Critical Accounting Policies and Estimates

The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain of the Company's accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments and estimates are based upon the Company's historical experience, current trends and information available from other sources that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company's significant accounting policies are summarized in Note B to our consolidated financial statements in our annual report on Form 10-K. The Company believes the following critical accounting policies are more significant to the judgments and estimates used in the preparation of its consolidated financial statements. Revisions in such estimates are recorded in the period in which the facts that give rise to the revisions become known.

Oil and Gas Property Accounting

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.

The full cost method requires the Company to calculate quarterly, by cost center, a "ceiling," or limitation on the amount of properties that can be capitalized on the balance sheet. To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.

The standardized measure of discounted future net cash flows and changes in such cash flows are prepared using assumptions required by the Financial Accounting Standards Board and the Securities and Exchange Commission. Such assumptions include a standardized method for determining pricing and require that future cash flow be discounted using a 10% rate. The valuation that results may not represent management's estimated current market value of proved reserves.

Doubtful Accounts

The Company's allowance for doubtful accounts receivable and notes receivable is based on an analysis of the risk of loss on specific accounts. The analysis places particular emphasis on past due accounts. Management considers such information as the nature and age of the receivable, the payment history of the tenant, customer or other debtor and the financial condition of the tenant or other debtor. Management's estimate of the required allowance, which is reviewed on a quarterly basis, is subject to revision as these factors change.

Deferred Tax Assets

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The future recoverability of the Company's net deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of the loss carry forwards. At March 31, 2012, the Company had a deferred tax asset due to tax deductions available to it in future years. However, as management could not determine that it was more likely than not that the benefit of the deferred tax asset would be realized, a 100% valuation allowance was established.

Liquidity and Capital Resources

At March 31, 2012, the Company had current assets of $316,000 and current liabilities of $779,000.

Cash and cash equivalents at March 31, 2012 were $123,000 as compared to $109,000 at December 31, 2011.

Net cash used in operating activities was ($8,000) for the three months ended March 31, 2012. During the three-month period, the Company had a net loss of $1,267,000. Included in the net loss was an impairment loss of $912,000 to reflect a reduction in the accounting value of the Company's oil and gas reserves.

Net cash used in investing activities was $8,000 for the three months ended March 31, 2012, consisting of the purchase of equipment and other capitalized drilling costs at the Company's oil and gas production facility.

Net cash provided in financing activities was $30,000 for the three months ended March 31, 2012, consisting of a net increase in loans from a bank.

Results of Operations

The Company reported a net loss of $1,267,000 for three months ended March 31, 2012, as compared to net income of $97,000 for the similar period in 2011.

For the three months ended March 31, 2012, the Company recorded oil and gas revenues of $290,000 as compared to $280,000 for the comparable period of 2011. The changes in oil & gas revenue was due to an increase of approximately $70,000 due to new oil wells that were drilled in late 2011 and a decrease of approximately $60,000 due to lower prices being received for the sale of our natural gas.

The Company recorded revenues of $674,000 for the three months ended March 31, 2012 from its retirement property compared to $729,000 for the comparable period in 2011. The decrease was due almost entirely to a reduction in the number of residence in the facility.

For the three months ended March 31, 2012, the Company recorded oil and gas operating expenses of $471,000 as compared to $335,000 for the comparable period of 2011. The increase was principally due to an increase in depletion expense. The marked decrease in the market price being paid for natural gas resulted in a modification in the valuation the company placed on its gas reserves which impacted the anticipated production life of its wells. This lead to an acceleration of the depletion expense being recorded.

For the three months ended March 31, 2012, operating expenses and lease expense at the retirement property were $597,000 as compared to $581,000 for the comparable period in 2011. The increase was due to an increase in the lease payment being recorded on the property of $40,000 offset by a general reduction in operating costs.

For the three months ended March 31, 2012, corporate general & administrative expenses were $159,000 as compared to $124,000 for the comparable periods in 2011. The increase is primarily due to legal fees incurred by the company to defend itself against certain lawsuits.

For the three months ended March 31, 2012, interest income was $0 as compared to $119,000 for the comparable period in 2011. In December 2011 the Company became concerned about the collectability of a certain note receivable and determined that the note and any accrued interest be fully reserved. The company continues to accrue interest but provides a full reserve should it be unable to collect.

For the three months ended March 31, 2012 the Company recorded interest expense of $62,000 as compared to $31,000 for the comparable periods in 2011. The increase is due to additional interest due on financing obtained in late 2011. The proceeds were used to drill wells.

The Company recorded other expense of $4,000 for the three months ended March 31, 2012. In 2011 other expense was $72,000 for the comparable period. The expense in 2011 was the result of a one-time legal settlement for $71,000 that was not anticipated.

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 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, the 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 properties 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 charges in its retirement community. The Company has attempted to identify, in context, certain of the factors that it currently believes 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.

Inflation

The Company's principal source of revenue is rents from a retirement community and fees for services rendered. The real estate operation is affected by rental rates that are highly dependent upon market conditions and the competitive environment in the areas where the property is located. Compensation to employees and maintenance are the principal cost elements relative to the operation of this property. Although the Company has not historically experienced any adverse effects of inflation on salaries or other operating expenses, there can be no assurance that such trends will continue or that, should inflationary pressures arise, the Company will be able to offset such costs by increasing rental rates in its real estate operation.

Environmental Matters

The Company has conducted environmental assessments on most of its existing owned or leased properties. These assessments have not revealed any environmental liability that the Company believes would have a material adverse affect on the Company's business, assets or results of operations. The Company is not aware of any such environmental liability. The Company believes that all of its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products. The Company has not been notified by any governmental authority and is not otherwise aware of any material non-compliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of its communities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate 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

(a) Based on an evaluation by our management (with the participation of our Principal Executive Officer and Principal Financial Officer), as of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.

(b) There has been no change in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 6. Exhibits

The following exhibits are filed herewith or incorporated by reference as
indicated below.
  Exhibit
Designation                     Exhibit Description

    3.1     Articles of Incorporation of Medical Resource Companies of
            America (incorporated by reference to Exhibit 3.1 to
            Registrant's Form S-4 Registration Statement No. 333-55968
            dated December 21, 1992)

    3.2     Amendment to the Articles of Incorporation of Medical
            Resource Companies of America (incorporated by reference to
            Exhibit 3.5 to Registrant's Form 8-K dated April 1, 1993)

    3.3     Restated Articles of Incorporation of Greenbriar Corporation
            (incorporated by reference to Exhibit 3.1.1 to Registrant's
            Form 10-K dated December 31, 1995)

    3.4     Amendment to the Articles of Incorporation of Medical
            Resource Companies of America (incorporated by reference to
            Exhibit to Registrant's PRES 14-C dated February 27, 1996)

    3.5     Bylaws of Registrant (incorporated by reference to Exhibit
            3.2 to Registrant's Form S-4 Registration Statement No.
            333-55968 dated December 21, 1992)

    3.6     Amendment to Section 3.1 of Bylaws of Registrant adopted
            October 9, 2003 (incorporated by reference to Exhibit 3.2.1
            to Registrant's Form S-4 Registration Statement No.
            333-55968 dated December 21, 1992)

    3.7     Certificate of Decrease in Authorized and Issued Shares
            effective November 30, 2001 (incorporated by reference to
            Exhibit 2.1.7 to Registrant's Form 10-K dated December 31,
            2002)

    3.8     Certificate of Designations, Preferences and Rights of
            Preferred Stock dated May 7, 1993 relating to Registrant's
            Series B Preferred Stock (incorporated by reference to
            Exhibit 4.1.2 to Registrant's Form S-3 Registration
            Statement No. 333-64840 dated June 22, 1993)

    3.9     Certificate of Voting Powers, Designations, Preferences and
            Rights of Registrant's Series F Senior Convertible Preferred
            Stock dated December 31, 1997 (incorporated by reference to
            Exhibit 2.2.2 of Registrant's Form 10-KSB for the fiscal
            year ended December 31, 1997)

   3.10     Certificate of Voting Powers, Designations, Preferences and
            Rights of Registrant's Series G Senior Non-Voting
            Convertible Preferred Stock dated December 31, 1997
            (incorporated by reference to Exhibit 2.2.3 of Registrant's
            Form 10-KSB for the fiscal year ended December 31, 1997)

   3.11     Certificate of Designations dated October 12, 2004 as filed
            with the Secretary of State of Nevada on October 13, 2004
            (incorporated by reference to Exhibit 3.4 of Registrant's
            Current Report on Form 8-K for event occurring October 12,
            2004)

   3.12     Certificate of Amendment to Articles of Incorporation
            effective February 8, 2005 (incorporated by reference to
            Exhibit 3.5 of Registrant's Current Report on Form 8-K for
            event occurring February 8, 2005)

   3.13     Certificate of Amendment to Articles of Incorporation
            effective March 21, 2007 (incorporated by reference to
            Exhibit 3.13 of Registrant's Current Report on Form 8-K for
            event occurring March 21, 2005)

   31.1*    Certification pursuant to Rule 13a-14 and 15d-14 under the
            Securities Exchange Act of 1934, as amended, of Principal
            Executive Officer and Chief Financial Officer

   32.1*    Certification of Principal Executive Officer and Chief
            Financial Officer pursuant to 18 U.S.C. §1350

   101      Interactive data files pursuant to Rule 405 of Regulation
            S-T.

*Filed herewith.

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 the undersigned, thereunto duly authorized.

Date: May 15, 2012 By: /s/ Gene Bertcher Gene S. Bertcher, Principal Executive Officer, President and Chief Financial Officer