<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 March 31, 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 (I.R.S. 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 May 8, 1997, the issuer had outstanding approximately 6,550,000 shares of par
value $.01 common stock.
<PAGE>
GREENBRIAR CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets................. 1
Consolidated Statements of Earnings
Three Months Ended March 31, 1996 and 1997.. 3
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1997.. 4
Notes to Consolidated Financial Statements.. 6
Item 2. Management's Discussion and Analysis
or Plan of Operation........................ 10
PART II. OTHER INFORMATION
Item 3. Exhibits ................................... 15
Signatures ................................. 16
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
GREENBRIAR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 552 $ 2,784
Accounts receivable - trade 664 561
Real estate operations held for sale,
at lower of cost or market 5,361 5,379
Other current assets 1,144 665
-------- --------
TOTAL CURRENT ASSETS 7,721 9,389
DEFERRED INCOME TAX BENEFIT 1,306 868
INVESTMENT IN SECURITIES, AT COST 4,105 4,086
MORTGAGE NOTES RECEIVABLE 8,829 8,768
PROPERTY AND EQUIPMENT, AT COST
Land and improvements 10,696 10,566
Buildings and improvements 70,820 69,369
Equipment and furnishings 4,690 4,317
Construction in progress 3,078 3,836
-------- --------
89,284 88,088
Less accumulated depreciation 3,293 2,635
-------- --------
85,991 85,453
DEPOSITS 4,791 5,553
GOODWILL AND OTHER INTANGIBLES 1,114 1,199
OTHER ASSETS 2,582 1,385
-------- --------
$116,439 $116,701
======== ========
</TABLE>
1
<PAGE>
GREENBRIAR CORPORATION
CONSOLIDATED BALANCE SHEETS - CONTINUED
(Amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,797 $ 1,588
Notes payable - stockholder 986 930
Long-term debt collateralized by properties
under contract of sale 899 901
Accounts payable - trade 2,476 3,810
Accrued expenses 3,186 3,482
Other current liabilities 1,421 1,223
-------- --------
TOTAL CURRENT LIABILITIES 10,765 11,934
LONG-TERM DEBT 56,140 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 $5,705 in 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,
6,471 and 4,752 shares respectively 66 65
Additional paid-in capital 51,389 51,232
Accumulated deficit (13,315) (12,642)
-------- --------
38,209 38,725
Less stock purchase note receivable
(including $2,438 from related parties) (2,573) (2,573)
-------- --------
$116,439 $116,701
======== ========
</TABLE>
2
<PAGE>
GREENBRIAR CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
For the Three
Month Period Ended March 31,
1997 1996
------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUE
Assisted Living Operations $ 8,878 $3,652
Other 27 -
------- ------
8,905 3,652
OPERATING EXPENSES
Assisted Living Community Operations 5,754 2,417
Lease Expense 1,118 576
Depreciation and amortization 758 160
Corporate General and Administrative 1,469 1,031
------- ------
9,099 4,184
------- ------
OPERATING LOSS (194) (532)
OTHER INCOME (EXPENSE):
Interest and dividend income 153 261
Interest expense (1,580) (460)
Gain on sales of assets - 32
Other 549 450
------- ------
(878) 283
------- ------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (1,072) (249)
INCOME TAX EXPENSE (BENEFIT) (429) (95)
------- ------
LOSS FROM CONTINUING OPERATIONS (643) (154)
DISCONTINUED OPERATIONS
Earnings from operations, net of income
taxes 67 51
Gain on disposal, net of income
taxes - 580
------- ------
NET EARNINGS (LOSS) (576) 477
Preferred stock dividend requirement (80) (34)
------- ------
Earnings (loss) allocable to
Common Stockholders $ (656) $ 443
======= ======
Earnings (loss) per share
Continuing operations $( .10) $( .03)
Net earnings $( .10) $.09
Weighted average number of common and
equivalent shares outstanding 6,564 4,744
</TABLE>
3
<PAGE>
GREENBRIAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Three
Month Period Ended March 31,
1997 1996
-------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (576) $ 477
Adjustments to reconcile net earnings
(loss) to net cash used in
operating activities
Discontinued operations - (580)
Depreciation and amortization 714 194
Gain on sales of assets - (32)
Changes in operating assets
and liabilities
Accounts receivable (103) 161
Deferred income taxes - 378
Other current and noncurrent
assets (1,362) (870)
Accounts payable and other
liabilities (1,444) (62)
------- -------
Net cash used in operating
activities of continuing operations (2,771) (334)
Net cash used in Operating activities
of Discontinued operations (47) (349)
------- -------
NET CASH USED IN OPERATING ACTIVITIES (2,818) (683)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Assets - 256
Collections of notes receivable 29 -
Purchase of Property and Equipment (1,196) (2,386)
Additions to Notes Receivable (61) (249)
Net Cash Received in Acquisition
Of Business - 739
NET CASH USED IN
INVESTING ACTIVITIES (1,228) (1,640)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 1,924 400
Payments on Debt (235) (2)
Dividends on Preferred Stock (80) -
Purchase of Common and Preferred Stock (1) (121)
Exercise of Stock Options 206 -
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,814 277
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,232) (2,046)
------- -------
</TABLE>
4
<PAGE>
GREENBRIAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Three
Month Period Ended March 31,
1997 1996
------------ --------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash and cash equivalents at beginning
of period 2,784 7,622
------ ----------
Cash and cash equivalents at end of
period $ 552 $5,576
====== ==========
</TABLE>
Supplemental information on noncash investing and financing transactions is as
follows (in thousands):
Stock dividend paid on preferred
shares $ 16 $ 73
5
<PAGE>
GREENBRIAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Unaudited Three Months Ended March 31, 1996 and 1997
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 month period ended March 31, 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 three month period ended March 31, 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.
6
<PAGE>
<TABLE>
<CAPTION>
(Amounts in Thousands,
except per share data)
For the Three
Month Period Ended March 31,
1997 1996
--------- ----------
(Pro Forma)
----------
(Unaudited)
<S> <C>
Revenue $3,871
Earnings from continuing operations $ 420
Net Earnings $ 570
Earnings allocable to common shareholders $ 442
Earnings per share from continuing operations $ 0.06
NET EARNINGS PER SHARE $ 0.09
</TABLE>
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 OPERATIONS
- ----------------------------------------------
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 the North Carolina center. Management
expects that the proceeds from the sale of the centers will be at least equal to
the $5,361,000 book value of the real estate assets.
Accordingly, the Company's real estate operations have been reflected as
discontinued in the financial statements at March 31, 1997.
NOTE E - LONG-TERM OBLIGATIONS
- ------------------------------
Long-term debt is comprised of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Notes payable to financial
institutions maturing through
2015; fixed and variable
Interest rates ranging from
4.8% to 11.75%; collateralized
by, property, fixtures, equip-
ment and the assignment of
rents $12,670 $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,
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C>
equipment and the assignment of
rents 12,829 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 5.6%
at December 31, 1996;
collateralized by personal
property, land, fixtures and
rents 7,660 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 2,631 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 8,607 8,043
Mortgage note payable to a
financial institution maturing
in 2007; bearing interest at
11.35%; collateralized by
property and equipment 11,485 11,500
Other 818 538
------- --------
57,897 56,305
Less: current maturities 1,757 1,588
------- --------
$56,140 $54,717
======= ========
</TABLE>
The Company operates two communities that are financed through sale-leaseback
obligations. At the end of the tenth year of 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 recorded as
financings, and the Company has recorded the proceeds from the sales as
financing obligations, classified the lease payments as interest expense and
continued to carry the communities and record depreciation.
8
<PAGE>
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):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
-------- -----------
<S> <C> <C>
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 1997 and 1996, respectively $ 1 $ 1
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 1997 and 1996,
respectively. 1
Series D cumulative preferred stock,
$.10 par value; liquidation value
of $3,375 in 1997 and 1996;
authorized, issued and outstanding
675 shares in 1997 and 1996. 68 68
--- ---
$69 $70
=== ===
</TABLE>
9
<PAGE>
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 MONTH PERIOD ENDED MARCH 31, 1997 COMPARED TO THREE MONTH PERIOD ENDED
MARCH 31, 1996.
REVENUES AND OPERATING EXPENSES FROM ASSISTED LIVING OPERATIONS
- ---------------------------------------------------------------
Revenues were $8,905,000 for the three months ended March 31, 1997 as compared
to $3,652,000 for the three months ended March 31, 1996. Combined operating
expenses including assisted living community expenses, lease expense and
depreciation and amortization, were $7,630,000 for the three months ended March
31, 1997 as compared to $3,153,000 for the three months ended March 31, 1996.
Wedgwood was acquired effective March 31, 1996 in a transaction accounted for as
a purchase. The revenue and related expenses for the 16 communities acquired
through the Wedgwood acquisition are not included in the amounts for 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 during 1996 and increased census at
the existing communities.
10
<PAGE>
<TABLE>
<CAPTION>
Three-MONTH PERIOD ENDED
MARCH 31, 1997
(Amounts in thousands)
Stabilized Start-up Total
Communities Communities
(1) (2)
------ ----- ------
<S> <C> <C> <C>
Assisted Living Community Income $8,256 $ 649 $8,905
Assisted Living Community Operating
Expenses 5,045 709 5,754
------ ----- ------
Gross Operating Income (loss) 3,211 (60) 3,151
Lease Expense 1,029 89 1,118
Community depreciation &
amortization 547 211 758
------ ----- ------
Income (loss) from Community
Operations $1,635 $(360) $1,275
====== ===== ======
</TABLE>
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 27 stabilized and 5 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 $1,469,000 for the three months ended
March 31, 1997 compared to $1,031,000 for the three months ended March 31, 1996.
The increases were due primarily to the acquisition of Wedgwood.
Interest Expense
- ----------------
Interest expense for the three months ended March 31, 1997 was $1,580,000
compared to $460,000 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 1996.
Discontinued Operations
- -----------------------
Earnings from discontinued operations include the real estate operations that
are classified as held for sale.
The real estate operations had net earnings of $67,000 for the three months
ended March 31, 1997 and earnings of $51,000 for the comparable period in 1996.
The sale in the first quarter of 1996 of the Mobility Group resulted in a gain
on sale, net of tax, of $580,000.
11
<PAGE>
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.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had a deficit in working capital of $3,044,000.
As of March 31, 1997, the Company had assets of $116,439,000, liabilities of
$78,230,000 and stockholders' equity of $38,209,000. The Company is currently
refinancing certain of its properties, and negotiating a line of credit and
other financings with various financial institutions. 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 the 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 $5,361,000 book value of the real
estate assets. As of March 31, 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:
1. 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
March 31, 1997, the Company had utilized $5.3 million of the commitment for
funding the Oak Park property under construction in Clermont, Florida.
12
<PAGE>
2. 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.
3. The Company has obtained commitments from First National Bank & Trust Co. of
McAlester, Oklahoma of $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%).
The Community in Muskogee was completed in March 1997 and the Sherman
Community is in the early stages of construction.
4. In 1995 Investors Real Estate Trust ("IRET") issued a commitment to provide
100% of the construction costs up to $2,810,000 for the Sweetwater Springs
Community in Lithia Springs, Georgia that opened in October 1996. Upon
completion the community was leased to the Company for a term of 15 years. In
1996 the commitment was increased by $1,540,000 to a maximum of $4,350,000 in
order to provide for the construction of a second phase of the community
consisting of 16 Alzheimer's special care units. The monthly lease payments
will be based on the funded amount and on annual interest rates of 11.0% for
the first five years, 12.65% for the next five years and 14.55% for the last
five years of the lease. The Company has an option to purchase the Community
at fair market value during the first nine months of the fourteenth year of
the lease. The lease is secured by the community.
Construction of the second phase has been deferred indefinitely. Though some
of the additional funding has been utilized, the remaining funds available
are considered sufficient to complete the second phase.
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.
13
<PAGE>
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.
14
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
ITEMS 1-2 ARE NOT APPLICABLE
ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
During the first quarter of 1997, the Company filed a report dated January 14,
1997 on Form 8-K which reported the acquisition of American Care Communities,
Inc. The financial statements required to be filed with respect to the
acquisition were filed with this filing by amendment and consisted of the
following:
A). The audited balance sheets of American Care Communities, Inc. as of
December 31, 1995 and 1994, and the related combined statements of
operations, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1995.
B). A pro forma consolidated balance sheet of the Company as of September
30, 1996 prepared as though the acquisition had occurred on that date.
B). A pro forma consolidated statement of earnings of the Company for the
nine months ended September 30, 1996 and 1995 and the years ended
December 31, 1995 and 1994 prepared as though the disposition had
occurred at the beginning of the period.
15
<PAGE>
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
-----------------------------
Executive Vice President
Chief Financial Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 AND CONSOLIDATED STATEMENT OF
EARNINGS (LOSS) FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 552
<SECURITIES> 0
<RECEIVABLES> 664
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,721
<PP&E> 89,284
<DEPRECIATION> 3,293
<TOTAL-ASSETS> 116,439
<CURRENT-LIABILITIES> 10,765
<BONDS> 56,140
0
69
<COMMON> 66
<OTHER-SE> 38,074
<TOTAL-LIABILITY-AND-EQUITY> 116,439
<SALES> 0
<TOTAL-REVENUES> 8,905
<CGS> 0
<TOTAL-COSTS> 9,099
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,580
<INCOME-PRETAX> (1,072)
<INCOME-TAX> (429)
<INCOME-CONTINUING> (643)
<DISCONTINUED> 67
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (576)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
