FORM 10-Q/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X]
| | |
þ | | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTER ENDED MARCH 31, 2005
or
| | |
o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 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 nameFile Number 000-08187
CABELTEL INTERNATIONAL CORPORATION
(Exact Name of Registrant as specifiedSpecified in its charter)
Nevada 75-2399477
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
14185 Dallas Parkway, Suite 650, Its Charter)
| | |
Nevada | | 75-2399477 |
| | |
(State or Other Jurisdiction of Incorporation or Organization) | | (I.R.S. Employer Identification No.) |
Dallas, Texas 75254
(Address
(Address of principal executive offices) (Zip
1755 Wittington Place, Suite 340
75234
(Zip Code)
Registrant's
(972) 407-8400
(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: Nonecode)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the issuerregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the issuerRegistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
At November 3, 2003,Yesx. No¨.
Indicate by check mark whether the issuer hadregistrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yeso. Nox.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso. Nox.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yeso. Noo.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding approximately 703,000 shares of each of the issuer’s classes of Common Stock, as of the latest practicable date.
| | |
Common Stock, $.01 par value (Class) | | 977,000 (Outstanding at April 30, 2005) |
AMENDMENT NO. 1 TO
FORM 10-Q QUARTERLY REPORT FOR
CABELTEL INTERNATIONAL CORPORATION
FOR THE FISCAL QUARTER ENDED MARCH 31, 2005
The undersigned Registrant hereby amends the following items, exhibits, or other portions of its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, as set forth below and as reflected in the substituted pages attached hereto which replace the same numbered pages in the original filing.
As a preface to the identification below, the entirety of the Report has been amended to reflect an acquisition of two U.S. entities which are not consolidated into the Company but are maintained in a separate basis. This change was necessitated by certain comments by the Staff of the Securities and Exchange Commission (the “SEC”), which resulted in an appeal to the Office of the Chief Accountant of the SEC. On October 25, 2005, the Office of the Chief Accountant of the SEC provided its determination of the appeal with respect to certain accounting treatment. The appeal was the result of an initial determination and comment by the Staff of the SEC during May 2005, that, in this very unique set of circumstances and in the opinion of the Staff, reverse acquisition accounting treatment may not have been the proper treatment. Management has determined based upon discussions with the Office of the Chief Accountant during such appeal that while the overall acquisition and other contingent aspects of the transaction are a single transaction, the appropriate accounting treatment at this time is recordation of the issuance of the Preferred Stock together with a recordation of a “contra asset” in the same amount for the value
$.01 Common Stock.
GREENBRIARof the two U.S. corporations and CableTEL AD. The result is that Management of the Company filed a Form 8-K Current Report for event noted October 25, 2005, under Item 4.02, which of necessity requires certain changes in the Annual Report on Form 10-K and the Quarterly Report on Form 10-Q to cover such treatment. This document includes items which are changed are as follows: | • | | Page 4, Item 1 — Financial Statements |
|
| • | | Page 11, Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
| • | | Page 14, Item 3 — Quantitative and Qualitative Disclosures About Market Risk |
The balance of the items have not been changed from the original filing and have, accordingly, not been updated to a more current date.
CABELTEL INTERNATIONAL CORPORATION
Index to Quarterly Report on Form 10-Q
Period ended
September 30, 2003
PART I: FINANCIAL INFORMATION..................................................3
ITEM 1: FINANCIAL STATEMENTS...............................................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......................................................14
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE
AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002.........................14
FORWARD LOOKING STATEMENTS..............................................18
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........18
ITEM 4: CONTROLS AND PROCEDURES............................................18
PART II: OTHER INFORMATION....................................................19
SIGNATURES.................................................................19
2
March 31, 2005 | | | | |
PART I: FINANCIAL INFORMATION
ITEM | | | 4 | |
Item 1: FINANCIAL STATEMENTS
- -----------------------------
Greenbriar Corporation
Financial Statements | | | 4 | |
Consolidated Balance Sheets
(Amounts in thousands)
September 30, December 31,
Assets 2003 2002
(Unaudited)
------------- -------------
Current assets
Cash and cash equivalents $ 238 $ 661
Accounts receivable-trade 108 22
Note receivable 2,604 1,238
Other current assets 207 323
------------- -------------
Total current assets 3,157 2,244
Notes receivable, from sale of properties 4,107 7,997
Less deferred gains (3,720) (6,127)
------------- -------------
387 1,870
Deferred income tax benefit 1,161 1,161
Property and equipment, at cost
Land and improvements 541 678
Buildings and improvements 4,851 6,850
Equipment and furnishings 1,285 1,387
Proven oil and gas properties (full cost method) 1,294
------------- -------------
7,971 8,915
Less accumulated depreciation and
depletion 2,172 2,282
------------- -------------
5,799 6,633
Deposits 292 311
Other assets 391 405
------------- -------------
$ 11,187 $ 12,624
============= =============
|
3
Greenbriar Corporation
Consolidated Balance Sheets - Continued
(Amounts in thousands)
September 30, December 31,
Liabilities and Stockholders' equity 2003 2002
(Unaudited)
------------- -------------
Current liabilities
Current maturities of long-term debt $ 2,340 $ 113
Accounts payable - trade 306 405
Accrued expenses 574 367
Other current liabilities 279 668
------------- -------------
Total current liabilities 3,499 1,553
Long-term debt 4,591 8,479
Investment in Affiliate 82 46
Deferred Gain 740 740
Other long term liabilities 508 455
------------- -------------
Total liabilities 9,420 11,273
Stockholders' equity
Preferred stock 1 1
Common stock $.01 par value; authorized, 4,000
shares; 703 shares issued and outstanding 7 7
Additional paid-in capital 54,988 54,988
Accumulated deficit (53,229) (53,645)
------------- -------------
1,767 1,351
------------- -------------
$ 11,187 $ 12,624
============= =============
4
Greenbriar Corporation
| | 4 | | Consolidated Statements Ofof Operations
(Amounts in thousands, except per share data)
For The Three Month For The Nine Month
Period Ended Period Ended
September 30, September 30,
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Revenue
Assisted living operations $ 1,168 $ 1,185 $ 3,356 $ 3,554
Oil and gas operations 174 174
--------- --------- --------- ---------
1,342 1,185 3,530 3,554
--------- --------- --------- ---------
Operating expenses
Assisted living operations 633 547 1,888 1,661
Oil and gas operations 141 141
Lease expense 338 376 1,137 1,145
Depletion, depreciation and 84 120 241 345
amortization
Corporate general and
administrative 295 480 554 1,349
--------- --------- --------- ---------
1,491 1,523 3,961 4,500
--------- --------- --------- ---------
Operating loss (149) (338) (431) (946)
Other income (expense)
Interest income 110 178 224 408
Interest expense (157) (203) (543) (597)
Net gain on sale of assets 1,008 1,008
Equity in net income (loss) of
affiliated partnership 16 (254) 49 (667)
Other 27 (660) 109 (660)
--------- --------- --------- ---------
1,004 (939) 847 (1,516)
--------- --------- --------- ---------
Earnings (loss) from continuing 855 (1,277) 416 (2,462)
Operations
Discontinued operations
Loss from operations (374) (684)
Loss on disposal, including taxes
of $400 (2,822) (2,822)
--------- --------- --------- ---------
Loss from discontinued (3,196) (3,506)
operations
--------- --------- --------- ---------
Net earnings (loss) 855 (4,473) 416 (5,968)
--------- --------- --------- ---------
Net earnings (loss) per common share -
basic and diluted $ 1.21 $ (6.23) $ .59 $ (8.31)
Weighted average of common and
equivalent shares outstanding - 703 718 703 834
basic and diluted
|
5
Greenbriar Corporation
| | 6 | | Consolidated Statements of Cash Flow
(Amounts in thousands)
For the nine month
Period Ended September 30,
2003 2002
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net earnings (loss) $ 416 $ (5,968)
Adjustments to reconcile net earnings (loss) to net
cash used in operating activities
Depreciation | | | 7 | |
Notes To Consolidated Financial Statements | | | 8 | |
Item 2: Management’s Discussion And Analysis Of Financial Condition And Results Of Operations | | | 11 | |
Item 3. Quantitative and amortization 241 345
(Gain) loss on saleQualitative Disclosures About Market Risk | | | 14 | |
Item 4. Controls and Procedures | | | 14 | |
PART II: OTHER INFORMATION | | | 14 | |
Item 2. Unregistered Sales of assets (1,008) 2,422
Equity in net loss (income)Securities and Use of partnership (49) 667
Changes in operating assets and liabilities
Deferred taxes 400
Accounts receivable (86) 54
Other current and non current assets 92 (1,204)
Accounts payable and other liabilities 59 (141)
----------- -----------
Net cash used in operating activities (335) (3,425)
----------- -----------
Cash flows used in investing activities
Proceeds from sale of property 125 8,558
Purchase of property and equipment (262) (209)
----------- -----------
Net cash provided by (used in) investing
activities (137) 8,349
Cash flows from financing activities
Payments on debt (51) (6,699)
Borrowings 100 1,417
----------- -----------
Net cash provided by (used in) financing
activities 49 (5,282)
----------- -----------
NET DECREASE IN CASH AND (423) (358)
CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 661 1,246
----------- -----------
Cash and cash equivalents at end of period $ 238 $ 888
=========== ===========
| | | 14 | |
Item 6. Exhibits | | | 15 | |
Signatures | | | 16 | |
Part I: Financial Information
Item 1: Financial Statements
CabelTel International Corporation
Consolidated Balance Sheets
(Amounts in thousands)
| | | | | | | | |
| | March 31, | | | December 31, | |
| | 2005 | | | 2004 | |
| | (Unaudited) | | | | |
Assets | | | | | | | | |
Current Assets | | | | | | | | |
Cash and cash equivalents | | $ | 227 | | | $ | 762 | |
Accounts receivable-trade | | | 260 | | | | 222 | |
Notes receivable | | | 756 | | | | 856 | |
Property held for sale | | | 1,147 | | | | 2,925 | |
Other current assets, net | | | 210 | | | | 103 | |
| | | | | | |
| | | | | | | | |
Total Current Assets | | | 2,600 | | | | 4,868 | |
| | | | | | | | |
Notes Receivablenet of deferred income | | | 309 | �� | | | 309 | |
Property and equipment, at cost | | | | | | | | |
Land and improvements | | | 2,232 | | | | 2,232 | |
Buildings and improvements | | | 5,379 | | | | 5,349 | |
Equipment and furnishings | | | 275 | | | | 273 | |
Proven oil and gas properties (full cost method) | | | 1,403 | | | | 1,479 | |
| | | | | | |
| | | 9,289 | | | | 9,333 | |
| | | | | | | | |
Less accumulated depreciation, depletion and amortization | | | (709 | ) | | | (617 | ) |
| | | | | | |
| | | 8,580 | | | | 8,716 | |
| | | | | | | | |
Deferred Tax Asset | | | 1,161 | | | | 1,161 | |
| | | | | | | | |
Due from CableTEL AD — related party | | | 1,737 | | | | 951 | |
| | | | | | | | |
Deposits | | | 154 | | | | 36 | |
| | | | | | | | |
Other Assets | | | 1,494 | | | | 725 | |
| | | | | | |
| | | | | | | | |
Total Assets | | $ | 16,035 | | | $ | 16,766 | |
| | | | | | |
The accompanying notes are an integral part of this statement.
4
CabelTel International Corporation
Consolidated Balance Sheets — Continued
(Amounts in thousands)
| | | | | | | | |
| | March 31, | | | December 31, | |
| | 2005 | | | 2004 | |
| | (Unaudited) | | | | |
Liabilities and Stockholders' Equity | | | | | | | | |
Current Liabilities | | | | | | | | |
Current maturities of long-term debt | | $ | 3,526 | | | $ | 5,945 | |
Current notes payable | | | 70 | | | | 240 | |
Accounts payable — trade | | | 545 | | | | 687 | |
Accrued expenses | | | 1,048 | | | | 828 | |
Other current liabilities | | | 415 | | | | — | |
| | | | | | |
| | | | | | | | |
Total Current Liabilities | | | 5,604 | | | | 7,700 | |
| | | | | | | | |
Long-term debt | | | 8,669 | | | | 7,173 | |
| | | | | | | | |
Other non-current liabilities | | | 161 | | | | 155 | |
| | | | | | |
| | | | | | | | |
Total Liabilities | | | 14,434 | | | | 15,028 | |
| | | | | | | | |
Stockholders’ Equity | | | | | | | | |
Preferred stock Series B | | | 1 | | | | 1 | |
Preferred stock Series J | | | 3,150 | | | | 3,150 | |
Preferred stock Series J contra equity | | | (3,150 | ) | | | (3,150 | ) |
Common stock $.01 par value; authorized, 4,000,000 shares; shares issued and outstanding, 977,000 | | | 10 | | | | 10 | |
Additional paid-in capital | | | 55,966 | | | | 55,966 | |
Retained earnings | | | (54,376 | ) | | | (54,239 | ) |
| | | | | | |
| | | 1,601 | | | | 1,738 | |
| | | | | | |
| | | | | | | | |
Total Liabilities & Stockholders’ Equity | | $ | 16,035 | | | $ | 16,766 | |
| | | | | | |
The accompanying notes are an integral part of this statement.
5
CabelTel International Corporation
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
| | | | | | | | |
| | For The Three Month | |
| | Period Ended March 31, | |
| | 2005 | | | 2004 | |
| | (Unaudited) | | | (Unaudited) | |
Revenue | | | | | | | | |
Real estate operations | | | 1,100 | | | | 1,224 | |
Oil and gas operations | | | 414 | | | | 315 | |
| | | | | | |
| | | 1,514 | | | | 1,539 | |
| | | | | | |
| | | | | | | | |
Operating expenses | | | | | | | | |
Real estate operations | | | 606 | | | | 632 | |
Oil and gas operations | | | 267 | | | | 246 | |
Lease expense | | | 231 | | | | 224 | |
Depreciation, depletion and amortization | | | 109 | | | | 87 | |
Corporate, general and administrative | | | 262 | | | | 277 | |
| | | | | | |
| | | 1,475 | | | | 1,466 | |
| | | | | | |
| | | | | | | | |
Operating earnings (loss) | | | 39 | | | | 73 | |
| | | | | | | | |
Other income (expense) | | | | | | | | |
Interest income | | | 40 | | | | 74 | |
Interest expense | | | (135 | ) | | | (282 | ) |
Gain (loss) on sale of assets | | | (118 | ) | | | — | |
Equity in net income of affiliated partnership | | | — | | | | 15 | |
Other | | | 32 | | | | 11 | |
| | | | | | |
| | | (181 | ) | | | (182 | ) |
| | | | | | |
| | | | | | | | |
(Loss) from continuing operations | | | (142 | ) | | | (109 | ) |
| | | | | | | | |
Gain (Loss) from discontinued operations | | | 5 | | | | (66 | ) |
| | | | | | | | |
Net loss applicable to common shares | | $ | (137 | ) | | $ | (175 | ) |
| | | | | | | | |
Earnings per share — basic | | | | | | | | |
Continuing operations | | $ | (0.14 | ) | | $ | ( 0.11 | ) |
Discontinued operations | | | — | | | | (0.07 | ) |
| | | | | | |
Net earnings (loss) per share | | $ | (0.14 | ) | | $ | (0.18 | ) |
| | | | | | | | |
Basic weighted average common shares | | | 977 | | | | 977 | |
The accompanying notes are an integral part of this statement.
6
CabelTel International Corporation
Consolidated Statements of Cash Flow
(Amounts in thousands)
| | | | | | | | |
| | For The Three Month | |
| | Period Ended March 31, | |
| | 2005 | | | 2004 | |
| | (Unaudited) | | | (Unaudited) | |
Cash flows from operating activities | | | | | | | | |
Net loss | | $ | (137 | ) | | $ | (175 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | |
Depreciation, depletion and amortization | | | 109 | | | | 87 | |
Depreciation from discontinued operations | | | — | | | | 36 | |
(Gain) from affiliate | | | | | | | (18 | ) |
Loss on sale of assets | | | 118 | | | | | |
Changes in operating assets and liabilities | | | | | | | | |
Accounts receivable | | | (38 | ) | | | (76 | ) |
Other current and non current assets | | | (1,033 | ) | | | (61 | ) |
Accounts payable and other liabilities | | | 499 | | | | (258 | ) |
| | | | | | |
| | | | | | | | |
Net cash used in operating activities | | | (482 | ) | | | (465 | ) |
| | | | | | | | |
Cash flows provided by investing activities | | | | | | | | |
Repayment of notes receivable | | | 100 | | | | 638 | |
Sale of assisted living facility | | | 1,910 | | | | | |
(Sale) purchase of property and equipment, net | | | (32 | ) | | | 13 | |
| | | | | | |
| | | | | | | | |
Net cash provided by investing activities | | | 1,978 | | | | 651 | |
| | | | | | | | |
Cash flows from financing activities | | | | | | | | |
Net advances from affiliate | | | 562 | | | | — | |
Payments on debt | | | (2,593 | ) | | | ( 579 | ) |
| | | | | | |
| | | | | | | | |
Net cash used in financing activities | | | (2,031 | ) | | | (579 | ) |
| | | | | | | | |
Net (decrease) in cash and cash equivalents | | | (535 | ) | | | (393 | ) |
| | | | | | | | |
Cash and cash equivalents at beginning of period | | | 762 | | | | 688 | |
| | | | | | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 227 | | | $ | 295 | |
The accompanying notes are an integral part of this statement.
7
Notes To Consolidated Financial Statements
For the Unaudited Three and Nine Months Ended June 30, 2003March 31, 2005 and 2002
2004
Note A: Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of GreenbriarCabelTel International Corporation and its majority-owned subsidiaries (collectively, "the Company"“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,reflect all adjustments that are, in the opinion of management, allnecessary to fairly present such information. All such adjustments (consistingare of a normal recurring accruals) necessary fornature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a fair presentationdescription of consolidated resultssignificant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of operations,America, have been condensed or omitted pursuant to such rules and regulations.
These financial statements should be read in conjunction with the consolidated financial positionstatements and consolidated cash flows ataccompanying notes included in the dates andCompany’s Annual Report on Form 10-K, as amended, for the periods indicated have been
included.fiscal year ended December 31, 2004. Operating results for the three and nine month periodsperiod ended September 30, 2003March 31, 2005 are not necessarily indicative of the results that may be expected for any subsequent quarter or the year endedending 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.
2005.
Note B: Notes Receivable and Deferred Gain From Sale Of Property
As a result of the sale of two communitiesproperties in 2001 the Company holds tax-exempt notes in the amount of $4,030,000 bearing interest at 9.5%. The notes mature on April 1, 2032, and August 1, 2031, respectively. The repayment of the notes is limited to the cash flow of the respective communitiesproperties either from operations, refinance or sale. The Company has deferred gains in the amount of $3,720,000. The deferred gains and$3,721,000 plus unpaid interest incomefrom these properties which will be recognized as cash is received.
The Company also sold a property in March 2005, and received a $200,000 non-interest bearing note as partial payment. Repayment of the note is limited to the cash flow of the property from operations, refinancing or sale. The Company has deferred gains of $200,000 which will be recognized as cash is received.
8
Note C: Affiliated PartnershipsLong-Term Obligations
Long-term debt is comprised of the following (in thousands):
| | | | | | | | |
| | March 31, | | | December 31, | |
| | 2005 | | | 2004 | |
Notes payable to financial institutions maturing through 2018; fixed and variable interest rates ranging from 5.75% to 11%, collateralized by property, fixtures, equipment and the assignment of rents | | $ | 7,579 | | | $ | 7,627 | |
| | | | | | | | |
Notes payable to individuals and companies maturing through 2023; fixed and variable interest rates ranging from 10% to 18% collateralized by real property, personal property, fixtures, equipment and the assignment of rents | | | 2,255 | | | | 4,590 | |
| | | | | | | | |
Notes payable to related parties, bearing interest at rates ranging from 15% to 18% | | | 2,361 | | | | 901 | |
| | | | | | |
| | | 12,195 | | | | 13,118 | |
| | | | | | | | |
Less: current maturities | | | 3,526 | | | | 5,945 | |
| | | | | | |
| | $ | 8,669 | | | $ | 7,173 | |
Note D — Discontinued Operations
The Company owned an assisted living property in Greenville, South Carolina. In October 2001,August 2002 the Company became a 56% limited partner in Corinthians Real
Estate Investors, LP ("CREI"), a partnership formedleased the property to acquire two properties.an unrelated third party who has taken over the property’s operation. The general partner is a limited liability corporation whose sole member is W.
Michael Gilley,monthly lease payments received by the sonCompany approximated the Company’s cost for interest and real estate taxes. In May 2005 the Company sold the property to the lessee for the amount of the former CEO ofexisting mortgage on the Company. Sylvia Gilley, W.
Michael Gilley's mother, has a 25.9% interest,property which approximated the general partner has a .1%
interest,Company’s carrying value for the Company's current chief executive officer has a 10.5% interest,
and other employees ofproperty.
On January 31, 2004, the Company
have interests aggregating 7.5%. In October
2001, the Partnership acquiredterminated a
retirement communitylease for
approximately
$9,100,000 and in January 2002, it acquired an assisted living community
for
approximately $2,800,000.
7
in Georgia. 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 as
consideration for paymentoperations 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 to
the Company a $400,000 participation in another note due September 30, 2004 in
payment of all 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 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
September 30, 2003
Current assets $ 51
Other assets 248
Notes receivable 994
-----------
$ 1,293
Current liabilities $ 70
Other liabilities 157
Deferred gain 994
-----------
1,221
Partners' equity 72
-----------
$ 1,293
Statement of Operations
Nine months ended September 30, 2003
Interest Income $ 89
Expenses 6
-----------
Net Income $ 83
-----------
9
Note D - Acquisition and Sale of Assets
Acquisition of Gaywood Oil & Gas, LLC
Effective August 1, 2003 Greenbriar acquired Gaywood Oil & Gas, LLC (Gaywood) a
company that has oil and gas leases in the East Texas Field. The oil wells in
this fieldproperty have low but steady oil production. The Texas Railroad Commission,
which regulates the oil & gas industry in Texas, limits production in this field
to 20 barrels of oil per day for each operating well. There are approximately
300 existing wells on the leases owned by Gaywood At the time of the acquisition
Gaywood had 46 operating wells, generating approximately 4,000 barrels of oil
per month.
Greenbriar has elected to account for it's oil and gas operations using the full
cost method of accounting.
Gaywood was formed and acquired the leases in October 2002 however the
production was insignificant until January of 2003. The following pro forma
financial information reflects Greenbriar as if Gaywood had been acquired on
January 1, 2003
Three months Nine Months
ended ended
September 30, 2003 September 30, 2003
------------------ ------------------
Revenue $1,428,000 $4,045,000
Net earnings $830,000 $441,000
Net earnings per share $1.18 $.63
Greenbriar purchased Gaywood with 9.5% interest bearing bonds which were carried
at zero in the Company's financial statements. Gaywood was valued by independent
reserve engineers as having a fair market value of $1,119,000 which was recordedreflected as a gain by Greenbriar.discontinued operation in 2005 and 2004. In March 2005, the company sold an assisted living facility in North Carolina and recorded a loss of $42,000. The purposeoperations of this acquisition was to acquirethat property have been reflected as a cash
flowing asset with future potential valuediscontinued operation in excess of the purchase price.
Gaywood was acquired from a trust for the benefit of Mr. Gene E. Phillips spouse2005 and children. On October 16, 2003 Mr. Phillips and six other entities filed a
Schedule 13D with the Securities and Exchange Commission indicating that the six
entities owned, in total, 55,000 shares (approximately 8% of the Company's
outstanding common stock) and the entire group may be deemed to constitute a
person within the meaning of Section 13d of the Securities act of 1934.
Sale of Undeveloped Land
On September 10, 2003,2004.
In May 2005 the Company sold
one acre of undeveloped land for
$125,000an assisted living facility in
cash to an entity whichSouth Carolina. The facility has been
deemed to be an affiliate of Gene
E. Phillips. The sale resulted in a loss of approximately $111,000.
10
Note E: Long-Term Obligations
Long-term debt is comprised of the following (in thousands):
September 30, December 31,
2003 2002
------------- -------------
Notes 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 $ 2,107 $ 3,956
Notes payable to individuals and companies maturing
through 2023; variable and fixed interest rates ranging
from 7% to 12% collateralized by real property,
personal property, fixtures, equipment and the assignment of rents 1,850 1,753
Notes payable to Sylvia M. Gilley, bearing interest at 10% and
maturing on July 1, 2004 2,255 2,255
Notes payable to current and former executive officers,
non-interest bearing at 8.5% and maturing on December 31,
2004, net of discount of $163 and $260 respectively,
representing interest imputed at 8.5% 695 598
Other 24 30
------------- -------------
6,931 8,592
Less: current maturities 2,340 113
============= =============
$ 4,591 $ 8,479
As discussed in Note C the company is a guarantor of debt in the amount of
$1,600,000.
Note F - 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 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,
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
11
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 an asset held for sale.sale at March 31, 2005. The operations of that property have been reflected as a discontinued operation in 2005 and 2004. 9
Note E — Segment Reporting
Business Operations
The Company adopted
SFAS No. 144 as of January 1, 2002.
During 2002, the Company disposed of six communities. Revenues for the six
communities for the three and nine months ended September 30, 2002 were
$1,157,000 and $4,262,000 respectively.
Pursuant to SFAS No. 144, the results of operations for the six communities have
been reclassified to Discontinued Operations for the three and nine months ended
September 30, 2002.
Note G - Stock Options
operates two separate distinct businesses:
| • | | The ownership and operation of real estate through one retirement community in King City, Oregon, with a capacity of 114 residents, leasing of a residential retirement property to a third party in Greenville, South Carolina and ownership and operation of an outlet mall in Gainesville, Texas with approximately 315,000 square feet of retail space available for lease. |
|
| • | | The ownership of oil and gas leases in Gregg and Rusk Counties, Texas on which 48 producing wells were operating as of March 31, 2005. |
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 Statement 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 pro forma stock
based compensation expense for any period presented.
Note H - Stock Split
In October 2003 the Company completed a stock split, affected in the form of a
stock dividend, whereby each shareholder received one additional share of stock
for each share that they owned. All financial and share information included in
this filing has been adjusted to reflect the stock split.
Note I - Segments
The Company and its subsidiaries are principally engaged in the business of
acquiring, enhancing and selling real estate properties. Since 1996 those
activities have, almost exclusively, involved assisted living facilities.
Effective August 1, 2003 the Company acquired 100% of the stock in Gaywood Oil &
Gas LLC, a limited liability company that owns working interests in certain oil
producing wells. The acquisition was done for investment purposes and
substantially all costs associated with the oil and gas operations are operating
expenses incurred directly by Gaywood. The Company continues to allocate all of
its corporate overhead expenses to its core real estate operation.
12
Segmentsegment information and reconciliation to income (loss) from operations are as
follows:
Three months ended September 30, 2003
- -------------------------------------
Real Estate Oil and Gas Consolidated
Operations Operations
Revenue $ 1,168,000 $ 174,000 $ 1,342,000
Depletion, depreciation
and amortization 69,000 15,000 84,000
Operating income (loss) (167,000) 18,000 (149,000)
Total assets $ 9,873,000 $ 1,314,000 $ 11,187,000
Nine months ended September 30, 2003
- ------------------------------------
Real Estate Oil and Gas Consolidated
Operations Operations
Revenue $ 3,356,000 $ 174,000 $ 3,530,000
Depletion, depreciation
and amortization 226,000 15,000 241,000
Operating income (loss) (449,000) 18,000 (431,000)
Total assets $ 9,873,000 $ 1,314,000 $ 11,187,000
Note J - 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 judge's award of legal
fees. Based upon the ruling of the Court of Appeals the defendants are obligated
for the judgment plus $165,093 in interest since 1993. The judgment is against
all the defendants as a group.
The defendants have filed an appeal to the California Supreme Court but the
appeal was denied. There are no further legal defenses available. There remains
the issue of the allocation of the award among the defendants. Management has
provided a reserve that it believes is sufficient to cover its expected
liability in this matter.
13
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- --------------------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
Overview
As of September 30, 2003, the Company owns one assisted living community and
leases two assisted living communities in three states with a capacity of 257
residents. In addition the Company owns one assisted living 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 whose intent is
to acquire properties and either sell, lease or hire third party operators to
manage the properties.
Effective August 1, 2003 Greenbriar acquired Gaywood Oil & Gas, LLC (Gaywood) a
company that has oil and gas leases in the East Texas field. The oil wells in
this field have low but steady production. There are approximately 300 existing
wells on the leases owned by Gaywood. At the time of the acquisition Gaywood had
46 operating wells, generating approximately 4,000 barrels of oil per month.
Greenbriar intends to open additional Gaywood wells however Greenbriar does not,
at this time, anticipate acquiring additional oil and gas properties. The
purpose of this acquisition was to acquire a cash flowing asset with future
potential value in excess of the purchase price.
Three and nine month periods ended September 30, 2003 compared to three and
nine-month periods ended September 30, 2002.
Revenues and Operating Expenses from Assisted Living Operations
Revenues for the assisted living communities were $1,168,000 and $3,356,000 for
the three and nine months ended September 30, 2003 as compared to $1,185,000 and
$3,554,000 for the three and nine months ended September 30, 2002. Community
operating expenses, which consist of assisted living community expenses, lease
expense, depreciation and amortization, were $1,040,000 and $3,128,000 for the
three and nine months ended September 30, 2003 as compared to $1,043,000 and
$2,863,000 for the three and nine months ended September 30, 2002.
14
The Company owned a community that it leased to a third party during the three
and nine month periods ended September 30, 2002. The lease expired in November
2002 and the Company operated the Community during the three and nine months
ended September 30, 2003. The revenues included for this community in 2003 were
$177,000 and $461,000 respectively. The operating expenses were $184,000 and
$564,000.
Included in revenue for the nine months ended September 30, 2002 is $333,000,
which pertains to one community that was contributed to an unconsolidated
partnership in May 2002. Operating expense for the equivalent period was
$215,000. The Company sold its partnership interest in November 2002.
During the three and nine months ended September 30, 2002 the Company managed
three communities for a third party. The management fees recorded in the three
and nine months of 2002 were $114,000 and $338,000, respectively. The Company
did not manage properties for third parties during 2003.
On a "same store" basis the revenues for the three and nine months ended
September 30, 2003 were $991,000 and $2,895,000 as compared to $1,071,000 and
$2,883,000. The Community operating expenses for the three and nine months ended
September 30, 2003 were $856,000 and $2,564,000 as compared to $1,043,000 and
$2,648,000 for the three and nine months ended September 30, 2002.
Corporate General and Administrative Expenses
General and administrative expenses were $295,000 and $554,000 for the three and
nine months ended September 30, 2003 compared to $480,000 and $1,349,000 for the
three and nine months ended September 30, 2002. During the later part of 2001
and 2002 the Company sold, leased or disposed of 26 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 fewer communities, expenses
such as travel, communication costs and general operating costs were reduced.
In October 2001, principally to help the Company's cash flow due to its reduced
size, the senior officers agreed to substantial salary reductions. In lieu of
salary the Company agreed to allow the officers to participate in future
acquisitions. In October 2003 the Company's Board of Directors decided that the
officers would no longer participate in the ownership of acquired entities. The
Board agreed to increase certain officers' salaries effective January 1, 2003.
During the third quarter of 2003 there was a charge of $110,000 for officers'
salaries that pertained to the first two quarters of 2003.
Interest Income
Interest income decreased to $110,000 and $224,000 for the three and nine months
ended September 30, 2003 as compared to $178,000 and $408,000 for the three and
nine months ended September 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 2003. The balance of the difference is due principally to a
lowering of interest rates.
15
Interest Expense
Interest expense decreased to $157,000 and $543,000 for the three and nine
months ended September 30, 2003 as compared to $203,000 and $597,000 for the
three and nine months ended September 30, 2002.
In December 2002 the Company borrowed $1,700,000 at 12% interest which
represents an additional $51,000 and $153,000 for the three and nine months
ended September 30, 2003 when compared to 2002.
In May 2002 the Company contributed one community to an unconsolidated
partnership. Interest expense for that community was $18,000 and $73,000 for the three months and nineended March 31, 2005, follows.Three months ended September 30, 2002. In November 2002,March 31, 2005 (amounts in thousands)
| | | | | | | | | | | | | | | | |
| | | | | | Real | | | Oil | | | | |
| | Corporate | | | Estate | | | Operation | | | Consolidated | |
| | |
Revenue | | $ | — | | | $ | 1,100 | | | $ | 414 | | | $ | 1,514 | |
| | |
| | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | |
Operations | | | — | | | | 606 | | | | 267 | | | | 873 | |
Lease expense | | | 20 | | | | 211 | | | | — | | | | 231 | |
Depreciation, depletion and amortization | | | 2 | | | | 81 | | | | 26 | | | | 109 | |
Corporate general and administrative | | | 262 | | | | — | | | | — | | | | 262 | |
| | |
| | | 284 | | | | 898 | | | | 293 | | | | 1,475 | |
| | |
| | | | | | | | | | | | | | | | |
Operating earnings (loss) | | | (284 | ) | | | 202 | | | | 121 | | | | 39 | |
| | | | | | | | | | | | | | | | |
Interest income | | | 40 | | | | — | | | | — | | | | 40 | |
Interest expense | | | (54 | ) | | | (81 | ) | | | | | | | (135 | ) |
(Loss) on sale of assets | | | (42 | ) | | | — | | | | (76 | ) | | | (118 | ) |
Other | | | 32 | | | | — | | | | — | | | | 32 | |
| | |
| | | (24 | ) | | | (81 | ) | | | (76 | ) | | | (181 | ) |
| | |
| | | | | | | | | | | | | | | | |
Net earnings (loss) from continuing operations | | | (308 | ) | | | 121 | | | | 45 | | | | (142 | ) |
| | | | | | | | | | | | | | | | |
Total assets | | $ | 5,848 | | | $ | 8,507 | | | $ | 1,680 | | | $ | 16,035 | |
10
Item 2: Management’s Discussion And Analysis Of Financial ConditionAnd Results Of Operations
Overview
Critical Accounting Policies and Estimates
The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company transferred its partnership interestCompany’s Consolidated Financial Statements, which have been prepared in Muskogee Real Estate Investors,
LP to Sylvia M. Gilley in exchange for a reductionaccordance with accounting principles generally accepted in the debt due Mrs. GilleyUnited States of $1,120,000 and extending the due dateAmerica. Certain of the note by one yearCompany’s accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to June 30,
2004. This reductionan inherent degree of uncertainty. These judgments and estimates are based upon the Company’s historical experience, current trends, and information available from other sources that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company believes the following critical accounting policies are more significant to the judgments and estimates used in debt reduced interest expense bythe preparation of its consolidated financial statements. Revisions in such estimates are recorded in the period in which the facts that give rise to the revisions become known.
The Company’s allowance for doubtful accounts receivable and notes receivable is based on an additional $28,000
and $84,000 for the three and nine months ended September 30, 2003.
Equity in Net Income (Loss) of Affiliated Partnership
During the three and nine months ended September 30, 2002, CREI operated two
properties. The Company's shareanalysis of the net losses was ($254,000)risk of loss on specific accounts. The analysis places particular emphasis on past due accounts. Management considers such information as the nature and ($667,000)
respectively. CREI sold these properties in September 2002 and, as partage of the proceeds, received notes. The collectionreceivable, the payment history of the notestenant, customer or other debtor and interest thereon is
the only remaining operationfinancial condition of the partnership. For the three and nine month
periods ended September 30, 2003 the Company's portiontenant or other debtor. Management’s estimate of the CREI's earnings
were $16,000required allowance, which is reviewed on a quarterly basis, is subject to revision as these factors change.
Deferred Tax Assets
Significant management judgment is required in determining the provision for income taxes, deferred tax assets and
$49,000 respectively.
16
Other Income (Expense)
Other Income (expense) forliabilities and any valuation allowance recorded against net deferred tax assets. The future recoverability of the three months and nine months ended September 30,
2003 was $27,000 and $109,000 respectively. These amounts principally representCompany’s net deferred tax assets is dependent upon the generation of future taxable income fromprior to the reimbursementexpiration of a prior year insurance claim as well as the settlement of a lawsuit.
Gain on Sale of Assets
In 2001loss carry forwards. The company believes that it will generate future taxable income to fully utilize the Company sold a property and received proceeds of both cash and a
bond bearing interest at the rate of 9.5%. The payment of both principal and
interest on the bond was based exclusively on the cash flow from the property
sold. For financial statement purposes the bond was valued at zero.
In August the Company exchanged the bond for 100% of Gaywood Oil & Gas LLC.
Gaywood was valued by independent engineers as having a fair market value of
$1,119,000, which was recorded as a gain by the Company. In September 2003 the
Company sold land it was holding for $125,000 cash and recorded a loss of
$111,000 on the sale.
net deferred tax assets. Liquidity and Capital Resources
On September 30, 2003,
At March 31, 2005, the Company had current assets of $3,157,000$2,600,000 and current liabilities of $3,499,000.$5,604,000. Included in current liabilities is a $2,255,000 note$1,147,000 mortgage loan for an assisted living community located in South Carolina. This community was sold in May 2005 and the cash proceeds were sufficient to Sylvia M. Gilley. Underrepay the mortgage. Also included in current liabilities is an obligation of principal and accrued interest of $2,768,000 the terms of the note the obligation will only be due
ifwhich are similar to that
11
of preferred stock, whereby the Company has sufficient cash tocan only pay the note.
Operating activities used $335,000 of cash in 2003 and $3,425,000 in 2002. The
decrease in cash used in 2003 as compared to 2002 was the net result of the
reduced net loss offset by a lower level of non-cash charges in 2003.
Investing Activities used $137,000 of cash in 2003 and provided $8,349,000 of
cash in 2002. The net cash used in 2003 was for purchases of equipment at the
various Communities owned by the Company. The cash provided in 2002 includes
$8,558,000, which is the proceedsthis obligation from the sale of properties less expenditures
of $209,000 for the purchase of equipment.
Financing activities provided $49,000 in cash in 2003 and used $5,282,000 in
cash in 2002. The cash provided in 2003 was additional debt of $100,000 as part
of the Gaywood Oil & Gas acquisition offset by $51,000 in principal payments on
the debt. The cash used in 2002 was for the payment of debt. The principal
source of the cash in 2002 was from the sale of properties.available earned surplus.
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.
17
Forward Looking Statements
"Safe Harbor" Statement under Cash and cash equivalents at March 31, 2005 were $227,000, compared with $762,000 at December 31, 2004.
Net cash used by operating activities was $482,000 for the Private Securities Litigation Reform Act of
1995: A numberthree months ended March 31, 2005.
Net cash provided in investing activities was $1,978,000 for the three months ended March 31, 2005. In March 2005, the Company sold an assisted living community and received approximately $1,910,000. The proceeds were used principally to pay off the existing mortgage.
Net cash flow used in financing activities was $2,031,000 in the three months ended March 31, 2005. In January 2005, the Company paid a $631,000 note due to the wife of the mattersformer President of the Company. In March 2005, the Company used the proceeds from the sale of an assisted living facility to repay the mortgage of $1,700,000.
Results of Operations
The Company reported a net loss of $137,000 for the three months ended March 31, 2005, as compared to a net loss of $175,000 for the corresponding period in 2004.
Revenue from real estate operations were $1,100,000 for the three months ended March 31, 2005, as compared to $1,224,000 for the three months ended March 31, 2004. The decrease is due to the revenues received at the Company’s retail mall. The lower revenue reflects certain reductions in lease rates from certain tenants.
Revenue from oil and subject areas discussedgas operations was $414,000 for the three months ended March 31, 2005 as compared to $315,000 for the three months end March 31, 2004. The increase in this filingrevenue was due primarily to the increased price of oil.
Expenses for real estate operations was $606,000 for the three months ended March 31, 2005, as compared to $632,000 for the three months ended March 31, 2004. The decrease was due to certain cost reductions at the Gainesville outlet mall.
Expenses for oil and gas operations was $267,000 for the three months ended March 31, 2005, as compared to $246,000 for the three months ended March 31, 2004. The increase was due to certain well repairs that were incurred in 2005.
Lease expense was $231,000 for the for the three months ended March 31, 2005, as compared to $224,000 for the three months ended March 31, 2004. The slight increase was due to additional lease expense at the Company’s retirement facility.
12
Depreciation, depletion and amortization was $109,000 for the three months ended March 31, 2005, as compared to $87,000 for the three months ended March 31, 2004. The increase was due to depreciation for additional assets at the Gainesville, Texas, outlet mall.
General and administrative expenses were $262,000 for the three months ended March 31, 2005, as compared to $277,000 for the three months ended March 31, 2004. The slight decrease was due to reduced professional fees.
Interest income was $40,000 for the three months ended March 31, 2005, as compared to $74,000 for the three months ended March 31, 2004. The decrease was due principally to a reduction in notes receivable in 2005.
Interest expense was $135,000 for the three months ended March 31, 2005, as compared to $282,000 for the three months ended March 31, 2004. The decrease was due principally to the refinancing of the Gainesville outlet mall.
Loss on the sale of assets was $118,000 for the three months ended March 31, 2005. The Company sold certain of its non-producing oil wells where it was determined by the Company that the operation of those wells was unlikely and incurred a loss of $76,000. The Company also incurred certain legal and closing costs in its sale of the assisted living property in North Carolina.
Inflation
The Company’s principal sources of revenue are from rents in a retirement community, an outlet shopping mall and its oil and gas operations. The operation of the real estate entities is affected by rental rates that are not historical or current facts deal with potential future circumstances,
operations,highly dependent upon market conditions 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 the 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 communitiescompetitive environment in the Company's portfolio,areas where the properties are located. Worldwide consumption patterns seem to preclude competition in the oil business in the foreseeable future. Compensation to employees and maintenance are the principal cost elements relative to the operations of the entities. Although the Company has not historically experienced any adverse effects of inflation on salaries or other operating expenses, there can be no assurance that such trends will continue or that, should inflationary pressures arise, the Company will be able to offset such costs by increasing rental rates in its real estate properties. The price of oil is dictated by market conditions and the abilityCompany could not arbitrarily increase the price 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. oil.
Environmental Matters
The Company has attemptedconducted environmental assessments on most of its existing owned or leased properties. These assessments have not revealed any environmental liability that the Company believes would have a material adverse effect on the Company’s business, assets or results of operations. The Company is not aware of any such environmental liability. The Company believes that all of its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products. The Company has not been notified by any governmental authority and is not otherwise aware of any material non-compliance, liability or claim relating to identify,hazardous or toxic substances or petroleum products in context, certainconnection with any of the factors that they currently believe may cause actual
future experienceits communities.
13
Item 3. Quantitative and results to differ from the 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 the Company's Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------------------------------------------------------------------Qualitative Disclosures About Market Risk
Interest Rate Risk
Nearly all of the Company'sCompany’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
Item 4. Controls and Procedures
As required by Rule 13(a)-15(b), the Company’s management, including the principal executive officer, chief financial officer and principal accounting officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures and internal
controls designed to ensure that information required to be disclosedas defined in the
Company's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarizedRule 13(a)-15(e). Based on that evaluation, the chief executive officer and reported within the time period specified in the
Securities and Exchange Commission rules and forms. Our principal executive andchief financial officer has evaluated our disclosure control procedures within 90 days
prior toconcluded that the filing of this Quarterly report on Form 10-Q and have determined
that suchCompany’s disclosure controls and procedures are effective.
There were no significanteffective as of the end of the period covered by this report. As required by Rule 13(a)-15(d), the Company’s management, including the chief executive officer, chief financial officer and principal accounting officer, also conducted an evaluation of the Company’s internal controls over financial reporting to determine whether any changes occurred in the Company'sfirst fiscal quarter that materially affected, or are reasonably likely to materially effect, the Company’s internal control over financial reporting. Based on that evaluation, there has been no such change during the first fiscal quarter.xyz
It should be noted that any system of controls, or, tohowever well designed and operated, can only provide reasonable and not absolute assurance that the objectives of the system will be met. In addition, the design of any control system is based in part on certain assumptions about the likelihood of future events.
Part II: Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the period of time covered by this report CabelTel International Corporation did not repurchase any of its
knowledge,equity securities. The following table sets forth a summary for the quarter indicating no repurchases were made and that, at the end of the period covered by this report, no specified number of shares may be purchased under any program in
other factors that could significantly affect its disclosure
controls and procedures subsequent to the Evaluation Date.
18
PART II: OTHER INFORMATION
ITEMS 1-6: ARE NOT APPLICABLE.
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EXHIBITS
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place. | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Maximum | |
| | | | | | | | | | Total Number | | | Number of | |
| | | | | | | | | | of Shares | | | Shares that May | |
| | | | | | Average | | | Purchased as | | | Yet be | |
| | Total Number | | | Price | | | Part of Publicly | | | Purchased | |
| | of Shares | | | Paid per | | | Announced | | | Under the | |
Period | | Purchased | | | Share | | | Program | | | Program(a) | |
Balance as of March 31, 2005 | | | — | | | | — | | | | — | | | | — | |
April 1-30, 2005 | | | — | | | $ | — | | | | — | | | | — | |
May 1-31, 2005 | | | — | | | | — | | | | — | | | | — | |
June 1-30, 2005 | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
Total | | | — | | | $ | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (a) | | As a courtesy to stockholders of less than 100 shares and to relieve such stockholders of having to pay a broker’s commission, the Company, although not obligated to do so, has periodically repurchased its common stock at the then most recent closing price of the |
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| | | Company’s common stock on the last trading day before the stock certificate(s) is actually received by the Company from the stockholder. The number of such shares purchased in any period of time has been minimal; no purchases were made during the quarter ended June 30, 2005. |
Item 6. Exhibits
Exhibit 31.1 -— Certification of Chief Executive Officer Pursuant to Rule 13(a)-14(a) or Rule 15d-14(a)
Exhibit 31.2 — Certification of Chief Financial Officer Pursuant to Rule 13(a)-14(a) or Rule 15d-14(a)
Exhibit 32.1 — 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)13(a)-14(b), 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
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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 the undersigned, thereunto duly authorized.
Greenbriar Corporation
Date: November 17, 2003 By: /s/ Gene S. Bertcher
-----------------------
Chief Executive Officer
Chief Financial Officer
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| | | | |
| | CabelTel International Corporation |
| | | | |
Date: November 21, 2005 | | By: | | /s/ Gene S. Bertcher |
| | | | |
| | | | President & Chief Financial Officer |
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