UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022 
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     

Commission file number: 1-13445
csu-20210331_g1.jpg
CapitalSonida Senior Living, CorporationInc.
(Exact Name of Registrant as Specified in its Charter)
Delaware75-2678809
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
14160 Dallas Parkway,16301 Quorum Drive, Suite 300, Dallas,160A, Addison, TX7525475001
(Address of Principal Executive Offices)principal executive offices)(Zip Code)code)
(972) 770-5600
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)
NONE
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of exchange on which registered
Common Stock, $0.01 par value per shareCSUSNDANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   x¨     No  ¨x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filer¨
Non-accelerated filerxSmaller reporting company☒x
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐
No  x
As of May 10, 2021,April 30, 2022, the Registrant had 2,182,375 outstanding6,755,938 shares of its Common Stock, $0.01 par value, per share.common stock outstanding.



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

Item 1. Financial Statements.

Condensed Consolidated Balance Sheets — March 31,, 2021 2022 and December 31, 2020
3
Consolidated Statements of Operations and Comprehensive Income (Loss) — Three Months Ended March 31, 2021 and 2020(Unaudited)
4
Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2022 and 2021 (Unaudited)
5
Condensed Consolidated Statements of Shareholders’ Equity (Deficit)— Three Months Ended March 31, 31, 2021 and 20202202 (Unaudited)
56
Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31,, 2021 2022 and 20202021 (Unaudited)
57
Notes to UnauditedCondensed Consolidated Financial Statements (Unaudited)
78
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2217
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3220
Item 4. Controls and Procedures
3220
3322
Item 1. Legal Proceedings
3322
Item 1A. Risk Factors
3322
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
3422
Item 3. Defaults Upon Senior Securities
3422
Item 4. Mine Safety Disclosures
3422
Item 5. Other Information
3422
Item 6. Exhibits
3523
3524


2


Cautionary Note Regarding Forward-Looking Statements

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

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

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

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

Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.Financial Statements
CAPITAL SENIOR LIVING CORPORATIONSonida Senior Living, Inc.
CONSOLIDATED BALANCE SHEETSCondensed Consolidated Balance Sheets (Unaudited)
(in thousands)
March 31,
2021		December 31,
2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$16,766 $17,885 
Restricted cash4,982 4,982 
Accounts receivable, net3,926 5,820 
Federal and state income taxes receivable0 76 
Property tax and insurance deposits4,450 7,637 
Prepaid expenses and other5,122 7,028 
Total current assets35,246 43,428 
Property and equipment, net647,895 655,731 
Operating lease right-of-use assets, net287 536 
Other assets, net3,470 3,138 
Total assets$686,898 $702,833 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$12,131 $14,967 
Accrued expenses41,992 48,515 
Current portion of notes payable, net of deferred loan costs261,346 304,164 
Current portion of deferred income3,883 3,984 
Current portion of lease liabilities245 421 
Federal and state income taxes payable383 249 
Customer deposits779 822 
Total current liabilities320,759 373,122 
Lease liabilities, net of current portion257 533 
Other long-term liabilities3,714 3,714 
Notes payable, net of deferred loan costs and current portion602,423 604,729 
Commitments and contingencies00
Shareholders’ deficit:
Preferred stock, $0.01 par value:0 0 
Authorized shares – 15,000; 0 shares issued or outstanding
Common stock, $0.01 par value:
Authorized shares – 4,333; issued and outstanding shares – 2,182 and
   2,084 in 2021 and 2020, respectively
22 21 
Additional paid-in capital189,143 188,978 
Retained deficit(429,420)(468,264)
Total shareholders’ deficit(240,255)(279,265)
Total liabilities and shareholders’ deficit$686,898 $702,833 
See accompanying notes to unaudited consolidated financial statements.
3

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
Three Months Ended
March 31,
20212020
Revenues:
Resident revenue$45,202 $105,616 
Management fees1,186 56 
Community reimbursement revenue15,260 457 
Total revenues61,648 106,129 
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)36,758 75,402 
General and administrative expenses7,187 6,435 
Facility lease expense0 10,788 
Stock-based compensation expense166 596 
Depreciation and amortization expense9,283 15,715 
Long-lived asset impairment0 35,954 
Community reimbursement expense15,260 457 
Total expenses68,654 145,347 
Other income (expense):
Interest income4 54 
Interest expense(9,374)(11,670)
Gain on facility lease modification and termination, net0 11,240 
Gain on extinguishment of debt46,999 0 
Loss on disposition of assets, net(421)(7,356)
Other income8,705 1 
Income (loss) from continuing operations before provision for income taxes38,907 (46,949)
Provision for income taxes(63)(232)
Net income (loss)$38,844 $(47,181)
Per share data:
Basic net income (loss) per share (1)$18.87 $(23.28)
Diluted net income (loss) per share (1)$18.80 $(23.28)
Weighted average shares outstanding — basic (1)2,058 2,027 
Weighted average shares outstanding — diluted (1)2,066 2,027 
Comprehensive income (loss)$38,844 $(47,181)
(1) Prior period results and share amounts have been adjusted to reflect the fifteen-for-one Reverse Stock Split. amounts)See Note 7 - Equity.
March 31,
2022		December 31,
2021
 
Assets
Current assets:
Cash and cash equivalents$48,634 $78,691 
Restricted cash3,982 4,882 
Accounts receivable, net4,502 3,983 
Property tax and insurance deposits3,946 6,666 
Prepaid expenses and other7,665 9,328 
Total current assets68,729 103,550 
Property and equipment, net627,844 621,199 
Other assets, net6,808 3,803 
Total assets$703,381 $728,552 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expense$48,528 $46,194 
Current portion of notes payable, net of deferred financing costs43,851 69,769 
Deferred income3,527 3,162 
Federal and state income taxes payable850 599 
Other current liabilities778 758 
Total current liabilities97,534 120,482 
Notes payable, net of deferred financing costs and current portion627,170 613,342 
Other liabilities220 288 
Total liabilities724,924 734,112 
Commitments and contingencies00
Redeemable preferred stock:
Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding41,250 41,250 
Shareholders’ deficit:
Preferred stock $0.01 par value per share; 15,000 shares authorized; none issued or outstanding— — 
Common stock $0.01 par value per share; 15,000 shares authorized; 6,665 and 6,634 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively67 66 
Additional paid-in capital296,475 295,781 
Retained deficit(359,335)(342,657)
Total shareholders’ deficit(62,793)(46,810)
Total liabilities, redeemable preferred stock and shareholders’ deficit$703,381 $728,552 
See accompanying notesNotes to unaudited consolidated financial statements.Condensed Consolidated Financial Statements.
4

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

See Notes to Condensed Consolidated Financial Statements.
5

CAPITAL SENIOR LIVING CORPORATIONSonida Senior Living, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWSCondensed Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited)
(unaudited, in thousands)
 Three Months Ended March 31,
 20212020
Operating Activities  
Net income (loss)$38,844 $(47,181)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization9,283 15,715 
Amortization of deferred financing charges358 464 
Deferred income(244)137 
Operating lease expense adjustment(264)(3,312)
Loss on disposition of assets, net421 7,356 
Gain on facility lease modification and termination, net0 (11,240)
Gain on extinguishment of debt(46,999)0 
Long-lived asset impairment0 35,954 
Provision for bad debts365 745 
Stock-based compensation expense166 596 
Changes in operating assets and liabilities:
Accounts receivable1,528 (72)
Property tax and insurance deposits3,187 4,059 
Prepaid expenses and other1,876 893 
Other assets(332)(164)
Accounts payable(933)(1,047)
Accrued expenses(4,302)(7,648)
Other liabilities0 13 
Federal and state income taxes receivable/payable210 224 
Deferred resident revenue143 (424)
Customer deposits(43)(69)
Net cash provided by (used in) operating activities3,264 (5,001)
Investing Activities
Capital expenditures(2,108)(5,351)
Proceeds from disposition of assets0 6,396 
Net cash provided by (used in) investing activities(2,108)1,045 
Financing Activities
Proceeds from notes payable1,148 0 
Repayments of notes payable(3,406)(4,922)
Cash payments for financing lease and financing obligations(17)(313)
Net cash used in financing activities(2,275)(5,235)
Decrease in cash and cash equivalents(1,119)(9,191)
Cash and cash equivalents and restricted cash at beginning of period22,867 37,063 
Cash and cash equivalents and restricted cash at end of period$21,748 $27,872 
Supplemental Disclosures
Cash paid during the period for:
Interest$7,740 $10,798 
Lease modification and termination$0 $250 
Income taxes$3 $9 
Common StockAdditional
Paid-In
Capital		Retained
Deficit
SharesAmountTotal
Balance at December 31, 20202,084 $21 $188,978 $(468,264)$(279,265)
Restricted stock awards (cancellations), net98 1 (1)— — 
Stock-based compensation— — 166 — 166 
Net income— — — 38,844 38,844 
Balance at March 31, 20212,182 $22 $189,143 $(429,420)$(240,255)
Balance at December 31, 20216,634 $66 $295,781 $(342,657)$(46,810)
Series A convertible preferred stock dividends— — (1,133)— (1,133)
Stock-based compensation31 1 1,827 — 1,828 
Net loss— — — (16,678)(16,678)
Balance at March 31, 20226,665 $67 $296,475 $(359,335)$(62,793)
See accompanying notesNotes to unaudited consolidated financial statements.Condensed Consolidated Financial Statements.
























6

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

Sonida Senior Living, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATIONBasis of Presentation
CapitalOrganization and Business

Sonida Senior Living, Corporation,Inc., a Delaware corporation, (together with its subsidiaries, the “Company”), is one of the leading owner-operators of senior housing communities in the United States in terms of resident capacity. As used herein, the “Company,” “we,” “us,” or “our” refers to Sonida Senior Living, Inc. and its subsidiaries). The Company owns, operates, develops and manages senior housing communities throughout the United States. As of March 31, 2021,2022, the Company operated 9176 senior housing communities in 2018 states with an aggregate capacity of approximately 10,000approximately 9,500 residents, including 6062 senior housing communities whichthat the Company owned 15 properties that were in the process of transitioning legal ownership to Fannie Mae, and 1614 communities that the Company managed on behalf of third parties. The accompanying condensed consolidated financial statements include the financial statements of CapitalSonida Senior Living, CorporationInc. and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Interim Unaudited Financial Information

The accompanying Consolidated Balance Sheet, as of December 31, 2020, has been derived from auditedcondensed consolidated financial statements of the Company for the year ended December 31, 2020, and the accompanying unaudited consolidated financial statements, as of and for the three month periods ended March 31, 2021 and 2020, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States have not been included pursuant to those rulesof America (“GAAP”) and regulations. For further information, refer toshould be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020,2021. Certain information and footnote disclosures normally included in the Company’s Annualfinancial statements prepared in accordance with GAAP have been omitted from this Quarterly Report on Form 10-K filed with10-Q pursuant to the rules and regulations of the Securities and Exchange Commission on March 31, 2021.(“SEC”). The Company meets the SEC’s definition of a “Smaller Reporting Company,” and therefore qualifiesresults for the SEC’s reduced disclosure requirements for smaller reporting companies.
interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of the Company,management, the accompanying unaudited condensed consolidated financial statements containinclude all adjustments, including normal recurring items, necessary to present fairly the Company’sour condensed consolidated financial position as of March 31, 2022 and December 31, 2021, and our condensed consolidated results of operations and cash flows for the three month periods ended March 31, 20212022 and 2020. The results of operations for2021.

Reclassification

Certain amounts previously reflected in the three month period endedprior year condensed consolidated balance sheet have been reclassified to conform to our March 31, 2021 are not necessarily indicative2022 presentation. The condensed consolidated balance sheet as of the results for the year ending December 31, 2021.2021 reflects reclassifying “operating lease right-of-use assets, net” to “other assets, net.” “Accounts payable” and “accrued liabilities” have been combined into one line. “Current portion of lease liabilities” and “customer deposits” were combined into “other current liabilities.” “Lease liabilities, net of current portion” has been reclassified as “other liabilities.” These reclassifications had no effect on the previously reported total current assets, total assets, current liabilities or total liabilities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items related to the accounting for: income taxes, including assessments of probabilities of realization of income tax benefits; impairment of long-lived assets, including applicable cash flow projections, holding periods and fair value evaluations; and depreciation and amortization including determination of estimated useful lives. Actual results could differ from those estimates.
2. GOING CONCERN UNCERTAINTY
The United States broadly continues to experience the pandemic caused by COVID-19, which has significantly disrupted the nation’s economy, the senior living industry,Significant Accounting Policies and the Company’s business.
In an effort to protect its residents and employees and slow the spread of COVID-19 and in response to quarantines, shelter-in-place orders and other limitations imposed by federal, state and local governments, the Company had previously restricted or limited access to its communities, including limitations on in-person prospective resident tours and, in certain cases, new resident admissions. As a result, the COVID-19 pandemic caused a decline in the occupancy levels at the Company’s communities, which has negatively impacted the Company’s revenues and operating results, which depend significantly on such occupancy levels.  Reduced controllable move-out activity during the COVID-19 pandemic may partially offset future adverse revenue impacts.
In addition, the outbreak of COVID-19 has required the Company to incur significant additional operating costs and expenses in order to implement enhanced infection control protocols and otherwise care for its residents, including increased costs and expenses relating to supplies and personal protective equipment, testing of the Company’s residents and employees, labor and specialized disinfecting and cleaning services, which has increased the costs of caring for the residents and resulted in reduced occupancy at such communities. During the three months ended March 31, 2021 and 2020, the Company incurred $1.0 million and $0.1 million, respectively, in costs related to the COVID-19 pandemic.
Recently Issued Accounting Standards Codification (“ASC”) 205-40, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” requires an evaluation of whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. Initially, this evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt exists, management evaluates the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
7

In complying with the requirements under ASC 205-40 to complete an evaluation without considering mitigating factors, the Company considered several conditions or events including (1) uncertainty around the continued impact of the COVID-19 pandemic on the Company’s operations and financial results, (2) $72.5 million of debt maturing and $13.2 million of debt service payments due during the remainder of fiscal 2021, (3) recurring operating losses and projected operating losses for fiscal periods through May 2022, (4) the Company's working capital deficiency and (5) noncompliance with certain financial covenants of its loan agreements with Fifth Third Bank covering 2 properties at March 31, 2021 and December 31, 2020 and noncompliance with certain financial covenants of its loan agreements with BBVA, USA ("BBVA") covering 3 properties at December 31, 2020. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern for the 12-month period following the date that the interim March 31, 2021 financial statements are issued.
The Company has implemented plans as discussed below, which includes strategic and cash-preservation initiatives designed to provide the Company with adequate liquidity to meet its obligations for at least the twelve-month period following the date its interim March 31, 2021 financial statements are issued. The Company’s primary sources of near- and medium-term liquidity are expected to be (1) cash from operations that will be used in operations, and (2) debt forbearance, refinancings or extensions to the extent available on acceptable terms.
Strategic and Cash Preservation Initiatives
The Company has taken or intends to take the following actions, among others, to improve its liquidity position and to address uncertainty about its ability to operate as a going concern:
•In the first quarter of 2019, the Company implemented a three-year operational improvement plan which began to show improved operating results during 2020, prior to the onset of the COVID-19 pandemic, and is expected to continue to drive incremental profitability improvements.
•The Company is in active discussions with Fifth Third Bank and BBVA to resolve its noncompliance with financial covenants at March 31, 2021, December 31, 2020 and September 30, 2020, as applicable, for debt totaling $72.5 million, included in current portion of notes payable, net of deferred loan costs on the Consolidated Balance Sheets. As a result of these defaults, subsequent to quarter end, Fifth Third Bank issued a notice of default letter and both loans are callable. In the event that either of these loans are accelerated, these loans have either 25% recourse (in the case of the $31.5 million Fifth Third loan) or full recourse (in the case of the $41.0 million BBVA loan) to Capital Senior Living Corporation.
•The Company has implemented additional proactive spending reductions to improve liquidity, including reduced discretionary spending and monitoring capital spending.
•As of December 31, 2020, the Company has exited all master lease agreements in order to strengthen the Company's balance sheet and allow the Company to strategically invest in certain existing communities.
•In May 2020, the Company entered into short-term debt forbearance agreements with a number of its lenders. In October 2020, the Company entered into an additional short-term forbearance agreement with Protective Life Insurance Company.
•In November 2020, the Company closed on the sale of 1 senior housing community located in Canton, Ohio, for a total purchase price of $18.0 million and received approximately $6.4 million in net proceeds after retiring outstanding mortgage debt of $10.8 million and paying customary transaction and closing costs. At the closing in November 2020, the Company entered into a management agreement with the successor owner to manage the community, pursuant to which the Company receives a management fee based on the gross revenues of the property.
•In November 2020 and January 2021, the Company accepted $8.1 million and $8.7 million, respectively, of cash for grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phase 2 and 3 General Distribution, which was expanded by the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act") to provide grants or other funding mechanisms to eligible healthcare providers for healthcare related expenses or lost revenues attributable to COVID-19. The $8.7 million Phase 3 Provider Relief Funds were recorded as other income in the three months ended March 31, 2021. The CARES Act Phase 2 and Phase 3 funds are grants that do not have to be repaid, provided the Company satisfies the terms and conditions of the CARES Act. In addition, the Company had received approximately $1.9 million in relief from state agencies in the year ended December 31, 2020.
•The Company has elected to utilize the CARES Act payroll tax deferral program to delay payment of a portion of payroll taxes estimated to be incurred from April 2020 through December 2020.  At March 31, 2021, the Company had deferred $7.4 million in payroll taxes, of which, $3.7 million is included in accrued expenses and $3.7 million is included in other long-term liabilities in the Company’s Consolidated Balance Sheets.
8

•In July 2020, the Company initiated a process that is intended to transfer the operations and ownership of 18 communities that are either underperforming or are in underperforming loan pools to Fannie Mae, the holder of nonrecourse debt on such communities. See “Note 6- Notes Payable.” When legal ownership of the properties transfers to Fannie Mae and the liabilities relating to such communities are extinguished, the Company expects to recognize a gain related to the extinguishment in accordance with ASC 470, “Debt.” During the three months ended March 31, 2021, Fannie Mae completed the transition of legal ownership of 3 properties and the Company recorded a gain on extinguishment of debt of $47.0 million. At March 31, 2021, the Company included $176.1 million in outstanding debt in the current portion of notes payable, net of deferred loan costs, and $8.0 million of accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to these properties. 
•The Company is evaluating possible debt and capital options.
The Company’s plans are designed to provide the Company with adequate liquidity to meet its obligations for at least the 12-month period following the date its interim March 31, 2021 financial statements are issued; however, the remediation plan is dependent on conditions and matters that may be outside of the Company’s control or may not be available on terms acceptable to the Company, if at all, many of which have been made worse or more unpredictable by the COVID-19 pandemic. Accordingly, management could not conclude that it was probable that the plans will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.  If the Company is unable to successfully execute all of these initiatives or if the plan does not fully mitigate the Company’s liquidity challenges, the Company’s operating plans and resulting cash flows along with its cash and cash equivalents and other sources of liquidity may not be sufficient to fund operations for the 12-month period following the date the interim March 31, 2021 financial statements are issued.  
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date the financial statements are issued. As such, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The Company has deposits in banks that exceed Federal Deposit Insurance Corporation insurance limits. Management believes that credit risk related to these deposits is minimal. Restricted cash consists of deposits required by certain counterparties as collateral pursuant to letters of credit. The deposit must remain so long as the letterletters of credit, which isare subject to renewal annually, isare outstanding.
8

The following table sets forth the Company’s cash, and cash equivalents and restricted cash total as presented in our statements of cash flows (in thousands):
March 31,
20212020March 31,
2022		March 31,
2021
Cash and cash equivalentsCash and cash equivalents$16,766 $17,729 Cash and cash equivalents$48,634 $16,766 
Restricted cashRestricted cash4,982 10,143 Restricted cash3,982 4,982 
$21,748 $27,872 
Total cash, cash equivalents, and restricted cashTotal cash, cash equivalents, and restricted cash$52,616 $21,748 
Long-Lived AssetsProperty and ImpairmentEquipment
Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. At each balance sheet date, the Company reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed. The Company considers internal factors such as net operating losses along with external factors relating to each asset, including contract changes, local market developments, and other publicly available information to determine whether impairment indicators exist.
If an indicator of impairment is identified, recoverability of an asset group is assessed by comparing its carrying amount to the estimated future undiscounted net cash flows expected to be generated by the asset group through operation or disposition,
9

calculated utilizing the lowest level of identifiable cash flows. If this comparison indicates that the carrying amount of an asset group is not recoverable, we estimate fair value of the asset group and record an impairment loss when the carrying amount exceeds fair value.
Off-Balance Sheet Arrangements
The Company had There were no material off-balance sheet arrangements atimpairments of long-lived assets during the three months ended March 31, 20212022 or December 31, 2020.2021.
In evaluating our investments for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses.
Upon the acquisition of new communities accounted for as an acquisition of an asset, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their relative fair values once we have determined the fair value of each of these assets and liabilities. The acquisition date is the date on which we obtain control of the real estate property and associated transaction costs are capitalized. The assets acquired and liabilities assumed consist of land, inclusive of associated rights, buildings, assumed debt, and identified intangible assets and liabilities.
Revenue Recognition
Resident revenue primarily consists of fees for basic housing and certain support services and fees associatedprovided to residents which are accounted for under GAAP in accordance with additional housing and expanded support requirements such as assisted living care, memory care, and ancillary services. Basic housing and certain support services revenue is recorded when services are rendered and amounts billed are due from residents in the period in which the rental and other services are provided, which totaled approximately $44.4 million and $103.6 million for the three months ended March 31, 2021 and 2020, respectively. Residencylease accounting standards. The Company's residency lease agreements are generally short term in nature, with durations of one year or less, and are typically terminable by either party, under certain circumstances, upon providing 30 days’ notice, unless state law provides otherwise, with residentotherwise. Resident leases do not contain purchase options or require significant assumptions or judgments. Resident fees are billed monthly in advance. TheBasic housing and certain support services revenue is recorded when services are rendered and amounts are billable to residents in the period in which the rental and other services are provided. At March 31, 2022 and December 31, 2021, the Company had contract liabilitiesliabilities for deferred fees paid by ourits residents prior to the month that housing and support services were to be provided totaling approximately $3.2$2.7 million and $3.3$2.3 million, respectively, which are included as a component of deferred income within current liabilities of the Company’s Consolidated Balance Sheets at March 31, 2021 and December 31, 2020, respectively. Deferred fees paid by our residents recognized into revenue during the three months ended March 31, 2021 and 2020 totaled approximately liabilities.$3.3 million and $4.3 million, respectively, and were recognized as a component of resident revenue within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).
Revenue for certain ancillary services is recognized as services are provided to customers and includes fees for certain services, such as medication management, daily living activities, beautician/barber, laundry, television, guest meals, pets, and parking, which are generally billed monthly in arrears and totaled approximately $0.4 millionare included as a component of resident revenue.
Other operating revenue generally includes nonrecurring state grants and $0.9 million for the three months ended March 31, 2021 and 2020, respectively,is included as a component of resident revenue within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).as earned.
The Company's senior housing communities have residency agreements that generally require the resident to pay a community fee prior to moving into the community and are recorded initially by the Company as deferred revenue. At March 31, 20212022 and December 31, 2020,2021, the Company had contract liabilities for deferred community fees totaling approximately $0.7$0.9 million and $0.9$0.8 million,, respectively, which are included as a component of deferred income within current liabilities of the Company’s Consolidated Balance Sheets.liabilities.
9

The Company recognized community fees as a component of resident revenue within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) of approximately $0.4 million and $1.1 million during the three months ended March 31, 2021 and 2020, respectively. 
The Company has management agreements whereby it manages certain communities on behalf of third party owners under a contract that provides for periodic management fee payments to the Company. The Company recognized revenue from management fees of $1.2 million and $0.1 million, during the three months ended March 31, 2021, and 2020, respectively. The Company has determined that all community management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in “community reimbursement revenue” on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).revenue.” The related costs are included in “community reimbursement expense” onexpense.” Although these costs are funded by the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss). The Company recognized community reimbursement revenue and expense of $15.3 million and $0.5 million during the three months ended March 31, 2021, and 2020, respectively. 
Lease Accounting
Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of the identified asset means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.
Operating lease right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term on the lease commencement date. When the implicit lease rate is not determinable, management
10

uses the Company’s incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future minimum lease payments. The expected lease terms include options to extend or terminate the lease when it is reasonably certainowners, accounting guidance requires the Company will exercise such options. Lease expense for minimum lease payments is recognizedto report these fees on a straight-linegross basis over the expected lease terms.
Financing lease right-of-use assets are recognized within property, plantas both revenues and equipment and leasehold improvements, net on the Company's Consolidated Balance Sheets. The Company recognizes interest expense on the financing lease liabilities utilizing the effective interest method. The right-of-use asset is generally amortized to depreciation and amortization expense on a straight-line basis over the lease term.
Modifications to existing lease agreements, including changes to the lease term or payment amounts, are reviewed to determine whether they result in a separate contract. For modifications that do not result in a separate contract, management reviews the lease classification and re-measures the related right-of-use assets and liabilities at the effective date of the modification.
Certain of the Company’s lease arrangements have lease and non-lease components. The Company accounts for the lease components and non-lease components as a single lease component for all classes of underlying assets. Leases with an expected lease term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term.expenses.
Credit Risk and Allowance for Doubtful Accounts
The Company’s resident receivables are generally due within 30 days from the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $5.6$5.1 million and $6.1$4.7 million at March 31, 2021,2022, and December 31, 2020,2021, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance, as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Self-Insurance Liability Accruals
The Company offers full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs, including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims and claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health insurance claims. Additionally, the Company may be liable for an Employee Shared Responsibility Payment (“ESRP”) pursuant to the Affordable Care Act. The ESRP is applicable to employers that had 50 or more full-time equivalent employees, did not offer minimum essential coverage (“MEC”) to at least 70% of full-time employees and their dependents, or did offer MEC to at least 70% of full-time employees and their dependents that did not meet the affordable or minimum value criteria and had one or more full-time employees certified as being allowed the premium tax credit. The IRS determines the amount of the proposed ESRP from information returns completed by employers and from income tax returns completed by employees. Management believes that the liabilities recorded and reserves established for outstanding losses and expenses are adequate to cover the ultimate cost of losses and expenses incurred at March 31, 2021; however, actual claims and expenses may differ. Any subsequent changes in estimates are recorded in the period in which they are determined.
The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant judgments based on projected future events, including among other factors, potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums and/or estimated litigation costs and other factors.costs. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, it is possible the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.
11

Income Taxes
Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three months ended March 31, 20212022 and 20202021 differ from the statutory tax rates duedue to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax (“TMT”), which effectively imposes tax on modified gross revenues for communities within the State of Texas. The Company consolidated 17 and 38 Texas communities for purposes of the TMT, for the three months ended March 31, 2021 and 2020, respectively, which contributes to the overall provision for income taxes.
Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which the Company expects those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. At year end,As of December 31, 2021, the Company had a three-year cumulative net operating loss for its U.S. operations and is subject to annual operating loss utilization limits and accordingly, has provided a full valuation allowance on its U.S. and state net deferred tax assets.  The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized. However, in the event that the Company were to ultimately determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded
10

amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.
The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide betterenhanced financial statement comparability among different companies.companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” to be upheld on audit based onlysolely on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense.
Redeemable Preferred Stock

The Company evaluates the classification of redeemable preferred stock based on the instrument’s specific terms and rights. Perpetual convertible preferred stock which can be converted to common stock outside of the Company’s control is generally no longer subjectclassified as mezzanine equity, outside of the stockholders’ deficit section, and recorded at the maximum liquidation or conversion amount. Dividends on redeemable preferred stock are recorded to federal and state tax audits for years priorretained earnings or additional paid-in capital if retained earnings is an accumulated deficit. During the year ended December 31, 2021, the Company issued 41,250 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”).
Derivative Instruments
We use derivative instruments as part of our overall strategy to 2017manage our exposure to market risks associated with the exceptionfluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for Net Operating Losses originating from 2013.trading or speculative purposes. We record all derivatives at fair value. As of March 31, 2022 and December 31, 2021, all of our derivative instruments were interest rate caps, and none are designated as hedge instruments. Changes in fair value of undesignated hedge instruments are recorded in current period earnings in interest expense.
Net Income (Loss) Per Common Share
Basic income (loss) per share is computed by dividing net income (loss) less distributions to participating securities using the two-class method and preferred stock dividends, including redeemable preferred stock classified as mezzanine equity, divided by the weighted average number of shares of common stock outstanding. Under the two-class method, net income is reduced by the amount of any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated based on the weighted-average shares outstanding of common stock and Series A Preferred Stock (on an if-converted basis) to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the Series A Preferred Stock have no obligation to fund losses.
Diluted net income (loss) per common share is computed under the two-class method by dividingusing the weighted-average number of shares of common stock outstanding, plus, for periods with net income (loss) byattributable to common stockholders, the weighted average numberpotential dilutive effects of instruments convertible into common shares outstanding forstock, stock options, stock-based compensation awards and warrants. The Company analyzes the potential dilutive effect of convertible instruments under the “if-converted” method, in which it is assumed that the instruments convert into common stock at the beginning of the period or when issued, if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as its diluted net income per share during the period. Potentially dilutive securities consist of unvested restricted shares and shares that could be issued under outstanding stock options. Potentially dilutiveDilutive securities are excluded from the computation of net income (loss) per common share if their effect is antidilutive.
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except for per share amounts):
Three Months Ended
March 31,
20212020
Net income (loss)$38,844 $(47,181)
Net income (loss) allocated to unvested restricted shares0 0 
Undistributed net income (loss) allocated to common shares$38,844 $(47,181)
Weighted average shares outstanding – basic (1)2,058 2,027 
Effects of dilutive securities:
Employee equity compensation plans8 0 
Weighted average shares outstanding – diluted (1)2,066 2,027 
Basic net income (loss) per share – common shareholders$18.87 $(23.28)
Diluted net income (loss) per share – common shareholders$18.80 $(23.28)
12

(1) Prior period results and share amounts have been adjusted to reflect the fifteen-for-one Reverse Stock Split. See Note 7 - Equity.
Awards of unvested restricted stock and restricted stock units representing approximately 101,030 shares and 9,816 stock options were antidilutive for the three months ended March 31, 2021. Awards of unvested restricted stock and restricted stock units representing approximately 62,200 shares and approximately 9,800 stock options, were antidilutive as a result of the net loss reported by the Company for the three months ended March 31, 2020. Accordingly, such shares and options were not included in the calculation of diluted weighted average shares outstanding forincome per share if the three months ended effect would be anti-dilutive.

March 31, 2021
Concentration of Credit Risk and 2020, respectivelyBusiness Risk

Substantially all of our revenues are derived from senior living communities we own and senior living communities that we manage. Senior living operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the effects of the COVID-19 pandemic, which has and may continue to adversely affect our business, financial condition and results of operations.
.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASBFinancial Accounting Standards Board (“FASB”) issued ASUAccounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. Current U.S. generally accepted accounting principles requireGAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. ASU 2016-13 replaces the current incurred loss methodology fornon-lease revenue credit losses and removes the thresholds that companies apply to measure credit losses on financial statements measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities with a methodology that reflects expected credit losses and requires consideration of a broader
11

range of reasonable and supportable information to form credit loss estimates. For smaller reporting companies, ASU 2016-13 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of ASU 2016-13this guidance will have on its consolidated financial statements and disclosures.

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

4. IMPAIRMENT OF LONG-LIVED ASSETS3. Property and Equipment, net
There were 0 impairmentsThe following is a summary of long-lived assets during the three months ended March 31, 2021.
During the first quarter of 2020, the Company determined that the modifications of certain of its Master Lease Agreements (see “Note 5- Dispositions and Other Significant Transactions”) and adverse impacts on the Company’s operating results resulting from the COVID-19 pandemic were indicators of potential impairment of its long-lived assets. As such, the Company evaluated its long-lived asset groups for impairment and identified communities with a carrying amount of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets.    
In March 2020, the Company entered into forbearance agreements with Ventas and Welltower, which, among other things, provided that the lease agreements covering the communities would be converted into property management agreements with the Company as manager on December 31, 2020 if the properties had not transitioned to a successor operator on or prior to such date (see “Note 5- Dispositions and Other Significant Transactions”). The Company’s leases with Ventas and Welltower were originally scheduled to mature during 2025 and 2026.  Due to the modification of the lease term and the expected impacts of the COVID-19 pandemic, the Company evaluated certain owned communities and all leased communities for impairment and tested the recoverability of these assets by comparing projected undiscounted cash flows associated with these assets to their respective historical carrying values.  For communities in which the historical carrying value was not recoverable, the Company compared the estimated fair value of the assets to their carrying amount and recorded an impairment charge for the excess of carrying amount over fair value.  For the operating lease right-of-use assets, fair value was estimated utilizing a discounted cash flow approach based on historical and projected cash flows and market data, including management fees and a market supported lease coverage ratio.  The fair values of theour property and equipment, net as of these communities, were primarily determined utilizingMarch 31, 2022 and December 31, 2021 (in thousands):
Asset LivesMarch 31,
2022		December 31,
2021
Land$47,598 $46,069 
Land improvements5 to 20 years19,305 19,146 
Buildings and building improvements10 to 40 years825,195 814,035 
Furniture and equipment5 to 10 years54,247 52,602 
Automobiles5 to 7 years2,679 2,662 
Assets under financing leases and leasehold improvements (1)
 2,287 2,276 
Construction in progress 1,905 392 
Total property and equipment, net953,216 937,182 
Less accumulated depreciation and amortization(325,372)(315,983)
Total property and equipment, net$627,844 $621,199 
__________
(1) Leasehold improvements are amortized over the cost approach, which determines the current replacement costshorter of the property being appraised and then deducts for the loss in value caused by physical deterioration, functional obsolescence, and economic obsolescence the amount required to replaceuseful life of the asset as if newor the remaining lease term. Assets under financing leases and adjusts to reflect usage.  These fair value measurements are considered Level 3 measurements within the valuation hierarchy.  During the first quarterleasehold improvements include $0.3 million of 2020, the Company recorded non-cash impairment charges of $6.2 million and $29.8 million to operatingfinancing lease right-of-use assets, net of accumulated amortization, as of both March 31, 2022 and property and equipment, net, respectively.December 31, 2021.
On February 1, 2022, the Company completed the acquisition of 2 senior living communities located in Indiana for a combined purchase price of $12.3 million. The communities consist of a total of 157 independent living units. The acquisition price was funded with cash on hand.
1312

5. DISPOSITIONS AND OTHER SIGNIFICANT TRANSACTIONS
Disposition of Boca Raton, Florida Community
Effective January 15, 2020, the Company’s leased senior living community located in Boca Raton, Florida, transitioned to a new operator.  In conjunction with the transition, the Company paid the lessor, Healthpeak, a one-time $0.3 million termination payment as a prepayment against the remaining lease payments and was relieved of any additional obligation to Healthpeak with regard to that property and the lease was terminated as to this property.  The Company recorded an approximate $1.8 million gain on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2020.
Disposition of Merrillville, Indiana Community
Effective March 31, 2020, the Company sold 1 community located in Merrillville, Indiana for a total purchase price of $7.0 million and received approximately $6.9 million in cash proceeds after paying customary closing costs.  The community was unencumbered by any mortgage debt.  The Company recognized a loss of $7.4 million on the disposition, which is included in loss on disposition of assets, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2020.
Early Termination of Master Lease Agreements
As of December 31, 2020, the Company had exited all master lease agreements.
As of December 31, 2019, the Company leased 46 senior housing communities from certain real estate investment trusts (“REITs”).  The Company transitioned 1 community to a different operator effective January 15, 2020. During the first quarter of 2020, the Company entered into agreements that restructured or terminated certain of its Master Lease Agreements with each of its landlords as further described below. The Company was not subject to any Master Lease Agreements during the three months ended March 31, 2021.
Ventas
As of December 31, 2019, the Company leased 7 senior housing communities from Ventas.  The term of the Ventas lease agreement was scheduled to expire on September 30, 2025.  On March 10, 2020, the Company entered into an agreement with Ventas (as amended, the “Ventas Agreement”), providing for the early termination of its Master Lease Agreement with Ventas covering all seven communities. Pursuant to the Ventas Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Ventas rent of approximately $1.0 million per month for such communities as compared to approximately $1.3 million per month that would otherwise have been due and payable under the Master Lease Agreement.  In addition, the Ventas Agreement provided that the Company would not be required to comply with certain financial covenants of the Master Lease Agreement during the forbearance period, which terminated on December 31, 2020.  In conjunction with the Ventas Agreement, the Company released to Ventas $4.1 million in security deposits and $2.5 million in escrow deposits held by Ventas, and Ventas reduced the amounts and term of the Company’s lease payments, and effectively eliminated the Company’s lease termination obligation, which was $11.4 million at December 31, 2019.  The Master Lease Agreement terminated on December 31, 2020.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Ventas and modification of the lease term pursuant to the Ventas Agreement was determined to be a modification of the Master Lease Agreement.  As such, the Company reassessed the classification of the Master Lease Agreement with Ventas based on the modified terms and determined that the lease continued to be classified as an operating lease until the communities transitioned to a different operator or management agreement, at which time the lease would terminate. The modification resulted in a reduction to the lease termination obligation, lease liability and operating lease right-of-use asset recorded in theCompany's Consolidated Balance Sheets by approximately $11.4 million, $51.6 million, and $47.8 million, respectively, during the first quarter of 2020.  The Company recognized a net gain of approximately $8.4 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2020 and was primarily due to the impact of the change in lease term on certain of the right-of-use asset balances.  As a result of the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 4- Impairment of Long-Lived Assets.”
Under the terms of the Ventas Agreement, on December 31, 2020, Ventas elected to enter into a property management agreement with the Company as manager of the 7 properties for a management fee based on gross revenues of the
14

applicable community payable to the Company and other customary terms and conditions. As a result of these transactions, the Company had no remaining lease agreements with Ventas on January 1, 2021.
Welltower
As of December 31, 2019, the Company leased 24 senior housing communities from Welltower. The initial terms of the Welltower lease agreements were scheduled to expire on various dates from April 2025 through April 2026. On March 15, 2020, the Company entered into an agreement with Welltower (the “Welltower Agreement”), providing for the early termination of three Master Lease Agreements between it and Welltower covering all 24 communities.  Pursuant to the Welltower Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Welltower rent of approximately $2.2 million per month for such communities as compared to approximately $2.8 million per month that would otherwise have been due and payable under the Master Lease Agreements. In addition, the Welltower Agreement provided that the Company would not be required to comply with certain financial covenants of the Master Lease Agreements during the forbearance period, which terminated on December 31, 2020.  In conjunction with the Welltower Agreement, the Company agreed to release $6.5 million in letters of credit to Welltower, which were released subsequent to March 31, 2020. Upon termination, Welltower elected to enter into a property management agreement with the Company as manager or to transition the properties to a new operator.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Welltower under the then- existing Master Lease Agreements with Welltower and modification to the lease term pursuant to the Welltower Agreement was determined to be a modification of the Master Lease Agreements.  As such, the Company reassessed the classification of the Master Lease Agreements based on the modified terms and determined that the each of the leases continued to be classified as an operating lease until the applicable communities transitioned to a different operator or management agreement, at which time such lease would terminate.  The modification resulted in a reduction to the lease liability and operating lease right-of-use asset recorded in theCompany'sConsolidatedBalanceSheets byapproximately $129.9 million, and $121.9 million, respectively,during the first quarter of 2020.  The Companyrecognized a gain ofapproximately $8.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2020.  As a result of the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 4- Impairment of Long-Lived Assets.”
Under the terms of the Welltower Agreement, on December 31, 2020, Welltower elected to enter into a property management agreement with the Company as manager of the remaining properties for a management fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions for the properties that had not transitioned to other operators. At March 31, 2021, the Company managed 4 communities on behalf of Welltower.
Healthpeak
On March 1, 2020, the Company entered into an agreement with Healthpeak (the "Healthpeak Agreement”), effective February 1, 2020, providing for the early termination of one of its Master Lease Agreements with Healthpeak, which was previously scheduled to mature in April 2026. Such Master Lease Agreement terminated and was converted into a Management Agreement under a RIDEA structure pursuant to which the Company agreed to manage the 6 communities that were subject to the Master Lease Agreement until such communities are sold by Healthpeak.  Pursuant to the Management Agreement, the Company will receive a management fee equal to 5% of gross revenues realized at the applicable senior living communities plus reimbursement for its direct costs and expenses related to such communities.  In conjunction with the Healthpeak Agreement, the Company released to Healthpeak approximately $2.6 million of security deposits held by Healthpeak. The Company recognized a net loss of $7.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2020. In January 2021, Healthpeak sold the 6 properties and terminated all agreements related to those 6 properties.
In November 2020, upon the expiration of the other Master Lease Agreement with Healthpeak, the Company entered into a short-term excess cash flow lease pursuant to which the Company agreed to manage the 7 communities that were then subject to the Master Lease Agreement until the earlier of such time that the communities are sold by Healthpeak or until April 30, 2021. Pursuant to such agreement, the Company began paying Healthpeak monthly rent of any excess cash flow of the communities and earning a management fee for management of the 7 communities. At March 31, 2021, the Company managed 4 properties on behalf of Healthpeak. Subsequent to quarter end, Healthpeak sold 1 property and terminated all agreements related to that property.
15

In April 2021, subsequent to quarter end, the Company executed an agreement with Healthpeak to amend and extend its existing management agreement for the remaining 3 properties managed by the Company on behalf of Healthpeak. The Company, in addition to a management fee based on a percentage of revenue, will receive a monthly flat fee for three months with such fee increasing thereafter until such properties are sold or December 31, 2021, whichever is earlier. See "Note-12 Subsequent Events."
6.4. Notes Payable
Notes payable consists of the following (in thousands):
March 31,December 31,
20212020
Fixed mortgage notes payable$743,008 $787,029 
Variable mortgage notes122,742 122,742 
Notes payable - insurance2,156 3,887 
Notes payable - other2,121 2,121 
$870,027 $915,779 
Deferred financing costs, net6,258 6,886 
Total long-term debt$863,769 $908,893 
Less current portion261,346 304,164 
Total long-term debt, less current portion$602,423 $604,729 
Maturity DatesMarch 31,
2022		December 31,
2021
Fixed mortgage notes payable2022 to 2045$543,593 $592,997 
Variable mortgage notes payable2026 to 2029130,127 88,711 
Notes payable - insurance20221,532 3,483 
Notes payable - other20232,121 2,121 
Total notes payable$677,373 $687,312 
Less: deferred financing costs, net6,352 4,201 
Total notes payable, net$671,021 $683,111 
Less: current portion43,851 69,769 
Total long-term notes payable, less current portion$627,170 $613,342 
Deferred Financing Charges
AtThe following schedule summarizing our notes payable as of March 31, 20212022 (in thousands):
Principal payments due in:
2022$42,391 
202314,452 
2024152,155 
2025194,285 
202675,919 
Thereafter198,171 
Total notes payable, excluding deferred financing costs$677,373 

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

As of March 31, 2020,2022, we had property and equipment with a net carrying value of $603.8 million that is secured by outstanding notes payable.
2022 Mortgage Refinance
In March 2022, the Company had grosscompleted the refinancing of certain existing mortgage debt (“Refinance Facility”) for 10 of its communities. The Refinance Facility includes an initial term loan of $80.0 million. In addition, $10.0 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility based upon achieving certain financial covenants maintained over a certain time period As defined and required in the Limited Payment Guaranty, the Company is required to maintain certain covenants including maintaining a Tangible Net Worth of $150 million and Liquid Assets of at least $13 million (inclusive of a $1.5 million debt service reserve fund provided by the Company at the closing of the Refinance Facility).
The Refinance Facility also requires the financial performance of the 10 communities to achieve certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first measurement date as of June 30, 2022 and quarterly measurement dates thereafter. We can provide no assurance that any future financial covenants will be met. The Loan Agreement requires the establishment of a debt service reserve fund with a defined balance of $1.5 million (included in Liquid Assets) that may be released based upon terms described in the Loan Agreement. The reserve fund is included in our “other assets.”
The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of the Refinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the lender’s requirements.
13

The Company incurred costs related to the Refinance Facility of $2.1 million that are included in deferred loanfinancing costs of approximately $13.4 million and $14.0 million, respectively. Accumulated amortization was approximately $7.1 million at March 31, 2021 and December2022.
The financing transaction generated a loss on refinancing of notes payable of $0.6 million which is included in loss on extinguishment of debt for the three months ended March 31, 2020.

2022.
Transactions Involving Certain Fannie Mae Loans

The CARESCoronavirus Aid, Relief and Economic Security (“CARES”) Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. On May 7,During 2020, the Company entered into several loan forbearance agreements with Berkadia Commercial Mortgage LLC, as servicer of 23 of its Fannie Mae loans covering 20 properties.  On May 9, 2020, the Company entered into a forbearance agreement with Wells Fargo Bank (“Wells Fargo”), as servicer of 1 Fannie Mae loan covering 1 property.  OnMay 20, 2020, the Company entered into forbearance agreements with KeyBank, as servicer of 3 Fannie Mae loans covering 2 properties. The forbearance agreements allowedthe Company to withhold the loan payments due under the loan agreements for the months of April, May and JuneFederal National Mortgage Association (“Fannie Mae”). In July 2020, and Fannie Maetagreed toforbear in exercising its rights and remedies during such period. During this three-month loan payment forbearance, the Company agreedto pay to Fannie Mae monthly net operating income, if any, as defined in theforbearanceagreement, for the properties receiving forbearance.  
On July 8, 2020, the Company entered into forbearance extension agreements with Fannie Mae, which provided for a one month extension of the forbearance agreements between it and Fannie Mae covering 23 properties. The forbearance extension agreements extended the forbearance period until July 31, 2020, and Fannie Mae agreed to forbear in exercising its rights and remedies during such period.  By July 31, 2020, the Company was required to repay to Fannie Mae the deferred payments, less payments made during the forbearance period.  
On July 31, 2020, the Company made required payments to Fannie Mae totaling $0.6 million, which included the deferred payments, less payments made during the forbearance period, for 5 properties with forbearance agreements.  Thehe Company elected not to pay $3.9$3.8 million on the loans for the remaining 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 
As a result of the default, Fannie Mae filed a motion with the United States District Court requesting that a receiver be appointed over the 18 properties, which was approved by the court.  The Company agreed to continue to manage the 18 communities, subject to earning a management fee, until management of the community is transitioned to a successor operator
16

or legal ownership of the properties is transferred to Fannie Mae.  Management fees earned from the properties are recognized as revenue when earned.  In conjunction with the receivership order, the Company must obtain approval from the receiver for all payments, but will receive reimbursements from Fannie Mae for reasonable operating expenses incurred on behalf of any of the 18 communities under the receivership order. As a result of the events of default and receivership order, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded it was no longer entitled to receive any existing accounts receivable or revenue related to the properties, all amounts held in escrow by Fannie Mae had beenwere forfeited, and that the Company no longer has control of the properties in accordance ASC 610-20.  
with GAAP. Accordingly, the Company derecognized the net carrying value of the properties and related assets from the financial statements and recorded a loss from the forbearance. The Company continued to recognize the related debt and liabilities until the debts are formally released. When these debts are formally released, the net carrying value of the debts is derecognized and a gain on extinguishment of debt is recognized. During the three months ended March 31, 2021, the CompanyFannie Mae completed the transfertransition of legal ownership of 3 of the communities back to Fannie Mae. As a result of the legal extinguishment of the debtCompany's properties and liabilities of such communities, the Company recognizedrecorded a $47.0 million gain on extinguishment of debt inthis debt.

As of March 31, 2022, 2 properties remain for which the Company's Consolidated Statement of Operationslegal ownership has not been transferred back to Fannie Mae. At both March 31, 2022 and Comprehensive Income (Loss). At MarchDecember 31, 2021, the Company included $176.1$32.0 million in outstanding debt in current portion of notes payable, net of deferred loan costs,financing costs. As March 31, 2022 and $8.0 million ofDecember 31, 2021, accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to the remaining properties. At2 properties was $3.4 million and $2.7 million, respectively. As of March 31, 2022 and December 31, 2021, the Company continued todid not manage 5these properties (or any properties) on behalf of Fannie Mae, pursuant to a management agreement.
Letters of Credit
The Company issued standby letters of credit with Wells Fargo, totaling approximately $1.0 million,Mae. Except for the benefit of Calpine Corporation in connectionnon-compliance with certain of its energy provider agreements which remained outstanding at March 31, 2021.
The Company previously issued standby letters of credit with Wells Fargo, totaling approximately $3.4 million,Fannie Mae mortgages for the benefit of Hartford Financial Services in connection with the administration of workers’ compensation, which remained outstanding at March 31, 2021.  
The Company previously issued standby letters of credit with JP Morgan Chase Bank (“Chase”), totaling approximately $6.5 million, for the benefit of Welltower, in connection with certain leases between Welltower and the Company.  The letters of credit remained outstanding as of March 31, 2020, but were subsequently surrendered2 remaining properties expected to Welltower in conjunction with the Welltower Agreement during the quarter ended June 30, 2020.
The Company previously issued standby letters of credit with Chase, totaling approximately $2.9 million, for the benefit of Healthpeak in connection with certain leases between Healthpeak and the Company.  The letters of credit were releasedtransition back to the Company during the quarter ended March 31, 2020 and were included in cash and cash equivalents on the Company’s Consolidated Balance Sheets.
Debt Covenant Compliance
The Company was not in compliance with a certain financial covenant of its loan agreement with Fifth Third Bank, covering 2 properties, as of March 31, 2021, December 31, 2020 and September 30, 2020, in which a minimum debt service coverage ratio must be maintained, which constitutes a default. In May 2020, subsequent to quarter end, Fifth Third Bank issued a notice of default. In the event that this loan for $31.5 million is accelerated, the loan has 25% recourse to Capital Senior Living Corporation. The Company is in active discussions with Fifth Third Bank to resolve this noncompliance, but cannot give any assurance that a mutually agreed resolution will be reached. The Company included $31.5 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at March 31, 2021.  
The Company was not in compliance with a certain financial covenant of its loan agreement with BBVA covering three properties as of December 31, 2020, in which a minimum debt service coverage ratio must be maintained, which constitutes a default. As a result of the default, the loan is callable. In the event that this loan for $41.0 million is accelerated, the loan has full recourse to Capital Senior Living Corporation. The Company is in active discussions with BBVA to resolve this noncompliance, but cannot give any assurance that a mutually agreed resolution will be reached. The Company included $41.0 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at March 31, 2021.

ExceptFannie Mae, as noted above, the Company was in compliance with all other aspects of its outstanding indebtedness at March 31, 2021.2022.
5. Redeemable Preferred Stock

In 2021, the Company issued 41,250 shares of Series A Preferred Stock. The Series A Preferred Stock is convertible outside of the Company's control and in accordance with GAAP is classified as mezzanine equity, outside the stockholders’ deficit section, on our condensed consolidated balance sheets. The Series A Preferred Stock was initially recorded at fair value upon issuance in 2021, net of issuance costs. The holders of Series A Preferred Stock are entitled to vote with the holders of common stock on all matters submitted to a vote of stockholders of the Company. It is deemed probable that the Series A Preferred Stock could be redeemed for cash, and as such the Series A Preferred Stock is required to be remeasured and adjusted to its maximum redemption value at the end of each reporting period. However, to the extent that the maximum redemption value of the Series A Preferred Stock does not exceed fair value of the shares at the date of issuance, the shares are not adjusted below the fair value at the date of issuance. As of March 31, 2022 and December 31, 2021, the Series A Preferred Stock is carried at the maximum redemption value. The Series A Preferred Stock does not have a maturity date and therefore is considered as perpetual.
7. EQUITY
The Series A Preferred Stock has an 11% annual dividend calculated on the original investment of $41.3 million accrued quarterly in arrears and compounded. Dividends are guaranteed and may be paid in cash or in additional liquidation preference to the shares of Series A Preferred Stock at the discretion of the Company’s Board of Directors. On March 31, 2022, the Company declared a $1.1 million cash dividend on the Series A Preferred Stock which is included in accounts payable and accrued expense. The cash dividend was paid in April 2022.
1714

Reverse Stock Split
On December 9, 2020, the Company’s Board of Directors approved and effected a Reverse Stock Split of the Company’s common stock at a ratio of 15-for-1 (the "Reverse Stock Split"). The Reverse Stock Split reduced the number of issued and outstanding shares of common stock from approximately 31,268,943 shares to approximately 2,084,596 shares. The authorized number of shares of common stock was also proportionately reduced from 65,000,000 shares to 4,333,334 shares. All share amounts
6. Revenue
Revenue for the three months ended March 31, 2020 have been recast to give effect to the 15-for-1 Reverse Stock Split.
Treasury Stock
The Company accounts for treasury stock under the cost method2022 and includes treasury stock as a component of shareholders’ equity (deficit). All shares acquired by the Company have been purchased in open-market transactions. There were 0 repurchases2021 are comprised of the Company’s common stock during the three months ended March 31, 2021 or 2020. In conjunctionfollowing components (in thousands):
Three Months Ended March 31,
20222021
Housing and support services$49,438 $44,441 
Community fees453 411 
Ancillary services254 350 
Other operating revenue689 — 
Resident revenue50,834 45,202 
Management fees628 1,186 
Community reimbursement revenue7,022 15,260 
Total revenue$58,484 $61,648 
Ancillary services, community fees, management fees, and community reimbursement revenue represent revenue from contracts with the Reverse Stock Splitcustomers in December 2020, the Company retired all of the Treasury stock to available for issuance and recorded a reduction to additional paid in capital of $3.4 million.accordance with GAAP.
8. STOCK-BASED COMPENSATION
The Company recognizes compensation expense for share-based stock awards to certain employees and directors, including grants of employee stock options and awards of restricted stock, in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) based on their fair values.
On May 14, 2019, the Company’s stockholders approved the 2019 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation (the “2019 Plan”), which replaced the 2007 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation (as amended, the “2007 Plan”). The 2019 Plan provides for, among other things, the grant of restricted stock awards, restricted stock units and stock options to purchase shares of the Company’s common stock. The 2019 Plan authorizes the Company to issue up to 150,000 shares of common stock plus reserved shares not issued or subject to outstanding awards under the 2007 Plan, and the Company has reserved shares of common stock for future issuance pursuant to awards under the 2019 Plan. Effective March 26, 2019, the 2007 Plan was terminated and 0 additional awards will be granted under the 2007 Plan.
Stock Options
The Company may periodically grant stock options as a long-term retention tool that is intended to attract, retain and provide incentives for employees, officers and directors and to more closely align stockholder interests with those of our employees and directors. The Company’s stock options generally vest over a period of one to five years and the related expense is amortized on a straight-line basis over the vesting period. A summary of the Company’s stock option activity and related information for the three months ended March 31, 2021 is presented below:
Outstanding at
Beginning of
Period		GrantedExercisedCancelledOutstanding at
End of Period
Options9,816 0 0 0 9,816 
At March 31, 2021, the options outstanding had 0 intrinsic value, a weighted-average remaining contractual life of 7.75 years, and a weighted average exercise price of $111.90.  At March 31, 2021, there was approximately $0.1 million of total unrecognized compensation expense, which is expected to be recognized over a weighted average period of 0.75 years.  At March 31, 2021, 6,479 options were exercisable, and the remaining options were unvested.  There were 0 stock options granted during the three months ended March 31, 2021.
Restricted Stock
The Company periodically grants restricted stock awards and units to employees, officers, and directors in order to attract, retain, and provide incentives for such individuals and to more closely align stockholder and employee interests. For restricted stock awards and units without performance and market-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period, which is generally a period of three years, unless the award is subject to certain accelerated vesting requirements. Restricted stock awards are considered outstanding at the time of grant since the holders thereof are entitled to dividends, upon vesting, and voting rights. For restricted stock awards with performance and market-based vesting conditions, total compensation expense is recognized over the requisite service period
18

for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement.  Performance goals are evaluated periodically, and if such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed for performance-based awards.
The Company recognizes compensation expense of a restricted stock award over its respective vesting or performance period based on the fair value of the award on the grant date, net of actual forfeitures. A summary of the Company’s restricted stock awards activity and related information for the three months ended March 31, 2021 is presented below:
Outstanding at
Beginning of
Period		GrantedVestedCancelledOutstanding at
End of Period
Shares33,504 101,030 (3,881)(3,444)127,209 
The restricted stock outstanding at March 31, 2021 had an intrinsic value of approximately $4.9 million.  7. Stock-Based Compensation
During the three months ended March 31, 2021,2022, the Company awarded 101,030 shares ofgranted market-based restricted common stock to certain employees of the Company, of which 60,618awards. The shares were subject to performance vesting conditions. The average market valueissued in 3 tranches that vest if the Company’s stock price closes at or above an established threshold for each tranche for 90 consecutive trading days within five years of the common stock on the date of grant was $36.42 per share. These awards ofthe grant. Compensation expense related to market-based restricted stock vestawards is recognized over the requisite service period on a three-yearstraight-line basis. The requisite service period is a measure of the expected time to reach the respective vesting threshold and had an intrinsic valuewas estimated by utilizing a Monte Carlo simulation, considering only those stock price-paths in which the threshold was exceeded.
Grants of approximately $3.7 million on the date of grant.market-based restricted stock awards were as follows:
The Company recognized $0.2 million and $0.6 million in stock-based compensation expense
 Number of SharesWeighted Average Grant Date Fair Value Per ShareTotal Grant Date Fair Value (in thousands)
Three months ended March 31, 202230,039 $25.17 $756 
There was no other stock-compensation activity that occurred during the three months ended March 31, 20212022. The Company recognized $1.8 million and 2020, respectively, which is primarily associated with employees whose corresponding salaries and wages are included within general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss). Unrecognized$0.2 million in stock-based compensation expense was $4.3 million asfor the three months ended March 31, 2022 and March 31, 2021, respectively.
8. Commitments and Contingencies
As of March 31, 2021. If all awards granted are earned, the Company expects this expense2022, we had contractual commitments of $5.8 million related to future renovations and technology enhancements to our communities. We expect these amounts to be recognized over a one to three-year period for performance stock awards and a one to three-year period for nonperformance-based stock awards, options and units.substantially expended during 2022.
9. CONTINGENCIES
The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to deductibles, normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material detrimental impact on the consolidated financial statements of the Company.
Comp
any.
10. FAIR VALUE MEASUREMENTS9. Related Party Transactions
Financial Instruments
The carrying amounts and fair valuesAs of financial instruments at March 31, 20212022, affiliates of Conversant Capital LLC owned approximately 57% of our outstanding shares of common stock (inclusive of common stock issuable upon conversion of outstanding Series A Preferred Stock and Decemberoutstanding warrants). Series A Preferred Stock dividend declared, all recognized to additional paid in capital was $1.1 million for the three months ended March 31, 2020, are as follows (in thousands):
March 31, 2021December 31, 2020
Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Cash and cash equivalents$16,766 $16,766 $17,885 $17,885 
Restricted cash$4,982 $4,982 $4,982 $4,982 
Notes payable, excluding deferred loan costs$870,027 $775,431 $915,779 $846,134 
The following methods and assumptions2022. Dividends of $0.7 million were used in estimatingpaid on the Company’s fair value disclosuresSeries A Preferred Stock during the three months ended March 31, 2022. There was no corresponding amounts for financial instruments:
Cash and cash equivalents and Restricted cash: The carrying amounts reported in the Company’s Consolidated Balance Sheets for cash and cash equivalents and restricted cash approximate fair value, which represent level 1 inputs as defined in the accounting standards codification.three months ended March 31, 2021.
1915

10. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Notes
The Company uses interest rate cap arrangements with financial institutions to manage exposure to interest rate changes for loans that utilize floating interest rates. As of March 31, 2022, we had an interest rate cap with an aggregate notional value of $50.3 million, a strike rate of 4.0%. The interest rate cap terminates in 2024. The fair value and net book value related to this cap were insignificant.
Financial Instruments Not Reported at Fair Value
For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows at March 31, 2022 and December 31, 2021 (in thousands):
March 31, 2022December 31, 2021
Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Notes payable, excluding deferred financing costs$677,373 $660,524 $687,312 $636,836 
We believe the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable excluding deferred loan costs: and accrued liabilities approximate fair value due to their short-term nature.
The fair value of notes payable, excluding deferred loanfinancing costs, is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements, which represent levelLevel 2 inputs as defined in the accounting standards codification.
Operating Lease Right-Of-Use Assets
The Company recorded non-cash impairment charges to operating lease right-of-use assets, net of $6.2 million for the three months ended March 31, 2020.  The fair value of the impaired assets was $14.6 million and Liabilities Measured at March 31, 2020. The fair values of the right-of-use assets were estimated, using level 3 inputs as defined in the accounting standards codification, utilizingFair Value on a discounted cash flow approach based upon historical and projected cash flows and market data, including management fees and a market supported lease coverage ratio of 1.1. The range of discount rates utilized was 7.7% to 10.3%, depending upon the property type and geographical location of the respective community.  There were 0 non-cash impairment charges to operating lease right-of-use assets during the three months ended March 31, 2021. See “Note 4- Impairment of Long-Lived Assets.”
Property and Equipment, NetNonrecurring Basis
During the three monthsyear ended MarchDecember, 31, 2020,2021, the Company recorded non-cash impairment charges of $29.8$6.5 million to property and equipment, net. The fair value of the impaired assets was $10.5$14.0 million at MarchDecember 31, 2020.2021. The fair value of the property and equipment, net of these communitiesthis community was primarily determined using the costutilizing an income capitalization approach which determines the current replacement costconsidering stabilized facility operating income and market capitalization rates of the property being appraised and then deducts8.25%. There are no impairment losses for the loss in value caused by physical deterioration, functional obsolescence and economic obsolescence the amount required to replace the asset as if new and adjusts to reflect usage.  This fair value measurement is considered a Level 3 measurement within the valuation hierarchy. There were 0 non-cash impairment charges to property and equipment, net during the three monthsyear ended March 31, 2021. See “Note 4- Impairment of Long-Lived Assets.”
The estimated fair value of these assets and liabilities could be affected by market changes and this effect could be material.
As of March 31, 2021, there was a wide range of possible outcomes as a result of the COVID-19 pandemic, as there was a high degree of uncertainty about its ultimate impacts. Management’s estimates of the impacts of the pandemic are highly dependent on variables that are difficult to predict, including the duration, severity, and geographic concentrations of the pandemic and any resurgence of the disease, the duration and degree to which visitors are restricted from the Company's communities, the effect of the pandemic on the demand for senior living communities, the degree to which the Company may receive government financial relief and the timing thereof, and the duration and costs of the Company’s response efforts. Future events may indicate differences from management's current judgments and estimates which could, in turn, result in future impairments.2022.
11. LEASESSubsequent Event
As of December 31, 2020,In April 2022, the Company had exited all master lease agreements underaccepted $9.1 million of cash for grants from the Provider Relief Fund’s Phase 4 General Distribution, which was expanded by the CARES Act to provide grants or other funding mechanisms to eligible healthcare providers for healthcare-related expenses or lost revenues attributable to COVID-19. The CARES Act Phase 4 funds are grants that do not have to be repaid provided the Company was previously responsible for all operating costs, maintenancesatisfies the terms and repairs, insurance and property taxes. At March 31, 2020,conditions of the Company leased 39 senior housing communities from certain real estate investment trusts (“REITs”). Under these facility lease agreements, the Company was previously responsible for all operating costs, maintenance and repairs, insurance and property taxes.CARES Act.
A summary of operating and financing lease expense (including the respective presentation on the consolidated statement of operations and comprehensive income (loss)) and cash flows from leasing transactions is as follows (in thousands):
Three Months Ended March 31,
Operating Leases20212020
Facility lease expense$0 $10,787 
General and administrative expenses38 $200 
Operating expenses, including variable lease expense of $0 and $1,513 in 2021 and 2020, respectively34 $1,605 
Total operating lease costs$72 $12,592 
Operating lease expense adjustment264 $3,312 
Operating cash flows from operating leases$336 $15,904 







2016

Three Months Ended March 31,
Financing Leases20212020
Depreciation and amortization$21 $36 
Interest expense: financing lease obligations4 8 
Total financing lease costs25 44 
Operating cash flows from financing leases$4 $36 
Financing cash flows from financing leases21 8 
Total cash flows from financing leases$25 $44 
Future minimum lease payments associated with operating lease liabilities recognized on the Company’s Consolidated Balance Sheets as of March 31, 2021 are as follows (in thousands):
Year Ending December 31,Operating LeasesFinancing
Leases
Remainder 2021$157 $66 
202269 87 
202344 82 
202431 3 
20252 0 
Thereafter0 0 
Total$303 $238 
Less: Amount representing interest (present value discount)(19)(20)
Present value of lease liabilities$284 $218 
Less: Current portion of lease liabilities(169)(76)
Lease liabilities, net of current portion$115 $142 


21

12. SUBSEQUENT EVENTS
Fifth Third Bank Notice of Default
On May 3, 2021, the Company received notice of default from Fifth Third Bank.
Transactions Involving Certain Fannie Mae Loans
In the second quarter of 2021, subsequent to quarter end, Fannie Mae completed the transfer of ownership on 3 properties. As discussed in “Note 6- Notes Payable,” the transfer of legal ownership of these properties was probable at December 31, 2020 and accordingly, the Company disposed of all assets related to these property in the year ended December 31, 2020. As a result of the change in legal ownership, the Company will de-recognize all of the debt and related liabilities for these properties in the second quarter of fiscal 2021.
Management Agreement with Healthpeak
In April 2021, subsequent to quarter end, the Company executed an agreement with Healthpeak to amend and extend its existing management agreement for the remaining 3 properties managed by the Company on behalf of Healthpeak. The Company will receive a management fee which includes a percentage of revenue and a monthly flat fee with escalating flat fee amounts after three months until the properties are sold or December 31, 2021, whichever is earlier.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain information containedThis Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our business and results of operations. This MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This report, constitutes “Forward-Looking Statements” withinincluding the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “would,” “intend,” “could,” “believe,” “expect,” “anticipate,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Examples offollowing MD&A, contains forward-looking statements include, without limitation, those relating toregarding future events or trends that should be read in conjunction with the Company’s future business prospects and strategies, financial results, working capital, liquidity, capital needs and expenditures, interest costs, insurance availability and contingent liabilities. Forward-looking statements are subject to certain risks, and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, but not limited to, the impact of COVID-19, the Company's near term debt maturities, and other conditionsfactors described under “Cautionary Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q and events described herein on the Company's ability to continue as a going concern; the Company’s ability to generate sufficient cash flows from operations, additional proceeds from debt refinancings, and proceeds from the sale of assets to satisfy its short and long-term debt obligations and to fund the Company’s capital improvement projects to expand, redevelop, and/or reposition its senior living communities; the Company’s ability to obtain additional capital on terms acceptable to it; the Company’s ability to extend or refinance its existing debt as such debt matures; the Company’s compliance with its debt agreements, including certain financial covenants and the terms and conditions of its recent forbearance agreements, and the risk of cross-default in the event such non-compliance occurs; the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all; the risk of oversupply and increased competition in the markets which the Company operates; the risks related to an epidemic, pandemic or other health crisis, such as the recent outbreak of COVID-19; the risk of increased competition for skilled workers due to wage pressure and changes in regulatory requirements; the departure of the Company’s key officers and personnel; the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes; the risks associated with a decline in economic conditions generally; the adequacy and continued availability of the Company’s insurance policies and the Company’s ability to recover any losses it sustains under such policies; changes in accounting principles and interpretations; and the other risks and factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including those set forth under “Item 1A. Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 filed with the SEC on April 15, 2022. Actual results may differ materially from those projected in such statements as a result of such risks, certainties and this Quarterlyother factors.
Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-Q. On10-K for the fiscal year ended December 9, 2020, the Company’s Board of Directors approved a reverse stock split of the Company’s common stock at a ratio of 1-for-15, which became effective on December 11, 2020. Accordingly, all of the Company’s common share, equity award and per-share amounts31, 2021. There have been adjustedno significant changes to reflect such reverse stock split for all prior periods presented.our critical accounting policies since December 31, 2021.

Overview
The following discussion and analysis addresses (i) the Company’s results of operations for the three months ended March 31, 20212022 and 2020,2021, and (ii) liquidity and capital resources of the Company, and should be read in conjunction with the Company’s consolidated financial statements contained elsewhere in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
22

Company.
The Company is one of the leading owner-operators of senior housing communities in the United States. The Company’s operating strategy is to provide value to its senior living residents by providingoffering quality senior living services at reasonable prices, while achieving and sustaining a strong, competitive position within its geographically concentrated regions, as well as continuing to enhance the performance of its operations. The Company provides senior living services to the 75+ population, including independent living, assisted living, and memory care services at reasonable prices. Many of the Company’s communities offer a continuum of care to meet each resident’s needs as they change over time. This continuum of care, which integrates independent living, assisted living, and memory care which may be bridged by home care through independent home care agencies, sustains our residents’ autonomy and independence based on their physical and mental abilities.
As of March 31, 2021,2022, the Company operated 9176 senior housing communities in 2018 states with an aggregate capacity of approximately 10,0009,500 residents, including 6062 owned senior housing communities that the Company owned, 15 properties that were in the process of transitioning legal ownership to Fannie Mae, and 1614 communities that the Company managedwe manage on behalf of third parties.
COVID-19 Pandemic
The United States broadly continues to experience the pandemic caused by COVID-19, which has significantly disrupted the nation’s economy, the senior living industry and the Company’s business.
The COVID-19 pandemic caused a decline in the occupancy levels at the Company’s communities, which negatively impacted the Company’s revenues and operating results, that depend significantly on such occupancy levels. In an effort to protect its residents and employees and slow the spread of COVID-19 and in response to quarantines, shelter-in-place orders and other limitations imposed by federal, state and local governments, the Company had previously restricted or limited access to its communities, including limitations on in-person prospective resident tours and, in certain cases, new resident admissions. As a result,of March 31, 2022, all of the Company's senior living communities were open for new resident move-ins. Although vaccines are now widely available, we cannot predict the duration of the pandemic or its ongoing impact on our business. If the COVID-19 pandemic caused a decline inworsens, including the occupancy levels at the Company’s communities, which has negatively impacted the Company’s revenues and operating results, which depend significantly on such occupancy levels.  Reduced controllable move-out activity duringtransmission of highly contagious variants of the COVID-19 pandemicvirus, the Company may partially offset future adverse revenue impacts.have to impose or revert to restricted or limited access to its communities.
In addition, the outbreak ofThe COVID-19 pandemic has required the Company to incur significant additional operating costs and expenses in order to implement enhanced infection control protocols and otherwise care for its residents, including increased costs and expenses relating to supplies and personal protective equipment, testing of the Company’s residents and employees, labor and specialized disinfecting and cleaning services, which has increased the costs of caring for the residents and resulted in reduced occupancy at such communities. During the three months ended March 31, 20212022 and 2020,2021, the Company incurred $0.2 million and $1.0 million, and $0.1 million, respectively, in direct costs related to the COVID-19 pandemic.
As ofIn April 2021, subsequent to quarter-end, the Company completed the second and third round vaccine clinics at 100% of its communities, and COVID-19 positive cases have been reduced to nearly zero across our properties. Further leading indicators, such as leads and tours, continue to improve, which indicates that demand for senior housing and services is beginning to rebound.
In November 20202022 and January 2021, the Company accepted $8.1$9.1 million and $8.7 million of cash, forrespectively, through grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phase 2Phases 4 and 3 General Distribution, which was expanded by the CARES Act to provide grants or other funding mechanismsmechanism to eligible healthcare providers for healthcare related expenses
17

healthcare-related or lost revenues attributable to COVID-19. The $8.7 million Phase 3 Provider Relief Funds have beenwere recorded as other income in the three months ended March 31, 2021. The Phase 4 Provider Relief Funds will be recorded in the second quarter of 2022. The CARES Act Phase 23 and Phase 34 funds are grants that do not havehave to be repaid provided the Company satisfieswe satisfy the terms andand conditions of the CARES Act. In addition, the Company had received approximately $1.9 million in relief from state agencies in the year ended December 31, 2020 and has applied for additional federal and state funding.  
The Company has elected to utilize the CARES Act payroll tax deferral program to delay payment of a portion of its payroll taxes estimated to be incurred from April 2020 through December 2020. The Company repaid one-half of the deferral amount in December 2021 and the other half will become due on December 31, 2022. At March 31, 2021,2022, the Company had deferred $7.4$3.7 million in deferred payroll taxes, of which $3.7 million is included in accrued expenses and $3.7 million is included in other long-term liabilities in the Company’s Consolidated Balance Sheets.expenses.
CARES Act Provider Relief Funds are subject to the terms and conditions of the program, including stringent restrictions that funds may only be used to reimburse COVID-19 related expenses or lost revenue that are attributable to COVID-19 and have not been reimbursed from other sources or that other sources are not obligated to reimburse.While we intend to pursue additional funding that may become available, there can be no assurances that we will qualify for, or receive, any additional relief funds in the future.
We cannot, at this time, predict with reasonable certainty the impacts that the COVID-19 pandemic ultimately will have on our business, results of operations, cash flow, and liquidity, and our preparation and response efforts may delay or negatively impact our strategic initiatives, including plans for future growth. The ultimate impact of the COVID-19 pandemic will depend on many factors, many of which cannot be foreseen, including: (i) the duration, severity and geographic concentrations of the
23

COVID-19 pandemic and any resurgence, second waves or new strains of the disease; (ii) the impact of COVID-19 on the nation’s economy and debt and equity markets at large and the local economies in our markets; (iii) the development and availability of COVID-19 infection and antibody testing, therapeutic agents and vaccines, and the prioritization of such resources among businesses and demographic groups; (iv) governmental financial and regulatory relief efforts that may become available to businesses and individuals; (v) concerns over and the perceptions of the safety of senior living communities during and after the pandemic; (vi) changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand; (vii) the impact of COVID-19 on our residents’ and their families’ ability to afford our resident fees, including due to changes in unemployment rates, consumer confidence, and equity markets caused by the COVID-19 pandemic; (viii) changes in the acuity levels of our new residents; (ix) the disproportionate impact of the COVID-19 pandemic on seniors generally and those residing in our communities; (x) the duration and costs of our preparation and response efforts, including increased supplies, labor, litigation, and other expenses; (xi) the impact of the COVID-19 pandemic on our ability to (1) complete equity and debt financings, refinancing, or other transactions (including dispositions) or (2) generate sufficient cash flow to cover required interest payments and to satisfy financial and other covenants in our debt documents; (xii) increased regulatory requirements and enforcement actions resulting from the COVID-19 pandemic, including those that may limit our collection efforts for delinquent accounts; and (xiii) the frequency and magnitude of legal actions and liability claims that may arise due to the COVID-19 pandemic or our associated response efforts.
Going ConcernSignificant Financial and Management’s PlanOperational Highlights
Accounting Standards Codification (“ASC”) 205-40, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” requires an evaluation of whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. Initially, this evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt exists, management evaluates the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
In complying with the requirements under ASC 205-40 to complete an evaluation without considering mitigating factors, the Company considered several conditions or events including (1) uncertainty around the continued impact of the COVID-19 pandemic on the Company’s operations and financial results, (2) $72.5 million of debt maturing and $13.2 million of debt service payments due during the remainder of fiscal 2021, (3) recurring operating losses and projected operating losses for fiscal periods through May 2022, (4) the Company's working capital deficiency and (5) non-compliance with certain financial covenants of its loan agreements with Fifth Third Bank covering two properties at March 31, 2021 and December 31, 2020 and non-compliance with certain financial covenants of its loan agreements with BBVA covering three properties at December 31, 2020. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern for the 12-month period following the date its interim March 31, 2021 financial statements are issued.
The Company has implemented plans as discussed below, which includes strategic and cash-preservation initiatives designed to provide the Company with adequate liquidity to meet its obligations for at least the twelve-month period following the date its interim March 31, 2021 financial statements are issued. The Company’s primary sources of near- and medium-term liquidity are expected to be (1) cash from operations that will be used in operations, and (2) debt forbearance, refinancings or extensions to the extent available on acceptable terms.
Strategic and Cash Preservation Initiatives
The Company has taken or intends to take the following actions, among others, to improve its liquidity position and to address uncertainty about its ability to operate as a going concern:Operations
•In the first quarter of 2019, the Company implemented a three-year operational improvement plan which began to show improved operating results during 2020, prior to the onset of the COVID-19 pandemic, and is expected to continue to drive incremental profitability improvements.
•The Company is in active discussions with Fifth Third Bank and BBVA to resolve its noncompliance with financial covenants at March 31, 2021, December 31, 2020 and September 30, 2020, as applicable,Weighted average occupancy for debt totaling $72.5 million, included in current portion of notes payable, net of deferred loan costs on the Consolidated Balance Sheets. As a result of these defaults, subsequent to quarter end, Fifth Third Bank issued a notice of default letter, and both loans are callable. In the event that either of these loans are accelerated, these loans have either 25% recourse (in the case of the $31.5 million Fifth Third loan) or full recourse (in the case of the $41.0 million BBVA loan) to Capital Senior Living Corporation.
24

•The Company has implemented additional proactive spending reductions to improve liquidity, including reduced discretionary spending and monitoring capital spending.
•As of December 31, 2020, the Company has exited all master lease agreements in order to strengthen the Company's balance sheet and allow the Company to strategically invest in certain existing communities.
•In May 2020, the Company entered into short-term debt forbearance agreements with a number of its lenders. In October 2020, the Company entered into an additional short-term forbearance agreement with Protective Life Insurance Company.
•In November 2020, the Company closed on the sale of one senior housing community located in Canton, Ohio, for a total purchase price of $18.0 million and received approximately $6.4 million in net proceeds after retiring outstanding mortgage debt of $10.8 million and paying customary transaction and closing costs. At closing, in November 2020, the Company entered into a management agreement with the successor owner to manage the community, pursuant to which the Company receives a management fee based on the gross revenues of the property.
•In November 2020 and January 2021, the Company accepted $8.1 million and $8.7 million, respectively, of cash for grants from the Provider Relief Fund Phase 2 and 3 General Distribution, which was expanded by the CARES Act. The $8.7 million Phase 3 Provider Relief Funds have been recorded as other income in the three months ended March 31, 2021.2022 and 2021 for the 60 communities owned during both periods was 82.3% and 75.5%, respectively, reflecting continued occupancy recovery. The CARES Act Phase 2 and Phase 3 funds are grants that do not have to be repaid provided the Company satisfies the terms and conditions of the CARES Act. In addition, the Company had received approximately $1.9 million in relief from state agencies in the year ended December 31, 2020.
•The Company has elected to utilize the CARES Act payroll tax deferral program to delay payment of a portion of payroll taxes estimated to be incurred from April 2020 through December 2020.  At March 31, 2021, the Company had deferred $7.4 million in payroll taxes, of which $3.7 million is included in accrued expenses and $3.7 million is included in other long-term liabilities in the Company’s Consolidated Balance Sheets.
•In July 2020, the Company initiated a process that is intended to transfer the operations and ownership of 18 communities that are either underperforming or are in underperforming loan pools to Fannie Mae, the holder of nonrecourse debt on such communities. When legal ownership of the properties transfers to Fannie Mae and the liabilities relating to such communities are extinguished, the Company expects to recognize a gain related to the extinguishment in accordance with ASC 470, “Debt.” Inaverage monthly rental rate for the three months ended March 31, 2021, Fannie Mae completed the transition of legal ownership of three properties and the Company recorded a gain on extinguishment of debt of $47.0 million. At March 31, 2021, the Company included $176.1 million in outstanding debt in the current portion of notes payable, net of deferred loan costs, and $8.0 million of accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to these properties. 
•The Company is evaluating possible debt and capital options.
The Company’s plans are designed to provide the Company with adequate liquidity to meet its obligations for at least the 12-month period following the date its interim March 31, 2021 financial statements are issued; however, the remediation plan is dependent on conditions and matters that may be outside of the Company’s control or may not be available on terms acceptable to the Company, if at all, many of which have been made worse or more unpredictable2022 was higher by the COVID-19 pandemic. Accordingly, management could not conclude that it was probable that the plans will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.  If the Company is unable to successfully execute all of these initiatives or if the plan does not fully mitigate the Company’s liquidity challenges, the Company’s operating plans and resulting cash flows along with its cash and cash equivalents and other sources of liquidity may not be sufficient to fund operations for the 12-month period following the date the interim March 31, 2021 financial statements are issued.  
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date the financial statements are issued. As such, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. The United States broadly continues to experience the pandemic caused by COVID-19, which has significantly disrupted the nation’s economy, the senior living industry, and the Company’s business.

25

Significant Financial and Operational Highlights
Revenues for the first quarter of 2021 were down 57%320 basis points when compared to the first quarter of 2020 as the Company completed its termination of all underperforming leases by December 31, 2020, resulting in 39 fewer leased communities in the consolidated portfolio than compared with the prior comparable period. These reductions in revenues that were primarily driven by volume reductions from property dispositions also drove corresponding reductions in operating expenses.
During the first quarter of 2021, the Company completed the transition of the legal ownership of three of its communities to Fannie Mae, the holder of the non-recourse debt related to such properties, and recognized a gain on the extinguishment of debt and de-recognition of liabilities of those properties of $47.0 million.
During the first quarter of 2021, the Company accepted $8.7 million of cash under the CARES Act Phase 3 Provider Relief funds which have been recorded as other income in the three months ended March 31, 2021.
Early Termination of Master Lease Agreements
As of December 31, 2020, the Company had exited all master lease agreements.
As of December 31, 2019, the Company leased 46 senior housing communities from certain real estate investment trusts (“REITs”).  The Company transitioned one community to a different operator effective January 15, 2020. During the first quarter of 2020, the Company entered into agreements that restructured or terminated certain of its Master Lease Agreements with each of its landlords as further described below. The Company was not subject to any Master Lease Agreements during the three months ended March 31, 2021.
Ventas
As of December 31, 2019,2022, the Company leased sevencontinued to be impacted by the senior housingliving industry's workforce challenges related to limited staff availability, which required the use of overtime, shift bonuses and contract labor to properly support our senior living communities from Ventas.and residents.

Acquisition of Indiana Communities
On February 1, 2022, the Company completed the acquisition of two senior living communities located in Indiana for a combined purchase price of $12.3 million. The communities consist of a total of 157 independent living units. The acquisition price was funded with cash on hand.
2022 Mortgage Refinance
In March 2022, the Company completed the refinancing of certain existing mortgage debt (“Refinance Facility”) for ten of its communities. The Refinance Facility includes an initial term loan of $80.0 million. In addition, $10.0 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility if the Company achieves certain financial covenants maintained over a certain time period. As defined and required in the Limited Payment Guaranty, The Company is required to maintain certain covenants including maintaining Tangible Net Worth of $150 million and Liquid Assets of at least $13 million (inclusive of a $1.5 million debt service reserve fund provided by The Company at the closing of the Refinance Facility).
The Refinance Facility carries an initial interest rate of one-month SOFR plus 3.50%, subject to a SOFR floor of 0.25% and a lower margin spread of 3.25% or 3.00% if the Company achieves and maintains certain financial covenants. The Refinance Facility also requires the financial performance of the ten communities to achieve certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first measurement date as of June 30, 2022 and quarterly measurement dates thereafter. We can provide no assurance that future financial covenants will be met. The Loan Agreement requires the establishment of a debt service reserve fund with a defined balance of $1.5 million (included in Liquid Assets) that may be released based upon terms described in the Loan Agreement. This reserve fund is included in our “other assets.”
The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of the Ventas lease agreement was scheduled to expire on September 30, 2025.  OnRefinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the lender’ requirement.
18

Results of Operations
Three months ended March 10, 2020, the Company entered into an agreement with Ventas (as amended, the “Ventas Agreement”), providing for the early termination of its Master Lease Agreement with Ventas covering all seven communities. Pursuant to the Ventas Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Ventas rent of approximately $1.0 million per month for such communities2022 as compared to approximately $1.3 million per month that would otherwise have been due and payable under the Master Lease Agreement.  In addition, the Ventas Agreement provided that the Company would not be required to comply with certain financial covenants of the Master Lease Agreement during the forbearance period, which terminated on Decemberthree months ended March 31, 2020.  In conjunction with the Ventas Agreement, the Company released to Ventas $4.1 million in security deposits and $2.5 million in escrow deposits held by Ventas, and Ventas reduced the amounts and term of the Company’s lease payments, and effectively eliminated the Company’s lease termination obligation, which was $11.4 million at December 31, 2019.  The Master Lease Agreement terminated on December 31, 2020.2021
Revenues
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Ventas and modification of the lease term pursuant to the Ventas Agreement was determined to be a modification of the Master Lease Agreement.  As such, the Company reassessed the classification of the Master Lease Agreement with Ventas based on the modified terms and determined that the lease continued to be classified as an operating lease until the communities transitioned to a different operator or management agreement, at which time the lease would terminate. The modification resulted in a reduction to the lease termination obligation, lease liability and operating lease right-of-use asset recorded in theCompany's Consolidated Balance Sheets by approximately $11.4 million, $51.6 million, and $47.8 million, respectively, during the first quarter of 2020.  The Company recognized a net gain of approximately $8.4 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss)Resident revenue for the three months ended March 31, 2020 and2022, was primarily due to the impact of the change in lease term on certain of the right-of-use asset balances.  As a result of the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarter of 2020.  See “Note 4- Impairment of Long-Lived Assets.”
Under the terms of the Ventas Agreement, on December 31, 2020, Ventas elected to enter into a property management agreement with the Company as manager of the seven properties for a management fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions. As a result of these transactions, the Company had no remaining lease agreements with Ventas on January 1, 2021.

26

Welltower
As of December 31, 2019, the Company leased 24 senior housing communities from Welltower. The initial terms of the Welltower lease agreements were scheduled to expire on various dates from April 2025 through April 2026. On March 15, 2020, the Company entered into an agreement with Welltower (the “Welltower Agreement”), providing for the early termination of three Master Lease Agreements between it and Welltower covering all 24 communities.  Pursuant to the Welltower Agreement, among other things, from February 1, 2020 through December 31, 2020, the Company agreed to pay Welltower rent of approximately $2.2$50.8 million per month for such communities as compared to approximately $2.8$45.2 million per month that would otherwise have been due and payable under the Master Lease Agreements. In addition, the Welltower Agreement provided that the Company would not be required to comply with certain financial covenants of the Master Lease Agreements during the forbearance period, which terminated on December 31, 2020. In conjunction with the Welltower Agreement, the Company agreed to release $6.5 million in letters of credit to Welltower, which were released subsequent to March 31, 2020. Upon termination, Welltower elected to enter into a property management agreement with the Company as manager or to transition the properties to a new operator.
In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to Welltower under the then- existing Master Lease Agreements with Welltower and modification to the lease term pursuant to the Welltower Agreement was determined to be a modification of the Master Lease Agreements.  As such, the Company reassessed the classification of the Master Lease Agreements based on the modified terms and determined that the each of the leases continued to be classified as an operating lease until the applicable communities transitioned to a different operator or management agreement, at which time such lease would terminate.  The modification resulted in a reduction to the lease liability and operating lease right-of-use asset recorded in theCompany'sConsolidatedBalanceSheets byapproximately $129.9 million, and $121.9 million, respectively,during the first quarter of 2020.  The Companyrecognized a gain ofapproximately $8.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2020. As a result2021,an increase of $5.6 million, or 12%. The increase in revenue was primarily due to increased occupancy, increased average rent rates and the lease modification, the Company assessed the operating lease right-of-use assets for impairment during the first quarteracquisition of 2020.  See “Note 4- Impairment of Long-Lived Assets.”two new communities in early 2022.
Under the terms of the Welltower Agreement, on December 31, 2020, Welltower elected to enter into a property management agreement with the Company as manager of certain properties for a managementManagement fee based on gross revenues of the applicable community payable to the Company and other customary terms and conditions for the properties that had not transitioned to other operators. At March 31, 2021, the Company managed four communities on behalf of Welltower.
Healthpeak
On March 1, 2020, the Company entered into an agreement with Healthpeak (the "Healthpeak Agreement”), effective February 1, 2020, providing for the early termination of one of its Master Lease Agreements with Healthpeak, which was previously scheduled to mature in April 2026. Such Master Lease Agreement terminated and was converted into a Management Agreement under a RIDEA structure pursuant to which the Company agreed to manage the six communities that were subject to the Master Lease Agreement until such communities are sold by Healthpeak.  Pursuant to the Management Agreement, the Company receives a management fee equal of gross revenues realized at the applicable senior living communities plus reimbursement for its direct costs and expenses related to such communities.  In conjunction with the Healthpeak Agreement, the Company released to Healthpeak approximately $2.6 million of security deposits held by Healthpeak. The Company recognized a net loss of $7.0 million on the transaction, which is included in gain on facility lease modification and termination, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss)revenue for the three months ended March 31, 2020. In January 2021, Healthpeak sold the six properties and terminated all agreements related to those six properties.
In November 2020, upon the expiration of the other Master Lease Agreement with Healthpeak, the Company entered into a short-term excess cash flow lease pursuant to which the Company agreed to manage the seven communities that were then subject2022, decreased by $0.6 million as compared to the Master Lease Agreement until the earlier of such time that the communities are sold by Healthpeak or until April 30, 2021. Pursuant to such agreement, the Company began paying Healthpeak monthly rent of any excess cash flow of the communities and earning a management fee for management of the seven communities. Atthree months ended March 31, 2021, the Company managed four properties on behalfprimarily as a result of Healthpeak. Subsequent to quarter end, Healthpeak sold one property and terminated all agreements related to that property.managing fewer communities in 2022.
In April 2021, subsequent to quarter end, the Company executed an agreement with Healthpeak to amend and extend its existing management agreementCommunity reimbursement revenue for the remaining three properties managed by the Company on behalf of Healthpeak. The Company, in addition to a management fee based on a percentage of revenue, will receive a monthly flat fee for three months with such fee increasing thereafter until such properties are sold or Decemberended March 31, 2021, whichever is earlier.
27

Website
The Company’s Internet website, www.capitalsenior.com, contains an Investor Relations section, which provides links2022, was $7.0 million as compared to the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and Section 16 filings and any amendments to those reports and filings. These reports and filings are available free of charge through the Company’s Internet website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
Results of Operations
The following table sets forth$15.3 million for the periods indicated selected Consolidated Statements of Operations and Comprehensive Income (Loss) data in thousands of dollars and expressed as a percentage of total revenues.
Three months ended March 31,
20212020
$%$%
Revenues:
Resident revenue$45,202 73.3 $105,616 99.5 
Management fees1,186 1.9 56 0.1 
Community reimbursement revenue15,260 24.8 457 0.4 
Total revenues61,648 100.0 106,129 100.0 
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)36,758 59.6 75,402 71.0 
General and administrative expenses7,187 11.7 6,435 6.1 
Facility lease expense— — 10,788 10.2 
Stock-based compensation expense166 0.3 596 0.6 
Depreciation and amortization expense9,283 15.1 15,715 14.8 
Long-lived asset impairment— — 35,954 33.9 
Community reimbursement expense15,260 24.8 457 0.4 
Total expenses68,654 111.4 145,347 137.0 
Other income (expense):
Interest income4 — 54 0.1 
Interest expense(9,374)(15.2)(11,670)(11.0)
Gain on facility lease modification and termination, net— — 11,240 10.6 
Gain on extinguishment of debt46,999 76.2 — — 
Loss on disposition of assets, net(421)(0.7)(7,356)(6.9)
Other income8,705 14.1 1 — 
Income (loss) from continuing operations before provision for income taxes38,907 63.0 (46,949)(44.2)
Provision for income taxes(63)(0.1)(232)(0.2)
Net income (loss)$38,844 62.9 $(47,181)(44.4)
28

Three Months Endedthree months ended March 31, 2021, Compared to the Three Months Ended March 31, 2020
Revenues.
When comparing the first quarter of fiscal 2021 to the first quarter of fiscal 2020, the Company generated resident revenue of approximately $45.2 million, compared to resident revenue of approximately $105.6 million, respectively, representing a decrease of approximately $60.4 million, or 57%.  The decrease in revenue is generated from significant property dispositions throughout 2020, including: (1) the sale of two owned properties, one of which transitioned to a management agreement with the successor owner; (2) the transition of 39 leased communities to different operators in conjunction with the Company exiting its master lease agreements; and (3) the process of transferring legal ownership of 18 communities to Fannie Mae, the holder of nonrecourse debt related to such communities. Together, these actions accounted for a decrease in revenue of approximately $43.9$8.3 million. The remaining decrease was primarily duea result of transitioning 15 Fannie Mae communities to a decreaseother operators in total occupancies at2021.
Expenses
Operating expenses for the Company’s remaining senior housing communities and small reductions in average monthly rent. The decrease in the total occupancy was primarily due to reduced move-in activity related to the COVID-19 pandemic and our response efforts.
The decreases in resident revenuethree months ended March 31, 2022, were partially offset by increases in management fees and community reimbursement revenue of $1.2$41.9 million and $15.3 million, respectively, which were due to the Company’s management of 19 communities during the first quarter of 2021.
Expenses.
Total expenses were $68.7 million in the first quarter of fiscal 2021as compared to $145.3$36.8 million infor the first quarterthree months ended March 31, 2021, an increase of fiscal 2020, representing a decrease of $76.6 million, or 53%. This decrease is primarily the result of a $38.6 million decrease in operating expenses, a $10.8 million decrease in facility lease expenses, a $6.4 million decrease in depreciation expense, a $36.0 million decrease in non-cash impairment charges and a $0.4 million decrease in stock-based compensation expense, partially offset by a $14.8 million$5.1 million. The increase in community reimbursement expense and a $0.7 million increase in general and administrative expenses.  
•The quarter-over-quarter decrease in operating expenses of $38.6 million is primarily due to a $21.7$3.2 million decreaseincrease in labor and employee-related expenses, a $3.0 million decrease in food expense, a $1.5 million decrease in legal and transaction costs, a $2.8 million decrease in utilities, a $1.3 million decrease in advertising and promotions expenseincluding premium labor, and a $8.3$1.9 million decreaseincrease in all other operating expenses, all of which were primarily due to the disposition of communities since the first quarter of 2020.expenses.
•The increase in generalGeneral and administrative expenses for the three months ended March 31, 2022, were $6.4 million as compared to $7.2 million for the three months ended March 31, 2021, a decrease of $0.7 million$0.8 million. This decrease is primarily due to a $1.0decreased labor and employee-related expenses.
Community reimbursement expense for the three months ended March 31, 2022 was $7.0 million increase in employee incentive and retention bonus programs, and $1.2as compared to $15.3 million higher employee benefits and health insurance claims, partially offset by reductions of approximately $0.3 million in travel and other expenses and $1.2 million in transaction costs incurred infor the first quarter of 2020, which were related to the lease amendments and terminations in the prior year.
•The $10.8 million decrease in facility lease expense is primarily attributable to the termination of all of the Company's Master Lease Agreements during fiscal 2020.
•The $0.4 million decrease in stock-based compensation expense is primarily attributable to previously issued stock awards vesting and becoming fully amortized. 
•The $6.4 million decrease in depreciation and amortization expense primarily results fromthree months ended March 31, 2021, a decrease of $8.3 million. The decrease was primarily a result of transitioning 15 Fannie Mae communities to other operators in depreciable assets at the Company’s communities resulting from the disposition of communities since the first quarter of 2020.2021.
•During the first quarter of 2020, the Company recorded $36.0 million of non-cash impairment charges with no comparable charges in the first quarter of 2021.
•The $14.8 million increase in community reimbursement expense includes reimbursements due from the owners of the communities for which the Company began providing management services on March 1, 2020.
Other income and expense.
•Interest income generally reflects interest earned on the investment of cash balances and escrowed funds or interest associated with certain income tax refunds or property tax settlements.
•Interest expense decreased infor the first quarter of fiscal 2021 whenthree months ended March 31, 2022 was $7.6 million as compared to $9.4 million for the first quarterthree months ended March 31, 2021, a decrease of fiscal 2020$1.8 million primarily due to lower overall borrowings in 2022. Notes payable decreased $192.7 million from March 31, 2021 to March 31, 2022.
Loss on extinguishment of debt for the early repayment of mortgage debt associated with the sale of one community in the fourth quarter of 2020 and the completion of the transition of the ownership of three communitiesmonths ended March 31, 2022 was $0.6 million as compared to Fannie Mae in the first quarter of 2021.
29

•Thea gain on extinguishment of debt of $47.0$47.0 million for the three months ended March 31, 2021, a decrease of $47.6 million. The 2022 loss relates to the de-recognitionrefinancing of debt. The 2021 gain related to the derecognition of notes payable and liabilities as a result of the completion of the transition of the legal ownership of three of the Company'sfour communities back to Fannie Mae, the holder of the related non-recourse debt related to such properties.debt.
•Other income for the three months ended March 31, 2022 was $0.1 million as compared to other income for the three months ended March 31, 2021 of $8.7 million is the$8.7 million. The 2021 amount reflects cash received for the Phase 3 General Distribution of the CARES Act for healthcare relatedhealthcare-related expenses or lost revenues attributable to COVID-19.

ProvisionCash Flow Analysis
Three months ended March 31, 2022 as compared to three months ended March 31, 2021
Operating activities
Net cash provided by operating activities for income taxes.the three months ended March 31, 2022 was $0.4 million as compared to $3.3 million for the three months ended March 31, 2021, a decrease of $2.9 million primarily a result of the $8.7 million CARES Act funding received in the first quarter of 2021 that was not received in the first quarter of 2022, and decreased cash inflows from operations in 2022 as compared to 2021. We received $9.1 million in CARES Act funding in April 2022.
ProvisionInvesting activities
Net cash used in investing activities for income taxesthe three months ended March 31, 2022 was $17.9 million as compared to $2.1 million for the three months ended March 31, 2021 and primarily results from ongoing capital improvements and refurbishments at existing communities and, for 2022, the acquisition of two new communities.
Financing activities
Net cash used in financing activities for the three months ended March 31, 2022 was $13.4 million and primarily results from repayments of notes payable and deferred financing costs paid, net of proceeds from notes payable, of $12.7 million, related to our 2022 debt refinancing and $0.7 million of dividends paid to Series A Preferred Stockholders. The net cash used in financing
19

activities for the three months ended March 31, 2021 was $0.1 million, or 0.2% of net income before income taxes, compared to a provision for income taxes of $0.2 million, or 0.5% of loss before income taxes, for the three months ended March 31, 2020 . The effective tax rates for the first quarters of fiscal 2021 and 2020 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax (“TMT”), which effectively imposes tax on modified gross revenues for communities within the State of Texas. The Company consolidated 17 and 38 Texas communities at March 31, 2021 and 2020, respectively, which contributes to the overall provision for income taxes. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. At year end, the Company had a three-year cumulative operating loss for its U.S. operations and accordingly, has provided a full valuation allowance on its net deferred tax assets. The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized.
Net income (loss) and comprehensive income (loss).
As a result of the foregoing factors, the Company reported net income and comprehensive income of $38.82.3 million for the three months ended March 31, 2021, compared toand primarily results from repayments of notes payable, net loss and comprehensive loss of $47.2 million for the three months ended March 31, 2020.proceeds from notes payable.
Liquidity and Capital Resources
Short-term liquidity
In addition to approximatelyOur primary source of short-term liquidity is our cash and cash equivalents and results from operations. As of March 31, 2022, we had $16.848.6 million of unrestricted cash balances on hand as of March 31, 2021,and cash equivalents. Due to the Company’s principal sources of liquidity are expectedcontinued effects the COVID-19 pandemic, our operations have not yet returned to 2019, pre-pandemic levels. We currently anticipate cash flow from operations will continue to be cash flows from operations and additional proceeds from debt refinancings, equity issuances, and/or proceeds from the sale of owned assets. The Company is implementing plans, which includes strategic and cash-preservation initiatives, which are designed to provide the Company with adequate liquidity to meet its obligationsimpacted for at least the twelve-month period followingnear-term. Our known liquidity requirements primarily consist of funds necessary to pay for operating expenses related to our communities and other expenditures, including general and administrative expenses, interest and scheduled principal payments on our debt and dividends on our redeemable preferred stock.
The Refinancing Facility we entered into in March 2022 contains financial covenants that are effective beginning June 30, 2022 and quarterly thereafter. Based on current operations, the date its financial statements are issued. See “Going Concern and Management’s Plan.”  The Company’s long-term capital requirements are andCompany expects to be in compliance with the June 30, 2022 covenants. There is no assurance that the Company will be dependent on its abilityable to accessmeet any future financial covenant requirements. In addition, we are required to maintain cash and cash equivalents of no less than $13 million, inclusive of a $1.5 million lender service reserve, which is included in “other assets.”
Additional short-term sources of liquidity include grants under the CARES Act. As described above, these grants are available to reimburse the Company for COVID-19 related expenses. In April 2022, we received a grant of $9.1million, where we believe we will be able to meet the CARES Act requirements which will allow the Company to retain the funds and not repay the grant. We do not consider this to be a significant source of liquidity in the future. There is no assurance that we will meet such requirements or qualify for, or receive, any additional CARES Act funds throughin the debt and/or equity markets or additional sales of assets. future. In addition, the Company is eligible for funding in connection with various state programs.

Long-term liquidity
The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt financing or refinancings, equity issuances, purchases and sales of assets, reorganizations and other transactions. If capital were obtained through the issuance of Company equity, the issuance of Company securities would dilute the ownership of our existing stockholders and any newly issued securities may have rights, preferences, and/or privileges senior to those of our common stock. There can be no assurance that the Company will continue to generate cash flows at or above current levels, or that the Company will be able to obtain the capital necessary to meet the Company’s short and long-term capital requirements.
Recent changes in the current economic environment, and other future changes, could result in decreases in the fair value of assets, slowing of transactions, and tightening liquidity and credit markets. These impacts could make securing debt or refinancings for the Company or buyers of the Company’s properties more difficult or on terms not acceptable to the Company.
In summary, the Company’s cash flows were as follows (in thousands):
Three months ended March 31,
20212020
Net cash provided by (used in) operating activities$3,264 $(5,001)
Net cash provided by (used in) investing activities(2,108)1,045 
Net cash used in financing activities(2,275)(5,235)
Net decrease in cash and cash equivalents$(1,119)$(9,191)
30

Operating activities.
The net cash provided by operating activities forIn connection with the three months endedrefinancing transaction in March 31, 2021 primarily results from net income of $38.8 million, decreases in cash flows from current assets of $6.3 million, decreases from current liabilities of $4.9 million and net non-cash charges of $36.9 million. The net cash used in operating activities for the three months ended March 31, 2020, primarily results from net loss of $47.2 million, a decrease in accrued expenses of $7.7 million, an operating lease expense adjustment of $3.3 million, a decrease in accounts payable of $1.0 million, an increase in other assets of $0.2 million, and a decrease in deferred resident revenue of $0.4 million, partially offset by net non-cash charges of $46.4 million, a decrease in tax and insurance deposits of $4.1 million, and a decrease in prepaid expenses of $0.9 million.
Investing activities.
The net cash used in investing activities for the three months ended March 31, 2021 primarily results from ongoing capital improvements and refurbishments at the Company’s senior housing communities of $2.1 million. The net cash provided by investing activities for the three months ended March 31, 2020 primarily results from the Company's receipt of $6.4 million in proceeds from the disposition of assets, partially offset by capital expenditures associated with ongoing capital improvements and refurbishments at the Company’s senior housing communities of $5.4 million.
Financing activities.
The net cash used in financing activities for the three months ended March 31, 2021 primarily results from repayments of notes payable of $3.4 million offset by $1.1 million of proceeds from debt for cash advances for the Fannie Mae properties in the process of transitioning legal ownership back to Fannie Mae. The net cash used in financing activities for the three months ended March 31, 2020 primarily results from repayments of notes payable of $4.9 million and payments on financing obligations of $0.3 million.
Debt transactions.
Transactions Involving Certain Fannie Mae Loans
The CARES Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. On May 7, 2020, the Company entered into forbearance agreements with Berkadia Commercial Mortgage LLC, as servicer of 23 of its Fannie Mae loans covering 20 properties.  On May 9, 2020, the Company entered into a forbearance agreement with Wells Fargo Bank (“Wells Fargo”), as servicer of one Fannie Mae loan covering one property.  OnMay 20, 2020, the Company entered into forbearance agreements with KeyBank, as servicer of three Fannie Mae loans covering two properties. The forbearance agreements allowedthe Company to withhold the loan payments due under the loan agreements for the months of April, May and June 2020 and Fannie Maeagreed toforbear in exercising its rights and remedies during such period. During this three-month loan payment forbearance, the Company agreed to pay to Fannie Mae monthly net operating income, if any, as defined in the forbearance agreement, for the properties receiving forbearance.  
On July 8, 2020, the Company entered into forbearance extension agreements with Fannie Mae, which provided for a one month extension of the forbearance agreements between it and Fannie Mae covering 23 properties. The forbearance extension agreements extended the forbearance period until July 31, 2020, and Fannie Mae agreed to forbear in exercising its rights and remedies during such period.  By July 31, 2020,2022, the Company was requiredable to repayrefinance certain debt due during 2022 and 2023 with longer-term financing that matures in 2026. In addition, $10.0 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to Fannie Mae the deferred payments, less payments made during the forbearance period.  an additional uncommitted $40 million may be available to fund future growth initiatives. There is no assurance that we will be able to meet future financial covenant requirements.
On July 31, 2020, the Company made required payments to Fannie Mae totaling $0.6 million, which included the deferred payments, less payments made during the forbearance period, for five properties with forbearance agreements.  The Company elected not to pay $3.9 million on the loans for the remaining 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 
As a resultdiscussed in “Note 4. Notes Payable” of the default, Fannie Mae filed a motion withcondensed consolidated financial statements, the United States District Court requesting that a receiver be appointed overCompany has scheduled maturities of debt coming due in the 18 properties, which was approved by the court.next five years and thereafter. The Company agreedcurrently expects to continuebe able to managemeet those maturities from cash on hand,future operations and future refinancings. The Refinance Facility matures in four years with an optional one-year extension if certain financial performance metrics and other customary conditions are maintained. There is no assurance that we will be able to meet such conditions or source refinancings at the 18 communities, subject to earning a management fee, until management of the communities is transferred to a successor operator or legal ownership of the properties is transferred to Fannie Mae. Management fees earned from the properties are recognized as revenue when earned.  In conjunction with the receivership order, the Company must obtain approval from the receiver for all payments, but will receive reimbursements from Fannie Mae for reasonable operating expenses incurred on behalf of any of the 18 communities under the receivership order. As a result of the events of default and receivership order, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded it was no longer entitled to receive any existing accounts receivable or revenue
31

related to the properties, all amounts held in escrow by Fannie Mae had been forfeited, and that the Company no longer has control of the properties in accordance ASC 610-20.  
During the three months ended March 31, 2021, the Company completed the transfer of legal ownership of three of the communities back to Fannie Mae. As a result of the legal extinguishment of the debt and liabilities related to those communities, the Company recognized a $47.0 million gain on extinguishment of debt in accordance with ASC 470. At March 31, 2021, the Company included $176.1 million in outstanding debt in current portion of notes payable, net of deferred loan costs, and $8.0 million of accrued interest in accrued expenses on the Company’s Consolidated Balance Sheets related to the remaining properties. At March 31, 2021, the Company continued to manage five properties on behalf of Fannie Mae, pursuant to a management fee.
Letters of Credit
The Company issued standby letters of credit with Wells Fargo, totaling approximately $1.0 million, for the benefit of Calpine Corporation in connection with certain of its energy provider agreements, which remained outstanding at March 31, 2021.
The Company previously issued standby letters of credit with Wells Fargo, totaling approximately $3.4 million, for the benefit of Hartford Financial Services in connection with the administration of workers’ compensation, which remained outstanding at March 31, 2021.  
Debt Covenant Compliance
Certain of our debt agreements contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum debt service coverage ratios, in each case on a multi-community basis. The debt service coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee, divided by the debt (principal and interest). Furthermore, our debt is secured by our communities and if an event of default has occurred undertime any of our debt subjectmatures or whether the terms of such refinancings will be comparable or satisfactory compared to cure provisions in certain instances, the respective lender would have the right to declare all the related outstanding amounts of indebtedness immediately due and payable, foreclose on our mortgaged communities, and/or pursue other remedies available to such lender. We cannot provide assurance that we would be able to pay the debts if they became due upon acceleration following an event of default.current loans.
We were not in compliance
The Company has unencumbered properties with a certain financial covenantnet book value of our loan agreement with Fifth Third Bank, covering two properties at$24.0 million as of March 31, 2021, December 31, 2020 and September 30, 2020 in2022, which could provide a minimum debt service coverage ratio must be maintained, which constitutes a default. In May 2020, subsequent to quarter end, Fifth Third Bank issued a noticesource of default. The Company is in active discussions with Fifth Third Bank to resolve this noncompliance, but cannot give any assurance that a mutually agreed resolution will be reached. The Company included $31.5 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at March 31, 2021.  
We were not in compliance with a certain financial covenant of our loan agreement with BBVA covering three properties as of December 31, 2020, in which a minimum debt service coverage ratio must be maintained, which constitutes a default. As a result of the default, the loan is callable. The Company is in active discussions with BBVA to resolve this noncompliance, but cannot give any assurance that a mutually agreed resolution will be reached. The Company included $41.0 million in outstanding debt related to those properties in current portion of notes payable, net of deferred loan costs, on the Company’s Consolidated Balance Sheets at March 31, 2021.
Except as noted above, the Company was in compliance with all aspects of its outstanding indebtedness at March 31, 2021.liquidity from new debt.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. CONTROLS AND PROCEDURES.Controls and Procedures
Effectiveness of Controls and Procedures
20

The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Principal Financial Officer (“PFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.Quarterly Report on Form 10-Q. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure
32

controls and procedures are also designed to ensure that such information is accumulated and communicated to the Company’s management, including the CEO and PFO as appropriate, to allow timely decisions regarding required disclosure.

Based upon the controls evaluation, procedures evaluation and the material weakness described in our Annual reportReport on Form 10-K, which was filed with the SEC on April 15, 2022, the Company’s CEO and PFO have concluded that, as of the end of the period covered by this report,Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures are ineffective.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s fiscal quarter ended March 31, 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Remediation Plan
As disclosed in previous filings for the year ended December 31, 2020, and for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, and for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting. Due to challenges in maintaining necessary accounting staffing levels, this material weakness has not been remediated as of March 31, 2022, as disclosed above.
We have developed a plan for remediation of the material weakness, including developing and maintaining appropriate management review and process level controls. Control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively. We will continue to monitor the effectiveness of our remediation measures in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures, and we will make any changes to the design of our plan and take such other actions that we deem appropriate given the circumstances. We expect to completehave implemented the remediationremediation process by the end of the fourth quarter of 2021.2022.

21


Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.Legal Proceedings
The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material effect on the consolidated financial statements of the Company if determined adversely to the Company.
Item 1A. RISK FACTORS.Risk Factors.
The following
There have been no material changes to the risk factors areset forth in addition to the risks and uncertainties described under “Item 1A. Risk Factors”Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 31, 2021.  The effects of the events and circumstances described in the following risk factors may, directly or indirectly, heighten, exacerbate or otherwise bring to fruition many of the risks and uncertainties contained in our annual, quarterly and periodic reports filed with the SEC.
If we are unable to successfully implement our business plans and strategies, our consolidated results of operations, financial position, liquidity and ability to continue as a going concern could be negatively affected.
As noted elsewhere in this Quarterly Report on Form 10-Q, due to the impact of the COVID-19 pandemic on our financial position and our upcoming debt maturities, management has concluded that there is substantial doubt about our ability to continue as a going concern. We have taken, and intend to take, actions to improve our liquidity position and to address the uncertainty about our ability to operate as a going concern, but these actions are subject to a number of assumptions, projections, and analyses. If these assumptions prove to be incorrect, we may be unsuccessful in executing our business plans or achieving the projected results, which could adversely impact our financial results and liquidity. Those plans include various cost-cutting, efficiency and profitability initiatives. There are no assurances such initiatives will prove to be successful or the cost savings, profitability or other results we achieve through those plans will be consistent with our expectations. As a result, our results of operations, financial position and liquidity could be negatively impacted. If we become insolvent or fail to continue as a going concern, our common stock may become worthless.
Our failure to comply with financial covenants and other restrictions contained in our debt instruments could result in the acceleration of the related debt or in the exercise of other remedies.
Our outstanding indebtedness is secured by our communities, and, in certain cases, a guaranty by us or by one or more of our subsidiaries. Therefore, an event of default under the outstanding indebtedness, subject to cure provisions in certain instances, would give the respective lenders, the right to declare all amounts outstanding to be immediately due and payable, or foreclose on collateral securing the outstanding indebtedness.
33


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

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

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

Pursuant to the forbearance agreements described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Transactions Involving Certain Fannie Mae Loans,” we withheld loan payments due under loan agreements with Fannie Mae covering certain of our communities. In addition, we were not in compliance with certain financial covenants of our loan agreements with Fifth Third Bank covering two properties and our loan with BBVA, USA (“BBVA”) covering three properties as of March 31, 2021, December 31, 2020 and September 30, 2020, as applicable and as a result of such defaults, the debt has become callable. In May 2020, subsequent to quarter end, Fifth Third Bank issued a notice of default. In the event that either of these loans are accelerated, these loans have either 25% recourse (in the case of the $31.5 million Fifth Third loan) or full recourse (in the case of the $41.0 million BBVA loan) to Capital Senior Living Corporation. We are in active discussions with Fifth Third Bank and BBVA to resolve these defaults. However, we cannot give any assurance that a mutually agreeable resolution will be reached.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.Unregistered Sales of Equity Securities and Use of Proceeds
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following information is provided pursuant to Item 703 of Regulation S-K. The information set forth in the table below reflects sharesthe common stock purchased by the Company pursuant to its share repurchase program (as described below) as offor the quarter ended March 31, 2021.2022:
PeriodTotal
Number
of Shares
Purchased		Average
Price Paid
per Share		Total Shares
Purchased
as Part of
Publicly
Announced
Program		Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the
Program
Total at December 31, 202032,941 $199.45 32,941 $6,570,222 
January 1 – January 31, 2021— — — 6,570,222 
February 1 – February 28, 2021— — — 6,570,222 
March 1 – March 31, 2021— — — 6,570,222 
Total at March 31, 202132,941 $199.45 32,941 $6,570,222 
Period
Total
Number
of Shares
Purchased (1)
Average
Price Paid
per Share		Total Shares
Purchased
as Part of
Publicly
Announced
Program		Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the
Program
January 1 – January 31, 2022— — — 6,570,222 
February 1 – February 28, 2022— — — 6,570,222 
March 1 – March 31, 2022— — — 6,570,222 
__________
(1) Does not include shares withheld to satisfy tax liabilities due upon the vesting of restricted stock, all of which have been reported in Form 4 filings relating to the Company. The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date.
On January 22, 2009, the Company’s board of directors approved a share repurchase program that authorized the Company to purchase up to $10.0 million of the Company’s common stock. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the share repurchase authorization has no stated expiration date. On January 14, 2016, the Company announced that its board of directors approved a continuation of the share repurchase program. All shares that have been acquired by the Company under this program were purchased in open-market transactions. The Company does not expect to repurchase any shares of the Company’s common stock in the near term.
Item 3. DEFAULTS UPON SENIOR SECURITIES.Defaults upon Senior Securities
Not applicable.
Item 4. MINE SAFETY DISCLOSURES.Mine Safety Disclosures
Not applicable.
Item 5. OTHER INFORMATION.Other Information
Not applicable.
3422

Not applicable.
Item 6. EXHIBITS.Exhibits
The following documents are filed as a part of this report. Those exhibits previously filed and incorporated herein by reference are identified below. Exhibits not required for this report have been omitted.
Exhibit
Number		Description
3.1
Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to exhibitExhibit 3.1 to the Registration Statement No. 333-33379 on Form S-1/A filed by the Company with the Securities and Exchange Commission on September 8, 1997.)
3.1.1
Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to exhibitExhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999, filed by the Company with the Securities and Exchange Commission.)
3.2
3.1.2
Second Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on December 14, 2020.)
10.23.1.3
Employment Agreement, dated asThird Amendment to Amended and Restated Certificate of March 26, 2021, by and between Capital Senior Living Corporation and David R. Brickman.Incorporation of the Registrant (Incorporated by reference to exhibit 10.28Exhibit 3.1 to the Company’s AnnualCurrent Report on Form 10-K8-K filed by the Company with the Securities and Exchange Commission on March 31,November 4, 2021.)
3.1.4
Fourth Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 10, 2021.)
3.2
Second Amended and Restated Bylaws of the Registrant. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report filed by the Company on Form 8-K with the Securities and Exchange Commission on March 8, 2013.)
3.2.1
Amendment to the Second Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 10, 2021.)
3.3
Certificate of Designation, Rights and Privileges of Series A Convertible Preferred Stock, par value $0.01, of the Company (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 4, 2021.)
10.1
Amendment No. 2 to Sonida Senior Living, Inc. 2019 Omnibus Stock and Incentive Plan, as amended (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed by the Company with the Securities and Exchange Commission on January 28, 2022.)

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






23



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CapitalSonida Senior Living, Corporation
35

Inc
(Registrant)
By:/s/ Tiffany L. DuttonKIMBERLY S. LODY
Tiffany L. DuttonKimberly S Lody
Senior Vice President- AccountingPresident, Chief Executive Officer, and Finance and Principal Accounting OfficerDirector
(Principal FinancialExecutive Officer and Duly AuthorizedPrincipal Financial Officer)
Date: May 14, 202123, 2022

3624