CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

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

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

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

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SACHEM CAPITAL CORP.

BALANCE SHEETS

September 30, 2017
(unaudited)

December 31, 2016
(audited)

Assets
Assets:
Cash $ 1,016,588 $ 1,561,863
Escrow deposits 46,440 -
Mortgages receivable 52,693,657 32,521,588
Mortgages receivable, affiliate - 1,229,022
Interest and fees receivable 633,806 478,928
Other receivables 168,615 182,842
Due from borrowers 360,605 81,911
Prepaid expenses 38,342 -
Property and equipment, net 508,553 397,448
Real estate owned 1,224,969 1,222,454
Pre-offering costs 72,427 625,890
Deposits on property - -
Deferred financing costs 111,003 67,475
Total assets $ 56,875,005 $ 38,369,421

Liabilities and Shareholders'/Members’ Equity
Liabilities:
Line of credit $ 15,921,186 $ 8,113,943
Mortgage payable 303,568 310,000
Accrued expenses 77,908 196,086
Security deposit held 2,550 800
Advances from borrowers 446,763 291,875
Due to shareholders/member 16,958 656,296
Deferred revenue 871,197 290,456
Accrued interest 79,421 24,350
Total liabilities 17,719,551 9,883,806

Shareholders'/members’ equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued - -
Common stock - $.001 par value; 50,000,000 authorized; 11,103,237 issued and outstanding 11,103 -
Additional paid-in capital 37,980,133 -
Members' equity - 28,485,615
Retained earnings 1,164,218 -
Total shareholders'/members’ equity 39,155,454 28,485,615
Total liabilities and shareholders'/members’ equity $ 56,875,005 $ 38,369,421


	June 30, 2022		December 31, 2021
	(unaudited)		(audited)
Assets
Assets:
Cash and cash equivalents	$	29,130,494	$	41,938,897
Investment securities		34,382,317		60,633,661
Mortgages receivable		422,404,523		292,301,209
Interest and fees receivable		5,212,936		3,693,645
Other receivables		487,732		94,108
Due from borrowers		4,651,732		3,671,016
Prepaid expenses		170,142		271,291
Property and equipment, net		2,943,046		2,172,185
Real estate owned		5,904,614		6,559,010
Investments in partnerships		19,616,970		6,055,838
Other assets		420,684		306,440
Deferred financing costs, net		45,423		264,451
Total assets	$	525,370,613	$	417,961,751

Liabilities and Shareholders’ Equity
Liabilities:
Notes payable (net of deferred financing costs of $7,939,241 and $5,747,387)	$	240,212,509	$	160,529,363
Repurchase facility		39,372,430		19,087,189
Mortgage payable		750,000		750,000
Line of credit		23,406,655		33,178,031
Accrued dividends payable		0		3,927,600
Accounts payable and accrued expenses		177,866		501,753
Advances from borrowers		11,336,297		15,066,114
Deferred revenue		4,627,997		4,643,490
Other notes		17,640		30,921
Accrued interest		466,224		164,729
Total liabilities		320,367,618		237,879,190

Commitments and Contingencies

Shareholders’ equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; 1,903,000 shares of Series A Preferred Stock issued and outstanding		1,903		1,903
Common stock - $.001 par value; 100,000,000 shares authorized; 36,755,786 and 32,730,004 issued and outstanding		36,756		32,730
Paid-in capital		206,973,510		185,516,394
Accumulated other comprehensive loss		(425,972)		(476,016)
Accumulated deficit		(1,583,202)		(4,992,450)
Total shareholders’ equity		205,002,995		180,082,561
Total liabilities and shareholders’ equity	$	525,370,613	$	417,961,751

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

~~SACHEM CAPITAL CORP.~~

~~STATEMENTS OF OPERATIONS~~

~~(unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenue:
Interest income from loans $ 1,570,877 $ 952,511 $ 3,831,636 $ 2,687,711
Origination fees, net 196,811 43,477 464,211 138,620
Late and other fees 34,998 - 100,453 99,309
Processing fees 30,480 17,100 84,855 44,085
Rental income, net 9,637 2,954 58,865 20,008
Other income 80,196 - 205,775 -
Gain on sale of real estate 15,931 - 178 -
Total revenue 1,938,930 1,016,042 4,745,973 2,989,733
Operating costs and expenses:
Interest and amortization of deferred financing costs 302,548 138,992 589,457 360,684
Compensation to manager - 79,441 35,847 231,958
Professional fees 47,202 20,000 179,344 44,743
Compensation, fees and taxes 195,673 6,215 466,497 28,603
Exchange fees 31,548 - 69,213 -
Depreciation 8,734 - 21,624 -
General and administrative expenses 35,338 - 212,676 -
Impairment loss - 96,697 - 96,697
Total operating costs and expenses 621,043 341,345 1,574,658 762,685
Net income $ 1,317,887 $ 674,697 $ 3,171,315 $ 2,227,048

Basic and diluted net income per common share outstanding:
Basic $ 0.12 $ 0.26 *
Diluted $ 0.12 $ 0.26 *

Weighted average number of common shares outstanding:
Basic 11,103,237 11,103,237
Diluted 11,103,237 11,103,237

*Net income per share for the period beginning February 9, 2017 (~~i.e.,~~ ~~the effective date of the company’s initial public offering) and ending September 30, 2017.~~

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

Table of Contents

SACHEM CAPITAL CORP.
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
~~STATEMENT OF CHANGES IN SHAREHOLDERS’/MEMBERS’ EQUITY~~

Three Months Ended

Six Months Ended

June 30,

June 30,


2022

2021

2022

2021
Revenue:








Interest income from loans

$
10,433,572

$
4,682,295

$
18,944,947

$
9,213,528
Investment income

225,033

180,120

496,505

422,811
Income from partnership investments

317,004

36,868

589,493

54,241
Gain (loss) on sale of investment securities

5,570

85,471

(148,565)

(43,968)
Origination fees, net

2,045,638

831,893

3,683,266

1,349,321
Late and other fees

117,676

61,970

246,540

97,899
Processing fees

62,615

43,410

128,470

79,385
Rental income (loss), net

18,158

(9,398)

28,200

(5,214)
Unrealized losses on investment securities

(1,478,432)

0

(2,530,662)

0
Other income

801,296

801,266

1,411,312

1,258,075
Total revenue

12,548,130

6,713,895

22,849,506

12,426,078

Operating costs and expenses:








Interest and amortization of deferred financing costs

5,209,865

2,505,234

9,108,253

4,969,989
Professional fees

229,038

251,170

459,753

482,928
Compensation, fees and taxes

1,187,940

812,143

2,181,903

1,404,230
Exchange fees

12,467

12,465

24,795

24,795
Other expenses and taxes

95,354

23,506

160,058

45,314
Depreciation

22,239

21,263

44,478

40,865
General and administrative expenses

416,833

248,308

818,066

407,916
(Gain) Loss on sale of real estate

(188,182)

14,962

(122,343)

17,096
Impairment loss

335,000

294,000

595,500

319,000
Total operating costs and expenses

7,320,554

4,183,051

13,270,463

7,712,133
Net income

5,227,576

2,530,844

9,579,043

4,713,945
Preferred stock dividend

(921,766)

0

(1,843,531)

0
Net income attributable to common shareholders

4,305,810

2,530,844

7,735,512

4,713,945

Other comprehensive loss

Unrealized gain (loss) on investment securities

(192,764)

(104,316)

50,044

(111,810)
Comprehensive income

$
4,113,046

$
2,426,528

$
7,785,556

$
4,602,135
Basic and diluted net income per common share outstanding:








Basic

$
0.12

$
0.10

$
0.22

$
0.20
Diluted

$
0.12

$
0.10

$
0.22

$
0.20

Weighted average number of common shares outstanding:








Basic

36,373,570

24,851,010

35,630,455

23,503,679
Diluted

36,373,877

24,857,897

35,636,374

23,507,685

Nine Months Ended September 30, 2017
(unaudited)
Common
Shares Amount Additional
Paid in
Capital Retained
Earnings Predecessor’s
Members'
Equity

Beginning balance, January 1, 2017 2,220,000 $ 2,220 $ (2,220 ) $ 28,485,615

Member contributions 653,646

Member distributions (2,460,125 )

Net income for the period January 1, 2017 - February 8, 2017 286,100

Conversion of members' equity into common stock 6,283,237 6,283 26,958,953 (26,965,236 )

Initial public offering 2,600,000 2,600 11,023,400

Dividends paid $ (1,720,997 )

Net income for the period February 9, 2017 – September 30, 2017 2,885,215
Balance, September 30, 2017 11,103,237 $ 11,103 $ 37,980,133 $ 1,164,218

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

3

2

Table of Contents

~~SACHEM CAPITAL CORP.~~
~~STATEMENTS OF CASH FLOW~~
~~(unaudited)~~
Nine Months
Ended September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,171,315 $ 2,227,048
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs 43,677 36,116
Depreciation expense 21,624 -
Gain on sale of real estate (179 ) -
Impairment loss - 96,697
Adjustment to loss for sale of collateral (42,231 ) -
Changes in operating assets and liabilities:
(Increase) decrease in:
Interest and fees receivable (154,877 ) (199,277 )
Other receivables 14,227 (81,551 )
Due from borrowers (278,694 ) -
Prepaid expenses (38,342 ) -
(Decrease) increase in:
Due to member (656,296 ) 276,743
Due to shareholder 16,957 -
Accrued interest 55,071 (14,741 )
Accrued expenses (118,183 ) -
Deferred revenue 580,741 (1,162 )
Advances from borrowers 154,888 76,226
Total adjustments (401,617 ) 189,051
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,769,698 2,416,099

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of real estate owned 530,181 545,970
Acquisitions of and improvements to real estate owned (424,023 ) (562,950 )
Escrow deposit (46,440 ) (57,000 )
Purchase of furniture and equipment (132,729 ) -
Security deposit 1,750 -
Principal disbursements for mortgages receivable (33,792,878 ) (14,335,922 )
Principal collections on mortgages receivable 14,849,831 10,921,370
NET CASH USED FOR INVESTING ACTIVITIES (19,014,308 ) (3,488,532 )
4
SACHEM CAPITAL CORP.
STATEMENTS OF ~~CASH FLOW (Continued)~~CHANGES IN SHAREHOLDERS’ EQUITY
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit 25,341,633 5,425,000
Repayment of line of credit (17,534,390 ) (2,900,000 )

Principal payments on mortgage payable (6,432 ) -
Dividends paid (1,720,997 ) -
Proceeds from IPO 13,000,000 -
Pre-offering costs incurred (1,486,798 ) (197,999 )
Financing costs incurred (87,202 ) (65,050 )
Member contributions 653,646 3,754,069
Member distributions (2,460,125 ) (3,500,892 )
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,699,335 2,515,128

NET INCREASE (DECREASE) IN CASH (545,275 ) 1,442,695

CASH - BEGINNING OF PERIOD 1,561,863 1,834,082

CASH - END OF PERIOD $ 1,016,588 $ 3,276,777

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Interest paid $ 545,782 $ 339,309
(unaudited)
~~SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES~~

FOR THE THREE MONTHS ENDED JUNE 30, 2022

Accumulated

Additional

Other

Preferred Stock

Common Stock

Paid in

Comprehensive

Accumulated


Shares

Amount

Shares

Amount

Capital

Loss

Deficit

Totals
Balance, April 1, 2022

1,903,000

$
1,903

35,513,887

$
35,514

$
201,168,304

$
(233,208)

$
(1,562,750)

$
199,409,763

Issuance of Common Stock, net of expenses

—

—

1,136,432

1,136

5,681,884

—

—

5,683,020

Stock based compensation

—

—

105,467

106

123,322

—

—

123,428

Unrealized loss on marketable securities

—

—

—

—

—

(192,764)

—

(192,764)

Dividends paid on Preferred Stock

—

—

—

—

—

—

(921,766)

(921,766)

Dividends paid on Common Stock

—

—

—

—

—

—

(4,326,262)

(4,326,262)

Net income for the period ended June 30, 2022

—

—

—

—

—

—

5,227,576

5,227,576
Balance, June 30, 2022

1,903,000

$
1,903

36,755,786

$
36,756

$
206,973,510

$
(425,972)

$
(1,583,202)

$
205,002,995

FOR THE THREE MONTHS ENDED JUNE 30, 2021

Accumulated

Additional

Other

Preferred Stock

Common Stock

Paid in

Comprehensive

Accumulated


Shares

Amount

Shares

Amount

Capital

Loss

Deficit

Totals
Beginning balance, April 1, 2021

—

$
—

22,428,208

$
22,428

$
85,360,645

$
(33,486)

$
(707,868)

$
84,641,719

Issuance of Preferred Stock, net of expenses

1,700,000

1,700

—

—

40,611,426

—

—

40,613,126

Issuance of Common Stock, net of expenses

—

—

4,210,324

4,211

21,332,173

—

—

21,336,384

Stock based compensation

—

—

94,681

94

58,212

—

—

58,306

Unrealized loss on marketable securities

—

—

—

—

—

(104,316)

—

(104,316)

Dividends paid

—

—

—

—

—

—

(2,786,659)

(2,786,659)

Net income for the period ended June 30, 2021

—

—

—

—

—

—

2,530,844

2,530,844
Balance, June 30, 2021

1,700,000

$
1,700

26,733,213

$
26,733

$
147,362,456

$
(137,802)

$
(963,683)

$
146,289,404
~~On February 8, 2017, Sachem Capital Partners, LLC transferred all its assets and liabilities to the Company in exchange for 6,283,237~~

Table of ~~the Company's common shares.~~Contents

FOR THE SIX MONTHS ENDED JUNE 30, 2022

Accumulated

Additional

Other

Preferred Stock

Common Stock

Paid in

Comprehensive

Accumulated


Shares

Amount

Shares

Amount

Capital

Loss

Deficit

Totals
Balance, January 1, 2022

1,903,000

$
1,903

32,730,004

$
32,730

$
185,516,394

$
(476,016)

$
(4,992,450)

$
180,082,561

Issuance of Common Stock, net of expenses

—

—

3,867,157

3,867

21,227,108

—

—

21,230,975

Exercise of warrants

—

—

19,658

20

(20)

—

—

—

Stock based compensation

—

—

138,967

139

230,028

—

—

230,167

Unrealized gain on marketable securities

—

—

—

—

—

50,044

—

50,044

Dividends paid on Preferred Stock

—

—

—

—

—

—

(1,843,531)

(1,843,531)

Dividends paid on Common Stock

—

—

—

—

—

—

(4,326,264)

(4,326,264)

Net income for the period ended June 30, 2022

—

—

—

—

—

—

9,579,043

9,579,043
Balance, June 30, 2022

1,903,000

$
1,903

36,755,786

$
36,756

$
206,973,510

$
(425,972)

$
(1,583,202)

$
205,002,995


FOR THE SIX MONTHS ENDED JUNE 30, 2021

Accumulated

Additional

Other

Preferred Stock

Common Stock

Paid in

Comprehensive

Accumulated


Shares

Amount

Shares

Amount

Capital

Loss

Deficit

Totals
Beginning balance, January 1, 2021

—

$
—

22,124,801

$
22,125

$
83,814,376

$
(25,992)

$
(2,890,969)

$
80,919,540

Issuance of Preferred Stock, net of expenses

1,700,000

1,700

—

—

40,611,426

—

—

40,613,126

Issuance of Common Stock, net of expenses

—

—

4,513,731

4,514

22,874,335

—

—

22,878,849

Stock based compensation

—

—

94,681

94

62,319

—

—

62,413

Unrealized loss on marketable securities

—

—

—

—

—

(111,810)

—

(111,810)

Dividends paid

—

—

—

—

—

—

(2,786,659)

(2,786,659)

Net income for the period ended June 30, 2021

—

—

—

—

—

—

4,713,945

4,713,945
Balance, June 30, 2021

1,700,000

$
1,700

26,733,213

$
26,733

$
147,362,456

$
(137,802)

$
(963,683)

$
146,289,404
~~As of September 30, 2016, the Company is obligated for the repayment of certain expenses paid by the managing member on behalf of the Company for certain borrowers in the amount of $85,972.~~
~~During the nine months ended September 30, 2016, $496,950 of mortgages receivable and $35,510 of accrued interest receivable and late fees receivable were converted to real estate owned~~
~~During the nine months ended September 30, 2016, certain real estate held for sale in the amount of $107,498 was converted to mortgages receivable.~~

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

5

4

Table of Contents

SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW
(unaudited)

Six Months Ended

June 30,


2022

2021
CASH FLOWS FROM OPERATING ACTIVITIES




Net income

$
9,579,043

$
4,713,945
Adjustments to reconcile net income to net


cash provided by operating activities:

Amortization of deferred financing costs and bond discount

1,108,675

502,872
Write-off of deferred financing costs

0

72,806
Depreciation expense

44,478

40,865
Stock based compensation

230,167

62,319
Impairment loss

595,500

319,000
(Gain) Loss on sale of real estate

(122,343)

17,096
Unrealized loss on investment securities

2,530,662

0
Loss on sale of investment securities

148,565

43,968
Debt Forgiveness

0

(257,845)
Changes in operating assets and liabilities:


(Increase) decrease in:

Interest and fees receivable

(1,620,733)

(197,929)
Other receivables

(393,624)

(63,868)
Due from borrowers

(1,102,371)

(280,683)
Prepaid expenses

101,149

(82,419)
(Decrease) increase in:

Accrued interest

301,495

14,955
Accounts payable and accrued expenses

(323,887)

(56,954)
Deferred revenue

(15,493)

131,104
Advances from borrowers

(3,729,817)

1,156,692
Total adjustments

(2,247,577)

1,421,979

NET CASH PROVIDED BY OPERATING ACTIVITIES

7,331,466

6,135,924

CASH FLOWS FROM INVESTING ACTIVITIES




Purchase of investment securities

(36,088,438)

(85,471,393)
Proceeds from the sale of investment securities

59,710,599

78,107,144
Purchase of interests in investment partnerships, net

(13,561,132)

(1,843,398)
Proceeds from sale of real estate owned

1,397,502

919,014
Acquisitions of and improvements to real estate owned, net

(19,917)

(286,346)
Purchase of property and equipment

(815,339)

(776,465)
Principal disbursements for mortgages receivable

(191,971,926)

(75,190,172)
Principal collections on mortgages receivable

60,895,362

58,012,498
Costs in connection with investment activities

(114,244)

(192,646)
NET CASH USED FOR INVESTING ACTIVITIES

(120,567,533)

(26,721,764)

CASH FLOWS FROM FINANCING ACTIVITIES




Net proceeds from (repayment of) line of credit

(9,771,376)

6,220,770
Net proceeds from repurchase facility

20,285,241

0
Repayment of mortgage payable

0

(767,508)
Principal payments on other notes

(13,281)

(11,764)
Dividends paid on Common Stock

(8,253,864)

(5,441,636)
Dividends paid on Preferred Stock

(1,843,531)

0
Financings costs incurred

0

(88,212)
Proceeds from issuance of common shares, net of expenses

21,230,975

22,878,849
Proceeds from issuance of Series A Preferred Stock, net of expenses

0

40,613,126
Gross proceeds from issuance of fixed rate notes

81,875,000

0
Financings costs incurred in connection with fixed rate notes

(3,081,500)

0
NET CASH PROVIDED BY FINANCING ACTIVITIES

100,427,664

63,403,625

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(12,808,403)

42,817,785

CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR

41,938,897

19,408,028

CASH AND CASH EQUIVALENTS - END OF PERIOD

$
29,130,494

$
62,225,813

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

Table of Contents

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

(unaudited)

Six Months Ended

June 30,


2022

2021
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION




Interest paid

$
7,710,686

$
4,479,800

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended June 30, 2022 amounted to $1,091,348.

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

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS
~~SEPTEMBER~~

JUNE 30, ~~2017~~2022

1.	1. The Company

Sachem Capital Corp. (the “Company”) ~~was formed under the name HML Capital Corp in January 2016 under the~~, a New York Business Corporation Law. On February 8, 2017, the Company completed an exchange transaction (the “Exchange”) with Sachem Capital Partners, LLC (“SCP”), a Connecticut limited liability company located in Branford, Connecticut, which commenced operations on December 8, 2010, pursuant to which SCP transferred all its assets to the Company and, in exchange therefor, the Company issued 6,283,237 of its common shares to SCP and assumed all of SCP’s liabilities. Prior to the consummation of the Exchange, the Company was not engaged in any business or investment activities, and had only nominal assets and no liabilities. On February 9, 2017, the Company’s registration statement on Form S-11 was declared effective by the U.S. Securities and Exchange Commission. Pursuant to such registration statement, the Company issued and sold 2,600,000 common shares at a price of $5.00 per share, or $13 million of gross proceeds (the “IPO”). The net proceeds, after payment of underwriting discounts and commissions and transaction fees, were approximately $11.1 million. The IPO was consummated on February 15, 2017. Prior to the Exchange, SCP was managed by JJV, LLC (“JJV”), a Connecticut limited liability company and related party.

~~The Company~~corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company offers short term ~~(i.e.~~(i.e., one to three ~~years or less)~~years), secured, ~~non-banking~~non-bank loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in ~~Connecticut.~~the Northeastern United States and Florida. The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate ~~collateral. Each loan is also personally guaranteed~~owned by the ~~principal(s) of the~~ borrower ~~which guaranty may be collaterally secured by~~or its principals, a pledge of the ~~guarantor’s interest~~ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. The Company does not lend to owner occupants. The Company’s primary underwriting criteria is a conservative loan to value ~~ratio.~~ratio evaluated on each transaction. In addition, the Company may make opportunistic real estate purchases apart from its lending ~~activities.~~activities or enter into other transactions with third parties involving real estate financing transactions.

2. Significant Accounting Policies

The accompanying statements of operations, changes in shareholders’/members’ equity and cash flows for the three and nine-month periods ended September 30, 2016 and September 30, 2017 until the consummation of the Exchange, are those of SCP.

2.	~~Significant Accounting Policies~~

Unaudited Financial Statements

The accompanying unaudited financial statements of the Company have been prepared in accordance with ~~U.S.~~ generally accepted accounting principles ~~(‘‘GAAP’’~~in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year.

Use of Estimates

The preparation of financial statements in conformity with ~~generally accepted accounting principles in the United States of America~~GAAP 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. Management ~~will base the use of~~bases its estimates on (a) various assumptions that consider its ~~past~~ experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could materially differ from those estimates.

Cash and Cash Equivalents

~~SACHEM CAPITAL CORP.~~
~~NOTES TO FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

~~Concentrations~~The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of ~~Credit Risk~~

~~Financial instruments that potentially subject the Company~~deposit with an original maturity of three months or less to ~~concentrations of credit risk consist primarily of~~be cash ~~and mortgage loans.~~equivalents. The Company maintains its cash ~~with one major~~and cash equivalents at financial ~~institution. Accounts at the financial institution are insured by~~institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation upinsurance coverage, and, as a result, there is a concentration of credit risk related to ~~$250,000.~~amounts on deposit. The Company does not believe that the risk is significant.

Allowance for Loan Loss

~~Credit risks associated~~The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio. Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required.

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

Fair Value Measurements

The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 are described as follows:

Level 1Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company can access.

Level 2Inputs to the valuation methodology include:

●

quoted prices for similar assets or liabilities in active markets;

●

quoted prices for identical or similar assets or liabilities in inactive markets;

●

inputs other than quoted prices that are observable for the asset or liability; and

●

inputs that are derived principally from or corroborated by observable market data by correlation to other means.

If the asset or liability has a specified (i.e., contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Property and Equipment

Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019.

Land and building acquired in 2021 to serve as the Company’s future corporate headquarters is stated at cost. The building is not currently being depreciated as it is undergoing renovations.

Real Estate Owned

Real estate owned by the Company is stated at cost and is tested for impairment quarterly.

Consolidations

The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity. All intercompany accounts and transactions have been eliminated.

Impairment of long-lived assets

The Company monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.If the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets.

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

Deferred Financing Costs

Costs incurred in connection with the Company’s ~~mortgage loan portfolio and related interest receivable are~~revolving credit facilities, described in Note ~~3 entitled “Mortgages Receivable.”~~7-Line of Credit, Mortgage Payable and Churchill Facility are, amortized over the term of the applicable facility using the straight-line method.

Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 9 - Notes Payable, are being amortized over the term of the respective Notes.

Revenue Recognition

~~Income Taxes~~

~~Subsequent~~Interest income from the Company’s loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears. The Company, generally, does not accrue interest income on mortgages receivable that are more than 90 days past due or interest charged at default rates. Interest income not accrued at June 30, 2022 and collected prior to the ~~Exchange~~issuance of this report is included in income for the period ended June 30, 2022.

Origination fee revenue, generally 1% – 3% of the original loan principal amount, is collected at loan funding and is recognized ratably over the ~~IPO,~~contractual life of the loan in accordance with ASC 310.

Income Taxes

The Company believes it qualifies as a ~~Real Estate Investment Trust (REIT)~~real estate investment trust (“REIT”) for federal income tax purposes and ~~intends to make~~operates accordingly. It made the election to be taxed as a REIT ~~when it files~~on its 2017 ~~federal~~Federal income tax return. ~~As a REIT, the Company is required to distribute at least 90% of its taxable income to its shareholders on an annual basis.~~ The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the ~~distributions~~distribution requirements applicable to REITs and the diversity of ownership of its outstanding ~~common shares.~~capital stock. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification.

~~The Company has adopted the provisions of~~ FASB ASC Topic 740-10 “Accounting for Uncertainty in Income ~~Taxes”. The standard~~Taxes” prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required. Under this standard, an entity may only recognize or continue to recognize tax positions that meet a ~~“more~~“more likely than ~~not”~~not” threshold. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense. The Company has determined that there are no0 uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of ~~September~~June 30, ~~2017.~~2022 and 2021.

~~Land and Building~~

Land and building acquired in December 2016 to house the Company’s office facilities is stated at cost. The building will be depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred.

~~Revenue Recognition~~

The Company recognizes 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, the Company recognizes 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.

Interest income from the Company’s loan portfolio is earned, over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears.

~~Origination fee revenue is recognized ratably over the contractual life of the loan in accordance with ASC 310.~~

~~SACHEM CAPITAL CORP.~~
~~NOTES TO FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

~~Deferred Financing Costs~~

~~Costs incurred in connection with the Company’s line of credit, as discussed in Note 6, are amortized over the term of the line of credit, using the straight-line method.~~

~~Fair Value of Financial Instruments~~

For the line of credit, mortgage payable and interest-bearing mortgages receivable held by the Company, the carrying amount approximates fair value due to the relative short-term nature of such instruments.

Earnings Per Share

Basic and diluted earnings per share are calculated in accordance with ASC 260 ~~“Earnings~~—“Earnings Per ~~Share”.~~Share.” Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income.

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~~Prior to~~SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

Investment Transactions and Related Income.

Investment transactions are accounted for on a trade-date basis. Dividends are recorded on the ~~Exchange,~~ex-dividend date and interest is recognized on the ~~Company’s business was conducted by SCP,~~accrual basis. Investment securities are marked-to-market. Unrealized gains and losses on investment securities with a ~~limited liability company. Accordingly, earnings per share for the nine months ended September 30, 2017, does not include the~~stated maturity date are included in other comprehensive income (loss). All other unrealized gains and losses on investment securities are included in net income ~~per share for the period prior to the Exchange, and there are no earnings per share for the three- and nine-month periods ended September 30. 2016.~~(loss).

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash - a consensus of the FASB Emerging Issues Task Force.” The ASU requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. For public companies that file with the SEC, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. For all entities, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU expands the activities that qualify for hedge accounting and simplifies the rules for reporting hedging transactions. For public companies that file with the SEC, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

Management does not believe that any ~~other~~ recently issued, but not yet ~~effected,~~effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements.

Reclassifications

~~SACHEM CAPITAL CORP.~~
~~NOTES TO FINANCIAL STATEMENTS~~
~~SEPTEMBER~~Certain amounts included in the June 30, ~~2017~~2021 financial statements have been reclassified to conform to the June 30, 2022 presentation.

3.    Fair Value Measurement
The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair market value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
3. ~~Mortgages Receivable~~
The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of June 30, 2022:


Level 1

Level 2

Level 3

Total
Stocks and ETFs

$
19,318,777

0

0

$
19,318,777
Mutual funds

15,063,540

0

0

15,063,540
Total liquid investments

$
34,382,317

0

0

$
34,382,317
Real estate owned

—

0

$
5,904,614

$
5,904,614

Following is a description of the methodologies used for assets measured at fair value:
Stocks and ETFs: Valued at the closing price reported in the active market in which the individual securities are traded.
Mutual funds: Valued at the daily closing price reported by the fund. Mutual funds held by the Company are open-end mutual funds that are registered with the U.S. Securities and Exchange Commission. These funds are required to publish their daily net asset values and to transact at that price. The mutual funds held by the Company are deemed to be actively traded.
Real estate owned: The Company estimates fair values of real estate owned using market information such as recent sales contracts, appraisals, recent sales, assessed values or discounted cash value models.

4.    Mortgages Receivable
The Company offers secured, ~~non-banking~~non-bank loans to real estate owners and investors (also known as ~~hard money~~“hard money” loans) to fund their acquisition, ~~and construction~~renovation, development, rehabilitation or improvement of properties located ~~mainly~~primarily in ~~Connecticut.~~the Northeastern United States and Florida. The loans are ~~principally~~ secured by first ~~mortgages~~mortgage liens on ~~real estate and, generally, are also personally guaranteed~~one or more properties owned by the borrower or ~~its principals.~~related parties. The loans are generally for a term of one to three years. The loans are initially recorded and carried thereafter, in the financial

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

statements, at cost. Most of the loans provide for monthly payments of interest only (in arrears) during the term of the loan and a “balloon” payment of the principal on the maturity date.
For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, the aggregate amounts of loans funded by the Company were ~~$33,792,878~~$191,971,926 and ~~$14,849,831,~~$75,190,172, respectively, offset by principal repayments of ~~$14,637,831~~$60,895,362 and ~~$10,921,370,~~$58,012,498, respectively.
~~For~~As of June 30, 2022, the ~~quarter ended September 30, 2017, the Company closed~~Company’s mortgage loan portfolio includes loans ranging in size ~~from $10,000~~up to ~~$1,200,000~~$22,122,500 with stated interest rates ranging from ~~11%~~5.0% to ~~12%~~14.2%, and a default interest rate for non-payment of 18%.
As of June 30, 2022 and 2021, the Company’s mortgage loan portfolio had an impairment loss of $105,000 and $0, respectively.
At ~~September~~June 30, ~~2017,~~2022 and 2021, no single borrower or group of related borrowers had loans outstanding representing more than 10% of the total balance of the loans outstanding.
The Company ~~generally grants loans for a term of one to three years. In some cases, the Company has agreed~~may agree to extend the term of a loan if, at the ~~loans. A~~time of the extension, the loan ~~that is extended is treated~~and the borrower meet all the Company’s then underwriting requirements. The Company treats a loan extension as a new loan. ~~However, prior to granting an extension, the loan underwriting process is repeated.~~
In November 2016, the Company purchased a mortgage note at a discount of $74,954 and then subsequently refinanced the note obtaining additional collateral and payment terms consistent with similar notes held by the Company. The discount is being amortized over the three-year life of the refinanced loan.
Credit Risk
Credit risk profile based on loan activity as of ~~September~~June 30, ~~2017:~~2022 and December 31, 2021:

Performing Loans Residential Commercial Land Mixed Use Total
Outstanding
Mortgages
September 30, 2017 $ 35,512,825 $ 12,375,768 $ 4,545,931 $ 259,133 $ 52,693,657


Total

Outstanding


Residential

Commercial

Land

Mixed Use

Mortgages
December 31, 2021

$
157,841,896

$
95,319,795

$
20,755,891

$
18,383,627

$
292,301,209
June 30, 2022

$
225,325,860

$
134,810,383

$
33,780,053

$
28,488,227

$
422,404,523

The following is the maturities of mortgages receivable as of ~~September~~June 30:

2022

$
165,155,672
2023

195,379,331
2024

58,659,394
2025

3,210,126
Total

$
422,404,523

At June 30, ~~2017:~~2022 approximately $46.2 million of mortgages receivable were past maturity and either in foreclosure or in the process of being extended. Of the 503 mortgage loans in the Company’s portfolio, 28 were the subject of foreclosure proceedings. The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of June 30, 2022 was approximately $9.1 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan plus accrued interest and borrower charges.

2017 $ 8,005,973
2018 27,495,413
2019 7,147,929
2020 10,044,342
Total $ 52,693,657
4. 5.    Real Estate Owned
Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned.
As of ~~September~~June 30, ~~2017,~~2022 and June 30, 2021, real estate owned totaled ~~$1,224,969~~$5,904,614 and $7,892,845, respectively , with no valuation ~~allowance, all~~allowance. For the six months ended June 30, 2022, the Company recorded an impairment loss of ~~which is~~$490,500 compared to an impairment loss of $319,000 for the same period in 2021. For the three-months ended June 30, 2022 and 2021, the impairment loss was $335,000 and $294,000, respectively.

As of June 30, 2022, real estate owned included $800,949 of real estate held for ~~rental.~~rental and $5,103,685 of real estate held for sale.As of June 30, 2021, real estate owned included $986,975 of real estate held for rental and $6,905,870 of real estate held for sale.
9
11

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS
~~SEPTEMBER~~

JUNE 30, ~~2017~~2022

Properties Held for Sale
5. ~~Escrow Deposits~~
During the three and six months ended June 30, 2022, the Company sold 2 properties held for sale and recognized an aggregate gain of $188,182 and $122,343, respectively. During the three and six months ended June 30, 2021, the Company sold a property classified as real estate held for sale, and recognized an aggregate loss of $14,962 and $17,096, respectively.
Properties Held for Rental
As of ~~September~~June 30, ~~2017, escrow deposits consist~~2022, 1 property, a commercial building, was held for rental. The tenant signed a 5 year lease that commenced on August 1, 2021.
Rental payments due from real estate held for rental are as follows:

Year ending December 31, 2022

$
53,200
Year ending December 31, 2023

53,200
Year ending December 31, 2024

53,200
Year ending December 31, 2025

53,200
Total

$
212,800

6.     Profit Sharing Plan
On April 16, 2018, the Company’s Board of ~~funds~~Directors approved the adoption of the Sachem Capital Corp. 401(k) Profit Sharing Plan (the “401(k) Plan”). All employees, who meet the participation criteria, are eligible to participate in the 401(k) Plan. Under the terms of the 401(k) Plan, the Company is obligated to contribute 3% of a participant’s compensation to the 401(k) Plan on behalf of an employee-participant. For the six months ended June 30, 2022 and 2021, the 401(k) Plan expense was $50,001 and $32,462, respectively. For the three month ended June 30, 2022 and 2021, the 401(k) Plan expense was $30,008 and $12,744, respectively.

7.     Line of Credit, Mortgage Payable, and Churchill Facility
Wells Fargo Margin Line of Credit
During the year ended December 31, 2020, the Company established a margin loan account at Wells Fargo Advisors that is secured by the Company’s portfolio of short-term securities. The credit line bears interest at a rate equal to 1.75% below the prime rate. At June 30, the rate on the Wells Fargo credit line was 3.00%. As of June 30, 2022 the total outstanding balance on the Wells Fargo credit line was $23,406,655.
Mortgage Payable
In 2021, the Company obtained a new adjustable-rate mortgage loan from New Haven Bank (“NHB”) for up to a maximum principal amount of $1.4 million (the “NHB Mortgage”) of which $750,000 was outstanding at June 30, 2022. The NHB Mortgage accrues interest at an initial rate of 3.75% per annum for the first 72 months and is due and payable in full on December 1, 2037. During the first 12 months, from December 1, 2021 to November 30, 2022, only interest is due and payable. Beginning on December 1, 2022 and through December 1, 2037, principal and interest on the NHB Mortgage will be due and payable on a monthly basis. Payments of principal under the NHB Mortgage are amortized based on a 20-year amortization schedule. The interest rate will be adjusted on each of December 1, 2027 and 2032 to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 2.60%. The NHB Mortgage is a non-recourse loan, secured by a first mortgage lien on the Company’s current corporate headquarters, located at 698 Main Street, Branford, Connecticut, and the Company’s future corporate headquarters, located at 568 East Main Street, Branford, Connecticut. The $750,000 of proceeds funded at closing were used to reimburse the Company for out-of-pocket costs relating to the acquisition of the East Main Street property. The balance of the loan will be used to reimburse the

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

Company for the out-of-pocket costs incurred to renovate the East Main Street property. Upon completion of the renovation, and assuming the Company can provide NHB with an appraisal that the East Main Street property has a value of not less than $1.4 million, the first mortgage lien on the current corporate headquarters will be released.

Churchill MRA Funding I LLC Repurchase Financing Facility

On July 21, 2021, the Company consummated a $200 million master repurchase financing facility (“Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York. Under the terms of the Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans. In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill. The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other circumstances. The repurchase price is calculated by applying an interest factor , as defined, to the purchase price of the mortgage loan. The Company has also pledged the mortgage loans sold to Churchill to secure its repurchase obligation. The cost of capital under the Facility is equal to the sum of (a) the greater of (i) 0.25% and (ii) the 30-day LIBOR plus (b) 3%-4%, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time. As of June 30, 2022 the effective rate charged under the Facility was 5.44%.

The Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements. Under one such covenant, the Company (A) is prohibited from (i) paying any dividends or making distributions in excess of 90% of its taxable income, (ii) incurring any indebtedness or (iii) purchasing any of its capital stock, unless, it has an asset coverage ratio of at least 150%; and (B) must maintain unencumbered cash and cash equivalents in an amount equal to or greater than 2.50% of the amount of its repurchase obligations. Churchill has the right to terminate the Facility at any time upon 180 days prior notice to the Company. The Company then has an additional 180 days after termination to repurchase all the mortgage loans held by Churchill. The Company uses the proceeds from the Facility to finance the continued expansion of its lending business and for general corporate purposes.

At June 30, 2022, the total amount outstanding under the Facility was $39,372,430 and the Company estimates that it had approximately $5.2 million of additional availability under the Facility. The collateral pledged to Churchill at June 30, 2022, was 31 mortgage loans that in the aggregate had unpaid principal balance of approximately $73.9 million.

The NHB Mortgage and the Churchill Facility contain cross-default provisions.

8. Financing Transactions
During the six month period ended June 30, 2022, the Company generated approximately $103.7 million of gross proceeds from the sale of its securities as follows:
(i) $51,875,000 from the sale of its 6.0% unsecured, unsubordinated notes due March 30, 2027;
(ii) $30,000,000 from the sale of its 7.125% unsecured, unsubordinated notes due June 30, 2027; and
(iii) $21,780,906 from the sale of 3,867,157 common shares in an “at-the-market” offering.
The net proceeds from the sale of these securities, approximately $100.0 million, were used primarily to fund new mortgage loans, for working capital and general corporate purposes.
During the six month period ended June 30, 2021, the Company sold 4,513,731 common shares in an at-the-market offering. Net proceeds to the Company from ~~closed construction mortgages. Closing counsel returns~~the sale of these ~~funds to~~shares were $22,878,849.

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

9. Notes Payable

At June 30, 2022, the Company ~~post-closing, then these funds are held by~~had an aggregate of $240,212,509 of unsecured, unsubordinated notes payable outstanding, net of $7,939,241 of deferred financing costs (collectively, the ~~Company and available to the borrower when specific progress goals during the construction process are met.~~

“Notes”). The Notes were issued in 6 series:

~~Line~~(i)

Notes having an aggregate principal amount of ~~Credit~~$23,663,000 bearing interest at 7.125% per annum and ~~Mortgage Payable~~maturing June 30, 2024 (“the June 2024 Notes”);

(ii)

Notes having an aggregate principal amount of $34,500,000 bearing interest at 6.875% per annum and maturing December 30, 2024 (the “December 2024 Notes”);

(iii)

Notes having an aggregate principal amount of $56,363,750 bearing interest at 7.75% per annum and maturing December 30, 2024 (the “September 2025 Notes”);

(iv)

Notes having an aggregate principal amount of $51,750,000 bearing interest at 6.0% per annum and maturing December 30, 2026 (the “December 2026 Notes”);

(v)

Notes having an aggregate principal amount of $51,875,000 bearing interest at 6.0% per annum and maturing March 30, 2027 (the “March 2027 Notes”); and

(vi)

Notes having an aggregate principal amount of $30,000,000 bearing interest at 7.125% per annum and maturing June 30, 2027 (the “June 2027 Notes”)

~~Line~~The Notes were sold in underwritten public offerings, were issued in denomination of ~~Credit~~

~~On December 18, 2014, SCP entered into a two-year revolving Line~~$25.00 each and are listed on the NYSE American and trade under the symbols “SCCB”, “SACC”,“SCCC”, “SCCD”, “SCCE” and “SCCF”, respectively. All the Notes were issued at par except for the last tranche of ~~Credit Agreement with Bankwell Bank (the “Bank”) pursuant to~~the September 2025 notes, in the original principal amount of $28 million, which were issued at $24.75 each. Interest on the ~~Bank agreed to advance up to $5 million (the “Bankwell Credit Line”) against assignments of mortgages~~Notes is payable quarterly on each March 30, June 30, September 30 and ~~other collateral requiring monthly payments of interest only. On~~ December 30 ~~2015,~~that they are outstanding. So long as the Bankwell Credit Line was amended to increase available borrowings to $7,000,000. On March 15, 2016, the Credit Line was amended again to increase available borrowings to $15,000,000. In connection with the Exchange, the Company assumed all of SCP’s obligations to Bankwell and entered into a new agreement with Bankwell, the material terms of whichNotes are substantially identical to the terms of the agreement between the SCP and Bankwell. On June 30, 2017, the Bankwell Credit Line was amended to increase available borrowings to $20,000,000. The interest rate on the Bankwell Credit Line is variable at 4.5% in excess of the London Interbank Offered Rate (LIBOR), but in no event less than 5.50%, per annum, on the money in use. As of September 30, 2017, the interest rate on the Bankwell Credit line was 5.83%. The Bankwell Credit Line expires on June 30, 2019, at which time the entire unpaid principal balance and any accrued and unpaid interest shall become due. The Company has the option to extend the term of the loan for the sole purpose of repaying the principal balance over a thirty-six month period in equal monthly installments. The Bankwell Credit Line is secured by substantially all Company assets and is subject to borrowing base limitations and financial covenants including, maintaining a minimum fixed charge coverage ratio and maintaining minimum tangible net worth. In addition, among other things, provisions of the agreement prohibit Company merger, consolidation or disposal of assets or declaring and paying dividends in certain circumstances. JJV and each of the Company’s co-chief Executive Officers have, jointly and severally, guaranteed the Company’s obligations under the Bankwell Credit Line up to a maximum of $1,000,000 each. The co-chief Executive Officers are also required to maintain certain capital balances, andoutstanding, the Company is prohibited from ~~ownership changes that would reduce their interests.~~

Asmaking distributions in excess of ~~September 30, 2017,~~90% of its taxable income, incurring any additional indebtedness or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150% after giving effect to the ~~outstanding amount under~~payment of such dividend, the ~~Bankwell Credit Line was $15,921,186.~~

~~Mortgage Payable~~

incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company ~~also has a mortgage payable to Bankwell Bank, collateralized by land and a building purchased by~~may redeem the ~~Company to be used as its primary business location. The property is currently being renovated and the Company expects to move its operations~~Notes, in whole or in part, without premium or penalty, at any time after their second anniversary of issuance upon at least 30 days prior written notice to the ~~new location in~~holders of the ~~second quarter of 2018.~~Notes. The ~~original~~redemption price will be equal to the outstanding principal amount of the ~~mortgage loan is $310,000 and bears interest at~~Notes redeemed plus the ~~rate of 4.52%. Interest and principal are payable in monthly installments of $1,975 commencing in February 2017. The entire outstanding principal balance of the mortgage loan and all~~ accrued ~~and~~but unpaid interest thereon ~~is due~~up to, but not including the date of redemption. The June 2024 Notes and ~~payable in January 2022.~~the December 2024 Notes are callable at any time. The September 2025 Notes will be callable at any time after September 4, 2022, the December 2026 Notes will be callable at any time after December 30, 2023, the March 2027 Notes will be callable at any time after March 9, 2024 and the June 2027 Notes will be callable at any time after May 11, 2024.

10.    Other income
~~Principal payments on~~For the ~~mortgage payable are due as follows:~~three and six-month periods ended June 30, 2022 and 2021, other income consists of the following:

Year ending December 31, 2017 $ 8,933
2018 10,176
2019 10,645
2020 11,136
2021 11,650
Thereafter 251,028
$ 303,568

Three Months

Six Months

ended June 30,

ended June 30,


2022

2021

2022

2021
Income on borrower charges

$
399,159

$
251,387

$
633,623

$
335,878
Modification and extension fees

301,820

492,008

609,870

798,150
In-house legal fees

99,840

54,500

161,940

111,800
Miscellaneous

477

3,371

5,879

12,247
Total

$
801,296

$
801,266

$
1,411,312

$
1,258,075

10

14

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS
~~SEPTEMBER~~

JUNE 30, ~~2017~~2022

11.    Commitments and Contingencies
7. ~~Commitments and Contingencies~~
~~Loan Brokerage Commissions/~~Origination Fees ~~Paid to JJV~~
Loan origination fees ~~consist of points,~~ generally ~~2%-5%~~range from 1%-3% of the original loan ~~principal. Pursuant to~~principal and, generally, are payable at the Company’s operating agreement and prior to the Exchange, JJV was entitled to 75% of loan origination fees. For the nine months ended September 30, 2017 and 2016, loan origination fees paid to JJV were $52,902 and $384,258, respectively, and for the three months ended September 30, 2017 and 2016, origination fees paid to JJV were $-0- and $140,106, respectively. These payments are amortized over the life oftime the loan ~~for financial statement purposes and recognized~~is funded. The unamortized portion is recorded as ~~a reduction of origination fee income. After~~Deferred revenue on the ~~Exchange, JJV is no longer entitled to origination fee payments.~~balance sheet. At June 30, 2022, Deferred revenue was $4,627,997, which will be recorded as income as follows:

Year ending December 31, 2022

$
2,664,388
Year ending December 31, 2023

1,336,689
Year ending December 31, 2024

626,920
Total

$
4,627,997

~~Original maturities of deferred revenue are as follows as of:~~
December 31,
2018 $ 608,697
2019 172,559
2020 89,941
Total $ 871,197
In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in ~~full.~~
full at the time of repayment.
~~Loan Servicing Fees~~Employment Agreements
~~JJV administered~~In February 2017, the ~~servicing~~Company entered into an employment agreement with John Villano, the material terms of which are as follows: (i) the employment term is five years with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement; (ii) a base salary of $260,000, which was increased in April 2018, April 2021 and April 2022 to $360,000, $500,000 and $750,000, respectively; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s ~~loan portfolio. At JJV’s discretion, the loan servicing fee ranged from one-twelfth (1/12~~^th)Board of ~~one-half percent (0.5%) to one percent (1.0%) of~~Directors; (iv) participation in the Company’s ~~loan portfolio, payable monthly and calculated based on total loans as of the first of each month. The percentage charged by JJV was 1.0% for the September 30, 2017 period up~~employee benefit plans; (v) full indemnification to the ~~date~~extent permitted by law; (vi) a two-year non-competition period following the termination of employment without cause; and (vii) payments upon termination of employment or a change in control. In April 2022, the ~~Exchange~~Company granted 98,425 restricted common shares (having a market value of approximately $500,000) to Mr. Villano. One-third of such shares will vest on January 1, 2023, and ~~1.0% for the September 30, 2016 period. After the Exchange, JJV is no longer entitled to loan servicing fees.~~an additional one-third will vest on each of January 1, 2024 and 2025.
~~For the nine months ended September 30, 2017 and 2016, loan servicing fees paid to JJV were $32,778 and $218,790 respectively.~~
Unfunded Commitments
At ~~September~~June 30, ~~2017,~~2022, the Company ~~is committed to an additional $3,095,917 in construction loans that~~had future funding obligations totaling $119,108,255, which can be drawn by the ~~borrower~~borrowers when ~~certain~~the conditions ~~are met.~~relating thereto have been satisfied.
Other
In the normal course of its business, the Company is named as a party-defendant because it is a mortgagee having interests in real properties that are being foreclosed upon, primarily resulting from unpaid property taxes. The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists. At June 30, 2022, there were 8 such properties, representing approximately $594,000 of mortgages receivable.
8. ~~Related Party Transactions~~

12.    Related Party Transactions
In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans adheres to prevailing Company ~~currently leases office space in a building owned by Union News~~policy. The terms of ~~New Haven, Inc., an entity that is controlled and 20%-owned by Jeffrey Villano,~~such loans, including the ~~Company’s co-CEO. Rent~~interest rate, income, origination fees and other ~~facility related charges paid by~~closing costs are the ~~Company~~same as those applicable to ~~Union News~~loans made to unrelated third parties in the portfolio. As of June 30, 2022, and 2021, loans to known shareholders totaled $18,409,255 and $10,153,291, respectively. Interest income earned on these loans for the six months ended June 30, 2022 and 2021 totaled $666,584 and $416,965, respectively, and for the three months ended ~~September~~June 30, ~~2017~~2022 and 2021 totaled $312,546 and $246,006, respectively.

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

The wife of the ~~period beginning February 8, 2017~~Company’s chief executive officer is employed by the Company as its director of finance. For the six-month periods ended June 30, 2022 and ~~ending September~~2021, the wife of the Company’s chief executive officer was paid $60,394 and $56,385, respectively, as compensation from the Company. For the three months ended June 30, ~~2017~~2022 and 2021, the corresponding amounts were ~~$3,000~~$34,247 and ~~$10,500,~~$28,206, respectively. ~~Prior~~She retired from the company on June 30, 2022. In December 2021, the Company hired the daughter of the Company’s chief executive officer to ~~the Exchange~~perform certain internal audit and ~~the IPO, SCP reimbursed JJV, the Managing Member of SCP, for amounts paid by JJV to Union News.~~compliance services. For the three and ~~nine-month~~six month periods ended ~~September~~June 30, ~~2016, these amounts were $900~~2022, she received compensation of $36,704 and ~~$3,700,~~$62,850, respectively. ~~The Company expects to move its operations to a new location, owned by~~In January 2022, the Company inhired the ~~second quarter~~step-daughter of ~~2018. (See Note 6.)~~the Company’s chief executive officer to perform executive assistant and administrative services. For the three and six month periods ended June 30, 2022, she received compensation of $19,570 and $27,716, respectively.

~~SACHEM CAPITAL CORP.~~
~~NOTES TO FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~13. Concentration of Credit Risk

~~Prior to the Exchange, from time to time, JJV acquired certain troubled assets from third parties who were not existing Company borrowers. JJV borrowed money from~~Financial instruments that potentially subject the Company to ~~finance these arrangements. The real estate purchased is held by JJV~~concentrations of credit risk consist primarily of cash, cash equivalents, investments in ~~trust for the Company.~~ securities , investments in partnerships, and mortgage loans.

The Company ~~accounts for these arrangements as separate loans~~maintains its cash and cash equivalents with various financial institutions. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to ~~JJV.~~ $250,000.

The ~~income earned on these loans~~Company is ~~equivalent~~potentially subject to ~~the income earned on similar loans~~concentration of credit risk in ~~the portfolio. All underwriting guidelines~~its investment securities. Currently, all of its investment securities, which include common stocks, preferred stock, corporate bonds and mutual funds, are adhered to. The mortgage documents allow JJV to sell the properties in case of default with proceeds in excess of loan principal and accrued expense being returned to the borrower. During the nine months ended September 30, 2017, the Company did not enter into any new loan agreements with JJV. The principal balanceheld at Wells Fargo Advisors. Wells Fargo Advisors is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules.

The Company makes loans ~~to JJV at September 30, 2017 were $1,104,022.~~

~~During the nine months ended September 30, 2017 and 2016, JJV was paid $52,902 and $384,258, respectively, related to origination fees. (See Note 7.)~~

~~During the three and nine-month periods ended September 30, 2017 and 2016, JJV paid $31,320 and $41,145, and $103,223 and $127,158, respectively, of interest on borrowings from the Company.~~

~~Prior to the date of the Exchange, JJV frequently paid for costs on behalf of the Company. These costs include insurance and real estate taxes where the Company has been notified~~ that ~~the borrower is in default, costs of any actions (~~~~i.e.,~~ foreclosures) commenced by the Company to enforce its rights or collect amounts due from borrowers who have defaulted on their obligations to the Company as well as other related costs that the Company deems appropriate to protects its interests. Salaries and payroll taxes paid for by JJV on behalf of the Company are included in other fees and taxes. For the nine months ended September 30, 2017 and 2016, JJV charged the Company $9,035 and -0-, respectively, for certain payroll and related costs. Unreimbursed costs advanced and unpaid by JJV on behalf of the Company as of September 30, 2017 were $16,958 and are included in due to shareholders on the Company’s balance sheet.

~~On February 9, 2017, the Company purchased computer hardware, software and furniture and fixtures totaling $92,806 from JJV at cost.~~

9.	~~Subsequent Events~~

Subsequent to September 30, 2017, the Company commenced foreclosure proceeding with respect to two loans made to two separate borrowers, having an aggregate unpaid principal balance of $238,000 and accrued but unpaid interest of $4,440. The loans are secured by first mortgage liens on ~~properties owned~~real property located primarily in Connecticut (approximately 45.1%), Florida (approximately 19.0%) and New York (approximately 14.7%). This concentration of credit risk may be affected by changes in economic or other conditions of the ~~borrowers. The Company halted an ongoing foreclosure proceeding when the borrower entered into a settlement agreement~~particular geographic area.

Credit risks associated with the ~~Company. This agreement provided additional collateral~~Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable.

14. Outstanding Warrants

In 2017 the Company consummated two public offerings – an initial public offering (“IPO”) in February and a follow-on offering in October-November. In connection with the IPO, the Company issued to the ~~Company~~underwriters warrants to purchase an aggregate of 130,000 common shares at an exercise price of $6.25 per common share (“IPO Warrants”). The IPO Warrants expired unexercised on February 9, 2022.

In connection with a public offering that was consummated in ~~exchange for time to repay the obligations. The Company has obtained real property assessments and broker opinions of value for these properties. Based on these values,~~October 2017, the Company ~~has not recorded~~issued to the underwriters warrants to purchase an ~~impairment loss for these properties.~~aggregate of 187,500 common shares at an exercise price of $5.00 per share. These warrants expire on October 24, 2022. In Janaury 2022, warrants to purchase 93,750 of the Company’s common shares were exercised. The holders of those warrants elected to use the cashless exercise option available to them under the terms of the warrants. As such, they received 19,658 common shares. At June 30, 2022, 49,219 warrants were outstanding.

15. Stock-Based Compensation

On October ~~19, 2017,~~27, 2016, the Company ~~declared a dividend~~adopted the 2016 Equity Compensation Plan (the “Plan”), the purpose of ~~$.105 per share~~which is to ~~be paid on November 17, 2017 to shareholders of record on November 7, 2017. The total amount~~align the interests of the ~~dividend payment~~Company’s officers, other employees, advisors and consultants or any subsidiary, if any, with those of the Company’s shareholders and to afford an incentive to such officers, employees, consultants and advisors to continue as such, to increase their efforts on the Company’s behalf and to promote the success of the Company’s business. The Plan is ~~estimated~~administered by the Compensation Committee. The maximum number of common shares reserved for the grant of awards under the Plan is 1,500,000, subject to ~~be approximately $1,560,000.~~adjustment as provided in Section 5 of the Plan. The number of securities remaining available for future issuance under the Plan as of June 30, 2022 was 1,213,468.

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SACHEM CAPITAL CORP.

~~From October 27 through November 3, 3017,~~NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

During the six months ended June 30, 2022 and 2021, the Company granted an aggregate of 138,967 and 94,681 restricted common shares under the Plan, respectively. With respect to the restricted common shares granted in 2022, (i) 13,514 shares vested immediately on the date of grant, an additional 13,514 shares will vest on each of the first and second anniversaries of the date of grant, and (ii) 32,808 shares will vest on January 1, 2023, 32,808 shares will vest on January 1, 2024 and 32,809 shares will vest on January 1, 2025. With respect to the restricted common shares granted in 2021, (i) 29,976 shares vested on January 1, 2022 and an additional 29,976 shares will vest on each January 1, 2023 and January 1, 2024, and (ii) 4,753 shares became fully-vested when the Company waived the restrictions on such shares upon the retirement of its then executive vice president and chief operating officer in January 2022.

Stock based compensation for the three months ended June 30, 2022 and 2021 was $123,428 and $58,306, respectively. Stock based compensation for the six months ended June 30, 2022 and 2021 was $230,167 and $62,413, respectively. As of June 30, 2022, there was unrecorded stock based compensation expense $969,604.

16. Equity Offerings
On December 6, 2021, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $44,925,000 of its common shares in an “at-the market” offering, which is ongoing. During the six months ended June 30, 2022, the Company sold an aggregate of ~~4,312,500 of its~~3,867,157 common shares ~~(including 562,500 covered~~under this prospectus and realized net proceeds of $21,345,265 in connection therewith. At June 30, 2022, $14,812,843 of common shares were available for future sale under the ongoing “at-the market” offering.

17. Partnership Investments
As of June 30, 2022, the Company had invested an aggregate of approximately $19.6 million in four limited liability companies managed by a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States. The Company’s ownership interest in the four limited liability companies ranges from 7.6% to 49%. The Company accounts for these investments at cost because the Company does not control or have significant influence over the investments. The Company’s withdrawal from each limited liability company may only be granted by the manager of such entity. Each limited liability company has elected to be treated as a partnership for income tax purposes.
For the three and six months ended June 30, 2022, the partnerships generated $317,004 and $589,493 of income for the Company.

At June 30, 2022, the Company had unfunded partnership commitments totaling approximately $2.7 million.

18. Special Purpose Acquisition Corporation

On March 24, 2021, the Company loaned $25,000 to its wholly-owned subsidiary, Sachem Sponsor LLC. Sachem Sponsor LLC used those funds to purchase 1,437,500 shares of Class B common stock of Sachem Acquisition Corp., a newly organized blank check company formed under the laws of Maryland in February 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. As of June 30, 2022, the Company had incurred approximately $421,000 of costs related to the preparation and filing of the registration statement, including legal fees, accounting fees and filing fees as well organizational costs and an ~~over-allotment option) in~~expense advance to the underwriter.
On July 14, 2021, Sachem Acquisition Corp. filed a ~~follow-on underwritten public offering~~registration statement on Form S-1 registering the sale of 5,750,000 units at ~~a public offering price of $4.00~~$10.00 per ~~share,~~unit, or ~~$17,250,000~~$57,500,000 in the aggregate. Each unit consists of 1 share of Class A common stock and one-half of a warrant to purchase 1 share of Class A common stock.

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SACHEM CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

19. Series A Preferred Stock

On June 25, 2021, the Company filed a Certificate of Amendment with the Department of State of the State of New York to designate 1,955,000 shares of the Company’s authorized preferred shares, par value $0.001 per share, as shares of Series A Preferred Stock with the powers, designations, preferences and other rights as set forth therein (the “Certificate of Amendment”). The ~~net proceeds~~Certificate of Amendment provides that the Company will pay quarterly cumulative dividends on the Series A Preferred Stock, in arrears, on the 30th day of each of September, December, March and June from, and including, the ~~offering,~~date of original issuance of the Series A Preferred Stock at 7.75% of the $25.00 per share liquidation preference per annum (equivalent to $1.9375 per annum per share). The Series A Preferred Stock will not be redeemable before June 29, 2026, except upon the occurrence of a Change of Control (as defined in the Certificate of Amendment). On or after ~~deducting underwriting discounts~~June 29, 2026, the Company may, at its option, redeem any or all of the shares of the Series A Preferred Stock at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. Upon the occurrence of a Change of Control, the Company may, at its option, redeem any or all of the shares of Series A Preferred Stock within 120 days after ~~reimbursing~~ the ~~underwriters for their expenses related~~first date on which such Change of Control occurred at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into common shares in connection with a Change of Control by the holders of the Series A Preferred Stock. Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right (subject to the Company’s election to redeem the Series A Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date as defined in the Certificate of Amendment) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of the common shares determined by formula, in each case, on the terms and subject to the conditions described in the Certificate of Amendment, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Certificate of Amendment. Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights.

20. Subsequent Events

From July 1, 2022 through August 8, 2022, the Company sold an aggregate of 2,265,841 common shares under its at-the-market offering ~~were~~facility realizing gross proceeds of approximately ~~$15.8~~$10.8 million. ~~The net proceeds will be used primarily~~

On July 8, 2022, the board of directors declared a dividend of $0.14 per common share payable on July 28, 2022 to shareholders of record as of July 21, 2022.

On July 19, 2022, after shareholders approved an amendment to the Company’s charter at its 2022 Annual Meeting of Shareholders, the Company filed a Certificate of Amendment of the Certificate of Incorporation to increase the number of authorized common shares available for issuance from 100,000,000 to 200,000,000.

On July 19, 2022, the Company issued an aggregate of 15,000 restricted common shares to its threeindependent directors (i.e., 5,000 shares each), of which 3,750 shares vested immediately upon issuance and 3,750 shares will vest on each of July 19, 2023, 2024 and 2025.

On July 26, 2022, the Company entered into an agreement with John E. Warch pursuant to which it will employ Mr. Warch as its Chief Financial Officer and Executive Vice President. Mr. Warch’s employment term commenced August 1, 2022 and will continue until terminated by either party. His annual base compensation is $325,000. In connection with this hire, John L. Villano resigned as the Company’s ~~loan portfolio~~Chief Financial Officer but will continue to serve as its Chief Executive Office and ~~for working capital and general corporate purposes.~~

President.

Management has evaluated subsequent events through ~~November~~August 9, ~~2017~~2022 the date on which the financial statements were available to be issued. Based on the evaluation, no adjustments were required in the accompanying financial statements.

Table of Contents

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, that involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements.
Company Overview
~~Introduction~~
~~Sachem Capital Corp. was formed as HML Capital Corp.~~We are a Connecticut-based real estate finance company that specializes in ~~January 2016 under the New York Business Corporation Law. On~~originating, underwriting, funding, servicing and managing a portfolio of short-term (i.e., three years or less) loans secured by first mortgage liens on real property. From our inception in December 2010, through our initial public offering, in February 8, 2017, we consummated an exchange transaction (the “Exchange”) with Sachem Capital Partners, LLC (“SCP”) pursuant to which SCP transferred all of its assets to us in exchange for 6,283,237 of our common shares and our assumption of all of SCP’s liabilities, including SCP’s obligations to Bankwell Bank (“Bankwell”).operated as a limited liability company. On February 9, 2017, we ~~issued and sold 2,600,000 common shares pursuant to an effective S-11 registration statement~~completed our initial public offering (the “IPO”)~~. Prior~~, the primary purpose of which was to ~~the consummation of the Exchange,~~raise equity capital to fund mortgage loans, expand our mortgage loan portfolio and diversify our ownership so that we ~~were not engaged in any business~~could qualify, for federal income tax purposes, as a real estate investment trust, or ~~investment activities, and had only nominal assets and no liabilities.~~
REIT. We believe that, ~~upon the~~since consummation of the IPO, we ~~met~~meet all the requirements to qualify as a REIT for federal income tax purposes and ~~intend to elect~~elected to be taxed as a REIT beginning with our 2017 tax ~~year or as soon as practicable thereafter.~~year. As a REIT, we are entitled to claim deductions for distributions of taxable income to our shareholders thereby eliminating any corporate tax on such taxable income. Any taxable income not distributed to shareholders is subject to tax at the regular corporate tax rates and may also be subject to a 4% excise tax to the extent it exceeds 10% of our total taxable income. To maintain our qualification as a REIT, we are required to distribute each year at least 90% of our taxable income. As a REIT, we may also be subject to federal excise taxes and state taxes.
~~Business and Strategic Overview~~
~~We are a Connecticut-based real estate finance company specializing in originating, underwriting, funding, servicing and managing a portfolio of short-term loans (~~~~i.e.~~~~, one to three years) secured by first mortgage liens on real property located primarily in Connecticut. Each loan is also personally guaranteed by the principal(s)~~Review of the ~~borrower,~~First Half of 2022 and Outlook for Balance of Year
Compared to the first half of 2021, revenue increased 83.9%, net income attributable to common shareholders increased 64.1%, and earnings per share increased $0.02 per share, or 8.2%. The revenue increase was directly related to the growth in our lending activities, reflected in our interest income which ~~guaranty is usually collaterally secured~~had an increase of 105.6% and our origination fees that had an increase of 173.0%. The increase in revenue was partly offset by a ~~pledge~~72.1% increase in operating costs and expenses. The increase in operating expenses is mainly attributable to a 83.3% increase in interest and amortization of deferred financing costs and an 55.4% increase in compensation and related expenses. The increase in compensation expense is mainly attributable to the ~~guarantor’s interest~~addition of a Chief Investment Officer in April 2021 as well as additional support staff in our operations and finance teams, positions that are part of our long-term growth strategy. With the hiring of a new Chief Financial Officer in the ~~borrower. Our typical borrower is a small real estate investor who will use the proceeds~~third quarter of 2022,and additional accounting staff to ~~fund its acquisition, renovation, rehabilitation, development and/or improvement of residential or commercial properties located~~support him, we expect compensation to continue to increase. Mortgages receivable increased by 144.5% compared to June 30, 2021, while cash and cash equivalents decreased 53.2%. The increase in both mortgages receivable and decrease in cash and cash equivalents were primarily due to an increase in Connecticut held for investment or sale. The property may or may not be income producing. We do not lend to owner-occupants. Our loans are referred to in the real estate finance industry as “hard money loans.”
lending.
Our primary business objective isfor 2022 remains to grow our loan portfolio while protecting and preserving capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term principally through dividends. We intend to achieve this objective by ~~continuing~~accelerating profitable growth and driving operational excellence. To accelerate profitable growth, we will continue to focus on selectively originating, managing, and servicing a portfolio of first mortgage real estate loans ~~and to carefully manage our loan portfolio in a manner~~ designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We ~~believe~~are also targeting larger-value commercial loans with strong, experienced sponsors. To drive operational excellence, we have embarked on a broad initiative to review, assess, and upgrade - or transform if necessary - our existing operational processes, from workflows and employee roles/responsibilities to decision trees and data collection procedures and forms. To that the demand for commercial real estate loans that have a principal amount of less than $500,000, in Connecticut and neighboring states is significant and growing and that traditional lenders, including banks and other financial institutions that usually serve this market are unable to satisfy this demand. This demand/supply imbalance has created an opportunity for “hard money” real estate lenders like us to selectively originate high-quality first mortgage loans on attractive terms and these conditions should persist for several years. Accordingly, we intend to continue to focus primarily on the Connecticut markets as well as other marketsend, in the ~~New England region~~second quarter of 2022 we rolled out a new web-based underwriting platform that further automates our underwriting process. The automation allows for more accurate and ~~in New York.~~
~~Our loans typically have a maximum initial term~~timely processing of ~~one to three years and bear interest at a fixed rate of 9% to 12% per year and a default rate for non-payment of 18%.~~loan applications, thus increasing loan production while keeping our employee headcount down. In addition, 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. Since we treat an extension or renewal of an existing loan as a new loan, we receive additional “points” and other loan-related fees in 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 65%. In the case of construction loans, the loan-to-value ratio is based on the post-construction value of the property. Under the terms of the Bankwell Credit Line (described below), loans exceeding $325,000 require an independent appraisal of the collateral. Failure to obtain such an appraisal would render the loan ineligible for financing under the credit facility. In the case of smaller loans, we rely on readily available market data, including tax assessment rolls, recent sales transactions and brokers to evaluate the strength of the collateral. Finally, we have adopted a policy that limits the maximum amount of any loan we fund to a single borrower or a group of affiliated borrowers to 10% of the aggregate amount of our loan portfolio taking into account the loan under consideration.
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Our revenue consists primarily of interest earned on our loan portfolio and our net income is basically the spread between the interest we earn and our cost of funds. Our capital structure is more heavily weighted to equity rather than debt (71.1% vs. 28.9% of our total capitalization at September 30, 2017) and the interest rate on the Bankwell Credit Line is currently 5.83% (as of September 30, 2017). As of September 30, 2017, the annual yield on our loan portfolio was 12.13% per annum. The yield has been increasing steadily over the past few years as older loans with lower interest rates come due and are either being repaid or refinanced at higher rates. The yield reflected above does not include other amounts collected from borrowers such as origination fees and late payment fees. We expect our borrowing costs to increase in 2017 and 2018 as the Federal Reserve Bank continues to raise interest rates in accordance with its current monetary policy. To date, we have not raised rates on our loans to match the recent increases in our borrowing rate. After considering the pros and cons of increasing our rates and considering our relatively low level of debt following our IPO, we believe the better strategy for now isbegun to focus on ~~building market share rather than short-term profits and cash flow, although this strategy could adversely impact~~developing relationships with larger scale wholesale brokers, furthering our ~~profits and cash flow in the short-term. In addition, we cannot assure investors~~efforts to attract larger borrowers with better credit quality. We believe that ~~we will be able to increase our rates at any time in the future. However, to mitigate some of the risks associated with rate increases, many of our new loans have a term of one year rather than three.~~
~~We have built our business on a foundation of intimate knowledge of the Connecticut real estate market,~~ our ability to ~~respond~~react quickly to ~~customer~~the needs ~~and demands and a disciplined underwriting and due diligence culture that focuses primarily on the value~~ of ~~the underlying collateral and that is designed to protect and preserve capital. We believe that~~borrowers, our flexibility in terms of ~~meeting~~structuring loans to meet the needs of borrowers, ~~without compromising~~ our ~~standards on credit risk, our expertise, our intimate~~ knowledge of the primary real estate ~~market~~markets we lend in, ~~Connecticut and the surrounding states~~our expertise in “hard money” lending and our focus on newly originated first mortgage loans, ~~has defined our success until now and~~ should enable us to achieve our primary objective. Nevertheless, we remain flexible to take advantage of other real estate opportunities that may arise from time to time, whether they relate to the mortgage market or to direct or indirect investments in real estate.

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Our strategy to achieve this objective also includes the following:

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capitalize on opportunities created by the long-term structural changes in the real estate lending market and the continuing lack of liquidity in the commercial and investment real estate markets;

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take advantage of the prevailing economic environment and current economic, political and social trends that may impact real estate lending, as well as the outlook for real estate in general and particular asset classes;

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remain flexible to capitalize on changing sets of investment opportunities that may be present in the various points of an economic cycle;

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increase the size and quality of our mortgage loans and expand our geographic footprint to reduce our exposure to adverse market conditions that have a disproportionate impact on a single asset class or geographic area;

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maintain our status as a publicly-held company, subject to the reporting requirements of the Exchange Act, which gives us immediate access to the public markets for much-needed capital; and

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operate to qualify as a REIT and for an exemption from registration under the Investment Company Act of 1940, as amended.

We expect the second half of 2022 to be challenging due to the following factors:

Interest rates and inflation. Since the beginning of the current year, the Federal Reserve Board has raised interest rates four times: 0.25% in March; 0.50 in May; 0.75% in June and 0.75% in July. These are the first interest increases since December 2018. As a result, the prime rate has increase from 3.25% to 5.50%. The Fed’s rate increases are in response to a sharp increase in the annual rate of inflation in the United States, which is currently 9.1%, the highest its been in decades. As a result of these increases, the growth of the U.S. economy has slowed, with a decrease in U.S. GDP reported in both the first quarter and second quarter of 2022. If the second quarter decrease is confirmed later this month, the United States would officially be in a recession. Until now, these economic factors have not had an adverse impact on our business other than to increase our borrowing costs on our variable rate indebtedness (i.e., the Wells Fargo Loan and the Churchill Facility.) However, any fixed rate indebtedness that we incur in the future is likely to be more expensive than our current fixed rate indebtedness. In addition, if these trends continue, they could result in decreased demand for our products and a decrease in property valuations, which could have an adverse impact on the ability of our borrowers to repay their loans. Thus, we cannot assure you that our business, operations and financial condition will not be adversely impacted.

COVID-19. The novel corona virus known as COVID-19 remains a concern as the risk of new variants and the related personal and economic disruption is still prevalent. In terms of dealing with COVID-19, keeping our workforce healthy and safe is our number one priority and we are following the updated guidelines and recommendations issued by the State of Connecticut and Centers for Disease Control. We continue to ~~achieve our objectives.~~

Asencourage employees to stay home when sick and encourage working from home when possible. In the event of a ~~real estate finance company, we deal with a variety~~positive COVID-19 test result, employees are expected to inform management immediately and follow state testing and contact tracing protocols. To mitigate the risk of ~~default situations, including breaches of covenants, such as the obligation of the borrower to maintain adequate liability insurance on the mortgaged property, to pay the taxes on the property~~office closure and to ~~make timely payments~~ensure business continuity, our employees are equipped so they can seamlessly work remotely. This remote work set-up has proven to ~~us. As such,~~be effective since, at times during the pandemic, employees had to self-isolate based on their own health condition or that of an immediate family member. While loan processing and funding may have been marginally delayed, there was no material adverse impact to the service levels we provided our borrowers. In the event we are forced to close our physical office, it is likely to have some adverse impact on our operations. For example, the underwriting process would continue to function but would take longer to complete without immediate access to background and credit profiles. Loan committee meetings would continue to be held virtually (as they are under normal conditions) but the loan approval process may incur delay or not be as thorough and efficient as in the past. In addition, we may not be ~~aware~~able to meet with borrowers or potential borrowers, including physical property inspections, which could adversely impact our ability to service our loans, monitor compliance and originate new loans. Finally, the filing of loan documents with the various recording offices may be delayed.

Geopolitical concerns. The Russian Ukrainian war has caused market volatility, spikes in commodity prices, supply chain interruptions, heightened cybersecurity concerns and general concerns that ~~a default occurred.~~it might lead to unconventional warfare. As ~~a result,~~our business is purely domestic, except for issues related to market volatility, rising interest rates and cybersecurity concerns, the war has had limited impact on our operations.

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Increased competition. In the past, our primary competitors were other non-bank real estate finance companies, banks and other financial institutions. Our principal competitive advantages included our size and our ability to address the needs of borrowers in terms of timing and structuring loan transactions. More recently, we are ~~unable~~encountering competition from private equity funds, hedge funds and other specialty finance entities funded by investment banks, asset managers, private equity funds and hedge funds. Clearly, the primary driver for these new market participants is the need to ~~quantify~~generate yield. They are well-funded and aggressive in terms of pricing. Competition is becoming more of a factor as we implement our strategy to focus on larger loans and more sophisticated borrowers.

Borrower expectations. The new competitive landscape is shifting the ~~number~~negotiating leverage in favor of borrowers. As borrowers have more choices, they are demanding better terms. This is particularly true as we focus more on larger loans ~~that may have,~~and borrowers with better credit histories.

Property value fluctuations. We remain aware of property value market cycles and utilize a dashboard of indicators to track property value trends. Our response to this development would be to adhere to our underwriting guidelines and aggressively enforce our rights when loans go into default. By judiciously relying on our dashboard of leading indicators and continuing to make decisions in a sound and proper manner, we see no reason to expect any significant negative outcome regarding our business operations and growth. Some of our indicators within our dashboard are interest rate changes impacting mortgage rates, days-on-market, pending sales, NAHB’s Housing Market Index and the Senior Loan Officer Opinion Survey.
Increased operating expenses. Our operating expenses for the three and six months ended June 30, 2022 are significantly higher than they were in the same period in 2021 due to our higher debt load, increased headcount, and increased loan volume. In addition, our compensation expense has increased as we hired new personnel and increased salaries of existing employees to administer a larger loan portfolio and more complex loan transactions.
Unfunded commitments. Most of our loans are funded in full at ~~one time~~closing. However, where all or another, been in default. Since our inception in December 2010 (when SCP commenced operations) through September 30, 2017, we foreclosed on two properties and acquired nine other properties by “deed in lieu of foreclosure” —~~i.e.~~~~, the borrower, in default of its obligations under the terms~~a portion of the loan ~~transferred title~~proceeds are to be used to fund the ~~mortgaged~~costs of renovating or constructing improvements on the property, ~~to us. Three properties were each sold for~~only a gain, five properties were each sold at a loss, two were sold for less than their respective carrying values but the borrowers’ obligations are guaranteed by a third party and we intend to assert our rights under the guaranty, one is currently held for investment and one is held for rental.
Our principal executive officers are experienced in hard money lending under various economic and market conditions. Our co-chief executive officers, Jeffrey C. Villano and John L. Villano CPA, spend a significant portion of ~~their time on business development as well as on underwriting, structuring and servicing each~~the loan inmay be funded at closing. At June 30, 2022, our ~~portfolio.~~
A principal source of new transactions has been repeat business from existing and former customers and their referral of new business. We also receive leads for new business from banks, brokers, attorneys and web-based advertising. We rely on our own employees, independent legal counsel, and other independent professionals to verify title and ownership, to file liens and to consummate the transactions.
~~Operational and Financial Overview~~
~~Since December 2010, when SCP commenced operations, we have made approximately 592 loans, including renewals and extensions of existing loans. At September 30, 2017, (i) our~~mortgage loan portfolio included ~~311~~191 loans with ~~individual principal loan amounts ranging from $10,000 to $1.2 million and an aggregate loan amount of approximately $52.7 million, (ii) the average original principal amount of the loans~~future funding obligations, in the portfolio was $169,000 and the median loan amount was $116,500 and (iii) approximately 81% of the loans had a principal amount of $250,000 or less. In comparison, at September 30, 2016, (i) our loan portfolio included 202 loans, with individual principal loan amounts ranging from $25,000 to $1.1 million and an aggregate loan amount of approximately $30.6 million, (ii) the average original principal amount of the loans in the portfolio was $151,277, the median loan amount was $113,700 and (iii) approximately 86% of the loans had a principal amount of $250,000 or less. At September 30, 2017 and 2016, unfunded commitments for future advances under construction loans totaled $3.1 million and $1.07 million, respectively.
~~From our inception in December 2010 through September 30, 2017, we had eight loans, having an aggregate original~~ principal amount of approximately ~~$1.5~~$119.1 million, compared to 130 loans in the aggregate principal amount of approximately $31,845,533 at June 30, 2021. The increase is due to an increase in construction loan originations, a large portion of which is in the Florida market. Advances under these loans are funded against requests supported by all required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction. In order to deal with these obligations, we are compelled to maintain higher cash balances, which could adversely impact our financial performance.
Despite these challenges, the changing dynamics of the real estate finance marketplace, the debt and equity markets, supply chain disruptions, and the impact of COVID-19, we continue to believe in the viability of our business model. We believe that ~~we characterized~~there continues to be a significant market opportunity for a well-capitalized “hard money” lender to originate attractively priced loans to small- and mid-scale real estate developers with good collateral, particularly in markets where, traditionally, real estate values are stable and substandard properties are improved, rehabilitated, and renovated as ~~“non-performing”. In each~~well as under-developed markets that are experiencing rapid growth due to population shifts. We also believe developers will prefer to borrow from us rather than other lending sources because of ~~those cases, we acquired~~flexibility in structuring loans to suit their needs, our lending criteria, which places greater emphasis on the value of the collateral rather than the property ~~securing~~cash flow or credit of the borrower, and our ability to close quickly. Our goal is, and has always been, to continue to grow our mortgage loan ~~either through foreclosure~~portfolio and increase our loan profitability, while at the same time maintain or ~~by deed-in-lieu~~improve on our existing underwriting and loan criteria.

Table of ~~foreclosure. The eight properties have been sold and, in connection with those sales, we recognized aggregate net losses of approximately $93,000.~~Contents

For the third quarter of 2017, revenues and net income were approximately $1.9 million and $1.3 million, respectively. In comparison, for the third quarter of 2016, revenues and net income were approximately $1.0 million and $675,000, respectively. For the nine months ended September 30, 2017, revenues and net income were approximately $4.7 million and $3.2 million, respectively. In comparison, for the nine months ended September 30, 2016, revenues and net income were approximately $3.0 million and $2.2 million, respectively.

Financing Strategy Overview

To continue to grow our business, we must increase the size of our loan portfolio, which requires that we use our existing working capital to fund new loans and raise additional capital either by selling shares of our capital stock or by incurring additional indebtedness. We do not have a policy limiting the amount of indebtedness that we may incur. Thus, our operating income in the future will depend on how much debt we incur and the spread between our cost of funds and the yield on our loan portfolio. Rising interest rates could have an adverse impact on our business if we cannot increase the rates on our loans to offset the increase in our cost of funds and to satisfy investor demand for yield. In addition, rapidly rising interest rates could have an unsettling effect on real estate values, which could compromise some of our collateral.

We do not have any formal policy limiting the amount of indebtedness we may incur. However, under the terms of the Bankwell Credit Line, we may not incur any additional indebtedness exceeding $100,000 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. Although we have no pre-set guidelines in terms of leverage ratio, the amount of leverage we will deploy will depend on our assessment of a variety of factors, which may include the liquidity 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 risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion regarding the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, and our outlook for interest rates and property values. At ~~September~~June 30, ~~2017,~~2022, debt ~~proceeds~~ represented approximately ~~29%~~59.3% of our total ~~capital. However,~~capital compared to 50.6% at June 30, 2021. To prudently grow the business and satisfy the tax requirement to ~~pay out~~distribute 90% of ~~net profits,~~our taxable income, we expect to ~~increase~~maintain our current level of debt ~~over time~~and look to ~~approximately 50%~~reduce our cost of capital. We intend to ~~use~~continue to leverage our portfolio for the sole purpose of financing our portfolio and not for speculating on changes in interest ~~rates.~~rates, particularly while interest rates remain low.

~~We raised $13~~As of June 30, 2022, we had six series of unsecured unsubordinated notes outstanding, having an aggregate outstanding principal balance of $248.2 million (collectively, the “Notes”) all of ~~equity capital~~which rank equally in right of payment with all of our ~~IPO, which was consummated~~existing and future senior unsecured and unsubordinated indebtedness and are effectively subordinated in ~~February 2017, in~~right of payment to all existing and future secured indebtedness (including indebtedness that is initially unsecured to which we ~~sold 2,600,000 common shares at~~subsequently grant a ~~price~~security interest) and structurally subordinated to all existing and future indebtedness of ~~$5.00 per share.~~our subsidiaries. Interest on each series of notes is payable quarterly in arrears on each March 30, June 30, September 30 and December 30 of each year they are outstanding and, except as noted below, each series can be prepaid beginning on the second anniversary of its date of issuance. The net proceeds, net of the deferred financing cost, is approximately $237.5 million.

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$30,000,000 aggregate original principal amount, issued May 11, 2022, bearing interest at the rate of 7.125% per annum and maturing on June 30, 2027 (the “June 2027 Notes”) and which trade on the NYSE American under the symbol SCCF;

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$51,875,000 aggregate original principal amount, issued March 9, 2022, bearing interest at the rate of 6.00% per annum and maturing on March 30, 2027 (the “March 2027 Notes”) and which trade on the NYSE American under the symbol SCCE;

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$51,750,000 aggregate original principal amount, issued December 20, 2021, bearing interest at the rate of 6.00% per annum and maturing on December 30, 2026 (the “2026 Notes”) and which trade on the NYSE American under the symbol SCCD;

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$56,363,750 aggregate original principal amount, of which approximately $14.4 million was issued September 4, 2020, $14.0 million was issued October 23, 2020 and $28.0 million was issued December 22, 2020, bearing interest at the rate of 7.75% per annum and maturing on September 30, 2025 (the “2025 Notes”) and which trade on the NYSE American under the symbol SCCC. The 2025 Notes are prepayable beginning on September 4, 2022;

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$34,500,000 aggregate original principal amount, issued November 7, 2019, bearing interest at the rate of 6.875% per annum and maturing on December 30, 2024 (the “December 2024 Notes”) and which trade on the NYSE American under the symbol SACC; and

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$23,663,000 aggregate original principal amount, issued June 25, 2019, bearing interest at the rate of 7.125% per annum and maturing on June 30, 2024 (the “June 2024 Notes”) and which trade on the NYSE American under the symbol SCCB.

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Each series of Notes was issued pursuant to the Indenture, dated June 21, 2019, and a supplement thereto, which provides for the form and terms, including default provisions and cures, applicable to each series. All six series of Notes are subject to (i) “Defeasance,” which means that, by depositing with a trustee an amount of cash and/or government securities sufficient to pay all principal and interest, if any, on such notes when due and satisfying any additional conditions required under the Indenture, we will be deemed to have been discharged from our obligations under such notes and (ii) an “Asset Coverage Ratio” requirement pursuant to which we may not (x) pay any dividends or make distributions in excess of 90% of our taxable income, (y) incur any indebtedness or (z) purchase 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 making of such distribution or the incurrence of such indebtedness. “Asset Coverage Ratio” means the ratio (expressed as a percentage) of the value of our total assets relative to the aggregate amount of its indebtedness.

Under the terms of the Indenture, we may, at our option, at any time and from time to time, on or after June 30, 2021, in the case of the June 2024 Notes, November 7, 2021, in the case of the December 2024 Notes, September 4, 2022, in the case of the 2025 Notes, December 20, 2023, in the case of the 2026 Notes, March 9, 2024, in the case of the March 2027 Notes and May 11, 2024, in the case of the June 2027 Notes, redeem such notes, in whole or in part, at a redemption price equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest to, but excluding, the date fixed for redemption. On and after any redemption date, interest will cease to accrue on the redeemed notes.

Our secured indebtedness includes the Churchill Facility, the Wells Fargo Loan and the NHB Mortgage (each as described below).

On July 21, 2021, we consummated a $200 million facility (the “Churchill Facility”) with Churchill MRA Funding I LLC (“Churchill”). Under the terms of the Churchill Facility, we have the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans. In addition, we have the right and, in some instances the obligation, to repurchase those loans from Churchill. The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other circumstances but generally will not exceed 70% of the unpaid principal balance purchased. The repurchase price is calculated by applying an interest factor, as defined, to the purchase price of the mortgage loan. We also granted Churchill a first priority security interest on the mortgage loans sold to Churchill to secure our repurchase obligation. The cost of capital under the Churchill Facility is equal to the sum of (a) the greater of (i) 0.25% and (ii) the 30-day LIBOR plus (b) 3% - 4%, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time. Our obligations under the Churchill Facility are secured by a lien on the mortgage loans sold to Churchill. (After the 30-day LIBOR is phased out a new benchmark rate, determined by Churchill, will be used instead.) The Churchill Facility is also subject to various terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that prohibits us from (A) (i) paying any dividend or make any distribution in excess of 90% of our taxable income, (ii) incurring any indebtedness or (iii) purchasing any shares of our capital stock, unless, in any case, we have an asset coverage ratio of at least 150%; and (B) have unencumbered cash and cash equivalents in an amount equal to or greater than 2.50% of the amount of our repurchase obligations. Churchill has the right to terminate the Churchill Facility at any time upon 180 days prior notice to us. At such time, we have an additional 180 days after termination to repurchase all the mortgage loans held by Churchill. We believe the Churchill Facility gives us the ability to raise capital as needed at a relatively low rate. It also gives us the flexibility to seek other sources of funding. At June 30, 2022, the amount outstanding under the Churchill Facility was approximately 39.4 million, which amount was accruing interest of an effective rate of 5.44% per annum.

In 2020, we established a margin loan account with Wells Fargo that allows us to borrow against our investment securities portfolio (the “Wells Fargo Loan”). The Wells Fargo Loan is secured by our portfolio of short-term securities, had a balance of approximately $23.4 million at June 30, 2022. The outstanding balance on this loan bears interest at a rate equal to 1.75% below the prime rate. At June 30, 2022, the prime rate was 4.75% and the interest rate on the Wells Fargo Loan was 3.00%. However, on July 27, 2022, the Federal Reserve Board raised interest rates 0.75%, which will result in an increase in the prime rate and other interest rate benchmarks. Other than increasing our borrowing costs under the Wells Fargo Loan, it is too early to tell what impact this latest rate increase will have on our business, operations and/or financial condition.

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In 2021, we obtained a new adjustable-rate mortgage loan from New Haven Bank for up to a maximum principal amount of $1.4 million (the “NHB Mortgage”) of which $750,000 was outstanding at June 30, 2022. The initial proceeds of the NHB Mortgage were used to offset some of the costs we incurred to acquire the property located at 568 East Main Street, Branford, Connecticut, which, once renovated, will become our new corporate headquarters. The balance of the NHB Mortgage will be funded when those renovations are completed. The NHB Mortgage accrues interest at an initial rate of 3.75% per annum for the first 72 months and is due and payable in full on December 1, 2037. During the first 12 months, from December 1, 2021 to November 30, 2022, only interest will be due and payable. Beginning on December 1, 2022 and through December 1, 2037 (the “Amortization Period”), principal and interest will be due and payable on a monthly basis. Payments of principal will be based on a 20-year amortization schedule. The interest rate will be adjusted on each fifth anniversary of the commencement of the Amortization Period to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 2.60%. The NHB Mortgage is a non-recourse loan, secured by a first mortgage lien on 698 Main Street, Branford, Connecticut, our current corporate headquarters, and 568 East Main Street, Branford, Connecticut. Once the NHB Mortgage is fully funded, the mortgage lien on 698 Main Street will be released.

In addition to the foregoing, in June 2021 and July 2021, we raised aggregate net proceeds of approximately $45.5 million (after deducting underwriting discounts and commissions and ~~transaction fees were approximately $11.1 million. We used a portion of the net proceeds immediately to pay down 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) of equity capital~~offering expenses) from the sale of ~~an additional 4,312,500 common~~1,903,000 shares ~~(including 562,500 covered by an over-allotment option)~~of our Series A Preferred Stock in a ~~follow-on~~firm commitment underwritten public offering at a public offering price of ~~$4.00~~$25.00 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 facility that we use to fund the loans we originate. Borrowings under the Bankwell Credit Line bear interest at a rate~~share, 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. As of September 30, 2017, the rate~~liquidation preference. The Series A Preferred Stock is listed on the ~~Bankwell Credit Line is 5.83% per annum. The Bankwell Credit Line expires~~NYSE American and began trading under the ~~outstanding indebtedness thereunder will become due and payable~~symbol “SACHPRA” on July 6, 2021.

Finally, from time-to-time we raise capital by selling our common shares in ~~full on~~various at-the market offerings. During the six months ended June 30, ~~2019. Assuming~~2022, we ~~are not then in default under~~sold an aggregate of 3,867,157 common shares pursuant to an at-the-market offering for which we realized aggregate net proceeds of approximately $21.3 million.

REIT Qualification

We believe that we have qualified as a REIT since the ~~terms~~consummation of the ~~Bankwell Credit Line, we have~~IPO and that it is in 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%best interests of our ~~mortgages receivable, satisfied all of~~shareholders that we operate as a REIT. We made the ~~eligibility requirements set forth in the Bankwell Credit Line.~~election to be taxed as a REIT beginning with our 2017 tax year. 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 dividend~~shareholders on an annual basis. We cannot assure you that we will be ~~payable on November 17, 2017~~able 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, operating~~Our 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, certain~~meet on a continuing basis, through actual investment and operating ~~expenses, such~~results, 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, printing~~amended, 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 to~~values of our assets, our compliance with ~~various laws, rules and regulations~~the distribution requirements applicable to REITs and ~~a publicly-held reporting company. Also,~~the diversity of ownership of our outstanding common shares. We cannot assure you that we will be able to maintain our qualification as a ~~public reporting company,~~REIT.

So long as we ~~must establish~~qualify as a REIT, we, generally, 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 disclosure~~do 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. As~~may 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 ~~need~~be subject to ~~hire additional accounting~~certain U.S. federal, state and ~~finance personnel with appropriate public company experience and technical accounting knowledge, which will also increase~~local taxes on our ~~operating expenses.~~income.

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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 not applicable to other public companies but ~~not~~applicable 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~~on December 31, 2022 and, accordingly, will no longer be exempt from the ~~earliest of: (i)~~various reporting requirements. However, since we will still be a smaller reporting company, we will continue to be exempt from the ~~end~~independent auditor certification requirement under Section 404 of the fiscal year following the fifth anniversary of the IPO; (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 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 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 shares less attractive, there may be a less active trading market for our common shares and the price of our common shares may be more volatile.Sarbanes-Oxley Act.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with ~~generally accepted accounting principles~~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) a preset number of assumptions that consider past experience, (b) future projections and (c) general financial market conditions. Actual amounts could materially 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, interestInterest 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~~reduced disclosure requirements for emerging growth companies and investors may deem our securities a less attractive investment relative to those other companies, which could adversely affect our stock price.

Results of ~~operations~~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~~June 30, ~~2017~~2022 compared to three months ended ~~September~~June 30, ~~2016~~2021

Total revenue

Total revenue for the three months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$1.9~~$12.5 million compared to approximately ~~$1.0~~$6.7 million for the three months ended ~~September~~June 30, ~~2016,~~2021, an increase of ~~$900,000,~~approximately $5.8 million, or ~~90.8%~~86.9%. The increase in revenue ~~represents~~is primarily attributable to an increase in our lending operations. For the ~~2017~~2022 period, interest income was approximately ~~$1.57~~$10.4 million ~~and net origination~~compared to approximately $4.7 million for the 2021 period, representing an increase of approximately $5.8 million or 122.8%. Origination fees were approximately ~~$197,000. In comparison,~~$2.0 million compared to approximately $832,000 for the 2021 period, representing an increase of approximately $1.2 million or 145.9%. For the three months ended ~~September~~June 30, ~~2016, interest income~~2022, revenue was offset by approximately ~~$952,000 and net origination fees were approximately $43,000. Prior to~~$1.5 million of unrealized losses on investment securities. There was no such offset in 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 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 shareholder of Sachem Capital Corp.)comparable 2021 period.

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Operating costs and expenses

Total operating costs and expenses for three months ended ~~September~~June 30, ~~2017~~2022 were approximately ~~$621,000~~$7.3 million compared to approximately ~~$341,000~~$4.2 million for the three months ended ~~September~~June 30, ~~2016 period,~~2021, an increase of approximately ~~82%~~$3.1 million, or 75.0%. The increase in operating costs and expenses is primarily attributable to the ~~following: (i)~~increase in our unsecured indebtedness, which was the fuel for our revenue growth, and an increase in compensation ~~and taxes~~expense 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~~46.3%. In the 2022 period, interest ~~expense~~ and amortization of deferred financing costs was approximately $5.2 million compared to approximately $2.5 million in the same 2021 period, an increase of approximately ~~$164,000. These increases are primarily due to~~$2.7 million or 108.0%. The balance of the increase in ~~our lending activity,~~operating expenses was primarily attributable to (i) compensation, fees and taxes which increased approximately $376,000, and (ii) general and administrative expenses which increased approximately $169,000, offset by gain on sale of real estate, which decreased approximately $203,000.

Comprehensive income

For the ~~costs incurred as a result~~quarter ended June 30, 2022, we reported an unrealized loss on investment securities of ~~our conversion from a privately-held limited liability company to a publicly-held corporation, although year-to-year comparisons may not be meaningful~~approximately $193,000 reflecting the decrease in ~~light~~the market value of certain securities since March 31, 2022. For the ~~changes to our corporate structure and our operation as a REIT.~~

quarter ended June 30, 2021, we reported an unrealized loss on investment securities of approximately $104,000 reflecting the decrease in the market value of certain securities since March 31, 2021.

Net Income

Net income attributable to common shareholders for the three months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$1.32~~$4.3 million, or $0.12 per share, ~~(basic and diluted)~~ compared to ~~$675,000~~approximately $2.5 million, or $0.10 per share for the three months ended ~~September~~June 30, ~~2016. Since we operated as a limited liability company prior to the IPO, we do not report net income per share data for 2016 periods.~~2021.

~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2022 compared to ~~nine~~six months ended ~~September~~June 30, ~~2016~~

2021

Total revenue

Total revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$4.75~~$22.8 million compared to approximately ~~$2.99~~$12.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, an increase of ~~$1.76~~approximately $10.4 million, or ~~59%~~83.9%. The increase in revenue ~~represents an increase~~is primarily attributable to the growth in our lending operations. For the ~~2017~~2022 period, interest income was approximately ~~$3.8~~$18.9 million ~~and net origination fees were~~compared to approximately ~~$464,000. In comparison,~~$9.2 million for the ~~nine months ended September 30, 2016, interest~~2021 period, representing an increase of approximately $9.7 million or 105.6%. Origination fees increased to approximately $3.7 million for the 2022 period compared to approximately $1.3 million for the 2021 period, an increase of approximately $2.3 million, or 173.0%. Income from partnership investments increased to approximately $589,000 for the 2022 period compared to approximately $54,000 for the 2021, an increase of approximately $535,000. Other income was approximately ~~$2.7~~$1.4 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~~2022 period ~~and, roughly,~~compared to approximately $1.3 million for the ~~first~~2021 period, an increase of approximately $153,000. For the six ~~weeks~~months ended June 30, 2022, revenue was offset by approximately $2.5 million of unrealized losses on investment securities. There was no such offset in the 2017 period, net origination fee income is net 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 shareholder of Sachem Capital Corp.)

comparable 2021 period.

Operating costs and expenses

Total operating costs and expenses for ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 were approximately ~~$1.57~~$13.3 million compared to approximately ~~$763,000~~$7.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016 period,~~2021, an increase of approximately ~~106%~~$5.6 million, or 72.1%. The increase in operating costs and expenses is primarily attributable to the ~~following: (i) an~~ increase in ~~compensation~~our unsecured bond debt while growing our lending operations 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 infor the reasons discussed herein. In the 2022 period, interest ~~expense~~ and amortization of deferred financing costs was approximately $9.1 million compared to approximately $5.0 million in the same 2021 period, an increase of ~~approximately $229,000. These increases are primarily due to~~$4.1 million, or 83.3%. The balance of the increase in ~~our lending activity, our initial public offering,~~operating expenses was attributable to (i) compensation, fees and ~~our conversion from a privately-held limited liability company to a publicly-held corporation, although year-to-year comparisons may not be meaningful~~taxes which increased approximately $778,000, or 55.4%, (ii) general and administrative expenses which increased approximately $410,000, or 100.5%, (iii) other expenses and taxes which increased approximately $115,000 and (iv) impairment loss which increased approximately $277,000, or 86.7%.

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Comprehensive income

For the six months ended June 30, 2022, we reported an unrealized gain on investment securities of approximately $50,000 reflecting the increase in ~~light~~the market value of such securities since December 31, 2021. For the ~~changes to our corporate structure, our IPO and our operation as a REIT.~~

six months ended June 30, 2021, we reported an unrealized loss on investment securities of approximately $112,000 reflecting the decrease in the market value of such securities since December 31, 2020.

Net Income

Net income attributable to common shareholders for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$3.17~~$7.7 million, or $0.22 per share, compared to ~~$2.23~~$4.7 million, ~~for the nine months ended September 30, 2016. Net income~~or $0.20 per share for the ~~period beginning February 9, 2017 (the effective date~~six months ended June 30, 2021.

Non-GAAP Metrics – Adjusted Earnings

We invest our excess cash in marketable securities. Under GAAP, those securities are required to be “marked to market” at the end of each reporting period. Accordingly, if the value of certain of those securities increases, the increase is reported as revenue, whereas the remaining increase is reported as a change in accumulated other comprehensive income. On the other hand, if the value decreases, as has been the case in the first two quarters of 2022, the decrease in value of certain of the ~~IPO)~~securities reduces our revenues. For income tax purposes, we do not report the gain or loss on those securities until they are actually sold. This creates a discrepancy between our GAAP net income and ~~ending September 30, 2017 was $0.26. Since we were operating~~our taxable income. To maintain our status as a ~~limited liability company~~REIT, we are required to distribute, on an annual basis, at least 90% of our taxable income. Thus, to give our shareholders a better perspective of our taxable income, we use a metric called Adjusted Earnings.

Adjusted Earnings is calculated as net income attributable to common shareholders, prior to the ~~IPO, the~~effect unrealized gains (losses) on securities available-for-sale. Adjusted Earnings should be examined in conjunction with net income (loss) as shown in our statements of comprehensive income. Adjusted Earnings should not be considered as an alternative to net income (loss) (determined in accordance with generally accepted accounting principles in the United States of America (“GAAP)), or to cash flows from operating activities (determined in accordance with GAAP), as a measure of our liquidity, nor is Adjusted Earnings indicative of funds available to fund our cash needs or available for distribution to shareholders. Rather, Adjusted Earnings is an additional measure we use to analyze our business performance because it excludes the effects of certain non-cash charges that we believe are not necessarily indicative of our operating performance. It should be noted that our manner of calculating Adjusted Earnings may differ from the calculations of similarly-titled measures by other companies. In addition, there may be other differences between GAAP and tax accounting that would impact Adjusted Earnings, which are not reflected in the table below.

For the Three Month

For the Six Month

Period Ended June 30,

Period Ended June 30,


2022

2022
Adjusted Earnings:



Net income attributable to common shareholders

$
4,305,810

$
7,735,512
Add: Unrealized losses on investment securities

1,478,432

2,530,662
Adjusted earnings attributable to common shareholders

$
5,784,242

$
10,266,174

For the three months ended June 30, 2022 adjusted earnings per share ~~data~~was $0.16. For the six months ended June 30, 2022 adjusted earnings per share was $0.29. There were no unrealized gains or losses on investment securities reported in net income for the ~~nine months~~six month period ended ~~September~~June 30, ~~2017 does not include the net income per share for the period prior to the IPO.~~
2021.
Liquidity and Capital Resources
At June 30, 2022, cash and cash equivalents and investment securities totaled approximately $63.5 million compared to approximately $102.6 million at December 31, 2021. The decrease in cash and cash equivalents and investment securities is a reflection that we were drawing down those assets to fund new loans. Some of the cash represented the proceeds from the sale of the June 2027 Notes.

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Total assets at June 30, 2022 were approximately $525.4 million compared to approximately $418.0 million at December 31, 2021, an increase of approximately $107.4 million, or 25.7%. The increase was due primarily to the increase of our mortgage loan portfolio of approximately $130.1 million, an increase in investments in partnerships of approximately $13.6 million, offset in part by a decrease in cash and cash equivalents and investment securities of approximately $39.1 million.

Total liabilities at June 30, 2022 were approximately $320.4 million compared to approximately $237.9 million at December 31, 2021, an increase of approximately $82.5 million, or 34.7%. This increase is principally due to increases in the repurchase facility of approximately $20.3 million, or 106.3%, and the notes payable, net of deferred financing costs, of approximately $79.7 million, or 49.6%, offset primarily by decreases in the accrued dividends payable of approximately $3.9 million, line of credit of approximately $9.8 million and advances from borrowers of approximately $3.7 million.

Total shareholders’ equity at June 30, 2022 was approximately $205.0 million compared to approximately $180.1 million at December 31, 2021, an increase of approximately $24.9 million. This increase was due primarily to net proceeds of $21.2 million from the sale of common shares and our net income attributable to common shareholders of approximately $7.7 million.

Net cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$2.8~~$7.3 million compared to approximately ~~$2.42~~$6.1 million for same 2021 period. For the ~~nine months ended September 30, 2016. Net~~2022 period net cash provided by operating activities ~~in the 2017 period is~~consisted primarily ~~attributable to approximately $3,170,000, $581,000, and $155,000, in~~of net income of approximately $9.6 million, amortization of deferred ~~revenue~~financing costs and bond discount of $1.1 million and unrealized loss on investment securities of approximately $2.5 million offset by increases in interest and fees receivable of $1.6 million, due from borrowers of $1.1 million and decreases in advances from borrowers ~~respectively,~~of approximately $3.7 million. For the 2021 period net cash provided by operating activities consisted primarily of net income of $4.7 million, amortization of deferred financing costs and bond discount of $503,000, an impairment loss of $319,000, increase in deferred revenue of 131,000, and an increase in advances from borrowers of $1.2 million, offset by an increase in interest and fees receivable of ~~approximately $279,000 in amounts~~$198,000, other receivables of $64,000, due from borrowers of $281,000, prepaid expenses of $82,000, and a ~~decrease~~gain on extinguishment of ~~approximately $656,000 in the amount due to member.~~

debt of $258,000.

Net cash used for investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$19.0~~$120.6 million compared to approximately ~~$3.49~~$26.7 million for ~~same 2016~~the comparable 2021 period. ~~Proceeds~~For the 2022 period, net cash used for investing activities consisted primarily of purchases of investment securities of approximately $36.1 million, purchases of interests in investment partnerships of approximately $13.6 million and principal disbursements for mortgages receivable of approximately $192.0 million, offset by principal collections on mortgages receivable of approximately $60.9 million, proceeds from the sale of investment securities $59.7 million and proceeds from the sale of real estate owned inof $1.4 million. For the ~~2017~~2021 period, ~~was approximately $530,000, compared to approximately $546,000 for the 2016 period. The 2017 period also included approximately $424,000 of~~net cash used ~~to acquire and improve properties that we acquired compared to~~for investing activities consisted primarily of purchases of investment securities of approximately ~~$563,000 in the same 2016 period. Finally, in the 2017 period,~~$85.5 million, principal disbursements for mortgages receivable ~~were~~of approximately ~~$33.8~~$75.2 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 increasepurchase of interests in ~~the 2017 period~~investment partnerships of approximately ~~$3.9~~$1.8 million, inoffset by principal collections on mortgages receivable ~~resulting~~of approximately $58.0 million, proceeds from ~~an increased rate~~the sale of ~~prepayments~~investment securities $78.1 million and proceeds from the sale of ~~outstanding loans, is primarily attributable to increasing lending activity by traditional lenders, such as banks, which could be an indicator~~real estate owned of ~~improving economic conditions in general. If this trend continues it may signal increased competition for our business.~~

$919,000.

Net cash provided by financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was approximately ~~$15.7~~$100.4 million compared to approximately ~~$2.5~~$63.4 million of cash used for the ~~nine months ended September 30, 2016. Prior to the IPO,~~comparable 2021 period. Net cash ~~flows from~~provided by financing activities ~~basically reflects~~for the ~~difference between proceeds from borrowings under the Bankwell Credit Line and member contributions, on the one hand, and repayments~~2022 period consists principally of the amounts outstanding on the Bankwell Credit Line 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 of grossnet proceeds from the ~~IPO. Other factors included approximately $25.3~~issuance of fixed rate notes of $78.8 million, ofnet proceeds from the ~~Bankwell Credit Line,~~issuance of common shares of approximately ~~$17.5~~$21.2 million and net proceeds from repurchase facility of ~~payments to Bankwell,~~ approximately ~~$654,000~~$20.3 million, offset primarily by repayment of ~~member contributions~~line of credit of approximately $9.7 million, dividends paid on common shares of approximately $8.3 million and dividends paid on preferred stock of approximately ~~$2.5~~$1.8 million. Net cash provided by financing activities for the 2021 period consists principally of the net proceeds from issuance of common shares of $22.9 million, net proceeds from the issuance of ~~distributions to members. In addition, we incurred approximately $87,000~~preferred stock of ~~financing costs~~$40.6 million and ~~approximately$1.5~~proceeds from our line of credit of $6.2 million, offset primarily by dividends paid of ~~costs related to the IPO. For the same 2016 period, the principal elements were (i) approximately~~ $5.4 million and repayment of ~~proceeds from Bankwell, (ii) $2.9 million~~mortgage payable of ~~payments to Bankwell, (iii) approximately $3.75 million of member contributions and (iv) approximately $3.5 million in distributions to members.~~

$768,000.

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 construction draws and payments for usual and customary operating and administrative expenses, such as interest payments on notes payable, 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. Funding for long-term cash needs will come from ~~our cash on hand,~~unused net proceeds from financing activities, operating cash flows and ~~unused capacity~~proceeds from sales of real estate owned.

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From and after the ~~Bankwell Credit Line or any replacement thereof. In addition, to maintain~~effective date of our ~~status as a~~ REIT election, we intend to pay regular quarterly distributions to holders of our common 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

~~Subsequent to September 30, 2017,~~From July 1, 2022 through August 8, 2022, we ~~commenced foreclosure proceeding with respect to two loans made to two separate borrowers, having~~sold an aggregate ~~unpaid principal balance~~ of ~~$238,000 and accrued but unpaid interest~~2,265,841 common shares under our at-the-market offering facility realizing gross proceeds of $4,440. The loans are secured by first mortgage liens on properties owned by the borrowers. We halted an ongoing foreclosure proceeding when the borrower entered into a settlement agreement with us, which provided us with additional collateral in exchange for us extending the borrower additional time to repay the obligations. We have obtained real property assessments and broker opinions of value for these properties. Based on these values, we have not recorded an impairment loss for these properties.

approximately $10.8 million.

On ~~October 19, 2017, we~~July 8, 2022, the board of directors declared a dividend of ~~$.105~~$0.14 per common share ~~to be paid~~payable on ~~November 17, 2017~~July 28, 2022 to shareholders of record ~~on November 7, 2017. The total amount~~as of July 21, 2022.

On July 19, 2022, after shareholders approved an amendment to our charter at our 2022 Annual Meeting of Shareholders, we filed a Certificate of Amendment of the ~~dividend payment~~Certificate of Incorporation to increase the number of authorized common shares available for issuance from 100,000,000 to 200,000,000.

On July 19, 2022, we issued an aggregate of 15,000 restricted common shares to our three independent directors (i.e., 5,000 shares each), of which 3,750 shares vested immediately upon issuance and 3,750 shares will vest on each of July 19, 2023, 2024 and 2025.

On July 26, 2022, we entered into an agreement with John E. Warch pursuant to which we will employ Mr. Warch as our Chief Financial Officer and Executive Vice President. Mr. Warch’s employment term commenced August 1, 2022 and will continue until terminated by either party. His annual base compensation is ~~estimated~~$325,000. In connection with this hire, John L. Villano resigned as our Chief Financial Officer but will continue to ~~be approximately $1,560,000.~~serve as our Chief Executive Office and President.

~~As described above and in Note~~Management has evaluated subsequent events through August 9, to2022 the date on which the financial statements ~~included~~were available to be issued. Based on the evaluation, no adjustments were required in ~~this Report, from October 27 through November 3, 3017, we raised an additional $17.25 million (gross) 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.~~accompanying financial statements.

Off-Balance Sheet Arrangements

We ~~have~~are not ~~entered into~~a 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~~June 30, ~~2017,~~2022, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans as well as contractual obligations ~~consist~~consisting of operating leases for equipment, software licenses and ~~software licenses.~~investment in partnerships.

	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Operating lease obligations	$	12,700	$	8,021	$	4,679	$	—	$	—
Unfunded portions of outstanding construction loans		3,095,917		3,095,917		—		—		—

													Less than		1 – 3		3 – 5		More than
											Total		1 year		years		years		5 years
Investment in partnerships												2,707,508		2,707,508		—		—		—
Unfunded loan commitments		—		—		—		—		—		119,108,255		119,108,255		—		—		—
Total contractual obligations	$	3,108,617	$	3,103,938	$	4,679	$	—	$	—	$	121,815,763	$	121,815,763	$	—	$	—	$	—

Critical Accounting Policies and Recent Accounting Pronouncements

See “Note 2 ~~- Summary of~~— Significant Accounting Policies” to the financial statements for explanation of recent accounting pronouncements impacting ~~us.~~us included elsewhere in this report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information required by this Item.

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Item 4.CONTROLS AND PROCEDURES
(a)
Evaluation and Disclosure Controls and Procedures
~~Our management, with the participation of~~Management, specifically our ~~co-chief~~chief executive officer and chief financial officer (the same person), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~June 30, ~~2017~~2022 (the “Evaluation Date”). Based upon that evaluation, the chief executive officer and the chief financial officer (same person) concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to ~~our~~ management, ~~including its~~specifically our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b)
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred during the fiscal quarter ended ~~September~~June 30, ~~2017~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
Item1A. Risk Factors
We have significant unfunded commitments to existing borrowers. If we are unable to fund these commitments, we may be subject to borrower legal claims.
At June 30, 2022, we had unfunded commitments under existing loans of approximately $119.1 million. We do not record these unfunded commitments as liabilities on our balance sheets as the unfunded portion of the loans are not included in the outstanding mortgage loan balances. We also have not created a reserve for these unfunded commitments. However, we try to maintain a reasonable amount of working capital at all times, although not in amounts sufficient to cover all our deferred funding obligations. In addition, we also have the ability to borrow funds against our portfolio of marketable securities, although the value of these securities in our account fluctuate regularly based on our liquidity and demand for our loans. We also can raise capital through the Churchill Facility. Nevertheless, there is a possibility that demands for funding under existing loans could exceed our available working capital and if we fail to meet our funding obligations, we may be subject to legal claims by the borrowers. This could have a material and adverse impact on our business reputation, our operations as well as our financial condition.

Item 6.EXHIBITS

~~Exhibit~~
~~No.~~

~~Description~~
Exhibit No.
Description
~~2.1~~

2.1

Form of Amended and Restated Exchange Agreement (1)
3.1

Certificate of Incorporation (1)
3.1(a)

Certificate of Amendment to Certificate of Incorporation (1)
19

~~Exhibit~~
~~No.~~ ~~Description~~
~~3.2~~
3.1(b)

~~Bylaws, as amended~~Certificate of Amendment to Certificate of Incorporation filed on October 7, 2019 (2)
~~4.1~~
3.1(c)

~~Form~~Certificate of ~~Representative’s Warrants (1)~~Amendment to Certificate of Incorporation filed on June 25, 2021 (10)
~~4.2~~
3.1(d)

Certificate of Amendment to Certificate of Incorporation filed on July 19, 2022 *
3.2

Amended and Restated Bylaws, effective as of November 25, 2019 (3)
4.1

Form of Representatives’ Warrants issued on October 27, 2017 in connection with the follow-on underwritten public offering (4)
4.2

Indenture, dated as of June 21, 2019, between the Company and U.S. Bank National Association, as Trustee (5)
4.3

First Supplemental Indenture, dated as of June 25, 2019, between the Company and U.S. Bank National Association, as Trustee (5)
4.4

Form of 7.125% Notes due 2024 (5)
4.5

Second Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (2)
4.6

Form of 6.875% Notes due 2024 (7)
4.7

Third Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (8)
4.8

Form of 7.75% Notes due 2025 (included as Exhibit A to Exhibit 4.7 above)
4.9

Specimen 7.75% Series A Cumulative Redeemable Preferred Stock Certificate. (10)
4.10

Fourth Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (11)
4.11

Form of 6.00% Note due 2026 (attached as Exhibit A to Exhibit 4.10 above).
4.12

Fifth Supplemental Indenture between the Company and U.S. Bank Trust Company, National Association, as Trustee (15)
4.13

Form of 6.00% Note due 2027 (attached as Exhibit A to Exhibit 4.12 above)
4.14

Sixth Supplemental Indenture between the Company and U.S. Bank Trust Company, National Association, as Trustee (17)
4.15

Form of 7.125% Note due 2027 (attached as Exhibit A to Exhibit 4.14 above)
10.1**

Employment Agreement by and between John ~~C. Villano and Sachem Capital Corp. (1)~~
10.2** ~~Employment Agreement by and between Jeffrey~~ L. Villano and Sachem Capital ~~Corp.~~Corp (1)
~~10.3~~
10.2

Sachem Capital Corp. 2016 Equity Compensation Plan (1)
~~10.4.1~~
10.3**

~~Amended and Restated Revolving Note, dated March 15, 2016, in the principal amount of $15,000,000.00 (1)~~
~~10.4.2~~ Final Form of ~~Second Amended and Restated Commercial Revolving Loan and Security~~the Restrictive Stock Grant Agreement ~~February 8, 2017, among Bankwell Bank, as Lender, and Sachem Capital Partners, LLC, as Existing Borrower, and~~dated July 17, 2018 under the Sachem Capital Corp.~~, as Borrower (1)~~ 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (6)
~~10.4.3~~
10.4**

~~Guaranty~~Final Form of the Restrictive Stock Grant Agreement dated ~~December 18, 2014 (1)~~October 4, 2019 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (2)

Table of Contents

10.5**		Final Form of the Restrictive Stock Grant Agreement dated April 2021 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of John L. Villano and Peter J. Cuozzo (12)
~~10.4.4~~ 10.6		~~Form~~Master Repurchase Agreement and Securities Contract, dated as of ~~Second Reaffirmation of Guaranty Agreement, dated February 8, 2017 (1)~~July 21, 2021, between Sachem Capital Corp. and Churchill MRA Funding I LLC (13)
~~10.4.5~~ 10.7		~~Amended and Restated Revolving Note, dated June 30, 2017, in the principal amount of $20,000,000.00 (3)~~
~~10.4.6~~		~~Modification of Second Amended and Restated Commercial Revolving Loan and Security~~Custodial Agreement, dated as of ~~June 30, 2017,~~July 21, 2021, among ~~Bankwell Bank (as lender),~~ Sachem Capital Corp. ~~(as borrower)~~, Churchill MRA Funding I LLC. and U.S. Bank National Association (13)
10.8**		Agreement and General Release, dated as of January 14, 2022, between Sachem Capital Corp. and Peter J. Cuozzo (16)
10.9**		Final Form of the Restrictive Stock Grant Agreement dated April 2022 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and John L. Villano ~~Jeffrey C. Villano and JJV, LLC, (as guarantors) (3)~~(18)
~~10.4.7~~ 10.10**		~~Third Reaffirmation~~Final Form of ~~Guaranty~~the Restrictive Stock Grant Agreement dated ~~June 30, 2017 (3)~~October 15, 2020 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz *
~~31.1~~ 10.11**		Final Form of the Restrictive Stock Grant Agreement dated October 13, 2021 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz *
10.12**		Final Form of the Restrictive Stock Grant Agreement dated July 19, 2022 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz *
10.13**		Employment Agreement, dated July 26, 2022, by and between John E. Warch and Sachem Capital Corp. (19)
31.1		Chief Executive Officer Certification as required under section 302 of the Sarbanes Oxley Act *
31.2		Chief Financial Officer Certification as required under section 302 of the Sarbanes Oxley Act *
32.1		Chief Executive Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act ***
32.2		Chief Financial Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act ***
101.INS		XBRL Instance Document *
101.SCH		XBRL Taxonomy Extension Schema Document *
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB		XBRL Taxonomy Extension Label Linkbase Document *
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document *
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

*	Filed herewith.

**	Compensation plan or arrangement for current or former executive officers and directors.

***	* Filed herewith. Compensation plan or arrangement for current or former executive officers and directors. ~~*~~ Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K.

(1)

Previously filed as an exhibit to the Registration Statement on Form S-11, as amended (SEC File No.: 333-214323) and incorporated herein by reference.

(2)

Previously filed as an exhibit to the ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q for the ~~year~~period ended ~~December 31, 2016~~September 30, 2019 and incorporated herein by reference.

(3)

Previously filed as an exhibit to the Current Report on Form 8-K on ~~July 6, 2017~~November 27, 2019 and incorporated herein by reference.

(4)

Previously filed on October 20, 2017, as Exhibit A to Exhibit 1.1 of the Registration Statement on Form S-11, as amended (SEC File No.: 333-218954) and incorporated herein by reference.

(5)	20Previously filed as an exhibit to the Current Report on Form 8-K on June 25, 2019 and incorporated herein by reference.

(6)	Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended June 30, 2018 and incorporated herein by reference.

(7)	Previously filed as an exhibit to the Current Report on Form 8-K on November 6, 2019 and incorporated herein by reference.

Table of Contents

(8)	Previously filed as an exhibit to the Current Report on Form 8-K on September 9, 2020 and incorporated herein by reference.

(9)	Intentionally omitted.

(10)	Previously filed as an exhibit to the Current Report on Form 8-K on June 29, 2021 and incorporated herein by reference.

(11)	Previously filed as an exhibit to the Current Report on Form 8-K on December 20, 2021 and incorporated herein by reference.

(12)	Previously filed as an exhibit to the Current Report on Form 8-K on April 13, 2021 and incorporated herein by reference.

(13)	Previously filed as an exhibit to the Current Report on Form 8-K on July 27, 2021 and incorporated herein by reference.

(14)	Intentionally omitted.

(15)	Previously filed as an exhibit to the Current Report on Form 8-K on March 9, 2022 and incorporated herein by reference.

(16)	Previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.

(17)	Previously filed as an exhibit to the Current Report on Form 8-K on May 12, 2022 and incorporated herein by reference.

(18)	Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended March 31, 2022 and incorporated herein by reference.

(19)	Previously filed as an exhibit to the Current Report on Form 8-K on July 27, 2022 and incorporated herein by reference.

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SACHEM CAPITAL CORP.
Date: August 9, 2022
By:
~~Date: November 13, 2017~~ ~~By:~~ ~~/s/ Jeffrey C. Villano~~
~~Jeffrey C. Villano~~
~~Co-Chief Executive Office~~
~~(Principal Executive Officer)~~
~~Date: November 13, 2017~~ ~~By:~~
/s/ John L. Villano
John L. Villano, CPA

~~Co-Chief Executive Office~~
President and Chief Executive Officer

(Principal ~~Financial~~Executive Officer)

Date: August 9, 2022
21
By:
/s/ John E. Warch
John E. Warch, CPA

Chief Financial Officer

(Principal Accounting and Financial Officer)

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


Large accelerated filer ¨	☐	Accelerated filer ¨	☐
Non-accelerated filer ¨ ~~(Do not check if a smaller reporting company)~~	☒	Smaller reporting company x	☒
		Emerging growth company x	☒

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

		~~Page Number~~
��
Part I	FINANCIAL INFORMATION	1
			Page Number
Item 1.	Financial Statements (unaudited)	1

	Balance Sheets as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021		1
	Statements of Comprehensive Income for the Three-Month and Six-Month Periods Ended June 30, 2022 and 2021		2
	Statements ~~of Operations for the Three and Nine Month Periods Ended September 30, 2017 and 2016~~	2

	~~Statement~~ of Changes in Shareholders’~~/Members’~~ Equity for the ~~Nine Month Period~~Three-Month and Six-Month Periods Ended ~~September~~June 30, ~~2017~~2022 and 2021		3

	Statements of Cash ~~Flow~~Flows for the ~~Nine Month~~Six-Month Periods Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021	4	5

	Notes to Financial Statements (unaudited)	6	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19	29

Item 4.	Controls and Procedures	19	30

Part II	OTHER INFORMATION	19

Item 6.1A.	~~Exhibits~~Risk Factors	19	31
Item 6.	Exhibits		31
SIGNATURES		21	34
EXHIBITS
~~EXHIBITS~~

	September 30, 2017 (unaudited)		December 31, 2016 (audited)
Assets
Assets:
Cash	$	1,016,588	$	1,561,863
Escrow deposits		46,440		-
Mortgages receivable		52,693,657		32,521,588
Mortgages receivable, affiliate		-		1,229,022
Interest and fees receivable		633,806		478,928
Other receivables		168,615		182,842
Due from borrowers		360,605		81,911
Prepaid expenses		38,342		-
Property and equipment, net		508,553		397,448
Real estate owned		1,224,969		1,222,454
Pre-offering costs		72,427		625,890
Deposits on property		-		-
Deferred financing costs		111,003		67,475
Total assets	$	56,875,005	$	38,369,421

Liabilities and Shareholders'/Members’ Equity
Liabilities:
Line of credit	$	15,921,186	$	8,113,943
Mortgage payable		303,568		310,000
Accrued expenses		77,908		196,086
Security deposit held		2,550		800
Advances from borrowers		446,763		291,875
Due to shareholders/member		16,958		656,296
Deferred revenue		871,197		290,456
Accrued interest		79,421		24,350
Total liabilities		17,719,551		9,883,806

Shareholders'/members’ equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued		-		-
Common stock - $.001 par value; 50,000,000 authorized; 11,103,237 issued and outstanding		11,103		-
Additional paid-in capital		37,980,133		-
Members' equity		-		28,485,615
Retained earnings		1,164,218		-
Total shareholders'/members’ equity		39,155,454		28,485,615
Total liabilities and shareholders'/members’ equity	$	56,875,005	$	38,369,421

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017			2016
Revenue:
Interest income from loans	$	1,570,877	$	952,511	$	3,831,636		$	2,687,711
Origination fees, net		196,811		43,477		464,211			138,620
Late and other fees		34,998		-		100,453			99,309
Processing fees		30,480		17,100		84,855			44,085
Rental income, net		9,637		2,954		58,865			20,008
Other income		80,196		-		205,775			-
Gain on sale of real estate		15,931		-		178			-
Total revenue		1,938,930		1,016,042		4,745,973			2,989,733
Operating costs and expenses:
Interest and amortization of deferred financing costs		302,548		138,992		589,457			360,684
Compensation to manager		-		79,441		35,847			231,958
Professional fees		47,202		20,000		179,344			44,743
Compensation, fees and taxes		195,673		6,215		466,497			28,603
Exchange fees		31,548		-		69,213			-
Depreciation		8,734		-		21,624			-
General and administrative expenses		35,338		-		212,676			-
Impairment loss		-		96,697		-			96,697
Total operating costs and expenses		621,043		341,345		1,574,658			762,685
Net income	$	1,317,887	$	674,697	$	3,171,315		$	2,227,048

Basic and diluted net income per common share outstanding:
Basic	$	0.12			$	0.26	*
Diluted	$	0.12			$	0.26	*

Weighted average number of common shares outstanding:
Basic		11,103,237				11,103,237
Diluted		11,103,237				11,103,237


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenue:
Interest income from loans	$	10,433,572	$	4,682,295	$	18,944,947	$	9,213,528
Investment income		225,033		180,120		496,505		422,811
Income from partnership investments		317,004		36,868		589,493		54,241
Gain (loss) on sale of investment securities		5,570		85,471		(148,565)		(43,968)
Origination fees, net		2,045,638		831,893		3,683,266		1,349,321
Late and other fees		117,676		61,970		246,540		97,899
Processing fees		62,615		43,410		128,470		79,385
Rental income (loss), net		18,158		(9,398)		28,200		(5,214)
Unrealized losses on investment securities		(1,478,432)		0		(2,530,662)		0
Other income		801,296		801,266		1,411,312		1,258,075
Total revenue		12,548,130		6,713,895		22,849,506		12,426,078

Operating costs and expenses:
Interest and amortization of deferred financing costs		5,209,865		2,505,234		9,108,253		4,969,989
Professional fees		229,038		251,170		459,753		482,928
Compensation, fees and taxes		1,187,940		812,143		2,181,903		1,404,230
Exchange fees		12,467		12,465		24,795		24,795
Other expenses and taxes		95,354		23,506		160,058		45,314
Depreciation		22,239		21,263		44,478		40,865
General and administrative expenses		416,833		248,308		818,066		407,916
(Gain) Loss on sale of real estate		(188,182)		14,962		(122,343)		17,096
Impairment loss		335,000		294,000		595,500		319,000
Total operating costs and expenses		7,320,554		4,183,051		13,270,463		7,712,133
Net income		5,227,576		2,530,844		9,579,043		4,713,945
Preferred stock dividend		(921,766)		0		(1,843,531)		0
Net income attributable to common shareholders		4,305,810		2,530,844		7,735,512		4,713,945

Other comprehensive loss
Unrealized gain (loss) on investment securities		(192,764)		(104,316)		50,044		(111,810)
Comprehensive income	$	4,113,046	$	2,426,528	$	7,785,556	$	4,602,135
Basic and diluted net income per common share outstanding:
Basic	$	0.12	$	0.10	$	0.22	$	0.20
Diluted	$	0.12	$	0.10	$	0.22	$	0.20

Weighted average number of common shares outstanding:
Basic		36,373,570		24,851,010		35,630,455		23,503,679
Diluted		36,373,877		24,857,897		35,636,374		23,507,685

	Nine Months Ended September 30, 2017 (unaudited)
	Common Shares		Amount		Additional Paid in Capital			Retained Earnings			Predecessor’s Members' Equity

Beginning balance, January 1, 2017		2,220,000	$	2,220	$	(2,220	)				$	28,485,615

Member contributions												653,646

Member distributions												(2,460,125	)

Net income for the period January 1, 2017 - February 8, 2017												286,100

Conversion of members' equity into common stock		6,283,237		6,283		26,958,953						(26,965,236	)

Initial public offering		2,600,000		2,600		11,023,400

Dividends paid								$	(1,720,997	)

Net income for the period February 9, 2017 – September 30, 2017									2,885,215
Balance, September 30, 2017		11,103,237	$	11,103	$	37,980,133		$	1,164,218

	Nine Months
	Ended September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,171,315		$	2,227,048
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs		43,677			36,116
Depreciation expense		21,624			-
Gain on sale of real estate		(179	)		-
Impairment loss		-			96,697
Adjustment to loss for sale of collateral		(42,231	)		-
Changes in operating assets and liabilities:
(Increase) decrease in:
Interest and fees receivable		(154,877	)		(199,277	)
Other receivables		14,227			(81,551	)
Due from borrowers		(278,694	)		-
Prepaid expenses		(38,342	)		-
(Decrease) increase in:
Due to member		(656,296	)		276,743
Due to shareholder		16,957			-
Accrued interest		55,071			(14,741	)
Accrued expenses		(118,183	)		-
Deferred revenue		580,741			(1,162	)
Advances from borrowers		154,888			76,226
Total adjustments		(401,617	)		189,051
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,769,698			2,416,099

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of real estate owned		530,181			545,970
Acquisitions of and improvements to real estate owned		(424,023	)		(562,950	)
Escrow deposit		(46,440	)		(57,000	)
Purchase of furniture and equipment		(132,729	)		-
Security deposit		1,750			-
Principal disbursements for mortgages receivable		(33,792,878	)		(14,335,922	)
Principal collections on mortgages receivable		14,849,831			10,921,370
NET CASH USED FOR INVESTING ACTIVITIES		(19,014,308	)		(3,488,532	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		25,341,633			5,425,000
Repayment of line of credit		(17,534,390	)		(2,900,000	)

Principal payments on mortgage payable		(6,432	)		-
Dividends paid		(1,720,997	)		-
Proceeds from IPO		13,000,000			-
Pre-offering costs incurred		(1,486,798	)		(197,999	)
Financing costs incurred		(87,202	)		(65,050	)
Member contributions		653,646			3,754,069
Member distributions		(2,460,125	)		(3,500,892	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		15,699,335			2,515,128

NET INCREASE (DECREASE) IN CASH		(545,275	)		1,442,695

CASH - BEGINNING OF PERIOD		1,561,863			1,834,082

CASH - END OF PERIOD	$	1,016,588		$	3,276,777

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Interest paid	$	545,782		$	339,309


	FOR THE THREE MONTHS ENDED JUNE 30, 2022
									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Totals
Balance, April 1, 2022	1,903,000	$	1,903	35,513,887	$	35,514	$	201,168,304	$	(233,208)	$	(1,562,750)	$	199,409,763

Issuance of Common Stock, net of expenses	—		—	1,136,432		1,136		5,681,884		—		—		5,683,020

Stock based compensation	—		—	105,467		106		123,322		—		—		123,428

Unrealized loss on marketable securities	—		—	—		—		—		(192,764)		—		(192,764)

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

Dividends paid on Common Stock	—		—	—		—		—		—		(4,326,262)		(4,326,262)

Net income for the period ended June 30, 2022	—		—	—		—		—		—		5,227,576		5,227,576
Balance, June 30, 2022	1,903,000	$	1,903	36,755,786	$	36,756	$	206,973,510	$	(425,972)	$	(1,583,202)	$	205,002,995


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

Issuance of Preferred Stock, net of expenses	1,700,000		1,700	—		—		40,611,426		—		—		40,613,126

Issuance of Common Stock, net of expenses	—		—	4,513,731		4,514		22,874,335		—		—		22,878,849

Stock based compensation	—		—	94,681		94		62,319		—		—		62,413

Unrealized loss on marketable securities	—		—	—		—		—		(111,810)		—		(111,810)

Dividends paid	—		—	—		—		—		—		(2,786,659)		(2,786,659)

Net income for the period ended June 30, 2021	—		—	—		—		—		—		4,713,945		4,713,945
Balance, June 30, 2021	1,700,000	$	1,700	26,733,213	$	26,733	$	147,362,456	$	(137,802)	$	(963,683)	$	146,289,404


	Level 1		Level 2		Level 3		Total
Stocks and ETFs	$	19,318,777		0		0	$	19,318,777
Mutual funds		15,063,540		0		0		15,063,540
Total liquid investments	$	34,382,317		0		0	$	34,382,317
Real estate owned		—		0	$	5,904,614	$	5,904,614

Performing Loans	Residential		Commercial		Land		Mixed Use		Total Outstanding Mortgages
September 30, 2017	$	35,512,825	$	12,375,768	$	4,545,931	$	259,133	$	52,693,657


									Total
									Outstanding
	Residential		Commercial		Land		Mixed Use		Mortgages
December 31, 2021	$	157,841,896	$	95,319,795	$	20,755,891	$	18,383,627	$	292,301,209
June 30, 2022	$	225,325,860	$	134,810,383	$	33,780,053	$	28,488,227	$	422,404,523


2022	$	165,155,672
2023		195,379,331
2024		58,659,394
2025		3,210,126
Total	$	422,404,523

2017	$	8,005,973
2018		27,495,413
2019		7,147,929
2020		10,044,342
Total	$	52,693,657


Year ending December 31, 2022	$	53,200
Year ending December 31, 2023		53,200
Year ending December 31, 2024		53,200
Year ending December 31, 2025		53,200
Total	$	212,800

Year ending December 31,	2017	$	8,933
	2018		10,176
	2019		10,645
	2020		11,136
	2021		11,650
	Thereafter		251,028
		$	303,568


	Three Months				Six Months
	ended June 30,				ended June 30,
	2022		2021		2022		2021
Income on borrower charges	$	399,159	$	251,387	$	633,623	$	335,878
Modification and extension fees		301,820		492,008		609,870		798,150
In-house legal fees		99,840		54,500		161,940		111,800
Miscellaneous		477		3,371		5,879		12,247
Total	$	801,296	$	801,266	$	1,411,312	$	1,258,075


Year ending December 31, 2022	$	2,664,388
Year ending December 31, 2023		1,336,689
Year ending December 31, 2024		626,920
Total	$	4,627,997


	For the Three Month		For the Six Month
	Period Ended June 30,		Period Ended June 30,
	2022		2022
Adjusted Earnings:
Net income attributable to common shareholders	$	4,305,810	$	7,735,512
Add: Unrealized losses on investment securities		1,478,432		2,530,662
Adjusted earnings attributable to common shareholders	$	5,784,242	$	10,266,174

~~Exhibit~~ ~~No.~~		~~Description~~
Exhibit No.		Description
~~2.1~~
2.1		Form of Amended and Restated Exchange Agreement (1)
3.1		Certificate of Incorporation (1)
3.1(a)		Certificate of Amendment to Certificate of Incorporation (1)

~~Exhibit~~ ~~No.~~		~~Description~~
~~3.2~~ 3.1(b)		~~Bylaws, as amended~~Certificate of Amendment to Certificate of Incorporation filed on October 7, 2019 (2)
~~4.1~~ 3.1(c)		~~Form~~Certificate of ~~Representative’s Warrants (1)~~Amendment to Certificate of Incorporation filed on June 25, 2021 (10)
~~4.2~~ 3.1(d)		Certificate of Amendment to Certificate of Incorporation filed on July 19, 2022 *
3.2		Amended and Restated Bylaws, effective as of November 25, 2019 (3)
4.1		Form of Representatives’ Warrants issued on October 27, 2017 in connection with the follow-on underwritten public offering (4)
4.2		Indenture, dated as of June 21, 2019, between the Company and U.S. Bank National Association, as Trustee (5)
4.3		First Supplemental Indenture, dated as of June 25, 2019, between the Company and U.S. Bank National Association, as Trustee (5)
4.4		Form of 7.125% Notes due 2024 (5)
4.5		Second Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (2)
4.6		Form of 6.875% Notes due 2024 (7)
4.7		Third Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (8)
4.8		Form of 7.75% Notes due 2025 (included as Exhibit A to Exhibit 4.7 above)
4.9		Specimen 7.75% Series A Cumulative Redeemable Preferred Stock Certificate. (10)
4.10		Fourth Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (11)
4.11		Form of 6.00% Note due 2026 (attached as Exhibit A to Exhibit 4.10 above).
4.12		Fifth Supplemental Indenture between the Company and U.S. Bank Trust Company, National Association, as Trustee (15)
4.13		Form of 6.00% Note due 2027 (attached as Exhibit A to Exhibit 4.12 above)
4.14		Sixth Supplemental Indenture between the Company and U.S. Bank Trust Company, National Association, as Trustee (17)
4.15		Form of 7.125% Note due 2027 (attached as Exhibit A to Exhibit 4.14 above)
10.1**		Employment Agreement by and between John ~~C. Villano and Sachem Capital Corp. (1)~~
10.2**		~~Employment Agreement by and between Jeffrey~~ L. Villano and Sachem Capital ~~Corp.~~Corp (1)
~~10.3~~ 10.2		Sachem Capital Corp. 2016 Equity Compensation Plan (1)
~~10.4.1~~ 10.3**		~~Amended and Restated Revolving Note, dated March 15, 2016, in the principal amount of $15,000,000.00 (1)~~
~~10.4.2~~		Final Form of ~~Second Amended and Restated Commercial Revolving Loan and Security~~the Restrictive Stock Grant Agreement ~~February 8, 2017, among Bankwell Bank, as Lender, and Sachem Capital Partners, LLC, as Existing Borrower, and~~dated July 17, 2018 under the Sachem Capital Corp.~~, as Borrower (1)~~ 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (6)
~~10.4.3~~ 10.4**		~~Guaranty~~Final Form of the Restrictive Stock Grant Agreement dated ~~December 18, 2014 (1)~~October 4, 2019 under the Sachem Capital Corp. 2016 Equity Compensation Plan between the Company and each of Leslie Bernhard, Arthur Goldberg and Brian Prinz (2)

	SACHEM CAPITAL CORP.
Date: August 9, 2022	By:
~~Date: November 13, 2017~~	~~By:~~	~~/s/ Jeffrey C. Villano~~
		~~Jeffrey C. Villano~~
		~~Co-Chief Executive Office~~
		~~(Principal Executive Officer)~~

~~Date: November 13, 2017~~	~~By:~~	/s/ John L. Villano
		John L. Villano, CPA
		~~Co-Chief Executive Office~~ President and Chief Executive Officer
		(Principal ~~Financial~~Executive Officer)

Date: August 9, 2022	21 By:	/s/ John E. Warch
		John E. Warch, CPA
		Chief Financial Officer
		(Principal Accounting and Financial Officer)