What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-10 · 381 added, 354 removed, 550 unchanged (57% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2024

(dollars in thousands, except share data)

June 30, 2024

December 31, 2023

3 unchanged sentences

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, net

2 unchanged sentences

Investments in partnerships

Investments in rental real estate, net

Property and equipment, net

Liabilities and Shareholders’ Equity

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

Notes payable (net of deferred financing costs of $ 4,826 and $ 6,048 )

Repurchase facility

12 unchanged sentences

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

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

2,206,128 and 2,029,923 shares of Series A Preferred Stock issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common shares - $ .001 par value;

200,000,000 shares authorized;

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

Paid-in capital

47,547,051 and 46,765,483 issued and outstanding at June 30, 2024 and December 31, 2023

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

( 16,466,797 )

( 20,115,496 )

Total shareholders’ equity

2 unchanged sentences

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(dollars in thousands, except share and per share data)

Three Months Ended

Six Months Ended

Interest income from loans

Investment gain, net

Fee income from loans

Income from partnership investments

Origination and modification fees, net

Fee and other income

Unrealized gain on equity securities

Total revenue

Operating costs and expenses:

Other investment income

Total revenues

Operating expenses

Interest and amortization of deferred financing costs

Compensation, fees and taxes

Compensation and employee benefits

General and administrative expenses

Provision for credit losses related to loans

Other expenses

Total operating expenses

Income before other income (loss)

Other income (loss)

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

Gain on equity securities

Total other income (loss), net

Net income (loss)

Preferred stock dividend

( 1,021,526 )

Net income attributable to common shareholders

Net income (loss) attributable to common shareholders

Basic earnings (loss) per common share

Diluted earnings (loss) per common share

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

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

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(dollars in thousands, except share and per share data)

Three Months Ended

Six Months Ended

Net income (loss)

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:

Unrealized gain (loss) on debt securities

Reversal of losses on debt securities from unrealized to realized

Comprehensive income (loss)

Preferred stock dividend

Total comprehensive income (loss) attributable to common shareholders

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 MARCH 31, 2024

Preferred Stock

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

(dollars in thousands, except share data)

FOR THE THREE MONTHS ENDED JUNE 30, 2024

Preferred Shares

Common Shares

1 unchanged sentence

Income (Loss)

Balance, April 1, 2024

Issuance of Series A Preferred Stock, net of expenses

Issuance of Common Shares, net of expenses

Stock-based compensation

Unrealized loss on debt securities

Reversal of losses from unrealized to realized

Dividends paid on Series A Preferred Stock

Dividends Paid on Common Shares

Net income (loss)

Balance, June 30, 2024

FOR THE THREE MONTHS ENDED JUNE 30, 2023

Preferred Shares

Common Shares

Comprehensive

Balance, April 1, 2023

Issuance of Series A Preferred Stock, net of expenses

Issuance of Common Shares, net of expenses

Stock Buyback

Stock-based compensation

Unrealized gain on debt securities

Dividends paid on Series A Preferred Stock

Dividends Paid on Common Shares

Balance, June 30, 2023

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

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued) (unaudited)

(dollars in thousands, except share data)

FOR THE SIX MONTHS ENDED JUNE 30, 2024

Preferred Shares

Common Shares

Comprehensive

Income (Loss)

Balance, January 1, 2024

( 20,115,496 )

Issuance of Series A Preferred Stock, net of expenses

2 unchanged sentences

Unrealized loss on debt securities

Reversal of losses from unrealized to realized

Dividends paid on Series A Preferred Stock

( 1,021,526 )

Balance, March 31, 2024

( 16,466,797 )

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Preferred Stock

Dividends Paid on Common Shares

Balance, June 30, 2024

FOR THE SIX MONTHS ENDED JUNE 30, 2023

Preferred Shares

Common Shares

1 unchanged sentence

Balance, January 1, 2023

( 7,995,143 )

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

( 2,489,574 )

Issuance of Series A Preferred Stock, net of expenses

Issuance of Common Shares, net of expenses

Stock Buyback

Stock-based compensation

1 unchanged sentence

Dividends paid on Series A Preferred Stock

Balance, March 31, 2023

( 6,289,257 )

Dividends paid on Common Shares

Balance, June 30, 2023

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

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW

Three Months Ended

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(dollars in thousands)

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

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

Impairment Loss

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

(Gain) on equity securities

Changes in operating assets and liabilities:

1 unchanged sentence

Due from borrowers, net

( 1,037,945 )

Accounts payable and accrued liabilities

1 unchanged sentence

Advances from borrowers

( 1,821,780 )

Total adjustments

2 unchanged sentences

Purchase of investment securities

( 7,725,283 )

( 13,971,218 )

Proceeds from the sale of investment securities

Purchase of interests in investment partnerships, net

( 3,185,824 )

( 4,491,054 )

Proceeds from sale of real estate owned

1 unchanged sentence

Purchases of property and equipment

Purchases of rental real estate

Improvements in investment in rental real estate

Principal disbursements for mortgages receivable

( 42,654,300 )

( 58,883,824 )

Principal collections on mortgages receivable

1 unchanged sentence

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

( 33,955,046 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from lines of credit

Net proceeds from (repayment of) 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

Proceeds from (repayment of) mortgage payable

Dividends paid on common shares

( 5,144,203 )

( 5,342,160 )

Dividends paid on Series A Preferred Stock

( 1,021,526 )

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 (repayment of) notes payable

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

( 2,720,574 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 3,380,581 )

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

2 unchanged sentences

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)

Three Months Ended

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (unaudited)

(dollars in thousands)

Six 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.

Real estate acquired in connection with the foreclosure of certain mortgages during the six months ended June 30, 2024 and 2023 amounted to $ 1,627 and $ 1,187 , respectively.

Real estate owned decreased as a result of increases in mortgages receivable that were financed by new borrowers, during the six months ended June 30, 2024 and 2023, which amounted $ 1,980 and $ 1,370 , respectively.

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

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Sachem Capital Corp.

6 unchanged sentences

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

In addition, the Company may participate in real estate loans made by third parties or invest in third parties that make real estate loans, as well as make opportunistic real estate purchases apart from its lending activities.

Summary of Significant Accounting Policies

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.

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

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

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 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.

The balance sheet information as of December 31, 2023 is derived from audited financial statements, but does not include all disclosures required by GAAP.

Results of operations for the three months and six month periods ended June 30, 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.

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP.

The preparation of the accompanying unaudited 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 such 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.

Actual amounts could materially differ from those estimates.

The accompanying unaudited 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.

5 unchanged sentences

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, 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

If the cost of an investment exceeds its fair value, management evaluates, among other factors, general market conditions, credit quality of debt

SACHEM CAPITAL CORP.

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.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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 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.

1 unchanged sentence

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).

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.

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 the carrying value.

Changes in value are recorded in net income (loss).

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 (”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.

The initial CECL credit allowance adjustment of $ 2.5 million 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 operations in “Provision for credit losses related to loans”.

The Company records an “Allowance for credit losses” in accordance with the CECL standard on the consolidated balance sheets with respect to its loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics.

This methodology, known as the “static pool methodology,” replaces the “probable incurred loss impairment” methodology.

2 unchanged sentences

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

The amount of loans in pending/pre-foreclosure as of March 31, 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 amount of loans in pending/pre-foreclosure as of June 30, 2024 and December 31, 2023 was $ 73.1 million and $ 68.1 million, respectively.

As of June 30, 2024 and December 31, 2023, the Company has taken reserves against loans subject to foreclosure of $ 11.3 million and $ 6.2 million, respectively, which is included in “Allowance for credit losses” on the consolidated balance sheets included in the accompanying consolidated financial statements.

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

7 unchanged sentences

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.

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

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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

2 unchanged sentences

losses related to loans

Balance as of March 31, 2024

Balance as of June 30, 2024

(in thousands)

Mortgages receivable

3 unchanged sentences

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 .

During the six months ended June 30, 2024, there were $ .05 million of mortgages receivable that were directly written off, that are included in the $ 9.9 million provision for credit losses related to loans presented on the consolidated statements of operations.

There were no such write offs for the six months period ended June 30, 2023, nor were there during the three months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023 the Company had an Allowance for credit losses on debt securities of $ 0 and $ 0.8 million, respectively, which is presented in “Investment securities (at fair value)” on the Company’s consolidated balance sheets.

During the three months ended June 30, 2024, the Company sold all of its debt securities, as such, as of June 30, 2024 the balance of these securities was $ 0 .

As of December 31, 2023, the fair value of these securities was $ 0.8 million.

The cost basis of these securities was $ 1.6 million.

Fair Value Measurements

12 unchanged sentences

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 during the three months ended March of 2023.

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

SACHEM CAPITAL CORP.

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

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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

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

During the three and six months ended June 30, 2024 and 2023, the Company had impairment of $ 0 and $ 0.2 million on the building that served as the Company’s old office building.

The following tables represent the Company’s Property and Equipment, Net as of June 30, 2024 and December 31, 2023:

June 30, 2024

Accumulated Depreciation

Property and Equipment, Net

(in thousands)

Furniture and fixtures

1 unchanged sentence

Total property and equipment, net

December 31, 2023 (Audited)

December 31, 2023

Accumulated Depreciation

Property and Equipment, Net

(in thousands)

Furniture and fixtures

16 unchanged sentences

The Company assesses the fair value of the acquired leases based on estimated cash flow projections that utilize appropriate discount rates and available market information.

Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

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.

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,

Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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.

The transaction was completed on August 31, 2023.

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.

In addition, the Company recorded a lease liability stemming from below-market rental rates.

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

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

Total consideration, including capitalized acquisition-related costs, was $ 10.7 million.

See Note 5 – Investment in Rental Real Estate, net for further details surrounding the above acquisition as of June 30, 2024.

Real Estate Owned (“REO”)

2 unchanged sentences

REO is evaluated for recoverability when impairment indicators are identified.

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

Any impairment losses are included in the consolidated statements of operations.

Impairment of Long-Lived Assets

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

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

When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

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

If the undiscounted cash flow 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.

Goodwill at June 30, 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.

1 unchanged sentence

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.

As of June 30, 2024 and 2023, goodwill was $ 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 and six months ended June 30, 2024 and 2023.

Deferred Financing Costs

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Revenue Recognition

2 unchanged sentences

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

However, interest income not accrued at 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.

However, interest income not accrued at June 30, 2024 but collected prior to the issuance of this Report is included in income for the six-month period ended June 30, 2024.

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 Topic 310.

10 unchanged sentences

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

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.

During the three and six months ended June 30, 2024, the Company’s TRSs recognized provisions for federal and state income tax of $ 0 and $ 0.2 million, respectively, which is represented in other expenses on the Company’s consolidated statements of operations.

During the three and six months ended June 30, 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.

2 unchanged sentences

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

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying 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 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.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying consolidated financial statements as of June 30, 2024 and 2023.

Earnings (Losses) Per Share

Basic and diluted earnings (losses) 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 (losses) per share is similar to basic earnings (losses) 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 (losses) per common share for each period is the reported net income (loss).

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 .

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

For the three and six months ended June 30, 2024, the Company had basic and diluted weighted average shares of 47,504,875 and 47,415,630 outstanding , resulting in basic and diluted losses per share of $0.09 and $0.01 , respectively .

For the three and six months ended June 30, 2023, the Company had basic and diluted weighted averages shares of 43,844,285 and 43,321,303 outstanding, resulting in basic and diluted earnings per share of $ 0.11 and $ 0.21 , respectively .

Recent Accounting Pronouncements

1 unchanged sentence

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.

This update did not have a material effect on the accompanying unaudited consolidated financial statements.

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

3 unchanged sentences

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.

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

This update is not expected to have a material effect on the accompanying consolidated financial statements.

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

Reclassifications

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.

Certain amounts included in the Company’s June 30, 2023 and December 31, 2023 consolidated financial statements have been reclassified to conform to the presentation in the accompanying unaudited consolidated financial statements.

Fair Value Measurement

The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair market value measurement.

The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair value measurement.

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

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

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of June 30, 2024:

(in thousands)

Stocks and ETFs

Debt securities

Total investment securities

Total investment securities, at fair value

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):

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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:

(in thousands)

Stocks and ETF’s

Debt securities

Total investment securities

Total investment securities, at fair value

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

12 unchanged sentences

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

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

As of March 31, 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:

Pursuant to ASC Topic 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 June 30, 2024 and December 31, 2023, the Company had a continuous unrealized losses over 12 months in Available-For-Sale (“AFS”) debt securities of $ 0 and $ 0.8 million, 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, corporate earnings and the impending maturity date of said securities, as of the most recently filed financial statements.

As such, at June 30, 2024 and December 31, 2023, the Company has an allowance for credit losses regarding AFS debt securities totaling $ 0 and $ 0.8 million, respectively, of which is included in investment securities (at fair value) on the consolidated balance sheets included in the accompanying consolidated financial statements.

There was no such related provision of credit losses for the three and six month periods ended June 30, 2024 and 2023.

During the three months ended June 30, 2024, the Company sold all of the remaining AFS debt securities.

The following table presents the impact of the Company’s AFS securities - debt securities on its Other Comprehensive Income (“OCI”) for the three and six months ended June 30, 2024 and 2023:

Three Months Ended

Six months Ended

(in thousands)

OCI from AFS securities – debt securities:

1 unchanged sentence

Reversal of losses from unrealized to realized

Unrealized (losses) gain on debt securities

Unrealized (loss) gain

Change in OCI from AFS debt securities

Balance at end of period

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

As of June 30, 2024 and 2023, the investment securities cost basis was $ 3.1 million and $ 38.9 million, respectively.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Mortgages Receivable, net

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

The 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.

6 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.

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.

As of June 30, 2024 and December 31, 2023, loans on nonaccrual status had an outstanding principal balance of $ 106.9 million and $ 84.6 million, respectively.

The nonaccrual loans are inclusive of loans pending foreclosure.

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.

For the three and six months ended June 30, 2024, $ 0.3 million and $ 0.4 million of interest income was recorded on nonaccrual loans due to payments received, respectively.

For both the three and six months ended June 30, 2023, $ 0.2 million of interest income, was recorded on nonaccrual loans.

For the six months ended June 30, 2024 and 2023, the aggregate amounts of loans funded by the Company were $ 84.3 million and $ 114.5 million, respectively, offset by principal repayments of $ 79.6 million and $ 66.4 million, respectively.

As of June 30, 2024, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 41.7 million with stated interest rates ranging from 5.0 % to 15.0 %, compared to loans ranging in size of up to $ 34.0 million with stated interest rates ranging from 5.0 % to 14.2 % for the period ended June 30, 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.

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.

As of June 30, 2024, and December 31, 2023, the Company had one borrower representing 11.7 % and 10.1 % of the outstanding mortgage loan portfolio, or $ 58.4 million and $ 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.

8 unchanged sentences

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.

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.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

The Company reviews charge-off experience factors, contractual delinquency, historical collection rates, the value of underlying collateral and other information to make the necessary judgments as to allowance for 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.

4 unchanged sentences

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:

The following table summarizes the activity in the mortgages receivable allowance for credit losses from December 31, 2023 through June 30, 2024:

Allowance for credit losses

1 unchanged sentence

Provision for credit losses

as of March 31,

(dollars in thousands)

December 31, 2023 (Audited)

as of June 30,

December 31, 2023

related to loans

(in thousands)

Geographical Location

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

March 31, 2024

December 31, 2023 (Audited)

(dollars in thousands)

June 30, 2024

December 31, 2023

Carrying Value

2 unchanged sentences

% of Portfolio

(in thousands)

Geographical Location

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Presented below are the carrying values by property type:

March 31, 2024

December 31, 2023 (Audited)

(dollars in thousands)

June 30, 2024

December 31, 2023

% of Portfolio

(in thousands)

Property Type

3 unchanged sentences

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

March 31, 2024

June 30, 2024

Year Originated (1)

FICO Score (2) (dollars in thousands)

FICO Score (2)

(in thousands)

Allowance for credit losses

2 unchanged sentences

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

December 31, 2023 (Audited)

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

December 31, 2023

Year Originated (1)

FICO Score (2) (dollars in thousands)

FICO Score (2)

(in thousands)

Allowance for credit losses

2 unchanged sentences

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

The following table sets forth the maturities of mortgages receivable as of June 30, 2024:

As of June 30, 2024

(in thousands)

2024 (6 month) and prior

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.

At June 30, 2024, of the 262 mortgage loans included in the Company’s loan portfolio, 79 , or 30.2 %, representing $ 132.0 million of mortgage receivables have matured but have not been repaid in full or extended.

The 79 aforementioned loans are inclusive of loans in pending/pre-foreclosure status.

1 unchanged sentence

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.

At December 31, 2023, of the 311 mortgage loans in the Company’s portfolio, 89 , or 28.6 %, representing $ 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

2 unchanged sentences

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 March 31, 2024

Carrying Value of

(in thousands)

Carrying Value

Financial Effect

Loans modified during the period ended

Term extension

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

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

For the three months ended June 30, 2024 and 2023, $ 61.0 million, or 12.2 %, and $ 17.7 million, or 3.5 %, of total mortgage receivable was modified for borrowers experiencing financial difficulty, respectively.

For the six months ended June 30, 2024 and 2023, $ 104.5 million, or 20.9 %, and $ 27.6 million, or 5.4 %, of total mortgage receivable was modified for borrowers experiencing financial difficulty, respectively.

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

Financial Effect

Loans modified during the period ended

Term extension

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

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, 2023

(in thousands)

90-119 days past due

120+ days past due

Loans modified during the period ended

Term extension

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.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

As of June 30, 2024 and 2023, the Company has committed to lend additional amounts totaling $ 13.4 million and $ 3.5 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

As of June 30, 2024 and December 31, 2023, investment in rental real estate, net consist of the following:

Six months ended June 30, 2024

Accumulated Depreciation

Investment in Rental Real Estate, Net

(in thousands)

Site improvements

1 unchanged sentence

Construction in progress

Year ended December 31, 2023 (Audited)

Year ended December 31, 2023

Accumulated Depreciation

Investment in Rental Real Estate, Net

(in thousands)

Site improvements

4 unchanged sentences

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 .

For the six months ended June 30, 2024, depreciation and amortization related to the asset was $ 0.1 million.

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 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

improvement allowance of approximately $ 2.7 million.

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 of 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 improvement allowance of $ 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:

As of June 30, 2024, future minimum rents under non-cancelable operating leases were as follows:

Years Ending December 31,

(in thousands)

2024 (6 months)

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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

Years Ending December 31,

(in thousands)

2024 (6 months)

1 unchanged sentence

Years Ending December 31,

(in thousands)

2024 (6 months)

1 unchanged sentence

Years Ending December 31,

(in thousands)

2024 (6 months)

1 unchanged sentence

● 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.

3 unchanged sentences

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.

Accordingly, the agreed payment of $ 0.1 million per certain approved and sold or permitted market rate residential units has been recognized.

The expected payment, of which is $ 0.6 million, has been accrued as of June 30, 2024 and is included in accounts payable and accrued liabilities on the consolidated balance sheets included in the accompanying unaudited consolidated financial statements.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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

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

As of June 30, 2024 and December 31, 2023, REO totaled $ 3.9 million and $ 3.5 million, respectively.

For the three months ended June 30, 2024 and 2023, the Company recorded an impairment loss of 0.1 million and $ 0.2 million, respectively.

For the six months ended June 30, 2024 and 2023, the Company recorded an impairment loss of $ 0.1 million and $ 0.2 million, respectively.

The following table presents the Company’s REO as of June 30, 2024 and December 31, 2023:

June 30, 2024

December 31, 2023

(in thousands)

Real estate owned at the beginning of period

Principal basis transferred to real estate owned

1 unchanged sentence

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.

Gain on sale of real estate owned

Balance at end of period

As of June 30, 2024, REO included $ 0.8 million of real estate held for rental and $ 3.1 million of real estate held for sale.

As of December 31, 2023, REO included $ 0.8 million of real estate held for rental and $ 2.7 million of real estate held for sale.

Properties Held for Sale

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 .

During the three months ended June 30, 2024, the Company sold ten properties held for sale and recognized a net gain of $ 0.3 million.

During the six months ended June 30, 2024, the Company sold eleven properties held for sale and recognized a net gain of $ 0.3 million.

During the three months ended June 30, 2023, the Company sold three properties held for sale and recognized a net loss of $ 0.02 million.

During the six months ended June 30, 2023, the Company sold five properties held for sale and recognized a net gain of $ 0.1 million.

Properties Held for Rental

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

As of June 30, 2024, one property, a commercial building, was held for rental.

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

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

As of June 30, 2024, future minimum rents under this lease were as follows:

Years Ending December 31,

(in thousands)

2024 (6 months)

1 unchanged sentence

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)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

As of June 30, 2024 and December 31, 2023, other assets consist of the following:

June 30, 2024

December 31, 2023

(in thousands)

Prepaid expenses

8 unchanged sentences

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 ( 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.

The credit line bears interest at a rate equal to 1.75 % below the prime rate ( 7.02 % at June 30, 2024 and 6.77 % at December 31, 2023).

During the second quarter of 2024, the Company sold all of its investment securities that collateralized the line of credit.

As such, the balance as of June 30, 2024 was $ 0 .

At December 31, 2023 the total outstanding balance on the Wells Fargo credit line was $ 26.8 million.

Line of Credit – Needham Bank

3 unchanged sentences

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.

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

6 unchanged sentences

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 %.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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

As of June 30, 2024 and December 31, 2023, the total outstanding principal balance on the Needham Credit Facility was $ 55.0 million and $ 35.0 million, respectively, with an interest rate of 8.25 %.

Mortgage Payable

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

In 2021, the Company obtained a $ 1.4 million adjustable-rate mortgage loan from New Haven Bank (the “NHB Mortgage”) of which $ 750,000 was funded at closing to reimburse the Company for out-of-pocket costs relating to the acquisition of the property located at 568 East Main Street, Branford, Connecticut, which now serves as the Company’s headquarters.

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

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

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

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

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

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

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

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 NHB Mortgage was a non-recourse loan, secured by a first mortgage lien on the Company’s prior headquarters, which was located at 698 Main Street, Branford, Connecticut and the property located at 568 East Main Street, Branford, Connecticut.

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.

Over the next five years, the Company is scheduled to make principal payments ranging from $ 47,000 to $ 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.

The new loan is a non-recourse obligation, secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut.

As of June 30, 2024 and December 31, 2023, the total outstanding principal balance on the New NHB Mortgage was $ 1.0 million and $ 1.1 million, respectively.

Churchill MRA Funding I LLC Repurchase Financing Facility

6 unchanged sentences

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.

As of June 30, 2024 and December 31, 2023, the effective interest rate charged under the facility was 9.60 % and 9.47 %, respectively.

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.

4 unchanged sentences

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.

At June 30, 2024, the total amount outstanding under the Churchill Facility was $ 23.0 million.

The collateral pledged to Churchill at June 30, 2024 was 16 mortgage loans that in the aggregate had unpaid principal balance of $ 54.0

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

At December 31, 2023, the total amount outstanding under the Churchill Facility was $ 26.5 million.

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

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

Unsecured Notes Payable

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 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.

At June 30, 2024, the Company had an aggregate of $ 259.9 million of unsecured, unsubordinated notes payable outstanding, net of $ 4.8 million of deferred financing costs (collectively, the “Notes”).

On June 25, 2024, the Company redeemed its 7.125 % unsecured, unsubordinated Notes due June 30, 2024 in the aggregate principal amount of $ 23.7 million (“the June 2024 Notes”) plus the accrued interest thereon.

Following the repayment of the June 2024 Notes, the Company has six series of Notes outstanding:

(i) 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”);

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

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

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

(v) 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”);

(vi) Notes having an aggregate principal amount of $ 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 “SACC,” “SCCC,” “SCCD,” “SCCE,” “SCCF” and “SCCG,” respectively.

All the Notes were issued at par except for the last tranche of the September 2025 notes, in the original principal amount of $ 28 million, which were issued at $ 24.75 each.

3 unchanged sentences

The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including the date of redemption.

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.

Currently, the December 2024 Notes, the September 2025 Notes, 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 on or 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:

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

The following are the future principal payments on the notes payable as of June 30, 2024:

Years ending December 31,

(in thousands)

2024 (6 months)

1 unchanged sentence

Deferred financing costs

( 5,443,237 )

Total notes payable, net of deferred financing costs

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

The estimated amortization of the deferred financing costs as of June 30, 2024 is as follows:

Years ending December 31,

(in thousands)

2024 (6 months)

1 unchanged sentence

Accounts Payable and Accrued Liabilities

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

March 31, 2024

December 31, 2023 (Audited)

As of June 30, 2024 and December 31, 2023, accounts payable and accrued liabilities include the following:

June 30, 2024

December 31, 2023

(in thousands)

Accounts payable and accrued expenses

1 unchanged sentence

Accrued interest

Fee and Other Income

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

Ended March 31,

Fee income from loans

For the three and six month periods ended June 30, 2024 and 2023, fee income from loans consists of the following:

ended June 30,

(in thousands)

Origination and Modification fees

Extension fees

Late and other fees

Processing fees

Rental income, net

Extension fees

Construction servicing fees

Inspection fees

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Commitments and Contingencies

2 unchanged sentences

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

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

At June 30, 2024, deferred revenue was $ 4.8 million, which will be recorded as income as follows:

Years ending December 31,

(in thousands)

2024 (6 months)

9 unchanged sentences

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

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

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

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

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

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

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

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

In February 2023, the Company granted 130,890 restricted common shares (having a market value of $ 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.

In March 2024, the Company granted 111,857 restricted common shares (having a market value of $ 500,000 ) to Mr.

One -third of such shares will vest on each of January 1, 2025, 2026 and 2027 .

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.

As of June 30, 2024, 231,926 restricted common shares remain unvested.

Unfunded Commitments

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.

At June 30, 2024, the Company had future funding obligations totaling $ 89.0 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.

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 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.

At June 30, 2024, there was two such properties.

The unpaid principal balance on the properties that are subject to these proceedings was $ 2.1 million.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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.

Any future payments will be expensed.

On September 11, 2023, the Company entered into a contract to acquire a residential property in Miami, FL.

The purchase price for the property is $ 2,300,000 .

The Company paid $ 230,000 upon the execution and delivery of the contract, which amount is refundable if the seller fails to satisfy certain closing conditions or fails to transfer ownership of the property.

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

As of June 30, 2024, and December 31, 2023, loans to known shareholders totaled $ 23.9 million and $ 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 June 30, 2024 and 2023 totaled $ 0.5 million for both periods, and for the six months ended June 30, 2024 and 2023 totaled $ 1.1 million for both periods, which is included in interest income in the Company’s accompanying consolidated statements of operations.

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

For the three-month periods ended June 30, 2024 and 2023, she received compensation of $ .04 million and $ .03 million respectively.

For the six-month periods ended June 30, 2024 and 2023, she received compensation of $ .08 million and $ .08 million, respectively.

Concentration of Credit Risk

2 unchanged sentences

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 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.

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;

As of June 30, 2024, 36.3 % of the properties securing the Company’s mortgage loans were located in Connecticut, 28.4 % in Florida, and 12.8 % in New York.

The Company’s mortgage loans are categorized into four property types, which as of June 30, 2024 were;

Residential ( 58.0 %), Commercial ( 29.3 %), Pre-Development Land ( 6.8 %), and Mixed Use ( 5.9 %).

1 unchanged sentence

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

3 unchanged sentences

The maximum number of common shares reserved for the grant of awards under the Plan is 1,500,000 , subject to adjustment as provided in Section 5 of the Plan.

The number of securities remaining available for future issuance under the Plan as of 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.

The number of securities remaining available for future issuance under the Plan as of June 30, 2024 was 781,262 .

During the six months ended June 30, 2024 and 2023, the Company granted an aggregate of 212,857 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 had a fair value of approximately $ 0.8 million and approximately $ 0.7 million, respectively.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

With respect to the restricted common shares granted during the six months ended June 30, 2024, (i) 33,666 shares vested on May 9, 2024;

(ii) 33,667 shares will vest on May 1, 2025 and 2026, respectively;

(iii) 37,285 shares will vest on January 1, 2025;

and (iv) 37,286 shares will vest on January 1, 2026 and 2027 , respectively.

Stock-based compensation for the three months ended June 30, 2024 and 2023 was $ 0.2 million for both periods, which is included in compensation and employee benefits on the accompanying consolidated statements of operations.

Stock-based compensation for the six months ended June 30, 2024 and 2023 was $ 0.4 million for both periods.

As of June 30, 2024, there was unrecorded stock-based compensation expense of $ 1.1 million.

Employee Benefits

3 unchanged sentences

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

For the 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.

For the three months ended June 30, 2024 and 2023, the 401(k) Plan expense was $ 0.03 million and $ 0.03 million, respectively, which is included within compensation and employee benefits in the accompanying consolidated statements of operations.

For the six months ended June 30, 2024 and 2023, the 401 (k) Plan expense was $ 0.08 million and $ 0.08 million, respectively, which is included within compensation and employee benefits in the accompanying consolidated statements of operations.

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

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 18 below) with an aggregate liquidation preference of up to $ 25.0 million in an “at-the market” offering, which is ongoing (the “ATM Offering”).

On June 17, 2024, the Company filed a new prospectus supplement (the “New Prospectus Supplement”) which modified the ATM Offering by reducing the amount of common shares the Company may offer and sell to up to an aggregate of $ 48.7 million, including the common shares the Company has already sold in the ATM Offering prior to the date of the New Prospectus Supplement.

All the other terms of the ATM Offering remained the same.

During the six months ended June 30, 2024, under this offering, the Company sold an aggregate of 568,711 common shares, realizing gross proceeds of $ 2.1 million and 176,205 shares of its Series A Preferred Stock having an aggregate liquidation preference of approximately $ 4.4 million, realizing gross proceeds of $ 3.7 million (representing a discount of 16.2 % from the liquidation preference).

The Company’s issuance costs for both common shares and Series A Preferred Stock shares sold during the six months ended June 30, 2024 were nominal.

Partnership Investments

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.

As of June 30, 2024, the Company had invested an aggregate of $ 47.0 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 7 % to 49 % and one of the partnerships is owned 100 % by the Company.

The Company accounts for these investments at cost because the Company does not manage the entities and thus has no control or have significant influence over the investments.

6 unchanged sentences

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

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

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

These loans are primarily two- to three- year collateralized mortgage loans, often with contractual extension options for the borrowers

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

of an additional year.

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

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 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.

For the three months ended June 30, 2024 and 2023, the non-controlling partnership interests generated $ 1.2 million and $ 1.0 million, respectively, of income for the Company.

For the six months ended June 30, 2024 and 2023, the partnerships generated $ 2.4 million and $ 1.6 million, respectively, of income for the Company.

At June 30, 2024, the Company had unfunded partnership commitments totaling $ 2.7 million.

Series A Preferred Stock

8 unchanged sentences

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 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.)

On July 19, 2024 the Company declared a dividend of $ 0.08 per share, or $ 3.8 million in the aggregate, to shareholders of record as of July 29, 2024, which was paid on August 6, 2024.

Between July 1, 2024 and August 14, 2024, through the Company’s at-the-market offering facility, the Company sold no common shares, and 7,622 shares of its Series A Preferred Stock having an aggregate liquidation preference of $ 0.2 million, realizing gross proceeds of $ 0.2 million (representing a discount of 13.3 % from the liquidation preference.)

Between July 1, 2024 and August 14, 2024, the Company repurchased 114,796 of its common shares through its existing stock repurchase plan.

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