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, 2023

☐ 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.)

568 East 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 10, 2023, the Issuer had a total of 45,356,429 common shares, $0.001 par value per share, outstanding.

Table of Contents

SACHEM CAPITAL CORP.

TABLE OF CONTENTS

		Page Number
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 (audited)	1
	Consolidated Statements of Comprehensive Income for the Three-Month and Nine-Month Periods Ended September 30, 2023 and 2022 (unaudited)	2
	Consolidated Statements of Changes in Shareholders’ Equity for the Three-Month and Nine-Month Periods Ended September 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Cash Flows for the Three-Month and Nine-Month Periods Ended September 30, 2023 and 2022 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39

Part II	OTHER INFORMATION	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41
SIGNATURES		44
EXHIBITS

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q includes forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “seek,” “intend,” “believe,” “may,” “might,” “will,” “should,” “could,” “likely,” “continue,” “design,” and the negative of such terms and other words and terms of similar expressions are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, some of which are described in our 2022 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We disclaim any duty to update any of these forward-looking statements after the date of this report to confirm these statements in relationship to actual results or revised expectations.

All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in this report. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.

Unless the context otherwise requires, all references in this quarterly report on Form 10-Q to “Sachem Capital,” “we,” “us” and “our” refer to Sachem Capital Corp., a New York corporation.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SACHEM CAPITAL CORP.

CONSOLIDATED BALANCE SHEETS

(unaudited)


	September 30, 2023		December 31, 2022
	(unaudited)		(audited)
Assets
Cash and cash equivalents	$	25,811,964	$	23,713,097
Investment securities		37,044,657		24,576,462
Mortgages receivable, net		495,917,840		460,633,268
Investments in rental real estate, net		10,434,591		—
Interest and fees receivable		7,922,415		6,309,845
Due from borrowers		7,415,413		5,276,967
Real estate owned		3,481,177		5,216,149
Investments in partnerships		39,959,110		30,831,180
Property and equipment, net		3,433,613		4,121,721
Other assets		6,427,159		4,983,173
Total assets	$	637,847,939	$	565,661,862

Liabilities and Shareholders’ Equity
Liabilities:
Unsecured notes payable (net of deferred financing costs of $6,641,817 and $8,352,597)	$	281,759,933	$	280,049,153
Repurchase facility		47,929,713		42,533,466
Mortgage payable		1,100,635		750,000
Line of credit		51,339,905		3,587,894
Accrued dividends payable		—		5,342,160
Accounts payable and accrued liabilities		2,060,788		1,439,219
Advances from borrowers		12,505,033		9,892,164
Below-market lease intangible		664,737		—
Deferred revenue		4,959,079		4,360,452
Total liabilities		402,319,823		347,954,508

Commitments and Contingencies

Shareholders’ equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 1,996,000 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at September 30, 2023 and December 31, 2022, respectively		1,996		1,903
Common shares - $.001 par value; 200,000,000 shares authorized; 45,364,429 and 41,093,536 issued and outstanding at September 30, 2023 and December 31, 2022, respectively		45,364		41,094
Paid-in capital		243,834,113		226,220,990
Accumulated other comprehensive loss		(459,684)		(561,490)
Accumulated deficit		(7,893,673)		(7,995,143)
Total shareholders’ equity		235,528,116		217,707,354
Total liabilities and shareholders’ equity	$	637,847,939	$	565,661,862

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

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SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue:
Interest income from loans	$	14,273,858	$	11,545,748	$	37,155,668	$	30,490,694
Investment gain, net		284,841		238,225		893,510		586,166
Income from partnership investments		781,530		523,067		2,337,731		1,112,560
Origination and modification fees, net		1,194,645		1,669,034		4,434,828		5,759,650
Fee and other income		1,239,552		641,749		3,518,132		2,048,921
Unrealized gain (loss) on investment securities		(239,989)		(1,076,836)		360,610		(3,607,498)
Total revenue		17,534,437		13,540,987		48,700,479		36,390,493

Operating costs and expenses:
Interest and amortization of deferred financing costs		7,683,059		5,974,975		21,694,966		15,083,228
Compensation, fees and taxes		1,735,430		1,509,518		5,077,213		3,691,421
General and administrative expenses		1,321,807		715,994		3,537,266		1,993,812
Other expenses		336,480		90,899		633,025		320,231
(Gain) Loss on sale of real estate		198,849		962		71,988		(121,381)
(Recovery of) provision for loan losses		(131,382)		—		65,065		105,000
Impairment loss		200,000		195,000		612,500		685,500
Total operating costs and expenses		11,344,243		8,487,348		31,692,023		21,757,811
Net income		6,190,194		5,053,639		17,008,456		14,632,682
Dividends paid on Series A Preferred Stock		(966,754)		(921,766)		(2,816,279)		(2,765,297)
Net income attributable to common shareholders		5,223,440		4,131,873		14,192,177		11,867,385

Other comprehensive loss
Unrealized gain (loss) on investment securities		(83,606)		(131,569)		101,806		(81,525)
Comprehensive income	$	5,139,834	$	4,000,304	$	14,293,983	$	11,785,860
Basic and diluted net income per common share outstanding:
Basic	$	0.12	$	0.11	$	0.32	$	0.32
Diluted	$	0.12	$	0.11	$	0.32	$	0.32
Weighted average number of common shares outstanding:
Basic		44,754,921		38,829,610		43,805,310		36,723,305
Diluted		44,754,921		38,829,852		43,805,310		36,729,184

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

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SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)


	FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023
									Accumulated
							Additional		Other
	Preferred Shares			Common Shares			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Balance, July 1, 2023	1,927,603	$	1,928	43,822,050	$	43,822	$	236,595,201	$	(376,078)	$	(7,222,078)	$	229,042,795

Issuance of Series A Preferred Stock, net of expenses	68,276		68	—		—		1,378,133		—		—		1,378,201

Issuance of common shares, net of expenses	—		—	1,542,379		1,542		5,639,808		—		—		5,641,350

Stock based compensation	—		—	—		—		220,971		—		—		220,971

Unrealized gain (loss) on investments	—		—	—		—		—		(83,606)		—		(83,606)

Dividends paid on Series A Preferred Stock	—		—	—		—		—		—		(966,754)		(966,754)

Dividends paid on common shares	—		—	—		—		—		—		(5,895,035)		(5,895,035)

Net income for the period ended September 30, 2023	—		—	—		—		—		—		6,190,194		6,190,194
Balance, September 30, 2023	1,995,879	$	1,996	45,364,429	$	45,364	$	243,834,113	$	(459,684)	$	(7,893,673)	$	235,528,116


	FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022
									Accumulated
							Additional		Other
	Preferred Shares			Common Shares			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

Table of Contents


	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
									Accumulated
							Additional		Other
	Preferred Shares			Common Shares			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Balance, January 1, 2023	1,903,000	$	1,903	41,093,536	$	41,094	$	226,220,990	$	(561,490)	$	(7,995,143)	$	217,707,354

Adoption of ASU 2016-13	—		—	—		—		—		—		(2,489,574)		(2,489,574)

Issuance of Series A Preferred Stock, net of expenses	92,879		93	—		—		1,895,110		—		—		1,895,203

Issuance of common shares, net of expenses	—		—	4,158,503		4,158		15,327,773		—		—		15,331,931

Repurchase of common shares	—		—	(71,000)		(71)		(226,256)		—		—		(226,327)

Stock based compensation	—		—	183,390		183		616,496		—		—		616,679

Unrealized loss on investments	—		—	—		—		—		101,806		—		101,806

Dividends paid on Series A Preferred Stock	—		—	—		—		—		—		(2,816,279)		(2,816,279)

Dividends paid on common shares	—		—	—		—		—		—		(11,601,133)		(11,601,133)

Net income for the period ended September 30, 2023	—		—	—		—		—		—		17,008,456		17,008,456
Balance, September 30, 2023	1,995,879	$	1,996	45,364,429	$	45,364	$	243,834,113	$	(459,684)	$	(7,893,673)	$	235,528,116


	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
									Accumulated
							Additional		Other
	Preferred Shares			Common Shares			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 gain 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

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

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SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited)

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income