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 June 30, 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 August 12, 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 June 30, 2004
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..................................................13
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2004 COMPARED TO THREE AND
SIX-MONTH PERIODS ENDED JUNE 30, 2003...................................13
FORWARD LOOKING STATEMENTS..............................................16
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........17
ITEM 4: CONTROLS AND PROCEDURES............................................17
PART II: OTHER INFORMATION....................................................18
SIGNATURES.................................................................18
2
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
- -----------------------------
Greenbriar Corporation
Consolidated Balance Sheets
(Amounts in thousands)
June 30, December 31,
Assets 2004 2003
(Unaudited)
------------ ------------
Current assets
Cash and cash equivalents $ 310 $ 688
Accounts receivable-trade 218 100
Note receivable 1,556 2,435
Property held for sale 650 --
Other current assets 236 198
------------ ------------
Total current assets 2,970 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
Investment in Affiliate 17 --
Property and equipment, at cost
Land and improvements 2,552 2,758
Buildings and improvements 8,546 9,410
Equipment and furnishings 1,140 1,317
Proven oil and gas properties (full cost method) 1,474 1,361
------------ ------------
13,712 14,846
Less accumulated depreciation and
depletion 2,203 2,233
------------ ------------
11,509 12,613
Deposits 282 232
Other assets 403 317
------------ ------------
$ 16,729 $ 18,131
============ ============
3
Greenbriar Corporation
Consolidated Balance Sheets - Continued
(Amounts in thousands)
June 30, December 31,
Liabilities and Stockholders' equity 2004 2003
(Unaudited)
------------ ------------
Current liabilities
Current maturities of long-term debt $ 5,614 $ 4,690
Current notes payable -- 5,571
Accounts payable - trade 427 503
Accrued expenses 546 633
Other current liabilities 434 931
------------ ------------
Total current liabilities 7,021 12,328
Long-term debt 6,612 2,053
Deferred Gain 740 740
Other long term liabilities 183 456
------------ ------------
Total liabilities 14,556 15,577
Stockholders' equity
Preferred stock 1 1
Common stock $.01 par value; authorized, 4,000
shares; 703 shares issued and outstanding 10 10
Additional paid-in capital 55,966 55,966
Accumulated deficit (53,804) (53,423)
------------ ------------
2,173 2,554
------------ ------------
$ 16,729 $ 18,131
============ ============
4
Greenbriar Corporation
Consolidated Statements Of Operations
(Amounts in thousands, except per share data)
For The Three Month For The Six Month
Period Ended Period Ended
June 30, June 30,
2004 2003 2004 2003
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Revenue
Real Estate operations $ 1,397 $ 803 $ 2,888 $ 1,548
Oil and gas operations 323 638
--------- --------- --------- ---------
1,720 803 3,526 1,548
--------- --------- --------- ---------
Operating expenses
Real estate operations 917 392 1,745 807
Oil and gas operations 245 491
Lease expense 231 260 455 547
Depletion, depreciation and 134 88 256 164
amortization
Corporate general and
administrative 272 149 561 290
--------- --------- --------- ---------
1,799 889 3,508 1,808
--------- --------- --------- ---------
Operating earning (loss) (79) (86) 18 (260)
Other income (expense)
Interest income 54 60 128 114
Interest expense (246) (190) (602) (386)
Net gain on sale of assets
Equity in net income of
Affiliated partnership 16 15 31 33
Other 57 55 66 112
--------- --------- --------- ---------
(119) (60) (377) (127)
--------- --------- --------- ---------
Earnings (loss) from continuing (198) (146) (359) (387)
Operations
Discontinued operations
Loss from operations (7) (31) (21) (52)
--------- --------- --------- ---------
Net earnings (loss) (205) (177) (380) (439)
--------- --------- --------- ---------
Net (loss) per common share -
basic and diluted $ (.21) $ (.51) $ (.39) $ (1.28)
Weighted average of common and
equivalent shares outstanding - 977 344 977 344
basic and diluted
5
Greenbriar Corporation
Consolidated Statements of Cash Flow
(Amounts in thousands)
For the six month
Period Ended June 30,
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net earnings (loss) $ (380) $ (439)
Adjustments to reconcile net earnings (loss) to net
cash used in operating activities
Depreciation and amortization 256 173
(Gain) on partnership (31) (33)
Changes in operating assets and liabilities
Accounts receivable (118) (13)
Other current and non current assets (195) 153
Accounts payable and other liabilities (648) (291)
----------- -----------
Net cash used in operating activities (1,116) (450)
----------- -----------
Cash flows used in investing activities
Repayment of notes receivable 879
Purchase of property and equipment (52) (50)
----------- -----------
Net cash provided by (used in) investing
activities 827 (50)
Cash flows from financing activities
Payments on debt (89) (20)
----------- -----------
Net cash provided by (used in) financing
activities (89) (20)
----------- -----------
NET DECREASE IN CASH AND (378) (520)
CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 688 661
----------- -----------
Cash and cash equivalents at end of period $ 310 $ 141
=========== ===========
6
Notes To Consolidated Financial Statements
For the Unaudited Three and Six Months Ended June 30, 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 and six month periods ended June 30, 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: Property Held for Sale
In August 2004 the Company sold a property in Ellensburg, WA. The carrying value
of the property had been written down in prior years to $675,000. The terms of
the sale included the Company paying the buyer $25,000 and the buyer paying off
the existing mortgages of approximately $900,000. The Company will record a
non-cash gain of approximately $200,000 in the third quarter of 2004.
7
Note D: Affiliated Partnerships
In October 2001, the Company became a 56% limited partner in Corinthians Real
Estate Investors, LP ("CREI"), a partnership formed to acquire two properties.
The general partner is a limited liability corporation whose sole member is W.
Michael Gilley, the son of the former CEO of the Company. Sylvia Gilley, W.
Michael Gilley's mother, has a 25.9% interest, the general partner has a .1%
interest, the Company's 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.
The Company issued a $1,600,000 note to the seller as partial payment for the
purchase of one of the retirement communities. 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.
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
June 30, 2004
Current assets $ 80
Other assets 172
Notes receivable 994
------
$1,246
Other liabilities $ 126
Deferred gain 1,064
------
1,190
Partners' equity 56
------
$1,246
Statement of Operations
Six months ended June 30, 2004
Interest Income $ 57
Expenses 2
------
Net Income $ 55
------
9
Note E: Long-Term Obligations
Long-term debt is comprised of the following (in thousands):
June 30, December 31,
2004 2003
------------ ------------
Notes payable to financial institutions maturing through
2015; fixed and variable interest rates ranging from
8.25% to 15%; collateralized by property, fixtures,
equipment and the assignment of rents $ 7,527 $ 2,090
Notes payable to individuals and companies maturing
through 2023; variable and fixed interest rates ranging
from 7% to 14% collateralized by real property,
personal property, fixtures, equipment and the assignment of rents 1,848 1,851
Notes payable to Sylvia M. Gilley, bearing interest at 10% and
maturing on July 1, 2004 2,255 2,255
Note payable to a former executive officer, non-interest
bearing at 8.5% and maturing on December 31, 2004, net
of discount of $47 and $103 respectively, representing
interest imputed at 8.5% 584 528
Other 12 19
---------------------------
12,226 6,743
Less: current maturities 5,614 4,690
===========================
$ 6,612 $ 2,053
As discussed in Note C the company is a guarantor of debt in the amount of
$1,600,000.
Subsequent to June 30, 2004, the Company contributed the Gainesville Outlet Mall
and the associated debt to a controlled partnership in order to facilitate a
refinancing of the debt to a more favorable term. This refinancing resulted in
the debt being moved from short term to long term in the accompanying financial
statements.
Note F - Stock Options
The Company has elected to follow Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" (APB 25) in its primary financial
statements and has provided supplemental disclosures required by 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."
10
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 G - Discontinued Operations
On January 31, 2004 the Company negotiated, at no cost, the termination 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 H - Segments
The Company and its subsidiaries are principally engaged in the business of
acquiring, enhancing and selling real estate properties. From 1996 through 2002
those activities were almost exclusively involved assisted living facilities. By
the end of 2002 the Company had disposed of the bulk of its assisted living
facilities and was actively seeking to acquire real estate properties other than
assisted living. In December 2003 the Company acquired a shopping mall in
Gainesville, Texas
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 June 30, 2004
- --------------------------------
Real Estate Oil and Gas Consolidated
Operations Operations
Revenue $ 1,397,000 $ 323,000 $ 1,720,000
Depletion, depreciation
and amortization 93,000 41,000 134,000
Operating income (loss) (175,000) 36,000 (139,000)
Total assets $ 15,327,000 $ 1,402,000 $ 16,729,000
11
Six months ended June 30, 2004
- ------------------------------
Real Estate Oil and Gas Consolidated
Operations Operations
Revenue $ 2,888,000 $ 638,000 $ 3,526,000
Depletion, depreciation
and amortization 190,000 66,000 256,000
Operating income (loss) (339,000) 80,000 (259,000)
Total assets $ 15,327,000 $ 1,402,000 $ 16,729,000
Note I - 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.
It was ultimately determined that the Company's portion of the judgment
including interest was approximately $230,000.The Company had established a
reserve for this obligation prior to 2004. In May 2004 the Company paid the
amount due which under the terms of the agreement completely concluded this
matter.
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
12
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 August 2004 the Company and the IRS concluded a settlement whereby the
Company admitted no guilt in the matter and paid a fine of $216,000.
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 June 30, 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 to and
operated by an independent third party with a capacity of 41 residents.
The Company acquired the Gainesville Factory Outlet Mall in Gainesville, TX in
December 2003. 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
The Company acquired Gaywood Oil & Gas, LLC (Gaywood) which has oil and gas
leases in the East Texas field effective August 31, 2003. 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 August 12, 2004 Gaywood had 52 operating
13
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.
At this time Greenbriar does not 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 six month periods ended June 30, 2004 compared to three and six-month
periods ended June 30, 2003.
Revenues and Operating Expenses
Revenues for the assisted living communities were $909,000 and $1,745,000 for
the three and six months ended June 30, 2004 as compared to $846,000 and
$1,523,000 for the three and six months ended June 30, 2003. Community operating
expenses, which consist of assisted living community expenses, lease expense,
depreciation and amortization, were $683,000 and $1,436,000 for the three and
six months ended June 30, 2004 as compared to $660,000 and $1,338,000 for the
three and six months ended June 30, 2003.
The increase in revenue is due principally to increased census at the
communities.
Revenues for the outlet mall were $479,000 and $1,060,000 for the three and six
months ended June 30, 2004. Operating expenses were $452,000 and $817,000 for
the comparable periods. The outlet mall was not owned by the Company during the
three and six month period ended June 30, 2003
Revenues for the oil & gas operations were $323,000 and $628,000 for the three
and six month periods ending June 30, 2004. Operating expenses were $246,000 and
$491,000 for the comparable periods. The oil & gas operations were not owned by
the Company during the three and six month periods ending June 30, 2003
Corporate General and Administrative Expenses
General and administrative expenses were $272,000 and $561,000 for the three and
six month periods ending June 30, 2004 compared to $149,000 and $290,000 for the
three and six months ending June 30, 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 and $100,000 in increased
expenses for the three and six month periods ending June 30, 2003, respectively.
The balance of the additional expenses is due to additional administrative
salaries and expenses due to the addition 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.
14
Interest Income
Interest income was to $54,000 and $128,000 for the three and six month periods
ending June 30, 2004 as compared to $60,000 and $114,000 for the three and six
months ending June 30, 2003. Interest was $20,000 higher for the first quarter
of 2004 due to increased interest rates on certain notes held by the Company.
During April 2004 the Company received certain principal payments which reduced
the level of interest bearing notes outstanding. During the second quarter
interest income was $34,000 less than that of the comparable period during 2003.
15
Interest Expense
Interest expense was $246,000 and $602,000 for the three and six month periods
ended June 30, 2004 as compared to $190,000 and $386,000 for the three and six
months periods ended June 30, 2003.
The increase is due almost entirely to the financing of the Gainesville Outlet
Mall. When the mall was acquired in December 2003 it was initially financed with
a short term note which escalated form 3% to 15% during the six months ended
June 30, 2004. The short term note was refinanced in August 2004 with a five
year note requiring interest at 5.85%
Other Income (Expense)
Other Income (expense) for the three and six month periods ending June 30, 2004
was $57,000 and $66,000 as compared to $55,000 and $112,000 for the three and
six months ending June 30, 2003. In 2002 the Company sold a property in
California and was required to establish an escrow fund for certain repairs to
the building. The escrowed amounts were written off when the building was sold.
The 2004 amount represents the return of a portion of escrow funds that were in
excess of the amount required. Also included in 2004 is a $216,000 expense to
provide for the settlement of the Company's dispute with the IRS. The 2003
amounts principally represent income from the reimbursement of a prior year
insurance claim as well as the settlement of a lawsuit.
Discontinued Operations
On January 31, 2004 the company terminated a lease for an assisted living
community in Georgia. The operating losses for the community were $7,000 and
$21,000 for the three and six month periods ending June 30, 2004 and $31,000 and
$52,000 for the three and six months ending June 30, 2003.
Liquidity and Capital Resources
On June 30, 2004, the Company had current assets of $2,970,000 and current
liabilities of $7,021,000.
Included in current liabilities is a $2,600,000 note plus accrued interest to
Sylvia M. Gilley, wife of a former President of the Company. Under the terms of
the note the obligation will only be due if the Company has sufficient cash to
pay the note.
Also included in current liabilities is $900,000 in mortgages for a property in
Ellensburg WA. This property was sold during the third quarter and the buyer
paid off the existing mortgages.
Also included in current liabilities is a $1,700,000 mortgage for a property in
North Carolina which is due in December 2004. The Company anticipates that the
mortgage will be refinanced prior to the due date.
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.
16
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.
17
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: August 16, 2004 By: /s/ Gene S. Bertcher
-----------------------
Chief Executive Officer
Chief Financial Officer
18