GBCS 10-Q
Selectis Health, Inc. (GBCS)
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)
| (State or other jurisdiction of | I.R.S. Employer | |
| incorporation or organization) | Identification number |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s
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
Reporting Company |
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).
Emerging
growth company
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 November 12, 2025, the Registrant had shares of its Common Stock outstanding.
INDEX
| 2 |
PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2025 | December 31, 2024 | |||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Long Term Assets: | ||||||||
| Restricted cash | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Dividends payable | ||||||||
| Short-term debt, related parties | ||||||||
| Current maturities of long-term debt, net of
issuance costs of $ | ||||||||
| Lines of credit | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long-term debt, net of issuance costs of $ | ||||||||
| Lease security deposit | ||||||||
| Total Liabilities | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| Deficit: | ||||||||
| Preferred stock: | ||||||||
| Series A - | ||||||||
| Series D - | ||||||||
| Common stock - $ par value; shares authorized, shares issued and outstanding at September 30, 2025 and December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Selectis Health, Inc. Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 3 |
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | ||||||||||||||||
| Rental Revenue | $ | $ | $ | $ | ||||||||||||
| Healthcare 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) | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income from employee retention credits | ||||||||||||||||
| Gain on sale of an asset | ||||||||||||||||
| Other income | ||||||||||||||||
| Total other income (expense) | ( | ) | ||||||||||||||
| 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 and diluted | $ | $ | ) | $ | ) | $ | ) | |||||||||
| Weighted Average Common Shares Outstanding: Basic and Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 4 |
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
For the Three Months Ended September 30, 2025
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, June 30, 2025 | | $ | | $ | | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Series D Preferred Dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
For the Three Months Ended September 30, 2024
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, June 30, 2024 | | $ | | $ | | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Series D Preferred Dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
For the Nine months Ended September 30, 2025
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 | | $ | | $ | | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Series D Preferred Dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
For the Nine months Ended September 30, 2024
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, 2023 | | $ | | $ | | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Series D Preferred Dividends | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 5 |
SELECTIS HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of deferred loan costs and debt discount | ||||||||
| Provision for credit losses | ||||||||
| Gain on sale of an asset | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Lease security deposits | ||||||||
| Other current liabilities | ||||||||
| Cash provided by (used) in operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Sale of land and building | ||||||||
| Cash paid for property and equipment | ( | ) | ( | ) | ||||
| Cash (used in) provided by investing activities | ( | ) | ||||||
| Cash Flows from financing activities: | ||||||||
| Proceeds from debt, non-related party | ||||||||
| Payments on debt, non-related party | ( | ) | ( | ) | ||||
| Proceeds from line of credit | ||||||||
| Payment on line of credit | ( | ) | ||||||
| Cash used in financing activities | ( | ) | ( | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of the period | ||||||||
| Cash, 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, Cash Equivalents and Restricted Cash | $ | $ | ||||||
| Supplemental Schedule of Non-Cash Investing and Financing Activities | ||||||||
| Dividends declared on Series D Preferred Stock | $ | $ | ||||||
| Assumption of debt related party from a non-related party | $ | $ | ||||||
| Line of credit converted to note payable | $ | $ | ||||||
| Payoff of secured fixed rate mortgage loan | $ | $ | ||||||
| Financing of insurance premiums | $ | $ | ||||||
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 South and Southeastern portions of the US.
The Company acquires, develops, leases 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.
Management’s Liquidity Plans 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 nine months ended September 30, 2025, the Company had a net loss of approximately $
| ● | Increasing revenue by increasing occupancy in the facilities and increasing Medicaid reimbursement rates; | |
| ● | 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 our 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 are intended to alleviate any substantial doubt about the Company’s ability to continue as a going concern. However, we cannot predict, with certainty, the outcome of our actions to generate liquidity and the failure to do so could negatively impact our future operations.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Management has evaluated conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management has developed plans intended to mitigate these conditions; however, there is no assurance that such plans will be successfully implemented or that they will be sufficient to alleviate the substantial doubt. Accordingly, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from this uncertainty.
| 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 and nine months ended September 30, 2025, 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, 2024, 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.
Basic earnings 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 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 |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator for basic earnings per share: | ||||||||||||||||
| Net Income (Loss) Attributable to Selectis Health, Inc. | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Series D Preferred Dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Income (Loss) Attributable to Common Stockholders – Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator for basic earnings per share: | ||||||||||||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Net Income (Loss) per Share Attributable to Common Stockholders: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Segment Reporting
The Company operates through a single operating and reportable segment focused on the business of operating assisted living facilities, independent living facilities, and skilled nursing facilities across the South and Southeastern portions of the US. The Company manages all business activities on a consolidated basis. The Company’s chief operating decision maker (CODM) is the Chief Executive Officer.
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 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 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. All our revenue is attributable to the United States and to our single operating segment.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. The Company adopted ASU 2023-9 on January 1, 2025 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
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 2025. 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 September 30, 2025, and December 31, 2024, are as follows:
| September 30, 2025 | December 31, 2024 | |||||||
| Land | $ | $ | ||||||
| Land improvements | ||||||||
| Buildings and improvements | ||||||||
| Furniture, fixtures and equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, net | $ | $ | ||||||
| For the Nine months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Depreciation Expense (excluding Intangible Assets) | $ | $ | ||||||
4. DEBT AND DEBT - RELATED PARTIES
The following is a summary of the Company’s debt outstanding as of September 30, 2025 and December 31 2024:
September 30, 2025 | December 31, 2024 | |||||||
| Senior secured promissory notes | $ | $ | ||||||
| Senior secured promissory notes - related parties | ||||||||
| Lines of credit | ||||||||
| Fixed-rate mortgage loans | ||||||||
| Other notes payable | ||||||||
| Variable-rate mortgage loans | ||||||||
| Other debt, subordinated secured | ||||||||
| Other debt, subordinated secured - seller financing | ||||||||
| Total | ||||||||
| Unamortized discount and debt issuance costs | ( | ) | ( | ) | ||||
| Total debt, net of discount | $ | $ | ||||||
| As presented in the Condensed Consolidated Balance Sheets: | ||||||||
| Current Maturities of long term debt, net | $ | $ | ||||||
| Short term debt – related parties | $ | $ | ||||||
| Lines of credit | $ | $ | ||||||
| Long-term debt, net | $ | $ | ||||||
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
As of September 30, 2025 and December 31, 2024, the Company was not in compliance with two its loan covenants. These amounts have been included in the current maturities of long term debt for the respective periods.
| 10 |
Corporate Senior and Senior Secured Promissory Notes
Senior Secured Notes
As
of September 30, 2025, 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
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 December 31, 2024, relying upon an Agreement Among Lenders to which all noteholders are a party.
As consideration effective July 1, 2023, the annual interest rate increased 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
On December 31, 2024, 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.
| 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:
| Total Principal Outstanding as of | ||||||||||||||||
| State | Number of Properties | Total Face Amount | September 30, 2025 | December 31, 2024 | ||||||||||||
| Arkansas(1) | $ | $ | $ | |||||||||||||
| Georgia(2) | $ | $ | $ | |||||||||||||
| Ohio(3) | $ | $ | $ | |||||||||||||
| Oklahoma(4) | $ | $ | $ | |||||||||||||
| $ | $ | $ | ||||||||||||||
| (1) | |
| (2) | |
| (3) | |
| (4) |
Subordinated, Corporate and Other Debt
Other debt due at September 30, 2025 and December 31, 2024 includes unsecured notes payable issued to entities controlled by the Company used to facilitate the acquisition of the nursing home properties.
Total Principal Outstanding as of | ||||||||||||||||
| Property | Face Amount | September 30, 2025 | December
31, 2024 | Stated Interest Rate | Maturity Date | |||||||||||
| Goodwill Nursing Home | $ | $ | $ | |||||||||||||
| Higher Call Nursing Center (1) | ||||||||||||||||
| $ | $ | $ | ||||||||||||||
| (1) |
| 12 |
The Company’s corporate debt as of September 30, 2025, and December 31, 2024 includes unsecured notes and notes secured by all assets of the Company not serving as collateral for other notes.
Total Principal Outstanding as of | ||||||||||||||||
| Series | Face Amount | September 30, 2025 | December 31, 2024 | Stated Interest Rate | Maturity Date | |||||||||||
| Senior Secured Promissory Notes | $ | $ | $ | |||||||||||||
| Senior Secured Promissory Notes – Related Party | ||||||||||||||||
| $ | $ | $ | ||||||||||||||
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 $
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:
| Year Ending December 31 | ||||
| 2025 (remaining three months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and Thereafter | ||||
| Total (without debt discount) | $ | |||
5. STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company has authorized shares of preferred stock. These shares may be issued in series with such rights and preferences as may be determined by the board of directors.
Series A Convertible Redeemable Preferred Stock
The
Company’s Board of Directors has authorized shares of $ stated value, Series A Preferred Stock. The preferred stock
has a senior liquidation preference value of $
As of September 30, 2025, and December 31, 2024, the Company has shares of Series A Preferred Stock outstanding.
| 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 non-voting shares with a stated value of $ per share. Holders of the Series D preferred
stock are entitled to receive dividends at the annual rate of
As of September 30, 2025 and December 31, 2024, the Company had shares of Series D Preferred Stock outstanding.
For
the three months ended September 30, 2025, and 2024, the Company declared $
Common Stock
The Company’s Board of Directors has authorized shares of $ par value, Common Stock. As of September 30, 2025 and December 31, 2024, the Company has shares of common stock outstanding.
Common Stock Warrants
As
of September 30, 2025, and December 31, 2024, the Company had
Activity for the nine months ended September 30, 2025, related to common stock warrants is as follows:
| September 30, 2025 | ||||||||
| Number of | Weighted Average | |||||||
| Warrants | Exercise Price | |||||||
| January 1, 2025 Balance | $ | |||||||
| Exercised | ||||||||
| Expired | ||||||||
| September 30, 2025 Balance | $ | |||||||
| 14 |
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 and nine months ended September 30, 2025 and 2024, the Company recorded impairment of Goodwill.
Following is a summary of goodwill as of September 30, 2025 and December 31, 2024:
| Balance, December 31, 2024 | $ | |||
| Additions | ||||
| Impairment | ||||
| Balance, September 30, 2025 | $ |
7. 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 that may result from these claims. The cost of defense is generally covered by these liability policies subject to reasonable reserves and deductibles. Nevertheless the Company may 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. As of September 30, 2025, management cannot reasonably determine the likelihood of an unfavorable outcome.
The following represent some of the matters pending as of the date of this Report:
Hines v. Global Abbeville LLC, d/b/a Glen Eagle, et al, Superior Court of Warren County, State of Georgia, Civil Action No.2023-CV-094
This is a personal injury lawsuit filed on September 11, 2023 against various defendants arising from injuries several months after being admitted to the Glen Eagle facility. The complaint alleges that the facility was negligent in the care administered to the plaintiff which resulted in the injuries, which the Company denies. The Company has referred the litigation to its insurance company for management and believes that its exposure in this matter is de minimus.
Hunter v. Global Abbeville LLC, d/b/a Glen Eagle, et al, State Court of Fulton County, State of Georgia
This is a wrongful death lawsuit filed on June 20, 2023 against various defendants alleging negligence that led to the death of the plaintiff’s mother who had been admitted to the facility. The complaint alleges that the Company deviated from the standard of care that caused injuries that ultimately led to the death of the patient, which the Company denies. The Company has referred the litigation to its insurance company for management and believes that its exposure in this matter is de minimus.
8. 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.
| 15 |
Purchase and Sale Agreement
Effective on February 7, 2025, the Company caused three of the Company’s wholly-owned subsidiaries Global Abbeville Property, LLC, Dodge NH, LLC, and ATL/WARR, LLC, each a Georgia limited liability company (each a “Seller”), to execute and deliver a definitive Purchase and Sale Agreement (“PSA”) with Abbeville Propco Holdco, LLC, a Delaware limited liability company (“Purchaser”) and also caused a fourth subsidiary, Providence HR, LLC, a Georgia limited liability company, to execute and deliver an additional Purchase and Sale Agreement (also a “Seller”) with the Purchaser. Pursuant to both PSAs each Seller agreed to sell substantially all of the real and personal property owned by each, namely the skilled nursing facilities located at (i) 206 Main Street East, Abbeville, Georgia, 31001, upon which is located that certain 101-bed skilled nursing facility commonly known as “Glen Eagle Healthcare & Rehab” (the “Glen Eagle Facility”), (ii) 556 Chester Highway, Eastman, Georgia, 31023, upon which is located that certain 100-bed skilled nursing facility commonly known as “Eastman Healthcare & Rehab” (the “Eastman Facility”), (iii) 60 Providence Street, Sparta, Georgia, 31087, upon which is located that certain 71-bed skilled nursing facility commonly known as “Providence of Sparta Health and Rehabilitation” (the “Sparta Facility”), and (iv) 813 Atlanta Highway, Warrenton, Georgia, 30828, upon which is located that certain 110-bed skilled nursing facility commonly known as “Warrenton Health and Rehabilitation” (the “Warrenton Facility” and together with the Eastman Facility, Glen Eagle Facility, and Sparta Facility, the “Facilities”).
The
Sparta Facility was covered under a separate PSA to reflect the Purchaser’s desire and intent to assume the HUD loan secured by
the Sparta Facility. The purchase price to be paid by Purchaser for the four (4) Facilities under the two PSAs is an aggregate of $
In July of 2025 the Purchaser cancelled the PSA.
Operations Transfer Agreements
The Facilities are operated by separate, wholly-owned subsidiaries of the Company, namely Global Abbeville, LLC, a Georgia limited liability company, Global Eastman, LLC, a Georgia limited liability company, Selectis Sparta, LLC, a Georgia limited liability company, and Selectis Warrenton, LLC, a Georgia limited liability company (collectively, the “Existing Operators”). Concurrently with the execution of the PSA, the Company caused three of the Existing Operators to execute Operations Transfer Agreement (“OTA”) with a new entity affiliated with the Purchaser, Abbeville Opco Holdco LLC, a Delaware limited liability company (the “Abbeville New Operator”) and also cause the Existing Operator Selectis Sparta, LLC to execute an OTA with Sparta Opco Holdcso LLC, a Delaware limited liability company (the “Sparta New Operator”). If consummated, of which there can be no assurance, the OTA will govern the transfer of the skilled nursing operations from the Existing Operators to the New Operators. Consummation of the OTA’s is contingent upon the consummation of the PSAs as well as other conditions customary in transaction of this nature.
Escrow Agreement
In
connection with the PSA, the Company’s three wholly-owned subsidiaries Global Abbeville Property, LLC, Dodge NH, LLC, and ATL/WARR,
LLC, each a Georgia limited liability company (each a “Seller”), Abbeville Propco Holdco LLC, a Delaware limited liability
company (individually and collectively, “Purchaser”), and Landmark Abstract Agency, LLC (the “Escrow Agent”),
entered into an Escrow Agreement dated February 7, 2025 whereby the Purchaser delivered to Escrow Agent an initial deposit of $
During
the nine months ended September 30, 2025, the Company received $
9. INCOME TAXES
The provision for income taxes for interim periods is determined using an estimated annual effective tax rate. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, if any, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business.
The calculation of the Company’s tax liabilities involves dealing with uncertainties of the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step approach. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments. As of September 30, 2025 and December 31, 2024 the company did not record any liability for tax uncertainties.
For the three and nine months ended September 30, 2025, the Company recorded no provision or benefit for federal income taxes and no state income tax provision or benefit, respectively. For the three and nine months ended September 30, 2024 the Company recorded no provision or benefit for federal and state income tax expense. The federal income tax benefit primarily relates to an increase in net operation losses that are not subject to limitations under Section 382 of the Internal Revenue Code. The Company’s net deferred tax assets generated mainly from net operating losses are fully offset by a valuation allowance as the Company believes it is not more likely than not that the benefit will be realized. The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future.
Enactment of U.S. Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on its unaudited condensed consolidated financial statements, which are expected to be immaterial.
The Company has no open income tax audits with any taxing authority as of September 30, 2025.
10. 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.
On
September 10, 2025, the Company entered into a management services agreement with Tiaps Rehab Center, LLC to operate a facility in
Oklahoma City, Oklahoma which began on October 1, 2025. The Company will operate the facility on a 12 month term with an option to renew the agreement for an
additional 24 months. The Company will be paid a fixed fee plus
| 16 |
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, 2024, 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 future business plans and strategies; |
| ● | anticipated operating results and sources of future revenue; |
| ● | organization’s growth; |
| ● | adequacy of our financial resources; |
| ● | development of markets; |
| ● | competitive pressures; |
| ● | changing economic conditions; |
| ● | expectations regarding competition from other companies; |
| ● | the duration and scope of the COVID-19 pandemic; |
| ● | the impact of the COVID-19 pandemic on occupancy rates and on the operations of the Company’s facilities and its operators/tenants; |
| ● | actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting our properties and our operations and the operations of our operators/tenants; |
| ● | the effects of health and safety measures adopted by us and our operators/tenants in response to the COVID-19 pandemic; |
| ● | increased operational costs because of health and safety measures related to COVID-19; |
| ● | the impact of the COVID-19 pandemic on the business and financial conditions of our operators/tenants and their ability to pay rent; |
| ● | disruptions to our property acquisition and disposition activities due to economic uncertainty caused by COVID-19; and |
| ● | general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth. |
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Properties
As of September 30, 2025, we owned twelve (12) long-term care facilities including a campus of three buildings in Tulsa, OK. The following table provides summary information regarding these facilities at September 30, 2025:
| Total Square Feet | # of Beds | |||||||||||||||||||||||||||
| Operating | Leased | |||||||||||||||||||||||||||
| Leased | Square | Square | Operating | Leased | ||||||||||||||||||||||||
| State | Properties | Operations | Operations | Feet | Feet | Beds | Beds | |||||||||||||||||||||
| Arkansas | 1 | - | 1 | - | 40,737 | - | 141 | |||||||||||||||||||||
| Georgia (1) | 4 | 4 | - | 78,197 | - | 382 | - | |||||||||||||||||||||
| Ohio | 1 | - | - | 27,500 | - | 99 | - | |||||||||||||||||||||
| Oklahoma | 6 | 5 | - | 162,976 | - | 412 | - | |||||||||||||||||||||
| Total | 12 | 9 | 1 | 268,673 | 40,737 | 893 | 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 February 7, 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, the Company’s four (4) skilled nursing facilities in the State of Georgia: Abbeville, Dodge, Warrenton and Sparta. If consummated, the PSA’s would result in the Company no longer having facilities in the State of Georgia. Effective July 13, 2025, the Company received written notice from the Purchaser, that the Purchaser was terminating the PSA and OTA without consummation.
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 September 30, 2025, Compared to the Three Months Ended September 30, 2024
Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Healthcare revenue | $ | 10,839,954 | $ | 10,016,416 | ||||
| Total Revenue | 10,839,954 | 10,016,416 | ||||||
| Expenses | ||||||||
| Property taxes, insurance and other operating | 8,519,256 | 7,573,735 | ||||||
| General and administrative | 2,146,196 | 2,395,897 | ||||||
| Provision for credit losses | 106,763 | 844,429 | ||||||
| Depreciation | 364,699 | 374,118 | ||||||
| Total Expenses | 11,136,914 | 11,188,179 | ||||||
| Loss from Operations | (296,960 | ) | (1,171,763 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense, net | (205,700 | ) | (475,130 | ) | ||||
| Income from employee retention credits | 659,923 | - | ||||||
| Other income | 595,102 | 39,771 | ||||||
| Total other income (expense) | 1,049,325 | (435,359 | ) | |||||
| Net income (loss) | $ | 752,365 | $ | (1,607,122 | ) | |||
Healthcare Revenue
Healthcare revenue for the three months ended September 30, 2025 was $10,839,954, compared to $10,016,416 for the three months ended September 30, 2024, an increase of $823,538 or 8%. Healthcare revenues increased due to the increase in Medicaid rates at our Georgia and Oklahoma facilities.
Operating Expenses
Property Taxes, Insurance, and Other Operating
Property taxes, insurance, and other operating expenses was $8,519,256 for the three months ended September 30, 2025, compared to $7,573,735 for the three months ended September 30, 2024, an increase of $945,521 or 12%. This increase can be attributed to higher operating cost as a result of inflation between the two periods.
General and Administrative
General and administrative expenses was $2,146,196 for the three months ended September 30, 2025, compared to $2,395,897 for the three months ended September 30, 2024, a decrease of $249,701 or 10%. The decrease can be attributed to a decrease in cost of professional services fees and payroll related cost.
| 18 |
Provision for Credit Losses
Provision for credit losses was $106,763 for the three months ended September 30, 2025, compared to $844,429 for the three months ended September 30, 2024, a decrease of $737,666 or 87%. The decrease can be attributed to the Company hiring outside professionals to assist with collections during the year.
Depreciation
Depreciation expense was $364,699 for the three months ended September 30, 2025, compared to $374,118 for the three months ended September 30, 2024, a decrease of $9,419 or 3%. This decrease is related to an increase in fully depreciated assets along with assets sold in the Goodwill Hunting sale as compared to the same period in the prior year.
Other Income (Expense)
Interest Expense, Net
Interest expense, net was $205,700 for the three months ended September 30, 2025, compared to $475,130 for the three months ended September 30, 2024, a decrease of $269,430 or 57%. The decrease was driven by a reduction in total debt payable, resulting from principal payments made from the prior year. In addition, the company recorded interest income associated with employee retention credit payments received during the three months ended September 30, 2025.
Income from Employee Retention Credit
Income from Employee Retention Credit was $659,923 for the three months ended September 30, 2025, compared to none for the three months ended September 30, 2024, an increase of $659,923 or 100%. The increase was due to the Company collecting previous claims made to obtain the credit.
Other Income
Other income was $595,102 for the three months ended September 30, 2025, compared to $39,771 for the three months ended September 30, 2024, an increase of $555,331 or 1,396%. This is primarily related to recording of income attributed to the state of Georgia as a result of state Medicaid credits received.
Nine months Ended September 30, 2025, Compared to the Nine months Ended September 30, 2024
Nine months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Rental revenue | $ | - | $ | 321,352 | ||||
| Healthcare revenue | 31,768,137 | 28,772,271 | ||||||
| Total Revenue | 31,768,137 | 29,093,623 | ||||||
| Expenses | ||||||||
| Property taxes, insurance and other operating | 24,756,402 | 22,491,386 | ||||||
| General and administrative | 6,747,550 | 6,982,262 | ||||||
| Provision for credit losses | 342,719 | 1,044,665 | ||||||
| Depreciation | 1,090,461 | 1,207,247 | ||||||
| Total Expenses | 32,937,132 | 31,725,560 | ||||||
| Loss from Operations | (1,168,995 | ) | (2,631,937 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense, net | (974,358 | ) | (1,691,170 | ) | ||||
| Income from employee retention credits | 986,423 | - | ||||||
| Gain on sale of asset | - | 2,112,143 | ||||||
| Other income | 945,299 | 363,466 | ||||||
| Total other income | 957,364 | 784,439 | ||||||
| Net loss | $ | (211,631 | ) | $ | (1,847,498 | ) | ||
| 19 |
Rental Revenue
Rental revenue for the nine months ended September 30, 2025 was none compared to $321,352 for the nine months ended September 30, 2024, a decrease of $321,352 or 100%. This decrease was due to the sale of our Archway Property in June 2024 with which we had monthly rental revenues of approximately $53,000. Since this was the only property that we were leasing to a third party, rental revenue to third parties ceased after June 2024.
Healthcare Revenue
Healthcare revenue for the nine months ended September 30, 2025 was $31,768,137 compared to $28,772,271 for the nine months ended September 30, 2024, an increase of $2,995,866 or 10%. Healthcare revenues increased due to the increase in Medicaid rates at our Georgia and Oklahoma facilities.
Operating Expenses
Property Taxes, Insurance, and Other Operating
Property taxes, insurance, and other operating expenses was $24,756,402 for the nine months ended September 30, 2025, compared to $22,491,386 for the nine months ended September 30, 2024, an increase of $2,265,016 or 10%. This increase can be attributed to higher operating cost as a result of inflation between the two periods.
General and Administrative
General and administrative expenses was $6,747,550 for the nine months ended September 30, 2025, compared to $6,982,262 for the nine months ended September 30, 2024, a decrease of $234,712 or 3%. The decrease can be attributed to lower professional fees and payroll cost.
Provision for Credit Losses
Provision for credit losses was $342,719 for the nine months ended September 30, 2025, compared to $1,044,665 for the nine months ended September 30, 2024, a decrease of $701,946 or 67%. The decrease can be attributed to the Company hiring outside professionals to assist with collections.
Depreciation
Depreciation expense was $1,090,461 for the nine months ended September 30, 2025, compared to $1,207,247 for the nine months ended September 30, 2024, a decrease of $116,786 or 10%. This decrease is related to an increase in fully depreciated assets along with assets sold in the Goodwill Hunting sale as compared to the same period in the prior year.
Other Income (Expense)
Interest Expense, Net
Interest expense, net was $974,358 for the nine months ended September 30, 2025, compared to $1,691,170 for the nine months ended September 30, 2024, a decrease of $716,812 or 42%. The decrease was due to the repayment of our mortgage for our Archway Property upon the sale of that property in June 2024.
Income from Employee Retention Credit
Income from Employee Retention Credit was $986,423 for the nine months ended September 30, 2025, compared to none for the nine months ended September 30, 2024, an increase of $986,423 or 100%. The increase was due to the Company collecting previous claims made to obtain the credit.
Gain on Sale of Asset
For the nine months ended September 30, 2024, the Company recorded a $2,112,143 gain on the sale of our Goodwill Hunting property as a result of a sale to a third-party.
| 20 |
Below is a summary of the gain calculated as a result of the sale:
| Description | Amount | |||
| Cash | $ | 2,484,800 | ||
| Security Deposit | 250,000 | |||
| Interest Exp | 21,470 | |||
| Notes Payable | 3,679,890 | |||
| Prepaid Rent | (146,740 | ) | ||
| Land & Buildings | (4,177,277 | ) | ||
| Total Gain on Sale of Goodwill Hunting | $ | 2,112,143 | ||
Other Income
Other income was $945,299 for the nine months ended September 30, 2025, compared to $363,466 for the nine months ended September 30, 2024, a increase of $581,833 or 160%. 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. In addition the Company had recognized $590,404 in credit from the state of Georgia during the nine months ended September 30, 2025 as a result of state Medicaid credit received.
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 September 30, 2025, the Company had cash of $417,125 and restricted cash of $806,886. Our restricted cash is to be expended on repairs and capital expenditures associated with Providence of Sparta Nursing Home or Warrenton Health and Rehab. 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.
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 $0.2 million for the nine months ended September 30, 2025 and had a working capital deficiency of $16.3 million as of September 30, 2025. 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.
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. 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.
| 21 |
Sources of Liquidity
The CARES Act provides an employee retention credit (“CARES Employee Retention Credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2020. Additional relief provisions were passed by the United States government, which extend and slightly expand the qualified wage caps on these credits through December 31, 2021. Based on these additional provisions, the tax credit is now equal to 70% of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has been increased to $10,000 of qualified wages per quarter. The Company qualified for the tax credit under the CARES Act for qualified wages for the years ended December 31, 2020 and 2021. In February 2023, the Company submitted filings for CARES Employee Retention Credits totaling $8,124,710. The Company has received a majority of the credits of $6,866,759 as of December 31, 2024 and received payments of $986,423 during the nine months ended September 30, 2025. The Company has fully reserved for the remaining receivable due in the amount of $271,528.
As of September 30, 2025 and December 31, 2024, our debt balances consisted of the following:
September 30, 2025 | December 31, 2024 | |||||||
| Senior secured promissory notes | $ | 1,050,000 | $ | 1,025,000 | ||||
| Senior secured promissory notes - related parties | 775,000 | 750,000 | ||||||
| Lines of credit | 74,442 | 799,752 | ||||||
| Fixed-rate mortgage loans | 24,363,944 | 25,152,756 | ||||||
| Other note payable | 557,230 | - | ||||||
| Variable-rate mortgage loans | 4,571,813 | 4,675,991 | ||||||
| Other debt, subordinated secured | 173,500 | 173,500 | ||||||
| Other debt, subordinated secured - seller financing | - | 7,957 | ||||||
| Total | 31,565,929 | 32,584,956 | ||||||
| Unamortized discount and debt issuance costs | (439,384 | ) | (451,936 | ) | ||||
| Total debt, net of discount | $ | 31,126,545 | $ | 32,133,020 | ||||
| As presented in the Condensed Consolidated Balance Sheets: | ||||||||
| Current maturities of long term debt, net | $ | 11,764,959 | $ | 11,450,406 | ||||
| Short term debt – related parties, net | $ | 775,000 | $ | 750,000 | ||||
| Short term debt – line of credit | $ | 74,442 | $ | 799,752 | ||||
| Long-term debt | $ | 18,512,144 | $ | 19,132,862 | ||||
Sources and Uses of Cash
The following table provides information regarding our cash flows for the nine months ended September 30, 2025 and 2024:
| Nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by (used in) operating activities | $ | 1,238,060 | $ | (1,401,076 | ) | |||
| Net cash (used in) provided by investing activities | (386,988 | ) | 2,458,573 | |||||
| Net cash used in financing activities | (1,019,027 | ) | (1,539,624 | ) | ||||
| Net change in cash and cash equivalents and restricted cash | $ | (167,955 | ) | $ | (482,127 | ) | ||
Cash Flows Provided By (Used In) Operating Activities
Cash flows provided by operating activities was $1,238,060 for the nine months ended September 30, 2025, compared to cash used in operation of $1,401,076 for the nine months ended September 30, 2024. The increase in cash provided by operations primarily resulted from the decrease in our net loss which went from a net loss of $1,847,498 for the nine months ended September 30, 2024 to a loss of $211,631 for the nine months ended September 30, 2025. The decrease in net loss was offset by non-cash charges of $1,445,732 largely comprised of depreciation and changes in the provision for credit losses. The remainder of our sources of cash provided by operating activities of $3,959 was from changes in our working capital, including $920,131 from increases of accounts receivable payments and $111,407 from timing of prepaids offset by an increase of $400,000 on other current liabilities and an increase of $627,597 from timing of accounts payable and accrued expenses.
Cash Flows (Used In) Provided By Investing Activities
Cash used in investing activities was $386,988 for the nine months ended September 30, 2025, compared to cash provided by of $2,458,573 for the nine months ended September 30, 2024. The cash used in investing activities for the nine months ended September 30, 2025 was attributed to purchases of property and equipment. The cash provided by investing activities for the nine months ended September 30, 2024 is primarily attributed to the $2,484,800 in proceeds from the sale of the Goodwill Hunting asset.
Cash Flows Used In Financing Activities
Cash used in financing activities was $1,019,027 for the nine months ended September 30, 2025, compared to $1,539,624 for the nine months ended September 30, 2024. During both periods we made payments on long-term debt, line of credit and related party debt.
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Critical Accounting Policies
Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. Certain of these accounting policies are particularly important for an understanding of the financial position and results of operations presented in the consolidated financial statements set forth elsewhere in this report. These policies require the application of judgment and assumptions by management and, as a result, are subject to a degree of uncertainty. Actual results could differ as a result of such judgment and assumptions.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue Recognition. Under the accounting guidance our revenues are presented net of estimated allowances, and we no longer present the contractual allowance as a separate line item on our balance sheet.
The Company reviews its calculations for the realizability of gross service revenues monthly to make certain that we are properly allowing for the uncollectible portion of our gross billings and that our estimates remain sensitive to variances and changes within our payer groups. The contractual allowance calculation is made based on historical allowance rates for the various specific payer groups monthly with a greater emphasis given to current trends. This calculation is routinely analyzed by the Company based on actual allowances issued by payers and the actual payments made to determine what adjustments, if any, are needed.
Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, and Medicaid) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare, and Medicaid). Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member.
Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual allowances under managed care are based upon the payment terms specified in the related contractual agreements.
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the “cost report” filing and settlement process).
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Recently Issued Accounting Pronouncements
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2025. 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 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 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 deficiencies that we believe to be material weaknesses:
| ● | Inadequate design of information technology (IT) general and application controls resulting from inappropriate access given to certain individuals within finance, including the CFO and Controller; | |
| ● | Lack of segregation of duties in certain accounting and financial reporting processes including the initiation, processing, recording and approval of disbursements; and | |
| ● | 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 weaknesses 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 2025, 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 September 30, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of prior, current, and pending litigation of material significance to the Company, please see Note 7, Commitments and Contingencies, 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: November 14, 2025 | By: | /s/ Adam Desmond |
| Adam Desmond, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 14, 2025 | By: | /s/ Adam Desmond |
| Adam Desmond, Chief Executive Officer | ||
| (Principal Accounting Officer) | ||
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