GBCS 10-K & 10-Q changes, risk factors and insider trading

The COVID-19company pandemicis has subjected our business, operations, and financial conditionsubject to several risks, including, but not limited to, those discussed below:

The events and consequences discussed in these risk factors could, in circumstances we may not be able to accurately predict, recognize or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results, cash flows, liquidity, ability to pay dividends and stock price. As the COVID-19 pandemic continues to adversely affect our operating and financial results, it may also have the effect of heightening many of the other risks described in this Report.

Rental revenue for the year ended December 31, 2024 2025 was $321,352,none, compared to $634,570$321,352 for the year ended December 31, 2023,2024, a decrease of $313,218$321,352 or 49%.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.

HealthcareManagement Fee Revenue

HealthcareManagement fee revenue for the year ended December 31, 20242025 was $39,170,660,$65,795, compared to $34,537,723none for the year ended December 31, 2023, 2024, an increase of $4,632,937 $65,795 or 13%.100%. HealthcareManagement fee revenues increased due to the increasestart inof Medicaida ratesmanagement atfee our Georgia and Oklahoma facilities.arrangement.

Property taxes, insurance, and other operating expenses was $30,358,824$31,759,000 for the year ended December 31, 2024, 2025, compared to $31,575,921$30,358,824 for the year ended December 31, 2023,2024, aan decreaseincrease of $1,017,097$1,400,176 or 3%.5%. This decreaseincrease is attributed to aan decreaseincrease in operationaloperating headcountcost resultingdue in lower operational wages and decreased spending on COVID relatedto expenses.inflation.

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, compareda to $2,733,157 for the year ended December 31, 2023, a decrease of $1,690,459$159,660 or 62%.15%. This decrease iscan relatedbe attributed to athe decreaseimprovement of incollections of accounts receivable andresulting thein relateda lower accounts receivable over 90 days past due.balance.

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 compared to $6,866,759 for the year ended December 31, 2023, a decreaseincrease of $6,866,759$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 was $1,542,505 for the year ended December 31, 2025, compared to $239,981 for the year ended December 31, 2024, comparedan toincrease of $296,442$1,302,524 foror 543%. The Company had recognized $1,484,703 in credit from the state of Georgia during the year ended December 31, 2025 2023,as ana decrease of $56,461 or 19%. As partresult of otherstate incomecredits forreceived. bothIn periods presented,addition, the Companychange recordedis due to the principal reduction payments made by the operator forof the Arkansas facility as other income. InWe addition,will continue to record this as the Companyoperator recorded a one-time payment from a third-party of $100,000 attributedcontinues to the forfeiture of a deposit as a result of cancelling a contract forsatisfy the potential purchase of the Georgia Facilities.debt.

As reflected in our consolidated financial statements included elsewhere in this Annual Report, we have a history of losses and incurred a net loss of $2.4 million and had a working capital deficiency of $16.1$17.7 million as of December 31, 2024.2025. 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 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.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.

The CARES Act provides an employee retention credit (“CARES Employee Retention Credit”), which is a refundable tax credit against 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 totallingtotaling $8,124,710.$6,866,759. The Company has received a majority of the credits 6,886,759,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 hasrecorded fullyan reservedexpense 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 due in the amount of $1,267,352.$271,529 is fully reserved.

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 OctoberAugust 2024,2025, the Company entered into another Commercial Line of Credit Agreementwas converted into a Promissory Note and Noteextended to December 12, 2030 with Southern Bank for a secured line of credit in the principal amount limit of $750,000 at a fixedan interest rate of 7.75%7.25%. The perCompany annum with a Maturity Date of November 14, 2025. As of December 31, 2024,repaid the balance outstanding on the linesPromissory ofNote creditsin areJanuary $799,752 and the amount available is approximately $700,000.2026.

Cash Flows Provided By (Used In) InvestingOperating 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, compared to cash used of $29,805 for the year ended December 31, 2023.2024. The cash provided by operatinginvesting activities activities was primarily due to proceeds of $2,484,800 attributed to the sale of a building. Purchases of property and equipment increased during during the year ended December 31, 2024 was $36,063 compared to $29,805 in the prior year.$36,063.

Cash used in financing activities was $1,537,057$976,692 for the year ended December 31, 2024,2025, compared to $618,738$1,537,057 for the years ended December 31, 2024. 2023.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 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 party debt and $800,000 on our line of credit. During the year ended December 31, 2023, we made payments on long-term debt of $611,838, net of discounts.

As of MarchJune 31,30, 2026, we owned teneight (108) long-term care facilities including a campus of three buildings in Tulsa, OK. The following table provides summary information regarding these facilities at MarchJune 31,30, 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 ownowns any healthcare facilities in the State of Georgia.

Three Months Ended MarchJune 31,30, 2026, Compared to the Three Months Ended MarchJune 31,30, 2025

Healthcare revenue for the three months ended MarchJune 31,30, 2026 was $7,181,161,$4,618,665, compared to $10,486,939$10,441,244 for the three months ended MarchJune 31,30, 2025, a a decrease of $3,305,778$5,822,579 or 32%.56%. Healthcare revenues decreased due to the sale of twofour of our Georgia facilities in mid-JanuaryJanuary and May 2026.

Management fee fee revenue for the three months ended MarchJune 31,30, 2026 was $107,441$108,334 compared to $0 for the three months ended MarchJune 31,30, 2025, an increase of of $107,441$108,334 or 100%. Management fee revenues increased due to the start of a management fee arrangement in November 2025.

Property taxes, insurance, and other operating expenses was $6,068,043 for the three months ended March 31, 2026, compared to $8,080,969$4,132,334 for the three months ended MarchJune 31,30, 2026, compared to $8,156,177 for the three months ended June 30, 2025, a decrease of $2,012,926 $4,023,843 or 25%.49%. This decrease can be attributed to lower operating cost anddue to the sale of our twofour Georgia facilities.

General and administrative expenses was $2,129,484 for the three months ended March 31, 2026, compared to $2,365,088$2,103,004 for the three months ended MarchJune 31,30, 2026, compared to $2,236,266 for the three months ended June 30, 2025, a decrease of $235,604$133,262 or 10%.6%. The decrease can be attributed to a decrease in salary and benefits expense.

Provision for credit losses was $20,357$363,538 for the three months ended MarchJune 31,30, 2026, compared to $99,608$136,348 for the three months ended MarchJune 31,30, 2025, an a decreaseincrease of $79,251$227,190 or 80%.167%. The change can be attributed to the improvementwrite madeoff onreceivables collections and less accounts receivable outstandingprimarily due to the sale of twofour of our facilities during the three months ended March 31, 2026.facilities.

Depreciation expense was $333,211$229,471 for the three months ended MarchJune 31,30, 2026, compared to $363,020$362,742 for the three months ended March 31,June 30, 2025, a decrease of $29,809$133,271 or 8%.37%. This decrease is related to an increase in fully depreciated assets along with assets sold atin 2026 attributed to our twofour Georgia facilities as compared to the same period in the prior year.

Gain on sale of asset was income of $8,896,309$10,150,510 for the three months ended MarchJune 31,30, 2026, compared to $0 for the three months ended MarchJune 31, 30, 2025. The increase was the result of the gain recognized due to the completion of the sale of our two Georgia facilities.

Interest expense, net was $923,784$1,136,395 for the threesix months ended March 31,June 30, 2026, compared to $542,667$768,658 for the threesix months ended MarchJune 31,30, 2025, an increase of 381,117$367,737 or 70%.48%. The increase was due higher interest rates on our debt compared to the prior year in addition duea prepayment premium fees and fees attributedassociated towith themortgage payoffpayoffs ofbeing debt.recorded within interest expense as well as higher interest rates were used in 2026.

Other income was $226,085$984,315 for the threesix months ended MarchJune 31,30, 2026, compared to $308,444$350,197 for the threesix months ended MarchJune 31,30, 2025, aan decreaseincrease of $82,359 $634,118 or 27%.181%. ThisThe isincrease was primarily relatedattributable to recordingstate thecredits principal reduction payments maderecognized by the operatorCompany for the Arkansas facility as other income. We will continue to record this asfrom the operatorstates continuesof toGeorgia satisfy the debt.and Oklahoma.

Income tax expense was $409,735$881,158 for the threesix months ended MarchJune 31,30, 2026, compared to $0 for the threesix months ended MarchJune 31,30, 2025. Income tax expense was the result of the gain recognized due to the completion of the sale of our twofour Georgia facilities.facilities and the reversal of our valuation allowance.

At MarchJune 31,30, 2026, the Company had cash of $1,286,452$7.7 million and restricted cash of $192,129.$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 twofour of our GeorgiGeorgia 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 losses and incurred a net loss of $1.0 million for the year ended December 31, 2025 and had a working capital deficiency of $6.5$0.2 million million as of MarchJune 31,30, 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.

The Company’s current sources of liquidity include the sale of it’s its properties. During the threesix months ended March 31,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 MarchJune 31,30, 2026 and December 31, 2025, our debt balances consisted of the following:

The weighted average interest rate and term of our fixed rate debt are 6.41%4.16% and 13.1917.82 years, respectively, as of MarchJune 31,30, 2026. The weighted average interest rate and term of our variable rate debt are 8.35% and 11.8811.64 years, respectively, as of MarchJune 31,30, 2026.

The following table provides information regarding our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:

Cash flows used in operating activities was $2,289,812$4,325,406 for the threesix months ended MarchJune 31,30, 2026, compared to cash provided $1,035,411$958,032 for the threesix months ended MarchJune 31,30, 2025. The decrease primarily resulted from our change in net loss during the prior period of $655,969 compared to income of $6,526,382,$15,613,736 a $7,182,351 change. This changewhich was offset by achanges in non-cash adjustmentadjustments of $8,776,721$18,835,861 which iswas primarily due attributed to athe change of $8,896,309 attributed to ain gain on sale of assets. Theasset of $19,046,819 compared to the prior year. In addition, the Company noted a change in working capital accounts year-over-yearof $2,061,313 which was $1,730,853 which is primarily due attributed to oura change in accounts payable andof accrued liabilities,$2,483,132 liabilities held for sale and other liabilities offset by a changes attributedcompared to accountsthe receivableprior and prepaid expenses and other assets.year.

Cash provided by investing activities was $5,023,930$13,722,245 for the three six months ended MarchJune 31,30, 2026, compared to cash used of $219,240$382,755 for the three six months ended MarchJune 31,30, 2025. Cash provided by investing activities can be attributed to the proceeds received from the sale of our two four Georgia facilities. The cash used in investing activities during the three six months ended MarchJune 31,30, 2025 was attributed to purchases of property and equipment.

Cash used in financing activities was $3,109.230$3,315,980 for the threesix months ended MarchJune 31,30, 2026, compared to $182,439$635,320 for the threesix months ended MarchJune 31,30, 2025. The increase in cash used in finance activities can be attributed to repayments made on our line of creditcredit, mortgages and senior secured notes.