-----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, RqsOL5oquhNVJkfCokE/yAfFC91XbSxRFYDHpjyb6uhEtMMRO5mbfKWO9XUm8kyy bYhRcu6MWCy33FcGRrd7xw== 0001010549-97-000183.txt : 19970815 0001010549-97-000183.hdr.sgml : 19970815 ACCESSION NUMBER: 0001010549-97-000183 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: AMEX 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-08187 FILM NUMBER: 97661451 BUSINESS ADDRESS: STREET 1: 4265 KELLWAY CIRCLE CITY: ADDISON STATE: TX ZIP: 75244 BUSINESS PHONE: 2144078400 MAIL ADDRESS: STREET 1: 4265 KELLWAY CIRCLE CITY: ADDISON STATE: TX ZIP: 75244 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 10QSB 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB (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, 1997 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from to Commission File Number: 0-8187 GREENBRIAR CORPORATION (Name of Small Business Issuer in its Charter) Nevada 75-2399477 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 4265 Kellway Circle, Addison, Texas, 75244 (Address of principal executive offices) (972) 407-8400 (Issuer's telephone number) Check 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 twelve months (or for such shorter period that the registrant 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 14, 1997, the issuer had outstanding approximately 6,564,000 shares of par value $.01 common stock. Greenbriar Corporation Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1997 and December 31, 1996..........................3 Consolidated Statements of Earnings Three and Six Months Ended June 30, 1997 and 1996............5 Consolidated Statements of Cash Flows Three and Six Months Ended June 30, 1997 and 1996............6 Notes to Consolidated Financial Statements...................8 Item 2. Management=s Discussion and Analysis of Financial Condition and Results of Operations..........................12 Part II. Other Information Item 3. Exhibits........................................................17 Signatures......................................................18 PART I. FINANCIAL INFORMATION - ------------------------------ ITEM 1. FINANCIAL STATEMENTS - ----------------------------- Greenbriar Corporation CONSOLIDATED BALANCE SHEETS (Amounts in thousands) June 30, December 31, 1997 1996 --------- ----------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 299 $ 2,784 Accounts receivable-trade 1,114 561 Real estate operations held for sale, at lower cost of market 3,087 5,379 Other current assets 1,128 665 -------- ------- TOTAL CURRENT ASSETS 5,628 9,389 Deferred Income Tax Benefit 1,686 868 Investment in Securities, at cost 4,325 4,086 Mortgage Notes Receivable 8,953 8,768 Property and Equipment, at cost Land and improvements 10,602 10,566 Buildings and improvements 71,087 69,369 Equipment and furnishings 4,847 4,317 Construction in progress 3,707 3,836 -------- -------- 90,243 88,088 Less accumulated depreciation 3,983 2,635 -------- -------- 86,260 85,453 Deposits 4,542 5,553 Goodwill and Other Intangibles 1,043 1,199 Other Assets 2,651 1,385 -------- -------- $115,088 $116,701 ======== ======== Greenbriar Corporation CONSOLIDATED BALANCE SHEETS - CONTINUED (Amounts in thousands) LIABILITIES AND STOCKHOLDERS EQUITY June 30, December 31, 1997 1996 ---------- ----------- (Unaudited) CURRENT LIABAILITIES Current maturities of long-term debt $ 1,871 $ 1,588 Notes Payable-stockholder 1,250 930 Long-term debt collateralized by properties under contract of sale 897 901 Accounts payable-trade 1,902 3,810 Accrued expenses 2,614 3,482 Other current liabilities 1,402 1,223 -------- -------- TOTAL CURRENT LIABILITIES 9,936 11,934 Long-term Debt 56,160 54,717 Financing Obligations 10,815 10,815 Deferred Gain 3,083 3,083 STOCKHOLDERS' EQUITY Preferred stock, $.10 par value; liquidation value of $3,685 in 1997 and $5,705in 1996; authorized, 775 shares; issued and outstanding, (in two series), 678 shares in 1997 and 698 shares in 1996 69 70 Common stock $.01 par value authorized, 20,000 shares; issued and outstanding, 6,564 and 6,471 shares respectively 66 65 Additional paid-in capital 51,389 51,232 Accumulated deficit (13,857) (12,642) -------- -------- 37,667 38,725 Less stock purchase note receivable (including $2,438 from related parties) (2,573) (2,573) -------- -------- 35,094 36,152 -------- -------- $115,088 $116,701 ======== ======== Greenbriar Corporation CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands, except share data) The Three Month For The Six Month Period Ended June 30, Period Ended June 30, 1997 1996 1997 1996 ---- ---- ---- ---- (Unaudited) (Unaudited) Revenue Assisted Living Operations $ 9,248 $ 8,031 $ 18,126 $ 11,683 Other 37 - 64 - ------- ------- -------- -------- 9,285 8,031 18,190 11,683 Operating Expenses Assisted Living Community Operations $ 6,006 $ 5,041 $ 11,760 $ 7,458 Lease Expense 1,146 1,043 2,264 1,619 Depreciation and Amortization 785 569 1,543 729 Corporate General and Administration 1,234 1,166 2,703 2,197 ------- ------- -------- -------- 9,171 7,819 18,270 12,003 ======= ======= ======== ======== Operating Profit (Loss) 114 212 (80) (320) Other Income (expense): Interest and Dividend Income $ 80 $ 224 $ 233 $ 485 Interest expense (1,589) (1,228) (3,169) (1,688) Gain on sales of assets - - - 32 Other (46) (34) 503 416 -------- -------- --------- -------- (1,555) (1,038) (2,433) (755) -------- -------- --------- -------- Loss from Continuing Operations before Income Taxes (1,441) (826) (2,513) (1,075) Income Tax Benefit (585) (314) (1,014) (409) -------- -------- --------- -------- Loss from Continuing Operations (856) (512) (1,499) (666) Discontinued Operations Earnings from operations, net of income taxes 56 78 123 129 Gain on disposal, net of income taxes 323 - 323 580 --------- -------- --------- -------- NET EARNINGS (LOSS) (477) (434) (1,053) 43 Preferred stock dividend requirement (80) (114) (160) (148) Loss allocable to common shareholders $ (557) $ (548) $ (1,213) $ (105) ========= ======== ========= ======== Loss per share Continuing operations (.13) (.11) (.23) (.14) Net Earnings (.08) (.11) (.18) (.02) Weighted average number of common and equivalent shares outstanding 6,564 4,811 6,564 4,811
Greenbriar Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) For the Six Month Period Ended June 30, 1997 1996 ----- ----- (Unaudited) (Unaudited) Cash flows from operating activities Net earnings (loss) $ (1,053) $ 43 Adjustments to reconcile net earnings (loss) to net cash used in operating activities Discontinued operations (446) (696) Depreciation and amortization 1,543 729 Gain on sales of assets - (32) Changes in operating assets and liabilities Accounts receivable (553) (269) Deferred income taxes (818) 19 Other current and noncurrent assets (947) (1,026) Accounts payable and other liabilities (2,918) 240 --------- -------- Net cash used in operating activities of continuing operations (5,192) (992) Net cash provided by (used in) operating activities of discontinued operations 207 (190) --------- -------- Net cash used in Operating Activities (4,985) (1,182) --------- -------- Cash flows from Investing activities Proceeds from Sale of Assets 256 Collections of notes receivable 96 148 Purchase of Property and Equipment (2,155) (8,151) Additions to Notes Receivable (281) (459) Net Cash received in Acquisition of Business - 739 Investing activities of discontinued operations 2,734 (3) ---------- -------- Net Cash provided by (used in) Investing Activities 394 (7,470) Cash flows from Financing Activities Proceeds from borrowings 2,751 4,420 Payments on debt (705) (196) Dividends on Preferred Stock (145) (80) Purchase of Common and Preferred Stock (1) (122) Exercise of Stock Options 206 - Financing activities of discontinued operations - (17) ---------- -------- Net Cash provided by Financing Activities 2,106 4,005 --------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS ( 2,485) (4,647) --------- --------- Greenbriar Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) For the Six Month Period Ended June 30, 1996 1997 ---- ---- (Unaudited) (Unaudited) Cash and cash equivalents at beginning of period 2,784 7,623 -------- ------- Cash and cash equivalents at end of period $ 299 $ 2,976 ======== ======= Greenbriar Corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Unaudited Three and Six Months Ended June 30, 1997 and 1996 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 inter-company 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-QSB and Item 310 of Regulation S-B, and accordingly, do not include all of the information and footnotes required by generally accepted accounting principles for interim financial statements. 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 six month periods ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996 as amended by Form 10-KSB/A. NOTE B - ACQUISITION OF WEDGWOOD RETIREMENT INNS, INC. - ------------------------------------------------------ In March 1996, Greenbriar acquired substantially all of the assets and liabilities of a number of companies under common control and management of Wedgwood Retirement Inns, Inc. ("Wedgwood"). The acquisition has been accounted for as a purchase transaction and Wedgwood's operations are reflected in the consolidated statement of earnings beginning April 1, 1996. The following table presents pro forma unaudited consolidated results of operations for the six month period ended June 30, 1996, assuming that the acquisition had taken place on January 1, 1996. The pro forma results are not necessarily indicative of the results of operations that would have occurred had the acquisition been made on January 1, 1996, or of future results of operations of the combined companies. (Amounts in Thousands, except per share data) For the Six Month Period Ended June 30,1996 (Pro Forma) ----------- (Unaudited) Revenue $ 15,945 Loss from continuing operations $ (938) Net Earnings $ (229) Loss allocable to common shareholders $ (457) Loss per share from continuing operations $ (.19) NET LOSS PER SHARE $ (.05) NOTE C - ACQUISITION OF AMERICAN CARE COMMUNITIES, INC. - ------------------------------------------------------- In December 1996 Greenbriar acquired American Care Communities, Inc. The combination has been accounted for as a pooling of interests and, accordingly, the Company's consolidated financial statements for 1996 have been restated to include the accounts and operations of American Care Communities, Inc. NOTE D - DISPOSITION OF REAL ESTATE HELD FOR SALE As of June 30, 1997 the Company owned three shopping centers in Georgia. While all the centers are profitable, they do not fit into the Company's long range strategic plans and commitment to the assisted living industry. The Company is actively attempting to sell all the centers. In April 1997 the Company sold a shopping center in North Carolina. The proceeds from the sale of the center were $2,734,000 and the Company recorded a gain, net of income taxes of $323,000. The Company's Real estate operations have been reflected as discontinued in the financial statements for all periods presented. NOTE E - LONG-TERM OBLIGATIONS - ------------------------------ Long-term debt is comprised of the following (in thousands): June 30, December 31, 1997 1996 ---- ---- Notes payable to financial institutions maturing through 2015; fixed and variable Interest rates ranging from 4.8% to 11.75%; collateralized by property, fixtures, equipment and the assignment of rents $ 12,671 $ 13,319 Notes payable to individuals and companies maturing through 2022; variable and fixed interest rates ranging from 7% to 12% collateralized by real property, personal property, fixtures, equipment and the assignment of rents 12,706 12,391 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 5.725% at June 30, 1997; collateralized by personal property, land, fixtures and rents 7,580 7,660 Notes payable to related parties maturing in 2001; interest rates ranging from 9.25% to 12% 1,197 1,196 Notes payable to a bank maturing in 2007; interest at prime (8.25% to December 31, 1996) plus 2.0%; collateralized by property and equipment 3,122 1,658 Notes payable to financial institution maturing in 1997 through 2000; bearing interest at prime plus .50% to 1.25%; collateralized by property and equipment 8,252 8,043 Mortgage note payable to a financial institution maturing in 2007; bearing interest at 11.35%; collateralized by 11,467 11,500 property and equipment Other 1,036 538 --------- -------- 58,031 56,305 Less: current maturities 1,871 1,588 --------- -------- $ 56,160 $ 54,717 ========= ======== The Company operates two communities that are financed through sale-leaseback obligations. At the end of the tenth year of the fifteen-year leases, the Company has options to repurchase the communities for the greater of the sales prices 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. NOTE F - NEW ACCOUNTING PRONOUNCEMENT - ------------------------------------- The FASB has issued Statement of Financial Accounting Standards No. 128, Earnings Per Share, which is effective for financial statements issued after December 15, 1997. Early adoption of the new standard is not permitted. The new standard eliminates primary and fully diluted earnings per share and requires presentation of basic and diluted earnings per share together with disclosure of how the per share amounts were computed. The adoption of this new standard is not expected to have a material impact on the disclosure of earnings per share in the financial statements. NOTE G - PREFERRED STOCK - ------------------------ The following summarizes the various classes of preferred stock (amounts in thousands except per share data): June 30, December 31, 1997 1996 ---- ---- Series B cumulative convertible preferred stock, $.10 par value; liquidation value of $310 in 1997 and $1,330 in 1996; authorized, 100 shares; issued and outstanding, 3 and 13 shares in $ 1 $ 1 1997 and 1996, respectively Series C cumulative convertible preferred stock, $.10 par value; liquidation value of $0 in 1997 and $1,000 in 1996; authorized, 20 shares; issued and outstanding, 0 and 10 shares in 1 1997 and 1996, respectively Series D cumulative preferred stock, $.10 par value; liquidation value of $3,375; authorized, issued and outstanding 675 shares 68 68 -------- -------- $ 69 $ 70 ======== ======== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Overview During 1994 the Company began a series of steps to focus its business on the development, management and ownership of assisted living communities. The Company's historical businesses during the past five years have included ownership and operation of skilled nursing and retirement centers, real estate investments and manufacture and leasing of electric convenience vehicles and wheelchairs. The nursing and retirement centers and convenience vehicle businesses have been sold, and the real estate investments are being liquidated. During 1994, the Company began independently to develop its assisted living business, began construction of its first assisted living community in July 1995, and opened such community to residents on May 30, 1996. By July 1, 1996, the Company (not including the communities of Wedgwood and American Care) had three additional assisted living communities under construction. In order to increase the Company's presence in the assisted living industry, create geographic diversity and obtain experienced personnel, the Company acquired Wedgwood in March 1996 and American Care in December 1996. The Wedgwood Acquisition has been accounted for as a purchase, and the historical financial statements of the Company do not include any revenues or earnings (losses) attributed to Wedgwood prior to the acquisition. The American Care acquisition has been accounted for as a pooling of interests and accordingly, the Company's financial statements have been restated to include the accounts and operations of American Care for all periods prior to the acquisition. Results of Operations - ---------------------- Three and six month periods ended June 30, 1997 compared to three and six month periods ended June 30, 1996. Revenues and Operating Expenses from Assisted Living Operations - --------------------------------------------------------------- Revenues were $9,285,000 and $18,190,000 for the three and six months ended June 30, 1997 as compared to $8,031,000 and $11,683,000 for the three and six months ended June 30, 1996. Community operating expenses which consists of assisted living community expenses, lease expense and depreciation and amortization, were $7,937,000 and $15,567,000 for the three and six months ended June 30, 1997 as compared to $6,653,000 and $9,806,000 for the three and six months ended June 30, 1996. Wedgwood was acquired effective March 31, 1996 in a transaction accounted for as a purchase. The revenue and related expenses for the three month period ended March 31, 1996 for the 16 communities acquired through the Wedgwood acquisition are not included in the amounts for the six month period ended June 30, 1996. The revenues and related expenses for Wedgwood for the three months ended March 31, 1996 were $4,262,000 and $3,670,000, respectively. The balance of the increases are due to the opening of new communities and increased census at the existing communities. Three Month Period Ended June 30, 1997 (Amounts in thousands) Stabilized Start-up Total Communities Communities (1) (2) ----------- ----------- -------- Assisted Living Community Income $ 8,602 $ 683 $ 9,285 Assisted Living Community Operating Expenses 5,310 696 6,006 -------- --------- -------- Gross Operating Income (loss) 3,292 (13) 3,279 Lease Expense 1,056 90 1,146 Community depreciation and amortization 597 188 785 -------- --------- -------- Income (loss) from community operations $ 1,639 $ (291) $ 1,348 ======== ========= ======== 1. Stabilized communities are those communities that have been operating for one year or have achieved stabilized occupancy of 95%. 2. Start-up communities are those communities that have not been operating for one year and have not achieved a stabilized occupancy of 95% or more. 3. The Company has 29 stabilized and 4 start-up communities. 4. The community operating expense does not include corporate general and administrative expense or lease expense for the respective communities. Corporate General and Administrative Expenses - -------------------------------------------- General and administrative expenses were $1,234,000 and $2,703,000 for the three and six months ended June 30, 1997 compared to $1,166,000 and $2,197,000 for the three and six months ended June 30, 1996. The increases were due primarily to the acquisition of Wedgwood and the growth of the Company. Interest and Dividend Income - ---------------------------- Interest and dividend income for the three and six months ended June 30, 1997 was $80,000 and $233,000 compared to $224,00 and $485,000 for the comparable period in 1996. The decrease in interest and dividend income is due to a decrease in cash available for investment purposes. Interest Expense - -------------- Interest expense for the three and six months ended June 30, 1997 was $1,589,000 and $3,169,000 compared to $1,228,000 and $1,688,000 for the comparable period in 1996. The increase in interest expense represents the interest incurred on the mortgage debt and financing obligations on the Wedgwood communities, as well as debt incurred on new communities which opened in 1997 and 1996. Discontinued Operations - ----------------------- Earnings from discontinued operations consist of the Real estate operations that are classified as held for sale. The Real estate operations had net earnings of $56,000 and $123,000 for the three and six months ended June 30, 1997 and earnings of $78,000 and $129,000 for the comparable period in 1996. The decrease in 1997 was due to the sale of the North Carolina Shopping Center which occurred in April 1997. That sale resulted in a gain of $323,000 net of income tax, in 1997. The sale in the first quarter of 1996 of the Mobility Group resulted in a gain on sale, net of tax, of $580,000. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1997, the Company had a deficit in working capital of $4,308,000. As of June 30, 1997, the Company had assets of $115,088,000 liabilities of $79,994,000 and stockholders' equity of $35,094,000. In July 1997, the Company refinanced three of its communities resulting in additional working capital of approximately $2,800,000. The Company is currently negotiating financings with various financial institutions and other lenders. The Company believes it has sufficient liquidity and capital to meet its current obligations. As of March 31, 1997, the Company owned three shopping centers in Georgia and one shopping center in North Carolina. While all the centers are profitable, they do not fit into the Company's long range strategic plans and commitment to the assisted living industry. The Company is actively attempting to sell all the centers. In April 1997 the Company sold a North Carolina center and received cash proceeds of $2,734,000. Management expects that the proceeds from the sale of the centers will be at least equal to the $3,087,000 book value of the real estate assets. As of June 30, 1997, the Company has loans in place or has received commitments for future financing, subject, in the case of the commitments, to final documentation, as follows: I. Health Care REIT, Inc. has issued a commitment to provide $60 million over three years to acquire and pay 100% of the construction costs of assisted living communities to be leased to the Company. The term of the leases will range from 11 years to 14 years plus two five-year renewal options, with lease payments based upon the interest rate on U.S. Treasury notes plus 3.75%, subject to inflation adjustments not to exceed .25% per year. A 1% commitment fee is required, as each lease is entered into. The Company will have the option to purchase each community at the end of the term for its original cost plus 50% of the increase in its fair market value. As additional security to the lessor, the Company will provide a letter of credit for 5% of the amount financed, a first lien on personal property and receivables of the community, and subordination of management fees and rentals from subtenants. The commitment is in three segments of $20 million each, with approval of the REIT's Investment Committee before using the second and third segments. As of June 30, 1997, the Company had utilized $5.3 million of the commitment for funding the Oak Park property under construction in Clermont, Florida. II. In 1995 Health Care REIT, Inc. provided mortgage loan commitments for two communities totaling $16,891,000. Of that amount, $4,536,000 was used to refinance one of the communities (Camelot) and $5,625,000 was used to construct another community (La Villa) which opened in the fourth quarter of 1996. The balance includes $5,160,000 to fund construction of the Camelot Assisted Living community, which is under construction, and $645,000 to fund certain improvements to the existing Camelot community that are almost complete, along with $925,000 for the construction of a second phase of La Villa, which is not presently scheduled for development and is not included in the development and construction total. The construction loans convert to term loans upon completion of construction. The term loans mature in seven to ten years, initially bear interest at a rate of 4.5% over the corresponding U.S. Treasury Note rate and are secured by the communities, an assignment of leases, rents and management contract, letters of credit and an assignment of the communities licenses and permits. III. The Company has two loans from First National Bank & Trust Co. of McAlester, Oklahoma totaling $5.2 million to provide mortgage financing for the two assisted living Communities in Muskogee, Oklahoma and Sherman, Texas. Such loans require a 2% commitment fee and are payable in 10 years (but callable at the discretion of the bank in 5 years) based on a 20 year amortization, with interest at a prime plus 2% (subject to a minimum interest rate of 8.70% and a maximum interest rate of 12.75%). As of June 30, 1997, the Company had utilized $2.6 million for the Muskogee Community and $522,000 for the Sherman Community. The Community in Muskogee was completed in March 1997 and the Sherman Community is in the early stages of construction. In addition to development and construction financing, described above, Comerica Bank-Texas has issued a commitment to provide $1,600,000 to finance buses and other vehicles to transport residents of the Company's communities. Each vehicle will be financed at 90% of cost and the loan for each vehicle will be amortized over 48 months. The interest rate will be prime plus one percent. The Company believes it has adequate resources to complete its communities currently under construction and development and plans to use the balance of such committed resources for future development of assisted living communities. 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. Forward Looking Statements - -------------------------- Certain statements included in this Managements' Discussion and Analysis are forward looking statements that predict the future development of the Company. The realization of these predictions will be subject to a number of variable contingencies, and there is no assurance that they will occur or be realized in the time frame proposed. The risks associated with the potential actualization of the Company's plans include: contractor delays, the availability and cost of financing, availability of managerial oversight and regulatory approvals, to name a few. PART II. OTHER INFORMATION - --------------------------- Item 1: Legal Proceedings Clay Capital Corporation vs Greenbriar, Care America and James R. Gilley Clay Capital alleges that certain repayments of loan proceeds to Greenbriar from the sale of two nursing homes in 1994 were improper. Plaintiff also claims that such loan was created to prevent payment of sums alleged due it pursuant to a profit participation arrangement entered into by one of the Company's subsidiaries in 1993. The Plaintiff seeks in excess of $1 million. The Company believes that this claim is without merit. Item 4: Submission of Matters to a Vote of Security Holders The Company's annual meeting was held on May 22, 1997. At that meeting the shareholders re-elected Don C. Benton as a director with a term to expire in 2000. The vote was 4,782,542 for and 2,532 votes withheld. The Company's directors whose terms continue after this meeting are as follows: Terms expire in 1998 -------------------- James R. Gilley - Chairman of the Board Floyd B. Rhoades Paul G. Chrysson Terms expire in 1999 -------------------- Michael E. McMurray Matthew G. Gallins Victor L. Lund At the meeting the shareholders voted to approve the Company's 1997 Stock Option Plan under which 500,000 shares of Common Stock will be reserved for issuance to key employees, directors and consultants of the Company. The vote to approve the 1997 Stock Option Plan was 4,256,810 for approval, 42,280 votes against approval and 3,482 votes abstaining. At the meeting the Shareholders voted to ratify the selection of Grant Thornton LLP to serve as the Company's independent auditors for the year ending December 31, 1997. The vote to approve Grant Thornton was 4,783,408 votes for approval, 424 votes against approval and 1,192 votes abstaining. Item 6: Exhibits and Reports on Form 8-K a) The following exhibits are filed with this report: 27.1 Financial schedule required by Item 601 of Regulation S-B b) There were no reports on Form 8-K filed by the company during the quarter ended June 30, 1997. Greenbriar Corporation 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 9, 1997 By: /s/ Gene S. Bertcher -------------------- Gene S. Bertcher Executive Vice President Chief Financial Officer EX-27 2
5 0000105744 GREENBRIAR CORPORATION 1,000 US DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 299 0 1,114 0 0 5,628 90,243 3,983 115,088 9,936 56,160 0 69 66 34,959 115,088 0 9,285 0 9,171 0 0 1,589 (1,441) (585) (856) 379 0 0 (477) (.08) (.08)
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