_
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31,June 30, 2003
OR
[ ][_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-8187
Greenbriar Corporation
(Exact name of Registrant as specified in its charter)
Nevada 75-2399477
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
14185 Dallas Parkway, Suite 650, Dallas, Texas 75254
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 407-8400
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the issuer was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
YES [X] NO [ ]
At May 13,August 19, 2003, the issuer had outstanding approximately 343,900 shares of
par value $.01 Common Stock.
GREENBRIAR CORPORATION
Index to Quarterly Report on Form 10-Q
Period ended March 31,June 30, 2003
PART I: FINANCIAL INFORMATION..................................................3
ITEM 1: FINANCIAL STATEMENTS................................................3STATEMENTS...............................................3
CONSOLIDATED BALANCE SHEETS..............................................3
CONSOLIDATED STATEMENTS OF OPERATIONS....................................5
CONSOLIDATED STATEMENTS OF CASH FLOW.....................................6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...............................7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS........................................11
THREE-MONTH PERIODOPERATIONS..................................................12
THREE AND SIX MONTH PERIODS ENDED MARCH 31, 2003OMPAREDJUNE 30, 2003 COMPARED TO THREE-MONTH
PERIODTHREE
AND SIX MONTH PERIODS ENDED MARCH 31, 2002...........................................11JUNE 30, 2002.............................. 12
FORWARD LOOKING STATEMENTS..............................................13STATEMENTS..............................................14
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RATE.........14RISK.........15
ITEM 4: CONTROLS AND PROCEDURES............................................14PROCEDURES............................................15
PART II: OTHER INFORMATION....................................................15
SIGNATURES.................................................................15INFORMATION....................................................16
EXHIBIT 99.2..................................................................1731.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A)..........16
EXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B), 18 U.S.C. SECTION
1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002...............................................................172002.............................................................16
SIGNATURES.................................................................16
2
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Greenbriar Corporation
Consolidated Balance Sheets
(Amounts in thousands)
March 31,June 30, December 31,
Assets 2003 2002
(Unaudited)
------------ ------------
Current Assetsassets
Cash and cash equivalents $ 166141 $ 661
Accounts receivable-trade 35 22
NotesNote receivable 1,2382,322 1,238
Other current assets 220172 323
------------ ------------
Total Current Assets 1,659current assets 2,670 2,244
Notes receivable, from sale of properties 7,9976,914 7,997
Less deferred gains (6,127) (6,127)
------------ ------------
1,870787 1,870
Deferred income tax benefit 1,161 1,161
Property and equipment, at cost
Land and improvements 678777 678
Buildings and improvements 6,8504,841 6,850
Equipment and furnishings 1,4321,325 1,387
------------ ------------
8,9606,943 8,915
Less accumulated depreciation 2,344 (2,282)2,172 2,282
------------ ------------
6,6164,771 6,633
Deposits 327324 311
Other Assets 391assets 374 405
------------ ------------
$ 12,02410,087 $ 12,624
============ ============
3
Greenbriar Corporation
Consolidated Balance Sheets - Continued
(Amounts in thousands)
March 31,June 30, December 31,
Liabilities and Stockholders' Equitystockholders' equity 2003 2002
(Unaudited)
------------ ------------
Current Liabilitiesliabilities
Current maturities of long-term debt $ 852,331 $ 113
Accounts payable - trade 177301 405
Accrued expenses 346375 367
Other current liabilities 541426 668
------------ ------------
Total Current Liabilities 1,149current liabilities 3,433 1,553
Long-term debt 8,5214,487 8,479
Investment in Affiliate 2813 46
Deferred Gain 740 740
Other long term liabilities 497502 455
------------ ------------
Total Liabilities 10,935liabilities 9,175 11,273
Stockholders' Equityequity
Preferred stock 1 1
Common stock $.01 par value; authorized,
100,000authorized,100,000
shares; 359 shares issued and outstanding 72 72
Additional paid-in capital 54,923 54,923
Accumulated deficit (53,907)(54,084) (53,645)
------------ ------------
1,089912 1,351
$ 12,02410,087 $ 12,624
============ ============
4
Greenbriar Corporation
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
For The Three Month
Period Ended
March 31,
2003 2002
(Unaudited)
Revenue
Assisted living operations $ 1,070 $ 1,327
Operating expenses
Assisted living operations 632 638
Lease expense 413 377
Depreciation and amortization 79 121
Corporate, general and
administrative 142 431
------- -------
1,266 1,567
------- -------
Operating income (loss) (196) (240)
Other income (expense)
Interest income 54 161
Interest expense (196) (229)
Equity in net income (loss) of
affiliated partnership 18 (121)
Other 58 --
------- -------
(66) (189)
------- -------
Loss from continuing operations (262) (429)
Discontinued operations
Loss from operations
(29)
------- -------
------- -------
NET (LOSS) $ (262) $ (458)
======= =======
Net loss per common share -
basic and diluted $ (.76) $ (1.28)
Weighted average number
of common and equivalent
shares outstanding 344 359
5
Greenbriar Corporation
Consolidated Statements Of Cash FlowOperations
(Amounts in thousands)thousands, except per share data)
For the three monthThe Three Month For The Six Month
Period Ended March 31,Period Ended
June 30, June 30,
2003 2002 --------- ---------2003 2002
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss
Revenue
Assisted living operations $ (262)1,118 $ (458)
Adjustments to reconcile net loss to net
cash used in operating activities1,042 $ 2,189 $ 2,369
Operating expenses
Assisted living operations 607 476 1,239 1,114
Lease expense 386 391 799 768
Depreciation and amortization 79 33193 103 173 224
Corporate general and
administrative 149 438 290 869
---------- ---------- ---------- ----------
1,235 1,408 2,501 2,975
---------- ---------- ---------- ----------
Operating loss (117) (366) (312) (606)
Other income (expense)
Interest income 60 66 114 227
Interest expense (190) (198) (386) (427)
Equity in net income (loss) of
affiliated partnership 15 (292) 33 (413)
Other 55 (19) 112 (19)
---------- ---------- ---------- ----------
(60) (443) (127) (632)
---------- ---------- ---------- ----------
Loss (Gain) from affiliate (18) 121
Changes in operating assetscontinuing operations (177) (809) (439) (1,238)
Discontinued operations
Loss from operations (228) (257)
---------- ---------- ---------- ----------
Net loss (177) (1,037) (439) (1,495)
---------- ---------- ---------- ----------
Net loss per common share -
basic and liabilities
Accounts receivable (13) 121
Other currentdiluted $ (.51) $ (2.49) $ (1.28) $ (3.59)
Weighted average of common and
non current assets 84 38
Accounts payable and other liabilities (334) (465)
--------- ---------
Net cash used in operating activities (464) (312)
--------- ---------
Cash flows provided by (used in) investing activities
Purchase of property and equipment (45) (48)
--------- ---------
Net cash provided by (used in) investing
Activities (45) (48)
Cash flows from financing activities
Payments on debt (14) --
Borrowings -- 179
--------- ---------
Net cash provided by (used in) financing
activities (14) 179
--------- ---------
Net increase (decrease) in cash and
cash equivalents (495) (181)
Cash and cash equivalents at beginning of period 661 1,246
--------- ---------
Cash and cash equivalents at end of period $ 166 $ 1,065equivalent shares outstanding 344 417 344 417
5
Greenbriar Corporation
Consolidated Statements Of Cash Flow
(Amounts in thousands)
For the six month
Period Ended June 30,
2003 2002
--------- --------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $ (439) $ (1,495)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 173 704
Loss on sale of assets 19
(Gain) loss on partnership (33) 413
Changes in operating assets and liabilities
Accounts receivable (13) 248
Other current and non current assets 153 4
Accounts payable and other liabilities (291) (395)
--------- ---------
Net cash used in operating activities (450) (502)
--------- ---------
Cash flows used in investing activities
Proceeds from sale of property 4,236
Purchase of property and equipment (50) (208)
--------- ---------
Net cash provided by (used in) investing
activities (50) 4,028
Cash flows from financing activities
Payments on debt (20) (4,993)
Borrowings 179
--------- ---------
Net cash used in financing
activities (20) (4,814)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND (520) (1,288)
CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 661 2,344
--------- ---------
Cash and cash equivalents at end of period $ 141 $ 1,056
========= =========
6
Notes To Consolidated Financial Statements
For the Unaudited Three and Six Months Ended March 31,June 30, 2003 and 2002
Note A: Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Greenbriar Corporation and its majority-owned subsidiaries
(collectively, "the Company"). All significant intercompany transactions and
accounts have been eliminated.
The statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and, accordingly, do not include all of the
information and footnotes required by generally accepted accounting principles.
These financial statements have not been examined by independent certified
public accountants, but in the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
consolidated results of operations, consolidated financial position and
consolidated cash flows at the dates and for the periods indicated, have been
included.
Operating results for the three-month periodthree and six month periods ended March 31,June 30, 2003 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2003. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2002.
Note B: Notes Receivable and Deferred Gain From Sale Of Property
As a result of the sale of three communities in 2001 the Company holds tax-free-notestax
exempt notes in the amount of $6,437,000 bearing interest at 9.5%. The notes
mature on April 1, 2032, March 20, 2037 and August 1, 2031 respectively.
The repayment of the notes is limited to the cash flow of the respective
communities either from operations, refinance or sale. The Company has deferred
gains in the amount of $6,127,000. The deferred gains and interest income will
be recognized as cash is received.
Note C: Affiliated Partnerships
In October 2001, the Company became a 56% limited partner in Corinthians Real
Estate Investors LP (CREI), a partnership formed to acquire two properties. The
general partner is a limited liability corporation whose sole member is W.
Michael Gilley, the son of the former CEO of the company. Sylvia Gilley, W.
Michael Gilley's mother, has a 25.9% interest, the general partner has a .1%
interest, the Company's chief financial officer has a 10.5% interest, and other
employees of the Company have interests aggregating 7.5%. In October 2001, the
Partnership acquired a retirement community for approximately $9,100,000 and in
January 2002, it acquired an assisted living community for approximately
$2,800,000.
7
The Company issued a $1,600,000 note to the seller as partial payment for the
purchase of the retirement community. CREI gave the Company a $1,600,000 note in
consideration for payment of that amount of the purchase price. The balance of
the purchase price was funded by CREI's borrowings from a third party.
In September 2002 CREI sold its two properties for cash and notes and paid off
its third party debt. As part of the proceeds, CREI received a note for
$1,600,000 due September 30, 2004 which was transferred to the Company in
satisfaction of its $1,600,000 note receivable from CREI. CREI also assigned the
Company a $400,000 participation in another note due September 30, 2004 in
payment of other CREI debt to the Company.
The Company transferred the $1,600,000 note it received to the original owner of
the retirement community in payment of the Company's $1,600,000 debt. The
Company guaranteed payment of the $1,600,000 note.
CREI recognized a gain of $1,322,000. The Company has deferred recognition of
its $740,000 share of the gain because of the aforementioned guaranty. CREI has
deferred a gain of $994,000 that will be recognized on the installment method.
The Company will realize its $557,000 (56%) portion of the $994,000 as it
receives proceeds.upon
collection of the notes held by CREI. The notes are due September 30, 2004.
8
Following are unaudited, condensed financial statements of CREI (in thousands):
Balance Sheet
March 31,June 30, 2003
Current assets $ 96109
Other assets 152
Notes receivable 994
-----------------------
$ 1,2421,255
Current liabilities $ 70
Other liabilities 157
Deferred gain 994
-----------------------
1,221
Partners' equity 21
-----------34
------------
$ 1,2421,255
Statement of Operations
ThreeSix months ended March 31,June 30, 2003
RevenueInterest Income $ 3357
Expenses 1
----------6
------------
Net Income $ 32
----------51
------------
9
Note D: Long-Term Obligations
Long-term debt is comprised of the following (in thousands):
March 31,June 30, December 31,
2003 2002
------------ ------------
NotespayableNotes payable to financial institutions maturing through
2015; fixed and variable interest rates ranging from
5.25% to 10.50%; collateralized by property, fixtures,
equipment and the assignment of rents $ 3,9372,123 $ 3,956
NotespayableNotes payable to individuals and companies maturing
through 2023; variable and fixed interest rates ranging
from 7% to 8.75% collateralized by real property,
personal property, fixtures, equipment and the
assignment of rents 1,7531,752 1,753
Notes payable to Sylvia M. Gilley, bearing interest at
10% and maturing on July 1, 2004 2,255 2,255
NotespayableNotes payable to current and former executive officers,
non interest bearing at 8.5% and maturing on December
31, 2004, net of discount of $227 and $260 respectively,
representing interest imputed at 8.5% 631661 598
Other 3027 30
------------ ------------
8,6066,818 8,592
Less: current maturities 852,331 113
------------ ------------============ ============
$ 8,5214,487 $ 8,479
As discussed in Note C the company is guarantor of debt in the amount of
$1,600,000.
Note E - Discontinued Operations and Sales of Real Estate
In October 2001, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes FASB
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" and the accounting and reporting provisions
for disposals of a segment of a business as addressed in APB Opinion No. 30,
10
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." SFAS No. 144 establishes a single accounting model for
long-lived assets to be disposed of by sale and addresses various implementation
issues of SFAS No. 121. In addition, SFAS No. 144 extends the reporting
requirements of discontinued operations to include components of an entity that
has either been disposed of or classified as held for sale. The Company adopted
SFAS No. 144 as of January 1, 2002.
10
During 2002, the Company disposed of six communities. Revenues for the six
communities for the three and six months ended March 31,June 30, 2002 was $1,888,000.$1,507,000 and
$3,105,000 respectively.
Pursuant to SFAS No. 144, the results of operations for the six communities has
been reclassified to Discontinued Operations for the three and six months ended
March
31,June 30, 2002.
Note F - Stock Options
The Company has elected to follow Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" (APB 25) in its primary financial
statements and has provided supplemental disclosures required by State of
Financial Accounting Standards No. 123 (SFAS 123) "Accounting for Stock-Based
Compensation" and by Statement of Financial Accounting Standards No. 148
"Accounting for Stock-Based Compensation - Transition and Disclosure an
Amendment of SFAS No. 123."
SFAS 123 requires disclosure of pro forma net earnings (loss) and pro forma net
earnings (loss) per share as if the fair value method had been applied in
measuring compensation cost for stock based awards. There was no stock based
compensation expense for any period presented.
Note G - Contingencies
Benetic Financial vs. Wedgwood et al
This action is against a subsidiary of the Company as well as other corporate
and individual defendants who are unrelated to The Company. In 1993, Wedgwood
Retirement Inns entered into a financing arrangement with a third party lender.
The plaintiff alleged that he had a verbal brokerage agreement with Wedgwood and
was entitled to a fee. The Company acquired Wedgwood in 1996.
In a jury trial the plaintiff was awarded $150,000 on one count of his
complaint. However, the jury found for the defendants on all other counts. In
his final ruling the judge awarded the defendants legal fees that were in excess
of the judgment. The plaintiff appealed and on April 30,2003 the California
Court of Appeals let the $150,000 stand but reversed the judges award of legal
fees. At this point the defendants are obligated for the judgment plus interest
since 1993. The judgment is against all the defendants as a group.
The defendants have filed an appeal to the California Supreme Court.
11
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - -------------------------------------------------------------------------
AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
--------------------------------------
Overview
As of March 31,June 30, 2003, the Company owns orone community and leases threetwo communities
in three states with a capacity of 257 residents, consisting of two communities that are
owned and one that is leased.residents. In addition the Company owns
one community that is operated by an independent third party with a capacity of
41 residents.
Since 1996 the Company has owned, leased and operated assisted living and
retirement communities throughout the United States. During that period of time
the Company has both acquired and sold over seventy communities. The acquiring
and disposing of its real estate assets has been an integral part of the
Company's business.
During the past year the Company's business strategy has evolved into one of
focusing on the real estate component and reducing its operating activities. The
Company's objective is to become an investor in various entities, principally
partnerships, whose intent is to acquire properties and either sell, lease or
enter into joint venture agreements with third party operators with respect to
these properties
Three-month periodThree and six month periods ended March 31,June 30, 2003 compared to three-month periodthree and six month
periods ended March 31,June 30, 2002.
Revenues and Operating Expenses from Assisted Living Operations
Revenues were $1,070,000$1,118,000 and $2,189,000 for the three and six months ended March 31,June
30, 2003 as compared to $1327,000$1,042,000 and $2,369,000 for the three and six months
ended March 31,June 30, 2002. Community operating expenses, which consist of assisted
living community expenses, lease expense and depreciation and amortization, were
$1,124,000$1,086,000 and $2,211,000 for the three and six months ended March
31,June 30, 2003 as
compared to $1,136,000$970,000 and $2,106,000 for the three and six months ended March 31,June 30,
2002.
11
Included in revenue and operating expenses for 2002 are $240,000 and $165,000
respectively which pertain to one community that was contributed to an
unconsolidated partnership in May 2002. The partnership was subsequently sold.
The Company owned a community which it leased to a third party during the three-monththree
and six month period ended March 31,June 30, 2002. The lease expired in November 2002 and
the Company operated the Community during the three and six months ended March 31June 30
2003. The revenues and operating expenses included for this community in 2003 were $115,000$170,000 and
$161, 000$284,000 respectively. The operating expenses were $155,000 and $316,000.
Included in revenue for the three and six months ended June 30, 2002 are $
78,000 and 333,000 respectively which pertain to one Community that was
contributed to an unconsolidated partnership in May 2002. Operating expenses for
the equivalent periods were $50,000 and $215,000. The Company sold its
partnership interest in November 2002.
During the three and six months ended March 31,June 30, 2002 the Company managed three
communities for a third party. The management fees recorded in the three and six
months of 2002 were $110,000.$114,000 and $224,000, respectively. The Company did not
manage properties for third parties during 2003.
12
Corporate General and Administrative Expenses
General and administrative expenses were $142,000$149,000 and $290,000 for the three and
six months ended March 31,June 30, 2003 compared to $431,000$438,000 and $869,000 for the three
and six months ended March 31,June 30, 2002. During the later part of 2001 and 2002 the
Company sold, leased or disposed twenty-six communities. The decrease in the
corporate general and administrative expenses is primarily a result of a
decrease in salaries and related payroll expenses. Due to the reduction in the
number of communities operated by the Company, the number of employees on the
corporate staff was reduced. In addition, due to having lessfewer communities, expenses
such as travel, communication costs and general operating costs were reduced.
Interest Income
Interest income decreased to $54,000$60,000 and $114,000 for the three and six months
ended March 31,June 30, 2003 as compared to $161,000$66,000 and $227,000 for the three and six
months ended March 31,June 30, 2002. Interest for the first quarter of 2002 includes
$117,000 received from the notes receivable from the sale of properties. As
discussed in Note B, the interest from these notes is recorded when a payment is
received. The Company did not receive an interest payment for the notes during
the three months ended March 31, 2003.
12
Interest Expense
Interest expense decreased to $196,000$190,000 and $386,000 for the three and six months
ended March 31,June 30, 2003 as compared to $229,000$198,000 and $427,000 for the three and six
months ended March 31,June 30, 2002. In December the Company borrowed $1,700,000 at 12%
interest which represents an additional $51,000 inand $102,000 for the three and
six months ended June 30, 2003 when compared to 2002.
In May 2002 the Company contributed one community to an unconsolidated
partnership. Interest expense for that community was $55,000 during$18,000 and $73,000 for the
three months and six months ended March 31,June 30, 2002. In November 2002, the Company
transferred theits partnership interest in Muskogee Real Estate Investors, LP to
Sylvia M. Gilley, wife of the former CEO of the Company, and reducedreducing the debt due to Mrs. Gilley by $1,120,000 and
extending the due date of the note by one year to June 30, 2004. This reduction
in debt reduced interest expense by an additional $28,000 inand $56,000 for the
three and six months ended June 30, 2003 as compared to 2002.
Equity in Net Income (Loss) of Affiliated Partnership
During the quarterthree and six months ended March 31,June 30, 2002, CREI operated two
properties. The Company's share of the operatingnet losses was ($121,000).292,000) and ($439,000)
respectively. CREI sold its properties in September 2002 and, as part of the
proceeds, received notes. The collection of the notes and interest thereon is
the only remaining operation of the partnership. For the three monthsand six month
periods ended March 31,June 30, 2003 the Company's portion of the CREI's earnings was $18,000.were
$15,000 and $33,000 respectively.
13
Other Income (Expense)
Other Income (expense) for the three months and six months ended March 31,June 30, 2003
was $58,000.$55,000 and $112,000 respectively. The majority of that amount was proceeds
from the settlement of a legal action brought by the Company.
Liquidity and Capital Resources
At March 31,June, 2003, the Company had current assets of $1,659,000$2,670,000 and current
liabilities of $1,149,000.$3,433,000. Included in current liabilities is a $2,255,000 note
to Sylvia M. Gilley. Under the terms of the note the obligation will only be due
if the Company has sufficient cash to pay the note.
Operating activities used $464,000$450,000 of cash in 2003 and $312,000$502,000 in 2002.2002 The
decrease in cash used in 2003 as compared to 2002 was the net result of decreased cash for certain working capital accounts.the
reduced net loss offset by a lower level of non-cash charges in 2003.
Investing Activities used $45,000$50,000 of cash in 2003 and $48,000provided $4,028,000 of
cash in 2002. The use of cash used in 2003 was for purchases of equipment at the
various Communities owned by the CompanyCompany. The cash provided in 2002 includes
$4,236,000 which is the proceeds from the sale of properties as well as
expenditures of $208,000 for the purchase of equipment.
Financing activities used $14,000$20,000 in cash in 2003 and provided $179,000used $4,814,000 in cash in
2002. In 2002 the Company had increased net borrowings of $179,000 whileThe cash used in 2003 the Company had no additionswas for principal payments on debt. The cash used in
debt.
It is anticipated that the Company will acquire additional properties through
investments in third party entities which,2002 was for the most part, will be
13
partnerships.payment of debt. The Company may or may not beprincipal source of the controlling party with respect
to these investments. It is anticipated thatcash in 2002 was
from the senior officers will bring
potential acquisitions and financing to the Company. The Company has no
obligation to participate.sale of properties.
Future acquisitions by the Company are dependent upon obtaining capital and
financing through various means, including financing obtained from loans,
sale/leaseback transactions, long-term state bond financing, debt or equity
offerings and, to the extent available, cash generated from operations. There
can be no assurance that the Company will be able to obtain adequate capital to
finance its projected growth.
Forward Looking Statements
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: A number of the matters and subject areas discussed in this filing that
are not historical or current facts deal with potential future circumstances,
operations, and prospects. The discussion of such matters and subject areas is
qualified by the inherent risks and uncertainties surrounding future
expectations generally, and also may materially differ from Greenbriar
Corporation'sThe Company's actual
future experience involving any one or more of such matters and subject areas
relating to interest rate fluctuations, ability to obtain adequate debt and
equity financing, demand, pricing, competition, construction, licensing,
permitting, construction delays on new developments contractual and licensure,
and other delays on the disposition, transition, or restructuring of currently
or previously owned, leased or managed communities in the Company's portfolio,
and the ability of the Company to continue managing its costs and cash flow
while maintaining high occupancy rates and market rate assisted living charges
in its assisted living communities. GreenbriarThe Company Corporation has attempted to
identify, in context, certain of the factors that they currently believe may
cause actual future experience and results to differ from Greenbriar
Corporation'sThe Company's current
expectations regarding the relevant matter of subject area. These and other
risks and uncertainties are detailed in the Company's reports filed with the
Securities and Exchange Commission (SEC), including Greenbriar Corporation'sThe Company's Annual Reports
on Form 10-K and Quarterly Reports on Form 10-Q.
14
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------------------------------------------------------------------
Nearly all of the Company's debt is financed at fixed rates of interest.
Therefore the Company has minimal risk from exposure to changes in interest
rates.
ITEM 4: CONTROLS AND PROCEDURES
- -------------------------------
The Company maintains a set of disclosure controls and procedures and internal
controls designed to ensure that information required to be disclosed in the
Company's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time period specified in the
Securities and Exchange Commission rules and forms. Our principal executive and
financial officer has evaluated our disclosure control procedures within 90 days
prior to the filing of this Quarterly report on Form 10-Q and have determined
that such disclosure controls and procedures are effective.
There were no significant changes in the Company's internal controls or, to its
knowledge, in other factors that could significantly affect its disclosure
controls and procedures subsequent to the Evaluation Date.
1415
PART II: OTHER INFORMATION
ITEMS 1-6: ARE NOT APPLICABLE.
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EXHIBITS
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Exhibit 31.1 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Exhibit 32.1 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Rule 13a-14(b), 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by
undersigned, thereunto duly authorized.
Greenbriar Corporation
Date: May 20, 2002August 19, 2003 By: /s/ Gene S. Bertcher
-----------------------
Chief Executive Officer
Chief Financial Officer
15
GREENBRIAR CORPORATION
MARCH 31, 2003
CERTIFICATIONS
I, Gene S. Bertcher, Chief Executive Officer and Chief Financial Officer of
Greenbriar Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Greenbriar Corporation
("Registrant");
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the
Registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date.
5. I have disclosed, based on our most recent evaluation, to the Registrant's
auditors and the audit committee of the Registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrant's ability to record, process,
summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and
6. I have indicated in this annual report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
/S/ Gene S. Bertcher
---------------------------------
Chief Executive Officer
Chief Financial Officer
May 20, 2002
16