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, 2021March 31, 2022 
OR
☐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: 1-13445
csu-20210630_g1.jpg
CapitalSonida Senior Living, CorporationInc.
(Exact Name of Registrant as Specified in its Charter)
Delaware75-2678809
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
14160 Dallas Parkway,16301 Quorum Drive, Suite 300, Dallas,160A, Addison, TX7525475001
(Address of Principal Executive Offices)principal executive offices)(Zip Code)code)
(972) 770-5600
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)
NONE
(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 classTrading
Symbol(s)		Name of exchange on which registered
Common Stock, $0.01 par value per shareCSUSNDANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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   x     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   x¨     No  ¨x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions 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 filerxSmaller reporting companyx
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐
No  x
As of August 10, 2021,April 30, 2022, the Registrant had 2,190,599 outstanding6,755,938 shares of its Common Stock, $0.01 par value, per share.common stock outstanding.



CAPITAL SENIOR LIVING CORPORATIONSonida Senior Living, Inc.
INDEXForm 10-Q Table of Contents
For the Period Ended March 31, 2022
Page
Number

Item 1. Financial Statements.

Condensed Consolidated Balance Sheets — June 30, 2021March 31, 2022 and December 31, 2020
3
Consolidated Statements of Operations and Comprehensive Income (Loss) — Three and Six Months Ended June 30, 2021 and 2020(Unaudited)
4
Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2022 and 2021 (Unaudited)
5
Condensed Consolidated Statements of Shareholders’ Equity (Deficit)— Three and Six Months Ended June 30, 2021March 31, 2021 and 20202022 (Unaudited)
56
Condensed Consolidated Statements of Cash Flows — SixThree Months Ended June 30,March 31, 2022 and 2021 and 2020(Unaudited)
67
Notes to UnauditedCondensed Consolidated Financial Statements (Unaudited)
78
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2317
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3720
Item 4. Controls and Procedures
3720
3722
Item 1. Legal Proceedings
3722
Item 1A. Risk Factors
3722
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
3922
Item 3. Defaults Upon Senior Securities
3922
Item 4. Mine Safety Disclosures
3922
Item 5. Other Information
3922
Item 6. Exhibits
4123
4224


2


Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this Quarterly Report on Form 10-Q of Sonida Senior Living, Inc. (together with its consolidated subsidiaries, “Sonida,” “we,” “our,” “us,” or the “Company”) constitutes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, without limitation, those relating to the Company’s future business prospects and strategies, financial results, working capital, liquidity, capital needs and expenditures, interest costs, insurance availability and contingent liabilities, are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “would,” “intend,” “could,” “believe,” “expect,” “anticipate,” “project,” “plans,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology.

Forward-looking statements are subject to certain risks and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, among others, the risks, uncertainties and factors set forth under “Item. 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2022, and also include the following:

•the impact of COVID-19, including the actions taken to prevent or contain the spread of COVID-19, the transmission of its highly contagious variants and sub-lineages and the development and availability of vaccinations and other related treatments, or another epidemic, pandemic or other health crisis;
•the Company’s ability to generate sufficient cash flows from operations, additional proceeds from debt financings or refinancings, and proceeds from the sale of assets to satisfy its short and long-term debt obligations and to fund the Company’s capital improvement projects to expand, redevelop, and/or reposition its senior living communities;
•increases in market interest rates that increase the cost of our debt obligations;
•increased competition for, or a shortage of, skilled workers, including due to the COVID-19 pandemic or general labor market conditions, along with wage pressures resulting from such increased competition, low unemployment levels, use of contract labor, minimum wage increases and/or changes in overtime laws;
•the Company’s ability to obtain additional capital on terms acceptable to it;
•the Company’s ability to extend or refinance its existing debt as such debt matures;
•the Company’s compliance with its debt agreements, including certain financial covenants and the terms and conditions of its recent forbearance agreements, and the risk of cross-default in the event such non-compliance occurs;
•the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all;
• the risk of oversupply and increased competition in the markets which the Company operates;
•the Company’s ability to improve and maintain controls over financial reporting and remediate the identified material weakness discussed in Item 4 of this Quarterly Report on Form 10-Q;
•the departure of the Company’s key officers and personnel;
•the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes;
•risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; and
•changes in accounting principles and interpretations.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or outcomes that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. Except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
3

Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.Financial Statements
CAPITAL SENIOR LIVING CORPORATIONSonida Senior Living, Inc.
CONSOLIDATED BALANCE SHEETSCondensed Consolidated Balance Sheets (Unaudited)
(in thousands)
June 30,
2021		December 31,
2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$14,556 $17,885 
Restricted cash4,982 4,982 
Accounts receivable, net3,970 5,820 
Federal and state income taxes receivable0 76 
Property tax and insurance deposits4,550 7,637 
Prepaid expenses and other5,244 7,028 
Total current assets33,302 43,428 
Property and equipment, net642,003 655,731 
Operating lease right-of-use assets, net219 536 
Other assets, net3,351 3,138 
Total assets$678,875 $702,833 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$17,922 $14,967 
Accrued expenses43,172 48,515 
Current portion of notes payable, net of deferred loan costs232,060 304,164 
Current portion of deferred income3,964 3,984 
Current portion of lease liabilities197 421 
Federal and state income taxes payable187 249 
Customer deposits754 822 
Total current liabilities298,256 373,122 
Lease liabilities, net of current portion219 533 
Other long-term liabilities3,714 3,714 
Notes payable, net of deferred loan costs and current portion567,346 604,729 
Commitments and contingencies00
Shareholders’ deficit:
Preferred stock, $0.01 par value:
Authorized shares – 15,000; 0 shares issued or outstanding0 0 
Common stock, $0.01 par value:
Authorized shares – 4,333; issued and outstanding shares – 2,194 and
   2,084 in 2021 and 2020, respectively
22 21 
Additional paid-in capital189,660 188,978 
Retained deficit(380,342)(468,264)
Total shareholders’ deficit(190,660)(279,265)
Total liabilities and shareholders’ deficit$678,875 $702,833 
See accompanying notes to unaudited consolidated financial statements.
3

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
Three Months Ended
June 30,		Six Months Ended June 30,
2021202020212020
Revenues:
Resident revenue$46,649 $99,442 $91,851 $205,058 
Management fees763 159 1,949 215 
Community reimbursement revenue10,130 1,876 25,390 2,333 
Total revenues57,542 101,477 119,190 207,606 
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)37,568 71,307 74,326 146,709 
General and administrative expenses8,839 6,473 16,026 12,908 
Facility lease expense0 6,520 0 17,308 
Stock-based compensation expense517 478 683 1,074 
Depreciation and amortization expense9,025 16,321 18,308 32,036 
Long-lived asset impairment0 0 0 35,954 
Community reimbursement expense10,130 1,876 25,390 2,333 
Total expenses66,079 102,975 134,733 248,322 
Other income (expense):
Interest income1 15 5 69 
Interest expense(9,499)(11,233)(18,873)(22,903)
Gain on facility lease modification and termination, net0 0 0 11,240 
Gain on extinguishment of debt67,213 0 114,212 0 
Loss on disposition of assets, net0 0 (421)(7,356)
Other income (expense)(2)(8)8,703 (7)
Income (loss) from continuing operations before provision for income taxes49,176 (12,724)88,083 (59,673)
Provision for income taxes(98)(29)(161)(261)
Net income (loss)$49,078 $(12,753)$87,922 $(59,934)
Per share data:
Basic net income (loss) per share (1)$23.81 $(6.25)$42.68 $(29.47)
Diluted net income (loss) per share (1)$23.49 $(6.25)$42.33 $(29.47)
Weighted average shares outstanding — basic (1)2,061 2,039 2,060 2,033 
Weighted average shares outstanding — diluted (1)2,089 2,039 2,077 2,033 
Comprehensive income (loss)$49,078 $(12,753)$87,922 $(59,934)
(1) Prior period results and share amounts have been adjusted to reflect the fifteen-for-one Reverse Stock Split. amounts)See Note 8 - Equity.
March 31,
2022		December 31,
2021
 
Assets
Current assets:
Cash and cash equivalents$48,634 $78,691 
Restricted cash3,982 4,882 
Accounts receivable, net4,502 3,983 
Property tax and insurance deposits3,946 6,666 
Prepaid expenses and other7,665 9,328 
Total current assets68,729 103,550 
Property and equipment, net627,844 621,199 
Other assets, net6,808 3,803 
Total assets$703,381 $728,552 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expense$48,528 $46,194 
Current portion of notes payable, net of deferred financing costs43,851 69,769 
Deferred income3,527 3,162 
Federal and state income taxes payable850 599 
Other current liabilities778 758 
Total current liabilities97,534 120,482 
Notes payable, net of deferred financing costs and current portion627,170 613,342 
Other liabilities220 288 
Total liabilities724,924 734,112 
Commitments and contingencies00
Redeemable preferred stock:
Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding41,250 41,250 
Shareholders’ deficit:
Preferred stock $0.01 par value per share; 15,000 shares authorized; none issued or outstanding— — 
Common stock $0.01 par value per share; 15,000 shares authorized; 6,665 and 6,634 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively67 66 
Additional paid-in capital296,475 295,781 
Retained deficit(359,335)(342,657)
Total shareholders’ deficit(62,793)(46,810)
Total liabilities, redeemable preferred stock and shareholders’ deficit$703,381 $728,552 
See accompanying notesNotes to unaudited consolidated financial statements.Condensed Consolidated Financial Statements.
4

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)Sonida Senior Living, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(unaudited, in thousands)thousands, except per share data)
Common StockAdditional
Paid-In
Capital		Retained
Deficit		Treasury
Stock
Shares (1)AmountTotal
Balance at December 31, 20192,096 $319 $190,386 $(172,896)$(3,430)$14,379 
Restricted stock awards (cancellations), net(3)— — — — 0 
Stock-based compensation— — 596 — — 596 
Net loss— — — (47,181)— (47,181)
Balance at March 31, 20202,093 319 190,982 (220,077)(3,430)(32,206)
Restricted stock awards (cancellations), net3 — — — — — 
Stock-based compensation— — 478 — — 478 
Net loss— — — (12,753)— (12,753)
Balance at June 30, 20202,096 319 191,460 (232,830)(3,430)(44,481)
Balance at December 31, 20202,084 21 188,978 (468,264)0 (279,265)
Restricted stock awards (cancellations), net98 1 (1)— — 0 
Stock-based compensation— — 166 — — 166 
Net income— — — 38,844 — 38,844 
Balance at March 31, 20212,182 $22 $189,143 $(429,420)$0 $(240,255)
Restricted stock awards (cancellations), net12 — — — — — 
Stock-based compensation— — 517 — — 517 
Net income— — — 49,078 — 49,078 
Balance at June 30, 20212,194 $22 $189,660 $(380,342)$0 $(190,660)
(1) Prior period results and share amounts have been adjusted to reflect the fifteen-for-one Reverse Stock Split. See Note 8 - Equity.
See accompanying notes to unaudited consolidated financial statements.
Three Months Ended
March 31,
20222021
Revenues:
Resident revenue$50,834 $45,202 
Management fees628 1,186 
Community reimbursement revenue7,022 15,260 
Total revenues58,484 61,648 
Expenses:
Operating expenses41,929 36,758 
General and administrative expenses6,445 7,187 
Stock-based compensation expense1,828 166 
Depreciation and amortization expense9,578 9,283 
Community reimbursement expense7,022 15,260 
Total expenses66,802 68,654 
Other income (expense):
Interest income1 4 
Interest expense(7,603)(9,374)
Gain (loss) on extinguishment of debt(641)46,999 
Loss on disposition of assets, net— (421)
Other income137 8,705 
Income (loss) before provision for income taxes(16,424)38,907 
Provision for income taxes(254)(63)
Net income (loss)(16,678)38,844 
Dividends on Series A convertible preferred stock(1,133)— 
Net income (loss) attributable to common stockholders$(17,811)$38,844 
Weighted average common shares outstanding — basic6,341 2,058 
Weighted average common shares outstanding — diluted6,341 2,066 
Basic net income (loss) per common share$(2.81)$18.87 
Diluted net income (loss) per common share$(2.81)$18.80 

See Notes to Condensed Consolidated Financial Statements.
5

CAPITAL SENIOR LIVING CORPORATIONSonida Senior Living, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWSCondensed Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited)
(unaudited, in thousands)
 Six Months Ended June 30,
 20212020
Operating Activities  
Net income (loss)$87,922 $(59,934)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization18,308 32,036 
Amortization of deferred financing charges742 931 
Deferred income(161)(51)
Operating lease expense adjustment(282)(13,852)
Loss on disposition of assets, net421 7,356 
Gain on facility lease modification and termination, net0 (11,240)
Long-lived asset impairment0 35,954 
Gain on extinguishment of debt(114,212)0 
Provision for bad debts524 1,409 
Stock-based compensation expense683 1,074 
Changes in operating assets and liabilities:
Accounts receivable1,325 (1,576)
Property tax and insurance deposits3,087 2,671 
Prepaid expenses and other3,240 (16)
Other assets(213)(1,715)
Accounts payable5,171 (193)
Accrued expenses322 6,351 
Other liabilities0 0 
Federal and state income taxes receivable/payable14 227 
Deferred resident revenue141 (55)
Customer deposits(68)(121)
Net cash provided by (used in) operating activities6,964 (744)
Investing Activities
Capital expenditures(4,753)(8,081)
Proceeds from disposition of assets0 6,396 
Net cash used in investing activities(4,753)(1,685)
Financing Activities
Proceeds from notes payable1,148 2,172 
Repayments of notes payable(6,671)(7,639)
Cash payments for financing lease and financing obligations(17)(311)
Deferred financing charges paid0 (14)
Net cash used in financing activities(5,540)(5,792)
Decrease in cash and cash equivalents(3,329)(8,221)
Cash and cash equivalents and restricted cash at beginning of period22,867 37,063 
Cash and cash equivalents and restricted cash at end of period$19,538 $28,842 
Supplemental Disclosures
Cash paid during the period for:
Interest$15,173 $16,932 
Lease modification and termination$0 $6,791 
Income taxes$297 $11 
Common StockAdditional
Paid-In
Capital		Retained
Deficit
SharesAmountTotal
Balance at December 31, 20202,084 $21 $188,978 $(468,264)$(279,265)
Restricted stock awards (cancellations), net98 1 (1)— — 
Stock-based compensation— — 166 — 166 
Net income— — — 38,844 38,844 
Balance at March 31, 20212,182 $22 $189,143 $(429,420)$(240,255)
Balance at December 31, 20216,634 $66 $295,781 $(342,657)$(46,810)
Series A convertible preferred stock dividends— — (1,133)— (1,133)
Stock-based compensation31 1 1,827 — 1,828 
Net loss— — — (16,678)(16,678)
Balance at March 31, 20226,665 $67 $296,475 $(359,335)$(62,793)
See accompanying notesNotes to unaudited consolidated financial statements.Condensed Consolidated Financial Statements.
























6

CAPITAL SENIOR LIVING CORPORATIONSonida Senior Living, Inc.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSCondensed Consolidated Statements of Cash Flows (Unaudited)
June 30, 2021(in thousands)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities:  
Net income (loss)$(16,678)$38,844 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization9,578 9,283 
Amortization of deferred financing charges244 358 
Deferred income365 (244)
Operating lease expense adjustment(55)(264)
Loss on disposition of assets, net— 421 
(Gain) loss on extinguishment of debt641 (46,999)
Provision for bad debts106 365 
Stock-based compensation expense1,828 166 
Changes in operating assets and liabilities:
Accounts receivable(625)1,528 
Property tax and insurance deposits2,720 3,187 
Prepaid expenses and other1,633 1,876 
Other assets(1,333)(332)
Accounts payable and accrued expenses1,700 (5,235)
Federal and state income taxes receivable/payable251 210 
Deferred resident revenue— 143 
Other current liabilities26 (43)
Net cash provided by operating activities401 3,264 
Cash flows from investing activities:
Acquisition of new communities(12,342)— 
Capital expenditures(5,582)(2,108)
Net cash used in investing activities(17,924)(2,108)
Cash flows from financing activities:
Proceeds from notes payable80,000 1,148 
Repayments of notes payable(90,579)(3,406)
Cash payments for financing lease and financing obligations— (17)
Dividends paid to Series A preferred stockholders(718)— 
Deferred financing costs paid(2,137)— 
Net cash used in financing activities(13,434)(2,275)
Decrease in cash and cash equivalents and restricted cash(30,957)(1,119)
Cash, cash equivalents and restricted cash at beginning of period83,573 22,867 
Cash, cash equivalents and restricted cash at end of period$52,616 $21,748 
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest$7,076 $7,740 
Income taxes$3 $3 
Non-cash investing and financing activities
Dividends payable to Series A preferred stockholders$1,133 $— 
See Notes to Condensed Consolidated Financial Statements.
7

Sonida Senior Living, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATIONBasis of Presentation
Organization and Business
Capital
Sonida Senior Living, Corporation,Inc., a Delaware corporation, (together with its subsidiaries, the “Company”), is one of the leading owner-operators of senior housing communities in the United States in terms of resident capacity. As used herein, the “Company,” “we,” “us,” or “our” refers to Sonida Senior Living, Inc. and its subsidiaries). The Company owns, operates, develops and manages senior housing communities throughout the United States.States. As of June 30, 2021,March 31, 2022, the Company operated 8476 senior housing communities in 1918 states with an aggregate capacity of approximately 10,000approximately 9,500 residents, including 6062 senior housing communities that the Company owned 9 properties that were in the process of transitioning legal ownership to Fannie Mae, and 1514 communities that the Company managed on behalf of third parties. The accompanyingaccompanying condensed consolidated financial statements include the financial statements of CapitalSonida Senior Living, CorporationInc. and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Interim Unaudited Financial Information

The accompanying Consolidated Balance Sheet, as of December 31, 2020, has been derived from auditedcondensed consolidated financial statements of the Company for the year ended December 31, 2020, and the accompanying unaudited consolidated financial statements, as of and for the three and six month periods ended June 30, 2021 and 2020, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States have not been included pursuant to those rulesof America (“GAAP”) and regulations. For further information, refer toshould be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020,2021. Certain information and footnote disclosures normally included in the Company’s Annualfinancial statements prepared in accordance with GAAP have been omitted from this Quarterly Report on Form 10-K filed with10-Q pursuant to the rules and regulations of the Securities and Exchange Commission on March 31, 2021.  
(“SEC”). The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of the Company,management, the accompanying unaudited condensed consolidated financial statements containinclude all adjustments, including normal recurring items, necessary to present fairly the Company’sour condensed consolidated financial position as of June 30,March 31, 2022 and December 31, 2021, and our condensed consolidated results of operations and cash flows for the three and six month periods ended June 30, 2021March 31, 2022 and 2020. The results of operations for the three and six month periods ended June 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021.

Reclassification
2. COVID-19 PANDEMIC
Certain amounts previously reflected in the prior year condensed consolidated balance sheet have been reclassified to conform to our March 31, 2022 presentation. The condensed consolidated balance sheet as of December 31, 2021 reflects reclassifying “operating lease right-of-use assets, net” to “other assets, net.” “Accounts payable” and “accrued liabilities” have been combined into one line. “Current portion of lease liabilities” and “customer deposits” were combined into “other current liabilities.” “Lease liabilities, net of current portion” has been reclassified as “other liabilities.” These reclassifications had no effect on the previously reported total current assets, total assets, current liabilities or total liabilities.

Use of Estimates

The United States broadly continuespreparation of financial statements in conformity with GAAP requires management to experiencemake estimates and assumptions that affect the pandemic caused by COVID-19, which significantly disrupted the nation’s economy, the senior living industry,reported amounts and the Company’s business.
In an effort to protect its residents and employees and slow the spread of COVID-19 and in response to quarantines, shelter-in-place orders and other limitations imposed by federal, state and local governments, the Company had previously restricted or limited access to its communities, including limitations on in-person prospective resident tours and, in certain cases, new resident admissions. As a result, the COVID-19 pandemic caused a declinedisclosures in the occupancy levels at the Company’s communities, which has negatively impacted the Company’s revenues and operating results, which depend significantly onfinancial statements. These estimates include such occupancy levels.  
In addition, the outbreak of COVID-19 has required the Company to incur significant additional operating costs and expenses in order to implement enhanced infection control protocols and otherwise care for its residents, including increased costs and expenses relating to supplies and personal protective equipment, testing of the Company’s residents and employees, labor and specialized disinfecting and cleaning services, which has increased the costs of caring for the residents and resulted in reduced occupancy at such communities. During the three and six months ended June 30, 2021 the Company incurred $0.2 million and $1.3 million, respectively, in costsitems related to the COVID-19 pandemicaccounting for: income taxes, including assessments of probabilities of realization of income tax benefits; impairment of long-lived assets, including applicable cash flow projections, holding periods and during the three and six months ended June 30, 2020 the Company incurred $2.9 millionfair value evaluations; and $3.2 million, respectively, in costs related to the COVID-19 pandemic.
In November 2020depreciation and January 2021, the Company accepted $8.1 million and $8.7 million, respectively,amortization including determination of cash for grantsestimated useful lives. Actual results could differ from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phase 2 and 3 General Distribution, which was expanded by the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act") to provide grants or other funding mechanisms to eligible healthcare providers for healthcare related expenses or lost revenues attributable to COVID-19. The $8.7 million Phase 3 Provider Relief Funds were recorded as other income in the six months ended June 30, 2021. The CARES Act Phase 2 and Phase 3 funds are grants that do not have to be repaid, provided the Company satisfies the terms and conditions of the CARES Act. In addition, the Company had received approximately $1.9 million in relief from state agencies in the year ended December 31, 2020.
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The Company has elected to utilize the CARES Act payroll tax deferral program to delay payment of a portion of its payroll taxes estimated to be incurred from April 2020 through December 2020. At June 30, 2021, $3.7 million of deferred amounts is included in accrued expenses, and the remaining $3.7 million is included in other long-term liabilities in the Company’s Consolidated Balance Sheets.those estimates.
3. GOING CONCERN UNCERTAINTY
2. Significant Accounting Policies and Recently Issued Accounting Standards Codification (“ASC”) 205-40, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” requires an evaluation of whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. Initially, this evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt exists, management evaluates the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
In complying with the requirements under ASC 205-40 to complete an evaluation without considering mitigating factors, the Company considered several conditions or events including (1) uncertainty around the continued impact of the COVID-19 pandemic on the Company’s operations and financial results, (2) $121.3 million of debt maturing in the next 12 months, which includes $72.0 million due in December 2021, $37.0 million due in the second quarter of fiscal 2022 and $12.3 million of debt service payments, (3) the Company's working capital deficiency and (4) noncompliance with certain financial covenants of its loan agreements with Fifth Third Bank covering 2 properties at June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020 and noncompliance with certain financial covenants of its loan agreements with BBVA, USA ("BBVA") covering 3 properties at June 30, 2021 and December 31, 2020. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern for the 12-month period following the date that the interim June 30, 2021 financial statements are issued.
The Company has implemented plans as discussed below, which includes strategic and cash-preservation initiatives designed to provide the Company with adequate liquidity to meet its obligations for at least the twelve-month period following the date its interim June 30, 2021 financial statements are issued. The Company’s primary sources of near- and medium-term liquidity are expected to be cash flows from operations, the private placement of convertible preferred stock and common stock rights offering discussed below and debt refinancings or extensions, to the extent available on acceptable terms.
Strategic and Cash Preservation Initiatives
The Company has taken or intends to take the following actions, among others, to improve its liquidity position and to address uncertainty about its ability to operate as a going concern:
•In August 2021, subsequent to quarter end, the Company executed a one year extension of the Company's $40.5 million loan with BBVA covering 3 of the Company's properties, with an option to extend an additional six months. This loan agreement extension also waived existing non-compliance with certain financial ratios and eliminated these financial ratios going forward. The extension requires a principal payment of $1.0 million in December 2021 and quarterly principal payments of $0.5 million beginning in March 2022 unless a certain financial ratio is attained. See "Note 13- Subsequent Events."
•The Company is in active discussions with Fifth Third Bank to resolve its noncompliance with financial covenants at June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020 for debt totaling $31.5 million at June 30, 2021, included in current portion of notes payable, net of deferred loan costs on the Consolidated Balance Sheets. As a result of these defaults, in May 2021, Fifth Third Bank issued a notice of default letter and the Fifth Third bridge loan is callable. In the event that this loan is accelerated there is 25% recourse to Capital Senior Living Corporation.
•In July 2020, the Company initiated a process that is intended to transfer the operations and ownership of 18 communities that were either underperforming or were in underperforming loan pools to Fannie Mae, the holder of nonrecourse debt on such communities. See “Note 7- Notes Payable.” When legal ownership of the properties transfers to Fannie Mae or its designees and the liabilities relating to such communities are extinguished, the Company expects to recognize a gain related to the extinguishment in accordance with ASC 470, “Debt.” During the three and six months ended June 30, 2021, Fannie Mae completed the transition of legal ownership of 6 and 9 of the Company's properties, respectively, and the Company recorded a gain on extinguishment of debt of
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$67.2 million and $114.2 million, respectively. At June 30, 2021, the Company included $112.7 million in outstanding debt in the current portion of notes payable, net of deferred loan costs, and $6.5 million of accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to these properties. 
•In July 2021, subsequent to quarter-end, the Company entered into an investment agreement with Conversant Capital, LLC ("Conversant"), pursuant to which affiliates of Conversant have agreed to purchase $82.5 million of the Company's Series A Convertible Stock ("Convertible Preferred Stock") in a private placement, to backstop $42.5 million of an approximately $70.0 million rights offering of the Company's common stock through the purchase of additional shares of the Company's Convertible Preferred Stock, and to provide a $25.0 million accordion. The minimum initial gross proceeds from the proposed transaction will total $125.0 million in aggregate. The proposed transaction is subject to approval by the Company’s stockholders and other customary closing conditions. In conjunction with the proposed transaction, the Company entered into a $17.3 million promissory note, $15.0 million of which bears interest at 15% and will be converted into the Convertible Preferred Stock upon closing of the private placement (or paid down with the proceeds of the private placement). See "Note 13- Subsequent Events."
The Company’s plans are designed to provide the Company with adequate liquidity to meet its obligations for at least the 12-month period following the date its interim June 30, 2021 financial statements are issued; however, the remediation plan is dependent on conditions and matters that may be outside of the Company’s control or may not be available on terms acceptable to the Company, if at all, many of which have been made worse or more unpredictable by the COVID-19 pandemic. Accordingly, management could not conclude that it was probable that the plans will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.  If the Company is unable to successfully execute all of these initiatives or if the plan does not fully mitigate the Company’s liquidity challenges, the Company’s operating plans and resulting cash flows along with its cash and cash equivalents and other sources of liquidity may not be sufficient to fund operations for the 12-month period following the date the interim June 30, 2021 financial statements are issued.  
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date the financial statements are issued. As such, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The Company has deposits in banks that exceed Federal Deposit Insurance Corporation insurance limits. Management believes that credit risk related to these deposits is minimal. Restricted cash consists of deposits required by certain counterparties as collateral pursuant to letters of credit. The deposit must remain so long as the letters of credit, which are subject to renewal annually, isare outstanding.
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The following table sets forth the Company’s cash, and cash equivalents and restricted cash total as presented in our statements of cash flows (in thousands):
June 30,
20212020March 31,
2022		March 31,
2021
Cash and cash equivalentsCash and cash equivalents$14,556 $25,460 Cash and cash equivalents$48,634 $16,766 
Restricted cashRestricted cash4,982 3,382 Restricted cash3,982 4,982 
$19,538 $28,842 
Total cash, cash equivalents, and restricted cashTotal cash, cash equivalents, and restricted cash$52,616 $21,748 
Long-Lived AssetsProperty and ImpairmentEquipment
Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. At each balance sheet date, the Company reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed. The Company
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considers internal factors such as net operating losses along with external factors relating to each asset, including contract changes, local market developments, and other publicly available information to determine whether impairment indicators exist.
If an indicator of impairment is identified, recoverability of an asset group is assessed by comparing its carrying amount to the estimated future undiscounted net cash flows expected to be generated by the asset group through operation or disposition, calculated utilizing the lowest level of identifiable cash flows. If this comparison indicates that the carrying amount of an asset group is not recoverable, we estimate fair value of the asset group and record an impairment loss when the carrying amount exceeds fair value. There were no impairments of long-lived assets during the three months ended March 31, 2022 or 2021.
Off-Balance Sheet ArrangementsIn evaluating our investments for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses.
Upon the acquisition of new communities accounted for as an acquisition of an asset, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their relative fair values once we have determined the fair value of each of these assets and liabilities. The Company had no material off-balance sheet arrangements at June 30, 2021 or December 31, 2020.acquisition date is the date on which we obtain control of the real estate property and associated transaction costs are capitalized. The assets acquired and liabilities assumed consist of land, inclusive of associated rights, buildings, assumed debt, and identified intangible assets and liabilities.
Revenue Recognition
Resident revenue primarily consists of fees for basic housing and certain support services and fees associatedprovided to residents which are accounted for under GAAP in accordance with additional housing and expanded support requirements such as assisted living care, memory care, and ancillary services. Basic housing and certain support services revenue is recorded when services are rendered and amounts billed are due from residents in the period in which the rental and other services are provided, which totaled approximately $46.0 million and $90.5 million for the three and six months ended June 30, 2021, respectively and approximately $97.8 million and $201.4 million for the three and six months ended June 30, 2020, respectively.lease accounting standards. The Company's residency lease agreements are generally short term in nature, with durations of one year or less, and are typically terminable by either party, under certain circumstances, upon providing 30 days’ notice, unless state law provides otherwise, with residentotherwise. Resident leases do not contain purchase options or require significant assumptions or judgments. Resident fees are billed monthly in advance. Basic housing and certain support services revenue is recorded when services are rendered and amounts are billable to residents in the period in which the rental and other services are provided. At June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had contract liabilitiesliabilities for deferred fees paid by its residents prior to the month that housing and support services were to be provided totaling approximately $3.2$2.7 million and $3.3$2.3 million,, respectively, which are included as a component of deferred income within current liabilities of the Company’s Consolidated Balance Sheets.liabilities.
Revenue for certain ancillary services is recognized as services are provided to customers and includes fees for certain services, such as medication management, daily living activities, beautician/barber, laundry, television, guest meals, pets, and parking, which are generally billed monthly in arrears and totaled approximately $0.2 millionare included as a component of resident revenue.
Other operating revenue generally includes nonrecurring state grants and $0.6 million for the three and six months ended June 30, 2021, respectively, and approximately $0.6 million and $1.5 million for the three and six months ended June 30, 2020, respectively,is included as a component of resident revenue within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).as earned.
The Company's senior housing communities have residency agreements that generally require the resident to pay a community fee prior to moving into the community and are recorded initially by the Company as deferred revenue. At June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had contract liabilities for deferred community fees totaling approximately $0.7$0.9 million and $0.9$0.8 million, respectively, which are included as a component of deferred income within current liabilities of the Company’s Consolidated Balance Sheets.liabilities.
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The Company recognized community fees as a component of resident
revenue within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) of approximately $0.4 million and $0.8 million during the three and six months ended June 30, 2021, respectively and $1.1 million and $2.2 million during the three and six months ended June 30, 2020, respectively. 
The Company has management agreements whereby it manages certain communities on behalf of third party owners under a contract that provides for periodic management fee payments to the Company. The Company recognized revenue from management fees of $0.8 million and $1.9 million during the three and six months ended June 30, 2021, respectively and $0.2 million for both the three and six months ended June 30, 2020, respectively. The Company has determined that all community management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in “community reimbursement revenue” on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).revenue.” The related costs are included in “community reimbursement expense” onexpense.” Although these costs are funded by the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss). The Company recognized community reimbursement revenue and expense of $10.1 million and $25.4 million during the three and six months ended June 30, 2021, respectively and $1.9 million and $2.3 million during the three and six months ended June 30, 2020, respectively. 
Lease Accounting
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Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of the identified asset means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.
Operating lease right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term on the lease commencement date. When the implicit lease rate is not determinable, management uses the Company’s incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future minimum lease payments. The expected lease terms include options to extend or terminate the lease when it is reasonably certainowners, accounting guidance requires the Company will exercise such options. Lease expense for minimum lease payments is recognizedto report these fees on a straight-linegross basis over the expected lease terms.
Financing lease right-of-use assets are recognized within property, plantas both revenues and equipment and leasehold improvements, net on the Company's Consolidated Balance Sheets. The Company recognizes interest expense on the financing lease liabilities utilizing the effective interest method. The right-of-use asset is generally amortized to depreciation and amortization expense on a straight-line basis over the lease term.
Modifications to existing lease agreements, including changes to the lease term or payment amounts, are reviewed to determine whether they result in a separate contract. For modifications that do not result in a separate contract, management reviews the lease classification and re-measures the related right-of-use assets and liabilities at the effective date of the modification.
Certain of the Company’s lease arrangements have lease and non-lease components. The Company accounts for the lease components and non-lease components as a single lease component for all classes of underlying assets. Leases with an expected lease term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term.expenses.
Credit Risk and Allowance for Doubtful Accounts
The Company’s resident receivables are generally due within 30 days from the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $5.0$5.1 million and $6.1$4.7 million at June 30, 2021,March 31, 2022, and December 31, 2020,2021, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance, as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Self-Insurance Liability Accruals
The Company offers full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs, including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims and claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health insurance claims. Additionally, the Company may be liable for an Employee Shared Responsibility Payment (“ESRP”) pursuant to the Patient Protection and Affordable Care Act. The ESRP is applicable to employers that (i) had 50 or more full-time equivalent employees, (ii) did not offer minimum essential coverage (“MEC”) to at least 70% of full-time employees and their dependents, or (iii) did offer MEC to at least 70% of full-time employees and their dependents that did not meet the affordable or minimum value criteria and had one or more full-time employees certified as being allowed the premium tax credit. The IRS determines the amount of the proposed ESRP from information returns completed by employers and from income tax returns completed by such employers' employees. Management believes that the liabilities recorded and reserves established for outstanding losses and expenses are adequate to cover the ultimate cost of losses and expenses incurred at June 30, 2021; however, it is possible that actual claims and expenses may differ. Any subsequent changes in estimates are recorded in the period in which they are determined.
The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant
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judgments based on projected future events, including among other factors, potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums and/or estimated litigation costs. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, it is possible the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.


Income Taxes
Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three and six months ended June 30,March 31, 2022 and 2021 and 2020 differ from the statutory tax rates duedue to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax (“TMT”), which effectively imposes tax on modified gross revenues for communities within the State of Texas. The Company consolidated 16 and 38 Texas communities for purposes of the TMT for the six months ended June 30, 2021 and 2020, respectively, which contributes to the overall provision for income taxes.
Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which the Company expects those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. As of December 31, 2020,2021, the Company had a three-year cumulative net operating loss for its U.S. operations and is subject to annual operating loss utilization limits and accordingly, has provided a full valuation allowance on its U.S. and state net deferred tax assets.  The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized. However, in the event that the Company were to ultimately determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded
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amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.
The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide enhanced financial statement comparability among different companies.companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” to be upheld on audit based solely on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense. The Company is generally no longer subject to federal and state tax audits for years prior to 2017 with the exception for net operating losses originating from 2013.
Redeemable Preferred Stock

The Company evaluates the classification of redeemable preferred stock based on the instrument’s specific terms and rights. Perpetual convertible preferred stock which can be converted to common stock outside of the Company’s control is classified as mezzanine equity, outside of the stockholders’ deficit section, and recorded at the maximum liquidation or conversion amount. Dividends on redeemable preferred stock are recorded to retained earnings or additional paid-in capital if retained earnings is an accumulated deficit. During the year ended December 31, 2021, the Company issued 41,250 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”).
Derivative Instruments
We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. As of March 31, 2022 and December 31, 2021, all of our derivative instruments were interest rate caps, and none are designated as hedge instruments. Changes in fair value of undesignated hedge instruments are recorded in current period earnings in interest expense.
Net Income (Loss) Per Common Share
Basic income (loss) per share is computed by dividing net income (loss) less distributions to participating securities using the two-class method and preferred stock dividends, including redeemable preferred stock classified as mezzanine equity, divided by the weighted average number of shares of common stock outstanding. Under the two-class method, net income is reduced by the amount of any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated based on the weighted-average shares outstanding of common stock and Series A Preferred Stock (on an if-converted basis) to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the Series A Preferred Stock have no obligation to fund losses.
Diluted net income (loss) per common share is computed under the two-class method by dividingusing the weighted-average number of shares of common stock outstanding, plus, for periods with net income (loss) byattributable to common stockholders, the weighted average numberpotential dilutive effects of instruments convertible into common shares outstanding forstock, stock options, stock-based compensation awards and warrants. The Company analyzes the potential dilutive effect of convertible instruments under the “if-converted” method, in which it is assumed that the instruments convert into common stock at the beginning of the period or when issued, if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as its diluted net income per share during the period. Potentially dilutive securities consist of unvested restricted shares and shares that could be issued under outstanding stock options. Potentially dilutiveDilutive securities are excluded from the computation of net income (loss) per common share if their effect is antidilutive.
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The following table sets forth the computation of basic and diluted net loss per share (in thousands, except for per share amounts):
Three Months Ended
June 30,		Six Months Ended June 30,
2021202020212020
Net income (loss)$49,078 $(12,753)$87,922 $(59,934)
Net income (loss) allocated to unvested restricted shares0 0 0 0 
Undistributed net income (loss) allocated to common shares$49,078 $(12,753)$87,922 $(59,934)
Weighted average shares outstanding – basic (1)2,061 2,039 2,060 2,033 
Effects of dilutive securities:
Employee equity compensation plans28 0 17 0 
Weighted average shares outstanding – diluted (1)2,089 2,039 2,077 2,033 
Basic net income (loss) per share – common shareholders$23.81 $(6.25)$42.68 $(29.47)
Diluted net income (loss) per share – common shareholders$23.49 $(6.25)$42.33 $(29.47)
(1) Prior period results and share amounts have been adjusted to reflect the fifteen-for-one Reverse Stock Split. See Note 8 - Equity.
Awards of unvested restricted stock and restricted stock units representing approximately 75,072 shares and 9,816 stock options were antidilutive for the three and six months ended June 30, 2021. Awards of unvested restricted stock and restricted stock units representing approximately 47,933 shares and approximately 9,800 stock options were antidilutive as a result of the net loss reported by the Company for the three and six months ended June 30, 2020. Accordingly, such shares and options were not included in the calculation of diluted weighted average shares outstanding forincome per share if the threeeffect would be anti-dilutive.

Concentration of Credit Risk and six months ended Business Risk

June 30, 2021
Substantially all of our revenues are derived from senior living communities we own and 2020, respectivelysenior living communities that we manage. Senior living operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the effects of the COVID-19 pandemic, which has and may continue to adversely affect our business, financial condition and results of operations.
.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASBFinancial Accounting Standards Board (“FASB”) issued ASUAccounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. Current U.S. generally accepted accounting principles requireGAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. ASU 2016-13 replaces the current incurred loss methodology fornon-lease revenue credit losses and removes the thresholds that companies apply to measure credit losses on financial statements measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities with a methodology that reflects expected credit losses and requires consideration of a broader
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range of reasonable and supportable information to form credit loss estimates. For smaller reporting companies, ASU 2016-13 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of ASU 2016-13this guidance will have on its consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate.Rate (“LIBOR”). The provisions of this standard are available for election through December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by ASU 2020-04.this update.

5. IMPAIRMENT OF LONG-LIVED ASSETS3. Property and Equipment, net
There were 0 impairmentsThe following is a summary of long-lived assets during the threeour property and six months ended June 30,equipment, net as of March 31, 2022 and December 31, 2021 or for the three months ended June 30, 2020.(in thousands):
Asset LivesMarch 31,
2022		December 31,
2021
Land$47,598 $46,069 
Land improvements5 to 20 years19,305 19,146 
Buildings and building improvements10 to 40 years825,195 814,035 
Furniture and equipment5 to 10 years54,247 52,602 
Automobiles5 to 7 years2,679 2,662 
Assets under financing leases and leasehold improvements (1)
 2,287 2,276 
Construction in progress 1,905 392 
Total property and equipment, net953,216 937,182 
Less accumulated depreciation and amortization(325,372)(315,983)
Total property and equipment, net$627,844 $621,199 
__________
During(1) Leasehold improvements are amortized over the first quartershorter of 2020,the useful life of the asset or the remaining lease term. Assets under financing leases and leasehold improvements include $0.3 million of financing lease right-of-use assets, net of accumulated amortization, as of both March 31, 2022 and December 31, 2021.
On February 1, 2022, the Company determined thatcompleted the modificationsacquisition of certain2 senior living communities located in Indiana for a combined purchase price of its master lease agreements (see “Note 6- Dispositions and Other Significant Transactions”) and adverse impacts$12.3 million. The communities consist of a total of 157 independent living units. The acquisition price was funded with cash on the Company’s operating results resulting from the COVID-19 pandemic were indicators of potential impairment of its long-lived assets. As such, the Company evaluated its long-lived asset groups for impairment and identified communities with a carrying amount of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets.    hand.
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In March 2020, the Company entered into forbearance agreements with Ventas Inc. ("Ventas") and Welltower, Inc. ("Welltower") which, among other things, provided that the lease agreements covering the communities would be converted into property management agreements with the Company as manager on December 31, 2020 if the properties had not transitioned to successor operators on or prior to such date (see “Note 6- Dispositions and Other Significant Transactions”). The Company’s leases with Ventas and Welltower were originally scheduled to mature in 2025 and 2026.  Due to the modification of the lease term and the expected impacts of the COVID-19 pandemic, the Company evaluated certain owned communities and all leased communities for impairment and tested the recoverability of these assets by comparing projected undiscounted cash flows associated with these assets to their respective historical carrying values.  For communities in which the historical carrying value was not recoverable, the Company compared the estimated fair value of the assets to their carrying amount and recorded an impairment charge for the excess of carrying amount over fair value.  For the operating lease right-of-use assets, fair value was estimated utilizing a discounted cash flow approach based on historical and projected cash flows and market data, including management fees and a market supported lease coverage ratio. The fair values of the property and equipment, net of these communities, were primarily determined utilizing the cost approach, which determines the current replacement cost of the property being appraised and then deducts for the loss in value caused by physical deterioration, functional obsolescence, and economic obsolescence the amount required to replace the asset as if new and adjusts to reflect usage.  These fair value measurements are considered Level 3 measurements within the valuation hierarchy.  During the first quarter of 2020, the Company recorded non-cash impairment charges of $6.2 million and $29.8 million to operating lease right-of-use assets, net and property and equipment, net, respectively.
6. DISPOSITIONS AND OTHER SIGNIFICANT TRANSACTIONS
Disposition of Boca Raton, Florida Community
Effective January 15, 2020, the Company’s leased senior living community located in Boca Raton, Florida, transitioned to a new operator.  In conjunction with the transition, the Company paid the lessor, Healthpeak Properties, Inc. ("Healthpeak"), a one-time $0.3 million termination payment as a prepayment against the remaining lease payments and was relieved of any additional obligation to Healthpeak with regard to that property and the lease was terminated as to this property.  The Company recorded a gain of approximately $1.8 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020.
Disposition of Merrillville, Indiana Community
Effective March 31, 2020, the Company sold 1 community located in Merrillville, Indiana for a total purchase price of $7.0 million and received approximately $6.9 million in cash proceeds after paying customary closing costs.  The community was unencumbered by any mortgage debt.  The Company recognized a loss of $7.4 million on the disposition, which is included in loss on disposition of assets, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020.
Early Termination of Master Lease Agreements
As of December 31, 2020, the Company had exited all of its master lease agreements.
As of December 31, 2019, the Company leased 46 senior housing communities from certain real estate investment trusts (“REITs”).  The Company transitioned 1 community to a different operator effective January 15, 2020. During the first quarter of 2020, the Company entered into agreements that restructured or terminated certain of its master lease agreements with each of its landlords as further described below. The Company was not subject to any master lease agreements during the six months ended June 30, 2021.
Ventas
As of December 31, 2019, the Company leased 7 senior housing communities from Ventas.  The term of the Ventas lease agreement was scheduled to expire on September 30, 2025.  On March 10, 2020, the Company entered into an agreement with Ventas (as amended, the “Ventas Agreement”), providing for the early termination of its master lease agreement with Ventas (the "Ventas Master Lease Agreement") covering all 7 communities. Pursuant to the Ventas Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Ventas rent of approximately $1.0 million per month for such communities as compared to approximately $1.3 million per month that would otherwise have been due and payable under the Ventas Master Lease Agreement.  In addition, the Ventas Agreement provided that the Company would not be required to comply with certain financial covenants of the Ventas Master Lease Agreement during the forbearance
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period, which terminated on December 31, 2020.  In conjunction with the Ventas Agreement, the Company released to Ventas $4.1 million in security deposits and $2.5 million in escrow deposits held by Ventas, and Ventas reduced the amounts and term of the Company’s lease payments, and effectively eliminated the Company’s lease termination obligation, which was $11.4 million at December 31, 2019.  The Ventas Master Lease Agreement terminated on December 31, 2020.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Ventas and modification of the lease term pursuant to the Ventas Agreement was determined to be a modification of the Ventas Master Lease Agreement.  As such, the Company reassessed the classification of the Ventas Master Lease Agreement with Ventas based on the modified terms and determined that the lease continued to be classified as an operating lease until the communities transitioned to a different operator or management agreement, at which time the lease would terminate. The modification resulted in a reduction to the lease termination obligation, lease liability and operating lease right-of-use asset recorded in theCompany's Consolidated Balance Sheets by approximately $11.4 million, $51.6 million, and $47.8 million, respectively, during the first quarter of 2020.  The Company recognized a net gain of approximately $8.4 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020 and was primarily due to the impact of the change in lease term on certain of the right-of-use asset balances.  As a result of the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 5- Impairment of Long-Lived Assets.”
Under the terms of the Ventas Agreement, Ventas elected to enter into a property management agreement on December 31, 2020 with the Company as manager of the 7 properties for a management fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions. As a result of these transactions, the Company had no remaining lease agreements with Ventas on January 1, 2021. At June 30, 2021, the Company managed these 7 communities on behalf of Ventas.
Welltower
As of December 31, 2019, the Company leased 24 senior housing communities from Welltower. The initial terms of the Welltower master lease agreements ("the Welltower Master Lease Agreements") were scheduled to expire on various dates from April 2025 through April 2026. On March 15, 2020, the Company entered into an agreement with Welltower (the “Welltower Agreement”), providing for the early termination of three Welltower Master Lease Agreements covering all 24 communities.  Pursuant to the Welltower Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Welltower rent of approximately $2.2 million per month for such communities as compared to approximately $2.8 million per month that would otherwise have been due and payable under the Welltower Master Lease Agreements. In addition, the Welltower Agreement provided that the Company would not be required to comply with certain financial covenants of the Welltower Master Lease Agreements during the forbearance period, which terminated on December 31, 2020.  In conjunction with the Welltower Agreement, the Company agreed to release $6.5 million in letters of credit to Welltower, which were released during the three months ended June 30, 2020. The Welltower Master Lease Agreement terminated on December 31, 2020. Upon termination, Welltower elected to enter into a property management agreement with the Company as manager for the remaining properties that had not been transitioned to other operators.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Welltower under the then- existing Welltower Master Lease Agreements and modification to the lease term pursuant to the Welltower Agreement was determined to be a modification of the Welltower Master Lease Agreements.  As such, the Company reassessed the classification of the Welltower Master Lease Agreements based on the modified terms and determined that the each of the leases continued to be classified as an operating lease until the applicable communities transitioned to a different operator or management agreement, at which time such lease would terminate.  The modification resulted in a reduction to the lease liability and operating lease right-of-use asset recorded in theCompany'sConsolidatedBalanceSheets byapproximately $129.9 million, and $121.9 million, respectively,during the first quarter of 2020.  The Companyrecognized a gain ofapproximately $8.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020.  As a result of the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 5- Impairment of Long-Lived Assets.”
Under the terms of the Welltower Agreement, on December 31, 2020, Welltower elected to enter into a property management agreement with the Company as manager of the remaining properties that had not been transitioned to other operators for a management fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions. At June 30, 2021, the Company managed 4 communities on behalf of Welltower.
Healthpeak
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On March 1, 2020, the Company entered into an agreement with Healthpeak (the "Healthpeak Agreement”), effective February 1, 2020, providing for the early termination of one of its Master Lease Agreements with Healthpeak (the "Healthpeak Master Lease Agreement"), which was previously scheduled to mature in April 2026. The Healthpeak Master Lease Agreement terminated and was converted into a management agreement under a structure permitted by the Reit Investment Diversification and Empowement Act of 2007 (the "Healthpeak Management Agreement"), pursuant to which the Company agreed to manage the 6 communities that were subject to the Healthpeak Master Lease Agreement until such communities are sold by Healthpeak.  Pursuant to the Healthpeak Management Agreement, the Company received a management fee equal to 5% of gross revenues realized at the applicable senior living communities plus reimbursement for its direct costs and expenses related to such communities.  In conjunction with the Healthpeak Agreement, the Company released to Healthpeak approximately $2.6 million of security deposits held by Healthpeak. The Company recognized a net loss of $7.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020. In January 2021, Healthpeak sold the 6 properties and terminated all agreements with the Company related to those 6 properties.
In November 2020, upon the expiration of the other Master Lease Agreement with Healthpeak, the Company entered into a short-term excess cash flow lease amendment pursuant to which the Company agreed to manage the 7 communities that were then subject to the other Master Lease Agreement until the earlier of such time that the communities are sold by Healthpeak or until April 30, 2021. Pursuant to such agreement, the Company began paying Healthpeak monthly rent of any excess cash flow of the communities and earning a management fee for management of the 7 communities.
In April 2021, the Company executed an agreement with Healthpeak to amend and extend its existing agreement for the remaining 3 properties managed by the Company on behalf of Healthpeak. In addition to a management fee based on a percentage of revenue, the Company will receive a monthly flat fee for three months with such fee increasing thereafter until such properties are sold or December 31, 2021, whichever is earlier. At June 30, 2021, the Company continued to manage the 3 properties on behalf of Healthpeak.
7. NOTES PAYABLE4. Notes Payable
Notes payable consists of the following (in thousands):
June 30,December 31,
20212020
Fixed mortgage notes payable$677,860 $787,029 
Variable mortgage notes122,261 122,742 
Notes payable - insurance2,603 3,887 
Notes payable - other2,121 2,121 
Notes payable, excluding deferred financing costs$804,845 $915,779 
Deferred financing costs, net5,439 6,886 
Total long-term debt$799,406 $908,893 
Less current portion232,060 304,164 
Total long-term debt, less current portion$567,346 $604,729 
Maturity DatesMarch 31,
2022		December 31,
2021
Fixed mortgage notes payable2022 to 2045$543,593 $592,997 
Variable mortgage notes payable2026 to 2029130,127 88,711 
Notes payable - insurance20221,532 3,483 
Notes payable - other20232,121 2,121 
Total notes payable$677,373 $687,312 
Less: deferred financing costs, net6,352 4,201 
Total notes payable, net$671,021 $683,111 
Less: current portion43,851 69,769 
Total long-term notes payable, less current portion$627,170 $613,342 
Deferred Financing ChargesThe following schedule summarizing our notes payable as of March 31, 2022 (in thousands):
At June 30, 2021 and December 31, 2020, the Company had gross deferred loan costs of approximately $12.5 million and $14.0 million, respectively. Accumulated amortization was approximately $7.0 million and $7.1 million at June 30, 2021 and December 31, 2020, respectively.
Principal payments due in:
2022$42,391 
202314,452 
2024152,155 
2025194,285 
202675,919 
Thereafter198,171 
Total notes payable, excluding deferred financing costs$677,373 

Insurance Notes PayableAs of March 31, 2022, our fixed mortgage notes interest rates range from 3.6% to 6.3%. Our variable mortgage notes are based on one-month LIBOR or the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. As of March 31, 2022, one-month LIBOR and one-month SOFR was 0.44% and 0.29%, respectively, and the applicable margins were 2.14% and 3.50%, respectively.

As of March 31, 2022, we had property and equipment with a net carrying value of $603.8 million that is secured by outstanding notes payable.
2022 Mortgage Refinance
In June 2021,March 2022, the Company renewedcompleted the refinancing of certain insurance policiesexisting mortgage debt (“Refinance Facility”) for 10 of its communities. The Refinance Facility includes an initial term loan of $80.0 million. In addition, $10.0 million is available as delayed loans that can be borrowed upon achieving and entered intomaintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a finance agreement totaling approximatelylimited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility based upon achieving certain financial covenants maintained over a certain time period As defined and required in the Limited Payment Guaranty, the Company is required to maintain certain covenants including maintaining a Tangible Net Worth of $150 million and Liquid Assets of at least $13 million (inclusive of a $1.5 million. million debt service reserve fund provided by the Company at the closing of the Refinance Facility).
The finance agreement hasRefinance Facility also requires the financial performance of the 10 communities to achieve certain financial covenants, including a fixedminimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first measurement date as of June 30, 2022 and quarterly measurement dates thereafter. We can provide no assurance that any future financial covenants will be met. The Loan Agreement requires the establishment of a debt service reserve fund with a defined balance of $1.5 million (included in Liquid Assets) that may be released based upon terms described in the Loan Agreement. The reserve fund is included in our “other assets.”
The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of 4.45%the Refinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the principal being repaid overlender’s requirements.
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The Company incurred costs related to the Refinance Facility of $2.1 million that are included in deferred financing costs at March 31, 2022.
The financing transaction generated a 10-month term.loss on refinancing of notes payable of $0.6 million which is included in loss on extinguishment of debt for the three months ended March 31, 2022.
Transactions Involving Certain Fannie Mae Loans

The CARESCoronavirus Aid, Relief and Economic Security (“CARES”) Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. On
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May 7,During 2020, the Company entered into several loan forbearance agreements with Berkadia Commercial Mortgage LLC, as servicer of 23 of its Fannie Mae loans covering 20 of the Company's properties.  On May 9, 2020, the Company entered into a forbearance agreement with Wells Fargo Bank (“Wells Fargo”), as servicer of 1 Fannie Mae loan covering 1 of the Company's properties.  OnMay 20, 2020, the Company entered into forbearance agreements with KeyBank, as servicer of 3 Fannie Mae loans covering 2 of the Company's properties. The forbearance agreements allowedthe Company to withhold the loan payments due under the loan agreements for the months of April, May and JuneFederal National Mortgage Association (“Fannie Mae”). In July 2020, and Fannie Maetagreed toforbear in exercising its rights and remedies during such three month period. During this three-month loan payment forbearance, the Company agreedto pay to Fannie Mae monthly net operating income, if any, as defined in theforbearanceagreement, for the properties receiving forbearance.  
On July 8, 2020, the Company entered into forbearance extension agreements with Fannie Mae, which provided for a one month extension of the forbearance agreements between the Company and Fannie Mae covering 23 of the Company's properties. The forbearance extension agreements extended the forbearance period until July 31, 2020, and Fannie Mae agreed to forbear in exercising its rights and remedies during such period.  By July 31, 2020, the Company was required to repay to Fannie Mae the deferred payments, less any payments made during the forbearance period.  
On July 31, 2020, the Company made required payments to Fannie Mae totaling $0.6 million, which included the deferred payments, less payments made during the forbearance period, for 5 of the Company's properties with forbearance agreements.  Thehe Company elected not to pay $3.9$3.8 million on the loans for the remaining 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 
As a result of the default, Fannie Mae filed a motion with the United States District Court (the "District Court") requesting that a receiver be appointed over the 18 properties, which was approved by the District Court.  The Company agreed to continue to manage the 18 communities, subject to earning a management fee, until management of the community is transitioned to a successor operator or legal ownership of the properties is transferred to Fannie Mae or its designee.  Management fees earned from the properties are recognized as revenue when earned.  In conjunction with the receivership order, the Company must obtain approval from the receiver for all payments, but will receive reimbursements from Fannie Mae for reasonable operating expenses incurred on behalf of any of the 18 communities under the receivership order. 
As a result of the events of default and receivership order, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded it was no longer entitled to receive any existing accounts receivable or revenue related to the properties, all amounts held in escrow by Fannie Mae were forfeited, and that the Company no longer has control of the properties in accordance ASC 610-20.  
with GAAP. Accordingly, the Company derecognized the net carrying value of the properties and related assets from the financial statements and recorded a loss from the forbearance. The Company continued to recognize the related debt and liabilities until the debts are formally released. When these debts are formally released, the net carrying value of the debts is derecognized and a gain on extinguishment of debt is recognized. During the three and six months ended June 30,March 31, 2021, Fannie Mae completed the transition of legal ownership of 6 and 93 of the Company's properties respectively, and the Company recorded a $47.0 million gain on extinguishment of debtthis debt.

As of $67.2 millionMarch 31, 2022, 2 properties remain for which the legal ownership has not been transferred back to Fannie Mae. At both March 31, 2022 and $114.2 million, respectively, which is included in gain on extinguishment of debt in the Company's Consolidated Statement of Operations and Comprehensive Income (Loss). At June 30,December 31, 2021, the Company included $112.7$32.0 million in outstanding debt in current portion of notes payable, net of deferred loan costs,financing costs. As March 31, 2022 and $6.5 million ofDecember 31, 2021, accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to the remaining 9 properties. At June 30,2 properties was $3.4 million and $2.7 million, respectively. As of March 31, 2022 and December 31, 2021, the Company did not manage these properties (or any propertiesproperties) on behalf of Fannie Mae.
Debt Forbearance Agreement on BBVA Loan
The Company also entered into a loan amendment with another lender, BBVA, related to a loan covering 3 of the Company's properties pursuant to which the Company deferred monthly debt service payments for April, May and June 2020, which deferred payments were added to principal. The deferred month debt service payments were paid by the Company in June 2021. At June 30, 2021 no deferred payments remained outstanding.
Debt Forbearance Agreement on HUD Loan
The Company also entered into a debt forbearance agreement with ORIX Real Estate Capital, LLC (“ORIX”), related to a U.S. Department of Housing and Urban Development (“HUD”) loan covering 1 of the Company's properties pursuant to which the Company deferred monthly debt service payments for April, May and June 2020, which deferred payments were added to the regularly scheduled payments in equal installments for one year following the forbearance period and were paid in the six months ended June 30, 2021. At June 30, 2021, no deferred payments remained outstanding.
Protective Life Amendments to Loan Agreements and Loan Modification and Temporary Deferral Agreements
On May 21, 2020, the Company entered into amendments to its loan agreements with one of its lenders, Protective Life Insurance Company (“Protective Life”), related to loans (the "Protective Life Loans") covering 10 of the Company's properties. These amendments allowed the Company to defer principal and interest payments for April, May and June 2020 and to defer principal payments for July 2020 through September 2021, with such deferral amounts being added to principal due at maturity
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in either 2025 or 2026, depending upon the loan. At June 30, 2021, the Company had deferred payments of $6.4 million related to the Protective Life Loans, of which $2.6 million was included in accrued expenses in the Company’s Consolidated Balance Sheets. The remaining $3.8 million is included in notes payable, net of deferred loan costs and current portion on the Company’s Consolidated Balance Sheets.
Letters of Credit
The Company previously issued standby letters of credit with Wells Fargo, totaling approximately $1.0 million, Except for the benefit of Calpine Corporation in connectionnon-compliance with certain of its energy provider agreements, which remained outstanding at June 30, 2021.
The Company previously issued standby letters of credit with Wells Fargo, totaling approximately $3.4 million,Fannie Mae mortgages for the benefit of Hartford Financial Services in connection with the administration of workers’ compensation, which remained outstanding at June 30, 2021.  

The Company previously issued standby letters of credit with JP Morgan Chase Bank (“Chase”), totaling approximately $6.5 million, for the benefit of Welltower, in connection with certain leases between Welltower and the Company. The letters of credit were surrendered and paid2 remaining properties expected to Welltower in conjunction with the Welltower Agreement during the quarter ended June 30, 2020.
The Company previously issued standby letters of credit with Chase, totaling approximately $2.9 million, for the benefit of Healthpeak in connection with certain leases between Healthpeak and the Company.  The letters of credit were releasedtransition back to the Company during the first quarter of 2020 and were included in cash and cash equivalents on the Company’s June 30, 2020 Consolidated Balance Sheets.
Debt Covenant Compliance
The Company was not in compliance with a certain financial covenant under its loan agreement with Fifth Third Bank, covering 2 of the Company's properties, as of June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, in which a minimum debt service coverage ratio must be maintained, which constituted a default. In May 2021, Fifth Third Bank issued a notice of default. In the event that this loan for $31.5 million is accelerated, the loan has 25% recourse to Capital Senior Living Corporation. The Company is in active discussions with Fifth Third Bank to resolve this noncompliance, but cannot give any assurances that a mutually agreed upon resolution will be reached. The Company included $31.5 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at June 30, 2021.  

The Company was not in compliance with a certain financial covenant under its loan agreement with BBVA covering 3 of the Company's properties as of June 30, 2021 and December 31, 2020, in which a minimum debt service coverage ratio must be maintained, which constitutes a default. As a result of the default, the loan was callable at June 30, 2021 and the Company included $40.5 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at June 30, 2021. In August 2021, subsequent to quarter end, the Company executed a one year extension of its loan agreement with BBVA with an additional six months extension option if certain financial criteria are met. This loan agreement extension also waived existing non-compliance with certain financial ratios and eliminated these financial ratios going forward. The extension requires a principal payment of $1.0 million in December 2021 and quarterly principal payments of $0.5 million beginning in March 2022 unless a certain financial ratio is attained.

ExceptFannie Mae, as noted above, the Company was in compliance with all other aspects of its outstanding indebtedness at June 30, 2021.March 31, 2022.
5. Redeemable Preferred Stock

In 2021, the Company issued 41,250 shares of Series A Preferred Stock. The Series A Preferred Stock is convertible outside of the Company's control and in accordance with GAAP is classified as mezzanine equity, outside the stockholders’ deficit section, on our condensed consolidated balance sheets. The Series A Preferred Stock was initially recorded at fair value upon issuance in 2021, net of issuance costs. The holders of Series A Preferred Stock are entitled to vote with the holders of common stock on all matters submitted to a vote of stockholders of the Company. It is deemed probable that the Series A Preferred Stock could be redeemed for cash, and as such the Series A Preferred Stock is required to be remeasured and adjusted to its maximum redemption value at the end of each reporting period. However, to the extent that the maximum redemption value of the Series A Preferred Stock does not exceed fair value of the shares at the date of issuance, the shares are not adjusted below the fair value at the date of issuance. As of March 31, 2022 and December 31, 2021, the Series A Preferred Stock is carried at the maximum redemption value. The Series A Preferred Stock does not have a maturity date and therefore is considered as perpetual.
8. EQUITY
ReverseThe Series A Preferred Stock Split
On December 9, 2020,has an 11% annual dividend calculated on the original investment of $41.3 million accrued quarterly in arrears and compounded. Dividends are guaranteed and may be paid in cash or in additional liquidation preference to the shares of Series A Preferred Stock at the discretion of the Company’s Board of Directors approvedDirectors. On March 31, 2022, the Company declared a $1.1 million cash dividend on the Series A Preferred Stock which is included in accounts payable and effected a Reverse Stock Split of the Company’s common stock at a ratio of 15-for-1 (the "Reverse Stock Split").accrued expense. The Reverse Stock Split reduced the number of the Company's issued and outstanding shares of common stock from approximately 31,268,943 shares to approximately 2,084,596 shares. The authorized number of shares of common stockcash dividend was also proportionately reduced from 65,000,000 shares to 4,333,334 shares. All share amounts for the three and six months ended June 30, 2020 have been recast to give effect to the 15-for-1 Reverse Stock Split.paid in April 2022.
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Treasury Stock
The Company accounts6. Revenue
Revenue for treasury stock under the cost methodthree months ended March 31, 2022 and includes treasury stock as a component2021 are comprised of shareholders’ equity (deficit). All shares acquired bythe following components (in thousands):
Three Months Ended March 31,
20222021
Housing and support services$49,438 $44,441 
Community fees453 411 
Ancillary services254 350 
Other operating revenue689 — 
Resident revenue50,834 45,202 
Management fees628 1,186 
Community reimbursement revenue7,022 15,260 
Total revenue$58,484 $61,648 
Ancillary services, community fees, management fees, and community reimbursement revenue represent revenue from contracts with customers in accordance with GAAP.
7. Stock-Based Compensation
During the three months ended March 31, 2022, the Company have been purchased in open-market transactions. There were 0 repurchases of the Company’s common stock during the three and six months ended June 30, 2021 or 2020. In conjunction with the Reverse Stock Split in December 2020, the Company retired all of the Treasury stock to available for issuance and recorded a reduction to additional paid in capital of $3.4 million in the fourth quarter of fiscal 2020.
9. STOCK-BASED COMPENSATION
The Company recognizes compensation expense for share-based stock awards to certain employees and directors, including grants of employee stock options and awards ofgranted market-based restricted stock awards. The shares were issued in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) based on their fair values.
On May 14, 2019, the Company’s stockholders approved the 2019 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation (the “2019 Plan”), which replaced the 2007 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation (as amended, the “2007 Plan”). The 2019 Plan provides for, among other things, the grant of restricted stock awards, restricted stock units and stock options to purchase shares of the Company’s common stock. The 2019 Plan authorizes the Company to issue up to 150,000 shares of common stock plus reserved shares not issued or subject to outstanding awards under the 2007 Plan, and the Company has reserved shares of common stock for future issuance pursuant to awards under the 2019 Plan. Effective March 26, 2019, the 2007 Plan was terminated and 0 additional awards will be granted under the 2007 Plan.
Stock Options
The Company may periodically grant stock options as a long-term retention tool3 tranches that is intended to attract, retain and provide incentives for employees, officers and directors and to more closely align stockholder interests with those of our employees and directors. The Company’s stock options generally vest over a period of one to five years, and the related expense is amortized on a straight-line basis over the vesting period. A summary ofif the Company’s stock option activity andprice closes at or above an established threshold for each tranche for 90 consecutive trading days within five years of the date of the grant. Compensation expense related information for the six months ended June 30, 2021 is presented below:
Outstanding at
Beginning of
Period		GrantedExercisedCancelledOutstanding at
End of Period
Options9,816 0 0 0 9,816 
At June 30, 2021, the options outstanding had 0 intrinsic value, a weighted-average remaining contractual life of 7.50 years, and a weighted average exercise price of $111.90. At June 30, 2021, there was approximately $0.1 million of total unrecognized compensation expense, which is expected to be recognized over a weighted average period of 0.5 years.  At June 30, 2021, 6,479 options were exercisable and the remaining options were unvested.  There were 0 stock options granted during the six months ended June 30, 2021.
Restricted Stock
The Company periodically grantsmarket-based restricted stock awards and units to employees, officers, and directors in order to attract, retain, and provide incentives for such individuals and to more closely align stockholder and employee interests. For restricted stock awards and units without performance and market-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period, which is generally a period of three years, unless the award is subject to certain accelerated vesting requirements. Restricted stock awards are considered outstanding at the time of grant since the holders thereof are entitled to dividends, upon vesting, and voting rights. For restricted stock awards with performance and market-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting trancheon a straight-line basis. The requisite service period is a measure of the award as ifexpected time to reach the award is, in substance, multiple awards once the performance target is deemed probable of achievement.  Performance goals are evaluated periodically, and if such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed for performance-based awards.
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The Company recognizes compensation expense of a restricted stock award over its respective vesting or performance period based onthreshold and was estimated by utilizing a Monte Carlo simulation, considering only those stock price-paths in which the fair valuethreshold was exceeded.
Grants of the award on the grant date, net of actual forfeitures. A summary of the Company’smarket-based restricted stock awards were as follows:
 Number of SharesWeighted Average Grant Date Fair Value Per ShareTotal Grant Date Fair Value (in thousands)
Three months ended March 31, 202230,039 $25.17 $756 
There was no other stock-compensation activity and related information forthat occurred during the sixthree months ended June 30, 2021 is presented below:
Outstanding at
Beginning of
Period		GrantedVestedCancelledOutstanding at
End of Period
Shares33,504 114,041 (5,416)(4,464)137,665 
The restricted stock outstanding at June 30, 2021 had an intrinsic value of approximately $6.8 million.  
During the three and six months ended June 30, 2021, the Company awarded 13,011 and 114,041 shares of restricted common stock, respectively, to certain employees of the Company, of which 60,618 shares were subject to performance vesting conditions. The weighted average market value of the common stock on the date of grant was $37.95 per share. These awards of restricted stock vest over a three-year period and had an intrinsic value of approximately $4.3 million on the date of grant.

March 31, 2022. The Company recognized $0.5$1.8 million and $0.7$0.2 million in stock-based compensation expense duringfor the three and six months ended June 30,March 31, 2022 and March 31, 2021, respectively, and $0.5respectively.
8. Commitments and Contingencies
As of March 31, 2022, we had contractual commitments of $5.8 million related to future renovations and $1.1 million during the three and six months ended June 30, 2020, respectively, which is primarily associated with employees whose corresponding salaries and wages are included within general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss). Unrecognized stock-based compensation expense was $4.3 million as of June 30, 2021. If all awards granted are earned, the Company expects this expensetechnology enhancements to our communities. We expect these amounts to be recognized over a one to three-year period for performance stock awards and a one to three-year period for non-performance-based stock awards, options and units.substantially expended during 2022.
10. CONTINGENCIES
The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to deductibles, normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material detrimental impact on the consolidated financial statements of the Company.Company.
9. Related Party Transactions
As of March 31, 2022, affiliates of Conversant Capital LLC owned approximately 57% of our outstanding shares of common stock (inclusive of common stock issuable upon conversion of outstanding Series A Preferred Stock and outstanding warrants). Series A Preferred Stock dividend declared, all recognized to additional paid in capital was $1.1 million for the three months ended March 31, 2022. Dividends of $0.7 million were paid on the Series A Preferred Stock during the three months ended March 31, 2022. There was no corresponding amounts for the three months ended March 31, 2021.
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10. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis

11. FAIR VALUE MEASUREMENTSThe Company uses interest rate cap arrangements with financial institutions to manage exposure to interest rate changes for loans that utilize floating interest rates. As of March 31, 2022, we had an interest rate cap with an aggregate notional value of $50.3 million, a strike rate of 4.0%. The interest rate cap terminates in 2024. The fair value and net book value related to this cap were insignificant.
Financial instrumentsInstruments Not Reported at Fair Value
TheFor those financial instruments not carried at fair value, the carrying amountsamount and estimated fair values of our financial instrumentsassets and liabilities were as follows at June 30, 2021March 31, 2022 and December 31, 2020, are as follows2021 (in thousands):
June 30, 2021December 31, 2020
Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Cash and cash equivalents$14,556 $14,556 $17,885 $17,885 
Restricted cash$4,982 $4,982 $4,982 $4,982 
Notes payable, excluding deferred loan costs$804,845 $731,170 $915,779 $846,134 
March 31, 2022December 31, 2021
Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Notes payable, excluding deferred financing costs$677,373 $660,524 $687,312 $636,836 
The following methods and assumptions were used in estimatingWe believe the Company’s fair value disclosures for financial instruments:
Cash and cash equivalents and Restricted cash: The carrying amounts reported in the Company’s Consolidated Balance Sheets foramount of cash and cash equivalents, and restricted cash, accounts receivable, and accounts payable and accrued liabilities approximate fair value which represent level 1 inputs as defined in the accounting standards codification.due to their short-term nature.
Notes payable, excluding deferred loan costs: The fair value of notes payable, excluding deferred loanfinancing costs, is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements, which represent levelLevel 2 inputs as defined in the accounting standards codification.
Operating lease right-of-use assets
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The Company recorded non-cash impairment charges to operating lease right-of-use assets, net of $6.2 million during the first quarter of 2020.  The fair value of the impaired assets was $14.6 millionAssets and Liabilities Measured at March 31, 2020. The fair values of the right-of-use assets were estimated, using level 3 inputs as defined in the accounting standards codification, utilizingFair Value on a discounted cash flow approach based upon historical and projected cash flows and market data, including management fees and a market supported lease coverage ratio of 1.1. The range of discount rates utilized was 7.7% to 10.3%, depending upon the property type and geographical location of the respective community. See “Note 5- Impairment of Long-Lived Assets.” There were 0 non-cash impairment charges to operating lease right-of-use assets during the three and six months ended June 30, 2021 or the three months ended June 30, 2020.
Property and equipment, netNonrecurring Basis
During the first quarter of 2020,year ended December, 31, 2021, the Company recorded non-cash impairment charges of $29.8$6.5 million to property and equipment, net. The fair value of the impaired assets was $10.5$14.0 million at MarchDecember 31, 2020.2021. The fair value of the property and equipment, net of these communitiesthis community was primarily determined usingutilizing an income capitalization approach considering stabilized facility operating income and market capitalization rates of 8.25%. There are no impairment losses for the cost approach,year ended March 31, 2022.
11. Subsequent Event
In April 2022, the Company accepted $9.1 million of cash for grants from the Provider Relief Fund’s Phase 4 General Distribution, which determineswas expanded by the current replacement costCARES Act to provide grants or other funding mechanisms to eligible healthcare providers for healthcare-related expenses or lost revenues attributable to COVID-19. The CARES Act Phase 4 funds are grants that do not have to be repaid provided the Company satisfies the terms and conditions of the property being appraised and then deducts for the loss in value caused by physical deterioration, functional obsolescence and economic obsolescence the amount required to replace the asset as if new and adjusts to reflect usage.  This fair value measurement is considered a Level 3 measurement within the valuation hierarchy. See “Note 5- Impairment of Long-Lived Assets.” There were 0 non-cash impairment charges to property and equipment, net during the three and six months ended June 30, 2021 or the three months ended June 30, 2020.
The estimated fair value of these assets and liabilities could be affected by market changes and this effect could be material.
As of June 30, 2021, there was a wide range of possible outcomes as a result of the COVID-19 pandemic, as there was a high degree of uncertainty about the duration and extent of its ultimate impacts. Management’s estimates of the impacts of the COVID-19 pandemic are highly dependent on variables that are difficult to predict, including the duration, severity, and geographic concentrations of the pandemic and any resurgence of the disease, the duration and degree to which visitors are restricted from the Company's communities, the effect of the pandemic on the demand for senior living communities, the degree to which the Company may receive government financial relief and the timing thereof, and the duration, costs and effectiveness of the Company’s response efforts. Future events may indicate differences from management's current judgments and estimates which could, in turn, result in future impairments.
12. LEASESCARES Act.
As of December 31, 2020, the Company had exited all master lease agreements under which the Company was previously responsible for all operating costs, maintenance and repairs, insurance and property taxes. At June 30, 2020, the Company leased 39 senior housing communities from certain REITs. Under these facility lease agreements, the Company was previously responsible for all operating costs, maintenance and repairs, insurance and property taxes.
A summary of operating and financing lease expense (including the respective presentation on the consolidated statement of operations and comprehensive income (loss) and cash flows from leasing transactions is as follows (in thousands):
Six Months Ended June 30,
Operating Leases20212020
Facility lease expense$0 $17,308 
General and administrative expenses75 361 
Operating expenses, including variable lease expense of $0 and $3,006 in 2021 and 2020, respectively60 3,190 
Total operating lease costs$135 $20,859 
Operating lease expense adjustment282 13,852 
Operating cash flows from operating leases$417 $34,711 






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Six Months Ended June 30,
Financing Leases20212020
Depreciation and amortization$42 $73 
Interest expense: financing lease obligations7 17 
Total financing lease costs$49 $90 
Operating cash flows from financing leases7 73 
Financing cash flows from financing leases42 17 
Total cash flows from financing leases$49 $90 
Future minimum lease payments associated with operating lease liabilities recognized on the Company’s Consolidated Balance Sheets as of June 30, 2021 are as follows (in thousands):
Year Ending December 31,Operating LeasesFinancing
Leases
Remainder 2021$87 $44 
202269 87 
202344 82 
202431 3 
20252 0 
Thereafter0 0 
Total$233 $216 
Less: Amount representing interest (present value discount)(16)(17)
Present value of lease liabilities$217 $199 
Less: Current portion of lease liabilities(121)(76)
Lease liabilities, net of current portion$96 $123 

13. SUBSEQUENT EVENTS

Investment Agreement
On July 22, 2021, subsequent to quarter end and as previously announced, the Company entered into an investment agreement (the “Investment Agreement”) with Conversant Dallas Parkway (A) LP (“Investor A”) and Conversant Dallas Parkway (B) LP, affiliates of Conversant Capital LLC (together with Investor A, the “Investors”), pursuant to which: (i) the Investors agreed to purchase from the Company, and the Company agreed to sell to the Investors, in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), 82,500 shares of newly designated Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) at a price per share equal to $1,000 (the “Private Placement”); and (ii) the Company intends to initiate a rights offering (the “Rights Offering”) to allow the holders of the outstanding shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), the right to purchase at $32 per share (the “Subscription Price”), a number of shares of Common Stock that would result in gross cash proceeds to the Company of approximately $70 million. Further details on the Rights Offering, including the record date and subscription period will be announced by the Company at or prior to the launch of the Rights Offering. In addition, the Investors agreed to partially backstop the Rights Offering up to $42.5 million through the purchase of additional shares of Series A Preferred Stock (the “Backstop Commitment” and together with the Private Placement and the Rights Offering, the “Transactions”), in each case on the terms described in the Investment Agreement.
The consummation of the transactions contemplated by the Investment Agreement is subject to stockholder approval and other customary closing conditions. Subject to the satisfaction or waiver of the closing conditions, the Transactions are expected to close in the fourth quarter of 2021.
On or after the closing date under the Investment Agreement, under the Investment Agreement, the Company may from time to time request additional investments from the Investors in shares of Series A Preferred Stock for future investment in accretive capital expenditures and acquisitions post-closing up to an aggregate amount equal to $25,000,000, subject to certain
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conditions. At the Closing, the Company and the Investors will enter into an Investor Rights Agreement, pursuant to which, among other things, the Investors will have the right to designate a number of directors to the Board of Directors, proportionate to its beneficial ownership of the Company.
At the Closing, all outstanding performance-based stock based compensation including restricted shares will be converted at target award levels to time-based restricted stock awards that will vest on the applicable scheduled vesting dates or the relevant award termination date applicable to such performance shares.

Also in conjunction with the Conversant transaction, the Company has established a cash retention pool of $4.2 million in the aggregate pursuant to which cash retention awards will be paid to certain employees, including the Company's senior management team. The Company also agreed in the retention agreements that following the Closing it will grant a total of 257,000 performance shares under the 2019 Plan to various individuals, subject to such individual’s continued employment through the grant date.

Promissory Note
Simultaneously with the entry into the Investment Agreement, the Company and the Investors entered into a $17.295 million secured promissory note (the “Promissory Note”) to provide interim debt financing to the Company. The Promissory Note will bear interest at a rate of 15.0% per annum, provided that $2.295 million of the Promissory Note which is applied to the payment of fees and expenses in connection with the Promissory Note and the Transactions will bear interest at a rate of 0% until the Outside Date (as defined in the Investment Agreement) and 15% from and after the Outside Date. Interest payments may be made, at the option of the Company, in cash or in kind (“PIK Interest”). In addition, the Promissory Note provides for a payment premium payable on the loans thereunder (other than the $2.295 million earmarked for the payment of fees and expenses) in an amount equal to either (i) 5% of the initial principal amount of the loans (less the amount of any interest paid or accrued on such loans), if the loans are repaid on the Closing Date or (ii) 20% of the initial principal amount of the loans (less the amount of any interest paid or accrued on such loans), if the loans are not repaid on the Closing Date. The proceeds of the Promissory Note will be used in accordance with an approved budget as agreed between the Company and the Investors. The Promissory Note is secured by certain assets of the Company as described therein. The Promissory Note will mature upon the earlier of (a) the Closing Date or (b) July 22, 2022. The interest rate on the Promissory Note will increase by an additional 3% if an Event of Default (as defined in the Promissory Note) occurs. If an Event of Default occurs, the Investors may, at their option, declare the entire unpaid principal sum (including PIK Interest), and accrued interest immediately due and payable in full.

Extension of BBVA Loan
In August 2021, subsequent to quarter-end, the Company executed a one year extension of the Company's $40.5 million loan agreement with BBVA, which extended the maturity date to December 10, 2022. The extension also included an additional six months extension option if certain financial criteria are met. This loan agreement extension also waived existing non-compliance with certain financial ratios and eliminated these financial ratios going forward. The extension requires a principal payment of $1.0 million in December 2021 and quarterly principal payments of $0.5 million beginning in March 2022 unless a certain financial ratio is attained.

Transactions Involving Certain Fannie Mae Loans
In the third quarter of 2021, subsequent to quarter end, Fannie Mae completed the transfer of ownership on 4 of the Company's properties. As discussed in “Note 7- Notes Payable,” the transfer of legal ownership of these properties was probable at December 31, 2020 and accordingly, the Company disposed of all assets related to these properties in the year ended December 31, 2020. As a result of the change in legal ownership, the Company will de-recognize all of the debt and related liabilities for these properties in the third quarter of fiscal 2021.

Insurance Notes Payable
In July 2021, the Company renewed certain insurance policies and entered into a finance agreement totaling approximately $0.2 million. The finance agreement has a fixed interest rate of 4.45% with the principal being repaid over a 9-month term.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain information containedThis Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our business and results of operations. This MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This report, constitutes “Forward-Looking Statements” withinincluding the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “would,” “intend,” “could,” “believe,” “expect,” “anticipate,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Examples offollowing MD&A, contains forward-looking statements include, without limitation, those relating toregarding future events or trends that should be read in conjunction with the Company’s future business prospects and strategies, financial results, working capital, liquidity, capital needs and expenditures, interest costs, insurance availability and contingent liabilities. Forward-looking statements are subject to certain risks, and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, but not limited to: the Company's ability to obtain stockholder approval for the proposed transaction with Conversant Capital, LLC ("Conversant"); the satisfaction of all conditions to the closing of the proposed transaction; other risks related to the consummation of the proposed transaction, including the risk that the transaction will not be consummated within the expected time period or at all; the costs related to the proposed transaction; the impact of the proposed transaction on the Company's business; any legal proceedings that may be brought related to the proposed transaction; the impact of COVID-19, including the actions taken to prevent or contain the spread of COVID-19; the Company's near-term debt maturities, and other conditionsfactors described under “Cautionary Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q and events described herein on the Company's ability to continue as a going concern; the Company’s ability to generate sufficient cash flows from operations, additional proceeds from debt refinancings, and proceeds from the sale of assets to satisfy its short and long-term debt obligations and to fund the Company’s capital improvement projects to expand, redevelop, and/or reposition its senior living communities; the Company’s ability to obtain additional capital on terms acceptable to it; the Company’s ability to extend or refinance its existing debt as such debt matures; the Company’s compliance with its debt agreements, including certain financial covenants and the terms and conditions of its recent forbearance agreements, and the risk of cross-default in the event such non-compliance occurs; the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all; the risk of oversupply and increased competition in the markets which the Company operates; the risks related to an epidemic, pandemic or other health crisis, such as the COVID-19 pandemic, including the transmission of its highly contagious variants and sub-lineages, and the development and availability of vaccinations and other related treatments; the risk of increased competition for skilled workers due to wage pressure and changes in regulatory requirements; the departure of the Company’s key officers and personnel; the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes; the risks associated with a decline in economic conditions generally; the adequacy and continued availability of the Company’s insurance policies and the Company’s ability to recover any losses it sustains under such policies; changes in accounting principles and interpretations; and the other risks and factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including those set forth under “Item 1A. Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 , which was2021 filed with the SEC on March 31, 2021April 15, 2022. Actual results may differ materially from those projected in such statements as a result of such risks, certainties and this Quarterlyother factors.
Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-Q.10-K for the fiscal year ended December 31, 2021. There have been no significant changes to our critical accounting policies since December 31, 2021.

Overview
The following discussion and analysis addresses (i) the Company’s results of operations for the three and six months ended June 30,March 31, 2022 and 2021, and 2020, and (ii) liquidity and capital resources of the Company, and should be read in conjunction with the Company’s consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.Company.
The Company is one of the leading owner-operators of senior housing communities in the United States. The Company’s operating strategy is to provide value to its senior living residents by offering quality senior living services at reasonable prices, while achieving and sustaining a strong, competitive position within its geographically concentrated regions, as well as continuing to enhance the performance of its operations. The Company provides senior living services to the 75+ population, including independent living, assisted living, and memory care services at reasonable prices. Many of the Company’s communities offer a continuum of care to meet each resident’s needs as they change over time. This continuum of care, which integrates independent living, assisted living, and memory care which may be bridged by home care through independent home care agencies, sustains our residents’ autonomy and independence based on their physical and mental abilities.
As of June 30, 2021,March 31, 2022, the Company operated 8476 senior housing communities in 1918 states with an aggregate capacity of approximately 10,0009,500 residents, including 6062 owned senior housing communities that the Company owned, 9 properties that were in the process of transitioning legal ownership to Fannie Mae, and 1514 communities that the Company managedwe manage on behalf of third parties.

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COVID-19 Pandemic
The United States broadly continues to experience the pandemic caused by COVID-19, including its highly contagious variants and sub-lineages, which has significantly disrupted the nation’s economy, the senior living industry and the Company’s business.
The COVID-19 pandemic caused a decline in the occupancy levels at the Company’s communities, which negatively impacted the Company’s revenues and operating results, that depend significantly on such occupancy levels. In an effort to protect its residents and employees and slow the spread of COVID-19 and in response to quarantines, shelter-in-place orders and other limitations imposed by federal, state and local governments, the Company had previously restricted or limited access to its communities, including limitations on in-person prospective resident tours and, in certain cases, new resident admissions. As a result,of March 31, 2022, all of the Company's senior living communities were open for new resident move-ins. Although vaccines are now widely available, we cannot predict the duration of the pandemic or its ongoing impact on our business. If the COVID-19 pandemic caused a decline inworsens, including the occupancy levels at the Company’s communities, which has negatively impacted the Company’s revenues and operating results, which depend significantly on such occupancy levels.  Reduced controllable move-out activity duringtransmission of highly contagious variants of the COVID-19 pandemicvirus, the Company may partially offset future adverse revenue impacts.have to impose or revert to restricted or limited access to its communities.
In addition, theThe COVID-19 pandemic has required the Company to incur significant additional operating costs and expenses in order to implement enhanced infection control protocols and otherwise care for its residents, including increased costs and expenses relating to supplies and personal protective equipment, testing of the Company’s residents and employees, labor and specialized disinfecting and cleaning services, which has increased the costs of caring for the residents and resulted inin reduced occupancy at such communities. During the three and six months ended June 30,March 31, 2022 and 2021, the Company incurred $0.2 million and $1.3$1.0 million, respectively, in costs related to the COVID-19 pandemic and during the three and six months ended June 30, 2020, the Company incurred $2.9 million and $3.2 million, respectively, indirect costs related to the COVID-19 pandemic.
In November 2020April 2022 and January 2021, the Company accepted $8.1$9.1 million and $8.7 million of cash, forrespectively, through grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phase 2Phases 4 and 3 General Distribution, which was expanded by the CARES Act to provide grants or other funding mechanismsmechanism to eligible healthcare providers for healthcare related expenses
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healthcare-related or lost revenues attributable to COVID-19. The $8.7 million Phase 3 Provider Relief Funds have beenwere recorded as other income in the sixthree months ended June 30,March 31, 2021. The Phase 4 Provider Relief Funds will be recorded in the second quarter of 2022. The CARES Act Phase 23 and Phase 3 Provider Relief Funds4 funds are grants that do not havehave to be repaid provided the Company satisfieswe satisfy the terms andand conditions of the CARES Act. In addition, the Company had received approximately $1.9 million in relief from state agencies in the year ended December 31, 2020, and has applied for additional federal and state funding.  
The Company elected to utilize the CARES Act payroll tax deferral program to delay payment of a portion of its payroll taxes incurred from April 2020 through December 2020 totaling $7.4 million.2020. The Company repaid one-half of the deferral amount in December 2021 and the other half will become due on December 31, 2022. At June 30, 2021,March 31, 2022, the Company had $3.7 million of thein deferred amountspayroll taxes, which is included in accrued expenses and the remaining $3.7 million is included in other long-term liabilities in the Company’s Consolidated Balance Sheets.expenses.
CARES Act Provider Relief Funds are subject to the terms and conditions of the program, including stringent restrictions that funds may only be used to reimburse COVID-19 related expenses or lost revenue that are attributable to COVID-19 and have not been reimbursed from other sources or that other sources are not obligated to reimburse.While we intend to pursue additional funding that may become available, there can be no assurances that we will qualify for, or receive, any additional relief funds in the future.
In the second quarter of fiscal year 2021, the Company experienced increased visits to our communities as a result of less restrictive visitation protocols and regulations, as well as returning to in-person community tours as the general economy began to show signs of recovery from the disruption caused by the COVID-19 pandemic.
We cannot, at this time, predict with reasonable certainty the impacts that the COVID-19 pandemic will ultimately have on our business, results of operations, cash flow, and liquidity, and our preparation and response efforts may delay or negatively impact our strategic initiatives, including plans for future growth. The ultimate impact of the COVID-19 pandemic will depend on many factors, many of which cannot be foreseen, including: (i) the duration, severity and geographic concentrations of the COVID-19 pandemic and any resurgence, additional waves and highly contagious variants and strains of the disease; (ii) the impact of COVID-19 on the nation’s economy and debt and equity markets at large and the local economies in our markets; (iii) the development and availability of COVID-19 infection and antibody testing, therapeutic agents and vaccines, and the prioritization of such resources among businesses and demographic groups, including within the geographic areas in which the Company operates and derives material revenue; (iv) governmental financial and regulatory relief efforts that may become available to businesses and individuals; (v) concerns over, and the perceptions of, the safety of senior living communities during and after the pandemic; (vi) changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand; (vii) the impact of the COVID-19 pandemic on our residents’ and their families’ ability to afford our resident fees, including due to changes in unemployment rates, consumer confidence, and equity markets; (viii) changes in the acuity levels of our new residents; (ix) the disproportionate impact of the COVID-19 pandemic on seniors generally and those residing in our communities; (x) the duration and costs of our preparation and response efforts, including increased supplies, labor, litigation, and other expenses; (xi) the impact of the COVID-19 pandemic on our ability to (1) complete equity and debt financings, refinancings, or other transactions (including dispositions) and (2) generate sufficient cash
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flow to cover required interest payments and to satisfy financial and other covenants in our debt documents; (xii) increased regulatory requirements and enforcement actions resulting from the COVID-19 pandemic, including those that may limit our collection efforts for delinquent accounts; and (xiii) the frequency and magnitude of legal actions and liability claims that may arise due to the COVID-19 pandemic and our associated response efforts.
Going Concern and Management’s Plan
Accounting Standards Codification (“ASC”) 205-40, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” requires an evaluation of whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. Initially, this evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt exists, management evaluates the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
In complying with the requirements under ASC 205-40 to complete an evaluation without considering mitigating factors, the Company considered several conditions or events including (1) uncertainty around the continued impact of the COVID-19 pandemic on the Company’s operations and financial results, (2) $121.3 million of debt maturing in the next 12 months, which includes $72.0 million due in December 2021, $37.0 million due in the second quarter of fiscal 2022 and $12.3 million of debt service payments, (3) the Company's working capital deficiency and (4) non-compliance with certain financial covenants of its loan agreements with Fifth Third Bank covering two properties at June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020 and non-compliance with certain financial covenants of its loan agreements with BBVA covering three properties at June 30, 2021 and December 31, 2020. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern for the 12-month period following the date its interim June 30, 2021 financial statements are issued.
As discussed below, the Company has implemented plans, including strategic and cash-preservation initiatives designed to provide the Company with adequate liquidity to meet its obligations for at least the twelve-month period following the date its interim June 30, 2021 financial statements are issued. The Company’s primary sources of near- and medium-term liquidity are expected to be cash flows from operations, the private placement of convertible preferred stock and common stock rights offering and debt refinancings or extensions, to the extent available on acceptable terms.
Strategic and Cash Preservation Initiatives
The Company has taken or intends to take the following actions, among others, to improve its liquidity position and to address uncertainty about its ability to operate as a going concern:
•In August 2021, subsequent to quarter end, the Company executed a one year extension of the Company's $40.5 million loan with BBVA covering three of the Company's properties, with an option to extend an additional six months. This loan agreement extension also waived existing non-compliance with certain financial ratios and eliminated these financial ratios going forward. The extension requires a principal payment of $1.0 million in December 2021 and quarterly principal payments of $0.5 million beginning in March 2022 unless a certain financial ratio is attained. See "Note 13- Subsequent Events."
•The Company is in active discussions with Fifth Third Bank to resolve its noncompliance with financial covenants at June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020 for debt totaling $31.5 million at June 30, 2021, included in current portion of notes payable, net of deferred loan costs on the Consolidated Balance Sheets. As a result of these defaults, in May 2021, Fifth Third Bank issued a notice of default letter and the Fifth Third bridge loan is callable. In the event that this loan is accelerated there is 25% recourse to Capital Senior Living Corporation.
•In July 2020, the Company initiated a process that is intended to transfer the operations and ownership of 18 communities that were either underperforming or were in underperforming loan pools to Fannie Mae, the holder of nonrecourse debt on such communities. When legal ownership of the properties transfers to Fannie Mae or its designees and the liabilities relating to such communities are extinguished, the Company expects to recognize a gain related to the extinguishment in accordance with ASC 470, “Debt.” During the three and six months ended June 30, 2021, Fannie Mae completed the transition of legal ownership of six and nine of the Company's properties, respectively, and the Company recorded a gain on extinguishment of debt of $67.2 million and $114.2 million, respectively. At June 30, 2021, the Company included $112.7 million in outstanding debt in the current portion of
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notes payable, net of deferred loan costs, and $6.5 million of accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to these properties. 
•In July 2021, subsequent to quarter end, the Company entered into an investment agreement with Conversant Capital, LLC ("Conversant") pursuant to which affiliates of Conversant agreed to purchase $82.5 million of the Company's Series A Convertible Preferred Stock ("Convertible Preferred Stock") in a private placement, to backstop $42.5 million of an approximately $70.0 million rights offering of the Company's common stock through the purchase of additional shares of Convertible Preferred Stock, and to provide a $25.0 million accordion. The minimum initial gross proceeds from the proposed transaction will total $125.0 million in aggregate. The proposed transaction is subject to approval by the Company’s stockholders and other customary closing conditions. In conjunction with this proposed transaction, the Company entered into a $17.3 million promissory note, $15.0 million of which bears interest at 15% and will be converted into Convertible Preferred Stock upon closing of the private placement (or paid down with the proceeds of the private placement). See "Note 13- Subsequent Events."
The Company’s plans are designed to provide the Company with adequate liquidity to meet its obligations for at least the 12-month period following the date its interim June 30, 2021 financial statements are issued; however, the remediation plan is dependent on conditions and matters that may be outside of the Company’s control or may not be available on terms acceptable to the Company, if at all, many of which have been made worse or more unpredictable by the COVID-19 pandemic. Accordingly, management could not conclude that it was probable that the plans will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.  If the Company is unable to successfully execute all of these initiatives or if the plan does not fully mitigate the Company’s liquidity challenges, the Company’s operating plans and resulting cash flows along with its cash and cash equivalents and other sources of liquidity may not be sufficient to fund operations for the 12-month period following the date the interim June 30, 2021 financial statements are issued.  
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date the financial statements are issued. As such, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. The United States broadly continues to experience and be impacted by the COVID-19 pandemic, including its highly contagious variants and sub-lineages, which has significantly disrupted the nation’s economy, the senior living industry, and the Company’s business.

Significant Financial and Operational Highlights
RevenuesOperations
Weighted average occupancy for the second quarter ofthree months ended March 31, 2022 and 2021 were down 53%for the 60 communities owned during both periods was 82.3% and 75.5%, respectively, reflecting continued occupancy recovery. The average monthly rental rate for the three months ended March 31, 2022 was higher by 320 basis points when compared to the second quarter of 2020 asthree months ended March 31, 2021.

During the three months ended March 31, 2022, the Company completed its terminationcontinued to be impacted by the senior living industry's workforce challenges related to limited staff availability, which required the use of all underperforming leases by December 31, 2020, resulting in 39 fewer leasedovertime, shift bonuses and contract labor to properly support our senior living communities in the consolidated portfolio than compared with the prior comparable period. These reductions in revenues that were primarily driven by volume reductions from property dispositions also drove corresponding reductions in operating expenses.and residents.
During the second quarter
Acquisition of 2021,Indiana Communities
On February 1, 2022, the Company completed the transitionacquisition of two senior living communities located in Indiana for a combined purchase price of $12.3 million. The communities consist of a total of 157 independent living units. The acquisition price was funded with cash on hand.
2022 Mortgage Refinance
In March 2022, the Company completed the refinancing of certain existing mortgage debt (“Refinance Facility”) for ten of its communities. The Refinance Facility includes an initial term loan of $80.0 million. In addition, $10.0 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the legal ownershipthen outstanding balance of sixthe Refinance Facility if the Company achieves certain financial covenants maintained over a certain time period. As defined and required in the Limited Payment Guaranty, The Company is required to maintain certain covenants including maintaining Tangible Net Worth of its$150 million and Liquid Assets of at least $13 million (inclusive of a $1.5 million debt service reserve fund provided by The Company at the closing of the Refinance Facility).
The Refinance Facility carries an initial interest rate of one-month SOFR plus 3.50%, subject to a SOFR floor of 0.25% and a lower margin spread of 3.25% or 3.00% if the Company achieves and maintains certain financial covenants. The Refinance Facility also requires the financial performance of the ten communities to Fannie Mae,achieve certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the holderLoan Agreement) with a first measurement date as of June 30, 2022 and quarterly measurement dates thereafter. We can provide no assurance that future financial covenants will be met. The Loan Agreement requires the non-recourseestablishment of a debt related to such properties, and recognizedservice reserve fund with a gain ondefined balance of $1.5 million (included in Liquid Assets) that may be released based upon terms described in the extinguishment of debt and de-recognition of liabilities of those properties of $67.2 million.Loan Agreement. This reserve fund is included in our “other assets.”
Consolidated average financial occupancy for the second quarters of fiscal 2021 and 2020 was 78.1% and 77.6%, respectively reflecting recovery from challenged occupancy during the COVID-19 pandemic. Consolidated average monthly rental rates were lower by 640 basis points when comparing the second quarter of fiscal 2021 to the second quarter of fiscal 2020 as a result of due to the transitioning of leased communities, the impact of move-outs related to COVID-19, and some promotional activity as the company focuses on recovering lost occupancy.
Early Termination of Master Lease Agreements
As of December 31, 2020,The Refinancing Facility requires that the Company had exited all of its master lease agreements.
As of December 31, 2019, the Company leased 46 senior housing communities from certain REITs.  The Company transitioned one community to a different operator effective January 15, 2020. During the first quarter of 2020, the Company entered into agreements that restructured or terminated certain of its master lease agreements with each of its landlords as further described below. The Company was not subject to any master lease agreementspurchase and maintain an interest rate cap facility during the three months ended June 30, 2021.
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Ventas
As of December 31, 2019, the Company leased seven senior housing communities from Ventas Inc. ("Ventas").  The term of the Company's master lease agreement with Ventas (the "Ventas Master Lease Agreement") was scheduled to expire on September 30, 2025.  On March 10, 2020,Refinancing Facility. The Company is in process of obtaining the Company entered into an agreement with Ventas (as amended, the “Ventas Agreement”), providing for the early termination of the Ventas Master Lease Agreement covering all seven communities. Pursuant to the Ventas Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Ventas rent of approximately $1.0 million per month for such communities as compared to approximately $1.3 million per month that would otherwise have been due and payable under the Ventas Master Lease Agreement.  In addition, the Ventas Agreement provided that the Company would not be required to comply with certain financial covenants of the Ventas Master Lease Agreement during the forbearance period, which terminated on December 31, 2020.  In conjunctioninterest rate cap facility in compliance with the Ventas Agreement, the Company released to Ventas $4.1 million in security deposits and $2.5 million in escrow deposits held by Ventas, and Ventas reduced the amounts and term of the Company’s lease payments, and effectively eliminated the Company’s lease termination obligation, which was $11.4 million at December 31, 2019.  The Master Lease Agreement terminated on December 31, 2020.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Ventas and modification of the lease term pursuant to the Ventas Agreement was determined to be a modification of the Ventas Master Lease Agreement.  As such, the Company reassessed the classification of the Ventas Master Lease Agreement based on the modified terms and determined that the lease continued to be classified as an operating lease until the communities transitioned to a different operator or management agreement, at which time the lease would terminate. The modification resulted in a reduction to the lease termination obligation, lease liability and operating lease right-of-use asset recorded in theCompany's Consolidated Balance Sheets by approximately $11.4 million, $51.6 million, and $47.8 million, respectively, during the first quarter of 2020.  The Company recognized a net gain of approximately $8.4 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020, and was primarily due to the impact of the change in lease term on certain of the right-of-use asset balances.  As a result of the modification to the Ventas Master Lease Agreement, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 5- Impairment of Long-Lived Assets.”
Under the terms of the Ventas Agreement, on December 31, 2020, Ventas elected to enter into a property management agreement with the Company as manager of the seven properties for a management fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions. As a result of these transactions, the Company had no remaining lease agreements with Ventas on January 1, 2021. At June 30, 2021, the Company managed these seven communities on behalf of Ventas.
Welltower
As of December 31, 2019, the Company leased 24 senior housing communities from Welltower Inc. ("Welltpower"). The initial terms of the Welltower master lease agreements (the "Welltower Master Lease Agreements") were scheduled to expire on various dates from April 2025 through April 2026. On March 15, 2020, the Company entered into an agreement with Welltower (the “Welltower Agreement”), providing for the early termination of three Welltower Master Lease Agreements between it and Welltower covering all 24 communities.  Pursuant to the Welltower Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Welltower rent of approximately $2.2 million per month for such communities as compared to approximately $2.8 million per month that would otherwise have been due and payable under the Welltower Master Lease Agreements. In addition, the Welltower Agreement provided that the Company would not be required to comply with certain financial covenants of the Welltower Master Lease Agreements during the forbearance period, which terminated on December 31, 2020. In conjunction with the Welltower Agreement, the Company agreed to release $6.5 million in letters of credit to Welltower, which were released in the second quarter of fiscal 2020. The Welltower Master Lease Agreements terminated on December 31, 2020. Upon termination, Welltower elected to enter into a property management agreement with the Company as manager for the remaining properties that had not been transitioned to other operators.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Welltower under the then- existing Welltower Master Lease Agreements and modification to the lease term pursuant to the Welltower Agreement was determined to be a modification of the Welltower Master Lease Agreements.  As such, the Company reassessed the classification of the Welltower Master Lease Agreements based on the modified terms and determined that the each of the leases continued to be classified as an operating lease until the applicable communities transitioned to a different operator or management agreement,lender’ requirement.
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at which time such lease would terminate.  The modification resulted in a reduction to the lease liability and operating lease right-of-use asset recorded in theCompany'sConsolidatedBalanceSheets byapproximately $129.9 million, and $121.9 million, respectively,during the first quarter of 2020.  The Companyrecognized a gain ofapproximately $8.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020. As a result of the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 5- Impairment of Long-Lived Assets.”
Under the terms of the Welltower Agreement, on December 31, 2020, Welltower elected to enter into a property management agreement with the Company as manager of the remaining properties that had not been transitioned to other operators for a management fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions. At June 30, 2021, the Company managed four communities on behalf of Welltower.
Healthpeak
On March 1, 2020, the Company entered into an agreement (the "Healthpeak Agreement”) with Healthpeak Properties, Inc. ("Healthpeak"), effective February 1, 2020, providing for the early termination of one of its Master Lease Agreements with Healthpeak (the "Healthpeak Master Lease Agreements"), which was previously scheduled to mature in April 2026. The Healthpeak Master Lease Agreement terminated and was converted into a management agreement under a structure permitted under the REIT INvestment Diversification and Empowerment Act of 2007, pursuant to which the Company agreed to manage the six communities that were subject to the Healthpeak Master Lease Agreement until such communities are sold by Healthpeak.  Pursuant to the Management Agreement, the Company receives a management fee equal of gross revenues realized at the applicable senior living communities plus reimbursement for its direct costs and expenses related to such communities.  In conjunction with the Healthpeak Agreement, the Company released to Healthpeak approximately $2.6 million of security deposits held by Healthpeak. The Company recognized a net loss of $7.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2020. In January 2021, Healthpeak sold the six properties and terminated all agreements with the Company related to those six properties.
In November 2020, upon the expiration of the other Master Lease Agreement with Healthpeak, the Company entered into a short-term excess cash flow lease amendment pursuant to which the Company agreed to manage the seven communities that were then subject to the other Master Lease Agreement until the earlier of such time that the communities are sold by Healthpeak or until April 30, 2021. Pursuant to such agreement, the Company began paying Healthpeak monthly rent of any excess cash flow of the communities and earning a management fee for management of the seven communities.
In April 2021, the Company executed an agreement with Healthpeak to amend and extend its existing agreement for the remaining three properties managed by the Company on behalf of Healthpeak. In addition to a management fee based on a percentage of revenue, the Company will receive a monthly flat fee for three months with such fee increasing thereafter until such properties are sold or December 31, 2021, whichever is earlier. At June 30, 2021, the Company managed the three properties on behalf of Healthpeak.
Website
The Company’s Internet website, www.capitalsenior.com, contains an Investor Relations section, which provides links to the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and Section 16 filings and any amendments to those reports and filings. These reports and filings are available free of charge through the Company’s Internet website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
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Results of Operations
The following table sets forthThree months ended March 31, 2022 as compared to three months ended March 31, 2021
Revenues
Resident revenue for the periods indicated selected Consolidated Statements of Operations and Comprehensive Income (Loss) data in thousands of dollars and expressedthree months ended March 31, 2022, was $50.8 million as a percentage of total revenues:
Three months ended June 30,Six Months Ended June 30,
2021202020212020
$%$%$%$%
Revenues:
Resident revenue$46,649 81.1 $99,442 98.0 $91,851 77.1 $205,058 98.8 
Management fees763 1.3 159 0.2 1,949 1.6 215 0.1 
Community reimbursement revenue10,130 17.6 1,876 1.8 25,390 21.3 2,333 1.1 
Total revenues57,542 100.0 101,477 100.0 119,190 100.0 207,606 100.0 
Expenses:       
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)37,568 65.3 71,307 70.3 74,326 62.4 146,709 70.7 
General and administrative expenses8,839 15.4 6,473 6.4 16,026 13.4 12,908 6.2 
Facility lease expense— — 6,520 6.4 — — 17,308 8.3 
Stock-based compensation expense517 0.9 478 0.5 683 0.6 1,074 0.5 
Depreciation and amortization expense9,025 15.7 16,321 16.1 18,308 15.4 32,036 15.4 
Long-lived asset impairment— — — — — — 35,954 17.3 
Community reimbursement expense10,130 17.6 1,876 1.8 25,390 21.3 2,333 1.1 
Total expenses66,079 114.8 102,975 101.5 134,733 113.0 248,322 119.6 
Other income (expense):       
Interest income1 — 15 — 5 — 69 — 
Interest expense(9,499)(16.5)(11,233)(11.1)(18,873)(15.8)(22,903)(11.0)
Gain on facility lease modification and termination, net— — — — — — 11,240 5.4 
Gain on extinguishment of debt67,213 116.8 — — 114,212 95.8 — — 
Loss on disposition of assets, net— — — — (421)(0.4)(7,356)(3.5)
Other income (expense)(2)— (8)— 8,703 7.3 (7)— 
Income (loss) from continuing operations before provision for income taxes49,176 85.5 (12,724)(12.6)88,083 73.9 (59,673)(28.7)
Provision for income taxes(98)(0.2)(29)— (161)(0.1)(261)(0.1)
Net income (loss)$49,078 85.3 $(12,753)(12.6)$87,922 73.8 $(59,934)(28.8)
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Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
Revenues.
When comparing the second quarter of fiscal 2021 to the second quarter of fiscal 2020, the Company generated resident revenue of approximately $46.6 million compared to resident revenue$45.2 million for the three months ended March 31, 2021,an increase of approximately $99.4 million, respectively, representing a decrease of approximately $52.8$5.6 million, or 53%12%. The decreaseincrease in revenue was generated by significant property dispositions throughout 2020, including: (1) the sale of two owned properties, one of which transitioned to a management agreement with the buyer; (2) the transition of 39 leased communities to different operators in conjunction with the Company exiting its master lease agreements; and (3) the process of transferring legal ownership of 18 communities to Fannie Mae, the holder of nonrecourse debt related to such communities. Together, these actions accounted for a decrease in revenue of approximately $39.2 million. The remaining decrease was primarily due to a decreaseincreased occupancy, increased average rent rates and the acquisition of two new communities in total occupancies atearly 2022.
Management fee revenue for the Company’s remaining senior housing communities and reductions in average monthly rent. The decrease in the total occupancy was primarily due to reduced move-in activity relatedthree months ended March 31, 2022, decreased by $0.6 million as compared to the COVID-19 pandemic and our response efforts.three months ended March 31, 2021, primarily as a result of managing fewer communities in 2022.
The decreases in resident revenue were partially offset by increases in management fees and communityCommunity reimbursement revenue of $0.6for the three months ended March 31, 2022, was $7.0 million and $8.3 million, respectively, which were due to the Company’s management of 15 communities during the second quarter of 2021.
Expenses.
Total expenses were $66.1 million in the second quarter of fiscal 2021as compared to $103.0$15.3 million infor the second quarter of fiscal 2020, representingthree months ended March 31, 2021, a decrease of $36.9 million, or 36%. This$8.3 million. The decrease iswas primarily thea result of a $33.7transitioning 15 Fannie Mae communities to other operators in 2021.
Expenses
Operating expenses for the three months ended March 31, 2022, were $41.9 million decrease in operating expenses, a $6.5as compared to $36.8 million decrease in facility lease expenses, and a $7.3 million decrease in depreciation expense, which was partially offset by a $8.3 millionfor the three months ended March 31, 2021, an increase in community reimbursement expense and a $2.4 millionof $5.1 million. The increase in general and administrative expenses.  
•The quarter-over-quarter decrease in operating expenses of $33.7 million is primarily due to a $23.8$3.2 million decreaseincrease in labor and employee-related expenses, a $3.0 million decrease in food expense, a $2.5 million decrease in utilities,including premium labor, and a $4.4$1.9 million decreaseincrease in all other operating expenses, all of which were primarily due to the disposition of communities in the second quarter of 2020.expenses.
•The increase in generalGeneral and administrative expenses for the three months ended March 31, 2022, were $6.4 million as compared to $7.2 million for the three months ended March 31, 2021, a decrease of $2.4 million$0.8 million. This decrease is primarily due to $2.8 million higher employee benefits and health insurance claims, $0.9 million in travel and other expenses, and $0.4 million in contractdecreased labor and consulting expenses, whichemployee-related expenses.
Community reimbursement expense for the three months ended March 31, 2022 was partially offset by reductions of approximately $1.0$7.0 million labor related expenses, and $0.7as compared to $15.3 million reduction in transaction costs related to lease amendments and terminations infor the second quarter of prior year.
•The $6.5 million decrease in facility lease expense is attributable to the termination of all of the Company's master lease agreements during fiscal 2020.
•The $7.3 million decrease in depreciation and amortization expense primarily results fromthree months ended March 31, 2021, a decrease of $8.3 million. The decrease was primarily a result of transitioning 15 Fannie Mae communities to other operators in depreciable assets at2021.
Interest expense for the Company’s communities resulting from the disposition of communities since the first quarter of 2020.
•The $8.3three months ended March 31, 2022 was $7.6 million increase in community reimbursement expense includes reimbursements due from the owners of the communities for which the Company began providing management services on March 1, 2020 for 6 communities,as compared to providing management services to 15 communities during$9.4 million for the second quarterthree months ended March 31, 2021, a decrease of 2021.
Other income and expense.
•Interest income generally reflects interest earned on the investment of cash balances and escrowed funds or interest associated with certain income tax refunds or property tax settlements.
•Interest expense decreased in the second quarter of fiscal 2021 when compared to the second quarter of fiscal 2020$1.8 million primarily due to lower overall borrowings in 2022. Notes payable decreased $192.7 million from March 31, 2021 to March 31, 2022.
Loss on extinguishment of debt for the (i) early repayment of mortgage debt associated with the sale of one community in the fourth quarter of 2020 and (ii) completion of the transition of the ownership of nine communities to Fannie Mae in the sixthree months ended June 30, 2021.
•TheMarch 31, 2022 was $0.6 million as compared to a gain on extinguishment of debt of $67.2$47.0 million for the three months ended March 31, 2021, a decrease of $47.6 million. The 2022 loss relates to the de-recognitionrefinancing of debt. The 2021 gain related to the derecognition of notes payable and liabilities as a result of the completion of the transition of the legal ownership of six of the Company's communities back to
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Fannie Mae, the holder of the non-recourse debt related to such properties, during the three months ended June 30, 2021.
Provision for income taxes.
Provision for income taxes for the three months ended June 30, 2021 was $0.1 million, or 0.2% of net income before income taxes, compared to a provision for income taxes of $0.1 million, or 0.2% of loss before income taxes, for the three months ended June 30, 2020. The effective tax rates for the second quarters of fiscal 2021 and 2020 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax, which effectively imposes tax on modified gross revenues for communities within the State of Texas. The Company consolidated 16 and 38 Texas communities at June 30, 2021 and 2020, respectively, which contributes to the overall provision for income taxes. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. At year end, the Company had a three-year cumulative operating loss for its U.S. operations and accordingly, has provided a full valuation allowance on its net deferred tax assets. The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized.
Net income (loss) and comprehensive income (loss).
As a result of the foregoing factors, the Company reported net income and comprehensive income of $49.1 million for the three months ended June 30, 2021, compared to net loss and comprehensive loss of $12.8 million for the three months ended June 30, 2020.
Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
Revenues.
When comparing the six month period ended June 30, 2021 to the six month period ended June 30, 2020, the Company generated resident revenue of approximately $91.9 million compared to resident revenue of approximately$205.1 million, respectively, representing a decrease of approximately $113.2 million, or 55%.  The decrease in revenue was generated by significant property dispositions throughout 2020, including: (1) the sale of two owned properties, one of which transitioned to a management agreement with the buyer; (2) the transition of 39 leased communities to different operators in conjunction with the Company exiting its master lease agreements; and (3) the process of transferring legal ownership of 18four communities to Fannie Mae, the holder of nonrecourse debtthe related to such communities. Together, these actions accounted for a decrease in revenue of approximately $83.0 million. The remaining decrease was primarily due to a decrease in total occupancies at the Company’s remaining senior housing communities and reductions in average monthly rent. The decrease in the total occupancy was primarily due to reduced move-in activity related to the COVID-19 pandemic and our response efforts.
The decreases in resident revenue were partially offset by increases in management fees and community reimbursement revenue of $1.7 million and $23.1 million, respectively, which were due to the Company’s management of 15 communities during the first six months of 2021.
Expenses.
Total expenses were $134.7 million for the first six months of fiscal 2021 compared to $248.3 million for the first six months of fiscal 2020, representing a decrease of $113.6 million, or 46%. This decrease is primarily the result of a $72.4 million decrease in operating expenses, a $17.3 million decrease in facility lease expenses, a $13.7 million decrease in depreciation expense, and a $36.0 million decrease in non-cash impairment charges, partially offset by a $23.1 million increase in community reimbursement expense and a $3.1 million increase in general and administrative expenses.  
•The year-over-year decrease in operating expenses of $72.4 million is primarily due to a $48.1 million decrease in labor and employee-related expenses, a $5.8 million decrease in food expense, $5.3 million decrease in utilities, and a $13.2 million decrease in all other operating expenses, all of which were primarily due to the disposition of communities since the first quarter of 2020.
•The increase in general and administrative expenses of $3.1 million is primarily due to a $4.4 million higher employee benefits and health insurance claims, $0.9 million in contract labor and consulting expenses, and $0.5 million in other expenses, which were partially offset by reductions of approximately $2.0 million in transaction
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costs incurred in the first half of 2020 and which were related to the lease amendments and terminations in the prior year, $0.3 million in labor related expenses and $0.4 million in total fees.
•The $17.3 million decrease in facility lease expense is attributable to the termination of all of the Company's Master Lease Agreements during fiscal 2020.
•The $13.7 million decrease in depreciation and amortization expense primarily results from a decrease in depreciable assets at the Company’s communities resulting from the disposition of communities since the first quarter of 2020.
•During the first half of 2020, the Company recorded $36.0 million of non-cash impairment charges with no comparable charges in the first half of 2021.
•The $23.1 million increase in community reimbursement expense includes reimbursements due from the owners of the communities for which the Company began providing management services on March 1, 2020 for 6 communities, compared to providing management services to 15 communities during the six months ended June 30, 2021.non-recourse debt.
Other income and expense.
•Interest income generally reflects interest earned onfor the investment of cash balances and escrowed funds or interest associated with certain income tax refunds or property tax settlements.
•Interest expense decreased in the first half of fiscal 2021 whenthree months ended March 31, 2022 was $0.1 million as compared to other income for the first half of fiscal 2020 primarily due to the early repayment of mortgage debt associated with the sale of one community in the fourth quarter of 2020 and the completion of the transition of the ownership of nine communities to Fannie Mae in the first half of 2021.
•The gain on extinguishment of debt of $114.2 million relates to the de-recognition of notes payable and liabilities as a result of the completion of the transition of the legal ownership of nine of the Company's communities back to Fannie Mae, the holder of the non-recourse debt related to such properties.
•Other incomethree months ended March 31, 2021 of $8.7 million is themillion. The 2021 amount reflects cash received for the Phase 3 General Distribution of the CARES Act for healthcare relatedhealthcare-related expenses or lost revenues attributable to COVID-19.

Provision for income taxes.Cash Flow Analysis
Provision for income taxesThree months ended March 31, 2022 as compared to three months ended March 31, 2021
Operating activities
Net cash provided by operating activities for the sixthree months ended June 30, 2021March 31, 2022 was $0.2$0.4 million or 0.2% of net income before income taxes,as compared to a provision for income taxes of $0.3$3.3 million or 0.4% of loss before income taxes, for the sixthree months ended June 30, 2020. The effective tax rates for the first six monthsMarch 31, 2021, a decrease of fiscal 2021 and 2020 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax, which effectively imposes tax on modified gross revenues for communities within the State of Texas. The Company consolidated 16 and 38 Texas communities at June 30, 2021 and 2020, respectively, which contributes to the overall provision for income taxes. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. At year end, the Company had a three-year cumulative operating loss for its U.S. operations and accordingly, has provided a full valuation allowance on its net deferred tax assets. The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized.
Net income (loss) and comprehensive income (loss).
As$2.9 million primarily a result of the foregoing factors,$8.7 million CARES Act funding received in the Company reported net incomefirst quarter of 2021 that was not received in the first quarter of 2022, and comprehensive income of $87.9decreased cash inflows from operations in 2022 as compared to 2021. We received $9.1 million in CARES Act funding in April 2022.
Investing activities
Net cash used in investing activities for the sixthree months ended June 30, 2021,March 31, 2022 was $17.9 million as compared to net loss $2.1 million for the three months ended March 31, 2021 and comprehensive lossprimarily results from ongoing capital improvements and refurbishments at existing communities and, for 2022, the acquisition of $59.9 milliontwo new communities.
Financing activities
Net cash used in financing activities for the sixthree months ended June 30, 2020.
Liquidity and Capital Resources
In addition to approximatelyMarch 31, 2022 was $14.613.4 million and primarily results from repayments of unrestricted cash balances on hand asnotes payable and deferred financing costs paid, net of June 30, 2021, the Company’s principal sources of liquidity are expected to be cash flows from operations, the private placement of Convertible Preferred Stock and the common stock rights offering in July 2021, subsequent to quarter-end, and additional proceeds from notes payable, of $12.7 million, related to our 2022 debt refinancings, and/or proceeds from the salerefinancing and $0.7 million of owned assets. dividends paid to Series A Preferred Stockholders. The Company has implemented plans, which includes raising capital, and othernet cash used in financing
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strategicactivities for the three months ended March 31, 2021 was $2.3 million and cash-preservation initiatives, allprimarily results from repayments of which are designednotes payable, net of proceeds from notes payable.
Liquidity and Capital Resources
Short-term liquidity
Our primary source of short-term liquidity is our cash and cash equivalents and results from operations. As of March 31, 2022, we had $48.6 million of cash and cash equivalents. Due to provide the Company with adequate liquiditycontinued effects the COVID-19 pandemic, our operations have not yet returned to meet its obligations2019, pre-pandemic levels. We currently anticipate cash flow from operations will continue to be impacted for at least the twelve-month period followingnear-term. Our known liquidity requirements primarily consist of funds necessary to pay for operating expenses related to our communities and other expenditures, including general and administrative expenses, interest and scheduled principal payments on our debt and dividends on our redeemable preferred stock.
The Refinancing Facility we entered into in March 2022 contains financial covenants that are effective beginning June 30, 2022 and quarterly thereafter. Based on current operations, the date its financial statements are issued. See “Going Concern and Management’s Plan.”  The Company’s long-term capital requirements are andCompany expects to be in compliance with the June 30, 2022 covenants. There is no assurance that the Company will be dependent on, among other factors, its abilityable to accessmeet any future financial covenant requirements. In addition, we are required to maintain cash and cash equivalents of no less than $13 million, inclusive of a $1.5 million lender service reserve, which is included in “other assets.”
Additional short-term sources of liquidity include grants under the CARES Act. As described above, these grants are available to reimburse the Company for COVID-19 related expenses. In April 2022, we received a grant of $9.1million, where we believe we will be able to meet the CARES Act requirements which will allow the Company to retain the funds and not repay the grant. We do not consider this to be a significant source of liquidity in the future. There is no assurance that we will meet such requirements or qualify for, or receive, any additional CARES Act funds throughin the private placement of Convertible Preferred Stock andfuture. In addition, the common stock rights offering. Company is eligible for funding in connection with various state programs.

Long-term liquidity
The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt financing or refinancings, purchases and sales of assets, reorganizations and other transactions. If capital were obtained through the issuance of Company equity, the issuance of Company securities would dilute the ownership of our existing stockholders and any newly issued securities may have rights, preferences, and/or privileges senior to those of our common stock. There can be no assurance that the Company will continue to generate cash flows at or above current levels, or that the Company will be able to obtain the capital necessary to meet the Company’s short and long-term capital requirements.
Recent changes
In connection with the refinancing transaction in the current economic environment, and other future changes, could result in decreases in the fair value of assets, slowing of transactions, and the tightening of liquidity and credit markets. These impacts could make securing debt or refinancings forMarch 2022, the Company or buyers of the Company’s properties more difficult or on terms not acceptablewas able to the Company.
refinance certain debt due during 2022 and 2023 with longer-term financing that matures in 2026. In summary, the Company’s cash flows wereaddition, $10.0 million is available as follows (in thousands):
Six Months Ended June 30,
20212020
Net cash provided by (used in) operating activities$6,964 $(744)
Net cash used in investing activities(4,753)(1,685)
Net cash used in financing activities(5,540)(5,792)
Net decrease in cash and cash equivalents$(3,329)$(8,221)
Odelayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiativeperating activities.
The net cash provided by operating activities for the six months ended June 30, 2021 primarily results from net income of $87.9 million, decreases in cash flows from current assets of $7.4 million, decreases from current liabilities of $5.6 million and net non-cash charges of $94.0 million. The net cash used in operating activities for the six months ended June 30, 2020, primarily results from net loss of $59.9 million, an increase in accounts receivable of $1.6 million, and an increase in other assets of $1.7 million, partially offset by net non-cash charges of $53.6 million, a decrease in tax and insurance deposits of $2.7 million, a $0.2 million increase in accounts payable and a $6.4 million increase in accrued liabilities.
Investing activities.
The net cash used in investing activities for the six months ended June 30, 2021 primarily results from ongoing capital improvements and refurbishments at the Company’s senior housing communities of $4.8 million. The net cash used in investing activities for the six months ended June 30, 2020 primarily results from ongoing capital improvements and refurbishments at the Company’s senior housing communities of $8.1 million, partially offset by the Company's receipt of $6.4 million in proceeds from the disposition of assets.
Financing activities.
The net cash used in financing activities for the six months ended June 30, 2021 primarily results from repayments of notes payable of $6.7 million offset by $1.1 million of proceeds from debt for cash advances for the Fannie Mae properties in the process of transitioning legal ownership backs. There is no assurance that we will be able to Fannie Mae. The net cash used in financing activities for the six months ended June 30, 2020 primarily results from repayments of notes payable of $7.6 million and payments on financing obligations of $0.3 million.meet future financial covenant requirements.

Investment Agreement and Promissory Note
In July 2021, subsequent to quarter end,As discussed in “Note 4. Notes Payable” of the condensed consolidated financial statements, the Company entered into an investment agreement with Conversant pursuant to which affiliateshas scheduled maturities of Conversant agreed to purchase $82.5 million of Convertible Preferred Stock in a private placement, to backstop $42.5 million of an approximately $70.0 million rights offering of common stock through the purchase of additional shares of preferred stock, and to provide a $25.0 million accordion. The minimum initial gross proceeds from the transaction will total $125.0 milliondebt coming due in the aggregate.next five years and thereafter. The proposed transaction is subjectCompany currently expects to approval by the Company’s stockholdersbe able to meet those maturities from cash on hand,future operations and future refinancings. The Refinance Facility matures in four years with an optional one-year extension if certain financial performance metrics and other customary closing conditions. In conjunction with this transaction, the Company entered into a $17.3 million promissory note,
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$15.0 million of which bears interest at 15% andconditions are maintained. There is no assurance that we will be converted into convertible preferred stock upon closing ofable to meet such conditions or source refinancings at the private placement (or paid down with the proceeds of the private placement).
Debt transactions.
Transactions Involving Certain Fannie Mae Loans
The CARES Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. On May 7, 2020, the Company entered into forbearance agreements with Berkadia Commercial Mortgage LLC, as servicer of 23 of its Fannie Mae loans covering 20 of the Company's properties.  On May 9, 2020, the Company entered into a forbearance agreement with Wells Fargo Bank (“Wells Fargo”), as servicer of one Fannie Mae loan covering one of the Company's properties.  OnMay 20, 2020, the Company entered into forbearance agreements with KeyBank, as servicer of three Fannie Mae loans covering two of the Company's properties. The forbearance agreements allowedthe Company to withhold the loan payments due under the loan agreements for the months of April, May and June 2020 and Fannie Maeagreed toforbear in exercising its rights and remedies during such period. During this three-month loan payment forbearance, the Company agreed to pay to Fannie Mae monthly net operating income, if any, as defined in the forbearance agreement, for the properties receiving forbearance.  
On July 8, 2020, the Company entered into forbearance extension agreements with Fannie Mae, which provided for a one month extension of the forbearance agreements between it and Fannie Mae covering 23 properties. The forbearance extension agreements extended the forbearance period until July 31, 2020, and Fannie Mae agreed to forbear in exercising its rights and remedies during such period.  By July 31, 2020, the Company was required to repay to Fannie Mae the deferred payments, less payments made during the forbearance period.  
On July 31, 2020, the Company made required payments to Fannie Mae totaling $0.6 million, which included the deferred payments, less payments made during the forbearance period, for five properties with forbearance agreements.  The Company elected not to pay $3.9 million on the loans for the remaining 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 
As a result of the default, Fannie Mae filed a motion with the United States District Court ("District Court") requesting that a receiver be appointed over the 18 properties, which was approved by the District Court.  The Company agreed to continue to manage the 18 communities, subject to earning a management fee, until management of the communities is transferred to a successor operator or legal ownership of the properties is transferred to Fannie Mae or its designee. Management fees earned from the properties are recognized as revenue when earned.  In conjunction with the receivership order, the Company must obtain approval from the receiver for all payments, but will receive reimbursements from Fannie Mae for reasonable operating expenses incurred on behalf of any of the 18 communities under the receivership order. As a result of the events of default and receivership order, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded it was no longer entitled to receive any existing accounts receivable or revenue related to the properties, all amounts held in escrow by Fannie Mae were forfeited, and that the Company no longer has control of the properties in accordance ASC 610-20.  
During the three and six months ended June 30, 2021, Fannie Mae completed the transition of legal ownership of six and nine of the Company's properties, respectively, and the Company recorded a gain on extinguishment of debt of $67.2 million and $114.2 million, respectively, which is included in gain on extinguishment of debt in the Company's Consolidated Statement of Operations and Comprehensive Income (Loss). At June 30, 2021, the Company included $112.7 million in outstanding debt in current portion of notes payable, net of deferred loan costs, and $6.5 million of accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to the remaining nine properties. At June 30, 2021, the Company did not manage any properties on behalf of Fannie Mae.
Debt Forbearance Agreement on BBVA Loan
The Company also entered into a loan amendment with another lender, BBVA, related to a loan covering three of the Company's properties pursuant to which the Company deferred monthly debt service payments for April, May and June 2020, which deferred payments were added to the principal of such loan. The deferred month debt service payments were paid by the Company in June 2021. At June 30, 2021 no deferred payments remained outstanding.
Debt Forbearance Agreement on HUD Loan
The Company also entered into a debt forbearance agreement with ORIX Real Estate Capital, LLC (“ORIX”), related to a U.S. Department of Housing and Urban Development (“HUD”) loan covering one of the Company's properties pursuant to which the Company deferred monthly debt service payments for April, May and June 2020, which deferred payments were added to the
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regularly scheduled payments in equal installments for one year following the forbearance period and were paid in the six months ended June 30, 2021. At June 30, 2021, no deferred payments remained outstanding.
Protective Life Amendments to Loan Agreements and Loan Modification and Temporary Deferral Agreements
On May 21, 2020, the Company entered into amendments to its loan agreements with one of its lenders, Protective Life Insurance Company (“Protective Life”), related to loans ("the Protective Life Loans") covering ten of the Company's properties. These amendments allowed the Company to defer principal and interest payments for April, May and June 2020 and to defer principal payments for July 2020 through September 2021, with such deferral amounts being added to principal due at maturity in either 2025 or 2026, depending upon the loan. At June 30, 2021, the Company had deferred payments of $6.4 million related to the Protective Life Loans, of which $$2.6 million was included in accrued expenses in the Company’s Consolidated Balance Sheets. The remaining $3.8 million of deferred payments is included in notes payable, net of deferred loan costs and current portion on the Company’s Consolidated Balance Sheets.
Letters of Credit
The Company issued standby letters of credit with Wells Fargo, totaling approximately $1.0 million, for the benefit of Calpine Corporation in connection with certain of its energy provider agreements, which remained outstanding at June 30, 2021.
The Company previously issued standby letters of credit with Wells Fargo, totaling approximately $3.4 million, for the benefit of Hartford Financial Services in connection with the administration of workers’ compensation, which remained outstanding at June 30, 2021.  
The Company previously issued standby letters of credit with JP Morgan Chase Bank (“Chase”), totaling approximately $6.5 million, for the benefit of Welltower, in connection with certain leases between Welltower and the Company. The letters of credit were surrendered and paid to Welltower in conjunction with the Welltower Agreement during the quarter ended June 30, 2020.
The Company previously issued standby letters of credit with Chase, totaling approximately $2.9 million, for the benefit of Healthpeak in connection with certain leases between Healthpeak and the Company.  The letters of credit were released to the Company during the first quarter of 2020 and were included in cash and cash equivalents on the Company’s June 30, 2020 Consolidated Balance Sheets.
Debt Covenant Compliance
Certain of our debt agreements contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum debt service coverage ratios, in each case on a multi-community basis. The debt service coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee, divided by the debt (principal and interest). Furthermore, our debt is secured by our communities and if an event of default has occurred undertime any of our debt subject to cure provisions in certain instances,matures or whether the respective lender would have the right to declare all the related outstanding amountsterms of indebtedness immediately due and payable, foreclose on our mortgaged communities, and/or pursue other remedies available to such lender. We cannot provide assurances that we would be able to pay the debts if they became due upon acceleration following an event of default, if at all.
As of June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020 we were not in compliance with a certain financial covenant under our loan agreement with Fifth Third Bank, covering two of the Company's properties in which a minimum debt service coverage ratio must be maintained, which constitutes a default. In May 2021, Fifth Third Bank issued a notice of default. The Company is in active discussions with Fifth Third Bank to resolve this noncompliance, but cannot give any assurances that a mutually agreed upon resolutionrefinancings will be reached. The Company included $31.5 million in outstanding debt relatedcomparable or satisfactory compared to those properties inour current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at June 30, 2021.  loans.
As of June 30, 2021 and December 31, 2020 we were not in compliance with a certain financial covenant under our loan agreement with BBVA covering three of the Company's properties, in which a minimum debt service coverage ratio must be maintained, which constitutes a default. As a result of the default, the loan was callable at June 30, 2021 and The Company included $40.5 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at June 30, 2021. In August 2021, subsequent to quarter end, the Company executed a one year extension of its loan agreement with BBVA with an additional six month extension option if certain financial criteria are met. This loan agreement extension also waived existing non-compliance with certain financial ratios and eliminated these financial ratios going forward. The extension requires a principal payment of $1.0 million in December 2021 and quarterly principal payments of $0.5 million beginning in March 2022 unless a certain financial ratio is attained.
36

Except as noted above, the Company was in compliance with all aspects of its outstanding indebtedness at June 30, 2021.

The Company has unencumbered properties with a net book value of $24.0 million as of March 31, 2022, which could provide a source of liquidity from new debt.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. CONTROLS AND PROCEDURES.Controls and Procedures
Effectiveness of Controls and Procedures
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The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Principal Financial Officer (“PFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to the Company’s management, including the CEO and PFO as appropriate, to allow timely decisions regarding required disclosure.
Based upon the controls evaluation, procedures evaluation and the material weakness described in our Annual Report on Form 10-K, which was filed with the SEC on March 31, 2021,April 15, 2022, the Company’s CEO and PFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures are ineffective.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s fiscal quarter ended June 30, 2021March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Remediation Plan
As disclosed in previous filings for the year ended December 31, 2020, and for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, and for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting. Due to challenges in maintaining necessary accounting staffing levels, this material weakness has not been remediated as of March 31, 2022, as disclosed above.
We have developed a plan for remediation of the material weakness, including developing and maintaining appropriate management review and process level controls. Control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively. We will continue to monitor the effectiveness of our remediation measures in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures, and we will make any changes to the design of our plan and take such other actions that we deem appropriate given the circumstances. We expect to completehave implemented the remediationremediation process by the end of the fourth quarter of 2021.2022.

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Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.Legal Proceedings
The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material effect on the consolidated financial statements of the Company if determined adversely to the Company.
Item 1A. RISK FACTORS.Risk Factors.
The following
There have been no material changes to the risk factors areset forth in addition to the risks and uncertainties described under “Item 1A. Risk Factors”Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 31, 2021.  The effects of the events and circumstances described in the following risk factors may, directly or indirectly, heighten, exacerbate or otherwise bring to fruition many of the risks and uncertainties contained in our annual, quarterly and periodic reports filed with the SEC.

Our pending investment by Conversant is subject to conditions, including certain conditions that may not be satisfied, and may not be completed on a timely basis, or at all. Failure to complete the transactions contemplated by the Investment Agreement could have material and adverse effects on us.
37

The completion of our pending investment by Conversant is subject to a number of conditions, including the receipt of stockholder approval, which make the completion and timing of the completion of the transactions uncertain. Also, either we or Conversant may terminate the Investment Agreement if the transactions contemplated thereby have not been completed by December 31, 2021 unless the failure of the transactions to be completed has resulted from the failure of the party seeking to terminate the Investment Agreement to perform its obligations.
If the transactions contemplated by the Investment Agreement are not completed on a timely basis, or at all, our ongoing business may be adversely affected. Additionally, in the event the investment by Conversant is not completed, we will be subject to a number of risks without realizing any of the benefits of having completed the transactions, including the following:
a.If the Investment Agreement is terminated, we may not be able to identify or complete a financing alternative that would be as beneficial to our capital structure as the transactions contemplated by the Investment Agreement. In light of our current capital constraints and near term mortgage maturities, failure to complete the transactions on our expected timeline could have a material adverse effect on our financial condition and results of operations and our ability to continue as a going concern;
b.Time and resources committed by management to matters relating to the transactions could otherwise have been devoted to pursuing other beneficial opportunities.
If we are unable to successfully implement our business plans and strategies, our consolidated results of operations, financial position, liquidity and ability to continue as a going concern could be negatively affected.
As noted elsewhere in this Quarterly Report on Form 10-Q, due to the impact of the COVID-19 pandemic on our financial position and our upcoming debt maturities, management has concluded that there is substantial doubt about our ability to continue as a going concern. We have taken, and intend to take, actions to improve our liquidity position and to address the uncertainty about our ability to operate as a going concern, but these actions are subject to a number of assumptions, projections, and analyses. If these assumptions prove to be incorrect, we may be unsuccessful in executing our business plans or achieving the projected results, which could adversely impact our financial results and liquidity. Those plans include various cost-cutting, efficiency and profitability initiatives. There are no assurances such initiatives will prove to be successful or the cost savings, profitability or other results we achieve through those plans will be consistent with our expectations. As a result, our results of operations, financial position and liquidity could be negatively impacted. If we become insolvent or fail to continue as a going concern, our common stock may become worthless.
Our failure to comply with financial covenants and other restrictions contained in our debt instruments could result in the acceleration of the related debt or in the exercise of other remedies.
Our outstanding indebtedness is secured by our communities, and, in certain cases, a guaranty by us or by one or more of our subsidiaries. Therefore, an event of default under the outstanding indebtedness, subject to cure provisions in certain instances, would give the respective lenders, the right to declare all amounts outstanding to be immediately due and payable, or foreclose on collateral securing the outstanding indebtedness.

There are various financial covenants and other restrictions in certain of our debt instruments, including provisions which:

•require us to meet specified financial tests at the subsidiary company level, which include, but are not limited to, tangible net worth requirements;
•require us to meet specified financial tests at the community level;
•require us to maintain the physical condition of the community and meet certain minimum spending levels for capital and leasehold improvements; and
•require consent for changes in control of us.

If we fail to comply with any of these requirements, then the related indebtedness could become due and payable prior to their stated dates. We cannot assure that we could pay these debt obligations if they became due prior to their stated dates.

Pursuant to the forbearance agreements described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Transactions Involving Certain Fannie Mae Loans,” we withheld loan payments due under loan agreements with Fannie Mae covering certain of our communities.

In addition, we were not in compliance with certain financial covenants of our loan agreement with BBVA covering three properties, as of June 30, 2021 and December 31, 2020 and as a result of such defaults, these debts were callable at June 30,
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2021. In August 2021, subsequent to quarter end, the Company executed a one year extension of the Company's $40.5 million loan with BBVA covering three of the Company's properties, with an option to extend an additional six months. This loan agreement extension also waived existing non-compliance with certain financial ratios and eliminated these financial ratios going forward. The extension requires a principal payment of $1.0 million in December 2021 and quarterly principal payments of $0.5 million beginning in March 2022 unless a certain financial ratio is attained.
The Company was not in compliance with a certain financial covenant under its loan agreement with Fifth Third Bank, covering two of the Company's properties, as of June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, in which a minimum debt service coverage ratio must be maintained, which constituted a default. The Company is in active discussions with Fifth Third Bank to resolve its noncompliance with financial covenants for debt totaling $31.5 million at June 30, 2021, included in current portion of notes payable, net of deferred loan costs on the Consolidated Balance Sheets. As a result of these defaults, in May 2021, Fifth Third Bank issued a notice of default letter and the Fifth Third bridge loan is callable. In the event that this loan is accelerated there is 25% recourse to Capital Senior Living Corporation.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.Unregistered Sales of Equity Securities and Use of Proceeds
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following information is provided pursuant to Item 703 of Regulation S-K. The information set forth in the table below reflects sharesthe common stock purchased by the Company pursuantfor the quarter ended March 31, 2022:
Period
Total
Number
of Shares
Purchased (1)
Average
Price Paid
per Share		Total Shares
Purchased
as Part of
Publicly
Announced
Program		Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the
Program
January 1 – January 31, 2022— — — 6,570,222 
February 1 – February 28, 2022— — — 6,570,222 
March 1 – March 31, 2022— — — 6,570,222 
__________
(1) Does not include shares withheld to itssatisfy tax liabilities due upon the vesting of restricted stock, all of which have been reported in Form 4 filings relating to the Company. The average price paid per share repurchase program (as described below) asfor such share withholding is based on the closing price per share on the vesting date of June 30, 2021.
PeriodTotal
Number
of Shares
Purchased		Average
Price Paid
per Share		Total Shares
Purchased
as Part of
Publicly
Announced
Program		Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the
Program
Total at March 31, 202032,941 $199.45 32,941 $6,570,222 
April 1 – April 30, 2021— — — 6,570,222 
May 1 – May 31, 2021— — — 6,570,222 
June 1 – June 30, 2021— — — 6,570,222 
Total at June 30, 202132,941 $199.45 32,941 $6,570,222 
the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date.
On January 22, 2009, the Company’s board of directors approved a share repurchase program that authorized the Company to purchase up to $10.0 million of the Company’s common stock. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the share repurchase authorization has no stated expiration date. On January 14, 2016, the Company announced that its board of directors approved a continuation of the share repurchase program. All shares that have been acquired by the Company under this program were purchased in open-market transactions. The Company does not expect to repurchase any shares of the Company’s common stock in the near term.
Item 3. DEFAULTS UPON SENIOR SECURITIES.Defaults upon Senior Securities
Not applicable.
Item 4. MINE SAFETY DISCLOSURES.Mine Safety Disclosures
Not applicable.
Item 5. OTHER INFORMATION.Other Information
Retention Agreements
In conjunction with the Transactions the Company has established a cash retention pool of $4.215 million in the aggregate pursuant to which cash retention awards will be paid to certain employees, including the Company’s senior management team. If and when the Transactions close (the "Closing"), fifty percent of senior management's retention award will be paid at Closing and the remaining fifty percent will be paid on the six (6) month anniversary of the Closing, subject to continued employment through the applicable payment date (except in the case of an “involuntary termination” as defined under the 2019Not applicable.
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Plan, in which case payment of the retention awards will be accelerated). The intent of the retention awards, as approved by the Company's Compensation Committee, was to insure that key management employees remain in place through the Closing of the Transaction and for a period of time after closing to provide consistency and stability through this prolonged and unpredictable Covid impacted operating environment. As of August 11, 2021, the Company entered into retention agreements (the "Retention Agreements") with various employees that included the following retention bonus awards: to Kimberly Lody, the Company's Chief Executive Officer, $1,626,900, to Brandon Ribar, the Company's Executive Vice President and Chief Operating Officer, $600,000, to David Brickman, the Company's Senior Vice President, General Counsel and Secretary, $341,161 and to other Company employees in the aggregate, $1,625,996.
The Retention Agreements, all provisions of which are conditioned upon Closing of the Transactions, with certain employees of the Company, including the Company’s senior management team (including Ms. Lody and Messrs. Ribar and Brickman, and certain other executive officers) provided that all outstanding options and other equity awards in respect of the Common Stock will remain outstanding following the Closing and all outstanding performance share awards, including awards held by Ms. Lody and Mr. Ribar, will be converted at target award levels to time-based restricted stock awards that will vest on the applicable scheduled vesting dates or the relevant award termination date applicable to such performance shares. In addition, upon an equity award holder’s “involuntary termination” (as such term is defined in the 2019 Plan) within one year following the Closing or termination due to death or disability following the Closing, his or her equity awards will fully vest.
The Retention Agreements also provide that in the event any of Ms. Lody, Mr. Ribar, Mr. Brickman, Tiffany Dutton, Jeremy Falke, Michael Fryar or Carole Burnell is terminated without “cause” or resigns for “good reason” (as such terms are defined in the employee’s employment agreement) within one year following Closing, such employee will be entitled to enhanced severance benefits in the areas of salary, incentive bonuses and insurance benefits pursuant to his or her employment agreement.
The Company also agreed in the Retention Agreements that following the Closing it will grant a total of 257,000 performance shares under the 2019 Plan to various individuals , subject to such individual’s continued employment through the grant date. These performance share awards, which will be contingent on attainment of certain Company stock price targets, include 51,400 shares to Ms. Lody, 38,550 shares to Mr. Ribar, 25,700 shares to Mr. Brickman and 141,350 shares to other officers of the Company.
The foregoing description of the Retention Agreements does not purport to be complete and is subject to, and is qualified in its entirety by reference to the full text of the Retention Agreements, the form of which is filed as Exhibit 10.3 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
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Item 6. EXHIBITS.Exhibits
The following documents are filed as a part of this report. Those exhibits previously filed and incorporated herein by reference are identified below. Exhibits not required for this report have been omitted.
Exhibit
Number		Description
3.1
Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to exhibitExhibit 3.1 to the Registration Statement No. 333-33379 on Form S-1/A filed by the Company with the Securities and Exchange Commission on September 8, 1997.)
3.1.1
Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to exhibitExhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999, filed by the Company with the Securities and Exchange Commission.)
3.2
3.1.2
Second Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on December 14, 2020.)
10.23.1.3
Secured Promissory Note, Effective asThird Amendment to Amended and Restated Certificate of July 22, 2021Incorporation of the Registrant (Incorporated by reference to exhibit 10.2Exhibit 3.1 to the Company'sCompany’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on July 22,November 4, 2021.)
10.3*3.1.4
Fourth Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 10, 2021.)
3.2
Second Amended and Restated Bylaws of Retention Agreement forthe Registrant. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report filed by the Company Executive Officerson Form 8-K with the Securities and Exchange Commission on March 8, 2013.)
3.2.1
Amendment to the Second Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 10, 2021.)
3.3
Certificate of Designation, Rights and Privileges of Series A Convertible Preferred Stock, par value $0.01, of the Company (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 4, 2021.)
10.1
Amendment No. 2 to Sonida Senior Living, Inc. 2019 Omnibus Stock and Incentive Plan, as amended (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed by the Company with the Securities and Exchange Commission on January 28, 2022.)

31.1*
Certification of Chief PrincipalExecutive and Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*
32.1*
32.2*101*
101.INS*Inline XBRL Instance – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
104*Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*Filed herewith.






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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CapitalSonida Senior Living, CorporationInc
(Registrant)
By:/s/ Tiffany L. DuttonKIMBERLY S. LODY
Tiffany L. DuttonKimberly S Lody
Senior Vice President- AccountingPresident, Chief Executive Officer, and Finance and Principal Accounting OfficerDirector
(Principal FinancialExecutive Officer and Duly AuthorizedPrincipal Financial Officer)
Date: August 13, 2021May 23, 2022

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