January 10, 2006 (FinancialWire) (Investrend Research Syndicate) In a ResearchNote, the rating for Universal Property Development & Acquistion Corp. (OTCBB: UPDA) has been downgraded from a “No Rating/3” to a “Suspended/1” rating by Investrend Research analyst Daniel Capo, CFA, after the company issued a press release that misled investors about its role in the issued report and contested aspects of the analyst’s report of January 9.
January 10, 2006 (FinancialWire) (Investrend Research Syndicate) In a ResearchNote, the rating for Universal Property Development & Acquistion Corp. (OTCBB: UPDA) has been downgraded from a “No Rating/3” to a “Suspended/1” rating by Investrend Research analyst Daniel Capo, CFA, after the company issued a press release that misled investors about its role in the issued report and contested aspects of the analyst’s report of January 9.
The company’s coverage has also been irrevocably terminated, and Investrend Research will not provide any further research to the company as long as present management and key institutions are associated with it. Separately, questions are also raised about the company’s trading on Friday and Monday.
The company issued a press release contesting aspects of the report without disclosing that the company’s CEO, Kamal Abdullah had signed off on the accuracy of the complete report during the errors and omission’s process.
As part of the normal Investrend research report process, the company was given the opportunity to review the completed report for errors or omissions. The completed report was sent to Universal’s CEO Kamal Abdullah on 12/16/2005. Over 2 weeks later, Mr. Abdullah sent back a email confirming the content of the report as follows:
“Thank you very much for the report, I think you did an excellent job.
My changes are simple
1. The name of our Company in Oklahoma is WinRock Energy Inc which is a joint venture between UPDA and the Lion Partners Hedge Fund.( After you did the report we hired an engineer approved by our bank to do a Reserve Estimates.. The result is over 20 million Barrel of oil in proven reserve - I am sending you the report)
2. The Other Change is the construction contract with have been assigned to D & D Construction Company.
I have been working on Canyon Creek assets namely the Inez Field so far we spent $700,000 and expect to finish it on Wed. As you know this well is capable of generating close to $1,000,000 a month.
I will contact (Investrend) to see If we can release it the week of the 9th.”
In response to the company’s recent press release regarding that the statement “The largest asset on UPDA's balance sheet is 1,000,000 shares of convertible preferred B stock of SiteWorks Building & Development Company” was without context or foundation; the analyst vigorously contests this accusation. This reference to Siteworks and UPDA’s balance sheet can be found on page 14 of the report under the heading “Operating Results for the Months ending 9/30/2005. This information accurately depicts UPDA’s balance sheet as of 9/30/2005 which is presented in UPDA’s most recent 10Q submitted to the SEC, which can also be found on page 18 of the report.
Regarding the statement that the report “fails” to “account for UPDA’s cash investment now approaching 1.5M in Canyon Creek Oil & Gas”; the analyst vigorously contests this accusation. The analyst noted on page 15, that the company had already “paid approximately 50% or $600,000 towards this commitment with Canyon Creek”, which was the amount communicated to the analyst as of the date of the report.
Regarding the statement that the report does not to reflect the value of UPDA's oil and gas reserves”; the analyst vigorously contests this accusation. The analyst dedicated 4 pages of the research report detailing reserve and production estimates given to him by the company on pages 8 – 12; and included the only 3rd party verification the analyst received; by Warpath Energy Inc.”
The full ResearchNote is published at
www.investrendresearch.com The January 9 Target report stated that the largest asset on Universal’s balance sheet is 1,000,000 shares of convertible preferred B stock of SiteWorks Building & Development Company (OTCBB: SWKJ).
The analyst added:
The company currently is involved in three joint ventures: Canyon Creek Oil & Gas Inc., West Oil & Gas Inc., and Winrock Energy Inc. (Domes Unit).
Unlike several micro cap E&P start ups, Universal Property is not a wildcat player. The company is focused on acquiring proven properties with deep production histories.
Universal’s subsidiaries have started selling oil and gas which should directly improve the company’s financial statements.
Production estimates based upon historical and partial production total millions of dollars per year in revenues.
The company has teamed up with well established partners.
Due to supply worries and energy market volatility, revitalization projects on mature US reserves should remain profitable as crude oil and wellhead natural gas prices are expected to remain above historical levels.
The company reported just over $10,000 in cash as of 9/30/2005, and has reported that $2 million dollars are required to execute its 2006 business plan. Cash flow from operations is projected to be insufficient to support expenditures; the company most likely will issue stock to raise funds.
Dilution is the key risk factor. As of November 1, 2005, UPDA had 23,774,986 shares outstanding. Based on the trading activity since November, we believe this number may be higher, though we could not get confirmation.
The initial Target report above is also available at
www.investrendresearch.com On Friday, January 6, Universal Property Development gained 50.14% on volume of 5,256,962, which was five times its average 1,120,100, to close at $0.2102 on no known news,.although it was touted by two promotional presss releases, one by OTCPicks.com, and the other by OTCStockExchange.com.
Monday, January 9, after the report was issued, the price declined 23.41% on volume of 3,858,400, over three times its average volume, closing at $0.16.
The coverage of Universal Property Development has had previous problems. On November 28, 2005, FinancialWire reported that a fraudulent spam email had misrepresented Investrend Research’s announcement of coverage of the company in a manner that made it look as if a report and rating had already been issued. Earl Adkins, CEO of TurnkeyGold.com, asked authorities to look into who “hijacked” his servers to perpetrate the hoax.
Irate also recipients initially contacted Investrend, since it appeared to some as if Investrend might have sent the email. Even Adkins had initially believed the emails had involved Investrend.
The matter was referred to the U.S. Securities and Exchange Commissoin. Enforcement officials from the SEC subsequently contacted Investrend, but there has been no recent confirmation that anyone is currently under investigation. The SEC usually does not comment on its investigations. There has been no suggestion that the company itself was involved in this episode.
Since accurate third party analysis of a company is a shareholder prerequisite, the company may petition to have the suspension lifted if and when it obtains standards-based, investor-monitored continuing coverage from a different research provider, and the initial report is published.
An InvestorPower™ page has been created regarding the company at
www.investrend.com/company/list.asp?sPathParam=yes .
Investrend Research has been the leading independent equity research publishing and distribution program since 1996, with over 75 qualified professional analysts posting more than 1,000 reports to date. Anyone may enroll a company in the Investrend platforms. Enrollment fees for the Target research platform are $5,780, which was paid by Morgan Merchants, a third party. Analysts are paid in advance for their initial reports by Investrend Research to limit or eliminate pecuniary interests, and no one associated with the program may own or trade in the equities of companies under coverage.
The company has also been enrolled in the shareholder-monitoring program by the Shareholders Research Alliance (
www.shareholdersresearch.com), established to eliminate conflict and bias, and Investrend subscribes to the exacting “Standards for Independent Research Providers” at
www.firstresearchconsortium.com Anyone interested in receiving alerts regarding Universal Property research or webcasts should e-mail contact@investrend.com with “UPDA” in the subject line, or click on
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