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<SEC-DOCUMENT>0001010549-04-000746.txt : 20041115
<SEC-HEADER>0001010549-04-000746.hdr.sgml : 20041115
<ACCEPTANCE-DATETIME>20041115162830
ACCESSION NUMBER:		0001010549-04-000746
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20040930
FILED AS OF DATE:		20041115
DATE AS OF CHANGE:		20041115

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:		041145650

	BUSINESS ADDRESS:	
		STREET 1:		1755 WITTINGTON PLACE
		STREET 2:		SUITE 340
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
		BUSINESS PHONE:		9724078400

	MAIL ADDRESS:	
		STREET 1:		1755 WITTINGTON PLACE
		STREET 2:		SUITE 340
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MEDICAL RESOURCE COMPANIES OF AMERICA
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WESPAC INVESTORS TRUST
		DATE OF NAME CHANGE:	19900605
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>green10q093004.txt
<TEXT>

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

                                    FORM 10-Q

(Mark One)

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934
                    For the period ended September 30, 2004

                                       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.)

1755 Wittington Place, Suite 340, Dallas, Texas                     75234
   (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                     A        merican 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 12, 2004, the issuer had outstanding approximately 977,000 shares of
par value $.01 Common Stock.





<PAGE>

                             GREENBRIAR CORPORATION
                     Index to Quarterly Report on Form 10-Q
                         Period ended September 30, 2004


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
      OVERVIEW................................................................13
      THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
      THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003...................14
      FORWARD LOOKING STATEMENTS..............................................17
   ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........18
   ITEM 4: CONTROLS AND PROCEDURES............................................18

PART II: OTHER INFORMATION....................................................19

   EXHIBITS...................................................................19
   SIGNATURES.................................................................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                                                         2004             2003
                                                            (Unaudited)
                                                           -------------    -------------
<S>                                                        <C>              <C>
Current assets
       Cash and cash equivalents                           $         324    $         688
       Accounts receivable-trade                                     336              100
       Note receivable                                             1,156            2,435
       Property held for sale                                      1,876
       Other current assets                                          241              198
                                                           -------------    -------------

              Total current assets                                 3,933            3,421

Notes receivable, from sale of properties                          4,107            4,107
          Less deferred gains                                     (3,720)          (3,720)
                                                           -------------    -------------
                                                                     387              387

Deferred income tax benefit                                        1,161            1,161


Property and equipment, at cost
       Land and improvements                                       2,240            2,758
       Buildings and improvements                                  6,549            9,410
       Equipment and furnishings                                   1,228            1,317
       Proven oil and gas properties (full cost method)            1,466            1,361
                                                           -------------    -------------
                                                                  11,483           14,846
               Less accumulated depreciation and
                    depletion                                      1,288            2,233
                                                           -------------    -------------
                                                                  10,195           12,613

Deposits                                                             307              232

Other assets                                                         691              317
                                                           -------------    -------------

                                                           $      16,674    $      18,131
                                                           =============    =============
</TABLE>



                                       3
<PAGE>

                             Greenbriar Corporation
                     Consolidated Balance Sheets - Continued
                  (Amounts in thousands, except share amounts)

                                                 September 30,    December 31,
Liabilities and Stockholders' equity                 2004            2003
                                                  (Unaudited)
                                                 -------------    -------------

Current liabilities
       Current maturities of long-term debt      $       4,756    $       4,690
       Current notes payable                             5,571
       Accounts payable - trade                            214              503
       Accrued expenses                                    821              633
       Other current liabilities                           309              931
                                                 -------------    -------------

              Total current liabilities                  6,100           12,328


Long-term debt                                           7,589            2,053

Deferred Gain                                              740

Other long term liabilities                                188              456
                                                 -------------    -------------

              Total liabilities                         13,877           15,577

Stockholders' equity
       Preferred stock                                       1                1

       Common stock $.01 par value; authorized,
          4,000,000 shares; 977,000 shares
          issued and outstanding                            10               10
       Additional paid-in capital                       55,966           55,966
       Accumulated deficit                             (53,180)         (53,423)
                                                 -------------    -------------

                                                         2,797            2,554
                                                 -------------    -------------

                                                 $      16,674    $      18,131
                                                 =============    =============



                                       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,
                                             2004        2003        2004        2003
                                          ---------    --------    --------    --------
                                               (Unaudited)              (Unaudited)
<S>                                       <C>          <C>         <C>         <C>
Revenue
       Real Estate operations             $   1,589    $    837    $  4,477    $  2,385
       Oil and gas operations                   358         174         996         174
                                          ---------    --------    --------    --------
                                              1,947       1,011       5,473       2,559
                                          ---------    --------    --------    --------

Operating expenses
       Real estate operations                   857         413       2,602       1,238
       Oil and gas operations                   267         141         758         141
       Lease expense                            231         212         686         757
       Depletion, depreciation and              109          79         365         227
              amortization
       Corporate general and
              administrative                    213         295         774         554
                                          ---------    --------    --------    --------
                                              1,677       1,140       5,185       2,917
                                          ---------    --------    --------    --------

              Operating earning  (loss)         270        (129)        288        (358)

Other income (expense)
       Interest income                           51         110         179         224
       Interest expense                        (392)       (157)       (994)       (543)
       Net gain on sale of assets             1,409       1,008       1,409       1,008
       Equity in net income of
              Affiliated partnership              0          16          31          49
       Other                                   (715)         27        (649)        109
                                          ---------    --------    --------    --------
                                                353       1,004         (24)        847
                                          ---------    --------    --------    --------

       Earnings from continuing                 623         875         264         489
              Operations

Discontinued operations
       Loss from operations                     (20)        (21)        (73)
                                          ---------    --------    --------    --------

       Net earnings                             623         855         243         416
                                          ---------    --------    --------    --------

Net earnings per common share -
       basic and diluted                  $     .64    $   1.21    $    .25    $    .59


Weighted average of common and
       equivalent shares outstanding -          977         703         977         703
       basic and diluted
</TABLE>



                                       5
<PAGE>
<TABLE>
<CAPTION>

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

                                                                 For the nine month
                                                             Period Ended September 30,
                                                                 2004           2003
                                                             -----------    -----------
                                                             (Unaudited)    (Unaudited)
<S>                                                          <C>            <C>
Cash flows from operating activities
       Net earnings                                          $       243    $       416
       Adjustments to reconcile net earnings (loss) to net
              cash used in operating activities
              Depreciation and amortization                          325            241
              (Gain) on sale of assets                              (740)        (1,008)
               Equity in net (income) of partnership                 (31)           (49)
              Changes in operating assets and liabilities
                  Accounts receivable                               (236)           (86)
                  Other current and non current assets               739             92
                  Accounts payable and other liabilities            (705)            59
                                                             -----------    -----------

              Net cash used in operating activities                 (405)          (335)
                                                             -----------    -----------

Cash flows used in investing activities
       Proceeds from the sale of property                            109            125
       Purchase of property and equipment                            (99)          (262)
                                                             -----------    -----------

              Net cash provided by (used in) investing
                    activities                                        10           (137)

Cash flows from financing activities
       Payments on debt                                           (6,469)           (51)
       Borrowings                                                  6,500            100
                                                             -----------    -----------

              Net cash provided by financing
                    activities                                        31             49
                                                             -----------    -----------

              NET DECREASE IN CASH AND                              (364)          (423)
                     CASH EQUIVALENTS

       Cash and cash equivalents at beginning of period              688            661
                                                             -----------    -----------

       Cash and cash equivalents at end of period            $       324    $       238
                                                             ===========    ===========
</TABLE>



                                       6
<PAGE>


                   Notes To Consolidated Financial Statements
    For the Unaudited Three and Nine Months Ended September 30, 2004 and 2003

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 unaudited  financial  statements  included  herein have been prepared by the
Company  without audit,  pursuant to the rules and regulations of the Securities
and Exchange  Commission.  The financial statements reflect all adjustments that
are, in the opinion of management, necessary to fairly present such information.
All such  adjustments  are of a normal  recurring  nature.  Although the Company
believes that the disclosures are adequate to make the information presented not
misleading,   certain   information  and  footnote   disclosures,   including  a
description of significant  accounting  policies  normally included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America, have been condensed or omitted pursuant to such
rules and regulations.

These financial  statements  should be read in conjunction with 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, 2003.  Operating results for
the three and nine month  periods ended  September 30, 2004 are not  necessarily
indicative of the results that may be expected for any subsequent quarter or the
year ended December 31, 2004


Note B: Notes Receivable and Deferred Gain From Sale Of Property

As a result of the sale of two retirement  communities in 2001 the Company holds
tax-exempt notes in the total amount of $4,030,000 bearing interest at 9.5%. The
notes mature on April 1, 2032, 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 in the amount of $3,720,000.  The deferred gains and interest  income will
be recognized as cash is received.

Note C: Property Held for Sale

The  Company  has an  agreement  to sell a  subsidiary  whose  sole  asset is an
assisted living community in North Carolina. The carrying value of this asset is
$1,876,000  and  there  is  a  mortgage  of  $1,700,000.  The  net  sales  price
approximates the carrying value.

Note D: Affiliated Partnerships

In October 2001,  the Company became a 56% 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 sole member is W.
Michael  Gilley,  the son of a former  CEO of the  Company.  Sylvia  Gilley,  W.
Michael  Gilley's  mother,  has a 25.9% interest,  the general partner has a .1%
interest,  the  Company's  current  president  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>
<TABLE>
<CAPTION>

The Company  issued a $1,600,000  note to the seller as partial  payment for the
purchase  of one  of  the  retirement  communities.  CREI  gave  the  Company  a
$1,600,000  note as  consideration  for payment of that  amount of the  purchase
price. The balance of the purchase price was funded by CREI's  borrowings from a
third party.

In September  2002 CREI sold its two  properties for cash and notes and paid off
its  third  party  debt.  As part of the  proceeds,  CREI  received  a note  for
$1,600,000  due  September  30,  2004 which was  transferred  to the  Company in
satisfaction of its $1,600,000 note receivable from CREI.

CREI  recognized a gain of $1,322,000.  The Company has deferred  recognition of
its  $740,000  share of the gain  because  of the  aforementioned  guaranty.  In
addition CREI had deferred a gain to be recognized  both by the  partnership and
the Company on the installment method when payment is received.

In September  2004 the notes were paid in full.  The Company  recorded a gain of
$1,232,000.

Note E: Long-Term Obligations

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

                                                            September 30,    December 31,
                                                                 2004            2003
                                                            -------------   -------------
<S>                                                         <C>             <C>
Notes payable to financial institutions maturing through
2015; fixed and variable interest rates ranging from
5.875% to 15%; collateralized by property, fixtures,
equipment and the assignment of rents                       $       7,674   $       2,090

Notes payable to individuals and companies maturing
through 2023; variable and fixed interest rates ranging
from 7% to 14% collateralized by real property, personal
property, fixtures, equipment and the assignment of rents           1,800           1,851

Note payable to Sylvia M. Gilley, bearing interest at 10%
and maturing on July 1, 2004                                        2,255           2,255

Note payable to a former officer, non-interest bearing at
8.5% and maturing on December 31, 2004, net of
discount of $23 and $103 respectively, representing
interest imputed at 8.5%                                              608             528

Other                                                                   8              19
                                                            -------------   -------------
                                                                   12,345           6,743

Less: current maturities                                            4,756           4,690
                                                            =============   =============
                                                            $       7,589   $       2,053
</TABLE>


                                       8
<PAGE>

Note F - Stock Options

The Company has elected to follow  Accounting  Principles  Board  Opinion No. 25
"Accounting  for Stock Issued to  Employees"  (APB 25) in its primary  financial
statements and has provided  supplemental  disclosures  required by Statement of
Financial  Accounting  Standards No. 123 (SFAS 123)  "Accounting for Stock-Based
Compensation"  and by  Statement  of  Financial  Accounting  Standards  No.  148
"Accounting  for  Stock-Based   Compensation  -  Transition  and  Disclosure  an
Amendment of SFAS No. 123."

SFAS 123 requires  disclosure of pro forma net earnings (loss) and pro forma net
earnings  (loss)  per share as if the fair  value  method  had been  applied  in
measuring compensation cost for stock based awards. There was no pro forma stock
based compensation expense for any period presented.

Note G - Discontinued Operations

On January 31, 2004 the Company negotiated,  at no cost, the termination a lease
for an assisted  living  community in Georgia.  The operations of that community
have been reflected as discontinued operations for 2004 and 2003.

Note H - Segments

The Company and its  subsidiaries  are  principally  engaged in the  business of
acquiring,  enhancing and selling real estate properties. From 1996 through 2002
those activities were almost exclusively involved assisted living facilities. By
the end of 2002 the Company  had  disposed  of the bulk of its  assisted  living
facilities and was actively seeking to acquire real estate properties other than
assisted  living.  In  December  2003 the  Company  acquired a shopping  mall in
Gainesville, Texas

Effective August 1, 2003 the Company acquired 100% of the stock in Gaywood Oil &
Gas LLC, a limited  liability company that owns working interests in certain oil
producing  wells.   The  acquisition  was  done  for  investment   purposes  and
substantially all costs associated with the oil and gas operations are operating
expenses incurred directly by Gaywood.  The Company continues to allocate all of
its corporate overhead expenses to its core real estate operation.




                                       9
<PAGE>

Segment  information and  reconciliation to income (loss) from operations are as
follows:

Three months ended September 30, 2004
- -------------------------------------

                                  Real Estate   Oil and Gas   Consolidated
                                   Operations    Operations


       Revenue                    $ 1,589,000   $   358,000   $ 1,947,000
       Depletion, depreciation
          and amortization             89,000        20,000       109,000
        Operating income (loss)       179,000        91,000       270,000
       Total assets               $15,180,000   $ 1,494,000   $16,674,000
























                                       10
<PAGE>

Nine months ended September 30, 2004
- ------------------------------------

                                  Real Estate   Oil and Gas   Consolidated
                                   Operations    Operations

       Revenue                    $ 4,477,000   $   996,000   $ 5,473,000
       Depletion, depreciation
          and amortization            283,000        82,000       365,000
        Operating income (loss)       132,000       156,000       288,000
       Total assets               $15,180,000   $ 1,494,000   $16,674,000



Note I - Contingencies


Internal Revenue Service Pre-Assessment Letter

In  December  1991 the  Company  sold  four  nursing  homes to a  not-for-profit
corporation  in exchange for tax exempt bonds issued on behalf of the  acquiring
corporation by government  authorities.  The bonds were issued in three lettered
series:  A, B and C. The  aggregate  principal  amount of the Series A bonds was
$8,700,000,  the aggregate principal amount of the series B bonds was $1,000,000
and the aggregate  amount of the Series C bonds was $6,700,000.  Interest on the
bonds was payable  semi-annually.  A nationally  recognized law firm opined that
interest on the bonds would be tax-exempt.

In March 1992,  pursuant to a plan  promulgated  and recommended by a nationally
recognized  investment  banking firm,  the Series C bonds were converted to zero
coupon  status  and their  value  was  enhanced  by  substituting  higher  grade
collateral.  The  substitute  collateral,  which  consisted  of zero coupon U.S.
Treasury  obligations,  was  placed in trust to  defease  the  Series C bonds in
exchange  for the  underlying  mortgage.  The  Series C bonds were then sold for
approximately $47,000,000. A gain was recorded equal to the proceeds received by
the Company of $6,252,000 after deducting  transaction costs and the cost of the
higher  grade  collateral.  A  nationally  recognized  law firm  opined that the
defeasance of the bonds would not adversely affect the tax exempt status.

In December 1992,  again  pursuant to a plan  promulgated  and  recommended by a
nationally recognized investment banking firm, the Series A bonds were converted
to zero coupon  status,  their value enhanced by  substituting  zero coupon U.S.
Treasury  obligations  as  collateral  and the  collateral  placed  in  trust in
exchange for the mortgage underlying the Series A bonds in a transaction similar
to the sale of the  Series C  bonds.  The  Series  A bonds  were  then  sold for
approximately $20,000,000. A gain was recorded equal to the proceeds received by
the Company of $2,081,000 after deducting  transaction costs and the cost of the
higher grade collateral.

On January 8, 2004 the Company  was  notified by the  Internal  Revenue  Service
(IRS) in the  form of a  Section  6700  Pre-Assessment  Letter  that the IRS was
considering  assessing penalties under Section 6700 of the Internal Revenue Code
as a result of the Company's  organization  or assistance in connection with the
issuance and sale of the Series A and Series C bonds.

In August  2004 the  Company  and the IRS  concluded  a  settlement  whereby the
Company admitted no guilt in the matter and paid a fine of $216,000.


                                       11
<PAGE>

Other

The  Company  has been named as a defendant  in other  lawsuits in the  ordinary
course of business.  Management  is of the opinion that these  lawsuits will not
have a material effect on the financial condition, results of operations or cash
flows of the Company.


Note J: Subsequent Event - Acquisition of Bulgarian Cable and Telecommunications
Company

On October 12, 2004 the Company acquired two privately-held U.S. corporations in
exchange for 31,500 shares of  newly-designated 2% Series J Preferred Stock. The
two U.S.  corporations each own an undivided one-half of the equity interests in
Tacaruna  BV, a  Netherlands  company,  which in turn  owns 75% of  CableTEL  AD
("CableTEL"). The remaining 25% is owned by an unrelated third party.

CableTEL,  the largest  cable  television  provider in  Bulgaria,  has  launched
Bulgaria's  first,  fully  connected  fiber  optic  backbone  ring  which,  upon
completion,  will  cover  the  entire  country  with  connections  to its  major
metropolitan cities.

In addition to its current cable television  business,  CableTEL's business plan
is to build a vertically integrated  communications company which will provide a
full range of telephone  services  (including voice over IP),  internet services
and fiber optic backbone  connectivity to individual,  commercial and government
customers.  With the  completion  of the fiber  optic  backbone  and with  legal
barriers to admission  into the fixed voice market lifted in Bulgaria,  CableTEL
is preparing an aggressive entry into the Bulgarian telecommunications market.

A  significant  component of  CableTEL's  business  plan is the leasing of fiber
optic backbone connectivity to commercial,  industrial and governmental clients.
Bordered  by Greece,  Turkey,  Macedonia,  Yugoslavia  and  Romania,  CableTEL's
land-based fiber optic infrastructure will offer a less expensive alternative to
current  connectivity  under the Mediterranean  Sea for countries  desiring high
speed internet, voice and data access to the rest of the world.

Bulgaria is situated in Southeastern  Europe and occupies the northeastern  part
of the Balkan Peninsula.  Bulgaria's  Parliamentary  Republic form of government
has  brought  political   stability  and  its  stringent  fiscal  controls  have
stimulated  sustained  economic  growth of 4.1%-5.4% per annum for the past four
years.  Bulgaria is a member of NATO and expects to join the  European  Union by
2007.

The  European  Union,  which  currently  consists  of 25 member  countries,  has
earmarked  substantial  funding to assist  candidate  countries  to achieve  the
infrastructure and institutional  reforms necessary for membership in the Union.
The Union's  commitment to Bulgaria from this funding is 816,000,000 Euros (over
one billion U.S.  dollars),  nearly 20% of the European Union assistance budget.
Bulgaria has completed over 85% of the steps the Union requires for entry.


                                       12
<PAGE>

As  consideration  for the acquisition,  Greenbriar  issued 31,500 shares of its
newly-designated  2% Series J Preferred Stock (the  "Preferred  Shares") to four
individual stockholders of the two U.S. corporations.  The 2% Series J Preferred
Stock has a  liquidation  value of $1,000  per  share,  has the right to receive
cumulative cash dividends of $20 per share per annum payable quarterly,  payment
of $1,000 per share in the event of  liquidation,  dissolution  or winding up of
Greenbriar  before any  distribution  is made to common  stockholders,  optional
redemption  at any time after  September 30, 2006 at a price of $1,000 per share
plus cumulative unpaid dividends.  The Preferred Shares are not convertible into
any other securities of Greenbriar,  and each share has voting rights consisting
of five votes per share voting together with all other classes of stock.


The Acquisition Agreement requires as soon as reasonably practicable,  and in no
event later than September 30, 2005,  that  Greenbriar  present the  transaction
represented by the  Acquisition  Agreement,  together with a proposed  mandatory
exchange of the Preferred Shares for Common Stock to its current stockholders in
accordance  with the  applicable  requirements  of the  Securities  and Exchange
Commission  and the  American  Stock  Exchange,  Inc.  for a vote (or a  written
consent by the requisite  number) of  stockholders  to approve the  transaction,
including a mandatory  exchange of all shares of the Preferred Shares for shares
of  Greenbriar  Common Stock on the basis of 279 shares of Common Stock for each
share  of  the  Preferred  Shares,   which  would  result  in  an  aggregate  of
approximately  8,788,500 shares of Greenbriar  Corporation's  Common Stock being
issued to the four individuals, which would then constitute approximately 90% of
the total issued and outstanding  shares of Common Stock of Greenbriar,  subject
to the listing  requirements  with the AMEX.  In the event the  stockholders  of
Greenbriar  do not approve the  transaction  and the  mandatory  exchange by the
requisite  number of votes,  the holders of the Preferred Shares have the option
exercisable by all of them at any time after  September 30, 2005 until September
30, 2006 to rescind the transaction by delivery back to Greenbriar of the 31,500
Preferred  Shares to receive in exchange  all of the  ordinary  shares and other
securities of Tacaruna BV held by the Company.

For a more detailed  description of the CableTEL  acquisition  see the Company's
Form 8-K filed October 15, 2004.



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


Overview

As of September 30, 2004,  the Company owned one assisted  living  community and
leased  one  assisted  living  community  in two states  with a capacity  of 200
residents.  In addition,  the Company owns one assisted living community that is
leased to and  operated  by an  independent  third  party with a capacity  of 41
residents.

The Company acquired the Gainesville  Factory Outlet Mall in Gainesville,  TX in
December 2003. The mall has  approximately  315,000 sq ft. of retail space which
is leased to a number of  nationally  know  retail  operations  as well as local
vendors.


                                       13
<PAGE>

The Company  acquired  Gaywood Oil & Gas,  LLC  (Gaywood)  which has oil and gas
leases in the East Texas field effective  August 31, 2003. The oil wells in this
field have low but steady production. There are approximately 200 existing wells
on the leases  owned by Gaywood  however as of November  12, 2004 Gaywood had 52
operating  wells  generating  approximately  4,000  barrels  of oil  per  month.
Gaywood, based upon the price of oil and available financing,  and the Company's
estimates  of  potential  production  may open  additional  wells.  At this time
Greenbriar does not anticipate acquiring additional oil and gas properties.  The
purpose of this  acquisition  was to acquire a cash  flowing  asset with  future
potential value in excess of the purchase price.


Three and nine month  periods  ended  September  30, 2004  compared to three and
nine-month periods ended September 30, 2003.


Revenues and Operating Expenses

Revenues for the assisted  living  communities  were $945,000 and $2,773,000 for
the three and nine months ended  September  30, 2004 as compared to $803,000 and
$2,313,000  for the three and nine months ended  September  30, 2003.  Community
operating expenses,  which consist of assisted living community expenses,  lease
expense,  depreciation  and  amortization,  were $746,000 and $2,205,000 for the
three and nine months  ended  September  30,  2004 as  compared to $661,000  and
$2,001,000 for the three and nine months ended September 30, 2003.

The  increase  in  revenue  is  due  principally  to  increased  census  at  the
communities.  The increase in expenses is the increased operating cost necessary
to care for the additional  residents.  The significant increases were for wages
and food.

Revenues for the outlet mall were $644,000 and $1,704,000 for the three and nine
months ended September 30, 2004. Operating expenses were $379,000 and $1,197,000
for the comparable periods.  The outlet mall was not owned by the Company during
the three and nine month period ended September 30, 2003

Revenues for the oil & gas  operations  were $358,000 and $996,000 for the three
and nine month  periods  ending  September  30, 2004.  Operating  expenses  were
$267,000 and $758,000 for the comparable periods.  The oil & gas operations were
not owned by the Company until August 31, 2003.

Corporate General and Administrative Expenses

General and administrative expenses were $213,000 and $774,000 for the three and
nine month periods  ending  September 30, 2004 compared to $295,000 and $554,000
for the three and nine months ending September 30, 2003.

During the later part of 2001 and 2002 the Company  sold,  leased or disposed of
26 communities. In October 2001, principally to help the Company's cash flow due
to  its  reduced  size,  the  senior  officers  agreed  to  substantial   salary
reductions.  In lieu of salary  the  Company  agreed to allow  the  officers  to
participate  in future  acquisitions.  In October  2003 the  Company's  Board of
Directors decided that the officers would no longer participate in the ownership
of acquired entities. In the third quarter of 2003 the Board of Directors agreed


                                       14
<PAGE>

to increase certain officers'  salaries effective January 1, 2003. The general &
administrative  expenses  in the third  quarter of 2003  includes  an expense of
approximately $90,000 that pertains to the first six months of 2003. The balance
of the  additional  expenses is due to  additional  administrative  salaries and
expenses due to the  addition of the outlet mall and the oil and gas  operations
as well as additional legal fees due to the Company's  dispute with the Internal
Revenue Service.


Interest Income

Interest income was to $51,000 and $179,000 for the three and nine month periods
ending September 30, 2004 as compared to $110,000 and $224,000 for the three and
nine months ending September 30, 2003. Interest was $20,000 higher for the first
quarter of 2004 In April 2004 the Company  received certain  principal  payments
which reduced the level of interest bearing notes outstanding. This reduction in
notes  receivable was the most  significant  factor in the reduction in interest
income.






















                                       15
<PAGE>

Interest Expense

Interest  expense was $392,000 and $994,000 for the three and nine month periods
ended  September 30, 2004 as compared to $157,000 and $543,000 for the three and
nine months periods ended September 30, 2003.

The increase is due almost entirely to the financing of the  Gainesville  Outlet
Mall. When the mall was acquired in December 2003 it was initially financed with
a short term note which  escalated  form 3% to 15% during the nine months  ended
September  30, 2004.  The short term note was  refinanced  in August 2004 with a
five year note requiring interest at 5.85%.


Other Income (Expense)

Other Income (expense) for the three and nine month periods ending September 30,
2004 was  ($715,000)  and ($649,000) as compared to $27,000 and $109,000 for the
three and nine months  ended  September  30,  2003.  In 2002 the Company  sold a
property in California  and was required to establish an escrow fund for certain
repairs to the building. The escrowed amounts were written off when the building
was sold.  Included in other income for 2004 is $125,000  which  represents  the
return of a portion of escrow funds in excess of the amount  required.  Due to a
reduction  in the  corporate  staff the  Company  needed  less space than it was
occupying and reached a settlement with the owner of the building,  in the third
quarter,  whereby the Company  made a one time payment of $472,000 to settle all
obligations  and to  terminate  the  lease  early.  Also  included  in 2004 is a
$216,000 expense to provide for the settlement of the Company's dispute with the
IRS.

The 2003 amounts principally  represent income from the reimbursement of a prior
year insurance claim as well as the settlement of a lawsuit.


Gain on Sale of Assets

The gain on sale of asset for the three and nine months ended September 30, 2004
was $1,409,000 as compared to a gain of $1,008,000 for the three and nine months
ended September 30, 2003.

In October 2001,  the Company became a 56% limited  partner in Corinthians  Real
Estate Investors, LP ("CREI"), a partnership formed to acquire two properties.

In September  2002 CREI sold its two  properties for cash and notes and paid off
its  third  party  debt.  As part of the  proceeds,  CREI  received  a note  for
$1,600,000  due  September  30,  2004 which was  transferred  to the  Company in
satisfaction of its $1,600,000 note receivable from CREI.

The Company  deferred  recognition  of its $740,000 share of the gain because of
the  aforementioned  guaranty.  In  addition  CREI  had  deferred  a gain  to be
recognized both by the  partnership  and the Company on the  installment  method
when payment is received.

In September 2004 the notes were paid in full and the Company recorded a gain of
$1,232,000.



                                       16
<PAGE>

The Company owned a property in  Ellensburg  WA. The  property's  book value was
$202,000  less than its debt.  In July 2004 the Company  sold the property to an
unrelated third party and recorded a gain of $177,000 net of expenses.

In 2001 the Company  sold a property  and  received  proceeds of both cash and a
bond bearing  interest at the rate of 9.5%.  The payment of both  principal  and
interest on the bond was based  exclusively  on the cash flow from the  property
sold. For financial statement purposes the bond was valued at zero.

In August 2003 the Company exchanged the bond for 100% of Gaywood Oil & Gas LLC.
Gaywood was valued by  independent  engineers  as having a fair market  value of
$1,119,000,  which was recorded as a gain by the Company.  In September 2003 the
Company  sold land it was  holding  for  $125,000  cash and  recorded  a loss of
$111,000 on the sale.


Discontinued Operations

On January  31,  2004 the  company  terminated  a lease for an  assisted  living
community in Georgia. The operating losses for the community were $0 and $21,000
for the three and nine month periods  ending  September 30, 2004 and $20,000 and
$73,000 for the three and nine months ending September 30, 2003.


Liquidity and Capital Resources

On September 30, 2004,  the Company had current assets of $3,933,000 and current
liabilities of $6,100,000.

Included in current  liabilities is a $2,600,000  note plus accrued  interest to
Sylvia M. Gilley, wife of a former president of the Company.  Under the terms of
the note the obligation  will only be due if the Company has sufficient  cash to
pay the note.

Also included in current  liabilities is a $1,700,000 mortgage for a property in
North  Carolina  which is due in December  2004. The Company has an agreement to
sell  the  property.  The  sale  will  generate  sufficient  cash to  repay  the
$1,700,000.

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 filing 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



                                       17
<PAGE>

expectations generally, and also may materially differ from the Company'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.  The Company has attempted to identify,  in
context,  certain of the factors  that they  currently  believe may cause actual
future experience and results to differ from the Company'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 the Company's Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q.


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Nearly  all of the  Company's  debt is  financed  at fixed  rates  of  interest.
Therefore  the  Company has  minimal  risk from  exposure to changes in interest
rates.


ITEM 4: CONTROLS AND PROCEDURES

The Company  maintains a set of disclosure  controls and procedures and internal
controls  designed to ensure that  information  required to be  disclosed in the
Company's  filings  under  the  Securities  Exchange  Act of 1934  is  recorded,
processed,  summarized  and  reported  within the time period  specified  in the
Securities and Exchange  Commission rules and forms. Our principal executive and
financial officer has evaluated our disclosure control procedures within 90 days
prior to the filing of this  Quarterly  report on Form 10-Q and have  determined
that such disclosure controls and procedures are effective.

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












                                       18
<PAGE>

                           PART II: OTHER INFORMATION


ITEMS 1-6:  ARE NOT APPLICABLE.


EXHIBITS

Exhibit  31.1 -  Certification  of  Chief  Executive  Officer  Pursuant  to Rule
13a-14(a) or Rule 15d-14(a)
Exhibit  31.2 -  Certification  of  Chief  Financial  Officer  Pursuant  to Rule
13a-14(a) or Rule 15d-14(a)
Exhibit  32.1 -  Certification  of  Chief  Executive  Officer  Pursuant  to Rule
13a-14(b),  18 U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Exhibit  32.2 -  Certification  of  Chief  Financial  Officer  Pursuant  to Rule
13a-14(b),  18 U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002


SIGNATURES

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


                                                         Greenbriar Corporation


Date: November 15, 2004                               By: /s/ Gene S. Bertcher
                                                         -----------------------
                                                         President
                                                         Chief Financial Officer




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>green10qex311093004.txt
<DESCRIPTION>CERTIFICATION OF CEO UNDER SECTION 302
<TEXT>

Exhibit 31.1


Certification  of Chief  Executive  Officer  Pursuant to Rule  13a-14(a) or Rule
lSd-14(a)

I, Ronald C. Finley, Chief Executive Officer of Greenbriar Corporation,  certify
that:

1. I have reviewed this quarterly report on Form 10-Q of Greenbriar  Corporation
("Registrant");

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial condition,  results of operations,  and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15(d)-15(e) and internal control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f)  and  lSd-15(f)  for the
registrant and have:

a) designed such disclosure  controls and procedures,  or caused such disclosure
controls and  procedures  to be designed  under my  supervision,  to ensure that
material  information  relating to the  Registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this report is being prepared;

b) Designed  such  internal  control over  financial  reporting,  or caused such
internal  control over financial  reporting to be designed under my supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles;

c) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures and presented in this report our conclusions  about the effectiveness
of the  controls  and  procedures,  as of the end of the period  covered by this
report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over
financial  reporting that occurred  during the  registrant's  most recent fiscal
quarter that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
Registrant's  auditors  and the audit  committee  of the  Registrant's  board of
directors:

a) all  significant  deficiencies  and  material  weaknesses  in the  design  or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  Registrant's  ability  to  record,  process,
summarize and report financial data; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the Registrant's internal controls; and


                                          /S/  Ronald C. Finley
                                         -----------------------
                                         Ronald C. Finley
                                         Chief Executive Officer
                                         November 15, 2004




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>green10qex312093004.txt
<DESCRIPTION>CERTIFICATION OF CFO UNDER SECTION 302
<TEXT>

Exhibit 31.2


Certification  of Chief  Financial  Officer  Pursuant to Rule  13a-14(a) or Rule
lSd-14(a)

I, Gene S. Bertcher, Chief Financial Officer of Greenbriar Corporation,  certify
that:

1. I have reviewed this quarterly report on Form 10-Q of Greenbriar  Corporation
("Registrant");

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial condition,  results of operations,  and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15(d)-15(e) and internal control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f)  and  lSd-15(f)  for the
registrant and have:

a) designed such disclosure  controls and procedures,  or caused such disclosure
controls and  procedures  to be designed  under my  supervision,  to ensure that
material  information  relating to the  Registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this report is being prepared;

b) Designed  such  internal  control over  financial  reporting,  or caused such
internal  control over financial  reporting to be designed under my supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles;

c) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures and presented in this report our conclusions  about the effectiveness
of the  controls  and  procedures,  as of the end of the period  covered by this
report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over
financial  reporting that occurred  during the  registrant's  most recent fiscal
quarter that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
Registrant's  auditors  and the audit  committee  of the  Registrant's  board of
directors:

a) all  significant  deficiencies  and  material  weaknesses  in the  design  or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  Registrant's  ability  to  record,  process,
summarize and report financial data; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the Registrant's internal controls; and


                                          /S/ Gene S. Bertcher
                                         -----------------------
                                         Gene S. Bertcher
                                         Chief Financial Officer
November 15, 2004





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>green10qex321093004.txt
<DESCRIPTION>CERTIFICATION OF CEO UNDER SECTION 906
<TEXT>

EXHIBIT 32.1


Certification of Chief Executive  Officer Pursuant to Rule 13a-14(b),  18 U.S.C.
Section 1350, as Adopted  Pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002

In connection with the filing by Greenbriar  Corporation  (the "Company") of the
Quarterly  Report on Form 10-Q for the period  ending  September  30,  2003 (the
Report), I, Ronald C. Finley,  Chief Executive Officer of the Company,  certify,
pursuant  to 18  U.S.C.  1350,  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the  requirements of section 13(a) and 5(d) of
the Securities Exchange Act of 1934, and

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



                                          /S/   Ronald C. Finley
                                         -----------------------
                                         Ronald C. Finley
                                         Chief Executive Officer
                                         November 15, 2004






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>green10qex322093004.txt
<DESCRIPTION>CERTIFICATION OF CFO UNDER SECTION 906
<TEXT>

EXHIBIT 32.2


Certification of Chief Financial  Officer Pursuant to Rule 13a-14(b),  18 U.S.C.
Section 1350, as Adopted  Pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002

In connection with the filing by Greenbriar  Corporation  (the "Company") of the
Quarterly  Report on Form 10-Q for the period  ending  September  30,  2003 (the
Report), I, Gene S. Bertcher,  Chief Financial Officer of the Company,  certify,
pursuant  to 18  U.S.C.  1350,  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the  requirements of section 13(a) and 5(d) of
the Securities Exchange Act of 1934, and

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



                                          /S/  Gene S. Bertcher
                                         -----------------------
                                         Gene S. Bertcher
                                         Chief Financial Officer
                                         November 15, 2004






</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
