Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

The following is Management's Discussion and Analysis of Financial Condition and Results of Operations and should be read in conjunction with the interim financial statements and notes thereto contained in this report. This section contains forward-looking statements, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based. These forward-looking statements generally are identified by the words "believes," "projects," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise. All forward-looking statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.

Actual future results and trends may differ materially from expectations depending on a variety of factors discussed in our filings with the SEC. These factors include without limitation:

	*	strategic business relationships;
	*	statements about our future business plans and strategies;
	*	anticipated operating results and sources of future revenue;
	*	our organization's growth;
	*	adequacy of our financial resources;
	*	development of markets;
	*	competitive pressures;
	*	changing economic conditions; and
	*	expectations regarding competition from other companies.

Although we believe that any forward-looking statements, we make in this Quarterly Report are reasonable, because forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements, besides the specific factors identified above in the Risk Factors section of this Quarterly Report, include:

	*	changes in general economic and business conditions affecting the healthcare industry;
	*	developments that make our facilities less competitive;
	*	changes in our business strategies;
	*	the level of demand for our facilities; and
	*	regulatory changes affecting the healthcare industry and third-party payor practices.

Properties

As of June 30, 2026, we owned eight (8) long-term care facilities including a campus of three buildings in Tulsa, OK. The following table provides summary information regarding these facilities at June 30, 2026:

														Total Square Feet								# of Beds
State		Properties				Operations				Leased Operations				Operating Square Feet				Leased Square Feet				Operating Beds				Leased Beds
Arkansas			1				-				1				-				40,737				-				141
Ohio			1				-				-				27,500				-				99				-
Oklahoma			6				5				-				162,976				-				412				-
Total			8				5				1				190,476				40,737				511				141

Effective December 5, 2025, the Company executed two Purchase and Sale Agreements, and corresponding Operations Transfer Agreements, pursuant to which the Company agreed to sell to an unrelated third party, two (2) of the Company's skilled nursing facilities in the State of Georgia: Warrenton and Sparta. The completion of the sale of the PSA's resulted in the Company having two (2) remaining facilities in the State of Georgia. The Company closed on this transaction in January 2026.

Effective March 5, 2026, the Company executed two Purchase and Sale Agreements, and corresponding Operations Transfer Agreements, pursuant to which the Company agreed to sell to an unrelated third party, the Company's remaining two (2) skilled nursing facilities in the State of Georgia: Glen Eagle and Eastman. This transaction closed in May 2026, therefore the Company would no longer owns any healthcare facilities in the State of Georgia.

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 June 30, 2026, Compared to the Three Months Ended June 30, 2025

		Three Months Ended June 30,
		2026				2025
Revenue
Healthcare revenue		$	4,618,665			$	10,441,244
Management fee revenue			108,334				-
Total Revenue			4,726,999				10,441,244
Expenses
Property taxes, insurance and other operating			4,132,334				8,156,177
General and administrative			2,103,004				2,236,266
Provision for credit losses			363,538				136,348
Depreciation			229,471				362,742
Total Expenses			6,828,347				10,891,533
Loss from Operations			(2,101,348	)			(450,289	)
Other income (expense)
Interest expense, net			(212,611	)			(225,991	)
Income from employee retention credits			-				326,500
Gain on sale of assets			10,150,510				-
Other income			758,230				41,753
Total other (income) expense			10,696,129				142,262
Income (loss) before income taxes			8,594,781				(308,027	)
Provision for income taxes			471,423				-
Net income (loss)		$	8,123,358			$	(308,027	)

Revenues

Healthcare Revenue

Healthcare revenue for the three months ended June 30, 2026 was $4,618,665, compared to $10,441,244 for the three months ended June 30, 2025, a decrease of $5,822,579 or 56%. Healthcare revenues decreased due to the sale of four of our Georgia facilities in January and May 2026.

Management Fee Revenue

Management fee revenue for the three months ended June 30, 2026 was $108,334 compared to $0 for the three months ended June 30, 2025, an increase of $108,334 or 100%. Management fee revenues increased due to the start of a management fee arrangement in November 2025.

Operating Expenses

Property Taxes, Insurance, and Other Operating

Property taxes, insurance, and other operating expenses was $4,132,334 for the three months ended June 30, 2026, compared to $8,156,177 for the three months ended June 30, 2025, a decrease of $4,023,843 or 49%. This decrease can be attributed to lower operating cost due to the sale of our four Georgia facilities.

General and Administrative

General and administrative expenses was $2,103,004 for the three months ended June 30, 2026, compared to $2,236,266 for the three months ended June 30, 2025, a decrease of $133,262 or 6%. The decrease can be attributed to a decrease in salary and benefits expense.

Provision for Credit Losses

Provision for credit losses was $363,538 for the three months ended June 30, 2026, compared to $136,348 for the three months ended June 30, 2025, an increase of $227,190 or 167%. The change can be attributed to the write off receivables primarily due to the sale of four of our facilities.

Depreciation

Depreciation expense was $229,471 for the three months ended June 30, 2026, compared to $362,742 for the three months ended June 30, 2025, a decrease of $133,271 or 37%. This decrease is related to an increase in fully depreciated assets along with assets sold in 2026 attributed to our four Georgia facilities as compared to the same period in the prior year.

Other Income (Expense)

Interest Expense, Net

Interest expense, net was $212,611 for the three months ended June 30, 2026, compared to $225,991 for the three months ended June 30, 2025, a decrease of $13,380 or 6%. The decrease was due the payoff of debt as a result of the sale of our four Georgia facilities during 2026.

Income from Employee Retention Credit

Income from Employee Retention Credit was $0 for the three months ended June 30, 2026, compared to $326,500 for the three months ended June 30, 2025, a decrease of $326,500 or 100%. The decrease was due to the Company collecting previous claims made to obtain the credit.

Gain on Sale of Asset

Gain on sale of asset was income of $10,150,510 for the three months ended June 30, 2026, compared to $0 for the three months ended June 30, 2025. The increase was the result of the gain recognized due to the completion of the sale of our two Georgia facilities.

Other Income

Other income was $758,230 for the three months ended June 30, 2026, compared to $41,753 for the three months ended June 30, 2025, an increase of $716,477 or 1,716%. The increase was primarily attributable to state credits recognized by the Company from the states of Georgia and Oklahoma.

Provision for income taxes

Income tax expense was $471,423 for the three months ended June 30, 2026, compared to $0 for the three months ended June 30, 2025. Income tax expense was the result of the gain recognized due to the completion of the sale of our two Georgia facilities and the reversal of our valuation allowance.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025

		Six Months Ended June 30,
		2026				2025
Revenue
Healthcare revenue		$	11,799,826			$	20,928,183
Management fee revenue			215,775				-
Total Revenue			12,015,601				20,928,183
Expenses
Property taxes, insurance and other operating			10,200,377				16,237,146
General and administrative			4,232,488				4,601,354
Provision for credit losses			383,895				235,956
Depreciation			562,682				725,762
Total Expenses			15,379,442				21,800,218
Loss from Operations			(3,363,841	)			(872,035	)
Other income (expense)
Interest expense, net			(1,136,395	)			(768,658	)
Income from employee retention credits			-				326,500
Gain on sale of assets			19,046,819				-
Other income			984,315				350,197
Total other (income) expense			18,894,739				(91,961	)
Income (loss) before income taxes			15,530,898				(963,996	)
Provision for income taxes			881,158				-
Net income (loss)		$	14,649,740			$	(963,996	)

Revenues

Healthcare Revenue

Healthcare revenue for the six months ended June 30, 2026 was $11,799,826, compared to $20,928,183 for the six months ended June 30, 2025, a decrease of $9,128,357 or 44%. Healthcare revenues decreased due to the sale of four of our Georgia facilities during 2026.

Management Fee Revenue

Management fee revenue for the six months ended June 30, 2026 was $215,775 compared to $0 for the six months ended June 30, 2025, an increase of $215,775 or 100%. Management fee revenues increased due to the start of a management fee arrangement in November 2025.

Operating Expenses

Property Taxes, Insurance, and Other Operating

Property taxes, insurance, and other operating expenses was $10,200,377 for the six months ended June 30, 2026, compared to $16,237,146 for the six months ended June 30, 2025, a decrease of $6,036,769 or 37%. This decrease can be attributed to lower operating cost due to the sale of our four Georgia facilities.

General and Administrative

General and administrative expenses was $4,232,488 for the six months ended June 30, 2026, compared to $4,601,354 for the six months ended June 30, 2025, a decrease of $368,866 or 8%. The decrease can be attributed to a decrease in salary and benefits expense.

Provision for Credit Losses

Provision for credit losses was $383,895 for the six months ended June 30, 2026, compared to $235,956 for the six months ended June 30, 2025, an increase of $147,939 or 63%. The change can be attributed to write offs on receivables attributed to the sale of our four Georgia facilities.

Depreciation

Depreciation expense was $562,682 for the six months ended June 30, 2026, compared to $725,762 for the six months ended June 30, 2025, a decrease of $163,080 or 22%. This decrease is related to an increase in fully depreciated assets along with assets sold at our four Georgia facilities as compared to the same period in the prior year.

Other Income (Expense)

Interest Expense, Net

Interest expense, net was $1,136,395 for the six months ended June 30, 2026, compared to $768,658 for the six months ended June 30, 2025, an increase of $367,737 or 48%. The increase was due to a prepayment premium and fees associated with mortgage payoffs being recorded within interest expense as well as higher interest rates were used in 2026.

Income from Employee Retention Credit

Income from Employee Retention Credit was $0 for the six months ended June 30, 2026, compared to $326,500 for the six months ended June 30, 2025, a decrease of $326,500 or 100%. The decrease was due to the Company collecting previous claims made to obtain the credit.

Gain on Sale of Asset

Gain on sale of asset was income of $19,046,819 for the six months ended June 30, 2026, compared to $0 for the six months ended June 30, 2025. The increase was the result of the gain recognized due to the completion of the sale of our four Georgia facilities.

Other Income

Other income was $984,315 for the six months ended June 30, 2026, compared to $350,197 for the six months ended June 30, 2025, an increase of $634,118 or 181%. The increase was primarily attributable to state credits recognized by the Company from the states of Georgia and Oklahoma.

Provision for income taxes

Income tax expense was $881,158 for the six months ended June 30, 2026, compared to $0 for the six months ended June 30, 2025. Income tax expense was the result of the gain recognized due to the completion of the sale of our four Georgia facilities and the reversal of our valuation allowance.

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 June 30, 2026, the Company had cash of $7.7 million and restricted cash of $0.2 million. Our restricted cash is to be expended on repairs and capital expenditures associated with Warrenton Health and Rehab facilities and decreased from December 31, 2025 as a result of the sale of four of our Georgia facilities. Our liquidity is expected to increase from potential equity and debt offerings and decrease as net offering proceeds are expended in connection with our various property improvement projects. Our continuing short-term liquidity requirements consisting primarily of operating expenses and debt service requirements, excluding balloon payments at maturity, are expected to be achieved from healthcare operations, rental revenues received, and existing cash on hand.

As reflected in our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and incurred a net loss of $1.0 million for the year ended December 31, 2025 and had a working capital of $0.2 million as of June 30, 2026. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. Our consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds through the sale of equity and/or debt securities via public and/or private offerings. There can be no assurance that management's attempts at any or all of these endeavors will be successful.

Our long-term ability to continue as a going concern is dependent upon our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, and obtain additional sources of suitable and adequate financing. Our ability to continue as a going concern is also dependent its ability to further develop and execute on our business plan (including possible asset sales). We may also have to reduce certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can be no assurance that management's attempts at any or all of these endeavors will be successful.

Sources of Liquidity

The Company's current sources of liquidity include the sale of its properties. During the six months ended June 30, 2026 the Company received gross proceeds of $13.2 million as a result of the sale of two of our Georgia Facilities. In addition, on May 1, 2026, the Company received gross proceeds of $15.7 million as a result of the sale of an additional two of our Georgia Facilities.

As of June 30, 2026 and December 31, 2025, our debt balances consisted of the following:

		June 30, 2026				December 31, 2025
Senior Secured Promissory Notes		$	431,772			$	1,591,238
Senior Secured Promissory Notes - Related Parties			-				775,000
Fixed-Rate Mortgage Loans			12,406,293				24,258,870
Variable-Rate Mortgage Loans			4,361,750				4,485,462
Line of Credit			-				325,192
			17,199,815				31,435,762
Unamortized Discount and Debt Issuance Costs			(200,733	)			(435,200	)
		$	16,999,082			$	31,000,562
As presented in the Consolidated Balance Sheets:
Current Maturities of Long-Term Debt, Net		$	5,386,507			$	10,938,102
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
Line of Credit - Current			-				325,192
Long-Term Debt			11,612,575				13,407,805
		$	16,999,082			$	31,000,562

(1)	$0 and $5,554,463 is classified within Liabilities held for sale within the consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively, which is the short-term classified debt attributable to our two Georgia facilities sold in January 2026 (See Note 9).

The weighted average interest rate and term of our fixed rate debt are 4.16% and 17.82 years, respectively, as of June 30, 2026. The weighted average interest rate and term of our variable rate debt are 8.35% and 11.64 years, respectively, as of June 30, 2026.

The weighted average interest rate and term of our fixed rate debt are 6.21% and 13.76 years, respectively, as of December 31, 2025. The weighted average interest rate and term of our variable rate debt are 8.35% and 12.12 years, respectively, as of December 31, 2025.

Sources and Uses of Cash

The following table provides information regarding our cash flows for the six months ended June 30, 2026 and 2025:

		Six months ended June 30,
		2026				2025
Net cash (used in) provided by operating activities		$	(4,325,406	)		$	958,032
Net cash provided by (used in) investing activities			13,722,245				(382,755	)
Net cash used in financing activities			(3,315,980	)			(635,320	)
Net change in cash and cash equivalents and restricted cash		$	6,080,859			$	(60,043	)

Cash Flows (Used In) Provided By Operating Activities

Cash flows used in operating activities was $4,325,406 for the six months ended June 30, 2026, compared to cash provided $958,032 for the six months ended June 30, 2025. The decrease primarily resulted from our change in net income of $15,613,736 which was offset by changes in non-cash adjustments of $18,835,861 which was primarily attributed to the change in gain on sale of asset of $19,046,819 compared to the prior year. In addition, the Company noted a change in working capital accounts of $2,061,313 which was primarily attributed to a change in accounts payable of $2,483,132 compared to the prior year.

Cash Flows Provided By (Used In) Investing Activities

Cash provided by investing activities was $13,722,245 for the six months ended June 30, 2026, compared to cash used of $382,755 for the six months ended June 30, 2025. Cash provided by investing activities can be attributed to the proceeds received from the sale of our four Georgia facilities. The cash used in investing activities during the six months ended June 30, 2025 was attributed to purchases of property and equipment.

Cash Flows Used In Financing Activities

Cash used in financing activities was $3,315,980 for the six months ended June 30, 2026, compared to $635,320 for the six months ended June 30, 2025. The increase in cash used in finance activities can be attributed to repayments made on our line of credit, mortgages and senior secured notes.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on historical experience and management's assessment of current events and other facts and circumstances that are considered to be relevant. Actual results could differ from these estimates.

Our critical accounting estimates reflecting management's estimates and judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2025. We have reviewed recently issued accounting pronouncements and are evaluating the potential impact, if any, on our condensed consolidated financial statements. Accordingly, there have been no material changes to critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recently Issued Accounting Pronouncements

The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2026. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company's reported financial position or operations in the near term.