As a result of these transactions, we strengthened our balance sheet, eliminated the fees and expenses relating to the Webster Facility, which were significant, eliminated the risk associated with variable rate instruments and relieved ourselves from onerous loan covenants, which we felt limited our operational and financing flexibility. We believe these benefits outweigh the higher interest rate we are paying on the Notes relative to the rate we were paying on the Webster Facility.

Because most of the net proceeds from these financing transactions were used to repay existing indebtedness, we were not able to significantly increase our mortgage loan portfolio or revenues in the third quarter of 2019. However, at September 30, 2019 we had $11.0 million of available cash, which we intend to use to fund new mortgage loans in the fourth quarter of 2019. In addition, on October 31, 2019 we sold $30.0 million aggregate principal amount of unsecured unsubordinated 6.875% notes due December 30, 2024 (the “November 2019 Notes.”) The net proceeds from the sale of these notes were approximately $28.6 million. We may sell up to an additional $4.5 million aggregate principal amount of these notes if the underwriters exercise their over-allotment option in full. The over-allotment option expires November 30, 2019. Third, we can sell up to an additional $7.0 million of Common Shares through our existing at-the-market offering facility. (The facility was reduced to $11.5 million from $30 million in order to accommodate the sale of the November 2019 Notes.) Finally, given our improved balance sheet, we may obtain a new credit facility in the future if we believe the terms are reasonable. Thus, we believe we are well-capitalized for the next 12-18 months and plan to use these funds to increase our mortgage loan portfolio.

Operational and Financial Overview

At September 30, 2019, (i) our loan portfolio included 432 mortgage loans, with individual principal loan amounts ranging from approximately $8,000 to approximately $2.9 million and an aggregate loan amount of approximately $89.0 million, (ii) the average original principal amount of the mortgage loans in the portfolio was approximately $206,000 and the median mortgage loan amount was $137,731 and (iii) approximately 77% of the mortgage loans had a principal amount of $250,000 or less. In comparison, at September 30, 2018, (i) our loan portfolio included 395 mortgage loans, with individual principal loan amounts ranging from $6,000 to $2.0 million and an aggregate loan amount of approximately $77.8 million, (ii) the average original principal amount of the mortgage loans in the portfolio was $197,000 and the median mortgage loan amount was $136,000 and (iii) approximately 79.5% of the mortgage loans had a principal amount of $250,000 or less. At September 30, 2019 and 2018, unfunded commitments for future advances totaled approximately $7.3 million and $6.8 million, respectively.

For the three months ended September 30, 2019, revenues and net income were approximately $3.4 million and $2.1 million, respectively. For the three months ended September 30, 2018, revenues and net income were approximately $3.1 million and $2.0 million, respectively. For the nine months ended September 30, 2019, revenues and net income were approximately $9.8 million and $5.3 million, respectively. For the nine months ended September 30, 2018, revenues and net income were approximately $8.8 million and $6.1 million, respectively.

Our operating expenses have increased significantly primarily due to the growth in our operations.

The mortgage loans that we originate typically have a maximum initial term of one to three years and bear interest at a fixed rate of 5% to 13% per year and a default rate of 18% per year. For the three and nine month periods ended September 30, 2019, the yield on our mortgage loan portfolio was 12.66% and 12.58%, respectively.

We usually receive origination fees, or “points,” ranging from 2% to 5% of the original principal amount of the loan as well as other fees relating to underwriting, funding and managing the loan, such as inspection fees. Since we treat an extension or renewal of an existing loan as a new loan, we also receive additional “points” and other loan-related fees in connection with those transactions. Interest is always payable monthly in arrears. As a matter of policy, we do not make any loans if the loan-to value ratio exceeds 70%. However, in the case of loans secured by property undergoing construction or renovation and that have future funding obligations, the loan-to-value ratio is based on the estimated post-construction or post-renovation value of the property. Accordingly, during the construction or renovation period the loan amount could exceed the actual value of the property. Generally, we rely on readily available market data, including tax assessment rolls, recent sales transactions, brokers and, in some cases, third-party appraisals to evaluate the strength of the collateral. Finally, we have adopted a policy that limits the maximum amount of any formal policyloan we fund to a single borrower or a group of affiliated borrowers to 10% of the aggregate amount of our loan portfolio after taking into account the loan under consideration. 

Our revenue consists primarily of interest earned on our loan portfolio and our net income is the spread between the interest we earn and our cost of funds. Our capital structure is more heavily weighted to equity rather than debt (approximately 78% vs.22% of our total capitalization at September 30, 2019). At September 30, 2019, the annual yield on our loan portfolio was 12.66% per annum. The yield has remained steady over the past few years as older loans come due and are either repaid or refinanced at similar rates. The yield reflected above does not include other amounts collected from borrowers such as origination fees, default rates of interest and late payment fees.

In addition, we seek to mitigate some of the risk associated with rising rates by generally limiting the amountterm of indebtednessnew loans to one year. If, at the end of the term, the loan is not in default and meets our other underwriting criteria, we will consider an extension or renewal of the loan at our then prevailing interest rate. However, if interest rates continue to increase, we may incur. However, underfind it necessary to change our strategy and try to increase the termsrates on our mortgage loans as well. If we are successful, this may undermine our strategy to increase market share. If we are not successful, the “spread” between our borrowing costs and the yield on our portfolio will be squeezed and would adversely impact our net income. We cannot assure you that we will be able to increase our rates at any time in the future and we cannot assure you that we can continue to increase our market share.

As a real estate finance company, we deal with a variety of default situations, including breaches of covenants, such as the obligation of the Bankwell Credit Line,borrower to maintain adequate insurance on the mortgaged property, to pay the taxes on the property and to make timely payments to us. As such, we may not incur any additional indebtedness exceeding $100,000be aware that a default occurred. As a result, we are unable to quantify the number of loans that may have, at one time or another, been in the aggregate without Bankwell’s consent. Depending on various factors we may, in the future, decide to take on additional debt to expand our mortgage loan origination activities to increase the potential returns to our shareholders. Althoughdefault. Since inception through September 30, 2019, we have no pre-set guidelines in terms of leverage ratio, themade approximately 1,100 mortgage loans having an aggregate original principal amount of leverage we will deploy will depend on our assessment of a variety of factors, which may include the liquidityapproximately $217 million.

At September 30, 2019, of the real estate market in which most of our collateral is located, employment rates, general economic conditions, the cost of funds relative to the yield curve, the potential for losses and extension risk432 mortgage loans in our portfolio, sixteen have been referred to legal counsel for collection and are the gap betweensubject of foreclosure proceedings. The aggregate outstanding principal balance of these sixteen mortgage loans and the durationaccrued but unpaid interest as of September 30, 2019 was approximately $7.9 million, representing approximately 8.87% of our assets and liabilities, our opinion regardingaggregate mortgage loan portfolio. In the creditworthinesscase of our borrowers,each of these sixteen mortgage loans, we believe the value of the collateral underlying our portfolio,exceeds the sum of the outstanding principal balance of the loan, the accrued but unpaid interest on the loan and our outlook for interest rates andany unpaid property values. taxes due with respect to the collateral.

At September 30, 2017, debt proceeds represented2019, real estate owned included sixteen properties having an aggregate book value of approximately 29%$5.3 million. At December 31, 2018, real estate owned included eleven properties having an aggregate book $2.9 million.

The key factors contributing to our growth to date have been our ability to access working capital and the strong demand for our products and services, which was driven principally by a robust Connecticut real estate market. These factors coincided with the overall growth in the U.S. economy. In the second quarter of 2019, we curtailed our total capital. However,lending operations due to growa shortage of working capital and our desire to repay in full our credit facility with Webster Bank, which adversely impacted our revenues and net income for the second and third quarters of 2019. In addition, beginning in the second half of 2018 and continuing through the third quarter of 2019, we started noticing subtle changes in the business environment. For example, traditional lending institutions, such as banks, appeared to be tightening their credit requirements. Normally, that would be a positive development for our business. However, at the same time, property values in Connecticut were either stagnant or declining and satisfy the requirementlength of time between initial listing and sale was expanding. It is unclear whether these developments are merely temporary phenomena or represent long-term trends. In the meantime, the demand for our products and services continues to pay out 90% of net profits, we expectbe robust. We believe that our best strategy to increase our level of debt over time to approximately 50% of capital. We intend to use leverage for the sole purpose of financing our portfolio and not for speculating ondeal with adverse changes in interest rates.the marketplace is to adhere to our basic underwriting guidelines. Those two factors, together with our liquidity, lead us to believe that we are well-positioned to address the changes and new trends in the real estate lending market.

REIT Qualification

We raised $13 million of equity capital in our IPO, which was consummated in February 2017, in whichbelieve that we sold 2,600,000 common shares athave qualified as a price of $5.00 per share. The net proceeds, after payment of underwriting discounts and commissions and transaction fees were approximately $11.1 million. We used a portionREIT since the consummation of the net proceeds immediately to pay downIPO and that it is in the entire balance on the Bankwell Credit Line then outstanding.

From October 27 through November 3, 3017, we raised an additional $17.25 million (gross)best interests of equity capital from the sale of an additional 4,312,500 common shares (including 562,500 covered by an over-allotment option) in a follow-on underwritten public offering at a public offering price of $4.00 per share. After deducting underwriting discounts and after reimbursing the underwriters for their expenses related to the offering, the net proceeds from the follow-on public offering were approximately $15.8 million. The net proceeds from our IPO were used, and the net proceeds from our follow-on public offering will be used, primarily to increase our loan portfolio and for working capital and general corporate purposes.

The Bankwell Credit Line is a $20.0 million revolving credit facilityshareholders that we useoperate as a REIT. We made the election to fund the loans we originate. Borrowings under the Bankwell Credit Line bear interest atbe taxed as a rate equal to the greater of (i) a variable rate equal to the sum the LIBOR as in effect from time to time plus 4.50% or (ii) 5.5% per annum.REIT beginning with our 2017 tax year. As of September 30, 2017, the rate on the Bankwell Credit Line is 5.83% per annum. The Bankwell Credit Line expires and the outstanding indebtedness thereunder will become due and payable in full on June 30, 2019. Assuming we are not then in default under the terms of the Bankwell Credit Line, we have the option to repay the outstanding balance, together with all accrued interest thereon in 36 equal monthly installments beginning July 30, 2019. The Bankwell Credit Line is secured by assignment of mortgages and other collateral and is jointly and severally guaranteed by JJV, Jeffrey C. Villano and John L. Villano, CPA, our co-chief executive officers. The liability of each guarantor is capped at $1 million. As of September 30, 2017, we estimate that loans having an aggregate principal amount of approximately $38.8 million, representing approximately 73.6% of our mortgages receivable, satisfied all of the eligibility requirements set forth in the Bankwell Credit Line. As of September 30, 2017, the total amount outstanding under the Bankwell Credit Line was approximately $15.9 million

Dividend Policy

To maintain our qualification as a REIT, we are required to distribute at least 90% of our taxable income each year to our shareholders. On October 19, 2017, our board of directors declared a quarterly dividend of $0.105 per common share for the third quarter of 2017. This dividendshareholders on an annual basis. We cannot assure you that we will be payable on November 17, 2017able to common shareholders of record at the close of business on November 7, 2017. Taking into account this most recent dividend, since our IPO, we have distributed $0.26 per share to our shareholder, representing 100% of our Net Income through September 30, 2017maintain REIT status.

Corporate Reorganization and REIT Qualification

Since the IPO, our operating expenses have increased significantly due to various factors including our conversion from a limited liability company to a regular C corporation, operatingOur qualification as a REIT our status as a publicly-held reporting company and growth in our operations. As a corporation, we incur various costs and expenses that we did not have as a limited liability company, such as director fees, directors’ and officers’ insurance and state and local franchise taxes and we will incur significant compensation and other employee-related costs for services rendered by our senior executive officers. Moreover, because of various laws, rules and regulations that prohibit or severely limitdepends on our ability to enter into agreements with related parties, certainmeet on a continuing basis, through actual investment and operating expenses, suchresults, various complex requirements under the Internal Revenue Code of 1986, as rent, will increase as well. Finally, we have experienced increases in professional fees, filing fees, printingamended (the “Code”), relating to, among other things, the sources of our gross income, the composition and mailing costs, exchange listing fees, transfer agent fees and other miscellaneous costs related tovalues of our assets, our compliance with various laws, rules and regulationsthe distributions requirements applicable to REITs and the diversity of ownership of our outstanding Common Shares. Given that our senior executive officers, Jeffrey C. Villano and John L. Villano, own a publicly-held reporting company. Also,significant portion of our outstanding capital shares, we cannot assure you that we will be able to maintain that qualification.

So long as we qualify as a public reporting company,REIT, we, must establishgenerally, will not be subject to U.S. federal income tax on our taxable income that we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable year and maintain effective disclosuredo not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate income tax rates and financial controls. Asmay be precluded from electing to be treated as a result,REIT for four taxable years following the year during which we lose our REIT qualification. Even if we qualify for taxation as a REIT, we may needbe subject to hire additional accountingcertain U.S. federal, state and finance personnel with appropriate public company experience and technical accounting knowledge, which will also increaselocal taxes on our operating expenses.income.

Emerging Growth Company Status

We are an “emerging growth company”,company,” as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As an emerging growth company, we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.

We will cease to be an emerging growth company upon the earliest of: (i) the end of the 2022 fiscal year following the fifth anniversary of the IPO;year; (ii) the first fiscal year after our annual gross revenue are $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common sharesCommon Shares held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common sharesCommon Shares less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common sharesCommon Shares less attractive, there may be a less active trading market for our common sharesCommon Shares and the price of our common sharesCommon Shares may be more volatile.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our use of estimates on (a) a preset number of assumptions that consider past experience, (b) future projections and (c) general financial market conditions. Actual amounts could differ from those estimates.

We recognize revenues in accordance with ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, we recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery of the product has occurred or services have been rendered, (iii) the sales price charged is fixed or determinable and (iv) collectability is reasonably assured. Accordingly, interest income from commercial loans is recognized, as earned, over the loan period and origination fee revenue on commercial loans is amortized over the term of the respective note.

As an “emerging growth company,” we intend to avail ourselves of the of the reduced disclosure requirements and extended transition periods for adopting new or revised accounting standards that would otherwise apply to us as a public reporting company. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company. As a result, our financial statements may not be comparable to those of other public reporting companies that either are not emerging growth companies or that are emerging growth companies but have opted not to avail themselves of these provisions of the JOBS Act and investors may deem our securities a less attractive investment relative to those other companies, which could adversely affect our stock price.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our use of estimates on a preset number of assumptions that consider (a) past experience, (b) future projections and (c) general financial market conditions. Actual amounts could differ materially from those estimates.

Interest income from commercial loans is recognized, as earned, over the loan period and origination fee revenue on commercial loans is amortized over the term of the respective note.

Results of operations

We were formed in January 2016 and, prior to the consummation of the Exchange, had not engaged in any business activity. The results of operations discussed below for the three and nine-month periods ended September 30, 2016 and for the portion of the nine months ended September 30, 2017, until the consummation of the Exchange, are those of SCP.

Three months ended September 30, 2017 compared to three months ended September 30, 20162019 and 2018

Total revenue

Total revenue for the three months ended September 30, 20172019 was approximately $1.9$3.4 million compared to approximately $1.0$3.1 million for the three months ended September 30, 2016,2018, an increase of $900,000, or 90.8%approximately 10.7%. The increase in revenue represents anreflects the increase in our lending operations. ForCompared to the 20172018 period, for the 2019 period, interest income was higher by approximately $1.57 million and net$171,000, origination fees werehigher by approximately $197,000. In comparison, for the three months ended September 30, 2016, interest income was approximately $952,000 and net origination fees were approximately $43,000. Prior to the completion of our IPO, 75% of gross origination fees were paid to JJV, LLC, SCP’s managing member. Accordingly, for the 2016 period, net origination fee income is net of the amounts payable to JJV$114,000 and other adjustments. Fromincome higher by approximately $150,000. These increases were offset by reductions of approximately $107,000 in gain on sale of real estate and after February 9, 2017 JJV is no longer entitled to any payments from us (other than dividends paid to itapproximately $42,000 in its capacity as a shareholder of Sachem Capital Corp.)late fee income.

Operating costs and expenses

Total operating costs and expenses for three months ended September 30, 20172019 were approximately $621,000$1.3 million compared to approximately $341,000$1.1 million for the three months ended September 30, 20162018 period, an increase of approximately 82%21.6%. The increase in operating costs and expenses is primarily attributable to the following: (i) an increaseincreases in compensation and taxes of approximately $189,000; (ii) an increase in professional fees of approximately $27,000; (iii) an increase in general and administrative expenses of approximately $35,000; and (iv) an increase in interest expense and amortization of deferred financing costs of approximately $164,000. These increases are primarily due to the increase in our lending activity,$44,000, professional fees of approximately $51,000 and the costs incurred as a resultcompensation, fees and taxes of our conversion from a privately-held limited liability company to a publicly-held corporation, although year-to-year comparisons may not be meaningful in lightapproximately $132,000, offset by stock-based compensation of the changes to our corporate structureapproximately $25,000 and our operation as a REIT.general and administrative expenses of approximately $11,000.

Net Income

Net income for the three months ended September 30, 20172019 was approximately $1.32$2.1 million, or $0.12$0.10 per share, (basic and diluted) compared to $675,000$2.0 million, or $0.13 per share for the three months ended September 30, 2016. Since we operated as a limited liability company prior2018. The decrease in earnings per share is due to the IPO, we do not report net income per share data for 2016 periods.increase in the weighted average number of shares outstanding

Nine months ended September 30, 2017 compared to nine months ended September 30, 20162019 and 2018

Total revenue

Total revenue for the nine months ended September 30, 20172019 was approximately $4.75$9.8 million compared to approximately $2.99$8.8 million for the nine months ended September 30, 2016,2018, an increase of $1.76 millionapproximately $980,000, or 59%11.1%. The increase in revenue representsresulted from an increase in lending operations. For the 20172019 period, interest income was approximately $3.8$7.5 million, and net origination fees were approximately $464,000.$1.2 million and other income approximately $650,000. In comparison, for the nine months ended September 30, 2016,2018, interest income was approximately $2.7$6.6 million, and net origination fees were approximately $139,000. Prior to the completion of the IPO, 75% of gross origination fees were paid to JJV, LLC, SCP’s managing member. Accordingly, for the 2016 period$1.1 million and roughly, the first six weeks of the 2017 period, net originationother income was approximately $675,000. Finally, late and other fee income is netincreased by approximately $61,000. These increases were offset, in part, by a reduction in gain on the sale of the amounts payable to JJV and other adjustments. From and after February 9, 2017, JJV is no longer entitled to any payments from us (other than dividends paid to it in its capacity as a shareholderreal estate of Sachem Capital Corp.)approximately $100,000.

Operating costs and expenses

Total operating costs and expenses for nine months ended September 30, 20172019 were approximately $1.57$4.5 million compared to approximately $763,000$2.7 million for the nine months ended September 30, 20162018 period, an increase of approximately 106%70.0%. The increase in operating costs and expenses is primarilypartially attributable to $780,000 of expense incurred in connection with the following: (i) antermination of the Webster Credit Facility. In addition to that expense being a non-recurring charge, $439,446 represents a write-off of unamortized deferred financing costs, a non-cash item. The second biggest contributor to the increase in compensationoperating costs and taxes of approximately $438,000; (ii) an increase in professional fees of approximately $135,000; (iii) an increase in general and administrative expenses of approximately $213,000; and (iv) an increase inwas interest expense and amortization of deferred financing costs, ofwhich increased approximately $229,000. These increases are primarily due to$512,000 reflecting the increase in our lending activity,mortgage loan portfolio, an increase in the interest rate on the Webster Facility and the slightly higher cost of capital on our initial public offering,unsecured notes. Another contributor to the overall increase in operating costs and expenses was a $423,000 increase in compensation expense (including stock-based compensation). This increase reflects the increase in base salary paid to our co-chief executive officers, which was effective as of July 1, 2018, as well as compensation to our controller, who was hired in August 2018, and our conversion from a privately-held limited liability company to a publicly-held corporation, although year-to-year comparisons may not be meaningfulin-house legal counsel, who was hired in light of the changes to our corporate structure, our IPONovember 2018. Finally, general and our operation as a REIT.administrative expenses increased approximately $86,000.

Net Income

Net income for the nine months ended September 30, 20172019 was approximately $3.17$5.3 million, compared to $2.23 millionor $0.30 per share. In comparison, net income for the nine months ended September 30, 2016. Net2018 was $6.1 million, or $0.40 per share. The decrease in net income was due to the increase in total operating expenses and most of that increase was attributable to the expense in connection with the termination of the Webster Credit Facility, which was incurred in the second quarter. We estimate the impact of that expense was to reduce earnings per share for the period beginning February 9, 2017 (the effective date of the IPO) and ending September 30, 2017 was $0.26. Since we were operating as a limited liability company prior to the IPO, the net incomeby approximately $0.04. In addition, earnings per share data forwas negatively impacted by the nine months ended September 30, 2017 does not includeincrease in the net income per share for the period prior to the IPO.weighted average number of shares outstanding

Liquidity and Capital Resources

At September 30, 2019, we had approximately $11.0 million in cash, none of which is restricted, compared to cash of approximately $158,900 (including restricted cash) at December 31, 2018.

Net cash provided by operating activities for the nine months ended September 30, 20172019 was approximately $2.8$7.3 million compared to approximately $2.42$3.8 million for the nine months ended September 30, 2016. Net cash provided by operating activities in the 2017same 2018 period, is primarily attributable to approximately $3,170,000, $581,000, and $155,000, in net income, deferred revenue and advances from borrowers, respectively, offset by an increase of approximately $279,000$3.5 million or 94.2%. For the 2019 period, the total adjustments to net income were approximately positive $2.1 million reflecting a (i) $440,000 adjustment for non-cash costs associated with the termination of the Webster Facility and (ii) $2.1 million decrease in amounts due from borrowers, offset by a (i) $450,000 increase in interest and fees receivable, (ii) $177,000 decrease in due to note purchaser and (iii) $160,000 decrease in accrued expenses. In comparison, for the 2018 period, the total adjustments to net income were approximately negative $2.37 million, reflecting a (i) $723,000 decrease of approximately $656,000 in the amount due to member.the note purchaser, (ii) $296,000 decrease in accrued expenses, (iii) $309,000 increase in due from borrowers, (iv) $917,000 increase in interest and fees receivable, (v) $151,000 increase in other receivables and (vi) $120,000 gain on sale of real estate, offset by (i) $90,000 in amortization of deferred financing cost, (ii) $20,000 in depreciation expense, (iii) $29,250 in stock-based compensation, (iv) $111,000 decrease in escrow deposits, (v) $117,000 increase in accrued interest and (vi) $44,000 increase in deferred revenue.

Net cash used for investing activities for the nine months ended September 30, 20172019 was approximately $19.0$14.5 million compared to approximately $3.49$16.1 million for same 2016the comparable 2018 period. Proceeds from sale of real estate owned in the 2017 period was approximately $530,000, comparedThis decrease is primarily due to approximately $546,000 for the 2016 period. The 2017 period also included approximately $424,000 of cash used to acquire and improve properties that we acquired compared to approximately $563,000 in the same 2016 period. Finally, in the 2017 period, principal disbursements for mortgages receivable were approximately $33.8a $7.0 million and principal collections were approximately $14.8 million. In the 2016 period, the corresponding amounts were approximately $14.3 million and approximately $10.9 million, respectively. We believe that the increase in the 2017 period of approximately $3.9 million in principal collections on mortgages receivable, resultingoffset by a (i) $4.9 million increase in principal disbursements for mortgages receivable, (ii) $340,000 increase in costs to acquire and improve real estate owned and (iii) $310,000 decrease in proceeds from an increased ratethe sale of prepayments of outstanding loans, is primarily attributable to increasing lending activity by traditional lenders, such as banks, which could be an indicator of improving economic conditions in general. If this trend continues it may signal increased competition for our business.real estate.

Net cash provided by financing activities for the nine months ended September 30, 20172019 was approximately $15.7$18.1 million compared to approximately $2.5$11.9 million for the nine months ended September 30, 2016. Prior to the IPO,comparable 2018 period. Net cash flows fromprovided by financing activities basically reflectsfor the difference between2019 period consists primarily of approximately (i) $42.7 million of proceeds from borrowings under the Bankwell Credit Line and member contributions, onWebster Facility, (ii) $19.8 million of net proceeds from the one hand, and repaymentssale of Common Shares, (iii) $10.7 million of net proceeds from the sale of Common Shares, (iv) $82,000 in gross proceeds from the exercise of warrants, (v) $22.4 million of net proceeds from the sale of the amounts outstanding onJune 2019 Notes, (vi) $1.0 million of proceeds from the Bankwell Credit Linesale of mortgage notes and distributions to members, on the other hand. From and after the IPO there will no longer be contributions from or distributions from members. On the other hand, we intend to pay quarterly dividends to maintain our status as a REIT and we may, from time to time raise capital by selling securities. For the 2017 period, the most significant element of cash flow from financing activities was the $13 million(vii) $800,000 of gross proceeds from the IPO. Other factors includedNew Bankwell Mortgage Loan, offset by approximately $25.3(i) $69.9 million of repayments on the Webster Facility, (ii) $7.0 million of dividends paid, (iii) $298,000 repayment of the Old Bankwell Mortgage Loan and (iv) 2.2 million of repayment of notes due to shareholder. For the 2018 period, net cash from financing activities consisted primarily of approximately $61.0 million of proceeds from the Bankwell Credit Line,our credit facilities offset by approximately $17.5(i) $43.7 million of payments to Bankwell, approximately $654,000 of member contributions and approximately $2.5repayments on our credit facilities, (ii) $4.9 million of distributions to members. In addition, we incurred approximately $87,000dividends paid and (iii) $567,000 of financing costs and approximately$1.5 million(most of costswhich related to the IPO. ForWebster Facility.)

2019 Financing Transactions

In the same 2016 period,first nine months of 2019, we consummated the following financing transactions:

Refinancing of Bankwell Mortgage

We refinanced the $310,000 mortgage loan obtained from Bankwell Bank in February 2017 (the “Old Bankwell Mortgage Loan”) with a new 10-year mortgage loan from Bankwell Bank in the principal elementsamount of $795,000 bearing interest at the rate of 5.06% per annum and maturing on March 31, 2029 (the “New Bankwell Mortgage Loan”). Monthly payments of interest and principal on the New Bankwell Mortgage Loan, $4,710, are payable in arrears starting May 1, 2019, calculated based on a 25-year amortization rate. Interest on the Old Bankwell Mortgage Loan accrued at the rate of 4.52% per annum and the monthly installment payments were (i) approximately $5.4 million$1,975. The entire outstanding principal balance of the New Bankwell Mortgage Loan and all accrued and unpaid interest thereon is due and payable on March 31, 2029. The New Bankwell Mortgage Loan, among other things, is secured by a first mortgage lien on the real property owned by us, which currently serves as our principal place of business, located at 698 Main Street, Branford, Connecticut. In connection with the New Bankwell Mortgage Loan, John L. Villano and Jeffrey C. Villano, our Co-Chief Executive Officers, jointly and severally, during the term of the loan, indemnified Bankwell Bank from and against any and all actual claims, demands, liabilities, losses, damages, judgments, penalties, reasonable out-of-pocket costs and expenses arising out of or attributable to the New Bankwell Mortgage Loan.

At-the-Market Offerings

Over the first nine months of 2019, we sold an aggregate of 4,340,456 Common Shares through our at-the-market offering facilities. Gross proceeds from Bankwell, (ii) $2.9these sales were $20,465,203 and the net proceeds were $19,836,610.

June 2019 Note Offering

In June and July 2019 we sold, in a registered public offering, $23,663,000 aggregate principal amount of our 7.125% unsecured, unsubordinated notes due June 30, 2024 (the “June 2019 Notes”). The net proceeds from the sale of the June 2019 Notes were approximately $22.3 million. The June 2019 Notes were issued in denomination of $25.00 each and are listed on the NYSE American and trade under the symbol “SCCB.” Interest accrues on the June 2019 Notes commencing on June 25, 2019. Accrued interest is payable quarterly, in cash, in arrears, on each March 30, June 30, September 30 and December 30 that they are outstanding, commencing September 30, 2019. So long as the June 2019 Notes are outstanding, we are prohibited from making distributions in excess of 90% of our taxable income, incurring any additional indebtedness or purchasing any shares of our capital stock unless we have an “Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. We may redeem the June 2019 Notes, in whole or in part, without premium or penalty, at any time on or after June 30, 2021 upon at least 30 days prior written notice to the holders of the June 2019 Notes. The redemption price will be equal to the outstanding principal amount of the June 2019 Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption.

In July and August 2019, we sold an aggregate of 2,300,000 Common Shares at $5.00 per share pursuant to an underwritten public offering, including 300,000 shares from the exercise of the over-allotment option by the underwriter of the offering, Aegis Capital Corp. The offering was made pursuant to a Prospectus Supplement filed under the Company’s S-3 Registration Statement, dated November 9, 2018. The net proceeds to us from the offering were approximately $10.9 million, after deducting underwriting discounts and commission but before deducting other transaction costs.

On July 16, 2019, we received gross proceeds of payments to Bankwell, (iii) approximately $3.75 million$82,035 from the exercise of member contributions and (iv) approximately $3.5 million in distributions to members.16,407 warrants having an exercise price of $5.00 per share.

We project anticipated cash requirements for our operating needs as well as cash flows generated from operating activities available to meet these needs. Our short-term cash requirements primarily include funding of loans and payments for usual and customary operating and administrative expenses, such as employee compensation, rent, sales, and marketing expenses and dividends. Based on this analysis, we believe that our current cash balances, the amount available to us under the Bankwell Credit Line and our anticipated cash flows from operations will be sufficient to fund the operations for the next 12 months.

Our long-term cash needs will include principal payments on outstanding indebtedness and funding of new mortgage loans.loans, payment of operating expenses, interest payments on our outstanding notes and dividend payments to our shareholders. Funding for long-term cash needs will come from our cash on hand, operating cash flows and unused capacityfinancing transactions, whether sales of equity securities, debt securities or a new revolving credit facility.

From and after the Bankwell Credit Line or any replacement thereof. In addition, to maintaineffective date of our status as a REIT election, we intend to pay regular quarterly distributions to holders of our common sharesCommon Shares in an amount not less than 90% of our REIT taxable income (determined before the deduction for dividends paid and excluding any net capital gains).

Subsequent Events

On October 19, 2017,July 11, 2019, we declared a dividend of $.105$0.12 per common share, to bewhich was paid on November 17, 2017July 29, 2019 to shareholders of record on November 7, 2017.July 22, 2019. The total amount of the dividend payment is estimated to be approximately $1,560,000.was $2,348,452.

As described aboveOn July 26, 2019, we repaid an amount owed to a shareholder in connection with the repurchase of certain mortgage loans. The total payment was $2,231,777, including principal of $2,217,000 and in Note 9accrued interest of $14,777.

Subsequent Events

On October 3, 2019, we declared a dividend of $0.12 per common share, which was paid on October 22, 2019 to shareholders of record on October 14, 2019. The total amount of the financial statements included in this Report, fromdividend payment was $2,654,076.

From October 271 through November 3, 3017,13, 2019, we raised an additional $17.25sold 14,317 Common Shares through our at-the-market offering facility and realized gross proceeds of $68,006 from such sales. Approximately $7.0 million (gross)remains available to us for future sales under the facility. (The facility was reduced to $11.5 million from $30 million in order to accommodate the sale of equity capitalthe November 2019 Notes.)

In November 2019 we sold, in a registered public offering, $30.0 aggregate principal amount of our 6.875% unsecured, unsubordinated notes due December 30, 2024 (the “November 2019 Notes”). The net proceeds from the sale of the November 2019 Notes were approximately $28.6 million. The November 2019 Notes were issued in denomination of $25.00 each and are listed on the NYSE American and trade under the symbol “SACC.” Interest accrues on the November 2019 Notes commencing on November 7, 2019. Accrued interest is payable quarterly, in cash, in arrears, on each March 30, June 30, September 30 and December 30 that they are outstanding, commencing December 30, 2019. So long as the November 2019 Notes are outstanding, we are prohibited from making distributions in excess of 90% of our taxable income, incurring any additional indebtedness or purchasing any shares of our capital stock unless we have an additional 4,312,500 common shares (including 562,500 covered by an over-allotment option)“Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. We may redeem the November 2019 Notes, in a follow-on underwritten public offeringwhole or in part, without premium or penalty, at a public offeringany time on or after November 7, 2021 upon at least 30 days prior written notice to the holders of the November 2019 Notes. The redemption price will be equal to the outstanding principal amount of $4.00 per share.the November 2019 Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption.

Off-Balance Sheet Arrangements

We haveare not entered intoa party to any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of our requirements for capital resources.

Contractual Obligations

As of September 30, 2017,2019, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans as well as contractual obligations consistconsisting of operating leases for equipment and software licenses.equipment.