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, 2004
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.)
1755 Wittington Place, Suite 340, Dallas, Texas 75234
(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, 14, 2004 the issuer had outstanding approximately 977,000 shares of par
value $.01 Common Stock.
GREENBRIAR CORPORATION
Index to Quarterly Report on Form 10-Q
Period ended March 31, 2004
PART I: FINANCIAL INFORMATION..................................................3
ITEM 1: FINANCIAL STATEMENTS................................................3
CONSOLIDATED BALANCE SHEETS..............................................3
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..............................................13
THREE MONTH PERIOD ENDED MARCH 31, 2004 COMPARED TO THREE MONTH
PERIOD ENDED MARCH 31, 2003............................................14
FORWARD LOOKING STATEMENTS..............................................16
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........16
ITEM 4: CONTROLS AND PROCEDURES............................................16
PART II: OTHER INFORMATION....................................................18
SIGNATURES.................................................................18
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A)....................19
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.......21
2
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Greenbriar Corporation
Consolidated Balance Sheets
(Amounts in thousands)
March 31, December 31,
Assets 2004 2003
(Unaudited)
------------ ------------
Current Assets
Cash and cash equivalents $ 295 $ 688
Accounts receivable-trade 176 100
Notes receivable 1,797 2,435
Other current assets 169 198
------------ ------------
Total Current Assets 2,437 3,421
Notes receivable, from sale of properties 4,107 4,107
Less deferred gains (3,720) (3,720)
------------ ------------
387 387
Deferred income tax benefit 1,161 1,161
Property and equipment, at cost
Land and improvements 2,752 2,758
Buildings and improvements 8,997 9,410
Equipment and furnishings 1,118 1,317
Proven oil and gas properties (full cost method)
1,430 1,361
------------ ------------
14,297 14,846
Less accumulated depreciation (2,086) (2,233)
------------ ------------
12,211 12,613
Deposits 258 232
Other Assets 381 317
------------ ------------
$ 16,835 $ 18,131
============ ============
3
Greenbriar Corporation
Consolidated Balance Sheets - Continued
(Amounts in thousands)
March 31, December 31,
Liabilities and Stockholders' Equity 2004 2003
(Unaudited)
------------ ------------
Current Liabilities
Current maturities of long-term debt $ 4,611 $ 4,690
Current notes payable 5,481 5,571
Accounts payable - trade 374 503
Accrued expenses 658 633
Other current liabilities 272 931
------------ ------------
Total Current Liabilities 11,396 12,328
Long-term debt 2,143 2,053
Deferred Gain 740 740
Other long term liabilities 177 456
------------ ------------
Total Liabilities 14,456 15,577
Stockholders' Equity
Preferred stock 1 1
Common stock $.01 par value; authorized,
4,000,000 shares; shares issued and outstanding,
977,000 shares in 2004 and 688,000 in 2003 10 10
Additional paid-in capital 55,966 55,966
Accumulated deficit (53,598) (53,423)
------------ ------------
2,379 2,554
$ 16,835 $ 18,131
============ ============
4
Greenbriar Corporation
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
For The Three Month
Period Ended March 31,
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Revenue
Real estate operations $ 1,491 $ 745
Oil and gas operations 315
----------- -----------
1,806 745
----------- -----------
Operating expenses
Real estate operations 828 416
Oil and gas operations 246 --
Lease expense 224 287
Depreciation and amortization 122 75
Corporate, general and
administrative 289 142
----------- -----------
1,709 920
----------- -----------
Operating income (loss) 97 (175)
Other income (expense)
Interest income 74 54
Interest expense (356) (196)
Equity in net income of
affiliated partnership 15 18
Other 9 58
----------- -----------
(258) (66)
----------- -----------
Loss from continuing operation (161) (241)
Discontinued operations
Loss from operations (14) (21)
----------- -----------
$ (175) $ (262)
NET (LOSS)
Basic and diluted (loss) per common share -
Continuing operations $ (.16) $ (.35)
Discontinued operations (.02) (.03)
----------- -----------
Net (loss) per share $ (.18) $ (.38)
Weighted average number
of common and equivalent
shares outstanding 977 688
5
Greenbriar Corporation
Consolidated Statements Of Cash Flow
(Amounts in thousands)
For the three month
Period Ended March 31,
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $ (175) $ (262)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 123 79
(Gain) from affiliate (18) (18)
Changes in operating assets and liabilities
Accounts receivable (76) (13)
Other current and non current assets (61) 84
Accounts payable and other liabilities (258) (334)
----------- -----------
Net cash used in operating activities (465) (464)
Cash flows provided by (used in) investing activities
Repayment of Notes Receivable 638 --
Purchase of property and equipment, net 13 (45)
----------- -----------
Net cash provided by (used in) investing
Activities 651 (45)
Cash flows from financing activities
Proceeds from borrowings -- 14
Payments on debt (579) --
----------- -----------
Net cash provided by (used in) financing
activities (579) 14
----------- -----------
Net increase (decrease) in cash and (393) (495)
cash equivalents
Cash and cash equivalents at beginning of period 688 661
----------- -----------
Cash and cash equivalents at end of period $ 295 $ 166
=========== ===========
6
Notes To Consolidated Financial Statements
For the Unaudited Three Months Ended March 31, 2004 and 2003
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 unaudited financial statements included herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The financial statements reflect all adjustments that
are, in the opinion of management, necessary to fairly present such information.
All such adjustments are of a normal recurring nature. Although the Company
believes that the disclosures are adequate to make the information presented not
misleading, certain information and footnote disclosures, including a
description of significant accounting policies normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America, have been condensed or omitted pursuant to such
rules and regulations.
These financial statements should be read in conjunction with 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, 2003. Operating results for
the three month period ended March 31, 2004 are not necessarily indicative of
the results that may be expected for any subsequent quarter or the year ended
December 31, 2004.
Note B: Notes Receivable and Deferred Gain From Sale Of Property
As a result of the sale of two communities 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
communities either from operations, refinance or sale. The Company has deferred
gains in the amount of $3,720,000. 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 a 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 current chief executive 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 as
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 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.
The Company has deferred recognition of its $740,000 share of the gain from the
2002 sale of CREI's property because of the aforementioned guaranty. In
addition, 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.
Following are unaudited, condensed financial statements of CREI (in thousands):
Balance Sheet
March 31, 2004
Current assets $ 84
Other assets 171
Notes receivable 994
----------
$ 1,249
Current liabilities $ 70
Other liabilities 157
Deferred gain 994
----------
1,221
Partners' equity 28
----------
$ 1,249
Statement of Operations
Nine months ended March 31, 2004
Interest Income $ 28
Expenses 1
----------
Net Income $ 27
----------
8
Note D: Long-Term Obligations
Long-term debt is comprised of the following (in thousands):
March 31, December 31,
2004 2003
------------ ------------
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 $ 2,073 $ 2,090
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 1,849 1,851
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% 561 528
Other 16 19
------------ ------------
6,754 6,743
Less: current maturities 4,611 4,690
============ ============
$ 2,143 $ 2,053
As discussed in Note C the company is a guarantor of debt in the amount of
$1,600,000.
Note E - 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 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.
9
Note F - Discontinued Operations
On January 31, 2004 the Company terminated a lease for an assisted living
community in Georgia. The operations of that community have been reflected as
discontinued operations for 2004 and 2003.
Note G - 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. In
December 2003 the Company acquired an outlet mall.
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.
Segment information and reconciliation to income (loss) from operations are as
follows:
Three months ended March 31, 2004
Real Estate Oil and Gas Consolidated
Operations Operations
Revenue $ 1,607,000 $ 315,000 $ 1,922,000
Depletion, depreciation
and amortization 56,000 67,000 123,000
Operating income 39,000 44,000 83,000
Total assets $15,443,000 $ 1,392,000 $16,835,000
Note H - 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.
Plaintiff Benetic 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.
10
It was ultimately determined that the Company's portion of the judgment
including interest was approximately $230,000. The Company established a reserve
for this obligation prior to 2004.
Internal Revenue Service Pre-Assessment Letter
In December 1991 the Company sold four nursing homes to a not-for-profit
corporation in exchange for tax exempt bonds issued on behalf of the acquiring
corporation by government authorities. The bonds were issued in three lettered
series: A, B and C. The aggregate principal amount of the Series A bonds was
$8,700,000, the aggregate principal amount of the series B bonds was $1,000,000
and the aggregate amount of the series C bonds was $6,700,000. Interest on the
bonds was payable semi-annually. A nationally recognized law firm opined that
interest on the bonds would be tax-exempt.
In March 1992, pursuant to a plan promulgated and recommended by a nationally
recognized investment banking firm, the Series C bonds were converted to zero
coupon status and their value was enhanced by substituting higher grade
collateral. The substitute collateral, which consisted of zero coupon U.S.
Treasury obligations, was placed in trust to defease the Series C bonds, in
exchange for the underlying mortgage. The Series C bonds were then sold for
approximately $47,000,000. A gain was recorded equal to the proceeds received by
the Company of $6,252,000 after deducting transaction costs and the cost of the
higher grade collateral. A nationally recognized law firm opined that the
defeasance of the bonds would not adversely affect the tax exempt status.
In December 1992, again pursuant to a plan promulgated and recommended by a
nationally recognized investment banking firm, the Series A bonds were converted
to zero coupon status, their value enhanced by substituting zero coupon U.S.
Treasury obligations as collateral and the collateral placed in trust in
exchange for the mortgage underlying the Series A bonds in a transaction similar
to the sale of the Series C bonds. The Series A bonds were then sold for
approximately $20,000,000. A gain was recorded equal to the proceeds received by
the Company of $2,081,000 after deducting transaction costs and the cost of the
higher grade collateral.
On January 8, 2004 the Company was notified by the Internal Revenue Service
(IRS) in the form of a Section 6700 Pre-Assessment Letter that the IRS was
considering assessing penalties under Section 6700 of the Internal Revenue Code
as a result of the Company's organization or assistance in connection with the
issuance and sale of the Series A and Series C bonds.
In general, Section 6700 of the IRS Code imposes a penalty on any person or
organization who organizes or assists in organizing an entity or participates in
the sale of any interest in an entity and makes or furnishes or causes another
person to make or furnish a statement with respect to the allowably of any
deduction, the excludability of any income which the person knows or has reason
to know is false or fraudulent as to any material matter.
The penalty prescribed in Section 6700 is the lesser of 100% of the gross income
derived from the activity or $1,000 for each such activity. Each entity or
arrangement shall be treated as a separate activity.
11
If it is ultimately determined that the Company is subject to a fine, that fine
would be the lesser of $1,000 per activity or the gross proceeds the Company
received. Effectively the fine would be calculated based upon a determination as
to what constitutes an activity. The IRS has informed the Company that the
Series A and C bonds were purchased by 266 individuals or entities. If the
penalty is computed by considering each sale an activity the maximum exposure to
the Company would be $267,000. However, neither Section 6700 nor, to the
Company's knowledge, relevant authorities specify what constitutes an activity.
The IRS has indicated that the $1,000 per activity should be computed in a
manner other than the number of individuals who purchased the bonds however they
have not indicated to the Company any basis or authority for their position. If
the IRS's assertions as to the number of activities exceeds 8,333 activities
then the Company believes the maximum exposure would be the total proceeds
received and income recorded of $8,333,000.
The transactions which the IRS is examining involved technically complex
financial and legal issues and were undertaken on the advice of and reliance on
the investment banking firm, the law firms that issued the tax exempt bond legal
opinions and other professionals. The Company believed in 1992 and still
believes that its actions were appropriate in all respects.
The Company and the IRS are engaged in negotiations regarding settling this
twelve year old matter. However, there is no assurance that any settlement will
be achieved. In the absence of a settlement, the Company intends to contest the
IRS's position in court. Any litigation may be expensive and time consuming.
However, if this matter is litigated the Company believes that it will prevail
on the merits. Should it not prevail in this matter the Company intends to
pursue actions against the professionals who advised the Company regarding the
sales of the bonds.
Other
The Company has been named as a defendant in other lawsuits in the ordinary
course of business. Management is of the opinion that these lawsuits will not
have a material effect on the financial condition, results of operations or cash
flows of the Company.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
As of March 31, 2004, the Company owned one assisted living community and leased
one assisted living community in two states with a capacity of 200 residents. In
addition, the Company owns one assisted living community that is leased and
operated by an independent third party with a capacity of 41 residents.
On December 10, 2003 the Company acquired the Gainesville Factory Outlet Mall in
Gainesville, TX. The mall has approximately 315,000 sq ft. of retail space which
is leased to a number of nationally know retail operations as well as local
vendors
12
Effective August 1, 2003 the Company 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 200 existing
wells on the leases owned by Gaywood. As of May 14, 2004 Gaywood had 52
operating wells, generating approximately 4,000 barrels of oil per month.
Gaywood, based upon the price of oil and available financing, intends to open
additional 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 month period ended March 31, 2004 compared to three month period ended
March 31, 2003.
Revenues and operating expenses from assisted living operations
Revenues for the assisted living communities were $909,000 for the three months
ended March 31, 2004 as compared to $745,000 for the three months ended March
31, 2003. Community operating expenses, which consist of assisted living
community expenses, lease expense, depreciation and amortization, were $753,000
for the three months ended March 31, 2004 as compared to $778,000 for the months
ended March 31, 2003
The increase in revenue is due principally to increased census at the
communities. The reduction in expenses represents an overall reduction in
operating costs.
Corporate General and Administrative Expenses
General and administrative expenses were $289,000 for the three and nine months
ended September 30, 2003 compared to $142,000 for the three months ended March
31, 2003.
During the later part of 2001 and 2002 the Company sold, leased or disposed of
26 communities. 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. The increase in salaries as compared to the prior
year period accounted for approximately $50,000 in increased expenses. The
balance of the additional expenses is due to additional administrative salaries
and expenses due to the additions of the outlet mall and the oil and gas
operations as well as additional legal fees due to the Company's dispute with
the Internal Revenue Service.
Interest Income
Interest income increased to $74,000 for the three months ended March 31, 2004
as compared to $54,000 for the three months ended March 31, 2004. The increase
in interest income is due to an increase in interest from the sale of properties
which occurred in the prior two years.
13
Interest Expense
Interest expense increased to $356,000 for the three months ended March 31, 2004
as compared $196,000 for the three months ended March 31, 2003. The increase in
interest expense is due almost entirely to the financing of the acquisition of
the Gainesville Factory Outlet Mall
Other Income (Expense)
Other Income for the three months ended March 31, 2004 was $9,000 as compared to
$58,000 for the three months ended March 31, 2003 $109,000 respectively. The
other income in 2003 represents income from the settlement of a lawsuit.
Discontinued Operations
On January 31, 2004 the company terminated a lease for the operation of an
assisted living community in Georgia. The operating losses for the community
were $14,000 and $21,000 for the three months ended March 31, 2004 and 2003
respectively.
Liquidity and Capital Resources
At March 31, 2004, the Company had current assets of $2,437,000 and current
liabilities of $11,396,000
In December 2003 the Company acquired the Gainesville Outlet Mall in
Gainesville, Texas. The Company paid approximately $800,000 in cash and a short
term obligation to pay the seller approximately $5,571,000. In addition, the
Company has spent approximately $400,000 for purchase costs, financing costs and
working capital for the mall. The Company has negotiated long term financing and
anticipates closing during the second quarter of 2004.
Also included in current liabilities is an obligation of principal and accrued
interest to Sylvia Gilley, wife of a former president of the Company, for
$2,548,000. The terms of this obligation are similar to that of preferred stock
whereby the Company can only pay this obligation out of 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.
14
Operating activities used $465,000 of cash in the three months ended March 31,
2004 and $464,000 in the similar period in 2003.
Investing Activities provided $651,000 of cash in the three months ended March
31, 2004 and used $45,000 of cash in the similar period in 2003. The cash
provided in 2004 includes $638,000 from the collection of certain notes
receivable. These notes were from the sale of certain properties in 2002 and
2003.
Financing activities used $579,000 in cash in the three months ended March 31,
2004 and provided $14,000 in cash in the similar period in 2003. The cash used
in 2004 was for the repayment of short term debt incurred by the Company in the
latter part of 2003.
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 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 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. The Company has attempted to identify, in
context, certain of the factors that they currently believe may cause actual
future experience 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
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.
15
PART II: OTHER INFORMATION
ITEMS 1-6: ARE NOT APPLICABLE.
EXHIBITS
- --------
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 15, 2004 By: /s/ Gene S. Bertcher
------------------------
Chief Executive Officer
Chief Financial Officer