**United
      States Securities and Exchange Commission**


Washington,
      D.C. 20549




**Form
      10-KSB/A**




(Mark
      One)




**x** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE**


**ACT
      OF 1934,**




**For
      The Fiscal Year Ended December 31, 2006**




**o** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES**


**EXCHANGE
      ACT OF 1934.**




**For
      The Transition Period From ___________ To __________**




*Commission
      file number: 0-25416*




**UNIVERSAL
      PROPERTY DEVELOPMENT AND ACQUISITION CORPORATION**


(Exact
      name of registrant as specified in its charter)





Nevada
            
            20-3014499(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No)





14255
      U.S. Highway #1, Suite 209, Juno Beach, FL 33408


(Address
      of principal executive offices) (Zip Code)





(561)
      630-2977


(Issuer's
      Telephone Number, Including Area Code)




Securities
      registered under Section 12(b) of the Exchange Act:




Common
      Stock, par value $0.001 per share




Securities
      registered under Section 12(g) of the Exchange Act: None










Indicate
      by checkmark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. YES x NO o




Indicate
      by checkmark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein and will not be contained, to the best
      of
      the registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o




Registrant's
      revenues for its most recent year ended December 31, 2006 were
      $581,279.




The
      aggregate market value of the registrant's common stock held by non-affiliates
      of the registrant as of March 31, 2007 was $34,662,788 based on the closing
      bid
      price of $0.07 per share as reported on the Over-the-Counter Bulletin Board
      ("OTC Bulletin Board") operated by the National Association of Securities
      Dealers, Inc.




As
      of
      March 31, 2007, the registrant had 498,039,108 shares of common stock, par
      value
      $0.001 per share, outstanding.




Transitional
      Small Business Disclosure Format (check one): Yes o No x




**Forward
      Looking Statements**




All
      statements, other than statements of historical fact included in this Annual
      Report on Form 10-KSB/A (herein, "Annual Report") regarding our strategy, future
      operations, financial position, estimated revenues and losses, projected costs,
      prospects, plans and objectives of management are forward-looking statements.
      When used in this Annual Report, the words "could", "believe", "anticipate",
      "intend", "estimate", "expect", "project", and similar expressions are intended
      to identify forward-looking statements, although not all forward-looking
      statements contain such identifying words. All forward-looking statements speak
      only as of the date of this Annual Report. You should not place undue reliance
      on these forward-looking statements. Although we believe that our plans,
      intentions and expectations reflected in or suggested by the forward-looking
      statements we make in this Annual Report are reasonable, we can give no
      assurance that these plans, intentions or expectations will be achieved. We
      disclose important factors that could cause our actual results to differ
      materially from our expectations under the "Risk Factors" and "Management's
      Discussion and Analysis of Financial Condition and Results of Operations"
      sections and elsewhere in this Annual Report. These cautionary statements
      qualify all forward-looking statements attributable to us or persons acting
      on
      our behalf.




Unless
      the context otherwise requires, references in this Annual Report to "UPDA",
      "registrant", "issuer", "we", "us", "our", "the Company" or "ours" refer to
      Universal Property Development and Acquisition Corporation.
















**Explanatory
      Note**




This
      amendment on Form 10-KSB/A is being filed to amend our annual report on
      Form 10-KSB for the year ended December 31, 2006, as filed with the
      Securities and Exchange Commission on April 9, 2007, (the “Original Report”),
      solely for the purpose of making one correction. This amendment reflects the
      following change:





·
            The
                inclusion of our auditors, KBL’s audit opinion that was erroneously
                excluded in the Original Report filed on April 9, 2007. No other
                information was changed or
                modified.





This
      amendment does not reflect events occurring after the filing of the Original
      Report, or modify or update those disclosures affected by subsequent events.
      This Amendment continues to speak as of the date of the Original Report, and
      does not modify or update any other item or disclosures in the Original
      Report.










**PART
      I**





**ITEM
      1 - DESCRIPTION OF BUSINESS**




**Historical
      Background**





Universal
      Property Development and Acquisition Corporation was incorporated in the State
      of California in 1982 under the name Tahoe Lake Concession. In August 1983
      we
      changed our name to BAOA, Inc., in November 2000 we changed our name to Call
      Solutions, Inc., and in November 2003 we changed our name to Procore Group,
      Inc.
      In June 2005, our Board of Directors authorized and approved the upstream merger
      of our wholly owned subsidiary, Universal Property Development and Acquisition
      Corporation, a Nevada corporation which had no operations, with and into UPDA
      pursuant to Chapter 92A of the Nevada Revised Statutes (the "Upstream Merger").
      The Upstream Merger became effective on June 17, 2005, when we filed Articles
      of
      Merger with the Nevada Secretary of State. In connection with the Upstream
      Merger, and as authorized by Section 92A.180 of the Nevada Revised Statutes,
      we
      changed our state of domicile from California to Nevada and changed our name
      from Procore, Inc. to Universal Property Development and Acquisition
      Corporation. The Board of Directors of UPDA as it existed prior to the Upstream
      Merger survived the merger with no resignations or new
      appointments.





As
      a
      result of the name change, our common stock now trades on the OTC Bulletin
      Board
      under the trading symbol “UPDA.OB”. Our common stock also trades on the Berlin
      Stock Exchange under the trading symbol “UP1.BE”; on the XETRA Stock Exchange
      under the trading symbol “UP1.DE”; on the Frankfurt Stock Exchange under the
      trading symbol “UP1.F”; on the Munich Stock Exchange under the trading symbol
“UP1.MU”; and on the Struttgart Stock Exchange under the trading symbol
“UP1.SG”.





**General**





Our
      principal executive offices are located at 14255 U.S. Highway 1, Suite 209,
      Juno
      Beach, FL 33408, and our telephone number is (561) 630-2977.





We
      are
      engaged in the oil and natural gas acquisition, production, development,
      storage, distribution and blending industry. We currently have operations in
      the
      State of Texas. Our focus for the current fiscal year will be on developing
      our
      existing properties and operations, while continuing to pursue acquisitions
      of
      oil and gas properties with the potential for increased production through
      the
      application of modern production technologies.





We
      operate as a holding company. We operate in one segment and our business
      operation is focused primarily on Exploration and Production. We currently
      operate our own fields through our wholly owned UPDA Operators, Inc. subsidiary.
      Additionally, we currently own an oil and gas gathering system that is
      approximately 85 miles of pipeline. Our operations are conducted through our
      subsidiaries, which are either wholly-owned or operate as joint ventures with
      other entities in the oil and natural gas acquisition, development, production
      or transportation industry. Through the formation of subsidiaries and joint
      ventures, we have been able to expand our portfolio of assets, broaden our
      base
      of operations and hire or otherwise engage individuals with extensive industry
      knowledge and experience.




Our
      current operating subsidiaries and joint ventures are UPDA Operators, Inc.,
      UPDA
      Texas Trading, Inc., US Petroleum Depot, Inc., Catlin Oil & Gas, Inc.,
      Ambient Wells Services, Inc., Canyon Creek Oil & Gas, Inc., West Oil &
Gas, Inc., Texas Energy, Inc. and Texas Energy Pipeline & Gathering Systems,
      Inc.





**Operations**





The
      following is a description of the operations and entities that are in our
      business.





Exploration
      and Production





The
      primary purpose of our Exploration and Production focus is the acquisition
      and
      development of currently producing oil and gas properties with existing wells
      that are in need of modernization through the use of technology. The goal of
      our
      operations in the Exploration and Production division is to acquire oil and
      gas
      leases on such properties and improve the profitability of the existing oil
      and
      gas wells. The objective is to improve the oil and gas output of the existing
      wells on our leased properties through the modernization of the well equipment
      and the application of various new production increasing
      technologies.





Where
      appropriate, we may also drill additional wells on our leased properties to
      increase the productivity of that property. We will only engage in such drilling
      when the prospects for increased productivity are strong and the risk of
      drilling a non-producing well is low. To date we have not drilled any new wells
      on our leased property.





The
      oil
      and gas lease properties in our Exploration and Production portfolio are owned
      by four of our majority owned joint venture companies. The names of these joint
      venture companies are Canyon Creek Oil & Gas Inc. (“CCOG”), a Nevada
      corporation, Catlin Oil & Gas, Inc. (“Catlin”), a Nevada corporation, West
      Oil & Gas Inc. (“WOG”), a Nevada corporation, and Texas Energy, Inc.
      (“TEI”), a Nevada corporation. The operations of the properties are managed by
      our wholly-owned subsidiary UPDA Operators, Inc. (“UPDA-OI”), a Nevada
      corporation.


1




*Canyon
      Creek Oil & Gas, Inc.*





Canyon
      Creek Oil & Gas Inc. (“CCOG”), a Nevada corporation, was formed in July 2005
      as a joint venture entity between us, US Production & Exploration, LLC
      (“USPX”) and Triple Crown Consulting (“TCC”) for the purpose of acquiring
      certain currently producing oil and gas properties, low risk drilling prospects
      and existing oil and gas wells on properties in several locations in the State
      of Texas. We own sixty percent (60%) of the capital stock of CCOG, USPX owns
      thirty percent (30%) of the capital stock of CCOG, TCC owns five percent (5%)
      of
      the capital stock of CCOG, and Anjos Partners Ltd. (“APL”) recently acquired
      five percent (5%). CCOG holds the leases to approximately sixty (60) oil and
      gas
      wells located on more than 2,000 acres in North Texas. CCOG also holds leases
      on
      oil and gas properties located in Archer, Palo Pinto, Young, Victoria and
      Coleman County, Texas. CCOG is pursuing a revitalization program on some of
      its
      properties in order to improve production and profitability and to bring more
      wells on line. CCOG owns a 100% working interest in all the wells covered by
      its
      leases.





The
      following table shows the status of the wells at December 31, 2006 owned by
      CCOG
      on its leases:




Site
                County
            
            Total
                Acres
            
            Total
                Wells
            
            Wells
                OnlineColeman
                County
            
            
            915
            
            
            16
            
            
            10Archer
                County
            
            
            960
            
            
            17
            
            
            8Palo
                Pinto County
            
            
            614
            
            
            28
            
            
            0Victoria
                (Inez Field)
            
            
            243
            
            
            1
            
            
            0Young
                County
            
            
            40
            
            
            1
            
            
            0Total
            
            
            2,772
            
            
            63
            
            
            18




*Catlin
      Oil & Gas, Inc.*





Catlin
      Oil & Gas Inc. (“Catlin”), a Nevada corporation, was formed in 2006. It is a
      joint venture entity between us, Eleben Partners, Ltd (“EPL”) and APL for the
      purpose of acquiring certain currently producing oil and gas properties, low
      risk drilling prospects and existing oil and gas wells on properties in Jack
      County, Texas. We own ninety percent (90%) of the capital stock of Catlin,
      EPL
      owns five percent (5%) of the capital stock of Catlin, and APL owns five percent
      (5%) of the capital stock of Catlin. Catlin holds the leases to approximately
      sixty-five (65) oil and gas wells located on more than 3,000 acres in Jack
      County, Texas. Catlin is currently pursuing a revitalization program on all
      of
      its leases in order to improve production and profitability and to bring more
      wells on line.





The
      following table shows the current status of the work being done by Catlin on
      its
      leases:




Site
                County
            
            Total
                Acres
            
            Total
                Wells
            
            Wells
                OnlineJack
                County
            
            
            3,000
            
            
            65
            
            
            22Total
            
            
            3,000
            
            
            65
            
            
            22




*West
      Oil & Gas, Inc.*





West
      Oil
& Gas Inc. (“WOG”), a Nevada corporation, was formed in October 2005 as a
      joint venture entity between us, the Masaood Group (“MG”), Triple Crown
      Consulting, Inc. (“TCC”), and RAKJ, Inc. (“RI”) for the purpose of potentially
      acquiring oil and gas properties and existing wells in the state of Utah. We
      own
      seventy percent (70%) of the capital stock of WOG, MG owns twenty percent (20%)
      of the capital stock of WOG, and TCC and RI each own five percent (5%) of the
      capital stock of WOG. WOG did not pursue the acquisition of leases on the
      properties in Utah, and WOG is currently in the process of reviewing the
      potential acquisition of oil and gas leases on properties in the State of
      Texas.





As
      of
      December 31, 2006, WOG did not have any business operations or
      assets.





*Texas
      Energy, Inc.*





Texas
      Energy, Inc. (“TEI”), a Nevada corporation, was formed in March 2006 as a joint
      venture entity with Sundial Resources, Inc. for the purpose of acquiring and
      developing the Thresher-Medlin leasehold on properties in Young County, Texas.
      Upon the formation of this joint venture entity, we owned seventy percent (70%)
      of the capital stock of TEI and Sundial Resources, Inc. owned the remaining
      thirty percent (30%) of the capital stock of TEI.


2




In
      December 2006, but effective July 01, 2006, TEI entered into a series of
      agreements where TEI assigned its interests in Threser-Medlin leases to Sundial
      Resources Inc, and paid Sundial Resources Inc. $200,000 in return for its stock
      in Texas Energy Inc. As a result, UPDA owns one hundred percent (100%) of the
      capital stock of TEI. As of December 31, 2006, TEI had no business operations
      or
      assets.





*UPDA
      Operators, Inc.*





UPDA
      Operators, Inc. (“UPDA-OI”), a Nevada corporation, was formed in 2006 as a
      wholly-owned subsidiary of the company. UPDA-OI is designated by the Texas
      Railroad Commission as the operator of all UPDA subsidiaries leases and
      additionally provides managerial, legal and administrative services for all
      of
      the properties in our Exploration and Production division. UPDA-OI employs
      the
      personnel that engage in the managerial and administrative activities that
      are
      necessary to operate the properties owned by CCOG, Catlin and WOG and TEI.
      UPDA-OI, among other things, provides operational, geological, engineering,
      legal, land and handles accounting and bookkeeping activities necessary to
      commercially operate the assets of the company that are in our Exploration
      and
      Production division. By centralizing the division’s operations in UPDA-OI, we
      take advantage of economies of scale, maximize the productivity of employees
      and
      avoid duplicative costs and activities.





*Business
      Developments in Our Exploration and Production Division*





Since
      August 2005, we have striven to build our asset base and achieve growth in
      our
      Exploration and Production division primarily through the acquisition of leases
      on currently producing oil and gas properties with existing oil and gas wells
      that will benefit from the application of modern production technologies and
      low
      risk drilling prospects. From the implementation of our business plan through
      December 31, 2006, we have increased our proved reserves to approximately 15,714
      Barrels of Oil and 109,983 Mcf of natural gas, based on third party engineering
      reports by Long Consultants Inc and Eventech Inc. As of December 31, 2006,
      our
      estimated proved reserves had a pre-tax PV10 (present value of future net
      revenues before income taxes discounted at 10%) of approximately .$.438 million.
      We spent approximately $3.4 million on acquisitions and capital projects during
      2006.





We
      have a
      portfolio of oil and natural gas reserves, with approximately 46% of our proved
      reserves consisting of oil and approximately 54% consisting of natural gas.
      Approximately 100% of our proved reserves are classified as proved developed
      producing, or “PDP.” None of our proved reserves are classified as proved
      developed non-producing, or “PDNP,” and approximately none are classified as
      proved undeveloped, or “PUD.”





Management
      believes its reserves are substantially higher than what is reflected in the
      independant third party reserve report. These third party reserve reports were
      impacted by the transition of operations from TransPecos (Orr) to UPDA Operators
      and by a active workover program.. Third party engineers require approximately
      120 days of consistent production which UPDA was unable to achieve on many
      of
      its properties.





Management
      intends to continue to monitor production from the wells on a quarterly basis
      to
      assess whether the oil and gas properties are further impaired than what was
      reflected as of December 31, 2006.


3




*Ambient
      Wells Services, Inc.*





Ambient
      Wells Services, Inc. (“Ambient”), a Nevada corporation, was formed in 2006 as a
      joint venture with Damary. We own eighty percent (80%) of the capital stock
      of
      Ambient, Damary owns twenty percent (20%) of the capital stock of Ambient.
      Ambient was formed for the purpose of providing operational and maintenance
      services to all of the wells and oil production equipment located on the
      properties in our Exploration and Production division.





*Texas
      Energy Pipeline and Gathering Systems, Inc.*





Texas
      Energy Pipeline and Gathering Systems, Inc. (“TEPG”), a Nevada corporation, was
      formed in 2006 as a wholly-owned subsidiary of the company. TEPG owns no assets
      at December 31, 2006.





*US
      Petroleum Depot, Inc.*





US
      Petroleum Depot, Inc. (“US Petroleum”), a Nevada corporation, was formed in 2006
      as a wholly-owned subsidiary of the company. In late 2006, US Petroleum entered
      into an agreement to purchase an oil blending and distribution facility located
      at 32 Espiritu, Brownsville, Texas. US Petroleum closed on the storage facility
      in the first quarter of 2007. The property leased and operated by US Petroleum
      consists of, but is not limited to: (i) approximately 5.45 acres of real
      property, (ii) four oil storage tanks with an aggregate capacity of 48,000
      barrels, (iii) ship channel access via two 8 inch diameter oil pipelines that
      measure 2,000 feet each , (iv) a railroad spur to receive or load oil via rail
      cars with a capacity of up to 800 barrels each and (v) equipment to allow the
      loading and unloading of oil from tanker trucks.





U.S.
      Petroleum intends to use the Brownsville facility in the operation of its
      business of receiving, storing and distributing petroleum products. The
      Brownsville facility will allow U.S. Petroleum to receive and to load barges
      of
      diverse capacities, and to receive and load rail cars. US Petroleum is currently
      preparing manifolds to accommodate the pumps required in order to receive
      shipments of petroleum via truck transport. U.S. Petroleum contracted the firm
      of MWS Consultants of Brownsville, Texas to assist in the preparation of the
      proper documentation to be filed with regulators such as the United States
      Coast
      Guard, OSHA, EPA and has now obtained all operational permits required for
      its
      business operations.




**Competitive
      Business Conditions**





We
      operate in a highly competitive environment for acquiring properties,
      modernizing existing wells, marketing oil and natural gas and securing trained
      personnel. The majority of our competitors possess and employ financial,
      technical and personnel resources substantially greater than ours, which can
      be
      particularly important in the areas in which we operate. Those companies may
      be
      able to pay more for productive oil and natural gas properties and exploratory
      prospects and to evaluate, bid for and purchase a greater number of properties
      and prospects than our financial or personnel resources permit. Our ability
      to
      acquire additional prospects and to find and develop reserves in the future
      will
      depend on our ability to evaluate and select suitable properties and to
      consummate transactions in a highly competitive environment. Also, there is
      substantial competition for capital available for investment in the oil and
      natural gas industry.





Current
      competitive factors in the domestic oil and gas industry are unique. The actual
      price range of crude oil is largely established by major international
      producers. Pricing for natural gas is more regional. Because the current
      domestic demand for oil and gas exceeds supply, we believe there is little
      risk
      that all current production will not be sold at relatively fixed prices. To
      this
      extent we do not believe we are directly competitive with other producers,
      nor
      is there any significant risk that we could not sell all our current production
      at current prices with a reasonable profit margin. The risk of domestic
      overproduction at current prices is not deemed significant. However, more
      favorable prices can usually be negotiated for larger quantities of oil and/or
      gas product. In this respect, while we believe we have a price disadvantage
      when
      compared to larger producers, we view our primary pricing risk to be related
      to
      a potential decline in international prices to a level which could render our
      current production uneconomical.





We
      are
      presently committed to use the services of the existing gathering companies
      in
      our present areas of production. This potentially gives such gathering companies
      certain short-term relative monopolistic powers to set gathering and
      transportation costs, because obtaining the services of an alternative gathering
      company would require substantial additional costs (since an alternative
      gathering would be required to lay new pipeline and/or obtain new rights of
      way
      to any lease from which we are selling production).




**Major
      Customers**





We
      principally sell our oil and natural gas production to marketers and other
      purchasers that have access to nearby pipeline facilities. In areas where there
      is no practical access to pipelines, oil is trucked to storage facilities.
      Our
      marketing of oil and natural gas can be affected by factors beyond our control,
      the effects of which cannot be accurately predicted. For the fiscal year 2006,
      one purchaser, Sunoco Partners Marketing & Terminals LP, was responsible for
      generating approximately 77% of our total oil sales, and one purchaser ,
      Enbridge G & P (North Texas) LP. **,** was
      responsible for generating approximately 71% of our natural gas sales. However,
      we believe that the loss of either of these oil and gas purchasers would not
      materially impact our business, because we could readily find other purchasers
      for our oil and gas as produced.


4




**Governmental
      Regulations**




*Regulation
      of Transportation of Oil*





Sales
      of
      crude oil, condensate and natural gas liquids are not currently regulated and
      are made at negotiated prices. Nevertheless, Congress could reenact price
      controls in the future.





Our
      sales
      of crude oil are affected by the availability, terms and cost of transportation.
      The transportation of oil in common carrier pipelines is also subject to rate
      regulation. The Federal Energy Regulatory Commission, or the FERC, regulates
      interstate oil pipeline transportation rates under the Interstate Commerce
      Act.
      Intrastate oil pipeline transportation rates are subject to regulation by state
      regulatory commissions. The basis for intrastate oil pipeline regulation, and
      the degree of regulatory oversight and scrutiny given to intrastate oil pipeline
      rates, varies from state to state.





Insofar
      as effective interstate and intrastate rates are equally applicable to all
      comparable shippers, we believe that the regulation of oil transportation rates
      will not affect our operations in any way that is of material difference from
      those of our competitors. Further, interstate and intrastate common carrier
      oil
      pipelines must provide service on a non-discriminatory basis. Under this open
      access standard, common carriers must offer service to all shippers requesting
      service on the same terms and under the same rates. When oil pipelines operate
      at full capacity, access is governed by pro-rationing provisions set forth
      in
      the pipelines’ published tariffs. Accordingly, we believe that access to oil
      pipeline transportation services generally will be available to us to the same
      extent as to our competitors.





*Regulation
      of Transportation and Sale of Natural Gas*





Historically,
      the transportation and sale for resale of natural gas in interstate commerce
      have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas
      Policy Act of 1978 and regulations issued under those Acts by the FERC. In
      the
      past, the federal government has regulated the prices at which natural gas
      could
      be sold. While sales by producers of natural gas can currently be made at
      uncontrolled market prices, Congress could reenact price controls in the
      future.





Since
      1985, the FERC has endeavored to make natural gas transportation more accessible
      to natural gas buyers and sellers on an open and non-discriminatory basis.
      The
      FERC has stated that open access policies are necessary to improve the
      competitive structure of the interstate natural gas pipeline industry and to
      create a regulatory framework that will put natural gas sellers into more direct
      contractual relations with natural gas buyers by, among other things, unbundling
      the sale of natural gas from the sale of transportation and storage services.
      Although the FERC’s orders do not directly regulate natural gas producers, they
      are intended to foster increased competition within all phases of the natural
      gas industry.





We
      cannot
      accurately predict whether the FERC’s actions will achieve the goal of
      increasing competition in markets in which our natural gas is sold. Therefore,
      we cannot provide any assurance that the less stringent regulatory approach
      recently established by the FERC will continue. However, we do not believe
      that
      any action taken will affect us in a way that materially differs from the way
      it
      affects other natural gas producers.





Intrastate
      natural gas transportation is subject to regulation by state regulatory
      agencies. The basis for intrastate regulation of natural gas transportation
      and
      the degree of regulatory oversight and scrutiny given to intrastate natural
      gas
      pipeline rates and services varies from state to state. Insofar as such
      regulation within a particular state will generally affect all intrastate
      natural gas shippers within the state on a comparable basis, we believe that
      the
      regulation of similarly situated intrastate natural gas transportation in any
      states in which we operate and ship natural gas on an intrastate basis will
      not
      affect our operations in any way that is of material difference from those
      of
      our competitors.





*Regulation
      of Production*





The
      production of oil and natural gas is subject to regulation under a wide range
      of
      local, state and federal statutes, rules, orders and regulations. Federal,
      state
      and local statutes and regulations require permits for drilling operations,
      drilling bonds and reports concerning operations. All of the states in which
      we
      own and operate properties have regulations governing conservation matters,
      including provisions for the unitization or pooling of oil and natural gas
      properties, the establishment of maximum allowable rates of production from
      oil
      and natural gas wells, the regulation of well spacing, and plugging and
      abandonment of wells. The effect of these regulations is to limit the amount
      of
      oil and natural gas that we can produce from our wells and to limit the number
      of wells or the locations at which we can drill, although we can apply for
      exceptions to such regulations or to have reductions in well spacing. Moreover,
      each state generally imposes a production or severance tax with respect to
      the
      production and sale of oil, natural gas and natural gas liquids within its
      jurisdiction.





The
      failure to comply with these rules and regulations can result in substantial
      penalties. Our competitors in the oil and natural gas industry are subject
      to
      the same regulatory requirements and restrictions that affect our
      operations.


5




**Environmental
      Compliance and Risks**





Our
      oil
      and natural gas exploration, development and production operations are subject
      to stringent federal, state and local laws and regulations governing the
      discharge of materials into the environment or otherwise relating to
      environmental protection. Historically, most of the environmental regulation
      of
      oil and gas production has been left to state regulatory boards or agencies
      in
      those jurisdictions where there is significant gas and oil production, with
      limited direct regulation by such federal agencies as the Environmental
      Protection Agency. However, while we believe this generally to be the case
      for
      our production activities in Texas, there are various regulations issued by
      the
      Environmental Protection Agency (“EPA”) and other governmental agencies that
      would govern significant spills, blow-outs, or uncontrolled
      emissions.





In
      Texas,
      specific oil and gas regulations apply to the drilling, completion and
      operations of wells, and the disposal of waste oil and salt water. There are
      also procedures incident to the plugging and abandonment of dry holes or other
      non-operational wells, all as governed by the applicable governing state
      agency.





At
      the
      federal level, among the more significant laws and regulations that may affect
      our business and the oil and gas industry are: The Comprehensive Environmental
      Response, Compensation and Liability Act of 1980, also known as “CERCLA” or
      Superfund; the Oil Pollution Act of 1990; the Resource Conservation and Recovery
      Act, also known as “RCRA”; the Clean Air Act; Federal Water Pollution Control
      Act of 1972, or the Clean Water Act; and the Safe Drinking Water Act of
      1974.





Compliance
      with these regulations may constitute a significant cost and effort for us.
      No
      specific accounting for environmental compliance has been maintained or
      projected by us at this time. We are not presently aware of any environmental
      demands, claims, or adverse actions, litigation or administrative proceedings
      in
      which either us or our acquired properties are involved or subject to, or
      arising out of any predecessor operations.





In
      the
      event of a breach of environmental regulations, these environmental regulatory
      agencies have a broad range of alternative or cumulative remedies which include:
      ordering a clean-up of any spills or waste material and restoration of the
      soil
      or water to conditions existing prior to the environmental violation; fines;
      or
      enjoining further drilling, completion or production activities. In certain
      egregious situations the agencies may also pursue criminal remedies against
      us
      or our principal officers.





**Management’s
      Business Strategies**





Our
      goal
      is to increase stockholder value by 1) investing in oil and gas projects with
      attractive rates of return on capital employed, 2) growing our Well Services
      company, and 3) growing and expanding our Trading company. We plan to achieve
      these goals by 1) exploiting and developing our existing oil and natural gas
      properties and pursuing acquisitions of additional properties, 2) contracting
      with third parties for well maintenance services and 3) increasing the volume
      of
      our condensate trading and expanding into the fuel blending and distribution
      market. Specifically, we have focused, and plan to continue to focus, on the
      following:





*Developing
      and Exploiting Existing Properties* . We
      believe that there is significant value to be created by drilling the identified
      undeveloped opportunities on our properties. We believe that our current and
      future cash flow and financing activities will enable us to undertake the
      exploitation of our properties through additional drilling and development
      activities.





*Pursuing
      Acquisitions.* We have
      historically pursued acquisitions of properties that we believe to have
      exploitation and development potential. We will pursue an acquisition program
      designed to increase reserves and complement our existing core properties.
      We
      have access to an experienced team of management and engineering professionals
      who identify and evaluate acquisition opportunities, negotiate and close
      purchases and manage acquired properties. During our fiscal year 2006, we
      acquired approximately 3,000 acres at an acquisition cost of approximately
      $2.0
      million, had capital development expenditures of approximately $1.3 million.
      While our emphasis in 2007 and beyond is anticipated to focus on the further
      development of our existing properties, we will continue to look for properties
      with both existing cash flow from production and future development
      potential.





*Controlling
      Costs through Operation of Existing Properties* . We
      operate essentially 100% of the pre-tax PV10 value of our total proved reserves,
      which we believe enables us to better manage expenses, capital allocations
      and
      the decision-making processes related to our exploitation and exploration
      activities.





*Expansion
      of Well Services.* Through
      our subsidiary, Ambient Wells Services, Inc., we intend to expand our current
      well services operations to include existing wells that are not owned, or partly
      owned, by our company. Ambient employs or has contracts with an experienced
      group of well services professionals. Management believes that currently there
      is substantial demand for well servicing personnel as a result of historically
      high oil and natural gas prices. Many older oil and gas wells that had been
      inactive can now be run on a profitable basis as a result of the recent
      increases in oil and gas prices. Management believes that this increase in
      well
      operating activity will enable the company to enter into well servicing
      contracts through Ambient, and to thereby leverage Ambient’s personnel into a
      new source of revenue for the company.





*Expansion
      of Trading.* Through
      our wholly-owned subsidiary, US Petroleum Depot, Inc., we intent to expand
      our
      current condensate trading operations and enter into the fuel blending and
      wholesale distribution markets. Pursuant to our relationship with UPDA Texas
      Trading, we estimate that approximately 40,000 barrels of condensate per month
      are currently received, stored and distributed by US Petroleum at the
      Brownsville facility. US Petroleum expects to research and develop a unique
      formula for unleaded gasoline through the blending of fuels with varying octane
      levels. US Petroleum is in the process of cultivating a distribution network
      to
      market and deliver this new product to independent dealers and retail outlets.
      As this network matures, we intend to increase the volume of production and
      we
      anticipate the acquisition of additional storage and blending facilities to
      facilitate this business area.


6




**Current
      Employees**





As
      of
      December 31, 2006, we had 19 full-time employees. Our employees are not
      represented by any labor union. We consider our relations with our employees
      to
      be satisfactory and have never experienced a work stoppage or
      strike.





We,
      or
      our subsidiaries and joint venture entities, retain certain engineers,
      geologists, landmen, pumpers and other personnel on a contract or fee basis
      as
      necessary for our operations.





**ITEM
      1A - RISK FACTORS**





You
      should carefully consider each of the risks described below, together with
      all
      of the other information contained or incorporated by reference in this Annual
      Report. If any of the following risks develop into actual events, our business,
      financial condition or results of operations could be materially adversely
      affected and the trading prices of our common stock could decline.





***General
      Risks Related to Our Company***





**We
      Have a Limited Operating History**  *.*




Because
      our business plan was only adopted in July 2005 we have a limited operating
      history. Such limited operating history makes it more difficult to predict
      whether or not we will be successful in the future. Our future financial and
      operational success is subject to the risks, uncertainties, expenses, delays
      and
      difficulties associated with managing a new business, many of which may be
      beyond our control. In addition, we compete in a volatile and highly price
      sensitive industry and we may face many uncertainties. Our success will depend
      on many factors, including those described in this Risk Factors
      section.





**We
      Have a History of Losses and May Need Additional Financing**




We
      have
      experienced operating losses, as well as net losses, for each of the years
      during which we have operated. We anticipate future losses and negative cash
      flow to continue for the foreseeable future.





To
      date,
      we have received only limited revenue from the sale of our products. We have
      incurred significant costs in connection with the development of our leases
      and
      properties and there is no assurance that we will achieve sufficient revenues
      to
      offset anticipated operating costs. Although we anticipate deriving revenues
      from the sale of our oil and gas production, no assurance can be given that
      these products can be sold on a net profit basis. Included in such former and
      future losses are development expenses and general and administrative expenses.
      We anticipate that our losses will continue until we are able to generate
      sufficient revenues to support our operations. If we achieve profitability,
      we
      cannot give any assurance that we would be able to sustain or increase
      profitability on a quarterly or annual basis in the future.




Similarly,
      in the future, we may not generate sufficient revenue from operations to pay
      our
      operating expenses. If we fail to generate sufficient cash from operations
      to
      pay these expenses, our management will need to identify other sources of funds.
      We may not be able to borrow money or issue more shares of common or preferred
      stock to meet our cash needs. Even if we can complete such transactions, they
      may not be on terms that are favorable or reasonable from our perspective.





**We
      May Not Be Able to Borrow Funds**





There
      currently are no legal limitations on our ability to borrow funds to increase
      the amount of capital available to us to carry out our business plan. However,
      our limited resources and limited operating history will make it difficult
      to
      borrow funds. The amount and nature of any such borrowings would depend on
      numerous considerations, including our capital requirements, our perceived
      ability to meet debt service on any such borrowings and the then prevailing
      conditions in the financial markets, as well as general economic conditions.
      There can be no assurance that debt financing, if required or sought, would
      be
      available on terms deemed to be commercially acceptable by us and in our best
      interest.





**Managing
      Growth and Expansion.**





We
      currently anticipate a period of growth as a result of the recent changes in
      our
      corporate structure and the production and sale of oil and gas by our
      subsidiaries and joint venture entities under the leases on their properties.
      The resulting strain on our managerial, operational, financial and other
      resources could be significant. Success in managing any such expansion and
      growth will depend, in part, upon the ability of senior management to manage
      effectively. Any failure to manage the anticipated growth and expansion could
      have a material adverse effect on our business.


7




***Risks
      Relating to the Oil and Natural Gas Industry and Our
      Business***





**A
      substantial or extended decline in oil and natural gas prices may adversely
      affect our business, financial condition or results of operations and our
      ability to meet our capital expenditure obligations and financial
      commitments.**





The
      price
      we receive for our oil and natural gas production heavily influences our
      revenue, profitability, access to capital and future rate of growth. Oil and
      natural gas are commodities and, therefore, their prices are subject to wide
      fluctuations in response to relatively minor changes in supply and demand.
      Historically, the markets for oil and natural gas have been volatile. These
      markets will likely continue to be volatile in the future. The prices we receive
      for our production, and the levels of our production, depend on numerous factors
      beyond our control. These factors include, but are not limited to, the
      following:





·
            changes
                in global supply and demand for oil and natural
                gas;




·
            the
                actions of the Organization of Petroleum Exporting Countries, or
                OPEC;




·
            the
                price and quantity of imports of foreign oil and natural
                gas;




·
            political
                conditions, including embargoes, in or affecting other oil-producing
                activity;




·
            the
                level of global oil and natural gas exploration and production
                activity;




·
            the
                level of global oil and natural gas
                inventories;




·
            weather
                conditions;




·
            technological
                advances affecting energy consumption;
                and




·
            the
                price and availability of alternative
                fuels.





Lower
      oil
      and natural gas prices may not only decrease our revenues on a per share basis
      but also may reduce the amount of oil and natural gas that we can produce
      economically. Lower prices will also negatively impact the value of our proved
      reserves. A substantial or extended decline in oil or natural gas prices may
      materially and adversely affect our future business, financial condition,
      results of operations, liquidity or ability to finance planned capital
      expenditures.





**A
      substantial percentage of our proven properties are undeveloped; therefore
      the
      risk associated with our success is greater than would be the case if the
      majority of our properties were categorized as proved developed
      producing.**





Because
      a
      substantial percentage of our proven properties are proved undeveloped
      (approximately 95%) we will require significant additional capital to develop
      such properties before they may become productive. Further, because of the
      inherent uncertainties associated with drilling for oil and gas, some of these
      properties may never be developed to the extent that they result in positive
      cash flow. Even if we are successful in our development efforts, it could take
      several years for a significant portion of our undeveloped properties to be
      converted to positive cash flow.





While
      our
      current business plan is to fund the development costs with cash flow from
      our
      other producing properties, if such cash flow is not sufficient we may be forced
      to seek alternative sources for cash, through the issuance of additional equity
      or debt securities, increased borrowings or other means.





**Drilling
      for and producing oil and natural gas are high risk activities with many
      uncertainties that could adversely affect our business, financial condition
      or
      results of operations.**





Our
      future success will depend on the success of our exploitation, exploration,
      development and production activities. Our oil and natural gas exploration
      and
      production activities are subject to numerous risks beyond our control,
      including the risk that drilling will not result in commercially viable oil
      or
      natural gas production. Our decisions to purchase, explore, develop or otherwise
      exploit prospects or properties will depend in part on the evaluation of data
      obtained through geophysical and geological analyses, production data and
      engineering studies, the results of which are often inconclusive or subject
      to
      varying interpretations. Please read “—Reserve estimates depend on many
      assumptions that may turn out to be inaccurate” (below) for a discussion of the
      uncertainty involved in these processes. Our cost of drilling, completing and
      operating wells is often uncertain before drilling commences. Overruns in
      budgeted expenditures are common risks that can make a particular project
      uneconomical. Further, many factors may curtail, delay or cancel drilling,
      including the following:





·
            delays
                imposed by or resulting from compliance with regulatory
                requirements;




·
            pressure
                or irregularities in geological
                formations;




·
            shortages
                of or delays in obtaining equipment and qualified
                personnel;




·
            equipment
                failures or accidents;




·
            adverse
                weather conditions;




·
            reductions
                in oil and natural gas prices;




·
            title
                problems; and




·
            limitations
                in the market for oil and natural
                gas.





**If
      our assessments of recently purchased properties are materially inaccurate,
      it
      could have significant impact on future operations and
      earnings.**


8




The
      successful acquisition of producing properties requires assessments of many
      factors, which are inherently inexact and may be inaccurate, including the
      following:





·
            the
                amount of recoverable reserves;




·
            future
                oil and natural gas prices;




·
            estimates
                of operating costs;




·
            estimates
                of future development costs;




·
            estimates
                of the costs and timing of plugging and abandonment;
                and




·
            potential
                environmental and other
                liabilities.





Our
      assessment will not reveal all existing or potential problems, nor will it
      permit us to become familiar enough with the properties to assess fully their
      capabilities and deficiencies. As noted previously, we plan to undertake further
      development of our properties through the use of cash flow from existing
      production. Therefore, a material deviation in our assessments of these factors
      could result in less cash flow being available for such purposes than we
      presently anticipate, which could either delay future development operations
      (and delay the anticipated conversion of reserves into cash), or cause us to
      seek alternative sources to finance development activities.





**If
      oil and natural gas prices decrease, we may be required to take write-downs
      of
      the carrying values of our oil and natural gas properties, potentially
      negatively impacting the trading value of our securities.**





Accounting
      rules require that we review periodically the carrying value of our oil and
      natural gas properties for possible impairment. Based on specific market factors
      and circumstances at the time of prospective impairment reviews, and the
      continuing evaluation of development plans, production data, economics and
      other
      factors, we may be required to write down the carrying value of our oil and
      natural gas properties. A write-down could constitute a non-cash charge to
      earnings. It is likely the cumulative effect of a write-down could also
      negatively impact the trading price of our securities.





**Reserve
      estimates depend on many assumptions that may turn out to be inaccurate. Any
      material inaccuracies in these reserve estimates or underlying assumptions
      will
      materially affect the quantities and present value of our
      reserves.**





The
      process of estimating oil and natural gas reserves is complex. It requires
      interpretations of available technical data and many assumptions, including
      assumptions relating to economic factors. Any significant inaccuracies in these
      interpretations or assumptions could materially affect the estimated quantities
      and present value of our reported reserves.





In
      order
      to prepare our estimates, we must project production rates and timing of
      development expenditures. We must also analyze available geological,
      geophysical, production and engineering data. The extent, quality and
      reliability of this data can vary. The process also requires economic
      assumptions about matters such as oil and natural gas prices, drilling and
      operating expenses, capital expenditures, taxes and availability of funds.
      Therefore, estimates of oil and natural gas reserves are inherently
      imprecise.





Actual
      future production, oil and natural gas prices, revenues, taxes, development
      expenditures, operating expenses and quantities of recoverable oil and natural
      gas reserves most likely will vary from our estimates. Any significant variance
      could materially affect the estimated quantities and present value of our
      reported reserves. In addition, we may adjust estimates of proved reserves
      to
      reflect production history, results of exploration and development, prevailing
      oil and natural gas prices and other factors, many of which are beyond our
      control.





You
      should not assume that the present value of future net revenues from our
      reported proved reserves is the current market value of our estimated oil and
      natural gas reserves. In accordance with SEC requirements, we generally base
      the
      estimated discounted future net cash flows from our proved reserves on prices
      and costs on the date of the estimate. Actual future prices and costs may differ
      materially from those used in the present value estimate. If future values
      decline or costs increase it could negatively impact our ability to finance
      operations, and individual properties could cease being commercially viable,
      affecting our decision to continue operations on producing properties or to
      attempt to develop properties. All of these factors would have a negative impact
      on earnings and net income, and most likely the trading price of our
      securities.





**Prospects
      that we decide to drill may not yield oil or natural gas in commercially viable
      quantities.**





Our
      prospects are in various stages of evaluation, ranging from prospects that
      are
      currently being developed, to prospects that will require substantial additional
      seismic data processing and interpretation. There is no way to predict in
      advance of drilling and testing whether any particular prospect will yield
      oil
      or natural gas in sufficient quantities to recover drilling or completion costs
      or to be economically viable. This risk may be enhanced in our situation, due
      to
      the fact that a significant percentage of our proved reserves are currently
      proved undeveloped reserves. The use of seismic data and other technologies
      and
      the study of producing fields in the same area will not enable us to know
      conclusively prior to drilling whether oil or natural gas will be present or,
      if
      present, whether oil or natural gas will be present in commercial quantities.
      We
      cannot assure you that the analogies we draw from available data from other
      wells, more fully explored prospects or producing fields will be applicable
      to
      our drilling prospects.





**We
      may incur substantial losses and be subject to substantial liability claims
      as a
      result of our oil and natural gas operations.**


9




We
      are
      not insured against all risks. Losses and liabilities arising from uninsured
      and
      underinsured events could materially and adversely affect our business,
      financial condition or results of operations. Our oil and natural gas
      exploration and production activities are subject to all of the operating risks
      associated with drilling for and producing oil and natural gas, including the
      possibility of:





·
            environmental
                hazards, such as uncontrollable flows of oil, natural gas, brine,
                well
                fluids, toxic gas or other pollution into the environment, including
                groundwater and shoreline
                contamination;




·
            abnormally
                pressured formations;




·
            mechanical
                difficulties, such as stuck oil field drilling and service tools
                and
                casing collapse;




·
            fires
                and explosions;




·
            personal
                injuries and death; and




·
            natural
                disasters.





Any
      of
      these risks could adversely affect our ability to conduct operations or result
      in substantial losses to our company. We may elect not to obtain insurance
      if we
      believe that the cost of available insurance is excessive relative to the risks
      presented. In addition, pollution and environmental risks generally are not
      fully insurable. If a significant accident or other event occurs and is not
      fully covered by insurance, then it could adversely affect us.





**We
      are subject to complex laws that can affect the cost, manner or feasibility
      of
      doing business.**





Exploration,
      development, production and sale of oil and natural gas are subject to extensive
      federal, state, local and international regulation. We may be required to make
      large expenditures to comply with governmental regulations. Matters subject
      to
      regulation include:





·
            discharge
                permits for drilling operations;




·
            drilling
                bonds;




·
            reports
                concerning operations;




·
            the
                spacing of wells;




·
            unitization
                and pooling of properties; and




·
            taxation.





Under
      these laws, we could be liable for personal injuries, property damage and other
      damages. Failure to comply with these laws also may result in the suspension
      or
      termination of our operations and subject us to administrative, civil and
      criminal penalties. Moreover, these laws could change in ways that substantially
      increase our costs. Any such liabilities, penalties, suspensions, terminations
      or regulatory changes could materially adversely affect our financial condition
      and results of operations.





**Our
      operations may incur substantial liabilities to comply with the environmental
      laws and regulations.**





Our
      oil
      and natural gas operations are subject to stringent federal, state and local
      laws and regulations relating to the release or disposal of materials into
      the
      environment or otherwise relating to environmental protection. These laws and
      regulations may require the acquisition of a permit before drilling commences,
      restrict the types, quantities and concentration of substances that can be
      released into the environment in connection with drilling and production
      activities, limit or prohibit drilling activities on certain lands lying within
      wilderness, wetlands and other protected areas, and impose substantial
      liabilities for pollution resulting from our operations. Failure to comply
      with
      these laws and regulations may result in the assessment of administrative,
      civil
      and criminal penalties, incurrence of investigatory or remedial obligations
      or
      the imposition of injunctive relief. Changes in environmental laws and
      regulations occur frequently, and any changes that result in more stringent
      or
      costly waste handling, storage, transport, disposal or cleanup requirements
      could require us to make significant expenditures to maintain compliance, and
      may otherwise have a material adverse effect on our results of operations,
      competitive position or financial condition as well as the industry in general.
      Under these environmental laws and regulations, we could be held strictly liable
      for the removal or remediation of previously released materials or property
      contamination regardless of whether we were responsible for the release or
      if
      our operations were standard in the industry at the time they were
      performed.





**Unless
      we replace our oil and natural gas reserves, our reserves and production will
      decline, which would adversely affect our cash flows and
      income.**





Unless
      we
      conduct successful development, exploitation and exploration activities or
      acquire properties containing proved reserves, our proved reserves will decline
      as those reserves are produced. Producing oil and natural gas reservoirs
      generally are characterized by declining production rates that vary depending
      upon reservoir characteristics and other factors. Our future oil and natural
      gas
      reserves and production, and, therefore our cash flow and income, are highly
      dependent on our success in efficiently developing and exploiting our current
      reserves and economically finding or acquiring additional recoverable reserves.
      If we are unable to develop, exploit, find or acquire additional reserves to
      replace our current and future production, our cash flow and income will decline
      as production declines, until our existing properties would be incapable of
      sustaining commercial production.





**The
      unavailability or high cost of drilling rigs, equipment, supplies, personnel
      and
      oil field services could adversely affect our ability to execute on a timely
      basis our exploration and development plans within our
      budget.**


10




With
      the
      recent increase in the prices of oil and natural gas, we have encountered an
      increase in the cost of securing drilling rigs, equipment and supplies.
      Shortages or the high cost of drilling rigs, equipment, and supplies are
      expected to continue in the near-term. In addition, larger producers may be
      more
      likely to secure access to such equipment by virtue of offering drilling
      companies more lucrative terms. If we are unable to acquire access to such
      resources, or can obtain access only at higher prices, not only would this
      potentially delay our ability to convert our reserves into cash flow, but could
      also significantly increase the cost of producing those reserves, thereby
      negatively impacting anticipated net income.





**If
      our access to markets is restricted, it could negatively impact our production,
      our income and ultimately our ability to retain our
      leases.**





Market
      conditions or the unavailability of satisfactory oil and natural gas
      transportation arrangements may hinder our access to oil and natural gas markets
      or delay our production. The availability of a ready market for our oil and
      natural gas production depends on a number of factors, including the demand
      for
      and supply of oil and natural gas and the proximity of reserves to pipelines
      and
      terminal facilities. Our ability to market our production depends in substantial
      part on the availability and capacity of gathering systems, pipelines and
      processing facilities owned and operated by third parties. Our failure to obtain
      such services on acceptable terms could materially harm our
      business.





Currently,
      the majority of our production is sold to marketers and other purchasers that
      have access to nearby pipeline facilities. However, as we begin to further
      develop our properties, we may find production in areas with limited or no
      access to pipelines, thereby necessitating delivery by other means, such as
      trucking, or requiring compression facilities. Such restrictions on our ability
      to sell our oil or natural gas have several adverse affects, including higher
      transportation costs, fewer potential purchasers (thereby potentially resulting
      in a lower selling price) or, in the event we were unable to market and sustain
      production from a particular lease for an extended time, possibly causing us
      to
      lose a lease due to lack of production.





**Competition
      in the oil and natural gas industry is intense, which may adversely affect
      our
      ability to compete.**





We
      operate in a highly competitive environment for acquiring properties, marketing
      oil and natural gas and securing trained personnel. Many of our competitors
      possess and employ financial, technical and personnel resources substantially
      greater than ours, which can be particularly important in the areas in which
      we
      operate. Those companies may be able to pay more for productive oil and natural
      gas properties and exploratory prospects and to evaluate, bid for and purchase
      a
      greater number of properties and prospects than our financial or personnel
      resources permit. Our ability to acquire additional prospects and to find and
      develop reserves in the future will depend on our ability to evaluate and select
      suitable properties and to consummate transactions in a highly competitive
      environment. Also, there is substantial competition for capital available for
      investment in the oil and natural gas industry. We may not be able to compete
      successfully in the future in acquiring prospective reserves, developing
      reserves, marketing hydrocarbons, attracting and retaining quality personnel
      and
      raising additional capital.





***Risks
      Relating to Our Common Stock***





**The
      market price of our stock may be affected by the issuance of additional shares
      of our common stock upon the conversion of shares of our preferred
      stock.**





As
      of
      March 31, 2007 we had an aggregate of 108,178 shares of two classes of preferred
      stock outstanding, which are convertible, or will be convertible within the
      next
      twelve (12) months, into an aggregate of 263,560,000 restricted shares of our
      common stock.





Substantial
      sales of our common stock, including shares issued upon the conversion of our
      preferred shares, in the public market, or the perception that these sales
      could
      occur, may have a depressive effect on the market price of our common stock.
      Such sales or the perception of such sales could also impair our ability to
      raise capital or make acquisitions through the issuance of our common
      stock.





**We
      have no plans to pay dividends on our common stock. You may not receive funds
      without selling your stock.**





We
      do not
      anticipate paying any cash dividends on our common stock in the foreseeable
      future. We currently intend to retain future earnings, if any, to finance the
      expansion of our business. Our future dividend policy is within the discretion
      of our board of directors and will depend upon various factors, including our
      business, financial condition, results of operations, capital requirements
      and
      investment opportunities.





**Provisions
      under Nevada law could delay or prevent a change in control of our company,
      which could adversely affect the price of our common
      stock.**





While
      we
      do not believe that we currently have any provisions in our organizational
      documents that could prevent or delay a change in control of our company (such
      as provisions calling for a staggered board of directors, or the issuance of
      stock with super-majority voting rights), the existence of some provisions
      under
      Nevada law could delay or prevent a change in control of our company, which
      could adversely affect the price of our common stock. Nevada law imposes some
      restrictions on mergers and other business combinations between us and any
      holder of 10% or more of our outstanding common stock.




**Our
      Common Stock Is Subject To "Penny Stock" Restrictions Under Federal Securities
      Laws, Which Could Reduce The Liquidity Of Our Common Stock**


11




The
      Securities and Exchange Commission has adopted regulations, which generally
      define penny stocks to be an equity security that has a market price less than
      $5.00 per share or an exercise price of less than $5.00 per share, subject
      to
      certain exemptions. On April 5, 2007, the closing price for our common stock,
      as
      quoted on the Over the Counter Bulletin Board, was $0.06 per share and
      therefore, our common stock is designated a "Penny Stock." As a penny stock,
      our
      common stock may become subject to Rule 15g-9 under the Exchange Act or the
      Penny Stock Rules. These rules include, but are not limited to, Rules 3a5l-l,
      15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities Exchange
      Act of 1934, as amended. These rules impose additional sales practice
      requirements on broker-dealers that sell such securities to persons other than
      established customers and "accredited investors" (generally, individuals with
      a
      net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or
      $300,000 together with their spouses). For transactions covered by Rule 15g-9,
      a
      broker-dealer must make a special suitability determination for the purchaser
      and have received the purchaser's written consent to the transaction prior
      to
      sale. As a result, this rule may affect the ability of broker-dealers to sell
      our securities and may affect the ability of purchasers to sell any of our
      securities in the secondary market.





The
      rules
      may further affect the ability of owners of our shares to sell their securities
      in any market that may develop for them. There may be a limited market for
      penny
      stocks, due to the regulatory burdens on broker-dealers. The market among
      dealers may not be active. Investors in penny stock often are unable to sell
      stock back to the dealer that sold them the stock. The mark-ups or commissions
      charged by the broker-dealers may be greater than any profit a seller may make.
      Because of large dealer spreads, investors may be unable to sell the stock
      immediately back to the dealer at the same price the dealer sold the stock
      to
      the investor. In some cases, the stock may fall quickly in value. Investors
      may
      be unable to reap any profit from any sale of the stock, if they can sell it
      at
      all.





For
      any
      transaction involving a penny stock, unless exempt, the rules require delivery,
      prior to any transaction in a penny stock, of a disclosure schedule prepared
      by
      the Securities and Exchange Commission relating to the penny stock market.
      Disclosure is also required to be made about sales commissions payable to both
      the broker-dealer and the registered representative and current quotations
      for
      the securities. Finally, monthly statements are required to be sent disclosing
      recent price information for the penny stock held in the account and information
      on the limited market in penny stock.





The
      penny
      stock restrictions will no longer apply to our common stock if we become listed
      on a national exchange. In any event, even if our common stock were exempt
      from
      the penny stock restrictions, we would remain subject to Section 15(b)(6) of
      the
      Exchange Act, which gives the Securities and Exchange Commission the authority
      to restrict any person from participating in a distribution of penny stock,
      if
      the Securities and Exchange Commission finds that such a restriction would
      be in
      the public interest.





Significant
      dilution may be caused by the conversion of our outstanding shares of Series
      A
      Preferred Stock, and other shares of our preferred stock, to common stock.
      Additional dilution may be caused by any issuance of additional shares of our
      Series A Preferred Stock or other class of preferred stock.





On
      August
      4, 2005, the Company issued 80,000 shares of the company’s Series A Convertible
      Preferred Stock to Kamal Abdallah for an aggregate purchase price of $800,000.
      Each share of the Preferred Stock is convertible into 1,000 shares of UPDA
      common stock. All of the shares of Mr. Abdallah's Preferred Stock are currently
      convertible, or are convertible within the next sixty (60) days, into 80,000,000
      shares of UPDA common stock. Mr. Abdallah paid for the shares of Preferred
      Stock
      in cash.





On
      August
      4, 2005, the Company issued 20,000 shares of the company’s Series A Convertible
      Preferred Stock to Christopher McCauley for an aggregate purchase price of
      $200,000. Each share of the Preferred Stock is convertible into 1,000 shares
      of
      UPDA common stock. All of the shares of Mr. McCauley’s Preferred Stock are
      currently convertible, or are convertible within the next sixty (60) days,
      into
      20,000,000 shares of UPDA common stock. Mr. McCauley paid for the shares of
      Preferred Stock in cash.





In
      addition, as of March 20, 2007, we had 235,590 shares of our Procore Preferred
      Stock (as defined below) and 8,178 shares of our Class B Preferred Stock issued
      and outstanding. In the aggregate, these outstanding shares of Procore Preferred
      Stock and Class B Preferred Stock will be convertible within the next twelve
      (12) months into 46,166,048 shares of our common stock. The issuance of such
      a
      substantial number of shares of our common stock, or the perception that such
      issuances will occur, may have a depressive effect on the market price of our
      common stock. Furthermore, such share conversions or the perception that such
      share conversions will occur, could also impair our ability to raise capital
      or
      make acquisitions through the issuance of our common stock. *See
      the “Item 5 - Market for Registrant’s Common Stock and Related Stockholder
      Matters” section of this Annual Report for a more detailed description of our
      capitalization.*





**The
      ownership of our voting capital stock is closely held, making a small group
      of
      shareholders the major shareholders in our company.**




Approximately
      17% of the outstanding voting shares of our capital stock is currently held
      by
      two (2) insiders. *See
      the “Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters” section of this Annual Report.* Consequently, this small number of shareholders will be major shareholders
      in
      affecting the business decisions of our company, including, but not limited
      to,
      the election of the members of our Board of Directors.


12




**ITEM
      2 - DESCRIPTION OF PROPERTY**




**Oil
      and Gas Properties**





*General
      Background*





Since
      the
      implementation of our business plan in July 2005, we have begun to build an
      asset base and achieve growth primarily through property acquisitions, but
      with
      some exploitation activities. From the implementation of our business plan
      through December 31, 2006, our proved reserves are 34,045 Boe. All reserves
      are
      from properties located in Texas. We spent approximately $3.5 million on capital
      projects during 2006. We expect to further develop these properties through
      additional workovers, recompletions and development drilling. Although our
      focus
      will be on development of our existing properties and businesses, we also intend
      to continue seeking acquisition opportunities that compliment our current
      portfolio. We intend to fund our development and acquisition activities through
      the use of cash flow from operations, cash on hand, and the proceeds of future
      financing transactions. We believe that our acquisition experience, together
      with our operating experience and efficient cost structure, provides us with
      the
      potential to continue our growth.





We
      have a
      portfolio of oil and natural gas reserves, with approximately 46% of our proved
      reserves consisting of oil and approximately 54% consisting of natural gas.
      Approximately 100% of our proved reserves are classified as proved developed
      producing, or “PDP.” None of our proved reserves are classified as proved
      developed non-producing, or “PDNP,” and approximately none are classified as
      proved undeveloped, or “PUD.”





The
      following table summarizes our total net proved producing reserves as of
      December 31, 2006.




Geographic
                Area
            
            Oil
            
            Natural
                Gas
            
            Total(Bbl)
            
            (Mcf)
            
            (Boe)Texas
            
            
            15,714
            
            
            109,983
            
            
            34,045




Management
      believes it reserves are substantially higher than what is reflected in the
      third party reserve report. The third party reserve reports were impacted by
      the
      transition of operation from TransPecos (Orr) to UPDA Operators and by a active
      workover program. Third Party Engineers require approximately 120 days of
      consistent production which UPDA was unable to achieve on many of its
      properties.





*Cost
      Information*





We
      conduct our oil and natural gas activities entirely in the United States. Our
      average production costs, per Boe was $59.07 in 2006. UPDA costs were negatively
      impacted by delays in being named operator and the resulting delays in workovers
      as a result of ongoing litigation. Net costs capitalized during the year ended
      December 31, 2006, related to our oil and natural gas producing activities
      are
      shown below.




*For
                the Year Ended December 31, 2006*Acquisition
                of proved oil and gas properties
            
            $
            1,086,756Acquisition
                of unproved oil and gas properties
            
            
            2,735,433Acquisition
                of oil field equipment
            
            
            2,092,651Sale
                of overriding royalty interests on the leases of CCOG, Catlin, TE
                Pipeline
            
            
            (1,000,000
            )Total
                Capitalized
            
            
            4,914,840Less
                depreciation & depletion expense
            
            
            (132,793
            )Net
                Capitalized Costs
            
            $
            4,782,047




*Reserve
      Quantity Information*





Our
      estimates of proved reserves and related valuations were based on reports
      prepared by third party consultants in accordance with the provisions of SFAS
      69, “Disclosures About Oil and Gas Producing Activities.” The estimates of
      proved reserves are inherently imprecise and are continually subject to revision
      based on production history, results of additional exploration and development,
      price changes and other factors.





Our
      oil
      and natural gas reserves are attributable solely to properties within the United
      States.





**Other
      Properties and Commitments**




In
      January 2006, the Company entered into a lease for office space in Florida.
      The
      lease expires February 28, 2009, and provides an option to renew for one
      additional term of three years. Annual rent under the lease is $20,398, subject
      to annual escalations.





On
      July
      31, 2006, UPDA-O entered into a lease agreement with Malone & Cruz Lease
      Partnership for office space in Jacksboro, Texas. The lease expires July 31,
      2009, and the minimum monthly rent is $500.


13




On
      August
      1, 2006 the Company entered into a Lease agreement with Livable Machines, LLC
      for office space in Cleveland, Ohio. The lease expires August 1, 2009 and
      provides an option to renew for one additional term of three years. Annual
      rent
      under the lease is $12,000.





On
      August
      15, 2006 the Company entered into a lease agreement with Crescent Real Estate
      Funding XII, L.P for office space in Dallas, Texas. The lease is for a period
      of
      64 months commencing on September 1, 2006 with rent of $3,659 per month, and
      is
      subject to annual escalations.





On
      August
      22, 2006 US Petroleum Depot Inc entered into a rental lease agreement with
      Brownsville Navigation District of Cameron County, Texas, for a term of five
      years payable semi-annually in installments of $9,801. The leased property
      is
      for the sole purpose of shipping and receiving oil products.





On
      September 27, 2006 the Company entered into a lease agreement with R.M Crowe
      Property Management, LP for office space in Houston, Texas. The lease has a
      term
      of sixty months, with rent of $2,800 per month, and is subject to annual
      escalations.




**ITEM
      3 - LEGAL PROCEEDINGS**




In
      June
      of 2006 Texas Energy entered into an agreement for the purchase of a pipeline
      and certain other oil and gas assets for $1.7 million. As part of the
      transaction Texas Energy remitted a deposited of $100,000. Subsequently as
      title
      to those assets was under review, it was determined that clear title could
      not
      be established and the Sellers were notified orally of Texas Energy’s intention
      to cancel the transaction. Although this oral notification was provided prior
      to
      the deadline set forth in the contract for the return of the deposit, written
      notification was not provided by Texas Energy’s attorney until after that
      deadline had passed. Upon notification from the Seller’s counsel and that he
      intended to release the escrow to his client, Texas Energy immediately filed
      suit and obtained an injunction against the release of the funds.




Texas
      Energy is currently in negotiations for the purchase of oil and gas leases
      located in Palo Pinto, Texas for $2.8 million. The seller has agreed to apply
      the $100,000 paid in the above transaction to the purchase price of this
      transaction in settlement of the litigation. On
      November 17, 2005 the Company, USPX, and Triple Crown Consulting ("TCC"), a
      private corporation, entered into a joint venture agreement (the "Agreement").
      Pursuant to the terms of the Agreement, the Company, USPX and TCC formed Canyon
      Creek as the joint venture entity to carry out the proposed operations of the
      joint venture. At the present time, the Company owns 60% of the capital stock
      of
      Canyon Creek, USPX owns 30% of the capital stock of Canyon Creek, TCC owns
      5% of
      the capital stock of Canyon Creek, and Anjos Partners, LLC owns 5% of the
      capital stock of Canyon Creek.





Under
      the
      terms of the Agreement, and as consideration for their respective shares of
      the
      capital stock of Canyon Creek, the Company invested $1,200,000 to finance the
      operations of the joint venture, USPX assigned certain oil and gas leases to
      the
      joint venture and TCC agreed to provide ongoing management consulting services
      to the joint venture. The leases assigned to the joint venture by USPX cover
      approximately two thousand acres and contain approximately 60 oil and gas wells.
      The joint venture also acquired additional acreage and wells and intended to
      pursue further acquisitions of currently producing oil and gas properties,
      low
      risk drilling prospects and existing wells in need of technology to improve
      profitability. In addition, USPX principal was installed as President of Canyon
      Creek.





The
      Company paid approximately an additional $2 million in workover costs that
      were
      incurred to place the oil and gas wells into working order.





USPX
      was
      responsible for the day-to-day operations of Canyon Creek, but the Company
      has
      control over the appointment of the financial officer of Canyon Creek. USPX
      was
      to be paid a managerial fee equal to 7.5% of the net operating revenue of Canyon
      Creek.





As
      a
      result of a review of the activities and expenditures of Canyon Creek that
      were
      undertaken and/or approved by USPX, the Company requested an explanation from
      USPX for apparent improprieties and mismanagement. As a result of that request,
      Don Orr submitted his resignation as President and board member of Canyon Creek
      and USPX was dismissed as manager of the properties.





On
      April
      12, 2006 USPX filed suit against the Company, alleging that the Company had
      breached the above joint venture agreement. Specifically, USPX alleged that
      the
      Company committed wrongful acts, including the misappropriation of
      opportunities, misappropriation of business and proprietary information, fraud,
      and conspiracy to intentionally cause damage to USPX. In addition USPX is
      alleging that it has failed to receive any or all of the consideration that
      it
      was promised by the Company or Canyon Creek. USPX is also alleging that the
      Company and Canyon Creek fraudulently induced USPX and its principal, Donald
      Orr, into causing the transfer and assignment of certain oil and gas interests
      held by them.





The
      Company is contending that Donald Orr had received and/or incurred expenses
      that
      were not related to Canyon Creek, based upon a preliminary internal
      investigation.  Upon being confronted with these allegations, Mr. Orr
      resigned his position with Canyon Creek. The Company is in the process of filing
      a counter claim that would induce USPX to relinquish its 30% equity interest
      in
      Canyon Creek and repay the cash it had received and spent
      inappropriately.




On
      June
      20, 2006 the Company filed a response denying the allegations. The matter is
      currently pending. As of the consolidated balance sheet date, the Company has
      not accrued any costs related to this matter, because the Company believes
      the
      suit is without merit. In addition, “Oil and Gas Property” assets associated
      with the leases originally assigned by Donald Orr, including workovers
      applicable to those leases, totaled $1,970,000 on December 31, 2006. Revenues
      already earned from October 2005 to December 2006 totaled $382,000.





As
      of
      December 31, 2006, Miller Electric, a vendor, filed suit against the Company
      for
      $51,000 for unpaid invoices. The Company is currently negotiating a settlement
      for the lawsuit with Miller Electric.




**ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





No
      matters were submitted to a vote of our securities holders during our quarter
      ended December 31, 2006.


14




**PART
      II**





**ITEM
      5 -**  **MARKET
      FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER
      MATTERS**





Market
      for our Common Stock





Our
      common stock, par value $0.001 per share, is traded on the Over-the-Counter
      Bulletin Board operated by the National Association of Securities Dealers,
      Inc.
      under the symbol “UPDA.OB”. Our common stock also trades on the Berlin Stock
      Exchange under the trading symbol “UP1.BE”; on the XETRA Stock Exchange under
      the trading symbol “UP1.DE”; on the Frankfurt Stock Exchange under the trading
      symbol “UP1.F”; on the Munich Stock Exchange under the trading symbol “UP1.MU”;
      and on the Struttgart Stock Exchange under the trading symbol
“UP1.SG”.




The
      following table sets forth the range of high and low closing bid prices for
      our
      common stock for the periods indicated as reported by the National Quotation
      Bureau, Inc. These prices represent quotations between dealers, do not include
      retail markups, markdowns or commissions, and do not necessarily represent
      actual transactions.





**Period**
            
            **High
                Bid**
            
            **Low
                Bid**1st
                Quarter 2005
            
            $
            0.14
            
            $
            0.042nd
                Quarter 2005
            
            
            0.05
            
            
            0.013rd
                Quarter 2005
            
            
            0.88
            
            
            0.254th
                Quarter 2005
            
            
            1.00
            
            
            0.211st
                Quarter 2006
            
            $
            0.55
            
            $
            0.172nd
                Quarter 2006
            
            
            0.23
            
            
            0.073rd
                Quarter 2006
            
            
            0.05
            
            
            0.114th
                Quarter 2006
            
            
            0.16
            
            
            0.071st
                Quarter 2007
            
            $
            0.14
            
            $
            0.06




As
      of
      April 5, 2007, the National Quotation Bureau, Inc. reported that the closing
      bid
      and ask prices on our common stock were $0.061 and $0.062
      respectively.




**Record
      Holders**





As
      of
      March 31, 2007, there were approximately 400 holders of record of our common
      stock. The Board of Directors believe that the number of beneficial owners
      is
      substantially greater than the number of record holders because a portion of
      our
      outstanding common stock is held of record in broker "street names" for the
      benefit of individual investors. The beneficial owners of such shares are not
      known to us.





As
      of
      March 31, 2007, the shareholders list from our transfer agent shows that there
      were 498,039,108 shares of common stock outstanding. Of those shares, 2,856,429
      shares, or 1% percent of our outstanding common stock, were owned by our
      officers and directors.





**Dividend
      Policy**





Our
      Board
      of Directors determines any payment of dividends to our common stockholders.
      We
      have not paid any dividends on our common stock during the last two years,
      and
      we do not anticipate paying any cash dividends on our common stock in the
      foreseeable future. We currently intend to retain future earnings, if any,
      to
      finance the expansion of our business. Our future dividend policy is within
      the
      discretion of our board of directors and will depend upon various factors,
      including our results of operations, financial condition, capital requirements
      and investment opportunities.





**Recent
      Sales of Unregistered Securities**





During
      the fourth quarter of 2006, we issued 8,041,000 shares of our common stock
      as
      payment for past services rendered by various consultants to the company. We
      recorded non-cash compensation charges of $1,013,920 related to these issuances,
      reflecting the fair market value of the shares when granted. The transactions
      referred to above did not involve an underwriter or placement agent and there
      were no underwriter’s discounts or commissions, or placement agent fees or
      commissions, paid in connection with the transaction. Each of the consultants
      who received shares of our common stock in the above referenced transactions
      are
      accredited investors, as defined by Rule 501 of Regulation D, and have the
      business and financial knowledge to analyze the risks associated with ownership
      of our common stock. The transactions referred to above were exempt transactions
      in accordance with the provisions of Section 4(2) of the Securities Act of
      1933,
      as amended, as a transaction by an issuer not involving any public offering.
      We
      did not engage in any public solicitations in connection with the above
      transaction.


15




During
      the year ended December 31, 2006, we issued 4,740 shares of our Class B
      Preferred Stock to Miramar Investments, Inc. (“Miramar”). The shares of Class B
      Preferred Stock issued to Miramar are restricted shares and cannot be resold
      unless they are subsequently registered pursuant to the Securities Act of 1933,
      as amended, or such sale is pursuant to a valid exemption from such
      registration. Each share of Class B Preferred Stock is convertible into 20,000
      shares of our common stock and is so convertible immediately upon issuance.
      The
      transaction referred to above did not involve an underwriter or placement agent
      and there were no underwriter’s discounts or commissions, or placement agent
      fees or commissions, paid in connection with the transaction. Miramar is an
      accredited investor, as defined by Rule 501 of Regulation D, and has the
      business and financial knowledge to analyze the risks associated with an
      investment in our Class B Preferred Stock. The securities issued to Miramar
      were
      in exchange for $4,740,000 in cash. The transactions referred to above were
      exempt transactions in accordance with the provisions of Section 4(2) of the
      Securities Act of 1933, as amended, as transactions by an issuer not involving
      any public offering. We did not engage in any public solicitations in connection
      with the above transactions.





During
      2006 we advised our stock transfer agent that any certificates representing
      shares of the 36 outstanding shares of our $.001 par value convertible preferred
      stock issued and dated prior to June 1, 2003 (“Procore Preferred Stock”) that
      were surrendered by the holders thereof for conversion to shares of our common
      stock should be converted at a rate of 200,000 shares of common stock for each
      share of this Procore Preferred Stock surrendered. The outstanding shares of
      this Procore Preferred Stock are restricted shares, but they have been fully
      paid and outstanding for a period in excess of two years from the date of their
      issuance by the company. No additional consideration is payable upon the
      conversion of this Procore Preferred Stock to shares of our common stock.
      Accordingly, the holders of the shares of underlying common stock issued upon
      conversion of shares of this Procore Preferred Stock shall be entitled to
      request the removal of any restrictive legends that would be attached to the
      common shares so issued in accordance with the provisions of Rule 144(k) under
      the Securities Act of 1933, as amended. During the year ended December 31,
      2006,
      approximately 36 shares of this Procore Preferred Stock were converted into
      7,200,000 shares of our common stock in the manner described above.





During
      2006 we advised our stock transfer agent that any certificates representing
      shares of the 475 outstanding shares of our $.001 par value convertible
      preferred stock issued and dated prior to June 1, 2003 (“Procore Preferred
      Stock”) that were surrendered by the holders thereof for conversion to shares of
      our common stock should be converted at a rate of 500,000 shares of common
      stock
      for each share of this Procore Preferred Stock surrendered. The outstanding
      shares of this Procore Preferred Stock are restricted shares, but they have
      been
      fully paid and outstanding for a period in excess of two years from the date
      of
      their issuance by the company. No additional consideration is payable upon
      the
      conversion of this Procore Preferred Stock to shares of our common stock.
      Accordingly, the holders of the shares of underlying common stock issued upon
      conversion of shares of this Procore Preferred Stock shall be entitled to
      request the removal of any restrictive legends that would be attached to the
      common shares so issued in accordance with the provisions of Rule 144(k) under
      the Securities Act of 1933, as amended. During the year ended December 31,
      2006,
      approximately 475 shares of this Procore Preferred Stock were converted into
      237,260,002 shares of our common stock in the manner described
      above.





On
      November 28, 2006 we advised our stock transfer agent that any certificates
      representing shares of the 1,217 outstanding shares of our $.001 par value
      convertible preferred stock issued and dated prior to December 31, 2003
      (“Procore Preferred Stock”) that were surrendered by the holders thereof for
      conversion to shares of our common stock should be converted at a rate of
      200,000 shares of common stock for each share of this Procore Preferred Stock
      surrendered. The outstanding shares of this Procore Preferred Stock are
      restricted shares, but they have been fully paid and outstanding for a period
      in
      excess of two years from the date of their issuance by the company. No
      additional consideration is payable upon the conversion of this Procore
      Preferred Stock to shares of our common stock. Accordingly, the holders of
      the
      shares of underlying common stock issued upon conversion of shares of this
      Procore Preferred Stock shall be entitled to request the removal of any
      restrictive legends that would be attached to the common shares so issued in
      accordance with the provisions of Rule 144(k) under the Securities Act of 1933,
      as amended. During the year ended December 31, 2006, approximately 383 shares
      of
      this Procore Preferred Stock were converted into 76,554,000 shares of our common
      stock in the manner described above.





**Capitalization**





As
      of
      March 31, 2007, we had 235,585 shares of our Procore Preferred Stock, as
      described above, issued and outstanding. The outstanding shares of Procore
      Preferred Stock are restricted shares and, therefore, they cannot be resold
      unless they are subsequently registered pursuant to the Securities Act of 1933,
      as amended, or such sale is pursuant to a valid exemption from such
      registration. All of the shares of Procore Preferred Stock that are outstanding
      are convertible into shares of our common stock based on which group of Procore
      Preferred Stock they are in, and the terms of their issuance. Based upon a
      total
      of 235,585 shares of our Procore Preferred Stock being outstanding, an aggregate
      of 45,166,048 shares of our common stock are issuable upon the conversion of
      all
      the outstanding shares of Procore Preferred Stock. No additional consideration
      is payable upon the conversion of the Procore Preferred Stock to shares of
      our
      common stock. As described above, the holders of the shares of underlying common
      stock issued upon conversion of the Procore Preferred Stock shall be entitled
      to
      request the removal of any restrictive legends that would be attached to the
      common shares so issued in accordance with the provisions of Rule 144(k) under
      the Securities Act of 1933, as amended.





As
      of
      March 31, 2007, we had 100,000 shares of our Class A Preferred Stock issued
      and
      outstanding. The outstanding shares of Class A Preferred Stock are restricted
      shares and, therefore, they cannot be resold unless they are subsequently
      registered pursuant to the Securities Act of 1933, as amended, or such sale
      is
      pursuant to a valid exemption from such registration. Each share of Class A
      Preferred Stock is convertible into 10,000 shares of our common stock. Based
      upon 100,000 shares of Class A Preferred Stock being outstanding, an aggregate
      of 100,000,000 shares of our common stock are issuable upon the conversion
      of
      all the outstanding shares of Class A Preferred Stock. No additional
      consideration is payable upon the conversion of the Class A Preferred Stock
      to
      shares of our common stock. The holders of shares of our Class A Preferred
      Stock
      are entitled to vote those shares on an as converted basis in all matters for
      which our common stockholders are entitled to vote.


16




As
      of
      March 31, 2007, we had 8,178 shares of our Class B Preferred Stock issued and
      outstanding. The outstanding shares of Class B Preferred Stock are restricted
      shares and, therefore, they cannot be resold unless they are subsequently
      registered pursuant to the Securities Act of 1933, as amended, or such sale
      is
      pursuant to a valid exemption from such registration. On or after April 1,
      2007,
      each share of Class B Preferred Stock will be convertible into 20,000 shares
      of
      our common stock. Based upon 8,178 shares of Class B Preferred Stock being
      outstanding, an aggregate of 163,560,000 shares of our common stock will be
      issuable upon the conversion of all the outstanding shares of Class B Preferred
      Stock. No additional consideration is payable upon the conversion of the Class
      B
      Preferred Stock to shares of our common stock.





The
      following table sets forth our current capitalization and our capitalization
      on
      a fully diluted basis based upon our outstanding common and preferred stock
      as
      of March 31, 2007:




Class
                of Stock
            
            Shares
              Outstanding
            
            Common
                Shares
              Issuable
                Upon
              Conversion
                of
              One
                Share of
              Class
            
            Date
                Convertible
            
            Aggregate
              Common
              Issuable
                Upon
              ConversionProcore
                Preferred Stock
            
            
            207
            
            
            200,000
            
            
            Currently
            
            
            41,400,000Procore
                Preferred Stock
            
            
            235,378
            
            
            16
            
            
            Currently
            
            
            3,766,048Class
                A Preferred Stock
            
            
            100,000
            
            
            1,000
            
            
            Currently
            *
            
            100,000,000Class
                B Preferred Stock
            
            
            8,178
            
            
            20,000
            
            
            April
                1, 2007
            
            
            163,560,000Common
                Stock
            
            
            498,039,108
            
            
            N/A
            
            
            N/A
            
            
            498,039,108





*
      The
      outstanding shares of our Class A Preferred Stock are held by officers and
      directors of the Company. *See
      Item 11 - “Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matter”.* The
      ownership of the shares of Class A Preferred Stock by such officers and
      directors will be fully vested on August 3, 2007.





**Section
      15(g) of the Securities Exchange Act of 1934**





Our
      shares are currently covered by Section 15(g) of the Securities Exchange Act
      of
      1934, as amended, and Rules 15g-1 through 15g-6 promulgated thereunder, which
      impose additional sales practice requirements on broker/dealers who sell our
      securities to persons other than established customers and accredited
      investors.





Rule
      15g-2 declares unlawful any broker-dealer transactions in penny stocks unless
      the broker-dealer has first provided to the customer a standardized disclosure
      document.





Rule
      15g-3 provides that it is unlawful for a broker-dealer to engage in a penny
      stock transaction unless the broker-dealer first discloses and subsequently
      confirms to the customer the current quotation prices or similar market
      information concerning the penny stock in question.





Rule
      15g-4 prohibits broker-dealers from completing penny stock transactions for
      a
      customer unless the broker-dealer first discloses to the customer the amount
      of
      compensation or other remuneration received as a result of the penny stock
      transaction.





Rule
      15g-5 requires that a broker dealer executing a penny stock transaction, other
      than one exempt under Rule 15g-1, disclose to its customer, at the time of
      or
      prior to the transaction, information about the sales persons
      compensation.





Our
      common stock may remain subject to the foregoing rules for the foreseeable
      future. The application of the penny stock rules may affect our stockholder’s
      ability to sell their shares because some broker/dealers may not be willing
      to
      make a market in our common stock because of the burdens imposed upon them
      by
      the penny stock rules.




**ITEM
      6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




Introduction





The
      following discussion and analysis should be read in conjunction with our
      accompanying financial statements and the notes to those financial statements
      included elsewhere in this Annual Report. The following discussion includes
      forward-looking statements that reflect our plans, estimates and beliefs. Our
      actual results could differ materially from those discussed in these
      forward-looking statements. Factors that could cause or contribute to such
      differences include, but are not limited to, those discussed below and elsewhere
      in this Annual Report.


17




Overview





We
      are
      engaged in oil and natural gas acquisition and exploitation activities in the
      state of Texas. Since the adoption of our business plan in July 2005, we have
      emphasized the acquisition of properties that provided current production and
      significant upside potential through further development. We have acquired
      our
      reserves by investing approximately $2.3 million in the acquisition of leases
      of
      oil and gas producing properties, and enhancements thereto, since July
      2005.





We
      also
      intend to continue seeking acquisition opportunities that compliment our current
      portfolio. We intend to fund our development activity through use of cash flow
      from operations and cash on hand. Proceeds from future equity transactions
      may
      also be available for development projects or future acquisitions.





Our
      business plan has involved increasing our base of reserves until we have
      acquired a sufficient core to enable us to utilize cash from existing production
      to fund further workover and production activities. We plan to continue our
      strategy of acquiring producing properties with additional development and
      exploitation potential.





Our
      revenue, profitability and future growth rate depend substantially on factors
      beyond our control, such as economic, political and regulatory developments
      and
      competition from other sources of energy. Oil and natural gas prices
      historically have been volatile and may fluctuate widely in the future.
      Sustained periods of low prices for oil or natural gas could materially and
      adversely affect our financial position, our results of operations, the
      quantities of oil and natural gas reserves that we can economically produce
      and
      our access to capital.





In
      a
      worst case scenario, future workover operations could be largely unsuccessful,
      oil and gas prices could sharply decline and/or other factors beyond our control
      could cause us to greatly modify or substantially curtail our development plans,
      which could negatively impact our earnings, cash flow and most likely the
      trading price of our securities.





Results
      of Operations




*Year
      Ended December 31, 2006 Compared to Year Ended December 31,
      2005*




*Natural
      gas sales.* For the
      year ended December 31, 2006, natural gas sales revenue was $114,683 compared
      to
      $28,965 for the same period during 2005. The revenues were the result of
      production in the Canyon Creek, Catlin and Texas Energy
      subsidiaries.




*Oil
      sales* .
      For the
      year ended December 31, 2006, oil sales revenue was $466,596 compared to none
      for the same period during 2005. The revenues were the result of our producing
      wells in the Canyon Creek, Catlin and Texas Energy subsidiaries.




*Lease
      operating expenses* .
      Our
      lease operating expenses were $739,740 for the year ended December 31, 2006
      compared with $3,794 for the year ended December 31, 2005.




*Depletion.* Our
      depletion expense was $77,787 for the year ended December 31, 2006, compared
      to
      $13,311 for the year ended December 31, 2005 because of our increased
      production.




*Impairment
      of oil and gas properties* .
      Impairment of oil and gas properties increased to $875,698 for the year ended
      December 31, 2006, compared to none for the same period in 2005. The impairment
      was for Canyon Creek and it included a full cost pool impairment of
      approximately $15,000 for the year ended December 31,2006. In addition, Canyon
      Creek wrote 60% of its value currently in undeveloped leasehold attributable
      to
      the Inez Well or approximately $860,000 for the year ended December 31,
      2006.





*Consulting
      Fees and*  *Services* .
      Consulting fees and services decreased by $5,653,676 to $2,538,668 for the
      year
      ended December 31, 2006 compared to same period in 2005. The decline was
      primarily due to the company hiring more full time employees and also issuing
      less stock for consulting services.





*Payroll
      and related benefits.* Payroll
      and related benefits increased to $561,634 for the year ended December 31,
      2006,
      compared to none for the same period in 2005. The increase was primarily related
      to increases in compensation expense associated with an increase in personnel
      required to administer our growth and entry into the energy
      business.





*General
      and administrative expenses* .
      General
      and administrative expenses increased by $625,534 to $980,901 for the year
      ended
      December 31, 2006, compared to the same period in 2005. The increase was
      primarily related to rent expense of $139,958, travel and entertainment expenses
      of $507,034, and legal and accounting expenses of $135,751.




*Depreciation* .
      Our
      depreciation expense was $55,005 for the year ended December 31, 2006, compared
      to $104 for the year ended December 31, 2005. The increase was a result of
      the
      mobile office and our recent purchases of office equipment.


18




*Other
      income (expense).* Other
      income and expense includes a loss on termination of the Sundial joint venture
      of $658,007 and a loss on sale of oil lease to American Flourite for $51,123
      for
      the year ended December 31, 2006 compared to none and none for the year ended
      December 31, 2005. The losses were offset by a net gain on sale of lease to
      Avalon Oil and Gas of $28,000 and a gain on write-off of loans and other
      liabilities no longer due and payable of $55,086 for the year ended December
      31,
      2006 versus none and $6,801, respectively for the same period in
      2005.





*Income
      tax expense* .
      Our
      effective tax rate was 25% during 2006 and 2005. As we have significant net
      operating loss carryforwards, income tax expense is comprised of minimum state
      filing fees only.




*Net
      loss after minority interest.* Net loss
      after minority interest decreased by $3,584,229 for the year ended December
      31,
      2006 to $5,450,215 when compared to the same period in 2005. The reasons for
      this decrease include the large decrease in stock issued for services,
      consulting fees and services due to the new management team, our exit from
      the
      real estate business, and our entry into the energy business.




*Net
      loss available to common shareholders.* Net loss
      available to common shareholders decreased to $29,788,268 for the year ended
      December 31, 2006 as compared to $172,864,973 for the same period last year.
      The
      decrease was primarily related a decrease in the number of conversions of our
      unlettered preferred convertible stock and beneficial conversion related to
      our
      Series A preferred stock.




Liquidity
      and Capital Resources





Cash
      Requirements





The
      Company has incurred recurring operating losses since its inception, and as
      of
      December 31, 2006 had an accumulated deficit of approximately $219,496,000
      and
      had insufficient capital to fund all of its obligations. These conditions raise
      substantial doubt about the Company's ability to continue as a going concern.
      The financial statements do not include any adjustments to reflect the possible
      future effect of the recoverability and classification of assets or the amounts
      and classifications of liabilities that may result from the outcome of this
      uncertainty.





The
      Company's continuation as a going concern is dependant upon receiving additional
      financing. The Company anticipates that during its 2007 fiscal year it will
      need
      to raise approximately $3.0 million of debt or equity financing to continue
      to
      execute the requirements of its business plan. We entered into an oral agreement
      to sell a portion of the stock of Catlin, Canyon Creek and Texas Energy
      Pipeline for the total sum of $1,000,000. As of December 31, 2006 we
      received the full sum of $1,000,000 of cash from the buyer and we closed on
      this
      transaction on March 5, 2007. In Q1 ended March 31, 2007, we received $375,000
      from Devida Capital for 375 Series B Preferred shares that we issued them.
      Also,
      in Q1 ended March 31, 2007, we received $1,590,000 from Five Star Partners
      for
      1,590 Series B Preferred shares that we issued them.





On
      April
      6, 2007 the Company executed a senior secured promissory note with Sheridan
      Asset Management, LLC (“Sheridan”) for the principal amount of $3,635,000. The
      note matures on April 6, 2008. The note amount of $3,635,000 includes a
      principal amount of $2,726,250 and $908,750 of original issue discount based
      upon a 29.12% yield to maturity. Any overdue accrued and unpaid principal and
      interest shall accrue a late fee of 18%. The proceeds of the note will be used
      for acquisitions and working capital.




As
      part
      of the transaction Sheridan received a warrant to purchase 22,343,821 shares
      of
      the Company’s common stock for an exercise price of $.05483. The warrant expires
      on April 6, 2012. The Company will account for the warrant as a discount to
      the
      note based on the fair market value of the warrant and accrete the discount
      over
      one year.




The
      note
      is guaranteed by the Company’s two operating subsidiaries Canyon Creek and
      Catlin. In addition, Kamal Abdallah, Chairman and CEO and Christopher McCauley,
      Vice President and General Council have provided the lender with personal
      guarantees.





Off-Balance
      Sheet Financing Arrangements





As
      of
      December 31, 2006 we had no off-balance sheet financing arrangements.





*Year
      ended December 31, 2006 compared to the year ended December 31,
      2005.*





Operating
      Activities





Net
      cash
      used in operating activities was $2,456,586 for the year ended December 31,
      2006. We had a net loss of $5,450,215. We had non-cash charges of $1,630,570
      due
      to consulting fees and services related to the issuance of common shares or
      options to acquire such shares, $132,793 related to depreciation and depletion,
      $95,000 for debt conversion costs, an $875,698 loss on impairment of oil and
      gas
      properties, a $658,007 loss on the termination of the Sundial joint venture,
      a
      $55,086 gain on the write off of loans and other liabilities no longer due
      and
      payable, a $28,000 gain on the sale of oil leases to Avalon Oil and Gas, Inc.,
      a
      $51,123 loss on the sale of an oil lease to American Flourite, a $200,000
      payment of a breakup fee to terminate the Sundial joint venture, and $427,279
      of
      minority interest gain. In addition, changes in operating assets and liabilities
      totaled $260,803 during the year ended December 31, 2006.


19




Net
      cash
      used in operating activities was $513,027 for the year ended December 31,
      2005. We had a net loss of $9,034,444. We had non-cash charges of $8,122,973
      due
      to consulting fees and services related to the issuance of common shares or
      options to acquire such shares and $528,934 due to loan conversion costs. We
      also had a $2,360 minority interest loss, a $6,801 gain on write-off of
      liabilities, a $21,355 loss on impairment of investment acquisition costs,
      a
      $4,735 accrued interest receivable on unsecured bridge loan receivable, and
      $13,415 of depreciation and depletion expense. In addition, changes in operating
      assets and liabilities totaled $165,554 during the year ended December 31,
      2005.





Investing
      Activities





Cash
      flows used in investing activities was $4,220,671 during the year ended December
      31, 2006. Investing activities included a $255,831 increase in restricted cash,
      $3,822,189 used for payment of capitalized oil and gas properties work-over
      costs and $2,092,651 for purchases of oil field equipment and other equipment,
      proceeds from substitution of cash for marketable securities of Siteworks for
      $1,000,000, proceeds from the sale of overriding royalty interests of oil and
      gas leases of $1,000,000, proceeds from the sale of oil leases to Avalon Oil
      and
      Gas, Inc. of $75,000, proceeds from the sale of oil leases to American fluorite
      of $25,000, and $150,00 in deposits paid towards pending oil oriented
      acquisitions.





Cash
      flows used in investing activities was $1,095,385 during the year ended December
      31, 2005. Investing activities was primarily due to workover expenses of
      $964,890 related to the Canyon Creek leases. Investing activities also included
      $128,000 payments for assignment of rights to oil and gas leases to the Company
      and $2,495 for purchases of oil field equipment and other
      equipment.





Financing
      Activities




The
      cash
      flows provided by financing activities of $6,556,761 during the year ended
      December 31, 2006, consisted of $4,740,000 of proceeds from the sale of our
      Class B preferred stock, $1,000,000 deposit received for the sale of minority
      equity interests in subsidiaries, and a $816,761 increase in notes
      payable.





The
      cash
      flows provided by financing activities of $1,737,696 during the year ended
      December 31, 2005, consisted of $1,473,000 proceeds from the sale of our Class
      B
      preferred stock, $200,000 proceeds from the sale of our common stock and, and
      a
      $64,696 increase in notes payable.




Critical
      Accounting Policies and Estimates





Our
      discussion of financial condition and results of operations is based upon the
      information reported in our financial statements. The preparation of these
      statements requires us to make assumptions and estimates that affect the
      reported amounts of assets, liabilities, revenues and expenses as well as the
      disclosure of contingent assets and liabilities at the date of our financial
      statements. We base our assumptions and estimates on historical experience
      and
      other sources that we believe to be reasonable at the time. Actual results
      may
      vary from our estimates due to changes in circumstances, weather, politics,
      global economics, mechanical problems, general business conditions and other
      factors. Our significant accounting policies are detailed in Note 1 to our
      financial statements included in this Annual Report. We have outlined below
      certain of these policies as being of particular importance to the portrayal
      of
      our financial position and results of operations and which require the
      application of significant judgment by our management.





*Revenue
      Recognition.* We
      predominantly derive our revenue from the sale of produced crude oil and natural
      gas. Revenue is recorded in the month the product is delivered to the purchaser.
      We receive payment from one to three months after delivery. At the end of each
      month, we estimate the amount of production delivered to purchasers and the
      price we will receive. Variances between our estimated revenue and actual
      payment are recorded in the month the payment is received; however, differences
      have been insignificant.





*Full
      Cost Method of Accounting.* We
      account for our oil and natural gas operations using the full cost method of
      accounting. Under this method, all costs associated with property acquisition,
      exploration and development of oil and gas reserves are capitalized. Costs
      capitalized include acquisition costs, geological and geophysical expenditures,
      lease rentals on undeveloped properties and cost of drilling and equipping
      productive and non-productive wells. Drilling costs include directly related
      overhead costs. All of our properties are located within the continental United
      States.





*Oil
      and Natural Gas Reserve Quantities.* Reserve
      quantities and the related estimates of future net cash flows affect our
      periodic calculations of depletion and impairment of our oil and natural gas
      properties. Proved oil and natural gas reserves are the estimated quantities
      of
      crude oil, natural gas and natural gas liquids which geological and engineering
      data demonstrate with reasonable certainty to be recoverable in future periods
      from known reservoirs under existing economic and operating conditions. Reserve
      quantities and future cash flows included in this Annual Report are prepared
      in
      accordance with guidelines established by the SEC and FASB. The accuracy of
      our
      reserve estimates is a function of:


20




·
            the
                quality and quantity of available date;·
            the
                interpretation of that data;·
            the
                accuracy of various mandated economic assumptions; and·
            the
                judgments of the persons preparing the estimates.




Our
      proved reserve information included in this Annual Report is based on reports
      by
      third party consultants. Because these estimates depend on many assumptions,
      all
      of which may differ substantially from actual results, reserve estimates may
      be
      different from the quantities of oil and natural gas that are ultimately
      recovered. We continually make revisions to reserve estimates throughout the
      year as additional properties are acquired. We make changes to depletion rates
      and impairment calculations in the same period that changes to the reserve
      estimates are made.





All
      capitalized costs of oil and gas properties, including estimated future costs
      to
      develop proved reserves and estimated future costs of site restoration, are
      amortized on the unit-of-production method using estimates of proved reserves
      as
      determined by independent engineers. Investments in unproved properties and
      major development projects are not amortized until proved reserves associated
      with the projects can be determined.





The
      capitalized cost included in the full cost pool is subject to a “ceiling test”,
      which limits such cost to the estimated present value, using a ten percent
      discount rate, of the future net revenue from proved reserves, based on current
      economic and operating conditions. The ceiling test calculation is dependent
      on
      the estimates used in the calculation of our proved reserves. As of December
      31,
      2005 and 2006, a portion of our oil and gas property was unproved and was
      excluded from amortization.




*Income
      Taxes.* We
      provide for income taxes in accordance with Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes.” Deferred income taxes are
      provided for the difference between the tax basis of assets and liabilities
      and
      the carrying amount in our financial statements. This difference will result
      in
      taxable income or deductions in future years when the reported amount of the
      asset or liability is settled. Since our tax returns are filed after the
      financial statements are prepared, estimates are required in valuing tax assets
      and liabilities. We record adjustments to actual in the period we file our
      tax
      returns.





Effects
      of Inflation and Pricing





The
      oil
      and natural gas industry is very cyclical and the demand for goods and services
      of oil field companies, suppliers and others associated with the industry puts
      extreme pressure on the economic stability and pricing structure within the
      industry. Typically, as prices for oil and natural gas increase, so do all
      associated costs, and this proved to be the case in 2005 as oil and gas prices
      rose significantly. Costs for oilfield services and materials increased during
      2005 due to higher demand as a result of the higher oil and gas prices. Material
      changes in prices impact the current revenue stream, estimates of future
      reserves, borrowing base calculations of bank loans and value of properties
      in
      purchase and sale transactions. Material changes in prices can impact the value
      of oil and natural gas companies and their ability to raise capital, borrow
      money and retain personnel. We anticipate the increased business costs will
      continue while the commodity prices for oil and natural gas, and the demand
      for
      services related to production and exploration, both remain high (from an
      historical context) in the near term.




Quantitative
      and Qualitative Disclosure About Market Risk




*Commodity
      Price Risk*





We
      have
      not historically entered into derivative contracts to manage our exposure to
      oil
      and natural gas price volatility. Normal hedging arrangements have the effect
      of
      locking in for specified periods the prices we would receive for the volumes
      and
      commodity to which the hedge relates. Consequently, while hedges are designed
      to
      decrease exposure to price decreases, they also have the effect of limiting
      the
      benefit of price increases.




**ITEM
      7 - FINANCIAL STATEMENTS**





The
      financial statements and supplementary data required by this item are included
      in the F pages.




**ITEM
      8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND FINANCIAL
      DISCLOSURE**




None.





**ITEM
      8A - CONTROLS AND PROCEDURES**





(a) *Evaluation
      of disclosure controls and procedures* .
      We
      maintain “disclosure controls and procedures,” as such term is defined in Rule
      13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that
      are designed to ensure that information required to be disclosed by us in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized, and reported within the time periods specified in Securities and
      Exchange Commission rules and forms, and that such information is accumulated
      and communicated to our management, including our Chief Executive Officer and
      General Counsel, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating our disclosure controls and procedures,
      management recognized that disclosure controls and procedures, no matter how
      well conceived and operated, can provide only reasonable, not absolute,
      assurance that the objectives of the disclosure controls and procedures are
      met.
      Additionally, in designing disclosure controls and procedures, our management
      necessarily was required to apply its judgment in evaluating the cost-benefit
      relationship of possible disclosure controls and procedures. The design of
      any
      disclosure controls and procedures also is based in part on certain assumptions
      about the likelihood of future events, and there can be no assurance that any
      design will succeed in achieving its stated goals under all potential future
      conditions.




Based
      on
      their evaluation as of the end of the period covered by this Annual Report
      on
      Form 10-KSB/A (December 31, 2006), our Chief Executive Officer and General
      Counsel have each concluded that, subject to the limitations noted above, our
      disclosure controls and procedures were effective.




(b) *Changes
      in internal control over financial reporting* .
      There
      were no changes in our internal control over financial reporting (as defined
      in
      Rule 13a-15(f) under the Exchange Act) identified in connection with the
      evaluation described in Item 8(a) above that occurred during the period covered
      by this Annual Report on Form 10-KSB/A and that have materially affected, or
      are
      reasonably likely to materially affect, our internal control over financial
      reporting.




**ITEM
      8B - OTHER INFORMATION**





None


21




**PART
      III**




**ITEM
      9 - DIRECTORS AND EXECUTIVE OFFICERS**




**Executive
      Officers and Directors**





The
      following table sets forth information regarding our executive officers, certain
      other officers and directors as of December 31, 2006:





**Name**
            
            **Age**
            
            **Position**Kamal
                Abdallah
            
            42
            
            President;
              Chief Executive Officer and Chairman of the Board of DirectorsChristopher
                McCauley
            
            46
            
            Vice
              President, Director, Secretary and General CounselSteve
                Barrera
            
            46
            
            Director
              and Regional Manager





Mr.
      Abdallah has served as a member of our Board of Directors since March 2005.
      Mr.
      McCauley was appointed to our board in July 2005 and Mr. Barrera was appointed
      in June 2005 by the Board of Directors to fill vacant seats on the board that
      resulted from an expansion of the size of the full board to five
      members.





**Background
      of Officers and Directors**





The
      following biographies describe the business experience of our executive officers
      and directors:





*Kamal
      Abdallah - President, Chief Executive Officer and Chairman.*





Mr.
      Abdallah, 42, has over fifteen years experience in commercial real estate
      investment and development. From 2000 to the present, Mr. Abdallah has been
      self-employed as a real estate development entrepreneur and he has developed
      a
      very successful real estate investment business, concentrated in the structuring
      and financing of a variety of real property transactions. Mr. Abdallah attended
      Oakland Community College and Oakland University in Michigan where he focused
      his studies in the area of accounting and finance.





*Christopher
      J. McCauley - Vice- President, General Counsel, Secretary and
      Director.*





Mr.
      McCauley, 46, has over twenty years experience in the areas of real estate
      and
      commercial law and over 8 years experience in oil and gas acquisitions and
      operations. From 1990 to July 2005, Mr. McCauley was in private practice in
      the
      state of Ohio as a sole practitioner. Mr. McCauley now devotes all of his
      professional efforts to the growth and management of the company. In 1982,
      Mr.
      McCauley graduated from The Ohio State University and in 1986 Mr. McCauley
      received his J.D. degree from Cleveland-Marshall College of Law.




*Steven
      Barrera - Regional Manager and Director.*





For
      over
      17 years, Mr. Barrera, 46, has performed large loss mitigation for insurance
      firms such as Lloyd's of London, AIG, Royal Insurance, CIGNA and USAA as well
      as
      for the United States Department of Agriculture and Department of Labor. Mr.
      Barrera also has over twenty years experience in real estate development and
      construction. Mr. Barrera was appointed regional manager in January 2006 to
      oversee the operations of Canyon Creek Oil & Gas, Inc. in the state of
      Texas. Mr. Barrera holds a bachelors degree in marketing from St. Mary's
      University in San Antonio, Texas.





**General**





Our
      executive officers are elected by, and serve at the pleasure of, our board
      of
      directors. Our directors serve terms of one year each, with the current
      directors serving until the next annual meeting of stockholders, and in each
      case until their respective successors are duly elected and
      qualified.





None
      of
      our directors currently serves as a director of any other company that is
      required to file periodic reports under the Securities Exchange Act of 1934.





None
      of
      our directors, executive officers, promoters or control persons has, within
      the
      last five years: (i) had a bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at the
      time of the bankruptcy or within two years prior to that time; (ii) been
      convicted in a criminal proceeding or is currently subject to a pending criminal
      proceeding (excluding traffic violations or similar misdemeanors); (iii) been
      subject to any order, judgment or decree, not subsequently reversed, suspended
      or vacated, of any court of competent jurisdiction, permanently or temporarily
      enjoining, barring, suspending or otherwise limiting his involvement in any
      type
      of business, securities or banking activities; (iv) been found by a court of
      competent jurisdiction (in a civil action), the Securities and Exchange
      Commission (the "SEC") or the Commodity Futures Trading Commission to have
      violated a federal or state securities or commodities law, and the judgment
      has
      not been reversed, suspended or vacated. There are no family relationships
      among
      any of our directors and executive officers.


22




**Board
      of Directors and Committees**




Our
      Board
      of Directors currently consists of five positions, of which three are filled
      and
      two are vacant. Historically, our Board of Directors has generally acted as
      a
      whole on most corporate governance matters. We plan to form audit, nominating
      and corporate governance and compensation committees that will meet the criteria
      for independence under, and other applicable requirements of, the Sarbanes-Oxley
      Act of 2002, the current rules of the Nasdaq Stock Market and the rules and
      regulations adopted by the SEC. We plan to appoint to these committees
      individuals who are determined by our Board of Directors to be “independent”
within the meaning of these laws and requirements. We intend to comply with
      such
      committee requirements as they become applicable to us. Our Board of Directors
      will adopt charters for these three committees. Once adopted, we intend to
      make
      the text of these charters available on our website at www.universalpropertydevelopment.com .




**Election
      of Directors and Officers**




Holders
      of our common stock are entitled to one (1) vote for each share held on all
      matters submitted to a vote of the stockholders, including the election of
      directors. Holders of our Series A Preferred Stock are entitled to one (1)
      vote
      for each share of common stock into which their preferred shares are convertible
      on all matters submitted to a vote of the common stockholders, including the
      election of directors. Cumulative voting with respect to the election of
      Directors is not permitted by our Certificate of Incorporation. Our Board of
      Directors is elected at the annual meeting of the stockholders or at a special
      meeting called for that purpose. Each director holds office until the next
      annual meeting of the stockholders and until the director’s successor is elected
      and qualified. If a vacancy occurs on the Board of Directors, including a
      vacancy resulting from an increase in the number of directors, the vacancy
      may
      be filled by the Board of Directors or by the stockholders at the next annual
      stockholders’ meeting or at a special meeting of the stockholders called for
      that purpose.




**Code
      of Business Conduct and Ethics**





Our
      Board
      of Directors has adopted a Code of Ethics applicable to our Chief Executive
      Officer and other executive officers, and a Code of Business Conduct and Ethics
      applicable to all of our employees, officers and directors. Our Code of Ethics
      and Code of Business Conduct will be available on our website. We intend to
      satisfy the disclosure requirement under Item 10 of Form 8-K relating to
      amendments or waivers from any provision of our Code of Ethics and our Code
      of
      Business Conduct and Ethics applicable to our principal executive officer,
      principal financial officer, principal accounting officer or controller by
      either filing a Form 8-K with the SEC or posting this information on our website
      within five business days following the date of amendment or waiver. Upon
      request, we will provide to any person, without charge, a copy of our Code
      of
      Ethics and Code of Business Conduct and Ethics. Requests may be directed to
      Universal Property Development & Acquisition Corporation, 14255 U.S. Highway
      1, Suite 209, Juno Beach, Florida 33408, attention Christopher J. McCauley,
      Esq., or by calling (561) 630-2977.





**Corporate
      Governance Guidelines**





Our
      Board
      of Directors intends to adopt Corporate Governance Guidelines, which will
      provide the framework for our company’s governance. These guidelines our Board
      of Directors will annually evaluate its effectiveness and the effectiveness
      of
      management, define director independence and establish a minimum number of
      meetings per year for the board of directors and its committees. Once adopted,
      the text of our Corporate Governance Guidelines will be made available on our
      website. Upon request, we will provide to any person, without charge, a copy
      of
      our Corporate Governance Guidelines. Requests may be directed to Universal
      Property Development & Acquisition Corporation, 14255 U.S. Highway 1, Suite
      209, Juno Beach, Florida 33408, attention Christopher J. McCauley, Esq., or
      by
      calling (561) 630-2977.





**Director
      Compensation**





Our
      directors currently do not receive any compensation for their roles as members
      of our Board of Directors and no director receives a salary as a director.





**Compensation
      Committee Interlocks and Insider Participation**





None
      of
      our executive officers serve as a member of the board of directors or
      compensation committee of any entity that has one or more of its executive
      officers serving as a member of our board of directors or compensation
      committee.





**Financial
      Experts**





At
      the
      present time no member of our Board of Directors meets the SEC definition of *“Financial
      Expert”* , which
      basically is limited to those who have prepared or audited comparable public
      company financial statements. While it might be possible to recruit a person
      who
      qualifies, the Board has determined that in order to fulfill all functions
      of
      our Board, each member of our Board should meet the criteria that have been
      established by our Board for board membership, and it is not in the best
      interests of our company to nominate someone who does not have all the
      experience, attributes and qualifications we seek.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Securities and Exchange Act of 1934 requires certain defined
      persons to file reports of and changes in beneficial ownership of a registered
      security with the Commission. Under the regulatory procedure, officers,
      directors and persons who own more than ten percent of a registered class of
      a
      company’s equity securities are also required to furnish the company with copies
      of all Section 16(a) forms they filed.


23




To
      our
      knowledge, and based solely upon a review of the copies of such reports
      furnished to us and written representations that no other reports were required
      during the year ended December 31, 2006, all Section 16(a) filing requirements
      applicable to our officers, directors and 10% or greater beneficial owners
      were
      complied with.




**ITEM
      10 - EXECUTIVE COMPENSATION**





The
      following Summary Compensation Table sets forth information concerning the
      annual and long-term compensation earned by our Chief Executive Officer and
      each
      of the other most highly compensated executive officers (collectively the “named
      executive officers”) for the three most recent fiscal years. This information
      includes the dollar value of base salaries and bonus awards and the number
      of
      stock options granted, if any, and certain other compensation, if
      any.


**Summary
      Compensation Table**





**Annual
                Compensation****Name
                and Principal Position**
            
            **Year**
            
            **Salary**
            
            ******Bonus**Kamal
                Abdallah (1)
            
            
            2006
            
            $
            187,500
            
            $
            0*President
                and Chief Executive Officer*
            
            
            2005
            
            $
            208,048
            
            $
            02004
            
            $
            0
            
            $
            0Christopher
                J. McCauley (2)
            
            
            2006
            
            $
            125,414
            
            $
            0*Vice-President
                and General Counsel*
            
            
            2005
            
            $
            50,000
            
            $
            02004
            
            $
            0
            
            $
            0Steven
                Barrera (3)
            
            
            2006
            
            $
            62,707
            
            $
            0*Regional
                Manager*
            
            
            2005
            
            $
            43,572
            
            $
            02004
            
            $
            0
            
            $
            0





Please
      line up rows.





(1)
      Mr. Abdallah’s salary for the 2006 fiscal year has not yet been paid and was
      recorded in accrued compensation at December 31, 2006. Mr. Abdallah was not
      an
      officer or director of the registrant prior to March 2005 and, therefore, he
      did
      not receive any salary or bonuses from us prior to our 2005 fiscal year. Mr.
      Abdallah’s salary and bonus for the 2005 fiscal year were paid by us with
      $70,986 in cash and through the issuance to Mr. Abdallah of an aggregate of
      1,940,000 shares of our common stock which we valued on the dates of issuance
      at
      an aggregate of $706,800.




(2)
      Mr. McCauley’s salary for the 2006 fiscal year was paid by us with $125,414 in
      cash. Mr. McCauley was not an officer or director of the registrant prior to
      July 2005 and, therefore, he did not receive any salary or bonuses from us
      prior
      to our 2005 fiscal year. Mr. McCauley’s salary and bonus for the 2005 fiscal
      year were paid by us with $22,000 in cash and through the issuance to Mr.
      McCauley of an aggregate of 778,572 shares of our common stock which we valued
      on the dates of issuance at an aggregate of $308,429.




(3)
      Mr. Barrera’s salary and bonus for the 2006 fiscal year were paid by us with
      $62,707 in cash and through the issuance to Mr. Barrera of an aggregate of
      75,000 shares of our common stock which we valued on the dates of issuance
      at an
      aggregate of $9,750. Mr. Barrera was not an officer or director of the
      registrant prior to November 2005 and, therefore, he did not receive any salary
      from us prior to our 2005 fiscal year. Mr. Barrera’s salary for the 2005 fiscal
      year was paid in its entirety by us through the issuance to Mr. Barrera of
      an
      aggregate of 71,429 shares of our common stock which we valued on the date
      of
      issuance at $43,572.





There
      are
      no current plans to change any officers’ salary from their level at December 31,
      2006.





**Employee
      Benefit Plans**





*Equity
      Incentive Plan.* In
      November 2004, our board of directors adopted an incentive stock option plan
      that was subsequently approved by our shareholders. The stock option plan is
      intended to promote continuity of management and to provide increased incentive
      and personal interest in our welfare by those employees and consultants who
      are
      primarily responsible for shaping and carrying out our long-range plans and
      securing our continued growth and financial success. In addition, by encouraging
      stock ownership by directors who are not our employees, the stock option plan
      is
      intended to attract and retain qualified directors.


24




The
      plan
      is administered by our board of directors, and they have the authority to select
      the employees, consultants and non-employee directors who participate in the
      plan, to determine the awards to be granted to participants, to set the terms
      and conditions of such awards and to establish, amend or waive rules for the
      administration of the plan.





The
      plan
      provides that up to a total of 65,000,000 shares of common stock, subject to
      adjustment to reflect stock dividends and other capital changes, are available
      for granting of awards under the stock option plan. No options to acquire shares
      are currently outstanding and no options to acquire shares were granted under
      the plan in 2006.





During
      2006, our Board of Directors approved the issuance of an aggregate of 13,784,850
      shares of our common stock to employees, directors, consultants and others
      under
      the terms of the stock option plan.





**Employment
      Contracts**





We
      have
      written employment contracts with the officers of the company, Kamal Abdallah,
      Christopher McCauley, and Steven Barrera.





*Employment
      Agreement with Kamal Abdallah.*




On
      October 1, 2005, we entered into an employment agreement with Mr. Kamal Abdallah
      which has an initial term of four (4) years. Mr. Abdallah serves as our
      President and Chief Executive Officer and is a member of our board of directors.
      Mr. Abdallah receives a base salary of $150,000 per year and is entitled to
      a
      discretionary bonus of up to $600,000 per year. The amount of Mr. Abdallah’s
      bonus will be determined by the board of directors, and will be based on the
      achievement of certain performance milestones as determined by the board of
      directors in its sole discretion. As additional compensation, the Company shall
      also issue and sell to Mr. Kamal certain restricted shares of common stock
      in
      the amounts and at the share prices determined by the board of directors in
      its
      sole discretion.




Mr.
      Abdallah’s employment agreement would be terminated under its terms upon the
      death or disability of Mr. Abdallah. If we terminate his employment agreement
      for “Cause” (as defined in the agreement) or if Mr. Abdallah terminates his
      employment voluntarily for any reason before the end of the term, Mr. Abdallah
      will be entitled to receive his accrued compensation through the date his
      employment terminates in addition to his pro rata bonus. If Mr. Abdallah’s
      employment is terminated by us without "Cause" then he will be entitled to
      receive (1) his accrued compensation through the termination date; (2) a single
      sum payment equal to one million dollars ($1,000,000); and (3) reimbursement
      for
      the cost of up to the first year of continuing group health plan coverage which
      Executive and his covered dependents receive pursuant to COBRA.





*Employment
      Agreement with Christopher McCauley.*




On
      October 1, 2005, we entered into an employment agreement with Mr. Christopher
      McCauley which has an initial term of four (4) years. Mr. McCauley serves as
      our
      Vice-President, Secretary and General Counsel and is a member of our board
      of
      directors. Mr. McCauley receives a base salary of $120,000 per year and is
      entitled to a discretionary bonus of up to $600,000 per year. The amount of
      Mr.
      McCauley’s bonus will be determined by the board of directors, and will be based
      on the achievement of certain performance milestones as determined by the board
      of directors in its sole discretion. As additional compensation, the Company
      shall also issue and sell to Mr. McCauley certain restricted shares of common
      stock in the amounts and at the share prices determined by the board of
      directors in its sole discretion.





Mr.
      McCauley’s employment agreement would be terminated under its terms upon the
      death or disability of Mr. McCauley. If we terminate his employment agreement
      for “Cause” (as defined in the agreement) or if Mr. McCauley terminates his
      employment voluntarily for any reason before the end of the term, Mr. McCauley
      will be entitled to receive his accrued compensation through the date his
      employment terminates in addition to his pro rata bonus. If Mr. McCauley’s
      employment is terminated by us without "Cause" then he will be entitled to
      receive (1) his accrued compensation through the termination date; (2) a single
      sum payment equal to one million dollars ($1,000,000); and (3) reimbursement
      for
      the cost of up to the first year of continuing group health plan coverage which
      Executive and his covered dependents receive pursuant to COBRA.





*Employment
      Agreement with Steven Barrera.*




On
      January 1, 2006, we entered into an employment agreement with Mr. Steven Barrera
      which has an initial term of one (1) year. Mr. Barrera serves as our Regional
      Manager for operations in the State of Texas and is a member of our board of
      directors. Mr. Barrera receives a base salary of $60,000 per year. As additional
      compensation, the Company shall also issue and sell to Mr. Barrera certain
      restricted shares of common stock in the amounts and at the share prices
      determined by the board of directors in its sole discretion.





Mr.
      Barrera’s employment agreement would be terminated under its terms upon the
      death or disability of Mr. Barrera. If we terminate his employment agreement
      for
“Cause” (as defined in the agreement), without such “Cause” or if Mr. Barrera
      terminates his employment voluntarily for any reason before the end of the
      term,
      Mr. Barrera will be entitled to receive his accrued compensation through the
      date his employment terminates.


25




**Indemnification**





Under
      our
      Articles of Incorporation and Bylaws, we may indemnify an officer or director
      who is made a party to any proceeding, including a lawsuit, because of his
      position, if he acted in good faith and in a manner he reasonably believed
      to be
      in our best interest. We may advance expenses incurred in defending a
      proceeding. To the extent that the officer or director is successful on the
      merits in a proceeding as to which he is to be indemnified, we must indemnify
      him against all expenses incurred, including attorney's fees. With respect
      to a
      derivative action, indemnity may be made only for expenses actually and
      reasonably incurred in defending the proceeding, and if the officer or director
      is judged liable, only by a court order. The indemnification is intended to
      be
      to the fullest extent permitted by the laws of the State of Nevada. Regarding
      indemnification for liabilities arising under the Securities Act, which may
      be
      permitted to directors or officers under Nevada law, we are informed that,
      in
      the opinion of the Commission, indemnification is against public policy, as
      expressed in the Act and is, therefore, unenforceable.




**ITEM
      11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





The
      following table sets forth, as of March 20, 2007, information regarding the
      beneficial ownership of our common stock: (i) by each of our directors and
      executive officers; (ii) by all directors and executive officers as a group;
      or
      (iii) by all persons known to us to own 5% or more of our outstanding shares
      of
      common stock. The mailing address for each of the persons indicated is our
      corporate headquarters.





Beneficial
      ownership is determined under the rules of the SEC. In general, these rules
      attribute beneficial ownership of securities to persons who possess sole or
      shared voting power and/or investment power with respect to those securities
      and
      includes, among other things, securities that an individual has the right to
      acquire within 60 days. Unless otherwise indicated, the stockholders identified
      in the following table have sole voting and investment power with respect to
      all
      shares shown as beneficially owned by them.




Shares
                of Common Stock
              Beneficially
                Owned (1)Name
            
            Number
                of Shares
            
            Percent
                of ClassKamal
                Abdallah
            
            
            82,060,000
            (2)
            
            13.74
            %Christopher
                J. McCauley
            
            
            20,650,000
            (3)
            
            3.46
            %Steven
                Barrera
            
            
            146,429
            
            
            
            *All
                directors and executive officers
            
            
            102,856,429
            
            
            17.23%
            (4)





*
      Represents beneficial ownership of less than 1%





(1)
        As used in this table, a beneficial owner of a security includes any
      person who, directly or indirectly, through contract, arrangement,
      understanding, relationship or otherwise has or shares (a) the power to vote,
      or
      direct the voting of, such security or (b) investment power which includes
      the
      power to dispose, or to direct the disposition of, such security. In addition,
      a
      person is deemed to be the beneficial owner of a security if that person has
      the
      right to acquire beneficial ownership of such security within 60 days. Because
      our common stock has one (1) vote per share on all matters and holders of our
      Series A Preferred Stock are entitled to one (1) vote for each share of common
      stock into which their preferred shares are convertible on all matters submitted
      to a vote of the common stockholders, including the election of directors,
      the
      percentage ownership is presented on the basis of the percentage of the sum
      of
      the number of shares of common stock outstanding and the number of shares of
      common stock into which the outstanding vested shares of Series A Preferred
      Stock are currently convertible or will be convertible within the next 60
      days.


(2)
        Mr. Abdallah owns 2,060,000 shares of our common stock. In addition, Mr.
      Abdallah owns 80,000 shares of our Series A Preferred Stock which have vested
      and are currently convertible into 80,000,000 shares of our common stock. The
      shares of Series A Preferred Stock owned by Mr. Abdallah are entitled to vote
      on
      an as converted basis in all matters for which the holders of shares of our
      common stock are entitled to vote, including, but not limited to, the election
      of our directors.


(3)
        Mr. McCauley owns 650,000 shares of our common stock. In addition, Mr.
      McCauley owns 20,000 shares of our Series A Preferred Stock which have vested
      and are currently convertible into 20,000,000 shares of our common stock. The
      shares of Series A Preferred Stock owned by Mr. McCauley are entitled to vote
      on
      an as converted basis in all matters for which the holders of shares of our
      common stock are entitled to vote, including, but not limited to, the election
      of our directors.


(4)
          This percentage ownership of our common stock by our officers and
      directors is based upon 597,039,108 shares of our common stock being
      outstanding.  The 597,039,108 common share number is computed by adding the
      100,000,000 shares of our common stock that would be issued as a result of
      the
      conversion of the shares of Series A Preferred Stock held by Mr. Kamal and
      Mr.
      McCauley, which have vested and are currently convertible, to the 497,039,108
      shares of our common stock that was outstanding as of March 20,
      2007.





The
      percentages in the above table are computed based upon a total of 597,039,108
      shares or common stock being outstanding on March 20, 2007.




**ITEM
      12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





None


26


**ITEM
      13 - EXHIBITS**





**(a)**  **Exhibits:**





The
      following documents heretofore filed by the Company with the Securities and
      Exchange Commission are hereby incorporated by reference:





Exhibit
              Number
            
            Description
                Of Document2.1
                #
            
            Agreement
                and Plan of Merger dated June 17, 2005, among Pro Core Group, Inc.,
                now
                known as Universal Property Development and Acquisition Corporation,
                and
                Universal Property Development and Acquisition Corporation, a Nevada
                corporation, which was a wholly-owned subsidiary of Procore Group,
                Inc.
                Incorporated by reference to Exhibit 1 to the Current Report on Form
                8-K
                filed by the company on July 15, 2005.2.2
                #
            
            Articles
                of Merger by and between Universal Property Development and Acquisition
                Corporation and Pro Core Group, Inc. dated June 17, 2005. Incorporated
                by
                reference to Exhibit 2 to the Current Report on Form 8-K filed by
                the
                company on July 15, 2005.3.1
                #
            
            Articles
                of Incorporation of Universal Property Development and Acquisition
                Corporation. Incorporated by reference to Exhibit 3.1 to the Quarterly
                Report on Form 10-QSB filed by the company on April 22,
                2007.3.2
                #
            
            By-Laws
                of Universal Property Development and Acquisition Corporation.
                Incorporated by reference to Exhibit 3.2 to the Quarterly Report
                on Form
                10-QSB filed by the company on April 22, 2007.4.1
                #
            
            Certificate
                of Designation of Powers, Preferences and Rights of the Series B
                Convertible Preferred Stock of Universal Property Development and
                Acquisition Corporation. Incorporated by reference to Exhibit 4.2
                to the
                Quarterly Report on Form 10-QSB filed by the company on April 22,
                2007.4.2
                #@
            
            Universal
                Property Development and Acquisition Corporation 2004 Stock Incentive
                Plan. Incorporated by reference to Exhibit 4 to the Registration
                Statement
                on Form S-8 numbered 333-120396 of the company filed on November
                12,
                2004.4.3
                #
            
            Certificate
                of Designation of Powers, Preferences and Rights of the Series A
                Convertible Preferred Stock of Universal Property Development and
                Acquisition Corporation. Incorporated by reference to Exhibit 4.1
                to the
                Quarterly Report on Form 10-QSB filed by the company on April 22,
                2007.10.1
                #
            
            Joint
                Venture Agreement dated November 17, 2005 by and between by and between
                USProduction & Exploration, LLC, Universal Property Development and
                Acquisition Corp, and Triple Crown Consulting governing the formation
                and
                management of the joint venture entity Canyon Creek Oil & Gas, Inc.
                Incorporate by reference to Exhibit 10.1 to the Current Report on
                Form 8-K
                filed by the Company on November 22, 2005.10.2
                #
            
            Joint
                Venture Agreement dated October 2005 by and between by and between
                Universal Property Development and Acquisition Corp, Triple Crown
                Consulting, Inc., RAKJ, Rene Kranvold and Masaood Group governing
                the
                formation and management of the joint venture entity West Oil & Gas,
                Inc. Incorporated by reference to Exhibit 10.2 to the Quarterly Report
                on
                Form 10-QSB filed by the company on April 22, 2007.10.3
                #
            
            Joint
                Venture Agreement dated December 2005 by and between by and between
                Universal Property Development and Acquisition Corp and Lion Partners
                Hedge Fund governing the formation and management of the joint venture
                entity Winrock Energy, Inc. Incorporated by reference to Exhibit
                10.3 to
                the Quarterly Report on Form 10-QSB filed by the company on April
                22,
                2007.10.4
                #
            
            Memorandum
                of Understanding dated March 2006 by and between by and between Sundial
                Resources, Inc, Ty McDermett and Andrew McDermett, Jr. and Universal
                Property Development and Acquisition Corporation governing the formation
                and management of the joint venture entity Texas Energy, Inc. Incorporate
                by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
                by
                the company on March 14, 2006.10.5
                #@
            
            Employment
                Agreement between Universal Property Development and Acquisition
                Corporation and Mr. Kamal Abdallah dated October 1, 2005. Incorporate
                by
                reference to Exhibit 99.1 to the Current Report on Form 8-K filed
                by the
                company on October 12, 2005.


27


10.6
                #@
            
            Employment
                Agreement between Universal Property Development and Acquisition
                Corporation and Mr. Christopher McCauley dated October 1, 2005.
                Incorporate by reference to Exhibit 99.2 to the Current Report on
                Form 8-K
                filed by the company on October 12, 2005.10.7
                #@
            
            Employment
                Agreement between Universal Property Development and Acquisition
                Corporation and Mr. Steven Barrera dated January 1, 2006. Incorporate
                by
                reference to Exhibit 10.1 to the Current Report on Form 8-K filed
                by the
                company on January 23, 2006.10.8
                #
            
            Commercial
                Contract-Improved Property by and between International Trades &
                Forwarding LLC as the Seller and U.S. Petroleum Depot, Inc. as the
                Buyer,
                dated as of December 1, 2006 . Incorporate by reference to Exhibit
                10.1 to
                the Current Report on Form 8-K filed by the company on February 27,
                2007.31.1
                *
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act.31.2
                *
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act.32.1
                *
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act.32.2*
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act.







#
            Incorporated
                herein by reference.*
            Filed
                herewith.@
            Management
                compensation agreement, plan or
                arrangement.





**ITEM
      14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      firm
      of KBL, LLP has served as our independent auditors since October 2000. The
      Board
      of Directors selected KBL, LLP as our independent auditors for the year ended
      December 31, 2005, and the Audit Committee has selected KBL, LLP to serve in
      the
      same capacity for the year ended December 31, 2006. The Audit Committee has
      adopted a policy that requires advance approval of all audit, audit-related,
      tax
      services and other services performed by the independent auditor.





**Fees
      and Independence**





*Audit
      Fees* .
      KBL,
      LLP billed us an aggregate of $197,383 and $64,826 for professional services
      rendered for the audit of our financial statements for the years ended December
      31, 2006 and 2005, respectively, and its reviews of our financial statements
      included in our Form 10-QSB’s for the first three quarters of 2006 and
      2005.





*Tax
      Fees* .
      KBL,
      LLP did not bill us for any tax related services, however the audit fees
      included the cost for our tax return preparation for the years ended December
      31, 2006 and 2005.





*All
      Other Fees.* No other
      fees were billed by KBL, LLP to us during 2006 or 2005.





The
      Board
      of Directors has determined that the provision of services by KBL, LLP described
      above is compatible with maintaining independence as our principal
      accountant.


28




**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.




**UNIVERSAL
                PROPERTY DEVELOPMENT AND**
              **ACQUISITION
                CORPORATION**Date:
                April 12, 2007
            By:
            /s/
                Kamal AbdallahKamal
                Abdallah
              Chief
                Executive Officer and President





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the date indicated.





**Signature**
            
            **Title**
            
            **Date**/s/
                Kamal Abdallah
            
            Chief
                Executive Officer,
            
            April
                12, 2007Kamal
                Abdallah
            
            President
                and Director(Principal
                Executive Officer)/s/
                Christopher J. McCauley
            
            Vice-President,
                Secretary
            
            April
                12, 2007Christopher
                J. McCauley
            
            and
                Director/s/
                Steven Barrera
            
            Director
            
            April
                12, 2007Steven
                Barrera




29


**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Report
                of Registered Independent Auditors
            
            F-1Consolidated
                Balance Sheets
            
            F-2Consolidated
                Statements of Operations
            
            F-3Consolidated
                Statements of Changes in Shareholders' Deficit
            
            F-4Consolidated
                Statements of Cash Flows
            
            F-5Notes
                to Consolidated Financial Statements
            
            F-6
                - F-24Supplemental
                Information on Oil and Gas Producing Activities
            
            F-25













30




**KBL,
      LLP**


**CERTIFIED
      PUBLIC ACCOUNTANTS & ADVISORS**




**REPORT
      OF REGISTERED INDEPENDENT AUDITORS**







Board
      of
      Directors and the Shareholders


Universal
      Property Development and Acquisition Corporation


Juno
      Beach, Florida





We
      have
      audited the accompanying consolidated balance sheets of Universal Property
      Development and Acquisition Corporation (a corporation formerly known as Procore
      Group, Inc.) as of December 31, 2006 and 2005, and the related consolidated
      statements of operations, changes in shareholders’ deficit, and cash flows, for
      the years then ended. These financial statements are the responsibility of
      the
      Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States of America). Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audit provides a reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Universal Property Development
      and
      Acquisition Corporation as of December 31, 2006 and 2005, and the results of
      its
      operations and its cash flows for the years then ended in conformity with
      accounting principles generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, the Company has suffered recurring losses from operations, and
      is
      dependent upon the sale of equity securities to provide sufficient working
      capital to maintain continuity. These circumstances create substantial doubt
      about the Company's ability to continue as a going concern. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





**KBL,
      LLP**


**Certified
      Public Accountants and Advisors**





**New
      York, NY**








**April
      9, 2007**


F-1




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Consolidated
      Balance Sheets


December
      31, 2006 and 2005





**December
                31,**
              **2006**
            
            **December
                31,**
              **2005****ASSETS**Current
                Assets:Cash
            
            $
            12,439
            
            $
            132,935Restricted
                cash
            
            
            255,831
            
            
            -Marketable
                securities
            
            
            -
            
            
            1,000,000Accounts
                receivable - oil and gas sales
            
            
            162,352
            
            
            13,137Overadvanced
                royalties due from oil and gas lease property owners
            
            
            100,308Inventory
            
            
            246,789
            
            
            -Other
                current assets
            
            
            118,934
            
            
            672**Total
                current assets**
            
            
            896,653
            
            
            1,146,744Property
                and Equipment:Oil
                and gas properties, using full cost accounting Subject to
                amortization
            
            
            1,398,302
            
            
            1,311,546Not
                subject to amortization
            
            
            1,902,465
            
            
            623,860Gross
                oil and gas properties
            
            
            3,300,767
            
            
            1,935,406Accumulated
                depletion
            
            
            (91,098
            )
            
            (13,311
            )Net
                oil and gas properties
            
            
            3,209,669
            
            
            1,922,095Oil
                field equipment and other fixed assets, at cost, net of accumulated
                depreciation of $55,110 and $104, respectively
            
            
            2,040,036
            
            
            2,391Property
                and equipment, net
            
            
            5,249,705
            
            
            1,924,486Other
                assets
            
            
            
            
            
            -Deposits
                towards pending oil oriented acquisitions
            
            
            150,000**TOTAL
                ASSETS**
            
            **$**
            **6,296,358**
            
            **$**
            **3,071,230****LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            1,264,451
            
            $
            485,544Notes
                payable - related parties
            
            
            954,696
            
            
            150,696Notes
                payable
            
            
            -
            
            
            10,717Due
                to USPX
            
            
            6,054
            
            
            2,041Due
                to royalty holders
            
            
            27,118
            
            
            -Income
                taxes payable
            
            
            3,019
            
            
            2,219Deposit
                received towards pending sale of minority equity interests in
                subsidiaries
            
            
            1,000,000
            
            
            -Other
                current liabilities
            
            
            32,931
            
            
            -**Total
                current liabilities**
            
            
            3,288,269
            
            
            651,21735%
                minority interest in Canyon Creek Oil & Gas, Inc.
                subsidiary
            
            
            203,215
            
            
            609,69125%
                minority interest in Texas Energy, Inc. subsidiary
            
            
            (10,262
            )
            
            -30%
                minority interest in West Oil & Gas, Inc. subsidiary
            
            
            (10,370
            )
            
            -20%
                minority interest in Ambient Wells Services subsidiary
            
            
            (171
            )
            
            -**Minority
                Interest**
            
            
            182,412
            
            
            609,691**STOCKHOLDERS'
                EQUITY**Common
                stock, 2,000,000,000 shares $.001 par value authorized, 368,263,108
                and
                32,964,256 shares issued/"to be issued" and outstanding,
                respectively
            
            
            368,263
            
            
            32,964Convertible
                preferred stock, 500,000,000 shares $.001 par value authorized, 236,212
                and 237,106 shares issued and outstanding, respectively
            
            
            237
            
            
            237Class
                A convertible preferred stock, 200,000 shares $10.00 par value authorized,
                100,000 and 100,000 shares issued and
                outstanding, respectively
            
            
            1,000,000
            
            
            1,000,000Class
                B convertible preferred stock, 6,213 shares $1,000.00 par value
                authorized, 6,213 and 1,473 shares issued and outstanding,
                respectively
            
            
            6,213,000
            
            
            1,473,000Additional
                paid-in capital
            
            
            214,740,065
            
            
            189,011,741Accumulated
                deficit
            
            
            (219,495,888
            )
            
            (189,707,620
            )**Total
                stockholders' equity**
            
            
            2,825,677
            
            
            1,810,322**Total
                liabilities and stockholder's equity**
            
            **$**
            **6,296,358**
            
            **$**
            **3,071,230**




See
      registered independent auditor report and notes to the financial
      statements




F-2




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Consolidated
      Statements of Operations


For
      the
      years ended December 31, 2006 and 2005





**For
                the Year**
              **Ended**
            
            **For
                the Year**
              **Ended****December
                31,**
              **2006**
            
            **December
                31,**
              **2005**Natural
                gas sales
            
            $
            114,683
            
            $
            28,965Oil
                sales
            
            
            466,596
            
            
            -**Total
                revenue**
            
            
            581,279
            
            
            28,965Costs
                and operating expenses:Lease
                operating expenses
            
            
            739,740
            
            
            3,794Depletion
                expense
            
            
            77,787
            
            
            13,311817,527
            
            
            17,105Loss
                on impairment of oil and gas properties
            
            
            875,698
            
            
            -1,693,225
            
            
            17,105Consulting
                fees and services, including $1,630,570 and $8,122,973 for the years
                ended
              December
                31, 2006 and 2005 incurred via issuance of common shares
            
            
            2,538,668
            
            
            8,192,344Payroll
                and related benefits
            
            
            561,634General
                and administrative
            
            
            980,901
            
            
            355,547Depreciation
                expense
            
            
            55,005
            
            
            104**Total
                costs amd operating expenses**
            
            
            5,829,433
            
            
            8,565,100**Operating
                loss**
            
            
            (5,248,154
            )
            
            (8,536,135
            )Other
                income (expenses):Gain
                on write off of loans and other liabilities no longer due and
                payable
            
            
            55,086
            
            
            6,801Interest
                expense
            
            
            (8,327
            )
            
            (16,661
            )Interest
                income
            
            
            5,831
            
            
            -Loss
                on sale of oil lease to American Flourite
            
            
            (51,123
            )
            
            -Loss
                on impairment of investment acquisition costs
            
            
            -
            
            
            (21,355
            )Loss
                on termination of Sundial joint venture
            
            
            (658,007
            )
            
            -Gain
                on sale of oil leases to Avalon Oil and Gas, Inc. net of of realized
                loss
                in  value of proceeds
              of
                Avalon Oil and Gas, Inc. common stock received of $787,500
            
            
            28,000
            
            
            -Loan
                conversion costs
            
            
            -
            
            
            (528,934
            )One-time
                financial fee earned in company abandoned arrangement to provide
                long-term
              construction
                development financing
            
            
            -
            
            
            65,000**Total
                other income (expenses)**
            
            
            (628,540
            )
            
            (495,149
            )Loss
                before provision for income taxes
            
            
            (5,876,694
            )
            
            (9,031,284
            )Provision
                for income taxes (current)
            
            
            800
            
            
            800Net
                loss before minority interest
            
            
            (5,877,494
            )
            
            (9,032,084
            )Add,
                35% minority interest in net (loss) income of Canyon Creek Oil &
                Gas,  Inc. subsidiary
            
            
            (406,476
            )
            
            2,360Add,
                25% minority interest in net (loss) of Texas Energy Inc.
                subsidiary through 9/30/06
            
            
            (10,262
            )
            
            -Add,
                30% minority interest in net (loss) of West Oil & Gas, Inc.
                subsidiary
            
            
            (10,370
            )
            
            -Add,
                20% minority interest in net (loss) of Ambient Wells
                Services
            
            
            (171
            )
            
            -**Minority
                Interest**
            
            
            (427,279
            )
            
            2,360Net
                loss after minority interest
            
            $
            (5,450,215
            )
            $
            (9,034,444
            )Preferred
                stock dividend resulting from beneficial feature associated with
                Series A
                beneficial
              feature
                being convertible to common stock
            
            
            -
            
            
            (1,000,000
            )Preferred
                stock dividend resulting from change in conversion feature on unlettered
                stock
            
            
            (24,338,053
            )
            
            (162,830,529
            )Net
                loss available to common shareholders
            
            $
            (29,788,268
            )
            $
            (172,864,973
            )Basic
                and diluted net loss per weighted-average shares common stock
                outstanding
            
            $
            (0.03
            )
            $
            (1.55
            )Diluted
                loss attributable to common stockholders per weighted average shares
                outstanding
            
            $
            (0.17
            )
            $
            (16.46
            )Weighted-average
                number of shares of common stock outstanding
            
            
            174,903,158
            
            
            10,504,859




See
      registered independent auditor report and notes to the financial
      statements.


F-3




UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES


Consolidated
      Statements of Changes in Shareholders' Equity (Deficit) For the Years Ended
      December 31, 2006 and 2005





**(shares)**
            
            **(shares)**
            
            
            
            
            
            
            
            
            
            **Stock****Common**
            
            **Preferred**
            
            **Common**
            
            **Preferred**
            
            
            
            **Accumulated**
            
            **Subscription****Stock**
            
            **Stock**
            
            **Stock**
            
            **Stock**
            
            **APIC**
            
            **Deficit**
            
            **Receivable**
            
            **Total****Balance
                December 31, 2004**
            
            
            398,454
            
            
            237,197
            
            $
            398
            
            $
            237
            
            $
            16,505,575
            
            $
            (16,842,647
            )
            $
            (330,000
            )
            $
            (666,437
            )Unlettered
                Convertible Preferred shares with induced conversion feature converted
                into common shares, as restated
            
            
            25,855,000
            
            
            (91
            )
            
            25,855
            
            
            -
            
            
            (25,855
            )
            
            
            
            
            
            
            
            -Class
                B convertible preferred stock to be issued for cash received by
                Company
            
            
            
            
            
            1,473
            
            
            
            
            
            1,473,000
            
            
            
            
            
            
            
            
            
            
            
            1,473,000Common
                stock issued for cash
            
            
            133,333
            
            
            
            
            
            133
            
            
            
            
            
            199,867
            
            
            
            
            
            
            
            
            200,000Change
                in conversion feature associated with certain unlettered preferred
                stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            162,830,529
            
            
            (162,830,529
            )
            
            
            
            
            -Common
                stock issued for services
            
            
            5,136,750
            
            
            
            
            
            5,137
            
            
            
            
            
            7,636,723
            
            
            
            
            
            
            
            
            7,641,860Common
                shares issued for investment in oil and gas exploration and development
                joint venture
            
            
            100,000
            
            
            
            
            
            100
            
            
            
            
            
            54,900
            
            
            
            
            
            
            
            
            55,000Common
                shares issued for consulting services in connection with oil and
                gas
                exploration and development joint venture
            
            
            500,000
            
            
            
            
            
            500
            
            
            
            
            
            264,500
            
            
            
            
            
            
            
            
            265,000Common
                stock issued in settlement of liabilities
            
            
            1,062,939
            
            
            
            
            
            1,063
            
            
            
            
            
            875,280
            
            
            
            
            
            
            
            
            876,343Cancellation
                of common shares returned on unwinding of prior real estate acquisition
                transaction
            
            
            (222,220
            )
            
            
            
            
            (222
            )
            
            
            
            
            (329,778
            )
            
            
            
            
            330,000
            
            
            -Class
                A convertible preferred stock issued in exchange for investment in
                preferred series B restricted stock
            
            
            
            
            
            100,000
            
            
            
            
            
            1,000,000
            
            
            
            
            
            
            
            
            
            
            
            1,000,000Preferred
                stock dividend resulting from beneficial feature associated with
                Series A
                being convertible to common stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,000,000
            
            
            (1,000,000
            )
            
            
            
            
            -Net
                Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (9,034,444
            )
            
            
            
            
            (9,034,444
            )**Balance
                December 31, 2005**
            
            
            32,964,256
            
            
            338,579
            
            $
            32,964
            
            $
            2,473,237
            
            $
            189,011,741
            
            $
            (189,707,620
            )
            $
            -
            
            $
            1,810,322Preferred
                shares converted to common
            
            
            321,014,002
            
            
            (894
            )
            
            321,014
            
            
            -
            
            
            (321,014
            )
            
            -
            
            
            -
            
            
            -Preferred
                shares sold for cash
            
            
            -
            
            
            4,740
            
            
            -
            
            
            4,740,000
            
            
            -
            
            
            -
            
            
            -
            
            
            4,740,000Common
                stock issued for services
            
            
            13,784,850
            
            
            -
            
            
            13,785
            
            
            -
            
            
            1,616,785
            
            
            -
            
            
            -
            
            
            1,630,570Common
                stock issued to retire debt
            
            
            500,000
            
            
            -
            
            
            500
            
            
            -
            
            
            94,500
            
            
            -
            
            
            -
            
            
            95,000Change
                in conversion feature associated with certain unlettered preferred
                stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            24,338,053
            
            
            (24,338,053
            )
            
            
            
            
            -Net
                Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (5,450,215
            )
            
            
            
            
            (5,450,215
            )**Balance
                at December 31, 2006**
            
            
            368,263,108
            
            
            342,425
            
            $
            368,263
            
            $
            7,213,237
            
            $
            214,740,065
            
            $
            (219,495,888
            )
            $
            -
            
            $
            2,825,677




See
      registered independent auditor report and notes to the financial
      statements.


F-4




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Consolidated
      Statements of Cash Flows


For
      the
      Years Ended December 31, 2006 and 2005





**For
                the Year**
            
            **For
                the Year****Ended
                12/31/06**
            
            **Ended
                12/31/05**CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (5,450,215
            )
            $
            (9,034,444
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Minority
                interest (gain) loss
            
            
            (427,279
            )
            
            2,360Loss
                on impairment of oil and gas properties
            
            
            875,698Loss
                on termination of Sundial joint venture
            
            
            658,007Loss
                on impairment of investment acquisition costs
            
            
            -
            
            
            21,355Accrued
                interest receivable on unsecured bridge loan receivable
            
            
            -
            
            
            4,735Depreciation
                and depletion expense
            
            
            132,793
            
            
            13,415Consulting
                fee and services incurred through issuance of company  equity
                shares or options to acquire such shares
            
            
            1,630,570
            
            
            8,122,973Debt
                conversion costs
            
            
            95,000
            
            
            528,934Gain
                on write off of loans and other liabilities no longer due and
                payable
            
            
            (55,086
            )
            
            (6,801
            )Gain
                on sale of oil leases to Avalon Oil and Gas, Inc.
            
            
            (28,000
            )Loss
                on sale of oil lease to American Flourite
            
            
            51,123Payment
                of breakup fee to Sundial on termination of joint venture
            
            
            (200,000
            )Changes
                in operating assets and liabilites:Increase
                in accounts receivable
            
            
            (149,215
            )
            
            (13,137
            )Increase
                in accounts receivable from joint interest billings
            
            
            (100,308
            )Increase
                in inventory
            
            
            (246,789
            )
            
            -Increase
                in prepaid expenses
            
            
            (93,848
            )
            
            -Increase
                in security deposits
            
            
            (24,414
            )
            
            (672
            )Increase
                (decrease) in accounts payable & accrued expenses
            
            
            810,515
            
            
            (149,242
            )Increase
                (decrease) in income taxes payable
            
            
            800
            
            
            (4,544
            )Increase
                in due to USPX
            
            
            4,013
            
            
            2,041Increase
                in due to royalty holders
            
            
            27,118
            
            
            -Increase
                in other current liabilities
            
            
            32,931
            
            
            -NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (2,456,586
            )
            
            (513,027
            )CASH
                FLOWS FROM INVESTING ACTIVITIESProceeds
                from substitution of cash for marketable securities of Siteworks
                Building
                & Development, Inc.
            
            
            1,000,000
            
            
            -Proceeds
                from sale of overriding royalty interests of oil and gas
                leases
            
            
            1,000,000Proceeds
                from sale of oil leases to Avalon Oil and Gas, Inc.
            
            
            75,000Proceeds
                from sale of oil leases to American Flourite
            
            
            25,000Increase
                in restricted cash
            
            
            (255,831
            )
            
            -Payment
                of capitalized oil and gas properties work-over costs
            
            
            (3,822,189
            )
            
            (964,890
            )Payments
                for assignment of rights to oil and gas leases to the
                Company
            
            
            -
            
            
            (128,000
            )Purchases
                of oil field equipment and other equipment
            
            
            (2,092,651
            )
            
            (2,495
            )Deposits
                towards pending oil oriented acquisitions
            
            
            (150,000
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (4,220,671
            )
            
            (1,095,385
            )CASH
                FLOWS FROM FINANCING ACTIVITIESNet
                increase in notes payable
            
            
            816,761
            
            
            64,696Proceeds
                from sale of common stock
            
            
            -
            
            
            200,000Proceeds
                from sale of Class B convertible preferred stock
            
            
            4,740,000
            
            
            1,473,000Deposit
                received for sale of minority equity interests in
                subsidiaries
            
            
            1,000,000NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            6,556,761
            
            
            1,737,696NET
                (DECREASE) INCREASE IN CASH
            
            
            (120,496
            )
            
            129,284Cash,
                beginning of period
            
            
            132,935
            
            
            3,651Cash,
                END OF PERIOD
            
            
            12,439
            
            
            132,935Supplementary
                disclosures of cash flow informationCash
                paid during the period for:Income
                taxes
            
            $
            -
            
            $
            5,344Interest
                expense
            
            
            1,234
            
            
            14,000Non-cash
                financing activity:Fair
                market value of 100,000 shares of common stock issued in connection
                with
                investment in oil & gas exploration and development joint
                venture
            
            $
            -
            
            $
            55,000




See
      registered independent auditor report and notes to the financial
      statements.


F-5




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005





**NOTE
      1 - BASIS OF PRESENTATION - GOING CONCERN**




The
      Company has incurred recurring operating losses since its inception and, as
      of
      December 31, 2006, had an accumulated deficit of approximately $219,496,000.
      These conditions raise substantial doubt about the Company's ability to continue
      as a going concern. The financial statements do not include any adjustments
      to
      reflect the possible future effect of the recoverability and classification
      of
      assets or the amounts and classifications of liabilities that may result from
      the outcome of this uncertainty.




The
      Company's continuation as a going concern is dependent upon receiving additional
      financing. The Company anticipates that during its 2007 fiscal year it will
      need
      to raise substantial funds to support its working capital needs and to continue
      to execute the requirements of its business plan. Management of the Company
      is
      currently in a process of trying to secure additional capital. There can be
      no
      assurance that the Company will be successful in this capital raise or with
      other attempts to raise sufficient capital.




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




**Organization**





Universal
      Property Development and Acquisition Corporation (“UPDA” or “the Company”) was
      incorporated in the State of California in 1982 under the name Tahoe Lake
      Concession. In August 1983 the name was changed to BAOA, Inc., in November
      2000
      the name was changed to Call Solutions, Inc., and in November 2003 the name
      was
      changed to Procore Group, Inc. In June 2005, our Board of Directors authorized
      and approved the upstream merger of our wholly owned subsidiary, Universal
      Property Development and Acquisition Corporation, which had no operations,
      with
      and into UPDA (the "Upstream Merger"). The Upstream Merger became effective
      on
      June 17, 2005 and our common stock trades on the OTC Bulletin Board under the
      trading symbol “UPDA.OB”.





The
      Company is engaged in the oil and natural gas acquisition, production,
      development, storage, distribution and blending industry. UPDA currently has
      operations in the State of Texas.




In
      June
      2005, the Company increased the number of its authorized shares of common stock
      from 750,000,000 to 2,000,000,000 and effectuated a 100:1 reverse split of
      the
      Company's common stock. The company is authorized to issue an aggregate of
      2,500,000,000 shares, of which 2,000,000,000 are designated as common shares
      and
      500,000,000 shares are designated as preferred stock.




**Principles
      of Consolidation**




The
      consolidated financial statements include the financial position and operating
      activities of UPDA and its 100% owned subsidiaries UPDA-Operators (“UPDA-OI” or
“UPDA-O”), Catlin Oil & Gas (“Catlin”), Texas Energy, Inc. (“TEI” or “Texas
      Energy”), US Petroleum Depot Inc. (“USPD”), UPDA Texas Trading, Inc. (“Texas
      Trading”), and Texas Energy Pipeline & Gathering Systems (“TEPG”), and 60%
      owned subsidiary, Canyon Creek Oil and Gas, Inc. (“Canyon Creek” or "Canyon"),
      its 70% owned subsidiary, West Oil & Gas, Inc. ("WOG" or “West Oil”), and
      its 80% owned subsidiary Ambient Wells Services, Inc. (“Ambient”). The Company
      has an additional joint venture, Winrock Energy Inc. (“Winrock”), which was
      inactive as of December 31, 2006. All inter-company balances have been
      eliminated in consolidation.




Cash
      and
      cash equivalents




The
      Company considers all highly liquid investments with a maturity of three months
      or less when purchased to be cash equivalents. Cash equivalents are carried
      at
      cost, which approximates market value.




**Estimates**




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosures of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results may differ from these estimates.




**Segment
      information**




The
      Company operates in one segment.




See
      independent auditor's report.




F-6




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**




**Fair
      value of financial instruments**




For
      financial statement instruments including cash, accounts receivable, and
      accounts and accrued expenses payable, the carrying amounts approximated fair
      value because of their short maturity.




**Depreciation**




Fixed
      assets are stated at cost. Depreciation is computed using the straight-line
      method over the estimated useful lives ranging from three to thirty
      years.




**Basic
      and Diluted Loss per Share**




Basic
      and
      diluted net loss per share information for all periods is presented under the
      requirements of SFAS No. 128, Earnings Per Share. Basic loss per share is
      calculated by dividing the net loss attributable to common stockholders by
      the
      weighted-average common shares outstanding during the period. Diluted loss
      per
      share is calculated by dividing net loss attributable to common stockholders
      by
      the weighted-average common shares outstanding. The dilutive effect of preferred
      stock, warrants, and options convertible into an aggregate of approximately
      394,826,000 and 413,745,000 of common shares as of December 31, 2006 and 2005,
      respectively, are not included because the inclusion of such would be
      anti-dilutive for all periods presented.




**Major
      Customers**




For
      the
      year-ended December 31, 2006, one purchaser, Sunoco Partners Marketing &
Terminals LP, was responsible for generating approximately 77% of our total
      oil
      sales, and one purchaser , Enbridge G & P (North Texas) LP. **,** was
      responsible for generating approximately 71% of our natural gas
      sales.




**Asset
      Retirement Obligations**




The
      Company follows SFAS No. 143, Accounting for Asset Retirement Obligations.
      In
      accordance with the provisions of SFAS No. 143, the Company records asset
      retirement costs and liabilities at the time of property acquisition as a
      reduction in earnings.




**Oil
      and Gas Properties**




The
      Company uses the full cost method of accounting for oil and gas properties.
      Under this method, all costs associated with acquisition and development of
      oil
      and gas properties are capitalized. The Company currently does not engage in
      exploration activities. Costs capitalized include acquisition costs, geological
      and geophysical expenditures, brokers and finders fees, lease rentals on
      undeveloped properties and costs of drilling and equipping productive and
      non-productive wells. Drilling costs include directly related overhead costs.
      Capitalized costs are categorized either as being subject to amortization or
      not
      subject to amortization.





Reserve
      quantities and the related estimates of future net cash flows affect our
      periodic calculations of depletion and impairment of our oil and natural gas
      properties. Proved oil and natural gas reserves are the estimated quantities
      of
      crude oil, natural gas and natural gas liquids which geological and engineering
      data demonstrate with reasonable certainty to be recoverable in future periods
      from known reservoirs under existing economic and operating conditions. Reserve
      quantities and future cash flows included in this Annual Report are prepared
      in
      accordance with guidelines established by the SEC and FASB. The accuracy of
      our
      reserve estimates is a function of:





·
            the
                quality and quantity of available date;·
            the
                interpretation of that data;·
            the
                accuracy of various mandated economic assumptions; and·
            the
                judgments of the persons preparing the estimates.





Our
      proved reserve information included in this Annual Report is based on reports
      by
      third party consultants. Because these estimates depend on many assumptions,
      all
      of which may differ substantially from actual results, reserve estimates may
      be
      different from the quantities of oil and natural gas that are ultimately
      recovered. We continually make revisions to reserve estimates throughout the
      year as additional properties are acquired. We make changes to depletion rates
      and impairment calculations in the same period that changes to the reserve
      estimates are made.




All
      capitalized costs of oil and gas properties, including the estimated future
      costs to develop proved reserves and estimated future costs to plug and abandon
      wells and costs of site restoration, are amortized on the unit-of-production
      method using estimates of proved reserves as determined by independent
      engineers. Investments in unproved properties and major development projects
      are
      not amortized until proved reserves associated with the projects can be
      determined or until impairment occurs. If the results of an assessment indicate
      that the properties are impaired, the amount of the impairment is added to
      the
      capitalized costs to be amortized. Depletion expense for the year ended December
      31, 2006, was $77,787 based on depletion at the rate of $7.64 per
      barrel-of-oil-equivalent.




The
      capitalized cost included in the full cost pool is subject to a “ceiling test”,
      which limits such cost to the estimated present value, using a ten percent
      discount rate, of the future net revenue from proved reserves, based on current
      economic and operating conditions. The ceiling test calculation is dependent
      on
      the estimates used in the calculation of our proved reserves. As of December
      31,
      2005 and 2006, a portion of our oil and gas property was unproved and was
      excluded from amortization.




**Revenue
      Recognition**




The
      Company recognizes net operating revenues from oil and natural gas at the time
      of delivery that is once the oil and gas purchasers have taken
      delivery.




See
      independent auditor's report.


F-7




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**




**EITF
      98-5**





EITF
      98-5
      applies to convertible securities with beneficial conversion features that
      must
      be settled in stock and to those that give the issuer a choice in setting the
      obligation in either stock or cash. EITF 98-5 requires that the beneficial
      conversion feature should be valued at the commitment date as the difference
      between the conversion price and the fair market value of the common stock
      into
      which the security is convertible, multiplied by the number of shares into
      which
      the security is convertible. EITF 98-5 further limits this amount to the
      proceeds allocated to the convertible instrument.




**Income
      taxes**




The
      Company accounts for income taxes using the asset and liability method as
      required by Statement of Financial Accounting Standards No. 109, under which
      deferred tax assets and liabilities are determined based upon the differences
      between financial statement carrying amounts and the tax bases of existing
      assets and liabilities. Deferred taxes are also recognized for operating losses
      that are available to offset future taxable income.




Valuation
      allowances are established when necessary to reduce deferred tax assets to
      the
      amount expected to be realized. Income tax expense is the tax payable or
      refundable for the period plus or minus the change during the period in deferred
      tax assets and liabilities.




**Recent
      Accounting Pronouncements**




In
      May
      2005, the FASB issued SFAS 154, "Accounting Changes and Error Corrections,"
      that
      applies to all voluntary changes in accounting principle. This Statement
      requires retrospective application to prior periods' financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. When it
      is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, this Statement requires
      that
      the new accounting principle be applied to the balances of assets and
      liabilities as of the beginning of the earliest period for which retrospective
      application is practicable and that a corresponding adjustment be made to the
      opening balance of retained earnings (or other appropriate components of equity
      or net assets in the statement of financial position) for that period rather
      than being reported in an income statement. When it is impracticable to
      determine the cumulative effect of applying a change in accounting principle
      to
      all prior periods, this Statement requires that the new accounting principle
      be
      applied as if it were adopted prospectively from the earliest date practicable.
      SFAS 154 will be effective for the Company for year ended December 31, 2007.
      The
      Company does not anticipate that the adoption of SFAS No. 154 will have an
      impact on the Company's overall results of operations or financial
      position.




In
      February 2006, the FASB issued SFAS 155, "Accounting for Certain Hybrid
      Financial Instruments--an amendment of FASB Statements No. 133 and 140," that
      allows a preparer to elect fair value measurement at acquisition, at issuance,
      or when a previously recognized financial instrument is subject to a
      re-measurement (new basis) event, on an instrument-by-instrument basis, in
      cases
      in which a derivative would otherwise have to be bifurcated. It also eliminates
      the exemption from applying Statement 133 to interests in securitized financial
      assets so that similar instruments are accounted for similarly regardless of
      the
      form of the instruments. This Statement is effective for all financial
      instruments acquired or issued after the beginning of an entity's first fiscal
      year that begins after September 15, 2006. The Company does not anticipate
      that
      the adoption of SFAS No. 155 will have an impact on the Company's overall
      results of operations or financial position.




In
      March
      2006, the FASB issued SFAS 156, "Accounting for Servicing of Financial
      Assets--an amendment of FASB Statement No. 140," that applies to the accounting
      for separately recognized servicing assets and servicing liabilities. This
      Statement requires that all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable. An entity
      should adopt this Statement as of the beginning of its first fiscal year that
      begins after September 15, 2006. The Company does not anticipate that the
      adoption of SFAS No. 156 will have an impact on the Company's overall results
      of
      operations or financial position.





In
      July
      13, 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
      in Income Taxes. The Interpretation clarifies the way companies are to account
      for uncertainty in income tax reporting and filing and prescribes a consistent
      recognition threshold and measurement attribute for recognizing, derecognizing,
      and measuring the tax benefits of a tax position taken, or expected to be taken,
      on a tax return. The Interpretation is effective for fiscal years beginning
      after December 15, 2006, although early adoption is possible. The Company does
      not plan to adopt early and the Company is currently in the process of
      evaluating the impact, if any, the adoption of the Interpretation will have
      on
      the 2007 financial statements.




See
      independent auditor's report.


F-8




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**




**Recent
      Accounting Pronouncements (Continued)**




In
      September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. The adoption of SFAS No. 157 will not have an
      impact on the Company's overall results of operations or financial
      position.





In
      September 2006, the Financial Accounting Standards Board (“FASB”) the issued
      SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an Amendment of FASB Statements No. 87, 88, 106, and
      132(R)” (“SFAS No. 158”). SFAS No. 158 requires companies to report the funded
      status of their defined benefit pension and other postretirement benefit plans
      on their balance sheets as a net liability or asset as of December 31, 2006.
      The
      new standard does not address the accounting treatment for pension and
      postretirement benefits in the income statement. The adoption of SFAS No. 158
      will have no impact on the Company’s overall results of operations or financial
      position.




In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No.159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an amendment of FASB Statement No.115”. SFAS No.159 permits entities
      to choose to measure eligible financial instruments and other items at fair
      value at specified election dates. A business entity shall report unrealized
      gains and losses on items for which the fair value option has been elected
      in
      earnings at each subsequent reporting date. The fair value option may be applied
      instrument by instrument but only upon the entire instrument - not portions
      of
      the instrument. Unless a new election date occurs, the fair value option is
      irrevocable. SFAS No.159 is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007. The adoption of SFAS No. 159
      will not have an impact on the Company's overall results of operations or
      financial position.




**NOTE
      3 - INVESTMENT IN CANYON CREEK OIL & GAS**




During
      July 2005 the Company formed a joint venture with US Production &
Exploration, LLC ("USPX") and Triple Crown Consulting ("TCC") named Canyon
      Creek
      Oil & Gas, Inc. (“Canyon Creek” or "Canyon"). Canyon was formed for the
      purpose of acquiring oil and gas producing properties, low risk drilling
      prospects, and prospects in need of technology to make them viable. USPX is
      an
      independent production and exploration company located in Sugar Land, Texas,
      engaged in the acquisition of oil and gas producing properties with multiple
      enhancement opportunities. TCC is engaged in the merchant and investment banking
      and commercial finance broker services and is located in Miami Beach, Florida.
      In a memorandum of understanding dated July 4, 2005, the ownership percentages
      were to be as follows: the Company - 25%, USPX - 70%, and TCC - 5%. According
      to
      the memorandum of understanding, the Company was required to deliver $300,000
      of
      funding in cash to Canyon within thirty days of the execution of the agreement.
      In addition, that agreement required the Company to deliver another $200,000
      in
      cash ninety days thereafter.




On
      November 17, 2005 the joint venture agreement was amended and the parties
      agreed, among other things, to change the ownership proportions to the
      following: the Company - 65%, USPX -30%, and TCC - 5%. In addition, the Company
      was required to make a minimum investment of $1,200,000 in cash and stock in
      Canyon on or before January 31, 2006. USPX has the right to pursue other oil
      and
      gas ventures as it deems necessary to carry out its own business plan, provided
      it offers Canyon the right of first refusal to participate in such ventures.
      Other terms of note in the joint venture agreement provide for payment of
      management fees of - 7.5% of defined net operating revenue to USPX, and for
      the
      Company to issue 500,000 of its restricted common shares to USPX ten days after
      the execution of this agreement. To date the Company has not issued the common
      shares to USPX.




On
      March
      24, 2006, Donald Orr resigned from all of his positions as an officer and member
      of the Board of Directors of Canyon Creek Oil & Gas, Inc. Donald Orr is a
      member of USPX. USPX was the sole operator of Canyon Creek Oil & Gas, Inc's
      oil fields.  In the second quarter of 2006, Don Orr commenced a lawsuit
      against Canyon Creek to which the Company responded and is countersuing. The
      details and current status of the lawsuits is more fully described under Note
      25-Litigation. As of December 31, 2006 UPDA did not accrue any costs related
      to
      this matter because the Company believes the suit is without merit.




As
      a
      result of the litigation, USPX was no longer the operator, leaving Canyon Creek
      without a licensed field operator in the second quarter.




On
      May 3,
      2006, the Company filed articles of incorporation for its new wholly
      owned-subsidiary UPDA Operators, Inc. UPDA-O was formed to manage all of the
      Company’s oil and gas well operations. Upon filing its P-5 Organization Report,
      UPDA Operators, Inc. would be authorized to operate over 150 wells that the
      Company owns through its subsidiaries. UPDA-O would assume all responsibility
      for the maintenance and pumping of the Company’s oil and gas wells, manage the
      reporting and sales of the expanding production, post the necessary bonds with
      the Texas Railroad Commission and provide adequate insurance for the fields
      which it will operate. On August 9, 2006, the Railroad Commission of Texas
      approved UPDA-O’s P-5 Organization Report and now UPDA-O is the sole operator of
      all the oil and gas wells covered by the Company’s leases. In October 2006
      UPDA-O received its P-4 to become the operator of record for Canyon Creek.
      As of
      December 31, 2006, UPDA-O is still the operator of record for Canyon
      Creek.




“Oil
      and
      Gas Property” assets associated with the leases originally assigned by Donald
      Orr, including workovers applicable to those leases, totaled approximately
      $1,970,000 on December 31, 2006. Revenues already earned from October 2005
      to
      December 2006 totaled approximately $382,000. See Note 25 for a detailed
      discussion of the litigation described in the preceding two
      paragraphs.




Canyon
      Creek recorded a full cost pool impairment of approximately $15,000 for the
      year
      ended December 31,2006. Based on management’s evaluation of the undeveloped
      leasehold owned by Canyon Creek, it was determined that the Inez was impaired
      because the Yegua sand was depleted and could not be produced at this zone.
      The
      remaining value is the potential completion in the Frio sand zone. As a result,
      Canyon Creek wrote 60% of its value currently in undeveloped leasehold
      attributable to the Inez Well or approximately $860,000. Accordingly the
      Consolidated Statement Operations of the Company for the year ended December
      31,
      2006 reflects a loss on the impairments of $875,698.





Management
      believes its reserves are substantially higher than what is reflected in the
      independent third party reserve report. This third party reserve reports were
      impacted by the transition of operations from TransPecos (Orr) to UPDA Operators
      and by a active workover program.. Third party engineers require approximately
      120 days of consistent production which UPDA was unable to achieve on many
      of
      its properties.





Management
      intends to continue to monitor production from the wells on a quarterly basis
      to
      assess whether the oil and gas properties are further impaired than what was
      reflected as of December 31, 2006.




See
      independent auditor's report.


F-9




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      4 - JOINT VENTURE MEMORANDUM OF UNDERSTANDING - UTAH**




In
      October 2005, the Company executed a Memorandum of Understanding (“MOU”) with
      Dark Horse Exploration, Inc. (DHE), a Wyoming corporation, and Masaood Group,
      Ltd. for the development and production of a natural gas and oil field
      consisting of 4,000 acres in Northern Utah. Under the terms of the MOU, UPDA
      would own sixty percent (60%) of the joint venture, DHE would own thirty percent
      (30%) and Masaood would own ten percent (10%). Pursuant to the MOU, DHE will
      operate the field which presently has five (5) wells and which could be expanded
      to eighty (80) wells. Masaood agreed to invest $1,000,000 in this joint venture
      and provided initial funding of $150,000 in cash for leasehold acquisitions
      and
      the revitalization of the existing wells. UPDA agreed to re-invest its pro-rata
      portion of any operating profits realized by this joint venture, up to a maximum
      of $1,000,000, back into the joint venture to finance the drilling of additional
      wells. In 2005, the Company formed West Oil, a Nevada Corporation, to be the
      operating company for this joint venture.




In
      January, 2006, West Oil terminated its relationship with DHE due to the lack
      of
      material progress in the joint venture’s operations. Because of the expanding
      involvement of, and opportunities being generated by Landmark 4, LLC West is
      currently negotiating to undertake projects that could be significantly more
      lucrative to the joint venture than those presented by DHE. In conjunction
      with
      the termination of West’s relationship with DHE, UPDA increased its stake in
      West to 70% while Masaood Group, LTD. owns 10% and Mr. Kronvold owns 20% of
      the
      equity of West.




**NOTE
      5 - JOINT VENTURE MEMORANDUM OF UNDERSTANDING - OKLAHOMA**




In
      November 2005, the Company executed a memorandum of understanding with the
      Lion
      Partners Hedge Fund to acquire certain oil and gas leases in Osage County,
      Oklahoma for 3,840 acres, which included 69 producing wells and 27 injection
      wells. The Company formed Win Rock Energy, Inc., a Nevada corporation, to be
      the
      operating entity for this joint venture. There has been no further activity
      within this joint venture, and Win Rock Energy, Inc. is currently
      inactive.




**NOTE
      6 - JOINT VENTURE MEMORANDUM OF UNDERSTANDING - TEXAS
      ENERGY**




In
      March
      2006, UPDA and Sundial Resources, Inc. of Graham, Texas executed a Memorandum
      of
      Understanding (MOU) for the development of 382.95 acres on four leases in Young
      County, Texas. Pursuant to the MOU, UPDA was to provide funding for the workover
      of the 17 wells on the property. As set forth in the MOU, UPDA was to establish
      and own 75% of a joint venture corporation, tentatively known as Texas Energy,
      Inc. According to the memorandum of understanding, the Company was required
      to
      provide $400,000 (the amount estimated by Sundial for the completion of the
      work
      to make the wells productive) of funding in cash to Texas Energy, Inc. over
      an
      unspecified period of time.




The
      above-described MOU also required the Company to pay cash consideration of
      $100,000 directly to Sundial for its assignment of its 100% working interest
      in
      the leases and wells on property commonly known as the Thresher, Medlen, Nantz,
      and Wiechman fields to the Texas Energy, Inc. joint venture corporation. Sundial
      was to manage the workover procedures and operate the wells upon completion.
      For
      this, Sundial would be paid annual managerial fees equal to 5% of the net
      operating revenue of Texas Energy, Inc. The Company made an advance payment
      of
      $50,000 in March 2006 to Andrew McDermett to be used for the workovers,
      coincident to remitting the $100,000 to be paid for the leases. In the second
      quarter ended June 30, 2006, the Company paid approximately $318,900 to Andrew
      McDermett for workovers and $47,000 for a lease. The venture was to have a
      term
      of five years.




Sundial
      was not able to get the wells known as the Thresher, Medlen, Nantz, Wiechman
      fields to produce in a manner that was satisfactory to Texas Energy.
      Accordingly, Texas Energy agreed in principle to return to Sundial its 100%
      working interest in the leases and wells and pay Sundial a $200,000 breakup
      fee
      to unwind the transaction and Sundial relinquished its 25% interest in Texas
      Energy. The Company incurred a loss relating to the unwinding of the Sundial
      joint venture of approximately $658,000.




See
      independent auditor's report.


F-10




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      6 - JOINT VENTURE MEMORANDUM OF UNDERSTANDING - TEXAS ENERGY
      (CONTINUED)**





During
      the year ended December 31, 2006, the Company derived approximately $24,000
      of
      Oil and Gas revenues since wells began operations.





Acquisition
      of Catlin Assets


On
      June
      2, 2006 Texas Energy, Inc. completed the acquisition of certain assets pursuant
      to the terms and conditions of a Purchase Agreement dated April 12, 2006 (the
      "PA") by and between Texas Energy as the purchaser and the Catlin Oil Company
      ("COC"), Virginia Catlin, Randy Catlin and the Estate of Carl Catlin
      (collectively the "Catlins") as the sellers. The aggregate purchase price of
      the
      assets purchased by Texas Energy pursuant to the PA was $1,700,000 in cash.
      The
      Company incurred a fee of $50,000 for not completing the transaction in a timely
      basis.





Texas
      Energy purchased and COC and the Catlins (collectively the "Sellers") sold
      all
      of the rights, title and interest of the Sellers in certain assets collectively
      defined as the "Jack County Property" in the PA. The Jack County Property
      consists of: (i) approximately forty-seven acres of real property located in
      Jack County, Texas, (ii) approximately thirty-six oil and gas Leases on
      properties located in Jack County, Texas, (iii) certain equipment including,
      but
      not limited to, oil and gas wells, wellhead equipment, pumping units, flow
      lines, tanks, compressors, saltwater disposal facilities, injection facilities
      and other equipment used in connection with oil and gas exploration, development
      and production operations, (iv) certain tangible property including, but not
      limited to, furniture, tools, jigs, molds, rigs, well service units, elevators,
      trucks, trailers and other vehicles, and (v) certain transferable permits,
      franchises, approvals, and authorizations used in connection with the
      Leases.





In
      connection with the closing of the asset purchase transaction described above,
      Texas Energy incurred a “finder’s fee “ of $500,000 to NorTex Holdings, Inc. for
      its professional services in bringing the parties together and facilitating
      the
      transaction, which is due in full a day after the transaction closing which
      took
      place on June 2, 2006. Accordingly, any amounts unpaid after that day are in
      technical default. The Company paid $100,000 against the $500,000 owing on
      June
      13, 2006, resulting in an unpaid liability of $400,000 which is included within
      accounts payable and accrued expenses at the balance sheet date. Texas Energy
      is
      currently negotiating with NorTex Holdings, Inc. to reduce this $400,000
      liability, and Company management has not received a legal demand for payment
      under the agreement. The Company incurred $5,833 of consulting fees to Steve
      Hall owner of NorTex Holding, Inc., during June 2006.





The
      Company also incurred $51,000 in brokers fees to Max Smith during the second
      quarter of 2006 related to the Catlin acquisition.





Below
      is
      a summary of the purchase price for Oil & Gas Property assets for the Catlin
      acquisition:




Cost
                of oil leases and other rights to operate wells, related well and
                transportation equipment, including late fee of $50,000
            
            $
            1,750,000Finders
                fee incurred to NorTex Holdings, Inc.
            
            
            500,000Broker
                fee to Max Smith
            
            
            51,000Total
                - consideration
            
            
            2,301,000




The
      Company has allocated the purchase price based on the fair market value of
      the
      assets as follows:





Less
      costs allocated to fixed assets:




Surface
                & Oil Field Equipment
            
            $
            536,075Rigs
            
            
            385,000Pipeline
            
            
            325,000Transportation
                Equipment
            
            
            94,300Land
            
            
            100,000House
            
            
            162,000Shop
            
            
            54,000Total
            
            
            1,656,375Total
                Allocated to Leases all subject to amortization
            
            $
            644,625




Catlin’s
      assets were transferred to Catlin Oil and Gas, a 100% UPDA owned subsidiary,
      on
      July 1, 2006. UPDA has subsequently sold a portion of its interest in Catlin
      Oil
      and Gas in 2007. See Note 16 for further detail on the sale of the
      interest.




See
      independent auditor's report.


F-11




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      7 - SALE OF CANYON CREEK STARR COUNTY LEASE**





On
      May 1,
      2006, Canyon Creek, a Nevada corporation, and a sixty-five percent (65%) owned
      joint venture subsidiary of UPDA, sold to Avalon Oil and Gas, Inc. ("Avalon")
      fifty percent (50%) of Canyon Creek’s working interest in the oil and gas
      leaseholds of Canyon Creek located in Starr County, Texas for an aggregate
      purchase price of $75,000 cash and 7,500,000 shares of Avalon's common stock.
      The shares of Avalon were valued by the Company at a fair market value of $.14
      (the publicly traded share price of that entities freely trading common stock
      based on a ten day average), less a twenty-five (25%) restricted stock discount,
      on the date that the leases were transferred to Avalon for a net price per
      share
      of $.11.





Subsequently
      during the fourth quarter of 2006, Canyon Creek wrote off the Avalon restricted
      shares as management did not believe they had any future value based on the
      current stock price and current state of Avalon’s business. The “Net Gain on the
      Sale to Avalon Oil and Gas, Inc.” of $28,000 was calculated as the value of
      total proceeds received from Avalon which consisted of 7,500,000 shares of
      Avalon’s common stock value at $0 plus $75,000 less the cost basis in the oil
      and gas leaseholds of $47,000.




Thad
      Kaplan became a board member of Canyon Creek in January 2006 and Chief Operation
      Officer of Canyon Creek in July 2006. The Company incurred a salary to him
      of
      $42,000 during the year ended December 31, 2006. He continues to serve as a
      member of the Board of Directors of Avalon, to whom the Company as described
      in
      the preceding paragraph sold an Oil lease and recognize a gain on its sale.
      Previously, he was serving as a consultant with the Company, a position he
      commenced in May of 2006, for which the Company incurred $7,000 of consulting
      fees and services.





**NOTE
      8 - ACQUISITION OF US PETROLEUM DEPOT**





On
      April
      20, 2006, the Company made a deposit of $50,000 under the terms of a letter
      of
      intent to purchase the US Petroleum Depot, an oil storage facility in
      Brownsville, Texas a total of $1,000,000. In March 2007 US Petroleum completed
      the acquisition of the oil storage facility.





**NOTE
      9 - LETTER OF CREDIT**




As
      of
      December 31, 2006, the Company is contingently liable to Wachovia for an open
      letter of credit in the amount of $250,000 for issuance and filing with the
      Texas Railroad Commission which is secured by a $250,000 deposit account at
      the
      bank in the form of a certificate of deposit that becomes due on August 2,
      2007
      and accrues interest at a rate of 5.26%. At December 31, 2006 restricted cash
      in
      the balance sheet in the amount of $255,831 represents the amount on deposit
      including interest.




**NOTE
      10 - SALE OF OVERRIDING INTEREST**





On
      October 1, 2006, Canyon Creek sold 5% of their overriding royalty interest
      on
      oil and gas property leases they currently hold (“ORRI”) to Benka Partners, Ltd
      (“Benka Partners”) and 5% of their ORRI to Joan Partners, Ltd (“Joan Partners”)
      for a total sum of $500,000. On October 1, 2006, Catlin sold 5% of their ORRI
      to
      Benka Partners and 5% of their ORRI to Joan Partners for a total sum of
      $500,000.





In
      general no gains or losses should be recognized under full cost accounting
      for
      sales of oil and gas properties unless such adjustments to capitalized oil
      and
      gas property costs arising from these transactions would materially distort
      the
      amortization rate. In regulation SX 4-10, the SEC states a material distortion
      will not occur unless 25% or more of the reserves are sold. Accordingly, in
      the
      2006 consolidated financials statements, the Company has reflected $1,000,000
      as
      a reduction in the producing asset pool.




**NOTE
      11 - ACQUISITION OF OIL AND GAS PROPERTIES**




Upon
      formation of Canyon, USPX contributed leasehold rights to certain oil and gas
      properties in North Texas valued at cost of $607,031, which consisted of a
      total
      of 2,489 acres and 61 wells in Archer, Coleman, and Palo Pinto Counties. A
      portion of these leases were classified as proved reserves at December 31,
      2006,
      and accordingly, acquisition costs are subject to amortization.




In
      August
      2005, Canyon purchased a 243-acre oil and gas lease in Victoria County, Texas.
      The lease is located in the Inez Gas Field about one mile west of Inez, Texas.
      The leasehold was acquired in exchange for 100,000 shares of UPDA stock, which
      was valued at $55,000, the fair market value on the date of issuance. These
      wells were classified as unproven reserves at December 31, 2006 and accordingly,
      acquisition costs are not subject to amortization.




See
      independent auditor's report.


F-12




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      11 - ACQUISITION OF OIL AND GAS PROPERTIES (CONTINUED)**




In
      September 2005, Canyon acquired an 80-acre lease in Fayette County, Texas for
      $16,000 in cash. The lease is located in the Giddings Gas Field, one of the
      largest producing gas fields in Texas. The Fayette County lease was subsequently
      sold in the fourth quarter of 2006 for $25,000 and a gain on the sale of the
      lease was recognized for $9,000.




In
      October 2005, Canyon completed the acquisition of a 266.73-acre oil and gas
      lease in Starr County, Texas for $94,000 in cash. The lease is located in the
      Boyle Field. These reserves are classified as unproved reserves at December
      31,
      2005. On May 1, 2006, Canyon sold 50% of its working interest in the oil and
      gas
      leaseholds for $47,000. Refer to Note 7 for further detail on the partial sale
      of the working interest in this lease. In October 2006, the Starr County lease
      expired and UPDA was not able to renew from the mineral owner.




In
      October 2005, Canyon completed the acquisition of a 40-acre oil and gas lease
      in
      Young County, Texas for a cash purchase price of $18,000. The lease is located
      in the Prideaux Field. These wells were classified as undeveloped **** at
      December 31, 2006, and accordingly, acquisition costs are not subject to
      amortization.




In
      the
      second quarter 2006, Texas Energy completed the acquisition of a lease in Texas
      for $47,000 in cash from Sundial. Sundial was not able to get the wells known
      as
      the Thresher, Medlen, Nantz, Wiechman fields to produce in a manner that was
      satisfactory to Texas Energy. Accordingly, Texas Energy agreed to return to
      Sundial its 100% working interest in the leases and wells and pay Sundial a
      $200,000 breakup fee to unwind the transaction and Sundial is required to
      relinquish its 25% interest in Texas Energy. This resulted in the sale of the
      lease and the recognition of approximately $658,000 loss on the termination
      of
      the joint venture at December 31, 2006.




In
      June
      2006, Texas Energy completed the acquisition of Catlin Common/Gifford oil and
      gas leases in Jack County, Texas (these assets were subsequently transferred
      to
      Catlin Oil and Gas) for a purchase price of $2.3 million. The acquisition
      consisted of more than 30 leases and 65 wells, covering approximately 3,000
      acres and various oil field equipment. A portion of these leases are classified
      as proved reserves at December 31, 2006. Acquisition costs are not subject
      to
      amortization until reserves may be classified proven .





Oil
                and gas properties subject to amortization
            
            $
            1,398,302Oil
                and gas properties not subject to amortization
            
            
            1,902,465Asset
                retirement obligation
            
            
            —Net
                Assets Acquired
            
            $
            3,300,767




**NOTE
      12 - ASSET RETIREMENT OBLIGATIONS**




The
      Company follows SFAS No. 143, Accounting for Asset Retirement Obligations,
      which
      requires entities to record the fair value of a liability for an asset
      retirement obligation when it is incurred which, for the Company, is typically
      when an oil or gas well is drilled or purchased. The standard applies to legal
      obligations associated with the retirement of long-lived assets that result
      from
      the acquisition, construction, development or normal use of the asset. The
      Company's asset retirement obligations relate primarily to the obligation to
      plug and abandon oil and gas wells and support wells at the conclusion of their
      useful lives.




SFAS
      No.
      143 requires that the fair value of a liability for an asset retirement
      obligation be recognized in the period in which it is incurred, if a reasonable
      estimate of fair value can be made. When the liability is initially recorded,
      the related cost is capitalized by increasing the carrying amount of the related
      oil and gas property. Over time, the liability is accreted upward for the change
      in its present value each period until the obligation is settled. The initial
      capitalized cost is amortized as a component of oil and gas
      properties.




**NOTE
      13 - SUPPLIER AGREEMENTS**




**Sunoco,
      Inc**




On
      November 4, 2005, Canyon Creek entered into a month-to-month agreement with
      Sunoco, Inc. (“Sunoco”) pursuant to which Sunoco will gather and purchase the
      oil produced from Canyon Creek's wells in the Fort Worth basin in North Central
      Texas. Sunoco has agreed to pay a one-dollar per barrel bonus over the posted
      price for West Texas Intermediate crude. In its agreement with Sunoco, Canyon
      Creek has specifically listed all of its properties located in Coleman, Palo
      Pinto, and Archer Counties. Accordingly, Canyon Creek has reserved the right
      and
      option to renegotiate the price or change the purchaser every 30 days, as it
      deems necessary.





**West
      Texas Gas (WTG)**





On
      October 1, 2005, Canyon entered a three-year natural gas purchase contract
      with
      WTG Jameson, LP to market casing head gas at its Hagler leases in Coleman
      County. Under the agreement, Canyon must pay certain fees and commissions on
      natural gas sales to WTG Jameson, LP.




See
      independent auditor's report.


F-13




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      14- HURRICANES IN 2005**




Neither
      Canyon Creek's well revitalization program nor its production of natural gas
      was
      affected by Hurricanes Rita or Katrina.





**NOTE
      15 - EQUIPMENT**




Fixed
      assets are stated at cost, less accumulated depreciation and are summarized
      below together with estimated useful lives used in computing depreciation and
      amortization:





**December
                31,**
              **2006**
            
            **December
                31,**
              **2005**
            
            **Estimated
                Useful**
              **Lives**House
            
            $
            162,000
            
            $
            —
            
            
            30
                yearsShop
            
            
            54,000
            
            
            —
            
            
            30
                yearsRigs
            
            
            385,000
            
            
            —
            
            
            15
                yearsTransportation
                Equipment
            
            
            94,300
            
            
            —
            
            
            3-5
                yearsPipeline
            
            
            325,000
            
            
            —
            
            
            15
                yearsSurface
                & Oil Field Equipment
            
            
            536,075
            
            
            —
            
            
            3-5
                yearsOther
                furniture and fixed assets
            
            
            538,771
            
            
            2,495
            
            
            3-5
                years2,095,146
            
            
            2,495Less:
                Accumulated depreciation and amortization
            
            
            (55,110
            )
            
            (104
            )**Oil
                field equipment and other fixed assets, net**
            
            **$**
            **2,040,036**
            
            **$**
            **2,391**




Depreciation
      and amortization expense for oil field equipment and other fixed assets for
      the
      year ended December 31, 2006 was $55,005.




**NOTE
      16 - DEPOSIT RECEIVED FOR SALE OF MINORITY EQUITY INTEREST IN
      SUBSIDIARIES**





The
      Company entered into agreements to sell 5% of the outstanding stock of Canyon
      Creek, or 5,000 shares, to Anjos Partners Ltd. (“Anjos Partners”) for $200,000;
      5% of the outstanding stock of Catlin (5,000 shares) to both Anjos Partners
      for
      $300,000 and Eleben Partners for $300,000; and 5% of the outstanding stock
      of
      Texas Energy Pipeline (5,000 shares) to both Anjos Partners for $100,000 and
      Eleben Partners for $100,000. The Company received the total of $1,000,000
      related to the sales of the 5% equity interests in the subsidiaries’ stocks
      during the fourth quarter of 2006 and it is captured in the Balance Sheet as
      a
      deposit received for sale of minority equity interest in subsidiaries at
      December 31, 2006. The Company completed the transactions in the first quarter
      of 2007.





**NOTE
      17 - NOTES PAYABLE**




At
      December 31, 2006 and December 31, 2005 notes payable are broken down as
      follows:





**December
                31,**
              **2006**
            
            **December
                31,**
              **2005**Unsecured
                notes payable due on demand to Katherine Betts, a minor Company
                shareholder, of which $20,000 bears interest at 11% per
                annum
            
            $
            80,000
            
            $
            80,000Unsecured
                notes payable due on demand to Kamal Abdallah, Company Chief Executive
                Officer and President and significant Company shareholder bears interest
                at 10% per annum
            
            
            874,696
            
            
            64,696Unsecured
                8% note payable on demand
            
            
            —
            
            
            6,000954,696
            
            
            150,696Other
                unsecured non-interest notes payable on demand
            
            
            —
            
            
            10,717Total
                notes payable, excluding interest
            
            $
            954,696
            
            $
            161,413




At
      December 31, 2006, and December 31, 2005, accrued interest payable on the above
      notes payable included within accounts payable and accrued expenses totaled
      $22,526 and $26,727, respectively. Accrued interest payable at December 31,
      2006
      and December 31, 2005 includes several years of interest from years prior to
      December 31, 2005.




See
      independent auditor's report.


F-14




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      18 - INCOME TAXES**




Temporary
      differences between the recognition of certain expense items for income tax
      purposes and financial reporting purposes are as follows:





**December
                31,**
              **2006**
            
            **December
                31,**
              **2005**Deferred
                tax asset:Net
                operating loss carryforward
            
            $
            10,795,750
            
            $
            6,468,683Valuation
                allowance
            
            
            (10,795,750
            )
            
            (6,468,683
            )Net
                deferred tax asset
            
            $
            —
            
            $
            —




The
      Company incurred no federal income tax expense for the years ended December
      31,
      2006 and 2005, and utilized no tax carryforward losses. The Company incurred
      $800 and $800 of state income tax expense for years ended December 31, 2006
      and
      2005, respectively.




The
      Company has a net operating loss carryover of approximately $31,752,205 to
      offset future income tax. The net operating losses expire as follows:





December
                31, 2009
            
            $
            1,431,2552010
            
            
            947,7602011
            
            
            1,269,6702017
            
            
            885,2912019
            
            
            2,289,3862020
            
            
            2,671,1282021
            
            
            3,736,1412022
            
            
            850,1272023
            
            
            1,001,2332024
            
            
            1,760,6562025
            
            
            9,032,0842026
            
            
            5,877,474Total
            
            
            31,752,205




The
      net
      operating loss carryforward may be subject to further limitation pursuant to
      Section 382 of the Internal Revenue Code due to events including changes of
      control and change in business activities.




See
      independent auditor's report.


F-15




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      19 - INVESTMENT IN PREFERRED SERIES B RULE 144 RESTRICTED STOCK OF SITEWORKS
      BUILDING AND DEVELOPMENT CO., A PUBLICLY-TRADED ENTITY**




Pursuant
      to the terms of the rescission of a real estate acquisition transaction between
      the Company and Mr. Kamal Abdallah, on July 27, 2005, Mr. Abdallah transferred
      1,000,000 restricted shares of $1 face value per share Convertible Preferred
      Series B stock of Siteworks Building and Development Co. ("Siteworks"), a
      publicly-traded company, to the Company in exchange for the conveyance to Mr.
      Abdallah of certain real estate properties by the Company. These transferred
      marketable securities of Siteworks had an aggregate fair value of approximately
      $1,000,000 on the date of the transfer, based on the publicly traded share
      price
      of the underlying common stock of Siteworks into which the preferred stock
      is
      convertible. Mr. Abdallah is the current Chairman, President and CEO of the
      Company.




**Background**




On
      June
      17, 2005, Mr. Abdallah received 1,100,000 restricted shares of Siteworks
      Convertible Preferred Series B Stock from Siteworks as a partial compensation
      for his transferring certain real property (comprised of a former Wal-Mart
      store, vacant land, and a parking lot) with an aggregate appraised value of
      $2,800,000 to Siteworks on that date. In addition to receiving Convertible
      Preferred Series B stock, Mr. Abdallah also received 35,000,000 Siteworks common
      shares with an estimated fair value of $1,000,000, based on the publicly traded
      share price of that common stock on the date of issuance. On July 27, 2005,
      as
      described in the preceding paragraph, Mr. Abdallah transferred 1,000,000 shares
      of his Siteworks Convertible Preferred Series B stock to the Company. Mr.
      Abdallah retained ownership of 100,000 shares of the Convertible Preferred
      Series B stock, the 35,000,000 shares or 44% of the voting capital stock of
      Siteworks (assuming that both the Company's and Mr. Abdallah’s Siteworks
      Convertible Preferred Series B Stock were converted to that entity's common
      stock).




In
      its
      originally filed Form 10-QSB for the quarterly period ended June 30, 2006 filed
      on August 18, 2006, Siteworks (now known as “SBD International, Inc.”) indicated
      in its footnotes to the financial statements that it had determined the property
      was not free and clear of mortgages and liens, that there was a second mortgage
      of approximately $1,200,000 in the name of former seller who was committed
      to
      make the payments on the mortgage and that the 35,000,000 shares described
      in
      the preceding paragraph had been placed in escrow and would be retired if the
      individual did not make the payment.




**Substitution
      of Siteworks B Preferred Stock with $1 million**




During
      the month of June 2006, the Company deposited an aggregate of $1,000,000 it
      received from Mr. Abdallah in consideration for the Company’s assignment of the
      100,000 Convertible Preferred Series B stock back to him, resulting in no gain
      or loss to the Company on the preferred shares. This substitution of cash
      occurred a year after the original transfer of Abdallah’s 1,000,000 shares of
      his Siteworks Convertible Preferred Series B stock to the Company. The
      transaction was memorialized in an agreement between the Company and Mr.
      Abdallah dated July 18, 2006 and approved by its two other members of the Board
      of Directors. (See Note 20 - “Equity Transactions” concerning the fair value of
      beneficial conversion feature related to the Company’s Series A convertible
      preferred stock received by Mr. Abdallah on August 4, 2005 in conjunction with
      the original Siteworks preferred stock transfer).




See
      independent auditor's report.


F-16




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND
      SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      20 - EQUITY TRANSACTIONS**




**Chronological
      Listing of Common and Preferred Stock Equity Transactions**




In
      December 2005 the Company agreed to issue 1,218 shares Class B Preferred stock
      in exchange for an investment of $1,218,000 from Miramar Investments, Inc.
      pursuant to a previously executed investment agreement. The stock certificates
      were issued during the first quarter of 2006.





On
      September 30,2005 the Company agreed to issue 255 shares of Class B convertible
      preferred stock with a $1,000 face value to Bratenahl Estates Development,
      LLC
      in consideration of $255,000 in cash. One share of Class B Preferred is
      convertible into 2,000 shares of Common Stock, which would equate to 510,000
      common shares if the entire 255 preferred shares were converted. The 255
      preferred shares or common stock converted there under are subject to Rule
      144
      restrictions. The Company received the entire $255,000 in cash during the third
      quarter. The 255 shares of Class B Preferred Stock certificates were issued
      to
      Bratenahl during the first quarter of 2006.




During
      December 2005 the Company issued 133,333 shares of common stock to Kamal
      Abdallah for $200,000.




During
      the year ended December 31, 2005, the Company issued 5,136,50 shares of its
      common stock under the terms of its 2004 Stock Incentive Plan to various
      consultants and employees for consulting services. Accordingly, the Company
      recorded a non-cash charge of $7,641,860 related to these issuances, based
      on
      the trading price of Company common shares on the date on which the shares
      were
      issued.





In
      August
      2005, Canyon Creek purchased a 243-acre oil and gas lease in Victoria County,
      Texas. The lease is located in the Inez Gas Field, about one mile west of Inez,
      Texas. The leasehold was acquired in exchange for 100,000 shares of the Company
      stock under regulation 144r, valued at $55,000, which was the fair market value
      on the date of issue .




As
      part
      of the Canyon Creek joint venture formation the Company was required to issue
      500,000 shares of its restricted common shares to USPX ten days after the
      execution of the agreement for consulting services. To date the Company has
      not
      issued the common shares to USPX. The company recorded a non-cash charge of
      $265,000 related to this issuance, based on the trading price of Company common
      shares on the date on which the shares were issued





During
      the year ended December 31, 2005, the Company issued 1,062,939 shares of its
      common stock in settlement of liabilities. The company recorded a non-cash
      gain
      on settlement of liabilities of $6,801 related to these issuances.





In
      August
      2004, the Company entered into a financing agreement with Carol Pop, an
      individual investor that had already been amended to extend the closing to
      May
      1, 2005. Under the terms of the agreement, the Company issued 222,220 restricted
      common shares for $350,000, of which the Company received $20,000 against the
      subscription prior to December 31, 2004. Accordingly, at December 31, 2004,
      the
      remainder balance of the subscription receivable was $330,000 and had been
      offset against shareholders' deficit .In August 2005 the Company and Carol
      Pop
      agreed to cancel 222,220 shares previously issued as Carol Pop was unable to
      deliver the remaining $330,000. The Company agreed to issue common stock for
      the
      $20,000 previously received from Carol Pop. The shares were not issued to Carol
      Pop. However, Carol Pop did return the shares in 2005.





The
      Company had incurred $21,355 in costs associated with the previously pending
      Company acquisition of real estate from Carol Pop involved in the financing
      agreement discussed in the previous paragraph. The aforementioned costs were
      been written off as a "loss on impairment of investment acquisition costs"
      during the second quarter of 2005.




On
      August
      4, 2005, the Company issued 80,000 shares of its Series A Convertible Preferred
      Stock to Kamal Abdallah for an aggregate purchase price of $800,000. Each share
      of the Series A Convertible Preferred Stock is convertible into 1,000 shares
      of
      UPDA common stock. All shares of Mr. Abdallah's Series A Convertible Preferred
      Stock are currently convertible into 80,000,000 shares of UPDA common stock.
      Mr.
      Abdallah paid for the shares of Series A Convertible Preferred Stock by
      transferring securities owned by him with an aggregate market value of $800,000
      to UPDA.




On
      August
      4, 2005, the Company issued 20,000 shares of its Series A Convertible Preferred
      Stock to Christopher McCauley for an aggregate purchase price of $200,000.
      Each
      share of the Series A Convertible Preferred Stock is convertible into 1,000
      shares of UPDA common stock. All shares of Mr. McCauley's Series A Convertible
      Preferred Stock are currently convertible into 20,000,000 shares of UPDA common
      stock. Mr. McCauley paid for the shares of Series A Convertible Preferred Stock
      by transferring securities owned by him with an aggregate market value of
      $200,000 to UPDA.




The
      fair
      value of the common stock that would be issued under the Series A Convertible
      Preferred Stock conversion feature, based on the trading price of the common
      stock on August 4, 2005, was $40,000,000 and exceeded the consideration of
      $1,000,000 received for the issuance of that preferred stock. Accordingly,
      during the year ended December 31, 2005 the Company has reflected a dividend
      in
      the form of a beneficial conversion feature, to the extent of the consideration
      received ($1,000,000), offset by a corresponding credit to additional paid
      in
      capital. The Company recorded a beneficial conversion relating to the conversion
      of the Series A Convertible Preferred Stock because the fair market value of
      the
      common stock was greater than the **** face
      value of the preferred stock. The beneficial conversion as measured is limited
      to the capital raised from the sale of the preferred stock pursuant to EITF
      98-5.




On
      March
      17, 2006, the Company issued 500,000 shares of its common stock under the terms
      of its 2004 Stock Incentive Plan in an agreement of settlement and release
      of
      claims for past consulting services in settlement of accounts payable and
      accrued expense payable of $125,000, resulting in a $30,000 gain on conversion
      costs and an increase in the same amount to stock issued for services being
      incurred from these liabilities.





During
      the year ended December 31, 2006, the Company issued 10,084,850 shares of its
      common stock under the terms of its 2004 Stock Incentive Plan to various
      consultants and employees for current year consulting services. Accordingly,
      the
      Company recorded a non-cash charge of $1,045,570 related to these issuances,
      based on the trading price of Company common shares on the date on which the
      shares were issued. Of the 10,084,850 shares of common stock issued in the
      year ended December 31, 2006, 75,000 shares of common stock were issued to
      related parties.





On
      December 27, 2006, the Company issued 3,700,000 shares of its common stock
      under
      the terms of its 2004 Stock Incentive Plan to Geoffrey Gordon Creed in full
      satisfaction of fees for past consulting services pursuant to a settlement
      agreement between the parties. Accordingly, the Company recorded a non-cash
      charge of $555,000 related to this issuance, based on the trading price of
      Company common shares on the date on which the shares were issued.





During
      the year ended December 31, 2006, the Company issued 4,740 shares of its Class
      B
      Preferred Stock to Miramar Investments, Inc. (“Miramar”) pursuant to the terms
      of an investment agreement between Miramar and the Company. The shares of Class
      B Preferred Stock issued to Miramar are restricted shares and cannot be resold
      unless they are subsequently registered pursuant to the Securities Act of 1933,
      as amended, or such sale is pursuant to a valid exemption from such
      registration. Each share of Class B Preferred Stock is convertible into 20,000
      shares of our common stock and is so convertible immediately upon issuance.
      The
      transaction referred to above did not involve an underwriter or placement agent
      and there were no underwriter’s discounts or commissions, or placement agent
      fees or commissions, paid in connection with the transaction. Miramar
      Investments, Inc. is an accredited investor, as defined by Rule 501 of
      Regulation D, and has the business and financial knowledge to analyze the risks
      associated with an investment in our Class B Preferred Stock. The securities
      issued to Miramar Investments, Inc., were in exchange for $4,740,000 in cash.
      The transaction referred to above was an exempt transaction in accordance with
      the provisions of Section 4(2) of the Securities Act of 1933, as amended, as
      a
      transaction by an issuer not involving any public offering. We did not engage
      in
      any public solicitations in connection with the above transaction.




See
      independent auditor's report.


F-17




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      21 - PREFERRED STOCK**  ****




**Preferred
      Stock, Beneficial Conversion Features, and Change in Conversions made into
      Common Stock**




During
      the third quarter of 2005, pursuant to an agreement between Bratenahl, Inc.
      (“Bratenahl”) and the Company, the Company advised its stock transfer agent that
      it was authorized to convert certain certificates representing 102 shares of
      $.001 par value “unlettered” convertible preferred stock of the Company held by
      Bratenahl into common stock of the Company at a conversion rate of 200,000
      shares of common stock for each share of such preferred stock (an aggregate
      of
      20,400,000 shares of common stock on a fully converted basis). The outstanding
      shares of this preferred stock are restricted shares, but they have been fully
      paid and outstanding for a period in excess of two years from the date of their
      issuance by the Company. No additional consideration is payable upon the
      conversion of this preferred stock to shares of our common stock. Accordingly,
      the holders of the shares of underlying common stock issued upon conversion
      of
      shares of this preferred stock are entitled to request the removal of any
      restrictive legends that would be attached to the common shares so issued in
      accordance with the provisions of Rule 144(k) under the Securities Act of 1933,
      as amended.





Management
      of the Company considers the conversion of the unlettered convertible preferred
      shares by Bratenahl as a change in conversion feature in accordance with EITF
      00.27 which required the difference in conversion to be treated as a dividend
      to
      the unlettered preferred stock holder. The fair market value on the commitment
      date for 20,400,000 shares of the Company’s common stock was valued at
      $12,850,329. Accordingly a change in conversion feature has been recorded in
      accordance with EITF 00.27 and the Company has reflected a stock dividend during
      the third quarter of 2005 of $12,850,329.





During
      the third and fourth quarter period ended December 31, 2005, 66 out of the
      102
“unlettered” convertible preferred shares held by Bratenahl were converted by
      Bratenahl into 13,200,000 shares of the Company’s common stock. Recording of the
      conversion of the 66 shares into common stock resulted in crediting “Common
      Stock” within “Shareholders’ Deficiency” for $13,225 at its par value and a
      corresponding charge against “Additional Paid-in Capital” in the same amount,
      since the par value of the “Unlettered Convertible Preferred” shares was
      nominal.




During
      the year ended December 31, 2006, the remaining 36 shares of this “unlettered”
convertible preferred stock held by Bratenahl were converted by Bratenahl into
      7,200,000 shares of common stock valued at $7,200.




See
      independent auditor's report.


F-18




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      21 - PREFERRED STOCK**  **(CONTINUED)**




**Preferred
      Stock, Beneficial Conversion Features, and Change in Conversions made into
      Common Stock - Continued**





During
      the fourth quarter of 2005, pursuant to an agreement between Miramar and the
      Company, the Company advised its stock transfer agent that it was authorized
      to
      convert certain certificates representing 500 shares of $.001 par value
“unlettered” convertible preferred stock of the Company held by Miramar into
      common stock of the Company at a conversion rate of 500,000 shares of common
      stock for each share of such preferred stock (an aggregate of 250,00,000 shares
      of common stock on a fully converted basis). The outstanding shares of this
      preferred stock are restricted shares, but they have been fully paid and
      outstanding for a period in excess of two years from the date of their issuance
      by the Company. No additional consideration is payable upon the conversion
      of
      this preferred stock to shares of our common stock. Accordingly, the holders
      of
      the shares of underlying common stock issued upon conversion of shares of this
      preferred stock are entitled to request the removal of any restrictive legends
      that would be attached to the common shares so issued in accordance with the
      provisions of Rule 144(k) under the Securities Act of 1933, as
      amended.





Management
      of the Company considers the conversion of the unlettered convertible preferred
      shares by Miramar as a change in conversion feature in accordance with EITF
      00.27 which required the difference in conversion to be treated as a dividend
      to
      the unlettered preferred stock holder. The fair market value on the commitment
      date of 249,967,000 shares the Company’s common stock was valued at
      $149,980,200. Accordingly a change in conversion feature has been recorded
      in
      accordance with EITF 00.27 and the Company has reflected a stock dividend during
      the fourth quarter of 2005 for $149,980,200.





Miramar
      is a division of DVD Construction, Inc. a privately held company domiciled
      in
      the British Virgin Islands. DVD Construction, Inc. is in the business of
      construction, real estate development and, through Miramar, investments. Neither
      DVD Construction, Inc. nor Miramar is related to the Company through common
      officers, directors, shareholders, key employees, family members or business
      relationships through other entities.





During
      the year ended December 31, 2005, 25 shares of this unlettered preferred stock,
      as restated, were converted by Miramar into 12,500,000 shares of the common
      stock of the Company. The shares were valued at $12,500.





During
      the year ended December 31, 2006, 474 shares of this unlettered preferred stock,
      as restated, were converted by Miramar into 237,260,002 shares of the common
      stock of the Company. The shares were valued at $237,260.




As
      discussed in “Note 20 - Equity Transactions” above, the Company reflected a
      stock dividend attributable to the shares of Series A Convertible Preferred
      Stock issued to Kamal Abdallah (80,000 shares) and Christopher McCauley (20,000
      shares) during the third quarter of 2005 of $1,000,000. If and when the 100,000
      shares of Series A Convertible Preferred Stock are converted into common stock
      it will equate to 100,000,000 shares of common stock.




See
      independent auditor's report.


F-19




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      21 - PREFERRED STOCK**  **(CONTINUED)**




**Preferred
      Stock, Beneficial Conversion Features, and Change in Conversions made into
      Common Stock - Continued**





As
      stated
      in Note 20 above, during the year ended December 31, 2006, the Company issued
      4,740 shares of its Class B Preferred Stock to Miramar Investments, Inc.
      (“Miramar”) pursuant to the terms of an investment agreement between Miramar and
      the Company. The shares of Class B Preferred Stock issued to Miramar are
      restricted shares and cannot be resold unless they are subsequently registered
      pursuant to the Securities Act of 1933, as amended, or such sale is pursuant
      to
      a valid exemption from such registration. Each share of Class B Preferred Stock
      is convertible into 20,000 shares of our common stock and is so convertible
      immediately upon issuance. The transaction referred to above did not involve
      an
      underwriter or placement agent and there were no underwriter’s discounts or
      commissions, or placement agent fees or commissions, paid in connection with
      the
      transaction. Miramar Investments, Inc. is an accredited investor, as defined
      by
      Rule 501 of Regulation D, and has the business and financial knowledge to
      analyze the risks associated with an investment in our Class B Preferred Stock.
      The securities issued to Miramar Investments, Inc., were in exchange for the
      $4,740,000 in cash. The transaction referred to above was an exempt transaction
      in accordance with the provisions of Section 4(2) of the Securities Act of
      1933,
      as amended, as a transaction by an issuer not involving any public offering.
      We
      did not engage in any public solicitations in connection with the above
      transaction.





During
      the year ended December 31, 2006, pursuant to an agreement between Five Star
      Partners, LLC (“Five Star”)   and the Company, the Company advised its
      stock transfer agent that it was authorized to convert certain certificates
      representing 757 shares of $.001 par value “unlettered” convertible preferred
      stock of the Company held by Five Star into common stock of the Company at
      a
      conversion rate of 200,000 shares of common stock for each share of such
      preferred stock (an aggregate of 151,400,000 shares of common stock on a fully
      converted basis). The outstanding shares of this preferred stock are restricted
      shares, but they have been fully paid and outstanding for a period in excess
      of
      two years from the date of their issuance by the Company. No additional
      consideration is payable upon the conversion of this preferred stock to shares
      of our common stock. Accordingly, the holders of the shares of underlying common
      stock issued upon conversion of shares of this preferred stock are entitled
      to
      request the removal of any restrictive legends that would be attached to the
      common shares so issued in accordance with the provisions of Rule 144(k) under
      the Securities Act of 1933, as amended.





Management
      of the Company considers the conversion of this unlettered convertible preferred
      stock by Five Star as a change in conversion feature in accordance with EITF
      00.27 which required the difference in conversion to be treated as a dividend
      to
      the unlettered preferred stock holder. The difference between the original
      conversion feature and the fair market value of 151,400,000 shares of the
      Company’s common stock on the commitment date was valued at $15,138,789.
      Accordingly a change in conversion feature has been recorded in accordance
      with
      EITF 00.27 and the Company has reflected a stock dividend during the fourth
      quarter of 2006 for $15,138,789.




During
      the year ended December 31, 2006, 250 shares out of the 757 shares of unlettered
      convertible preferred stock held by Five Star were converted by Five Star into
      approximately 50,000,000 shares of the common stock of the Company. Recording
      of
      this conversion of the 250 shares of unlettered convertible preferred stock
      into
      common stock resulted in crediting “Common Stock” within “Shareholders’
Deficiency” for $50,000 at its par value and a corresponding charge against
“Additional Paid-in Capital” in the same amount, since the par value of the
“Unlettered Convertible Preferred” shares was nominal.




See
      independent auditor's report.


F-20




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      21 - PREFERRED STOCK**  **(CONTINUED)**




**Preferred
      Stock, Beneficial Conversion Features, and Change in Conversions made into
      Common Stock - Continued**





During
      the year ended December 31, 2006, pursuant to an agreement between Devida
      Capital, LLC (“Devida”)   and the Company, the Company advised its stock
      transfer agent that it was authorized to convert certain certificates
      representing 460 shares of $.001 par value “unlettered” convertible preferred
      stock of the Company held by Devida into common stock of the Company at a
      conversion rate of 200,000 shares of common stock for each share of such
      preferred stock (an aggregate of 92,000,000 shares of common stock on a fully
      converted basis). The outstanding shares of this preferred stock are restricted
      shares, but they have been fully paid and outstanding for a period in excess
      of
      two years from the date of their issuance by the Company. No additional
      consideration is payable upon the conversion of this preferred stock to shares
      of our common stock. Accordingly, the holders of the shares of underlying common
      stock issued upon conversion of shares of this preferred stock are entitled
      to
      request the removal of any restrictive legends that would be attached to the
      common shares so issued in accordance with the provisions of Rule 144(k) under
      the Securities Act of 1933, as amended.





Management
      of the Company considers the conversion of this unlettered convertible preferred
      stock by Devida as a change in conversion feature in accordance with EITF 00.27
      which required the difference in conversion to be treated as a dividend to
      the
      unlettered preferred stock holder. The difference between the original
      conversion feature and the fair market value of 92,000,000 shares of the
      Company’s common stock on the commitment date was valued at $9,199,264.
      Accordingly a change in conversion feature has been recorded in accordance
      with
      EITF 00.27 and the Company has reflected a stock dividend during the fourth
      quarter of 2006 for $9,199,264.




During
      the year ended December 31, 2006, 133 shares out of the 460 shares of unlettered
      convertible preferred stock held by Devida were converted by Five Star into
      approximately 26,600,000 shares of the common stock of the Company. Recording
      of
      this conversion of the 133 shares of unlettered convertible preferred stock
      into
      common stock resulted in crediting “Common Stock” within “Shareholders’
Deficiency” for $26,600 at its par value and a corresponding charge against
“Additional Paid-in Capital” in the same amount, since the par value of the
“Unlettered Convertible Preferred” shares was nominal.




As
      discussed above under “Chronological Listing of Common and Preferred Stock
      Equity Transactions,” the Company has reflected a stock dividend attributable to
      Series A Convertible Preferred Stock issued to Kamal Abdallah (80,000 shares)
      and Christopher McCauley (20,000 shares) during the third quarter of 2005 of
      $1,000,000. If and when the 100,000 shares of preferred stock are converted
      into
      common stock it will equate to 100,000,000 shares. As of March 20, 2007, none
      of
      these preferred shares have as yet been converted to common stock. If these
      preferred shares had been converted to common stock as of December 31, 2006,
      Kamal Abdallah and Christopher McCauley, as officers of the Company would have
      controlled 22% of the ownership of the Company common stock.




**NOTE
      22 - STOCK PLAN**




The
      Board
      of Directors of the Company adopted a stock option plan (the “Plan”) effective
      October 18, 2004. The Plan shall expire on October 17, 2014. The Company has
      reserved 65,000,000 shares of common stock under the Plan for issuance to
      employees, directors, consultants and other eligible recipients. During the
      year
      ended December 31, 2006, our Board of Directors approved the issuance of an
      aggregate of 13,784,850 shares of our common stock to employees, directors,
      consultants and others under the terms of the stock option plan. As of December
      31, 2006, the Company had no options outstanding under the Plan.




**NOTE
      23 - RELATED PARTY TRANSACTIONS**




On
      March
      24, 2005 the Company issued to Curtis L. Pree 25,000 shares of stock subjected
      to rule 144 restrictions as part of his employment agreement. The Company
      recorded a non cash charge of $125,000 related to this stock
      issuance.




In
      March
      2005 the Company issued to four consultants 25,000 shares for professional
      services. The Company recorded a non-cash expense of $150,000 based on the
      fair
      market price of the Company's stock.




In
      March
      2005 the Company issued to Payment Solutions, Inc 70,000 shares of stock for
      consulting services. The Company recorded a non cash charge of $350,000 related
      to this stock issuance.




In
      March
      2005 the Company issued to George Csatary 30,000 shares of stock for consulting
      services. The Company recorded a non cash charge of $150,000 related to this
      stock issuance.




In
      March
      2005 the Company issued to LL Capital, Inc. 10,000 shares of stock for
      consulting services. The Company recorded a non cash charge of $50,000 related
      to this stock issuance.




In
      March
      2005, Kamal Abdallah was appointed by the Company as Chief Executive Officer,
      President and Chairman of its Board of Directors for a term of five (5) years,
      expiring March 11, 2010, with first year annual compensation of Three Hundred
      Thousand Dollars and issuance of Five Hundred Thousand free-trading shares
      each
      quarter and an additional two million shares each year. The agreement also
      entitles him to certain fringe benefits, such as vacation and health insurance,
      and guarantees payment of his compensation in the event of termination. The
      Board has also authorized a further issuance of 2,000,000 shares per annum
      for
      every one million dollars in Company net income as well as a bonus of no less
      than ten thousand dollars per quarter. Effective October 1, 2005, the employment
      agreement was amended to reduce annual compensation to $150,000 per year.  
During the years ended December 31, 2006 and December 31, 2005 the Company
      incurred $187,500 and $208,048, respectively of payroll expenses to Kamal
      Abdallah, the Chairman, President and Chief Executive Officer of the Company,
      of
      which $187,500 is included in accrued liabilities at December 31, 2006.
      Accordingly, consulting fees and services incurred by the Company to Kamal
      Abdallah, including share issuances and amounts paid or payable in cash,
      aggregated $187,500 and none during the year ended December 31, 2006, and
      December 31, 2005, respectively.




During
      the year ended December 31, 2006, the Company incurred $125,414 of payroll
      expenses to Christopher McCauley, the Company's in-house counsel, of which
      $0 is
      included in accrued liabilities at December 31, 2006. Accordingly, consulting
      fees and services incurred by the Company to Mr. McCauley, including share
      issuances and amounts paid or payable in cash, aggregated none and $30,000
      for
      the years ended December 31, 2006 and December 31, 2005,
      respectively.




During
      the year ended December 31, 2006, the Company incurred $25,000 of consulting
      fees and services to Dr. Bashirudden Usama, the former Chief Executive Officer
      and President. During the year ended December 31, 2005, the Company incurred
      $26,000 of consulting fees and services to Dr. Bashirudden Usama. Consulting
      fees and services incurred by the Company to Dr. Bashirudden Usama, including
      options granted and paid or payable in cash aggregated $32,120 during the year
      ended December 31, 2005.





In
      January 2006, Thad Kaplan was elected to the board of directors of Canyon Creek.
      On May 1 2006, the Company entered into an agreement with Thad Kaplan for
      consulting services including acting as liaison to UPDA Operators, Inc and
      Texas
      Energy Pipeline and Gathering Systems, Inc. for the period of two months with
      a
      payment of $7,000. Thad Kaplan is also a Director in Avalon Oil and Gas. On
      May
      1, 2006, the Company received 7,500,000 shares of Avalon's common stock due
      to
      the sale of our Starr County lease. The shares of Avalon were valued by the
      Company at a fair market value of $.14 (the publicly traded share price of
      that
      entities freely trading common stock based on a ten day average), less a
      twenty-five (25%) restricted stock discount, on the date that the leases were
      transferred to Avalon for a net price per share of $.11. Subsequently during
      the
      fourth quarter of 2006, Canyon Creek wrote off the Avalon restricted shares
      as
      management did not believe they had any future value based on the current stock
      price and current state of Avalon’s business. The “Net Gain on the Sale to
      Avalon Oil and Gas, Inc.” of $28,000 was calculated as the value of total
      proceeds received from Avalon which consisted of 7,500,000 shares of Avalon’s
      common stock value of $0 plus $75,000 less the cost basis in the oil and gas
      leaseholds of $47,000.




See
      independent auditor's report.


F-21




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      24 - COMMITMENTS AND CONTINGENCIES**




**Employment
      Agreements**




Effective,
      October 1, 2005, the Company entered into an Employment Agreement with a four
      year term with Kamal Abdallah, the Chairman, President and CEO of the Company,
      with automatic annual one year renewals, at a $150,000 annual compensation.
      It
      provides for a thirty-day notice period for non-renewal. It also provides for
      a
      performance bonus of up to $600,000 at the discretion of the Board of Directors,
      plus fringe benefits such as health and life insurance. In the event of
      termination without cause Mr. Abdallah is to receive a lump-sum payment from
      the
      Company of $1,000,000.




Effective
      October 1, 2005, the Company entered into an Employment Agreement with a four
      year term with Christopher McCauley, the Vice President and Secretary of the
      Company, with automatic annual one year renewals, at a $120,000 annual
      compensation. It provides for a thirty-day notice period for non-renewal. It
      also provides for a performance bonus of up to $600,000 at the discretion of
      the
      Board of Directors, plus fringe benefits such as health and life insurance.
      In
      the event of termination without cause Mr. McCauley is to receive a lump-sum
      payment from the Company of $1,000,000.




Effective
      January 1, 2006, the Company entered into an Employment Agreement with one
      year
      term with Steven Barrera, the Texas Regional Manager of the Company with
      automatic annual one year renewals, at a $60,000 annual compensation. It
      provides for a thirty-day notice period for non-renewal.





Effective
      July 1, 2006, the company entered into an Employment Agreement with a two year
      term with Steven A. Fall, the Chief Geologist of the Company and its
      subsidiaries at a $84,000 annual compensation. It also provides for a minimum
      bonus of $16,000 and other benefits and incentive bonus.




Under
      the
      above agreements, at December 31, 2006 the Company's future commitments are
      as
      follows:





Years
                ending December 31:2007
            
            $
            312,5002008
            
            
            370,0002009
            
            
            270,000Total
            
            $
            952,500




**Lease
      Agreements**




In
      January 2006, the Company entered into a lease for office space in Florida.
      The
      lease expires February 28, 2009, and provides an option to renew for one
      additional term of three years. Annual rent under the lease is $20,398, subject
      to annual escalations.





On
      July
      31, 2006, UPDA-O entered into a lease agreement with Malone & Cruz Lease
      Partnership for office space in Jacksboro, Texas. The lease expires July 31,
      2009, and the minimum monthly rent is $500.





On
      August
      1, 2006 the Company entered into a Lease agreement with Livable Machines, LLC
      for office space in Cleveland, Ohio. The lease expires August 1, 2009 and
      provides an option to renew for one additional term of three years. Annual
      rent
      under the lease is $12,000.





On
      August
      15, 2006 the Company entered into a lease agreement with Crescent Real Estate
      Funding XII, L.P for office space in Dallas, Texas. The lease is for a period
      of
      64 months commencing on September 1, 2006 with rent of $3,659 per month, and
      is
      subject to annual escalations.





On
      August
      22, 2006 US Petroleum Depot Inc entered into a rental lease agreement with
      Brownsville Navigation District of Cameron County, Texas, for a term of five
      years payable semi-annually in installments of $9,801. The leased property
      is
      for the sole purpose of shipping and receiving oil products.





On
      September 27, 2006 the Company entered into a lease agreement with R.M Crowe
      Property Management, LP for office space in Houston, Texas. The lease has a
      term
      of sixty months, with rent of $2,800 per month, and is subject to annual
      escalations.




Rent
      expense was $139,958 for the year ended December 31, 2006.




At
      December 31, 2006 the Company's future commitments are as follows:





Years
                ending December 31:2007
            
            $
            71,7882008
            
            
            147,2862009
            
            
            153,629Total
            
            $
            372,704




See
      independent auditor's report.


F-22




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND
      SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      25 - LITIGATION**




In
      June
      of 2006 Texas Energy entered into an agreement for the purchase of a pipeline
      and certain other oil and gas assets for $1.7 million. As part of the
      transaction Texas Energy remitted a deposited of $100,000. Subsequently as
      title
      to those assets was under review, it was determined that clear title could
      not
      be established and the Sellers were notified orally of Texas Energy’s intention
      to cancel the transaction. Although this oral notification was provided prior
      to
      the deadline set forth in the contract for the return of the deposit, written
      notification was not provided by Texas Energy’s attorney until after that
      deadline had passed. Upon notification from the Seller’s counsel and that he
      intended to release the escrow to his client, Texas Energy immediately filed
      suit and obtained an injunction against the release of the funds.




Texas
      Energy is currently in negotiations for the purchase of oil and gas leases
      located in Palo Pinto, Texas for $2.8 million. The seller has agreed to apply
      the $100,000 paid in the above transaction to the purchase price of this
      transaction in settlement of the litigation.




On
      November 17, 2005, the Company, USPX, and Triple Crown Consulting ("TCC"),
      a
      private corporation, entered into a joint venture agreement (the "Agreement").
      Pursuant to the terms of the Agreement, the Company, USPX and TCC formed Canyon
      Creek as the joint venture entity to carry out the proposed operations of the
      joint venture. The Company owns 65% of the capital stock of Canyon Creek, USPX
      owns 30% of the capital stock of Canyon Creek and TCC owns 5% of the capital
      stock of Canyon Creek.





Under
      the
      terms of the Agreement, and as consideration for their respective shares of
      the
      capital stock of Canyon Creek, the Company invested $1,200,000 to finance the
      operations of the joint venture, USPX assigned certain oil and gas leases to
      the
      joint venture and TCC agreed to provide ongoing management consulting services
      to the joint venture. The leases assigned to the joint venture by USPX cover
      approximately two thousand acres and contain approximately 60 oil and gas wells.
      The joint venture also acquired additional acreage and wells and intended to
      pursue further acquisitions of currently producing oil and gas properties,
      low
      risk drilling prospects and existing wells in need of technology to improve
      profitability. In addition, USPX principal was installed as President of Canyon
      Creek.





The
      Company paid an additional $2 million in workover costs that were incurred
      to
      place the oil and gas wells into working order.





USPX
      was
      responsible for the day-to-day operations of Canyon Creek, but the Company
      has
      control over the appointment of the financial officer of Canyon Creek. USPX
      was
      to be paid a managerial fee equal to 7.5% of the net operating revenue of Canyon
      Creek.





As
      a
      result of a review of the activities and expenditures of Canyon Creek that
      were
      undertaken and/or approved by USPX, the Company requested an explanation from
      USPX for apparent improprieties and mismanagement. As a result of that request,
      Don Orr submitted his resignation as President and board member of Canyon Creek
      and USPX was dismissed as manager of the properties.





On
      April
      12, 2006, USPX filed suit against the Company, alleging that the Company had
      breached the above joint venture agreement. Specifically, USPX alleged that
      the
      Company committed wrongful acts, including the misappropriation of
      opportunities, misappropriation of business and proprietary information, fraud,
      and conspiracy to intentionally cause damage to USPX. In addition USPX is
      alleging that it has failed to receive any or all of the consideration that
      it
      was promised by the Company or Canyon Creek. USPX is also alleging that the
      Company and Canyon Creek fraudulently induced USPX and its principal, Donald
      Orr, into causing the transfer and assignment of certain oil and gas interests
      held by them.





The
      Company is contending that Donald Orr had received and/or incurred expenses
      that
      were not related to Canyon Creek, based upon a preliminary internal
      investigation.  Upon being confronted with these allegations, Mr. Orr
      resigned his position with Canyon Creek. The Company is in the process of filing
      a counter claim that would induce USPX to relinquish its 30% equity interest
      in
      Canyon Creek and repay the cash it had received and spent
      inappropriately.




On
      June
      20, 2006, the Company filed a response denying the allegations. The matter
      is
      currently pending. As of the consolidated balance sheet date, the Company has
      not accrued any costs related to this matter, because the Company believes
      the
      suit is without merit. In addition, “Oil and Gas Property” assets associated
      with the leases originally assigned by Donald Orr, including workovers
      applicable to those leases, totaled $1,970,000 on December 31, 2006. Revenues
      already earned from October 2005 to December 2006 totaled $382,000.





As
      of
      December 31, 2006, Miller Electric, a vendor, filed suit against the Company
      for
      $51,000 for unpaid invoices. The Company is currently negotiating a settlement
      for the lawsuit with Miller Electric.





**NOTE
      26 - SUBSEQUENT EVENTS**  ****





On
      January 15, 2007 Catlin and UPDA-O entered into an agreement for settlement
      and
      general release of claim with Trinidad Roustabout Services (NAVA) in which,
      Nava
      releases Catlin and UPDA-O from any and all claims any and all claims of unpaid
      invoices and supplies or services that were provided to Catlin and UPDA-O.
      In
      return, Catlin will pay Nava $15,000 in full satisfaction and Nava agrees to
      accept the sum as full and final settlement of any and all claims.





On
      March
      5, 2007 the Company sold 5% of the outstanding stock of Canyon Creek, or 5,000
      shares, to Anjos Partners Ltd. (“Anjos Partners”) for $200,000. On March 5, 2007
      the Company sold 5% of the outstanding stock of Catlin (5,000 shares) to both
      Anjos Partners for $300,000 and Eleben Partners for $300,000. On March 5, 2007
      the Company sold 5% of the outstanding stock of Texas Energy Pipeline (5,000
      shares) to both Anjos Partners for $100,000 and Eleben Partners for $100,000.
      The Company received the $1,000,000 related to the sale of outstanding stock
      in
      the fourth quarter of 2006 and it is captured in deferred revenue at December
      31, 2006.





In
      March
      2007, US Petroleum completed the acquisition of the oil storage facility in
      Brownsville, Texas for $1,000,000.




See
      independent auditor's report.


F-23




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**NOTE
      26 - SUBSEQUENT EVENTS CONTINUED**





During
      the quarter ended March 31, 2007, the Company issued Three Hundred Seventy-Five
      (375) shares of its Class B Preferred Stock to Devida Capital (“Devida”)
      pursuant to the terms of an investment agreement between Devida and the Company.
      The shares of Class B Preferred Stock issued to Devida are restricted shares
      and
      cannot be resold unless they are subsequently registered pursuant to the
      Securities Act of 1933, as amended, or such sale is pursuant to a valid
      exemption from such registration. Each share of Class B Preferred Stock is
      convertible into 20,000 shares of our common stock and is so convertible
      immediately upon issuance. The transaction referred to above did not involve
      an
      underwriter or placement agent and there were no underwriter’s discounts or
      commissions, or placement agent fees or commissions, paid in connection with
      the
      transaction. Devida is an accredited investor, as defined by Rule 501 of
      Regulation D, and has the business and financial knowledge to analyze the risks
      associated with an investment in our Class B Preferred Stock. The securities
      issued to Devida were in exchange for the sum of Three Hundred Seventy-Five
      Thousand Dollars ($375,000) in cash. The transaction referred to above was
      an
      exempt transaction in accordance with the provisions of Section 4(2) of the
      Securities Act of 1933, as amended, as a transaction by an issuer not involving
      any public offering. We did not engage in any public solicitations in connection
      with the above transaction.





During
      the quarter ended March 31, 2007, the Company issued One Thousand Five Hundred
      and Ninety (1,590) shares of its Class B Preferred Stock to Five Star Partners
      (“Five Star”) pursuant to the terms of an investment agreement between Five Star
      and the Company. The shares of Class B Preferred Stock issued to Five Star
      are
      restricted shares and cannot be resold unless they are subsequently registered
      pursuant to the Securities Act of 1933, as amended, or such sale is pursuant
      to
      a valid exemption from such registration. Each share of Class B Preferred Stock
      is convertible into 20,000 shares of our common stock and is so convertible
      immediately upon issuance. The transaction referred to above did not involve
      an
      underwriter or placement agent and there were no underwriter’s discounts or
      commissions, or placement agent fees or commissions, paid in connection with
      the
      transaction. Five Star is an accredited investor, as defined by Rule 501 of
      Regulation D, and has the business and financial knowledge to analyze the risks
      associated with an investment in our Class B Preferred Stock. The securities
      issued to Five Star were in exchange for the sum of One Million Five Hundred
      and
      Ninety Thousand Dollars ($1,590,000) in cash. The transaction referred to above
      was an exempt transaction in accordance with the provisions of Section 4(2)
      of
      the Securities Act of 1933, as amended, as a transaction by an issuer not
      involving any public offering. We did not engage in any public solicitations
      in
      connection with the above transaction.




During
      the three months ended March 31, 2007, the Company issued 4,526,000 shares
      of
      its common stock under the terms of its 2004 Stock Incentive Plan to various
      consultants and employees for current year consulting services.




During
      the three months ended March 31, 2007, 318 shares out of the 757 shares of
      unlettered convertible preferred stock held by Five Star were converted by
      Five
      Star into approximately 63,500,000 shares of the common stock of the
      Company.




During
      the three months ended March 31, 2007, 309 shares out of the 460 shares of
      unlettered convertible preferred stock held by Devida were converted by Devida
      into approximately 61,750,000 shares of the common stock of the
      Company.




*Promissory
      Note with Sheridan Asset Management, LLC*





On
      April
      6, 2007 the Company executed a senior secured promissory note with Sheridan
      Asset Management, LLC (“Sheridan”) for the principal amount of $3,635,000. The
      note matures on April 6, 2008. The note amount of $3,635,000 includes a
      principal amount of $2,726,250 and $908,750 of original issue discount based
      upon a 29.12% yield to maturity. Any overdue accrued and unpaid principal and
      interest shall accrue a late fee of 18%. The proceeds of the note will be used
      for acquisitions and working capital.




As
      part
      of the transaction Sheridan received a warrant to purchase 22,343,821 shares
      of
      the Company’s common stock for an exercise price of $.05483. The warrant expires
      on April 6, 2012. The Company will account for the warrant as a discount to
      the
      note based on the fair market value of the warrant and accrete the discount
      over
      one year.




The
      note
      is guaranteed by the Company’s two operating subsidiaries Canyon Creek and
      Catlin. In addition, Kamal Abdallah, Chairman and CEO and Christopher McCauley,
      Vice President and General Council have provided the lender with personal
      guarantees.




See
      independent auditor's report.


F-24




**UNIVERSAL
      PROPERTY DEVELOPMENT ACQUISITION CORP. AND SUBSIDIARIES**




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




**SUPPLEMENTAL
      INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES**







Reserve
      Quantities Information - The following estimates of proved and proved developed
      reserve quantities and related standardized measure of discounted net cash
      flow
      are estimates only, and do not purport to reflect realizable values or fair
      market values of the Company's reserves. The Company emphasizes that reserve
      estimates are inherently imprecise and that estimates of new discoveries are
      more imprecise than those of producing oil and gas properties. Accordingly,
      these estimates are expected to change as future information becomes available.
      All of the Company's reserves are located in the United States of
      America.




Proved
      reserves are estimated reserves of crude oil (including condensate and natural
      gas liquids) and natural gas that geological and engineering data demonstrate
      with reasonable certainty to be recoverable in future years from known
      reservoirs under existing economic and operating conditions. Proved developed
      reserves are those expected to be recovered through existing wells, equipment
      and methods.




Capitalized
                Costs Relating to Oil and Gas Producing Activities*As
                of December 31, 2006*Unproved
                oil and gas properties
            
            $
            1,902,465Proved
                oil and gas properties
            
            
            2,398,302Oil
                field equipment
            
            
            2,095,146Sale
                of overriding royalty interests on the leases of CCOG, Catlin, TE
                Pipeline
            
            
            (1,000,000
            )Total
                capitalized costs
            
            
            5,395,913Less
                accumulated depreciation and depletion
            
            
            (146,208
            )Net
                Capitalized Costs
            
            $
            5,249,705Capitalized
                Costs Relating to Oil and Gas Producing Activities*For
                the Year Ended December 31, 2005*Acquisition
                of proved oil and gas properties
            
            $
            1,086,756Acquisition
                of unproved oil and gas properties
            
            
            2,735,433Acquisition
                of oil field equipment
            
            
            2,092,651Sale
                of overriding royalty interests on the leases of CCOG, Catlin, TE
                Pipeline
            
            
            (1,000,000
            )Total
                Capitalized
            
            
            4,914,840Less
                depreciation & depletion expense
            
            
            (132,793
            )Net
                Capitalized Costs
            
            $
            4,782,047




Results
      of Operations from Oil and Gas Producing Activities - The Company's results
      of
      operations from oil and gas producing activities are as follows. Income taxes
      are based on statutory tax rates, reflecting allowable deductions.





*For
                the Year Ended December 31, 2006*Oil
                and gas revenues
            
            $
            581,279Production
                costs
            
            
            (713,710
            )Production
                taxes
            
            
            (26,030
            )Depreciation
                and depletion expense
            
            
            (132,793
            )Loss
                on Impairment of oil & gas properties
            
            
            (875,698
            )General
                and administrative expense
            
            
            (980,901
            )Results
                of operations before income taxes
            
            
            (2,147,853
            )Provision
                for income taxes
            
            
            -Results
                of Oil and Gas Producing Operations
            
            $
            (2,147,853
            )




Notes
      to
      Consolidated financial Statements December 31, 2006 and 2005




F-25


**SUPPLEMENTAL
      INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES
      (CONTINUED)**




The
      standardized measure of discounted future net cash flows is computed by applying
      year-end prices of oil and gas to the estimated future production of proved
      oil
      and gas reserves, less estimated future expenditures (based on year-end costs)
      to be incurred in developing and producing the proved reserves, less estimated
      future income tax expenses (based on year-end statutory tax rates) to be
      incurred on pretax net cash flows less tax basis of the properties and available
      credits, and assuming continuation of existing economic conditions. The
      estimated future net cash flows are then discounted using a rate of 10 percent
      per year to reflect the estimated timing of the future cash flows.





For
                the Year Ended December 31, 2006Oil
                (1)
            
            Gas
                (1)Proved
                Developed at end of year
            
            
            15,714
            
            
            109,983




(1)
      Oil
      reserves are stated in barrels; gas reserves are stated in thousand cubic feet.





Standardized
                Measure of Discounted Cash FlowsDecember
                31, 2006Future
                cash flows
            
            $
            1,610,577Future
                production costs
            
            
            (1,036,081
            )Future
                development costs
            
            
            (10,000
            )Discounted
                Cash Flows
            
            $
            438,524




See
      independent auditor's report.


F-26




EXHIBIT
      INDEX





ExhibitNumber
            
            Description
                Of Document2.1
                #
            
            Agreement
                and Plan of Merger dated June 17, 2005, among Pro Core Group, Inc.,
                now
                known as Universal Property Development and Acquisition Corporation,
                and
                Universal Property Development and Acquisition Corporation, a Nevada
                corporation, which was a wholly-owned subsidiary of Procore Group,
                Inc.
                Incorporated by reference to Exhibit 1 to the Current Report on Form
                8-K
                filed by the company on July 15, 2005.2.2
                #
            
            Articles
                of Merger by and between Universal Property Development and Acquisition
                Corporation and Pro Core Group, Inc. dated June 17, 2005. Incorporated
                by
                reference to Exhibit 2 to the Current Report on Form 8-K filed by
                the
                company on July 15, 2005.3.1
                #
            
            Articles
                of Incorporation of Universal Property Development and Acquisition
                Corporation. Incorporated by reference to Exhibit 3.1 to the Quarterly
                Report on Form 10-QSB filed by the company on April 22,
                2007.3.2
                #
            
            By-Laws
                of Universal Property Development and Acquisition Corporation.
                Incorporated by reference to Exhibit 3.2 to the Quarterly Report
                on Form
                10-QSB filed by the company on April 22, 2007.4.1
                #
            
            Certificate
                of Designation of Powers, Preferences and Rights of the Series B
                Convertible Preferred Stock of Universal Property Development and
                Acquisition Corporation. Incorporated by reference to Exhibit 4.2
                to the
                Quarterly Report on Form 10-QSB filed by the company on April 22,
                2007.4.2
                #@
            
            Universal
                Property Development and Acquisition Corporation 2004 Stock Incentive
                Plan. Incorporated by reference to Exhibit 4 to the Registration
                Statement
                on Form S-8 numbered 333-120396 of the company filed on November
                12,
                2004.4.3
                #
            
            Certificate
                of Designation of Powers, Preferences and Rights of the Series A
                Convertible Preferred Stock of Universal Property Development and
                Acquisition Corporation. Incorporated by reference to Exhibit 4.1
                to the
                Quarterly Report on Form 10-QSB filed by the company on April 22,
                2007.10.1
                #
            
            Joint
                Venture Agreement dated November 17, 2005 by and between by and between
                USProduction & Exploration, LLC, Universal Property Development and
                Acquisition Corp, and Triple Crown Consulting governing the formation
                and
                management of the joint venture entity Canyon Creek Oil & Gas, Inc.
                Incorporate by reference to Exhibit 10.1 to the Current Report on
                Form 8-K
                filed by the Company on November 22, 2005.10.2
                #
            
            Joint
                Venture Agreement dated October 2005 by and between by and between
                Universal Property Development and Acquisition Corp, Triple Crown
                Consulting, Inc., RAKJ, Rene Kranvold and Masaood Group governing
                the
                formation and management of the joint venture entity West Oil & Gas,
                Inc. Incorporated by reference to Exhibit 10.2 to the Quarterly Report
                on
                Form 10-QSB filed by the company on April 22, 2007.10.3
                #
            
            Joint
                Venture Agreement dated December 2005 by and between by and between
                Universal Property Development and Acquisition Corp and Lion Partners
                Hedge Fund governing the formation and management of the joint venture
                entity Winrock Energy, Inc. Incorporated by reference to Exhibit
                10.3 to
                the Quarterly Report on Form 10-QSB filed by the company on April
                22,
                2007.10.4
                #
            
            Memorandum
                of Understanding dated March 2006 by and between by and between Sundial
                Resources, Inc, Ty McDermett and Andrew McDermett, Jr. and Universal
                Property Development and Acquisition Corporation governing the formation
                and management of the joint venture entity Texas Energy, Inc. Incorporate
                by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
                by
                the company on March 14, 2006.10.5
                #@
            
            Employment
                Agreement between Universal Property Development and Acquisition
                Corporation and Mr. Kamal Abdallah dated October 1, 2005. Incorporate
                by
                reference to Exhibit 99.1 to the Current Report on Form 8-K filed
                by the
                company on October 12, 2005.10.6
                #@
            
            Employment
                Agreement between Universal Property Development and Acquisition
                Corporation and Mr. Christopher McCauley dated October 1, 2005.
                Incorporate by reference to Exhibit 99.2 to the Current Report on
                Form 8-K
                filed by the company on October 12, 2005.10.7
                #@
            
            Employment
                Agreement between Universal Property Development and Acquisition
                Corporation and Mr. Steven Barrera dated January 1, 2006. Incorporate
                by
                reference to Exhibit 10.1 to the Current Report on Form 8-K filed
                by the
                company on January 23, 2006.




10.8
                #
            
            Commercial
                Contract-Improved Property by and between International Trades &
                Forwarding LLC as the Seller and U.S. Petroleum Depot, Inc. as the
                Buyer,
                dated as of December 1, 2006 . Incorporate by reference to Exhibit
                10.1 to
                the Current Report on Form 8-K filed by the company on February 27,
                2007.31.1
                *
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act.31.2
                *
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act.32.1
                *
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act.32.2*
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act.










#
      Incorporated herein by reference.




*
      Filed
      herewith.




@
      Management compensation agreement, plan or arrangement.