University General Health System 2013 Revenue Increases 45% to $164 Million

University General Health System 2013 Revenue Increases 45% to $164 Million 
Average Daily Census Improves by 53% Over Prior-Year Levels and
Company Announces Operational Restructuring Plan 
HOUSTON, TX -- (Marketwired) -- 07/02/14 --  University General
Health System, Inc. (OTCQB: UGHS), a diversified, integrated
multi-specialty health care delivery system, today announced its 2013
operating results, including a 44.8% improvement in total revenue, an
improvement in average daily census of 52.9%, an increase in assets
of $8.5 million, and a series of operational restructuring
initiatives that have been designed to restore the Company's
profitability in 2014. The Company will file its Form 10-K annual
report with the SEC later today, in advance of an investor conference
call that has been scheduled for Thursday, July 3, 2014 at 11:15 EDT
to allow ample time for shareholders to review the SEC filing.
Details on the conference call are provided later in this release. 
FY2013 HIGHLIGHTS  


 
--  Total revenue for 2013 increased $50.8 million, or 44.8%, to $164.0
    million, compared with $113.2 million for the year ended December 31,
    2012. The revenue increase was primarily attributable to a 52.9%
    increase in average daily census at the Company's hospitals. The
    average daily census for the year ended December 31, 2013 totaled 59,
    compared with an average daily census of 39 for the year ended
    December 31, 2012. In addition, the number of patient days increased
    56.2% to 20,539, versus 13,151 patient days in the previous year.
    Adjusted patient days increased 36.0% to 35,435 in 2013, from 26,055
    in 2012. Net patient service revenue increased 35% to $137.5 million
    in the year ended December 31, 2013, compared with $101.8 million in
    the year ended December 31, 2012. These increases were primarily
    driven by the acquisition of the Dallas hospital. The significant
    increase in net patient service revenue also benefited from hospital
    outpatient department (HOPD) acquisitions completed during 2013.
    
    
--  Hospital Segment revenue increased 44.3% to $148.3 million in 2013,
    compared with $102.8 million in 2012. The revenue increase was
    primarily attributable to a 51.3% increase in average daily census.
    
    
--  Net revenue in the Senior Living Segment increased 2.8% to
    approximately $8.1 million in 2013, versus approximately $7.9 million
    in 2012. This reflects an average revenue per unit occupied of $3,169
    in 2013, compared with an average revenue per unit occupied of $3,096
    in 2012. These are blended rates of assisted living-dominant
    facilities, which include independent living and memory care units.
    The senior living properties reported an overall average occupancy in
    excess of 92.9% in 2013, compared with 93.1% in 2012. This was higher
    than the senior living industry's national average occupancy of 89.7%
    for combined properties, as reported by the National Investment Center
    for the Seniors Housing (NIC) for the year 2013.
    
    
--  Support Services Revenue, net of intercompany revenue and management
    fees, totaled approximately $7.5 million in 2013, versus approximately
    $2.5 million in 2012. A net operating loss of approximately $1.6
    million was recorded by the Support Services Segment in 2013, compared
    with a net operating loss of $0.1 million in the previous year. The
    200% increase in revenue was due to an increase in the number of new
    clients, coupled with acquisitions completed in 2013.
    
    
--  Net patient revenue, before provision for doubtful accounts, from
    Medicare and Medicaid accounted for approximately 26.9% and 30.0% of
    total net patient revenue in 2013 and 2012, respectively. Revenue from
    managed care contracts and other third-party payors and self-pay
    (which was 1.6%) accounted for approximately 73.1% and 70.0% of net
    patient revenue in 2013 and 2012, respectively.
    
    
--  The provision for doubtful accounts rose to 16.1% at the end of 2013
    from 8.1% at December 31, 2012, primarily due to a change in accounts
    receivable recognition. The Company expects this to normalize in 2014
    to a more industry-consistent level, due to changes in accounts
    receivable (A/R) recognition and modifications within revenue cycle
    management, which will allow for easier auditing of revenues and Net
    A/R, and the implementation of better management tools.
    
    
--  Total assets increased 4.9% to $183.3 million as of December 31, 2013,
    compared with $174.8 million at December 31, 2012, due primarily to
    acquisitions in 2013.
    
    
--  Net days in accounts receivables improved to 56 as of December 31,
    2013, versus 73 at December 31, 2012.
    
    
--  Shareholders' equity declined by $17.3 million, from $10.7 million on
    December 31, 2012 to a negative $6.6 million in December 31, 2013,
    primarily due to the acquisition of UGH-Dallas, along with several
    one-time expenses and write-downs that are identified below.
    
    
--  Adjusted EBITDA declined to ($4.4) million in 2013, versus $29.5
    million in 2012. (Adjusted EBITDA is a non-GAAP measure that is
    reconciled with GAAP results in a table at the end of this press
    release).
    
    
--  An operating loss of approximately $17.1 million was recorded in 2013,
    versus operating income of approximately $19.1 million in the previous
    year, primarily due to the acquisition of UGH-Dallas and expenses
    related to certain marketing initiatives that are being discontinued.
    
    
--  The Company recorded a net loss attributable to common shareholders of
    ($35.7 million), or ($0.10) per share, in the most recent year,
    compared with a net loss attributable to common shareholders of ($4.0
    million), or ($0.01) per share, in 2012,
    
    
--  A Summarization of Financial Performance by Business Segment (Adjusted
    EBITDA Summary - in $ millions):
    
    

 
                                         
                                         
Hospital Segment                         
  UGH - Houston                   $ 19.7 
  UGH - Dallas                    $ (8.2)
  ER Services                     $ (0.8)
  Management Services             $(12.7)
  Ancillary Services              $  1.2 
  Physician Services              $ (0.8)
  UGHS, Inc.                      $ (4.6)
                                  ------ 
    Total                         $ (6.2)
Senior Living:                       1.6 
Support Services:                 $ (1.0)
                                  ------ 
    Total Operating EBITDA        $ (5.6)
Other Non-Operating Adjustments   $  1.2 
                                  ------ 
    Total Adjusted EBITDA         $ (4.4)
                                         
                                         

 
--  Other Expense Items (in $ millions), many of which are non-recurring
    or have been eliminated for 2014 :

 
                                      
                                      
Medicare Recovery Adjustment    $ 1.26
Self-Funded Health Claims       $ 0.65
Siemens Lawsuit Accrual         $ 2.10
Cost Report Adjustments         $ 0.60
Application of A/R Methodology  $ 5.50
Audit Fees                      $ 0.40
Marketing Initiatives           $ 3.50
Management Services             $ 2.67
Late Fees/Penalties             $ 5.00
Preferred Shareholder Fees      $ 0.94
                                ------
  Total Other Expense Items     $22.62

 
MANAGEMENT COMMENTS 
"Our 45% increase in total revenue during 2013 was primarily
attributable to an increase in the number of adjusted patient days
and an increase in the number of surgeries performed," commented Dr.
Hassan Chahadeh, M.D., Chairman and Chief Executive Officer of
University General Health System, Inc. "We are very pleased to have
recently achieved in-network status with United and Humana, two large
third-party payors, and believe the value of these relationships will
be reflected in our 2014 performance. The Company is confident that
the effects of MNRP (Maximum Non-Network Reimbursement Plans) will
continue to put downward pressure on out-of-network providers, and
thus negotiations with major third-party payors will remain a high
priority and necessary to the Company's future success. Nonetheless,
we acknowledge that our greatest challenges in 2013 involved the
amount of human and financial capital expended on our acquisition of
the UGH-Dallas hospital and the slower-than-expected turnaround we
have experienced at that facility. This has taken a significant toll
on our financial performance, which we expect to improve in 2014." 
"We have embarked upon a restructuring of our management team and
refocused our priorities on organic growth within the system versus
additional acquisitions, which have historically resulted in hospital
outpatient department integration challenges," continued Chahadeh.
"We have also focused on consolidation of our debt, to prepare for a
more global refinancing in the future. The performance of our
flagship Houston hospital remains stable, and the facility has
recorded revenue increases while implementing a $1,000,000 reduction
in monthly expenses from January to June 2014. As a Company, we have
learned much from our rapid expansion and are determined to address
the issues that resulted in a deterioration in our financial position
during 2013." 
OPERATIONAL RESTRUCTURING PLAN 
"Our financial performance during 2013 reflected many challenges that
we have addressed during the first half of 2014 and will continue to
focus on throughout the balance of the year," added Chahadeh. "We
have outlined below some of management's strategic restructuring
accomplishments, most of which were implemented in the second
quarter." 


 
--  Dallas Hospital: Management has refocused its efforts on the core
    business of the hospital, while maintaining a successful gero-psych
    outpatient program and many of the existing hospital outpatient
    departments. Management believes the changes implemented will reduce
    the hospital's operating losses by over 50% in 2014. Management is
    also exploring opportunities for partnerships that can mitigate losses
    while continuing to provide all necessary services within the market.
--  All Hospital Outpatient Departments (HOPDs) have been evaluated
    relative to resource productivity, and those that are non-core or
    non-performing have been or will be eliminated or restructured.
--  Houston Hospital: Management has implemented cost containment measures
    that have already reduced expenses by over $1 million per month since
    January 2014. Revenue at UGH-Houston continued to increase during the
    first half of the current year.
--  Significant salary reductions have been implemented for all Executive
    Staff, and all of the previous non-cash executive compensation (9.6
    million shares), which was subject to substantial risk of forfeiture,
    has been redeemed into treasury as of 12/31/2013. In addition the
    Company has implemented a reduction in force of all non-essential
    personnel.
--  The Company believes it has secured financing that addresses the
    growth in accounts payable and resolves outstanding payroll tax
    liabilities.
--  All non-core business segments are being examined to determine if
    dispositions would provide greater liquidity to the Company without a
    negative impact upon core hospital operations.
--  Management intends to refinance existing debt, while providing
    additional liquidity to support the anticipated turnaround in existing
    operations.
--  Ms. Kris Trent will be appointed Interim Chief Financial Officer,
    replacing Michael Griffin, who will continue to serve in business
    development. Ms. Trent will also oversee the treasury management
    function, while streamlining the Company's ability to file its
    required Securities and Exchange Commission quarterly and annual
    reports in a timely fashion. The Company also will be addressing
    treasury management as part of an overall restructuring of financial
    reporting systems. The accounting and information technology teams are
    working diligently to correct material weaknesses in revenue cycle
    management, while strengthening internal controls. The Company is
    hopeful that the Form 10-Qs for the first and second quarters will be
    filed in early August.

  
"These measures are significant and reflect our commitment to
shareholders as we focus on improving University General's operating
and financial performance in 2014," concluded Chahadeh. 
Investor Conference Call 
Management of University General Health System will host a conference
call on Thursday, July 3, 2014 at 11:15 a.m. EDT. Shareholders and
other interested parties may participate in tomorrow's conference
call by dialing 877-374-8416 (international participants dial
412-317-6716) and requesting participation in the "University General
Health System Conference Call" at least five minutes before 11:15 am
EDT.  
A replay of the conference call will be available one hour after the
call through Thursday, July 10, 2014 at 9:00 a.m. EDT by dialing
877-344-7529 (international participants dial 412-317-0088) and
entering the conference ID # 10048817.  
NON-GAAP FINANCIAL MEASURES (ADJUSTED EBITDA)  
Adjusted EBITDA is a measure of operating performance that is not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). Adjusted EBITDA should not be considered in
isolation or as a substitute for net income (loss), income from
operations or cash flows provided by or used in operations, as
determined in accordance with GAAP. Adjusted EBITDA is a key measure
of the Company's operating performance used by management to focus on
operating performance and management without mixing in items of
income and expense that relate to the financing and capitalization of
the business. The Company defines Adjusted EBITDA as net income
(loss) before provision (benefit) for income taxes, non-operating
(income) expense items, (gain) loss on sale of assets, depreciation
and amortization (including non-cash impairment charges),
amortization of deferred gains, and non-cash stock-based compensation
expense.  
The Company believes Adjusted EBITDA is useful to investors in
evaluating its performance, results of operations and financial
position for the following reasons:  


 
--  It is helpful in identifying trends in day-to-day performance because
    the items excluded have little or no significance to day-to-day
    operations;
--  It provides an assessment of controllable expenses and affords
    management the ability to make decisions that are expected to
    facilitate meeting current financial goals and achieve optimal
    financial performance; and
--  It is an indication of whether adjustments to current spending
    decisions are necessary.

  
ABOUT UNIVERSITY GENERAL HEALTH SYSTEM, INC.  
University General Health System, Inc. ("University General") is a
diversified, integrated multi-specialty health care provider that
delivers physician-centric, high quality patient-oriented services by
providing timely, innovative health solutions that are uniquely
competitive, efficient, and adaptive in today's health care delivery
environment. The Company currently operates two hospitals, multiple
ambulatory surgical centers, a number of diagnostic imaging, physical
therapy and sleep clinics, and a hyperbaric wound care center in the
Houston and Dallas metropolitan areas. Also, University General owns
three senior living facilities, manages six senior living facilities,
and owns a Support Services company that provides revenue cycle and
luxury facilities management services. 
The Company is headquartered in Houston, Texas, and its common stock
trades on the OTCQB under the symbol "UGHS". 
FORWARD-LOOKING STATEMENTS  
The information in this news release includes certain forward-looking
statements that are based upon assumptions that in the future may
prove not to have been accurate and are subject to significant risks
and uncertainties, including statements related to the future
financial performance of the Company. Although the Company believes
that the expectations reflected in the forward-looking statements are
reasonable, it can give no assurance that such expectations or any of
its forward-looking statements will prove to be correct. Factors that
could cause results to differ include, but are not limited to,
successful execution of growth strategies, product development and
acceptance, the impact of competitive services and pricing, general
economic conditions, and other risks and uncertainties described in
the Company's periodic filings with the Securities and Exchange
Commission. 
(Financial Highlights Follow)  


 
                                                                            
                                                                            
                   University General Health System, Inc.                   
                        Consolidated Balance Sheets                         
                                                                            
                                                                            
                                                       December 31,         
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                    ASSETS                                                  
Current Assets                                                              
Cash and cash equivalents                      $   1,708,898  $   1,188,230 
Accounts receivable, less allowance for                                     
 doubtful accounts of $36,802,691 and                                       
 $21,422,475                                      23,102,262     20,941,005 
Inventories                                        2,447,567      1,458,089 
Prepaid expenses and other assets                  6,635,294      3,986,378 
Current deferred taxes                             1,146,358      1,729,150 
                                               -------------  ------------- 
  Total Current Assets                            35,040,379     29,302,852 
                                                                            
Long-Term Assets                                                            
Property, equipment and leasehold                                           
 improvements, net                                98,883,912     96,965,889 
Intangible assets, net                             4,499,653      5,919,000 
Deferred tax assets                                        -        659,405 
Goodwill                                          42,613,953     39,271,829 
Other non-current assets, net                      2,227,366      2,721,587 
                                               -------------  ------------- 
  Total Long-Term Assets                         148,224,884    145,537,710 
                                                                            
                                               -------------  ------------- 
  Total Assets                                 $ 183,265,263  $ 174,840,562 
                                               =============  ============= 
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                              
Current Liabilities                                                         
Accounts payable                               $  21,696,595  $   9,699,411 
Payables to related parties                        2,131,730      2,133,053 
Accrued expenses                                  21,280,028     11,938,589 
Payroll taxes payable                              5,852,673      1,610,836 
Income tax payable                                14,604,353     11,813,198 
Deferred revenue                                     400,126        238,846 
Notes payable, current portion                    24,369,226     26,089,305 
Notes payable to related parties, current                                   
 portion                                           1,165,873      1,853,380 
Capital lease obligations, current portion           859,862        826,800 
Derivative liability                                 516,650      4,897,053 
                                               -------------  ------------- 
  Total Current Liabilities                       92,877,116     71,100,471 
                                                                            
Long-Term Liabilities                                                       
Line of credit                                    20,072,926     12,579,933 
Notes payable, less current portion               41,654,523     46,947,860 
Deferred taxes                                     1,236,700              - 
Capital lease obligations, less current                                     
 portion                                          31,069,580     30,928,491 
                                               -------------  ------------- 
  Total Long-Term Liabilities                     94,033,729     90,456,284 
                                                                            
Total Liabilities                                186,910,845    161,556,755 
                                                                            
Commitments and contingencies                                               
                                                                            
Series C, convertible preferred stock, $0.001                               
 par value, 20,000,000 shares authorized,                                   
 3,396 and 3,379 shares issued and                                          
 outstanding, respectively ($1,000 stated         2,971,221      2,566,308  
 value)                                                                     
                                                                            
Shareholders' Equity (Deficit)                                              
Preferred, par value $0.001, 20,000,000 shares                              
 authorized, Preferred stock Series B - 3,000                               
 shares issued and outstanding                             3              3 
Common stock, par value $0.001, 480,000,000                                 
 shares authorized, 377,223,630 and                                         
 343,459,294 shares issued and outstanding,                                 
 respectively                                        371,224        343,459 
Additional paid-in-capital                        83,916,725     65,419,774 
Shareholders' receivables                         (2,539,667)    (2,828,251)
Accumulated deficit                              (93,057,957)   (57,186,915)
                                               -------------  ------------- 
  Total shareholders' equity (deficit)           (11,309,672)     5,748,070 
Noncontrolling interest                            4,692,869      4,969,429 
                                               -------------  ------------- 
  Total equity (deficit)                          (6,616,803)    10,717,499 
                                               -------------  ------------- 
  Total Liabilities and Shareholders' Equity                                
   (Deficit)                                   $ 183,265,263  $ 174,840,562 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                                                                            
                   University General Health System, Inc.                   
                     Consolidated Statements of Income                      
                                                                            
                                                  Year Ended December 31,   
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
Revenues                                                                    
  Patient service revenues, net of contractual                              
   adjustments                                 $ 163,935,735  $ 112,184,538 
  Provision for doubtful accounts                (26,392,248)   (10,384,706)
                                               -------------  ------------- 
  Net patient service revenue less provision                                
   for doubful accounts                          137,543,487    101,799,832 
  Senior living revenues                           7,922,924      7,712,750 
  Support services revenues                        7,477,014      2,501,449 
  Other revenues                                  11,045,561      1,209,227 
                                               -------------  ------------- 
    Total revenues                               163,988,986    113,223,258 
                                                                            
Operating expenses                                                          
  Salaries, wages and benefits                    77,569,460     39,627,334 
  Medical supplies                                28,669,728     16,194,606 
  General and administrative expenses                                       
   (includes related party expenses of                                      
   $2,327,050 and $1,921,501, respectively)       63,379,990     32,766,205 
  Gain on extinguishment of liabilities                    -     (3,644,068)
  Depreciation and amortization (includes                                   
   related party expenses of $0 and $685,162,                               
   respectively)                                  11,476,315      9,215,713 
                                               -------------  ------------- 
    Total operating expenses                     181,095,493     94,159,790 
                                               -------------  ------------- 
Operating income (loss)                          (17,106,507)    19,063,468 
Other income (expense)                                                      
Interest expense, net of interest income of                                 
 $141,047 and $85,000 (includes related party                               
 interest expense $131,277 and $2,289,287)        (7,100,683)    (6,111,582)
Other income (expense)                             1,591,711       (381,026)
Direct investor expense                           (4,918,121)    (6,853,356)
Change in fair market value of derivatives        (2,019,076)    (4,937,170)
                                               -------------  ------------- 
Income (loss) before income tax                  (29,552,676)       780,334 
  Income tax expense                               5,270,052      4,564,195 
                                               -------------  ------------- 
Loss before noncontrolling interest              (34,822,728)    (3,783,861)
Net income attributable to noncontrolling                                   
 interests                                           276,560        363,531 
                                               -------------  ------------- 
Net loss attributable to the Company           $ (34,546,168) $  (3,420,330)
                                               =============  ============= 
                                                                            
Less: Cash dividend-Convertible Preferred C                                 
 Stock                                              (141,740)       (46,921)
Less: Accretion non-cash dividend-Convertible                               
 Preferred C Stock                                (1,019,789)      (512,190)
                                                                            
                                               -------------  ------------- 
Net loss attributable to common shareholders   $ (35,707,697) $  (3,979,441)
                                               =============  ============= 
                                                                            
Basic and diluted loss per share data:                                      
                                                                            
  Basic loss per common share                  $       (0.10) $       (0.01)
                                               =============  ============= 
                                                                            
  Basic weighted average shares outstanding      358,688,151    311,995,342 
                                               =============  ============= 
                                                                            
  Diluted loss per common share                $       (0.10) $       (0.01)
                                               =============  ============= 
                                                                            
  Diluted weighted average shares outstanding    358,688,151    311,995,342 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                                                                            
                   University General Health System, Inc.                   
                   Consolidated Statements of Cash Flows                    
                                                                            
                                                  Year Ended December 31,   
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
Cash flows from operating activities:                                       
Net loss                                       $ (34,822,728) $  (3,783,861)
Adjustments to reconcile net loss to net cash                               
 provided by operating activities:                                          
  Depreciation and amortization                   11,476,315      9,215,713 
  Provision for doubtful accounts                 26,392,248     10,384,706 
  Gain on sale of assets and other, net            1,700,411        (37,451)
  Gain on extinguishment of liabilities                    -     (3,644,068)
  Deferred income tax expense (benefits)           2,478,897     (2,388,555)
  Compensation expense                               180,000              - 
  Warrants issuance costs                                  -        392,609 
  Direct investor expense                          4,918,122      6,853,356 
  Change in fair market value of derivatives       2,019,076      4,937,170 
Net changes in operating assets and                                         
 liabilities:                                                               
  Accounts receivable                            (28,553,505)   (18,869,744)
  Related party payables                              (1,323)       298,729 
  Inventories                                       (989,478)       484,349 
  Prepaid expenses and other assets                 (593,129)    (2,108,971)
  Accounts payable, accrued expenses and taxes                              
   payable                                        24,762,947      6,583,479 
  Deferred revenues                                  161,280        (76,030)
                                               -------------  ------------- 
    Net cash provided by operating activities      9,129,133      8,241,431 
                                               -------------  ------------- 
Cash flows from investing activities:                                       
  Additions and acquisitions to property,                                   
   equipment and leasehold improvements           (7,286,545)    (5,850,056)
  Business acquistions, net of cash acquired      (2,055,245)    (2,180,203)
  Investments in unconsolidated affiliates           (65,000)      (249,493)
                                               -------------  ------------- 
    Net cash used in investing activities         (9,406,790)    (8,279,752)
                                               -------------  ------------- 
Cash flows from financing activities:                                       
  Proceeds from revolving credit facility                                   
   borrowings                                    113,993,564     39,253,933 
  Payments of revolving credit facility                                     
   borrowings                                   (106,500,571)   (26,674,000)
  Distributions to noncontrolling interests                -       (172,762)
  Issuance of common stock                         2,200,000      5,403,832 
  Issuance of preferred stock                      2,974,181      3,794,669 
  Dividend paid on Preferred C Convertible                                  
   Stock                                            (163,345)      (158,444)
  Borrowings under notes payable                   5,245,341     12,890,617 
  Payments on notes payable                      (15,355,934)   (16,945,280)
  Payments on debt issuance costs                          -     (1,511,251)
  Borrowings under notes payable to related                                 
   party                                             191,493         34,976 
  Payments on notes payable to related party        (879,000)      (453,057)
  Payments on capital leases                        (907,404)    (6,323,675)
  Payments on line of credits                              -     (8,451,025)
                                               -------------  ------------- 
    Net cash provided by financing activities        798,325        688,533 
                                               -------------  ------------- 
                                                                            
Net increase in cash and cash equivalents            520,668        650,212 
Cash and cash equivalents:                                                  
  Beginning of period                              1,188,230        538,018 
                                               -------------  ------------- 
  End of period                                $   1,708,898  $   1,188,230 
                                               =============  ============= 
Supplemental disclosures of cash flow                                       
 information:                                                               
  Interest paid                                $   6,679,064  $   6,194,924 
  Income taxes paid                            $           -  $     385,966 
Supplemental noncash investing activities:                                  
  Property and equipment additions financed    $   1,081,555  $     819,236 
Supplemental noncash financing activities:                                  
  Noncash consideration paid for acquisitions  $   3,123,651  $  37,164,490 
  Issuance of common stock                     $   1,794,903  $   1,237,682 
  Transfer from related party and account                                   
   payables to debt obligations                $           -  $   2,510,836 
  Issuance on conversions of preferred stock   $   2,892,735  $   1,324,600 
  Derivative ceases to exist                   $  11,637,078  $   7,702,031 
  Dividend on Preferred C Convertible Stock    $     141,740  $      46,921 
                                                                            
                                                                            
                                                                            
                                                                            
                                                 Adjusted EBITDA 2013       
                                           Twelve Months Ended December 31, 
                                                 2013             2012      
                                           ---------------  --------------- 
Net loss attributable to the Company       $   (34,546,168) $    (3,420,330)
Income expense attributable to non-                                         
 controlling interests                            (276,560)        (363,531)
Provision (benefit) for income taxes             5,270,052        4,564,195 
Other non-operating expense (income)            (1,591,711)         381,026 
Interest expense:                                                           
  Debt and lease obligations                     6,679,064        6,196,582 
Interest income                                   (141,047)         (85,000)
Direct investor expense                          4,918,121        6,853,356 
Change in fair value of derivatives              2,019,076        4,937,170 
Depreciation and amortization                   11,476,315        9,215,713 
Non-Cash Investor Transactions                   1,794,903        1,237,682 
                                           ---------------  --------------- 
Adjusted EBITDA                            $    (4,397,955) $    29,516,863 
                                           ===============  =============== 

  
For Additional Information, Please Contact:
Donald Sapaugh
President
(713) 375-7557 x 105
dsapaugh@ughs.net 
or 
R. Jerry Falkner, CFA
RJ Falkner & Company, Inc.
Investor Relations Counsel
(830) 693-4400
info@rjfalkner.com 
 
 
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