approximately $ 23.5 million, respectively.

Interest income earned on these loans for the three months ended September 30, 2023 and 2022 totaled $ 541,177 and $ 416,275 , respectively, and for the nine months ended September 30, 2023 and 2022 totaled $ 1,623,530 and $ 1,248,826 , respectively.

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The wife of the Company’s chief executive officer was employed by the Company as its director of finance until her retirement from the Company on September 30, 2022.

For the three and nine month periods ended September 30, 2022, she was paid $ 2,115 and $ 62,865 , respectively, as compensation from the Company.

As of March 31, 2024, and December 31, 2023, loans to known shareholders totaled approximately $ 23.8 million and approximately $ 25.6 million, respectively, which is included in mortgages receivables, net in the Company’s accompanying consolidated balance sheets.

Interest income earned on these loans for the three months ended March 31, 2024 and 2023 totaled approximately $ 0.6 million and approximately $ 0.5 million, respectively, which is included in interest income in the Company’s accompanying consolidated statements of comprehensive income.

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 months ended September 30, 2023 and 2022, she received compensation of $ 38,754 and $ 35,727 , respectively.

For the nine months ended September 30, 2023 and 2022, she received compensation of $ 114,754 and $ 106,327 , respectively.

For the three month period ended March 31, 2024 and 2023, she received compensation of $ 37,500 and $ 43,000 , respectively.

Concentration of Credit Risk

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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 .

Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $ 250,000 , per depositor.

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

Currently, all its investment securities, which include common shares, Series A Preferred Stock, corporate bonds and mutual funds, are held at Wells Fargo Advisors.

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).

SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules.

The Company makes loans that are secured by first mortgage liens on real property located primarily in Connecticut ( 44.9 %), Florida ( 23.7 %) and New York ( 12.9 %).

This concentration of credit risk may be affected by changes in economic or other conditions of the particular geographic area.

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

Outstanding Warrants

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.

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.

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

As of March 31, 2024, approximately 39.8 % of the properties securing the Company’s mortgage loans were located in Connecticut, approximately 26.2 % in Florida, and approximately 13.3 % in New York.

The Company’s mortgage loans are categorized into four property types, which as of March 31, 2024 were;

Residential ( 49.7 %), Commercial ( 36.5 %), Pre-Development Land ( 7.6 %), and Mixed Use ( 6.2 %).

These concentrations of credit risk may be affected by changes in economic or other conditions of the particular geographic area or particular asset type that collateralize the Company’s mortgage loans.

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

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Stock-Based Compensation and Employee Benefits

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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, 2023 was 988,785 .

During the nine months ended September 30, 2023 and 2022, the Company granted an aggregate of 201,390 and 153,967 restricted common shares under the Plan, respectively, with a fair value of $ 771,621 and $ 357,167 , respectively.

With respect to the restricted common shares granted during the nine months ended September 30, 2023, (i) an aggregate of 22,000 shares vested immediately on the date of grant, an additional aggregate of 22,000 shares will vest on each of the first and

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

second anniversaries of the date of grant, and 4,500 shares will vest on the third anniversary of the date of grant, and (ii) 43,630 shares will vest on January 1, 2024, 2025 and 2026, respectively.

Stock-based compensation for the three months ended September 30, 2023 and 2022 was $ 220,971 and $ 127,000 , respectively.

Stock-based compensation for the nine months ended September 30, 2023 and 2022 was $ 616,496 and $ 357,167 , respectively.

As of September 30, 2023, unrecorded stock-based compensation expense was $ 904,724 .

The number of securities remaining available for future issuance under the Plan as of March 31, 2024 was 882,262 .

During the three months ended March 31, 2024 and 2023, the Company granted an aggregate of 111,857 and 183,390 , respectively, restricted common shares under the Plan (including restricted common shares granted to the Company’s Chief Executive Officer, see Note 12).

Such shares during the three months ended March 31, 2024 and 2023 had a fair value of approximately $ 0.5 million and approximately $ 0.7 million, respectively.

With respect to the restricted common shares granted during the three months ended March 31, 2024, (i) 37,285 shares will vest on January 1, 2025 and (ii) an additional 37,286 shares will vest on January 1, 2025 and 2026, respectively.

Stock-based compensation expense for the three months ended March 31, 2024 and 2023 was approximately $ 0.2 million and approximately $ 0.2 million, respectively, which is included in compensation, fees, and taxes on the accompanying consolidated statements of comprehensive income.

As of March 31, 2024, there was unrecorded stock based compensation expense of approximately $ 1.0 million.

Employee Benefits

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

For the three months ended September 30, 2023 and 2022, the 401(k) Plan expense was $ 48,346 and $ 21,924 , respectively.

For the nine months ended September 30, 2023 and 2022, the 401(k) Plan expense was $ 123,735 and $ 71,925 , respectively.

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) having 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, 2023, under this offering, the Company sold an aggregate of 4,140,503 common shares, realizing gross proceeds of approximately $ 15.6 million, and sold an aggregate of 92,879 shares of its Series A Preferred Stock having an aggregate liquidation preference of $ 2,321,975 , realizing gross proceeds of approximately $ 1,933,900 representing a discount of approximately 16.7 % to the liquidation preference.

In October 2022, the Board adopted a stock repurchase plan (the “Repurchase Program”), pursuant to which the Company could repurchase up to an aggregate of $ 7,500,000 of its common shares.

Under the Repurchase Program, share repurchases are made from time to time on the open market at prevailing market prices or in negotiated transactions off the market in accordance with applicable federal securities laws, including Rule 10b-18 and 10b5-1 of the Exchange Act.

During the nine month period ended September 30, 2023, the Company repurchased 71,000 common shares under the Repurchase Program at a total cost of approximately $ 226,000 .

Following the repurchase, such shares were returned to authorized but unissued shares of the Company.

As of September 30, 2023, there were approximately $ 7,277,000 available under the Repurchase Program.

On September 7, 2023, the Company’s Board of Directors extended the Repurchase Program.

The new Repurchase Program will expire on October 9, 2024.

For the three months ended March 31, 2024 and 2023, the 401(k) Plan expense was $ 48,210 and $ 44,696 , respectively, which is included within compensation, fees, and taxes in the accompanying consolidated statements of comprehensive income.

Equity Offerings

On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 75.0 million of its common shares and its Series A Preferred Stock (as defined in Note 19 below) with an aggregate liquidation preference of up to $ 25.0 million in an “at-the market” offering, which is ongoing.

During the three months ended March 31, 2024, under this offering, the Company sold an aggregate of 568,711 common shares, realizing gross proceeds of approximately $ 2.1 million and 79,034 shares of its Series A Preferred Stock having an aggregate liquidation preference of approximately $ 2.0 million, realizing gross proceeds of approximately $ 1.6 million (representing a discount of approximately 20 % from the liquidation preference).

The Company’s issuance costs for both common shares and Series A Preferred Stock shares sold during the three months ended March 31, 2024 were nominal.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Partnership Investments

As of September 30, 2023, the Company had invested an aggregate of approximately $ 40.0 million in five limited liability companies in which it held non-controlling interests.

As of March 31, 2024, the Company had invested an aggregate of approximately $ 46.2 million in five limited liability companies in which it held non-controlling interests.

The Company’s ownership interest in four of the limited liability companies ranges from approximately 7 % to 49 % and one of the partnerships is owned 100 % by the Company.

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

The Company’s interests in

SACHEM CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

the funds are not redeemable at any time, as its investment will be repaid as the underlying loans are repaid.

The Company’s interests in the funds are not redeemable at any time, as its investment will be repaid as the underlying loans are repaid.

The Company expects to be repaid on its current investments by December 31, 2027.

For the three months ended September 30, 2023 and 2022, these investments generated $ 0.7 million and $ 0.5 million, respectively, of income for the Company.

For the nine months ended September 30, 2023 and 2022, the partnerships generated $ 2.3 million and $ 1.1 million, respectively, of income for the Company.

At September 30, 2023, the Company had unfunded partnership commitments totaling approximately $ 1.0 million.

Special Purpose Acquisition Corporation

In the third quarter ended September 30, 2023, the Company reported a loss of $ 477,047 representing its investment in Sachem Acquisition Corp., a special purpose acquisition company.

For the three months ended March 31, 2024 and 2023, the partnerships generated approximately $ 1.2 million and approximately $ 0.5 million, respectively, of income for the Company.

At March 31, 2024, the Company had unfunded partnership commitments totaling approximately $ 2.4 million.

Series A Preferred Stock

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

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Subsequent Events

On July 26, 2023, the Company’s Board of Directors declared a dividend of $ 0.11 per common share payable on November 7, 2023 to shareholders of record as of October 31, 2023.

Management has evaluated subsequent events through 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.

On April 1, 2024, the Company declared a dividend of $ 0.11 per share, or $ 5,219,066 in the aggregate, to shareholders of record as of April 9, 2024, which was paid on April 16, 2024.

Between April 1, 2024 and May 9, 2024, through the Company’s at-the-market offering facility, the Company sold no Common Shares, and 69,431 shares of its Series A Preferred Stock having an aggregate liquidation preference of $ 1,735,775 , realizing gross proceeds of $ 1,519,944 (representing a discount of approximately 12 % from the liquidation preference.)

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