Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ 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 othe ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) The company's unaudited statements detail its financial position, performance, and cash flows for the period [Balance Sheets](index=5&type=section&id=Balance%20Sheets) | Metric | Sep 30, 2022 (unaudited) | Dec 31, 2021 (audited) | | :--- | :--- | :--- | | **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 | | Total assets | $561,821,384 | $417,961,751 | | **Liabilities** | | | | Notes payable (net) | $279,557,613 | $160,529,363 | | Repurchase facility | $43,100,146 | $19,087,189 | | Total liabilities | $342,521,410 | $237,879,190 | | **Shareholders' Equity** | | | | Total shareholders' equity | $219,299,974 | $180,082,561 | | Total liabilities and shareholders' equity | $561,821,384 | $417,961,751 | - Total assets increased by **$143.8 million (34.4%)** from December 31, 2021, to September 30, 2022, primarily driven by a $156.2 million increase in the mortgage loan portfolio and a $16.5 million increase in partnership investments, partially offset by a $32.8 million decrease in cash and investment securities[185](index=185&type=chunk) - Total liabilities rose by **$104.6 million (44.0%)** over the same period, mainly due to increases in the repurchase facility ($24.0 million, 125.8%) and notes payable ($119.0 million, 74.1%), partially offset by decreases in accounts payable, accrued dividends, line of credit, and advances from borrowers[186](index=186&type=chunk) - Total shareholders' equity increased by **$39.2 million (21.8%)**, primarily from $36.7 million in net proceeds from common share sales and $11.9 million in net income attributable to common shareholders, partially offset by $2.8 million in preferred stock dividends and $9.6 million in common share dividends[187](index=187&type=chunk) [Statements of Comprehensive Income](index=6&type=section&id=Statements%20of%20Comprehensive%20Income) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Interest income from loans | $11,545,748 | $6,094,165 | $30,490,694 | $15,307,692 | | Origination and modification fees, net | $1,669,034 | $1,268,624 | $5,759,650 | $2,788,498 | | 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 | | Interest and amortization of deferred financing costs | $5,974,975 | $2,589,847 | $15,083,228 | $7,541,536 | | 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 | | Net income attributable to common shareholders | $4,131,873 | $3,386,824 | $11,867,385 | $8,100,769 | | Basic and diluted net income per common share | $0.11 | $0.12 | $0.32 | $0.32 | - Total revenue for the three months ended September 30, 2022, increased by **58.9% to $13.5 million**, primarily due to an 89.5% increase in interest income from loans and a 31.6% increase in origination and modification fees, partially offset by $1.1 million in unrealized losses on investment securities[171](index=171&type=chunk) - Operating costs and expenses for the three months ended September 30, 2022, surged by **101.0% to $8.5 million**, mainly driven by a 130.7% increase in interest and amortization of deferred financing costs, a 95.7% rise in compensation, fees, and taxes, and a 49.6% increase in general and administrative expenses[172](index=172&type=chunk) - Net income attributable to common shareholders for the three months ended September 30, 2022, was **$4.1 million ($0.11 per share)**, compared to $3.4 million ($0.12 per share) in the prior year, with a decrease in EPS despite higher net income due to an increased weighted average number of common shares outstanding[19](index=19&type=chunk)[175](index=175&type=chunk) [Statements of Changes in Shareholders' Equity](index=7&type=section&id=Statements%20of%20Changes%20in%20Shareholders%27%20Equity) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Shareholders' Equity (Beginning) | $180,082,561 | $80,919,540 | | Issuance of common shares, net | $36,654,419 | $30,883,928 | | Stock based compensation | $357,321 | $126,632 | | Unrealized loss on marketable securities | $(81,525) | $(611,998) | | Dividends paid on Series A Preferred Stock | $(2,765,297) | $(932,089) | | Dividends paid on common shares | $(9,580,187) | $(6,123,415) | | Net income for the period | $14,632,682 | $9,032,858 | | Total Shareholders' Equity (Ending) | $219,299,974 | $158,758,082 | - Shareholders' equity increased from **$180.1 million** at January 1, 2022, to **$219.3 million** at September 30, 2022, driven by $36.7 million from common share issuances and $14.6 million in net income, partially offset by $2.8 million in preferred stock dividends and $9.6 million in common share dividends[23](index=23&type=chunk)[187](index=187&type=chunk) [Statements of Cash Flows](index=9&type=section&id=Statements%20of%20Cash%20Flows) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,405,669 | $17,374,676 | | Net cash used for investing activities | $(151,227,331) | $(84,941,629) | | Net cash provided by financing activities | $132,347,022 | $67,401,241 | | Net increase (decrease) in cash and cash equivalents | $(6,474,640) | $(165,712) | | Cash and cash equivalents - End of period | $35,464,257 | $19,242,316 | - Net cash provided by operating activities decreased to **$12.4 million** for the nine months ended September 30, 2022, from $17.4 million in the prior year, primarily due to changes in operating assets and liabilities, including increases in interest and fees receivable and due from borrowers, and decreases in advances from borrowers[188](index=188&type=chunk)[190](index=190&type=chunk) - Net cash used for investing activities significantly increased to **$151.3 million** in 2022 from $84.9 million in 2021, driven by higher principal disbursements for mortgages receivable ($252.4 million vs $154.8 million) and increased purchases of investment securities and partnership interests[191](index=191&type=chunk) - Net cash provided by financing activities rose to **$132.3 million** in 2022 from $67.4 million in 2021, mainly due to $117.6 million from fixed-rate notes issuance, $36.7 million from common share issuance, and $24.0 million from the repurchase facility, partially offset by line of credit repayments and dividend payments[192](index=192&type=chunk) [Notes to Financial Statements (unaudited)](index=11&type=section&id=Notes%20to%20Financial%20Statements%20(unaudited)) [1. The Company](index=11&type=section&id=1.%20The%20Company) - Sachem Capital Corp specializes in originating, underwriting, funding, servicing, and managing a portfolio of short-term (one to three years), secured, non-bank first mortgage loans to real estate owners and investors, primarily in Connecticut, New York, and Florida[31](index=31&type=chunk) [2. Significant Accounting Policies](index=11&type=section&id=2.%20Significant%20Accounting%20Policies) - The unaudited financial statements are prepared in accordance with GAAP for interim financial information, relying on management estimates and assumptions[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The Company accounts for real estate owned at cost, tests for impairment quarterly, and consolidates subsidiaries where it has control[42](index=42&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - Sachem Capital Corp elected to be taxed as a **Real Estate Investment Trust (REIT)** for federal income tax purposes starting in 2017, which generally exempts it from US federal income tax on distributed taxable income, provided it meets various complex requirements[49](index=49&type=chunk) [3. Fair Value Measurement](index=15&type=section&id=3.%20Fair%20Value%20Measurement) | Asset Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Stocks and ETFs | $9,135,577 | — | — | $9,135,577 | | Mutual funds | $25,215,797 | — | — | $25,215,797 | | Total liquid investments | $34,351,374 | — | — | $34,351,374 | | Real estate owned | — | — | $5,615,940 | $5,615,940 | - The Company's fair value assets as of September 30, 2022, primarily consist of **Level 1 liquid investments** (stocks, ETFs, mutual funds) totaling **$34.4 million**, valued at quoted market prices[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Unrealized (losses) on AFS securities at beginning of period | $(425,972) | $(137,802) | $(476,016) | $(25,992) | | Unrealized (losses) on securities available-for-sale | $(131,569) | $(500,188) | $(81,525) | $(611,998) | | Balance at end of period | $(557,541) | $(637,990) | $(557,541) | $(637,990) | [4. Mortgages Receivable](index=16&type=section&id=4.%20Mortgages%20Receivable) - The Company's mortgage loan portfolio increased significantly, with **$252.4 million in loans funded** during the nine months ended September 30, 2022, compared to $154.8 million in the prior year[62](index=62&type=chunk) - As of September 30, 2022, the total outstanding mortgages receivable reached **$448.5 million**, up from $292.3 million at December 31, 2021[17](index=17&type=chunk)[62](index=62&type=chunk) | Loan Type | Dec 31, 2021 | Sep 30, 2022 | | :--- | :--- | :--- | | Residential | $157,841,896 | $234,747,362 | | Commercial | $95,319,795 | $143,898,654 | | Land | $20,755,891 | $39,513,545 | | Mixed Use | $18,383,627 | $30,365,104 | | Total | $292,301,209 | $448,524,665 | - At September 30, 2022, **92 loans totaling approximately $45.0 million** were past maturity and either in foreclosure or being extended[67](index=67&type=chunk) [5. Real Estate Owned](index=17&type=section&id=5.%20Real%20Estate%20Owned) - Real estate owned (REO) decreased from $6.8 million at September 30, 2021, to **$5.6 million** at September 30, 2022[69](index=69&type=chunk) - As of September 30, 2022, REO included **$800,053 of real estate held for rental** and **$4,815,887 held for sale**[70](index=70&type=chunk)[71](index=71&type=chunk) [6. Other Assets](index=18&type=section&id=6.%20Other%20Assets) | Category | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Prepaid expenses | $117,449 | $271,291 | | Other receivables | $512,284 | $94,108 | | Other assets | $472,800 | $306,440 | | Deferred financing costs, net | $19,809 | $264,451 | | Total | $1,122,342 | $936,290 | [7. Line of Credit, Mortgage Payable, and Churchill Facility](index=18&type=section&id=7.%20Line%20of%20Credit,%20Mortgage%20Payable,%20and%20Churchill%20Facility) - The Wells Fargo margin loan, secured by investment securities, had an outstanding balance of **$3,542,853** at September 30, 2022, with an interest rate of **4.50%**[76](index=76&type=chunk) - The NHB Mortgage, an adjustable-rate loan for up to $1.4 million, had **$750,000 outstanding** at September 30, 2022[77](index=77&type=chunk) - The $200 million Churchill MRA Funding I LLC Repurchase Financing Facility had **$43,100,146 outstanding** at September 30, 2022, with an effective interest rate of **6.99%**[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) [8. Financing Transactions](index=19&type=section&id=8.%20Financing%20Transactions) - During the nine months ended September 30, 2022, the Company generated approximately **$159.7 million in gross proceeds** from securities sales, including $122.1 million from various unsecured notes and $37.6 million from the sale of 7,177,043 common shares in an at-the-market offering[84](index=84&type=chunk)[85](index=85&type=chunk) [9. Notes Payable](index=21&type=section&id=9.%20Notes%20Payable) - As of September 30, 2022, the Company had **$279,557,613 in unsecured, unsubordinated notes payable** (net of deferred financing costs)[87](index=87&type=chunk)[89](index=89&type=chunk) - The notes are listed on the NYSE American and are callable by the Company without premium or penalty after their second anniversary of issuance[87](index=87&type=chunk) [10. Accounts Payable and Accrued Liabilities](index=21&type=section&id=10.%20Accounts%20Payable%20and%20Accrued%20Liabilities) | Category | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Accounts payable and Accrued expenses | $555,571 | $501,753 | | Other notes | $10,760 | $30,921 | | Accrued interest | $595,839 | $164,729 | | Total | $1,162,170 | $697,403 | [11. Fee and Other Income](index=23&type=section&id=11.%20Fee%20and%20Other%20Income) | Category | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Late and other fees | $92,098 | $202,572 | $338,638 | $300,471 | | Processing fees | $37,480 | $50,230 | $165,950 | $129,615 | | Rental income, net | $8,867 | $28,320 | $37,067 | $23,105 | | Extension fees | $212,608 | $86,671 | $415,128 | $232,886 | | Other fees | $124,292 | $55,025 | $259,542 | $150,094 | | Legal fees | $91,115 | $69,800 | $253,055 | $181,600 | | Other income | $75,289 | $98,823 | $579,541 | $833,260 | | Total | $641,749 | $591,441 | $2,048,921 | $1,851,031 | [12. Commitments and Contingencies](index=23&type=section&id=12.%20Commitments%20and%20Contingencies) - Deferred revenue from loan origination and modification fees totaled **$4,471,800** at September 30, 2022, with $1,583,313 expected to be recognized in 2022, $2,687,114 in 2023, and $201,373 in 2024[93](index=93&type=chunk) - At September 30, 2022, the Company had unfunded future funding obligations of **$118,103,785**, which borrowers can draw upon satisfying conditions[98](index=98&type=chunk)[99](index=99&type=chunk) [13. Related Party Transactions](index=24&type=section&id=13.%20Related%20Party%20Transactions) - Loans to known shareholders totaled **$20,932,994** at September 30, 2022, up from $13,200,972 in 2021, with interest income from these loans increasing to $1,248,826 for the nine months ended September 30, 2022, from $573,446 in the prior year[100](index=100&type=chunk) - Compensation paid to the CEO's wife (Director of Finance, retired Q3 2022) was **$62,865** for the nine months ended September 30, 2022[101](index=101&type=chunk)[103](index=103&type=chunk) [14. Concentration of Credit Risk](index=25&type=section&id=14.%20Concentration%20of%20Credit%20Risk) - The Company's mortgage loans are concentrated primarily in **Connecticut (approximately 43.0%)**, **Florida (approximately 21.7%)**, and **New York (approximately 14.2%)**, exposing it to regional economic conditions[104](index=104&type=chunk)[105](index=105&type=chunk) [15. Outstanding Warrants](index=25&type=section&id=15.%20Outstanding%20Warrants) - IPO Warrants to purchase 130,000 common shares **expired unexercised** on February 9, 2022[106](index=106&type=chunk)[107](index=107&type=chunk) [16. Stock-Based Compensation and Employee Benefits](index=25&type=section&id=16.%20Stock-Based%20Compensation%20and%20Employee%20Benefits) - Under the 2016 Equity Compensation Plan, **153,967 restricted common shares** were granted during the nine months ended September 30, 2022, compared to 94,681 in 2021[110](index=110&type=chunk)[111](index=111&type=chunk) - The 401(k) Plan expense for the nine months ended September 30, 2022, was **$71,925**, up from $46,276 in the prior year, reflecting the Company's obligation to contribute 3% of a participant's compensation[112](index=112&type=chunk) [17. Equity Offerings](index=26&type=section&id=17.%20Equity%20Offerings) - During the nine months ended September 30, 2022, the Company sold **7,177,043 common shares** through an at-the-market offering, generating net proceeds of **$36,654,419**[113](index=113&type=chunk)[114](index=114&type=chunk) [18. Partnership Investments](index=26&type=section&id=18.%20Partnership%20Investments) - As of September 30, 2022, the Company had invested approximately **$22.5 million** in four limited liability companies, with ownership interests up to 49%[115](index=115&type=chunk)[116](index=116&type=chunk) [19. Special Purpose Acquisition Corporation](index=28&type=section&id=19.%20Special%20Purpose%20Acquisition%20Corporation) - The Company loaned **$25,000** to its wholly-owned subsidiary, Sachem Sponsor LLC, to purchase shares in Sachem Acquisition Corp, a SPAC[119](index=119&type=chunk) [20. Series A Preferred Stock](index=28&type=section&id=20.%20Series%20A%20Preferred%20Stock) - The Series A Preferred Stock pays quarterly cumulative dividends at **7.75% per annum** ($1.9375 per share) on a $25.00 liquidation preference[121](index=121&type=chunk) [21. Charter Amendments](index=28&type=section&id=21.%20Charter%20Amendments) - On July 19, 2022, the Company increased its authorized common shares from **100,000,000 to 200,000,000**[122](index=122&type=chunk)[123](index=123&type=chunk) [22. Subsequent Events](index=28&type=section&id=22.%20Subsequent%20Events) - From October 1 to November 9, 2022, the Company sold **405,037 common shares**, generating approximately **$1.6 million** in gross proceeds[124](index=124&type=chunk)[127](index=127&type=chunk) - Effective October 7, 2022, the Board adopted a stock repurchase plan for up to **$7.5 million** of common shares through September 30, 2023[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial conditions and operational results, highlighting revenue growth and strategic initiatives [Company Overview](index=31&type=section&id=Company%20Overview) - Sachem Capital Corp is a Connecticut-based real estate finance company specializing in short-term first mortgage loans[133](index=133&type=chunk) [Review of the First Nine Months of 2022 and Outlook for Balance of Year](index=31&type=section&id=Review%20of%20the%20First%20Nine%20Months%20of%202022%20and%20Outlook%20for%20Balance%20of%20Year) - For the first nine months of 2022, **revenue increased by 73.7%**, net income attributable to common shareholders rose by 46.5%, and EPS remained consistent at $0.32[134](index=134&type=chunk) - The Company's primary objective for 2022 is to **grow its loan portfolio** while preserving capital and providing attractive risk-adjusted returns, mainly through dividends[135](index=135&type=chunk) - Challenges for the upcoming quarters include **rising interest rates and inflation** (Fed raised rates 6 times for 3.75% total), increased borrowing costs, and potential adverse impacts on capital access and property valuations[137](index=137&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Despite challenges, the Company believes in its business model, focusing on well-capitalized **'hard money' lending** to small- and mid-scale real estate developers in stable and growing markets[147](index=147&type=chunk) [Financing Strategy Overview](index=36&type=section&id=Financing%20Strategy%20Overview) - To grow its business, the Company must increase its loan portfolio by using existing working capital and raising additional capital through equity sales or debt[148](index=148&type=chunk) - As of September 30, 2022, the Company had **$288.4 million in seven series of unsecured unsubordinated notes** outstanding, ranking equally with other senior unsecured debt but subordinated to secured debt[149](index=149&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Secured indebtedness includes the **Churchill Facility ($43.1 million outstanding at 6.99% effective rate)**, the Wells Fargo Loan ($3.5 million outstanding at 4.5% interest), and the NHB Mortgage ($750,000 outstanding at 3.75% initial rate)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[159](index=159&type=chunk) - During the nine months ended September 30, 2022, the Company raised approximately **$36.7 million in net proceeds** from common share sales through an at-the-market offering[160](index=160&type=chunk)[161](index=161&type=chunk) [REIT Qualification](index=40&type=section&id=REIT%20Qualification) - The Company believes it has qualified as a REIT since its IPO in 2017 and intends to maintain this status, which requires distributing at least **90% of its taxable income annually** to shareholders[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) [Emerging Growth Company Status](index=40&type=section&id=Emerging%20Growth%20Company%20Status) - As an 'emerging growth company' under the JOBS Act, Sachem Capital Corp has availed itself of exemptions from certain reporting requirements, including delaying the adoption of new accounting standards[165](index=165&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk) [Critical Accounting Policies and Use of Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) - The preparation of financial statements requires management to make estimates and assumptions based on experience, future projections, and market conditions[168](index=168&type=chunk)[169](index=169&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) [Three months ended September 30, 2022 compared to three months ended September 30, 2021](index=42&type=section&id=Three%20months%20ended%20September%2030,%202022%20compared%20to%20three%20months%20ended%20September%2030,%202021) - Total revenue increased by **58.9% to $13.5 million**, driven by an 89.5% increase in interest income from loans and a 31.6% increase in origination and modification fees, partially offset by $1.1 million in unrealized losses on investment securities[171](index=171&type=chunk) - Operating costs and expenses rose by **101.0% to $8.5 million**, primarily due to a 130.7% increase in interest and amortization of deferred financing costs, a 95.7% increase in compensation, fees, and taxes, and a 49.6% increase in general and administrative expenses[172](index=172&type=chunk) - Net income attributable to common shareholders was **$4.1 million ($0.11 per share)** for the three months ended September 30, 2022, compared to $3.4 million ($0.12 per share) in the prior year, with a slight decrease in EPS due to a higher weighted average number of common shares outstanding[175](index=175&type=chunk) [Nine months ended September 30, 2022 compared to nine months ended September 30, 2021](index=44&type=section&id=Nine%20months%20ended%20September%2030,%202022%20compared%20to%20nine%20months%20ended%20September%2030,%202021) - Total revenue increased by **73.7% to $36.4 million**, primarily from a 99.2% increase in interest income ($30.5 million) and a 106.6% increase in origination and modification fees ($5.8 million)[176](index=176&type=chunk) - Operating costs and expenses grew by **82.6% to $21.8 million**, mainly due to a 100.0% increase in interest and amortization of deferred financing costs ($15.1 million), a 69.7% increase in compensation, fees, and taxes, and a 45.6% increase in general and administrative expenses[177](index=177&type=chunk) - Net income attributable to common shareholders was **$11.9 million ($0.32 per share)** for the nine months ended September 30, 2022, compared to $8.1 million ($0.32 per share) in the prior year, with EPS remaining flat despite higher net income due to an increased weighted average number of common shares outstanding[179](index=179&type=chunk) [Non-GAAP Metrics – Adjusted Earnings](index=44&type=section&id=Non-GAAP%20Metrics%20%E2%80%93%20Adjusted%20Earnings) - Adjusted Earnings, a non-GAAP metric, is used to provide a better perspective of taxable income by excluding unrealized gains (losses) on available-for-sale securities, which are marked-to-market under GAAP but not recognized for tax purposes until sold[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) | Metric | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net income attributable to common shareholders | $4,131,873 | $11,867,385 | | Add: Unrealized losses on investment securities | $1,076,836 | $3,607,498 | | Adjusted earnings attributable to common shareholders | $5,208,709 | $15,474,883 | | Adjusted Earnings per share | $0.13 | $0.42 | [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents and investment securities totaled **$69.8 million** at September 30, 2022, down from $102.6 million at December 31, 2021, reflecting a draw down to fund new loans[184](index=184&type=chunk)[185](index=185&type=chunk) - Total liabilities increased by **44.0% to $342.5 million**, mainly from increases in the repurchase facility and notes payable[186](index=186&type=chunk)[187](index=187&type=chunk) - Net cash provided by operating activities decreased to **$12.4 million**, while net cash used for investing activities significantly increased to **$151.3 million**[188](index=188&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The Company projects current cash balances and anticipated operating cash flows will be sufficient for short-term operating needs (next 12 months), including loan funding, expenses, and dividends[193](index=193&type=chunk)[194](index=194&type=chunk) [Subsequent Events](index=48&type=section&id=Subsequent%20Events) - From October 1 to November 9, 2022, the Company sold **405,037 common shares for approximately $1.6 million**[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - All remaining underwriters' warrants **expired unexercised** on October 24, 2022[199](index=199&type=chunk)[200](index=200&type=chunk) [Off-Balance Sheet Arrangements](index=49&type=section&id=Of%20-Balance%20Sheet%20Arrangements) - The Company is not a party to any off-balance sheet transactions, arrangements, or relationships with unconsolidated entities or other persons that are likely to affect liquidity or capital resources[201](index=201&type=chunk) [Contractual Obligations](index=49&type=section&id=Contractual%20Obligations) | Obligation | Total | Less than 1 year | | :--- | :--- | :--- | | Investment in partnerships | $3,588,984 | $3,588,984 | | Unfunded loan commitments | $118,103,785 | $118,103,785 | | Total contractual obligations | $121,692,769 | $121,692,769 | - As of September 30, 2022, total contractual obligations amounted to **$121.7 million**, primarily consisting of $118.1 million in unfunded loan commitments and $3.6 million in investment in partnerships, all due within one year[203](index=203&type=chunk) [Critical Accounting Policies and Recent Accounting Pronouncements](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Recent%20Accounting%20Pronouncements) - Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the Company's financial statements if currently adopted[54](index=54&type=chunk)[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, the company is exempt from providing detailed disclosures about market risk - As a smaller reporting company, Sachem Capital Corp is not required to provide quantitative and qualitative disclosures about market risk[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were **effective as of September 30, 2022**, ensuring timely and accurate reporting of information required under the Exchange Act[207](index=207&type=chunk) - **No changes in internal control** over financial reporting were identified during the fiscal quarter ended September 30, 2022, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[208](index=208&type=chunk) [PART II. OTHER INFORMATION](index=52&type=section&id=Part%20II%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=52&type=section&id=Item1A.%20Risk%20Factors) Key risks include significant unfunded commitments and the adverse impact of inflation and rising interest rates - The Company has significant unfunded commitments of approximately **$118.1 million** under existing loans[211](index=211&type=chunk) - Inflation and rising interest rates (Fed raised rates **3.75% in 2022**) have increased borrowing costs and adversely impacted the Company's ability to raise capital in public markets[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item2.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its unregistered sales of equity securities for an acquisition - On October 6, 2022, the Company issued **300,000 restricted common shares**, valued at approximately **$1.1 million**, to Urbane New Haven, LLC as part of an asset acquisition[213](index=213&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and certifications - The exhibits include various corporate documents such as the Certificate of Incorporation and amendments, Amended and Restated Bylaws, Indentures and Supplemental Indentures for different series of notes, and the form of Series A Cumulative Redeemable Preferred Stock Certificate[215](index=215&type=chunk) - Key agreements listed are employment agreements for John L Villano and John E Warch, the 2016 Equity Compensation Plan and related restrictive stock grant agreements, and the Master Repurchase Agreement with Churchill MRA Funding I LLC[215](index=215&type=chunk)[216](index=216&type=chunk) - Certifications required under the Sarbanes-Oxley Act (Sections 302 and 906) from the Chief Executive Officer and Chief Financial Officer are also included, along with XBRL Instance Document and Taxonomy Extension documents[216](index=216&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) The report contains official signatures from the CEO and CFO certifying the submission - The report is duly signed on November 10, 2022, by John L Villano, CPA, President and Chief Executive Officer, and John E Warch, CPA, Chief Financial Officer, in accordance with the requirements of the Securities Exchange Act of 1934[222](index=222&type=chunk)

Table of Contents 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 June 30, 2022 or ☐ 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 o ...

Revenue and Income Growth - Revenue increased by 80.3% compared to Q1 2021, with interest income rising by 87.8% and origination fees increasing by 216.5%[126] - Total revenue for Q1 2022 was approximately $10.3 million, an increase of 80.3% from $5.7 million in Q1 2021[160] - Interest income for Q1 2022 was approximately $8.5 million, up 87.8% from $4.5 million in Q1 2021[160] - Origination fees increased to approximately $1.6 million in Q1 2022, representing a 216.5% increase from approximately $517,000 in Q1 2021[160] - Net income attributable to common shareholders rose by 57.1%, while earnings per share remained unchanged at $0.10[126] - Net income attributable to common shareholders for the three months ended March 31, 2022, was $3,429,700, up from $2,183,101 in the prior year[166] - Adjusted earnings attributable to common shareholders for the period ended March 31, 2022, were $4,481,930, compared to $2,183,101 for the same period in 2021, reflecting a significant increase[166] Assets and Liabilities - Total assets increased by approximately $63.8 million, or 15.3%, to approximately $481.8 million as of March 31, 2022, primarily due to an increase in the mortgage loan portfolio[168] - Total liabilities rose by approximately $44.5 million, or 18.7%, to approximately $282.4 million as of March 31, 2022, mainly due to an increase in notes payable[169] - Total shareholders' equity increased by approximately $19.3 million to approximately $199.4 million as of March 31, 2022, driven by net proceeds from the sale of common shares[170] Cash Flow - Net cash provided by operating activities for the three months ended March 31, 2022, was approximately $7.8 million, compared to $2.8 million for the same period in 2021[171] - Net cash used for investing activities increased significantly to approximately $48.7 million for the three months ended March 31, 2022, compared to $2.1 million in the prior year[172] - Net cash provided by financing activities for the three months ended March 31, 2022, was approximately $56.8 million, a substantial increase from $1.8 million used in the comparable 2021 period[174] Loan Portfolio and Underwriting - Mortgages receivable increased by 125.6% compared to March 31, 2021, and cash and cash equivalents rose by 215.4%[126] - As of March 31, 2022, the mortgage loan portfolio included 204 loans with future funding obligations totaling approximately $115.4 million, up from 129 loans totaling approximately $23.5 million a year earlier[138] - The yield on the mortgage loan portfolio decreased from 11.73% in Q1 2021 to 11.30% in Q1 2022, indicating interest rate compression[130] - The company has implemented a new underwriting model to automate loan documentation, enhancing processing accuracy and efficiency[127] - The company is focusing on larger-value commercial loans with experienced sponsors to drive growth and operational excellence[127] Debt and Financing - Debt represented approximately 55.5% of total capital as of March 31, 2022, down from 63.0% a year prior[140] - The outstanding balance under the Churchill Facility was approximately $26.9 million as of March 31, 2022, accruing interest at an effective rate of 4.70% per annum[145] - The Wells Fargo Loan had a balance of approximately $23.3 million at March 31, 2022, with an interest rate of 1.75% below the prime rate[146] - The NHB Mortgage had an outstanding amount of $750,000 as of December 31, 2021, with an initial interest rate of 3.75% per annum[147] Shareholder Distributions - The company aims to grow its loan portfolio while maintaining a minimum distribution of 90% of taxable income to qualify as a REIT[125] - The company intends to pay regular quarterly distributions to holders of common shares of not less than 90% of its REIT taxable income[177] - The company raised approximately $15.5 million from the sale of 2,730,725 common shares during the three months ended March 31, 2022[150] - The company raised approximately $45.5 million from the sale of 1,903,000 shares of Series A Preferred Stock in June and July 2021[148] Operating Expenses - Increased operating expenses were noted, primarily due to a higher debt load, increased headcount, and loan volume[137] - Total operating costs and expenses for Q1 2022 were approximately $5.9 million, an increase of 68.6% from $3.5 million in Q1 2021[161] Contractual Obligations - As of March 31, 2022, total contractual obligations amounted to approximately $119.2 million, including unfunded loan commitments of $115.4 million[185]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ◻ 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) State or other jurisdiction of (I ...

Part I FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Sachem Capital's unaudited financial statements detail its financial position and performance for Q3 2021 [Balance Sheets](index=4&type=section&id=Balance%20Sheets) Total assets grew to **$313.4 million** by September 30, 2021, fueled by mortgages receivable and equity from stock offerings Balance Sheet Highlights (in USD) | Account | Sep 30, 2021 (Unaudited) | Dec 31, 2020 (Audited) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Assets** | **$313,351,751** | **$226,670,184** | **+38.2%** | | Mortgages Receivable | $219,963,291 | $155,616,300 | +41.4% | | Cash and cash equivalents | $19,242,316 | $19,408,028 | -0.9% | | **Total Liabilities** | **$154,593,669** | **$145,750,644** | **+6.1%** | | Notes payable (net) | $110,394,395 | $109,640,692 | +0.7% | | **Total Shareholders' Equity** | **$158,758,082** | **$80,919,540** | **+96.2%** | [Statements of Comprehensive Income](index=5&type=section&id=Statements%20of%20Comprehensive%20Income) Total revenue increased **62.5%** to **$20.9 million** for the nine months ended September 30, 2021, driving net income growth Income Statement Summary (Nine Months Ended Sep 30, in USD) | Metric | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $20,948,451 | $12,894,752 | +62.5% | | Interest income from loans | $15,307,692 | $9,640,387 | +58.8% | | Total operating costs | $11,915,593 | $6,250,875 | +90.6% | | Net Income | $9,032,858 | $6,643,877 | +36.0% | | Net income to common shareholders | $8,100,769 | $6,643,877 | +21.9% | | Diluted EPS | $0.32 | $0.30 | +6.7% | Income Statement Summary (Three Months Ended Sep 30, in USD) | Metric | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $8,522,376 | $4,271,808 | +99.5% | | Net Income | $4,300,615 | $2,138,784 | +101.1% | | Net income to common shareholders | $3,386,824 | $2,138,784 | +58.4% | | Diluted EPS | $0.12 | $0.10 | +20.0% | [Statements of Changes in Shareholders' Equity](index=6&type=section&id=Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity significantly increased to **$158.8 million** by September 30, 2021, primarily from preferred and common stock offerings - For the nine months ended September 30, 2021, the company issued 1,903,000 shares of preferred stock for net proceeds of **$45.5 million** and 6,096,448 shares of common stock for net proceeds of **$30.9 million**[23](index=23&type=chunk) - Dividends paid during the first nine months of 2021 totaled **$6.1 million** for common stock and **$932,089** for preferred stock[23](index=23&type=chunk) [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) Net cash from operating activities was **$17.4 million**, while investing activities used **$84.9 million**, resulting in a slight cash decrease Cash Flow Summary (Nine Months Ended Sep 30, in USD) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $17,374,582 | $7,389,446 | | Net Cash used for Investing Activities | ($84,941,629) | ($41,361,462) | | Net Cash from Financing Activities | $67,401,335 | $20,514,152 | | **Net (Decrease) in Cash** | **($165,712)** | **($13,457,864)** | | Cash at End of Period | $19,242,316 | $5,384,073 | [Notes to Financial Statements](index=10&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed context for the financial statements, covering accounting policies, fair value measurements, and specifics on assets, liabilities, and equity - The company specializes in short-term (one to three years), secured, non-banking "hard money" loans to real estate investors, primarily in **Connecticut**, secured by first mortgage liens[34](index=34&type=chunk) - The company elected to be taxed as a **Real Estate Investment Trust (REIT)** for federal income tax purposes starting with its 2017 tax return, requiring it to distribute at least **90%** of its taxable income annually[53](index=53&type=chunk) - The company's mortgage loan portfolio includes **157 loans** with future funding obligations totaling **$61,707,185** as of September 30, 2021[85](index=85&type=chunk) - The company's loan portfolio is geographically concentrated, with approximately **59.51%** in Connecticut, **21.09%** in Florida, and **10.69%** in New York[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses significant revenue and loan portfolio growth, strategic initiatives, and challenges, including financing strategy and REIT status [Review of the first Nine Months of 2021 and Outlook](index=26&type=section&id=Review%20of%20the%20first%20Nine%20Months%20of%202021%20and%20Outlook) Revenue grew **62.5%** and net income **21.9%** for the first nine months of 2021, driven by mortgage growth and strategic initiatives - The company's primary business objective is to grow its loan portfolio while protecting capital to provide attractive **risk-adjusted returns** to shareholders, primarily through dividends[115](index=115&type=chunk) - Strategic initiatives include focusing on **larger-value commercial loans**, driving operational excellence through automation, and developing relationships with larger wholesale brokers[115](index=115&type=chunk) - Challenges for the remainder of 2021 include increased competition, borrower expectations for better terms leading to **rate compression**, and increased operating expenses[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - As of September 30, 2021, the company had unfunded commitments of **$61.7 million**, primarily due to an increase in construction loan originations in the Florida market[126](index=126&type=chunk) [Operational and Financial Overview](index=33&type=section&id=Operational%20and%20Financial%20Overview) The company's capital structure is balanced with **49.3% debt** and **50.7% equity**, facing portfolio yield compression and borrower concentration - The company's capital structure as of September 30, 2021, is approximately **49.3% debt** and **50.7% equity**[130](index=130&type=chunk) - At September 30, 2021, one borrower's outstanding loans represented **10.2%** of the mortgage loan portfolio, and a second borrower's obligations, on a fully funded basis, would represent approximately **10.0%**[130](index=130&type=chunk) - The yield on the mortgage loan portfolio was **11.92%** for the nine months ended September 30, 2021, down from **12.28%** for the same period in 2020, indicating interest rate compression[134](index=134&type=chunk) [Financing Strategy Overview](index=35&type=section&id=Financing%20Strategy%20Overview) The company's financing strategy leverages debt and equity, with **$144.6 million** in outstanding debt and a new **$200 million** repurchase facility - In June and July 2021, the company raised approximately **$45.5 million** in net proceeds from the sale of its Series A Preferred Stock[138](index=138&type=chunk) - Total outstanding debt at September 30, 2021, was approximately **$144.6 million**, including a **$30.1 million** credit line and **$114.5 million** in unsecured notes[140](index=140&type=chunk)[144](index=144&type=chunk) - On July 21, 2021, the company established a **$200 million** master repurchase financing facility with Churchill, allowing it to sell mortgage loans to raise capital at a rate based on **30-day LIBOR plus a spread of 3%-4%**[145](index=145&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Total revenue nearly doubled in Q3 2021 and grew **62.5%** for the nine-month period, driven by interest income despite rising costs Q3 2021 vs Q3 2020 Performance (in USD) | Metric | Q3 2021 | Q3 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | ~$8.5M | ~$4.3M | +99.5% | | Interest Income | ~$6.1M | ~$3.5M | +75.5% | | Operating Costs | ~$4.2M | ~$2.1M | +97.9% | | Net Income to Common Shareholders | ~$3.4M | ~$2.1M | +58.4% | Nine Months 2021 vs 2020 Performance (in USD) | Metric | YTD 2021 | YTD 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | ~$20.9M | ~$12.9M | +62.5% | | Interest Income | ~$15.3M | ~$9.6M | +58.8% | | Operating Costs | ~$11.9M | ~$6.3M | +90.6% | | Net Income to Common Shareholders | ~$8.1M | ~$6.6M | +21.9% | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$75.3 million** in cash and equivalents, supported by significant asset and equity growth - Cash, cash equivalents, and investment securities totaled approximately **$75.3 million** at September 30, 2021[161](index=161&type=chunk) - Total assets increased by **38.2%** to **$313.4 million** at September 30, 2021, from **$226.7 million** at December 31, 2020[162](index=162&type=chunk) - Shareholders' equity increased by **$77.8 million**, primarily due to net proceeds from the Series A Preferred Stock offering (**~$45.5 million**) and common stock sales (**~$30.9 million**)[165](index=165&type=chunk) - Net cash provided by financing activities for the nine months ended September 30, 2021 was approximately **$67.5 million**, driven by stock issuances[168](index=168&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Sachem Capital Corp is exempt from providing quantitative and qualitative market risk disclosures - As a **smaller reporting company**, Sachem Capital Corp is not required to provide the information required by Item 3[179](index=179&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures are **effective**[181](index=181&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[182](index=182&type=chunk) Part II OTHER INFORMATION [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant credit risk due to borrower concentration and liquidity risk from **$61.7 million** in unfunded commitments - At September 30, 2021, one borrower's loans represented **10.2%** of the mortgage portfolio. A second borrower's total funding obligations would represent approximately **10.0%** of the portfolio on a fully funded basis, creating significant borrower concentration risk[185](index=185&type=chunk) - The company had significant unfunded commitments of approximately **$61.7 million** as of September 30, 2021. Failure to meet these obligations could lead to legal claims and adversely impact the business[186](index=186&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and key agreements - The report includes a comprehensive list of exhibits, such as the Certificate of Incorporation, bylaws, indentures for various note series, key employment agreements, the Master Repurchase Agreement with Churchill, and required CEO/CFO certifications[188](index=188&type=chunk)

Sachem Capital Corp. (NYSE:SACH) Q2 2021 Earnings Conference Call August 17, 2021 8:00 AM ET Company Participants David Waldman - Investor Relations John Villano - Chief Executive Officer & Chief Financial Officer Conference Call Participants Tyler Batory - Janney Christopher Nolan - Ladenburg Thalmann Brian Hollenden - Aegis Capital Operator Good morning, ladies and gentlemen, and welcome to the Sachem Capital Second Quarter 2021 Conference Call. At this time, all participants have been placed on a listen- ...

Revenue and Income - Revenue increased by 44.2% compared to the first half of 2020, driven by a 49.4% increase in interest income due to growth in lending activities [105]. - Net income rose by 4.6%, with earnings per share remaining unchanged at $0.10 [105]. - Total revenue for Q2 2021 was approximately $6.7 million, an increase of 56.0% from $4.3 million in Q2 2020, primarily driven by growth in lending operations [148]. - Interest income for Q2 2021 was approximately $4.7 million, up 43.4% from approximately $3.3 million in Q2 2020 [148]. - Net income for Q2 2021 was approximately $2.5 million, or $0.10 per share, compared to $2.3 million, or $0.10 per share in Q2 2020 [151]. - Total revenue for the six months ended June 30, 2021 was approximately $12.4 million, a 44.2% increase from $8.6 million in the same period of 2020 [152]. Assets and Liabilities - Total assets at June 30, 2021 were approximately $296.3 million, an increase of 30.7% from approximately $226.7 million at December 31, 2020 [159]. - Total liabilities at June 30, 2021 were approximately $150.0 million, a 2.9% increase from approximately $145.8 million at December 31, 2020 [160]. - Total shareholders' equity at June 30, 2021 was approximately $146.3 million, an increase of approximately $65.4 million from approximately $80.9 million at December 31, 2020 [161]. Cash Flow - Net cash provided by operating activities for the six months ended June 30, 2021 was approximately $6.1 million, compared to approximately $4.0 million for the same period in 2020 [163]. - Net cash used for investing activities for the six months ended June 30, 2021 was approximately $26.7 million, compared to approximately $15.7 million for the comparable 2020 period [164]. - Net cash provided by financing activities for the six months ended June 30, 2021, was approximately $63.4 million, a significant increase from $2.5 million in the comparable 2020 period [165]. - Anticipated cash requirements for operating needs are expected to be met by current cash balances and anticipated cash flows from operations for the next 12 months [167]. - Long-term cash needs will be funded through unused net proceeds from financing activities, operating cash flows, and proceeds from sales of real estate owned [168]. Capital Structure - The company's capital structure improved, with debt at 50.6% and equity at 49.4% as of June 30, 2021, compared to 63% debt and 37% equity at March 31, 2021 [120]. - As of June 30, 2021, the company's capital structure was approximately 50.6% debt and 49.4% equity, with total outstanding indebtedness of approximately $148.8 million [126][135]. - The company aims to maintain a modest amount of leverage for financing its portfolio, having reduced its debt level from 63.0% to 50.6% of total capital [134]. Loan Portfolio - Mortgages receivable increased by 55.1%, amounting to $61.4 million compared to June 30, 2020 [105]. - The yield on the loan portfolio decreased to 11.72% as of June 30, 2021, down from 12.38% in the same period of 2020, indicating rate compression [114]. - The yield on the mortgage loan portfolio decreased from 12.38% in 2020 to 11.72% in the first half of 2021, indicating interest rate compression [128]. - The company experienced $58 million in loan payoffs during the first half of 2021, compared to $55 million for all of 2020, attributed to a stronger real estate market [127]. - Approximately 88.5% of the mortgage loans in the portfolio had a term of one year or less as of June 30, 2021, to mitigate risks associated with rising interest rates [129]. - The company had 130 loans with future funding obligations totaling $31.8 million as of June 30, 2021 [117]. Operating Expenses and Financial Performance - Operating expenses increased significantly due to a higher debt load and new personnel hires, impacting overall financial performance [116]. - Total operating costs and expenses for Q2 2021 were approximately $4.2 million, an increase of 105.1% from $2.0 million in Q2 2020, mainly due to higher interest expenses [149]. Future Plans and Strategies - The company plans to use its cash reserves to further increase the mortgage loan portfolio in the second half of 2021 [120]. - The company plans to expand its geographic footprint beyond New England, focusing on markets in Florida and Texas, while exploring partnerships with local lenders [123]. - The company remains focused on maintaining its REIT status by distributing at least 90% of taxable income to shareholders [103]. - The company intends to pay regular quarterly distributions to common shareholders of not less than 90% of REIT taxable income [169]. Financing Activities - The company completed a $200 million master repurchase financing facility with Churchill MRA Funding I LLC, allowing for flexible capital raising at a low cost [123]. - A $200 million master repurchase financing facility was consummated with Churchill MRA Funding I LLC to finance the expansion of the lending business [171]. - The company raised approximately $45.4 million from the sale of 1,903,000 shares of Series A Preferred Stock in June and July 2021 [133]. - The company sold 1,700,000 shares of Series A Preferred Stock for net proceeds of $40.6 million on June 29, 2021 [166]. - From July 1, 2021, to August 9, 2021, the company raised $8,014,203 in net proceeds from the sale of 1,582,717 common shares [173]. Contractual Obligations - Total contractual obligations as of June 30, 2021, amounted to $31,852,145, including unfunded loan commitments of $31,845,533 [176]. - The company has a margin loan account with Wells Fargo, with a balance of approximately $34.3 million at June 30, 2021, bearing interest at 1.5% [139]. - Seven mortgage loans were under enforcement or collection proceedings, representing approximately 0.5% of the aggregate mortgage loan portfolio as of June 30, 2021 [130].

Financial Data and Key Metrics Changes - The company achieved a 33% increase in quarterly revenue, reaching approximately $5.7 million compared to $4.3 million in the same period last year [8][22] - Interest income on the loan portfolio increased by 56% year-over-year [8][22] - Net income for the first quarter was approximately $2.2 million, maintaining the same per-share earnings of $0.10 as the previous year [25] - Total assets increased by $1.6 million from $226.7 million to $228.4 million [28] - Total liabilities decreased to $143.8 million from $145.8 million at the end of the previous year [29] - Shareholders' equity increased by approximately $3.7 million to $84.6 million [30] Business Line Data and Key Metrics Changes - Loan repayments in Q1 2021 were $30.5 million, while new loan fundings were $31.7 million, both record highs for any quarter in the company's history [9] - Origination fee income remained relatively flat, increasing by approximately 1% [22] - Late and processing fees increased by 17%, and other income rose by 61% [22] Market Data and Key Metrics Changes - Nationally, active listings decreased by 53%, and median list home prices increased by 17% year-over-year [12] - In Connecticut, days on market decreased between 43% and 52%, with median list prices increasing by 2% to 18% depending on the county [12] Company Strategy and Development Direction - The company aims to grow its loan portfolio while maintaining strict underwriting guidelines to protect capital and provide attractive risk-adjusted returns [12][33] - Expansion beyond Connecticut is a priority, with a focus on Florida and Texas, targeting larger value commercial loans [18][34] - The company is exploring various financing alternatives to lower its cost of capital [41] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the economic climate in the Northeast and the favorable competitive landscape due to restrictive lending criteria from traditional lenders [16][17] - The company believes its quick turnaround and flexibility with borrowers provide a competitive advantage [17] - Despite challenges from COVID-19, the company remains confident in its long-term growth prospects [26] Other Important Information - The company raised approximately $56 million of unsecured unsubordinated notes in 2020, which has provided liquidity for growth [13] - A dividend of $0.12 per share was declared and paid to shareholders [36] - The company has a low interest line of credit with Wells Fargo, secured by its portfolio of short-term securities [14] Q&A Session Summary Question: What is the target leverage ratio for the second half of 2021? - The company currently has $200 million in assets versus $100 million in debt, maintaining a conservative approach to growth and avoiding over-leveraging [45][46] Question: Should the evaluation of ways to lower the cost of capital be expected in the second half of the year? - The company is in the process of evaluating opportunities and expects to make an announcement in approximately 45 days [49] Question: Can you provide an update on the expansion in Florida and Texas? - The company has approximately $15 million to $20 million in Florida, focusing on the Cape Coral area, and is cautiously exploring opportunities in Austin [53][55]

Part I FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) For the first quarter ended March 31, 2021, Sachem Capital Corp. reported total assets of $228.4 million, a slight increase from year-end 2020, with total revenue growing to $5.7 million from $4.3 million year-over-year, driven by higher interest income, while net income remained flat at $2.2 million, or $0.10 per share, due to a significant increase in interest and operating expenses, and cash flow from operations was $2.8 million, while investing activities used $2.1 million [Balance Sheets](index=4&type=section&id=Balance%20Sheets) As of March 31, 2021, total assets increased slightly to $228.4 million from $226.7 million at December 31, 2020, primarily driven by an increase in mortgages receivable to $156.8 million, while total liabilities decreased to $143.8 million, mainly due to the payment of accrued dividends, and shareholders' equity grew to $84.6 million from $80.9 million Balance Sheet Highlights (unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $18,345,654 | $19,408,028 | | Mortgages receivable | $156,771,704 | $155,616,300 | | Total assets | $228,432,452 | $226,670,184 | | **Liabilities & Equity** | | | | Notes payable (net) | $109,884,797 | $109,640,692 | | Line of credit | $28,160,988 | $28,055,648 | | Total liabilities | $143,790,733 | $145,750,644 | | Total shareholders' equity | $84,641,719 | $80,919,540 | [Statements of Comprehensive Income](index=5&type=section&id=Statements%20of%20Comprehensive%20Income) For the three months ended March 31, 2021, total revenue increased by 32.5% to $5.7 million, compared to $4.3 million in the same period of 2020, primarily due to a 56.2% rise in interest income from loans, but net income slightly decreased to $2.18 million from $2.24 million, as operating costs, particularly interest expenses, rose by 70.2%, while basic and diluted EPS remained unchanged at $0.10 Q1 2021 vs Q1 2020 Income Statement (unaudited) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenue | $5,712,181 | $4,312,302 | | Interest income from loans | $4,531,232 | $2,901,406 | | Total operating costs and expenses | $3,529,080 | $2,073,688 | | Interest and amortization | $2,464,755 | $1,149,953 | | Net income | $2,183,101 | $2,238,614 | | Basic and Diluted EPS | $0.10 | $0.10 | [Statements of Changes in Shareholders' Equity](index=6&type=section&id=Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity increased from $80.9 million at the beginning of the year to $84.6 million as of March 31, 2021, driven by $2.2 million in net income and $1.5 million from the sale of common stock through an at-the-market (ATM) offering - The company sold 303,407 common shares through its ATM program, raising approximately **$1.54 million** in capital during Q1 2021[18](index=18&type=chunk) - Net income of **$2.18 million** for the period contributed to the increase in total shareholders' equity[18](index=18&type=chunk) [Statements of Cash Flow](index=7&type=section&id=Statements%20of%20Cash%20Flow) For the first quarter of 2021, net cash provided by operating activities was $2.8 million, an increase from $1.7 million in Q1 2020, while net cash used for investing activities was significantly lower at $2.1 million compared to $16.2 million in the prior-year period, reflecting a better balance between loan disbursements ($31.7 million) and collections ($30.5 million), and financing activities used $1.8 million, resulting in a net decrease in cash of $1.1 million Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $2,789,056 | $1,727,381 | | Net Cash Used for Investing Activities | ($2,071,118) | ($16,221,817) | | Net Cash Used for Financing Activities | ($1,780,312) | ($2,721,479) | | Net Decrease in Cash | ($1,062,374) | ($17,215,915) | | Cash and Cash Equivalents - End of Period | $18,345,654 | $1,626,022 | [Notes to Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20Financial%20Statements%20%28unaudited%29) The notes detail the company's business as a 'hard money' lender, its accounting policies including its REIT status, and specifics on its financial accounts, with key details including a mortgage portfolio of $156.8 million with interest rates from 5.0% to 13.0%, and outstanding debt of $109.9 million in unsecured notes, and the company also disclosed its response to COVID-19, which included a temporary forbearance program and stricter lending criteria in 2020, which have since been normalized, with subsequent events including further ATM stock sales and executive compensation changes - The company specializes in short-term (one to three years), secured, non-banking loans ('hard money' loans) to real estate investors, primarily in Connecticut[23](index=23&type=chunk) - The company believes it qualifies as a Real Estate Investment Trust (REIT) and elected this status for its 2017 tax return, requiring it to distribute at least **90%** of its taxable income annually[38](index=38&type=chunk) Mortgage Loan Portfolio Details (as of March 31, 2021) | Metric | Value | | :--- | :--- | | Total Outstanding Principal | $156,771,704 | | Number of Loans | 479 | | Stated Interest Rate Range | 5.0% to 13.0% | | Loans in Foreclosure | 12 | | Aggregate Balance in Foreclosure | ~$2.6 million | Outstanding Notes Payable (as of March 31, 2021) | Series | Principal Amount | Interest Rate | Maturity Date | | :--- | :--- | :--- | :--- | | June 2024 Notes | $23,663,000 | 7.125% | June 30, 2024 | | December 2024 Notes | $34,500,000 | 6.875% | December 30, 2024 | | 2025 Notes | $56,363,750 | 7.75% | December 30, 2024 (Note: Text says 2025 Notes but maturity is Dec 30, 2024) | - In response to COVID-19 in early 2020, the company implemented a temporary forbearance program and a moratorium on new loan funding, which were canceled by the third quarter of 2020 as economic conditions stabilized[77](index=77&type=chunk) - Subsequent to quarter-end, between April 1 and May 4, 2021, the company sold **2,045,336** common shares in ATM offerings, realizing net proceeds of **$10.5 million**[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 32.5% Q1 revenue growth to expanded lending activities, but a 70.2% increase in operating costs, mainly from interest on increased debt, caused a slight dip in net income, with the primary challenge being deploying its $54.7 million in cash and investments efficiently to grow the loan portfolio and offset interest expenses, and the company faces increased competition and yield compression but aims to counter this by funding larger loans and expanding geographically, while its capital structure is 63% debt, primarily fixed-rate notes, which provides operational flexibility, and the company continues to operate as a REIT - Compared to Q1 2020, revenue increased **32.5%**, but net income decreased **2.5%** due to a **70.2%** increase in operating costs, primarily interest expense from higher debt levels[84](index=84&type=chunk) - The company's primary objective is to grow its loan portfolio by focusing on larger-value commercial loans and expanding its geographic footprint beyond Connecticut, with an emphasis on Florida and Texas[85](index=85&type=chunk)[99](index=99&type=chunk) - The company faces challenges from increased competition from private equity and hedge funds, leading to borrower-friendly terms and yield compression. The portfolio yield was **11.73%** in Q1 2021, down from **12.16%** in Q1 2020[90](index=90&type=chunk)[91](index=91&type=chunk)[103](index=103&type=chunk) - As of March 31, 2021, the company's capital structure was **63.0%** debt and **37.0%** equity. The weighted average interest rate on its **$114.5 million** of unsecured notes is **7.36%**[96](index=96&type=chunk)[101](index=101&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Comparing Q1 2021 to Q1 2020, total revenue rose by $1.4 million (32.5%), driven by a $1.6 million increase in interest income, while total operating costs increased by approximately $1.4 million (70.2%), with interest and amortization of deferred financing costs accounting for the entire increase, leading to net income remaining flat at $2.2 million for both periods Q1 2021 vs Q1 2020 Performance | Metric | Q1 2021 | Q1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | ~$5.7M | ~$4.3M | +32.5% | | - Interest Income | ~$4.5M | ~$2.9M | +56.2% | | Total Operating Costs | ~$3.5M | ~$2.1M | +70.2% | | - Interest & Amortization | ~$2.5M | ~$1.1M | +114.3% | | Net Income | ~$2.2M | ~$2.2M | ~0% | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) At March 31, 2021, the company held $54.7 million in cash, cash equivalents, and investment securities, with total assets growing by $1.8 million during the quarter to $228.4 million, while total liabilities decreased by $2.0 million to $143.8 million, and shareholders' equity increased by $3.7 million to $84.6 million, bolstered by stock sales and net income, and the company believes current cash and anticipated cash flows are sufficient to fund operations for the next 12 months - Cash, cash equivalents, and investment securities totaled approximately **$54.7 million** at March 31, 2021[124](index=124&type=chunk) - Shareholders' equity increased by **$3.7 million** in Q1 2021, primarily due to **$1.5 million** from stock sales and **$2.2 million** in net income[128](index=128&type=chunk) - Net cash from operating activities was **$2.8 million**, while investing activities used **$2.1 million** and financing activities used **$1.8 million**[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Contractual Obligations](index=37&type=section&id=Contractual%20Obligations) As of March 31, 2021, the company had total contractual obligations of $23.5 million, with the vast majority, $23.49 million, consisting of unfunded loan commitments due within one year, and a minor portion, approximately $8,000, relating to operating lease obligations Contractual Obligations as of March 31, 2021 | Obligation Type | Total | Less than 1 year | 1 – 3 years | | :--- | :--- | :--- | :--- | | Operating lease obligation | $8,031 | $2,888 | $5,143 | | Unfunded loan commitments | $23,489,412 | $23,489,412 | $0 | | **Total** | **$23,497,443** | **$23,492,300** | **$5,143** | [Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is a smaller reporting company and, as such, is not required to provide the information for this item - As a smaller reporting company, Sachem Capital Corp. is not required to provide quantitative and qualitative disclosures about market risk[143](index=143&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2021, and concluded they were effective, with no material changes to the company's internal control over financial reporting during the quarter - Management concluded that as of March 31, 2021, the company's disclosure controls and procedures are effective[144](index=144&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[145](index=145&type=chunk) Part II OTHER INFORMATION [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including documents related to corporate governance, debt indentures, employment agreements, and required certifications under the Sarbanes-Oxley Act, as well as XBRL interactive data files - The exhibits include the CEO and CFO certifications required under Section 302 and 906 of the Sarbanes-Oxley Act[148](index=148&type=chunk) - Key filed documents include indentures for the company's various note series (**7.125%** due 2024, **6.875%** due 2024, **7.75%** due 2025) and employment agreements for executive officers[148](index=148&type=chunk) [Signatures](index=41&type=section&id=SIGNATURES) The report is duly signed and authorized on May 14, 2021, by John L. Villano, in his capacity as President, Chief Executive Officer, and Chief Financial Officer - The Form 10-Q was signed on May 14, 2021, by John L. Villano, President, CEO, and CFO[156](index=156&type=chunk)