BELOW IS MY FIRST LETTER SENT TO PATRICK SMYTH ON 2/13 AND HIS REPLY. BELOW HIS REPLY IS FOLLOW-UP LETTER I SENT TO PATRICK ON 3/11 AND HIS REPLY. SINCE HIS 3/11 REPLY THERE HAS BEEN NO FURTHER COMMUNICATION FROM UTOG. IT IS NOW UP TO US TO DECIDE WHAT HAPPENS NEXT.
Sent: February-13-13 7:55 AM
To: Patrick Smyth; Patrick Smyth; Patrick Smyth
Subject: choices
Patrick,
Your recent actions are continuing to exacerbate credibility issues with stockholders. It is time to report results, not intentions. All we have been told is what UTOG has intended to accomplish. You must remember, UTOG's problems are also our problem.
If UTOG is unwilling to open up meaningful, concise, and timely dialog with it's stockholders, then I will have no choice but to post the following letter in a manner to reach as many UTOG stockholders as possible.
The choice is yours.
Don't make me the bad guy, I only want to help enhance UTOG's public credibility and improve the price of the stock......same as you!
One question for you.
How has UTOG's Board of Directors' management philosophy been working for us lately?
Sincerely,
Bruce
Patrick,
It appears you have made a choice to hide from and ignore requests from stockholders for updates concerning the on-going state of affairs for UTOG. These stockholder requests are the result of a stock price that is depressed to less than 10% of UTOG’s apparent book value of it’s assets. This price is a reflection of a lack of credibility of the management team that has been running the company the last couple of years, of which you have been the only apparent constant. The SEC sanctions and the lack of proper corporate conduct continue to be issues that are more of a concern to stockholders than the amount of oil being pumped out of the ground. i.e. with the apparent dissolution of NX Petroleum and the European partner, what is UTOG’s ownership position with the leases?
The Board of Directors has allowed the management of UTOG to disregard the UTOG by-laws. The stockholders have been denied a forum (annual stockholders meeting) to execute their voting rights for at least two years in Board of Directors’ election matters. UTOG has failed to provide proper notice to ALL stockholders of the annual stockholders’ meeting for the election of Board members. The issue is not if the Board has a quorum of stockholder votes, it is the issue of due process being denied all stockholders of record.
As your counsel knows, stockholders can, without a quorum, bring litigation against a company’s Board severally and in some instances against members of management individually to be determined by the level of misconduct or negligence.
The stockholders will be insisting in more oversight in the operations and decisions being made by UTOG’s management going forward and will consider litigation if management refuses to acknowledge our request.
From: Patrick Smyth <corporate@uniontownenergy.com> Sent: Wednesday, February 13, 2013 11:26 AM
Subject: RE: choices
Dear Bruce,
Thank you for your candid letter.
At present, as you know, neither myself nor anyone on the executive team is taking any monies from the company, nor have we done so in the last fiscal year. The SEC has finally asked us to provide them with information regarding the suspension, however, we are unable to provide any details of their request under law. The request is onerous, and has caused us to hire new outside counsel to advise us.
The information that they now request, some 18 months after the suspension, is very similar to the requests made by FINRA and also contains many the same materials we voluntarily sent the SEC after the suspension. Why the SEC would choose to request this information now is anyone’s guess, however, I believe that a shareholder(s) has been pushing them to do so.
The end result is unknown, but I am hopeful that this gets cleared up once and for all. Inter alia, the scope of the request is extensive and time consuming. Why they would want us to provide them with data now, that for the most part, is readily available in the public filings in not clear.
Darren is not around to answer some of the questions, and between his tenure and that of the following CEO, I am in a position of having to clean up this mess. The personal reasons for me even sticking around are two-fold; I don’t like leaving a company when things are not going well and I would expect us to one day trade again so I might get my options/salary.
We continue to source out financing, but until we have completed this SEC request, to say that task is difficult, is an understatement.
Regards,
Patrick Smyth
March 11, 2013
Patrick Smyth CEO
Uniontown Energy
Dear Patrick,
It has been 30 days since you received my last letter outlining requested changes in how UTOG does business. To date you have not responded with a proposal to resolve the issues that were raised. Therefore this is written notice that you have until April 1, 2013 to negotiate with me how and when you will resolve these issues (see list below) or I will begin implementing the following actions beginning April 1, 2013.
I feel confident that my proposed stockholder action cannot drive down the present value of the stock any further than UTOG’s past and present management group has. A shareholder lawsuit for tens of millions of dollars in damages and the ouster of the present BOD will certainly hinder UTOG’s ability to find an investor or getting listed on any Exchange. This is an end game strategy that I will do everything in my power to convince other shareholders to implement if you refuse to resolve these issues TIMELY.
We both know that UTOG is in better shape operationally now than a year or two ago. UTOG is pumping oil and the book value of UTOG’s assets are ten times what the stock trades for. Yet the stock has been trading at its lowest value for the past few months. WHY? The answer is the poor decisions management has made in the past and continues to make regarding transparency and the result has been a lack of management credibility.
We are going to insist on transparency and a presence on the BOD or we will attempt to 1.) force the sale of UTOG, 2.) the liquidation of UTOG or 3.) take control of the BOD through a law suit if necessary. Does the BOD want to spend time and money defending a shareholder suit or start running this company in a buslness-like manner? The decision the Board makes in this matter will reveal their intentions to either continue their agenda to withhold information and operate in the shadow of legitimacy or allow full disclosure to the stockholders as to the specific details of their plan A and plan B strategy to increase the value of the stock.
Here is a list of demands: (the first 6 are typically available to stockholders of a publicly-traded company)
1. Monthly income and production reports
2. Quarterly financials and balance sheets
3. A presence on the Board of Directors
4. Names and contact info of all Board Members
5. Names of all accounting and legal firms representing UTOG
6. Annual Stockholders meeting
7. A pro forma based on how UTOG can grow using only projected cash flow from operations
8. Weekly update on the status of the SEC fiasco
I do not know if I will succeed or fail in convincing other shareholders to join with me in pursuing these objectives if you fail to produce them voluntarily, but the status quo needs to be changed. A list of all current stockholders will be obtained from UTOG even if we have to subpoena that list. Hopefully, it will not come to that. I await your reply.
Sincerely,
Bruce Peters
From: Patrick Smyth <corporate@uniontownenergy.com>
Sent: Monday, March 11, 2013 1:27 PM
Subject: RE: choices
Dear Bruce:
We confirm we are in receipt of your email.
The Company is working to resolve issues with the SEC through third party council, and we have been advised not to speak on any issues at present.
Management has the best interests of its shareholders at hand, and also reminds you that it is management that has been paying for the continued corporate operations of the Company.
Regards,
Bcc: Terry Fields – Director
Bcc: John Karlssön – acting Director
Patrick Smyth – acting CEO
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