<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>green10q093002.txt
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

(Mark One)
[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934
                    For the period ended September 30, 2002

                                       OR

[ ]      TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                          Commission file number 0-8187

                             Greenbriar Corporation
             (Exact name of Registrant as specified in its charter)

                  Nevada                                         75-2399477
      (State or other jurisdiction of                           (IRS Employer
      Incorporation or organization)                         Identification No.)

14185 Dallas Parkway, Suite 650, Dallas, TX                         75254
 (Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code: (972) 407-8400

Securities registered pursuant to Section 12(b) of the Act:

                                                          Name of Each Exchange
         Title of Each Class                               on Which Registered
         -------------------                               -------------------
    Common Stock, $.01 par value                         American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark  whether the issuer (1) filed all reports  required to be
filed by Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during the
past 12 months (or for such shorter  period that the issuer was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

                                 YES [X] NO [ ]

At November 14, 2002 the issuer had outstanding  approximately 359,000 shares of
par value $.01 Common Stock.

<PAGE>

                             GREENBRIAR CORPORATION
                     Index to Quarterly Report on Form 10-Q
                         Period ended September 30, 2002


Part I: Financial Information..................................................3

   ITEM 1: FINANCIAL STATEMENTS................................................3
     Consolidated Balance Sheets...............................................3
     Consolidated Statements Of Operations.....................................5
     Consolidated Statements Of Cash Flow......................................6
     Notes To Consolidated Financial Statements................................7
   ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS..........................13
   ITEM 4: CONTROLS AND PROCEDURES............................................18

Part II: Other Information....................................................19






















                                       2
<PAGE>
<TABLE>
<CAPTION>

                          PART I: FINANCIAL INFORMATION


ITEM 1: FINANCIAL STATEMENTS

                             Greenbriar Corporation
                           Consolidated Balance Sheets
                             (Amounts in thousands)

                                                          September 30,      December 31,
Assets                                                        2002              2001
                                                           (Unaudited)
                                                          -------------     -------------
<S>                                                       <C>               <C>
Current assets
       Cash and cash equivalents                          $         888     $       1,246
          Short-term investments                                   --               1,098
          Accounts receivable-trade                                  52               106
          Receivables from affiliated partnerships                  537               311
          Prepaid expenses                                           48               572
          Note receivable                                         1,238              --
       Other current assets                                         905               541
                                                          -------------     -------------

              Total current assets                                3,668             3,874

Notes receivable, from sale of properties                         6,400             6,400
          Less deferred gains                                    (6,090)           (6,090)
                                                          -------------     -------------
                                                                    310               310

Note receivable from affiliate partnership                        1,600             1,600

Deferred income tax benefit                                       1,950             2,350

Property and equipment, at cost
       Land and improvements                                      1,741             4,430
       Buildings and improvements                                19,553            32,675
       Equipment and furnishings                                  2,436             3,134
                                                          -------------     -------------
                                                                 23,730            40,239
              Less accumulated depreciation                       4,695             6,498
                                                          -------------     -------------
                                                                 19,035            33,741

Deposits                                                          1,640             1,730

Other assets                                                        366               417
                                                          -------------     -------------

                                                          $      28,569     $      44,022
                                                          =============     =============
</TABLE>


                                       3
<PAGE>
<TABLE>
<CAPTION>

                             Greenbriar Corporation
                     Consolidated Balance Sheets - Continued
                             (Amounts in thousands)

                                                           September 30,     December 31,
Liabilities and stockholders' equity                           2002             2001
                                                            (Unaudited)
                                                           -------------    -------------
<S>                                                        <C>              <C>
Current liabilities
       Current maturities of long-term debt                $         112    $       4,316
       Accounts payable - trade                                      961            1,042
       Accrued expenses                                            1,300            1,116
       Other current liabilities                                     724              467
                                                           -------------    -------------

              Total current liabilities                            3,097            6,941

Long-term debt                                                    10,363           16,693

Financing obligations                                             10,815           10,815

Other long term liabilities                                        1,041              304

                                                           -------------    -------------

              Total liabilities                                   25,316           34,753

Stockholders' equity
       Preferred stock                                                 1                1

         Common stock $.01 par value; authorized,100,000
         shares; 359 shares issued and outstanding                    75               75
       Additional paid-in capital                                 56,826           56,828
       Accumulated deficit                                       (51,282)         (45,268)
                                                           -------------    -------------

                                                                   5,620           11,636
       Less stock purchase notes receivable
              (Including $2,250 from related parties)             (2,367)          (2,367)
                                                           -------------    -------------

              Total stockholders' equity                           3,253            9,269
                                                           -------------    -------------

                                                           $      28,569    $      44,022
                                                           =============    =============
</TABLE>



                                       4
<PAGE>
<TABLE>
<CAPTION>

                             Greenbriar Corporation
                      Consolidated Statements Of Operations
                  (Amounts in thousands, except per share data)

                                                 For The Three Month    For The Nine Month
                                                     Period Ended            Period Ended
                                                     September 30,           September 30,
                                                  2002        2001        2002        2001
                                                --------    --------    --------    --------
                                                   (Unaudited)               (Unaudited)
<S>                                             <C>         <C>         <C>         <C>
Revenue
       Assisted living operations               $  2,342    $  8,186    $  7,816    $ 27,409
                                                --------    --------    --------    --------

                                                   2,342       8,186       7,816      27,409
Operating expenses
       Assisted living community
              operations                        $  1,404    $  5,327    $  4,473    $ 17,053
       Lease expense                                 388         671       1,201       2,748
       Depreciation and amortization                 380         783       1,084       2,442
       Corporate general and
              administrative                         480         989       1,349       4,121
                                                --------    --------    --------    --------

                                                   2,652       7,770       8,107      26,364
                                                --------    --------    --------    --------

              Operating income (loss)               (310)        416        (291)      1,045


Other income (expense)
       Interest and dividend income             $    178    $     71    $    408    $    212
       Interest expense                             (605)     (1,516)     (1,917)     (4,190)
       Net gain (loss) on the sale of
          assets and write-downs of
          $1,002 in 2002                          (2,422)      4,239      (2,441)      4,398
       Equity in net loss of  partnerships          (254)       --          (667)       --
       Minority interest                                      (3,738)                 (3,880)
       Other                                        (660)         48        (660)         48
                                                --------    --------    --------    --------

                                                  (3,763)       (896)     (5,277)     (3,412)
                                                --------    --------    --------    --------

Loss from operations before                       (4,073)       (480)     (5,568)     (2,367)
            income taxes
Income tax expense                                  (400)                   (400)
                                                --------    --------    --------    --------

Net loss
                                                  (4,473)       (480)     (5,968)     (2,367)
                                                --------    --------    --------    --------

Preferred stock dividend requirement                --          --          --          (160)
                                                --------    --------    --------    --------

Loss allocable to common
       stockholders                               (4,473)       (480)     (5,968)     (2,527)
                                                ========    ========    ========    ========

Net loss per common share -
       basic and diluted                        $ (12.46)   $  (0.06)   $ (16.63)   $  (0.30)

Weighted average of common and
       equivalent shares outstanding                 359       8,348         359       8,348
</TABLE>



                                       5
<PAGE>
<TABLE>
<CAPTION>

                             Greenbriar Corporation
                      Consolidated Statements Of Cash Flow
                             (Amounts in thousands)

                                                                For the nine month
                                                            Period Ended September 30,
                                                                2002           2001
                                                            -----------    -----------
                                                            (Unaudited)    (Unaudited)
 <S>                                                         <C>            <C>
Cash flows from operating activities
       Net loss                                             $    (5,968)   $    (2,367)
       Adjustments to reconcile net loss to net
          cash used in operating activities
              Depreciation and amortization                       1,084          2,404
              Loss on sale of assets                              2,441         (4,398)
              Minority interest                                   3,880
              Loss on partnership                                   667           --
              Changes in operating assets and liabilities
                 Changes in Deferred Taxes                          400           --
                 Accounts receivable                               (175)            47
                 Other current and noncurrent assets                301         (2,554)
                 Accounts payable and other liabilities             384         (1,650)
                                                            -----------    -----------

              Net cash used in operating activities                (866)        (4,638)
                                                            -----------    -----------

Cash flows used in investing activities
       Proceeds from sale of property                            12,488         21,267
       Purchase of property and equipment                          (209)       (12,284)
                                                            -----------    -----------

              Net cash provided by investing
                   activities                                    12,279          8,983

Cash flows from financing activities
        Redemption of preferred stock                              --           (3,375)
        Notes Receivable                                         (1,238)          --
        Payments on debt                                        (10,713)       (14,341)
        Dividends on preferred stock                               --             (160)
        New borrowings                                              179         15,704
                                                            -----------    -----------

              Net cash used in financing
                   activities                                   (11,772)        (2,172)
                                                            -----------    -----------

              NET INCREASE (DECREASE) IN CASH AND                  (359)         2,173
                     CASH EQUIVALENTS

       Cash and cash equivalents at beginning of period           1,246          2,287
                                                            -----------    -----------

       Cash and cash equivalents at end of period           $       888    $     4,460
                                                            ===========    ===========
</TABLE>


                                       6
<PAGE>

                   Notes To Consolidated Financial Statements
    For the Unaudited Three and Nine Months Ended September 30, 2002 and 2001

Note A: Basis of Presentation

The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts  of  Greenbriar   Corporation  and  its   majority-owned   subsidiaries
(collectively,  "the Company").  All significant  intercompany  transactions and
accounts have been  eliminated.  The Company  records its  investment in certain
affiliated partnerships using the equity method of accounting (see "Note C").

The  statements  have  been  prepared  in  accordance  with  generally  accepted
accounting   principles  for  interim   financial   information   and  with  the
instructions  to  Form  10-Q  and,  accordingly,  do  not  include  all  of  the
information and footnotes required by generally accepted accounting  principles.
These financial  statements are unaudited but in the opinion of management,  all
adjustments  (consisting  of normal  recurring  accruals)  necessary  for a fair
presentation  of  consolidated  results of  operations,  consolidated  financial
position and consolidated cash flows at the dates and for the periods indicated,
have been included.

Operating results for the three and nine month periods ending September 30, 2002
are not necessarily  indicative of the results that may be expected for the year
ended  December 31, 2002.  For further  information,  refer to the  consolidated
financial  statements and notes thereto  included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2001.


Note B: Notes Receivable from Sale of Properties

During 2001 the Company  sold three  assisted  living  communities  for cash and
$6,400,000 of tax-free notes bearing interest at 9.5%. The notes mature on April
1, 2032, March 20, 2037 and August 1, 2031 respectively.

The  repayment  of the  notes  is  limited  to the cash  flow of the  respective
communities either from operations,  refinance or sale. The Company has deferred
gains from the sale of the communities in the amount of $6,090,000. The deferred
gains and interest income will be recognized as cash is received.

Note C: Affiliated Partnerships

In October 2001 the Company became a limited partner in Corinthians  Real Estate
Investors LP (CREI), a partnership formed to acquire two properties. The general
partner is a limited liability  corporation whose controlling member is James R.
Gilley.  Mr.  Gilley is also CEO of the  Company.  The  Company is a 56% limited
partner.  Mr.  Gilley  has a  25.9%  interest,  the  general  partner  has a .1%
interest,  the Company's chief financial officer has a 10.5% interest, and other
employees of the Company have  interests  aggregating  7.5%. In October 2001 the
Partnership acquired a retirement community for approximately  $9,100,000 and in
January  2002  it  acquired  an  assisted  living  community  for  approximately
$2,800,000.


                                       7
<PAGE>

The Company  issued a $1,600,000  note to the seller as partial  payment for the
purchase of the  retirement  community.  The balance of the  purchase  price was
funded by  borrowings  by CREI from a third  party in the amount of  $7,840,000,
which was guaranteed by the Company.  CREI gave the Company a $1,600,000 note in
consideration  for payment of that amount of the purchase price.  The note bears
interest  at 8.75% and is due  October  30,  2003.  CREI also  incurred  debt of
$3,975,000 to acquire the assisted living  community and fund operating  losses.
The debt was  collateralized  by the assisted living community and guaranteed by
the Company.

As of September  30, 2002 Messrs Gilley and Bertcher have received cash advances
from the  partnership of $275,500 and $122,700  respectively.  Messrs Gilley and
Bertcher  currently  hold notes  receivable  from the Company of $1,380,000  and
$360,000 respectively.  Both Messrs Gilley and Bertcher have pledged their notes
as  collateral  for the advances they have  received.  Neither the cash advances
received nor the notes issued by the Company bear interest.

The Company  accounts for its investment in CREI by the equity  method,  however
because of its debt  guarantees  the Company  records the greater of 100% of the
cash losses or 56% of the accounting losses of CREI, which were $738,000 for the
nine months ended  September 30, 2002. The Company had a receivable from CREI of
$599,404 at September 30, 2002 arising in the normal course of business.

On September 27, 2002 CREI sold its two properties to an independent third party
for  $14,600,000.  CREI  received  $11,800,000,  which  was used to  payoff  the
existing  mortgages on the properties.  The balance was paid with a note,  which
includes the balance of the  purchase  price,  a 4% fee,  and one month  accrued
interest.  The note totals  $2,944,000 is due in two years and bears interest at
12% payable  monthly.  In addition,  CREI sold its supply inventory and vehicles
for  approximately  $50,000,  which  was paid  with an 8% note  due in  eighteen
months.

CREI recorded a gain on the sale of its properties of approximately  $2,545,000.
In accordance with the governing accounting rules this gain has been deferred.

Following are unaudited condensed financial  statements of CREI at September 30,
2002 and nine-month period ended September 30, 2002 (in thousands):









                                       8
<PAGE>

                                  Balance Sheet

         Current Assets                                      $    77
         Notes Receivable                                      2,994
         Other Assets                                            398
                                                             -------

                                                             $ 3,469


         Payable to Greenbriar Corp.                         $   599
         Other Liabilities                                        55
         Notes Payable to Greenbriar Corp.                     1,600
         Deferred Gain                                         2,545
                                                             -------
                                                               4,799
         Partners' Deficit                                    (1,496)
                                                             -------

                                                             $ 3,469
         -----------------------------------------------------------


                             Statement of Operations

        Revenue                                              $ 2,233

        Expenses
           Operating                                           1,235
           Depreciation                                          747
           General and Administrative                            142
           Interest                                            1,344
                                                             -------
                                                             $ 3,468
                                                             -------
         Net loss                                            $(1,235)
                                                             =======


Effective May 31 2002 the Company became a 56% limited  partner in Muskogee Real
Estate  Investors LP (MREI),  a partnership  formed to acquire two properties in
Muskogee, Oklahoma. The general partner is a limited liability corporation whose
controlling  member is James R. Gilley.  Mr.  Gilley is also CEO of the Company.
Mr. Gilley has a 25.9%  interest,  the general  partner has a .1% interest,  the
Company's chief financial  officer has a 10.5% interest,  and other employees of
the  Company  have  interests  aggregating  7.5%.  In May 2002  the  Partnership
acquired two assisted living communities in close proximity to one another.  One
property was acquired from an  independent  third party for  $1,600,000  and one
property was acquired from Greenbriar for a 56% limited partnership  interest in
the  partnership.  The  debt on the  two  properties  is  $4,000,000,  which  is
personally guaranteed by Mr. Gilley.  Greenbriar recorded no gain or loss on the
exchange of one property for its 56% limited partnership interest.



                                       9
<PAGE>

The  Company  accounts  for its  investment  in MREI by the  equity  method  and
recorded  earnings of $24,764 for the four months ended  September 30, 2002. The
Company  had a payable  to MREI of  $75,000  and a  receivable  of $12,887 as of
September 30, 2002 resulting  from the normal course of business.  These amounts
were repaid in the subsequent month.

On September  30,2002  MREI entered into a triple net lease with an  independent
third  party.  The lease  payments  are $60,000 per month for three  years.  The
lessee is obligated to purchase the properties  during the three-year period for
$6,000,000.

Following are unaudited condensed financial  statements of MREI at September 30,
2002 and the four- month period ended September 30, 2002 (in thousands):


                                  Balance Sheet

         Current Assets                                         $    18
         Receivable from Greenbriar                                  75
         Property and Equipment                                   3,944
         Other Assets                                                28
                                                                -------
                                                                $ 4,065
                                                                =======

         Current Liabilities                                    $   (14)
         Payables to Greenbriar Corp.                                13
         Other Liabilities                                           56
         Mortgages Payable                                        3,966
                                                                -------
                                                                  4,021
         Partners' Equity                                            44
                                                                -------
                                                                $ 4,065
                                                                =======
         --------------------------------------------------------------
                             Statement of Operations

         Revenue                                                $   542

         Expenses
            Operating                                               336
            Depreciation                                             49
            General and Administrative                               40
            Interest                                                 73
                                                                -------
                                                                $   498
                                                                -------
         Net Income                                             $    44
                                                                =======




                                       10
<PAGE>
<TABLE>
<CAPTION>

Note D: Long-Term Obligations

Long-term debt is comprised of the following (in thousands):

                                                         September 30,    December 31,
                                                             2002            2001
                                                         -------------   -------------
<S>                                                      <C>             <C>
Notes payable to financial institutions maturing
     through 2015; fixed and variable interest rates
     ranging from 5.25% to 10.50%; collateralized by
     property, fixtures, equipment and the
     assignment of rents                                 $       4,002   $       8,947

Notes payable to individuals and companies
     maturing through 2023; variable and fixed
     interest rates ranging from 7% to 8.75%
     collateralized by real property, personal
     property, fixtures, equipment and the
     assignment of rents                                         1,653           1,655

Mortgage note payable to a financial institution
     maturing in 2010; bearing interest rates ranging
     from 7.5% through 14.5%; collateralized by
     property and equipment                                       --             5,253

Notes payable to Sylvia M. Gilley, bearing interest at
     10% and maturing on July 1, 2004                            3,375           3,375

Notes payable to executive officers, non-interest
     bearing and maturing on December 31, 2004,
     net of discount of $328 and $391 respectively,
     representing interest imputed at 8.5%                       1,445           1,349

Other                                                             --               430
                                                         -------------   -------------
                                                                10,475          21,009

     Less: current maturities                                      112           4,316
                                                         -------------   -------------
                                                         $      10,363   $      16,693
</TABLE>







                                       11
<PAGE>

Note E: Contingencies

Lifestyles Senior Housing Managers, LLC

In 1995 Lifestyles  Senior Housing  Managers,  LLC  (Lifestyles)  entered into a
contract to manage an assisted living community in Seaside,  OR, which is leased
by Neawanna by the Sea, LP (Neawanna) from a REIT. In 1996 the Company  acquired
the lease for Neawanna.  In March 2000  Lifestyles  organized and held a meeting
with the  executive  director  of Neawanna  for the purpose of offering  her the
position  of  manager  of an  assisted  living  community  not  affiliated  with
Greenbriar. Greenbriar believes the action of Lifestyles represented a breach of
their  fiduciary duty as the manager and  terminated  the  management  contract.
Lifestyles contended their termination was unjustified.  The matter was taken to
arbitration  and on April 9, 2001 the Company was notified that the  arbitration
panel had awarded Lifestyles $498,000 for damages plus expenses.

One of the terms of the Neawanna  lease is that any  unsatisfied  debt exceeding
$250,000 is an event of default. Rather than lose the lease on Neawanna, on July
12,  2001 Villa Del Rey - Seaside,  Inc.  and  Neawanna  By The Sea LP filed for
Chapter 11 bankruptcy  protection in the United States  Bankruptcy Court for The
District of Nevada.  In addition Villa del Rey - Roswell LP filed for Chapter 11
in the same court.  Although  unrelated to the Lifestyles matter Villa Del Rey -
Roswell  LP  has  a  lease  for  an   assisted   living   community,   which  is
cross-collateralized with the lease held by Neawanna by the Sea, LP.

The Company has entered into an agreement to sell its interest in VDR Roswell to
an  independent  third party.  This same group has purchased  Lifestyles'  claim
regarding Neawanna. The Company is currently negotiating the sale of Neawanna to
that group.  These properties were written down in September 2002 by $902,000 to
reflect anticipated net realizable value.



Internal Revenue Service Examination

In 1991 the Company sold four nursing  homes to a not for profit entity who used
tax-free  bonds to finance the  purchase.  On September 18, 2002 the Company was
notified by the  Internal  Revenue  Service  (IRS) that they have  initiated  an
examination under Section 6700 of the Internal Revenue Code as it relates to the
Company's activities in connection with the issuance and sale of such bonds.

The IRS  examination  is focused  on  whether  the  tax-free  bonds were  issued
inappropriately  and  whether  certain  inappropriate  statements  were  made or
furnished with respect to the  excludability  of income or the securing of other
tax benefits. If so, the IRS is reviewing whether the Company was involved.

The Company did sell the  properties  and receive  tax-free  bonds.  The Company
subsequently   sold  the  bonds.  The  Company  believes  that  it  did  nothing
inappropriate. Both the issuance of tax-free bonds and their subsequent sale are
a highly  technical  area and the  Company  relied on the advice and  reports of
investment  bankers,   appraisers,   attorneys,  and  outside  certified  public
accountants.



                                       12
<PAGE>

Other than the  initial  notice the Company  has not been  contacted  by the IRS
regarding this matter.


ITEM 2: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
        OF OPERATIONS
        -------------

Overview

As of September 30, 2002 the Company  operates four  communities in three states
with a capacity of 352 residents,  consisting of two communities  that are owned
and two that are leased.  In addition the Company owns two communities  that are
operated by independent third parties.

Since 1996 the  Company  has  owned,  leased and  operated  assisted  living and
retirement  communities throughout the United States. During that period of time
the Company has both acquired and sold over seventy  communities.  The acquiring
and  disposing  of its  real  estate  assets  has been an  integral  part of the
Company's business.

During the past year the  Company's  business  strategy  has evolved into one of
focusing on the real estate component and reducing its operating activities. The
Company  objective  is to become an  investor in various  entities,  principally
partnerships,  whose intent is to acquire  properties and either sell,  lease or
enter into joint venture  agreements  with third party operators with respect to
these properties

In October  2001 the  company  became a 56%  limited  partner in a  partnership,
Corinthian Real Estate  Investors LP (CREI),  which acquired two assisted living
communities in Carrollton,  TX. In September 2002 the  partnership  sold its two
properties for cash  sufficient to pay off its debt plus a note for  $1,335,000.
The note is due in two years with interest of 12% payable monthly.

In January  2002 the  Company  became a 56%  limited  partner in a  partnership,
Muskogee  Real Estate  Investors  (MREI),  which  acquired two  assisted  living
communities in Muskogee,  OK. In September 2002 the  partnership  leased the two
Communities to a third party for three years.  The lease will generate  positive
cash flow  during the  three-year  lease  period.  The lessee has  committed  to
purchase  the  two  properties   sometime  during  the  three-year   period  for
$6,000,000. The current debt on the property is $4,000,000.

It is the Company's intention to focus on these types of transactions.

In September  2002 the Company  entered into an  agreement  with an  independent
third party to jointly acquire  properties in the future. The third party entity
is affiliated  with the various  entities that acquired or leased the properties
from CREI and MREI  mentioned  above.  Affiliates  of this group also  purchased
properties  in  Harlingen,  TX  and  Sherman,  TX  from  the  Company  and it is
anticipated  that they will acquire the  Company's  interest in Neawanna and VDR
Roswell.

The agreement  provides that partnerships  formed by the Company will be allowed
to participate in the  acquisition of twelve  assisted  living  communities  and
receive a 50% partnership interest.  The Company has agreed to pay $660,000 over
the next  twelve  months to cover the due  diligence  expenses  incurred  by its
partner in these  ventures.  The  agreement  further  provides  that at any time


                                       13
<PAGE>

during the twenty-four  months  subsequent to the formation of a partnership and
the  acquisition  of  properties  the third  party can  purchase  the  Company's
partnership interest for $750,000 each.


Three and nine month  periods  ended  September  30, 2002  compared to three and
nine-month periods ended September 30, 2001.


Revenues and Operating Expenses from Assisted Living Operations

Revenues  were  $2,342,000  and  $7,816,000  for the three and nine months ended
September 30, 2002 as compared to $8,186,000 and  $27,409,000  for the three and
nine months  ended  September  30, 2001.  Community  operating  expenses,  which
consist of assisted living community operations,  lease expense and depreciation
and  amortization,  were $2,172,000 and $6,758,000 for the three and nine months
ended September 30, 2002 as compared to $6,781,000 and $22,243,000 for the three
and nine months ended September 30, 2001.

During the last six months of 2001 the  Company  disposed of 11  Communities  as
part of redemption of its Series E and F Preferred  Stock. The Company also sold
three  Communities  to not for  profit  organizations  and  retained  long  term
management  contracts.  The  Company  also sold one  Community  and  leased  one
Community to independent  third parties.  In addition the Company entered into a
sub-management   contract  for  three  properties  whereby  the  sub-manager  is
retaining  the  revenue  and  paying  the  expenses  as  their  fee for  being a
sub-manager.  The sub-manager also has an option to acquire the communities upon
approval of the third  party  lenders.  For  reporting  purposes  the Company no
longer records the revenue and operating expenses of the three  Communities.  In
May 2002 one of the properties with a sub-management contract was sold.

During the first quarter of 2002 leases held by the company for the operation of
two properties were not renewed. As of May 31, 2002 one property was contributed
to a partnership  in which the Company has a 56% limited  partnership  interest.
The partnership is accounted for using the equity method of accounting.

In  October  2001 and May 2002 the  Company  obtained  56%  limited  partnership
interests in two partnerships which own four communities.  These communities are
accounted for using the equity  method of  accounting  and therefore the Company
does not record the revenue and expenses of the communities.

Overall  the Company  recorded  revenue and  expenses  for 22 fewer  communities
during the three and nine months ended  September  30, 2002 than the  comparable
periods in the prior  year.  On a "same store  basis"  revenue for the three and
nine months ended  September 30, 2001 would have been  $2,176,000 and $7,235,000
respectively compared to $2,342,000 and $7,816,000 for the three and nine months
ended September 30, 2002.  Community  operating  expenses for the three and nine
months  ended  September  30,  2001 would have been  $2,074,000  and  $6,316,000
respectively compared to $2,172,000 and $6,758,000 for the three and nine months
ended  September  30, 2002. On a same store basis the increase in revenue is due
to an increase in both census and the average  rate  charged per  resident.  The
increase in expenses is due to the additional  costs  associated with additional
residents.


                                       14
<PAGE>

Corporate General and Administrative Expenses

General and  administrative  expenses were $480,000 and $1,349,000 for the three
and nine months ended  September 30, 2002 as compared to $989,000 and $4,121,000
for the three and nine months  ended  September  30,  2001.  The decrease in the
corporate  general  and  administrative  expenses  is  primarily  a result  of a
decrease  in  salaries  and  related  payroll  expenses.  Due  to a  significant
reduction  in the number of  Communities  operated  by the Company the number of
employees on the corporate staff was reduced.  In addition  salaries for members
of senior  management  have been reduced.  Also during the three and nine months
ended September 30, 2001 the Company was incurring legal and  professional  fees
with respect to a lawsuit with a preferred shareholder.  Legal fees decreased by
$926,752 and $1,211,755  for the three and nine months ended  September 30, 2002
when compared to the comparable periods in 2001.


Interest and Dividend Income

Interest and dividend  income for the three and nine months ended  September 30,
2002 was  $178,000  and  $408,000  compared  to  $71,000  and  $212,000  for the
comparable  periods in 2001.  The increase in interest  and dividend  income for
both the three and nine month  periods  are a result of  interest  recorded on a
$1,600,000 note receivable related to the Company's investment in the Corinthian
Real Estate Investors L.P. in November 2001.

Interest Expense

Interest  expense for the three and nine  months  ended  September  30, 2002 was
$605,000  and  $1,917,000  as  compared to  $1,516,000  and  $4,190,000  for the
comparable  periods in 2001.  Due to the reduction in the number of  Communities
the  company's  long-term  debt has been  reduced  significantly.  The  interest
expense on a "same store  basis" for the three and nine months  ended  September
30,  2001 would have been  $412,000  and  $1,506,000  respectively  compared  to
$605,000 and $1,917,000 for the three and nine months ended  September 30, 2002.
The increase in interest  expense on a "same store basis" is due  principally to
higher interest rates on existing borrowings when compared to the previous year.


Net Gain (Loss) on the Sale of Assets


The net gain  (loss) on the sale of assets for the three and nine  months  ended
September  30,  2001  was  $4,239,000  and  $4,398,000   respectively   and  was
($2,422,000)  and ($2,441,000) for the three and nine months ended September 30,
2002.







                                       15
<PAGE>

The Company sold its corporate  office building in 2001 which resulted in a gain
of $406,000.  In addition,  certain garden homes and related  property that were
adjacent  to  Camelot  Retirement  were  sold  in  2001  resulting  in a loss of
$296,000.  In 2001 the Company  also  exercised  purchase  options on two leased
communities  in Fort  Worth,  Texas,  Palm  House and Oak Park  Retirement,  and
simultaneously sold both of the two communities to unrelated third parties.  The
gains on the sales of assets generated from these two transactions were $49,000.

In August 2001 the Company sold Crown  Pointe  Retirement,  a community  that it
owned  sixty  percent  of in Corona  California.  Per the terms of this sale the
Company retained a fifteen-year  management  agreement with the new owners.  The
gross proceeds from the sale were  $3,950,000 of notes and  $14,371,068 of cash.
There  was a gain on the  sale of  assets  recorded  from  this  transaction  of
$4,239,000. Greenbriar's portion of the gain was $537,500 with the balance being
allocated to the minority investors in Crown Pointe.

In September  2002 the Company sold a community it owned in Sherman  Texas,  The
Willows at Sherman,  and a community in  Harlingen  Texas,  Camelot  Retirement.
There  was a net loss on the sale of these  two  properties  of  $1,520,000.  In
September  2002 when it entered  into an  agreement  to sell VDR  Roswell in New
Mexico and Neawanna by the Sea by the Sea in Oregon the Company wrote the assets
down by $902,000 to reflect the anticipated net realizable value.

Other Expenses:

In  September  2002 the  Company  entered  into a venture  with a third party to
secure  partnership   interests  in  future   acquisitions  of  assisted  living
communities.  The  agreement  required the Company to pay $660,000 over the next
twelve  months to fund the cost of the due  diligence  for  these  acquisitions.
There can be no assurance  that this venture will be successful  and the Company
has therefore set up a reserve for it's entire investment.

Liquidity and Capital Resources

At September 30, 2002 the Company had current  assets of $3,668,000  and current
liabilities of $3,097,000.

During  2001  the  Company  reduced  its  long-term  debt  from  $50,887,000  to
$16,693,000.  During the first nine months of 2002 the Company  further  reduced
its  long-term  debt  to  $10,363,000.  The  reduction  was  due to the  sale of
properties and the repayment of the mortgages related to the properties.

Subsequent  to September  30, 2002 the Company has  negotiated  agreements  with
certain note holders whose debt was coming due in 2003. These agreements provide
that the note holders accept certain  long-term third party notes receivable and
partnership interests held by the Company in exchange for their debt obligations
from the Company. It is anticipated that these transactions will be completed in
November  2002.  The result will be to further  reduce the Company's  long- term
debt by $2,720,000.



                                       16
<PAGE>

After the above  transactions are completed the Company will have long-term debt
of approximately $7,643,000 with the earliest maturity date being July 2004.

In September 2002 the Company as well as Corinthian Real Estate  Investors LP (a
partnership in which the Company is a 56% limited  partner) sold four properties
to various affiliated entities.  The Company agreed to loan the buyers a portion
of the proceeds  received from the sales. The loan was to assist the buyers with
the costs of financing the purchase as well as closing  costs.  The loan was for
$1,238,000 is due September 30, 2003 with 12% interest payable monthly.

The Company conducts its property  management  operations through its subsidiary
Senior Living Management, Inc (SLM). SLM may manage properties,  which are owned
or leased by the Company or are owned by  partnerships  or other  entities where
Greenbriar  is an  investor,  for a fee.  The Company may decide to engage third
party management companies.

Future  acquisitions  by the Company are dependent  upon  obtaining  capital and
financing  through  various  means,  including  financing  obtained  from loans,
sale/leaseback  transactions,  long-term  state bond  financing,  debt or equity
offerings and, to the extent  available,  cash generated from operations.  There
can be no assurance that the Company will be able to obtain adequate  capital to
finance its projected growth.



Forward Looking Statements

"Safe Harbor"  Statement under the Private  Securities  Litigation Reform Act of
1995: A number of the matters and subject areas  discussed in this form 10Q that
are not  historical or current facts deal with potential  future  circumstances,
operations,  and prospects.  The discussion of such matters and subject areas is
qualified  by  the  inherent   risks  and   uncertainties   surrounding   future
expectations   generally,   and  also  may  materially  differ  from  Greenbriar
Corporation's actual future experience involving any one or more of such matters
and subject  areas  relating to interest  rate  fluctuations,  ability to obtain
adequate debt and equity financing, demand, pricing, competition,  construction,
licensing,  permitting,  construction delays on new developments contractual and
licensure, and other delays on the disposition,  transition, or restructuring of
currently or previously  owned,  leased or managed  communities in the Company's
portfolio,  and the ability of the Company to  continue  managing  its costs and
cash flow while maintaining high occupancy rates and market rate assisted living
charges in its assisted living communities. Greenbriar Corporation has attempted
to identify, in context,  certain of the factors that they currently believe may
cause  actual  future   experience   and  results  to  differ  from   Greenbriar
Corporation's  current  expectations  regarding  the relevant  matter of subject
area.  These and other risks and  uncertainties  are  detailed in the  Company's
reports  filed with the  Securities  and Exchange  Commission  (SEC),  including
Greenbriar  Corporation's  Annual Reports on Form 10-K and Quarterly  Reports on
Form 10-Q.



                                       17
<PAGE>

Item 4:   Controls and Procedures

The  Company's  management,  including  its  Chief  Executive  Office  and Chief
Financial   Officer,   after  evaluating  the  effectiveness  of  the  Company's
disclosure  controls and procedures (as defined in rules 13a-14( c ) and15-d-14(
c ) under the Securities and Exchange Act of 1934) as of a date (the  Evaluation
Date)  which was  within  90 days of this  quarterly  report  on Form 10Q,  have
concluded in their  judgment  that , as of the  Evaluation  Date,  the Company's
disclosure  controls and  procedures  were  adequate and designed to ensure that
material  information relating to the Company and its subsidiaries would be made
known to them.

There were no significant  changes in the Company's internal controls or, to its
knowledge,  in other factors that could significantly  affect its disclosure and
procedures subsequent to the Evaluation Date.





















                                       18
<PAGE>

                           PART II: OTHER INFORMATION




ITEMS 1-5:  ARE NOT APPLICABLE
------------------------------



ITEM 6: EXHIBITS AND REPORT ON FORM 8-K
---------------------------------------

A)       EXHIBITS:

         10.4:    UMBRELLA  AGREEMENT BETWEEN BY AND BETWEEN CERTAIN  AFFILIATES
                  OF GREENBRIAR  CORPORATION,  JAMES R. GILLEY,  AND  GREENBRIAR
                  CORPORATION AND JON HARDER, SUNWEST MANAGEMENT, INC. ET AL.

         99.1:    CERTIFICATION  PURSUANT TO SECTION  906 OF THE  SARBANES-OXLEY
                  ACT OF 2002




B)       REPORTS ON FORM 8-K:

         A REPORT ON FORM 8K DATED  SEPTEMBER  30, 2002 WAS FILED ON  OCTOBER14,
         2002  RELATED  TO THE  SALE  OF TWO OF THE  COMPANY'S  ASSISTED  LIVING
         COMMUNITIES  AND  THE  SALE OF TWO  ASSISTED  LIVING  COMMUNITIES  BY A
         PARTNERSHIP INWHICH THE COMPANY OWNS A 56 LIMITED PARTNERSHIP INTEREST



Signature

Pursuant  to the  requirements  of the  Securities  and  Exchange  Act of  1934,
registrant  has  duly  caused  this  report  to  be  signed  on  its  behalf  by
undersigned, thereunto duly authorized.


                                                   Greenbriar Corporation



Date: November 18, 2002                            By:  /s/ Gene S. Bertcher
                                                      --------------------------
                                                      Executive Vice President &
                                                      Chief Financial Officer




















                                       19




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</DOCUMENT>
