##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q/A
 (Amendment No. 1)
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from
 Commission File Number: 000-54064
 
 UNIVERSITY GENERAL HEALTH SYSTEM, INC.
 
 Nevada
    
    71-0822436(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)7501 Fannin Street, Houston, Texas
    
    77054(Address of principal executive offices)
    
    (Zip Code)
 (713) 375-7100
 SeaBridge Freight Corp.
 þ o
 o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller Reporting company)
 o þ




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##### Table of Contents



UNIVERSITY GENERAL HEALTH SYSTEM, INC.
Form 10-Q/A
(Amendment No. 1)
For the Quarterly Period Ended March 31, 2011
 EXPLANATORY NOTE




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##### 



UNIVERSITY GENERAL HEALTH SYSTEM, INC.
Table of Contents
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited) (Restated)
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    35Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    51Item 4 Controls and Procedures
    
    
    51PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    52Item 1A. Risk Factors
    
    
    53Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    64Item 3. Defaults Upon Senior Securities
    
    
    64Item 4. (Removed and Reserved)
    
    
    64Item 5. Other Information
    
    
    64Item 6. Exhibits
    
    
    65SIGNATURES
    
    
    67Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 PAGEConsolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010 (Restated)
    
    
    4Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010 (Unaudited) (Restated)
    
    
    5Consolidated Statement of Shareholders Equity (Deficit) for the three months ended March 31, 2011 and 2010
(Unaudited) (Restated)
    
    
    6Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (Unaudited) (Restated)
    
    
    7Notes to Consolidated Financial Statements (Unaudited) (Restated)
    
    
    8
  3




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##### Table of Contents



UNIVERSITY GENERAL HEALTH SYSTEM, INC.
 
 Consolidated Balance Sheets
 (Restated)
    
    
    (Restated)March 31,
    
    
    December 31,2011
    
    
    2010(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    124,934
    
    
    $
    2,291,754Accounts receivables, net
    
    
    12,453,201
    
    
    
    11,812,184Inventories
    
    
    1,914,183
    
    
    
    1,765,735Receivables from related parties
    
    
    699,059
    
    
    
    633,678Prepaid expenses and other assets
    
    
    139,857
    
    
    
    52,790Total current assets
    
    
    15,331,234
    
    
    
    16,556,141Property and equipment, net
    
    
    51,638,289
    
    
    
    53,224,152Other assets
    
    
    276,133
    
    
    
    266,603Total assets
    
    $
    67,245,656
    
    
    $
    70,046,896LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    13,374,154
    
    
    $
    14,823,508Payables to related parties
    
    
    1,849,659
    
    
    
    4,714,951Accrued expenses
    
    
    7,205,674
    
    
    
    7,984,109Payable to Internal Revenue Service
    
    
    3,390,509
    
    
    
    5,436,041Lines of credit
    
    
    8,450,000
    
    
    
    Notes payable, current portion
    
    
    11,834,962
    
    
    
    8,321,298Notes payable to related parties, current portion
    
    
    2,321,858
    
    
    
    4,027,650Capital lease obligations, current portion
    
    
    8,129,626
    
    
    
    11,591,999Capital lease obligation to related party, current portion
    
    
    174,347
    
    
    
    137,076Total current liabilities
    
    
    56,730,789
    
    
    
    57,036,632Lines of credit
    
    
    
    
    
    
    8,450,000Notes payable, less current portion
    
    
    181,716
    
    
    
    5,487,939Notes payable to related parties, less current portion
    
    
    2,344,887
    
    
    
    2,087,241Capital lease obligations, less current portion
    
    
    466,949
    
    
    
    532,805Capital lease obligation payable to related party, less current portion
    
    
    30,981,663
    
    
    
    31,042,859Total liabilities
    
    
    90,706,004
    
    
    
    104,637,476Commitments and contingencies
    
    
    
    
    
    
    Shareholders equityPreferred stock, $0.001 par value, 20,000,000 shares authorized,
3,000 shares issued and outstanding
    
    
    3
    
    
    
    3Common stock, $0.001 par value, 480,000,000 shares authorized;
253,000,000 and 151,498,884 shares issued and outstanding at March
31, 2011 and December 31, 2010, respectively
    
    
    253,000
    
    
    
    151,499Additional paid in capital
    
    
    25,668,249
    
    
    
    12,069,750Shareholders receivables
    
    
    (2,130,000
    )
    
    
    Accumulated deficit
    
    
    (47,251,600
    )
    
    
    (46,811,832
    )Total shareholders equity
    
    
    (23,460,348
    )
    
    
    (34,590,580
    )Total liabilities and shareholders equity
    
    $
    67,245,656
    
    
    $
    70,046,896
   4




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##### Table of Contents



UNIVERSITY GENERAL HEALTH SYSTEM, INC.
 
 Consolidated Statements of Operations
 Three Months EndedMarch 31,2011
    
    
    2010(Restated)
    
    
    (Restated)RevenuesNet patient service revenues, net of contractual adjustments
    
    $
    15,734,036
    
    
    $
    10,579,729Other revenues
    
    
    5,982
    
    
    
    26,193Total revenues
    
    
    15,740,018
    
    
    
    10,605,922Operating expensesSalaries, benefits, and other employee costs
    
    
    6,134,717
    
    
    
    4,351,292Medical supplies
    
    
    3,160,635
    
    
    
    2,765,561Management fees
    
    
    1,389,655
    
    
    
    473,826General and administrative expenses
    
    
    3,484,039
    
    
    
    2,820,210Bad debt expense
    
    
    290,803
    
    
    
    844,048Gain on extinguishment of liabilities
    
    
    (1,303,366
    )
    
    
    (987,159
    )Depreciation and amortization
    
    
    1,762,607
    
    
    
    1,742,290Total operating expenses
    
    
    14,919,090
    
    
    
    12,010,068Operating income (loss)
    
    
    820,928
    
    
    
    (1,404,146
    )Interest expense
    
    
    (1,179,696
    )
    
    
    (1,428,401
    )Loss before income tax
    
    
    (358,768
    )
    
    
    (2,832,547
    )State income tax expense (benefit)
    
    
    81,000
    
    
    
    115,000Net loss
    
    $
    (439,768
    )
    
    $
    (2,947,547
    )Net loss per common share  basic and dilutedNet loss per common share
    
    $
    
    
    
    $
    (0.03
    )Weighted average shares outstanding
    
    
    174,728,566
    
    
    
    91,132,160
   5




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##### Table of Contents



UNIVERSITY GENERAL HEALTH SYSTEM, INC.
 
 Consolidated Statements of Shareholders Equity (Deficit)
 Additional
    
    
    
    
    
    
    
    
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    Shareholders
    
    
    Accumulated
    
    
    ShareholdersShares
    
    
    Par Value
    
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Receivable
    
    
    Deficit
    
    
    EquityBalance, December
31, 2010, Restated
    
    
    3,000
    
    
    $
    3
    
    
    
    151,498,884
    
    
    $
    151,499
    
    
    $
    12,069,750
    
    
    $
    
    
    
    $
    (46,811,832
    )
    
    $
    (34,590,580
    )Redemption of
common stock
on January 2011
    
    
    
    
    
    
    
    
    
    
    (173,632
    )
    
    
    (174
    )
    
    
    (49,826
    )
    
    
    
    
    
    
    
    
    
    
    (50,000
    )Issuance of common
stock
on February 2011
    
    
    
    
    
    
    
    
    
    
    56,388,831
    
    
    
    56,389
    
    
    
    7,193,611
    
    
    
    (130,000
    )
    
    
    
    
    
    
    7,120,000Issuance of common
stock
on February 2011
    
    
    
    
    
    
    
    
    
    
    22,040,000
    
    
    
    22,040
    
    
    
    1,977,960
    
    
    
    (2,000,000
    )
    
    
    
    
    
    
    Exchange of debt
for common stock
on February 2011
    
    
    
    
    
    
    
    
    
    
    40,600,587
    
    
    
    40,601
    
    
    
    3,459,399
    
    
    
    
    
    
    
    
    
    
    
    3,500,000Issuance of common
stock to affiliate
for
termination of
service
agreement
    
    
    
    
    
    
    
    
    
    
    11,600,000
    
    
    
    11,600
    
    
    
    988,400
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Exchange of profit
interest for common
stock
on February 2011
    
    
    
    
    
    
    
    
    
    
    2,204,000
    
    
    
    2,204
    
    
    
    (2,204
    )
    
    
    
    
    
    
    
    
    
    
    Effect of reverse
merger
    
    
    
    
    
    
    
    
    
    
    (31,158,670
    )
    
    
    (31,159
    )
    
    
    31,159
    
    
    
    
    
    
    
    
    
    
    
    Net loss  March
31, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (439,768
    )
    
    
    (439,768
    )March 31, 2011,
Restated
    
    
    3,000
    
    
    $
    3
    
    
    
    253,000,000
    
    
    $
    253,000
    
    
    $
    25,668,249
    
    
    $
    (2,130,000
    )
    
    $
    (47,251,600
    )
    
    $
    (23,460,348
    )
   6




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##### Table of Contents



UNIVERSITY GENERAL HEALTH SYSTEM, INC.
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010(Restated)
    
    
    (Restated)Operating activitiesNet loss
    
    $
    (439,768
    )
    
    $
    (2,947,547
    )Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Bad debt expense
    
    
    290,803
    
    
    
    844,048Depreciation and amortization
    
    
    1,762,607
    
    
    
    1,742,290Gain on issuance of common stock to affiliate for termination of service agreement
    
    
    (1,303,366
    )
    
    
    (987,159
    )Net changes in other operating assets and liabilities:Accounts receivable
    
    
    (931,820
    )
    
    
    1,892,166Related party receivables and payables
    
    
    (387,673
    )
    
    
    (2,665,213
    )Inventories
    
    
    (148,448
    )
    
    
    42,656Prepaid expenses and other assets
    
    
    (96,597
    )
    
    
    (42,227
    )Accounts payable, accrued expenses and payable to Internal Revenue Service
    
    
    (3,772,955
    )
    
    
    2,883,203Net cash (used in) provided by operating activities
    
    
    (5,027,217
    )
    
    
    762,217Investing activitiesPurchase of property and equipment
    
    
    (176,744
    )
    
    
    (11,507
    )Net cash used in investing activities
    
    
    (176,744
    )
    
    
    (11,507
    )Financing activitiesRedemption of common stock
    
    
    (50,000
    )
    
    
    Issuance of common stock
    
    
    7,120,000
    
    
    
    Payments on notes payable
    
    
    (1,752,559
    )
    
    
    Borrowings under notes payable to related party
    
    
    2,953,500
    
    
    
    1,018,000Payments on notes payable to related party
    
    
    (1,681,646
    )
    
    
    (1,244,383
    )Payments on capital lease obligation
    
    
    (3,528,229
    )
    
    
    (371,995
    )Payments on capital lease obligation to related party
    
    
    (23,925
    )
    
    
    (22,854
    )Net cash provided by (used in) financing activities
    
    
    3,037,141
    
    
    
    (621,232
    )Net (decrease) increase in cash and cash equivalents
    
    
    (2,166,820
    )
    
    
    129,478Cash and cash equivalents at beginning of period
    
    
    2,291,754
    
    
    
    1,640Cash and cash equivalents at end of period
    
    $
    124,934
    
    
    $
    131,118Supplemental disclosure of cash flow informationInterest paid
    
    $
    268,426
    
    
    $
    377,756Taxes paid
    
    $
    3,244,931
    
    
    $
    626,444Supplemental noncash financing activitiesReduction of property and equipment and accounts payable
    
    $
    
    
    
    $
    375,000Exchange of debt for common stock in February 2011
    
    $
    3,500,000
    
    
    $
    Issuance of common stock in February 2011
    
    $
    2,130,000
    
    
    $
    Issuance of common stock to affiliate for termination of service agreement
    
    $
    1,000,000
    
    
    $
    
   7




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
 
 Notes to the Consolidated Financial Statements (unaudited) (Restated)
        8




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
     Basis of Presentation
     9




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  March 31,
    
    
    December 31,2011
    
    
    2010Commercial and managed care providers
    
    
    65
    %
    
    
    67
    %Government-related programs
    
    
    33
    %
    
    
    31
    %Self-pay patients
    
    
    2
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
   10




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Related Parties Receivables
  Inventories
  Property and Equipment
  Estimated Lifein YearsBuildings
    
    40Machinery and Equipment
    
    3 to 15Leasehold improvement
    
    5 to 30Computer equipment and software
    
    5
 Impairment of Long-lived Assets
   11




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Fair Value Measurements
   Revenue Recognition
    Concentration of Credit Risk
   12




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Income Taxes
   Earnings (Losses) Per Share Information
  Segment Information
   13




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Commitments and Contingencies
   Subsequent Events
  Recent Accounting Pronouncements
   14




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
        March 31,
    
    
    December 31,2011
    
    
    2010Buildings
    
    $
    27,406,478
    
    
    $
    27,406,478Machinery and equipment
    
    
    29,592,665
    
    
    
    29,439,203Leasehold improvement
    
    
    21,353,505
    
    
    
    21,348,505Computer equipment and software
    
    
    3,511,547
    
    
    
    3,493,26581,864,195
    
    
    
    81,687,451Less accumulated depreciation and amortization
    
    
    (30,225,906
    )
    
    
    (28,463,299
    )$
    51,638,289
    
    
    $
    53,224,152
  15




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Lines of Credit
    Notes Payable
  March 31,
    
    
    December 31,2011
    
    
    2010Note payable to a financial institution due January 15, 2012, monthly principal
payments of $150,000 for January 2011 to June 2011, and $200,000 for July 2011
to January 2012 with interest at 6%
    
    $
    6,750,000
    
    
    $
    7,200,000Notes payable to a financial institution guaranteed by shareholders, due April 4, 2011,
interest at 7%
    
    
    1,629,925
    
    
    
    2,561,623Note payable to a financial institution due on demand, with interest at prime (3.25%
at March 31, 2010 and December 31, 2010)
    
    
    982,079
    
    
    
    982,079Notes payable to a financial institution due on September 30, 2009, with interest at
LIBOR
plus 2.25% (5.25% at March 31, 2011 and December 31, 2010)
    
    
    1,453,467
    
    
    
    1,604,063Note payable to individuals due on demand, interest at 15%
    
    
    180,000
    
    
    
    300,000Notes payable to Medicare, interest at 11% due October 1, 2013
    
    
    468,791
    
    
    
    507,295Notes payable due on demand guaranteed by shareholders, with 0% - 6.25% interest
    
    
    292,416
    
    
    
    403,482Non-interest bearing note payable due on demand to a shareholder.Note was paid in full in January, 2011
    
    
    
    
    
    
    250,695Non-interest bearing note payable to an individual due March 31, 2012
    
    
    260,000
    
    
    
    Total debt
    
    
    12,016,678
    
    
    
    13,809,237Less: current portion
    
    
    (11,834,962
    )
    
    
    (8,321,298
    )Total debt, less current portion
    
    $
    181,716
    
    
    $
    5,487,939
  16




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
       Year ending March 31,Fiscal 2012
    
    $
    11,834,962Fiscal 2013
    
    
    181,716Thereafter
    
    
    Total
    
    $
    12,016,678
   17




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Capital Leases
  Related Party
    
    
    Third PartyLease
    
    
    Leases
    
    
    Total2012
    
    $
    1,688,469
    
    
    $
    8,935,254
    
    
    $
    10,623,7232013
    
    
    2,323,333
    
    
    
    221,937
    
    
    
    2,545,2702014
    
    
    2,323,333
    
    
    
    53,472
    
    
    
    2,376,8052015
    
    
    2,323,333
    
    
    
    
    
    
    
    2,323,3332016
    
    
    2,323,333
    
    
    
    
    
    
    
    2,323,333Thereafter
    
    
    57,212,744
    
    
    
    
    
    
    
    57,212,744Total minimum lease payments
    
    
    68,194,545
    
    
    
    9,210,663
    
    
    
    77,405,208Less amounts representing interest
    
    
    (37,038,535
    )
    
    
    (614,088
    )
    
    
    (37,652,623
    )Present value of minimum lease payments
    
    
    31,156,010
    
    
    
    8,596,575
    
    
    
    39,752,585Less: current portion
    
    
    (174,347
    )
    
    
    (8,129,626
    )
    
    
    (8,303,973
    )Long term portion
    
    $
    30,981,663
    
    
    $
    466,949
    
    
    $
    31,448,612
    18




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Litigation
  Prexus
   Siemens
      19




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Internal Revenue Service Audit
  Employee Benefit Plans
  Operating Leases
   Management Service Agreements
 Kingwood Neighborhood Emergency Center
       20




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Common Stock Offerings
    Debt Exchange Agreements
  Issuance of Common Stock to Affiliate for Termination of Service Agreement
   21




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
   Exchange of Profit Interest for Common stock
       22




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Related Party Capital Lease Obligation
    Management Services Agreements
    Food services, Plant Operations & Management, Environmental, and Other Services Agreement
   23




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
    Other Related Party Transactions
     Receivables from Related Parties
  March 31,
    
    
    December 31,2011
    
    
    2010Receivable from former executive of UGH GP
    
    $
    438,820
    
    
    $
    438,820Receivable from Chief Executive Officer
    
    
    
    
    
    
    24,518Receivable from Cambridge
    
    
    234,598
    
    
    
    170,340Receivable from other related parties
    
    
    25,641
    
    
    
    $
    699,059
    
    
    $
    633,678
  24




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Payables to Related Parties
  March 31,
    
    
    December 31,2011
    
    
    2010Payable to APS
    
    $
    
    
    
    $
    2,649,711Payable to ASA
    
    
    110,098
    
    
    
    332,074Payable to USS
    
    
    17,018
    
    
    
    16,843Payable to Autimis
    
    
    32,800
    
    
    
    27,800Payable to Sigma
    
    
    15,575
    
    
    
    39,446Payable to Chief Executive Officer
    
    
    
    
    
    
    Interest on notes payable to shareholders
    
    
    1,315,063
    
    
    
    1,248,118Payable to SYBARIS
    
    
    359,105
    
    
    
    364,725Payable to other related party entities
    
    
    
    
    
    
    36,234$
    1,849,659
    
    
    $
    4,714,951
 Notes Payable to Related Parties
  March 31,
    
    
    December 31,2011
    
    
    2010UGH GP note payable to a shareholder, payable on demand, bearing interest at 10%
    
    $
    1,923,000
    
    
    $
    1,923,000UGH LP subordinated promissory notes payable to shareholders, payable in 2028,
bearing interest at 15%
    
    
    700,000
    
    
    
    800,000UGH LP non-interest bearing notes payable to shareholders, payable on demand
    
    
    343,750
    
    
    
    482,461UGH LP note payable to a shareholder, payable in $20,000 monthly installments
through 2017, interest imputed at 2.88%, with a discount of $135,113 and
$152,984 at March 31, 2011 and December 31, 2010, respectively, and principal
owed of $1,580,000 and $1,640,000 at March 31, 2011 and December 31, 2010,
respectively
    
    
    1,444,886
    
    
    
    1,487,016UGH LP various notes payable to shareholders, payable on demand, bearing
interest at 4.25% - 10%
    
    
    255,109
    
    
    
    1,422,414Total notes payable to related parties
    
    
    4,666,745
    
    
    
    6,114,891Less: current portion
    
    
    (2,321,858
    )
    
    
    (4,027,650
    )Notes payable to related parties, less current portion
    
    $
    2,344,887
    
    
    $
    2,087,241
  25




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
   Year ending March 31,2012
    
    $
    2,321,8582013
    
    
    391,9652014
    
    
    317,1662015
    
    
    222,4962016
    
    
    227,955Thereafter
    
    
    1,185,305Total
    
    $
    4,666,745
 Related Party Costs and Expenses
  Three Months Ended March 31,2011
    
    
    2010Interest expense
    
    $
    653,888
    
    
    $
    664,427Management fees
    
    
    461,814
    
    
    
    474,000General and administrative
    
    
    1,699,635
    
    
    
    1,229,637Amortization expense
    
    
    171,290
    
    
    
    171,290$
    2,986,627
    
    
    $
    2,539,354
     26




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Restatement Impact on Statements of Operations  Three Months Ended March 31, 2011 and 2010
  Three Months Ended
    
    
    Three Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010As initially reported
    
    
    Adjustment
    
    
    As adjustedRevenues
    
    $
    15,740,108
    
    
    $
    10,605,922
    
    
    $
    (90
    )
    
    $
    
    
    
    $
    15,740,018
    
    
    $
    10,605,922Operating expensesSalaries, benefits, and other
employee costs
    
    
    6,144,544
    
    
    
    4,351,292
    
    
    
    (9,827
    )
    
    
    
    
    
    
    6,134,717
    
    
    
    4,351,292Medical supplies
    
    
    3,107,249
    
    
    
    2,765,561
    
    
    
    53,386
    
    
    
    
    
    
    
    3,160,635
    
    
    
    2,765,561Other operating expenses
    
    
    1,196,373
    
    
    
    592,097
    
    
    
    (1,196,373
    )
    
    
    (592,097
    )
    
    
    
    
    
    
    Management fees
    
    
    
    
    
    
    
    
    
    
    1,389,655
    
    
    
    473,826
    
    
    
    1,389,655
    
    
    
    473,826General and administrative expenses
    
    
    3,356,998
    
    
    
    2,783,124
    
    
    
    127,041
    
    
    
    37,086
    
    
    
    3,484,039
    
    
    
    2,820,210Bad debt expense
    
    
    290,803
    
    
    
    1,103,232
    
    
    
    
    
    
    
    (259,184
    )
    
    
    290,803
    
    
    
    844,048Gain on extinguishment of liabilities
    
    
    
    
    
    
    
    
    
    
    (1,303,366
    )
    
    
    (987,159
    )
    
    
    (1,303,366
    )
    
    
    (987,159
    )Depreciation and amortization
    
    
    1,760,248
    
    
    
    1,738,757
    
    
    
    2,359
    
    
    
    3,533
    
    
    
    1,762,607
    
    
    
    1,742,290Total operating expenses
    
    
    15,856,215
    
    
    
    13,334,063
    
    
    
    (937,125
    )
    
    
    (1,323,995
    )
    
    
    14,919,090
    
    
    
    12,010,068Operating income (loss)
    
    
    (116,107
    )
    
    
    (2,728,141
    )
    
    
    937,035
    
    
    
    1,323,995
    
    
    
    820,928
    
    
    
    (1,404,146
    )Interest expense
    
    
    (1,111,921
    )
    
    
    (1,380,326
    )
    
    
    (67,775
    )
    
    
    (48,075
    )
    
    
    (1,179,696
    )
    
    
    (1,428,401
    )Other income, net
    
    
    726,721
    
    
    
    987,159
    
    
    
    (726,721
    )
    
    
    (987,159
    )
    
    
    
    
    
    
    Loss before income tax
    
    
    (501,307
    )
    
    
    (3,121,308
    )
    
    
    142,539
    
    
    
    288,761
    
    
    
    (358,768
    )
    
    
    (2,832,547
    )State income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    81,000
    
    
    
    115,000
    
    
    
    81,000
    
    
    
    115,000Net loss
    
    $
    (501,307
    )
    
    $
    (3,121,308
    )
    
    $
    61,539
    
    
    $
    173,761
    
    
    $
    (439,768
    )
    
    $
    (2,947,547
    )Net loss per common share  basic and
dilutedNet loss per common share
    
    $
    
    
    
    $
    (0.03
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (0.03
    )Weighted average shares outstanding
    
    
    174,728,566
    
    
    
    91,131,160
    
    
    
    
    
    
    
    1,000
    
    
    
    174,728,566
    
    
    
    91,132,160
  27




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Restatement
Balance Sheet Impact  March 31, 2011
   28




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  March 31, 2011As initially
    
    
    
    
    
    
    Asreported
    
    
    Adjustment
    
    
    restatedASSETSCurrent assetsCash and cash equivalents
    
    $
    86,645
    
    
    $
    38,289
    
    
    $
    124,934Accounts receivables, net
    
    
    11,300,768
    
    
    
    1,152,433
    
    
    
    12,453,201Inventories
    
    
    1,857,421
    
    
    
    56,762
    
    
    
    1,914,183Receivables from related parties
    
    
    
    
    
    
    699,059
    
    
    
    699,059Prepaid expenses and other assets
    
    
    139,857
    
    
    
    
    
    
    
    139,857Total current assets
    
    
    13,384,691
    
    
    
    1,946,543
    
    
    
    15,331,234Property and equipment, net
    
    
    51,712,566
    
    
    
    (74,277
    )
    
    
    51,638,289Receivables from related parties
    
    
    1,726,272
    
    
    
    (1,726,272
    )
    
    
    Other assets
    
    
    86,500
    
    
    
    189,633
    
    
    
    276,133Total assets
    
    $
    66,910,029
    
    
    $
    335,627
    
    
    $
    67,245,656LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    12,336,334
    
    
    $
    1,037,820
    
    
    $
    13,374,154Payables to related parties
    
    
    549,929
    
    
    
    1,299,730
    
    
    
    1,849,659Accrued expenses
    
    
    11,440,205
    
    
    
    (4,234,531
    )
    
    
    7,205,674Payable to Internal Revenue Service
    
    
    
    
    
    
    3,390,509
    
    
    
    3,390,509Lines of credit
    
    
    8,450,000
    
    
    
    
    
    
    
    8,450,000Notes payable, current portion
    
    
    16,016,165
    
    
    
    (4,181,203
    )
    
    
    11,834,962Notes payable to related parties, current portion
    
    
    
    
    
    
    2,321,858
    
    
    
    2,321,858Capital lease obligations, current portion
    
    
    7,580,441
    
    
    
    549,185
    
    
    
    8,129,626Capital lease obligation to related party, current portion
    
    
    
    
    
    
    174,347
    
    
    
    174,347Total current liabilities
    
    
    56,373,074
    
    
    
    (357,715
    )
    
    
    56,730,789Lines of credit
    
    
    
    
    
    
    
    
    
    
    Notes payable, less current portion
    
    
    749,791
    
    
    
    (568,075
    )
    
    
    181,716Notes payable to related parties, less current portion
    
    
    
    
    
    
    2,344,887
    
    
    
    2,344,887Capital lease obligations, less current portion
    
    
    31,112,801
    
    
    
    (30,645,852
    )
    
    
    466,949Capital lease obligation payable to related party, less current portion
    
    
    
    
    
    
    30,981,663
    
    
    
    30,981,663Total liabilities
    
    
    88,235,666
    
    
    
    2,470,338
    
    
    
    90,706,004Shareholders equityPreferred stock, $0.001 par value, 20,000,000 shares authorized,
3,000 shares issued and outstanding
    
    
    3
    
    
    
    
    
    
    
    3Common stock, $0.001 par value, 480,000,000 shares authorized;
253,000,000 and 120,340,214 shares issued and outstanding at March
31, 2011 and December 31, 2010, respectively
    
    
    253,000
    
    
    
    
    
    
    
    253,000Additional paid in capital
    
    
    26,718,247
    
    
    
    (1,049,998
    )
    
    
    25,668,249Shareholders receivables
    
    
    (2,130,000
    )
    
    
    
    
    
    
    (2,130,000
    )Accumulated deficit
    
    
    (46,166,887
    )
    
    
    (1,084,713
    )
    
    
    (47,251,600
    )Total shareholders equity
    
    
    (21,325,637
    )
    
    
    (2,134,711
    )
    
    
    (23,420,348
    )Total liabilities and shareholders equity
    
    $
    66,910,029
    
    
    $
    335,627
    
    
    $
    67,245,656
  29




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Restatement Balance Sheet Impact  December 31, 2010
   30




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  December 31, 2010As initially
    
    
    
    
    
    
    Asreported
    
    
    Adjustment
    
    
    restatedASSETSCurrent assetsCash and cash equivalents
    
    $
    2,246,774
    
    
    $
    44,980
    
    
    $
    2,291,754Accounts receivables, net
    
    
    10,718,443
    
    
    
    1,093,741
    
    
    
    11,812,184Inventories
    
    
    1,708,974
    
    
    
    56,761
    
    
    
    1,765,735Receivables from related parties
    
    
    
    
    
    
    633,678
    
    
    
    633,678Prepaid expenses and other assets
    
    
    52,790
    
    
    
    
    
    
    
    52,790Total current assets
    
    
    14,726,981
    
    
    
    1,829,160
    
    
    
    16,556,141Property and equipment, net
    
    
    53,296,070
    
    
    
    (71,918
    )
    
    
    53,224,152Receivables from related parties
    
    
    1,701,897
    
    
    
    (1,701,897
    )
    
    
    Other assets
    
    
    86,500
    
    
    
    180,103
    
    
    
    266,603Total assets
    
    $
    69,811,448
    
    
    $
    235,448
    
    
    $
    70,046,896LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    13,972,196
    
    
    $
    851,312
    
    
    $
    14,823,508Payables to related parties
    
    
    3,226,630
    
    
    
    1,488,321
    
    
    
    4,714,951Accrued expenses
    
    
    14,385,115
    
    
    
    (6,401,006
    )
    
    
    7,984,109Payable to Internal Revenue Service
    
    
    
    
    
    
    5,436,041
    
    
    
    5,436,041Lines of credit
    
    
    8,450,000
    
    
    
    (8,450,000
    )
    
    
    Notes payable, current portion
    
    
    17,276,041
    
    
    
    (8,954,743
    )
    
    
    8,321,298Notes payable to related parties, current portion
    
    
    
    
    
    
    4,027,650
    
    
    
    4,027,650Capital lease obligations, current portion
    
    
    11,204,153
    
    
    
    387,846
    
    
    
    11,591,999Capital lease obligation to related party, current portion
    
    
    
    
    
    
    137,076
    
    
    
    137,076Total current liabilities
    
    
    68,514,135
    
    
    
    (11,477,503
    )
    
    
    57,036,632Lines of credit
    
    
    
    
    
    
    8,450,000
    
    
    
    8,450,000Notes payable, less current portion
    
    
    2,412,366
    
    
    
    3,075,573
    
    
    
    5,487,939Notes payable to related parties, less current portion
    
    
    
    
    
    
    2,087,241
    
    
    
    2,087,241Capital lease obligations, less current portion
    
    
    31,279,277
    
    
    
    (30,746,472
    )
    
    
    532,805Capital lease obligation payable to related party, less current portion
    
    
    
    
    
    
    31,042,859
    
    
    
    31,042,859Total liabilities
    
    
    102,205,778
    
    
    
    2,431,698
    
    
    
    104,637,476Shareholders equityPreferred stock, $0.001 par value, 20,000,000 shares authorized,
3,000 shares issued and outstanding
    
    
    3
    
    
    
    
    
    
    
    3Common stock, $0.001 par value, 480,000,000 shares authorized;
253,000,000 and 120,340,214 shares issued and outstanding at March
31, 2011 and December 31, 2010, respectively
    
    
    120,340
    
    
    
    31,159
    
    
    
    151,499Additional paid in capital
    
    
    13,150,907
    
    
    
    (1,081,157
    )
    
    
    12,069,750Shareholders receivables
    
    
    
    
    
    
    
    
    
    
    Accumulated deficit
    
    
    (45,665,580
    )
    
    
    (1,146,252
    )
    
    
    (46,811,832
    )Total shareholders equity
    
    
    (32,394,330
    )
    
    
    (2,196,256
    )
    
    
    (34,590,586
    )Total liabilities and shareholders equity
    
    $
    69,811,448
    
    
    $
    235,448
    
    
    $
    70,046,896
  31




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
     Acquisitions
 TrinityCare
    32




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited)
   (in thousands)Current assets
    
    $
    743Property and equipment
    
    
    13,697Other noncurrent assets
    
    
    642Accounts payable and accrued expenses
    
    
    (1,450
    )Deferred revenue
    
    
    (24
    )Notes payable, short term portion
    
    
    (114
    )Notes payable, less short term
    
    
    (18,692
    )Goodwill
    
    
    25,453Total fair value of net assets acquired
    
    
    20,255Less: goodwill attributable to non-controlling interest
    
    
    (3,781
    )Total purchase consideration
    
    $
    16,474
    33




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##### Table of Contents



University General Health System, Inc.
(f/k/a SeaBridge Freight, Corp.)
Notes to the Consolidated Financial Statements (unaudited) (Restated)
  Autimus
    (in thousands)Current assets
    
    $
    345Property and equipment
    
    
    93Accounts payable and accrued expenses
    
    
    (70
    )Goodwill
    
    
    7,912Total purchase consideration
    
    $
    8,280
   34




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  
    
    risks related to environmental laws and regulations and environmental risks;
    
    risks related to changes in and the competitive nature of the healthcare industry;
    
    risks related to stock price and volume volatility;
    
    risks related to our ability to access capital markets;
    
    risks related to our ability to successfully implement our business and acquisition strategies;
    
    risks related to our issuance of additional shares of common stock.
   35




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##### Table of Contents



Nature of Business
     Merger Transaction
      36




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##### Table of Contents



Plan of Operation
   
    
    University General Hospital, which is a 72-bed general acute care hospital near Texas Medical Center in Houston, Texas.
    
    A hyberbaric wound care center as an HOPD of University General Hospital doing business under the name University
General Hospital -Hyperbaric Wound Care Center.
    
    A free-standing emergency room as an HOPD of University General Hospital doing business under the name EliteCare
Emergency Center
    
    A free-standing emergency room as an HOPD of University General Hospital doing business under the name Neighborhood
Emergency Center
    
    Mainland Surgery Center, which in an ambulatory surgery center in Dickinson, Texas located approximately 25 miles from
University General Hospital.
   University General Hospital
   37




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##### Table of Contents



Recent Developments
 Kingwood Neighborhood Emergency Center
   Mainland Surgery Center
   Regulatory Matters
    38




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##### Table of Contents



Licensure and Certification
      False Claims
   39




---



##### Table of Contents



Relationships with Physicians and Other Providers
 Anti-Kickback Law
        40




---



##### Table of Contents



Physician Self-Referral Law
         41




---



##### Table of Contents



HIPAA
        42




---



##### Table of Contents



Health Reform Legislation
       Medicare and Medicaid Participation
   43




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##### Table of Contents



Texas Statutory and Regulatory Risks
 Illegal Remuneration Law .
  44




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##### Table of Contents



Medicaid Fraud.
 Other Texas Statutes .
  Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
       45




---



##### Table of Contents



Liquidity and Capital Resources
      Off-Balance Sheet Arrangements
   46




---



##### Table of Contents



Critical Accounting Policies
   Business Combinations
   47




---



##### Table of Contents



Revenue Recognition
    Allowance for Doubtful Accounts
    48




---



##### Table of Contents



March
31, 2011
    
    

December
31, 2010Government payors and insured receivables
    
    
    98
    %
    
    
    98
    %Self-pay receivables (including deductible and co-payments)
    
    
    2
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
 Long-lived Assets
  Income Taxes
     49




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##### Table of Contents



Uncertain Tax Positions
  Assessment of Loss Contingencies
   Recent Accounting Pronouncements
   50




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls Procedures
    Changes in internal controls over financial reporting
  Officers Certifications
   51




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
 Prexus
   Siemens
  Internal Revenue Service
    52




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##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
  Risks related to our business and industry
 Our significant leverage could adversely affect our ability to raise additional capital to fund our
operations, limit our ability to react to changes in the economy or our industry, expose us to
interest rate risk and prevent us from meeting our obligations
  
    
    a substantial amount of our cash flow from operations must
be dedicated to the payment of lease payments and interest
on our indebtedness and will not be available for other
purposes;
    
    covenants contained in our debt obligations requires us to
meet certain financial tests and retain minimum cash
balances, in addition to certain other restrictions that
will limit our ability to borrow additional funds or
dispose of our assets and may affect our flexibility in
planning for, and reacting to, changes in our business;
    
    our ability to obtain permanent and additional financing
for working capital, capital expenditures, or general
corporate purposes may be impaired
    
    our vulnerability to downturns or adverse changes in
general economic, industry or competitive conditions and
adverse changes in government regulations is increased;
    
    our risk of exposure to interest rate fluctuations is increased
    
    our ability to make strategic acquisitions may be limited; and
    
    our ability to adjust to changing market conditions may be constrained.
 We may not be able to generate sufficient cash to service all of our indebtedness and may not be
able to refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced
to take other actions to satisfy our obligations under our indebtedness, which may not be
successful.
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We may not be able to obtain additional capital, when desired, on favorable terms, without dilution
to our shareholders or at all.
   If we are unable to enter into and retain managed care contractual arrangements on acceptable
terms, if we experience material reductions in the contracted rates we receive from managed care
payers or if we have difficulty collecting from health maintenance organizations, preferred
provider organizations, and other third party payors, our results of operations could be adversely
affected.
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We cannot predict with certainty the effect that the Affordable Care Act may have on our business,
financial condition, results of operations or cash flows
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.
 Our business and financial results could be harmed by violations of existing regulations or
compliance with new or changed regulations.
  .
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Future acquisitions may adversely affect our financial condition and results of operations.
 As part of our business strategy, we intend to pursue acquisitions of hospitals, surgery
centers, diagnostic and imaging centers, and other similar facilities that we believe could enhance
or complement our current business operations or diversify our revenue base. Acquisitions involve
numerous risks, any of which could harm our business, including:
 
    
    difficulties integrating the acquired business;
    
    unanticipated costs, capital expenditures or liabilities;
    
    diversion of financial and management resources from our existing business;
    
    difficulties integrating acquired business relationships with our existing business relationships;
    
    risks associated with entering markets in which we have little or no prior experience; and
    
    potential loss of key employees, particularly those of the acquired organizations.
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The profitability of our business may be affected by highly competitive healthcare industry.
      If we fail to implement and maintain effective internal controls over financial reporting, the
price of our common stock may be adversely affected.
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Our liability insurance may not be sufficient to cover all potential liability.
       We depend on relationships with the physicians who use our hospital.
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:
 
    
    terminates their relationship with, or reduces their use of, our hospital
    
    fails to maintain the quality of care provided or to
otherwise adhere to professional standards at our hospital;
suffers any damage to their reputation;
    
    exits the Houston, Texas market entirely;
    
    experiences major changes in the composition or leadership of the physician group or
    
    elects to join a competing hospital systems as an employee.
  A nationwide shortage of qualified nurses could affect our ability to grow and deliver quality,
cost-effective services.
   We are subject to liabilities from claims by various taxing authorities.
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We do not own the land on which our primary hospital is located and, as such, are subject to a
Lease Agreement with Cambridge Properties and various risks related to such lease arrangement
  We are subject to various licensure requirements
   We are subject to various environmental regulations
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Risks Related to Our Common Stock
 An active, liquid trading market for our common stock may not develop.
  Our stock price may be volatile.
    Our principal shareholders, executive officers and directors own a significant percentage of our
common stock and will continue to have significant control of our management and affairs, and they
can take actions that may be against your best interests.
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Our stock price could decline due to the large number of outstanding shares of our common
stock eligible for future sale
    Investors may face significant restrictions on the resale of our common stock due to federal
regulations of penny stocks.
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We currently do not intend to pay dividends on our common stock and, consequently, your only
opportunity to achieve a return on your investment is if the price of our common stock appreciates.
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    (REMOVED AND RESERVED)
 
 ITEM 5.
    
    OTHER INFORMATION
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ITEM 6.
    
    EXHIBITS
  
    
    should not in all instances be treated as categorical statements of
fact, but rather as a way of allocating the risk to one of the parties
if those statements prove to be inaccurate;
    
    have been qualified by disclosures that were made to the other party
in connection with the negotiation of the applicable agreement, which
disclosures are not necessarily reflected in the agreement;
    
    may apply standards of materiality in a way that is different from
what may be viewed as material to you or other investors; and
    
    were made only as of the date of the applicable agreement or such
other date or dates as may be specified in the agreement and are
subject to more recent developments.
 http://www.sec.gov
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ExhibitNo.
    
    Description10.1
    *
    
    Form of Subscription Documents for private placement investors in limited partner units of University General Hospital,
L.P.10.2
    *
    
    Employment
Agreement dated January 14, 2011 between University General Hospital, L.P. and Edward T. Laborde, Jr.10.3
    *
    
    Agreement of Debt Exchange dated February 28, 2011 between University General Hospital, L.P. and Hassan Chahadeh, M.D.10.4
    *
    
    Agreement of Debt Exchange dated February 28, 2011 between University General Hospital, L.P. and Felix Spiegel, M.D.10.5
    *
    
    Agreement of Debt Exchange dated February 28, 2011 between University General Hospital, L.P. and Kelly Riedel10.6
    *
    
    Executive Unit Purchase Agreement dated February 28, 2011 between University General Hospital, L.P. and Hassan Chahadeh,
M.D10.7
    *
    
    Executive Unit Purchase Agreement dated February 28, 2011 between University General Hospital, L.P. and Michael L. Griffin10.8
    *
    
    Executive Unit Purchase Agreement dated February 28, 2011 between University General Hospital, L.P. and Edward T.
Laborde, Jr.10.9
    *
    
    Executive Unit Purchase Agreement dated February 28, 2011 between University General Hospital, L.P. and Kelly Riedel10.10
    *
    
    Executive Unit Purchase Agreement dated February 28, 2011 between University General Hospital, L.P. and Rusty Shelton10.11
    *
    
    Termination of Management Agreement dated February 28, 2011 between University General Hospital, L.P. and Ascension
Physician Solutions, LLC31.1
    **
    
    Certification of Chief Executive Officer pursuant to SEC Rule 13(a)-14(a).31.2
    **
    
    Certification of Chief Financial Officer pursuant to SEC Rule 13(a)-14(a).32.1
    **§
    
    Certifications
of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code.
 *
    
    Previously filed and
incorporated by reference as the same Exhibit to the Companys
Form 10-Q filed May 24, 2011.**
    
    Filed herewith§
    
    This certification is being furnished and shall not be deemed filed with the SEC for purposes
of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall
not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it
by reference.  66




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SIGNATURES
  UNIVERSITY GENERAL HEALTH SYSTEM, INC.Dated:  August 15, 2011
    By:
    /s/ Hassan ChahadehName:
    Hassan Chahadeh, M.D.Title:
    Chief Executive OfficerDated:  August 15, 2011
    By:
    /s/ Michael L. GriffinName:
    Mr. Michael L. GriffinTitle:
    Chief Financial Officer