Asset sales reshape Selectis Health (GBCS) balance sheet amid going-concern risk
Selectis Health, Inc. reported a sharp swing to profitability for the three months ended March 31, 2026, driven by asset sales rather than core operations. The company generated net income of $6,526,382, or $2.13 basic and $1.90 diluted earnings per share, compared with a net loss of $655,969 a year earlier.
Total revenue fell to $7,288,602 from $10,486,939, a 32% decline, mainly because two Georgia facilities were sold in January 2026. Healthcare revenue dropped to $7,181,161, partly offset by new management fee revenue of $107,441. Operations posted a loss from operations of $1,262,493, but the company recognized a gain on sale of assets of $8,896,309 from the January sale of two Georgia facilities for gross proceeds of $13.2 million.
Asset sales and debt repayment significantly reshaped the balance sheet. Total debt, net of discounts, declined to $22,388,505 from $31,000,562, and total liabilities fell to $29,753,846 from $38,788,531. Stockholders’ equity improved from a deficit of $(6,210,538) at December 31, 2025 to positive equity of $258,344 at March 31, 2026.
Despite these improvements, liquidity remains strained. Cash and cash equivalents were $1,286,452 and restricted cash $192,129, and the company reported negative working capital of about $6.5 million and an accumulated deficit of $14,726,006. Management concluded that substantial doubt exists about Selectis Health’s ability to continue as a going concern and outlined plans to increase occupancy and reimbursement, sell additional facilities, control costs, and seek new capital.
The company continued to reposition its portfolio. As of March 31, 2026 it owned ten long-term care facilities with 712 operating beds and 141 leased beds, primarily in Arkansas, Ohio and Oklahoma, and had completed or agreed to sell all four Georgia skilled nursing facilities for combined gross proceeds of $28.9 million. Management also disclosed a material weakness in disclosure controls and procedures and plans to implement multi-level review and work with third parties to strengthen internal controls.
Positive
- None.
Negative
- Substantial doubt about going concern: Despite Q1 2026 net income of $6.5 million, the company reports negative working capital of about $6.5 million, an accumulated deficit of $14.7 million, and explicitly states that substantial doubt exists about its ability to continue as a going concern.
- Material weakness in disclosure controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2026 and identified a material weakness, indicating elevated financial reporting and control risk.
- Underlying operations still unprofitable: Revenue fell 32% year over year to $7.3 million, loss from operations widened to $1.3 million, and Q1 profitability was driven primarily by an $8.9 million gain on the sale of two Georgia facilities rather than sustainable operating improvements.
Insights
Q1 profit is sale-driven; leverage and going-concern risk remain elevated.
Selectis Health reported net income of $6.5 million in Q1 2026, but this was dominated by an $8.9 million gain on selling two Georgia facilities. Core operations still lost $1.3 million from operations on revenue that declined 32% year over year.
Asset sales and debt repayment reduced total debt, net of discounts, from $31.0 million to $22.4 million and turned a shareholders’ deficit into positive equity of $258,344. However, cash and restricted cash totaled only $1.48 million against negative working capital of roughly $6.5 million, and management explicitly identified substantial doubt about the company’s ability to continue as a going concern.
Future performance depends heavily on executing the stated plan: boosting occupancy and Medicaid reimbursement, further asset sales, cost controls, and raising additional debt or equity. The May 2026 sale of two additional Georgia facilities for $15.7 million supports deleveraging, but the filing notes a material weakness in disclosure controls, so subsequent financial reporting quality and liquidity developments will be important to track in later periods.
Key Figures
Key Terms
going concern financial
Series D Convertible Preferred Stock financial
Senior Secured Promissory Notes financial
assets held for sale financial
material weakness financial
weighted average interest rate financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from _______ to ______
Commission
file number
(Exact name of Registrant as specified in its Charter)
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| incorporation or organization) | Identification number |
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telephone number:
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12 months (or
for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
As
of May 20, 2026, the Registrant had
INDEX
| Page | ||
| No. | ||
| PART I — FINANCIAL INFORMATION | ||
| Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 3 |
| Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 3 | |
| Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 4 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 5 | |
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 6 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 |
| Item 4. | Controls and Procedures | 23 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 24 |
| Item 1A. | Risk Factors | 24 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| Item 3. | Defaults Upon Senior Securities | 24 |
| Item 4. | Mine Safety Disclosures | 24 |
| Item 5. | Other Information | 24 |
| Item 6. | Exhibits | 24 |
| 2 |
PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Other receivable | ||||||||
| Prepaid expenses and other assets | ||||||||
| Assets held for sale | ||||||||
| Total current assets | ||||||||
| Long Term Assets: | ||||||||
| Restricted cash | ||||||||
| Escrow receivable | - | |||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Liabilities: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Dividends payable | ||||||||
| Short term debt | - | |||||||
| Current portion of long-term debt, net of discount of $ | ||||||||
| Lines of credit | - | |||||||
| Liabilities held for sale, net of discount of $ | ||||||||
| Other current liabilities | - | |||||||
| Total Current Liabilities | ||||||||
| Long-term debt, net of discount of $ | ||||||||
| Lease security deposit | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | - | |||||||
| Stockholders’ Deficit: | ||||||||
| Preferred Series A - no dividends, $ | ||||||||
| Preferred Series D - | ||||||||
| Preferred stock value | ||||||||
| Common Stock - $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 3 |
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2026 | 2025 | |||||||
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | ||||||||
| Healthcare revenue | $ | $ | ||||||
| Management fee revenue | - | |||||||
| Total Revenue | ||||||||
| Expenses | ||||||||
| Property taxes, insurance and other operating | ||||||||
| General and administrative | ||||||||
| Provision for credit losses | ||||||||
| Depreciation | ||||||||
| Total Expenses | ||||||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Other (income) expense | ||||||||
| Gain on sale of asset | ( | ) | - | |||||
| Interest expense, net | ||||||||
| Other income | ( | ) | ( | ) | ||||
| Total other (income) expense | ( | ) | ||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Provision for income taxes | - | |||||||
| Net income (loss) | ( | ) | ||||||
| Series D preferred dividends | ( | ) | ( | ) | ||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | ) | ||||
| Per Share Data: | ||||||||
| Net income (loss) per share attributable to common stockholders: | ||||||||
| Basic | $ | $ | ( | ) | ||||
| Diluted | $ | $ | ( | ) | ||||
| Weighted Average Common Shares Outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 4 |
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
Series A Preferred Stock | Series D Preferred Stock | Common Stock | Additional | Selectis Health, Inc. | ||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Series D Preferred Dividends | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Repurchase of preferred stock | - | - | ( | ) | ( | ) | - | - | - | - | ( | ) | ||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
Series A Preferred Stock | Series D Preferred Stock | Common Stock | Additional | Selectis Health, Inc. | ||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Series D Preferred Dividends | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 5 |
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2026 | 2025 | |||||||
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Gain on sale of assets | ( | ) | - | |||||
| Provision for credit losses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
Liabilities held for sale | ( | ) | - | |||||
| Other current liabilities | ( | ) | ||||||
| Lease security deposits | ||||||||
| Cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of assets held for sale, net | - | |||||||
| Cash paid for property and equipment | ( | ) | ( | ) | ||||
| Cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from debt, non-related party | - | |||||||
| Payments on debt, related party | ( | ) | - | |||||
| Payments on debt, non-related party | ( | ) | ( | ) | ||||
| Repurchase of preferred stock | ( | ) | ||||||
| Payments on line-of-credit | ( |
) | - | |||||
| Proceeds from line-of-credit | - | |||||||
| Cash used in financing activities | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents and restricted cash at beginning of the period | ||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | $ | $ | ||||||
| Total Cash and Cash Equivalents and Restricted Cash | $ | $ | ||||||
| Supplemental Schedule of Non-Cash Investing and Financing Activities | ||||||||
| Dividends declared on Series D Preferred Stock | $ | $ | ||||||
Payoff of mortgages funded at closing | $ | $ | - | |||||
Escrow receivable funded at closing | $ | $ | - | |||||
Closing costs, prepayment penalties and other adjustments funded at closing | $ | $ | - | |||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
SELECTIS HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of the Business
Selectis Health, Inc (“Selectis” or “we” or the “Company”) owns and operates, through wholly-owned subsidiaries Assisted Living Facilities, Independent Living Facilities, and Skilled Nursing Facilities across the Midwest, South and Southeastern portions of the US.
The Company acquires, develops, lease and manages healthcare real estate and provides healthcare operations through our wholly-owned subsidiaries. Our portfolio is comprised of investments in the following healthcare operations: (i) senior housing (including independent and assisted living) and (ii) post-acute/skilled nursing. We will make investments within our healthcare operations using the following six investment products: (i) direct ownership of properties, (ii) debt investments, (iii) developments and redevelopments, (iv) investment management, (v) the Housing and Economic Recovery Act of 2008 (“RIDEA”), which represents investments in senior housing operations utilizing the structure permitted by RIDEA and (vi) owning healthcare operations.
Liquidity and Going Concern
The accompanying unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP applicable to a going concern. This presentation contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described below.
For
the three months ended March 31, 2026, the Company had net income of $
| ● | Increasing revenue by increasing occupancy in the facilities and increasing Medicaid reimbursement rates; | |
| ● | Sale of certain facilities; | |
| ● | Controlling operating expenses; and | |
| ● | Seeking additional capital through the issuance of debt or equity securities, or the sale of assets. |
The focus on opportunities within the Company’s current portfolio and future properties to acquire and operate, the settlement, refinance, and continued service of debt obligations, the potential funds generated from stock sales and other initiatives contributing to additional working capital should alleviate any substantial doubt about the Company’s ability to continue as a going concern. However, the Company cannot predict, with certainty, the outcome of these actions to generate liquidity and the failure to do so could negatively impact the Company’s future operations.
| 7 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and in conjunction with the rules and regulations of the Securities Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary to make the consolidated financial statements not misleading have been included. Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the entire year. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, the unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Income (Loss) Per Common Share
Basic earnings (loss) per share are based on the weighted-average number of shares of common stock outstanding. FASB ASC Topic 260, “Earnings per Share”, requires the Company to include additional shares in the computation of earnings per share, assuming dilution.
Diluted earnings per share are based on the assumption that all dilutive options and warrants were converted or exercised by applying the treasury stock method and that all convertible preferred stock were converted into common shares by applying the if-converted method. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period or at the time of issuance, if later, and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, the preferred dividends applicable to convertible preferred stock are added back to the numerator. The convertible preferred stock is assumed to have been converted at the beginning of the period or at time of issuance, if later, and the resulting common shares are included in the denominator.
We calculate basic earnings (loss) per share by dividing net income (loss) attributable to common stockholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the reporting period. Diluted earnings per share is calculated similarly but reflects the potential impact of outstanding options, warrants and other commitments to issue common stock, including shares issuable upon the conversion of convertible preferred stock outstanding, except where the impact would be anti-dilutive.
| 8 |
The following table sets forth the computation of basic and diluted earnings per share:
SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE
| 2026 | 2025 | |||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Numerator for basic and diluted earnings per share: | ||||||||
| Net income (Loss) Attributable to Selectis Health, Inc. | $ | $ | ( | ) | ||||
| Series D Preferred Dividends | ( | ) | ( | ) | ||||
| Net income (loss) attributable to common stockholders – Basic and Diluted | $ | $ | ( | ) | ||||
| Denominator for basic and diluted earnings per share: | ||||||||
| Weighted average common shares outstanding – Basic | ||||||||
| Weighted average common shares outstanding – Diluted | ||||||||
| Net income (loss) per share attributable to common stockholders: | ||||||||
| Basic | $ | $ | ( | ) | ||||
| Diluted | $ | $ | ( | ) | ||||
Segment Reporting
The
Company operates through a
The CODM evaluates the performance of the operating segment and allocates resources based on net loss that also is reported on the condensed consolidated statements of operations and comprehensive loss as net loss. The measure of the operating segment assets is reported on the condensed consolidated balance sheet as total assets.
The CODM uses net income (loss) to monitor budget versus actual results and to analyze cash flows in assessing performance of the segment and allocating resources. The significant expense categories regularly provided to the CODM include property taxes, insurance and other operating expenses and general and administrative expenses. These expense categories are reported as separate line items in our condensed consolidated statements of operations and comprehensive loss. All our revenue is attributable to the United States and to our single operating segment.
Recently issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in ASU 2024-03 require a public business entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity’s expenses to help investors (i) better understand the entity’s performance, (ii) better assess the entity’s prospects for future cash flows, and (iii) compare an entity’s performance over time and with that of other entities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2024-03.
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2026. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
| 9 |
3. PROPERTY AND EQUIPMENT, NET
The gross carrying amount and accumulated depreciation of the Company’s property and equipment as of March 31, 2026 and December 31, 2025, are as follows:
SCHEDULE OF PROPERTY PLANT AND EQUIPMENT
| March 31, 2026 | December 31, 2025 | |||||||
| Land | $ | $ | ||||||
| Land Improvements | ||||||||
| Buildings and Improvements | ||||||||
| Furniture, Fixtures and Equipment | ||||||||
| Property and Equipment, gross | ||||||||
| Less: Accumulated Depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, net | $ | $ | ||||||
As
of March 31, 2026 and December 31, 2025 $
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Depreciation Expense | $ | $ | ||||||
4. DEBT AND DEBT - RELATED PARTIES
The following is a summary of the Company’s debt outstanding as of March 31, 2026 and December 31, 2025:
SCHEDULE OF DEBT OUTSTANDING
| March 31, 2026 | December 31, 2025 | |||||||
| Senior Secured Promissory Notes | $ | $ | ||||||
| Senior Secured Promissory Notes - Related Parties | - | |||||||
| Fixed-Rate Mortgage Loans | ||||||||
| Variable-Rate Mortgage Loans | ||||||||
| Line of Credit | - | |||||||
| Total | ||||||||
| Unamortized Discount and Debt Issuance Costs | ( | ) | ( | ) | ||||
| Total debt, net of discount | $ | $ | ||||||
| As presented in the Consolidated Balance Sheets: | ||||||||
| Current Maturities of Long-Term Debt, Net | $ | $ | ||||||
| Current Maturities of Long-Term Debt, Net classified within liabilities held for sale (1) | ||||||||
| Short Term Debt – Related Parties, Net | - | |||||||
| Line of Credit - Current | - | |||||||
| Long-Term Debt | ||||||||
$ | 22,388,505 | $ | 31,000,562 | |||||
| (1) |
The
weighted average interest rate and term of our fixed rate debt are
The
weighted average interest rate and term of our fixed rate debt are
| 10 |
Corporate Senior and Senior Secured Promissory Notes
Senior Secured Notes
As
of March 31, 2026, the senior secured notes are subject to annual interest of
In
2017, $
In
October 2017, the Company sold an aggregate of $
In
October 2018, the Company, through a registered broker-dealer acting as Placement Agent, undertook a private offering to accredited investors
of Units, each Unit consisting of an
On
January 17, 2020, the Board of Directors agreed to increase the total offering amount and extend the period of its 2018 Offering of
These
notes were extended to
Effective
June 27, 2023, pursuant to an Allonge and Modification Agreement a Majority in Interest of the senior secured note holders agreed to
extend the maturity date of the notes to
Effective
December 31, 2024, pursuant to the Second Amended and Restated Allonge and Modification Agreement a Majority in Interest of the senior
secured note holders agreed to extend the maturity date of the notes to
Effective
December 31, 2025, pursuant to the Third Amended and Restated Allonge and Modification Agreement a Majority in Interest of the senior
secured note holders agreed to extend the maturity date of the notes to
The Company evaluated the Amendment Agreement and the amendment was not required to be accounted for as a Troubled Debt Restructuring under ASC 470-60 as no concession was granted to the Company. The Company then evaluated the Second Amended and Restated Allonge and Modification Agreement was not required to be accounted for as an extinguishment under ASC 470-50, Debt – Modifications and Extinguishment. The Company recorded the debt as a modification. As a result of the new warrants, the Company recorded the incremental increase in fair value as a debt discount which is being amortized over the extended life of the notes of twelve months.
During the three
months ended March 31, 2026 the Company paid off $
| 11 |
Mortgage Loans and Lines of Credit Secured by Real Estate
Mortgage loans and other debts such as line of credit here are collateralized by all assets of each nursing home property and an assignment of its rents. Collateral for certain mortgage loans includes the personal guarantee of Christopher Brogdon, formerly but no longer a related party, or corporate guarantees. Mortgage loans for the periods presented consisted of the following:
SCHEDULE OF MORTGAGE LOAN DEBT
| Number of | Total Face | Total Principal Outstanding as of | ||||||||||||||
| State | Properties | Amount | March 31, 2026 | December 31, 2025 | ||||||||||||
| Arkansas(1) | $ | $ | $ | |||||||||||||
| Georgia(2) | $ | $ | $ | |||||||||||||
| Ohio(3) | $ | $ | $ | |||||||||||||
| Oklahoma(4) | $ | $ | $ | |||||||||||||
| $ | $ | $ | ||||||||||||||
| (1) | |
| (2) | |
| (3) | |
| (4) |
Corporate and Other Debt
The Company’s corporate debt as of March 31, 2026 and December 31, 2025 includes unsecured notes and notes secured by all assets of the Company not serving as collateral for other notes.
SCHEDULE OF UNSECURED NOTES AND NOTES SECURED BY ALL ASSETS
| Face | Total Principal Outstanding as of | Stated Interest | Maturity | |||||||||||||
| Series | Amount | March 31, 2026 | December 31, 2025 | Rate | Date | |||||||||||
| Senior Secured Promissory Notes | $ | $ | - | $ | ||||||||||||
| Promissory Note – Southern Bank | ||||||||||||||||
| Senior Secured Promissory Notes – Related Party | - | |||||||||||||||
| $ | $ | $ | ||||||||||||||
| 12 |
Lines of Credits
On
April 12, 2024, the Company entered into a Commercial Line of Credit Agreement and Note with Southern Bank for a secured line of credit
in the principal amount limit of $
In
November 2024, the Company entered into another Commercial Line of Credit Agreement and Note with Southern Bank for a secured line
of credit in the principal amount limit of $
As
of March 31, 2026 and December 31, 2025, the balance outstanding on the Commercial Line of Credits is $
Amortization of Debt Discount
Amortization
expense for debt issuance costs and debt discounts totaled $
Future maturities and principal payments of all notes payable listed above for the next five years and thereafter are as follows:
SCHEDULE OF FUTURE MATURITIES OF NOTES PAYABLE
| Year Ending December 31 | ||||
| 2026 (remaining nine months) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
2030 | ||||
| Thereafter | ||||
| Total (without debt discount) | $ | |||
5. STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
The
Company has authorized
Series A Convertible Redeemable Preferred Stock
The
Company’s Board of Directors has authorized
As
of March 31, 2026 and December 31, 2025, the Company has
| 13 |
Series D Convertible Preferred Stock
The
Company has established a class of preferred stock designated Series D Convertible Preferred Stock (“Series D preferred stock”)
and authorized an aggregate of
As
of March 31, 2026 and December 31, 2025, the Company had
For
the three months ended March 31, 2026, and 2025, the Company declared $
Common Stock
The
Company’s Board of Directors has authorized
Common Stock Warrants
As
of March 31, 2026 and December 31, 2025, the Company had
Activity for the three months ended March 31, 2026, related to common stock warrants is as follows:
SCHEDULE OF COMMON STOCK WARRANTS ACTIVITY
| March 31, 2026 | ||||||||
| Number of | Weighted Average | |||||||
| Warrants | Exercise Price | |||||||
| January 1, 2026 Balance | $ | |||||||
| Exercised | - | - | ||||||
| Expired | - | - | ||||||
| March 31, 2026 Balance | $ | |||||||
6. GOODWILL
Goodwill is tested for impairment at a reporting unit level on an annual basis or when an event occurs, or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. During the three months ended March 31, 2026 and 2025, the Company recorded no impairment of Goodwill.
| 14 |
Following is a summary of goodwill as of March 31, 2026 and December 31, 2025:
SCHEDULE OF ACTIVITIES IN GOODWILL
| Balance, December 31, 2025 | $ | |||
| Additions | - | |||
| Transfer to assets held for sale | ( | ) | ||
| Balance, March 31, 2026 | $ |
7. ASSETS HELD FOR SALE
May 2026 Sale of Assets
On
March 5, 2026, the Company entered into a letter of intent to sell certain wholly-owned subsidiaries Global Abbeville Property, LLC and
Dodge NH, LLC, each a Georgia limited liability company (each a “Seller”) to execute and deliver a definitive Purchase and
Sale Agreement (“March 2026 PSA”) with two newly formed entities: Abbeville Crossing Propco of Journey LLC and Eastman Trails
Propco of Journey LLC, each a Georgia limited liability company (each a “Purchaser”); pursuant to which each Seller agreed
to sell substantially all of the real and personal property owned by each, namely the skilled nursing facilities for $
During
the three months ended March 31, 2026, the Company reclassified $
On
May 1, 2026 the Company sold the two Georgia facilities for gross proceeds of $
The following table sets forth the assets held for sale at March 31, 2026 relating to the pending sale of the two Georgia facilities:
SCHEDULE OF ASSETS HELD FOR SALE
| March 31, 2026 | ||||
| Property and equipment, net | $ | |||
Goodwill | $ | |||
| Debt attributed to assets held for sale | $ | ( | ) | |
| Accounts payable attributed to assets held for sale | $ | - | ||
The following table sets forth the assets held for sale at December 31, 2025 relating to the sale of the two Georgia facilities which closed in January 2026, see Note 8:
| December 31, 2025 | ||||
| Property and equipment, net | $ | |||
| Debt attributed to assets held for sale | $ | ( | ) | |
| Accounts payable attributed to assets held for sale | $ | ( | ) | |
8. SALE OF ATL/WARR AND PROVIDENCE HR
January 2026 Sale of Assets
On
December 5, 2025, the Company entered into a letter of intent to sell certain wholly-owned subsidiaries (collectively the “Sellers”)
of the “Company ATL/WARR, LLC and PROVIDENCE HR, LLC, each a Georgia limited liability company, consummated a definitive Purchase
and Sale Agreement (“ January 2026 PSA”) with GA SNF SPARTA GA LLC and GA SNF WARRENTON GA LLC, both limited liability companies
in exchange for $
During
the fourth quarter of 2025, the Company reclassified $
In
January 2026 the Company sold the two Georgia facilities for gross proceeds of $
| 15 |
A summary of the sale is as follows:
SCHEDULE OF SALE OF SUBSIDIARIES
| Description | Amount | |||
| Cash | $ | |||
| Escrow Receivable | ||||
| Notes Payable | ||||
| G&A Closing Costs | ||||
| Sale Total | $ | |||
As part of the sale of the properties, the Company recorded a gain on the sale of the properties. A summary of the gain is as follows:
SCHEDULE OF GAIN ON SALE OF PROPERTY
| Description | Amount | |||
| Cash | $ | |||
| Escrow Receivable | ||||
| Notes Payable | ||||
| Closing expenses and adjustments | ||||
| Land & Buildings | ( | ) | ||
| Total Gain on Sale | $ | |||
9. INCOME TAXES
The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter. The Company’s quarterly tax provision, and its quarterly estimate of its annual effective tax rate, are subject to significant volatility due to several factors, including the Company’s ability to accurately predict its pre-tax income and loss in multiple jurisdictions.
Income tax expense was $
10. LEGAL PROCEEDINGS
The Company and/or its affiliated subsidiaries provide patient care at or through their facilities. As such, the Company and its affiliated subsidiaries are subject from time to time to claims of negligence resulting in injury or death to residents. The Company maintains comprehensive general liability insurance and professional liability insurance in sufficient amounts to cover most material exposure resulting from these claims. The cost of defense is generally covered by these liability policies subject to reasonable reserves and deductibles. Nevertheless the Company does have exposure to these claims which in some cases can be material. There can be no assurance that the Company’s portfolio of insurance products will be adequate to cover all potential exposure or prevent material adverse financial losses.
11. COMMITMENTS AND CONTINGENCIES
General and Professional Liability Insurance and Lawsuits
The senior care industry has experienced significant increases in both the number of personal injury/wrongful death claims and in the severity of awards based upon alleged negligence by skilled nursing facilities and their employees in providing care to residents. The Company has been, and continues to be, subject to claims and legal actions that arise in the ordinary course of business, including potential claims related to patient care and treatment. The defense of these lawsuits may result in significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. The Company purchases insurance through third party providers that provides coverage for these claims.
There is certain additional litigation incidental to our business, none of which, based upon information available to date, would be material to our financial position, results of operations, or cash flows. In addition, the long–term care industry is continuously subject to scrutiny by governmental regulators, which could result in litigation or claims related to regulatory compliance matters.
Governmental Regulations
Laws and regulations governing the Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation. Management believes that it is following all applicable laws and regulations in all material respects. However, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusions from the Medicare, Medicaid and other federal healthcare programs.
| 16 |
12. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the condensed consolidated balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements, except as noted below:
March 2026 Purchase and Sale Agreement
Effective on March 5, 2026, the Company caused two of the Company’s wholly-owned subsidiaries Global Abbeville Property, LLC and Dodge NH, LLC, each a Georgia limited liability company (each a “Seller”) to execute and deliver the March 2026 PSA with two newly formed entities: Abbeville Crossing Propco of Journey LLC and Eastman Trails Propco of Journey LLC, each a Georgia limited liability company (each a “Purchaser”); pursuant to which each Seller agreed to sell substantially all of the real and personal property owned by each, namely the skilled nursing facilities located at 206 Main Street E, Abbeville, Georgia, upon which is located that certain 101-bed skilled nursing facility commonly known as “Glen Eagle Healthcare and Rehab” (the “Glen Eagle Facility”); and at 556 Chester Highway, Eastman, Georgia, upon which is located that certain 100-bed skilled nursing facility commonly known as “Eastman Healthcare and Rehab” (the “Eastman Facility”, and together with the Glen Eagle Facility, the “Facilities”).
On
May 1, 2026, the Seller consummated the March 2026 PSA with GA SNF ABBEVILLE GA LLC and GA SNF EASTMAN GA LLC. The purchase price to
be paid by Purchaser for the two (2) Facilities under the PSA. was an aggregate of $
Concurrently with the consummation of the PSA, the controlled lease operators of the Facilities (“Old Operators”) consummated an Operations Transfer Agreement (“OTA”) with controlled subsidiaries of the Purchasers (“New Operators”) under which all assets and operations of Old Operators were transferred to New Operators. No additional or separate consideration was paid by New Operators for the assets and operations so assigned.
| 17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is Management’s Discussion and Analysis of Financial Condition and Results of Operations and should be read in conjunction with the interim financial statements and notes thereto contained in this report. This section contains forward-looking statements, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based. These forward-looking statements generally are identified by the words “believes,” “projects,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise. All forward-looking statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
Actual future results and trends may differ materially from expectations depending on a variety of factors discussed in our filings with the SEC. These factors include without limitation:
| * | strategic business relationships; | |
| * | statements about our future business plans and strategies; | |
| * | anticipated operating results and sources of future revenue; | |
| * | our organization’s growth; | |
| * | adequacy of our financial resources; | |
| * | development of markets; | |
| * | competitive pressures; | |
| * | changing economic conditions; and | |
| * | expectations regarding competition from other companies. |
Although we believe that any forward-looking statements, we make in this Quarterly Report are reasonable, because forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements, besides the specific factors identified above in the Risk Factors section of this Quarterly Report, include:
| * | changes in general economic and business conditions affecting the healthcare industry; | |
| * | developments that make our facilities less competitive; | |
| * | changes in our business strategies; | |
| * | the level of demand for our facilities; and | |
| * | regulatory changes affecting the healthcare industry and third-party payor practices. |
Properties
As of March 31, 2026, we owned ten (10) long-term care facilities including a campus of three buildings in Tulsa, OK. The following table provides summary information regarding these facilities at March 31, 2026:
| Total Square Feet | # of Beds | |||||||||||||||||||||||||||
| State | Properties | Operations | Leased Operations | Operating Square Feet | Leased Square Feet | Operating Beds | Leased Beds | |||||||||||||||||||||
| Arkansas | 1 | - | 1 | - | 40,737 | - | 141 | |||||||||||||||||||||
| Georgia (1) | 2 | 2 | - | 63,616 | - | 201 | - | |||||||||||||||||||||
| Ohio | 1 | - | - | 27,500 | - | 99 | - | |||||||||||||||||||||
| Oklahoma | 6 | 5 | - | 162,976 | - | 412 | - | |||||||||||||||||||||
| Total | 10 | 7 | 1 | 254,092 | 40,737 | 712 | 141 | |||||||||||||||||||||
| (1) | As a result of the sale of Goodwill Hunting LLC on June 18, 2024 the Company had no more operating leases recorded on its consolidated balance sheet. |
Effective December 5, 2025, the Company executed two Purchase and Sale Agreements, and corresponding Operations Transfer Agreements, pursuant to which the Company agreed to sell to an unrelated third party, two (2) of the Company’s skilled nursing facilities in the State of Georgia: Warrenton and Sparta. The completion of the sale of the PSA’s resulted in the Company having two (2) remaining facilities in the State of Georgia. The Company closed on this transaction in January 2026.
Effective March 5, 2026, the Company executed two Purchase and Sale Agreements, and corresponding Operations Transfer Agreements, pursuant to which the Company agreed to sell to an unrelated third party, the Company’s remaining two (2) skilled nursing facilities in the State of Georgia: Glen Eagle and Eastman. This transaction closed in May 2026, therefore the Company would no longer own any healthcare facilities in the State of Georgia.
| 18 |
RESULTS OF OPERATIONS
The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our interim consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | ||||||||
| Healthcare revenue | $ | 7,181,161 | $ | 10,486,939 | ||||
| Management Fee Revenue | 107,441 | |||||||
| Total Revenue | 7,288,602 | 10,486,939 | ||||||
| Expenses | ||||||||
| Property taxes, insurance and other operating | 6,068,043 | 8,080,969 | ||||||
| General and administrative | 2,129,484 | 2,365,088 | ||||||
| Provision for credit losses | 20,357 | 99,608 | ||||||
| Depreciation | 333,211 | 363,020 | ||||||
| Total Expenses | 8,551,095 | 10,908,685 | ||||||
| Loss from Operations | (1,262,493 | ) | (421,746 | ) | ||||
| Other (income) expense | ||||||||
| Gain on sale of asset | (8,896,309 | ) | - | |||||
| Interest expense, net | 923,784 | 542,667 | ||||||
| Other income | (226,085 | ) | (308,444 | ) | ||||
| Total other (income) expense | (8,198,610 | ) | 234,223 | |||||
| Income (loss) before income taxes | 6,936,117 | (655,969 | ) | |||||
| Provision for income taxes | 409,735 | - | ||||||
| Net Income (Loss) | $ | 6,526,382 | $ | (655,969 | ) | |||
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025
Revenues
Healthcare Revenue
Healthcare revenue for the three months ended March 31, 2026 was $7,181,161, compared to $10,486,939 for the three months ended March 31, 2025, a decrease of $3,305,778 or 32%. Healthcare revenues decreased due to the sale of two of our Georgia facilities in mid-January 2026.
Management Fee Revenue
Management fee revenue for the three months ended March 31, 2026 was $107,441 compared to $0 for the three months ended March 31, 2025, an increase of $107,441 or 100%. Management fee revenues increased due to the start of a management fee arrangement in November 2025.
| 19 |
Operating Expenses
Property Taxes, Insurance, and Other Operating
Property taxes, insurance, and other operating expenses was $6,068,043 for the three months ended March 31, 2026, compared to $8,080,969 for the three months ended March 31, 2025, a decrease of $2,012,926 or 25%. This decrease can be attributed to lower operating cost and the sale of our two Georgia facilities.
General and Administrative
General and administrative expenses was $2,129,484 for the three months ended March 31, 2026, compared to $2,365,088 for the three months ended March 31, 2025, a decrease of $235,604 or 10%. The decrease can be attributed to a decrease in salary and benefits expense.
Provision for Credit Losses
Provision for credit losses was $20,357 for the three months ended March 31, 2026, compared to $99,608 for the three months ended March 31, 2025, a decrease of $79,251 or 80%. The change can be attributed to the improvement made on collections and less accounts receivable outstanding due to the sale of two of our facilities during the three months ended March 31, 2026.
Depreciation
Depreciation expense was $333,211 for the three months ended March 31, 2026, compared to $363,020 for the three months ended March 31, 2025, a decrease of $29,809 or 8%. This decrease is related to an increase in fully depreciated assets along with assets sold at our two Georgia facilities as compared to the same period in the prior year.
Other Income (Expense)
Gain on Sale of Asset
Gain on sale of asset was income of $8,896,309 for the three months ended March 31, 2026, compared to $0 for the three months ended March 31, 2025. The increase was the result of the gain recognized due to the completion of the sale of our two Georgia facilities.
Interest Expense, Net
Interest expense, net was $923,784 for the three months ended March 31, 2026, compared to $542,667 for the three months ended March 31, 2025, an increase of 381,117 or 70%. The increase was due higher interest rates on our debt compared to the prior year in addition due prepayment premium fees and fees attributed to the payoff of debt.
Other Income
Other income was $226,085 for the three months ended March 31, 2026, compared to $308,444 for the three months ended March 31, 2025, a decrease of $82,359 or 27%. This is primarily related to recording the principal reduction payments made by the operator for the Arkansas facility as other income. We will continue to record this as the operator continues to satisfy the debt.
Provision for income taxes
Income tax expense was $409,735 for the three months ended March 31, 2026, compared to $0 for the three months ended March 31, 2025. Income tax expense was the result of the gain recognized due to the completion of the sale of our two Georgia facilities.
LIQUIDITY AND CAPITAL RESOURCES
Current Financial Condition
Throughout its history, the Company has experienced shortages in working capital and has relied, from time to time, upon sales of debt and equity securities to meet cash demands generated by our acquisition activities.
At March 31, 2026, the Company had cash of $1,286,452 and restricted cash of $192,129. Our restricted cash is to be expended on repairs and capital expenditures associated with Warrenton Health and Rehab facilities and decreased from December 31, 2025 as a result of the sale of two of our Georgi facilities. Our liquidity is expected to increase from potential equity and debt offerings and decrease as net offering proceeds are expended in connection with our various property improvement projects. Our continuing short-term liquidity requirements consisting primarily of operating expenses and debt service requirements, excluding balloon payments at maturity, are expected to be achieved from healthcare operations, rental revenues received, and existing cash on hand.
| 20 |
As reflected in our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and incurred a net loss of $1.0 million for the year ended December 31, 2025 and had a working capital deficiency of $6.5 million as of March 31, 2026. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. Our consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds through the sale of equity and/or debt securities via public and/or private offerings. There can be no assurance that management’s attempts at any or all of these endeavors will be successful.
Our long-term ability to continue as a going concern is dependent upon our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, and obtain additional sources of suitable and adequate financing. Our ability to continue as a going concern is also dependent its ability to further develop and execute on our business plan (including possible asset sales). We may also have to reduce certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can be no assurance that management’s attempts at any or all of these endeavors will be successful.
Sources of Liquidity
The Company’s current sources of liquidity include the sale of it’s properties. During the three months ended March 31, 2026 the Company received gross proceeds of $13.2 million as a result of the sale of two of our Georgia Facilities. In addition, on May 1, 2026, the Company received gross proceeds of $15.7 million as a result of the sale of an additional two of our Georgia Facilities.
| 21 |
As of March 31, 2026 and December 31, 2025, our debt balances consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Senior Secured Promissory Notes | $ | - | $ | 1,591,238 | ||||
| Promissory Note | 484,094 | - | ||||||
| Senior Secured Promissory Notes - Related Parties | - | 775,000 | ||||||
| Fixed-Rate Mortgage Loans | 17,698,311 | 24,258,870 | ||||||
| Variable-Rate Mortgage Loans | 4,408,468 | 4,485,462 | ||||||
| Line of Credit | - | 325,192 | ||||||
| 22,590,873 | 31,435,762 | |||||||
| Unamortized Discount and Debt Issuance Costs | (202,368 | ) | (435,200 | ) | ||||
| $ | 22,388,505 | $ | 31,000,562 | |||||
| As presented in the Consolidated Balance Sheets: | ||||||||
| Current Maturities of Long-Term Debt, Net | $ | 3,876,312 | $ | 10,938,102 | ||||
| Current Maturities of Long-Term Debt, Net classified within liabilities held for sale (1) | 5,184,308 | 5,554,463 | ||||||
| Short Term Debt – Related Parties, Net | - | 775,000 | ||||||
| Line of Credit - Current | - | 325,192 | ||||||
| Long-Term Debt | 13,327,885 | 13,407,805 | ||||||
$ | 22,388,505 | $ | 31,000,562 | |||||
The weighted average interest rate and term of our fixed rate debt are 6.41% and 13.19 years, respectively, as of March 31, 2026. The weighted average interest rate and term of our variable rate debt are 8.35% and 11.88 years, respectively, as of March 31, 2026.
The weighted average interest rate and term of our fixed rate debt are 6.21% and 13.76 years, respectively, as of December 31, 2025. The weighted average interest rate and term of our variable rate debt are 8.35% and 12.12 years, respectively, as of December 31, 2025.
Sources and Uses of Cash
The following table provides information regarding our cash flows for the three months ended March 31, 2026 and 2025:
| Three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net cash (used in) provided by operating activities | $ | (2,289,812 | ) | $ | 1,035,411 | |||
| Net cash provided by (used in) investing activities | 5,023,930 | (219,240 | ) | |||||
| Net cash used in financing activities | (3,109,230 | ) | (182,439 | ) | ||||
| Net change in cash and cash equivalents and restricted cash | $ | (375,112 | ) | $ | 633,732 | |||
Cash Flows (Used In) Provided By Operating Activities
Cash flows used operating activities was $2,289,812 for the three months ended March 31, 2026, compared to cash provided $1,035,411 for the three months ended March 31, 2025. The decrease primarily resulted from our change in net loss during the prior period of $655,969 compared to income of $6,526,382, a $7,182,351 change. This change was offset by a non-cash adjustment of $8,776,721 which is primarily due to a change of $8,896,309 attributed to a gain on sale of assets. The change in working capital accounts year-over-year was $1,730,853 which is primarily due to our change in accounts payable and accrued liabilities, liabilities held for sale and other liabilities offset by a changes attributed to accounts receivable and prepaid expenses and other assets.
Cash Flows Provided By (Used In) Investing Activities
Cash provided by investing activities was $5,023,930 for the three months ended March 31, 2026, compared to cash used of $219,240 for the three months ended March 31, 2025. Cash provided by investing activities can be attributed to the proceeds received from the sale of our two Georgia facilities. The cash used in investing activities during the three months ended March 31, 2025 was attributed to purchases of property and equipment.
Cash Flows Used In Financing Activities
Cash used in financing activities was $3,109.230 for the three months ended March 31, 2026, compared to $182,439 for the three months ended March 31, 2025. The increase in cash used in finance activities can be attributed to repayments made on our line of credit and senior secured notes.
| 22 |
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on historical experience and management’s assessment of current events and other facts and circumstances that are considered to be relevant. Actual results could differ from these estimates.
Our critical accounting estimates reflecting management’s estimates and judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2025. We have reviewed recently issued accounting pronouncements and are evaluating the potential impact, if any, on our condensed consolidated financial statements. Accordingly, there have been no material changes to critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recently Issued Accounting Pronouncements
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2026. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives.
Our management, including our Interim CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on this evaluation, our Interim CEO and CFO concluded that the design and operation of our disclosure controls and procedures were not effective as of such date to provide assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management as appropriate, to allow timely decisions regarding disclosures.
Management noted the following deficiency that we believe to be a material weakness:
| ● | Lack of a formal review process that includes multiple levels of review as well as timely review of accounts and reconciliations leading to material post-closing adjustments. |
In light of the material weakness described above, we performed additional analysis deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the periods presented. The Company plans to implement multi-level review in 2026, and management intends to work internally and with various third-parties to ensure we have the proper controls in place going forward.
There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 23 |
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of prior, current, and pending litigation of material significance to the Company, please see Note 10, Legal Proceedings, of this Form 10–Q.
Item 1A. Risk Factors
Not required for small reporting companies
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002* | |
| 31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002* | |
| 32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
| 32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
| 101.INS | Inline XBRL Instance Document** | |
| 101.SCH | Inline XBRL Schema Document** | |
| 101.CAL | Inline XBRL Calculation Linkbase Document** | |
| 101.LAB | Inline XBRL Label Linkbase Document** | |
| 101.PRE | Inline XBRL Presentation Linkbase Document** | |
| 101.DEF | Inline XBRL Definition Linkbase Document** | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* filed herewith
** furnished, not filed
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SELECTIS HEALTH, INC | ||
| Date: May 22, 2026 | By: | /s/ Krystal Eckhart |
| Krystal Eckhart, Interim Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 22, 2026 | By: | /s/ Krystal Eckhart |
| Krystal Eckhart, Interim Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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