Sachem Capital (SACH) 10-Q 8 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 07, 2020
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Registrant Name	Sachem Capital Corp.
Entity Current Reporting Status	Yes
Entity Central Index Key	0001682220
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Trading Symbol	SACH
Entity Common Stock, Shares Outstanding		22,117,301
Entity Interactive Data Current	Yes

BALANCE SHEETS

BALANCE SHEETS - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Assets:
Cash and cash equivalents	$ 1,626,022	$ 18,841,937
Investments	16,248,958	15,949,802
Mortgages receivable	111,791,663	94,348,689
Interest and fees receivable	1,571,165	1,370,998
Other receivables	116,397	141,397
Due from borrowers	1,092,831	840,930
Prepaid expenses	33,289	24,734
Property and equipment, net	1,359,870	1,346,396
Deposits on property and equipment	35,000	71,680
Real estate owned	7,290,676	8,258,082
Deferred financing costs	16,429	16,600
Total assets	141,182,300	141,211,245
Liabilities:
Notes payable (net of deferred financing costs of $2,570,597 and $2,687,190)	55,592,403	55,475,810
Mortgage payable	779,963	784,081
Accounts payable and accrued expenses	258,015	249,879
Security deposits held	7,800	7,800
Advances from borrowers	1,233,747	848,268
Deferred revenue	1,280,745	1,205,740
Notes payable	70,501	75,433
Accrued interest	3,398	3,416
Total liabilities	59,226,572	58,650,427
Commitments and Contingencies
Shareholders' equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued	0	0
Common stock - $.001 par value;100,000,000 shares authorized; 22,117,301 issued and outstanding	22,117	22,117
Paid-in capital	83,802,062	83,856,308
Accumulated other comprehensive loss	(186,260)	(50,878)
Accumulated deficit	(1,682,191)	(1,266,729)
Total shareholders' equity	81,955,728	82,560,818
Total liabilities and shareholders' equity	$ 141,182,300	$ 141,211,245

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
BALANCE SHEETS
Deferred financing costs	$ 2,570,597	$ 2,687,190
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	22,117,301	22,117,301
Common Stock, Shares, Outstanding	22,117,301	22,117,301

STATEMENTS OF COMPREHENSIVE INC

STATEMENTS OF COMPREHENSIVE INCOME - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue:
Interest income from loans	$ 2,901,406	$ 2,751,080
Interest income on investments	97,516	0
Gain on sale of investment securities	446,083	0
Origination fees	511,056	364,717
Late and other fees	14,781	46,497
Processing fees	46,458	34,795
Rental income, net	10,728	25,649
Other income	284,274	117,140
Net gain on sale of real estate	0	7,149
Total revenue	4,312,302	3,347,027
Operating costs and expenses:
Interest and amortization of deferred financing costs	1,149,953	621,048
Professional fees	132,309	88,114
Compensation, fees and taxes	344,493	384,227
Exchange fees	7,273	10,287
Other expenses and taxes	28,703	14,193
Depreciation	16,283	7,503
General and administrative expenses	140,214	165,451
Net loss on sale of real estate	4,460	0
Impairment loss	250,000	0
Total operating costs and expenses	2,073,688	1,290,823
Net income	2,238,614	2,056,204
Other comprehensive loss
Unrealized loss on investment securities	(135,382)	0
Comprehensive income	$ 2,103,232	$ 2,056,204
Basic and diluted net income per common share outstanding:
Basic	$ 0.10	$ 0.13
Diluted	$ 0.10	$ 0.13
Weighted average number of common shares outstanding:
Basic	22,117,301	15,579,126
Diluted	22,117,301	15,579,126

STATEMENT OF CHANGES IN SHAREHO

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)	Common Shares [Member]ATM	Common Shares [Member]	Additional Paid-in Capital [Member]ATM	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Loss [Member]	(Accumulated Deficit) Retained Earnings [Member]	ATM	Total
Beginning balance at Dec. 31, 2018		$ 15,439		$ 53,192,859		$ (405,483)		$ 52,802,815
Beginning balance (in shares) at Dec. 31, 2018		15,438,621
Sales of stock through ATM	$ 511		$ 2,227,205				$ 2,227,716
Sales of stock through ATM (in shares)	511,635
Stock based compensation		$ 0		4,103				4,103
Net income		0		0		2,056,204		2,056,204
Balance at Mar. 31, 2019		$ 15,950		55,424,167		1,650,721		57,090,838
Balance (in shares) at Mar. 31, 2019		15,950,256
Beginning balance at Dec. 31, 2019		$ 22,117		83,856,308	$ (50,878)	(1,266,729)		82,560,818
Beginning balance (in shares) at Dec. 31, 2019		22,117,301
Offering costs-ATM		$ 0		(58,353)		0		(58,353)
Sales of stock through ATM (in shares)	0
Stock based compensation		0		4,107		0		4,107
Unrealized loss on marketable securities		0		0	(135,382)	0		(135,382)
Dividends paid		0		0		(2,654,076)		(2,654,076)
Net income		0		0		2,238,614		2,238,614
Balance at Mar. 31, 2020		$ 22,117		$ 83,802,062	$ (186,260)	$ (1,682,191)		$ 81,955,728
Balance (in shares) at Mar. 31, 2020		22,117,301

STATEMENTS OF CASH FLOW

STATEMENTS OF CASH FLOW - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,238,614	$ 2,056,204
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs	116,764	47,076
Depreciation expense	16,283	7,503
Stock based compensation	4,107	4,103
Impairment loss	250,000	0
Loss (gain) on sale of real estate	4,460	(7,149)
Realized gain on short-term marketable securities	(446,083)	0
(Increase) decrease in:
Escrow deposits	0	12,817
Interest and fees receivable	(200,167)	(649,157)
Other receivables	25,000	25,000
Due from borrowers	(778,324)	(92,045)
Prepaid expenses	(8,555)	(70,512)
Deposits on property and equipment	36,680	(37,881)
(Decrease) increase in:
Accrued interest	(18)	19,501
Accounts payable and accrued expenses	8,136	(187,820)
Deferred revenue	75,005	(31,014)
Advances from borrowers	385,479	69,438
Total adjustments	(511,233)	(890,140)
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,727,381	1,166,064
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments and marketable securities	(17,417,059)	0
Proceeds from the sale of investments and marketable securities	17,428,603	0
Proceeds from sale of real estate owned	1,090,236	124,808
Acquisitions of and improvements to real estate owned, net	(377,289)	(362,776)
Purchase of property and equipment	(29,757)	(141,924)
Principal disbursements for mortgages receivable	(28,675,048)	(12,827,043)
Principal collections on mortgages receivable	11,758,497	8,481,663
NET CASH USED FOR INVESTING ACTIVITIES	(16,221,817)	(4,725,272)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit	0	19,740,078
Repayment of line of credit	0	(16,576,655)
Proceeds from notes sold to shareholder	0	1,017,000
Proceeds from bank overdraft	0	117,781
Principal payments on mortgage payable	(4,118)	(290,984)
Principal payments on notes payable	(4,932)	0
Dividends Paid	(2,654,076)	(2,624,566)
Costs in connection with ATM	0	2,227,716
Financing costs incurred	(58,353)	(12,113)
Proceeds from mortgage payable	0	76,485
Prepayment of mortgage payable	0	795,000
NET CASH (USED IN)PROVIDED BY FINANCING ACTIVITIES	(2,721,479)	4,469,742
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(17,215,915)	910,534
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR	18,841,937	158,859
CASH AND CASH EQUIVALENTS - END OF YEAR	1,626,022	1,069,393
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Taxes paid	0	0
Interest paid	1,033,189	573,670
SUPPLEMENTAL INFORMATION-NON-CASH
Dividends declared and payable	$ 0	$ 0

STATEMENTS OF CASH FLOW (Parent

STATEMENTS OF CASH FLOW (Parenthetical)	Mar. 31, 2019USD ($)
STATEMENTS OF CASH FLOW
Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable	$ 1,962,669

The Company

The Company	3 Months Ended
	Mar. 31, 2020
The Company
The Company	1. The Company Sachem Capital Corp. (the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company offers short term ( i.e. , one to three years), secured, 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 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 owned by the borrower or its principals or a pledge of the ownership interests in the borrower by the principals thereof, as well as 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. In addition, the Company may make opportunistic real estate purchases apart from its lending activities. The Company believes it qualifies and has operated as a real estate investment trust since 2017.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Significant Accounting Policies
Significant Accounting Policies	2. Significant Accounting Policies Unaudited Financial Statements The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles 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. 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 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’s estimates are based on (a) assumptions that consider the Company’s past experience, (b) projections regarding the Company’s future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at various financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. Allowance for Loan Loss 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. 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 FASB ASC 820 are described as follows: Level 1 Level 2 · 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 or 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 3 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. Impairment of long-lived assets The Company continually 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 total of 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. Deferred Financing Costs Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 6 - Notes Payable -- are being amortized over the term of the respective Notes. Revenue Recognition 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 does not accrue interest income on mortgages receivable that are more than 90 days past due. Origination fee revenue, generally 2%-5% of the original loan principal amount, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310. Income Taxes The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and made the election to be taxed as a REIT when it filed its 2017 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, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding common shares. 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 follows the provisions of FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes”, which 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 likely than 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 no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of March 31, 2019. Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260 “Earnings Per 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. Recent Accounting Pronouncements In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company adopted both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU modifies ASC 740 to remove certain exceptions and adds guidance to reduce complexity in certain areas. For companies that file with the U.S. Securities and Exchange Commission ("SEC"), the standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted but requires simultaneous adoption of all provisions of the new standard. The Company believes that the adoption of this guidance will not have a material impact on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on the Company’s financial statements.

Fair Value Measurement

Fair Value Measurement	3 Months Ended
	Mar. 31, 2020
Fair Value Measurement
Fair Value Measurement	3. Fair Value Measurement The asset or liability’s fair value measurement level within the fair value hierarchy 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. The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of March 31, 2020: Level 1 Level 2 Level 3 Total Mutual Funds $ 16,248,958 — — $ 16,248,958 Total Investments $ 16,248,958 — — $ 16,248,958 Real Estate Owned $ 7,290,676 $ 7,290,676 Following is a description of the methodologies used for assets measured at fair value: 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 SEC. 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 offers, assessed values or discounted cash value models.

Mortgages Receivable

Mortgages Receivable	3 Months Ended
	Mar. 31, 2020
Mortgages Receivable
Mortgages Receivable	4. Mortgages Receivable Mortgages Receivable The Company offers secured, non-bank loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. In addition, each loan is personally guaranteed by the borrower or its principals, which guarantees may be collaterally secured as well. The loans are generally for a term of one to three years. The loans are initially recorded and carried thereafter, in the financial 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 quarters ended March 31, 2020 and 2019, the aggregate amounts of loans funded by the Company were $28,675,048 and $12,827,043, respectively, offset by principal repayments of $11,758,497 and $8,481,663, respectively. At March 31, 2020, the Company’s portfolio included loans with outstanding principal balances up to $2,450,000, with stated interest rates ranging from 5.0% to 13.0% and a default interest rate for non-payment of 18%. At March 31, 2020, no single borrower had loans outstanding representing more than 10% of the total balance of the loans outstanding. The Company will extend the term of a loan if, at the time of the extension, the loan and the borrower satisfy the Company’s underwriting requirements at the time of the extension. The Company treats a loan extension as a new loan. Credit Risk Credit risk profile based on loan activity as of March 31, 2020 and December 31, 2019: Total Outstanding Mortgages Receivable Residential Commercial Land Mixed Use Mortgages March 31, 2020 $ 72,897,328 $ 28,131,637 $ 7,407,774 $ 3,354,924 $ 111,791,663 December 31, 2019 $ 71,605,920 $ 16,122,990 $ 5,639,979 $ 979,800 $ 94,348,689 The following are the maturities of mortgages receivable as of March 31: 2020 $ 60,775,612 2021 35,794,450 2022 13,653,333 2023 1,568,268 Total $ 111,791,663 At March 31, 2020, of the 480 mortgage loans in the Company’s portfolio, 13 were the subject of foreclosure proceedings. The aggregate outstanding balances due on these loans as of March 31, 2020, including unpaid principal, accrued but unpaid interest and borrower fees, was approximately $3.1 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the total amount due.

Real Estate Owned

Real Estate Owned	3 Months Ended
	Mar. 31, 2020
Real Estate Owned
Real Estate Owned	5. Real Estate Owned Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned. As of March 31, 2020, and December 31, 2019, real estate owned totaled $7,290,676 and $8,258,082, respectively, with no valuation allowance. As of March 31, 2020, real estate owned included $1,545,398 of real estate held for rental and $5,745,278 of real estate held for sale. In the first quarter of 2020, the Company recorded an impairment loss of $250,000 compared to an impairment loss of $-0- in the first quarter of 2019.

Notes Payable

Notes Payable	3 Months Ended
	Mar. 31, 2020
Notes Payable
Notes Payable	6. Notes Payable In 2019 the Company issued 7.125% unsecured, unsubordinated notes due June 30, 2024 (the “June Notes”) and 6.875% unsecured, unsubordinated notes due December 30, 2024 (the “December Notes”; collectively, the June Notes and December Notes are referred to as the “Notes”), in underwritten public offerings in June 2019 and December 2019, respectively. The Notes were issued in denominations of $25.00 each and are listed on the NYSE American and trade under the symbol “SCCB” and “SACC”, respectively. Interest on the Notes commenced accruing on June 25, 2019 for the June Notes and November 7, 2019 for the December Notes. The accrued interest is payable quarterly in cash, in arrears, on March 30, June 30, September 30 and December 30, commencing September 30, 2019 for the June Notes and December 30 for the December Notes. The June and December Notes mature and the entire principal amount is due June 30, 2024 and December 30, 2024, respectively. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of 90% of its taxable income, incurring any additional indebtedness for borrowed money or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after June 25, 2021 for the June Notes and November 7, 2021 for the December Notes, upon at least 30 days prior written notice to the holders of the Notes. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption. The Notes are reflected on the Company’s March 31, 2020 and December 31, 2019 balance sheets net of deferred financing costs in the amount of approximately $2.7 million.

Other Income

Other Income	3 Months Ended
	Mar. 31, 2020
Other Income
Other Income	7. Other income For the three months ended March 31, 2020 and 2019, other income consists of the following: 2020 2019 Income on borrower charges $ 86,449 $ 4,034 Lender, modification and extension fees 132,274 61,249 In-house legal fees 51,150 29,150 Other income 14,401 22,707 Total $ 284,274 $ 117,140

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Origination Fees Loan origination fees consist of points, generally 2%-5% of the original loan principal. These payments are amortized over the life of the loan for financial statement purposes. Original maturities of deferred revenue are as follows as of: March 31, 2020 $ 2021 274,951 2022 51,369 2023 16,916 Total $ 1,280,745 In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment . Unfunded Commitments At March 31, 2020, the Company is committed to an additional $9,367,691 in construction loans that can be drawn by the borrower when certain conditions are met. 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, usually because the owner failed to pay 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 March 31, 2020, there were six (6) such properties, representing approximately $1.2 million in mortgages receivable.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2020
Related Party Transactions
Related Party Transactions	9. Related Party Transactions In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders (members in the case of loans funded prior to the Company’s initial public offering in February 2017). The underwriting process on these loans is consistent with Company policy. The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio. As of March 31, 2020, and 2019, loans to known shareholders totaled $5,922,692 and $4,327,297, respectively, and interest income earned on these loans totaled $180,107 and $121,535, respectively. At March 31, 2020, total amount owed by JJV to the Company was $11,397 and is reflected as other receivables on the Company’s balance sheet. For each of the three-month periods ended March 31, 2020 and 2019, the wife of the Company’s chief executive officer was paid $25,000 for accounting and financial reporting services provided to the Company.

Concentration of Credit Risk

Concentration of Credit Risk	3 Months Ended
	Mar. 31, 2020
Concentration of Credit Risk
Concentration of Credit Risk	10. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and mortgage loans. The Company maintains its cash and cash equivalents with two financial institutions. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company makes loans that are secured by first mortgage liens on real property located primarily (approximately 90%) in Connecticut. This concentration of credit risk may be affected by changes in economic or other conditions of the geographic area. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable.

Equity Offerings

Equity Offerings	3 Months Ended
	Mar. 31, 2020
Equity Offerings
Equity Offerings	11. Equity Offerings On November 9, 2018, the Company entered into an At the Market Issuance Sales Agreement with B. Riley FBR, Inc., (the “Sales Agent”) to sell common shares, par value $0.001 per share, of the Company (the “ATM Shares”), having an aggregate offering price of up to $16 million, from time to time, through an “at-the-market” equity offering program (the “ATM Offering”). A total of 511,635 ATM Shares were sold in the ATM Offering during the three-month period ended March 31, 2019, providing the Company net proceeds of approximately $2,227,716. No shares were sold under the ATM during the quarter ended March 31, 2020. On January 27, 2020, the Company filed a Registration Statement on Form S-3 with the SEC covering the offering and sale of up to $100 million of its securities, including common shares, preferred shares, debt securities, warrants, guaranties and units consisting of two or more classes of the foregoing securities. The registration statement became effective February 5, 2020. During the quarter ended March 31, 2020, no securities were sold pursuant to the registration statement.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events
Subsequent Events	12. Subsequent Events On April 27, 2020, the Company sold a note in default with a principal balance of $140,000 for $170,000 realizing approximately $18,000 in interest income. No gain or loss was recognized on the sale of the note. On April 29, 2020, the Company received $247,845 gross loan proceeds from the Paycheck Protection Program.

COVID 19

COVID 19	3 Months Ended
	Mar. 31, 2020
COVID-19
COVID-19	13. COVID-19 On March 20, 2020, Governor Ned Lamont of Connecticut issued an executive order requiring all “non-essential” businesses to close effective 8:00 p.m., Monday, March 23, 2020, until further notice. If this order remains in effect for an extended period, it could disrupt the Company’s operations in a material way, resulting in reductions in revenues, net income and cash flow. In addition, any disruption to the operations of a borrower could impair its ability to make monthly payments of interest, payments of insurance and/or taxes or to repay the outstanding balances on their loans at maturity. Furthermore, if a liquidity crisis were to develop, borrowers may not be able to refinance their loans when due. Finally, the spread of COVID-19 is having a negative impact on the overall economy, including on real estate values. If borrowers cannot sell their properties or the values of properties securing mortgage loans decline significantly, the borrowers may not be able to repay their loans when due. In addition, the filing and preparation of loan documents with the various recording offices may be delayed and currently there is no access to the Connecticut court system to process foreclosures and evictions. Currently, of our 480 mortgages receivable, we have 42 COVID-19 forbearance requests representing $9.2 million of mortgages receivable and a total of approximately $283,000 of deferred interest. Once a forbearance request is initiated by the borrower, we promptly request documentation to determine the validity of the request and if valid and reasonable, we defer the borrower’s payment of interest for a period of 90 days. A legal fee is the only charge passed on to the borrower. Under these circumstances, the Company may be compelled to take measures to preserve its cash flow, including reducing operating expenses and dividend payments until the consequences of the outbreak subside. There may be other adverse consequences to the Company’s business, operations and financial condition from the spread of COVID-19 that have not been considered.

Significant Accounting Polici_2

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Significant Accounting Policies
Unaudited Financial Statements	Unaudited Financial Statements The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles 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. 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	Use of Estimates The preparation of financial statements in conformity with 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’s estimates are based on (a) assumptions that consider the Company’s past experience, (b) projections regarding the Company’s future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at various financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant.
Allowance for Loan Loss	Allowance for Loan Loss 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.
Fair Value Measurements	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 FASB ASC 820 are described as follows: Level 1 Level 2 · 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 or 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 3
Property and Equipment	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.
Impairment of long-lived assets	Impairment of long-lived assets The Company continually 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 total of 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.
Deferred Financing Costs	Deferred Financing Costs Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 6 - Notes Payable -- are being amortized over the term of the respective Notes.
Revenue Recognition	Revenue Recognition 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 does not accrue interest income on mortgages receivable that are more than 90 days past due. Origination fee revenue, generally 2%-5% of the original loan principal amount, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310.
Income Taxes	Income Taxes The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and made the election to be taxed as a REIT when it filed its 2017 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, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding common shares. 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 follows the provisions of FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes”, which 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 likely than 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 no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of March 31, 2019.
Earnings Per Share	Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260 “Earnings Per 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.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company adopted both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU modifies ASC 740 to remove certain exceptions and adds guidance to reduce complexity in certain areas. For companies that file with the U.S. Securities and Exchange Commission ("SEC"), the standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted but requires simultaneous adoption of all provisions of the new standard. The Company believes that the adoption of this guidance will not have a material impact on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on the Company’s financial statements.

Fair Value Measurement (Tables)

Fair Value Measurement (Tables)	3 Months Ended
	Mar. 31, 2020
Fair Value Measurement
Summary of company's assets at fair value	The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of March 31, 2020: Level 1 Level 2 Level 3 Total Mutual Funds $ 16,248,958 — — $ 16,248,958 Total Investments $ 16,248,958 — — $ 16,248,958 Real Estate Owned $ 7,290,676 $ 7,290,676

Mortgages Receivable (Tables)

Mortgages Receivable (Tables)	3 Months Ended
	Mar. 31, 2020
Mortgages Receivable
Schedule of credit risk profile	Credit risk profile based on loan activity as of March 31, 2020 and December 31, 2019: Total Outstanding Mortgages Receivable Residential Commercial Land Mixed Use Mortgages March 31, 2020 $ 72,897,328 $ 28,131,637 $ 7,407,774 $ 3,354,924 $ 111,791,663 December 31, 2019 $ 71,605,920 $ 16,122,990 $ 5,639,979 $ 979,800 $ 94,348,689
Schedule of maturities of mortgage loans receivable	The following are the maturities of mortgages receivable as of March 31: 2020 $ 60,775,612 2021 35,794,450 2022 13,653,333 2023 1,568,268 Total $ 111,791,663

Other Income (Tables)

Other Income (Tables)	3 Months Ended
	Mar. 31, 2020
Other Income
Schedule of other income	For the three months ended March 31, 2020 and 2019, other income consists of the following: 2020 2019 Income on borrower charges $ 86,449 $ 4,034 Lender, modification and extension fees 132,274 61,249 In-house legal fees 51,150 29,150 Other income 14,401 22,707 Total $ 284,274 $ 117,140

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies
Schedule of original maturities of deferred revenue	Original maturities of deferred revenue are as follows as of: March 31, 2020 $ 2021 274,951 2022 51,369 2023 16,916 Total $ 1,280,745

The Company (Details)

The Company (Details)	3 Months Ended
	Mar. 31, 2020
Minimum [Member]
Debt term (in years)	1 year
Maximum [Member]
Debt term (in years)	3 years

Significant Accounting Polici_3

Significant Accounting Policies (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Uncertain tax positions		$ 0
Land and Building [Member]
Property, Plant and Equipment, Useful Life	40 years
Minimum [Member]
Origination fee revenue as a percentage of original loan principal amount	2.00%
Maximum [Member]
Origination fee revenue as a percentage of original loan principal amount	5.00%

Fair Value Measurement (Details

Fair Value Measurement (Details)	Mar. 31, 2020USD ($)
Fair Value Measurement
Mutual Funds	$ 16,248,958
Total Investments	16,248,958
Real Estate Owned	7,290,676
Level 1
Fair Value Measurement
Mutual Funds	16,248,958
Total Investments	16,248,958
Real Estate Owned	0
Level 2
Fair Value Measurement
Mutual Funds	0
Total Investments	0
Real Estate Owned	0
Level 3
Fair Value Measurement
Mutual Funds	0
Total Investments	0
Real Estate Owned	$ 7,290,676

Mortgages Receivable (Details)

Mortgages Receivable (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	$ 111,791,663	$ 94,348,689
Land [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	7,407,774	5,639,979
Residential Mortgage [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	72,897,328	71,605,920
Commercial Loan [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	28,131,637	16,122,990
Mixed Use [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	$ 3,354,924	$ 979,800

Mortgages Receivable - Maturiti

Mortgages Receivable - Maturities of mortgage loans (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Mortgages Receivable
2020	$ 60,775,612
2021	35,794,450
2022	13,653,333
2023	1,568,268
Total	$ 111,791,663	$ 94,348,689

Mortgages Receivable - Addition

Mortgages Receivable - Additional information (Details)	3 Months Ended
	Mar. 31, 2020USD ($)loan	Mar. 31, 2019USD ($)	Dec. 31, 2019USD ($)
Mortgage Loans on Real Estate, Default Interest Rate	18.00%
Payments to Acquire Mortgage Receivable	$ 28,675,048	$ 12,827,043
Proceeds from Collection of Mortgages Receivable	11,758,497	8,481,663
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	$ 111,791,663		$ 94,348,689
Mortgage loan portfolio number of loans | loan	480
Mortgage Concentration Risk [Member]
Concentration Risk, Percentage	10.00%
Mortgages [Member]
Payments to Acquire Mortgage Receivable	$ 28,675,048	$ 12,827,043
Minimum [Member]
Debt term (in years)	1 year
Mortgage Loans on Real Estate, Interest Rate	5.00%
Maximum [Member]
Debt term (in years)	3 years
Mortgage Loans on Real Estate, Face Amount of Mortgages	$ 2,450,000
Mortgage Loans on Real Estate, Interest Rate	13.00%
Thirteen Mortgage Loans [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate	$ 3,100,000
Mortgage loan portfolio number of loans in process of foreclosure | loan	13

Real Estate Owned - Additional

Real Estate Owned - Additional information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Real Estate Owned
Real Estate Investment Property, at Cost	$ 7,290,676		$ 8,258,082
Rental Properties	1,545,398
Real Estate Held-for-sale	5,745,278
Impairment loss on real estate owned	$ 250,000	$ 0

Notes Payable (Details)

Notes Payable (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019
Debt Issuance Costs, Net	$ 2,570,597	$ 2,687,190
Unsecured Unsubordinated Notes Due June 30, 2024 [Member]
Interest rate			7.125%
Notes issued denomination	$ 25
Threshold percentage of taxable income to prohibit distribution	90.00%
Threshold asset coverage ratio	150.00%
Period of written notice to redeem notes without premium or penalty	30 days
Debt Issuance Costs, Net	$ 2,700,000			$ 2,700,000
Unsecured Unsubordinated Notes Due December 30 2024 [Member]
Interest rate		6.875%

Other Income (Details)

Other Income (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Other Income
Income on borrower charges	$ 86,449	$ 4,034
Lender, modification and extension fees	132,274	61,249
In-house legal fees	51,150	29,150
Other income	14,401	22,707
Total	$ 284,274	$ 117,140

Commitments and Contingencies -

Commitments and Contingencies - Original maturities of deferred revenue (Details) - Deferred Lease Revenue [Member]	Mar. 31, 2020USD ($)
Other Commitments [Line Items]
2020	$ 937,509
2021	274,951
2022	51,369
2023	16,916
Total	$ 1,280,745

Commitments and Contingencies_2

Commitments and Contingencies - Additional Information (Details)	3 Months Ended
	Mar. 31, 2020USD ($)property
Number of Mortgage Properties | property	6
Mortgages receivable	$ 1,200,000
Unfunded Loan Commitment [Member]
Other Commitment	$ 9,367,691
Minimum [Member]
Loan Origination Fees On Original Loan Principal, Percentage	2.00%
Maximum [Member]
Loan Origination Fees On Original Loan Principal, Percentage	5.00%

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Manager [Member]
Related Party Transaction [Line Items]
Due to Officers or Stockholders	$ 11,397
Shareholders [Member]
Related Party Transaction [Line Items]
Loans and Leases Receivable, Related Parties	5,922,692	$ 4,327,297
Interest Income, Related Party	180,107	121,535
Wife of Executive Officer [Member] | Accounting and Financial Services [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 25,000	$ 25,000

Concentration of Credit Risk (D

Concentration of Credit Risk (Details) - Credit Concentration Risk [Member]	3 Months Ended
	Mar. 31, 2020USD ($)
Concentration Risk [Line Items]
Concentration Risk, Percentage	90.00%
Cash and cash equivalents insured by the Federal Deposit Insurance Corporation	$ 250,000

Equity Offerings (Details)

Equity Offerings (Details) - USD ($)	Jan. 27, 2020	Nov. 09, 2018	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Common Stock, Par or Stated Value Per Share			$ 0.001		$ 0.001
Proceeds from Issuance of Common Stock				$ 2,227,716
Proceeds from Issuance or Sale of Equity			$ 0
Maximum [Member]
Proceeds from Issuance or Sale of Equity	$ 100,000,000
ATM
Common Stock, Par or Stated Value Per Share		$ 0.001
Stock Issued During Period, Value, New Issues		$ 16,000,000		2,227,716
ATM | Common Shares [Member]
Stock Issued During Period, Value, New Issues				$ 511
Sale of common stock			0	511,635

Subsequent Events (Details)

Subsequent Events (Details) - USD ($)	Apr. 29, 2020	Apr. 27, 2020	Mar. 31, 2020	Dec. 31, 2019
Subsequent Event [Line Items]
Principal balance of notes sold			$ 70,501	$ 75,433
Subsequent Event [Member] | Notes Payable [Member]
Subsequent Event [Line Items]
Principal balance of notes sold		$ 140,000
Proceeds from sale of notes		170,000
Interest Income		$ 18,000
Subsequent Event [Member] | Paycheck Protection Program
Subsequent Event [Line Items]
Loan received	$ 247,845

COVID-19 (Details)

COVID-19 (Details)	3 Months Ended
	Mar. 31, 2020USD ($)loan
COVID-19
Number of mortgages receivable | loan	480
Number of COVID-19 forbearance requests | loan	42
Mortgages receivable for COVID-19 forbearance requests | $	$ 9,200,000
Deferred interest | $	$ 283,000
Modification of borrower's loan period	90 days