|
New York
|
| |
6798
|
| |
81-3467779
|
|
|
(State or Other Jurisdiction of
Incorporation or Organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification No.) |
|
|
Joel J. Goldschmidt, Esq.
Morse, Zelnick, Rose, & Lander, LLP 825 Third Avenue New York, NY 10022 Tel: (212) 838-8269 Fax: (212) 208-6809 |
| |
Brad L. Shiffman, Esq.
Blank Rome LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174-0208 Tel: (212) 885-5000 Fax: (212) 885-5001 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | | | Smaller Reporting Company ☒ | |
| (Do not check if a smaller reporting company) | | | Emerging Growth Company ☒ | |
Title of Each Class of Securities to be Registered
|
| |
Proposed Maximum
Aggregate Offering Price (1) |
| |
Amount
of Registration Fee(2) |
| ||||||
Common Shares, par value $0.001 per share(2)(3)
|
| | | $ | 13,800,000.00 | | | | | $ | 1,599.42 | | |
Representative’s Warrants(4)
|
| | | $ | 100.00 | | | | | $ | 0.01 | | |
Common Shares underlying the Representative’s Warrants(5)
|
| | | $ | 750,000.00 | | | | | $ | 86.93 | | |
Total
|
| | | $ | 14,550,100.00 | | | | | $ | 1,686.36 | | |
| | |
Per Share
|
| |
Total
|
| ||||||
| | | | $ | | | | | $ | | | ||
Public offering price
|
| | | $ | | | | | | $ | | | |
Underwriting discounts and commissions(1)
|
| | | $ | | | | | | $ | | | |
Proceeds to Sachem Capital (before expenses)
|
| | | $ | | | | | | $ | | | |
| | | | | 1 | | | |
| | | | | 15 | | | |
| | | | | 38 | | | |
| | | | | 39 | | | |
| | | | | 40 | | | |
| | | | | 41 | | | |
| | | | | 42 | | | |
| | | | | 43 | | | |
| | | | | 44 | | | |
| | | | | 52 | | | |
| | | | | 66 | | | |
| | | | | 67 | | | |
| | | | | 70 | | | |
| | | | | 74 | | | |
| | | | | 75 | | | |
| | | | | 76 | | | |
| | | | | 81 | | | |
| | | | | 84 | | | |
| | | | | 85 | | | |
| | | | | 103 | | | |
| | | | | 106 | | | |
| | | | | 113 | | | |
| | | | | 113 | | | |
| | | | | 113 | | | |
| | | | | F-1 | | |
| | |
Three Months Ended
March 31, |
| |
Years Ended
December 31, |
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
| | |
(unaudited)
|
| |
(audited)
|
| ||||||||||||||||||
Interest income from loans
|
| | | $ | 1,036,840 | | | | | $ | 803,484 | | | | | $ | 3,648,427 | | | | | $ | 2,477,876 | | |
Total revenue
|
| | | $ | 1,289,216 | | | | | $ | 878,297 | | | | | $ | 4,133,495 | | | | | $ | 2,786,724 | | |
Total operating costs and expenses
|
| | | $ | 392,438 | | | | | $ | 195,229 | | | | | $ | 1,082,868 | | | | | $ | 479,821 | | |
Net income
|
| | | $ | 896,778 | | | | | $ | 683,068 | | | | | $ | 3,050,627 | | | | | $ | 2,306,903 | | |
Basic and diluted net income per share*
|
| | | $ | 0.06 | | | | | | | | | | | | | | | | | | | | |
Weighted average number of shares outstanding Basic and diluted
|
| | | | 11,103,237 | | | | | | | | | | | | | | | | | | | | |
| | |
As at
March 31, 2017 |
| |
As at
December 31, 2016 |
| ||||||||||||
| | |
(unaudited)
|
| |
(as adjusted)
|
| |
(audited)
|
| |||||||||
Cash
|
| | | $ | 1,355,905 | | | | | $ | | | | | $ | 1,561,863 | | | |
Mortgages receivable
|
| | | $ | 40,072,875 | | | | | $ | | | | | | $ | 33,750,610 | | |
Total assets
|
| | | $ | 44,658,164 | | | | | $ | | | | | | $ | 38,369,421 | | |
Line of credit
|
| | | $ | 4,150,100 | | | | | $ | | | | | | $ | 8,113,943 | | |
Total liabilities
|
| | | $ | 6,056,250 | | | | | $ | | | | | | $ | 9,883,806 | | |
Shareholders’/members’ equity. .
|
| | | $ | 44,658,164 | | | | | $ | | | | | | $ | 38,369,421 | | |
| | |
As at March 31,
|
| |
As at December 31,
|
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
| | |
(unaudited)
|
| |
(audited)
|
| ||||||||||||||||||
Residential mortgages
|
| | | $ | 25,853,550 | | | | | $ | 20,605,890 | | | | | $ | 21,343,927 | | | | | $ | 18,820,509 | | |
Commercial mortgages . . . . . . . . . . .
|
| | | | 10,742,594 | | | | | | 5,668,880 | | | | | | 9,049,942 | | | | | | 5,712,566 | | |
Land mortgages . . . . . . . . . . . . . . . .
|
| | | | 3,220,067 | | | | | | 2,539,372 | | | | | | 3,149,602 | | | | | | 2,619,792 | | |
Mixed use . . . . . . . . . . . . . . . . . . .
|
| | | | 256,664 | | | | | | 456,000 | | | | | | 207,139 | | | | | | 380,000 | | |
Total mortgages receivable . . . . . . . .
|
| | | $ | 40,072,875 | | | | | $ | 29,270,142 | | | | | $ | 33,750,610 | | | | | $ | 27,532,867 | | |
|
| | |
Amount
|
| |
Percentage
|
| ||||||
Funding loans
|
| | | $ | | | | | | % | | | |
Capital expenditures
|
| | | | | | | | | | | | |
Working capital and general corporate purposes
|
| | | $ | | | | | | | 100.00% | | |
|
| | |
High
|
| |
Low
|
| ||||||
2017 | | | | | | | | | | | | | |
Third Quarter (through ______ __)
|
| |
|
| |
|
| ||||||
Second Quarter
|
| | | | | | | | | | | | |
First Quarter (from February 10)
|
| | | $ | 5.27 | | | | | $ | 4.70 | | |
|
Public offering price per share
|
| | | | | | | | | $ | | | |
|
Net tangible book value per share outstanding as at March 31,
|
| | | $ | | | | | | | | | |
|
Increase in historical net tangible book value per share outstanding attributable to new investors
|
| | | | | | | | | | | | |
|
As adjusted net tangible book value per share outstanding after this offering
|
| | | | | | | | | | | | |
|
Dilution per share to new investors
|
| | | | | | | | | $ | | | |
| | |
As at March 31, 2017
|
| ||||||||||||
| | |
(Actual)
|
| |
(As Adjusted)
|
| | ||||||||
Line of credit
|
| | | $ | 4,150,100 | | | | | $ | 4,150,100 | | | | ||
Shareholders’ equity: | | | | | | | | | | | | | | | | |
Preferred shares, $0. 001 par value, 5,000,000 shares authorized, no shares issued or outstanding
|
| | | $ | — | | | | | $ | — | | | | ||
Common shares, $0. 001 par value, 50,000,000 shares authorized; 11,103,237
shares issued and outstanding actual and _____ shares issued and outstanding as adjusted |
| | | | 11,103 | | | | | | | | | | ||
Additional paid in capital
|
| | | | 37,980,133 | | | | | | | | | | ||
Retained earnings
|
| | | | 610,678 | | | | | | — | | | | ||
Total shareholders’ equity
|
| | | | 38,601,914 | | | | | | | | | | ||
Total capitalization
|
| | | $ | 42,752,014 | | | | | $ | | | | | ||
|
| | |
Total
|
| |
Less than
1 year |
| |
1 – 3
years |
| |
3 – 5
years |
| |
More than
5 years |
| |||||||||||||||
Operating lease obligations
|
| | | $ | 16,711 | | | | | $ | 8,021 | | | | | $ | 8,690 | | | | | | — | | | | | | — | | |
Unfunded portions of outstanding
construction loans |
| | | $ | 3,109,446 | | | | | $ | 3,109,446 | | | | | | — | | | | | | — | | | | | | — | | |
Unfunded loan commitments
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total contractual obligations
|
| | | $ | 3,126,157 | | | | | $ | 3,117,467 | | | | | $ | 8,690 | | | | | $ | — | | | | | $ | — | | |
|
Amount
|
| |
Number of
Loans |
| |
Aggregate
Principal Amount |
| ||||||
Less than $100,000
|
| | | | 105 | | | | | $ | 7,071,020 | | |
$100,001 to $250,000
|
| | | | 97 | | | | | | 14,857,073 | | |
$250,001 to $500,000
|
| | | | 32 | | | | | | 10,654,066 | | |
$500,001 to $1,000,000
|
| | | | 6 | | | | | | 4,290,665 | | |
Over $1,000,000
|
| | | | 3 | | | | | | 3,200,051 | | |
Total
|
| | | | 243 | | | | | $ | 40,072,875 | | |
|
| | |
Three Months Ended
March 31, |
| |
Year Ended
December 31, |
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
Loans originated
|
| | | $ | 10,091,528 | | | | | $ | 5,113,384 | | | | | $ | 21,580,103 | | | | | $ | 19,412,438 | | |
Loans repaid
|
| | | $ | 3,938,601 | | | | | $ | 3,376,109 | | | | | $ | 14,861,360 | | | | | $ | 5,812,116 | | |
Mortgage lending revenues
|
| | | $ | 1,189,208 | | | | | $ | 878,297 | | | | | $ | 4,017,651 | | | | | $ | 2,786,724 | | |
Mortgage lending expenses
|
| | | $ | 303,543 | | | | | $ | 170,486 | | | | | $ | 907,408 | | | | | $ | 472,095 | | |
Number of loans outstanding
|
| | | | 243 | | | | | | 188 | | | | | | 217 | | | | | | 180 | | |
Principal amount of loans earning
interest |
| | | $ | 40,072,875 | | | | | $ | 29,270,142 | | | | | $ | 33,750,610 | | | | | $ | 27,532,867 | | |
Average outstanding loan balance
|
| | | $ | 164,909 | | | | | $ | 155,692 | | | | | $ | 155,533 | | | | | $ | 152,960 | | |
Weighted average contractual interest
rate(1) |
| | | | 12.22% | | | | | | 11.86% | | | | | | 12.23% | | | | | | 11.76% | | |
Weighted average term to maturity (in months)(2)
|
| | | | 18 | | | | | | 18 | | | | | | 18 | | | | | | 20 | | |
Year of Origination
|
| |
Number of
Loans |
| |
Aggregate
Principal Amount |
| ||||||
2017
|
| | | | 52 | | | | | $ | 9,462,182 | | |
2016
|
| | | | 100 | | | | | $ | 15,669,293 | | |
2015
|
| | | | 58 | | | | | $ | 9,544,443 | | |
2014 and prior
|
| | | | 33 | | | | | $ | 5,396,957 | | |
| | | | | 243 | | | | | $ | 40,072,875 | | |
| | |
At March 31,
|
| |
At December 31,
|
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
Developer – Residential Mortgages
|
| | | $ | 25,853,550 | | | | | $ | 20,605,890 | | | | | $ | 21,343,927 | | | | | $ | 18,820,509 | | |
Developer – Commercial Mortgages
|
| | | | 10,742,594 | | | | | | 5,668,880 | | | | | | 9,049,942 | | | | | | 5,712,566 | | |
Land Mortgages
|
| | | | 3,220,067 | | | | | | 2,539,372 | | | | | | 3,149,602 | | | | | | 2,619,792 | | |
Mixed Use
|
| | | | 256,664 | | | | | | 456,000 | | | | | | 207,139 | | | | | | 380,000 | | |
Total Mortgages Receivable
|
| | | $ | 40,072,875 | | | | | $ | 29,270,142 | | | | | $ | 33,750,610 | | | | | $ | 27,532,867 | | |
|
| | |
For the Three Months Ended March 31,
|
| |||||||||||||||||||||||||||||||||
| | |
2017*
|
| |
2016
|
| ||||||||||||||||||||||||||||||
| | |
# of Loans
|
| |
Interest earned
|
| |
%
|
| |
# of Loans
|
| |
Interest earned
|
| |
%
|
| ||||||||||||||||||
Residential
|
| | | | 193 | | | | | $ | 668,931 | | | | | | 64.5 | | | | | | 148 | | | | | $ | 565,645 | | | | | | 70.4 | | |
Commercial
|
| | | | 37 | | | | | | 277,952 | | | | | | 26.8 | | | | | | 27 | | | | | | 155,614 | | | | | | 19.4 | | |
Land Mortgages
|
| | | | 12 | | | | | | 83,316 | | | | | | 8.0 | | | | | | 9 | | | | | | 69,707 | | | | | | 8.7 | | |
Mixed Use
|
| | | | 3 | | | | | | 6,641 | | | | | | 0.7 | | | | | | 4 | | | | | | 12,518 | | | | | | 1.5 | | |
Total
|
| | | | 245 | | | | | $ | 1,036,840 | | | | | | 100.0 | | | | | | 188 | | | | | $ | 803,484 | | | | | | 100.0 | | |
|
| | |
For the Year Ended December 31,
|
| |||||||||||||||||||||||||||||||||
| | |
2016*
|
| |
2015
|
| ||||||||||||||||||||||||||||||
| | |
# of Loans
|
| |
Interest earned
|
| |
%
|
| |
# of Loans
|
| |
Interest earned
|
| |
%
|
| ||||||||||||||||||
Residential
|
| | | | 169 | | | | | $ | 2,307,270 | | | | | | 63.2 | | | | | | 129 | | | | | $ | 1,693,790 | | | | | | 72.4 | | |
Commercial
|
| | | | 34 | | | | | | 978,295 | | | | | | 26.8 | | | | | | 34 | | | | | | 514,114 | | | | | | 18.4 | | |
Land Mortgages
|
| | | | 11 | | | | | | 340,470 | | | | | | 9.3 | | | | | | 12 | | | | | | 235,773 | | | | | | 6.5 | | |
Mixed Use
|
| | | | 3 | | | | | | 22,392 | | | | | | 0.7 | | | | | | 5 | | | | | | 34,199 | | | | | | 2.7 | | |
Total
|
| | | | 217 | | | | | $ | 3,648,427 | | | | | | 100.0 | | | | | | 180 | | | | | $ | 2,477,876 | | | | | | 100.0 | | |
|
Sources of Capital:
|
| | |||||
Debt: | | | |||||
Line of credit
|
| | | $ | 4,150,100 | | |
Mortgage payable
|
| | | $ | 308,343 | | |
Total debt
|
| | | $ | 4,458,443 | | |
Other liabilities
|
| | | $ | 1,597,807 | | |
Total liabilities
|
| | | $ | 6,056,250 | | |
Capital (equity)
|
| | | | 38,601,914 | | |
Total sources of capital
|
| | | $ | 44,658,164 | | |
Assets: | | | |||||
Mortgages receivable
|
| | | $ | 40,072,875 | | |
Other assets
|
| | | | 4,585,289 | | |
Total assets
|
| | | $ | 44,658,164 | | |
|
Name
|
| |
Age
|
| |
Position
|
|
John L. Villano
|
| |
57
|
| | Chairman, Co-Chief Executive Officer, Chief Financial Officer and Secretary | |
Jeffrey C. Villano
|
| |
52
|
| | President, Co-Chief Executive Officer, Treasurer and Director | |
Leslie Bernhard(1)(2)
|
| |
73
|
| | Director | |
Arthur Goldberg(1)(3)
|
| |
78
|
| | Director | |
Brian Prinz(1)(4)
|
| |
64
|
| | Director | |
| | |
Before Offering
|
| |
After Offering
|
| |||||||||||||||
Name of Beneficial Owner(1)
|
| |
Number of Common
Shares Beneficial Owner(2) |
| |
Percentage of
Class(3) |
| |
Number of Common
Shares Beneficial Owner(2) |
| |
Percentage of
Class(3) |
| |||||||||
Executive Officers and Directors: | | | | | | | | | | | | | | | | | | | | | | |
John L. Villano(5)
|
| | | | 1,400,875 | | | | | | 12.62% | | | | | | | | | % | | |
Jeffrey C. Villano(6)
|
| | | | 1,907,202 | | | | | | 17.18% | | | | | | | | | % | | |
Leslie Bernhard
|
| | | | — | | | | | | — | | | | | | | | | % | | |
Arthur Goldberg
|
| | | | — | | | | | | — | | | | | | | | | % | | |
Brian Prinz
|
| | | | 322,768 | | | | | | 2.91% | | | | | | | | | % | | |
All officers and directors as a group (5 persons)
|
| | | | 3,630,845 | | | | | | 32.70% | | | | | | | | | % | | |
Greater Than 5% Shareholders | | | | | | | | | | | | | | | | | | | | | | |
Resource Real Estate Diversified Income Fund(7)
|
| | | | 600,000 | | | | | | 5.4% | | | | | | | | | % | | |
Underwriter
|
| |
Number of
Shares |
| |||
Joseph Gunnar & Co., LLC.
|
| | | | | | |
| | | | | | | |
Total | | | | | | | |
|
| | |
Per Share
|
| |
Total Without
Over-Allotment Option |
| |
Total With
Over-Allotment Option |
|
Public offering price
|
| | | | | | ||||
Underwriting discount (7%)
|
| | | | | | ||||
Proceeds, before expense, to us
|
| |
|
| | | ||||
Non-accountable expense allowance (1%)(1)
|
| | | | | |
| Financial Statements: | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
|
Notes to Financial Statements
|
| | |
| | | | ||
| Financial Statements: | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
|
Notes to Financial Statements
|
| | |
| | |
March 31, 2017
|
| |
December 31, 2016
|
| ||||||
| | |
(unaudited)
|
| |
(audited)
|
| ||||||
Assets | | | | ||||||||||
Assets: | | | | ||||||||||
Cash
|
| | | $ | 1,355,905 | | | | | $ | 1,561,863 | | |
Escrow deposit
|
| | | | 596,070 | | | | | | — | | |
Mortgages receivable
|
| | | | 40,072,875 | | | | | | 32,521,588 | | |
Mortgages receivable, affiliate
|
| | | | — | | | | | | 1,229,022 | | |
Interest and fees receivable
|
| | | | 498,423 | | | | | | 478,928 | | |
Other receivables
|
| | | | 178,231 | | | | | | 182,842 | | |
Due from borrowers
|
| | | | 153,923 | | | | | | 81,911 | | |
Prepaid insurance
|
| | | | 32,260 | | | | | | — | | |
Property and equipment, net
|
| | | | 494,619 | | | | | | 397,448 | | |
Real estate owned
|
| | | | 1,177,291 | | | | | | 1,222,454 | | |
Pre-offering costs
|
| | | | — | | | | | | 625,890 | | |
Deposits on property
|
| | | | 32,000 | | | | | | — | | |
Deferred financing costs
|
| | | | 66,567 | | | | | | 67,475 | | |
Total assets
|
| | | $ | 44,658,164 | | | | | $ | 38,369,421 | | |
Liabilities and Shareholders’/Members’ Equity | | | | ||||||||||
Liabilities: | | | | ||||||||||
Line of credit
|
| | | $ | 4,150,100 | | | | | $ | 8,113,943 | | |
Mortgage payable
|
| | | | 308,343 | | | | | | 310,000 | | |
Notes payable, other
|
| | | | 169,338 | | | | | | — | | |
Accrued expenses
|
| | | | 314,870 | | | | | | 196,086 | | |
Security deposit held
|
| | | | 800 | | | | | | 800 | | |
Advances from borrowers
|
| | | | 671,430 | | | | | | 291,875 | | |
Due to shareholders
|
| | | | 25,568 | | | | | | 656,296 | | |
Deferred revenue
|
| | | | 402,766 | | | | | | 290,456 | | |
Accrued interest
|
| | | | 13,035 | | | | | | 24,350 | | |
Total liabilities
|
| | | | 6,056,250 | | | | | | 9,883,806 | | |
Shareholders’/members’ equity: | | | | ||||||||||
Preferred shares – $.001 par value; 5,000,000 shares authorized; no shares issued
|
| | | | — | | | | | | — | | |
Common stock – $.001 par value; 50,000,000 authorized; 11,103,237 issued and outstanding
|
| | | | 11,103 | | | | | | — | | |
Additional paid-in capital
|
| | | | 37,980,133 | | | | | | — | | |
Members’ equity
|
| | | | — | | | | | | 28,485,615 | | |
Retained earnings
|
| | | | 610,678 | | | | | | — | | |
Total shareholders’/members’ equity
|
| | | | 38,601,914 | | | | | | 28,485,615 | | |
Total liabilities and shareholders’/members’ equity
|
| | | $ | 44,658,164 | | | | | $ | 38,369,421 | | |
|
| | |
Three Months
Ended March 31, |
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Revenue: | | | | ||||||||||
Interest income from loans
|
| | | $ | 1,036,840 | | | | | $ | 803,484 | | |
Origination fees, net
|
| | | | 97,461 | | | | | | 28,823 | | |
Late and other fees
|
| | | | 29,982 | | | | | | 33,255 | | |
Processing fees
|
| | | | 24,925 | | | | | | 12,735 | | |
Rental income, net
|
| | | | 27,383 | | | | | | — | | |
Other income
|
| | | | 46,147 | | | | | | — | | |
Gain on sale of real estate
|
| | | | 26,478 | | | | | | — | | |
Total revenue
|
| | | | 1,289,216 | | | | | | 878,297 | | |
Operating costs and expenses: | | | | ||||||||||
Interest and amortization of deferred financing costs
|
| | | | 116,270 | | | | | | 102,209 | | |
Compensation to manager
|
| | | | 35,847 | | | | | | 61,456 | | |
Professional fees
|
| | | | 83,739 | | | | | | 24,743 | | |
Other fees and taxes
|
| | | | 105,839 | | | | | | 4,862 | | |
Depreciation
|
| | | | 5,156 | | | | | | — | | |
General and administrative expenses
|
| | | | 45,587 | | | | | | 1,959 | | |
Total operating costs and expenses
|
| | | | 392,438 | | | | | | 195,229 | | |
Net income
|
| | | $ | 896,778 | | | | | $ | 683,068 | | |
Basic and diluted net income per common share outstanding: | | | | ||||||||||
Basic
|
| | | $ | 0.06* | | | | | $ | — | | |
Diluted
|
| | | $ | 0.06* | | | | | $ | — | | |
Weighted average number of common shares outstanding: | | | | ||||||||||
Basic
|
| | | | 11,103,237 | | | | | | — | | |
Diluted
|
| | | | 11,103,237 | | | | | | — | | |
|
| | |
March 31, 2017
|
| |||||||||||||||||||||||||||
| | |
(unaudited)
|
| |||||||||||||||||||||||||||
| | |
Common
Shares |
| |
Amount
|
| |
Additional
Paid in Capital |
| |
Retained
Earnings |
| |
Predecessor’s
Members’ Equity |
| |||||||||||||||
Beginning balance, January 1, 2017
|
| | | | 2,220,000 | | | | | $ | 2,220 | | | | | $ | (2,220) | | | | | $ | — | | | | | $ | 28,485,615 | | |
Member contributions
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 653,646 | | |
Member distributions
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,460,125) | | |
Net income for the period January 1, 2017 – February 8, 2017
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 286,100 | | |
Conversion of members’ equity into common
stock |
| | | | 6,283,237 | | | | | | 6,283 | | | | | | 26,958,953 | | | | | | | | | | | | (26,965,236) | | |
Initial public offering
|
| | | | 2,600,000 | | | | | | 2,600 | | | | | | 11,023,400 | | | | | ||||||||||
Net income for the period February 9, 2017 –
March 31, 2017 |
| | | | | | | | | | | | | | | | | | | | | | 610,678 | | | | | | | | |
Balance, March 31, 2017
|
| | | | 11,103,237 | | | | | $ | 11,103 | | | | | $ | 37,980,133 | | | | | $ | 610,678 | | | | | $ | — | | |
|
| | |
Three Months
Ended March 31, |
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | ||||||||||
Net income
|
| | | $ | 896,778 | | | | | $ | 683,068 | | |
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | ||||||||||
Amortization of deferred financing costs
|
| | | | 14,559 | | | | | | 12,996 | | |
Depreciation expense
|
| | | | 5,156 | | | | | | — | | |
Gain on sale of real estate
|
| | | | (26,478) | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | ||||||||||
(Increase) decrease in:
|
| | | ||||||||||
Escrow deposit
|
| | | | (596,070) | | | | | | — | | |
Interest and fees receivable
|
| | | | (19,495) | | | | | | (50,601) | | |
Other receivables
|
| | | | 4,611 | | | | | | 1,751 | | |
Prepaid Insurance
|
| | | | (32,260) | | | | | | — | | |
(Decrease) increase in:
|
| | | ||||||||||
Due to member
|
| | | | (630,728) | | | | | | 58,132 | | |
Accrued interest
|
| | | | (11,315) | | | | | | (8,326) | | |
Accrued expenses
|
| | | | 314,870 | | | | | | — | | |
Deferred revenue
|
| | | | 112,310 | | | | | | 10,250 | | |
Advances from borrowers
|
| | | | 307,543 | | | | | | (11,954) | | |
Total adjustments
|
| | | | (557,297) | | | | | | 12,248 | | |
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
| | | | 339,481 | | | | | | 695,316 | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | ||||||||||
Proceeds from sale of real estate owned
|
| | | | 90,123 | | | | | | — | | |
Acquisitions of and improvements to real estate owned
|
| | | | (18,482) | | | | | | (85,746) | | |
Purchase of furniture and equipment
|
| | | | (102,327) | | | | | | — | | |
Security deposit
|
| | | | (32,000) | | | | | | — | | |
Principal disbursements for mortgages receivable
|
| | | | (10,091,528) | | | | | | (5,113,384) | | |
Principal collections on mortgages receivable
|
| | | | 3,938,601 | | | | | | 3,376,109 | | |
NET CASH USED FOR INVESTING ACTIVITIES
|
| | | | (6,215,613) | | | | | | (1,823,021) | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | ||||||||||
Proceeds from line of credit
|
| | | | 7,595,766 | | | | | | 600,000 | | |
Repayment of line of credit
|
| | | | (11,559,609) | | | | | | (1,600,000) | | |
Principal payments on mortgage payable
|
| | | | (1,657) | | | | | | — | | |
Proceeds from IPO
|
| | | | 13,000,000 | | | | | | — | | |
Pre-offering costs incurred
|
| | | | (1,544,197) | | | | | | (73,500) | | |
Financing costs incurred
|
| | | | (13,650) | | | | | | (65,050) | | |
Member contributions
|
| | | | 653,646 | | | | | | 1,862,800 | | |
Member distributions
|
| | | | (2,460,125) | | | | | | (236,445) | | |
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| | | | 5,670,174 | | | | | | 487,805 | | |
NET DECREASE IN CASH
|
| | | | (205,958) | | | | | | (639,900) | | |
CASH – BEGINNING OF PERIOD
|
| | | | 1,561,863 | | | | | | 1,834,082 | | |
CASH – END OF PERIOD
|
| | | $ | 1,355,905 | | | | | $ | 1,194,182 | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION | | | | ||||||||||
Interest paid
|
| | | $ | 101,711 | | | | | $ | 97,540 | | |
|
Performing Loans
|
| |
Residential
|
| |
Commercial
|
| |
Land
|
| |
Mixed Use
|
| |
Total
Outstanding Mortgages |
| |||||||||||||||
March 31, 2017
|
| | | $ | 25,853,550 | | | | | $ | 10,742,594 | | | | | $ | 3,220,067 | | | | | $ | 256,664 | | | | | $ | 40,072,875 | | |
March 31, 2016
|
| | | $ | 20,605,890 | | | | | $ | 5,668,880 | | | | | $ | 2,539,372 | | | | | $ | 456,000 | | | | | $ | 29,270,142 | | |
|
2017
|
| | | $ | 12,573,810 | | |
|
2018
|
| | | | 16,282,106 | | |
|
2019
|
| | | | 8,454,993 | | |
|
2020
|
| | | | 2,761,966 | | |
|
Total
|
| | | $ | 40,072,875 | | |
|
|
Year ending December 31,
|
| | 2017 | | | | $ | 7,571 | | |
| | | | 2018 | | | | | 9,228 | | |
| | | | 2019 | | | | | 9,228 | | |
| | | | 2020 | | | | | 9,228 | | |
| | | | 2021 | | | | | 9,228 | | |
| | | | Thereafter | | | | | 263,860 | | |
| | | | | | | | $ | 308,343 | | |
|
December 31,
|
| | |||||
2017
|
| | | $ | 276,061 | | |
2018
|
| | | | 85,761 | | |
2019
|
| | | | 40,944 | | |
Total
|
| | | $ | 402,766 | | |
|
| | |
December 31,
|
| |||||||||
| | |
2016
|
| |
2015
|
| ||||||
Assets | | | | ||||||||||
Cash
|
| | | $ | 1,561,863 | | | | | $ | 1,834,082 | | |
Mortgages receivable
|
| | | | 32,521,588 | | | | | | 26,017,867 | | |
Mortgages receivable, affiliate
|
| | | | 1,229,022 | | | | | | 1,515,000 | | |
Interest and fees receivable
|
| | | | 478,928 | | | | | | 265,492 | | |
Other receivables
|
| | | | 182,842 | | | | | | 17,500 | | |
Due from borrowers
|
| | | | 81,911 | | | | | | 60,499 | | |
Land and building
|
| | | | 397,448 | | | | | | — | | |
Real estate owned
|
| | | | 1,222,454 | | | | | | 1,001,054 | | |
Pre-offering costs
|
| | | | 625,890 | | | | | | 45,000 | | |
Deferred financing costs
|
| | | | 67,475 | | | | | | 38,992 | | |
Total assets
|
| | | $ | 38,369,421 | | | | | $ | 30,795,486 | | |
Liabilities and Members’ Equity | | | | ||||||||||
Liabilities | | | | ||||||||||
Line of credit
|
| | | $ | 8,113,943 | | | | | $ | 6,000,000 | | |
Mortgage payable
|
| | | | 310,000 | | | | | | — | | |
Accrued expenses
|
| | | | 196,086 | | | | | | — | | |
Security deposit held
|
| | | | 800 | | | | | | — | | |
Advances from borrowers
|
| | | | 291,875 | | | | | | 107,714 | | |
Due to member
|
| | | | 656,296 | | | | | | 230,409 | | |
Deferred revenue
|
| | | | 290,456 | | | | | | 190,017 | | |
Accrued interest
|
| | | | 24,350 | | | | | | 37,829 | | |
Total liabilities
|
| | | | 9,883,806 | | | | | | 6,565,969 | | |
Members’ equity
|
| | | | 28,485,615 | | | | | | 24,229,517 | | |
Total liabilities and members’ equity
|
| | | $ | 38,369,421 | | | | | $ | 30,795,486 | | |
|
| | |
Years Ended
December 31, |
| |||||||||
| | |
2016
|
| |
2015
|
| ||||||
Revenue | | | | ||||||||||
Interest income from loans
|
| | | $ | 3,648,427 | | | | | $ | 2,477,876 | | |
Origination fees, net
|
| | | | 197,378 | | | | | | 108,385 | | |
Late and other fees
|
| | | | 105,911 | | | | | | 144,813 | | |
Processing fees
|
| | | | 65,935 | | | | | | 55,650 | | |
Rental income, net
|
| | | | 68,417 | | | | | | — | | |
Other income
|
| | | | 47,427 | | | | | | — | | |
Total revenue
|
| | | | 4,133,495 | | | | | | 2,786,724 | | |
Operating costs and expenses: | | | | ||||||||||
Interest and amortization of deferred financing costs
|
| | | | 505,135 | | | | | | 221,698 | | |
Compensation to manager
|
| | | | 350,229 | | | | | | 210,407 | | |
Professional fees
|
| | | | 87,493 | | | | | | 2,250 | | |
Other fees and taxes
|
| | | | 34,662 | | | | | | 5,093 | | |
Loss on sale of real estate, net
|
| | | | 87,967 | | | | | | 5,476 | | |
Bank fees
|
| | | | 17,382 | | | | | | 34,897 | | |
Total operating costs and expenses
|
| | | | 1,082,868 | | | | | | 479,821 | | |
NET INCOME
|
| | | $ | 3,050,627 | | | | | $ | 2,306,903 | | |
|
| | |
Years Ended
December 31, |
| |||||||||
| | |
2016
|
| |
2015
|
| ||||||
MEMBERS’ EQUITY, BEGINNING OF YEAR
|
| | | $ | 24,229,517 | | | | | $ | 16,104,075 | | |
NET INCOME
|
| | | | 3,050,627 | | | | | | 2,306,903 | | |
Members’ Contributions
|
| | | | 5,084,730 | | | | | | 7,214,754 | | |
Members’ Distributions
|
| | | | (3,879,259) | | | | | | (1,396,215) | | |
MEMBERS’ EQUITY, END OF YEAR
|
| | | $ | 28,485,615 | | | | | $ | 24,229,517 | | |
|
| | |
Years Ended
December 31, |
| |||||||||
| | |
2016
|
| |
2015
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | ||||||||||
Net income
|
| | | $ | 3,050,627 | | | | | $ | 2,306,903 | | |
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | ||||||||||
Amortization of deferred financing costs
|
| | | | 47,676 | | | | | | 26,916 | | |
Loss on sale of real estate
|
| | | | 87,967 | | | | | | 5,476 | | |
Impairment loss
|
| | | | — | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | ||||||||||
(Increase) decrease in:
|
| | | ||||||||||
Interest and fees receivable
|
| | | | (213,438) | | | | | | (207,098) | | |
Other receivables
|
| | | | (72,374) | | | | | | (17,500) | | |
(Decrease) increase in:
|
| | | ||||||||||
Due to member
|
| | | | 421,592 | | | | | | 135,929 | | |
Accrued interest
|
| | | | (13,479) | | | | | | 24,548 | | |
Accrued expenses
|
| | | | 196,086 | | | | | | — | | |
Deferred revenue
|
| | | | 25,484 | | | | | | 71,299 | | |
Advances from borrowers
|
| | | | 167,044 | | | | | | 29,724 | | |
Total adjustments
|
| | | | 646,558 | | | | | | 69,294 | | |
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
| | | | 3,697,185 | | | | | | 2,376,197 | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | ||||||||||
Proceeds from sale of real estate owned
|
| | | | 1,059,629 | | | | | | 421,822 | | |
Acquisitions of and improvements to real estate owned
|
| | | | (886,009) | | | | | | — | | |
Purchase of land and building
|
| | | | (397,448) | | | | | | — | | |
Security deposit
|
| | | | 800 | | | | | | — | | |
Principal disbursements for mortgages receivable
|
| | | | (21,580,103) | | | | | | (19,412,438) | | |
Principal collections on mortgages receivable
|
| | | | 14,861,360 | | | | | | 5,812,116 | | |
NET CASH USED FOR INVESTING ACTIVITIES
|
| | | | (6,941,771) | | | | | | (13,178,500) | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | ||||||||||
Proceeds from line of credit
|
| | | | 7,475,000 | | | | | | 6,000,000 | | |
Repayment of line of credit
|
| | | | (5,361,057) | | | | | | (5,000,000) | | |
Proceeds from mortgage
|
| | | | 310,000 | | | | | | — | | |
Pre-offering costs incurred
|
| | | | (580,890) | | | | | | (45,000) | | |
Financing costs incurred
|
| | | | (76,159) | | | | | | (12,075) | | |
Member contributions
|
| | | | 5,084,732 | | | | | | 7,214,754 | | |
Member distributions
|
| | | | (3,879,259) | | | | | | (1,396,215) | | |
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| | | | 2,972,367 | | | | | | 6,761,464 | | |
NET DECREASE IN CASH
|
| | | | (272,219) | | | | | | (4,040,839) | | |
CASH – BEGINNING OF YEAR
|
| | | | 1,834,082 | | | | | | 5,874,921 | | |
CASH – END OF YEAR
|
| | | $ | 1,561,863 | | | | | $ | 1,834,082 | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
|
| | | ||||||||||
Interest paid
|
| | | $ | 470,821 | | | | | $ | 170,234 | | |
|
Performing Loans
|
| |
Residential
|
| |
Commercial
|
| |
Land
|
| |
Mixed Use
|
| |
Total
Outstanding Mortgages |
| |||||||||||||||
December 31, 2016
|
| | | $ | 21,343,927 | | | | | $ | 9,049,942 | | | | | $ | 3,149,602 | | | | | $ | 207,139 | | | | | $ | 33,750,610 | | |
December 31, 2015
|
| | | $ | 18,820,509 | | | | | $ | 5,712,566 | | | | | $ | 2,619,792 | | | | | $ | 380,000 | | | | | $ | 27,532,867 | | |
|
2017
|
| | | $ | 13,328,863 | | |
|
2018
|
| | | | 10,704,193 | | |
|
2019
|
| | | | 8,096,976 | | |
|
2020
|
| | | | 1,620,578 | | |
|
Total
|
| | | $ | 33,750,610 | | |
|
|
Year ending December 31,
|
| | 2017 | | | | $ | 96,480 | | |
| | | | 2018 | | | | | 96,480 | | |
| | | | 2019 | | | | | 55,270 | | |
| | | | Total | | | | $ | 248,230 | | |
|
|
Year ending December 31,
|
| | 2017 | | | | $ | 9,228 | | |
| | | | 2018 | | | | | 9,228 | | |
| | | | 2019 | | | | | 9,228 | | |
| | | | 2020 | | | | | 9,228 | | |
| | | | 2021 | | | | | 9,228 | | |
| | | | Thereafter | | | | | 263,860 | | |
| | | | | | | | $ | 310,000 | | |
|
| | |
Deferred
Revenue, Beginning |
| |
Gross
Origination Fee Income |
| |
Amortization
of Deferred Revenue |
| |
Deferred
Revenue Ending |
| ||||||||||||
Manager’s Share
|
| | | | | | | | | $ | 636,260 | | | | | | | | | | | | | | |
Company’s Share
|
| | | $ | 190,017 | | | | | | 187,748 | | | | | $ | 162,264 | | | | | $ | 215,501 | | |
Total
|
| | | $ | 190,017 | | | | | $ | 824,008 | | | | | $ | 162,264 | | | | | $ | 215,501 | | |
|
| | |
Deferred
Revenue, Beginning |
| |
Gross
Origination Fee Income |
| |
Amortization
of Deferred Revenue |
| |
Deferred
Revenue Ending |
| ||||||||||||
Manager’s Share
|
| | | | | | | | | $ | 541,600 | | | | | | | | | | | | | | |
Company’s Share
|
| | | $ | 118,718 | | | | | | 179,684 | | | | | $ | 108,385 | | | | | $ | 190,017 | | |
Total
|
| | | $ | 118,718 | | | | | $ | 721,284 | | | | | $ | 108,385 | | | | | $ | 190,017 | | |
|
December 31,
|
| | |||||
2017
|
| | | $ | 124,800 | | |
2018
|
| | | | 62,491 | | |
2019
|
| | | | 28,210 | | |
Total
|
| | | $ | 215,501 | | |
|
|
Securities and Exchange Commission registration fee
|
| | | $ | 1,700 | | |
|
Financial Industry Regulatory Authority, Inc. filing fee
|
| | | | 2,700 | | |
|
NYSE MKT listing fee
|
| | | | 58,000 | | |
|
Legal fees and expenses
|
| | | | 100,000 | | |
|
Accounting fees and expenses
|
| | | | 30,000 | | |
|
Printing and engraving expenses
|
| | | | 15,000 | | |
|
Transfer agent fees
|
| | | | 5,000 | | |
|
Underwriter’s accountable expenses
|
| | | | 85,000 | | |
|
Miscellaneous
|
| | | | 100,000 | | |
|
Total
|
| | | $ | 397,400 | | |
|
|
Exhibit
No. |
| |
Description
|
|
| 1.1 | | | Form of Underwriting Agreement (including Form of Representative’s Warrant)* | |
| 2.1 | | | Form of Amended and Restated Exchange Agreement(2) | |
| 3.1 | | | Certificate of Incorporation(2) | |
| 3.1(a) | | | Certificate of Amendment to Certificate of Incorporation(2) | |
| 3.2 | | | Bylaws, as amended(3) | |
| 4.1 | | | Form of Representative Warrant (included in Exhibit 1.1) | |
| 5.1 | | | Form of Legal Opinion(1) | |
| 8.1 | | | Form of Tax Opinion(1) | |
| 10.1** | | | Employment Agreement by and between John C. Villano and Sachem Capital Corp.(2) | |
| 10.2** | | | Employment Agreement by and between Jeffrey L. Villano and Sachem Capital Corp.(2) | |
| 10.3 | | | Sachem Capital Corp. 2016 Equity Compensation Plan(2) | |
| 10.4.1 | | | Amended and Restated Revolving Note, dated March 15, 2016, in the principal amount of $15,000,000.00(2) | |
| 10.4.2 | | | Form of Second Amended and Restated Commercial Revolving Loan and Security Agreement, February 8, 2017, among Bankwell Bank, as Lender, and Sachem Capital Partners, LLC, as Existing Borrower, and Sachem Capital Corp., as Borrower(2) | |
| 10.4.3 | | | Guaranty Agreement, dated December 18, 2014(2) | |
| 10.4.4 | | | Form of Second Reaffirmation of Guaranty Agreement, dated February 8, 2017(2) | |
| 10.5 | | | Limited Liability Operating Agreement of Sachem Capital Partners, LLC(2) | |
| 21.1 | | | List of Subsidiaries(4) | |
| 23.1 | | | Consent of Hoberman & Lesser, LLP, dated June 23, 2017(1) | |
| 23.2 | | | Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit 5.1) | |
| 24.1 | | | Power of Attorney (included on Signature Page)(1) | |
| 101.INS | | | XBRL Instance Document(1) | |
| 101.SCH | | | XBRL Taxonomy Extension Schema Document(1) | |
| 101.CAL | | | XBRL Taxonomy Extension Calculation Linkbase Document(1) | |
| 101.DEF | | | XBRL Taxonomy Extension Definition Linkbase Document(1) | |
| 101.LAB | | | XBRL Taxonomy Extension Label Linkbase Document(1) | |
| 101.PRE | | | XBRL Taxonomy Extension Presentation Linkbase Document(1) | |
| | | | Sachem Capital Corp. | |
| | | |
By:
/s/ John L. Villano
John L. Villano, CPA
Co-Chief Executive Officer |
|
| | | |
By:
/s/ Jeffrey C. Villano
Jeffrey C. Villano
Co-Chief Executive Officer |
|
|
Signature
|
| |
Date
|
| |
Title
|
|
|
/s/ John L. Villano
John L. Villano, CPA
|
| | June 23, 2017 | | | Chairman, Co-Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer and Principal Financial Officer) | |
|
/s/ Jeffrey C. Villano
Jeffrey C. Villano
|
| | June 23, 2017 | | | Co-Chief Executive Officer, President and Director (Principal Executive Officer and Principal Operating Officer) | |
|
/s/ Arthur Goldberg
Arthur Goldberg
|
| | June 23, 2017 | | | Director | |
|
/s/ Leslie Bernhard
Leslie Bernhard
|
| | June 23, 2017 | | | Director | |
|
Brian Prinz
|
| | | | Director | |
|
Exhibit
No. |
| |
Description
|
|
| 1.1 | | | Form of Underwriting Agreement (including Form of Representative’s Warrant)* | |
| 2.1 | | | Form of Amended and Restated Exchange Agreement(2) | |
| 3.1 | | | Certificate of Incorporation(2) | |
| 3.1(a) | | | Certificate of Amendment to Certificate of Incorporation(2) | |
| 3.2 | | | Bylaws, as amended(3) | |
| 4.1 | | | Form of Representative Warrant (included in Exhibit 1.1) | |
| 5.1 | | | Form of Legal Opinion(1) | |
| 8.1 | | | Form of Tax Opinion(1) | |
| 10.1** | | | Employment Agreement by and between John C. Villano and Sachem Capital Corp.(2) | |
| 10.2** | | | Employment Agreement by and between Jeffrey L. Villano and Sachem Capital Corp.(2) | |
| 10.3 | | | Sachem Capital Corp. 2016 Equity Compensation Plan(2) | |
| 10.4.1 | | | Amended and Restated Revolving Note, dated March 15, 2016, in the principal amount of $15,000,000.00(2) | |
| 10.4.2 | | | Form of Second Amended and Restated Commercial Revolving Loan and Security Agreement, February 8, 2017, among Bankwell Bank, as Lender, and Sachem Capital Partners, LLC, as Existing Borrower, and Sachem Capital Corp., as Borrower(2) | |
| 10.4.3 | | | Guaranty Agreement, dated December 18, 2014(2) | |
| 10.4.4 | | | Form of Second Reaffirmation of Guaranty Agreement, dated February 8, 2017(2) | |
| 10.5 | | | Limited Liability Operating Agreement of Sachem Capital Partners, LLC(2) | |
| 21.1 | | | List of Subsidiaries(4) | |
| 23.1 | | | Consent of Hoberman & Lesser, LLP, dated June 23, 2017(1) | |
| 23.2 | | | Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit 5.1) | |
| 24.1 | | | Power of Attorney (included on Signature Page)(1) | |
| 101.INS | | | XBRL Instance Document(1) | |
| 101.SCH | | | XBRL Taxonomy Extension Schema Document(1) | |
| 101.CAL | | | XBRL Taxonomy Extension Calculation Linkbase Document(1) | |
| 101.DEF | | | XBRL Taxonomy Extension Definition Linkbase Document(1) | |
| 101.LAB | | | XBRL Taxonomy Extension Label Linkbase Document(1) | |
| 101.PRE | | | XBRL Taxonomy Extension Presentation Linkbase Document(1) | |