-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Aa6q3DyyB8XCOtRIFi/2pgjyfRcaTqrDnQAZwsaAKdHpZPr4Cy2nU3fY9fTbwOG4 mMcsq1cIqqzL6T4mAO0b5w== 0001010549-01-500561.txt : 20020410 0001010549-01-500561.hdr.sgml : 20020410 ACCESSION NUMBER: 0001010549-01-500561 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENBRIAR CORP CENTRAL INDEX KEY: 0000105744 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 752399477 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08187 FILM NUMBER: 1787514 BUSINESS ADDRESS: STREET 1: 14185 DALLAS PKWY STREET 2: STE 650 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9724078400 MAIL ADDRESS: STREET 1: 14185 DALLAS PKWY STREET 2: STE 650 CITY: DALLAS STATE: TX ZIP: 75204 FORMER COMPANY: FORMER CONFORMED NAME: MEDICAL RESOURCE COMPANIES OF AMERICA DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WESPAC INVESTORS TRUST DATE OF NAME CHANGE: 19900605 10-Q 1 green10q93001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended September 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-8187 Greenbriar Corporation (Exact name of Registrant as specified in its charter) Nevada 75-2399477 (State or other jurisdiction of (IRS Employer Incorporation or organization) Identification No.) 14185 Dallas Parkway, Suite 650, Dallas, TX 75254 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (972) 407-8400 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered ------------------- -------------------- Common Stock, $.01 par value American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] At November 10, 2001 the issuer had outstanding approximately 7,265,000 shares of par value $.01 Common Stock. GREENBRIAR CORPORATION Index to Quarterly Report on Form 10-Q Period ended September 30, 2001 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................................11 Part II: Other Information....................................................15 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS - ---------------------------- Greenbriar Corporation Consolidated Balance Sheets (Amounts in thousands) September 30, December 31, Assets 2001 2000 (Unaudited) Current Assets Cash And Cash Equivalents $ 4,460 $ 2,287 Accounts Receivable-Trade 423 470 Other Current Assets 4,657 1,105 ---------------- ---------------- Total Current Assets 9,540 3,862 Deferred Income Tax Benefit 4,750 4,750 Notes Receivable, Net of Deferred Gain of $6,090 310 -- Property And Equipment, At Cost Land And Improvements 8,890 9,716 Buildings And Improvements 69,566 75,723 Equipment And Furnishings 5,865 6,615 ---------------- ---------------- 84,321 92,054 Less Accumulated Depreciation 11,540 12,410 ---------------- ---------------- 72,781 79,644 Deposits 2,656 3,834 Lease Rights And Other Intangibles 5,031 9,347 Other Assets 1,329 1,151 ---------------- ---------------- $ 96,397 $102,588 ================ ================ 3
Greenbriar Corporation Consolidated Balance Sheets - Continued (Amounts in thousands) September 30, December 31, Liabilities And Stockholders' Equity 2001 2000 (Unaudited) Current Liabilities Current Maturities Of Long-Term Debt $ 2,352 $ 2,538 Accounts Payable - Trade 1,066 1,445 Accrued Expenses 738 1,934 Other Current Liabilities 975 668 ----------------- ----------------- Total Current Liabilities 5,131 6,585 Long-Term Debt 52,436 50,887 Financing Obligations 10,815 10,815 Other Long Term Liabilities 275 657 ----------------- ----------------- Total Liabilities 68,657 68,944 Preferred Stock Redemption Obligation 27,167 26,988 Stockholders' Equity Preferred Stock 1 254 Common Stock $.01 Par Value; Authorized,100,000 Shares; Issued And Outstanding, 8,560 Shares 84 76 And 7,514 Shares, Respectively Additional Paid-In Capital 56,907 60,219 Accumulated Deficit (54,052) (51,526) ----------------- ----------------- 2,940 9,023 Less Stock Purchase Notes Receivable (Including $2,250 From Related Parties) (2,367) (2,367) ----------------- ----------------- 573 6,656 ----------------- ----------------- $ 96,397 $ 102,588 ================= =================
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Greenbriar Corporation Consolidated Statements Of Operations (Amounts in thousands, except per share data) For The Three Month For The Nine Month Period Ended Period Ended September 30, September 30, 2001 2000 2001 2000 ------------- ------------- ------------- ------------- (Unaudited) (Unaudited) Revenue Assisted living operations $ 8,186 $ 10,263 $ 27,409 $ 31,104 ------------- ------------- ------------- ------------- 8,186 10,263 27,409 31,104 Operating Expenses Assisted living community operations $ 5,327 $ 6,222 $ 17,053 $ 18,619 Lease expense 671 1,217 2,748 3,759 Depreciation and amortization 783 903 2,442 2,846 Corporate general and administrative 989 1,067 4,121 3,244 Write-off of impaired assets and related expenses -- -- -- 7,461 ------------- ------------- ------------- ------------- 7,770 9,409 26,364 35,929 ------------- ------------- ------------- ------------- Operating income (loss) 416 854 1,045 (4,825) Other income (expense) Interest and dividend income $ 71 $ 105 $ 212 $ 321 Interest expense (1,516) (1,454) (4,190) (4,264) Net gain on the sale of assets 4,239 -- 4,398 74 Minority Interest (3,738) (84) (3,880) (276) Other 48 8 48 60 ------------- ------------- ------------- ------------- (896) (1,425) (3,412) (4,085) ------------- ------------- ------------- ------------- Net loss (480) (571) (2,367) (8,910) Preferred stock dividend requirement -- (1,028) (160) (3,103) ------------- ------------- ------------- ------------- Loss allocable to common stockholders (480) (1,599) (2,527) (12,013) ============= ============= ============= ============= Net loss per common share - Basic and diluted $ (0.06) $ (0.21) $ (0.30) $ (1.60) Weighted average number of common and equivalent shares outstanding 8,348 7,514 8,348 7,514
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Greenbriar Corporation Consolidated Statements Of Cash Flow (Amounts in thousands) For the nine month Period Ended September 30, 2001 2000 -------------- -------------- (Unaudited) (Unaudited) Cash flows from operating activities Net loss $ (2,367) $ (8,910) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization 2,404 2,846 Gain on sale of assets (4,398) (74) Minority Interest 3,880 527 Write-off of impaired assets and related expenses -- 7,461 Changes in operating assets and liabilities Accounts receivable 47 (335) Other current and noncurrent assets (2,554) (791) Accounts payable and other liabilities (1,650) (533) -------------- -------------- Net cash provided by (used in) operating activities (4,638) 191 -------------- -------------- Cash flows used in investing activities Proceeds from sale of property 21,267 645 Purchase of property and equipment (12,284) (1,068) -------------- -------------- Net cash provided by (used in) investing activities 8,983 (423) Cash flows from financing activities Proceeds from borrowings 15,704 -- Payments on debt (14,341) (569) Dividends on preferred stock (160) (1,099) Redemption of preferred stock (3,375) (4,000) -------------- -------------- Net cash used in financing activities (2,172) (5,668) -------------- -------------- NET INCREASE (DECREASE) IN CASH AND 2,173 (5,900) CASH EQUIVALENTS Cash and cash equivalents at beginning of period 2,287 8,814 -------------- -------------- Cash and cash equivalents at end of period $ 4,460 $ 2,914 ============== ==============
6 Notes To Consolidated Financial Statements For the Unaudited Three and Nine Months Ended September 30, 2001 and 2000 Note A: Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of Greenbriar Corporation and its majority-owned subsidiaries (collectively, "the Company"). All significant intercompany transactions and accounts have been eliminated. The statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and, accordingly, do not include all of the information and footnotes required by generally accepted accounting principles. These financial statements have not been examined by independent certified public accountants, but in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of consolidated results of operations, consolidated financial position and consolidated cash flows at the dates and for the periods indicated, have been included. Operating results for the three and nine month periods ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. 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, 2000. Note B: Notes Receivable A portion of the consideration received for the sale of Oak Park Retirement, Wedgwood Terrace and Crown Pointe (see Note E: Dispositions) was $6,400,000 of tax -free notes bearing interest of 9.5% annually. The notes mature on April 1, 2002, June 1, 2002 and August 1, 2002 respectively. It is anticipated that any unpaid principal and interest due upon maturity will be refinanced for a 35 year period. The repayment of the notes is limited to the cash flow of the respective communities either from operations or a subsequent sale. In accordance with Statement of Financial Accounting Standards No. 66, the gain pertaining to $6,090,000 of the notes has been deferred until the Company receives payment. 7
Note C: Long-Term Obligations Long-term debt is comprised of the following (in thousands): September 30, December 31, 2001 2000 ---- ---- Notes payable to financial institutions maturing through 2018; fixed and variable interest rates ranging from 7.5% to 14%; collateralized by property, fixtures, equipment and the assignment of rents $ 37,111 $ 27,991 Notes payable to individuals and companies maturing through 2022; variable and fixed interest rates ranging from 7% to 11.2% collateralized by real property, personal property, fixtures, equipment and the assignment of rents 56 4,477 Note payable to shareholder maturing on June 30,2004; bearing interest at 10% 3,375 - Note payable to the Redevelopment Agency of the City of Corona, California, payable into a sinking fund semi-annually in increasing amounts from $65 to $420 through May 1, 2015; variable interest rate of 5.55% at September 30, 2000; collateralized by personal property, land, fixtures and rents - 6,895 Mortgage note payable to a financial institution maturing in 2003; bearing interest at 6.75%; collateralized by property and equipment 13,972 13,972 Other 274 90 --------------- --------------- 54,788 53,425 Less: current maturities 2,352 2,538 --------------- --------------- $ 52,436 $ 50,887
The Company operates two communities that are financed through sale-leaseback obligations. At the end of the tenth year of the fifteen-year leases (March 31, 2004), the Company has options to repurchase the communities for the greater of the sales prices at the date of the sale-leaseback which was $10,815,000 or their current replacement costs less depreciation plus land at current fair market values. Accordingly, these transactions have been accounted for as financings, and the Company has recorded the proceeds from the sales as financing obligations, classified the lease payments as interest expense and continues to carry the communities and record depreciation. 8
Note D: Preferred Stock The following summarizes the various classes of preferred stock (amounts in thousands except per share data): September 30, December 31, 2001 2000 ---- ---- Series B cumulative convertible preferred stock, $.10 par value; liquidation value of $100; authorized, 100 shares; issued and outstanding, 1 share $ 1 $ 1 Series D cumulative convertible preferred stock, $.10 par value; liquidation value of $3,375; authorized, issued and outstanding, 675 shares - 68 Series F voting cumulative convertible preferred stock, $.10 par value; liquidation value of $14,000; authorized, issued and outstanding, 1,400 shares - 140 Series G cumulative convertible preferred stock, $.10 par value; liquidation value of $4,450; authorized 800 shares; issued and outstanding, 445 shares - 45 --------------------------------------- $1 $254 =======================================
The Series B preferred stock has a liquidation value of $100 per share and is convertible into common stock over a ten-year period at prices escalating from $25.00 per share in 1993 to $55.55 per share by 2001. Dividends, at a rate of 6%, are payable in cash or preferred shares at the option of the Company. The Series D preferred stock has a liquidation value of $5 per share and is convertible into common stock at $10.00 per share. Cumulative dividends are payable in cash at a rate of 9.5%. In July 2001 the Series D preferred stock was redeemed from a related party. The redemption value of the preferred stock was $3,375,000. The holder of the preferred stock was issued a note for $3,375,000 bearing interest of 10% and maturing on July 1, 2003. There were certain limitations regarding the redemption and payment of dividends with respect to the Series D Preferred stock. The same limitations will apply to the note. 9 The Series F and Series G preferred shares were sold to one investor in December 1997, for $22,000,000, less selling and offering costs of $453,000. In connection with the sale, the Company entered into an agreement which provides that, on the date of conversion, if the value of the Company's common stock has not increased at an annual rate of at least 14% during the period the preferred shares are outstanding, the Company is required to make a Cash Payment to the preferred stockholder equal to the market price deficiency on the shares received upon conversion. The Series F and G preferred stock had a liquidation value of $10.00 per share and each share was convertible into .57 shares of common stock. On January 13, 2001 the preferred F and G shares were converted into 1,054,202 shares of common stock. See further discussion of January 13, 2001 conversion and related dispute with preferred shareholder at Item 2, Liquidity and Capital Resources. Note E: Dispositions In January 2001, the Company sold its corporate office building in Addison, Texas and received net cash proceeds of $1,477,772 and recorded a gain on the sale of $406,000. The Corporate office has been relocated to approximately 10,000 square feet of leased space in Addison, Texas. In addition, the Company also sold certain garden homes and related property that were adjacent to Camelot Retirement in January 2001 and received net cash proceeds of $866,280 and recorded a loss on the sale of $296,000. In April 2001 the Company exercised purchase options on two leased communities in Fort Worth, Texas, Palm House and Oak Park Retirement, and simultaneously sold both of the two communities. Per the terms of the sale of Oak Park Retirement, the Company retained a fifteen year management agreement with the new owners. The gross proceeds from the sales of Palm House and Oak Park Retirement including both cash and notes were $5,200,000 and $15,280,750 respectively. The cash proceeds from these sales were $17,280,750 of which $4,450,000 was used to repay the mortgage on a retirement community owned by the Company in Harlingen, Texas, Camelot Retirement. This mortgage payoff was a requirement for the exercise of the purchase options on Palm House and Oak Park Retirement. The gains on the sale of assets generated from these two transactions following the payoff of Camelot Retirement were $49,000. In June 2001 the Company sold a community in Lewiston Idaho, Wedgwood Terrace. Per the terms of this sale, the Company retained a fifteen year management agreement with the new owners. The gross proceeds from the sale were $830,000 of notes and $3,031,250 of cash. There was no gain or loss on the sale of assets resulting from this sale. In August 2001 the Company sold a community that it owned sixty percent of in Corona California, Crown Pointe. Per the terms of this sale the Company retained a fifteen year management agreement with the new owners. The gross proceeds from the sale were $3,950,000 of notes and $14,371,068 of cash. There was a gain on the sale of assets recorded from this transaction of $4,239,000. Greenbriar's portion of the gain was $537,500 with the balance being allocated to the minority investors in Crown Pointe. 10 Note F: Acquisitions In July 2001 the Company borrowed $12,000,000, the proceeds of which were used to purchase two assisted living communities which the Company had under option. The collateral for the loan is the two assisted living communities. In October 2001 these two communities and the allocated debt were transferred to the holder of the series F and G preferred stock. See further discussion of this transfer at Item 2, Liquidity and Capital Resources. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - ------------------------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- Overview The Company owns and manages assisted living communities that provide housing, healthcare, hospitality and personal services to seniors. As of November 10, 2001 the Company operates 16 communities in 9 states with a capacity of 1,293 residents, including 3 communities managed for a third party. Three and nine month periods ended September 30, 2001 compared to three and nine month periods ended September 30, 2000. Revenues and Operating Expenses from Assisted Living Operations Revenues were $8,186,000 and $27,409,000 for the three and nine months ended September 30, 2001 as compared to $10,263,000 and $31,104,000 for the three and nine months ended September 30, 2000. Community operating expenses, which consist of assisted living community operations, lease expense and depreciation and amortization, were $6,781,000 and $22,243,000 for the three and nine months ended September 30, 2001 as compared to $8,342,000 and $25,224,000 for the three and nine months ended September 30, 2000. There were two communities disposed of in 2000, and certain garden homes and related property that were adjacent to Camelot Retirement were sold in the first quarter of 2001, three communities were sold in the second quarter of 2001 and one community was sold in the third quarter of 2001. The revenue from these communities that was included in both the three and nine months ended September 30, 2000 was $2,247,000 and $4,094,000 respectively. The operating expenses from these communities that were included in both the three and nine months ended September 30, 2000 were $1,934,000 and $3,784,000, respectively. Corporate General and Administrative Expenses General and administrative expenses were $989,000 and $4,121,000 for the three and nine months ended September 30, 2001 as compared to $1,067,000 and $3,244,000 for the three and nine month periods ended September 30, 2000. The increase in the corporate general and administrative expenses for the nine months ended September 30, 2001 is primarily a result of the increase in corporate legal expenses associated with the litigation with LSOF. See further discussion of litigation with LSOF at Liquidity and Capital Resources. 11 Write-off of Impaired Assets and Related Expenses For the nine months ended September 30, 2000 the Company recorded a write-off of impaired assets and related expenses of $7,461,000. In 1992 the Company sold four nursing homes to Southern Care Corporation and a subsidiary of the Company entered into a management agreement to manage the nursing homes. In 1994 Southern Care terminated the management agreement and informed the Company that they believed the notes due to the Company from the sale of the nursing homes in 1992 were invalid. The matter has been in the courts since 1995 and legal issues were resolved in June 2000 when Greenbriar was awarded a judgment of $18,688,000 for the notes, interest, amounts due for the management contract and reimbursement of legal fees. The assets had a recorded value of $4,525,000. The Company was informed that the financial condition of the four nursing homes had deteriorated, that they failed to make the mortgage payment to the first lien holder, and that the first mortgage holder foreclosed on the property in June 2000. Under the circumstances, the Company wrote off the entire $4,525,000. The Company decided to dispose of two assisted living communities, which were not meeting operating performance expectations. These communities were written down to net realizable value. Also, a third community whose operations had deteriorated was written down based on management's estimate of future cash flows pursuant to the provisions of Statement of Financial Accounting Standards No. 121. In addition certain receivables associated with these properties were written off. These write offs substantially account for the remainder of the write-off of impaired assets and related expenses. Interest and Dividend Income Interest and dividend income for the three and nine months ended September 30, 2001 was $71,000 and $212,000 compared to $105,000 and $321,000 for the comparable periods in 2000. The decrease in interest and dividend income for both the three and nine month periods is a result of less cash available for investment purposes. Net Gain (Loss) on the Sale of Assets The net gain on the sale of assets for the three and nine months ended September 30, 2001 was $4,239,000 and $4,398,000 respectively. The Company sold its corporate office building in 2001, which resulted in a gain of $406,000. In addition, certain garden homes and related property that were adjacent to Camelot Retirement were sold in 2001 resulting in a loss of $296,000. 12 In 2001 the Company also exercised purchase options on two leased communities in Fort Worth, Texas, Palm House and Oak Park Retirement, and simultaneously sold both of the two communities to unrelated third parties. The gains on the sales of assets generated from these two transactions were $49,000. The Company also sold a community in Corona, California and recorded a gain of $4,239,000 on the sale. See further discussion of these transactions at Note E: Dispositions. The 2000 gain of $74,000 is attributable to the sale of undeveloped land that did not fit into the Company's strategic plans. Liquidity and Capital Resources At September 30, 2001, the Company had working capital of $4,409,000. In April 2001 the Company exercised purchase options on two leased communities in Fort Worth, Texas and simultaneously sold both of the two communities to unrelated third parties. After exercise of the purchase options and the payoff of approximately $4,450,000 of debt on a third community, the Company generated $496,000 of cash proceeds. See Net Gain (Loss) on the Sale of Assets and Note E: Dispositions for additional discussion of these transactions. On October 3, 2001, the Company concluded and closed a transaction with LSOF Pooled Equity, L.P. to settle and resolve litigation over the amount and nature of LSOF's ownership of Registrant. The dispute had centered around the number of shares of the Company's common stock and extent of control to which LSOF was entitled upon conversion of its Series F and G Preferred Stock and the amount then due under a "Make Whole Agreement." LSOF's position would have resulted in a change of voting control of the Company to LSOF, which the Company resisted in the litigation between the parties. Under the terms of the settlement, the Company repurchased all of LSOF's ownership interests in the Company, which amounted to 1,054,202 shares of the Company's common stock, the Company was relieved of its preferred stock redemption obligation, and LSOF released all claims in exchange for $4,000,000 in cash and the conveyance of 11 assisted living properties out of the 24 owned and operated by the Company, subject to any indebtedness thereon. In addition the Company released LSOF from all claims. The settlement resulted in an increase in stockholders equity of approximately $13,154,000, which will be recorded in the fourth quarter. On August 3, 2001 the Company sold an assisted living property in California. The cash proceeds from the sale were used to provide the cash portion of the settlement with LSOF. See further discussion of this settlement with LSOF in the Company's Form 8-K filed on October 18, 2001. Future development activities of the Company are dependent upon obtaining capital and financing through various means, including financing obtained from sale/leaseback transactions, construction financing, 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. 13 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 form 10Q that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from Greenbriar Corporation'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. Greenbriar Corporation has attempted to identify, in context, certain of the factors that they currently believe may cause actual future experience and results to differ from Greenbriar Corporation's current expectations regarding the relevant matter of subject area. These and other risks and uncertainties are detailed in the Company's reports filed with the Securities and Exchange Commission (SEC), including Greenbriar Corporation's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. 14 PART II: OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS - ------------------------------ LSOF Pooled Equity L.P. v Greenbriar Corporation - ------------------------------------------------ See the discussion of this matter in Part I, Item 2. The Company has been named as 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. 15 ITEMS 2-5: NOT APPLICABLE. - ---------------------------- ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K - ---------------------------------------------- a) Exhibits: None b) Report on Form 8-K: Report filed on August 11, 2001 disclosing under Item 5 and filing exhibits for the mortgage loan and the settlement with LSOF Pooled Equity L.P. described in Part I, Item 2. Report filed on October 18, 2001 disclosing under Item 2 the settlement with LSOF Pooled Equity L.P. described in Part I, Item 2. 16 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: November 10, 2001 By: /s/ Gene S. Bertcher ---------------------------- Executive Vice President Chief Financial Officer 17 -----END PRIVACY-ENHANCED MESSAGE-----