UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37997

SACHEM CAPITAL CORP.

(Exact name of registrant as specified in its charter)

New York		81-3467779
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

698 Main Street, Branford, CT 06405

(Address of principal executive offices)

(203) 433-4736

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common Shares, par value $.001 per share	SACH	NYSE American LLC
7.125% Notes due 2024	SCCB	NYSE American LLC
6.875% Notes due 2024	SACC	NYSE American LLC
7.75% Notes due 2025	SCCC	NYSE American LLC
6.00% Notes due 2026	SCCD	NYSE American LLC
6.00% Notes due 2027	SCCE	NYSE American LLC
7.125% Notes due 2027	SCCF	NYSE American LLC
8.00% Notes due 2027	SCCG	NYSE American LLC
7.75% Series A Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share	SACHPRA	NYSE American LLC

As of November 8, 2022, the Issuer had a total of 40,795,709 common shares, $0.001 par value per share, outstanding.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SACHEM CAPITAL CORP.

BALANCE SHEETS


	September 30, 2022		December 31, 2021
	(unaudited)		(audited)
Assets
Assets:
Cash and cash equivalents	$	35,464,257	$	41,938,897
Investment securities		34,351,374		60,633,661
Mortgages receivable		448,524,665		292,301,209
Interest and fees receivable		5,746,907		3,693,645
Due from borrowers		5,055,146		3,671,016
Real estate owned		5,615,940		6,559,010
Investments in partnerships		22,542,941		6,055,838
Property and equipment, net		3,397,812		2,172,185
Other assets		1,122,342		936,290
Total assets	$	561,821,384	$	417,961,751

Liabilities and Shareholders’ Equity
Liabilities:
Notes payable (net of deferred financing costs of $8,844,137 and $5,747,387)	$	279,557,613	$	160,529,363
Repurchase facility		43,100,146		19,087,189
Mortgage payable		750,000		750,000
Line of credit		3,542,853		33,178,031
Accrued dividends payable		—		3,927,600
Accounts payable and accrued liabilities		1,162,170		697,403
Advances from borrowers		9,936,828		15,066,114
Deferred revenue		4,471,800		4,643,490
Total liabilities		342,521,410		237,879,190

Commitments and Contingencies

Shareholders’ equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; 1,903,000 shares of Series A Preferred Stock issued and outstanding		1,903		1,903
Common shares - $.001 par value; 200,000,000 shares authorized; 40,080,672 and 32,730,004 issued and outstanding		40,081		32,730
Paid-in capital		222,520,783		185,516,394
Accumulated other comprehensive loss		(557,541)		(476,016)
Accumulated deficit		(2,705,252)		(4,992,450)
Total shareholders’ equity		219,299,974		180,082,561
Total liabilities and shareholders’ equity	$	561,821,384	$	417,961,751

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

Table of Contents

SACHEM CAPITAL CORP.

STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Interest income from loans	$	11,545,748	$	6,094,165	$	30,490,694	$	15,307,692
Investment gains, net		238,225		532,163		586,166		911,005
Income from partnership investments		523,067		35,983		1,112,560		90,225
Origination and modification fees, net		1,669,034		1,268,624		5,759,650		2,788,498
Fee and other income		641,749		591,441		2,048,921		1,851,031
Unrealized losses on investment securities		(1,076,836)		—		(3,607,498)		—
Total revenue		13,540,987		8,522,376		36,390,493		20,948,451

Operating costs and expenses:
Interest and amortization of deferred financing costs		5,974,975		2,589,847		15,083,228		7,541,536
Compensation, fees and taxes		1,509,518		771,373		3,691,421		2,175,603
Other expenses		90,899		137,607		320,231		248,581
General and administrative expenses		715,994		478,484		1,993,812		1,369,328
Loss (Gain) on sale of real estate		962		94,450		(121,381)		111,545
Impairment loss		195,000		150,000		790,500		469,000
Total operating costs and expenses		8,487,348		4,221,761		21,757,811		11,915,593
Net income		5,053,639		4,300,615		14,632,682		9,032,858
Preferred stock dividend		(921,766)		(913,791)		(2,765,297)		(932,089)
Net income attributable to common shareholders		4,131,873		3,386,824		11,867,385		8,100,769

Other comprehensive loss
Unrealized gain (loss) on investment securities		(131,569)		(500,188)		(81,525)		(611,998)
Comprehensive income	$	4,000,304	$	2,886,636	$	11,785,860	$	7,488,771
Basic and diluted net income per common share outstanding:
Basic	$	0.11	$	0.12	$	0.32	$	0.32
Diluted	$	0.11	$	0.12	$	0.32	$	0.32
Weighted average number of common shares outstanding:
Basic		38,829,610		27,973,249		36,723,305		24,968,885
Diluted		38,829,852		27,977,095		36,729,184		24,972,837

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

Table of Contents

SACHEM CAPITAL CORP.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)


	FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022
									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Balance, July 1, 2022	1,903,000	$	1,903	36,755,786	$	36,756	$	206,973,510	$	(425,972)	$	(1,583,202)	$	205,002,995

Issuance of common shares, net of expenses	—		—	3,309,886		3,310		15,420,273		—		—		15,423,583

Stock based compensation	—		—	15,000		15		127,000		—		—		127,015

Unrealized loss on marketable securities	—		—	—		—		—		(131,569)		—		(131,569)

Dividends paid on Series A Preferred Stock	—		—	—		—		—		—		(921,766)		(921,766)

Dividends paid on common shares	—		—	—		—		—		—		(5,253,923)		(5,253,923)

Net income for the period ended September 30, 2022	—		—	—		—		—		—		5,053,639		5,053,639
Balance, September 30, 2022	1,903,000	$	1,903	40,080,672	$	40,081	$	222,520,783	$	(557,541)	$	(2,705,252)	$	219,299,974


	FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021
									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Beginning balance, July 1, 2021	1,700,000	$	1,700	26,733,213	$	26,733	$	147,362,456	$	(137,802)	$	(963,683)	$	146,289,404

Issuance of Series A Preferred Stock, net of expenses	203,000		203	—		—		4,849,297		—		—		4,849,500

Issuance of common shares, net of expenses	—		—	1,582,717		1,583		8,003,496		—		—		8,005,079

Stock based compensation	—		—	—		—		64,219		—		—		64,219

Unrealized loss on marketable securities	—		—	—		—		—		(500,188)		—		(500,188)

Dividends paid common shares	—		—	—		—		—		—		(3,336,756)		(3,336,756)

Dividends paid on Series A Preferred Stock	—		—	—		—		—		—		(913,791)		(913,791)

Net income for the period ended September 30, 2021	—		—	—		—		—		—		4,300,615		4,300,615
Balance, September 30, 2021	1,903,000	$	1,903	28,315,930	$	28,316	$	160,279,468	$	(637,990)	$	(913,615)	$	158,758,082

Table of Contents


	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Balance, January 1, 2022	1,903,000	$	1,903	32,730,004	$	32,730	$	185,516,394	$	(476,016)	$	(4,992,450)	$	180,082,561

Issuance of common shares, net of expenses	—		—	7,177,043		7,177		36,647,242		—		—		36,654,419

Exercise of warrants	—		—	19,658		20		(20)		—		—		—

Stock based compensation	—		—	153,967		154		357,167		—		—		357,321

Unrealized loss on marketable securities	—		—	—		—		—		(81,525)		—		(81,525)

Dividends paid on Series A Preferred Stock	—		—	—		—		—		—		(2,765,297)		(2,765,297)

Dividends paid on common shares	—		—	—		—		—		—		(9,580,187)		(9,580,187)

Net income for the period ended September 30, 2022	—		—	—		—		—		—		14,632,682		14,632,682
Balance, September 30, 2022	1,903,000	$	1,903	40,080,672	$	40,081	$	222,520,783	$	(557,541)	$	(2,705,252)	$	219,299,974


	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Beginning balance, January 1, 2021	—	$	—	22,124,801	$	22,125	$	83,814,376	$	(25,992)	$	(2,890,969)	$	80,919,540

Issuance of Series A Preferred Stock, net of expenses	1,903,000		1,903	—		—		45,460,723		—		—		45,462,626

Issuance of common shares, net of expenses	—		—	6,096,448		6,097		30,877,831		—		—		30,883,928

Stock based compensation	—		—	94,681		94		126,538		—		—		126,632

Unrealized loss on marketable securities	—		—	—		—		—		(611,998)		—		(611,998)

Dividends paid on common shares	—		—	—		—		—		—		(6,123,415)		(6,123,415)

Dividends paid on Series A Preferred Stock										—		(932,089)		(932,089)

Net income for the period ended September 30, 2021	—		—	—		—		—		—		9,032,858		9,032,858
Balance, September 30, 2021	1,903,000	$	1,903	28,315,930	$	28,316	$	160,279,468	$	(637,990)	$	(913,615)	$	158,758,082

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

Table of Contents

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

(unaudited)


	Nine Months Ended
	September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	14,632,682	$	9,032,858
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of deferred financing costs and bond discount		1,664,822		839,418
Write-off of deferred financing costs		—		72,806
Depreciation expense		66,533		61,286
Stock based compensation		357,321		126,632
Impairment loss		790,500		469,000
(Gain) Loss on sale of real estate		(121,381)		111,545
Unrealized loss on investment securities		3,607,498		(212,449)
Loss on sale of investment securities		148,565		—
Debt Forgiveness		—		(257,845)
Changes in operating assets and liabilities:
(Increase) decrease in:
Interest and fees receivable		(2,154,704)		(885,380)
Other assets - other receivables		(418,176)		(361,084)
Due from borrowers		(1,505,785)		(1,405,352)
Other assets - prepaid expenses		153,842		(14,500)
(Decrease) increase in:
Accounts payable and accrued liabilities - accrued interest		431,110		(3,344)
Accounts payable and accrued liabilities - accounts payable and accrued expenses		53,818		(179,992)
Deferred revenue		(171,690)		1,779,960
Advances from borrowers		(5,129,286)		8,201,117
Total adjustments		(2,227,013)		8,341,818

NET CASH PROVIDED BY OPERATING ACTIVITIES		12,405,669		17,374,676

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities		(39,715,900)		(160,896,229)
Proceeds from the sale of investment securities		62,160,599		141,709,658
Purchase of interests in investment partnerships, net		(16,487,103)		(1,804,217)
Proceeds from sale of real estate owned

Part I	FINANCIAL INFORMATION
		Page Number
Item 1.	Financial Statements (unaudited)
	Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Statements of Comprehensive Income for the Three-Month and Nine-Month Periods Ended September 30, 2022 and 2021	2
	Statements of Changes in Shareholders’ Equity for the Three-Month and Nine-Month Periods Ended September 30, 2022 and 2021	3
	Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2022 and 2021	5
	Notes to Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33

Part II	OTHER INFORMATION

Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
SIGNATURES		38
EXHIBITS