# EDGAR Filing Document

**Accession Number:** 0001004724
**File Stem:** 0000950170-25-108917
**Filing Date:** 2025-8
**Character Count:** 255662
**Document Hash:** 7faf6ea7c1d327fec72fffb7270f492a
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-25-108917.hdr.sgml**: 20250814

**ACCESSION NUMBER**: 0000950170-25-108917

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 83

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250814

**DATE AS OF CHANGE**: 20250814

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** REGIONAL HEALTH PROPERTIES, INC
- **CENTRAL INDEX KEY:** 0001004724
- **STANDARD INDUSTRIAL CLASSIFICATION:** LESSORS OF REAL PROPERTY, NEC [6519]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 815166048
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33135
- **FILM NUMBER:** 251219628

**BUSINESS ADDRESS:**
- **STREET 1:** 1050 CROWN POINTE PARKWAY
- **STREET 2:** SUITE 720
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30338
- **BUSINESS PHONE:** 678-869-5116

**MAIL ADDRESS:**
- **STREET 1:** 1050 CROWN POINTE PARKWAY
- **STREET 2:** SUITE 720
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30338

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ADCARE HEALTH SYSTEMS, INC
- **DATE OF NAME CHANGE:** 20130530

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ADCARE HEALTH SYSTEMS INC
- **DATE OF NAME CHANGE:** 19951208

?xml version='1.0' encoding='ASCII'? 10-Q

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM** 10-Q

**(Mark One)**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended** **June 30,** 2025

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from to** 

**Commission File Number** 001-33135

Regional Health Properties, Inc.

**(Exact name of registrant as specified in its charter)** 

---

| | |
|:---|:---|
| Georgia | 81-5166048 |
| **(State or other jurisdiction**<br>**of incorporation)** | **(I.R.S. Employer**<br>**Identification Number)** |

---

1050 Crown Pointe Parkway**,** Suite 720**,** Atlanta**,** GA 30338

**(Address of principal executive offices)**

**(**678**)** 869-5116

**(Registrant's telephone number, including area code)**

**(Former name, former address and former fiscal year, if changed since last report)** 

Securities registered pursuant to Section 12(b) of the Act:

---

| |
|:---|
| **Title of each class** |
| Common Stock, no par value<br> **RHEP** <sup>(1)</sup><br> **N/A** <sup>(1)</sup> |
| Series A Redeemable <br>Preferred Stock, no par value<br> **RHEPA** <sup>(1)</sup><br> **N/A** <sup>(1)</sup><br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) On June 11, 2025, NYSE American LLC ("NYSE American") filed a Form 25 with the U.S. Securities and Exchange Commission to delist Regional Health Properties, Inc.'s ("Regional") common stock, no par value (the "Common Stock"), and Regional's Series A Redeemable Preferred Shares, no par value (the "Series A Preferred Stock"), from NYSE American. The Common Stock and the Series A Preferred Stock trade on the OTCQB under the symbols "RHEP" and "RHEPA," respectively.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|  |  | 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. Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒

------

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of August 12, 2025 the registrant had 2,242,239 shares of common stock, no par value, outstanding.

------

**Regional Health Properties, Inc.**

**Form 10-Q**

**Table of Contents**

---

| | | |
|:---|:---|:---|
|  |  | **Page<br>Number** |
| **Part I.** | [**FINANCIAL INFORMATION**](#part_i__financial_information) |  |
| Item 1. | [Financial Statements (unaudited)](#item_1__financial_statements) | 4 |
|  | [Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024](#consolidated_balance_sheets) | 4 |
|  | [Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024](#consolidated_statements_operations) | 6 |
|  | [Consolidated Statements of Stockholders' Deficit for the three and six months ended June 30, 2025 and 2024](#consolidated_statement_stockholders_equi) | 7 |
|  | [Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024](#consolidated_statements_cash_flows_unaud) | 8 |
|  | [Notes to Consolidated Financial Statements](#notes_to_unaudited_consolidated_financia) | 10 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#item_2_managements_discussion_analysis_f) | 28 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#item_3_quantitative_qualitative_disclosu) | 37 |
| Item 4. | [Controls and Procedures](#item_4_controls_procedures) | 37 |
| **Part II.** | [**OTHER INFORMATION**](#part_ii_or_information) |  |
| Item 1. | [Legal Proceedings](#item_1_legal_proceedings) | 37 |
| Item 1A. | [Risk Factors](#item_1a_risk_factors) | 37 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#item_2_unregistered_sales_equity_securit) | 38 |
| Item 3. | [Defaults upon Senior Securities](#item_3_defaults_upon_senior_securities) | 38 |
| Item 4. | [Mine Safety Disclosures](#item_4_mine_safety_disclosures) | 38 |
| Item 5. | [Other Information](#item_5_or_information) | 38 |
| Item 6. | [Exhibits](#item_6_exhibits) | 38 |
| [**Signatures**](#signatures) | [**Signatures**](#signatures) | 40 |

---

------

**Part I. Financial Information**

**Item 1. Financial Statements**

**REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES** CONSOLIDATED BALANCE SHEETS

*(Amounts in 000's)*

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
|  | *(Unaudited)* |  |
| *<u>ASSETS</u>* |  |  |
| Property and equipment, net | $33015 | $33489 |
| Asset held for sale, net | 10372 | 10334 |
| Cash | 401 | 582 |
| Restricted cash | 2808 | 2890 |
| Accounts receivable, net of allowances of $470 and $141 | 4367 | 3362 |
| Prepaid expenses and other | 692 | 633 |
| Notes receivable | 369 | 369 |
| Intangible assets - bed licenses | 2471 | 2471 |
| Intangible assets - lease rights, net | 60 | 69 |
| Right-of-use operating lease assets | 1929 | 2154 |
| Goodwill | 1585 | 1585 |
| Straight-line rent receivable | 2069 | 2527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $60138 | $60465 |
| *<u>LIABILITIES AND EQUITY (DEFICIT)</u>* |  |  |
| Senior debt, net | $34238 | $34829 |
| Debt related to asset held for sale, net | 8012 | 8121 |
| Bonds, net | 5695 | 5851 |
| Other debt, net | 975 | 919 |
| Accounts payable | 7082 | 3695 |
| Accrued expenses | 5976 | 5414 |
| Operating lease obligation | 2220 | 2472 |
| Other liabilities | 1394 | 2082 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 65592 | 63384 |
| Commitments and contingencies (Note 12) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders' deficit: |  |  |
| Common stock and additional paid-in capital, no par value; 55,000 shares authorized; 2,253 shares issued and 2,242 shares outstanding at June 30, 2025; and 1,890 shares issued and 1,879 shares outstanding at December 31, 2024 | 63952 | 63173 |
| Preferred stock, no par value; 5,000 shares authorized (including amounts authorized for Series A and Series B); shares issued and outstanding designated as follows: |  |  |
| Preferred stock, Series A, no par value; 559 shares authorized, issued and outstanding at June 30, 2025 and December 31, 2024, with a redemption amount $426 at June 30, 2025 and December 31, 2024 | 426 | 426 |
| Preferred stock, Series B, no par value; 2,812 shares authorized; 2,252 shares issued and outstanding at June 30, 2025 and December 31, 2024, with a redemption amount $18,602 at June 30, 2025 and December 31, 2024 | 18602 | 18602 |
| Accumulated deficit | (88434) | (85120) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' deficit | (5454) | (2919) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' deficit | $60138 | $60465 |

---

------

See accompanying notes to unaudited consolidated financial statements.

------

**REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES**

CONSOLIDATED STATEMENTS OF OPERATIONS

*(Amounts in 000's, except net loss per share amounts)*

*(Unaudited)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenues: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patient care revenues | $8774 | $2525 | $14416 | $4834 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rental revenues | 1283 | 1800 | 2831 | 3617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 10057 | 4325 | 17247 | 8451 |
| Expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patient care expense | 7184 | 2183 | 11585 | 4283 |
| &nbsp;&nbsp;&nbsp;&nbsp;Facility rent expense | 149 | 149 | 356 | 297 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 403 | 514 | 805 | 1025 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense | 2429 | 1229 | 4659 | 2860 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on lease termination |  |  | 303 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit loss expense | 400 | 36 | 470 | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on operations transfer |  |  | (106) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 10565 | 4111 | 18072 | 8530 |
| Income (loss) from operations | (508) | 214 | (825) | (79) |
| Other expense: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 615 | 669 | 1268 | 1344 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense, net | 326 | 251 | 618 | 245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense, net | 941 | 920 | 1886 | 1589 |
| Net loss | $(1449) | $(706) | $(2711) | $(1668) |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock dividends |  |  | (603) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to Regional Health Properties, Inc. common stockholders | $(1449) | $(706) | $(3314) | $(1668) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss per share of common stock attributable to Regional Health Properties, Inc. |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and Diluted | $(0.68) | $(0.38) | $(1.60) | $(0.91) |
| Weighted average shares of common stock outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and Diluted | 2143 | 1847 | 2068 | 1843 |

---

See accompanying notes to unaudited consolidated financial statements.

------

**REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES**

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

*(Amounts in 000's)*

(Unaudited)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares of<br>Common<br>Stock** | **Shares of<br>Preferred<br>Stock A** | **Shares of<br>Preferred<br>Stock B** | **Shares of Treasury Stock** | **Common<br>Stock and<br>Additional<br>Paid-in<br>Capital** | **Preferred Stock A, no par value** | **Preferred Stock B, no par value** | **Accumulated<br>Deficit** | **Total** |
| Balance, December 31, 2024 | 1879 | 560 | 2252 | (11) | $63173 | $426 | $18602 | $(85120) | $(2919) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  |  |  |  | 22 |  |  |  | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issued in connection with Preferred Stock Series B dividends | 250 |  |  |  | 603 |  |  | (603) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (1262) | (1262) |
| Balance, March 31, 2025 | 2129 | 560 | 2252 | (11) | $63798 | $426 | $18602 | $(86985) | $(4159) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  |  |  |  | 25 |  |  |  | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted stock issuance | 65 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercise of stock options | 48 |  |  |  | 129 |  |  |  | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (1449) | (1449) |
| Balance, June 30, 2025 | 2242 | 560 | 2252 | (11) | $63952 | $426 | $18602 | $(88434) | $(5454) |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares of<br>Common<br>Stock Outstanding** | **Shares of<br>Preferred<br>Stock A** | **Shares of<br>Preferred<br>Stock B** | **Shares of Treasury Stock** | **Common<br>Stock and<br>Additional<br>Paid-in<br>Capital** | **Preferred Stock A, no par value** | **Preferred Stock B, no par value** | **Accumulated<br>Deficit** | **Total** |
| Balance, December 31, 2023 | 1839 | 560 | 2252 | (11) | $63059 | $426 | $18602 | $(81902) | $185 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  |  |  |  | 43 |  |  |  | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (962) | (962) |
| Balances, March 31, 2024 | 1839 | 560 | 2252 | (11) | $63102 | $426 | $18602 | $(82864) | $(734) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  |  |  |  | 23 |  |  |  | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted stock issuance | 65 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (706) | (706) |
| Balances, June 30, 2024 | 1904 | 560 | 2252 | (11) | $63125 | $426 | $18602 | $(83570) | $(1417) |

---

See accompanying notes to unaudited consolidated financial statements.

------

**REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES**

CONSOLIDATED STATEMENTS OF CASH FLOWS

*(Amounts in 000's)*

(Unaudited)

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(2711) | $(1668) |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 805 | 1025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 47 | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rent expense less than cash paid | (27) | (20) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rent revenue in excess of cash received | (265) | (263) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on lease termination | 303 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs, debt discounts and premiums | 37 | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on operations transfer | (106) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit loss expense | 470 | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (1420) | (123) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | (60) | 530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 3949 | 1383 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (217) | 70 |
| Net cash provided by operating activities | 805 | 1102 |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment | (360) | (395) |
| Net cash used in investing activities | (360) | (395) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of senior debt | (800) | (688) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of other debt | (569) | (612) |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt extinguishment and issuance costs |  | (17) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the exercise of stock options | 129 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from other debt | 532 |  |
| Net cash used in financing activities | (708) | (1317) |
| Net change in cash and restricted cash | (263) | (610) |
| Cash and restricted cash, beginning | 3472 | 4184 |
| Cash and restricted cash, ending | $3209 | $3574 |

---

------

**REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES**

CONSOLIDATED STATEMENTS OF CASH FLOWS

*(Amounts in 000's)*

(Unaudited)

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** |
| Supplemental disclosure of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash interest paid | $1285 | $1355 |
| Supplemental disclosure of non-cash activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Vendor-financed insurance | $560 | $712 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on operations transfer | $106 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock dividends paid in common stock | $603 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on lease termination | $303 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Cavalier management | $— | $78 |

---

See accompanying notes to unaudited consolidated financial statements.

------

**REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES**

Notes to Consolidated Financial Statements

June 30, 2025

**NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES**

**Description of Business**

Regional Health Properties, Inc.'s (the "Company" or "Regional Health") predecessor was incorporated in Ohio on August 14, 1991, under the name Passport Retirement, Inc. In 1995, Passport Retirement, Inc. acquired substantially all of the assets and liabilities of AdCare Health Systems, Inc. and changed its name to AdCare Health Systems, Inc. ("AdCare"). AdCare completed its initial public offering in November 2006, relocated its executive offices and accounting operations to Georgia in 2012, and changed its state of incorporation from Ohio to Georgia in December 2013. Regional Health Properties, Inc. is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior housing. The Company's business primarily consists of leasing such facilities to third-party tenants, which operate the facilities. The Company has two primary reporting segments: (i) Real Estate, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants and (ii) Healthcare Services segment, which consists of the operation of the Meadowood and Glenvue facilities. Effective August 3, 2023, the Company's 12.5% Series B Cumulative Redeemable Preferred Shares (the "Series B Preferred Stock") is quoted on the OTC Markets Group, Inc.'s OTCQB Venture Market under the symbol "RHEPB". Effective June 11, 2025, the Company's Common Stock and the Series A Preferred Stock trade on the OTCQB under the symbols "RHEP" and "RHEPA," respectively.

**Basis of Presentation**

The accompanying consolidated and condensed financial statements are prepared in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP") in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"). The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2024 audited consolidated financial statements and notes thereto, which are included in the 2024 Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on March 31, 2025.

**Use of Estimates**

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates**.** 

**Reclassifications**

Certain prior period amounts have been reclassified to conform with the current period presentation format. These reclassifications had no effect on previously reported results of operations, total assets, total liabilities, or stockholders' deficit.

**Revenue Recognition and Allowances**

*Patient Care Revenue.* ASU 2014-09, Revenue from Contracts with Customers, as codified in ASC 606 ("ASC 606"), requires a company to recognize revenue when the company transfers control of promised goods and services to a customer. Revenue is recognized in an amount that reflects the consideration to which a company expects to receive in exchange for such goods and services. Revenue from our Healthcare Services business segment is derived from services rendered to patients in the Glenvue, Meadowood and Mountain Trace facilities. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services ("CMS"); (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority of the revenue the Company recognizes is from government sources. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and other price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. The Company recognizes revenue at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs. Performance obligations are determined based on the nature of the services provided. Revenue is recognized as performance obligations are

------

satisfied. Estimated uncollectible amounts due from patients are generally considered implicit price concessions that are a direct reduction to net operating revenues.

*Triple-Net Leased Properties.* The Company recognizes rental revenue in accordance with ASC 842, Leases. The Company's triple-net leases provide for periodic and determinable increases in rent. The Company recognizes rental revenues under these

leases on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in the straight-line rent receivable on our consolidated balance sheets. In the event the Company cannot reasonably estimate the future collection of rent from one or more tenant(s) of the Company's facilities, rental income for the affected facilities is recognized only upon cash collection, and any accumulated straight-line rent receivable is expensed in the period in which the Company deems rent collection to no longer be probable. For additional information with respect to such facilities, see Note 2 – *Liquidity* and Note 7 – *Leases*.

*Allowances.* The Company assesses the collectability of its rent receivables, including straight-line rent receivables and working capital loans to tenants. The Company bases its assessment of the collectability of rent receivables and working capital loans to tenants on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, and current economic conditions. If the Company's evaluation of these factors indicates it is probable that the Company will be unable to receive the rent payments or payments on a working capital loan, then the Company provides a reserve against the recognized straight-line rent receivable asset or working capital loan for the portion that we estimate may not be recovered. Payments received on impaired loans are applied against the allowance. If the Company changes its assumptions or estimates regarding the collectability of future rent payments required by a lease or required from a working capital loan to a tenant, then the Company may adjust its reserve to increase or reduce the rental revenue or interest revenue from working capital loans to tenants recognized in the period the Company makes such change in its assumptions or estimates. See Note 7 – Leases. The Company has reserved for approximately 1.5% of our patient care receivables based on the historic industry standards and continues to assess the adequacy of such reserve.

Activity in the allowance for credit losses in the Healthcare segment for the six months ended June 30, 2025 and June 30, 2024 included provisions of credit losses of $0.3 million and $0.1 million, respectively. There were no write-offs or recoveries during either period.

The following table presents the Company's Accounts receivable, net of allowance for the periods presented:

---

| | | |
|:---|:---|:---|
| **(Amounts in 000's)** | **June 30, 2025** | **December 31, 2024** |
| Gross receivables |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real Estate Services | $758 | $1576 |
| &nbsp;&nbsp;&nbsp;&nbsp;Healthcare Services | 4079 | 1927 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 4837 | 3503 |
| Allowance |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real Estate Services | (200) | (71) |
| &nbsp;&nbsp;&nbsp;&nbsp;Healthcare Services | (270) | (70) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | (470) | (141) |
| &nbsp;&nbsp;Accounts receivable, net of allowance | $4367 | $3362 |

---

**Prepaid Expenses and Other**

As of June 30, 2025 and December 31, 2024, the Company had approximately $0.7 million and $0.6 million, respectively, in prepaid expenses and other; the $0.1 million increase is related to insurance for the Meadowood, Glenvue, and Southland facility operations, while the other amounts are predominantly for directors' and officers' insurance, NYSE American annual fees, and mortgage insurance premiums.

**Notes Receivable**

Notes receivable are initially recorded when accounts receivable are transferred into a promissory note and are recorded as an alternative to accounts receivable to memorialize an unqualified promise to pay a specific sum, typically with interest, in accordance with a defined payment schedule. The Company's payment terms with customers on promissory notes can vary

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based on several factors and the circumstances of each promissory note, however typically promissory notes mature over a 1 to 3 year period. Similar to accounts receivable, each reporting period the Company evaluates the collectability of outstanding notes receivable balances. We evaluate the collectability of our notes receivable based on a combination of credit quality indicators, including, but not limited to payment status, financial strength of the customer, and historical write-offs. We may establish reserves, accept modified payment terms, or book direct write offs for any estimated credit loss with generally a corresponding charge to credit loss expense in our Consolidated Statement of Operations. Subsequent changes in our estimate of credit losses may result in a corresponding increase or decrease to the credit loss expense in our Consolidated Statement of Operations.

**Assets Held for Sale and Discontinued Operations**

The Company may decide to sell properties that are held for use. The Company records these properties as assets held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year. Assets classified as held for sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell. When the carrying value exceeds the fair value, less estimated costs to sell, an impairment expense is recognized. The Company estimates fair value, less estimated closing costs, based on similar real estate sales transactions. These valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 2 and 3 inputs. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. See Note 5 - *Assets Held for Sale* for additional details on assets held for sale as of June 30, 2025 and December 31, 2024. Any debt related to assets held for sale or sold during the period are classified as debt related to assets held for sale for the current and prior periods presented in the accompanying consolidated financial statements.

Assets held for sale are presented as discontinued operations in all periods presented if the disposition represents a strategic shift that has, or will have, a major effect on the Company's financial position or results of operations. This includes the net gain (or loss) upon disposal of property held for sale, the property's operating results, depreciation and interest expense.

**Accounts Payable**

The following table presents the Company's Accounts payable for the periods presented:

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| | | |
|:---|:---|:---|
| **(Amounts in 000's)** | **June 30, 2025** | **December 31, 2024** |
| Accounts Payable |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real Estate Services | $2674 | $2008 |
| &nbsp;&nbsp;&nbsp;&nbsp;Healthcare Services | 4408 | 1687 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Accounts Payable | $7082 | $3695 |

---

**Other Liabilities**

As of June 30, 2025 and December 31, 2024, the Company had approximately $1.4 million and $2.1 million, respectively in Other liabilities, consisting of security lease deposits and sublease improvement funds.

**Leases and Leasehold Improvements**

The Company leases certain facilities and equipment in the normal course of business. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating lease or finance lease. As of June 30, 2025, the Company's leased facility are accounted for as an operating lease. For operating leases that contain scheduled rent increases, the Company records rent expense on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term.

The Company assesses any new contracts or modification of contracts in accordance with *ASC* 842, *Leases*, to determine the existence of a lease and its classification. We are reporting revenues and expenses for real estate taxes and insurance where the lessee has not made those payments directly to a third party in accordance with their respective leases with us.

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**Insurance** 

The Company maintains insurance for professional and general liability claims for its Healthcare Services segment, which includes any facility the Company is likely to operate. however for claims prior to January 1, 2020, the Company is self-insured against professional and general liability claims since it discontinued its healthcare operations in connection with the Transition. The Company evaluates quarterly the adequacy of its self-insurance reserve based on a number of factors, including: (i) the number of actions pending and the relief sought; (ii) analyses provided by defense counsel, medical experts or other information which comes to light during discovery; (iii) the legal fees and other expenses anticipated to be incurred in defending the actions; (iv) the status and likely success of any mediation or settlement discussions, including estimated settlement amounts and legal fees and other expenses anticipated to be incurred in such settlement, as applicable; and (v) the venues in which the actions have been filed or will be adjudicated. The Company believes that most of the professional and

general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. Accordingly, the self-insurance reserve reflects the Company's estimate of settlement amounts for the pending actions, if applicable, and legal costs of settling or litigating the pending actions, as applicable. Because the self-insurance reserve is based on estimates, the amount of the self-insurance reserve may not be sufficient to cover the settlement amounts actually incurred in settling the pending actions, or the legal costs actually incurred in settling or litigating the pending actions. See Note 8 – *Accrued Expenses* and Note 12 - *Commitments and Contingencies*.

In addition, the Company maintains certain other insurance programs, including commercial general liability, property, casualty, directors' and officers' liability, crime, and employment practices liability.

**Net Loss Per Share**

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the respective period. Diluted earnings per share is similar to basic net loss per share except that the net loss is adjusted by the impact of the weighted-average number of shares of common stock outstanding including potentially dilutive securities (such as options, warrants and non-vested common stock) when such securities are not anti-dilutive. Potentially dilutive securities from options, warrants and unvested restricted shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options and warrants with exercise prices exceeding the average market value are used to repurchase common stock at market value. The incremental shares remaining after the proceeds are exhausted represent the potentially dilutive effect of the securities.

Securities outstanding that were excluded from the computation, because they would have been anti-dilutive were as follows:

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| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
| **(Share amounts in 000's)** | **2025** | **2024** |
| Stock options |  | 33 |
| Warrants - employee |  | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total anti-dilutive securities |  | 65 |

---

***Recently Adopted Accounting Pronouncements*** 

In November 2023, the FASB issued ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*, which requires a public company to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. A public company with a single reportable segment is required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements. See Note 13 – *Segment Results* for more information.

In December 2023, the FASB issued ASU 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*,

which requires a public company, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after

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December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 effective January 1, 2025. The adoption of ASU-2023-09 did not have a material impact on the Company's consolidated financial statements.

**New Accounting Pronouncements Issued But Not Yet Effective**

In November 2024, the FASB issued ASU 2024-03, *Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses* (ASU 2024-03), which requires disclosure of incremental income statement expense information on an annual and interim basis, primarily through enhanced disclosures of specified costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statement disclosures.

No other new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company's financial statements.

**Note 2 – Liquidity**

Regional continues to take strategic steps to strengthen its liquidity position and support long-term growth. These initiatives include refinancing or repaying existing debt to reduce interest expense and mandatory principal payments—potentially through expanded borrowing arrangements—alongside efforts to increase lease revenue through acquisitions and reinvestments in existing properties. The Company is also working to restructure lease terms with certain tenants, replace non-performing tenants, reduce general and administrative expenses, and complete its pending merger with SunLink Health Systems, Inc. ("SunLink").

As of June 30, 2025, the Company held approximately $0.4 million in unrestricted cash and $4.4 million in net accounts receivable, primarily comprised of patient accounts and rent receivables. Regional has committed to a plan to sell specific assets classified as held for sale to generate additional liquidity in support of operations and potential investment opportunities. See Note 5 - *Assets Held for Sale*

During the six months ended June 30, 2025, the Company generated $0.8 million in cash from operating activities, largely due to timing differences in accounts payable and accrued expense payments. Management is actively working to accelerate the collection of aged patient receivables. Future operating cash flows will depend on the financial performance of the Company's leased facilities and facilities managed by CJM Advisors, including Georgetown, Glenvue, Mountain Trace, Southland, and Sumter.

On January 6, 2025, Regional and SunLink announced the execution of an Agreement and Plan of Merger dated January 3, 2025, under which SunLink would merge with and into Regional. In exchange, SunLink shareholders would receive 1,410,000 shares of Regional common stock and 1,410,000 shares of newly authorized Series D 8% Cumulative Convertible Redeemable Preferred Stock, with an initial $10.00 per share liquidation preference.

Subsequently, on April 14, 2025, the companies entered into an Amended and Restated Agreement and Plan of Merger. Among other changes, the revised agreement increased the common stock consideration to 1.1330 shares of Regional common stock per SunLink share, raised the Series D Preferred Stock liquidation preference to $12.50 per share, and improved the conversion ratio to 1.1330 shares of Regional common stock for every three shares of Series D Preferred Stock, subject to further potential reduction. The revised agreement also permitted SunLink to pay one or two special cash dividends to its shareholders before closing, subject to specified limitations. The merger agreement has been approved by both companies' boards of directors and remains subject to shareholder approvals, regulatory clearance, and other customary closing conditions.

On June 22, 2025, Regional and SunLink amended the merger agreement to extend the outside termination date to 5:00 p.m. Eastern Time on August 11, 2025. Under the amended agreement, either party may terminate the transaction if the merger is not completed by the revised termination date.

While the Company continues to move toward closing the merger, it has also received and evaluated unsolicited acquisition proposals. On May 6, 2025, Regional received an unsolicited proposal from "Party A" to acquire substantially all of its assets. The proposed consideration included assumption of certain HUD-insured mortgage loans, payment of the remaining mortgage debt (up to a $51 million cap), and $4.00 per share for outstanding common stock. Pursuant to the merger agreement, Regional promptly notified SunLink and, after careful review with legal counsel, the Board of Directors determined on June 20, 2025, that the proposal did not constitute a "Superior Regional Proposal."

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A second unsolicited proposal was received on June 23, 2025, from "Party B," who expressed interest in launching a tender offer to purchase up to 100% of Regional's common stock at $4.25 per share. The Company again notified SunLink and, following legal review, the Board concluded on July 10, 2025, that this offer also did not represent a Superior Regional Proposal under the terms of the merger agreement.

Separately, the Company experienced changes in its listing status. Until February 5, 2025, Regional's common stock and Series A Preferred Stock were listed on the NYSE American under the ticker symbols "RHE" and "RHE-PA," respectively. Trading was suspended on that date due to noncompliance with listing standards. On June 11, 2025, the NYSE American formally delisted both securities. They now trade on the OTC Markets under the symbols "RHEP" (common stock) and "RHEPA" (Series A Preferred Stock).

Trading on the OTC Markets presents challenges, including reduced liquidity, wider bid-ask spreads, and limited analyst coverage. In addition, broker-dealers face greater regulatory burdens, which may further discourage trading activity. These limitations could depress trading prices and negatively impact the Company's ability to raise capital through equity or debt offerings. Such constraints may impair the Company's ability to invest in future growth or refinance upcoming debt maturities.

**Debt**

As of June 30, 2025, the Company had $48.9 million in indebtedness, net of $0.9 million deferred financing costs and $0.1 million in unamortized discounts. The Company anticipates net principal repayments of approximately $3.3 million during the next twelve-month period, approximately $2.7 million of routine debt service amortization, $0.4 million of insurance financing amortization, and $0.2 million payment of bond debt.

**Debt Covenant Compliance**

At June 30, 2025, the Company was in compliance with the various financial and administrative covenants under all the Company's outstanding credit related instruments.

**Evaluation of the Company's Ability to Continue as a Going Concern**

Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the Company's current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due arising within one year of the date of the issuance of the Company's consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. The Company's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

In applying applicable accounting guidance, management considered the Company's current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company's obligations due over the next twelve months, and the Company's recurring business operating expenses.

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The Company concluded that it is probable that the Company will be able to meet its obligations arising within one year of the date of issuance of these consolidated financial statements within the parameters set forth in the accounting guidance.

**NOTE 3. CASH AND RESTRICTED CASH** 

The following presents the Company's cash and restricted cash:

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| | | |
|:---|:---|:---|
| **(Amounts in 000's)** | **June 30, 2025** | **December 31, 2024** |
| Cash | $401 | $582 |
| Restricted cash: |  |  |
| &nbsp;&nbsp;Cash collateral | $3 | $34 |
| &nbsp;&nbsp;HUD and other replacement reserves | 1937 | 1992 |
| &nbsp;&nbsp;Escrow deposits | 551 | 546 |
| &nbsp;&nbsp;Restricted investments for debt obligations | 317 | 318 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total restricted cash | 2808 | 2890 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash and restricted cash | $3209 | $3472 |

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*Cash collateral—*In securing mortgage financing from certain lending institutions, the Company and certain of its wholly-owned subsidiaries are required to deposit cash to be held as collateral in accordance with the terms of such loan agreements.

*HUD and other replacement reserves—*The regulatory agreements entered into in connection with the financing secured through HUD require monthly escrow deposits for replacement and improvement of the HUD project assets.

*Escrow deposits—*In connection with financing secured through the Company's lenders, several wholly-owned subsidiaries of the Company are required to make monthly escrow deposits for taxes and insurance.

*Restricted cash for debt obligations*—In compliance with certain financing and insurance agreements, the Company and certain wholly-owned subsidiaries of the Company are required to deposit cash held as collateral by the lender or in escrow with certain designated financial institutions.

**NOTE 4. PROPERTY AND EQUIPMENT**

The following table sets forth the Company's property and equipment:

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| | | | |
|:---|:---|:---|:---|
| **(Amounts in 000's)** | **Estimated<br>Useful<br>Lives (Years)** | **June 30, 2025** | **December 31, 2024** |
| Buildings and improvements | 5-40 | $50730 | $50520 |
| Equipment and computer related | 2-10 | 708 | 701 |
| Land |  | 2331 | 2331 |
| &nbsp;&nbsp;Property and equipment |  | 53769 | 53552 |
| &nbsp;&nbsp;Less: accumulated depreciation |  | (20754) | (20063) |
| &nbsp;&nbsp;Property and equipment, net |  | $33015 | $33489 |

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The following table summarizes total depreciation and amortization expense three and six months ended June 30, 2025 and 2024:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **(Amounts in 000's)** | **2025** | **2024** | **2025** | **2024** |
| Depreciation | $310 | $406 | $619 | $809 |
| Amortization | 93 | 108 | 186 | 216 |
| &nbsp;&nbsp;Total depreciation and amortization expense | $403 | $514 | $805 | $1025 |

---

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**NOTE 5. ASSETS HELD FOR SALE**

Assets held for sale represent our Coosa and Meadowood facilities. The following table sets forth the Company's assets held for sale:

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| | | | |
|:---|:---|:---|:---|
| **(Amounts in 000's)** | **Estimated<br>Useful<br>Lives (Years)** | **June 30, 2025** | **December 31, 2024** |
| Buildings and improvements | 5 - 40 | $14395 | $14358 |
| Equipment and computer related | 2 - 10 | 459 | 458 |
| Land |  | 443 | 443 |
|  |  | 15297 | 15259 |
| &nbsp;&nbsp;Less: accumulated depreciation |  | (4925) | (4925) |
| &nbsp;&nbsp;Asset held for sale, net |  | $10372 | $10334 |
| **(Amounts in 000's)** |  | **June 30, 2025** | **December 31, 2024** |
| Coosa |  | $6258 | $6258 |
| Meadowood |  | $4114 | 4076 |
| &nbsp;&nbsp;Assets held for sale, net |  | $10372 | $10334 |

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The following table sets forth the Company's assets held for sale's associated debt outstanding:

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| | | |
|:---|:---|:---|
| **(Amounts in 000's)** <sup>(1)</sup> | **June 30, 2025** | **December 31, 2024** |
| Coosa | $4947 | $4971 |
| Meadowood | $3065 | $3263 |
| &nbsp;&nbsp;Debt of assets held for sale, net | $8012 | $8234 |

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See Note 14 – *Subsequent Events* for more information on asset purchase agreement.

**NOTE 6. INTANGIBLE ASSETS AND GOODWILL**

Intangible assets and Goodwill consist of the following:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **(Amounts in 000's)** | **Bed licenses<br>(included<br>in property and<br>equipment)** <sup>(1)</sup> | **Bed Licenses - <br>Separable** <sup>(2)</sup> | **Lease<br>Rights** | **Total** | **Goodwill (2)** |
| Balances, December 31, 2024 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross | $14276 | $2471 | $176 | $16923 | $1585 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated amortization | (5411) |  | (107) | (5518) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net carrying amount | $8865 | $2471 | $69 | $11405 | $1585 |
| Balances, June 30, 2025 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross | $14276 | $2471 | $176 | $16923 | $1585 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated amortization | (5587) |  | (116) | (5703) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net carrying amount | $8689 | $2471 | $60 | $11220 | $1585 |

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<sup>(1)</sup> Non-separable bed licenses are included in property and equipment as is the related accumulated amortization expense (see Note 4 – *Property and Equipment*).

<sup>(2)</sup> The Company does not amortize indefinite-lived intangibles, which consist of separable bed licenses and goodwill.

The following table summarizes amortization expense for the three and six months ended June 30, 2025 and 2024:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **(Amounts in 000's)** | **2025** | **2024** | **2025** | **2024** |
| Bed licenses | $87 | $102 | $176 | $206 |
| Lease rights | 6 | 6 | 10 | 10 |
| &nbsp;&nbsp;Total amortization expense | $93 | $108 | $186 | $216 |

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Expected amortization expense for the years ending December 31, for all definite-lived intangibles, for each of the next five years and thereafter is as follows:

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| | | |
|:---|:---|:---|
| **(Amounts in 000's)** | **Bed<br>Licenses** | **Lease<br>Rights** |
| 2025 (6 months remaining) | $176 | $9 |
| 2026 | 353 | 18 |
| 2027 | 353 | 18 |
| 2028 | 353 | 15 |
| 2029 | 353 |  |
| Thereafter | 7101 |  |
| &nbsp;&nbsp;Total expected amortization expense | $8689 | $60 |

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**NOTE 7. LEASES**

**Operating Leases**

As of June 30, 2025 and December 31, 2024, the Company leases one Skilled Nursing Facility ("SNF") in Covington, Ohio under a non-cancelable lease, which has rent escalation clauses and provisions for payments of real estate taxes, insurance, and maintenance costs. The remaining lease term for the Covington facility is approximately 3.8 years as of June 30, 2025. The Company subleases the Covington facility to a third party.

The Company also leased certain office space located in Suwanee, Georgia through the termination date of June 30, 2023. Effective July 1, 2023, the Company signed a sublease for 2,000 sq ft of office space in Atlanta, Georgia. The sublease expires on July 31, 2025.

As of June 30, 2025, the Company is in compliance with all operating lease financial covenants.

***Future Minimum Lease Payments***

Future minimum lease payments for the twelve months ending December 31, for each of the next five years and thereafter is as follows:

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| | | | |
|:---|:---|:---|:---|
| **(Amounts in 000's)** | **Future<br>rental<br>payments** | **Accretion of<br>lease liability** <sup>(1)</sup> | **Operating<br>lease<br>obligation** |
| 2025 (6 months remaining) | $328 | $(83) | $245 |
| 2026 | 658 | (134) | 524 |
| 2027 | 671 | (90) | 581 |
| 2028 | 685 | (42) | 643 |
| 2029 | 230 | (3) | 227 |
| Thereafter |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2572 | $(352) | $2220 |

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<sup>(1)</sup> Weighted average discount rate 7.98%.

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**Facilities Lessor**

On February 1, 2025, Regional and SL SNF, LLC entered into a At-Risk-Management in order to transition the Southland facility back to the Company. The Company filed the Change of Ownership ("CHOW") application with the state of Georgia on February 22, 2025. On April 1, 2025 the State of Georgia approved the Company's application to change the ownership of the Southland facility from SL SNF, LLC to Southland Operations, LLC.

In March 2025, Oak Hollow Healthcare Management and the Company entered into an Operations Transfer Agreement ("OTA") to transition the two facilities leased by Oak Hollow back to the Company due to an inability to safely operate the facilities. As part of the OTA, in exchange for a release of the Personal Guaranty securing the lease obligations, the Company received the patient receivables. The result of the exchange was a $0.1 million gain recognized. The Company submitted the CHOW application with the state of South Carolina with an effective date of May 1, 2025.

As of June 30, 2025, seven facilities (six owned by Regional and one leased to Regional) are leased or subleased on a triple net basis, meaning that the lessee (i.e., the third-party operator of the property, or the Company with respect to the operated facilities) is obligated under the lease or sublease, as applicable, for all liabilities of the property in respect to insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable.

***Future Minimum Lease Receivables***

Future minimum lease receivables for the twelve months ending December 31, for each of the next five years and thereafter is as follows:

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| | |
|:---|:---|
|  | **(Amounts<br>in 000's)** |
| 2025 (6 months remaining) | $2597 |
| 2026 | 5249 |
| 2027 | 5323 |
| 2028 | 5137 |
| 2029 | 2336 |
| Thereafter | 1674 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $22316 |

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For further details regarding the Company's leased and subleased facilities to third-party operators, including a full summary of the Company's leases to third-parties and which comprise the future minimum lease receivables of the Company, see Note 7 - *Leases* and Leasing Transactions in Part I, Item 1, Financial Statements and Supplementary Data, included in the Annual Report.

**NOTE 8. ACCRUED EXPENSES**

Accrued expenses consist of the following:

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| | | |
|:---|:---|:---|
| **(Amounts in 000's)** | **June 30, 2025** | **December 31, 2024** |
| Accrued employee benefits and payroll-related | $887 | $582 |
| Real estate and other taxes <sup>(1)</sup> | 4651 | 3924 |
| Self-insured reserve | (28) |  |
| Accrued interest | 169 | 215 |
| Insurance escrow |  | 174 |
| Other accrued expenses <sup>(2)</sup> | 297 | 519 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total accrued expenses | $5976 | $5414 |

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<sup>(1)</sup> June 30, 2025 and December 31, 2024 includes approximately $0.7 million of bed taxes in arrears related to the Wellington Transition in 2020

<sup>(2)</sup> As of June 30, 2025 and December 31, 2024, the remaining escheatment liabilities for discontinued operations are $0.3 million and are included in other accrued expenses.

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**NOTE 9. NOTES PAYABLE AND OTHER DEBT**

See Note 9– *Notes Payable and Other Debt* in Part II, Item 8, Financial Statements and Supplementary Data, included in the Annual Report for a detailed description of all the Company's debt facilities.

Notes payable and other debt consists of the following:

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| | | |
|:---|:---|:---|
| **(Amounts in 000's)** | **June 30, 2025** | **December 31, 2024** |
| Senior debt—guaranteed by HUD | $27717 | $28146 |
| Senior debt—guaranteed by USDA <sup>(1)</sup> | 6808 | 6988 |
| Senior debt—guaranteed by SBA <sup>(2)</sup> | 526 | 533 |
| Senior debt—bonds | 5811 | 5970 |
| Senior debt—other mortgage indebtedness | 7543 | 7728 |
| Other debt | 1470 | 1349 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 49875 | 50714 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred financing costs | (851) | (886) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unamortized discount on bonds | (104) | (107) |
| Senior debt and other debt | $48920 | $49721 |

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<sup>(1)</sup> U.S. Department of Agriculture (USDA)

<sup>(2)</sup> U.S. Small Business Administration (SBA)

The following is a detailed listing of the debt facilities that comprise each of the above categories:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **(Amounts in 000's)** |  |  |  |  |  |  |
| **Facility** | **Lender** | **Maturity** | **Interest Rate (1)** | **Interest Rate (1)** | **June 30, 2025** | **December 31, 2024** |
| **Senior debt - guaranteed by HUD** <sup>(2)</sup> |  |  |  |  |  |  |
| The Pavilion Care Center | Newpoint Capital | 12/01/2039 | Fixed | 3.97% | $746 | $765 |
| Hearth and Care of Greenfield | Newpoint Capital | 8/01/2050 | Fixed | 3.97% | 1847 | 1868 |
| Woodland Manor | Newpoint Capital | 11/01/2052 | Fixed | 3.97% | 4751 | 4799 |
| Glenvue | Newpoint Capital | 10/01/2044 | Fixed | 3.75% | 6731 | 6849 |
| Autumn Breeze | KeyBank | 01/01/2045 | Fixed | 3.65% | 5855 | 5956 |
| Georgetown | Newpoint Capital | 10/01/2046 | Fixed | 2.98% | 2974 | 3023 |
| Sumter Valley | KeyBank | 01/01/2047 | Fixed | 3.70% | 4813 | 4886 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  |  |  |  | $27717 | $28146 |
| **Senior debt - guaranteed by USDA** <sup>(3)</sup> |  |  |  |  |  |  |
| Mountain Trace | Community B&T | 12/24/2036 | Prime + 1.75% | 9.25% | $3333 | $3423 |
| Southland | Cadence Bank, NA | 07/27/2036 | Prime + 1.50% | 9.00% | 3475 | 3565 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  |  |  |  | $6808 | $6988 |
| **Senior debt - guaranteed by SBA** |  |  |  |  |  |  |
| Southland <sup>(5)</sup> | Cadence Bank, NA | 07/27/2036 | Prime + 2.25% | 9.75% | 526 | $533 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  |  |  |  | $526 | $533 |

---

<sup>(1)</sup> Represents interest rates as of June 30, 2025 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs which are approximately 0.16% per annum.

<sup>(2)</sup> For the seven SNF's, the Company has term loans insured 100% by HUD with financial institutions. The loans are secured by, among other things, an assignment of all rents paid under any existing or future leases and rental agreements with respect to the underlying facility. The loans contain customary events of default, including fraud or material misrepresentations or material omission, the commencement of a forfeiture action or proceeding, failure to make required payments, and failure to perform or comply with certain agreements. Upon the occurrence of certain events of default, the lenders may, after receiving the prior written approval of HUD, terminate the loans and all amounts under the loans will become immediately due and payable. In connection with entering into loans, the facilities entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions.

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<sup>(3)</sup> For the two SNF's, the Company has term loans with financial institutions, which are insured 70% to 80% by the USDA. The loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 1% through 2020, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter.

<sup>(4)</sup> For one SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is insured 75% by the SBA.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **(Amounts in 000's)** |  |  |  |  |  |  |
| **Facility** | **Lender** | **Maturity** | **Interest Rate** <sup>(1)</sup> | **Interest Rate** <sup>(1)</sup> | **June 30, 2025** | **December 31, 2024** |
| **Senior debt - bonds** |  |  |  |  |  |  |
| Eaglewood Bonds Series A | City of Springfield, Ohio | 05/01/2042 | Fixed | 7.65% | $5811 | $5970 |

---

<sup>(1)</sup> Represents cash interest rates as of June 30, 2025. The rates exclude amortization of deferred financing of approximately 0.10% per annum.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **(Amounts in 000's)** |  |  |  |  |  |  |
| **Facility** | **Lender** | **Maturity** | **Interest Rate (1)** | **Interest Rate (1)** | **June 30, 2025** | **December 31, 2024** |
| **Senior debt - other mortgage indebtedness** | **Senior debt - other mortgage indebtedness** | **Senior debt - other mortgage indebtedness** |  |  |  |  |
| Meadowood <sup>(2)</sup> | Exchange Bank of Alabama | 10/01/2026 | Fixed | 4.50% | $3067 | $3153 |
| Coosa <sup>(3)</sup> | Exchange Bank of Alabama | 10/10/2026 | Fixed | 3.95% | 4476 | 4575 |
| Total |  |  |  |  | $7543 | $7728 |

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<sup>(1)</sup> Represents cash interest rates as of June 30, 2025 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.34% per annum.

<sup>(2)</sup> The Meadowood Credit Facility is secured by the Meadowood Facility and the assets of Coosa, which is guaranteed by Regional Health Properties, Inc. Represents debt liability related to asset held for sale (see Note 5 – *Assets Held for Sale*).

<sup>(3)</sup> The Coosa Credit Facility, guaranteed by Regional Health Properties, Inc., includes customary terms, including events of default with an associated annual 5% default interest rate, and is secured by the Coosa Facility and the assets of Meadowood. Upon the occurrence of certain events of default, the lenders may terminate the Coosa Credit Facility and the Meadowood Credit Facility, and all amounts due under both credit facilities will become immediately due and payable. The Coosa Credit Facility has prepayment penalties of 5% in the 1st year, 4% in the 2nd year and 1% thereafter. Represents debt liability related to asset held for sale (see Note 5 – *Assets Held for Sale*)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **(Amounts in 000's)** |  |  |  |  |  |
| **Lender** | **Maturity** | **Interest Rate** | **Interest Rate** | **June 30, 2025** | **December 31, 2024** |
| **Other debt** |  |  |  |  |  |
| First Insurance Funding <sup>(1)</sup> | Various 2024 | Fixed | 9.97% | $443 | $311 |
| Exchange Bank | 11/10/2025 | Fixed | 7.75% | 495 | 430 |
| Key Bank <sup>(2)</sup> | 08/25/2025 | Fixed | 0.00% | 495 | 495 |
| Marlin Capital Solutions | 06/1/2027 | Fixed | 5.00% | 3 | 9 |
| Cavalier Management | 3/1/2025 | Fixed | 6.00% | 34 | 104 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  |  |  | $1470 | $1349 |

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<sup>(1)</sup> Annual Insurance financing primarily for the Company's directors and officers insurance.

<sup>(2)</sup> On December 30, 2022, Key Bank and the Company extended the maturity date from August 25, 2023 to August 25, 2025.

**Debt Covenant Compliance**

As of June 30, 2025, the Company had 18 credit related instruments outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum earnings before interest, taxes, depreciation, and amortization or earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs, and current ratios. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on measurements at the subsidiary level (i.e., facility, multiple facilities or a combination of subsidiaries). The subsidiary level requirements are as follows: (i) financial covenants measured against subsidiaries of the Company; and (ii) financial covenants measured against third-party operator performance.

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Some covenants are based on annual financial metric measurements, whereas others are based on monthly and quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements.

As of June 30, 2025, the Company was in compliance with the various financial and administrative covenants under the Company's outstanding credit related instruments.

**Scheduled Maturities**

The schedule below summarizes the scheduled gross maturities as of June 30, 2025 for each of the next five years and thereafter.

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| | |
|:---|:---|
| **For the Twelve Months Ended December 31,** | **(Amounts in 000's)** |
| 2025 (6 months remaining) | $2163 |
| 2026 | 8964 |
| 2027 | 1572 |
| 2028 | 1667 |
| 2029 | 1770 |
| Thereafter | 33739 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subtotal | $49875 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: unamortized discounts | (104) |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: deferred financing costs, net | (851) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total notes and other debt | $48920 |

---

**NOTE 10. COMMON AND PREFERRED STOCK**

**Common Stock**

As of June 30, 2025, the Company had 55,000,000 shares of Common Stock authorized and 2,253,119 shares issued and 2,242,239 shares outstanding. There were no dividends declared or paid on the common stock during the three and six months ended June 30, 2025 and 2024.

**Preferred Stock**

As of June 30, 2025, the Company had 5,000,000 shares of Preferred Stock authorized and 2,811,535 shares issued and outstanding.

*Series A Preferred Stock*

As of June 30, 2025, the Company had 559,263 shares of Series A Preferred Stock issued and outstanding. There were no dividends declared or paid on the Series A Preferred Stock for the three and six months ended June 30, 2025 and 2024.

*Series B Preferred Stock*

On January 29, 2025, the board of directors of Regional declared a dividend to the holders of its 12.5% Series B Cumulative Redeemable Preferred Shares (the "Series B Preferred Stock"), on a pro rata basis in proportion to the number of shares of Series B Preferred Stock held by such holders of 250,000 shares of the Company's common stock, rounded down to the nearest whole share of Common Stock. The dividend was paid on February 19, 2025 to holders of record of the Series B Preferred Stock as of the close of business on February 10, 2025 and 249,990 shares of the Company's common stock were issued. Regional is required to pay the dividend of Common Stock to such holders of Series B Preferred Stock pursuant to the terms of Regional's Amended and Restated Articles of Incorporation, which governs the terms of the Series B Preferred Stock.

As of June 30, 2025, the Company had 2,252,272 shares of Series B Preferred Stock issued and outstanding. There were no dividends declared or paid on the Series B Preferred Stock for the three months ended June 30, 2025 and for the three and six months ended June 30, 2024.

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**NOTE 11. STOCK BASED COMPENSATION**

**Stock Incentive Plans**

As of June 30, 2025, the number of securities remaining available for future issuance under the Company's 2023 Omnibus Incentive Plan is 76,000.

For the three and six months ended June 30, 2025 and 2024, the Company recognized stock-based compensation expense as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **(Amounts in 000's)** | **2025** | **2024** | **2025** | **2024** |
| Employee compensation: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock compensation expense | $25 | $23 | $47 | $66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total employee stock-based compensation expense | $25 | $23 | $47 | $66 |

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**Restricted Stock**

The following table summarizes the Company's restricted stock activity for the six months ended June 30, 2025:

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| | | |
|:---|:---|:---|
|  | **Number of<br>Shares (000's)** | **Weighted Avg.<br>Grant Date <br>(per Share)<br>Fair Value** |
| &nbsp;&nbsp;&nbsp;&nbsp;Unvested, December 31, 2024 | 86 | $2.61 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 65 | $2.60 |
| &nbsp;&nbsp;&nbsp;&nbsp;Vested | (33) | $2.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unvested, June 30, 2025 | 118 | $2.57 |

---

There were 65,000 restricted stock awards granted during the six months ended June 30, 2025, which will vest in two equal annual installments on June 20, 2026 and June 20, 2027. The unvested shares at June 30, 2025 will vest over the next 1.8 years with $278 thousand in compensation expense recognized over this period.

**Common Stock Options**

The following summarizes the Company's employee and non-employee stock option activity for the six months ended June 30, 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br>Shares (000's)** | **Weighted<br>Average<br>Exercise<br>Price** | **Weighted<br>Average<br>Remaining<br>Contractual<br>Term<br>(in years)** | **Aggregate <br>Intrinsic <br>Value (000's)** |
| Outstanding, December 31, 2024 | 48 | $2.68 | 8.5 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercised | (48) | $2.68 |  |  |
| Outstanding, June 30, 2025 |  | $— |  | $— |

---

No stock options were granted for the six months ended June 30, 2025. All vested stock options were exercised during the six months ended June 30, 2025; thus, there are no outstanding stock options as of June 30, 2025.

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**Common Stock Warrants**

The following summarizes the Company's warrant activity for the six months ended June 30, 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Outstanding and Exercisable** | **Outstanding and Exercisable** | **Outstanding and Exercisable** |  |
|  | **Number of<br>Shares (000's)** | **Weighted<br>Average<br>Exercise<br>Price** | **Weighted<br>Average<br>Remaining<br>Contractual<br>Term<br>(in years)** | **Aggregate<br>Intrinsic<br>Value<br>(in 000's)** |
| Outstanding, December 31, 2024 | 15 | $51.00 | 0.2 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Expired | (15) | $51.00 |  |  |
| Outstanding, June 30, 2025 |  | $— |  | $— |

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No warrants were granted during the six months ended June 30, 2025. All vested warrants expired during the six months ended June 30, 2025; thus, there are no outstanding common stock warrants as of June 30, 2025.

**NOTE 12. COMMITMENTS AND CONTINGENCIES**

**Regulatory Matters**

Laws and regulations governing federal Medicare and state Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from certain governmental programs. As of June 30, 2025, all of the Company's facilities operated by Regional or leased and subleased to third-party operators are certified by CMS and are operational. See Note 7 *- Leases*.

**Legal Matters**

The Company is a party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims that the services the Company provided during the time it operated SNFs resulted in injury or death to the patients of the Company's facilities and claims related to professional and general negligence, employment, staffing requirements and commercial matters. Although the Company intends to vigorously defend itself in these matters, there is no assurance that the outcomes of these matters will not have a material adverse effect on the Company's business, results of operations and financial condition.

The Company previously operated, and the Company and its tenants now operate, in an industry that is highly regulated. As such, in the ordinary course of business, the Company and its tenants are continuously subject to state and federal regulatory scrutiny, supervision and control. Such regulatory scrutiny often includes inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. In addition, the Company believes that there has been, and will continue to be, an increase in governmental investigations of long-term care providers, particularly in the area of Medicare and Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Adverse determinations in legal proceedings or governmental investigations against or involving the Company or its tenants, whether currently asserted or arising in the future, could have a material adverse effect on the Company's business, results of operations and financial condition.

**Professional and General Liability Claims**

As of June 30, 2025, the Company is a defendant in one professional and general liability action related directly to patient care that our current or prior tenants provided to their patients.

As of June 30, 2025, the Company is a defendant in one professional and general liability action commenced on behalf of one of our former patients who received care at one of our facilities. The plaintiff in this action alleges negligence due to failure to provide adequate and competent staff resulting in injuries, pain and suffering, mental anguish and malnutrition and seeks

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unspecified actual and compensatory damages, and unspecified punitive damages. This action is covered by insurance, except that any punitive damages awarded would be excluded from coverage.

See Note 14 – *Subsequent Events* for more information on litigation proceedings.

**NOTE 13. SEGMENT RESULTS**

The chief operating decision maker ("CODM") is the President and Chief Executive Officer. The Company represents two reportable segments, based on how its CODM evaluates the business and allocates resources. The CODM assesses performance for the Company and decides how to allocate resources based on each segments Income (Loss) From Operations ("Operating Income"). The CODM uses Operating Income to evaluate the performance of each segment in deciding whether to reinvest profits into the segment. The CODM evaluates performance based on Operating Income, as noted in the table below. The Company reports segment information based on the "significant expense principle" defined in ASC 280, *Segment Reporting* along with other segment items, which is the difference between segment revenue and less segment expenses disclosed under the significant expense principle for each reported measure of segment profit or loss.

The Company has two primary reporting segments: (i) Real Estate Services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants and (ii) Healthcare Services, which consists of the operation of the Glenvue, Meadowood, Georgetown, Sumter, Southland, and Mountain Trace facilities.

The table below presents the results of operations for our reporting segments for the periods presented.

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---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
| **(Amounts in 000's)** | **Real Estate Services** | **Healthcare Services** | **Total** | **Real Estate Services** | **Healthcare Services** | **Total** | **Real Estate Services** | **Healthcare Services** | **Total** | **Real Estate Services** | **Healthcare Services** | **Total** |
| Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patient care revenues | $— | $8774 | $8774 | $— | $2525 | $2525 | $— | $14416 | $14416 | $— | $4834 | $4834 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rental revenues | 1283 |  | 1283 | 1800 |  | 1800 | 2831 |  | 2831 | 3617 |  | 3617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 1283 | 8774 | 10057 | 1800 | 2525 | 4325 | 2831 | 14416 | 17247 | 3617 | 4834 | 8451 |
| Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patient care expense |  | 7184 | 7184 |  | 2183 | 2183 |  | 11585 | 11585 |  | 4283 | 4283 |
| &nbsp;&nbsp;&nbsp;&nbsp;Facility rent expense | 149 |  | 149 | 149 |  | 149 | 298 | 58 | 356 | 297 |  | 297 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of management fees |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 322 | 81 | 403 | 384 | 130 | 514 | 646 | 159 | 805 | 770 | 255 | 1025 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense | 729 | 1700 | 2429 | 871 | 358 | 1229 | 1750 | 2909 | 4659 | 2136 | 724 | 2860 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on lease termination |  |  |  |  |  |  | 303 |  | 303 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit loss expense | 200 | 200 | 400 |  | 36 | 36 | 200 | 270 | 470 |  | 65 | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on operations transfer |  |  |  |  |  |  |  | (106) | (106) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 1400 | 9165 | 10565 | 1404 | 2707 | 4111 | 3197 | 14875 | 18072 | 3203 | 5327 | 8530 |
| Income (loss) from operations | (117) | (391) | (508) | 396 | (182) | 214 | (366) | (459) | (825) | 414 | (493) | (79) |

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The CODM does not regularly review total assets for our reportable segments as total assets are not used to assess performance or allocate resources.

**NOTE 14. SUBSEQUENT EVENTS**

*Litigation Proceedings.* On July 11, 2025, a putative class action lawsuit alleging violations of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was filed in the United States District Court, Northern District of Georgia, against the Company, its Chief Executive Officer and certain current directors of the Company's Board (the "Shareholder Lawsuit"). Additionally, on July 11, 2025, an emergency motion for preliminary injunction was filed in connection with disclosures and shareholder voting leading up to the Merger.

The Company believes that the claims asserted in the Shareholder Lawsuit are without merit and supplemental disclosures are not required or necessary under applicable laws. However, in order to avoid the risk that the Shareholder Lawsuit delay or otherwise adversely affect the Merger, and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the Company provided supplemental information to the joint proxy statement/prospectus as described in the Current Report on Form 8-K filed on July 18, 2025 with the SEC. The Company and the other named defendants deny that they have violated any laws.

*Unsolicited Offer.* On July 18, 2025, Black Pearl Equities, LLC ("Black Pearl"), which above is referred to as "Party B," filed a Tender Offer Statement on Schedule TO (the "Schedule TO") with the Securities & Exchange Commission (the "SEC") containing a tender offer to purchase up to 1,118,877 shares of Regional common stock at a price per share of $4.25 (the "Third Unsolicited Offer"). The filing indicates that the tender offer will be in effect from August 1, 2025, until August 31, 2025,

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subject to possible further extension by Black Pearl. The Schedule TO indicates that the tender offer is subject to a number of conditions. At a meeting of the Regional Board held on July 25, 2025, the Regional Board, in consultation with its outside legal counsel, carefully reviewed the Third Unsolicited Offer and the clarifying information that had been provided and determined that, despite the offer's price per share of $4.25, it did not represent a Superior Regional Proposal.

*Asset Purchase Agreement.* On July 30, 2025, the Company, Coosa Nursing ADK LLC, a wholly-owned subsidiary of Regional ("Coosa"), and Coosa Valley SNF Realty LLC (the "Purchaser") entered into a binding asset purchase agreement (the "APA"), whereby Coosa would sell Coosa Valley Health and Rehab (the "Facility") to the Purchaser, subject to a 45-day due diligence window in favor of the Purchaser. Under the terms contemplated by the APA, the Purchaser would acquire the Facility for a purchase price of $10,600,000.

*Operating Lease.* On July 31, 2025, the Company subleased certain office space located in Atlanta, Georgia expired. On July 30, 2025, the Company entered into a two year lease with the landlord which the lease will commence August 1, 2025 and will expire on July 31, 2027. The lease payments are:

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| | |
|:---|:---|
| **(Amounts in 000's)** |  |
| 2025 (5 months remaining) | $23 |
| 2026 | 69 |
| 2027 | 47 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $138 |

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*Merger Agreement*. On August 04, 2025, the Company's common stock shareholders approved the Merger Agreement, dated as of April 14, 2025, by and between the Company and SunLink. In addition, in connection with the Merger Agreement, the Company's common stock shareholders approved the issuance of shares of Common Stock, no par value, and Series D 8% Cumulative Convertible Redeemable Participating Preferred Stock (the Series D Preferred Stock"), no par value per share.

On August 5, 2025, the Company filed Articles of Amendment (the "Articles of Amendment") to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Georgia to establish its Series D Preferred Stock. Shares of Series D Preferred Stock will form part of the merger consideration to be issued in connection with the closing of the merger.

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**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

**Forward Looking Statements**

This Quarterly Report and certain information incorporated herein by reference contain forward-looking statements and information within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This information includes assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, and management's plans and objectives. In addition, certain statements included in this Quarterly Report, in the Company's future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as "may," "could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "seek," "plan," "project," "continue," "predict," "will," and other words or expressions of similar meaning are intended by us to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on the Company's current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.

All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. The Company's actual results may differ materially from those projected, stated or implied in these forward-looking statements as a result of many factors, including the Company's critical accounting policies and risks and uncertainties related to, but not limited to, the operating results of the Company's tenants, the overall industry environment, the Company's financial condition, and the impact of the COVID-19 pandemic on the Company's business. These and other risks and uncertainties are described in more detail in the Annual Report and in Part II, Item 1A "Risk Factors" of this Quarterly Report, as well as other reports that the Company files with the SEC.

Forward-looking statements speak only as of the date they are made and should not be relied upon as representing the Company's views as of any subsequent date. The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by applicable laws, and you are urged to review and consider disclosures that the Company makes in this Quarterly Report and other reports that the Company files with the SEC that discuss factors germane to the Company's business.

**Overview**

Regional Health Properties, Inc., a Georgia corporation is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior housing. We operate through two reportable segments: Real Estate and Healthcare Services. Our Real Estate segment consists of real estate investments in skilled nursing and senior housing facilities. We fund our real estate investments primarily through: (1) operational cash flow, (2) mortgages, and (3) sale of equity securities. Our Healthcare Services segment is comprised of an entity set up to operate our facilities.

While the Company is a self-managed real estate investment company, the Company, when business conditions require, may undertake initiatives to take back facilities in order operate the facilities ourselves or using a third manager.

**Real Estate Portfolio**

As of June 30, 2025, we had investments of approximately $67.9 million in eleven health care real estate properties and one leased property. We currently own eleven properties, consisting of nine skilled nursing facilities and two multi-service facilities (of which one multi-service campus contains two co-located properties). Seven facilities are pursuant to triple-net leases and six facilities are managed by two external managers. The Company has one leased facility that is subleased pursuant to a triple-net lease.

*Skilled nursing facilities.* SNFs provide services that include daily nursing, therapeutic rehabilitation, social services, activities, housekeeping, nutrition, medication management and administrative services for individuals requiring certain assistance for activities in daily living. A typical skilled nursing facility includes mostly one and two bed units, each equipped with a private or shared bathroom and community dining facilities.

*Multi-Service Campuses.* Multi-service campuses generally include some combination of co-located skilled nursing, independent living, assisted living and/or memory care units all housed at a single location and operated as a continuum of care. We also refer to continuing care retirement communities as multi-service campuses. These facilities are often marketed as an

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opportunity for residents to "age in place," and tend to attract couples where the individuals may require or benefit from differing levels of care.

**Portfolio** 

The following table provides summary information regarding the number of facilities and related licensed beds/units as of June 30, 2025:

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| | | | |
|:---|:---|:---|:---|
| **<u>Location</u>** | **<u>Skilled Nursing Facilities</u>** | **<u>Multi Service Properties</u>** | **<u>Total Properties</u>** |
| Alabama <sup>(1)</sup> | 1 | 1 | 2 |
| Georgia | 3 | - | 3 |
| North Carolina | 1 | - | 1 |
| Ohio <sup>(2)</sup> | 2 | 1 | 3 |
| South Carolina | 2 | - | 2 |
|  | 9 | 2 | 11 |
| **<u>Location</u>** | **<u>Skilled Nursing Beds/Units</u>** | **<u>Multi Service Beds/Units</u>** | **<u>Total Beds/Units</u>** |
| Alabama <sup>(1)</sup> | 124 | 90 | 214 |
| Georgia | 395 | - | 395 |
| North Carolina | 106 | - | 106 |
| Ohio <sup>(2)</sup> | 100 | 180 | 280 |
| South Carolina | 180 | - | 180 |
|  | 905 | 270 | 1175 |
| **<u>Location</u>** | **<u>Skilled Nursing Investment</u>** | **<u>Multi Service Investment</u>** | **<u>Total Investment</u>** |
| Alabama <sup>(1)</sup> | $9613199 | $5224561 | $14837760 |
| Georgia | 21205517 | - | 21205517 |
| North Carolina | 7285682 | - | 7285682 |
| Ohio <sup>(2)</sup> | 4059240 | 10714214 | 14773454 |
| South Carolina | 9797062 | - | 9797062 |
|  | $51960700 | $15938776 | $67899475 |

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| |
|:---|
| (1) Meadowood Retirement Village offers assisted living, memory care, and independent living and is therefore considered a multi-service campus. |
| (2) Eaglewood Village offers assisted living and Eaglewood Care Center offers skilled nursing. Both properties are co-located and are therefore considered a multi-service campus. |

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The following table provides summary information regarding the number of facilities and related licensed beds/units by operator affiliation as of June 30, 2025:

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| | | |
|:---|:---|:---|
| **Operator Affiliation** | **Number of Facilities** <sup>(1)</sup> | **Beds / Units** |
| C.R. Management | 2 | 233 |
| Aspire Regional Partners | 3 | 280 |
| **&nbsp;&nbsp;&nbsp;&nbsp;Subtotal** | **5** | **513** |
| **Manager Affiliation** | **Number of Facilities** <sup>(2)</sup> | **Beds / Units** |
| Cavalier Senior Living | 1 | 90 |
| CJM Advisors | 5 | 572 |
| **&nbsp;&nbsp;&nbsp;&nbsp;Subtotal** | **6** | **662** |
| **Total** | **11** | **1175** |

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<sup>(1)</sup> Represents the number of facilities leased or subleased to separate tenants, of which each tenant is an affiliate of the entity named in the table above.

<sup>(2)</sup> Represents the number of facilities operated under third-party management agreements.

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For a more discussion of the above information, see Note 7 - *Leases* to the consolidated financial statements included in Part I, Item 1 herein*.* Additionally*,* see "*Portfolio of Healthcare Investments*" included in Part I, Item 1 "Business" in the Annual Report.

**Portfolio Occupancy Rates**

The following table provides summary information regarding our portfolio facility-level occupancy rates for the periods shown:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Operating Metric** | **September 30, 2024** | **December 31, 2024** | **March 31, 2025** | **June 30, 2025 (1)** |
| Occupancy (%) | 67.2% | 66.8% | 66.5% | 66.2% |
| (1) Reflects adjusted bed count |  |  |  |  |

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**Lease Expiration**

The following table provides summary information regarding our lease expirations for the years shown as of December 31,:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Licensed Beds** | **Licensed Beds** | **Annual Lease Revenue** <sup>(2)</sup> | **Annual Lease Revenue** <sup>(2)</sup> |
|  | **Number of Facilities** | **Count** | **Percent (%)** | **Amount ($)<br>'000's** <sup>(1)</sup> | **Percent (%)** |
| 2025 | 1 | 124 | 21.1% | 1071 | 22.0% |
| 2026 | 0 | - | 0.0% | - | 0.0% |
| 2027 | 0 | - | 0.0% | - | 0.0% |
| 2028 | 5 | 355 | 60.4% | 2761 | 56.8% |
| 2029 | 0 | - | 0.0% | - | 0.0% |
| 2030 | 1 | 109 | 18.5% | 1032 | 21.2% |
| 2031 | 0 | - | 0.0% | - | 0.0% |
| Thereafter | 0 | - | 0.0% | - | 0.0% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | 7 | 588 | 100.0% | 4864 | 100.0% |

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<sup>(1)</sup> Straight-line rent.

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**Results of Operations**

The following table sets forth, for the periods indicated, an unaudited statement of operations items and the amounts and percentages of change of these items. The results of operations for any particular period are not necessarily indicative of results for any future period. The following data should be read in conjunction with our consolidated financial statements and the notes thereto, which are included herein.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **Percent<br>Change** | **2025** | **2024** | **Percent<br>Change** |
| Revenues: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patient care revenues | $8774 | $2525 | 247.5% | $14421 | $4834 | 198.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;Rental revenues | 1283 | 1800 | (28.7)% | 2831 | 3617 | (21.7)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 10057 | 4325 | 132.5% | 17247 | 8451 | 104.1% |
| Expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patient care expense | 7184 | 2183 | 229.1% | 11585 | 4283 | 170.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;Facility rent expense | 149 | 149 |  | 356 | 297 | 19.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 403 | 514 | (21.6)% | 805 | 1025 | (21.5)% |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense | 2429 | 1229 | 97.6% | 4659 | 2860 | 62.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on lease termination |  |  | n/m | 303 |  | n/m |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit loss expense | 400 | 36 | 1011.1% | 470 | 65 | 623.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on operations transfer |  |  | n/m | (106) |  | n/m |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 10565 | 4111 | 157.0% | 18072 | 8530 | 111.9% |
| Income (loss) from operations | (508) | 214 | (337.4)% | (825) | (79) | 944.3% |
| Other expense: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 615 | 669 | (8.1)% | 1268 | 1344 | (5.7)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense, net | 326 | 251 | 29.9% | 618 | 245 | 152.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense, net | 941 | 920 | 2.3% | 1886 | 1589 | 18.7% |
| Net loss | $(1449) | $(706) | 105.2% | $(2711) | $(1668) | 62.5% |

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***Three Months Ended June 30, 2025 and 2024***

*Patient care revenues*—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Georgetown, Mountain Trace, Southland, and Sumter, facilities, were $8.8 million for the three months ended June 30, 2025, compared with $2.5 million for the same period in 2024. The 247.5% increase is primarily due to the transition of the Georgetown, Mountain Trace, Southland and Sumter facilities to the Healthcare Services segment.

*Rental revenues*—Rental revenue for our Real Estate Services segment decrease by approximately $0.5 million to $1.3 million for the three months ended June 30, 2025, compared with $1.8 million for the same period in 2024. The 28.7% decrease is due to the transition of the Georgetown, Mountain Trace, Southland, and Sumter facilities to the Healthcare Services segment.

*Patient care expense*—Patient care expense was $7.2 million for the three months ended June 30, 2025 compared with $2.2 million for the same period in 2024. The current period expense increase of $5.0 million is primarily due to the transition of the Georgetown, Mountain Trace, Southland, and Sumter facilities to the Healthcare Services segment.

*Facility rent expense—*Facility rent was $0.1 million for the three months ended June 30, 2025, compared with $0.1 million for the same period in 2024.

*Depreciation and amortization—*Depreciation and amortization was $0.4 million for the three months ended June 30, 2025, compared with $0.5 million for the same period in 2024. The 21.6% decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year and suspending depreciation expense on our assets held for sale.

*General and administrative expenses*—General and administrative expenses were $2.4 million for the three months ended June 30, 2025, compared with $1.2 million for the same period in 2024. The 123.7% increase is primarily due to the transition of the

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operations of the Georgetown, Mountain Trace, Southland and Sumter facilities back to the Company and an increase spent in investor relations.

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| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| **(Amounts in 000's)** | **2025** | **2024** | **Percent<br>Change** |
| General and administrative expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real Estate Services | $729 | $871 | (16.3)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Healthcare Services | 1700 | 358 | 374.9% |
| &nbsp;&nbsp;Total | $2429 | $1229 | 97.6% |

---

*Credit loss expense*—Credit loss expense primarily represents reserves taken against patient Accounts Receivable as well as rent receivable at the Coosa Valley facility for the three months ended June 30, 2025 and for the same period in 2024.

***Six Months Ended June 30, 2025 and 2024***

*Patient care revenues*—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Georgetown, Mountain Trace, Southland, and Sumter facilities, were $14.4 million for the six months ended June 30, 2025, compared with $4.8 million for the same period in 2024. The 198.3% increase is primarily due to the transition of the additional facilities to the Healthcare Services segment.

*Rental revenues*—Rental revenue for our Real Estate Services segment decreased by approximately $0.8 million to $2.8 million for the six months ended June 30, 2025, compared with $3.6 million for the same period in 2024. The 21.7% decrease is primarily due to transition of the Georgetown, Mountain Trace, Southland and Sumter facilities to our Healthcare Services segment.

*Patient care expense*—Patient care expense was $11.6 million for the six months ended June 30, 2025, compared with $4.3 million for the same period in 2024. The 170.5% increase is primarily due to the transition of the Mountain Trace, Georgetown, Southland, and Sumter facilities to the Healthcare Services segment.

*Facility rent expense—*Facility rent slightly increased year over year with $0.4 million for the six months ended June 30, 2025, compared with $0.3 million for the same period in 2024.

*Depreciation and amortization—*Depreciation and amortization was $0.8 million for the six months ended June 30, 2025, compared with $1.0 million for the same period in 2024. The 21.5% decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year and suspending depreciation expense on our assets held for sale.

*General and administrative expenses*—General and administrative expenses were $4.7 million for the six months ended June 30, 2025, compared with $2.9 million for the same period in 2024. The 74.1% increase is primarily due to the transition of the Georgetown, Mountain Trace, Southland, and Sumter facilities to the Healthcare Services segment.

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| | | | |
|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **(Amounts in 000's)** | **2025** | **2024** | **Percent<br>Change** |
| General and administrative expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real Estate Services | $1750 | $2136 | (18.1)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Healthcare Services | 2909 | 724 | 301.8% |
| &nbsp;&nbsp;Total | $4659 | $2860 | 62.9% |

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*Loss on Lease Termination-* Expenses related to the termination of the two leases to Oak Hollow Healthcare Management were $0.3 million for the six months ended June 30, 2025. The losses consist of the writeoffs of straight-line rent.

*Credit loss expense*—Credit loss expense of $0.5 million primarily represents reserves taken against rent receivable for Georgetown, Sumter, Coosa Valley, and Autumn Breeze facilities for the six months ended June 30, 2025 compared with $0.1 million in 2024.

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*Gain on operations transfer*—The gain on exchange of assets were $0.1 million for the six months ended June 30, 2025. The Company took patient Accounts Receivable in lieu of the outstanding Rent Receivable owed by Oak Hollow Healthcare Management as part of the lease termination.

**NON-GAAP Financial Measures**

The following table summarizes the Company's non GAAP financial measure of results based on EBITDA for the three and six months ended June 30, 2025 and 2024. EBITDA attributable to the Company's financial measure represents net income (loss) before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as recovery of previously reversed rent, lease termination revenue, property operating expenses, gains or losses from dispositions of real estate, real estate impairment charges, provision for loan losses, non-routine transaction costs, loss on extinguishment of debt, unrealized loss on other real estate related investments and provision for credit losses and lease restructuring, as applicable.

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| | | | | |
|:---|:---|:---|:---|:---|
| **REGIONAL HEALTH PROPERTIES, INC.** | **REGIONAL HEALTH PROPERTIES, INC.** | **REGIONAL HEALTH PROPERTIES, INC.** | **REGIONAL HEALTH PROPERTIES, INC.** | **REGIONAL HEALTH PROPERTIES, INC.** |
| **RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES** | **RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES** | **RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES** | **RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES** | **RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES** |
| *(in thousands)* | *(in thousands)* | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| *(Unaudited)* | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* |
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Net loss** | $(1449) | $(706) | $(2711) | $(1668) |
| Depreciation and amortization | 403 | 514 | 805 | 1025 |
| Interest expense, net | 615 | 669 | 1268 | 1344 |
| Other expense, net |  |  |  | (18) |
| Amortization of employee stock compensation | 25 | 24 | 47 | 66 |
| **EBITDA** | **(406)** | **501** | **(591)** | **749** |
| Credit loss expense | 400 | 36 | 470 | 65 |
| Merger costs | 357 |  | 618 |  |
| Loss on lease termination |  |  | 303 |  |
| Gain on operations transfer |  |  | (106) |  |
| Gain (loss) from write-off of liabilities and other credit balances from discontinued operations |  | 165 |  | 177 |
| Project costs |  | 25 |  | 65 |
| Tail insurance on legacy facilities | 19 | 79 | 74 | 152 |
| Other one-time costs | 86 | 80 | 196 | 140 |
| One-time income adjustment - quality incentive program (1) |  | (147) |  | (98) |
| **Adjusted EBITDA from operations** | $**456** | $**739** | $**964** | $**1250** |
| <sup>(1)</sup> Amounts represent adjustments needed for historical and estimated future amounts along with reconciling for timing differences. | <sup>(1)</sup> Amounts represent adjustments needed for historical and estimated future amounts along with reconciling for timing differences. | <sup>(1)</sup> Amounts represent adjustments needed for historical and estimated future amounts along with reconciling for timing differences. | <sup>(1)</sup> Amounts represent adjustments needed for historical and estimated future amounts along with reconciling for timing differences. | <sup>(1)</sup> Amounts represent adjustments needed for historical and estimated future amounts along with reconciling for timing differences. |

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**Liquidity and Capital Resources** 

***Overview***

*Overview.* The Company intends to pursue measures to grow its operations, streamline its cost infrastructure and otherwise increase liquidity, including: (i) refinancing or repaying debt to reduce interest costs and mandatory principal repayments, with such repayment to be funded through potentially expanding borrowing arrangements with certain lenders; (ii) increasing future lease revenue through acquisitions and investments in existing properties; (iii) modifying the terms of existing leases; (iv) replacing certain tenants who default on their lease payment terms;(v) reducing other and general and administrative expenses and (vi) executing the proposed merger with SunLink Health Systems, Inc. (as noted below).

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Management anticipates access to several sources of liquidity, including cash on hand, cash flows from operations, cash flows from investing and debt refinancing during the twelve months following the date of this filing. The Company has committed to a plan to sell certain assets held for sale (See Note 5 - *Assets Held for Sale* to the consolidated financial statements included in Part I, Item 1 herein) to increase cash available for operations and future investments. At June 30, 2025, the Company had $0.4 million in unrestricted cash and 4.4 million of net accounts receivable, mainly consisting of patient accounts receivable and rent receivables.

During the six months ended June 30, 2025, the Company's net cash provided by operating activities was $0.8 million mainly due to the timing of accounts payable and accrued expense payments. Management anticipates collecting a portion of the past due rent after the filing date and is currently negotiating various methods to collect the remaining unpaid rent and notes receivable.

As of June 30, 2025, Regional recorded an estimated allowance of $0.5 million against a gross accounts receivable of $4.8 million.

As of June 30, 2025, the Company had $48.9 million in indebtedness, net of $1.0 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $3.3 million during the next twelve-month period, approximately $2.7 million of routine debt service amortization, $0.4 million of insurance financing amortization, and a $0.2 million payment of bond debt.

On January 6, 2025, Regional and SunLink announced the execution of an Agreement and Plan of Merger dated January 3, 2025, under which SunLink would merge with and into Regional. In exchange, SunLink shareholders would receive 1,410,000 shares of Regional common stock and 1,410,000 shares of newly authorized Series D 8% Cumulative Convertible Redeemable Preferred Stock, with an initial $10.00 per share liquidation preference.

Subsequently, on April 14, 2025, the companies entered into an Amended and Restated Agreement and Plan of Merger. Among other changes, the revised agreement increased the common stock consideration to 1.1330 shares of Regional common stock per SunLink share, raised the Series D Preferred Stock liquidation preference to $12.50 per share, and improved the conversion ratio to 1.1330 shares of Regional common stock for every three shares of Series D Preferred Stock, subject to further potential reduction. The revised agreement also permitted SunLink to pay one or two special cash dividends to its shareholders before closing, subject to specified limitations. The merger agreement has been approved by both companies' boards of directors and remains subject to shareholder approvals, regulatory clearance, and other customary closing conditions.

On June 22, 2025, Regional and SunLink amended the merger agreement to extend the outside termination date to 5:00 p.m. Eastern Time on August 11, 2025. Under the amended agreement, either party may terminate the transaction if the merger is not completed by the revised termination date.

While the Company continues to move toward closing the merger, it has also received and evaluated unsolicited acquisition proposals. On May 6, 2025, Regional received an unsolicited proposal from "Party A" to acquire substantially all of its assets. The proposed consideration included assumption of certain HUD-insured mortgage loans, payment of the remaining mortgage debt (up to a $51 million cap), and $4.00 per share for outstanding common stock. Pursuant to the merger agreement, Regional promptly notified SunLink and, after careful review with legal counsel, the Board of Directors determined on June 20, 2025, that the proposal did not constitute a "Superior Regional Proposal."

A second unsolicited proposal was received on June 23, 2025, from "Party B," who expressed interest in launching a tender offer to purchase up to 100% of Regional's common stock at $4.25 per share. The Company again notified SunLink and, following legal review, the Board concluded on July 10, 2025, that this offer also did not represent a Superior Regional Proposal under the terms of the merger agreement.

Separately, the Company experienced changes in its listing status. Until February 5, 2025, Regional's common stock and Series A Preferred Stock were listed on the NYSE American under the ticker symbols "RHE" and "RHE-PA," respectively. Trading was suspended on that date due to noncompliance with listing standards. On June 11, 2025, the NYSE American formally delisted both securities. They now trade on the OTC Markets under the symbols "RHEP" (common stock) and "RHEPA" (Series A Preferred Stock).

Trading on the OTC Markets presents challenges, including reduced liquidity, wider bid-ask spreads, and limited analyst coverage. In addition, broker-dealers face greater regulatory burdens, which may further discourage trading activity. These limitations could depress trading prices and negatively impact the Company's ability to raise capital through equity or debt offerings. Such constraints may impair the Company's ability to invest in future growth or refinance upcoming debt maturities.

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***Debt Covenant Compliance***

As of June 30, 2025, the Company was in compliance with the various financial and administrative covenants under all the Company's outstanding credit related instruments.

***Evaluation of the Company's Ability to Continue as a Going Concern***

Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the Company's current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due arising within one year of the date of the issuance of the Company's consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. The Company's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In applying applicable accounting guidance, management considered the Company's current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company's obligations due over the next twelve months, and the Company's recurring business operating expenses.

The Company concludes that it is probable that the Company will be able to meet its obligations arising within one year of the date of issuance of these consolidated financial statements within the parameters set forth in the accounting guidance.

For additional information regarding the Company's liquidity, see Note 2 *– Liquidity* and Note 9 *– Notes Payable and Other Debt,* to the consolidated financial statements included in Part I, Item 1 herein.

***Cash Flows***

The following table presents selected data from our consolidated statements of cash flows for the periods presented:

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| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **(Amounts in 000's)** | **2025** | **2024** |
| Net cash provided by operating activities | $805 | $1102 |
| Net cash used in investing activities | (360) | (395) |
| Net cash used in financing activities | (708) | (1317) |
| Net change in cash and restricted cash | (263) | (610) |
| Cash and restricted cash at beginning of period | 3472 | 4184 |
| Cash and restricted cash, ending | $3209 | $3574 |

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***Six Months Ended June 30, 2025***

*Net cash provided by operating activities—*was approximately $0.8 million. The positive cash flow from operating activities was mainly due to the timing of working capital accounts.

*Net cash used in investing activities—*was approximately $0.4 million. This capital expenditure was primarily for leasehold improvements.

*Net cash used in financing activities—*was approximately $0.7 million. The cash was used to make routine payments totaling $0.8 million for our senior debt obligations, $0.6 million for other debt.

***Six Months Ended June 30, 2024***

*Net cash provided by operating activities—*was approximately $1.1 million. The positive cash flow from operating activities was mainly due to the timing of working capital accounts.

*Net cash used in investing activities—*was approximately $0.4 million. This capital expenditure was primarily for leasehold improvements.

*Net cash used in financing activities—*was approximately $1.3 million. The cash was used to make routine payments totaling

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$0.7 million for our senior debt obligations, $0.6 million for other debt.

***Off-Balance Sheet Arrangements***

***Guarantee***

The Company subleased five facilities located in Ohio to the Aspire Sublessees, formerly affiliated with MSTC Development Inc., pursuant to the Aspire Subleases, whereby the Aspire Sublessees took possession of, and commenced operating, the Aspire Facilities as subtenant. The Company agreed to indemnify Aspire against any and all liabilities imposed on them as arising from the former operator, capped at $8.0 million. The Company has assessed the fair value of the indemnity agreements as not material to the financial statements at June 30, 2025. For further information see Note 6 *– Leases*, to the consolidated financial statements included in Part I, Item 1 herein and also and Note 7 *– Leases* included in Part II, Item 8 of the Annual Report.

**Critical Accounting Policies**

We prepare our financial statements in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, we review our judgments and estimates, including, but not limited to, those related to credit losses, income taxes, stock compensation, intangible assets and loss contingencies. We base our estimates on historical experience, business knowledge and on various other assumptions that we believe to be reasonable under the circumstances at the time. Actual results may vary from our estimates. These estimates are evaluated by management and revised as circumstances change.

For a discussion of our critical accounting policies, see Note 1 *– Organization and Significant Accounting Policies* to the consolidated financial statements included in Part I, Item 1 herein.

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**Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

Disclosure in response to Item 3 of Form 10-Q is not required to be provided by smaller reporting companies.

**Item 4. Controls and Procedures.**

*Evaluation of Disclosure Controls and Procedures*

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to 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 our management, including our Chief Executive Officer (principal executive officer) and Senior Vice President (principal financial officer), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Senior Vice President, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report (the "Evaluation Date"). Based on such evaluation, our management has concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective.

*Changes in Internal Control Over Financial Reporting*

There has been no change in the Company's internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

**Part II. Other Information**

**Item 1. Legal Proceedings.**

The Company is a defendant in various legal actions and administrative proceedings arising in the ordinary course of business, including claims that the services the Company provided during the time it operated skilled nursing facilities resulted in injury or death to patients. Although the Company settles cases from time to time when settlement can be achieved on a reasonable basis, the Company vigorously defends any matter in which it believes the claims lack merit and the Company has a reasonable chance to prevail at trial or in arbitration. Litigation is inherently unpredictable. There is no assurance that the outcomes of these matters will not have a material adverse effect on the Company's financial condition. Although arising in the ordinary course of the Company's business, certain of these matters are described in Note 12 - *Commitments and Contingencies* and Note 14 - *Subsequent Events* to the consolidated financial statements included in Part I, Item 1 herein.

**Item 1A. Risk Factors.**

For a detailed description of certain risk factors that could affect our business, operations and financial condition, see Part I, Item 1A., Risk Factors, included in the Annual Report, as supplemented and modified by the risk factors set forth below in this Item 1A. The risk factors described in the Annual Report and this Quarterly Report (collectively, the "Risk Factors") do not describe all risks applicable to our business, and we intend it only as a summary of certain material factors. The Risk Factors should be considered in connection with evaluating the forward-looking statements contained in this Quarterly Report because the Risk Factors could cause the actual results and conditions to differ materially from those projected in forward-looking statements. If any of the risks actually occur, our business, financial condition, or results of operations could be negatively affected. In that case, the trading price of the common stock, no par value per share (the "common stock"), the Series A Redeemable Preferred Shares, no par value per share (the "Series A Preferred Stock"), and the 12.5% Series B Cumulative Redeemable Preferred Shares, no par value per share (the "Series B Preferred Stock"), could decline.

There are no material changes to the risk factors set forth in Part I, Item 1A, in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025.

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**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

None.

**Item 3. Defaults upon Senior Securities.**

None.

**Item 4. Mine Safety Disclosures.**

Not applicable.

**Item 5. Other Information.**

*NYSE American Listing*

The Company's common stock and Series A Preferred Stock ("securities") was listed for trading on the NYSE American under the symbol "RHE" and "RHE-PA," respectively, up until February 5, 2025 when it was suspended from trading as a result of not meeting certain listing requirements. And on June 11, 2025, the Company was notified that the Company's common stock and Series A Preferred Stock were delisted from the NYSE American Exchange. Currently, the Company's common stock and Series A Preferred Stock are listed on the OTC Market under the symbol "RHEP" and "RHEPA," respectively.

*Trading Arrangement*

During the second quarter of 2025, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408(c) of Regulation S-K of the Securities Act of 1933, as amended).

**Item 6. Exhibits.**

The agreements included as exhibits to this Quarterly Report are included to provide information regarding the terms of these agreements and are not intended to provide any other factual or disclosure information about the Company, its business or the other parties to these agreements. These agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•may apply standards of materiality in a way that is different from what may be viewed as material to investors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and should not be relied upon by investors.

------

**EXHIBIT INDEX**

---

| | | |
|:---|:---|:---|
| **Exhibit No.** | **Description** | **Method of Filing** |
| 2.1 | [<u>Agreement and Plan of Merger, by and between Regional Health Properties, Inc. and SunLink Health Systems Inc., dated as of January 3, 2025.</u>](https://www.sec.gov/Archives/edgar/data/1004724/000149315225001706/ex2-1.htm)<br>| Incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed on January 10, 2025 |
| 2.2 | [<u>Amended and Restated Agreement and Plan of Merger, by and between Regional Health Properties, Inc. and SunLink Health Systems Inc., dated as of April 14, 2025.</u>](https://www.sec.gov/Archives/edgar/data/1004724/000164117225005323/ex2-1.htm) | Incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed on April 18, 2025 <br>|
| 2.3 | [<u>Asset Purchase Agreement by and between Regional Health Properties, Inc., Coosa Nursing ADK LLC, and Coosa Valley SNF Realty LLC, executed July 30, 2025</u>](rhe-ex2_3.htm) | Filed herewith |
| 3.1 | [<u>Amended and Restated Articles of Incorporation of Regional Health Properties, Inc., effective July 3, 2023</u>](https://www.sec.gov/Archives/edgar/data/1004724/000149315223023812/ex3-1.htm) | Incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K filed on July 6, 2023  |
| 3.2 | [<u>Amended and Restated Bylaws of Regional Health Properties, Inc., effective September 21, 2017</u>](https://www.sec.gov/Archives/edgar/data/1004724/000100472417000056/copyof33rheamendedandresta.htm) | Incorporated by reference to Exhibit 3.3 of the Registrant's Current Report on Form 8-K12B filed on October 10, 2017 |
| 3.2 |  | Incorporated by reference to Exhibit 3.3 of the Registrant's Current Report on Form 8-K12B filed on October 10, 2017 |
| 3.2 |  | Incorporated by reference to Exhibit 3.3 of the Registrant's Current Report on Form 8-K12B filed on October 10, 2017 |
| 3.2(a) | [<u>Amendment No. 1 to Amended and Restated Bylaws of Regional Health Properties, Inc., effective June 27, 2023</u>](https://www.sec.gov/Archives/edgar/data/1004724/000149315223022735/ex3-6.htm) | Incorporated by reference to Exhibit 3.6 of the Registrant's Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (Reg. No. 333-269750) filed on June 28, 2023 |
| 3.2(b) | [<u>Articles of Amendment to Amendment and Restated Articles of Incorporation of Regional Health Properties, Inc., effective August 14 2025</u>](https://www.sec.gov/Archives/edgar/data/1004724/000164117225022285/ex3-1.htm) | Incorporated by reference to Exhibit 3.1 of Registrant's Current Report of Form 8-K filed on August 14, 2025 |
| 31.1 | [<u>Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act</u>](rhe-ex31_1.htm) | Filed herewith |
| 31.1 |  | Filed herewith |
| 31.2 | [<u>Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act</u>](rhe-ex31_2.htm) | Filed herewith |
| 31.2 |  | Filed herewith |
| 32.1 | [<u>Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act</u>](rhe-ex32_1.htm) | Filed herewith |
| 32.1 |  | Filed herewith |
| 32.2 | [<u>Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act</u>](rhe-ex32_2.htm) | Filed herewith |
| 32.2 |  | Filed herewith |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | Filed herewith |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | Filed herewith |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |  |

---

\* Identifies a management contract or compensatory plan or arrangement.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  |  | **REGIONAL HEALTH PROPERTIES, INC.** |
|  |  | **(Registrant)** |
| Date: | August 14, 2025 | /s/ Brent Morrison |
|  |  | Brent Morrison |
|  |  | Chairman, Chief Executive Officer and Director (Principal Executive Officer) |
| Date: | August 14, 2025 | /s/ Paul O'Sullivan |
|  |  | Paul O'Sullivan |
|  |  | Senior Vice President (Principal Financial Officer) |

---

------

## Exhibit 2.3

EXHIBIT 2.3

**ASSET PURCHASE AGREEMENT**

This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into effective July 30, 2025 (the "<u>Effective Date</u>"), by and among Coosa Valley SNF Realty LLC, an Alabama limited liability company, or its nominee or assignee (the "<u>Buyer</u>"), and Coosa Nursing ADK LLC, a Georgia limited liability company (the "<u>Seller</u>"), and Regional Health Properties, Inc., a Georgia corporation (the "<u>Guarantor</u>"). For purposes of this Agreement, the Seller, the Guarantor, and the Buyer may be referred to as a "<u>Party</u>" and collectively, the "<u>Parties</u>."

**RECITALS:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.The Seller is the owner of the Real Property (as hereinafter defined) located at the 124 bed skilled nursing facility commonly known as Coosa Valley Health and Rehab, located at 513 Pineview Ave., Glencoe, AL 35905 (the "<u>Facility</u>"), and the Seller is owner of the Other Property (as hereinafter defined) located at the Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.The Seller owns and leases the Facility (the "<u>Business</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.C.R. of Coosa Valley, LLC, a Georgia limited liability company (the "<u>Old Operator</u>"), is the licensed operator of the Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.Subject to the terms and conditions set forth herein, the Buyer desires to purchase the Real Property (as hereinafter defined) and Other Property used in connection with the Facility from the Seller, and the Seller desires to sell the same; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.The Buyer desires to lease, as lessor, the Facility to an affiliate of Buyer as the lessee and operator of the Facility (the "<u>New Operator</u>"), and certain operational matters not otherwise addressed herein shall be handled by an operations transfer agreement by and between the Old Operator and the New Operator (the "<u>Operations Transfer Agreement</u>").

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto do hereby agree as follows:

**ARTICLE I.** **<br>PURCHASE AND SALE OF ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.01<u>Transfer of Assets</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)Upon the terms and subject to the conditions set forth in this Agreement, at the Closing (as hereinafter defined), the Seller shall sell and the Buyer shall buy, free and clear of all liens, mortgages, pledges, deeds of trust, security interests, charges, encumbrances and other adverse Claims (as defined below), except for Permitted Exceptions (as hereinafter defined), all of the following assets, properties and rights (collectively, the "<u>Transferred Assets</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)<u>Real Property</u>. All of the Seller's right, title and interest in and to (i) the land described on Exhibit A (the "<u>Land</u>"), (ii) the Facility and any and all other fixtures and improvements erected thereon, (iii) the land lying in the bed of any street, highway, road or avenue,

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opened or proposed, public or private, in front of or adjoining the Land or any portion thereof, to the center line thereof, (iv) any rights of way, appendages, appurtenances, easements, sidewalks, alleys, gores or strips of land adjoining or appurtenant to the Land or any portion thereof and used in conjunction therewith, (v) any development rights appurtenant to the Land or any portion thereof, and (vi) any award or payment made or to be made in lieu of any of the foregoing or any portion thereof and any unpaid award for damage to the Land or any portion thereof (collectively, the "<u>Real Property</u>"), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)<u>Other Property</u>. All right, title and interest to all of the other assets owned by Seller located at the Real Property (the "<u>Other Property</u>"), including without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)all tangible personal property (such as furniture, fixtures, equipment, and automobiles), but excluding any personal property being transferred to the New Operator as provided for in the Operations Transfer Agreement; and,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)to the extent assignable by the Seller, all licenses, permits, certificates of authority, certificates of need, registrations, accreditations, and certificates of occupancy issued by any federal, state, municipal or local governmental authority relating to the use, maintenance or operation of the Facility, running to, or in favor of, the Seller (the "Governmental Authorizations").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)Any provision of this Agreement to the contrary notwithstanding, all of the assets listed on <u>Schedule 1.01(B)</u> shall be excluded from the Transferred Assets and retained by the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)The Seller shall transfer the Transferred Assets to the Buyer pursuant to a warranty deed in substantially the form attached hereto as <u>Exhibit B</u> (the "<u>Deed</u>"), an Assignment and Assumption Agreement in substantially the form attached hereto as <u>Exhibit C</u> (the "<u>Assignment and Assumption Agreement</u>"), and a Bill of Sale in substantially the form attached hereto as <u>Exhibit D</u> (collectively, the "<u>Bill of Sale</u>"). The Deed shall be subject only to (i) real estate taxes and assessments not yet due and payable; (ii) easements, restrictions and other conditions of record not objected to by Buyer pursuant to <u>Section 4.07</u> herein; (iii) the rights of residents pursuant to their occupancy agreements; and (iv) applicable zoning and use laws and regulations and (v) the exceptions listed on <u>Schedule 1.01(C)</u> (collectively, the "<u>Permitted Exceptions</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)At any time and from time to time after the Closing Date, at the request of the Buyer and without further consideration, the Seller shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to transfer, convey and assign to the Buyer the Transferred Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.02<u>Purchase Price</u>. In consideration for the transfer of the Transferred Assets, upon the terms and subject to the conditions set forth in this Agreement, the aggregate purchase price to be paid by the Buyer for the Transferred Assets shall be ten million six hundred thousand dollars ($10,600,000) (the "Purchase Price"), payable as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)<u>Good Faith Deposit</u>. Within three (3) Business Days following the Effective Date, Buyer shall deposit one hundred fifty thousand dollars ($150,000) (the "<u>Initial</u> 

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<u>Deposit</u>") with Landmark Abstract Agency (the "<u>Escrow Agent</u>") as a good faith deposit in connection with its obligations hereunder. Within three (3) Business Days following the expiration of the Due Diligence Period (as defined below), the Buyer shall deposit an additional one hundred fifty thousand dollars ($150,000) (the "<u>Additional Deposit</u>" and together with the Initial Deposit and the Extension Deposit (as defined below), if applicable, collectively, the "<u>Good Faith Escrow</u>") with Escrow Agent as a good faith deposit in connection with its obligations hereunder. In the event that the transaction contemplated herein is closed, the Good Faith Escrow shall be applicable to the Purchase Price at the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)<u>Balance of the Purchase Price</u>. The balance of the Purchase Price, as adjusted pursuant to this Agreement, shall be deposited in escrow with the Escrow Agent by wire transfer of immediately available funds. The funds deposited in escrow with the Escrow Agent shall be released at Closing as follows: (i) an amount required to pay off the New Operator's Small Business Administration Economic Injury Disaster Loan shall be released to the lender to pay off such Economic Injury Disaster Loan in full and (ii) all remaining funds in escrow after paying off the loan shall be released by Escrow Agent to the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.03<u>Allocation of Purchase Price</u>. The Purchase Price shall be allocated among the Transferred Assets purchased hereunder as set forth on <u>Schedule 1.03</u>, which shall be updated by the Parties and attached hereto prior to the Closing Date. The Seller and the Buyer each hereby covenant and agree that none of them will take a position on any income tax return, before any Governmental Authority, or in any judicial proceeding that is in any way inconsistent with the allocation set forth on <u>Schedule 1.03</u>. Each Party shall duly and timely file Form 8594 with its appropriate tax returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.04<u>Taxes, Fees and Expenses Associated with Transfer of the Assets</u>. The Seller shall be responsible for and shall pay: (a) the cost to prepare the Deed, (b) the cost to issue the title commitments, exam fees and the premium for the owner's policy of title insurance and (c) one-half of the escrow fee. The Buyer shall pay for (x) all applicable conveyance fees, state and county transfer taxes, recordation taxes and all other similar taxes arising out of the consummation of the transactions contemplated hereby, (y) any endorsements to the owner's policy of title insurance (other than a mechanic's lien endorsement, if applicable, which shall be paid by the Seller), and (z) one-half of the escrow fee. The Seller shall be responsible for and shall pay any sales tax and any income tax of the Seller, if any, as a result of the transactions contemplated herein. Except as set forth in this <u>Section 1.04</u>, the Buyer and the Seller shall each pay its own costs incurred in connection with the transactions contemplated herein, including all attorneys' fees and due diligence expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.05<u>Expense and Deposit Prorations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)All real estate and personal property taxes and assessments, franchise permit fees or "bed taxes", telephone expenses and utility charges shall be apportioned between the Buyer and the Seller (or between the Seller or Old Operator and the New Operator pursuant to the Operations Transfer Agreement) as of 12:01 a.m. on the Closing Date, in accordance with the principle that the Seller (or Old Operator), as applicable, shall be responsible for all such expenses and obligations arising from the conduct of the Business or ownership of the Facility before such time, and the Buyer (or the New Operator), as applicable, shall be responsible for all such expenses

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and obligations arising from the conduct of the Business or ownership of the Facility after such time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)No later than ten (10) Business Days prior to the Closing Date, the Seller shall deliver to the Buyer a list (the "<u>Closing Proration Schedule</u>") setting forth all such ongoing expenses associated with the operation of the Business, including expenses which have been prepaid by the Seller or Old Operator and expenses for goods or services received by or rendered to the Business which will not have been paid by the Seller or Old Operator as of the Closing Date, detailing each such expense in an itemized manner, with estimates for any expenses as to which definitive amounts are unavailable or incalculable at such time. The Closing Proration Schedule shall indicate which items are proposed to be prorated between the Old Operator and the New Operator under the Operations Transfer Agreement, and which items, if any, are proposed to be pro-rated between the Buyer and the Seller under this Agreement. The Buyer shall promptly review the Closing Proration Schedule to approve and/or provide comments to the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)The sum of all prepaid expenses and unpaid expenses listed on the Closing Proration Schedule that are to be prorated between the Old Operator and the New Operator shall be prorated in accordance with the terms of the Operations Transfer Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)The sum of all prepaid expenses and unpaid expenses listed on the Closing Proration Schedule that are to be prorated between the Seller and the Buyer, if any, shall be paid at the Closing by increasing or decreasing, as the case may be, the payment to be made by the Buyer to the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)If any estimate of any expense arising from the conduct of the Business on the Closing Proration Schedule proves to be incorrect or was omitted from the Closing Proration Schedule (including amounts paid by the Seller or Old Operator relating to periods from and after the Closing Date and amounts paid by the Buyer or the New Operator relating to periods prior to the Closing Date), then the Seller, the Old Operator, the Buyer or the New Operator, as the case may be, shall reimburse the appropriate Party based upon the actual amount of the applicable expense, as indicated by actual invoices received or other appropriate documentation. Within ninety (90) days after the Closing Date, the Parties shall communicate and, if either Party so requests, meet, for the purpose of reconciling all such adjustments, and any net amount owed shall be paid promptly, and in any event within ten (10) days, after completion of such reconciliation.

**ARTICLE II.** **<br>REPRESENTATIONS AND WARRANTIES OF THE SELLER**

As an inducement to the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Seller represents and warrants to the Buyer as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.01<u>Organization and Qualification of the Seller</u>. The Seller is a Georgia limited liability company, duly organized, validly existing and in good standing under the laws of the State of Georgia. The nature of the Business or the Transferred Assets does not require the Seller to be licensed or qualified in any other jurisdictions other than Georgia and Alabama. <u>Schedule 2.01</u> lists the address at which Seller manages the majority of its business operations and maintains its chief executive office as well as each other address at which Seller has any tangible personal

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property or maintains an office or any books or records relating to any of its real or personal property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.02<u>Corporate Power and Authority</u>. The Seller has the limited liability power and authority to own and hold its properties and to carry on its business as now conducted. The Seller (a) has the limited liability power and authority to execute, deliver and perform this Agreement and the Exhibits and to deliver the Schedules hereto and the other documents and instruments contemplated hereby (collectively this Agreement, the Exhibits and Schedules hereto, and the other documents and instruments contemplated hereby shall constitute the "<u>Documents</u>") and to consummate the transactions contemplated hereby and thereby and (b) has taken all necessary limited liability action to authorize and approve the execution, delivery and performance of this Agreement and the other Documents and the consummation of the transactions contemplated hereby and thereby. This Agreement and the other Documents have been duly and validly executed and delivered by the Seller and constitute valid and binding obligations of the Seller, enforceable against Seller in accordance with their terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.03<u>Validity, Etc</u>. Neither the execution and delivery of this Agreement or the other Documents, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement or the other Documents and such other agreements in compliance with the terms and conditions hereof and thereof by the Seller will: (i) violate, conflict with or result in any breach of any trust agreement, Certificate of Formation, bylaw, judgment, decree, ordinance, order, statute or regulation applicable to the Seller; (ii) violate, conflict with or result in a breach, default or termination or give rise to any right of termination, cancellation or acceleration of the maturity of any payment date of any of the obligations of the Seller or increase or otherwise affect the obligations of the Seller under any law, rule, regulation or any judgment, decree, order, governmental permit, license or order or any of the terms, conditions or provisions of any mortgage, indenture, note, license, agreement or other instrument or obligation related to the Seller or to any of abilities to consummate the transactions contemplated hereby or thereby, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been or will be obtained in writing prior to the Closing Date and provided to the Buyer; (iii) violate any order, writ, injunction, decree, statute, ordinance, rule or regulation applicable to the Seller; or (iv) result in the creation of any Claim upon the Transferred Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.04<u>Subsidiaries and Investments</u>. The Seller has no subsidiaries nor does it own, directly or indirectly, any capital stock or other equity or ownership or proprietary interest in any other corporation, limited liability company, partnership, association, trust, joint venture or other entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.05<u>Employment and Labor Matters</u>. Seller does not have, and has never had, any employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.06<u>Real Property</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)The Seller has good and marketable fee simple title to the Real Property, free and clear of all mortgages, liens, defects, encumbrances, conditions, exceptions, restrictions or other matters affecting title, subject only to the Permitted Exceptions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)There are no pending or, to the Seller's Knowledge, threatened condemnation actions or special assessments of any nature with respect to the Real Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)The Seller has not received written notice of, and the Seller has no other knowledge of, any pending or contemplated material change in any regulation or private restriction applicable to the Real Property or any part thereof, any pending or threatened judicial or administrative action, any action pending or threatened in writing by adjacent landowners or other persons, or of any natural or artificial condition not disclosed to the Buyer in writing, materially adversely affecting the Real Property or any part thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)There are no parties in possession of any portion of the Real Property as lessees, tenants at sufferance or trespassers, other than Old Operator and the nursing home residents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)There are no material unpaid bills for services, labor or materials furnished to the Real Property or any portion thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F)All utility services necessary for the proper operation of the Business are connected to the Real Property, including without limitation water supply and sanitary and storm sewer facilities, natural gas, electric and telephone facilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G)The Seller has not entered into any contract or agreement of any kind the performance of which by the other Party thereto would give rise to a lien on the Real Property other than Permitted Exceptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(H)The Seller is not a foreign persons, as that term is defined in Section 1445 of the "*Code*" the Internal Revenue Code of 1986, as amended (the "<u>Code</u>") and the applicable regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I)The Seller has not violated, in connection with the use, ownership, maintenance or operation of the Real Property the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et. seq.; or the Fair Sellers Act of 1968, 42 U.S.C. 3601 et seq. To Seller's Knowledge, the Facility is in substantial compliance with all requirements for participation in the Medicare and Medicaid Programs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.07<u>Powers of Attorney; Absence of Limitations on Competition, Guarantees</u>. No power of attorney or similar authorization given by the Seller is presently in effect or outstanding. No contract or agreement to which the Seller is a party or is bound or to which the Seller's properties or assets are subject limits the freedom of the Seller to compete in any line of business or with any Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.08<u>Governmental Approvals</u>. Except as set forth on <u>Schedule 2.08</u>, no registration or filing by the Seller with, or consent or approval of or other action by, any Governmental Authority is or will be necessary for the valid execution, delivery and performance by the Seller of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.09<u>Compliance with Law; Licenses and Permits</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)The Seller is in substantial compliance with all Legal Requirements applicable to it, its operations, properties, assets, products and services. Seller has not received any written notice or other written communication from any Governmental Authority or any other Person in connection with the Facility regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with any Legal Requirement, or (B) any actual, alleged, possible or potential obligation on the part of the Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. There is no existing Legal Requirement, and the Seller has no Knowledge of any proposed Legal Requirement which would prohibit or materially restrict the Buyer from, or otherwise materially adversely affect the Buyer in, conducting the Business in the manner heretofore conducted by the Seller. To Seller's Knowledge the Seller or Old Operator, as applicable, possess all franchises, permits, licenses, certificates and consents required from any Governmental Authority in order for the Seller to carry on the Business as currently conducted and to own and operate the Facility as now owned and operated. "<u>Legal Requirement</u>" means any federal, state, local, municipal, foreign, international, multinational, or other order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)Neither Seller nor any current member, officer, director or employee of Seller has been (i) sanctioned pursuant to the Anti-Kickback Statute (42 U.S.C. §§1320a-7a or 1320a-8), the False Claims Act (31 U.S.C. §3729 et seq.), the Stark Law (42 U.S.C. §1395nn), or the regulations promulgated pursuant to such statutes, or any related or similar federal, state or local statutes or regulations governing referrals, fraud, waste, and abuse in the healthcare industry ("<u>Health Care Fraud and Abuse Laws</u>"); or (ii) convicted of a criminal offense under the Health Care Fraud and Abuse Laws. To Seller's Knowledge there are no pending or threatened Healthcare Fraud and Abuse Law investigations, proceedings, or actions (including any civil investigative demand, subpoena, or self-disclosure) involving Old Operator, any current member, officer, director or employee of Seller, or the Facility. Other than as set forth on <u>Schedule 2.10(B)</u>, Seller has not received, within the last three (3) years, any notice (i) of the commencement of any proceeding under the Health Care Fraud and Abuse Laws or (ii) that the Facility, Seller, Old Operator, and/or any officer, director or employee of Seller or Old Operator is under investigation or involved in proceedings regarding the Health Care Fraud and Abuse Laws, including as a result of a self-disclosure. To Seller's Knowledge Seller and its agents and representatives, and all agreements, arrangements, and operations of the Facility, have at all times been in material compliance with all of the Health Care Fraud and Abuse Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)Except as set forth on <u>Schedule 2.10(C)</u>, neither Seller nor any current director, officer, or managing employee of Seller, is or has been party to a corporate integrity agreement, corporate compliance agreement, or other settlement agreement with the OIG, CMS, the United States Department of Justice, any state department of health, Medicaid, or similar state regulatory authority, or any state Attorney General, as a result of an alleged violation of any applicable law (and to Seller's Knowledge neither the Facility nor the Transferred Assets are in any way subject to or liable with respect to any such corporate integrity agreement, corporate compliance agreement, or other settlement agreement). Neither Seller nor any current director, officer, contractor, vendor, or employee of Seller is listed on the OIG List of Excluded Individuals and entities, any state Medicaid exclusion list, or has been suspended, excluded, or otherwise limited from participating in the Medicare program or any other government reimbursement program.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)Except as permitted by (or otherwise not in violation of) applicable law or regulation, neither of the Seller nor any of its members, directors, officers or employees is a party to any contract, lease agreement or other arrangement related to the Seller, Old Operator or the Business with any physician, physical or occupation therapist, health care facility, hospital, home health agency or other person who is in a position to make or influence referrals to or otherwise generate business for the Seller or Old Operator with respect to the Business, to provide services, lease space, lease equipment or engage in any other venture or activity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10<u>Employee Benefits</u>. Except as set forth on <u>Schedule 2.11</u>, none of Seller, Guarantor, or any ERISA Affiliate is or ever has been a party to, participates in, has participated in or has any liability or contingent liability with respect to any of the following: (i) any "employee welfare benefit plan" or "employee pension benefit plan" or "multiemployer plan" as those terms are respectively defined in sections 3(1), 3(2) and 3(37) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder ("<u>ERISA</u>"); (ii) any retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay, severance pay, Section 125 bonus or benefit arrangement, insurance or hospitalization program or any other fringe benefit arrangements for any current or former employee, director, consultant or agent, whether pursuant to contract, arrangement, custom or informal understanding, written or unwritten, which does not constitute an "employee benefit plan" (as defined in section 3(3) of ERISA); or (iii) any fringe benefit plans, as that term is defined in Section 6039D(d) of the Internal Revenue Code (collectively, the "<u>Employee Plans</u>"), and under no circumstances will Buyer have any liability with respect to any Employee Plan. None of Seller, Guarantor, or any ERISA Affiliate, has incurred any withdrawal liability, nor do any of them have any potential withdrawal liability. None of Seller, Guarantor, or any of its ERISA Affiliates has sponsored, contributed to or been obligated under Title I or IV of ERISA to contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)) or a plan that was ever subject to Sections 412 or 430 of the Code, or Part 3 of Title I of ERISA, and under no circumstances will Buyer have any liability with respect to any Employee Plan maintained by Seller, Old Operator or any ERISA Affiliate, regardless of whether such Employee Plan relates to the employees of Seller or Old Operator. For purposes of this Agreement, "<u>ERISA Affiliate</u>" means any entity which is a member of (A) a controlled group of corporations (as defined in Section 414(b) of the Code), (B) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (C) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11<u>Fixed Assets</u>. The Seller has good and marketable title to all of its owned fixed assets, free and clear of all Claims except for Permitted Exceptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12<u>Insurance</u>. The Seller is, and will be through the Closing Date, insured with insurers in respect of its properties, assets and businesses as set forth on the attached <u>Schedule 2.13</u>. <u>Schedule 2.13</u> lists the insurance coverage carried by the Seller, which insurance will remain in full force and effect with respect to all events occurring prior to the Closing Date. The Seller: (i) has not failed to give any notice or present any claim under any such policy or binder in due and timely fashion; (ii) has not received notice of cancellation or non-renewal of any such policy or binder; (iii) is not aware of any threatened or proposed cancellation or non-renewal of any such policy or binder; (iv) has not received notice of any insurance premium which will be materially

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increased in the future; and (v) is not aware of any insurance premium which will be materially increased in the future. There are no outstanding claims under any such policy which have gone unpaid for more than forty-five (45) days, or as to which the insurer has disclaimed liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13<u>Outstanding Contracts</u>. Seller is not a party to any material contracts related to the Facility other than the lease with the current operator of the Facility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14<u>Intangible Property</u>. Except for commercial software licensed for use on personal computers, the Seller owns the entire right, title and interest in and to all intangible property used in the operation of the Facility (collectively, "<u>Intangible Property</u>"). There have not been and are no pending or, to the Seller's Knowledge, threatened proceedings or litigation or other adverse Claims affecting or with respect to the Intangible Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15<u>Proprietary Information of Third Parties</u>. No third party has claimed or, to the Seller's Knowledge, has reason to claim that any Person employed by or consulting with the Seller ("<u>Related Person</u>") has: (i) violated any of the terms or conditions of such person's employment, non-competition or non-disclosure agreement with such third party; (ii) disclosed or utilized any trade secret or proprietary information or documentation of such third party; or (iii) interfered or may be interfering in the employment relationship between such third party and any of its present or former employees. No third party has requested information from the Seller which suggests that such a claim might be contemplated. No Related Person has employed or proposes to employ any trade secret or any information or documentation proprietary to any former employer and no Related Person has violated any confidential relationship which such Person may have had with any third party, in connection with the development or sale of any service of the Seller and the Seller has no reason to believe there will be any such employment or violation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16<u>Taxes</u>. All federal, state, local and foreign tax returns and tax reports required to be filed by the Seller on or before the date hereof have been timely filed with the appropriate governmental agencies in all jurisdictions in which such returns and reports are required to be filed and all taxes shown as due in connection therewith have been paid. All taxes (including, without limitation, income, accumulated earnings, property, sales, use, franchise, excise, license, value added, fuel, employees' income withholding social security taxes, and franchise permit fee or "bed taxes") which have become due or payable or are required to be collected by the Seller or are otherwise attributable to any periods ending on or before the Closing Date and all interest and penalties thereon, whether disputed or not, have been paid or will be paid in full or adequately reflected in the Seller's books and records in accordance with generally accepted accounting principles on or prior to the Closing Date. All deposits required by law to be made by the Seller with respect to employees' withholding taxes have been duly made, and, as of the Closing Date, all such deposits due will have been made. No examination of any tax return of the Seller is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any such tax return.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17<u>Litigation</u>. Except as set forth on <u>Schedule 2.17</u>, there is no: (i) Claim pending or, to the Seller's Knowledge, threatened against or affecting the Seller at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, including, without limitation, Claims under the False Claims Act (31 U.S.C. § 3729 et seq.); (ii) arbitration proceeding pending relating to the

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Seller; or (iii) governmental inquiry pending or threatened against or involving the Seller. There are no outstanding orders, writs, judgments, injunctions or decrees served upon the Seller by any court, governmental agency or arbitration tribunal against the Seller. The Seller is not in default with respect to any order, writ, injunction or decree known to or served upon it from any court or of any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. There is no action or suit by the Seller pending or threatened in writing against others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18<u>Environmental Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)Laws and Hazardous Substances. For purposes of this Agreement, the term "<u>Environmental Law(s)</u>" shall mean any federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Substance, as now or at any time hereafter in effect. For purposes of this Agreement, the term "<u>Hazardous Substance(s)</u>" shall have the meaning ascribed in any Environmental Law to any hazardous, toxic or dangerous waste, substance, pollutant or material, whether liquid, solid or gaseous, and in any event shall include all substances identified or characterized as "hazardous substances," "hazardous wastes," "pollutants," or "contaminants" in the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq. and the regulations promulgated thereunder (as amended from time to time); the Clean Air Act, 42 U.S.C. 7401, et seq. and the regulations promulgated thereunder (as amended from time to time); the Resource, Conservation and Recovery Act, 42 U.S.C. 6901 et seq. and the regulations promulgated thereunder (as amended from time to time); or the Oil Pollution Act of 1990, 33 U.S.C. 2701 et seq. and the regulations promulgated thereunder (as amended from time to time); any other material, waste, pollutant, contaminant or substance designated as hazardous, toxic or dangerous by Congress or by the United States Environmental Protection Agency (EPA) or by any federal, state, or local statute, law, code, ordinance, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any hazardous, toxic, or dangerous material, waste, pollutant, contaminant or substance, as such statutes, laws, ordinances, codes, rules, regulations or decrees are now or at any time hereafter in effect; and oil, oil waste, and used oil as those terms are defined in the Clean Water Act, 33 U.S.C. 1251 et seq. and the regulations promulgated thereunder (as amended from time to time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)<u>Compliance with Environmental Laws</u>. The Seller has not violated any Environmental Laws, in any material manner, in connection with the use, ownership, lease, maintenance or operation of the Real Property. Any and all environmental permits, licenses or approvals required by any Environmental Law pertaining to the Real Property are attached hereto as <u>Schedule 2.19</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)<u>Absence of Hazardous Substances</u>. Neither the Seller nor any other Person within the Seller's control has ever caused or permitted any Hazardous Substance to be placed, held, located or disposed of on, under or at the Real Property nor any part thereof in violation of any Environmental Law and neither the Real Property nor any part thereof has ever been used by the Seller or, to Seller's Knowledge, by any other person as a dump site or storage site, whether permanent or temporary, for any Hazardous Substance.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)<u>Tanks</u>. Except as set forth on <u>Schedule 2.19(E)</u>, to the Seller's Knowledge, there are not now, nor have there ever been, tanks or other facilities on, under, or at the Real Property which contained materials which, if known to be present in soils or groundwater, would require cleanup, removal or some other remedial action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19<u>Broker's or Finder's Fees</u>. Other than Blueprint Health Care Real Estate (the "<u>Broker</u>"), no agent, broker, person or firm acting on behalf of the Seller is, or will be, entitled to any commission or broker's or finder's fees from the Seller or from any person controlling, controlled by or under common control with the Seller in connection with any of the transactions contemplated herein. The Seller shall be responsible for paying all amounts due to the Broker at the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.20<u>Governmental Authorizations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)Except as set forth on <u>Schedule 2.20(A)</u>, the Seller possesses all Governmental Authorizations that are required for its ownership of the Facility. The Seller is in compliance with all requirements of federal, state and local law and all applicable terms and requirements of each Governmental Authorization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)A correct and complete list of all required Governmental Authorizations is set forth on <u>Schedule 2.21(B)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.21<u>OFAC</u>. The Seller is in compliance with the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the "<u>Order</u>") and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury ("<u>OFAC</u>") and in any enabling legislation or other Executive Orders or regulations in respect thereof (the Order and such other rules, regulations, legislation or orders are collectively hereinafter referred to as the "Orders"). Neither the Seller nor any of its Affiliates (i) is listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the "<u>Lists</u>"), (ii) is a Person (as defined in the Order) who has been determined by competent authority to be subject to the prohibitions contained in the Orders, or (iii) is owned or controlled by (including without limitation by virtue of such Person being a director or owning voting shares or interests), or acts for or on behalf of, any Person on the Lists or any other Person who has been determined by competent authority to be subject to the prohibitions contained in the Orders. The Seller is not acting, directly or indirectly for, or on behalf of, any Person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, "Specially Designated National and Blocked Person," or other banned or blocked Person, entity, or nation pursuant to any Law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in the transactions contemplated herein, directly or indirectly, on behalf of, or instigating or facilitating the transactions contemplated herein, directly or indirectly, on behalf of, any such Person, group, entity or nation.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.22<u>PPP Loans</u>. The Seller has not received any Paycheck Protection Program ("PPP") loans or similar governmental aid or deferred any payroll taxes in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.23<u>Bankruptcy</u>. No insolvency proceedings of any character, including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Seller (other than as a creditor) are pending or are being contemplated by the Seller, or to the Seller's knowledge are being threatened against the Seller, and the Seller has made any assignment for the benefit of creditors or taken any action in contemplation of or which would constitute the basis for the institution of such insolvency proceedings.

**ARTICLE III.** **<br>REPRESENTATIONS AND WARRANTIES OF THE BUYER**

As an inducement to the Seller to enter into this Agreement and to consummate the transactions contemplated hereby, the Buyer represents and warrants to the Seller as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.01<u>Organization</u>. The Buyer is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Alabama.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.02<u>Power and Authority</u>. The Buyer has the power and authority to execute, deliver and perform this Agreement and the other Documents. The execution, delivery and performance of the Documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary limited liability company action of the Buyer. The Documents to be executed and delivered by the Buyer have been duly executed and delivered by, and constitute the legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with their terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.03<u>Validity, Etc</u>. Neither the execution and delivery by the Buyer of this Agreement and the other Documents, the consummation by the Buyer of the transactions contemplated hereby or thereby, nor the performance by the Buyer of this Agreement and such other agreements in compliance with the terms and conditions hereof and thereof will: (i) violate, conflict with or result in any breach of any trust agreement, articles of organization, operating agreement, judgment, decree, order, statute or regulation applicable to the Buyer; (ii) violate, conflict with or result in a breach of or default (or give rise to any right of termination, cancellation or acceleration) under any law, rule or regulation or any judgment, decree, order, governmental permit, license or order or any of the terms, conditions or provisions of any mortgage, indenture, note, license, agreement or other instrument to which the Buyer is a Party; or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.04<u>Bankruptcy</u>. No insolvency proceedings of any character, including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Buyer (other than as a creditor) are pending or are being contemplated by the Buyer, or to the Buyer's Knowledge are being threatened against the Buyer, and the Buyer has not made any assignment for the benefit of creditors or taken any action in contemplation of or which would constitute the basis for the institution of such insolvency proceedings.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.05<u>Adequate Funds</u>. Buyer has or will have at the Closing adequate funds available to it in order to consummate the transactions contemplated by this Agreement and to perform its obligations hereunder and thereunder.

**ARTICLE IV.** **<br>COVENANTS AND AGREEMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.01<u>Efforts</u>. The Seller and the Buyer shall each use commercially reasonable efforts to procure all consents and approvals, completion of all filings, all registrations and certificates, and satisfaction of all other requirements prescribed by law which are necessary for the consummation of the transactions contemplated by this Agreement and the Buyer's ownership and operation of the Facility and the Business after the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.02<u>Tax Returns</u>. The Seller shall prepare and timely file, at its sole expense, all of its required tax returns relating to the Facility for all periods ending on or prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.03<u>Investigations</u>. During the period beginning on the Effective Date and continuing for forty-five (45) days thereafter (the "<u>Due Diligence Period</u>"), the Seller shall give the Buyer and its employees, accountants, attorneys, agents, contractors, and other authorized representatives reasonable access during all reasonable times to all the premises, properties, books and records, and furnish the Buyer with such financial and operating data, analyses and other information of any kind respecting the Real Property as the Buyer shall reasonably request from time to time. Any investigation shall be conducted in a manner which does not unreasonably interfere with business operations. Seller agrees to cooperate with Buyer in its inspections, including, without limitation, completing the environmental questionnaire of Buyer's environmental consultant to the best of Seller's Knowledge. In the event the transactions contemplated herein are not finally consummated, the Buyer shall keep all such information confidential and shall not disclose such information, except that the Buyer may disclose any such information which is a public record, subsequently becomes known publicly or which the Buyer is required by law to disclose or which is disclosed in connection with the enforcement of Buyer's rights under this Agreement. In the event that Buyer is not satisfied with the results of its investigations in Buyer's sole and absolute discretion, then Buyer may terminate this Agreement by providing written notice to the Seller prior to the expiration of the Due Diligence Period, whereupon the Good Faith Escrow shall be returned to the Buyer and the Parties shall have no further rights or obligations hereunder. If the Buyer does not otherwise terminate this Agreement prior to the expiration of the Due Diligence Period, then, following such expiration, the Good Faith Escrow shall be non-refundable to the Buyer except as otherwise set forth herein. In exercising its rights pursuant to this <u>Section 4.04</u>, the Buyer and its representatives shall cause as little disruption or interference as is commercially reasonable to the operations of the Facility or the residents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.04<u>Notification of Litigation</u>. The Seller shall provide the Buyer with prompt written notice, accompanied by a detailed description and analysis, of all Claims (whether actual or, to the Seller's Knowledge, threatened and whether or not material) against or possibly involving the Seller or the Facility. The notification of any Claims shall include, without limitation, any adverse material change in or any litigation arising in connection with any item or matter reported on any schedule, exhibit or document delivered by the Seller to the Buyer in connection with this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.05<u>Payment of Liabilities</u>. The Seller shall pay and satisfy in full all of the Seller's obligations and liabilities, of any nature whatsoever, which accrue prior or subsequent to the Closing Date. Except as specifically provided for in this Agreement, Buyer shall not assume any liabilities or obligations of the Seller whatsoever, fixed or contingent, including liabilities related to or arising from Seller's ownership of the Transferred Assets prior to the Closing Date. Notwithstanding the foregoing or anything to the contrary herein, Buyer shall be solely responsible for all liabilities and obligations related to or arising from Buyer's ownership of the Transferred Assets on or after the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.06<u>Duty of Cooperation in Litigation</u>. The Buyer agrees to reasonably cooperate, and cause the New Operator or any other tenant of the Facility to reasonably cooperate, with the Seller, its agents, attorneys, employees and other designated representatives, in the defense of any and all Claims brought against the Seller or the Facility arising prior to the Closing Date and for which the Seller has retained liability under the provisions of this Agreement. "<u>Reasonably cooperate</u>" as used in this <u>Section 4.09</u> means, without limitation, that the Buyer, New Operator or Buyer's other tenants will, at reasonable times and upon reasonable advance notice, provide to the Seller: (i) reasonable access, for inspection and copying at the Seller's expense, to the medical, business and other records of any resident or employee involved in a Claim; (ii) reasonable access to current employees and their personnel files; (iii) reasonable access to the physical premises of the Facility and all equipment located thereon; (iv) the last known names and addresses of former employees along with reasonable access to former employee personnel files; (iv) reasonable access to other documents and information necessary for the defense of any Claim. The Seller shall pay the reasonable cost, if any, incurred by the Buyer, the New Operator or any tenants in its compliance with this Section 4.09.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.07<u>Survey and Title Insurance</u>. The Buyer: (a) may order a current ALTA survey (including such Schedule A items to the ALTA Survey as the Buyer shall reasonably require) of the Real Property (the "<u>Survey</u>"); and (b) shall order an ALTA title insurance commitment (the "<u>Title Commitment</u>"), issued by Landmark Abstract Agency (the "<u>Title Company</u>"), committing to issue to the Buyer an owner's policy of title insurance with respect to the Real Property with such endorsements as may be required by the Buyer, including without limitation zoning and comprehensive endorsements (the "<u>Title Policy</u>").

During the Due Diligence Period, the Buyer shall notify the Seller in writing of any encumbrances reflected on the Survey or the Title Commitment that do not constitute Permitted Exceptions and are not acceptable to the Buyer (the "<u>Title Objections</u>"). Buyer shall have five (5) Business Days following receipt of any amended or updated Title Commitment or Survey in which to provide updated Title Objections to Seller. The Seller shall have a period of five (5) Business Days after its receipt of notice of the initial, and any subsequent Title Objections within which to notify the Buyer of its election either to attempt to cure such Title Objections prior to the Closing or decline to attempt to cure such Title Objections. The Seller's failure to give such notice on a timely basis shall be deemed its election to not attempt to cure such Title Objections. If the Seller elects to not attempt to cure such Title Objections, the Buyer may elect to terminate this Agreement in its entirety, and receive a return of the Good Faith Escrow, whereupon the Parties shall have no further rights or obligations hereunder. If the Buyer elects to close the transaction without the Seller's agreement to cure such Title Objections, then such Title Objection shall be deemed waived and shall become a Permitted Exception hereunder. If the Seller elects to attempt to cure a Title

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Objection, completion of such cure shall be a condition of Buyer's obligation to consummate the Closing. Notwithstanding anything to the contrary herein, whether or not included in the Title Objections, the Seller shall be obligated to cure all encumbrances affecting the Real Property constituting (A) liens securing a mortgage, deed of trust or trust deed made by the Seller; (B) judgment liens against the Seller; (C) broker's liens caused by the Seller; and (D) any mechanics' liens or materialman's liens caused by the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.08<u>Environmental and Engineering Reviews</u>. The Buyer may conduct or have conducted, at its own cost and expense, professional reviews with respect to the environmental and engineering condition of the Real Property (collectively, the "<u>Reports</u>"). In the event any condition set forth in the Reports is not satisfactory to the Buyer in the Buyer's sole and absolute discretion, then the Buyer may terminate this Agreement by providing written notice to the Seller prior to the expiration of the Due Diligence Period, whereupon the Good Faith Escrow shall be returned to the Buyer and the Parties shall have no further rights or obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.09<u>Casualty; Condemnation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)If, prior to the Closing, all or any material part of the Facility (taken as a whole) is destroyed or materially damaged by fire or other casualty event, the Seller shall promptly notify the Buyer of such fact. In such event, the Buyer shall have the right to terminate this Agreement by giving notice thereof to the Seller not later than ten (10) days after receiving the Seller's notice (and, if necessary, the Closing Date shall be extended until the second Business Day after the expiration of such ten-day period). If the Buyer elects to terminate this Agreement as aforesaid, the Good Faith Escrow shall be paid to the Buyer, whereupon, this Agreement shall terminate and be of no further force and effect and no party shall have any rights or obligations hereunder. If less than a material part of the Facility (taken as a whole) shall be affected or if the Buyer shall not elect to terminate this Agreement as aforesaid, Buyer shall be entitled, upon Closing, to all of the proceeds, if any, under the Seller's insurance policies covering the Facility solely with respect to such damage or destruction. In additional, Seller shall indemnify Buyer for the cost to reasonably repair or remediate such damage or destruction in the event that Seller's insurance policies do not fully cover such costs (including but not limited to any insurance policy deductible). For purposes hereof, "material" shall be deemed to mean a damage of more than Five Hundred Thousand and 00/100 Dollars ($500,000.00) to replace and/or repair.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)If, prior to the Closing, all or any material part of the Facility (taken as a whole) is taken by condemnation or eminent domain (or becomes the subject of a pending condemnation or taking which has not yet been consummated), or the Facility becomes subject to an actual or proposed conveyance to a condemning authority in lieu of a condemnation, the Seller shall notify the Buyer of such fact promptly after obtaining knowledge thereof and the Buyer shall have the right to terminate this Agreement by giving notice thereof to the Seller not later than ten (10) days after the giving of the Seller's notice (and, if necessary, the Closing Date shall be extended until the second day after the expiration of such ten-day period). If the Buyer elects to terminate this Agreement as aforesaid, the Good Faith Escrow shall be paid to the Buyer, whereupon, this Agreement shall terminate and be of no further force and effect and no party shall have any rights or obligations hereunder. If less than a material part of the Facility (taken as a whole) shall be affected or if the Buyer shall not elect to terminate this Agreement as aforesaid, the sale of the Facility shall be consummated as herein provided without any adjustment to the

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Purchase Price (except to the extent of any condemnation award received by the Seller prior to the Closing) and the Seller shall assign to the Buyer at the Closing all of the Seller's right, title and interest in and to all awards, if any, for the taking, and the Buyer shall be entitled to receive and keep all awards for the taking of such Facility or portion thereof. For purposes hereof, a "material part" shall be deemed to mean a taking of more than ten percent (10%) of the useable square footage of the Facility or which adversely affects access to the Facility or reduces the parking area by more than ten percent (10%).

**ARTICLE V.** **<br>CONDITIONS TO THE BUYER'S OBLIGATIONS**

The obligation of the Buyer to make deliveries to the Seller pursuant to <u>Section 1.02</u> hereof and to consummate the other transactions contemplated hereby is subject to the satisfaction, on or before the Closing Date, of the following conditions each of which may be waived by the Buyer in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.01<u>Consents</u>. The Buyer and/or the New Operator, as applicable, shall have obtained all necessary licenses, certificates, permits, certificates of need, registrations, accreditations, certificates of occupancy and approvals (or assurances reasonably satisfactory to the Buyer that all such necessary licenses, certificates, permits, certificates of need, registrations, accreditations, certificates of occupancy and approvals shall be issued from all federal, state and local governmental, Medicare, Medicaid and other third Party payors, accreditation or regulatory agencies) as required to acquire, own, lease, maintain, manage and operate the Facility (and the Business) in the manner currently operated as of the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.02<u>Closing Documents</u>. The Seller shall have delivered to the Escrow Agent duly executed and acknowledged counterparts of the documents described in <u>Section 7.02</u> and such other certificates, documents and instruments required by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.03<u>Operations Transfer Agreement</u>. The Old Operator and the New Operator shall have entered into the Operations Transfer Agreement, it shall be in full force and effect, the consummation of the transactions contemplated by the Operations Transfer Agreement shall have occurred simultaneously with the Closing under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.04<u>Withdrawal and Assignment of Assumed Name</u>. The Seller shall have delivered to the Buyer evidence satisfactory to the Buyer that the Seller has taken all necessary action to withdraw the Seller's right to use the name of the Facility and assign such right to the Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.05<u>Title Policy</u>. The Title Company shall have issued and delivered to the Buyer the Title Commitment. The Title Company shall be committed, subject only to the payment of its visual customary premium at the Closing, to issue the Title Policy to the Buyer, insuring that fee simple title to the Real Property is vested in the Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.06<u>Governmental Requirements</u>. The Seller shall have furnished to the Buyer evidence reasonably satisfactory to the Buyer of compliance with all applicable, material zoning and subdivision requirements with respect to the Real Property.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.07<u>Survey</u>. The Buyer shall have received the Survey, showing the location of all improvements, encroachments, easements, setback lines, relation of the Real Property to rights-of-way, the perimeter of the Real Property, and containing a metes and bounds description of the Real Property. The Survey shall be of acceptable form to the Title Company to delete the survey exception to the Title Commitment and to provide a survey endorsement. If requested by the Buyer and required by the Title Company, the Seller shall execute a "no-change" affidavit sufficient with respect to a prior Survey for the Title Company to delete the survey exception to the Title Commitment and to provide a survey endorsement (the "<u>No-Change Affidavit</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.08<u>Representations, Warranties and Covenants</u>. The representations and warranties of the Seller herein contained (considered individually and collectively) shall be true in all material respects as stated herein, both when made and with the same effect as though made again as of the Closing Date except to the extent of changes permitted by the terms of this Agreement, and except that those representations and warranties that contain materiality qualifications and other qualifications based on the word "material" shall be required to be true and correct in all respects and not merely material respects. The Seller shall have performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by the Seller prior to the Closing Date. In addition, the Seller shall have delivered to the Buyer a certificate, dated as of the Closing Date, to such effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.09<u>No Actions, Suits or Proceedings</u>. As of the Closing Date, no action, suit, survey, investigation or proceeding brought by any Person, corporation, governmental agency or other entity shall be pending or threatened, before any court or governmental body (i) to restrain, prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement or the consummation of the transactions contemplated hereby, or (ii) which has had or may have a materially adverse effect on the condition, financial or otherwise, or prospects of the Facility. No order, decree or judgment of any court or governmental body shall have been issued restraining, prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement. No insolvency proceeding of any character including without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting a Seller or the Business shall be pending, and the Seller shall not have taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings and the Seller shall have delivered to the Buyer a certificate dated as of the Closing Date, to such effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10<u>Condition of Transferred Assets</u>. Subject to <u>Section 4.09</u>, the Transferred Assets shall, at the Closing, be in substantially the same or better condition than they were on the Effective Date, normal wear and tear excepted.

**ARTICLE VI.** **<br>CONDITIONS TO THE SELLER'S OBLIGATIONS**

The obligation of the Seller to transfer the Transferred Assets to the Buyer and to consummate the other transactions contemplated hereby is subject to the satisfaction, on or before the Closing Date, of the following conditions, each of which may be waived by the Seller in its sole discretion:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.01<u>Purchase Price</u>. The Buyer shall have delivered the Purchase Price to the Escrow Agent and shall have authorized and directed the Escrow Agent to pay the same to the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.02<u>Closing Documents</u>. The Buyer shall have delivered to the Escrow Agent duly executed and acknowledged counterparts of the documents described in <u>Section 7.03</u> and such other certificates, documents and instruments required by this Agreement, and shall have authorized and directed the Escrow Agent to release the same to the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.03<u>Representations, Warranties and Covenants</u>. The representations and warranties of the Buyer herein contained (considered individually and collectively) shall be true in all material respects as stated herein, both when made and with the same effect as though made again as of the Closing Date except to the extent of changes permitted by the terms of this Agreement. The Buyer shall have performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by the Buyer prior to the Closing Date. In addition, the Buyer shall have delivered to the Seller a certificate, dated as of the Closing Date, to such effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.04<u>Operations Transfer Agreement</u>. The Old Operator and the New Operator shall have entered into the Operations Transfer Agreement, it shall be in full force and effect and the consummation of the transactions contemplated by the Operations Transfer Agreement shall have occurred simultaneously with the Closing under this Agreement.

**ARTICLE VII.** **<br>THE CLOSING AND CERTAIN CLOSING DOCUMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.01<u>Time and Place of Closing</u>. Upon the terms and subject to the satisfaction or waiver of the conditions contained in this Agreement, the closing of the transactions contemplated by this Agreement (the "<u>Closing</u>") shall take place by mail, or in person at such office as the Parties mutually agree, on or before the first business day of the first month following the date that is 30 days following the expiration of the Due Diligence Period, provided all of the conditions in Article V and Article VI have been satisfied (the "<u>Closing Date</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.02<u>The Seller's Closing Documents</u>. At the Closing, the Seller will deliver or cause to be delivered to the Buyer the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)All required consents of third Parties to the sale conveyance, transfer, assignment and delivery of the Transferred Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)A certificate of an officer or manager of the Seller certifying as of the Closing Date: (i) a true, correct, and complete copy of its Certificate of Formation and all amendments thereto as in effect on the Closing Date; (ii) a true, correct, and complete copy of the resolutions approved and adopted by the Seller authorizing and approving the execution, performance and delivery of this Agreement and the transactions contemplated by this Agreement; (iii) Certificates of Good Standing from the Secretary of State of Georgia, the Secretary of State of Alabama, and all other jurisdictions where the Seller is qualified to do business; and (iv) the incumbency of the duly authorized officers of the Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)The affidavits of the Seller certifying as to its non-foreign status in accordance with Section 1445(b)(2) of the Code;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)The No-Change Affidavit, if requested by the Buyer and Title Company pursuant to <u>Section 5.07</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)The Deed duly executed by the Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F)The Assignment and Assumption Agreement duly executed by the appropriate Seller(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G)The Bill of Sale duly executed by the Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(H)Reserved;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I)Tax clearance certificates issued by the applicable local, county and state governmental authorities showing that Seller does not currently have any outstanding audit assessment notices, tax delinquencies or bills;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(J)a so-called owner's affidavit in such form as will permit the Title Company to issue its title policy without exceptions for Parties-in-possession (other than the residents and New Operator) or mechanic's liens or other so-called "standard exceptions" that are routinely deleted with a title affidavit; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.03The Buyer's Closing Documents. At the Closing, the Buyer will deliver or cause to be delivered to the Seller the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)The Assignment and Assumption Agreement duly executed by the Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)Reserved; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)All other documents, instruments and writings required to be delivered pursuant to this Agreement or otherwise required in connection herewith.

**ARTICLE VIII.** **<br>TERMINATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.01<u>Events of Termination</u>. Prior to the Closing, this Agreement may be terminated and the transactions contemplated hereby abandoned as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)by the mutual written consent of the Parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)by the Seller upon a breach in any material respect of any covenant or agreement on the part of the Buyer set forth in this Agreement, or if any representation or warranty of the Buyer shall have been materially breached or shall have been or become materially untrue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)by the Buyer upon a breach in any material respect of any covenant or agreement on the part of (i) the Seller set forth in this Agreement or (ii) the Old Operator set forth in the Operations Transfer Agreement, or if any representation or warranty of (y) the Seller under this Agreement or (z) the Old Operator under the Operations Transfer Agreement, shall have been materially breached or shall have been or become materially untrue;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)by the Buyer pursuant to <u>Sections 4.03</u>, <u>4.07</u>, <u>4.08</u> and <u>4.09</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)by the Buyer or the Seller, by delivery of written notice of such termination to the other Party, at any time after December 1, 2025, if the Closing has not occurred;

Upon any termination by the Buyer pursuant to <u>Sections 8.01(A)</u>, <u>(C)</u>, <u>(D)</u> and/or <u>(E)</u>, the Good Faith Escrow shall be returned to the Buyer. Further, upon any termination by the Buyer pursuant to <u>Section 8.01(C)</u>, the Seller shall also reimburse the Buyer and New Operator, as applicable for costs and expenses actually incurred by Buyer and New Operator in connection with this Agreement and the transactions associated herewith up to an aggregate of $150,000. Upon any termination by the Seller pursuant to <u>Section 8.01(B)</u>, the Escrow Agent shall deliver the Good Faith Escrow to the Seller as liquidated damages. The Parties agree that it would be extremely difficult or impossible to determine the Seller's actual damages and that the liquidated damages amount is a reasonable estimate thereof. Upon any termination by the Seller pursuant to <u>Section 8.01(E)</u>, provided Buyer is not then in default under this Agreement, the Good Faith Escrow shall be returned to the Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.02<u>Exclusive Pre-Closing Remedies and Rights</u>. In the event of a breach of this Agreement prior to the Closing: (a) if the breach is by a Seller, the Buyer's sole remedy before Closing is termination of this Agreement and the remedies set forth in <u>Section 8.01</u>, (b) if the breach is by the Buyer, the Seller shall be entitled to its termination rights pursuant to <u>Section 8.01</u>. The termination rights and remedies set forth in this Article VIII shall be the exclusive pre-closing remedies of the Parties.

**ARTICLE IX.** **<br>INDEMNIFICATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.01<u>Survival</u>. Except as set forth herein, all representations, warranties and covenants made in this Agreement shall survive the Closing for a period of eighteen (18) months. A Party must notify the other Party of any alleged breach of any such representation or warranty or obligation to comply with a covenant on or before the day preceding eighteen (18) months from the Closing Date, and no action or proceeding may be commenced against any Party for any breach of any such representation or warranty or failure to comply with a covenant after the eighteen (18) month period from the Closing Date; provided, however, that (i) the representations and warranties made in <u>Sections 2.01</u>, <u>2.02</u>, <u>2.03</u>, <u>2.04</u>, <u>2.11</u>, <u>2.17</u>, <u>3.01</u>, <u>3.02 and 3.03</u>; (ii) indemnification obligations relating to Damages (as defined in <u>Section 9.02</u>) arising out of or resulting from Fundamental Representations (as defined in the Operations Transfer Agreement) (the representations in (i) and (ii) above, collectively, the "<u>Fundamental Representations</u>") and (iii) indemnification obligations relating to Damages arising out of or resulting from fraud or intentional misrepresentation shall survive the Closing for three (3) years and provided further that indemnification obligations relating to Damages arising out of or resulting from Recapture Claims (as defined in the Operations Transfer Agreement) shall survive the full period of the applicable statute of limitations, and until all Claims asserted in connection therewith on or prior to the expiration of any such period have been finally resolved and satisfied in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.02<u>Indemnification by the Seller</u>. Subject to the terms herein, the Seller, shall indemnify, defend, and hold the Buyer and its respective officers, directors, employees, successors

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and assigns harmless from, against and with respect to any Claim, liability, obligation, loss, damage, assessment, judgment, cost or expense of any kind or character, including reasonable attorneys' fees (the "<u>Damages</u>") (whether absolute, accrued, contingent or otherwise), arising out of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)any breach of the Seller's representations and warranties during their applicable survival period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)any failure by the Seller to perform or observe, or to have performed <br>or observed, in full, any covenant, agreement or condition to be performed or observed by it under this Agreement after the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)the operation of the Real Property by Seller prior to Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.03<u>Indemnification by the Buyer</u>. The Buyer shall indemnify, defend, and hold the Seller and its officers, directors, employees, successors and assigns harmless from, against and with respect to any Damages (whether absolute, accrued, contingent or otherwise), arising out of or in any manner incident, relating or attributable to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)any breach of any of the Buyer's representations and warranties during their applicable survival period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)any failure by the Buyer to perform or observe, or to have performed or observed, in full, any covenant, agreement or condition to be performed or observed by it under this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)the operation of the Real Property by Buyer subsequent to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.04<u>Indemnity Claims</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)If any indemnity claim (an "<u>Indemnity Claim</u>") is asserted by a Party as to which such Party may be entitled to indemnification hereunder, such Party (an "<u>Indemnified Party</u>") shall notify (the "<u>Claims Notice</u>") the other Party (an "<u>Indemnifying Party</u>") required by the terms of this Agreement to indemnify the Indemnified Party within ten (10) Business Days; provided, however, the failure or delay by an Indemnified Party to give prompt notice of any Indemnity Claim (if given prior to the expiration of any applicable survival periods) shall not release, waive or otherwise affect an Indemnifying Party's obligations with respect to the Indemnity Claim, except to the extent that the Indemnifying Party can demonstrate actual material loss or prejudice as a result of such failure or delay.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)The Claims Notice shall describe the Indemnity Claim and the specific facts and circumstances in reasonable detail, shall include copies of any notices received by Indemnified Party relating to such Indemnity Claim, and shall indicate the amount, if known, or an estimate, if possible, of Damages that have been or may be incurred or suffered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)The Indemnifying Party shall defend and may compromise (subject to the limitations set forth below) any Claim by a third Party ("<u>Third Party Claim</u>"), at its own expense and by its own counsel, who shall be reasonably acceptable to the Indemnified Party. The

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Indemnified Party may participate, at its own expense, in the defense of any Claim assumed by the Indemnifying Party. Without the approval of the Indemnified Party, which approval shall not be unreasonably withheld or delayed, the Indemnifying Party shall not compromise a Claim defended by the Indemnifying Party which would require the Indemnified Party to perform or take any action or to refrain from performing or taking any action or to pay any additional Persons in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)Notwithstanding anything in this <u>Section 9.04</u> to the contrary, if an Indemnified Party determines in good faith that there is a reasonable probability that a proceeding may affect it or its affiliates adversely other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise, or settle such proceeding, but the Indemnifying Party will not be bound by any determination of a proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld or delayed).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)If, within twenty (20) Business Days of the Indemnifying Party's receipt of a Claim Notice involving a Third Party Claim, the Indemnifying Party has not notified the Indemnified Party that the Indemnifying Party will assume the defense, the Indemnified Party may assume control of the defense or compromise of such Indemnity Claim, and the costs and expenses of such defense, including costs of investigation and reasonable attorneys' fees, shall be added to the damages associated with the Indemnity Claim. The Indemnified Party shall have the right to compromise such Indemnity Claim without the consent of the Indemnifying Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F)The Party assuming the defense of any Indemnity Claim shall keep the other Party reasonably informed at all times of the progress and development of the Party's defense of and compromise efforts related to such Indemnity Claim and shall furnish the other Party with copies of all relevant pleadings, correspondence and other papers. In addition, the Parties shall cooperate with each other, and make available to each other and their representatives all available relevant records or other materials required by them for their use in defending, compromising or contesting any Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.05Indemnification Limitations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)Seller shall have no obligation to indemnify the Buyer Indemnified Parties, and no indemnification claims shall be brought against Seller until the aggregate amount of damages under this Agreement or the Operations Transfer Agreement exceeds One Hundred Thousand dollars ($100,000), with such damages calculated without regard to any materiality qualification herein (the "<u>Indemnification Basket</u>"), at which point Seller will be obligated to indemnify the Buyer Indemnified Parties from and against all damages from the first dollar.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)Seller shall have no obligation to indemnify Buyer Indemnified Parties, and no indemnification claims shall be brought against Seller under this Agreement or the Operations Transfer Agreement for damages in excess of One Million Sixty Thousand Dollars ($1,060,000) (the "<u>Indemnification Cap</u>"). For the avoidance of doubt, the aggregate indemnification liability of Seller, New Operator and Guarantor under this Agreement and the Operations Transfer Agreement may not exceed the Indemnification Cap. Notwithstanding the forgoing or anything in the Operations Transfer Agreement to the contrary, the Indemnification Cap and the

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Indemnification Basket shall not apply to any indemnification obligations of the Old Operator, Seller, or Guarantor relating to, arising out of, or resulting from the Fundamental Representations (as defined in this Agreement) or Recapture Claims.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)The Party to be indemnified may not assert a claim for indemnification based on a breach by the indemnifying Party of a representation or warranty or covenant if the Party to be indemnified had knowledge of such breach prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.06<u>Guarantee of the Seller's Indemnification Obligations</u>. As an inducement to the Buyer to enter into and consummate the transactions contemplated under this Agreement, the Guarantor, hereby, jointly, severally, absolutely, unconditionally, and irrevocably guarantees to the Buyer all indemnification obligations of the Seller under this Agreement provided that such guarantee shall be limited to $1,060,000 (the "<u>Guarantee Cap</u>" and collectively the "<u>Guaranteed Obligations</u>"). Notwithstanding the forgoing, the Guarantee Cap shall not apply to any indemnification obligations of the Guarantor, Seller or Old Operator relating to, arising out of or resulting from the Fundamental Representations and Recapture Claims. The Guarantor agrees that the performance of the Guaranteed Obligations by the Guarantor shall be a primary obligation. The Guaranteed Obligations shall not be subject to any counterclaim, set-off, abatement, deferment or defense based upon any claim that the Guarantor may have against Buyer, Seller or Old Operator. The Guarantor agrees that performance of the Guaranteed Obligations by the Guarantor shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by, any circumstance or condition (whether or not the Guarantor shall have any knowledge thereof), including, without limitation, (i) any voluntary or involuntary bankruptcy, assignment for the benefit of creditors, receivership, or similar events or proceedings with respect to the Seller or the Guarantor, as applicable, or (ii) any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing and whether foreseen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of Guarantor or which otherwise might limit recourse against the Seller or the Guarantor, to the fullest extent permitted by law. For so long as this guarantee remains in effect, Guarantor shall not transfer, lease, assign, sell or convey substantially all of his, her or its assets or cease operating his, her, or its business in the ordinary course without the prior written consent of Buyer unless Guarantor is replaced with another guarantor to Buyer and New Operator's reasonable satisfaction; provided, such replacement guarantor has a substantially similar net worth to Guarantor. Guarantor understands that Buyer is relying on this guarantee in entering into this Agreement.

**ARTICLE X.** **<br>MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.01<u>Seller's Knowledge</u>. Where any representation or warranty contained in this Agreement is expressly qualified by reference to the Seller's Knowledge or to the knowledge of the Seller, such knowledge shall be to the actual knowledge of Brent Morrison and and/or the knowledge Brent Morrison would have reasonably obtained in the performance of Brent Morrison's duties as an officer of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.02<u>Notices</u>. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving Party's address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii)

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sent by recognized overnight courier, (iii) made by electronic mail, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid.

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| | |
|:---|:---|
| &nbsp;&nbsp;If to the Buyer: | &nbsp;&nbsp;Coosa Valley SNF Realty LLC<br>1777 Ave. of the States, #204<br>Lakewood, NJ 08701<br>Phone: 845.558.5784<br>Email: kblassberger@emeraldhcg.com <br>|
| &nbsp;&nbsp;With a copy to: | &nbsp;&nbsp;Daniel Gottesman, Esq.<br>Ice Miller LLP<br>600 Superior Avenue East, 13<sup>th</sup> Floor<br>Cleveland, Ohio 44114<br>Daniel.Gottesman@icemiller.com<br>|
| &nbsp;&nbsp;If to the Seller:  | &nbsp;&nbsp;Regional Health Properties, Inc.<br>Attn: Brent Morrison<br>1050 Crown Pointe Parkway, Suite 720<br>Atlanta, GA 30338<br>Email: Brent.Morrison@regionalhealthproperties.com<br>|
| &nbsp;&nbsp;With a copy to: | &nbsp;&nbsp;David Gordon, Esq.<br>Polsinelli PC<br>1201 W. Peachtree Street, Suite 1100<br>Atlanta, GA 30309<br>Email: dgordon@polsinelli.com<br>|

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All notices, requests, consents and other communications hereunder shall be deemed to have been given: (i) if by hand, at the time of the delivery thereof to the receiving Party at the address of such Party set forth above; (ii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service; (iii) if made by electronic mail, at the time that delivery thereof has been acknowledged by electronic confirmation or otherwise; or (iv) if sent by registered or certified mail, on the third business day following the day such mailing is sent. The address of any Party herein may be changed at any time by written notice to the Parties. The attorneys for any Party hereto shall be entitled to provide any notice that a Party desires to provide or is required to provide hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.03<u>Entire Agreement</u>. This Agreement and the other Documents embody the entire agreement and understanding between the Parties hereto with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in the other Documents shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.04<u>Modifications and Amendments</u>. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by all Parties hereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.05<u>Assignment/Binding Effect</u>. Neither this Agreement, nor any right hereunder, may be assigned by any of the Parties hereto without the prior written consent of the other Parties; provided, however, that the Buyer may (a) assign its right to receive the Transferred Assets to any one or more of its subsidiaries and (b) assign a collateral interest in this Agreement to one or more of its lenders, in each case without the consent of the Seller. This Agreement shall be binding upon, and inure to the benefit of, the Parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement shall be binding upon, and inure to the benefit of, the Parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.06<u>Parties in Interest</u>. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement. Nothing in this Agreement shall be construed to create any rights or obligations except among the Parties hereto, and no person or entity shall be regarded as a third-party beneficiary of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.07<u>Governing Law</u>. This Agreement and the rights and obligations of the Parties hereunder shall be construed in accordance with and governed by the internal laws of the State of Alabama without giving effect to the conflict of law principles thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.08<u>Severability</u>. In the event that any court of competent jurisdiction shall finally determine that any provision, or any portion thereof, contained in this Agreement shall be void or unenforceable in any respect, then such provision shall be deemed limited to the extent that such arbitral tribunal determines it enforceable, and as so limited shall remain in full force and effect. In the event that such arbitral tribunal shall determine any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.09<u>Interpretation</u>. The Parties hereto acknowledge and agree that: (i) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement, and (ii) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.10<u>Headings and Captions</u>. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify, or affect, or be considered in construing or interpreting the meaning or construction of any of the terms or provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.11<u>Expenses</u>. Each Party shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such Party) incurred in connection with this Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12<u>Gender</u>. All pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, neuter, singular, or plural as the identity of the person or entity or the context may require.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.13<u>Counterparts</u>. This Agreement may be executed in one or more counterparts, and by different Parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any counterparts or signatures may be delivered by facsimile or electronic mail (in .pdf format), and any counterparts or signatures so delivered shall be deemed an original counterpart or signature for all purposes hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.14<u>Jurisdiction and Venue</u>. IN THE EVENT ANY DISPUTE BETWEEN THE PARTIES HERETO RESULTS IN LITIGATION, ALL SUCH ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREIN SHALL BE LITIGATED IN COURTS HAVING SITUS IN THE STATE WHERE THE FACILITY IS LOCATED OR THE UNITED STATES DISTRICT COURT FOR SUCH STATE. EACH OF THE PARTIES HERETO HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST SUCH PARTY IN ACCORDANCE WITH THIS SECTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.15<u>Waiver of Jury Trial</u>. EACH OF THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND ANY RIGHTS HEREUNDER, AND AGREES THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.16<u>Confidentiality</u>. After the Closing, the Seller hereby agrees to hold in strict confidence all business and other information relating to the Transferred Assets and the Business and, except as otherwise required by law or as to information which becomes publicly available, not to disclose or otherwise reveal any such confidential information to any other person or entity without in each instance the prior written consent of the Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.17<u>Time of Essence</u>. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.18<u>Business Day</u>. Business Day. Any reference in this Agreement to a "business day" or "Business Day" shall mean every day other than Saturdays, Sundays, all days observed by the federal or Alabama State government as legal holidays and all days on which commercial banks in Alabama are required by law to be closed, and the following Jewish Holidays, with the dates of said holidays for 2025 set forth in parentheticals: Purim (March 14), Passover (April 13 - April 20), Shavuot (June 2 – June 3), "Nine Days" (July 25 – August 3), Rosh Hashanah (September 23 – September 24), Yom Kippur (October 2), and Sukkot (October 7 – October 13), Shemini Atzeres (October 14) and Simchas Torah (October 15). Unless otherwise specified, in computing any period of time described herein, the day of the act or event on which the designated period of time begins to run shall not be included and the last day of the period so computed shall be included. Any reference in this Agreement to a "day" or a number of "days" (other than references to a "business day(s)" or "Business Day(s)") shall mean a calendar day or calendar days, provided that

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if the calendar day or last calendar day to perform any act or give any notice or approval shall fall on a calendar day that is not a Business Day, such act or notice may be timely performed or given on the next succeeding Business Day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.19<u>Schedules and Exhibits</u>. All exhibits, appendices, schedules and documents referred to in or attached to this Agreement are integral parts of this Agreement as if fully set forth herein and all statements appearing therein shall be deemed to be representations. All items disclosed hereunder shall be deemed disclosed only in connection with the specific representation to that they are explicitly referenced. The parties shall provide the initial draft of the schedules contemplated in this Agreement within fourteen (14) days of the Effective Date and such schedules shall be deemed to modify the representations and warranties contained herein as of the Effective Date.

[signature page follows]

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IN WITNESS WHEREOF, the Buyer and the Seller have each caused this Agreement to be executed by its duly authorized officer all as of the day and year first above written.

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| |
|:---|
| &nbsp;&nbsp;THE BUYER:<br> Coosa Valley SNF Realty LLC, an Alabama limited liability company<br>By:_____________________________________<br>Name: Yisroel Herzka<br>Title: Authorized Representative<br>|
| &nbsp;&nbsp;THE SELLER:<br>Coosa Nursing ADK LLC, a Georgia limited liability company<br>By:_____________________________________<br>Name: Brent Morrison<br>Title: Authorized Signatory<br>|

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GUARANTOR (solely with respect to <u>Section 9.05</u>):

Regional Health Properties, Inc., a Georgia corporation

By:_____________________________________

Name: Brent Morrison

Title: President & CEO

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**<u>EXHIBIT A<br>DESCRIPTION OF THE LAND</u>**

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**<u>EXHIBIT B<br>FORM OF WARRANTY DEED</u>**<sup>1</sup>

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<sup>1</sup> NTD: Seller's counsel to propose form of deed

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**<u>EXHIBIT C<br>FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT</u>**

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT (this "<u>Assignment</u>") is entered into as of this [____] day of [____], 2025 (the "<u>Effective Date</u>"), by and between Coosa Nursing ADK LLC, a Georgia limited liability company ("Assignor"), in favor of [____], an [____] limited liability company ("<u>Assignee</u>").

WHEREAS, Assignor, as seller, and Assignee, as purchaser, have entered into that certain [____], dated as of [____], 2025 (as amended, supplemented or otherwise modified, the "<u>Purchase Agreement</u>"); and

WHEREAS, under the Purchase Agreement, Assignor has agreed to assign to Assignee, and Assignee has agreed to accept and assume, any and all of Assignor's respective right, title and interest in and to the intangible property included in the Transferred Assets (the "<u>Intangible Property</u>").

NOW, THEREFORE, effective as of the Effective Date, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows:

Assignor hereby assigns, sells, transfers, sets over and delivers unto Assignee as of the Effective Date, its respective right, title and interest in and to the Intangible Property.

Assignor hereby covenants that Assignor will, at no cost or liability to Assignor, and at any time and from time to time, upon written request therefore, execute and deliver to Assignee or Assignee's successors, nominees and assigns any new or confirmatory instruments which Assignee or Assignee's successors, nominees and assigns may reasonably request in order to fully confirm and vest in Assignee or Assignee's successors, nominees and assigns any and all of Assignor's respective right, title and interest in and to the Intangible Property free and clear of all liens and encumbrances except as otherwise provided in the Purchase Agreement including but not limited to any Permitted Exceptions.

Assignee hereby assumes the performance of all of the terms, covenants and conditions of the Intangible Property on the Assignor's part to be performed thereunder, arising or accruing from and after the Effective Date. Assignor agrees to remain liable for such liabilities and obligations arising or accruing prior to the Effective Date.

This Assignment shall be binding upon, and inure to the benefit of, the Assignor, the Assignee and their respective successors and assigns.

This Assignment shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State of Alabama, without regard to the conflicts of laws principles thereof.

This Assignment (including the recitals to this Assignment which are incorporated herein) and the Purchase Agreement set forth the entire understanding and agreement of Assignor and Assignee. No amendment or modification to any terms of this Assignment, waiver of

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the obligations of Assignor or Assignee hereunder, or termination of this Assignment, shall be valid unless in writing and signed by Assignor and Assignee.

This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, together, shall constitute one and the same instrument.

[Signature page follows]

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IN WITNESS WHEREOF, the undersigned have caused this Assignment to be executed as of the day and year first written above.

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| |
|:---|
| &nbsp;&nbsp;ASSIGNOR:<br>Coosa Nursing ADK LLC, a Georgia limited liability company<br>By:_____________________________________<br>Name:___________________________________<br>Title:____________________________________<br>|
| &nbsp;&nbsp;ASSIGNEE:<br>[___________], a(n) [___________]<br>By:_____________________________________<br>Name:___________________________________<br>Title:____________________________________<br>|

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**<u>EXHIBIT D <br>BILL OF SALE</u>**

THIS BILL OF SALE (this "Bill of Sale") is made effective as of _________________, 2025, by Coosa Nursing ADK LLC, a Georgia limited liability company (the "Seller"), and ____________________________ (the "Buyer").

**RECITALS:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.The Seller and the Buyer have agreed to the sale by the Seller to the Buyer of certain assets on the terms and subject to the conditions set forth in that certain Asset Purchase Agreement dated as of _______________, 2025 (the "<u>Asset Purchase Agreement</u>"), by and among [_______________], the Seller and the Buyer. Each capitalized term used herein shall have the meaning ascribed to such term in the Asset Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.The Seller wishes to execute and deliver this Bill of Sale for the purposes of transferring to and vesting in the Buyer all right, title, interest and benefit in and to the Other Property (as defined in the Asset Purchase Agreement) (the "<u>Assets</u>").

NOW THEREFORE, in consideration of Ten ($10.00) Dollars and other good and valuable consideration, the receipt of which is hereby acknowledged, and subject to the terms of the Asset Purchase Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Assignment</u>. The Seller does hereby convey, transfer, assign and deliver to the Buyer, all of the Seller's right, title, and interest in and to the Assets, free and clear of all liens, encumbrances, covenants, conditions, and restrictions except as otherwise provided in the Purchase Agreement including but not limited to any Permitted Exceptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Further Assurances</u>. The Seller hereby covenants and agrees to sign, seal, execute and deliver, or cause to be signed, sealed, executed and delivered and to do or make, or cause to be done or made, upon reasonable request by the Buyer, any and all agreements, instruments, papers, deeds, acts or things supplemental, confirmatory or otherwise, as may be reasonably required by the Buyer for the purpose of or in connection with acquiring, or more effectively vesting in the Buyer, or evidencing the vesting in the Buyer of, the Assets transferred, assigned or delivered hereby or hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Effective Date and Conflicts</u>. This instrument shall be effective on the Closing Date. In the event of any conflict between this Bill of Sale and the Asset Purchase Agreement, the Asset Purchase Agreement shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Governing Law</u>. This Bill of Sale shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of Alabama, without giving effect to the principles of conflicts of laws thereof.

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IN WITNESS WHEREOF, the Seller caused this Bill of Sale to be executed in its name by its officer thereunto duly authorized, as of the date written above.

Coosa Nursing ADK LLC, a Georgia limited liability company By:_____________________________________Name:___________________________________Title:____________________________________

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**<u>EXHIBIT E<br>ESCROW AGREEMENT</u>**

[form to be obtained from title company]

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATIONS** 

I, Brent Morrison, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regional Health Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| August 14, 2025 | By | /s/ Brent Morrison |
|  |  | *Chief Executive Officer and President* |

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## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATIONS** 

I, Paul O'Sullivan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regional Health Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| August 14, 2025 | By | /s/ Paul O' Sullivan |
|  |  | *Senior Vice President (Principal Financial Officer)* |

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO** 

**18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO**

**BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Regional Health Properties, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brent Morrison, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| | | |
|:---|:---|:---|
| August 14, 2025 | By: | /s/ Brent Morrison |
|  |  | Brent Morrison<br>*Chief Executive Officer and President* |

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## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO** 

**18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO**

**BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Regional Health Properties, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul O'Sullivan, Asset Manager of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Chi

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| | | |
|:---|:---|:---|
| August 14, 2025 | By: | /s/ Paul O'Sullivan |
|  |  | Paul O'Sullivan<br>*Senior Vice President (Principal Financial Officer)* |

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