Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Nov. 18, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | GLOBAL HEALTHCARE REIT, INC. | |
Entity Central Index Key | 0000727346 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Reporting Status Current | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,866,379 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Property and Equipment, Net | $ 37,140,599 | $ 36,394,587 |
Cash and Cash Equivalents | 2,844,515 | 641,215 |
Restricted Cash | 424,636 | 351,298 |
Accounts Receivable, Net | 1,562,911 | 1,188,100 |
Investments in Debt Securities | 24,387 | 24,387 |
Intangible Assets | 15,258 | |
Goodwill | 379,479 | 379,479 |
Prepaid Expenses and Other | 674,404 | 883,839 |
Total Assets | 43,050,931 | 39,878,163 |
Liabilities | ||
Debt, Net of discount of $450,111 and $493,353, respectively | 39,113,315 | 36,954,184 |
Debt - Related Parties, Net of discount of $5,192 and $0, respectively | 1,119,808 | 1,025,000 |
Accounts Payable and Accrued Liabilities | 1,011,543 | 1,241,573 |
Accounts Payable - Related Parties | 32,156 | |
Dividends Payable | 7,500 | 7,500 |
Lease Security Deposit | 252,600 | 251,100 |
Total Liabilities | 41,504,766 | 39,511,513 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Common Stock - $0.05 Par Value; 50,000,000 Shares Authorized, 27,414,525 and 27,441,040 Shares Issued and Outstanding at June 30, 2020 and December 31, 2019, respectively | 1,370,726 | 1,372,052 |
Additional Paid-In Capital | 10,397,755 | 10,385,417 |
Accumulated Deficit | (10,792,565) | (11,962,220) |
Total Global Healthcare REIT, Inc. Stockholders' Equity | 1,751,916 | 571,249 |
Noncontrolling Interests | (205,751) | (204,599) |
Total Equity | 1,546,165 | 366,650 |
Total Liabilities and Equity | 43,050,931 | 39,878,163 |
Series A - No Dividends, Non-voting [Member] | ||
Stockholders' Equity | ||
Preferred Stock, value | 401,000 | 401,000 |
Series D - 8% Cumulative, Convertible [Member] | ||
Stockholders' Equity | ||
Preferred Stock, value | $ 375,000 | $ 375,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Unamortized debt discount | $ 450,111 | $ 493,353 |
Debt discount of related parties | $ 5,192 | $ 0 |
Common stock, par value | $ 0.05 | $ 0.05 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 27,414,525 | 27,441,040 |
Common stock, shares outstanding | 27,414,525 | 27,441,040 |
Series A - No Dividends, Non-voting [Member] | ||
Preferred stock, par value | $ 2 | $ 2 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 200,500 | 200,500 |
Preferred stock, shares outstanding | 200,500 | 200,500 |
Series D - 8% Cumulative, Convertible [Member] | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 375,000 | 375,000 |
Preferred stock, shares outstanding | 375,000 | 375,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | ||||
Total Revenue | $ 5,130,465 | $ 1,614,424 | $ 8,982,066 | $ 2,889,503 |
Expenses | ||||
General and Administrative | 372,707 | 377,357 | 715,770 | 570,836 |
Property Taxes, Insurance and Other Operating | 2,654,231 | 543,831 | 4,985,975 | 893,019 |
Provision for Bad Debts | 57,282 | 263,890 | ||
Acquisition Costs | 13,763 | 28,654 | ||
Depreciation | 380,885 | 322,926 | 768,103 | 645,851 |
Total Expenses | 3,478,868 | 1,244,114 | 6,762,392 | 2,109,706 |
Income from Operations | 1,651,597 | 370,310 | 2,219,674 | 779,797 |
Other (Income) Expense | ||||
Gain on Warrant Liability | (2,655) | (2,758) | ||
Gain on Extinguishment of Debt | (80,400) | (80,400) | ||
Gain on Sale of Investments | (1,069) | |||
Gain on Proceeds from Insurance Claim | (270,264) | |||
Interest Income | (1,536) | (7,003) | ||
Interest Expense | 611,301 | 544,625 | 1,116,571 | 1,070,860 |
Total Other (Income) Expense | 530,901 | 540,434 | 1,036,171 | 789,766 |
Net Income (Loss) | 1,120,696 | (170,124) | 1,183,503 | (9,969) |
Net Loss Attributable to Noncontrolling Interests | 2,859 | 1,869 | 1,152 | 6,010 |
Net Income (Loss) Attributable to Global Healthcare REIT, Inc. | 1,123,555 | (168,255) | 1,184,655 | (3,959) |
Series D Preferred Dividends | (7,500) | (7,500) | (15,000) | (15,000) |
Net Income (Loss) Attributable to Common Stockholders | $ 1,116,055 | $ (175,755) | $ 1,169,655 | $ (18,959) |
Net Income (Loss) per Share Attributable to Common Stockholders: | ||||
Basic | $ 0.04 | $ (0.01) | $ 0.04 | $ 0 |
Diluted | $ 0.04 | $ (0.01) | $ 0.04 | $ 0 |
Weighted Average Common Shares Outstanding: | ||||
Basic | 27,414,816 | 27,347,134 | 27,427,928 | 27,122,607 |
Diluted | 27,797,316 | 27,347,134 | 27,810,428 | 27,122,607 |
Rental Revenue [Member] | ||||
Revenue | ||||
Total Revenue | $ 623,593 | $ 930,287 | $ 1,144,605 | $ 1,825,575 |
Healthcare Revenue [Member] | ||||
Revenue | ||||
Total Revenue | $ 4,506,872 | $ 684,137 | $ 7,837,461 | $ 1,063,928 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Series D Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Non-controlling Interests [Member] | Global Healthcare REIT, Inc. Stockholders' Equity [Member] | Total |
Beginning balance at Dec. 31, 2018 | $ 401,000 | $ 375,000 | $ 1,340,234 | $ 10,137,148 | $ (11,070,606) | $ (198,182) | $ 1,182,776 | $ 984,594 |
Beginning balance, shares at Dec. 31, 2018 | 200,500 | 375,000 | 26,804,677 | |||||
Share Based Compensation - Restricted Stock Awards (Forfeitures) and Stock Options | $ 13,636 | 36,893 | 50,529 | 50,529 | ||||
Share Based Compensation - Restricted Stock Awards (Forfeitures) and Stock Options, shares | 272,727 | |||||||
Series D Preferred Dividends | (7,500) | (7,500) | (7,500) | |||||
Net Income (Loss) | 164,296 | (4,141) | 164,296 | 160,155 | ||||
Ending balance at Mar. 31, 2019 | $ 401,000 | $ 375,000 | $ 1,353,870 | 10,174,041 | (10,913,810) | (202,323) | 1,390,101 | 1,187,778 |
Ending balance, shares at Mar. 31, 2019 | 200,500 | 375,000 | 27,077,404 | |||||
Beginning balance at Dec. 31, 2018 | $ 401,000 | $ 375,000 | $ 1,340,234 | 10,137,148 | (11,070,606) | (198,182) | 1,182,776 | 984,594 |
Beginning balance, shares at Dec. 31, 2018 | 200,500 | 375,000 | 26,804,677 | |||||
Net Income (Loss) | (9,969) | |||||||
Ending balance at Jun. 30, 2019 | $ 401,000 | $ 375,000 | $ 1,367,507 | 10,284,854 | (11,089,565) | (204,192) | 1,338,796 | 1,134,604 |
Ending balance, shares at Jun. 30, 2019 | 200,500 | 375,000 | 27,350,131 | |||||
Beginning balance at Mar. 31, 2019 | $ 401,000 | $ 375,000 | $ 1,353,870 | 10,174,041 | (10,913,810) | (202,323) | 1,390,101 | 1,187,778 |
Beginning balance, shares at Mar. 31, 2019 | 200,500 | 375,000 | 27,077,404 | |||||
Share Based Compensation - Restricted Stock Awards (Forfeitures) and Stock Options | $ 13,637 | 110,813 | 124,450 | 124,450 | ||||
Share Based Compensation - Restricted Stock Awards (Forfeitures) and Stock Options, shares | 272,727 | |||||||
Series D Preferred Dividends | (7,500) | (7,500) | (7,500) | |||||
Net Income (Loss) | (168,255) | (1,869) | (168,255) | (170,124) | ||||
Ending balance at Jun. 30, 2019 | $ 401,000 | $ 375,000 | $ 1,367,507 | 10,284,854 | (11,089,565) | (204,192) | 1,338,796 | 1,134,604 |
Ending balance, shares at Jun. 30, 2019 | 200,500 | 375,000 | 27,350,131 | |||||
Beginning balance at Dec. 31, 2019 | $ 401,000 | $ 375,000 | $ 1,372,052 | 10,385,417 | (11,962,220) | (204,599) | 571,249 | 366,650 |
Beginning balance, shares at Dec. 31, 2019 | 200,500 | 375,000 | 27,441,040 | |||||
Series D Preferred Dividends | (7,500) | (7,500) | (7,500) | |||||
Relative Fair Value of Warrants Issued with Senior Secured Notes | 19,762 | 19,762 | 19,762 | |||||
Net Income (Loss) | 61,100 | 1,707 | 61,100 | 62,807 | ||||
Ending balance at Mar. 31, 2020 | $ 401,000 | $ 375,000 | $ 1,372,052 | 10,405,179 | (11,908,620) | (202,892) | 644,611 | 441,719 |
Ending balance, shares at Mar. 31, 2020 | 200,500 | 375,000 | 27,441,040 | |||||
Beginning balance at Dec. 31, 2019 | $ 401,000 | $ 375,000 | $ 1,372,052 | 10,385,417 | (11,962,220) | (204,599) | 571,249 | 366,650 |
Beginning balance, shares at Dec. 31, 2019 | 200,500 | 375,000 | 27,441,040 | |||||
Net Income (Loss) | 1,183,503 | |||||||
Ending balance at Jun. 30, 2020 | $ 401,000 | $ 375,000 | $ 1,370,726 | 10,397,755 | (10,792,565) | (205,751) | 1,751,916 | 1,546,165 |
Ending balance, shares at Jun. 30, 2020 | 200,500 | 375,000 | 27,414,525 | |||||
Beginning balance at Mar. 31, 2020 | $ 401,000 | $ 375,000 | $ 1,372,052 | 10,405,179 | (11,908,620) | (202,892) | 644,611 | 441,719 |
Beginning balance, shares at Mar. 31, 2020 | 200,500 | 375,000 | 27,441,040 | |||||
Share Based Compensation - Restricted Stock Awards (Forfeitures) and Stock Options | $ (1,326) | (7,424) | (8,750) | (8,750) | ||||
Share Based Compensation - Restricted Stock Awards (Forfeitures) and Stock Options, shares | (26,515) | |||||||
Series D Preferred Dividends | (7,500) | (7,500) | (7,500) | |||||
Net Income (Loss) | 1,123,555 | (2,859) | 1,123,555 | 1,120,696 | ||||
Ending balance at Jun. 30, 2020 | $ 401,000 | $ 375,000 | $ 1,370,726 | $ 10,397,755 | $ (10,792,565) | $ (205,751) | $ 1,751,916 | $ 1,546,165 |
Ending balance, shares at Jun. 30, 2020 | 200,500 | 375,000 | 27,414,525 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Cash Flows From Operating Activities: | |||||||
Net income (loss) | $ 1,120,696 | $ 62,807 | $ (170,124) | $ 160,155 | $ 1,183,503 | $ (9,969) | |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | |||||||
Depreciation | 380,885 | 322,926 | 768,103 | 645,851 | |||
Amortization of Deferred Loan Costs and Debt Discount | 90,907 | 71,231 | |||||
Provision for Bad Debt | 57,282 | 263,890 | |||||
Stock Based Compensation (Forfeitures) | (8,750) | 174,979 | |||||
Gain on Sale of Investments | (1,069) | ||||||
Gain on Extinguishment of Debt | (80,400) | (80,400) | |||||
Gain on Derivative Liability | (2,758) | ||||||
Changes in Operating Assets and Liabilities, Net of Assets and Liabilities Acquired: | |||||||
Accounts and Rents Receivable | (638,701) | (358,523) | |||||
Prepaid Expenses and Other Assets | 115,786 | (121,818) | |||||
Deferred Rent Receivables | (23,851) | (42,019) | |||||
Accounts Payable and Accrued Liabilities | (262,051) | 74,934 | |||||
Lease Security Deposits | 1,500 | (30,000) | |||||
Cash Provided by Operating Activities | 1,409,936 | 400,839 | |||||
Cash Flows From Investing Activities: | |||||||
Issuance of Note Receivable | (143,666) | ||||||
Purchase of Investments in Debt Securities | (910) | ||||||
Proceeds from Sale of Investment in Debt Securities | 151,041 | ||||||
Net Cash Paid in Higher Call Asset Acquisition | (1,045,767) | ||||||
Capital Expenditures on Property and Equipment Additions | (185,590) | (1,464,562) | |||||
Cash Used in Investing Activities | (1,231,357) | (1,458,097) | |||||
Cash Flows From Financing Activities: | |||||||
Proceeds from Issuance of Debt, Related Party | 100,000 | ||||||
Proceeds from Issuance of Debt, Non-Related Party | 2,721,890 | 1,676,354 | |||||
Payments on Debt, Non-Related Party | (675,736) | (273,550) | |||||
Deferred Loan Costs Paid | (33,095) | (8,885) | |||||
Dividends Paid on Preferred Stock | (15,000) | (15,000) | |||||
Cash Provided by Financing Activities | 2,098,059 | 1,378,919 | |||||
Net Increase in Cash | 2,276,638 | 321,661 | |||||
Cash and Cash Equivalents and Restricted Cash at Beginning of the Period | $ 992,513 | $ 1,307,207 | 992,513 | 1,307,207 | $ 1,307,207 | ||
Cash and Cash Equivalents and Restricted Cash at End of the Period | 3,269,151 | 1,628,868 | 3,269,151 | 1,628,868 | 992,513 | ||
Supplemental Disclosure of Cash Flow Information | |||||||
Cash Paid for Interest | 1,025,664 | 1,094,089 | |||||
Cash Paid for Income Taxes | |||||||
Cash and Cash Equivalents | 2,844,515 | 1,314,364 | 2,844,515 | 1,314,364 | 641,215 | ||
Restricted Cash | 424,636 | 314,504 | 424,636 | 314,504 | $ 351,298 | ||
Total Cash and Cash Equivalents and Restricted Cash | $ 3,269,151 | $ 1,628,868 | 3,269,151 | 1,628,868 | |||
Supplemental Schedule of Non-Cash Investing and Financing Activities | |||||||
Dividends declared on Series D Preferred Stock | 15,000 | 15,000 | |||||
Non-cash owner financing for fixed assets purchase | 150,000 | ||||||
Prepaid deposit exchanged for fixed asset acquisition | 117,500 | ||||||
Relative Fair Value of Warrants Issued with Senior Secured Notes | 19,762 | ||||||
Interest on debt capitalized into principal | $ 135 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Description of the Business Global Healthcare REIT, Inc. (“we”, “our”, the “Company” or “Global”) was organized with the intent of operating as a real estate investment trust (REIT) for the purpose of investing in real estate and other assets related to the healthcare industry. The Company’s focus has partially shifted from leasing nursing home assets to independent operators toward owning and operating its real estate assets itself. As a result, the Company no longer intends to elect to qualify as a REIT, and is currently considering changing its name and other charter provisions to better reflect its current business model. Prior to the Company changing its name to Global Healthcare REIT, Inc. on September 30, 2013, the Company was known as Global Casinos, Inc. Global Casinos, Inc. operated two gaming casinos which were split-off and sold on September 30, 2013. Simultaneous with the split-off and sale of the gaming operations, the Company acquired West Paces Ferry Healthcare REIT, Inc. (WPF) in a transaction accounted for as a reverse acquisition whereby WPF was deemed to be the accounting acquirer. The Company acquires, develops, leases, manages and disposes of healthcare real estate, and provides financing to healthcare providers. As of June 30, 2020, the Company owned twelve healthcare properties which are either leased or managed by third-party operators under triple-net operating terms or operated directly by the Company. The Company operates the facilities internally when advantageous and expedient. Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and in conjunction with the rules and regulations of the Securities Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary to make the consolidated financial statements not misleading have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire year. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission. Recently Issued Accounting Pronouncements The Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2020. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net loss. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 2. GOING CONCERN The accompanying consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For the six months ended June 30, 2020, the Company had net income of $1,183,503 and reported net cash provided by operations of $1,409,936. However, the Company has incurred net losses in each of the previous five fiscal years and, as of June 30, 2020, had an accumulated deficit of $10,792,565. These circumstances raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues and cash flows to operate profitably and meet contractual obligations or raise additional capital through debt financing or through sales of common stock. Failure to achieve the necessary levels of profitability and cash flows or obtain additional funding would be detrimental to the Company. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Asset Acquisition - Higher Call
Asset Acquisition - Higher Call Nursing Center | 6 Months Ended |
Jun. 30, 2020 | |
Asset Acquisition - Higher Call Nursing Center | |
Asset Acquisition - Higher Call Nursing Center | 3. ASSET ACQUISITION – HIGHER CALL NURSING CENTER Effective March 2, 2020, the Company, through its newly formed wholly-owned subsidiary, Global Quapaw, LLC (“Quapaw”), completed the acquisition of an 86-licensed bed, long-term care facility known as Higher Call Nursing Center (“Higher Call”) located in Quapaw, Oklahoma for the purchase price of $1.3 million. Quapaw has entered into an operating lease agreement with Global Higher Call Nursing, LLC, a wholly owned subsidiary of the Company, as lessee, to be the operator of the facility. The acquisition represents the consummation of an Asset Purchase Agreement dated October 21, 2019 between Higher Call Nursing Center, Inc., as Seller, and Quapaw, as Buyer. The purchase was accounted for as an asset acquisition in accordance with ASC 805. Accordingly, on the acquisition date, the Company recorded property and equipment in the amount of $1.3 million in connection with the asset acquisition which consists of the purchase consideration of $1.3 million and acquisition costs of $13,267. In connection with the acquisition, the Company paid net cash of $1,045,767, relinquished a prepaid cash deposit of $117,500, and agreed to non-cash owner financing debt of $150,000. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. PROPERTY AND EQUIPMENT The gross carrying amount and accumulated depreciation of the Company’s property and equipment as of June 30, 2020 and December 31, 2019 are as follows: June 30, 2020 December 31, 2019 Land $ 1,676,692 $ 1,597,500 Land Improvements 242,000 242,000 Buildings and Improvements 39,710,962 38,362,127 Furniture, Fixtures and Equipment 1,778,755 1,707,925 Construction in Progress 3,185,068 3,185,068 46,593,477 45,094,620 Less Accumulated Depreciation (7,892,878 ) (7,140,033 ) Less Impairment (1,560,000 ) (1,560,000 ) $ 37,140,599 $ 36,394,587 For the Six Months Ended June 30, 2020 2019 Depreciation Expense $ 752,845 $ 645,851 Cash Paid for Capital Expenditures $ 185,590 $ 1,464,562 |
Investments in Debt Securities
Investments in Debt Securities | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments in Debt Securities | 5. INVESTMENTS IN DEBT SECURITIES On June 30, 2020 and December 31, 2019, the Company held investments in debt securities that were classified as held-to-maturity and carried at amortized costs. Held-to-maturity securities consisted of the following: June 30, 2020 December 31, 2019 States and Municipalities $ 24,387 $ 24,387 Contractual maturity of held-to-maturity securities at June 30, 2020 is $24,387, all due in one year or less, and total value of securities at their respective maturity dates is $24,387. Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Intangible Assets Abstract | |
Intangible Assets | 6. INTANGIBLE ASSETS As part of the acquisition of the operations at Southern Hills Rehab Center, LLC (“SHR”), the Company recognized certain intangible assets related to the potential net income from the existing patients in the facility. The Company estimated the value of these contracts to be $42,185 based on historical net revenues and census information provided by the seller. The asset was depreciated on a straight-line basis over 47 days, starting from December 1, 2019. Accordingly, the Company recognized depreciation expense of $15,258 during the six months ended June 30, 2020. The intangible asset was fully depreciated as of June 30, 2020. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 7. GOODWILL The Company recorded Goodwill because of the acquisition of the operations at SHR in December 2019. Goodwill is tested for impairment at a reporting unit level on an annual basis or when an event occurs, or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. During the six months ended June 30, 2020, the Company recorded no impairment of Goodwill. |
Debt and Debt - Related Parties
Debt and Debt - Related Parties | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Debt - Related Parties | 8. DEBT AND DEBT - RELATED PARTIES The following is a summary of the Company’s debt outstanding as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Senior Secured Promissory Notes $ 1,545,000 $ 1,485,000 Senior Unsecured Promissory Notes 300,000 300,000 Senior Secured Promissory Notes - Related Parties 975,000 875,000 Fixed-Rate Mortgage Loans 29,399,050 22,427,949 Variable-Rate Mortgage Loans 5,663,646 4,618,006 Line of Credit, Senior Secured - 7,230,582 Other Debt, Subordinated Secured 1,045,561 1,386,000 Other Debt, Subordinated Secured - Related Parties 150,000 150,000 Paycheck Protection Program Loans 1,610,169 - 40,688,426 38,472,537 Unamortized Discount and Debt Issuance Costs (455,303 ) (493,353 ) $ 40,233,123 $ 37,979,184 As presented in the Consolidated Balance Sheets: Debt, Net $ 39,113,315 $ 36,954,184 Debt - Related Parties, Net 1,119,808 1,025,000 $ 40,233,123 $ 37,979,184 Corporate Senior and Senior Secured Promissory Notes In 2017, $600,000 in notes were sold and issued, of which $425,000 were to related parties. On December 31, 2017, there were outstanding an aggregate of $1.2 million in senior secured notes. The maturity date of all the senior secured notes was extended to December 31, 2018 prior to their original maturity date. For every $1.00 in principal amount of note, investors got one warrant exercisable for one year to purchase an additional share of common stock at an exercise price of $0.75 per share. The warrants have a cashless exercise provision and were valued using the Black-Scholes pricing model. The maturity date of the 1.2 million warrants issued along with the notes was extended to December 31, 2018, 225,000 warrants of which occurred in 2018. As of December 31, 2019, the Company had not renewed or repaid $125,000 in 10% notes with a maturity date of December 31, 2018, and those notes were technically in default. Effective January 28, 2020, the Company exchanged $100,000 in outstanding senior secured 10% Notes and Warrants that had matured on December 31, 2018 for 11% Senior Secured Promissory Notes and issued 100,000 cashless exercise warrants for purchase of company stock at $0.50, expiring October 31, 2021. As of June 30, 2020, the Company had not renewed or repaid $25,000 in 10% notes with a maturity date of December 31, 2018, and those notes were technically in default. In October 2017, the Company sold an aggregate of $300,000 in senior unsecured notes. The notes bear interest at the rate of 10% per annum and are due in October 2020. For every $1.00 in principal amount of note, investors got one warrant exercisable for one year to purchase an additional share of common stock at an exercise price of $0.75 per share. The warrants have a cashless exercise provision. All notes remain outstanding as of June 30, 2020. Effective October 31, 2020, the Company exchanged $150,000 in outstanding Senior Unsecured 10% Notes and Warrants that had matured on October 31, 2020 for 11% Senior Secured Promissory Notes and issued 150,000 cashless exercise warrants for purchase of the Company’s common stock at $0.50 per share, expiring October 31, 2021. The Company also repaid the remaining $150,000 of 10% Senior Unsecured Notes. In October 2018, the Company, through a registered broker-dealer acting as Placement Agent, undertook a private offering to accredited investors of Units, each Unit consisting of an 11% Senior Secured Note, due in three years, (October 31, 2021) and one Warrant for each $1.00 in principal amount of Note exercisable for three years to purchase a share of Common Stock at an exercise price of $0.50 per share. The Company and the Placement Agent completed the Offering in December 2018 having sold an aggregate of $1,160,000 in Notes and Warrants. The net proceeds to the Company were $1,092,400, after deducting Placement Agent fees of $67,600, and issued 111,000 warrants to the Placement Agent with $21,453 of the fair value of the warrants recorded as loan cost. The Offering also included the exchange of an aggregate of $1.075 million in outstanding senior secured 10% Notes and Warrants for Units in the Offering. No proceeds were realized from the exchange and no fees were paid to the Placement Agent for such exchanges. During 2018, among the $1.075 million senior secured notes that were extended to October 31, 2021 by virtue of the exchange, $875,000 were to related parties. On January 17, 2020, the Board of Directors agreed to increase the total offering amount and extend the period of its 2018 Offering of 11% Senior Secured Notes. The total amount of the Offering has been increased to $2,500,000 and the offering period will continue until terminated by the Board of Directors. Effective February 5, 2020 and March 3, 2020, the Company completed the sale of $60,000 and $100,000, respectively, of Units in the Offering. The sale of $100,000 Units on March 3, 2020 was to a related party. Effective October 31, 2020 the Company completed the exchange of $150,000 of Units in the Offering for matured Senior Unsecure notes. No fees or commissions were paid on the sale of the Units. The proceeds will be used for general working capital. The value of the warrants issued to the note holders during the six months ended June 30, 2020 was calculated using the Black-Scholes pricing model using the following significant assumptions: Volatility 115.2% - 117.3 % Risk-free Interest Rate 0.71% - 1.45 % Exercise Price $ 0.50 Fair Value of Common Stock $ 0.20 - $0.24 Expected Life 1.7 – 1.8 years During the year ended December 31, 2018, the Company issued 1,160,000 warrants with a value on the issue date estimated to be $207,025 bifurcated from the value of the note and exchanged 1,075,000 existing warrants for new warrants in connection with its note offerings. During the six months ended June 30, 2020, the Company issued 160,000 warrants, 100,000 of which to related parties, with a value on the issue date estimated to be $11,616 bifurcated from the value of the note and exchanged 100,000 existing warrants for new warrants with a value on the issue date estimated to be $8,146 in connection with its note offerings. For all notes issued with warrants, the relative fair value of the warrants issued were recorded as debt discounts. As of June 30, 2020, the unamortized balance of discount on notes was $90,302. Amortization expense was $40,696 and $36,089 for the six months ended June 30, 2020 and 2019, respectively. Mortgage Loans and Lines of Credit Secured by Real Estate Mortgage loans and other debts such as line of credit here are collateralized by all assets of each nursing home property and an assignment of its rents. Collateral for certain mortgage loans includes the personal guarantee of Christopher Brogdon. Mortgage loans for the periods presented consisted of the following: Face Principal Outstanding at Stated Maturity Property Amount June 30, 2020 December 31, 2019 Interest Rate Date Southern Hills Retirement Center (1)(2) $ 7,227,074 $ 7,227,074 $ 7,230,582 4.75% Fixed June 18, 2023 Eastman Nursing Home (1)(3) 3,570,000 3,394,866 3,451,593 5.50% Fixed October 26, 2021 Goodwill Nursing Home (1)(4) 4,268,878 4,242,171 4,286,237 4.75% Fixed April 12, 2025 Warrenton Nursing Home (5) 3,768,600 3,704,959 3,739,942 3.73% Fixed July 1, 2049 Edward Redeemer Health & Rehab (6) 2,065,804 2,065,773 2,074,958 4.75% Fixed June 29, 2021 Glen Eagle Health and Rehab (7) 3,119,214 3,036,436 3,083,006 5.50% Fixed May 25, 2021 Providence of Sparta Nursing Home (8) 3,039,300 2,893,371 2,923,013 3.50% Fixed November 1, 2047 Meadowview Healthcare Center (9) 3,000,000 2,834,400 2,869,200 6.00% Fixed October 30, 2022 GL Nursing Home (10) 5,000,000 4,618,006 4,618,006 Prime Plus 1.50%/ 5.75% Floor August 3, 2037 Higher Call Nursing Center (11) 1,051,721 1,045,640 - Prime Plus 2.00% March 3, 2040 $ 35,062,696 $ 34,276,537 (1) Mortgage loans are non-recourse to the Company except for (i) the senior loan held by ServisFirst Bank on Meadowview (Ohio), (ii) the loans held by Colony Bank on Eastman and Glen Eagle, and (iii) the Southern Hills line of credit and Goodwill loan owed to Southern Bank (formerly First Commercial Bank). (2) On October 31, 2017, the Company, through its wholly-owned subsidiaries Southern Tulsa, LLC and Southern Tulsa TLC, LLC, as Co-Borrowers, consummated a new Line of Credit with Southern Bank (formerly First Commercial Bank) pursuant to a Promissory Note in the principal amount of $7,229,052 (the “Line of Credit”). Under the Line of Credit, the Company refinanced the prior mortgage on its skilled nursing facility in Tulsa for $1,546,801, funded open market and tender offer purchases of its Industrial Revenue Bonds covering the ALF and ILF as well as provided working capital for improvements to the ALF and ILF. As of June 30, 2020, a total of $7,227,074 was drawn under the Line of Credit, and as of December 31, 2019, a total of $7,230,582 was drawn under the Line of Credit. Modifications to the loan in June 2020 effectively convert it from a line of credit to a term loan. The interest rate on the Line of Credit increased from 5.25% to 5.75% effective April 28, 2019 and subsequently was reduced to 4.75% as part of a new three-year loan renewal. Monthly payments of interest began on November 30, 2017 and continue until the Promissory Note is paid in full on the Maturity Date. The Maturity Date was been extended multiple times in three month increments initially from April 30, 2018 to May 5, 2020, and subsequently to June 18, 2023 with a principal amount of $7,227,074. During the six months ended June 30, 2020, the Company capitalized $33,095 in loan costs paid. The Credit Note is secured by a First Mortgage and Assignment of Rents on Real Property for Southern Hills Rehabilitation Center, a Junior Lien and Assignment of Rents on Real Property for its Southern Hills Independent Living Facility location and a Junior Lien on Real Property for its Southern Hills Assisted Living Facility location. With the retirement of the Tulsa Industrial Authority Bonds effective November 1, 2018, Southern Bank (formerly First Commercial Bank) moved into a senior position on the ALF and ILF properties. (3) The loan at Eastman was renewed on November 26, 2018 with the maturity date extended to October 26, 2021. For the six months ended June 30, 2020, amortization expense related to loan costs totaled $643. (4) The maturity date for the loan at Goodwill Nursing was extended to April 12, 2025 in June 2020. The face value of the note was adjusted to the principal outstanding at the time of $4,268,878, and the interest rate was decreased to 4.75%, from 5.50%. The modification of the loan was substantial and resulted in an extinguishment of the original loan. (5) The original maturity date for the loan was extended on January 19, 2019 to January 20, 2020 and the Company capitalized $8,885 in loan costs paid. The loan was refinanced in June 2019. The Company has incurred $156,671 in unamortized loan costs to refinance this debt with another lender. The refinance was treated as debt extinguishment, with a new maturity date of July 1, 2049 and an interest rate of 3.73%. For the six months ended June 30, 2020, amortization expense related to loan costs totaled $2,611. (6) The maturity date for the loan at Edwards Redeemer was extended to June 29, 2021 in June 2020. The face value of the note was adjusted to the principal outstanding at the time of the modification, $2,065,804, and the interest rate was decreased from 5.50% to 4.75%. (7) Amortization expense related to loan costs of this loan totaled $437 for the six months ended June 30, 2020. Amortizing payments began in January 2019. In June 2018, the Company converted the original note to a fixed note which qualified as debt extinguishment, unamortized debt discount on the original note was expensed as a loss on extinguishment of $27,794. In April 2018, the Company capitalized $22,800 in fees and interest and added it to principal. The Company is subject to financial covenants and customary affirmative and negative covenants, including compliance with the covenants of all other notes and bonds. As of June 30, 2020, the Company was not in compliance with some unrelated notes and bonds, which is considered to be a technical Event of Default as defined in the note agreement, but the Company believes that it is in good standing with the Lender. In October 2018, the Lender extended the Company a line of credit with a limit of $200,365 to provide working capital to scale operations at the facility. The line of credit was expanded in February 2019 to $400,000 with a maturity date of September 30, 2019. Prior to September 30, 2019, the Company had drawn $400,000 on the line which was subsequently merged into the amortizing note due May 25, 2021. (8) The senior debt and subordinated debt owed in relation to Providence of Sparta was refinanced into a single senior HUD note during 2017. Amortization expense related to loan costs totaled $2,492 for the six months ended June 30, 2020. The interest rate was reduced from 3.88% to 3.50% as part of a refinance completed in April 2020. (9) Amortization expense related to loan costs of this loan totaled $4,652 for the six months ended June 30, 2020. The Company is subject to financial covenants and customary affirmative and negative covenants, including compliance with the covenants of all other notes and bonds. As of June 30, 2020, the Company was not in compliance with some unrelated notes and bonds, which is considered to be a technical Event of Default as defined in the note agreement, but the Company believes that it is in good standing with the Lender. (10) The mortgage loan collateralized by the GL Nursing Home is 80% guaranteed by the USDA and requires an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year. The Company is subject to financial covenants and customary affirmative and negative covenants. As of June 30, 2020, the Company was not in compliance with certain of these financial and non-financial covenants which is a technical Event of Default as defined in the note agreement. The Company is also delinquent in installment payments due under the mortgage. Remedies available to the lender in the event of a continuing Event of Default, at its option, include, but are not necessarily limited to the following (1) lender may declare the principal and all accrued interest on the note due and payable; and (2) lender may exercise additional rights and remedies under the note agreement to include taking possession of the collateral or seeking satisfaction from the guarantors. The Company has been notified by the lender regarding the Events of Default. Guarantors under the mortgage loan include Christopher Brogdon. With our consent, Mr. Brogdon has assumed operations of the facility and is making payment of interest on the loan. The Company is not obligated to repay the interest. (11) In connection with the acquisition of Higher Call, the Company entered into a senior loan agreement with Security Bank in the principal amount of $1,051,721. This loan accrues interest at the rate of 6.5% per annum and is payable in monthly installments of $7,907. The loan is secured by a senior Mortgage, Security Agreement and Assignment of Rents covering the Higher Call facility and a UCC Security Interest covering the personal property and other non-real estate assets. The Company is subject to financial covenants and customary affirmative and negative covenants. As of June 30, 2020, the Company was in compliance with these covenants. Other mortgage loans contain non-financial covenants, including reporting obligations, with which the Company has not complied in some instances or in an untimely manner. These mortgage loans are technically in default; however, our relationship with these lenders is considered good. Other Debt Other debt due at June 30, 2020 and December 31, 2019 includes unsecured notes payable issued to entities controlled by the Company used to facilitate the acquisition of the nursing home properties. Face Principal Outstanding at Stated Interest Maturity Property Amount June 30, 2020 December 31, 2019 Rate Date Goodwill Nursing Home (1) $ 2,180,000 $ 1,053,600 $ 1,536,000 13% (1) December 31, 2019 Higher Call Nursing Center (2) 150,000 141,961 - 8% Fixed April 1, 2024 $ 1,195,561 $ 1,536,000 (1) The subordinated note on Goodwill matured on July 1, 2015. Investors in the Goodwill note were entitled to an additional 5% equity in Goodwill Hunting, LLC every six months if the note is not paid when due. Effective December 31, 2015, the investors holding the subordinated debt executed an Agreement Among Lenders pursuant to which they (i) agreed to waive any and all equity ratchets and (ii) agreed to extend the maturity date of the subordinated debt to June 30, 2017. In exchange, Goodwill Hunting agreed to pay the investors an additional one-time premium equal to 5% of the principal amount of the individual note at such time as the note is repaid. Effective May 3, 2017, we entered into an Allonge and Modification Agreement with the Goodwill investors pursuant to which they agreed to (i) waive all accrued interest through December 31, 2017, (ii) reduce interest rate to 13% beginning January 1, 2018 and (iii) extend the maturity date of the notes to December 31, 2019. In exchange, the Company agreed that upon repayment of the notes, the investors would be entitled to a one-time premium payment in the amount of 15% of the principal balance of the notes. The Corporate entity, Global Healthcare REIT Inc. owns $800,000 of its own subsidiary’s notes, Goodwill Hunting, LLC, but this amount is excluded from the above table and eliminated in consolidation on the balance sheet. On June 30, 2020, the Company purchased from four former investors in GWH Investors, LLC their notes in favor of Goodwill Hunting, LLC in the aggregate amount of $482,400 for $402,000 cash and recognized a gain of $80,400, and subsequently in October purchased from two more investors an aggregate amount of $108,000 for $90,000 of cash and will recognize a gain of $18,000. The Company has not repaid or renewed the note as of June 30, 2020 and it is technically in default. (2) In connection with the acquisition of Higher Call, the Company executed a promissory note in favor of the Seller, Higher Call Nursing Center, Inc., in the principal amount of $150,000 which accrues interest at the rate of 8% per annum and is payable in equal monthly installments, principal and interest. This note is secured by a corporate guaranty of Global. Our corporate debt at June 30, 2020 and December 31, 2019 includes unsecured notes and notes secured by all assets of the Company not serving as collateral for other notes. Face Principal Outstanding at Stated Interest Series Amount June 30, 2020 December 31, 2019 Rate Maturity Date 10% Senior Secured Promissory Note $ 25,000 $ 25,000 $ 25,000 10.0% Fixed December 31, 2018 10% Senior Unsecured Promissory Notes 300,000 300,000 300,000 10.0% Fixed October 31, 2020 11% Senior Secured Promissory Notes 1,520,000 1,520,000 1,460,000 11.0% Fixed October 31, 2021 11% Senior Secured Promissory Notes – Related Party 975,000 975,000 875,000 11.0% Fixed October 31, 2021 $ 2,820,000 $ 2,660,000 Effective January 28, 2020, the Company exchanged $100,000 in outstanding senior secured 10% Notes that had matured December 31, 2018 for an 11% Senior Secured Note with a maturity date of October 31, 2021 and issued 100,000 cashless exercise warrants for purchase of company stock at $0.50, expiring October 31, 2021. Paycheck Protection Program Loans and Other Debt On April 20, 2020, the Company through its subsidiaries received a loan of $574,975 pursuant to the Paycheck Protection Program (the “PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan matures on April 20, 2022 (the “Maturity Date”), accrues interest at 1% per annum and may be prepaid in whole or in part without penalty. No interest payments are due within the initial six months of the PPP Loan. The interest accrued during the initial six-month period is due and payable, together with the principal, on the Maturity Date. The Company used all proceeds from the PPP Loan to retain employees, maintain payroll and make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts are eligible for forgiveness, subject to the provisions of the CARES Act. On May 4, 2020, the Company through its subsidiaries received loans of $324,442 and $710,752 pursuant to the Paycheck Protection Program (the “PPP Loans”) of the CARES Act. Both PPP Loans mature on May 4, 2022 (the “Maturity Date”), accrue interest at 1% per annum and may be prepaid in whole or in part without penalty. No interest payments are due within the initial six months of the PPP Loans. The interest accrued during the initial six-month period is due and payable, together with the principal, on the Maturity Date. The Company used all proceeds from the PPP Loans to retain employees, maintain payroll and make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts are eligible for forgiveness, subject to the provisions of the CARES Act. For the six months ended June 30, 2020 and 2019, the Company received proceeds from the issuance of debt of $2,821,890 and $1,676,354, respectively. Proceeds from the issuance of debt in the six months ended June 30, 2020 includes $100,000 from related parties. Cash payments on debt totaled $675,736 and $273,550 for the six months ended June 30, 2020 and 2019, respectively. Amortization expense for deferred loan costs and debt discounts totaled $90,907 and $71,231 for the six months ended June 30, 2020 and 2019, respectively. Future maturities and principal reduction payments of all notes and bonds payable listed above for the next five years and thereafter are as follows: Years 2020 $ 12,135,289 (1) 2021 8,182,778 2022 1,960,552 2023 7,595,127 2024 352,829 2025 and after 10,461,851 $ 40,688,426 (1) Any note or bond that is not in compliance with all financial and non-financial covenants is considered to have an immediate maturity, including those that require compliance with covenants on any and all other notes. The notes secured by the facilities at GL Nursing Home, Meadowview and Abbeville have such covenants which were in technical non-compliance at June 30, 2020, but the Company believes that its relationships with these lenders is good. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 9. STOCKHOLDERS’ EQUITY Preferred Stock The Company has authorized 10,000,000 shares of preferred stock. These shares may be issued in series with such rights and preferences as may be determined by the Board of Directors. Series A Convertible Redeemable Preferred Stock The Company’s Board of Directors has authorized 2,000,000 shares of $2.00 stated value, Series A Preferred Stock. The preferred stock has a senior liquidation preference value of $2.00 per share, has no voting or redemption rights and does not accrue dividends. As of June 30, 2020 and December 31, 2019, the Company has 200,500 shares of Series A Preferred stock outstanding. Series D Convertible Preferred Stock The Company has established a class of preferred stock designated “Series D Convertible Preferred Stock” (Series D preferred stock) and authorized an aggregate of 1,000,000 non-voting shares with a stated value of $1.00 per share. Holders of the Series D preferred stock are entitled to receive dividends at the annual rate of eight percent (8%) based on the stated value per share computed on the basis of a 360-day year and twelve 30-day months. Dividends are cumulative, shall be declared quarterly, and are calculated from the date of issue and payable on the fifteenth day of April, July, October, and January. The dividends may be paid, at the option of the holder either in cash or by the issuance of shares of the Company’s common stock valued at the market price on the dividend record date. Shares of the Series D preferred stock are redeemable at the Company’s option. At the option of the holder, shares of the Series D preferred stock plus any declared and unpaid dividends are convertible to shares of the Company’s common stock at a conversion rate of $1.00 per share. As of June 30, 2020, and December 31, 2019, the Company had 375,000 shares of Series D preferred stock outstanding. During the six months ended June 30, 2020 and 2019, the Company paid $15,000 and $15,000, respectively, for Series D preferred stock dividends. Dividends of $15,000 and $15,000 were declared during the six months ended June 30, 2020 and 2019, respectively, with dividends of $7,500 accrued and payable as of June 30, 2020 and 2019. All quarterly dividends previously declared have been paid. Restricted Stock Awards The following table summarizes the restricted stock unit activity during the six months ended June 30, 2020 and 2019. June 30, 2020 June 30, 2019 Outstanding Non-Vested Restricted Stock Units, Beginning 75,000 - Granted - 545,454 Vested (75,000 ) (409,091 ) Outstanding Non-Vested Restricted Stock Units, Ending - 136,363 In connection with these director and executive restricted stock grants, the Company recognized stock-based compensation of $135,000 for the six months ended June 30, 2019. No stock-based compensation was recognized for restricted stock grants for the six months ended June 30, 2020, but a reversal of stock-based compensation of $8,750 due to forfeitures of restricted stock awards granted in the prior year was recognized. Common Stock Warrants As of June 30, 2020 and December 31, 2019, the Company had 2,858,130 and 2,598,130, respectively, of outstanding warrants to purchase common stock at a weighted average exercise price of $0.53 and $0.54, respectively, and weighted average remaining term of 1.33 years and 2.10 years, respectively. During the six months ended June 30, 2020, an aggregate of 260,000 warrants with a weighted average exercise price of $0.50 were issued in connection with a private offering of the Company’s 11% Senior Secured Notes. During the six-month period ended June 30, 2019, an aggregate of 427,668 warrants with a weighted average exercise price of $0.75 expired. The aggregate intrinsic value of the common stock warrants outstanding at June 30, 2020 was $0. Common Stock Options As of June 30, 2020, and December 31, 2019, the Company had 600,000 and 600,000, respectively, of outstanding options to purchase common stock at a weighted average exercise price of $0.36 and a weighted average remaining term of 2.75 and 3.00 years, respectively. During the six-month period ended June 30, 2020 and 2019, no options expired. The aggregate intrinsic value of the common stock options outstanding at June 30, 2020 was $0. Earnings per Share Basic earnings per share are based on the weighted-average number of shares of common stock outstanding. FASB ASC Topic 260, “Earnings per Share”, requires the Company to include additional shares in the computation of earnings per share, assuming dilution. Diluted earnings per share are based on the assumption that all dilutive options and warrants were converted or exercised by applying the treasury stock method and that all convertible preferred stock were converted into common shares by applying the if-converted method. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period or at the time of issuance, if later, and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, the preferred dividends applicable to convertible preferred stock are added back to the numerator. The convertible preferred stock is assumed to have been converted at the beginning of the period or at time of issuance, if later, and the resulting common shares are included in the denominator. We calculate basic earnings per share by dividing net income attributable to common stockholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the reporting period. Diluted earnings per share is calculated similarly but reflects the potential impact of outstanding options, warrants and other commitments to issue common stock, including shares issuable upon the conversion of convertible preferred stock outstanding, except where the impact would be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share: Six Months Ended Three Months Ended June 30, June 30, 2020 2019 2020 2019 Numerator for basic earnings per share: Net Income (Loss) Attributable to Global Healthcare REIT, Inc. $ 1,184,655 $ (3,959 ) $ 1,123,555 $ (168,255 ) Series D Preferred Dividends (15,000 ) (15,000 ) (7,500 ) (7,500 ) Net Income (Loss) Attributable to Common Stockholders - Basic $ 1,169,655 $ (18,959 ) $ 1,116,055 $ (175,755 ) Numerator for diluted earnings per share: Net Income (Loss) Attributable to Common Stockholders $ 1,169,655 $ (18,959 ) $ 1,116,055 $ (175,755 ) Series D Preferred Dividends 15,000 - 7,500 - Net Income (Loss) Attributable to Common Stockholders - Diluted $ 1,184,655 $ (18,959 ) $ 1,123,555 $ (175,755 ) Denominator for basic earnings per share: Weighted Average Common Shares Outstanding 27,427,928 27,122,607 27,414,816 27,347,134 Denominator for diluted earnings per share: Weighted Average Common Shares Outstanding – Basic 27,427,928 27,122,607 27,414,816 27,347,134 Effect of dilutive securities: Conversion of Series D Convertible Preferred Stock 382,500 - 382,500 - Weighted Average Common Shares Outstanding - Diluted 27,810,428 27,122,607 27,797,316 27,347,134 Net Income (Loss) per Share Attributable to Common Stockholders: Basic $ 0.04 $ (0.00 ) $ 0.04 $ (0.01 ) Diluted $ 0.04 $ (0.00 ) $ 0.04 $ (0.01 ) Options to purchase 600,000 shares of common stock were outstanding during each of the three and six months ended June 30, 2020 but were not included in the computation of diluted earnings per share because they are anti-dilutive due to the options’ exercise price being greater than the average market price of the common shares. Warrants to purchase 2,858,130 shares of common stock were outstanding during each of the three and six months ended June 30, 2020 but were not included in the computation of diluted earnings per share because they are anti-dilutive due to the warrants’ exercise price being greater than the average market price of the common shares. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | 10. RELATED PARTIES Clifford Neuman provides office space for the Company’s Controller at no charge. As of June 30, 2020, and December 31, 2019, the Company owed Mr. Neuman for legal services rendered $0 and $32,156, respectively. Creative Cyberweb developed and maintains the Company’s website and is affiliated with former CFO Zvi Rhine’s family. The ongoing upkeep is $450 per month. In January 2018, the Directors modified the Directors’ Compensation Plan to provide the annual grants be subject to ratable vesting over 12 months. In March 2019, the Board approved an annual grant to three of its Directors without other compensation plans, restricted stock awards of 90,909 shares each, subject to vesting. In July 2019, the Board approved a pro-rated annual grant to two of its Directors without other compensation plans restricted stock awards of 90,909 shares in aggregate, subject to vesting. In connection with these director restricted stock grants, the Company recognized stock-based compensation of $45,000 for the six months ended June 30, 2019. No stock-based compensation was recognized in connection with director restricted stock grants for the six months ended June 30, 2020, but a reversal of stock-based compensation of $8,750 due to forfeitures of the restricted stock awards granted in prior year was recognized. In the first quarter of 2020, the Board revised the Director Compensation Plan to provide that non-employee directors are entitled to a directors’ fee equal to $7,500 per quarter, payable in cash. |
Facility Leases
Facility Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Facility Leases | 11. FACILITY LEASES The following table summarizes our leasing arrangements related to the Company’s healthcare facilities at June 30, 2020: Facility Monthly Lease Income (1) Lease Expiration Renewal Option if any Eastman (2) $ - - None Warrenton $ 55,724 June 30, 2026 Term may be extended for one Goodwill (3) $ 48,125 February 1, 2027 Term may be extended for one Edwards Redeemer (4) $ None Providence $ 42,519 June 30, 2026 Term may be extended for one Meadowview (5) $ - None GL Nursing (6) $ - - None Glen Eagle (7) $ - - None Southern Hills SNF (8) $ - - Term may be extended for two Southern Hills ALF (9) $ - - None Southern Hills ILF (10) $ - - None Higher Call $ - - None (1) Monthly lease income reflects rent income on a straight-line basis over, where applicable, the term of each lease. (2) On October 18, 2019, the Company terminated the lease at its Eastman property. A Receivership was appointed to assume the operations of the facility. The receivership was discharged on July 1, 2020 and the Company is currently operating the building independently. (3) In January 2016, the Goodwill facility was closed by Georgia regulators and all residents were removed. In a transaction related to the sale of the Greene Point facility, an affiliate of the buyer of Greene Point executed a ten-year operating lease covering Goodwill. After investing approximately $2.0 million in capital improvements in the property, the lease operator obtained all regulatory approvals and began admitting patients in December 2016. The lease became effective on February 1, 2017, and the facility began generating rental revenue thereafter. (4) Cadence, our former lease operator, informed the Company that it intended to close the Edwards Redeemer facility due to unprofitable operations. In violation of the operating lease, Cadence began moving patients from the facility and, as of October 18, 2019, all patients had been removed. In response to our Petition, on October 17, 2019, the District Court of Oklahoma County, State of Oklahoma issued a Temporary Order Appointing Receiver (the “Order”) pursuant to a Motion to Appoint Receiver filed by Edwards Redeemer Property Holdings, LLC (“Edwards Property”), a wholly-owned subsidiary of the Company, with respect as a skilled nursing facility. The Order was issued due to the violations by Cadence of the business-preservation obligations contained in the lease between Edwards Property and the Operator. The Company will allow Edwards Redeemer to remain closed for the purpose of undertaking extensive renovations to the facility. We are planning to reopen the facility in the first quarter of 2021 to be operated by our newly formed wholly-owned subsidiary Tiaps Rehab Center, LLC. (5) The lease was generating $33,000 in monthly gross rent; however, the operator experienced adverse results in late 2017 and throughout 2018. In April 2018, the Company recognized a bad debt expense of $56,000 related to rent receivables previously booked in 2018 at the Meadowview facility. Effective December 1, 2018, the Company completed the operations transfer to an affiliate of Infinity Health Interests, LLC (“Infinity”). The lease was structured with a lower base rent component than the prior operator but included occupancy-based escalators that were intended to better align facility operations with future rental payments. The Company did not receive any cash rent for the facility and has not recorded any rental revenues or receivables for this facility since the inception of the lease. On August 7, 2020, the facility was served with a Notice of Immediate Imposition of Remedies from the Centers for Medicare and Medicaid Services (“CMS”), as well as a Notice of Imposition of Remedies by the Ohio Department of Health (“ODH”) ordering the facility to relocate all residents no later than August 9, 2020. The actions of the CMS and ODH were the result of ongoing operating deficiencies which the operator failed to cure. All residents of the Meadowview facility were relocated by the August 9, 2020 deadline, and as a result the facility has been closed. The Company has applied with the ODH for a new nursing home license which is pending. In September 2020, the ODH served notice that it intended to commence proceedings to revoke the nursing license on the facility. The Company has not determined what future courses of action may be required or appropriate. (6) Effective January 1, 2016, the GL Nursing facility was leased to another operator for a period of ten years at a monthly base rent of $30,000 which was subject to increases based on census levels. Under the terms of the lease, the Company agreed to fund certain capital expenditures, which it was unable to fulfill. In July 2016, the new tenant served notice that it was terminating the lease effective August 31, 2016. The Company entered into a Lease Termination Agreement under which it paid the tenant $145,000 and is obligated to make future payments. Effective August 30, 2016, the Company entered into a new lease agreement with another nursing home operator. The lease term was to commence at the end of a straddle period. During the straddle period, the Company made working capital advances to enable the operator to cover cash flow deficits resulting from initial operations of the facility. Prior to the end of the straddle period, the lease operator informed the Company that it would vacate the facility. An entity affiliated with Mr. Brogdon, who is a guarantor of the mortgage, assumed operations of the facility in March 2018 under an OTA. We do not expect the facility to generate any future revenue for the Company. (7) The Company entered into a management agreement with Cadence Healthcare Solutions to operate Glen Eagle after expending approximately $1.0 million in capital improvements. The facility passed its licensure survey and began admitting patients in June 2018. Effective October 12, 2018, the facility gained its certification and started collecting revenues from Medicare and Medicaid in April 2019. On October 17, 2019, the Company terminated its management with Cadence Healthcare Solutions and is currently operating the building independently. (8) Lease agreement dated May 21, 2014 with lease payments commencing February 1, 2015. On May 10, 2016, the Company obtained a Court Order appointing a Receiver to control and operate the Southern Hills SNF. The former lease operator represented that it was unable to meet the financial commitments of the facility, including the payment of rent, payroll, and other operating requirements. In October 2017, the Receiver engaged a new manager for the facility at the request of the Company. In May 2019, the lease expired, and in July 2019 the facility was leased to Southern Hills Rehab Center LLC, a wholly owned subsidiary of the Company, to conduct operations. The approval of the transfer of the Certificates of Need and appropriate licenses to operate the facility was granted on December 1, 2019. The Company is currently operating the building independently. (9) The Company plans to operate the Southern Hills ALF independently once COVID-19 is brought under control. (10) The Company has been operating the Southern Hills Independent Living Facility (ILF) directly since September 2019. The facility does not provide healthcare services. It consists of private one- and two-bedroom units leased separately to individual tenants. The rollout of the ILF has been slowed due to COVID-19. Lessees are responsible for payment of insurance, taxes and other charges while under the lease. Should the lessees not pay all such charges as required under the leases, or if there is no tenant, the Company may become liable for such operating expenses. We have been required to cover those expenses at Glen Eagle as well as the Southern Hills SNF, ALF and ILF, Meadowview, Higher Call, and Edwards properties. Future cash payments for rent to be received during the initial terms of the leases for the next five years and thereafter are as follows (excludes Abbeville, Edwards Redeemer, Southern Tulsa SNF and Southern Tulsa ALF and ILF, and Higher Call due to properties being independently operated, and GL Nursing): Years 2020 $ 873,048 2021 1,764,942 2022 1,796,400 2023 1,828,480 2024 1,860,867 2025 and Thereafter 3,223,628 $ 11,347,365 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 12. FAIR VALUE MEASUREMENTS Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels: Level 1— Quoted market prices in active markets for identical assets or liabilities at the measurement date. Level 2— Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data. Level 3— Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our consolidated balance sheets include the following financial instruments: cash and cash equivalents, accounts receivable, notes receivable, restricted cash, accounts payable, debt and lease security deposit. We consider the carrying values of our short-term financial instruments to approximate fair value because they generally expose the Company to limited credit risk, because of the short period of time between origination of the financial assets and liabilities and their expected settlement, or because of their proximity to acquisition date fair values. The carrying value of debt approximates fair value based on borrowing rates currently available for debt of similar terms and maturities. Upon acquisition of real estate properties, the Company determines the total purchase price of each property and allocates this price base on the fair value of the tangible assets and intangible assets, if any, acquired and any liabilities assumed based on Level 3 inputs. These Level 3 inputs can include comparable sales values, discount rates, and capitalization rate assumptions from a third party appraisal or other market sources. The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the six months ended June 30, 2020 and 2019: 2020 2019 Beginning Balance January 1 $ - $ 2,785 Change in Fair Value of Warrant Liability - (2,758 ) Ending Balance, June 30 $ - $ 27 |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | 13. SEGMENT REPORTING The Company had two primary reporting segments during the six months ended June 30, 2020, which include real estate services and healthcare services. The Company reports segment information based on the “management approach” defined in ASC 280, Segment Reporting. Total assets for the healthcare services and real estate services segments were $8,191,160 and $34,859,771, respectively, as of June 30, 2020 and $4,654,845 and $35,223,318, respectively, as of December 31, 2019. Statements of Operations Items for the Six Months Ended June 30, 2020 June 30, 2019 Real Estate Healthcare Services Consolidated Real Estate Healthcare Services Consolidated Rental Revenue $ 1,144,605 $ - $ 1,144,605 $ 1,825,575 $ - $ 1,825,575 Healthcare Revenue - 7,837,461 7,837,461 - 1,063,928 1,063,928 Total Revenue 1,144,605 7,837,461 8,982,066 1,825,575 1,063,928 2,889,503 Expenses General and Administrative 296,149 419,621 715,770 390,097 180,739 570,836 Property Taxes, Insurance and Other Operating 299,379 4,686,596 4,985,975 86,065 806,954 893,019 Provision for Bad Debts - 263,890 263,890 - - - Acquisition Costs 28,654 - 28,654 - - - Depreciation 670,767 97,336 768,103 582,723 63,128 645,851 Total Expenses 1,294,949 5,467,443 6,762,392 1,058,885 1,050,821 2,109,706 Income (Loss) from Operations (150,344 ) 2,370,018 2,219,674 766,690 13,107 779,797 Other (Income) Expense Gain on Warrant Liability - - - (2,758 ) - (2,758 ) Gain on Extinguishment of Debt (80,400 ) - (80,400 ) - - - Gain on Sale of Investments - - - (1,069 ) - (1,069 ) Gain on Proceeds from Insurance Claim - - - (270,264 ) - (270,264 ) Interest Income - - - (7,003 ) - (7,003 ) Interest Expense 1,010,360 106,211 1,116,571 989,042 81,818 1,070,860 Total Other (Income) Expense 929,960 106,211 1,036,171 707,948 81,818 789,766 Net Income (Loss) (1,080,304 ) 2,263,807 1,183,503 58,742 (68,711 ) (9,969 ) Net Loss Attributable to Noncontrolling Interests 1,152 - 1,152 6,010 - 6,010 Net Income (Loss) Attributable to Global Healthcare REIT, Inc. $ (1,079,152 ) $ 2,263,807 $ 1,184,655 $ 64,752 $ (68,711 ) $ (3,959 ) Statements of Operations Items for the Three Months Ended June 30, 2020 June 30, 2019 Real Estate Healthcare Services Consolidated Real Estate Healthcare Services Consolidated Rental Revenue $ 623,593 $ - $ 623,593 $ 930,287 $ - $ 930,287 Healthcare Revenue - 4,506,872 4,506,872 - 684,137 684,137 Total Revenue 623,593 4,506,872 5,130,465 930,287 684,137 1,614,424 Expenses General and Administrative 147,579 225,128 372,707 278,327 99,030 377,357 Property Taxes, Insurance and Other Operating 153,539 2,500,692 2,654,231 25,241 518,590 543,831 Provision for Bad Debts - 57,282 57,282 - - - Acquisition Costs 13,763 - 13,763 - - - Depreciation 335,408 45,477 380,885 291,362 31,564 322,926 Total Expenses 650,289 2,828,579 3,478,868 594,930 649,184 1,244,114 Income (Loss) from Operations (26,696 ) 1,678,293 1,651,597 335,357 34,953 370,310 Other (Income) Expense Gain on Warrant Liability - - - (2,655 ) - (2,655 ) Gain on Extinguishment of Debt (80,400 ) - (80,400 ) - - - Interest Income - - - (1,536 ) - (1,536 ) Interest Expense 532,597 78,704 611,301 505,093 39,532 544,625 Total Other (Income) Expense 452,197 78,704 530,901 500,902 39,532 540,434 Net Income (Loss) (478,893 ) 1,599,589 1,120,696 (165,545 ) (4,579 ) (170,124 ) Net Loss Attributable to Noncontrolling Interests 2,859 - 2,859 1,869 - 1,869 Net Income (Loss) Attributable to Global Healthcare REIT, Inc. $ (476,034 ) $ 1,599,589 $ 1,123,555 $ (163,676 ) $ (4,579 ) $ (168,255 ) |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | 14. LEGAL PROCEEDINGS The Company and/or its affiliated subsidiaries are or were involved in the following litigation: Bailey v. GL Nursing, LLC, et. al in the Circuit Court of Lonoke County, Arkansas, 23rd Circuit, In April 2019, the Company’s wholly-owned subsidiary was named as a co-defendant in the action arising out of a claimed personal injury suffered by the plaintiff while a resident of the skilled nursing home owned, but not operated, by GL Nursing. As of this date, we have engaged legal counsel, but no further information is known regarding the merits of the claim. After initial inquiry, it does not appear that the lease operator of the facility had in effect general liability insurance covering the GL Nursing, as landlord, as required by the operating lease. As we simply were the owners of the property and not the operators, we believe that primary responsibility, if any, falls with the operator at the time. Under the terms of the lease, the operator has a duty to indemnify the Company, a claim which we intend to assert. While it is too early to assess the Company’s exposure, we believe at this time that the likelihood of an adverse outcome is remote. Thomas v. Edwards Redeemer Property Holdings, LLC, et.al., This action arises from a personal injury claim brought by heirs of a former resident of our Edwards Redeemer facility, filed in April 2016. We are entitled to indemnification from the lease operator and should be covered under the lease operator’s general liability policy. As we are not the operators of the facility and believe we have indemnity coverage, we believe we have no exposure. The lease operator’s insurance carrier is providing a defense and indemnity and, as a result, we believe the likelihood of a material adverse result is remote. Edwards Redeemer Property Holdings LLC v. Edwards Redeemer Healthcare & Rehab, LLC, This action was brought by us against the former lease operator for breaching the lease agreement, removing all the patients, and closing the facility. On October 17, 2019, the Court entered an Order Appointing a Receiver. Other claims against the former operator are pending. Dodge NH, LLC v. Eastman Healthcare & Rehab, LLC, This action was brought by us against the former lease operator for numerous violations of the operating lease, including violation of the cross-default provisions with Edwards Redeemer, which had been operated by an affiliate of the Eastman operator. We also served a Notice of Termination with respect to the operating lease. On October 18, 2019, the Court entered an Order granting to us a Temporary Restraining Order requiring the lease operator to maintain the status quo of the facility. On November 21, 2019, the prior Temporary Restraining Order was superseded by an Order Appointing Receiver requested by the Company’s subsidiary Dodge NH, LLC. Under the Order, a Receiver designated by us and approved by the Court will oversee the operations at the facility. This Order will mitigate any potential disruption to the facility’s ongoing operations in light of the various disputes between the Company and the former operator, Eastman Healthcare & Rehab LLC, an affiliate of Cadence Healthcare Solutions, LLC. On January 15, 2020, the Receiver filed a Motion for the Court to authorize the Receiver to negotiate an Operations Transfer Agreement with the Company, which Motion was granted. On July 2nd, 2020, the court approved the Operations Transfer Agreement (“OTA”) from the receiver to Global Eastman, LLC, newly formed subsidiary of the Company. Nearly simultaneously Global Eastman, LLC secured an operating license from the state with an effective date of July 1, 2020. Pursuant to the terms of the OTA, Global Eastman has assumed all receivables and selected critical liabilities associated with the prior operator. Village of Seville v. High Street Nursing, LLC, This is an action filed March 2020 for sanctions against our subsidiary arising from a claimed nuisance activity (assaults on patients) at the skilled nursing facility. As we lease the facility to an operator, we have retained an attorney and entered a plea of Not Guilty. We are the landlord and do not believe we have any liability in this matter. The action was subsequently dismissed without prejudice. Cadence Healthcare Solutions, LLC. We received a demand letter in February 2020 from an attorney representing Cadence Healthcare Solutions, LLC (“Cadence”) claiming unpaid management fees incurred at our Glen Eagle Healthcare facility in Abbeville, Georgia. Cadence is the same manager that is involved in the matters related to Edwards Redeemer in Oklahoma City and Eastman in Eastman, Georgia, as Cadence was the manager in all three facilities until it was terminated in Q4 2019. We believe we have significant defenses and offsets to this claim and intend to defend vigorously. We believe the likelihood of a material adverse outcome is extremely remote. Oliphant v. Global Eastman, LLC, et.al., State Court of Cobb County, State of Georgia, This is a personal injury lawsuit against various defendants arising out of the death of a patient of the Eastman Healthcare & Rehab Center (the “Facility”). At all relevant times, the Facility was owned by the Company wholly owned subsidiary Dodge NH, LLC and leased to Eastman Health & Rehab LLC, an affiliate of Cadence Healthcare, as lease operator. Neither the Company nor any affiliate of the Company had any involvement in patient care at the time of the incident complained of. The Company relies upon well-settled Georgia law that a landlord has no liability for patient care. The landlord is Dodge NH, LLC. Global Eastman, LLC was not formed as a legal entity during the period of the incident and did not assume the past liabilities as part of the OTA with the receivership of Eastman Healthcare & Rehab LLC which was effective July 1, 2020. Global Eastman LLC was formed on November 21, 2019. We strongly deny any liability and intend to vigorously defend. We believe that the likelihood of a material adverse outcome is extremely remote. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. SUBSEQUENT EVENTS On July 2, 2020, the court approved the Operations Transfer Agreement (“OTA”) from the receiver to Global Eastman, LLC, newly formed subsidiary of the Company. The OTA was made effective July 1, 2020, as that was the effective date of the nearly simultaneous issuance of operating license from the state. Pursuant to the terms of the OTA, Global Eastman assumed all receivables and only selected critical ongoing liabilities associated with the prior operator. All other liabilities remain with the prior operator in the former entity. Effective July 23, 2020, Global Fairland Property, LLC (“Fairland Property”), a newly formed wholly-owned subsidiary of the Company, signed a definitive Asset Purchase Agreement (the “Agreement’) pursuant to which Fairland Property intends to purchase a skilled nursing facility located in Fairland, Oklahoma consisting of 29 licensed beds and commonly known as “Family Care Center of Fairland” (the “Facility”). The purchase price of the Facility will be $796,500. The purchase and sale of the Facility is subject to numerous conditions, including satisfactory due diligence, financing, and other conditions customary in transactions of this nature. There can be no assurance that the transaction will be consummated. Effective July 31, 2020 the Company received a line of credit of $500,000 and a construction loan of $750,000 to be used for renovation and capital investment in its Edwards facility from Southern Bank. Both loans carry an interest rate of 4.75% on principal balance and mature July 30, 2021. On August 7, 2020, the Meadowview skilled-nursing facility owned by the Company was served with a Notice of Immediate Imposition of Remedies from the Centers for Medicare and Medicaid Services (“CMS”), as well as a Notice of Imposition of Remedies by the Ohio Department of Health (“ODH”) ordering the facility to relocate all residents no later than August 9, 2020. The actions of the CMS and ODH were the result of ongoing operating deficiencies which the operator failed to cure. All residents of the Meadowview facility were relocated by the August 9, 2020 deadline and, as a result, the facility has been closed. The Company has applied with the ODH for a new nursing home license which is pending. In September 2020, the ODH served notice that it intended to commence proceedings to revoke the license on the facility. The Company has not determined what other future courses of action may be required or appropriate. On August 18, 2020, the Company’s Board of Directors approved the repurchase for redemption of 443,431 shares of common stock for $75,385 or $0.17 per share in a privately negotiated transaction. The redemption has been completed and the shares of common stock were cancelled. On September 29, 2020, the Company’s President and Chief Financial Officer and a member of the Board of Directors resigned from all positions with the Company. The resignations were prompted by regulatory issues not involving the Company or its subsidiaries. On October 30, 2020, the Company purchased from two former investors in GWH Investors, LLC their notes in favor of Goodwill Hunting, LLC in the aggregate amount of $108,000 for $90,000 of cash and will recognize a gain of $18,000. Effective October 31, 2020, the Company exchanged $150,000 in outstanding Senior Unsecured 10% Notes and Warrants that had matured on October 31, 2020 for 11% Senior Secured Promissory Notes and issued 150,000 cashless exercise warrants for purchase of company stock at $0.50, expiring October 31, 2021. The Company also repaid the remaining $150,000 of 10% Senior Unsecured Notes. On November 13, 2020, the Company’s Board of Directors approved the repurchase for redemption of 104,715 shares of common stock for $26,718 or $0.25 per share in a privately negotiated transaction. The redemption has been completed and the shares of common stock were cancelled. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of the Business | Organization and Description of the Business Global Healthcare REIT, Inc. (“we”, “our”, the “Company” or “Global”) was organized with the intent of operating as a real estate investment trust (REIT) for the purpose of investing in real estate and other assets related to the healthcare industry. The Company’s focus has partially shifted from leasing nursing home assets to independent operators toward owning and operating its real estate assets itself. As a result, the Company no longer intends to elect to qualify as a REIT, and is currently considering changing its name and other charter provisions to better reflect its current business model. Prior to the Company changing its name to Global Healthcare REIT, Inc. on September 30, 2013, the Company was known as Global Casinos, Inc. Global Casinos, Inc. operated two gaming casinos which were split-off and sold on September 30, 2013. Simultaneous with the split-off and sale of the gaming operations, the Company acquired West Paces Ferry Healthcare REIT, Inc. (WPF) in a transaction accounted for as a reverse acquisition whereby WPF was deemed to be the accounting acquirer. The Company acquires, develops, leases, manages and disposes of healthcare real estate, and provides financing to healthcare providers. As of June 30, 2020, the Company owned twelve healthcare properties which are either leased or managed by third-party operators under triple-net operating terms or operated directly by the Company. The Company operates the facilities internally when advantageous and expedient. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and in conjunction with the rules and regulations of the Securities Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary to make the consolidated financial statements not misleading have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire year. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2020. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. |
Reclassification | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net loss. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property Plant and Equipment | The gross carrying amount and accumulated depreciation of the Company’s property and equipment as of June 30, 2020 and December 31, 2019 are as follows: June 30, 2020 December 31, 2019 Land $ 1,676,692 $ 1,597,500 Land Improvements 242,000 242,000 Buildings and Improvements 39,710,962 38,362,127 Furniture, Fixtures and Equipment 1,778,755 1,707,925 Construction in Progress 3,185,068 3,185,068 46,593,477 45,094,620 Less Accumulated Depreciation (7,892,878 ) (7,140,033 ) Less Impairment (1,560,000 ) (1,560,000 ) $ 37,140,599 $ 36,394,587 For the Six Months Ended June 30, 2020 2019 Depreciation Expense $ 752,845 $ 645,851 Cash Paid for Capital Expenditures $ 185,590 $ 1,464,562 |
Investments in Debt Securities
Investments in Debt Securities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Investments in Marketable Securities | On June 30, 2020 and December 31, 2019, the Company held investments in debt securities that were classified as held-to-maturity and carried at amortized costs. Held-to-maturity securities consisted of the following: June 30, 2020 December 31, 2019 States and Municipalities $ 24,387 $ 24,387 |
Debt and Debt - Related Parti_2
Debt and Debt - Related Parties (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Instruments | The following is a summary of the Company’s debt outstanding as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Senior Secured Promissory Notes $ 1,545,000 $ 1,485,000 Senior Unsecured Promissory Notes 300,000 300,000 Senior Secured Promissory Notes - Related Parties 975,000 875,000 Fixed-Rate Mortgage Loans 29,399,050 22,427,949 Variable-Rate Mortgage Loans 5,663,646 4,618,006 Line of Credit, Senior Secured - 7,230,582 Other Debt, Subordinated Secured 1,045,561 1,386,000 Other Debt, Subordinated Secured - Related Parties 150,000 150,000 Paycheck Protection Program Loans 1,610,169 - 40,688,426 38,472,537 Unamortized Discount and Debt Issuance Costs (455,303 ) (493,353 ) $ 40,233,123 $ 37,979,184 As presented in the Consolidated Balance Sheets: Debt, Net $ 39,113,315 $ 36,954,184 Debt - Related Parties, Net 1,119,808 1,025,000 $ 40,233,123 $ 37,979,184 |
Schedule of Weighted Average Assumptions | The value of the warrants issued to the note holders during the six months ended June 30, 2020 was calculated using the Black-Scholes pricing model using the following significant assumptions: Volatility 115.2% - 117.3 % Risk-free Interest Rate 0.71% - 1.45 % Exercise Price $ 0.50 Fair Value of Common Stock $ 0.20 - $0.24 Expected Life 1.7 – 1.8 years |
Schedule of Mortgage Loan Debt | Collateral for certain mortgage loans includes the personal guarantee of Christopher Brogdon. Mortgage loans for the periods presented consisted of the following: Face Principal Outstanding at Stated Maturity Property Amount June 30, 2020 December 31, 2019 Interest Rate Date Southern Hills Retirement Center (1)(2) $ 7,227,074 $ 7,227,074 $ 7,230,582 4.75% Fixed June 18, 2023 Eastman Nursing Home (1)(3) 3,570,000 3,394,866 3,451,593 5.50% Fixed October 26, 2021 Goodwill Nursing Home (1)(4) 4,268,878 4,242,171 4,286,237 4.75% Fixed April 12, 2025 Warrenton Nursing Home (5) 3,768,600 3,704,959 3,739,942 3.73% Fixed July 1, 2049 Edward Redeemer Health & Rehab (6) 2,065,804 2,065,773 2,074,958 4.75% Fixed June 29, 2021 Glen Eagle Health and Rehab (7) 3,119,214 3,036,436 3,083,006 5.50% Fixed May 25, 2021 Providence of Sparta Nursing Home (8) 3,039,300 2,893,371 2,923,013 3.50% Fixed November 1, 2047 Meadowview Healthcare Center (9) 3,000,000 2,834,400 2,869,200 6.00% Fixed October 30, 2022 GL Nursing Home (10) 5,000,000 4,618,006 4,618,006 Prime Plus 1.50%/ 5.75% Floor August 3, 2037 Higher Call Nursing Center (11) 1,051,721 1,045,640 - Prime Plus 2.00% March 3, 2040 $ 35,062,696 $ 34,276,537 (1) Mortgage loans are non-recourse to the Company except for (i) the senior loan held by ServisFirst Bank on Meadowview (Ohio), (ii) the loans held by Colony Bank on Eastman and Glen Eagle, and (iii) the Southern Hills line of credit and Goodwill loan owed to Southern Bank (formerly First Commercial Bank). (2) On October 31, 2017, the Company, through its wholly-owned subsidiaries Southern Tulsa, LLC and Southern Tulsa TLC, LLC, as Co-Borrowers, consummated a new Line of Credit with Southern Bank (formerly First Commercial Bank) pursuant to a Promissory Note in the principal amount of $7,229,052 (the “Line of Credit”). Under the Line of Credit, the Company refinanced the prior mortgage on its skilled nursing facility in Tulsa for $1,546,801, funded open market and tender offer purchases of its Industrial Revenue Bonds covering the ALF and ILF as well as provided working capital for improvements to the ALF and ILF. As of June 30, 2020, a total of $7,227,074 was drawn under the Line of Credit, and as of December 31, 2019, a total of $7,230,582 was drawn under the Line of Credit. Modifications to the loan in June, 2020 effectively convert it from a line of credit to a term loan. The interest rate on the Line of Credit increased from 5.25% to 5.75% effective April 28, 2019 and subsequently was reduced to 4.75% as part of a new three-year loan renewal. Monthly payments of interest began on November 30, 2017 and continue until the Promissory Note is paid in full on the Maturity Date. The Maturity Date was been extended multiple times in three month increments initially from April 30, 2018 to May 5, 2020, and subsequently to June 18, 2023 with a principal amount of $7,227,074. During the six months ended June 30, 2020, the Company capitalized $33,095 in loan costs paid. The Credit Note is secured by a First Mortgage and Assignment of Rents on Real Property for Southern Hills Rehabilitation Center, a Junior Lien and Assignment of Rents on Real Property for its Southern Hills Independent Living Facility location and a Junior Lien on Real Property for its Southern Hills Assisted Living Facility location. With the retirement of the Tulsa Industrial Authority Bonds effective November 1, 2018, Southern Bank (formerly First Commercial Bank) moved into a senior position on the ALF and ILF properties. (3) The loan at Eastman was renewed on November 26, 2018 with the maturity date extended to October 26, 2021. For the six months ended June 30, 2020, amortization expense related to loan costs totaled $643. (4) The maturity date for the loan at Goodwill Nursing was extended to April 12, 2025 in June 2020. The face value of the note was adjusted to the principal outstanding at the time of $4,268,878, and the interest rate was decreased to 4.75%, from 5.50%. The modification of the loan was substantial and resulted in an extinguishment of the original loan. (5) The original maturity date for the loan was extended on January 19, 2019 to January 20, 2020 and the Company capitalized $8,885 in loan costs paid. The loan was refinanced in June 2019. The Company has incurred $156,671 in unamortized loan costs to refinance this debt with another lender. The refinance was treated as debt extinguishment, with a new maturity date of July 1, 2049 and an interest rate of 3.73%. For the six months ended June 30, 2020, amortization expense related to loan costs totaled $2,611. (6) The maturity date for the loan at Edwards Redeemer was extended to June 29, 2021 in June 2020. The face value of the note was adjusted to the principal outstanding at the time of the modification, $2,065,804, and the interest rate was decreased from 5.50% to 4.75%. (7) Amortization expense related to loan costs of this loan totaled $437 for the six months ended June 30, 2020. Amortizing payments began in January 2019. In June 2018, the Company converted the original note to a fixed note which qualified as debt extinguishment, unamortized debt discount on the original note was expensed as a loss on extinguishment of $27,794. In April 2018, the Company capitalized $22,800 in fees and interest and added it to principal. The Company is subject to financial covenants and customary affirmative and negative covenants, including compliance with the covenants of all other notes and bonds. As of June 30, 2020, the Company was not in compliance with some unrelated notes and bonds, which is considered to be a technical Event of Default as defined in the note agreement, but the Company believes that it is in good standing with the Lender. In October 2018, the Lender extended the Company a line of credit with a limit of $200,365 to provide working capital to scale operations at the facility. The line of credit was expanded in February 2019 to $400,000 with a maturity date of September 30, 2019. Prior to September 30, 2019, the Company had drawn $400,000 on the line which was subsequently merged into the amortizing note due May 25, 2021. (8) The senior debt and subordinated debt owed in relation to Providence of Sparta was refinanced into a single senior HUD note during 2017. Amortization expense related to loan costs totaled $2,492 for the six months ended June 30, 2020. The interest rate was reduced from 3.88% to 3.50% as part of a refinance completed in April 2020. (9) Amortization expense related to loan costs of this loan totaled $4,652 for the six months ended June 30, 2020. The Company is subject to financial covenants and customary affirmative and negative covenants, including compliance with the covenants of all other notes and bonds. As of June 30, 2020, the Company was not in compliance with some unrelated notes and bonds, which is considered to be a technical Event of Default as defined in the note agreement, but the Company believes that it is in good standing with the Lender. (10) The mortgage loan collateralized by the GL Nursing Home is 80% guaranteed by the USDA and requires an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year. The Company is subject to financial covenants and customary affirmative and negative covenants. As of June 30, 2020, the Company was not in compliance with certain of these financial and non-financial covenants which is a technical Event of Default as defined in the note agreement. The Company is also delinquent in installment payments due under the mortgage. Remedies available to the lender in the event of a continuing Event of Default, at its option, include, but are not necessarily limited to the following (1) lender may declare the principal and all accrued interest on the note due and payable; and (2) lender may exercise additional rights and remedies under the note agreement to include taking possession of the collateral or seeking satisfaction from the guarantors. The Company has been notified by the lender regarding the Events of Default. Guarantors under the mortgage loan include Christopher Brogdon. With our consent, Mr. Brogdon has assumed operations of the facility and is making payment of interest on the loan. The Company is not obligated to repay the interest. (11) In connection with the acquisition of Higher Call, the Company entered into a senior loan agreement with Security Bank in the principal amount of $1,051,721. This loan accrues interest at the rate of 6.5% per annum and is payable in monthly installments of $7,907. The loan is secured by a senior Mortgage, Security Agreement and Assignment of Rents covering the Higher Call facility and a UCC Security Interest covering the personal property and other non-real estate assets. The Company is subject to financial covenants and customary affirmative and negative covenants. As of June 30, 2020, the Company was in compliance with these covenants. |
Schedule of Other Debt | Other debt due at June 30, 2020 and December 31, 2019 includes unsecured notes payable issued to entities controlled by the Company used to facilitate the acquisition of the nursing home properties. Face Principal Outstanding at Stated Interest Maturity Property Amount June 30, 2020 December 31, 2019 Rate Date Goodwill Nursing Home (1) $ 2,180,000 $ 1,053,600 $ 1,536,000 13% (1) December 31, 2019 Higher Call Nursing Center (2) 150,000 141,961 - 8% Fixed April 1, 2024 $ 1,195,561 $ 1,536,000 (1) The subordinated note on Goodwill matured on July 1, 2015. Investors in the Goodwill note were entitled to an additional 5% equity in Goodwill Hunting, LLC every six months if the note is not paid when due. Effective December 31, 2015, the investors holding the subordinated debt executed an Agreement Among Lenders pursuant to which they (i) agreed to waive any and all equity ratchets and (ii) agreed to extend the maturity date of the subordinated debt to June 30, 2017. In exchange, Goodwill Hunting agreed to pay the investors an additional one-time premium equal to 5% of the principal amount of the individual note at such time as the note is repaid. Effective May 3, 2017, we entered into an Allonge and Modification Agreement with the Goodwill investors pursuant to which they agreed to (i) waive all accrued interest through December 31, 2017, (ii) reduce interest rate to 13% beginning January 1, 2018 and (iii) extend the maturity date of the notes to December 31, 2019. In exchange, the Company agreed that upon repayment of the notes, the investors would be entitled to a one-time premium payment in the amount of 15% of the principal balance of the notes. The Corporate entity, Global Healthcare REIT Inc. owns $800,000 of its own subsidiary’s notes, Goodwill Hunting, LLC, but this amount is excluded from the above table and eliminated in consolidation on the balance sheet. On June 30, 2020, the Company purchased from four former investors in GWH Investors, LLC their notes in favor of Goodwill Hunting, LLC in the aggregate amount of $482,400 for $402,000 cash and recognized a gain of $80,400, and subsequently in October purchased from two more investors an aggregate amount of $108,000 for $90,000 of cash and will recognize a gain of $18,000. The Company has not repaid or renewed the note as of June 30, 2020 and it is technically in default. (2) In connection with the acquisition of Higher Call, the Company executed a promissory note in favor of the Seller, Higher Call Nursing Center, Inc., in the principal amount of $150,000 which accrues interest at the rate of 8% per annum and is payable in equal monthly installments, principal and interest. This note is secured by a corporate guaranty of Global. |
Schedule of Unsecured Notes and Notes Secured by All Assets | Our corporate debt at June 30, 2020 and December 31, 2019 includes unsecured notes and notes secured by all assets of the Company not serving as collateral for other notes. Face Principal Outstanding at Stated Interest Series Amount June 30, 2020 December 31, 2019 Rate Maturity Date 10% Senior Secured Promissory Note $ 25,000 $ 25,000 $ 25,000 10.0% Fixed December 31, 2018 10% Senior Unsecured Promissory Notes 300,000 300,000 300,000 10.0% Fixed October 31, 2020 11% Senior Secured Promissory Notes 1,520,000 1,520,000 1,460,000 11.0% Fixed October 31, 2021 11% Senior Secured Promissory Notes – Related Party 975,000 975,000 875,000 11.0% Fixed October 31, 2021 $ 2,820,000 $ 2,660,000 |
Schedule of Future Maturities of Notes Payable | Future maturities and principal reduction payments of all notes and bonds payable listed above for the next five years and thereafter are as follows: Years 2020 $ 12,135,289 (1) 2021 8,182,778 2022 1,960,552 2023 7,595,127 2024 352,829 2025 and after 10,461,851 $ 40,688,426 (1) Any note or bond that is not in compliance with all financial and non-financial covenants is considered to have an immediate maturity, including those that require compliance with covenants on any and all other notes. The notes secured by the facilities at GL Nursing Home, Meadowview and Abbeville have such covenants which were in technical non-compliance at June 30, 2020, but the Company believes that its relationships with these lenders is good. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of Restricted Stock Awards | The following table summarizes the restricted stock unit activity during the six months ended June 30, 2020 and 2019. June 30, 2020 June 30, 2019 Outstanding Non-Vested Restricted Stock Units, Beginning 75,000 - Granted - 545,454 Vested (75,000 ) (409,091 ) Outstanding Non-Vested Restricted Stock Units, Ending - 136,363 |
Schedule of computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: Six Months Ended Three Months Ended June 30, June 30, 2020 2019 2020 2019 Numerator for basic earnings per share: Net Income (Loss) Attributable to Global Healthcare REIT, Inc. $ 1,184,655 $ (3,959 ) $ 1,123,555 $ (168,255 ) Series D Preferred Dividends (15,000 ) (15,000 ) (7,500 ) (7,500 ) Net Income (Loss) Attributable to Common Stockholders - Basic $ 1,169,655 $ (18,959 ) $ 1,116,055 $ (175,755 ) Numerator for diluted earnings per share: Net Income (Loss) Attributable to Common Stockholders $ 1,169,655 $ (18,959 ) $ 1,116,055 $ (175,755 ) Series D Preferred Dividends 15,000 - 7,500 - Net Income (Loss) Attributable to Common Stockholders - Diluted $ 1,184,655 $ (18,959 ) $ 1,123,555 $ (175,755 ) Denominator for basic earnings per share: Weighted Average Common Shares Outstanding 27,427,928 27,122,607 27,414,816 27,347,134 Denominator for diluted earnings per share: Weighted Average Common Shares Outstanding – Basic 27,427,928 27,122,607 27,414,816 27,347,134 Effect of dilutive securities: Conversion of Series D Convertible Preferred Stock 382,500 - 382,500 - Weighted Average Common Shares Outstanding - Diluted 27,810,428 27,122,607 27,797,316 27,347,134 Net Income (Loss) per Share Attributable to Common Stockholders: Basic $ 0.04 $ (0.00 ) $ 0.04 $ (0.01 ) Diluted $ 0.04 $ (0.00 ) $ 0.04 $ (0.01 ) |
Facility Leases (Tables)
Facility Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Leasing Arrangements | The following table summarizes our leasing arrangements related to the Company’s healthcare facilities at June 30, 2020: Facility Monthly Lease Income (1) Lease Expiration Renewal Option if any Eastman (2) $ - - None Warrenton $ 55,724 June 30, 2026 Term may be extended for one Goodwill (3) $ 48,125 February 1, 2027 Term may be extended for one Edwards Redeemer (4) $ None Providence $ 42,519 June 30, 2026 Term may be extended for one Meadowview (5) $ - None GL Nursing (6) $ - - None Glen Eagle (7) $ - - None Southern Hills SNF (8) $ - - Term may be extended for two Southern Hills ALF (9) $ - - None Southern Hills ILF (10) $ - - None Higher Call $ - - None (1) Monthly lease income reflects rent income on a straight-line basis over, where applicable, the term of each lease. (2) On October 18, 2019, the Company terminated the lease at its Eastman property. A Receivership was appointed to assume the operations of the facility. The receivership was discharged on July 1, 2020 and the Company is currently operating the building independently. (3) In January 2016, the Goodwill facility was closed by Georgia regulators and all residents were removed. In a transaction related to the sale of the Greene Point facility, an affiliate of the buyer of Greene Point executed a ten-year operating lease covering Goodwill. After investing approximately $2.0 million in capital improvements in the property, the lease operator obtained all regulatory approvals and began admitting patients in December 2016. The lease became effective on February 1, 2017, and the facility began generating rental revenue thereafter. (4) Cadence informed the Company that it intended to close the Edwards Redeemer facility due to unprofitable operations. In violation of the operating lease, Cadence began moving patients from the facility and, as of October 18, 2019, all patients had been removed. In response to our Petition, on October 17, 2019, the District Court of Oklahoma County, State of Oklahoma issued a Temporary Order Appointing Receiver (the “Order”) pursuant to a Motion to Appoint Receiver filed by Edwards Redeemer Property Holdings, LLC (“Edwards Property”), a wholly-owned subsidiary of the Company, with respect as a skilled nursing facility. The Order was issued due to the violations by Cadence of the business-preservation obligations contained in the lease between Edwards Property and the Operator. The Company will allow Edwards Redeemer to remain closed for the purpose of undertaking extensive renovations to the facility. The renovations are expected to take up to 12 months. (5) The lease was generating $33,000 in monthly gross rent; however, the operator experienced adverse results in late 2017 and throughout 2018. In April 2018, the Company recognized a bad debt expense of $56,000 related to rent receivables previously booked in 2018 at the Meadowview facility. Effective December 1, 2018, the Company completed the operations transfer to an affiliate of Infinity Health Interests, LLC (“Infinity”). The lease was structured with a lower base rent component than the prior operator but included occupancy-based escalators that were intended to better align facility operations with future rental payments. The Company did not receive any cash rent for the facility and has not recorded any rental revenues or receivables for this facility since the inception of the lease. On August 7, 2020, the facility was served with a Notice of Immediate Imposition of Remedies from the Centers for Medicare and Medicaid Services (“CMS”), as well as a Notice of Imposition of Remedies by the Ohio Department of Health (“ODH”) ordering the facility to relocate all residents no later than August 9, 2020. The actions of the CMS and ODH were the result of ongoing operating deficiencies which the operator failed to cure. All residents of the Meadowview facility were relocated by the August 9, 2020 deadline, and as a result the facility has been closed. The Company has applied with the ODH for a new nursing home license which is pending. In September 2020, the ODH served notice that it intended to commence proceedings to revoke the nursing license on the facility. The Company has not determined what future courses of action may be required or appropriate. (6) Effective January 1, 2016, the GL Nursing facility was leased to another operator for a period of ten years at a monthly base rent of $30,000 which was subject to increases based on census levels. Under the terms of the lease, the Company agreed to fund certain capital expenditures, which it was unable to fulfill. In July 2016, the new tenant served notice that it was terminating the lease effective August 31, 2016. The Company entered into a Lease Termination Agreement under which it paid the tenant $145,000 and is obligated to make future payments. Effective August 30, 2016, the Company entered into a new lease agreement with another nursing home operator. The lease term was to commence at the end of a straddle period. During the straddle period, the Company made working capital advances to enable the operator to cover cash flow deficits resulting from initial operations of the facility. Prior to the end of the straddle period, the lease operator informed the Company that it would vacate the facility. An entity affiliated with Mr. Brogdon, who is a guarantor of the mortgage, assumed operations of the facility in March 2018 under an OTA. We do not expect the facility to generate any future revenue for the Company. (7) The Company entered into a management agreement with Cadence Healthcare Solutions to operate Glen Eagle after expending approximately $1.0 million in capital improvements. The facility passed its licensure survey and began admitting patients in June 2018. Effective October 12, 2018, the facility gained its certification and started collecting revenues from Medicare and Medicaid in April 2019. On October 17, 2019, the Company terminated its management with Cadence Healthcare Solutions and is currently operating the building independently. (8) Lease agreement dated May 21, 2014 with lease payments commencing February 1, 2015. On May 10, 2016, the Company obtained a Court Order appointing a Receiver to control and operate the Southern Hills SNF. The former lease operator represented that it was unable to meet the financial commitments of the facility, including the payment of rent, payroll, and other operating requirements. In October 2017, the Receiver engaged a new manager for the facility at the request of the Company. In May 2019, the lease expired, and in July 2019 the facility was leased to Southern Hills Rehab Center LLC, a wholly owned subsidiary of the Company, to conduct operations. The approval of the transfer of the Certificates of Need and appropriate licenses to operate the facility was granted on December 1, 2019. The Company is currently operating the building independently. (9) The Company plans to operate the Southern Hills ALF independently once construction is complete and a state license is secured. (10) The Company has been operating the Southern Hills Independent Living Facility (ILF) directly since September 2019. The facility does not provide healthcare services. It consists of private one- and two-bedroom units leased separately to individual tenants. |
Schedule of Future Cash Payments for Rent Received During Initial Term of Lease | Future cash payments for rent to be received during the initial terms of the leases for the next five years and thereafter are as follows (excludes Abbeville, Edwards Redeemer, Southern Tulsa SNF and Southern Tulsa ALF and ILF, and Higher Call due to properties being independently operated, and GL Nursing): Years 2020 $ 873,048 2021 1,764,942 2022 1,796,400 2023 1,828,480 2024 1,860,867 2025 and Thereafter 3,223,628 $ 11,347,365 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Changes in Fair Value of Company's Level 3 Valuation for Warrant Liability | The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the six months ended June 30, 2020 and 2019: 2020 2019 Beginning Balance January 1 $ - $ 2,785 Change in Fair Value of Warrant Liability - (2,758 ) Ending Balance, June 30 $ - $ 27 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Total assets for the healthcare services and real estate services segments were $8,191,160 and $34,859,771, respectively, as of June 30, 2020 and $4,654,845 and $35,223,318, respectively, as of December 31, 2019. Statements of Operations Items for the Six Months Ended June 30, 2020 June 30, 2019 Real Estate Healthcare Services Consolidated Real Estate Healthcare Services Consolidated Rental Revenue $ 1,144,605 $ - $ 1,144,605 $ 1,825,575 $ - $ 1,825,575 Healthcare Revenue - 7,837,461 7,837,461 - 1,063,928 1,063,928 Total Revenue 1,144,605 7,837,461 8,982,066 1,825,575 1,063,928 2,889,503 Expenses General and Administrative 296,149 419,621 715,770 390,097 180,739 570,836 Property Taxes, Insurance and Other Operating 299,379 4,686,596 4,985,975 86,065 806,954 893,019 Provision for Bad Debts - 263,890 263,890 - - - Acquisition Costs 28,654 - 28,654 - - - Depreciation 670,767 97,336 768,103 582,723 63,128 645,851 Total Expenses 1,294,949 5,467,443 6,762,392 1,058,885 1,050,821 2,109,706 Income (Loss) from Operations (150,344 ) 2,370,018 2,219,674 766,690 13,107 779,797 Other (Income) Expense Gain on Warrant Liability - - - (2,758 ) - (2,758 ) Gain on Extinguishment of Debt (80,400 ) - (80,400 ) - - - Gain on Sale of Investments - - - (1,069 ) - (1,069 ) Gain on Proceeds from Insurance Claim - - - (270,264 ) - (270,264 ) Interest Income - - - (7,003 ) - (7,003 ) Interest Expense 1,010,360 106,211 1,116,571 989,042 81,818 1,070,860 Total Other (Income) Expense 929,960 106,211 1,036,171 707,948 81,818 789,766 Net Income (Loss) (1,080,304 ) 2,263,807 1,183,503 58,742 (68,711 ) (9,969 ) Net Loss Attributable to Noncontrolling Interests 1,152 - 1,152 6,010 - 6,010 Net Income (Loss) Attributable to Global Healthcare REIT, Inc. $ (1,079,152 ) $ 2,263,807 $ 1,184,655 $ 64,752 $ (68,711 ) $ (3,959 ) Statements of Operations Items for the Three Months Ended June 30, 2020 June 30, 2019 Real Estate Healthcare Services Consolidated Real Estate Healthcare Services Consolidated Rental Revenue $ 623,593 $ - $ 623,593 $ 930,287 $ - $ 930,287 Healthcare Revenue - 4,506,872 4,506,872 - 684,137 684,137 Total Revenue 623,593 4,506,872 5,130,465 930,287 684,137 1,614,424 Expenses General and Administrative 147,579 225,128 372,707 278,327 99,030 377,357 Property Taxes, Insurance and Other Operating 153,539 2,500,692 2,654,231 25,241 518,590 543,831 Provision for Bad Debts - 57,282 57,282 - - - Acquisition Costs 13,763 - 13,763 - - - Depreciation 335,408 45,477 380,885 291,362 31,564 322,926 Total Expenses 650,289 2,828,579 3,478,868 594,930 649,184 1,244,114 Income (Loss) from Operations (26,696 ) 1,678,293 1,651,597 335,357 34,953 370,310 Other (Income) Expense Gain on Warrant Liability - - - (2,655 ) - (2,655 ) Gain on Extinguishment of Debt (80,400 ) - (80,400 ) - - - Interest Income - - - (1,536 ) - (1,536 ) Interest Expense 532,597 78,704 611,301 505,093 39,532 544,625 Total Other (Income) Expense 452,197 78,704 530,901 500,902 39,532 540,434 Net Income (Loss) (478,893 ) 1,599,589 1,120,696 (165,545 ) (4,579 ) (170,124 ) Net Loss Attributable to Noncontrolling Interests 2,859 - 2,859 1,869 - 1,869 Net Income (Loss) Attributable to Global Healthcare REIT, Inc. $ (476,034 ) $ 1,599,589 $ 1,123,555 $ (163,676 ) $ (4,579 ) $ (168,255 ) |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Net Income | $ 1,120,696 | $ 62,807 | $ (170,124) | $ 160,155 | $ 1,183,503 | $ (9,969) | |
Cash Provided by Operating Activities | 1,409,936 | $ 400,839 | |||||
Accumulated deficit | $ (10,792,565) | $ (10,792,565) | $ (11,962,220) |
Asset Acquisition - Higher Ca_2
Asset Acquisition - Higher Call Nursing Center (Details Narrative) - USD ($) | Mar. 02, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Acquisition costs | $ 13,763 | $ 28,654 | |||
Payment on acquisition | $ 1,045,767 | ||||
Global Quapaw, LLC [Member] | |||||
Purchase price | $ 1,300,000 | ||||
Business combination, property and equipment acquired | 1,300,000 | ||||
Purchase consideration | 1,300,000 | ||||
Acquisition costs | 13,267 | ||||
Payment on acquisition | 1,045,767 | ||||
Relinquished prepaid cash deposit provident fund | 117,500 | ||||
Non-cash owner financing debt | $ 150,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property Plant and Equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment, Gross | $ 46,593,477 | $ 46,593,477 | $ 45,094,620 | ||
Less Accumulated Depreciation | (7,892,878) | (7,892,878) | (7,140,033) | ||
Less Impairment | (1,560,000) | (1,560,000) | (1,560,000) | ||
Property and Equipment, Net | 37,140,599 | 37,140,599 | 36,394,587 | ||
Depreciation Expense | 380,885 | $ 322,926 | 768,103 | $ 645,851 | |
Cash Paid for Capital Expenditures | 185,590 | $ 1,464,562 | |||
Land [Member] | |||||
Property and Equipment, Gross | 1,676,692 | 1,676,692 | 1,597,500 | ||
Land Improvements [Member] | |||||
Property and Equipment, Gross | 242,000 | 242,000 | 242,000 | ||
Buildings and Improvements [Member] | |||||
Property and Equipment, Gross | 39,710,962 | 39,710,962 | 38,362,127 | ||
Furniture, Fixtures and Equipment [Member] | |||||
Property and Equipment, Gross | 1,778,755 | 1,778,755 | 1,707,925 | ||
Construction in Progress [Member] | |||||
Property and Equipment, Gross | $ 3,185,068 | $ 3,185,068 | $ 3,185,068 |
Investments in Debt Securitie_2
Investments in Debt Securities (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |
Contractual maturity of held-to-maturity securities period description | Contractual maturity of held-to-maturity securities at June 30, 2020 is $24,387, all due in one year or less. |
Contractual maturity of held-to-maturity securities | $ 24,387 |
Investments in Debt Securitie_3
Investments in Debt Securities - Schedule of Investments in Marketable Securities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Investments in marketable securities | $ 24,387 | $ 24,387 |
States and Municipalities [Member] | ||
Investments in marketable securities | $ 24,387 | $ 24,387 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) | Jun. 30, 2020USD ($) |
Intangible Assets Disclosure Abstract | |
Fair value of intangible assets | $ 42,185 |
Net intangible assets | $ 15,258 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment of goodwill |
Debt and Debt - Related Parti_3
Debt and Debt - Related Parties (Details Narrative) - USD ($) | Oct. 31, 2020 | May 04, 2020 | Apr. 20, 2020 | Mar. 03, 2020 | Feb. 05, 2020 | Jan. 28, 2020 | Jan. 28, 2020 | Oct. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2017 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 17, 2020 |
Debt outstanding amount | $ 2,820,000 | $ 2,820,000 | $ 2,660,000 | |||||||||||||||
Warrants to purchase common stock | 2,858,130 | 2,858,130 | ||||||||||||||||
Repayment of secured debt | $ 675,736 | $ 273,550 | ||||||||||||||||
Fair value of warrants | $ 19,762 | |||||||||||||||||
Gain on extinguishment of debt | $ (80,400) | (80,400) | ||||||||||||||||
Debt instrument, unamortized discount | $ 455,303 | 455,303 | $ 493,353 | |||||||||||||||
Amortization expense | 90,907 | 71,231 | ||||||||||||||||
Proceeds from loans | $ 324,442 | |||||||||||||||||
Proceeds from the issuance of debt | 2,721,890 | 1,676,354 | ||||||||||||||||
Related Parties [Member] | ||||||||||||||||||
Proceeds from the issuance of debt | $ 100,000 | |||||||||||||||||
Warrant [Member] | ||||||||||||||||||
Warrants to purchase common stock | 2,858,130 | 2,858,130 | 2,598,130 | |||||||||||||||
Notes and Warrants [Member] | ||||||||||||||||||
Maturity date | Oct. 31, 2021 | Oct. 31, 2021 | ||||||||||||||||
Warrants to purchase common stock | 111,000 | |||||||||||||||||
Debt instrument, interest rate | 10.00% | |||||||||||||||||
Proceeds from private offering | $ 1,160,000 | |||||||||||||||||
Proceed from private offering, net | 1,092,400 | |||||||||||||||||
Placement agent fees | 67,600 | |||||||||||||||||
Fair value of warrants | $ 21,453 | |||||||||||||||||
Aggregate exchangeable units, value | $ 1,075,000 | |||||||||||||||||
Related Parties [Member] | Notes and Warrants [Member] | ||||||||||||||||||
Aggregate exchangeable units, value | 875,000 | |||||||||||||||||
Senior Secured Promissory Notes [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 600,000 | |||||||||||||||||
Debt outstanding amount | $ 1,200,000 | |||||||||||||||||
Maturity date | Dec. 31, 2018 | |||||||||||||||||
Warrants description | For every $1.00 in principal amount of note, investors got one warrant exercisable for one year to purchase an additional share of common stock at an exercise price of $0.75 per share. | |||||||||||||||||
Warrants exercise price | $ 0.75 | |||||||||||||||||
Senior Secured Promissory Notes [Member] | Warrant [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 225,000 | |||||||||||||||||
Warrants to purchase common stock | 1,200,000 | |||||||||||||||||
Warrant maturity date | Dec. 31, 2018 | |||||||||||||||||
Senior Secured Promissory Notes [Member] | Related Parties [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 425,000 | |||||||||||||||||
Senior Secured Promissory Notes [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 300,000 | |||||||||||||||||
Maturity date | Oct. 31, 2020 | Dec. 31, 2018 | ||||||||||||||||
Warrants description | One Warrant for each $1.00 in principal amount of Note exercisable for three years to purchase a share of Common Stock at an exercise price of $0.50 per share. | For every $1.00 in principal amount of note, investors got one warrant exercisable for one year to purchase an additional share of common stock at an exercise price of $0.75 per share. | ||||||||||||||||
Warrants exercise price | $ 0.50 | $ 0.75 | ||||||||||||||||
Repayment of secured debt | $ 125,000 | |||||||||||||||||
Debt instrument, interest rate | 11.00% | 10.00% | 10.00% | |||||||||||||||
Notes exchanged | $ 100,000 | $ 100,000 | ||||||||||||||||
Debt instrument maturity date, description | Due in three years (October 31, 2021). | October, 2020. | ||||||||||||||||
Debt term | 3 years | |||||||||||||||||
Senior Secured Promissory Notes [Member] | Warrant [Member] | ||||||||||||||||||
Warrants to purchase common stock | 160,000 | 160,000 | 1,160,000 | |||||||||||||||
Fair value of warrants | $ 11,616 | $ 207,025 | ||||||||||||||||
Aggregate exchangeable units, value | $ 100,000 | 100,000 | ||||||||||||||||
Value of warrants with note offerings | 8,146 | |||||||||||||||||
Debt instrument, unamortized discount | $ 90,302 | 90,302 | ||||||||||||||||
Amortization expense | $ 40,696 | $ 36,089 | ||||||||||||||||
10% Notes [Member] | ||||||||||||||||||
Maturity date | Dec. 31, 2018 | |||||||||||||||||
Warrant maturity date | Dec. 31, 2018 | Dec. 31, 2018 | ||||||||||||||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | 10.00% | ||||||||||||||
Notes payable | $ 25,000 | $ 25,000 | ||||||||||||||||
10% Notes [Member] | Subsequent Event [Member] | ||||||||||||||||||
Warrant maturity date | Oct. 31, 2020 | |||||||||||||||||
Debt instrument, interest rate | 10.00% | |||||||||||||||||
11% Senior Secured Promissory Notes [Member] | ||||||||||||||||||
Debt instrument, interest rate | 11.00% | 11.00% | ||||||||||||||||
11% Senior Secured Promissory Notes [Member] | Subsequent Event [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 150,000 | |||||||||||||||||
Maturity date | Oct. 31, 2021 | |||||||||||||||||
Warrants exercise price | $ 0.50 | |||||||||||||||||
Debt instrument, interest rate | 11.00% | |||||||||||||||||
11% Senior Secured Promissory Note [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 100,000 | |||||||||||||||||
Debt outstanding amount | $ 1,520,000 | $ 1,520,000 | $ 1,460,000 | |||||||||||||||
Maturity date | Oct. 31, 2021 | Oct. 31, 2021 | Oct. 31, 2021 | |||||||||||||||
Warrants exercise price | $ 0.50 | $ 0.50 | ||||||||||||||||
Senior Unsecured Notes [Member] | ||||||||||||||||||
Repayment of secured debt | $ 150,000 | |||||||||||||||||
Debt instrument, interest rate | 10.00% | 10.00% | ||||||||||||||||
Senior Unsecured Notes [Member] | Subsequent Event [Member] | ||||||||||||||||||
Notes exchanged | $ 150,000 | |||||||||||||||||
Aggregate exchangeable units, value | $ 150,000 | |||||||||||||||||
11% Senior Secured Notes [Member] | ||||||||||||||||||
Senior secured promissory notes issued | $ 100,000 | $ 60,000 | ||||||||||||||||
Debt instrument, interest rate | 11.00% | |||||||||||||||||
11% Senior Secured Notes [Member] | Board of Director [Member] | ||||||||||||||||||
Debt outstanding amount | $ 2,500,000 | |||||||||||||||||
10% Senior Secured Promissory Note [Member] | ||||||||||||||||||
Debt outstanding amount | $ 25,000 | $ 25,000 | $ 25,000 | |||||||||||||||
Maturity date | Dec. 31, 2018 | Dec. 31, 2018 | ||||||||||||||||
Warrants exercise price | $ 0.50 | $ 0.50 | ||||||||||||||||
Warrants to purchase common stock | 100,000 | 100,000 | ||||||||||||||||
Repayment of secured debt | $ 100,000 | |||||||||||||||||
Debt instrument, interest rate | 10.00% | 10.00% | ||||||||||||||||
Paycheck Protection Program [Member] | ||||||||||||||||||
Maturity date | May 4, 2022 | Apr. 20, 2022 | ||||||||||||||||
Debt instrument, interest rate | 1.00% | 1.00% | ||||||||||||||||
Proceeds from loans | $ 710,752 | $ 574,975 |
Debt and Debt - Related Parti_4
Debt and Debt - Related Parties - Schedule of Debt Instruments (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt instrument, gross | $ 40,688,426 | $ 38,472,537 |
Unamortized Discount and Debt Issuance Costs | (455,303) | (493,353) |
Debt instrument, net of discount | 40,233,123 | 37,979,184 |
Debt, Net | 39,113,315 | 36,954,184 |
Debt - Related Parties, Net | 1,119,808 | 1,025,000 |
Debt, total | 40,233,123 | 37,979,184 |
Senior Secured Promissory Notes [Member] | ||
Debt instrument, gross | 1,545,000 | 1,485,000 |
Senior Unsecured Promissory Notes [Member] | ||
Debt instrument, gross | 300,000 | 300,000 |
Senior Secured Promissory Notes - Related Parties [Member] | ||
Debt instrument, gross | 975,000 | 875,000 |
Fixed-Rate Mortgage Loans [Member] | ||
Debt instrument, gross | 29,399,050 | 22,427,949 |
Variable-Rate Mortgage Loans [Member] | ||
Debt instrument, gross | 5,663,646 | 4,618,006 |
Line of Credit, Senior Secured [Member] | ||
Debt instrument, gross | 7,230,582 | |
Other Debt, Subordinated Secured [Member] | ||
Debt instrument, gross | 1,045,561 | 1,386,000 |
Other Debt, Subordinated Secured - Related Parties [Member] | ||
Debt instrument, gross | 150,000 | 150,000 |
Paycheck Protection Program Loans [Member] | ||
Debt instrument, gross | $ 1,610,169 |
Debt and Debt - Related Parti_5
Debt and Debt - Related Parties - Schedule of Weighted Average Assumptions (Details) - Senior Secured Notes [Member] | Jun. 30, 2020$ / shares |
Volatility [Member] | Minimum [Member] | |
Fair value measurement input | 115.2 |
Volatility [Member] | Maximum [Member] | |
Fair value measurement input | 117.3 |
Risk-Free Interest Rate [Member] | Minimum [Member] | |
Fair value measurement input | 0.71 |
Risk-Free Interest Rate [Member] | Maximum [Member] | |
Fair value measurement input | 1.45 |
Exercise Price [Member] | |
Fair value measurement input | 0.50 |
Fair Value of Common Stock [Member] | Minimum [Member] | |
Fair value measurement input | 0.20 |
Fair Value of Common Stock [Member] | Maximum [Member] | |
Fair value measurement input | 0.24 |
Expected Life [Member] | Minimum [Member] | |
Fair value measurements valuation techniques, term | 1 year 8 months 12 days |
Expected Life [Member] | Maximum [Member] | |
Fair value measurements valuation techniques, term | 1 year 9 months 18 days |
Debt and Debt - Related Parti_6
Debt and Debt - Related Parties - Schedule of Mortgage Loan Debt (Details) - USD ($) | Sep. 30, 2019 | Feb. 28, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | |
Long-term Debt, Gross | $ 2,820,000 | $ 2,660,000 | |||
Mortgage Loans [Member] | |||||
Long-term Debt, Gross | 35,062,696 | 34,276,537 | |||
Southern Hills Retirement Center Line of Credit [Member] | Mortgage Loans [Member] | |||||
Face Amount | [1],[2] | 7,227,074 | |||
Long-term Debt, Gross | [1],[2] | $ 7,227,074 | 7,230,582 | ||
Stated Interest Rate | [1],[2] | 4.75% Fixed | |||
Maturity Date | [1],[2] | Jun. 18, 2023 | |||
Eastman Nursing Home [Member] | Mortgage Loans [Member] | |||||
Face Amount | [1],[3] | $ 3,570,000 | |||
Long-term Debt, Gross | [1],[3] | $ 3,394,866 | 3,451,593 | ||
Stated Interest Rate | [1],[3] | 5.50% Fixed | |||
Maturity Date | [1],[3] | Oct. 26, 2021 | |||
Goodwill Nursing Home [Member] | Mortgage Loans [Member] | |||||
Face Amount | [1],[4] | $ 4,268,878 | |||
Long-term Debt, Gross | [1],[4] | $ 4,242,171 | 4,286,237 | ||
Stated Interest Rate | [1],[4] | 4.75% Fixed | |||
Maturity Date | [1],[4] | Apr. 12, 2025 | |||
Warrenton Nursing Home [Member] | Mortgage Loans [Member] | |||||
Face Amount | [5] | $ 3,768,600 | |||
Long-term Debt, Gross | [5] | $ 3,704,959 | 3,739,942 | ||
Stated Interest Rate | [5] | 3.73% Fixed | |||
Maturity Date | [5] | Jul. 1, 2049 | |||
Edward Redeemer Health & Rehab [Member] | Mortgage Loans [Member] | |||||
Face Amount | [6] | $ 2,065,804 | |||
Long-term Debt, Gross | [6] | $ 2,065,773 | 2,074,958 | ||
Stated Interest Rate | [6] | 4.75% Fixed | |||
Maturity Date | [6] | Jun. 29, 2021 | |||
Glen Eagle Health & Rehab [Member] | |||||
Maturity Date | May 25, 2021 | Sep. 30, 2019 | |||
Glen Eagle Health & Rehab [Member] | Mortgage Loans [Member] | |||||
Face Amount | [7] | $ 3,119,214 | |||
Long-term Debt, Gross | [7] | $ 3,036,436 | 3,083,006 | ||
Stated Interest Rate | [7] | 5.50% Fixed | |||
Maturity Date | [7] | May 25, 2021 | |||
Providence of Sparta Nursing Home [Member] | Mortgage Loans [Member] | |||||
Face Amount | [8] | $ 3,039,300 | |||
Long-term Debt, Gross | [8] | $ 2,893,371 | 2,923,013 | ||
Stated Interest Rate | [8] | 3.50% Fixed | |||
Maturity Date | [8] | Nov. 1, 2047 | |||
Meadowview Healthcare Center [Member] | Mortgage Loans [Member] | |||||
Face Amount | [9] | $ 3,000,000 | |||
Long-term Debt, Gross | [9] | $ 2,834,400 | 2,869,200 | ||
Stated Interest Rate | [9] | 6.00% Fixed | |||
Maturity Date | [9] | Oct. 30, 2022 | |||
GL Nursing Home [Member] | Mortgage Loans [Member] | |||||
Face Amount | [10] | $ 5,000,000 | |||
Long-term Debt, Gross | [10] | $ 4,618,006 | 4,618,006 | ||
Stated Interest Rate | [10] | Prime Plus 1.50%/ 5.75% Floor | |||
Maturity Date | [10] | Aug. 3, 2037 | |||
Higher Call Nursing Center [Member] | Mortgage Loans [Member] | |||||
Face Amount | [11] | $ 1,051,721 | |||
Long-term Debt, Gross | [11] | $ 1,045,640 | |||
Stated Interest Rate | [11] | Prime Plus 2.00% | |||
Maturity Date | [11] | Mar. 3, 2040 | |||
[1] | Mortgage loans are non-recourse to the Company except for (i) the senior loan held by ServisFirst Bank on Meadowview (Ohio), (ii) the loans held by Colony Bank on Eastman and Glen Eagle, and (iii) the Southern Hills line of credit and Goodwill loan owed to Southern Bank (formerly First Commercial Bank). | ||||
[2] | On October 31, 2017, the Company, through its wholly-owned subsidiaries Southern Tulsa, LLC and Southern Tulsa TLC, LLC, as Co-Borrowers, consummated a new Line of Credit with Southern Bank (formerly First Commercial Bank) pursuant to a Promissory Note in the principal amount of $7,229,052 (the "Line of Credit"). Under the Line of Credit, the Company refinanced the prior mortgage on its skilled nursing facility in Tulsa for $1,546,801, funded open market and tender offer purchases of its Industrial Revenue Bonds covering the ALF and ILF as well as provided working capital for improvements to the ALF and ILF. As of June 30, 2020, a total of $7,227,074 was drawn under the Line of Credit, and as of December 31, 2019, a total of $7,230,582 was drawn under the Line of Credit. Modifications to the loan in June, 2020 effectively convert it from a line of credit to a term loan. The interest rate on the Line of Credit increased from 5.25% to 5.75% effective April 28, 2019 and subsequently was reduced to 4.75% as part of a new three-year loan renewal. Monthly payments of interest began on November 30, 2017 and continue until the Promissory Note is paid in full on the Maturity Date. The Maturity Date was been extended multiple times in three month increments initially from April 30, 2018 to May 5, 2020, and subsequently to June 18, 2023 with a principal amount of $7,227,074. During the six months ended June 30, 2020, the Company capitalized $33,095 in loan costs paid. The Credit Note is secured by a First Mortgage and Assignment of Rents on Real Property for Southern Hills Rehabilitation Center, a Junior Lien and Assignment of Rents on Real Property for its Southern Hills Independent Living Facility location and a Junior Lien on Real Property for its Southern Hills Assisted Living Facility location. With the retirement of the Tulsa Industrial Authority Bonds effective November 1, 2018, Southern Bank (formerly First Commercial Bank) moved into a senior position on the ALF and ILF properties. | ||||
[3] | The loan at Eastman was renewed on November 26, 2018 with the maturity date extended to October 26, 2021. For the six months ended June 30, 2020, amortization expense related to loan costs totaled $643. | ||||
[4] | The maturity date for the loan at Goodwill Nursing was extended to April 12, 2025 in June 2020. The face value of the note was adjusted to the principal outstanding at the time of $4,268,878, and the interest rate was decreased to 4.75%, from 5.50%. The modification of the loan was substantial and resulted in an extinguishment of the original loan. | ||||
[5] | The original maturity date for the loan was extended on January 19, 2019 to January 20, 2020 and the Company capitalized $8,885 in loan costs paid. The loan was refinanced in June 2019. The Company has incurred $156,671 in unamortized loan costs to refinance this debt with another lender. The refinance was treated as debt extinguishment, with a new maturity date of July 1, 2049 and an interest rate of 3.73%. For the six months ended June 30, 2020, amortization expense related to loan costs totaled $2,611. | ||||
[6] | The maturity date for the loan at Edwards Redeemer was extended to June 29, 2021 in June 2020. The face value of the note was adjusted to the principal outstanding at the time of the modification, $2,065,804, and the interest rate was decreased from 5.50% to 4.75%. | ||||
[7] | Amortization expense related to loan costs of this loan totaled $437 for the six months ended June 30, 2020. Amortizing payments began in January 2019. In June 2018, the Company converted the original note to a fixed note which qualified as debt extinguishment, unamortized debt discount on the original note was expensed as a loss on extinguishment of $27,794. In April 2018, the Company capitalized $22,800 in fees and interest and added it to principal. The Company is subject to financial covenants and customary affirmative and negative covenants, including compliance with the covenants of all other notes and bonds. As of June 30, 2020, the Company was not in compliance with some unrelated notes and bonds, which is considered to be a technical Event of Default as defined in the note agreement, but the Company believes that it is in good standing with the Lender. In October 2018, the Lender extended the Company a line of credit with a limit of $200,365 to provide working capital to scale operations at the facility. The line of credit was expanded in February 2019 to $400,000 with a maturity date of September 30, 2019. Prior to September 30, 2019, the Company had drawn $400,000 on the line which was subsequently merged into the amortizing note due May 25, 2021. | ||||
[8] | The senior debt and subordinated debt owed in relation to Providence of Sparta was refinanced into a single senior HUD note during 2017. Amortization expense related to loan costs totaled $2,492 for the six months ended June 30, 2020. The interest rate was reduced from 3.88% to 3.50% as part of a refinance completed in April 2020. | ||||
[9] | Amortization expense related to loan costs of this loan totaled $4,652 for the six months ended June 30, 2020. The Company is subject to financial covenants and customary affirmative and negative covenants, including compliance with the covenants of all other notes and bonds. As of June 30, 2020, the Company was not in compliance with some unrelated notes and bonds, which is considered to be a technical Event of Default as defined in the note agreement, but the Company believes that it is in good standing with the Lender. | ||||
[10] | The mortgage loan collateralized by the GL Nursing Home is 80% guaranteed by the USDA and requires an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year. The Company is subject to financial covenants and customary affirmative and negative covenants. As of June 30, 2020, the Company was not in compliance with certain of these financial and non-financial covenants which is a technical Event of Default as defined in the note agreement. The Company is also delinquent in installment payments due under the mortgage. Remedies available to the lender in the event of a continuing Event of Default, at its option, include, but are not necessarily limited to the following (1) lender may declare the principal and all accrued interest on the note due and payable; and (2) lender may exercise additional rights and remedies under the note agreement to include taking possession of the collateral or seeking satisfaction from the guarantors. The Company has been notified by the lender regarding the Events of Default. Guarantors under the mortgage loan include Christopher Brogdon. With our consent, Mr. Brogdon has assumed operations of the facility and is making payment of interest on the loan. The Company is not obligated to repay the interest. | ||||
[11] | In connection with the acquisition of Higher Call, the Company entered into a senior loan agreement with Security Bank in the principal amount of $1,051,721. This loan accrues interest at the rate of 6.5% per annum and is payable in monthly installments of $7,907. The loan is secured by a senior Mortgage, Security Agreement and Assignment of Rents covering the Higher Call facility and a UCC Security Interest covering the personal property and other non-real estate assets. The Company is subject to financial covenants and customary affirmative and negative covenants. As of June 30, 2020, the Company was in compliance with these covenants. |
Debt and Debt - Related Parti_7
Debt and Debt - Related Parties - Schedule of Mortgage Loan Debt (Details) (Parenthetical) - USD ($) | Sep. 30, 2019 | Feb. 28, 2019 | Apr. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 18, 2023 | Dec. 31, 2019 | Apr. 28, 2019 | Oct. 31, 2018 | Oct. 31, 2017 |
Gain on extinguishment of debt | $ (80,400) | $ (80,400) | ||||||||||
Warrenton Nursing Home [Member] | ||||||||||||
Debt instrument, interest rate | 3.73% | 3.73% | ||||||||||
Amortization expense related to loan costs | $ 2,611 | |||||||||||
Unamortized loan costs | $ 156,671 | $ 156,671 | ||||||||||
Warrenton Nursing Home [Member] | April 12, 2025 in June 2020 [Member] | ||||||||||||
Maturity date description | The maturity for the loan at Goodwill Nursing was extended to April 12, 2025 in June 2020 | |||||||||||
Adjustment amount at the time of modification, shares | 4,268,878 | 4,268,878 | ||||||||||
Warrenton Nursing Home [Member] | January 19, 2019 to January 20, 2020 [Member] | ||||||||||||
Maturity date description | The refinance was treated as debt extinguishment, with a new maturity date of July 1, 2049 | |||||||||||
Amortization expense related to loan costs | $ 8,885 | |||||||||||
Edward Redeemer Health & Rehab [Member] | June 29, 2021 in June 2020 [Member] | ||||||||||||
Maturity date description | The maturity for the loan at Edwards Redeemer was extended to June 29, 2021 in June 2020. | |||||||||||
Adjustment amount at the time of modification, shares | 2,065,804 | 2,065,804 | ||||||||||
Glen Eagle Health & Rehab [Member] | ||||||||||||
Line of credit | $ 400,000 | $ 200,365 | ||||||||||
Amortization expense related to loan costs | $ 437 | |||||||||||
Gain on extinguishment of debt | 27,794 | |||||||||||
Capitalized fees and interest | $ 22,800 | |||||||||||
Line of credit | $ 400,000 | $ 400,000 | ||||||||||
Maturity date | May 25, 2021 | Sep. 30, 2019 | ||||||||||
Providence of Sparta Nursing Home [Member] | ||||||||||||
Amortization expense related to loan costs | 2,492 | |||||||||||
Meadowview Healthcare Center [Member] | ||||||||||||
Amortization expense related to loan costs | $ 4,652 | |||||||||||
GL Nursing Home [Member] | ||||||||||||
Mortgage loan description | The mortgage loan collateralized by the GL Nursing Home is 80% guaranteed by the USDA and requires an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year. | |||||||||||
USDA guaranteed rate | 80.00% | |||||||||||
Annual renewal fee payable | 25.00% | |||||||||||
Higher Call Nursing Center [Member] | Seniorloan Agreement [Member] | ||||||||||||
Debt instrument, face amount | $ 1,051,721 | $ 1,051,721 | ||||||||||
Debt instrument, interest rate | 6.50% | 6.50% | ||||||||||
Payable in monthly installments | $ 7,907 | |||||||||||
Forecast [Member] | ||||||||||||
Debt instrument, face amount | $ 7,227,074 | |||||||||||
Minimum [Member] | Warrenton Nursing Home [Member] | April 12, 2025 in June 2020 [Member] | ||||||||||||
Debt instrument, interest rate | 4.75% | 4.75% | ||||||||||
Minimum [Member] | Edward Redeemer Health & Rehab [Member] | June 29, 2021 in June 2020 [Member] | ||||||||||||
Debt instrument, interest rate | 4.75% | 4.75% | ||||||||||
Minimum [Member] | Providence of Sparta Nursing Home [Member] | ||||||||||||
Debt instrument, interest rate | 3.50% | 3.50% | ||||||||||
Maximum [Member] | Warrenton Nursing Home [Member] | April 12, 2025 in June 2020 [Member] | ||||||||||||
Debt instrument, interest rate | 5.50% | 5.50% | ||||||||||
Maximum [Member] | Edward Redeemer Health & Rehab [Member] | June 29, 2021 in June 2020 [Member] | ||||||||||||
Debt instrument, interest rate | 5.50% | 5.50% | ||||||||||
Maximum [Member] | Providence of Sparta Nursing Home [Member] | ||||||||||||
Debt instrument, interest rate | 3.88% | 3.88% | ||||||||||
Southern Tulsa, LLC [Member] | ||||||||||||
Debt instrument, face amount | $ 7,229,052 | |||||||||||
Line of credit | $ 1,546,801 | |||||||||||
Amount drawn under the line of credit | $ 7,227,074 | $ 7,227,074 | $ 7,230,582 | |||||||||
Debt instrument, interest rate | 4.75% | |||||||||||
Maturity date description | The loan at Eastman was renewed on November 26, 2018 with the maturity extended to October 26, 2021. | |||||||||||
Amortization expense related to loan costs | $ 643 | |||||||||||
Southern Tulsa, LLC [Member] | Minimum [Member] | ||||||||||||
Debt instrument, interest rate | 5.25% | |||||||||||
Southern Tulsa, LLC [Member] | Maximum [Member] | ||||||||||||
Debt instrument, interest rate | 5.75% |
Debt and Debt - Related Parti_8
Debt and Debt - Related Parties - Schedule of Other Debt (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | ||
Long-term Debt, Gross | $ 2,820,000 | $ 2,660,000 | |
Other Debt [Member] | |||
Long-term Debt, Gross | 1,195,561 | 1,536,000 | |
Goodwill Nursing Home [Member] | Other Debt [Member] | |||
Face Amount | [1] | 2,180,000 | |
Long-term Debt, Gross | [1] | $ 1,053,600 | 1,536,000 |
Stated Interest Rate | [1] | 13% Fixed | |
Maturity date | [1] | Dec. 31, 2019 | |
Higher Call Nursing Center [Member] | Other Debt [Member] | |||
Face Amount | [2] | $ 150,000 | |
Long-term Debt, Gross | [2] | $ 141,961 | |
Stated Interest Rate | [2] | 8% Fixed | |
Maturity date | [2] | Apr. 1, 2024 | |
[1] | The subordinated note on Goodwill matured on July 1, 2015. Investors in the Goodwill note were entitled to an additional 5% equity in Goodwill Hunting, LLC every six months if the note is not paid when due. Effective December 31, 2015, the investors holding the subordinated debt executed an Agreement Among Lenders pursuant to which they (i) agreed to waive any and all equity ratchets and (ii) agreed to extend the maturity date of the subordinated debt to June 30, 2017. In exchange, Goodwill Hunting agreed to pay the investors an additional one-time premium equal to 5% of the principal amount of the individual note at such time as the note is repaid. Effective May 3, 2017, we entered into an Allonge and Modification Agreement with the Goodwill investors pursuant to which they agreed to (i) waive all accrued interest through December 31, 2017, (ii) reduce interest rate to 13% beginning January 1, 2018 and (iii) extend the maturity date of the notes to December 31, 2019. In exchange, the Company agreed that upon repayment of the notes, the investors would be entitled to a one-time premium payment in the amount of 15% of the principal balance of the notes. The Corporate entity, Global Healthcare REIT Inc. owns $800,000 of its own subsidiary's notes, Goodwill Hunting, LLC, but this amount is excluded from the above table and eliminated in consolidation on the balance sheet. On June 30, 2020, the Company purchased from four former investors in GWH Investors, LLC their notes in favor of Goodwill Hunting, LLC in the aggregate amount of $482,400 for $402,000 cash and recognized a gain of $80,400, and subsequently in October purchased from two more investors an aggregate amount of $108,000 for $90,000 of cash and will recognize a gain of $18,000. The Company has not repaid or renewed the note as of June 30, 2020 and it is technically in default. | ||
[2] | In connection with the acquisition of Higher Call, the Company executed a promissory note in favor of the Seller, Higher Call Nursing Center, Inc., in the principal amount of $150,000 which accrues interest at the rate of 8% per annum and is payable in equal monthly installments, principal and interest. This note is secured by a corporate guaranty of Global. |
Debt and Debt - Related Parti_9
Debt and Debt - Related Parties - Schedule of Other Debt (Details) (Parenthetical) - USD ($) | Oct. 31, 2020 | Oct. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2020 |
Goodwill Hunting, LLC [Member] | ||||
Maturity date | Jul. 1, 2015 | |||
Debt description | The subordinated note on Goodwill matured on July 1, 2015. Investors in the Goodwill note were entitled to an additional 5% equity in Goodwill Hunting, LLC every six months if the note is not paid when due. Effective December 31, 2015, the investors holding the subordinated debt executed an Agreement Among Lenders pursuant to which they (i) agreed to waive any and all equity ratchets and (ii) agreed to extend the maturity date of the subordinated debt to June 30, 2017. In exchange, Goodwill Hunting agreed to pay the investors an additional one-time premium equal to 5% of the principal amount of the individual note at such time as the note is repaid. Effective May 3, 2017, we entered into an Allonge and Modification Agreement with the Goodwill investors pursuant to which they agreed to (i) waive all accrued interest through December 31, 2017, (ii) reduce interest rate to 13% beginning January 1, 2018 and (iii) extend the maturity date of the notes to December 31, 2019. In exchange, the Company agreed that upon repayment of the notes, the investors would be entitled to a one-time premium payment in the amount of 15% of the principal balance of the notes. | |||
Ownership amount | $ 800,000 | $ 800,000 | ||
Other debt | 482,400 | 482,400 | ||
Payments to acquire notes | 402,000 | |||
Gain on purchase of notes payable | 80,400 | |||
Goodwill Hunting, LLC [Member] | Subsequent Event [Member] | ||||
Other debt | $ 108,000 | $ 108,000 | ||
Payments to acquire notes | 90,000 | 90,000 | ||
Gain on purchase of notes payable | $ 18,000 | $ 18,000 | ||
Higher Call Nursing Center, Inc. [Member] | ||||
Debt principal amount | $ 150,000 | $ 150,000 | ||
Debt instrument, interest rate | 8.00% | 8.00% |
Debt and Debt - Related Part_10
Debt and Debt - Related Parties - Schedule of Unsecured Notes and Notes Secured by All Assets (Details) - USD ($) | Jan. 28, 2020 | Jan. 28, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Long-term Debt, Gross | $ 2,820,000 | $ 2,660,000 | ||
10% Senior Secured Promissory Note [Member] | ||||
Face Amount | 25,000 | |||
Long-term Debt, Gross | $ 25,000 | 25,000 | ||
Stated Interest Rate | 10.0% Fixed | |||
Maturity date | Dec. 31, 2018 | Dec. 31, 2018 | ||
10% Senior Unsecured Promissory Note [Member] | ||||
Face Amount | $ 300,000 | |||
Long-term Debt, Gross | $ 300,000 | 300,000 | ||
Stated Interest Rate | 10.0% Fixed | |||
Maturity date | Oct. 31, 2020 | |||
11% Senior Secured Promissory Note [Member] | ||||
Face Amount | $ 1,520,000 | |||
Long-term Debt, Gross | $ 1,520,000 | 1,460,000 | ||
Stated Interest Rate | 11.0% Fixed | |||
Maturity date | Oct. 31, 2021 | Oct. 31, 2021 | Oct. 31, 2021 | |
11% Senior Secured Promissory Notes - Related Party [Member] | ||||
Face Amount | $ 975,000 | |||
Long-term Debt, Gross | $ 975,000 | $ 875,000 | ||
Stated Interest Rate | 11.0% Fixed | |||
Maturity date | Oct. 31, 2021 |
Debt and Debt - Related Part_11
Debt and Debt - Related Parties - Schedule of Future Maturities of Notes Payable (Details) | Jun. 30, 2020USD ($) | |
Debt Disclosure [Abstract] | ||
2020 | $ 12,135,289 | [1] |
2021 | 8,182,778 | |
2022 | 1,960,552 | |
2023 | 7,595,127 | |
2024 | 352,829 | |
2025 and after | 10,461,851 | |
Long-term Debt, Fair Value | $ 40,688,426 | |
[1] | Any note or bond that is not in compliance with all financial and non-financial covenants is considered to have an immediate maturity, including those that require compliance with covenants on any and all other notes. The notes secured by the facilities at GL Nursing Home, Meadowview and Abbeville have such covenants which were in technical non-compliance at June 30, 2020, but the Company believes that its relationships with these lenders is good. |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Payments of preferred stock dividends | $ 15,000 | $ 15,000 | |
Accrued dividend | $ 7,500 | $ 7,500 | |
Warrants to purchase common stock, outstanding | 2,858,130 | ||
Outstanding warrants | $ 0 | ||
Options to purchase common stock | 600,000 | 600,000 | |
Weighted average exercise price of options to purchase common stock | $ 0.36 | $ 0.36 | |
Weighted average remaining term of options to purchase common stock | 2 years 9 months | 3 years | |
Intrinsic value of common stock options | $ 0 | ||
Private Offering [Member] | Senior Secured Notes [Member] | |||
Debt instrument percentage | 11.00% | ||
Directors and Executive Officers [Member] | |||
Share based compensation - restricted stock awards | 135,000 | ||
Series A Convertible Redeemable Preferred Stock [Member] | |||
Preferred stock, shares authorized | 2,000,000 | ||
Preferred stock, par value | $ 2 | ||
Liquidation preference value | $ 2 | ||
Preferred stock, shares outstanding | 200,500 | 200,500 | |
Series D Convertible Preferred Stock [Member] | |||
Preferred stock, shares authorized | 1,000,000 | ||
Preferred stock, par value | $ 1 | ||
Preferred stock, shares outstanding | 375,000 | 375,000 | |
Preferred stock, dividend rate, percentage | 8.00% | ||
Preferred stock, call or exercise features | Shares of the Series D preferred stock are redeemable at the Company's option. At the option of the holder, shares of the Series D preferred stock plus any declared and unpaid dividends are convertible to shares of the Company's common stock at a conversion rate of $1.00 per share. | ||
Preferred dividends declared | $ 15,000 | 15,000 | |
Payments of preferred stock dividends | 15,000 | 15,000 | |
Accrued dividend | $ 7,500 | $ 7,500 | |
Reversal of stock-based compensation | $ 8,750 | ||
Preferred Stock [Member] | |||
Preferred stock, shares authorized | 10,000,000 | ||
Warrant [Member] | |||
Warrants to purchase common stock, outstanding | 2,858,130 | 2,598,130 | |
Weighted average exercise price for warrant | $ 0.53 | $ 0.54 | |
Weighted average remaining term for warrant | 1 year 3 months 29 days | 2 years 1 month 6 days | |
Outstanding warrants, expired | 260,000 | 427,668 | |
Weighted average exercise price for warrant, expired | $ 0.50 | $ 0.75 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Restricted Stock Awards (Details) - Restricted Stock [Member] - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Outstanding Non-Vested Restricted Stock Units, Beginning | 75,000 | |
Non-vested Restricted Stock Units Granted | 545,454 | |
Non-vested Restricted Stock Units Vested | (75,000) | (409,091) |
Outstanding Non-vested Restricted Stock Units, Ending | 136,363 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of computation of Basic and Diluted Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Equity [Abstract] | ||||
Net Income (Loss) Attributable to Global Healthcare REIT, Inc. | $ 1,123,555 | $ (168,255) | $ 1,184,655 | $ (3,959) |
Series D Preferred Dividends | (7,500) | (7,500) | (15,000) | (15,000) |
Net Income (Loss) Attributable to Common Stockholders - Basic | 1,116,055 | (175,755) | 1,169,655 | (18,959) |
Net Income (Loss) Attributable to Common Stockholders | 1,116,055 | (175,755) | 1,169,655 | (18,959) |
Series D Preferred Dividends | 7,500 | 15,000 | ||
Net Income (Loss) Attributable to Common Stockholders - Diluted | $ 1,123,555 | $ (175,755) | $ 1,184,655 | $ (18,959) |
Weighted Average Common Shares Outstanding - Basic | 27,414,816 | 27,347,134 | 27,427,928 | 27,122,607 |
Effect of dilutive securities: Conversion of Series D Convertible Preferred Stock | 382,500 | 382,500 | ||
Weighted Average Common Shares Outstanding - Diluted | 27,797,316 | 27,347,134 | 27,810,428 | 27,122,607 |
Net Income (Loss) per Share Attributable to Common Stockholders: Basic | $ 0.04 | $ (0.01) | $ 0.04 | $ 0 |
Net Income (Loss) per Share Attributable to Common Stockholders: Diluted | $ 0.04 | $ (0.01) | $ 0.04 | $ 0 |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jul. 31, 2019 | Jan. 31, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Ongoing upkeep amount | $ 450 | ||||||
Non Employee Directors [Member] | |||||||
Directors fee payable per quarter in cash | $ 7,500 | ||||||
Mr. Neuman [Member] | |||||||
Stock issued for service rendered, value | 0 | $ 32,156 | |||||
Directors [Member] | |||||||
Vesting period | 12 months | ||||||
Directors [Member] | Restricted Common Stock [Member] | |||||||
Recognized stock-based compensation | $ 8,750 | $ 45,000 | |||||
Director One [Member] | |||||||
Number of restricted stock shares of common stock granted | 90,909 | 90,909 | |||||
Director Two [Member] | |||||||
Number of restricted stock shares of common stock granted | 90,909 | 90,909 | |||||
Director Three [Member] | |||||||
Number of restricted stock shares of common stock granted | 90,909 |
Facility Leases - Schedule of L
Facility Leases - Schedule of Leasing Arrangements (Details) | 6 Months Ended | |
Jun. 30, 2020USD ($) | ||
Eastman [Member] | ||
Monthly Lease Income | [1] | |
Lease Renewal Option | None | [2] |
Warrenton [Member] | ||
Monthly Lease Income | $ 55,724 | [1] |
Lease Expiration | Jun. 30, 2026 | |
Lease Renewal Option | Term may be extended for one additional ten-year term. | |
Goodwill [Member] | ||
Monthly Lease Income | $ 48,125 | [1],[3] |
Lease Expiration | Feb. 1, 2027 | [3] |
Lease Renewal Option | Term may be extended for one additional five-year term. | [3] |
Edwards Redeemer [Member] | ||
Monthly Lease Income | [1],[4] | |
Lease Renewal Option | None | [4] |
Providence [Member] | ||
Monthly Lease Income | $ 42,519 | [1] |
Lease Expiration | Jun. 30, 2026 | |
Lease Renewal Option | Term may be extended for one additional ten-year term. | |
Meadowview [Member] | ||
Monthly Lease Income | [1],[5] | |
Lease Renewal Option | None | [5] |
GL Nursing [Member] | ||
Monthly Lease Income | [1],[6] | |
Lease Renewal Option | None | [6] |
Glen Eagle [Member] | ||
Monthly Lease Income | [1],[7] | |
Lease Renewal Option | None | [7] |
Southern Hills SNF [Member] | ||
Monthly Lease Income | [1],[8] | |
Lease Renewal Option | Term may be extended for two additional five-year term. | [8] |
Southern Hills ALF [Member] | ||
Monthly Lease Income | [1],[9] | |
Lease Renewal Option | None | [9] |
Southern Hills ILF [Member] | ||
Monthly Lease Income | [1],[10] | |
Lease Renewal Option | None | [10] |
Higher Call [Member] | ||
Monthly Lease Income | ||
Lease Renewal Option | None | |
[1] | Monthly lease income reflects rent income on a straight-line basis over, where applicable, the term of each lease. | |
[2] | On October 18, 2019, the Company terminated the lease at its Eastman property. A Receivership was appointed to assume the operations of the facility. The receivership was discharged on July 1, 2020 and the Company is currently operating the building independently. | |
[3] | In January 2016, the Goodwill facility was closed by Georgia regulators and all residents were removed. In a transaction related to the sale of the Greene Point facility, an affiliate of the buyer of Greene Point executed a ten-year operating lease covering Goodwill. After investing approximately $2.0 million in capital improvements in the property, the lease operator obtained all regulatory approvals and began admitting patients in December 2016. The lease became effective on February 1, 2017, and the facility began generating rental revenue thereafter. | |
[4] | Cadence, our former lease operator, informed the Company that it intended to close the Edwards Redeemer facility due to unprofitable operations. In violation of the operating lease, Cadence began moving patients from the facility and, as of October 18, 2019, all patients had been removed. In response to our Petition, on October 17, 2019, the District Court of Oklahoma County, State of Oklahoma issued a Temporary Order Appointing Receiver (the "Order") pursuant to a Motion to Appoint Receiver filed by Edwards Redeemer Property Holdings, LLC ("Edwards Property"), a wholly-owned subsidiary of the Company, with respect as a skilled nursing facility. The Order was issued due to the violations by Cadence of the business-preservation obligations contained in the lease between Edwards Property and the Operator. The Company will allow Edwards Redeemer to remain closed for the purpose of undertaking extensive renovations to the facility. We are planning to reopen the facility in the first quarter of 2021 to be operated by our newly formed wholly-owned subsidiary Tiaps Rehab Center, LLC. | |
[5] | The lease was generating $33,000 in monthly gross rent; however, the operator experienced adverse results in late 2017 and throughout 2018. In April 2018, the Company recognized a bad debt expense of $56,000 related to rent receivables previously booked in 2018 at the Meadowview facility. Effective December 1, 2018, the Company completed the operations transfer to an affiliate of Infinity Health Interests, LLC ("Infinity"). The lease was structured with a lower base rent component than the prior operator but included occupancy-based escalators that were intended to better align facility operations with future rental payments. The Company did not receive any cash rent for the facility and has not recorded any rental revenues or receivables for this facility since the inception of the lease. On August 7, 2020, the facility was served with a Notice of Immediate Imposition of Remedies from the Centers for Medicare and Medicaid Services ("CMS"), as well as a Notice of Imposition of Remedies by the Ohio Department of Health ("ODH") ordering the facility to relocate all residents no later than August 9, 2020. The actions of the CMS and ODH were the result of ongoing operating deficiencies which the operator failed to cure. All residents of the Meadowview facility were relocated by the August 9, 2020 deadline, and as a result the facility has been closed. The Company has applied with the ODH for a new nursing home license which is pending. In September 2020, the ODH served notice that it intended to commence proceedings to revoke the nursing license on the facility. The Company has not determined what future courses of action may be required or appropriate. | |
[6] | Effective January 1, 2016, the GL Nursing facility was leased to another operator for a period of ten years at a monthly base rent of $30,000 which was subject to increases based on census levels. Under the terms of the lease, the Company agreed to fund certain capital expenditures, which it was unable to fulfill. In July 2016, the new tenant served notice that it was terminating the lease effective August 31, 2016. The Company entered into a Lease Termination Agreement under which it paid the tenant $145,000 and is obligated to make future payments. Effective August 30, 2016, the Company entered into a new lease agreement with another nursing home operator. The lease term was to commence at the end of a straddle period. During the straddle period, the Company made working capital advances to enable the operator to cover cash flow deficits resulting from initial operations of the facility. Prior to the end of the straddle period, the lease operator informed the Company that it would vacate the facility. An entity affiliated with Mr. Brogdon, who is a guarantor of the mortgage, assumed operations of the facility in March 2018 under an OTA. We do not expect the facility to generate any future revenue for the Company. | |
[7] | The Company entered into a management agreement with Cadence Healthcare Solutions to operate Glen Eagle after expending approximately $1.0 million in capital improvements. The facility passed its licensure survey and began admitting patients in June 2018. Effective October 12, 2018, the facility gained its certification and started collecting revenues from Medicare and Medicaid in April 2019. On October 17, 2019, the Company terminated its management with Cadence Healthcare Solutions and is currently operating the building independently. | |
[8] | Lease agreement dated May 21, 2014 with lease payments commencing February 1, 2015. On May 10, 2016, the Company obtained a Court Order appointing a Receiver to control and operate the Southern Hills SNF. The former lease operator represented that it was unable to meet the financial commitments of the facility, including the payment of rent, payroll, and other operating requirements. In October 2017, the Receiver engaged a new manager for the facility at the request of the Company. In May 2019, the lease expired, and in July 2019 the facility was leased to Southern Hills Rehab Center LLC, a wholly owned subsidiary of the Company, to conduct operations. The approval of the transfer of the Certificates of Need and appropriate licenses to operate the facility was granted on December 1, 2019. The Company is currently operating the building independently. | |
[9] | The Company plans to operate the Southern Hills ALF independently once COVID-19 is brought under control. | |
[10] | The Company has been operating the Southern Hills Independent Living Facility (ILF) directly since September 2019. The facility does not provide healthcare services. It consists of private one- and two-bedroom units leased separately to individual tenants. The rollout of the ILF has been slowed due to COVID-19. |
Facility Leases - Schedule of_2
Facility Leases - Schedule of Leasing Arrangements (Details) (Parenthetical) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Apr. 30, 2018 | Dec. 31, 2016 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | |
Bad debt expenses | $ 57,282 | $ 263,890 | |||||
GL Nursing [Member] | |||||||
Lease term | 10 years | ||||||
Lease rent expense | $ 30,000 | ||||||
Payments to tenant | 145,000 | ||||||
Infinity Health Interests, LLC [Member] | |||||||
Monthly gross rent | $ 33,000 | ||||||
Goodwill [Member] | |||||||
Lease term | 10 years | ||||||
Payments for capital improvements | $ 2,000,000 | ||||||
Meadowview [Member] | |||||||
Bad debt expenses | $ 56,000 | ||||||
Management Agreement [Member] | Cadence Healthcare Solutions [Member] | Abbeville [Member] | |||||||
Payments for capital improvements | $ 1,000,000 |
Facility Leases - Schedule of F
Facility Leases - Schedule of Future Cash Payments for Rent Received During Initial Term of Lease (Details) | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 873,048 |
2021 | 1,764,942 |
2022 | 1,796,400 |
2023 | 1,828,480 |
2024 | 1,860,867 |
2025 and Thereafter | 3,223,628 |
Total | $ 11,347,365 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Changes in Fair Value of Company's Level 3 Valuation for Warrant Liability (Details) - Level 3 [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Beginning Balance | $ 2,785 | |
Change in Fair Value of Warrant Liability | (2,758) | |
Ending Balance | $ 27 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 6 Months Ended | |
Jun. 30, 2020USD ($)Number | Dec. 31, 2019USD ($) | |
Number of reporting segment | Number | 2 | |
Total Assets | $ 43,050,931 | $ 39,878,163 |
Healthcare Services [Member] | ||
Total Assets | 8,191,160 | 4,654,845 |
Real Estate Services [Member] | ||
Total Assets | $ 34,859,771 | $ 35,223,318 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total Revenue | $ 5,130,465 | $ 1,614,424 | $ 8,982,066 | $ 2,889,503 | ||
General and Administrative | 372,707 | 377,357 | 715,770 | 570,836 | ||
Property Taxes, Insurance and Other Operating | 2,654,231 | 543,831 | 4,985,975 | 893,019 | ||
Provision for Bad Debt | 57,282 | 263,890 | ||||
Acquisition costs | 13,763 | 28,654 | ||||
Depreciation | 380,885 | 322,926 | 768,103 | 645,851 | ||
Total Expenses | 3,478,868 | 1,244,114 | 6,762,392 | 2,109,706 | ||
Income (Loss) from Operations | 1,651,597 | 370,310 | 2,219,674 | 779,797 | ||
Other (Income) Expense | ||||||
Gain on Warrant Liability | (2,655) | (2,758) | ||||
Gain on Extinguishment of Debt | (80,400) | (80,400) | ||||
Gain on Sale of Investments | (1,069) | |||||
Gain on Proceeds from Insurance Claim | (270,264) | |||||
Interest Income | (1,536) | (7,003) | ||||
Interest Expense | 611,301 | 544,625 | 1,116,571 | 1,070,860 | ||
Total Other (Income) Expense | 530,901 | 540,434 | 1,036,171 | 789,766 | ||
Net Income (Loss) | 1,120,696 | $ 62,807 | (170,124) | $ 160,155 | 1,183,503 | (9,969) |
Net Loss Attributable to Noncontrolling Interests | 2,859 | 1,869 | 1,152 | 6,010 | ||
Net Income (Loss) Attributable to Global Healthcare REIT, Inc. | 1,123,555 | (168,255) | 1,184,655 | (3,959) | ||
Rental Revenue [Member] | ||||||
Total Revenue | 623,593 | 930,287 | 1,144,605 | 1,825,575 | ||
Healthcare Revenue [Member] | ||||||
Total Revenue | 4,506,872 | 684,137 | 7,837,461 | 1,063,928 | ||
Real Estate Services [Member] | ||||||
Total Revenue | 623,593 | 930,287 | 1,144,605 | 1,825,575 | ||
General and Administrative | 147,579 | 278,327 | 296,149 | 390,097 | ||
Property Taxes, Insurance and Other Operating | 153,539 | 25,241 | 299,379 | 86,065 | ||
Provision for Bad Debt | ||||||
Acquisition costs | 13,763 | 28,654 | ||||
Depreciation | 335,408 | 291,362 | 670,767 | 582,723 | ||
Total Expenses | 650,289 | 594,930 | 1,294,949 | 1,058,885 | ||
Income (Loss) from Operations | (26,696) | 335,357 | (150,344) | 766,690 | ||
Other (Income) Expense | ||||||
Gain on Warrant Liability | (2,655) | (2,758) | ||||
Gain on Extinguishment of Debt | (80,400) | (80,400) | ||||
Gain on Sale of Investments | (1,069) | |||||
Gain on Proceeds from Insurance Claim | (270,264) | |||||
Interest Income | (1,536) | (7,003) | ||||
Interest Expense | 532,597 | 505,093 | 1,010,360 | 989,042 | ||
Total Other (Income) Expense | 452,197 | 500,902 | 929,960 | 707,948 | ||
Net Income (Loss) | (478,893) | (165,545) | (1,080,304) | 58,742 | ||
Net Loss Attributable to Noncontrolling Interests | 2,859 | 1,869 | 1,152 | 6,010 | ||
Net Income (Loss) Attributable to Global Healthcare REIT, Inc. | (476,034) | (163,676) | (1,079,152) | 64,752 | ||
Real Estate Services [Member] | Rental Revenue [Member] | ||||||
Total Revenue | 623,593 | 930,287 | 1,144,605 | 1,825,575 | ||
Real Estate Services [Member] | Healthcare Revenue [Member] | ||||||
Total Revenue | ||||||
Healthcare Services [Member] | ||||||
Total Revenue | 4,506,872 | 684,137 | 7,837,461 | 1,063,928 | ||
General and Administrative | 225,128 | 99,030 | 419,621 | 180,739 | ||
Property Taxes, Insurance and Other Operating | 2,500,692 | 518,590 | 4,686,596 | 806,954 | ||
Provision for Bad Debt | 57,282 | 263,890 | ||||
Acquisition costs | ||||||
Depreciation | 45,477 | 31,564 | 97,336 | 63,128 | ||
Total Expenses | 2,828,579 | 649,184 | 5,467,443 | 1,050,821 | ||
Income (Loss) from Operations | 1,678,293 | 34,953 | 2,370,018 | 13,107 | ||
Other (Income) Expense | ||||||
Gain on Warrant Liability | ||||||
Gain on Extinguishment of Debt | ||||||
Gain on Sale of Investments | ||||||
Gain on Proceeds from Insurance Claim | ||||||
Interest Income | ||||||
Interest Expense | 78,704 | 39,532 | 106,211 | 81,818 | ||
Total Other (Income) Expense | 78,704 | 39,532 | 106,211 | 81,818 | ||
Net Income (Loss) | 1,599,589 | (4,579) | 2,263,807 | (68,711) | ||
Net Loss Attributable to Noncontrolling Interests | ||||||
Net Income (Loss) Attributable to Global Healthcare REIT, Inc. | 1,599,589 | (4,579) | 2,263,807 | (68,711) | ||
Healthcare Services [Member] | Rental Revenue [Member] | ||||||
Total Revenue | ||||||
Healthcare Services [Member] | Healthcare Revenue [Member] | ||||||
Total Revenue | $ 4,506,872 | $ 684,137 | $ 7,837,461 | $ 1,063,928 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 13, 2020 | Oct. 31, 2020 | Oct. 30, 2020 | Aug. 18, 2020 | Jun. 30, 2020 | Jul. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 23, 2020 | Jan. 28, 2020 |
Repayment of secured debt | $ 675,736 | $ 273,550 | ||||||||
Senior Unsecured Notes [Member] | ||||||||||
Debt instrument, interest rate | 10.00% | 10.00% | ||||||||
Repayment of secured debt | $ 150,000 | |||||||||
10% Notes [Member] | ||||||||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | |||||||
Warrant maturity date | Dec. 31, 2018 | |||||||||
Maturity date | Dec. 31, 2018 | |||||||||
11% Senior Secured Promissory Notes [Member] | ||||||||||
Debt instrument, interest rate | 11.00% | |||||||||
Goodwill Hunting, LLC [Member] | ||||||||||
Other debt | $ 482,400 | $ 482,400 | ||||||||
Payments to acquire notes | 402,000 | |||||||||
Gain on purchase of notes payable | $ 80,400 | |||||||||
Maturity date | Jul. 1, 2015 | |||||||||
Subsequent Event [Member] | Senior Unsecured Notes [Member] | ||||||||||
Notes exchanged | $ 150,000 | |||||||||
Subsequent Event [Member] | 10% Notes [Member] | ||||||||||
Debt instrument, interest rate | 10.00% | |||||||||
Warrant maturity date | Oct. 31, 2020 | |||||||||
Subsequent Event [Member] | 11% Senior Secured Promissory Notes [Member] | ||||||||||
Debt instrument, interest rate | 11.00% | |||||||||
Senior secured promissory notes issued | $ 150,000 | |||||||||
Warrants exercise price | $ 0.50 | |||||||||
Maturity date | Oct. 31, 2021 | |||||||||
Subsequent Event [Member] | Goodwill Hunting, LLC [Member] | ||||||||||
Other debt | $ 108,000 | $ 108,000 | ||||||||
Payments to acquire notes | 90,000 | 90,000 | ||||||||
Gain on purchase of notes payable | $ 18,000 | $ 18,000 | ||||||||
Subsequent Event [Member] | Board of Director [Member] | ||||||||||
Repurchase for redemption, shares | 104,715 | 443,431 | ||||||||
Repurchase for redemption | $ 26,718 | $ 75,385 | ||||||||
Share issued per share | $ 0.25 | $ 0.17 | ||||||||
Subsequent Event [Member] | Edwards Facility [Member] | ||||||||||
Proceeds from line of credit | $ 500,000 | |||||||||
Proceeds from construction loan | $ 750,000 | |||||||||
Loan interest rate | 4.75% | |||||||||
Loan maturity date | Jul. 30, 2021 | |||||||||
Subsequent Event [Member] | Global Fairland Property, LLC [Member] | Asset Purchase Agreement [Member] | ||||||||||
Purchase price | $ 796,500 |