Sachem Capital Corp. 10-Q

Item 1A. Risk Factors There have been no material changes to the risk factors set forth under “Risk Factors” in Part I, Item 1A of our Annual Report, filed with the SEC on March 13, 2026, other than as described below. The consummation of the Transaction is subject to a number of conditions which, if not satisfied or waived, would adversely impact our ability to complete the Transaction. The Transaction is subject to certain closing conditions, including, among others: (1) the receipt by us of the affirmative vote of the holders of a majority of the outstanding Common Shares approving the Transaction (the “Sachem Shareholder Approval”); (2) the absence of any injunction or other order prohibiting consummation of the Transaction; (3) the accuracy of the representations and warranties of each party, subject to customary material adverse effect and materiality qualifications; (4) the performance in all material respects by each party of its covenants and obligations under the Contribution Agreement; (5) the absence of "Material Adverse Effect" (as defined in the Contribution Agreement) on either party; (6) the receipt by each party of a tax opinion from nationally recognized REIT counsel; (7) the consummation of the Pre-Closing Reorganization (as defined in the Contribution Agreement); (8) the delivery by each party of the Determination Date Certificates (as defined in the Contribution Agreement); (9) the delivery by each party of officer’s certificates regarding accuracy of representations and warranties; (10) the execution and delivery of specified transaction documents; and (11) other customary conditions specified in the Contribution Agreement. There can be no assurance these conditions will be satisfied or waived, if permitted. In addition, although there is no financing condition to the closing of the Transaction, it is anticipated that we will enter into a new credit facility or other debt financing in connection with the Transaction. No assurance can be given that any new credit facility or other debt financing will be available in the amounts, at the costs or on the terms contemplated, or at all, and the inability to obtain such financing could materially and adversely affect our ability to close the Transaction. Therefore, we cannot provide any assurance with respect to the timing of the closing of the Transaction, or that the Transaction will be completed at all. Failure to complete the Transaction could adversely affect the market price of our Common Shares and our future business and financial results. We cannot assure you that the conditions to closing of the Transaction will be satisfied or waived or that the Transaction will be completed. If the Transaction is not completed, our ongoing business could be adversely affected and we will be subject to a variety of risks associated with the failure to complete the Transaction, including the following: • upon termination of the Contribution Agreement under specified circumstances, we may be required to pay IRG Global a termination fee of $4.0 million; • we have incurred, and will continue to incur, significant transaction costs, including legal, accounting, financial advisor, filing, printing and mailing fees, regardless of whether the Transaction closes; and • the Transaction, whether or not it closes, will divert the attention of certain management and other key employees from our ongoing business activities, including the pursuit of other opportunities that could be beneficial to us. If the Transaction is not completed, these risks could materially affect our business and financial results and the market price of our Common Shares, including to the extent that the current market price of our Common Shares reflects, and is positively affected by, a market assumption that the Transaction will be completed. The Contribution Agreement contains provisions that could discourage a potential competing acquirer from making a favorable proposal to us and, in specified circumstances, could require us to make a termination payment to IRG Global. The Contribution Agreement contains certain provisions that restrict our ability to solicit, initiate, knowingly encourage or knowingly facilitate any proposals for, or that could reasonably lead to, alternative transactions with a third party, or participate in discussions relating to an alternative transaction or a proposal or inquiry related thereto, furnish non-public information to third parties relating to an alternative transaction or a proposal or inquiry therefor, change our board of directors’ recommendation to our shareholders or enter into an agreement with respect to any proposal for an alternative transaction, in each case, subject to certain exceptions. In addition, IRG Global generally has an opportunity to offer to 39 Table of Contents modify the terms of the Contribution Agreement in response to any competing acquisition proposal before our board of directors may withdraw or qualify its recommendation with respect to the Transaction. We will be required to pay IRG Global a termination fee of $4.0 million if the Contribution Agreement is terminated under certain specified circumstances, including (i) a termination by us, prior to obtaining the Sachem Shareholder Approval, in order to enter into a definitive agreement with respect to a Superior Acquisition Proposal (as defined in the Contribution Agreement), (ii) a termination by IRG Global following a Transferee Parent Adverse Recommendation Change (as defined in the Contribution Agreement) or our approval or entry into an alternative acquisition agreement, or (iii) certain terminations for failure to close by the outside date (which is April 30, 2027), our uncured terminating breach or failure to obtain the Sachem Shareholder Approval, in each case, if a qualifying competing acquisition proposal has been announced, disclosed or otherwise communicated prior to such termination and, within 12 months after the termination, we consummate, or enter into and subsequently consummate, a competing acquisition transaction. These provisions could discourage a potential competing acquirer or other third party that might have an interest in acquiring all or a significant portion of us or our assets from considering or proposing such a competing transaction, even if such third party were prepared to pay consideration with a higher value than the value implied by the Transaction. These provisions also might result in a potential competing acquirer proposing to pay a lower price to holders of our Common Shares than it might otherwise have proposed to pay because of the added expense of the termination payment that may become payable to IRG Global in certain circumstances under the Contribution Agreement. If the Contribution Agreement is terminated and after the termination we seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Transaction. The pendency of the Transaction could adversely affect our business and operations. In connection with the pending Transaction, some borrowers, lenders, noteholders, service providers or other counterparties may react unfavorably or delay or defer decisions concerning their business relationships or transactions with us, which could adversely affect our business, financial condition and results of operations, regardless of whether the Transaction is completed. In addition, due to certain restrictions in the Contribution Agreement on the conduct of our business prior to completing the Transaction, we may be unable (without IRG Global’s prior written consent), during the pendency of the Transaction, to pursue strategic transactions, undertake certain significant financing transactions, originate new loans above specified thresholds, enter into or modify certain material contracts and otherwise pursue other restricted actions, even if such actions would prove beneficial, and such restrictions may cause us to forego certain opportunities we might otherwise pursue absent the Contribution Agreement. In addition, the pendency of the Transaction may make it more difficult for us to effectively retain and incentivize key personnel and may cause distractions from our strategy and day-to-day operations for our current employees and management. We and/or IRG Global may be the target of securities class action and derivative lawsuits and other legal or regulatory proceedings, which could result in substantial costs and may delay or prevent the Transaction from being completed. Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into significant transaction agreements. Lawsuits or other proceedings may be brought against us and/or IRG Global challenging, among other things, the adequacy of the disclosures in the proxy statement or other disclosures we make in connection with the Transaction, the process conducted by our respective boards of directors, the terms of the Contribution Agreement, alleged breaches of fiduciary duties by our respective directors and/or officers, or the fairness of the consideration in connection with the Transaction. Even if such lawsuits or other legal or regulatory proceedings are without merit, defending against these claims can result in substantial costs and divert management time and resources from us and/or IRG Global. An adverse judgment in any such lawsuits or proceedings could result in monetary damages payable by us and/or IRG Global, which could have a negative impact on our and/or IRG Global’s liquidity, results of operations and financial condition. In addition, the pendency of such litigation could create uncertainty and negatively affect our relationships with borrowers, lenders, noteholders, service providers and other counterparties, and could impair our ability to recruit and retain employees. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Transaction, then that injunction may delay or prevent the Transaction from being completed, which may exacerbate the other risks described herein and adversely affect our business, results of operations and financial condition. Any such delay could also result in the Transaction not being consummated before the outside date (which is April 30, 2027), which could give rise to termination rights under the Contribution Agreement. Even if we are ultimately successful in defending against such claims, the costs and distraction of litigation during the pendency of the Transaction could materially and adversely affect our business, results of operations and financial condition, as well as the price of our Common Shares. 40 Table of Contents Our existing shareholders will experience substantial dilution, and IRG Global will have significant influence over us, as a result of the Transaction. If the Transaction is completed, our existing shareholders will experience substantial dilution of their economic ownership and voting power. Immediately following the closing of the Transaction, IRG Global is expected to hold approximately 94.1% of the outstanding OP Units of the Operating Partnership, with our existing common shareholders retaining ownership of approximately 5.9% on a fully diluted basis. IRG Global also will receive Class B Shares in the Transaction, which will have no economic rights, but are expected initially to represent, in the aggregate, 51% of the total voting power of all outstanding common shares entitled to vote generally in the election of directors for so long as IRG Global’s aggregate economic interest in the Operating Partnership equals or exceeds 51% of the outstanding OP Units. In addition, the partnership agreement of the Operating Partnership will provide IRG Global, for so long as it owns more than 35% of the outstanding OP Units, with consent rights over specified material actions of the Operating Partnership and its subsidiaries, including, but not limited to, equity issuances to third parties, debt incurrence, distributions, property acquisitions and dispositions, material contracts, leases and capital expenditures above certain thresholds, and hiring or terminating property managers or key executives. As a result, following the closing of the Transaction, our existing shareholders will have significantly less influence over the management, policies and operations of the combined company than they currently have with respect to Sachem. The interests of IRG Global may differ from the interests of our existing shareholders, and IRG Global’s ownership and governance rights may make it more difficult for existing shareholders to influence significant corporate decisions. These effects may adversely affect the market price of our securities and may discourage a third party from seeking to acquire us or otherwise engage in a strategic transaction with us following the closing of the Transaction. The Transaction represents a strategic transformation of our business, and we may not be able to successfully operate the combined company or realize the anticipated benefits of the Transaction. Historically, we have operated as a real estate finance company that specializes in originating, underwriting, funding, servicing and managing a portfolio of short-term loans secured by first mortgage liens on real property. If completed, the Transaction will result in a significant transformation of our business, asset base, operations and investment strategy, as an industrial property REIT with a real estate capital solutions platform. The management and operation of an industrial property REIT require different expertise and experience, and involve different risks, than those associated with our historical real estate finance business, including risks relating to property ownership and operation, leasing, tenant credit, occupancy levels, capital expenditures, environmental matters, property-level expenses, financing, asset management and competition in the industrial real estate sector. Although we expect to benefit from property management and other agreements with affiliates of IRG Global, we may not have sufficient experience, personnel, systems, controls or resources to manage these risks effectively following the closing of the Transaction. We also may not be able to successfully implement the combined company’s business strategy, realize the expected benefits of the Transaction, manage the contributed portfolio, integrate the contributed business with our existing operations or operate the combined company in a manner that produces the results we expect. If we are unable to manage this strategic transformation successfully, our business, financial condition, results of operations, cash flows, ability to pay dividends and the market price of our securities could be materially and adversely affected. We have identified a material weakness in our internal control over financial reporting. If we fail to properly remediate this material weakness or if we are otherwise unable to maintain an effective system of internal control over financial reporting, material misstatements in our financial statements could occur and we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us, our business, results of operations and financial condition, the trading price of our common shares, and our ability to remain listed on the NYSE American. We identified a material weakness in our internal control over financial reporting related to the design and operation of controls over the accounting and disclosure for complex, nonroutine transactions involving noncash loan workouts, asset acquisitions and related fair value measurements, and specifically, not sufficiently performing and documenting the reasonableness of significant assumptions used therein. See Part I, Item 4 “Controls and Procedures” of this quarterly report for additional information about this material weakness and our remediation efforts. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. Effective internal controls are necessary to provide reliable financial reporting and prevent fraud. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting 41 Table of Contents firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common shares could be adversely affected and we could become subject to litigation or regulatory investigations. We continue to evaluate and implement steps to remediate the material weakness. These remediation measures may be time-consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. The material weakness in our internal control over financial reporting will not be considered remediated until the management review control operates for a sufficient period of time and management concludes, through testing, that the control operates effectively. If we do not successfully remediate the material weakness, or if other material weaknesses or other deficiencies arise in the future, we may be unable to accurately report our financial results, specifically potential goodwill impairments, which could cause our financial results to be materially misstated. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, which could adversely affect investor confidence in us, our business, results of operations and financial condition, the trading price of our common shares, and our ability to remain listed on the NYSE American. Item 6. EXHIBITS Exhibit No. Description 2.1 Form of Amended and Restated Exchange Agreement (1) 3.1 Certificate of Incorporation (1) 3.1(a) Certificate of Amendment to Certificate of Incorporation (1) 3.1(b) Certificate of Amendment to Certificate of Incorporation filed on October 7, 2019 (2) 3.1(c) Certificate of Amendment to Certificate of Incorporation filed on June 25, 2021 (7) 3.1(d) Certificate of Amendment to Certificate of Incorporation filed on July 19, 2022 (17) 3.1(e) Certificate of Amendment to Certificate of Incorporation filed on August 23, 2022 (11) 3.1(f) Certificate of Amendment to Certificate of Incorporation filed on November 13, 2025 ( 6) 3.2 Amended and Restated Bylaws, effective as of March 25, 2025 (19) 4.1 Indenture, dated as of June 21, 2019, between Sachem Capital Corp. and U.S. Bank National Association, as Trustee (3) 4.2 Specimen 7.75% Series A Cumulative Redeemable Preferred Stock Certificate. (7) 4.3 Fourth Supplemental Indenture between Sachem Capital Corp. and U.S. Bank National Association, as Trustee (4) 4.4 Form of 6.00% Note due 2026 (attached as Exhibit A to Exhibit 4.3 above). 4.5 Fifth Supplemental Indenture between Sachem Capital Corp. and U.S. Bank Trust Company, National Association, as Trustee (8) 4.6 Form of 6.00% Note due 2027 (attached as Exhibit A to Exhibit 4.5 above) 4.7 Sixth Supplemental Indenture between Sachem Capital Corp. and U.S. Bank Trust Company, National Association, as Trustee (20) 4.8 Form of 7.125% Note due 2027 (attached as Exhibit A to Exhibit 4.7 above) 4.9 Seventh Supplemental Indenture between Sachem Capital Corp. and U.S. Bank Trust Company, National Association, as Trustee (10) 4.10 Form of 8.00% Note due 2027 (attached as Exhibit A to Exhibit 4.9 above) 4.11 Revolving Credit Note, dated March 20, 2025, in the principal amount of $50 million in favor of Needham Bank, as lender (18) 4.12 Note Purchase and Guaranty Agreement, dated June 11, 2025 (21) 10.1** Employment Agreement by and between John L. Villano and Sachem Capital Corp. (1) 10.1(a)** Amendment to Employment Agreement by and between John L. Villano and Sachem Capital Corp. (5) 10.2 Sachem Capital Corp. 2016 Equity Compensation Plan (1) 10.3 Credit and Security Agreement, dated as of March 20, 2025, among SN Holdings, as the borrower, Sachem Capital Corp., as the guarantor, the lenders party thereto and Needham Bank, as administrative agent (18) 42 Table of Contents 10.3(a) Amendment No.1 to the Credit and Security Agreement, dated as of June 9, 2025, among SN Holdings, as the borrower, Sachem Capital Corp., as the guarantor, the lenders party thereto and Needham Bank, as administrative agent (23) 10.3(b) Amendment No.2 to the Credit and Security Agreement, dated as of January 21, 2026, among SN Holdings, as the borrower, Sachem Capital Corp., as the guarantor, the lenders party thereto and Needham Bank, as administrative agent ( 9 ) 10.4** Final Form of the Restrictive Stock Grant Agreement dated February 17, 2023 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and John L. Villano (13) 10.5** Final Form of the Restricted Stock Grant Agreement dated March 19, 2024 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and John L. Villano (14) 10.6 Cooperation Agreement, dated August 20, 2024, between Sachem Capital Corp. and Blackwells Capital LLC, Blackwells Onshore I LLC and Jason Aintabi (15) 10.7** Final Form of the Restrictive Stock Grant Agreement dated September 7, 2023 under the Sachem Capital Corp. 2016 Equity Compensation Plan between Sachem Capital Corp. and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (16) 10.8** Final Form of the Restrictive Stock Grant Agreement dated March 10, 2025 under the Sachem Capital Corp. 2016 Equity Compensation Plan between Sachem Capital Corp. and each of Arthur Goldberg, Brian Prinz and Jeffery Walraven (19) 10.9 Sachem Capital Corp. 2025 Omnibus Incentive Plan (22) 10.10 Restricted Stock Award Agreement, dated August 11, 2025, under the Sachem Capital Corp. 2025 Omnibus Incentive Plan between Sachem Capital Corp. and John L. Villano (a portion of the exhibit has been excluded from the exhibit because it both (i) is not material and (ii) is the type that the company treats as private or confidential) (25) 10.11** Employment Agreement by and between Jeffery C. Walraven and Sachem Capital Corp. effective as of September 1, 2025 (24) 10.12** Restricted Stock Award Agreement, dated September 3, 2025, under the Sachem Capital Corp. 2025 Omnibus Incentive Plan between Sachem Capital Corp. and Jeffery C. Walraven (a portion of the exhibit has been excluded from the exhibit because it both (i) is not material and (ii) is the type that the company treats as private or confidential) (24) 31.1 Chief Executive Officer Certification as required under section 302 of the Sarbanes Oxley Act * 31.2 Chief Financial Officer Certification as required under section 302 of the Sarbanes Oxley Act * 32.1 Chief Executive Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act *** 32.2 Chief Financial Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act *** 97.1 Policy Relating to Recovery of Erroneously Awarded Compensation (14) 99.1 Open-End Construction Mortgage, Security Agreement and Assignment of Leases and Rents, dated February 28, 2023, by Sachem Capital Corp., in connection with the New Haven Bank Mortgage refinancing (12) 99.2 Commercial Term Note made by Sachem Capital Corp to New Haven Bank, dated February 28, 2023, in the principal amount of $1,660,000 (attached as Exhibit B to Exhibit 99.1 above) 99.3 Loan Agreement between Sachem Capital Corp. and New Haven Bank, dated as of February 28, 2023 (12) 99.4 Mortgage Release releasing Sachem Capital Corp. from the $1.4 million NHB Mortgage (12) 101.INS XBRL Instance Document * 101.SCH XBRL Taxonomy Extension Schema Document * 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document * 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB XBRL Taxonomy Extension Label Linkbase Document * 43 Table of Contents 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document * 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* ______________________________________________________________ * Filed herewith. ** Compensation plan or arrangement for current or former executive officers and directors. *** Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K. (1) Previously filed as an exhibit to the Registration Statement on Form S-11, as amended (SEC File No.: 333-214323) and incorporated herein by reference. (2) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended September 30, 2019 and incorporated herein by reference. (3) Previously filed as an exhibit to the Current Report on Form 8-K on June 25, 2019 and incorporated herein by reference. (4) Previously filed as an exhibit to the Current Report on Form 8-K on December 20, 2021 and incorporated herein by reference. (5) Previously filed as an exhibit to the Current Report on Form 8-K on April 14, 2021 and incorporated herein by reference. (6) Previously filed as an exhibit to the Current Report on Form 8-K on November 18, 2025 and incorporated herein by reference. (7) Previously filed as an exhibit to the Current Report on Form 8-K on June 29, 2021 and incorporated herein by reference. (8) Previously filed as an exhibit to the Current Report on Form 8-K on March 9, 2022 and incorporated herein by reference. (9) Previously filed as an exhibit to the Current Report on Form 8-K on January 22, 2026 and incorporated herein by reference. (10) Previously filed as an exhibit to the Current Report on Form 8-K on August 23, 2022 and incorporated herein by reference. (11) Previously filed as an exhibit to the Current Report on Form 8-K on August 24, 2022 and incorporated herein by reference. (12) Previously filed as an exhibit to the Current Report on Form 8-K on March 3, 2023 and incorporated herein by reference. (13) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended March 31, 2023 and incorporated herein by reference. (14) Previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2023 and incorporated herein by reference. (15) Previously filed as an exhibit to the Current Report on Form 8-K on August 26, 2024 and incorporated herein by reference. (16) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended September 30, 2024 and incorporated herein by reference. 44 Table of Contents (17) Previously filed as an exhibit to the Current Report on Form 8-K on December 16, 2024 and incorporated herein by reference. (18) Previously filed as an exhibit to the Current Report on Form 8-K on March 27, 2025 and incorporated herein by reference. (19) Previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2024 and incorporated herein by reference. (20) Previously filed as an exhibit to the Current Report on Form 8-K on May 12, 2022 and incorporated herein by reference. (21) Previously filed as an exhibit to the Current Report on Form 8-K on June 16, 2025 and incorporated herein by reference. (22) Previously filed as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A on April 30, 2025 and incorporated herein by reference. (23) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended June 30, 2025 and incorporated herein by reference. (24) Previously filed as an exhibit to the Current Report on Form 8-K on September 5, 2025 and incorporated herein by reference. (25) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended September 30, 2025 and incorporated herein by reference. 45 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. SACHEM CAPITAL CORP. Date: May 19, 2026 By: /s/ John L. Villano John L. Villano, CPA President and Chief Executive Officer (Principal Executive Officer) Date: May 19, 2026 By: /s/ Jeffery C. Walraven Jeffery C. Walraven Chief Financial Officer (Principal Accounting and Financial Officer) 46