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WILMINGTON, Del., Feb. 3 /PRNewswire-FirstCall/ -- Universal Capital Management, Inc. (OTC Bulletin Board: UCMT), a Wilmington, Delaware business development company that provides management and strategic growth resources to emerging growth companies, announced that Michael Queen, Chief Executive Officer sent the following letter to its shareholders:
Open Letter to Universal Capital Management Shareholders
Dear Shareholders:
As many of you know, Theater Xtreme filed Chapter 7 bankruptcy in December, 2008. My staff and I have been asked repeatedly if there was anything Universal Capital Management could have done to prevent that from happening.
Universal signed a management contract with Theater to assist them from 2004 to 2005. The company was one of our first holdings. In its initial year of operations it gained strong momentum and had a promising future. As a result, Theater no longer needed our management expertise and did not renew the contract. However, the company remained in our portfolio and we remained available to them if the need arose.
When Theater began taking on too much debt, they sought Universal's assistance once again. We found them a turn-around CEO and sent our controller there as interim CFO to attempt to remedy the situation. We even signed a new management agreement in July 2008. Despite capital raises, the debt was insurmountable. We helped negotiate a possible joint venture with Circuit City, but unfortunately both companies succumbed to a failing economy. We are truly disappointed by the outcome.
However, from a financial standpoint, the loss of TXEG from our balance sheet was very minimal. As we continue to grow and add new companies to our portfolio, Universal will retain investments with tremendous growth potential. Some of the companies may be highly successful, others may be less profitable. Some will make it, some will fail.
Universal's business plan is structured to allow for minimal investing and maximum management assistance while enhancing each company's ability to raise funds in order to enter the public marketplace. We believe that investing in Universal Capital Management is safer than investing directly into a portfolio company due to the diversity of risk. Our value is determined by the totality of our companies, not just one. If a single holding does well, it will have a positive impact on our value. In turn, if one fails, there is a good chance the others will compensate for it. The risk is there, but so is the potential for great rewards. We currently have eight companies in our portfolio in an array of industries. We select them based on extensive due diligence regarding both the company and the market they are geared to. Each holds its own value. We are very excited about these companies and will continue to report on their progress.
If you review Universal's year-end financials for the past two years you will see an increased Net Asset Value (NAV). Although our Sales and Income have been overwhelmingly good, these are not the best indicators when judging a closed-end fund's performance. We believe NAV is. For updates on our portfolio companies, visit www.unicapman.com.
Sincerely,
Michael D. Queen
President and CEO
February 3, 2009
About Universal Capital Management, Inc.:
Universal Capital Management, Inc., is a publicly traded Business Development Company created under the Investment Act of 1940. Its purpose is to assist its portfolio companies with funding and management to facilitate growth and increase their value. Please refer to the company's website at http://www.unicapman.com.
Forward-looking Statements:
Certain matters discussed in this press release are "forward-looking statements." These forward-looking statements can generally be identified as such because the context of the statement will include words, such as Universal Capital Management, Inc., or iVolution "expects," "should," "believes," "anticipates" or words of similar import. Similarly, statements that describe UCM's or iVolution's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, including the financial performance of UCM or iVolution as appropriate, and the valuation of UCM's investment portfolio, which could cause actual results to differ materially from those currently anticipated. Although UCM and iVolution believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, they cannot give any assurance that their expectations will be attained. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating any forward-looking statements. Certain factors could cause results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are discussed below. These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. These forward-looking statements are only made as of the date of this press release and both UCM and iVolution do not undertake any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
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