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<SEC-DOCUMENT>0001010549-02-000701.txt : 20021119
<SEC-HEADER>0001010549-02-000701.hdr.sgml : 20021119
<ACCEPTANCE-DATETIME>20021119163456
ACCESSION NUMBER:		0001010549-02-000701
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021119

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GREENBRIAR CORP
		CENTRAL INDEX KEY:			0000105744
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-SKILLED NURSING CARE FACILITIES [8051]
		IRS NUMBER:				752399477
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-08187
		FILM NUMBER:		02833332

	BUSINESS ADDRESS:	
		STREET 1:		14185 DALLAS PKWY
		STREET 2:		STE 650
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240
		BUSINESS PHONE:		9724078400

	MAIL ADDRESS:	
		STREET 1:		14185 DALLAS PKWY
		STREET 2:		STE 650
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75204

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WESPAC INVESTORS TRUST
		DATE OF NAME CHANGE:	19900605

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MEDICAL RESOURCE COMPANIES OF AMERICA
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<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




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>3
<FILENAME>green10qsbex104093002.txt
<DESCRIPTION>UMBRELLA AGREEMENT
<TEXT>

Exhibit 10.4

                               UMBRELLA AGREEMENT

     UMBRELLA  AGREEMENT  (this  "Agreement")  made this 25th day of  September,
2002, by and between  certain  affiliates of  Greenbriar  Corporation,  James R.
Gilley, and Greenbriar  Corporation,  each having an address at Centura Tower I,
Suite 650,  14185 Dallas  Parkway,  Dallas,  Texas  75254;  Attn James R. Gilley
(hereinafter  referred  collectively  to as  "Greenbriar"),  and Jon M.  Harder,
Kristin P. Harder, Darryl E. Fisher, Carol L. Fisher,  Sunwest Management,  Inc.
("SMI"), an Oregon corporation, certain affiliates of SMI, and any entity and/or
affiliate  of SMI, all with an address at 2735 - 12th Street SE,  Salem,  Oregon
97302; attn Jon M. Harder (hereinafter  referred to collectively as "the "Harder
Group"). Greenbriar is also referred to as "Seller" and The Harder Group is also
referred to as "Purchaser".

     WITNESSETH THAT THE HARDER GROUP AND GREENBRIAR HAVE AGREED AS FOLLOWS:

1.   Greenbriar  Corporation,  and some of its affiliates,  agree to sell to the
     Harder  Group,  for $10 and other  valuable  consideration,  including  the
     closing of all the transactions discussed in this agreement, the following:

     (a)  The Willows at Sherman, Sherman, Texas, as per separate contract, with
          a  purchase   price  of  Six  Million  One  Hundred   Fifty   Thousand
          ($6,150,000)  Dollars,  including  purchase  money  financing  of  Two
          Million Fifty Thousand  ($2,050,000) Dollars, The parties plan to sign
          an Agreement for Purchase and Sale (the "Sherman  Contract"),  between
          The Willows at Sherman,  Inc., a Texas corporation,  having an address
          for  notices  under  this  Agreement  at c/o  Greenbriar  Corporation,
          Centura Tower I, Suite 650, 14185 Dallas Parkway, Dallas, Texas 75254;
          Attn James R.  Gilley  (hereinafter  referred  to as  "Sherman"),  and
          Willows at Sherman  Assisted Living & Memory Care, LP, a Texas limited
          partnership  ("Willows),  with  an  address  for  notices  under  this
          Agreement  at c/o  Sunwest  Management,  Inc.,  2735 - 12th Street SE,
          Salem, Oregon 97302;

     (b)  (i) The Corinthians  Retirement  Project (as therein defined),  as per
          separate  contract,  with a  purchase  price of Eleven  Million  Three
          Hundred Fifty Thousand ($11,350,000) Dollars, including purchase money
          financing of Three  Million  Five  Hundred Ten  Thousand  ($3,510,000)
          Dollars.  The parties plan to sign an Agreement  for Purchase and Sale
          (the  "Corinthians  Retirement  Contract"),  between  Corinthians Real
          Estate Investors, L.P., a Texas limited partnership, having an address
          for  notices  under  this  Agreement  at c/o  Greenbriar  Corporation,
          Centura Tower I, Suite 650, 14185 Dallas Parkway, Dallas, Texas 75254;

<PAGE>

          Attn  James  R.  Gilley  (hereinafter  referred  to  as  "CREI"),  and
          Corinthians I Retirement  Community,  LP, a Texas limited  partnership
          ("Corinthians  Retirement"),  with an address for  notices  under this
          Agreement  at c/o  Sunwest  Management,  Inc.,  2735 - 12th Street SE,
          Suite 100, Salem,  Oregon 97302,  and. (ii) The  Corinthians  Assisted
          Living Project (as therein defined), as per separate contract,  with a
          purchase  price of Five Million  Seven Hundred  Thousand  ($5,700,000)
          Dollars,  including  purchase  money  financing  of One Million  Seven
          Hundred Forty Thousand  ($1,740,000) Dollars. The parties plan to sign
          an  Agreement  for  Purchase  and  Sale  (the  "Corinthians   Assisted
          Contract"),  between Corinthians Real Estate Investors,  L.P., a Texas
          limited  partnership,   having  an  address  for  notices  under  this
          Agreement at c/o Greenbriar  Corporation,  Centura Tower I, Suite 650,
          14185  Dallas  Parkway,  Dallas,  Texas  75254;  Attn James R.  Gilley
          (hereinafter referred to as "CREI"), and Corinthians Assisted Living &
          Memory Care, LP, a Texas limited  partnership  ("Corinthians  Assisted
          Living"),  with an address for  notices  under this  Agreement  at c/o
          Sunwest  Management,  Inc.,  2735 - 12th Street SE, Suite 100,  Salem,
          Oregon 97302,

     (c)  The  Harlingen  property in Cameron  County,  Texas,  as per  separate
          contract,  with a purchase  price of Three Million Three Hundred Sixty
          Thousand ($3,360,000) Dollars,  including purchase money financing not
          to exceed the excess,  if any, of the Purchase  Price over any debt to
          be assumed  or given by  Purchaser  to Vestin  Mortgage  Company.  The
          parties  plan  to  sign  an  Agreement  for  Purchase  and  Sale  (the
          "Harlingen  Contract"),  between The Willows at Sherman, Inc., a Texas
          corporation, having an address for notices under this Agreement at c/o
          Greenbriar  Corporation,  Centura  Tower I,  Suite 650,  14185  Dallas
          Parkway,  Dallas,  Texas  75254;  Attn  James R.  Gilley  (hereinafter
          referred to as "Harlingen"),  and Camelot I Retirement  Community,  LP
          ("Camelot"), a Texas limited partnership,  with an address for notices
          under this  Agreement  at c/o Sunwest  Management,  Inc.,  2735 - 12th
          Street SE, Salem, Oregon 97302; and

     (d)  100% of the common stock of the following  management  companies  (the
          "Management Companies"):

o    SLM-Crown Pointe, Inc.

o    SLM-Oak Park, Inc.

o    SLM-Wedgwood Terrace, Inc.

The date on which the sale and  transfer of the said common stock shall occur is
called the "Stock Closing Date"). The sale and transfer of the said common stock
shall not occur until the necessary regulatory  approvals (the "Approvals"),  if
any, have been obtained by the parties  hereto and until the Approvals have been
obtained the Harder Group shall act as consultants to such Management Companies.
Each  of the  above  listed  Management  Companies  is  the  manager  under  one

<PAGE>

management  contract  and  has  no  other  assets  or  liabilities.   Greenbriar
Corporation  will  indemnify the Harder Group against any claim that is asserted
against  these  Management  Companies,  or any  person  who is  included  in the
hereinabove defined term the "Harder Group", for actions or events that occurred
prior to the Stock Closing Date, including allegations,  if any, asserted by the
owner of any of the properties covered by the applicable  management  contracts:
(i) of  mismanagement,  and/or  (ii) that  Greenbriar  did not have the right to
transfer  the stock as herein  contemplated.  Similarly,  the Harder  Group will
indemnify  Greenbriar  against any claim that is asserted against any person who
is  included  in the  defined  term  "Greenbriar"  or against  these  Management
Companies,  for actions or events that occurred from and after the Stock Closing
Date, including  allegations,  if any, of mismanagement asserted by the owner of
any of the properties covered by the applicable management contracts.

     (e)  Greenbriar's  affiliate  will also  lease and  thereafter  sell to The
          Harder Group the two assisted living facilities in Muskogee, Oklahoma,
          as per separate lease and purchase contract.

     (f)  Greenbriar  agrees to lend to each of the purchasers of the properties
          listed in this Paragraph 1 (a), (b) and (c) the closing costs required
          to be paid by each such  purchaser  to Vestin  Mortgage at the time of
          the Closing of the  purchase  money  financing  required to close each
          such  acquisition;  specifically,  Greenbriar  will  lend to each such
          buyer  the  "points"  charged  by Vestin at  closing,  the legal  fees
          charged by Vestin's attorney at closing, the title insurance,  if any,
          required by such lender for each such property (Vestin may waive title
          insurance  in  certain  instances,  or may  just  require  an  updated
          endorsement,  in which event no loan for that particular  expense will
          be necessary),  and mortgage  recording costs and any advance interest
          payment  which Vestin may require,  and  Greenbriar  will also lend to
          each such Buyer any cash  outlay  required to be paid by such Buyer to
          Greenbriar  as a result  of  prorations  under  the  respective  sales
          contracts referred to above; provided, however, that if under one such
          contract  Greenbriar is owed net cash for prorations and under another
          such contract  Greenbriar must pay that Buyer net cash for prorations,
          the total net cash amounts under all the said contracts for prorations
          will  be  netted  out  and  the  result,  if  it is a  net  credit  in
          Greenbriar's  favor, will be added to the loan herein described.  Such
          loan will be evidenced by a Note, in the same form,  and upon the same
          terms, and signed and guaranteed  (using Vestin's form of guaranty) by
          the same persons, and bearing the same "points" (which points shall be
          added to the principal  amount of the Note to Greenbriar  and shall be
          due at maturity) and terms of payment,  and interest rate, as the loan
          made by Vestin.

     (g)  Greenbriar  Corporation  also  agrees  to  sell  its  49%  partnership
          interest  in Villa del Rey  Roswell,  LP and to transfer to the Harder
          Group  the  option  to  purchase  the 51%  interest  in Villa  del Rey
          Roswell, LP that Greenbriar's affiliate does not presently own. A copy
          of that  option is attached  as Exhibit A. As  consideration  for this
          transaction,  Greenbriar  Corporation  will receive a note in the same
          form as is discussed in the attached  Corinthians  Contract,  from the
          Harder Group for $823,728 and Greenbriar Corporation will also receive
          the  partnership  interests  discussed  in  Section  "3" below and the
          benefits of the other  transactions  described  herein.  The note will

<PAGE>

          bear interest at the prime rate, as published from time to time in the
          Wall  Street  Journal,  and will  accrue  monthly,  with each  monthly
          payment being added to the principal  debt on the first of each month,
          and with the entire  indebtedness being due and payable in full on the
          maturity  date. The principal and interest and all other amounts owing
          under  the  Note  will be due on March  16,  2004.  The  note  will be
          executed by Jon Harder and wife and Darryl Fisher and wife and Sunwest
          Management, Inc. (herein collectively called the "Harder Group")

2.   In addition to the above, so long as there is no monetary default (that has
     not been  cured  within  the  Notice  and  Grace  periods  provided  in the
     applicable  documents)  by the Harder Group under any of its  obligation to
     any member of the Greenbriar  Group (i.e.  any entity or person  affiliated
     with   Greenbriar   Corporation   and/or  any   affiliate   of   Greenbriar
     Corporation),  Greenbriar  Corporation  agrees  to  pay  the  Harder  Group
     $660,000,  payable at the rate of  $55,000  per month  beginning  one month
     after the closing of all the  transactions  contemplated  by this Agreement
     (other  than  those  discussed  in  Section  "3"),  and  ending  12  months
     thereafter.  This  payment  is for  due  diligence  and  expenses  for  the
     acquisition  of properties  for the  partnerships  in which the  Greenbriar
     Corporation will have a 50% partnership interest as contemplated by Section
     "3" below.

3.   (A) The Harder Group is currently  negotiating  to purchase the  properties
     listed  hereafter in this  paragraph.  In  consideration  for  Greenbriar's
     agreements herein, and for other valuable considerations,  the Harder Group
     will assign and convey to  Greenbriar  Corporation,  in the form of limited
     partnership interests, One Half (1/2) of all the ownership interests in the
     fee title, cash flow and profit and losses, in the following properties:

[Confidential  information  has  been  deleted  and  filed  separately  with the
Commission.]

(B) If, for any reason, the Harder Group is unable to purchase all or any of the
properties  listed  above,  then the Harder  Group will use its best  efforts to
assign and convey to the Greenbriar  Group a 50% total  ownership  interest,  as
stated above to be in the form of a limited partnership  interest, in properties
of similar value and with similar equity,  it being the intention of the parties
that the Greenbriar Group will receive a 50% interest total ownership  interest,
in the form of a limited partnership interest, in 12 properties of similar value
and with similar equity.

(C) If the Harder Group deems it  necessary to assign a percentage  of the total
ownership in any  particular  property  hereafter  acquired to another person or
entity,  then:  (i) the  Greenbriar  Group shall receive no less than 50% of the
total  ownership  interests  in such  property  that are  acquired by the Harder
Group,  and (ii) to the extent that, as a result of the preceding  clause "(i)",
Greenbriar receives less than a 50% ownership interest in any property,  that is
intended  by the parties to be part of the  properties  in which  Greenbriar  is
given an interest in fulfillment of the obligations discussed in this P. 3, then
the  number  of  properties  in which  Greenbriar  shall  be given an  ownership
interest as  contemplated  by this P. 3 shall be increased  proportionately,  to
compensate  Greenbriar  for the lower  percentage  ownership  interest  given to
Greenbriar in this property,  so that  Greenbriar  will receive,  as required by

<PAGE>

this P. 3, the percentage  equivalent of 50% of the total ownership interests in
12  properties.  For  example,  in  fulfillment  of  this P.  3,  the  following
combination,  which is merely an example,  and not an exhaustive  list, shall be
deemed  acceptable  in  fulfillment  of  this P. 3:  (a) a 25%  total  ownership
interest  (so  long  as it  1/2 of  the  Harder  Group's  total  interest)  in 8
properties,  plus (b) a 10% total  ownership  interest (so long as it 1/2 of the
Harder Group's total interest) in 10 properties,  plus (c) a 50% total ownership
interest  (so  long  as it  1/2 of  the  Harder  Group's  total  interest)  in 6
properties.

(D) In the event of a dispute as to value or  equity,  the  opinions  of 3 third
party  appraisers,  each of whom has never had dealings  with any of the parties
hereto,  will be decisive.  Time is of the essence and the Harder Group will use
its best efforts to acquire these acquisitions or similar  acquisitions no later
than September 30, 2004.

(E) Anytime during a 24 month period after the Greenbriar Group receives its 50%
limited  partnership  interest,  the  Harder  Group  may buy that  interest  for
$750,000  per  property  or a  total  of  $9,000,000,  it  being  intended  that
Greenbriar will receive  $9,000,000 of total equity (as appraised by the lending
institutions) from the transactions contemplated by this paragraph "3".

(F) All partnership agreements  contemplated in this Section "3" will be similar
in all respects to the Greatwood Partnership  Agreement,  attached as Exhibit B,
except for the names of the partners and their respective ownership interests.

                              4. INSPECTION PERIOD
                              --------------------

     Purchaser  has  inspected  and intends to continue  its  physical and other
inspection  of  the  properties  it  intends  to buy  and/or  lease,  as  herein
discussed,  through and including each Closing Date ("Inspection Period"), which
inspection  shall be at the sole cost and  expense of  Purchaser.  Seller  shall
assist with such  inspections,  but shall not be  obligated to incur any cost or
expense  or to furnish  any  information  other than at the place  where same is
maintained  in  connection  therewith.  All  information  received by  Purchaser
relating  to the  Project,  Seller  or its  affiliates  shall be kept in  strict
confidence and used solely for the purpose of determining  the  advisability  of
proceeding with the transaction  described in this Agreement.  Purchaser may not
communicate with any employee at any of the Properties  unless Purchaser obtains
Seller's general written consent to communicate with such employees at each such
property. Each sale and/or lease will be without any representations of any kind
or nature by the seller, the Purchaser  representing that it is sophisticated in
real estate and that this  purchase  price and sales  structure  are in material
consideration  of each sale being in its "as is,  where is"  condition,  with no
representations from Seller.

                         5. OPTION TO CONSOLIDATE NOTES
                         ------------------------------

                      Sherman/Corinthians Seller Financing.

A.  The  sellers  under  the  Agreements  for  Purchase  and Sale  mentioned  in
Paragraphs  1 "(a)" and 1 "(b)" of this  Agreement  will be  providing  purchase
money  financing for a portion of the Purchase Price under each such  Agreement.
This Section "5" does not cover or refer in any way to any promissory notes tha

<PAGE>

may be signed by any party with  regard to any  transaction  in which any of the
parties hereto, or their affiliates, may engage other than the notes hereinafter
specifically  described.  For example, this Section "5" does not cover the notes
which  evidence the  obligation  of any  purchaser to pay any seller for closing
costs that may be loaned by any seller to any buyer in any  transaction  related
to this  Agreement  or related to any party that is  affiliated  with a party to
this Agreement.

(i) With respect to the Sherman  Contract,  Sherman  will be providing  purchase
money financing of Two Million Fifty Thousand ($2,050,000) Dollars (the "Sherman
Financing") to Willows,  which will be evidenced by a Note (the "Sherman  Note")
in that  principal  amount and which will be  guaranteed  and secured as therein
provided.

(ii) With respect to the Corinthians Retirement Contract, CREI will be providing
purchase money financing of Three Million Five Hundred Ten Thousand ($3,510,000)
Dollars (the  "Corinthians  Retirement  Financing")  for the sale to Corinthians
Retirement and with respect to the Corinthians  Assisted Contract,  CREI will be
providing  purchase  money  financing of One Million Seven Hundred Forty Hundred
Thousand  ($1,740,000)  Dollars (the "Corinthians  Assisted  Financing") for the
sale to Corinthians  Assisted Living, which financings will each be evidenced by
a Note or Notes (the "Corinthians  Notes") in those respective principal amounts
and which will be guaranteed and secured as therein provided.

B.  Beginning on the 1st day  following the date (the "Start Date") on which the
last of the Corinthians Retirement,  Corinthians Assisted Living and The Willows
at Sherman transactions closes, Willows, Corinthians Retirement, and Corinthians
Assisted Living, as purchasers/payors,  and Sherman and CREI, as sellers/payees,
will each have the option for a period of six (6) months  from the Start Date to
convert the Corinthian  Retirement's  financing of $3,510,000,  the  Corinthians
Assisted Living financing of $1,740,000, and The Willows at Sherman financing of
$2,050,000, to one note (the "Converted Note") in a total principal amount equal
to the sum of $2,800,000 ($2,660,000 for Corinthians Retirement and $140,000 for
Corinthians  Assisted  Living),  plus  accrued  and  unpaid  interest  under the
original notes to the date of conversion,  and which principal amount shall bear
interest  at the  rate of  Twelve  (12%)  per  cent per  annum,  and be  payable
interest-only, in advance, on the first day of each and every month for a period
of 24 months,  at which time the entire unpaid  balance of principal,  interest,
and all other  amounts  owing  under the  Converted  Note shall be paid in full;
provided,  that if Sellers  shall be of the opinion that such Note may be deemed
unenforceable  under  Texas  law,  and the  Purchasers  shall fail to provide an
opinion of counsel  reasonably  acceptable to Sellers that the Converted Note is
not usurious,  then the interest rate under the Converted  Note shall be lowered
to the maximum  rate  allowed  under Texas law and the  principal  amount of the
Converted Note shall be increased,  and the payment  schedule shall be adjusted,
so that the total amount of dollars shall be paid as and when such dollars would
have been paid had the Converted Note carried the principal  amount and terms of
payment originally  contemplated in this paragraph.  The Converted Note shall be
made, jointly and severally, by all the parties to the Notes being converted and
shall be guaranteed and secured by the same parties,  collateral and other terms
as were the notes so converted.  To exercise such option, the parties exercising
the option shall provide the other party with one (1) days' prior written notice

<PAGE>

that it is exercising the option. Upon the signing of the Converted Note and all
guarantees  and  security  agreements  and UCCs and the  posting of all the same
collateral,  by all the purchasers and guarantors and others, the original notes
shall be deemed modified, released, superseded and replaced.



                                6. MISCELLANEOUS
                                ----------------

     6.1 This  Agreement  is binding  upon and shall inure to the benefit of the
parties hereto, their respective heirs,  successors,  legal  representatives and
permitted assigns.

     6.2 Wherever  under the terms and provisions of this Agreement the time for
performance  falls  upon a  Saturday,  Sunday  or legal  holiday,  such time for
performance shall be extended to the second business day thereafter.

     6.3 This  Agreement  may be  executed in one or more  counterparts,  all of
which when taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts have been executed by each of the
parties hereto and delivered to each of the other parties hereto.

     6.4 The captions at the beginning of the several  paragraphs,  Sections and
Articles are for  convenience  in locating the context,  but are not part of the
context.  Unless  otherwise  specifically  set  forth in this  Agreement  to the
contrary,  all references to Exhibits  contained in this Agreement  refer to the
Exhibits  which  are  attached  to this  Agreement,  all of which  Exhibits  are
incorporated  in,  and made a part  of,  this  Agreement  by  reference.  Unless
otherwise  specifically  set  forth  in  this  Agreement  to the  contrary,  all
references to Articles,  Sections,  paragraphs  and clauses refer to portions of
this Agreement.

     6.5 If any term or provision of this Agreement shall be held to be illegal,
invalid,  unenforceable  or inoperative as a matter of law, the remaining  terms
and provisions of this Agreement  shall not be affected  thereby,  but each such
remaining  term and provision  shall be valid and shall remain in full force and
effect.

     6.6 This  Agreement  and the other  writings  referred to in, or  delivered
pursuant  to,  this  Agreement,  embody the entire  understanding  and  contract
between the parties hereto with respect to the Project and supersede any and all
prior agreements and understandings  between the parties hereto, whether written
or oral,  formal  or  informal,  with  respect  to the  subject  matter  of this
Agreement. This Agreement has been entered into after full investigation by each
party and its  professional  advisors,  and  neither  party is relying  upon any
statement, representation or warranty made by or on behalf of the other which is
not expressly set forth in this Agreement.

     6.7 No extensions,  changes, waivers,  modifications or amendments to or of
this Agreement,  of any kind  whatsoever,  shall be made or claimed by Seller or
Purchaser,  and no notices of any extension,  change,  waiver,  modification  or
amendment made or claimed by Seller or Purchaser  shall have any force or effect
whatsoever,  unless the same is contained in a writing and is fully  executed by
the party against whom such matter is asserted.

<PAGE>

     6.8 This Agreement shall be governed and interpreted in accordance with the
laws of the State of Nevada.

     6.9 Each party  hereto  shall pay all charges  specified to be paid by them
pursuant to the provisions of this  Agreement and their own  attorney's  fees in
connection with the negotiation, drafting and closing of this Agreement.

     6.10 Each  party  hereto  warrants  and  represents  that,  subject  to any
provisions hereof to the contrary, it has full power and authority to enter into
this Agreement and to perform all of its obligations under this Agreement.  Each
member of the Purchaser and the Seller hereunder,  respectively,  is jointly and
severally liable with respect to all of, respectively,  Purchaser's and Seller's
obligations and liabilities hereunder.

     6.11  Purchaser and Seller agree that this  Agreement has been entered into
solely for the benefit of Purchaser and Seller and no other person or entity, it
being the intention of Purchaser and Seller that no person or entity not a party
to this  Agreement  shall  have any right or  standing  to (a) bring any  action
against  Purchaser  or Seller  based on this  Agreement,  or (b) assume that any
provision of this Agreement  will be enforced or remain  unmodified or unwaived,
or (c) assert that it or he is or should be or was intended to be a  beneficiary
of any provision of this Agreement.  IN WITNESS WHEREOF, the parties hereto have
caused this  Agreement  to be executed in their names by their  respective  duly
authorized representatives on the day and year first above written.

     The Harder Group:

                           /s/ Jon M. Harder
                           ----------------------------------
                               Jon M. Harder

                           /s/ Kristin P. Harder
                           ----------------------------------
                               Kristin P. Harder

                           /s/ Darryl E. Fisher
                           ----------------------------------
                               Darryl E. Fisher

                           /s/ Carol L. Fisher
                           ----------------------------------
                               Carol L. Fisher
                           Sunwest Management, Inc.


                           By: /s/ Jon Harder
                           ----------------------------------
                               Jon Harder, President


<PAGE>

         Greenbriar Corporation



By: /s/ James R. Gilley                       /s/ James R. Gilley
   ----------------------------------         ----------------------------------
   James R. Gilley, President and CEO         James R. Gilley, Individually

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>green10qsbex991093002.txt
<DESCRIPTION>CERTIFICATION OF CEO AND CFO
<TEXT>

Exhibit 99.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q for the
Quarter  Ended  September  30, 2002 (the  "Report")  by  Greenbriar  Corporation
("Registrant"), each of the undersigned hereby certifies that:

1.       The Report fully  complies  with the  requirements  of section 13(a) or
         15(d) of the Securities Exchange Act of 1934, as amended, and

2.       The  information  contained  in  the  Report  fairly  presents,  in all
         material respects, the financial condition and results of operations of
         Registrant.





                                   /s/ James R. Gilley
                                   ------------------------------
                                   James R. Gilley
                                   Chairman, President & Chief Executive Officer
                                   November 19, 2002


                                   /s/ Gene S. Bertcher
                                   -------------------------------
                                   Gene S. Bertcher
                                   Executive Vice President
                                   Chief Financial Officer
                                   November 19, 2002



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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