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.
<PAGE>
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
<PAGE>
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
======== ========
<PAGE>
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
======== ========
<PAGE>
Greenbriar Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except share data)
<TABLE>
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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)
--------- ---------
<PAGE>
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
======== =======
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
========= ========
<PAGE>
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
======== ========
<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 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.
<PAGE>
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.
<PAGE>
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:
<PAGE>
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.
<PAGE>
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.
<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
--------------------
Gene S. Bertcher
Executive Vice President
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000105744
<NAME> GREENBRIAR CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
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<PERIOD-END> JUN-30-1997
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0
69
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</TABLE>
