Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our business and results of operations for the fiscal year ended December 31, 2025, and our financial conditions at that date, should be read in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report. As used herein, "Selectis Health," the "Company," "we," "our" or "us" and similar terms refer collectively to Selectis Health, Inc. and its subsidiaries, unless the context indicates otherwise.

RESULTS OF OPERATIONS

The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results:

		Twelve Months Ended
		December 31,
		2025				2024
Revenue
Healthcare revenue		$	41,375,235			$	39,170,660
Rental revenue			-				321,352
Management fee revenue			65,795				-
Total Revenue			41,441,030				39,492,012
Expenses
Property taxes, insurance and other operating			31,759,000				30,358,824
General and administrative			8,889,246				9,249,718
Provision for credit losses			883,038				1,042,698
Depreciation and amortization			1,474,417				1,569,970
Total operating expenses			43,005,701				42,221,210
Loss from Operations			(1,564,671	)			(2,729,198	)
Other (Income) Expense
Gain on sale of asset			-				(2,112,143	)
Interest expense, net			1,726,239				2,046,887
Loss on debt extinguishment			252,970				-
Income from employee retention credits			(986,423	)			-
Other income, net			(1,542,505	)			(239,981	)
Total other (income), net			(549,719	)			(305,237	)
Loss before income taxes			(1,014,952	)			(2,423,961	)
Provision for income taxes			800				-
Net Loss			(1,015,752	)			(2,423,961	)
Series D preferred dividends			(37,500	)			(22,500	)
Net Loss Attributable to Common Stockholders		$	(1,053,252	)		$	(2,446,461	)
Per Share Data:
Net Loss per Share Attributable to Common Stockholders:
Basic		$	(0.34	)		$	(0.80	)
Diluted		$	(0.34	)		$	(0.80	)
Weighted Average Common Shares Outstanding:
Basic			3,067,059				3,067,059
Diluted			3,067,059				3,067,059

Revenues

Healthcare Revenue

Healthcare revenue for the year ended December 31, 2025 was $41,375,235, compared to $39,170,660 for the year ended December 31, 2024, an increase of $2,204,575 or 6%. Healthcare revenues increased due to the increase in Medicaid rates at our Georgia and Oklahoma facilities.

Rental Revenue

Rental revenue for the year ended December 31, 2025 was none, compared to $321,352 for the year ended December 31, 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.

Management Fee Revenue

Management fee revenue for the year ended December 31, 2025 was $65,795, compared to none for the year ended December 31, 2024, an increase of $65,795 or 100%. Management fee revenues increased due to the start of a management fee arrangement.

Operating Expenses

Property Taxes, Insurance, and Other Operating

Property taxes, insurance, and other operating expenses was $31,759,000 for the year ended December 31, 2025, compared to $30,358,824 for the year ended December 31, 2024, an increase of $1,400,176 or 5%. This increase is attributed to an increase in operating cost due to inflation.

General and Administrative

General and administrative expenses was $8,889,246 for the year ended December 31, 2025, compared to $9,249,718 for the year ended December 31, 2024, a decrease of $360,472 or 4%. The decrease can be attributed to a decrease in payroll cost as the Company reduced general and administrative headcount in 2025.

Provision for Credit Losses

Provision for credit losses was $883,038 for the year ended December 31, 2025, compared to $1,042,698 for the year ended December 31, 2024, a decrease of $159,660 or 15%. This decrease can be attributed to the improvement of collections of accounts receivable resulting in a lower accounts receivable balance.

Depreciation and Amortization

Depreciation and amortization expense was $1,474,417 for the year ended December 31, 2025, compared to $1,569,970 for the year ended December 31, 2024, a decrease of $95,553 or 6%. 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)

Gain on Sale of Asset

The Company recorded a $2,112,143 gain attributed to the gain on the sale of our Goodwill Hunting property for the year ended December 31, 2024. No gain of sale was recorded for the year ended December 31, 2025.

Interest Expense, Net

Interest expense, net was $1,726,239 for the year ended December 31, 2025, compared to $2,046,887 for the year ended December 31, 2024, a decrease of $320,648 or 16%. The decrease was due to the repayment of our mortgage for our Archway Property upon the sale of that property in June 2024. The interest expense associated with that property was approximately $24,000 per month.

Loss on debt extinguishment

The Company recorded a $252,970 loss on debt extinguishment for the year ended December 31, 2025. No loss on debt extinguishment was recorded for the year ended December 31, 2024. The loss on debt extinguishment can be attributed to the extension of warrants attributed to our promissory notes.

Income From Employee Retention Credits

Income from employee retention credits was $986,423 for the year ended December 31, 2025, compared to none for the year ended December 31, 2024, an increase of $986,423 of 100%. 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.

Other Income

Other income was $1,542,505 for the year ended December 31, 2025, compared to $239,981 for the year ended December 31, 2024, an increase of $1,302,524 or 543%. The Company had recognized $1,484,703 in credit from the state of Georgia during the year ended December 31, 2025 as a result of state credits received. In addition, the change is due to the principal reduction payments made by the operator of the Arkansas facility as other income. We will continue to record this as the operator continues to satisfy the debt.

Provision for income taxes

Provision for income taxes was $800 for the year ended December 31, 2025 compared to none for the year ended December 31, 2024. The increase was the result of state taxes owed in the current year.

LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

Through 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 December 31, 2025, the Company had cash and cash equivalents of $1,011,632 and restricted cash of $842,061. 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 consolidated financial statements included elsewhere in this Annual Report, we have a history of losses and had a working capital deficiency of $17.7 million as of December 31, 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. 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 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 $6,866,759. The Company has received a majority of the credits and recorded an employee retention credits receivable of approximately $1.3 million as of December 31, 2023. Based on its evaluation of the collectability, the Company recorded a full allowance against this receivable and recorded an expense to provision for credit losses of $1,257,952 in the statement of operations for the year ended December 31, 2023. During the year ended December 31, 2025, the Company received payments totaling $986,423. As of December 31, 2025, the remaining receivable of $271,529 is fully reserved.

As of December 31, 2025, and 2024, our debt balances consisted of the following:

		December 31, 2025				December 31, 2024
Senior Secured Promissory Notes		$	1,591,238			$	1,025,000
Senior Secured Promissory Notes - Related Parties			775,000				750,000
Fixed-Rate Mortgage Loans			24,258,870				25,152,756
Variable-Rate Mortgage Loans			4,485,462				4,675,991
Line of Credit			325,192				799,752
Other Debt, Subordinated Secured			-				173,500
Other Debt, Subordinated Secured - Seller Financing			-				7,957
			31,435,762				32,854,956
Unamortized Discount and Debt Issuance Costs			(435,200	)			(451,936	)
		$	31,000,562			$	32,133,020
As presented in the Consolidated Balance Sheets:
Current Maturities of Long-Term Debt, Net		$	10,938,102			$	11,450,406
Current Maturities of Long-Term Debt, Net classified within liabilities held for sale (1)			5,554,463				-
Short Term Debt - Related Parties, Net			775,000				750,000
Line of Credit - Current			325,192				799,752
Long-Term Debt			13,407,805				19,132,862

(1)

$5,554,463 is classified within Liabilities held for sale, within the consolidated balance sheet which is the short-term classified debt attributed to our two Georgia facilities.

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.

The weighted average interest rate and term of our fixed rate debt are 4.68% and 14.04 years, respectively, as of December 31, 2024. The weighted average interest rate and term of our variable rate debt are 9.10% and 13.11 years, respectively, as of December 31, 2024.

All of the Senior Secured Promissory Notes were redeemed in January 2026.

Mortgage Loans and Lines of Credit Secured by Real Estate

Mortgage loans and other debts such as lines of credit 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, a former but no longer related party, or corporate guarantees. Mortgage loans for the periods presented consisted of the following:

		Number of				Total Face				Total Principal Outstanding as of
State		Properties				Amount				December 31, 2025				December 31, 2024
Arkansas(1)			1			$	5,000,000			$	3,571,114			$	3,742,822
Georgia(2)			4			$	13,497,114			$	10,924,875			$	11,403,295
Ohio(3)			1			$	3,000,000			$	2,439,636			$	2,517,400
Oklahoma(4)			6			$	13,181,325			$	11,808,708			$	12,165,230
			12			$	34,678,439			$	28,744,333			$	29,828,747

(1)	The mortgage loan collateralized by this property is 80% guaranteed by the USDA and requires an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year. Guarantors under the mortgage loan include Christopher Brogdon. Mr. Brogdon has assumed operations of the facility and is making payments of principal and interest on the loan on our behalf. During the year ended December 31, 2025 and 2024, the Company recognized other income of $188,201 and $119,854 for repayments on the loan, respectively.
(2)	The Company had refinanced two of its mortgages that would have matured in June and October of 2021 amounting to $2,961,167 and $3,289,595, and extended their maturity dates to May 2024 for both. The Company entered into forbearance agreements that extended the maturity dates of the loans to December 31, 2025. Upon reaching maturity, both loans were in default and were therefore classified as current portion of long-term debt. Both loans were fully guaranteed by the Company. The loans were subsequently refinanced in February 2026 in the amounts of $2,710,624 and $2,473,684, with a new maturity date of February 17, 2027. The Company sold two of the facilities in January 2026 resulting in the repayment of $5,772,098 of outstanding principal.
(3)	The Company refinanced its mortgage that would have matured in May of 2022 amounting to $3,000,000 and extend its maturity date to October 2027.
(4)	The Company refinanced three mortgages in July 2021, that would have matured in June and July of 2021 amounting to $2,065,969 and $750,000, $500,000, to extend their maturity dates to June 2027. Additionally, the Company has refinanced the primary mortgage at the Southern Hills Campus, for 35 years at 2.38% with a maturity date of October 1, 2056.

Subordinated, Corporate, and Other Debt

Other debt due at December 31, 2025 and 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								Stated
Property		Face Amount				December 31, 2025				December 31, 2024				Interest Rate		Maturity Date
Goodwill Nursing Home		$	2,030,000			$	-			$	173,500			13% Fixed		-
Higher Call Nursing Center (1)			150,000				-				7,957			8% Fixed		-
		$	2,180,000			$	-			$	181,457

(1)

In connection with the acquisition of Higher Call, the Company executed a promissory note in favor of the Seller, Higher Call Nursing Center, Inc., in the principal amount of $150,000 which accrues interest at the rate of 8% per annum and is payable in equal monthly installments, principal and interest. This note is secured by a corporate guaranty of Global.

Our corporate debt at December 31, 2025 and 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								Stated
Series		Face Amount				December 31, 2025				December 31, 2024				Interest Rate		Maturity Date
Senior Secured Promissory Notes		$	1,255,000			$	1,050,000			$	1,025,000			13% Fixed		February 28, 2026
Promissory Note - Southern Bank			545,952				541,238				-			7.25% Fixed		December 12, 2030
Senior Secured Promissory Notes - Related Party			775,000				775,000				750,000			13% Fixed		February 28, 2026
		$	2,575,952			$	2,366,238			$	1,775,000

All of the Senior Secured Promissory Notes were redeemed in January 2026.

Commercial 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 $750,000 at a fixed interest rate of 8.50% per annum with a Maturity Date of April 12, 2025. In August 2025, the Commercial Line of Credit was converted into a Promissory Note and extended to December 12, 2030 with an interest rate of 7.25%. The Company repaid the balance outstanding on the Promissory Note in January 2026.

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 $750,000 at a fixed interest rate of 7.75% per annum with a Maturity Date of November 14, 2025. In November 2025 the Company and Southern Bank agreed to extend the maturity date of the Commercial Line of Credit to December 14, 2026. The interest rate of the on the Commercial Line of Credit as of December 31, 2025 was 7.75%.

As of December 31, 2025, the balance outstanding on the Commercial Line of Credits is $325,192 and the amount available is approximately $425,000.

Sources and Uses of Cash

The following table provides information regarding our cash flows for the fiscal years ended December 31, 2025 and 2024:

		Year Ended December 31,
		2025				2024
Net cash provided by (used in) operating activities		$	1,882,030			$	(1,824,437	)
Net cash (used in) provided by investing activities			(443,611	)			2,448,737
Net cash used in financing activities			(976,692	)			(1,537,057	)
Net change in cash and cash equivalents and restricted cash		$	461,727			$	(912,757	)

Cash Flows Provided By (Used In) Operating Activities

Cash flows provided by operating activities was $1,882,030 for the year ended December 31, 2025, compared to cash used in operating activities of $1,824,437 for the year ended December 31, 2024. The change primarily resulted from our decrease in our net loss of $1,408,209. Our non-cash charges were $2,453,661 which included non-cash charges which largely comprised of depreciation and amortization, changes in the provision for credit losses, loss on debt extinguishment and a gain on debt forgiveness. The remainder of our changes of cash operating activities between years was from changes in our working capital of $444,121, including $543,344 from a decrease of accounts receivable and $39,803 from timing of prepaids and $292,868 from timing of accounts payable and accrued expenses offset by other liabilities of $725,000.

Cash Flows Provided By (Used In) Provided By Investing Activities

Cash used in investing activities was $443,611 for the year ended December 31, 2025 and comprised of cash payments for equipment purchases. Cash provided by investing activities was $2,448,737 for the year ended December 31, 2024. The cash provided by investing activities was primarily due to proceeds of $2,484,800 attributed to the sale of a building. Purchases of property and equipment increased during the year ended December 31, 2024 was $36,063.

Cash Flows Used In Financing Activities

Cash used in financing activities was $976,692 for the year ended December 31, 2025, compared to $1,537,057 for the years ended December 31, 2024. During the year ended December 31, 2025, we made payments on long-term debt of $1,158,362 and $331,337 on our line of credit which was offset by proceeds of $50,000 on third party debt and $464,007 on our line of credit. During the year ended December 31, 2024, we made payments on long-term debt of $2,558,492 and $150,000 on related party debt which was offset by proceeds of $371,683 on third party debt and $800,000 on our line of credit.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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 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.

Impairment of Long-Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property's use and eventual disposition. This estimate considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition, and other factors. If impairment exists, due to the inability to recover the carrying amount of the property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. Estimated fair value is determined with the assistance from independent valuation specialists using recent sales of similar assets, market conditions or projected cash flows of properties using standard industry valuation techniques.

Goodwill

Goodwill represents the excess of the cost of an acquired business over the amounts assigned to its net assets. Goodwill is not amortized but 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. Events or changes in circumstances that may trigger interim impairment reviews include significant changes in business climate, operating results, planned investments in the reporting unit, or an expectation that the carrying amount may not be recoverable, among other factors.

The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is unnecessary. If an impairment test is necessary, the Company will estimate the fair value of its related reporting units. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is determined to be impaired, and the Company will proceed with recording an impairment charge equal to the excess of the carrying value over the related fair value.

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).

Measurement of Credit Losses

ASC 326, Financial Instruments- Credit Losses, requires entities to use a forward-looking approach based on current expected credit losses ("CECL") to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The Company adopted ASU 2016-13 January 1, 2023. We identified trade and ERTC accounts receivable financial instruments that would be impacted by this adoption.

As part of the analysis, the Company determined that all trade accounts receivable were of similar risk. Given the economy and our services provided, we determined the trade accounts receivable would not be impacted.

Recent Accounting Pronouncements

See Note 2 to our financial statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our financial statements.