UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

—————————

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2011

OR

¨ 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 000-51132

Universal Capital Management, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of Incorporation or Organization)
2601 Annand Drive Suite 16 Wilmington, DE (Address of principal executive offices) 20-1568059 (I.R.S. Employer Identification No.)


19808 (Zip Code)

Registrant’s telephone number, including area code: (302) 998-8824

Indicate by check mark whether the registrant (1) has filed all reports 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 ¨  No ý

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨  No ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one).

Large accelerated filer ¨  Accelerated filer ¨  Non-accelerated filer ý  Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No ý

The number of shares of the registrant’s Common Stock issued and outstanding as of July 25, 2013 was 23,187,426.

Universal Capital Management, Inc. (the “Company,” “our” or “we”) filed a Quarterly Report on Form 10-Q for the period ended October 31, 2011 (the “Original Report”) with the Securities and Exchange Commission (“SEC”) on December 20, 2011. The Financial Statements contained in the Original Report were not reviewed by the Company’s independent registered public accounting firm and a note to that effect was inserted at the beginning of the Original Report. We are filing this Amendment No. 1 to Quarterly Report on Form 10-Q/A (the “Amended Report”) to remove the note that the unaudited Financial Statements were not reviewed by the Company’s independent registered public accounting firm and to amend the Original Report as follows:

1.

The note inserted at the beginning of the Original Report stating that the Financial Statements contained in the Original Report were not reviewed by the Company’s independent registered public accounting firm is deleted. There were several adjustments to the Company’s October 31, 2011 Financial Statements included in the Original Report, primarily related to investments valuation, accruals and income taxes. The following tables provide the change from the Original Report as compared to the Amended Report for the statement of assets and liabilities, statement of operations and statement of cash flows.

i

Statement of Assets and Liabilities

	At October 31, 2011
	As Reported			Adjustments			As Restated
ASSETS
Investments, at fair value
Non-affiliate investments (cost: $475,267 and $475,228)	$	476,345		$	(269,000	)	$	207,345
Affiliate investments (cost: $1,234,952 and $1,473,552)		83,692			(49,725	)		33,967
Total Investments		560,037			(318,725	)		241,312
Cash and cash equivalents		15,383			-			15,383
Receivables:
Accounts receivable		49,296			-			49,296
Due from non-affiliates		49,221			(49,221	)		-
Due from affiliates (net of allowance of $3,500)		259,787			(259,787	)		-
Total Receivables		358,304			(309,008	)		49,296
Prepaid expenses		24,687			-			24,687
Property and equipment, net		82			-			82
Current income tax asset		65,000			(65,000	)		-
Deferred income tax		1,555,000			(1,555,000	)		-
Notes receivable – related party, net		-			-			-
Rent deposit		1,100			-			1,100
TOTAL ASSETS	$	2,579,593		$	(2,247,733	)	$	331,860
LIABILITIES
Accounts payable	$	366,378		$	12.264		$	378,642
Accounts payable, related parties		7,213			-			7,213
Accrued expenses		316,606			(134,996	)		181,610
Current state income taxes payable		-			128,000			128,000
Advances from shareholders		19,000			-			19,000
Notes payable		19,811			-			19,811
Notes payable, related parties		353,870			-			353,870
Accrued payroll and payroll taxes		-			139,906			139,906
Accrued interest		92,050			-			92,050
Accrued interest, related parties		85,572			1			85,573
TOTAL LIABILITIES	$	1,260,500		$	145,175		$	1,405,675
CONTINGENCIES (NOTE 12)
NET ASSETS (LIABILITIES)	$	1,319,093		$	(2,392,908	)	$	(1,073,815	)
COMPOSITION OF NET ASSETS (LIABILITIES)
Common stock, $0.001 par value, 60,000,000 shares authorized; 5,912,426 shares issued and outstanding at October 31, 2011 and April 30, 2011	$	5,912		$	-		$	5,912
Additional paid-in capital		6,194,586			(37,251	)		6,157,335
Accumulated income (loss):
Accumulated net operating loss		2,060,850			(2,073,925	)		(13,075	)
Dividends paid		(448,596	)		-			(448,596	)
Net realized loss on investments		(5,906,514	)		(301,033	)		(6,207,547	)
Net realized gain on dividend of portfolio stock		343,924			-			343,924
Net unrealized depreciation of investments		(931,069	)		19,301			(911,768	)
NET ASSETS (LIABILITIES)	$	1,319,093		$	(2,392,907	)	$	(1,073,815	)
Equivalent per share value based on 5,912,426 shares of capital stock outstanding as of October 31, 2011 and April 30, 2011	$	0.22		$	(0.40	)	$	(0.18	)

ii

Statement of Operations

	Three Months Ended October 31, 2011
	As Reported			Adjustments			As Restated
Revenue
Management services
Affiliates	$	45,804		$	49,348		$	95,152
Total Management Services		45,804			49,348			95,152
Other Income
Affiliates		49,348			(49,348	)		-
Total Revenue		95,152			-			95,152
Operating Expenses
Salaries and wages		10,233			-			10,233
Professional fees		8,699			-			8,699
Insurance		13,180			-			13,180
Interest expense		4,804			-			4,804
General and administrative		11,983			(79	)		11,904
Depreciation		125			-			125
Total Operating Expenses		49,024			(79	)		48,945
Operating Income before income taxes		46,128			79			46,207
Income tax benefit (provision)		(25,000	)		25,000			-
Miscellaneous income		-			300			300
Operating Income		21,128			25,378			46,507
Net realized and unrealized gains (losses)
Loss on disposal of portfolio stock		(195,000	)		-			(195,000	)
Unrealized appreciation (depreciation) on investments		(88,095	)		80,301			(7,795	)
Net Increase (Decrease) in Net Assets (Liabilities) Resulting from Operations		(261,967	)		105,679			(156,288	)
Net Increase (Decrease) in Net Assets (Liabilities) from Operations Per Share:
Basic	$	(0.04	)	$	0.01		$	(0.03	)
Diluted	$	(0.04	)	$	0.01		$	(0.03	)
Weighted average shares:
Basic		5,912,426			-			5,912,426
Diluted		5,912,426			-			5,912,426

iii

Statement of Operations

	Six Months Ended October 31, 2011
	As Reported			Adjustments			As Restated
Revenue
Management services
Affiliates	$	67,504		$	49,348		$	116,852
Total Management Services		67,504			49,348			116,852
Other Income
Affiliates		49,348			(49,348	)		-
Total Revenue		116,852			-			116,852
Operating Expenses
Salaries and wages		18,161			-			18,161
Professional fees		12,626			-			12,626
Insurance		33,058			-			33,058
Interest expense		14,193			-			14,193
General and administrative		30,871			44			30,915
Depreciation		600			(1	)		599
Total Operating Expenses		109,509			43			109,552
Operating Income (Loss) before income taxes		7,343			(43	)		7,300
Income tax benefit (provision)		(114,000	)		114,000			-
Miscellaneous income		-			1,420			1,420
Operating Income (Loss)		(106,657	)		115,377			8,720
Net realized and unrealized gains (losses)
Loss on disposal of portfolio stock		(380,339	)		-			(380,339	)
Unrealized appreciation (depreciation) on investments		36,495			97,300			133,795
Net Increase (Decrease) in Net Assets (Liabilities) Resulting from Operations		(450,501	)		212,677			(237,824	)
Net Increase (Decrease) in Net Assets (Liabilities) from Operations Per Share:
Basic	$	(0.08	)	$	0.04		$	(0.04	)
Diluted	$	(0.08	)	$	0.04		$	(0.04	)
Weighted average shares:
Basic		5,912,426			-			5,912,426
Diluted		5,912,426			-			5,912,426

iv

Statement of Cash Flows

	Six Months Ended October 31, 2011
	As Reported			Adjustments			As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets (liabilities) resulting from operations	$	(450,501	)	$	212,677		$	(237,824	)
Adjustments to reconcile net decrease in net assets (liabilities) resulting from operations to net cash provided by operating activities:
Sale of investment securities		77,336			(300	)		77,036
Purchase of investment securities		-			-			-
Loss on sale of portfolio stock		380,339			-			380,339
Depreciation expense		599			-			599
Net unrealized (appreciation) depreciation on investments		(36,537	)		(97,258	)		(133,795	)
Deferred income taxes		119,000			(119,000	)		-
Current income taxes		(5,000	)		5,000			-
(Increase) decrease in assets:
Accounts receivable		(49,296	)		-			(49,296	)
Prepaid expenses		4,749			-			4,749
Increase (decrease) in liabilities:
Accounts payable		(272	)		-			(272	)
Accrued payroll and payroll taxes		-			(2,910	)		(2,910	)
Accrued expenses		(7,910	)		2,910			(5,000	)
Accrued interest, related parties		14,109			2			14,111
Net cash provided by operating activities		46,616			1,121			47,737
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt		(4,799	)		-			(4,799	)
Repayment of promissory note - related parties		(43,000	)		-			(43,000	)
Net cash used in financing activities		(47,799	)		-			(47,799	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		(1,183	)		1,121			(62	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		16,566			(1,121	)		15,445
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	15,383		$	-		$	15,383
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
CASH PAID FOR INCOME TAXES	$	5,000		$	-		$	5,000

2.

The Financial Statements contained in Part I. Item 1 of the Original Report are deleted in their entirety and replaced with the Financial Statement contained in Part I. Item 1 of this Amended Report.

3.

The Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part I. Item 2 of the Original Report is deleted in its entirety and replaced with the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part I. Item 2 of this Amended Report.

4.

The information contained in Part II. Item 6 Exhibits of the Original Report is revised only to reflect the filing of currently dated certifications of our principal executive officer and our principal financial officer, which are attached to this Amended Report.

Except as described above, this Amended Report does not modify or update any other disclosures in, or exhibits to, the Original Report and this Amended Report continues to speak as of the date of the Original Report. Accordingly, this Amended Report should be read in conjunction with the Original Report and all of our filings made with the SEC subsequent to the filing of the Original Report, as information in such filings may update or supersede certain information contained in this Amended Report and the Original Report.

v

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
	PART II - OTHER INFORMATION
Item 6.	Exhibits	5

vi

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

See Appendix

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion contains forward-looking statements. The words “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “will,” “could,” “may” and similar expressions are intended to identify forward-looking statements. Such statements reflect our Company’s current views with respect to future events and financial performance and involve risks and uncertainties. Should one or more risks or uncertainties occur, or should underlying assumptions prove incorrect, actual results may vary materially and adversely from those anticipated, believed, expected, planned, intended, estimated, projected or otherwise indicated. Readers should not place undue reliance on these forward-looking statements.

The following discussion is qualified by reference to, and should be read in conjunction with our Company’s financial statements and the notes thereto.

On November 1, 2011, the Company filed Form N-54C notification of withdrawal of election to be regulated as a BDC. The withdrawal was effective upon receipt of the Form N-54C notification by the SEC, and our Company is no longer subject to regulation as a BDC as of November 1, 2011. Since November 1, 2011, we have had no intention to invest in securities or meet the definition of an investment company, as described in Section 3 of the 1940 Act. Also, our Company is managed so it will not be deemed to be an investment company as defined in the 1940 Act and will maintain its registration under the 1934 Act and continue to be obligated to file regular reports as required thereunder.

Our Company identifies, advises in development and markets consumer products. Our strategy employs three primary channels: Direct Response Television (Infomercials), Television Shopping Networks and Retail Outlets. We seek to assist and enable entrepreneurs to introduce products to the consumer market. Entrepreneurs can leverage our experience and valuable business contacts in functions such as product selection, marketing development, media buying and direct response television production. Inventors and entrepreneurs submit products or business concepts for our input and advice. We generate revenues from two primary sources (i) management of the entire business cycle of the consumer product and (ii) sales of consumer products, for which we receive a share of net profits of consumer products sold. We do not manufacture any of our products. As of the date of this Form 10-Q/A, we have generated limited revenues and do not rely on any principal products. While the Company has received limited revenues from management fees generated from the sales of several products, none of these fees have generated material revenues. We currently do not sell any internally developed or Company owned products.

We are currently positioning our Company to expand its business and become a diversified holding company that is engaged in different businesses through the operation of consolidated subsidiaries. We plan to accomplish this expansion through acquisition, merger or the formation of newly created subsidiaries. We are currently in various stages of talks with several companies that could further the company's goal to become a diversified holding company, but no agreements have been reached to date.

During the period covered by this Amended Report, our Company was a non-diversified, close-ended management investment company that had elected to be treated as a business development company (BDC) under the 1940 Act. We assisted early stage development companies in all aspects of the planning process from inception to entering the public marketplace. This included assisting with the preparation of financial statements, capitalization tables, valuations, business plans and coordinating public/investor relations efforts. Our niche was to assist young companies prepare themselves for introduction to a diversified group of accredited investors in order to assist them with obtaining private debt and/or equity financing. Since we had differing clients in varied industries, our overall portfolio during this period was extremely diversified, which enabled us to offer investors who invested in us a potentially higher return with less risk. For our management services we received a block of common stock which could result in a financial windfall for us and our shareholders.

Pursuant to the requirements of the Investment Company Act of 1940, as amended (“1940 Act”), our Board of Directors is responsible for determining in good faith the fair value of the securities and assets held by our Company for which market quotations are not readily available. This is because during the period covered by this Amended Report, our Company was a BDC under the 1940 Act. In making its determination, our Board of Directors may consider valuation appraisals provided by independent financial experts. With respect to private equity securities, each investment is valued using industry valuation benchmarks, and then the value may be assigned a discount reflecting the particular nature of the investment.

1

Our Board of Directors bases its determination of value on, among other things, applicable quantitative and qualitative factors. These factors may include, but are not limited to, the type of securities, the nature of the business of the portfolio company, the marketability of the securities, the market price of unrestricted securities of the same issue (if any), comparative valuation of securities of publicly traded companies in the same or similar industries, current financial conditions and operating results of the portfolio company, sales and earnings growth of the portfolio company, operating revenues of the portfolio company, competitive conditions, and current and prospective conditions in the overall economy and the equity markets.

Without a readily recognized market value, the estimated value of some portfolio securities may differ significantly from the values that would be placed on the portfolio if there existed a ready market for such equity securities.

Financial Condition

Our Company’s total assets, net assets, net asset value per share and unrealized appreciation are set forth in the following table:

	At the Quarter Ended October 31, 2011			At the Year Ended April 30, 2011
TOTAL ASSETS	$	331,860		$	611,554
NET LIABILITIES	$	(1,073,815	)	$	(835,991	)
NET LIABILITY VALUE PER SHARE	$	(0.18	)	$	(0.14	)
NET UNREALIZED DEPRECIATION ON INVESTMENTS	$	(911,768	)	$	(1,045,564	)

The changes in total assets, net liabilities and net liability value per share for the six months ending October 31, 2011 were primarily attributable to:

·

$380,339 loss on disposal of portfolio stock.

·

$133,795 net unrealized appreciation on investments.

At October 31, 2011 and April 30, 2011, $241,312 or approximately 22% and $564,892 or approximately 68% of our net liabilities, respectively, consisted of investments, of which cumulative net unrealized depreciation was $911,768 at October 31, 2011 and cumulative net unrealized depreciation was $1,045,564 at April 30, 2011.

Our Company’s financial condition is dependent on a number of factors including the ability of each portfolio company to effectuate its respective strategies with our Company’s help. Our Company has invested a substantial portion of its assets in development stage or start-up companies. These businesses are frequently thinly capitalized, unproven, small companies that may lack management depth, and may be dependent on new or commercially unproven technologies, and may have no operating history.

Because the portfolio companies tend to be at early stages of their business development, and because there are no markets for the securities of some portfolio companies, our Company may find it difficult to liquidate any of its investments in the near future. See “Liquidity and Capital Resources” below.

Results of Operations

Our Company’s financial statements have been prepared in conformity with the United States generally accepted accounting principles. On this basis, the principal measure of an investment company's financial performance during a time period is the net change in net assets during such period. Such change results from (i) income from operations, net of operating expenses, (ii) net realized gain or loss on investment, which is the difference between the proceeds received from dispositions of portfolio securities and their stated cost, and (iii) increase (decrease) in unrealized appreciation or depreciation on investments.

Company expenses include salaries and wages, professional fees, office expenses and supplies, rent, travel, and other normal business expenses. General and administrative costs include depreciation, investor relations and other overhead costs.

Three months ending October 31, 2011 compared to the three months ended October 31, 2010

For the three months ended October 31, 2011, we had revenue for services in the amount of $95,152 compared to $6,739 for the three months ended October 31, 2010. For 2011, all of our revenue was comprised of management services provided to affiliates. For 2010, all of our revenue was primarily comprised of accounting services provided to affiliates.

2

Total operating expenses for the three months ending October 31, 2011 were $48,946, the principal components of which were insurance of $13,180, general and administration of $11,905, and salaries and wages of $10,233. By comparison, total operating expenses for the three months ending October 31, 2010 were $182,491, the principal components of which were salaries and wages of $86,228, professional fees of $31,936, $24,472 of insurance expense and $17,122 of bad debt.

The Company realized an operating income of $46,506 for the three months ending October 31, 2011 compared to an operating loss of $219,886 for the three months ending October 31, 2010.

Six months ending October 31, 2011 compared to the six months ended October 31, 2010

For the six months ended October 31, 2011, we had revenue for services in the amount of $16,852 compared to $14,850 for the six months ended October 31, 2010. For 2011, all of our revenue was comprised of management services provided to affiliates. For 2010, all of our revenue was primarily comprised of accounting services provided to affiliates.

Total operating expenses for the six months ending October 31, 2011 were $109,552, the principal components of which were insurance of $33,058, general and administration of $30,915 and salaries and wages of $18,161. By comparison, total operating expenses for the six months ending October 31, 2010 were $612,326, the principal components of which were $301,622 of bad debt expense, $152,293 of salaries and wages, professional fees of $61,946, $48,851 of insurance expense and $31,080 of other general and administrative expense.

The Company realized an operating income of $8,720 for the six months ending October 31, 2011 compared to an operating loss of $1,505,610 for the six months ending October 31, 2010. Included in the 2010 loss is a net tax provision of $895,000 as a result of a valuation allowance against deferred tax assets with no corresponding amount in 2011.

Liquidity and Capital Resources

From inception, our Company has relied upon the infusion of capital through capital share transactions for liquidity. Our Company had $15,383 of cash at October 31, 2011. Consequently, payment of operating expenses and cash with which to make investments will similarly have to come from equity capital to be raised from investors or from borrowed funds. There is no assurance that our Company will be successful in raising such additional equity capital or additional borrowings or if it can, that it can do so at a price that management believes to be appropriate. Under the Investment Company Act of 1940, as amended (“1940 Act”), our Company may not sell shares of common stock at less than its net asset value except in certain limited circumstances.

At October 31, 2011, $146,235 or 61% of our investments are illiquid securities that do not have a market or they are restricted and therefore cannot be traded or sold.

Our Company may be forced to dispose of a portion of its current portfolio securities if it ever becomes short of cash. Any such dispositions may have to be made at inopportune times, which may have a material adverse effect on our overall revenue.

Critical Accounting Estimates

Valuation

The 1940 Act requires periodic valuation of each investment in our Company’s portfolio to determine our Company’s net asset value. Under the 1940 Act, unrestricted securities with readily available market quotations are to be valued at the current market value; all other assets must be valued at “fair value” as determined in good faith by or under the direction of the Board of Directors.

The Board of Directors is responsible for (1) determining overall valuation guidelines and (2) ensuring the valuation of investments within the prescribed guidelines.

Fair value is generally defined as the amount for which an investment could be sold in an orderly disposition over a reasonable time. Generally, to increase objectivity in valuing assets, external measures of value, such as public markets or third-party transactions, are used whenever possible. Valuation is not based on long-term work-out value, or immediate liquidation value, or incremental value for potential changes that may take place in the future. The values assigned to Company investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as such amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated.

3

Our Company’s valuation policy and methodology with respect to its portfolio companies are as follows:

Cost: The cost method is based on our Company’s original cost. This method is generally used in the early stages of a portfolio company’s development until significant events occur subsequent to the date of the original investment that dictates a change to another valuation method. Some examples of these events are: (1) a major recapitalization; (2) a major refinancing; (3) a significant third-party transaction; (4) the development of a meaningful public market for such company’s common stock; and (5) significant changes in such company’s business.

Private Market: The private market method uses actual, executed, historical transactions in a company’s securities by responsible third parties as a basis for valuation. The private market method may also use, where applicable, unconditional firm offers by responsible third parties as a basis for valuation.

Public Market: The public market method is used when there is an established public market for the class of the portfolio company’s securities held by our Company and the shares held by our Company bear no legal or contractual restrictions. Securities for which market quotations are readily available are carried at market value as of the time of valuation. Market value for securities traded on securities exchanges is the last reported sales price on the day of valuation. For other securities traded in the over-the-counter market and listed securities for which no sale was reported on a day, market value is the last quoted bid price on such day.

Public Market/Restricted Securities: When our Company holds securities which are publicly traded but under significant legal or contractual restrictions, the Board of Directors starts with the public market value of the shares as set forth in the paragraph above and applies an appropriate discount based on the nature and remaining duration of the restrictions.

Analytical Method: The analytical method is generally used to value an investment position when there is no established public or private market in our Company’s securities or when the factual information available to our Company dictates that an investment should no longer be valued under either the cost or private market method. This valuation method is inherently imprecise and, ultimately, the result of reconciling the judgments of our directors based on the data available to them. The resulting valuation, although stated as a precise number, is necessarily within a range of values that vary depending upon the significance attributed to the various factors being considered. Some of the factors considered may include the financial condition and operating results of the portfolio company, the long-term potential of the business of our Company, the values of similar securities issued by companies in similar businesses, the proportion of the portfolio company’s securities owned by our Company and the nature of any rights to require the portfolio company to register restricted securities under applicable securities laws.

4

PART II – OTHER INFORMATION

Item 6.

Exhibits.

The following exhibits are included herein:

31.1	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company.
31.2	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer of the Company.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Financial Officer of the Company.
101	The following unaudited financial information from Universal Capital Management, Inc.'s Quarterly Report on Form 10-Q/A for the quarter ended October 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Statements Of Assets And Liabilities; (ii) Statements Of Operations; (iii) Statements Of Cash Flows; (iv) Statement Of Changes In Net Liabilities; (v) Financial Highlights; (vi) Schedule Of Investments As of October 31, 2011; (vii) Schedule Of Investments As Of April 30, 2011; and (viii) Notes to Financial Statements.

5

SIGNATURES

Pursuant to the requirements 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 Capital Management, Inc.
July 25, 2013	By:	/s/ Michael D. Queen
		Michael D. Queen, Principal Executive Officer and Principal Financial Officer

6

UNIVERSAL CAPITAL MANAGEMENT, INC.

FINANCIAL STATEMENTS

OCTOBER 31, 2011

(UNAUDITED)

UNIVERSAL CAPITAL MANAGEMENT, INC.

CONTENTS

	PAGE
STATEMENTS OF ASSETS AND LIABILITIES	F-2
STATEMENTS OF OPERATIONS (UNAUDITED)	F-3
STATEMENTS OF CASH FLOWS (UNAUDITED)	F-4
STATEMENT OF CHANGES IN NET LIABILITIES (UNAUDITED)	F-5
FINANCIAL HIGHLIGHTS (UNAUDITED)	F-6
SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 2011 (UNAUDITED)	F-7
SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2011	F-9
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)	F-11 – F-26

F-1

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF ASSETS AND LIABILITIES

	October 31, 2011			April 30, 2011
	(Unaudited) (As Restated – Note 14)
ASSETS
Investments, at fair value
Non-affiliate investments (cost: $485,502 and $475,228)	$	207,345		$	398,707
Affiliate investments (cost: $1,005,602 and $1,473,552)		33,967			166,185
Total Investments		241,312			564,892
Cash and cash equivalents		15,383			15,445
Accounts receivable		49,296			-
Prepaid expenses		24,687			29,436
Property and equipment, net		82			681
Notes receivable – related party, net		-			-
Rent deposit		1,100			1,100
TOTAL ASSETS	$	331,860		$	611,554
LIABILITIES
LIABILITIES
Accounts payable	$	378,642		$	378,913
Accounts payable, related parties		7,213			7,213
Accrued expenses		181,610			186,610
Current state income taxes payable		128,000			128,000
Advances from shareholders		19,000			19,000
Notes payable		19,811			24,610
Notes payable, related parties		353,870			396,870
Accrued payroll and payroll taxes		139,906			142,816
Accrued interest		92,050			92,050
Accrued interest, related parties		85,573			71,463
TOTAL LIABILITIES		1,405,675			1,447,545
CONTINGENCIES (NOTE 12)
NET LIABILITIES	$	(1,073,815	)	$	(835,991	)
COMPOSITION OF NET LIABILITIES
Common stock, $0.001 par value, 60,000,000 shares authorized;5,912,426 shares issued and outstanding at October 31, 2011 and April 30, 2011	$	5,912		$	5,912
Additional paid-in capital		6,157,335			6,157,335
Accumulated income (loss):
Accumulated net operating loss		(13,075	)		(21,794	)
Dividends paid		(448,596	)		(448,596	)
Net realized loss on investments		(6,207,547	)		(5,827,208	)
Net realized gain on dividend of portfolio stock		343,924			343,924
Net unrealized depreciation of investments		(911,768	)		(1,045,564	)
NET LIABILITIES	$	(1,073,815	)	$	(835,991	)
Equivalent per share value based on 5,912,426 shares of capital stock outstanding as of October 31, 2011 and April 30, 2011	$	(0.18	)	$	(0.14	)

See accompanying unaudited notes to these unaudited financial statements.

F-2

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF OPERATIONS

	For the Three Months Ending						For the Six Months Ending
	October 31,						October 31,
	2011			2010			2011			2010
	(Unaudited)						(Unaudited)
	(As Restated - Note 14)						(As Restated - Note 14)
REVENUE
Management services
Affiliates	$	95,152		$	500		$	116,852		$	1,000
Total Management Services		95,152			500			116,852			1,000
Accounting services
Affiliates		-			6,000			-			13,200
Total Accounting Services		-			6,000			-			13,200
Other Income
Affiliates		-			239			-			650
TOTAL REVENUE		95,152			6,739			116,852			14,850
OPERATING EXPENSE
Bad debt		-			17,122			-			301,622
Salaries and wages		10,233			86,228			18,161			152,293
Professional fees		8,699			31,936			12,626			61,946
Insurance		13,180			24,472			33,058			48,851
Interest expense		4,804			7,629			14,193			15,587
General and administrative		11,904			14,632			30,915			31,077
Depreciation		125			472			599			950
TOTAL OPERATING EXPENSE		48,945			182,491			109,552			612,326
INCOME (LOSS) BEFORE INCOME TAXES		46,207			(175,752	)		7,300			(597,476	)
Income tax benefit		-			(31,000	)		-			(895,000	)
Penalties and interest		-			(13,134	)		-			(13,134	)
Miscellaneous income		300			-			1,420			-
OPERATING INCOME		46,507			(219,886	)		8,720			(1,505,610	)
Net realized and unrealized gains (losses):
Loss on disposal of portfolio stock		(195,000	)		(113,204	)		(380,339	)		(169,550	)
Loss on impairment of portfolio stock		-			(25,800	)		-			(364,125	)
Unrealized appreciation (depreciation) on investments		(7,795	)		47,956			133,795			(2,387,364	)
NET INCREASE (DECREASE) IN NET ASSETS (LIABILITIES) RESULTING FROM OPERATIONS	$	(156,288	)	$	(310,934	)	$	(237,824	)	$	(4,426,649	)
Net increase (decrease) in net assets (liabilities) from operations per share:
Basic	$	(0.03	)	$	(0.05	)	$	(0.04	)	$	(0.69	)
Diluted	$	(0.03	)	$	(0.05	)	$	(0.04	)	$	(0.69	)
Weighted average shares:
Basic		5,912,426			6,412,426			5,912,426			6,412,426
Diluted		5,912,426			6,412,426			5,912,426			6,412,426

See accompanying unaudited notes to these unaudited financial statements.

F-3

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS

	For the Six Months Ending
	October 31,
	2011			2010
	(Unaudited)
	(As Restated - Note 14)
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets (liabilities) resulting from operations	$	(237,824	)	$	(4,426,649	)
Adjustments to reconcile net increase (decrease) in net assets (liabilities) resulting from operations to net cash provided by (used in) operating activities:
Sale (purchase) of investment securities		77,036			274,212
Loss on sale of portfolio stock		380,339			169,550
Stock (received) granted for interest		-			-
Acquisition of warrants for sale of stock		-			(25,800	)
Investment securities received in exchange for management services		-			(1,000	)
Depreciation expense		599			950
Stock based compensation expense		-			2,544
Bad debt expense		-			301,622
Net unrealized (appreciation) depreciation and impairment on investments		(133,795	)		2,751,489
Deferred income taxes		-			920,000
Current income taxes		-			(29,500	)
(Increase) decrease in assets:
Accounts receivable		(49,296	)		-
Notes receivable affiliates		-			(72,944	)
Receivables non-affiliates		-			11,601
Prepaid expenses		4,749			14,466
Increase (decrease) in liabilities:
Accounts payable		(272	)		17,030
Accrued expenses		(5,000	)		55,945
Accrued payroll and payroll taxes		(2,910	)		-
Accrued interest, related parties		14,111			14,574
Net cash provided by (used in) operating activities		47,737			(21,910	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of promissory note		-			-
Proceeds from advance from shareholder - related party		-			-
Proceeds (Repayment) of debt		(4,799	)		(16,035	)
Proceeds from issuance of promissory note - related parties		-			34,696
Repayment of promissory note - related parties		(43,000	)		-
Net cash provided by (used in) financing activities		(47,799	)		18,661
NET DECREASE IN CASH AND CASH EQUIVALENTS		(62	)		(3,249	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		15,445			6,567
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	15,383		$	3,318
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
CASH PAID FOR INCOME TAXES	$	5,000		$	4,500

See accompanying unaudited notes to these unaudited financial statements.

F-4

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF CHANGES IN NET ASSETS

	For the Six Months Ending
	October 31,
	2011			2010
	(Unaudited)
	(As Restated - Note 14)
NET INCREASE (DECREASE) IN NET ASSETS (LIABILITIES) RESULTING FROM OPERATIONS	$	(237,824	)	$	(4,426,649	)
CAPITAL SHARE TRANSACTIONS
Share-based compensation expense		-			2,544
NET CAPITAL SHARE TRANSACTIONS		-			2,544
TOTAL INCREASE (DECREASE) IN NET ASSETS (LIABILITIES)		(237,824	)		(4,424,105	)
NET ASSETS (LIABILITIES), BEGINNING OF YEAR		(835,991	)		4,174,316
NET LIABILITIES, END OF PERIOD	$	(1,073,815	)	$	(249,789	)

See accompanying unaudited notes to these unaudited financial statements.

F-5

UNIVERSAL CAPITAL MANAGEMENT, INC.

FINANCIAL HIGHLIGHTS

	October 31,
	2011			2010
	(Unaudited)
	(As Restated - Note 14)
PER SHARE INFORMATION
Net asset (liability) value, beginning of period	$	(0.14	)	$	0.65
Net income (loss) from operations, net of taxes (1)		0.00			(0.23	)
Net realized loss on investments, net of taxes (1)		(0.06	)		(0.08	)
Net unrealized appreciation (depreciation) on investments, net of taxes (2)		0.02			(0.38	)
		(0.04	)		(0.69	)
Net liability value, end of period	$	(0.18	)	$	(0.04	)
Per share market value, end of period	$	0.09		$	0.20
Investment return, based on net liability value at end of period		28.45	%		-105.99	%
RATIO/SUPPLEMENTAL DATA
Net liabilities, end of period	$	(1,073,815	)	$	(249,789	)
Ratio of expenses to average net liabilities		-22.95	%		124.82	%
Ratio of net income (loss) from operations to average net liabilities		-3.65	%		-306.91	%
Diluted weighted average number of shares outstanding during the period		5,912,426			6,412,426

———————

(1)

Calculated based on diluted weighted average number of shares outstanding during the period.

(2)

Calculated as a balancing amount necessary to reconcile the change in net assets value per share with the other per share information presented. This amount may not agree with the aggregate gains and losses for the period because the difference in the net asset value at the beginning and end of period does not inherently equal the per share changes of the line items disclosed

See accompanying unaudited notes to these unaudited financial statements.

F-6

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

AS OF OCTOBER 31, 2011 (As Restated – Note 14)

(UNAUDITED)

						Number of
		Date of	% of			Units Held at		Method of			Value at		% of
	Business	Acquisition	Portfolio			October 31, 2011		Valuation (1)	Cost		Oct. 31, 2011		Net Assets
Affiliate Investments (2)
PR Specialists, Inc.(5)(6)(7)	Public shell	Dec-09		0.00	%		2,500,000	(M)	$	2,500	$	-		0.00	%
BF Acquisition Group V, Inc.(5)(6)(7)	Public shell	April-05; Nov-09		0.00	%		100,000	(M)		1,625		-		0.00	%
		Nov-09		0.00	%		1,900,000	(M)		1,900		-		0.00	%
Vystar Corporation (4)(6)	Natural rubber latex products	Mar-10		14.08	%		135,325	(M)		270,650		33,967		-3.16	%
Warrant to purchase 600,000 shares of Vystar Corporation	Natural rubber latex products
500,000 warrants expiring April 30, 2013(5)(6)		Jul-08		0.00	%		500,000	(I)		193,000		-		0.00	%
50,000 warrants expiring April 30, 2012(5)(6)		Oct-10		0.00	%		50,000	(I)		-		-		0.00	%
50,000 warrants expiring May 31, 2012(5)(6)		Nov-10		0.00	%		50,000	(I)		-		-		0.00	%
Innovation Industries
Promissory note (6)(8)	Direct sales	Oct-09		0.00	%			(C)		10,000		-		0.00	%
SIVOO Holdings, Inc. (4)(6)	High speed internet media	Dec-05 to Nov-06		0.00	%		664,501	(M)		319,725		-		0.00	%
Warrants to purchase 605,000 shares of SIVOO Holdings, Inc.	High speed internet media
200,000 warrants expiring November 14, 2011 (5)(6)		Nov-06		0.00	%		200,000	(I)		-		-		0.00	%
405,000 warrants expiring February 28, 2013 (5)(6)		Feb-08		0.00	%		405,000	(I)		206,202		-		0.00	%
4% of fully diluted common stock at time of exercise - TBD (5)(6)		Oct-09		0.00	%	TBD		(I)		-		-		0.00	%
	Total Investments in Affiliates			14.08	%					1,005,602		33,967		-3.16	%

(continued)

F-7

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS (CONTINUED)

AS OF OCTOBER 31, 2011 (As Restated – Note 14)

(UNAUDITED)

						Number of
		Date of	% of			Units Held at		Method of			Value at			% of
	Business	Acquisition	Portfolio			October 31, 2011		Valuation (1)	Cost		Oct. 31, 2011			Net Assets
Non-Affiliate Investments (3)
Lightwave Logic, Inc. (4)(6)(7)	Plastics engineering	Dec-10		25.33	%		97,000	(M)		93,075		61,110			-5.71	%
Warrant to purchase 357,500 shares of Lightwave Logic, Inc. common stock, expiring February 2012 (5)(6)(7)	Plastics engineering	Feb-08		56.37	%		357,500	(I)		250,250		136,000			-12.67	%
Warrant to purchase 1,000,000 shares of iVolution Medical Systems, Inc. (privately held) common stock, expiring July 2013 (5)(6)	Medical billing and medical records software	Jul-08		0.00	%		1,000,000	(I)		112,000		-			0.00	%
Warrant to purchase 500,000 shares of iVolution Medical Systems, Inc. (privately held) common stock, expiring July 2013 (5)(6)	Medical billing and medical records software	Jul-08		0.00	%		500,000	(I)		17,000		-			0.00	%
New Bastion Development, Inc.(6)(7)	Commercial Real Estate	May-09 to Oct-11		4.24	%		12,794	(M)		13,177		10,235			-0.95	%
	Total Investments in Non-Affiliates			85.92	%					485,502		207,345			-19.33	%
	Total Investments			100.00	%				$	1,491,104	$	241,312			-22.49	%
	Cash and other assets, less liabilities											(1,315,127	)		122.47	%
	Net liabilities at October 31, 2011										$	(1,073,815	)		100.00	%

Notes to Schedule of Investments:

(1)

Investments are valued using the (M) Market Approach, (I) Income Approach, which includes the Black-Scholes Method, or (C) Cost.

(2)

Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the voting securities.

(3)

Non-affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns less than 5% of the voting securities.

(4)

Unrestricted securities - liquid securities.

(5)

Restricted securities - illiquid securities; total illiquid securities of $136,000 represents 56% of total investments as of October 31, 2011.

(6)

Represents a non-income producing security. Equity investments that have not paid dividends within the last 12 months are considered to be non-income producing.

(7)

These investments are development stage companies. A development stage company is defined as a company that is devoting substantially all of its efforts to establishing a new business, and either it has not yet commenced its planned principal operations, or it has commenced such operations but has not realized significant revenue from them.

(8)

This represents a promissory note from Innovation Industries. Terms of the promissory note include a profit sharing on net profits. The promissory note is recorded at cost.

See accompanying unaudited notes to these unaudited financial statements.

F-8

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

AS OF APRIL 30, 2011

						Number of
		Date of	% of			Units Held at		Method of			Value at		% of
	Business	Acquisition	Portfolio			April 30, 2011		Valuation (1)	Cost		April 30, 2011		Net Assets
Affiliate Investments (2)
PR Specialists, Inc.(5)(6)(7)	Public shell	Dec-09		0.00	%		2,500,000	(M)	$	2,500	$	-		0.00	%
BF Acquisition Group V, Inc.(5)(6)(7)	Public shell	April-05; Nov-09		0.00	%		100,000	(M)		1,625		-		0.00	%
		Nov-09		0.00	%		1,900,000	(M)		1,900		-		0.00	%
Vystar Corporation (4)(6)	Natural rubber latex products	Mar-10		29.41	%		369,300	(M)		738,600		166,185		-19.88	%
Warrant to purchase 600,000 shares of Vystar Corporation	Natural rubber latex products
500,000 warrants expiring April 30, 2013(5)(6)		Jul-08		0.00	%		500,000	(I)		193,000		-		0.00	%
50,000 warrants expiring April 30, 2012(5)(6)		Oct-10		0.00	%		50,000	(I)		-		-		0.00	%
50,000 warrants expiring May 31, 2012(5)(6)		Nov-10		0.00	%		50,000	(I)		-		-		0.00	%
Innovation Industries
Promissory note (6)(8)	Direct sales	Oct-09		0.00	%			(C)		10,000		-		0.00	%
SIVOO Holdings, Inc. (4)(6)	High speed internet media	Dec-05 to Nov-06		0.00	%		664,501	(M)		319,725		-		0.00	%
Warrants to purchase 605,000 shares of SIVOO Holdings, Inc.	High speed internet media
200,000 warrants expiring November 14, 2011 (5)(6)		Nov-06		0.00	%		200,000	(I)		-		-		0.00	%
405,000 warrants expiring February 28, 2013 (5)(6)		Feb-08		0.00	%		405,000	(I)		206,202		-		0.00	%
4% of fully diluted common stock at time of exercise - TBD (5)(6)		Oct-09		0.00	%	TBD		(I)		-		-		0.00	%
	Total Investments in Affiliates			29.41	%					1,473,552		166,185		-19.88	%

(continued)

F-9

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS (CONTINUED)

AS OF APRIL 30, 2011

						Number of
		Date of	% of			Units Held at		Method of			Value at			% of
	Business	Acquisition	Portfolio			April 30, 2011		Valuation (1)	Cost		April 30, 2011			Net Assets
Non-Affiliate Investments (3)
Lightwave Logic, Inc. (4)(6)(7)	Plastics engineering	Feb-07 to Jan-09		0.17	%		817	(M)		678		907			-0.11	%
		Dec-10		15.72	%		100,000	(M)		95,000		88,800			-10.62	%
Warrant to purchase 357,500 shares of Lightwave Logic, Inc. common stock, expiring February 2012 (5)(6)(7)	Plastics engineering	Feb-08		54.70	%		357,500	(I)		250,250		309,000			-36.96	%
Warrant to purchase 1,000,000 shares of iVolution Medical Systems, Inc. (privately held) common stock, expiring July 2013 (5)(6)	Medical billing and medical records software	Jul-08		0.00	%		1,000,000	(I)		112,000		-			0.00	%
Warrant to purchase 500,000 shares of iVolution Medical Systems, Inc. (privately held) common stock, expiring July 2013 (5)(6)	Medical billing and medical records software	Jul-08		0.00	%		500,000	(I)		17,000		-			0.00	%
Other (5)(6)(7)	Various	May-09		0.00	%		3,000	(C)		300		-			0.00	%
	Total Investments in Non-Affiliates			70.59	%					475,228		398,707			-47.69	%
	Total Investments			100.00	%				$	1,948,780	$	564,892			-67.57	%
	Cash and other assets, less liabilities											(1,400,883	)		167.56	%
	Net liabilities at April 30, 2011										$	(835,991	)		100.00	%

Notes to Schedule of Investments

(1)

Investments are valued using the (M) Market Approach, (I) Income Approach, which includes the Black-Scholes Method, or (C) Cost.

(2)

Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the voting securities.

(3)

Non-affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns less than 5% of the voting securities.

(4)

Unrestricted securities - liquid securities.

(5)

Restricted securities - illiquid securities; total illiquid securities of $398,707.

(6)

Represents a non-income producing security. Equity investments that have not paid dividends within the last 12 months are considered to be non-income producing.

(7)

These investments are development stage companies. A development stage company is defined as a company that is devoting substantially all of its efforts to establishing a new business, and either it has not yet commenced its planned principal operations, or it has commenced such operations but has not realized significant revenue from them.

(8)

This represents a promissory note from Innovation Industries. Terms of the promissory note include a profit sharing on net profits. The promissory note is recorded at cost.

See accompanying unaudited notes to these unaudited financial statements.

F-10

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History and Nature of Business and Going Concern

During the period covered by these financial statements, Universal Capital Management, Inc. (the “Company”, “we”, “us”, “our”) was a business development company (“BDC”). During this period, the Company was a closed-end, non-diversified management investment company that has elected to be treated as a BDC under the Investment Company Act of 1940. We assisted early stage development companies in all aspects of the planning process from inception to entering the public marketplace. This included assisting with the preparation of financial statements, capitalization tables, valuations, business plans and coordinating public/investor relations efforts. Our niche during this period was to assist young companies preparing themselves for introduction to a diversified group of accredited investors in order to assist them with obtaining private debt and/or equity financing. Since we had differing clients in varied industries, our overall portfolio was extremely diversified, which we believed enabled us to offer investors who invested in us a potentially higher return with less risk. For our management services we received a block of common stock or warrants to purchase common stock which could result in a financial windfall for us and our shareholders. The Company refers to companies in which it invests as “portfolio companies.” See Subsequent Events Note 13.

The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern. For the six months ended October 31, 2011, the Company had a net increase in net liabilities from operations of $237,824 and as of October 31, 2011, has net liabilities of $1,073,815. In view of these matters, recoverability of any asset amounts shown in the accompanying unaudited financial statements is dependent upon the Company’s ability to achieve a level of profitability. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Since inception, the Company has financed its activities from the sale of equity securities. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities, until such time that funds provided by operations, if ever, are sufficient to fund working capital requirements. The unaudited financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

Basis of Presentation

The accompanying unaudited interim period financial statements of Universal Capital Management, Inc. (the “Company”) are unaudited pursuant to certain rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results of the periods indicated. Such results, however, are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Amended Annual Report on Form 10-K/A for the fiscal year ended April 30, 2011, as filed with the Securities and Exchange Commission. The interim operating results for the six months ending October 31, 2011 are not necessarily indicative of operating results expected for the full year.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments

Investments in securities of unaffiliated issuers represent holdings of less than 5% of the issuer's voting common stock. Investments in and advances to affiliates are presented as (i) majority-owned, if holdings, directly or indirectly, represent over 50% of the issuer's voting common stock, (ii) controlled companies if the holdings, directly or indirectly, represent over 25% and up to 50% of the issuer's voting common stock and (iii) other affiliates if the holdings, directly or indirectly, represent 5% to 25% of the issuer's voting common stock. Investments - other than securities represent all investments other than in securities of the issuer.

Security Valuations

Investments in securities or other than securities of privately held entities are initially recorded at their original cost as of the date the Company obtained an enforceable right to demand the securities or other investment purchased and incurred an enforceable obligation to pay the investment price.

For financial statement purposes, investments are recorded at their fair value. If at our reporting date, readily determinable fair values do not exist for our investments, such as restricted securities and other securities (small, privately-held companies), the fair value of these investments is determined in good faith by the Company's Board of Directors pursuant to a valuation policy and consistent valuation process. Due to the inherent uncertainty of these valuations, the estimates may differ significantly from the values that would have been used had a ready market for the investments existed and the differences may be material. Our valuation methodology includes the examination of among other things, the underlying portfolio company performance, financial condition and market changing events that impact valuation.

F-11

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments in securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation; other securities traded in the over-the-counter market (such as OTC BB, Pink Sheets, etc.) and listed securities for which no sale was reported on that date are stated at the last quoted bid price.

Investment securities are exposed to various risks, such as overall market volatility. Due to the level of risk associated with the securities of certain portfolio companies, it is likely that changes in their values will occur in the near term and that such changes could materially affect the amounts reported in the statement of assets and liabilities at future dates.

Realized gains (losses) from the sale of investments and unrealized gains (losses) from the valuation of investments are reflected in operations during the period incurred.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ from the estimates.

Cash Equivalents

For the purposes of the statement of cash flows, the Company considers all investment instruments purchased with maturity of three months or less to be cash and cash equivalents.

Concentration of Credit Risk

Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash. At October 31, 2011 the Company did not have deposits with a financial institution that exceeded the FDIC deposit insurance coverage.

Notes Receivable

Notes receivable consist of monies loaned to its portfolio companies evidenced by a note specifying a specific term, and interest rate and are reported at fair value. Notes receivable are presented as due from affiliated and non-affiliated issuers. Notes receivables from unaffiliated issuers represent notes from companies where we hold less than 5% of the issuer's voting common stock. Notes receivables from affiliated issuers represent notes from companies where we hold 5% or more of the issuer’s voting common stock. The Company provides an allowance for losses on notes receivable based on a review of the current status of existing receivables and management’s evaluation of periodic aging of accounts.

The Company charges off notes receivable against the allowance for losses when an account is deemed to be uncollectible. The provision for doubtful accounts was approximately $30,014 as of October 31, 2011 and April 30, 2011, respectively.

Accounts Receivable

Accounts receivable consist of fees for services provided by the Company and are reported at fair value. Accounts receivable are presented as due from affiliated and non-affiliated issuers. Accounts receivable from unaffiliated issuers represent receivables from companies where we hold less than 5% of the issuer's voting common stock. Accounts receivable from affiliated issuers represent receivables from companies where we hold 5% or more of the issuer’s voting common stock. The Company provides an allowance for losses on trade receivables based on a review of the current status of existing receivables and management’s evaluation of periodic aging of accounts. The Company charges off accounts receivable against the allowance for losses when an account is deemed to be uncollectible. It is not the Company’s policy to accrue interest on past due receivables.

Due from Affiliates and Non-Affiliates

Due from affiliates and non-affiliates represent fees that the Company has paid on behalf of a portfolio company and is reported at fair value. Due from non-affiliated issuers represent due from companies where we hold less than 5% of the issuer's voting common stock. Due from affiliated issuers represent due from companies where we hold 5% or more of the issuer’s voting common stock. The provision for doubtful receivables was zero and $301,622 for the six months ended October 31, 2011 and 2010, respectively.

F-12

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. For financial accounting purposes, depreciation is generally computed by the straight-line method over the following useful lives:

Furniture and fixtures	5 to 7 years
Computer and office equipment	3 to 7 years

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, receivables, accounts payable and accrued expenses. The carrying values of cash, receivables, accounts payable and accrued expenses approximate fair value because of their short maturities.

The carrying value of the notes payable approximates fair value since the interest rate associated with the debt approximates the current market interest rates.

Revenue Recognition

Management Services

The Company recognizes management services revenue for equity investments received as payment in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 505-50-05, Accounting by a Grantee for an Equity Instrument to be Received in Conjunction with Providing Goods or Services. The Company enters into a management service agreement with a portfolio company to provide services defined in a contract for equity instruments in the form of the portfolio company’s common stock or warrants to purchase common stock. The fair value of the common stock is the portfolio company’s current fair market value and the fair value of the warrant is determined using the Black-Scholes method of valuation. The fair value of the equity instruments is also the Company’s cost basis in the portfolio company’s securities and the income that is recognized for management services. The Company recognizes management services revenue for which payment is to be received in cash as services are provided and in accordance with the revenue recognition criteria of the Securities and Exchange Commission. ASC 505 states if persuasive evidence of an arrangement exists, if services have been rendered, the price is fixed or determinable and collectability is reasonably assured, revenue is amortized and recognized evenly over the life of the contract unless otherwise stated in the contract.

Accounting Services

The Company provides accounting and other administrative services to its portfolio companies. Upon entering into a contact with the portfolio company, the Company provides services as defined in the contract and revenue is recognized as incurred or as otherwise stated in the contract based on similar criteria as for management services discussed above.

Interest Income

The Company loans monies to its portfolio companies from time to time. These loans, which are evidenced by a note, are subject to interest accrued on a monthly basis. This interest income is recognized when accrued.

Income Taxes

Deferred tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Deferred income taxes arise principally from the recognition of unrealized gains or losses from appreciation or depreciation in investment value for financial statements purposes, while for income tax purposes, gains or losses are only recognized when realized (disposition). When unrealized gains and losses result in a net unrealized loss, provision is made for a deferred tax asset. When unrealized gains and losses result in a net unrealized gain, provision is made for a deferred tax liability. 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 to refundable for the period plus or minus the change during the period in deferred tax assets or liabilities.

Net Realized Gains or Losses and Net Changes in Unrealized Appreciation or Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the original cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized. The original cost basis of the securities we receive in connection with our management services is equal to the amount of revenue we recognize upon receipt of such securities. Net realized gains or losses are recognized as other income on the Company’s statement of operations for the period.

F-13

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net change in unrealized appreciation or depreciation of investments reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. Net change in unrealized appreciation or depreciation are recognized as other income on the Company’s statement of operations for the period.

Recoverability of Long Lived Assets

The Company follows ASC-360-10-20, Property, Plant and Equipment – Overall. This standard states that long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount over the estimated fair market value.

Reclassifications

Certain reclassifications were made to the October 31, 2010 financial statements in order to conform to the October 31, 2011 financial statement presentation.

Recently Issued Pronouncements

The Company follows ASC 805, Business Combinations. This standard establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. It also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement is effective for the Company beginning May 1, 2009 and will change the accounting for business combinations on a prospective basis.

The Company follows ASC 820-10, Fair Value Measurements and Disclosure, that was adopted on May 1, 2008. This position provides additional guidance for fair value measures under ASC 820-10 in determining if the market for an assets or liability is inactive and, accordingly, if quoted market prices may not be indicative of fair value. In January 2010, there was an amendment to ASC 820-10 which the Company adopted on February 1, 2010. The adoption of this amendment did not have a material impact on the Company’s financial statements.

ASC 825-10-65, Interim Disclosures About Fair Value of Financial Instruments, extends the existing disclosure requirements related to the fair value of financial instruments, which were previously only required in annual financial statements, to interim periods. Given that ASC 825-10-65 provides for additional disclosures, its adoption did not have any impact on the Company’s financial statements. The disclosure requirements under ASC 825-10-65 are included in Note 3 to the financial statements.

ASC 855, Subsequent Events, sets forth principles and requirements for subsequent events, specifically (1) the period during which management should evaluate events or transactions that may occur for potential recognition and disclosure, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, and (3) the disclosures that an entity should make about events and transactions occurring after the balance sheet date. ASC 855 was effective for interim reporting periods ending after June 15, 2009. This standard was amended in February 2010, Amendments to Certain Recognition and Disclosure Requirements. The Company has adopted ASC 855 and its amendment, and this adoption did not have a material impact on its financial statements.

In June 2009, the FASB issued ASC 105-10-65, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB No. 162, which will become the source of authoritative U.S. GAAP recognized by the FASB to be applied to non-governmental entities. On its effective date, ASC 105-10-65 will supersede all then-existing, non-SEC accounting and reporting standards. ASC 105-10-65 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company has adopted ASC 105-10-65, and this adoption did not have a material impact on its financial statements.

F-14

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 2 – BUSINESS RISKS AND UNCERTAINTIES

A substantial portion of our assets are in privately held companies whose securities are inherently illiquid. These privately held companies tend to lack management depth, to have limited or no history of operations and to not have attained profitability. Because of the speculative nature and the lack of a public market for these investments, there is greater risk of loss than is the case with traditional investment securities.

Because there is typically no public market for our interest in these small privately held companies, the valuation of the equity in that portion of our portfolio is determined in good faith by our Valuation Committee, comprised of all the members of the Board of Directors, in accordance with our Valuation Procedures and is subject to significant estimates and judgments. In the absence of a readily ascertainable market value, the determined value of our portfolio equity interest may differ significantly from the values that would be placed on the portfolio if a ready market for the equity interests existed. Any changes in valuation are recorded in our Statement of Operations as “Unrealized appreciation (depreciation) on investments.” Changes in valuation of any of our investments in privately held companies from one period to another may be volatile.

NOTE 3 – INVESTMENTS

As described in Note 1, the Company partially adopted ASC 820-10 on May 1, 2008. ASC 820-10, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1

Observable inputs such as quoted prices in active markets;

Level 2

Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

As described in Note 1, an amendment to ASC 820-10 was issued in January 2010. This amendment is effective for interim reporting periods beginning after December 15, 2009. The Company adopted this amendment on February 1, 2010 and it did not have a material affect on its financial statements.

At October 31, 2011, our financial assets were categorized as follows in the fair value hierarchy for ASC 820-10:

			Fair Value Measurement at Reporting Date Using:
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
	Fair Value		Identical Assets		Inputs		Inputs
	October 31, 2011		(Level 1)		(Level 2)		(Level 3)
Investments
Affiliate investments	$	33,967	$	33,967	$	-	$	-
Non-affiliate investments		207,345		61,110		-		146,235
Total Investments in securities	$	241,312	$	95,077	$	-	$	146,235

F-15

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 3 – INVESTMENTS (CONTINUED)

The following chart shows the components of change in the financial assets categorized as Level 3, for the three months ending October 31, 2011:

	Fair Value Measurement Using
	Significant Unobservable Inputs
	(Level 3)
Beginning Balance, July 31, 2011	$	258,422
Transfers into Level 3		12,755		(1)
Total unrealized gains/(losses) included in change in net assets		(124,942	)
Ending Balance, October 31, 2011	$	146,235
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.	$	(124,942	)

———————

(1)

Transfer in for New Bastion Development, Inc.

The following chart shows the components of change in the financial assets categorized as Level 3, for the six months ending October 31, 2011:

	Fair Value Measurement Using
	Significant Unobservable Inputs
	(Level 3)
Beginning Balance, April 30, 2011	$	309,000
Transfers out of Level 3		-
Transfers into Level 3		13,177		(1)
Total unrealized losses included in change in net assets		(175,942	)
Ending Balance, October 31, 2011	$	146,235
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.	$	(175,942	)

———————

(1)

Transfer in for New Bastion Development, Inc.

F-16

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 4 – NOTES RECEIVABLE

Notes receivable consists of the following:

	October 31, 2011			April 30, 2011
Notes Receivable - affiliated companies
SIVOO Holdings, Inc. ("SIVOO") - Principal of $25,000.
This note bears interest at 8% per year beginning on May 1, 2007. This note is payable upon demand.	$	30,014		$	30,014
Allowance for bad debt		(30,014	)		(30,014	)
Notes Receivable- affiliated companies	$	-		$	-

NOTE 5 – DUE FROM AFFILIATED COMPANIES

During the six months ended October 31, 2010, the Company determined that all due from non-affiliated and affiliated companies were probably uncollectible and as a result, recorded a direct write off as a bad debt expense of $301,622 in the accompanying unaudited financial statements and wrote off the previous allowance against a $3,500 receivable.

NOTE 6 – DEFERRED REVENUE AND MANAGEMENT SERVICE REVENUE

Deferred revenue represents unearned management fee income which is amortized and recognized evenly over the life of the contract unless otherwise stated in the contract. In accordance with ASC Subtopic 505-50, since the shares received by the Company are non-refundable, the value of the contract is determined by the number of shares the Company receives at the closing market price on the day of the contract (commitment date). Warrants are valued using the Black-Scholes method. As of October 31, 2011 and April 30, 2011, the Company had no deferred revenue.

Management service revenue recognized consists of:

	For the Six Months Ending
	October 31,
	2011		2010
Affiliates
PR Specialists, Inc./Mediavix, Inc. (“PR”)
Received 2,500,000 shares of PR common stock for payment of services per a one year contract dated December 2009, valued at $2,500, fair value and amortized over the life of the contract.	$	-	$	1,000
Total Affiliates	$	-	$	1,000
Total Management Services Revenue	$	-	$	1,000

F-17

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 7 – NOTES PAYABLE

Notes payable consists of the following:

	October 31, 2011		April 30, 2011
Notes payable
Notes payable, D&O Insurance Premium. Interest accrued at 9.2% for a period of ten months. Payable in ten monthly installments of $2,414 per month.	$	19,811	$	24,610
Notes payable	$	19,811	$	24,610
Notes payable, related party
Notes payable, related party. Interest accrued at 8.0%beginning on November 1, 2008. Principal and interest payable on demand. (NOTE 11)	$	293,068	$	332,068
Notes payable, related party. Interest accrued at 8.0%beginning on October 19, 2009. Principal and interest payable on demand. (NOTE 11)		50,000		50,000
Promissory notes payable, related party. Interest accrued at 5.0% per annum. Principal and interest due September 30, 2010. (NOTE 11)		10,802		14,802
Notes payable, related party	$	353,870	$	396,870

NOTE 8 – ADVANCES FROM SHAREHOLDERS

Amount represents advances from shareholders to cover operating expenses. There are no stated interest rate or repayment terms. As of October 31, 2011 and April 30, 2011, these advances totaled $19,000.

NOTE 9 – STOCK BASED COMPENSATION

In May 8, 2006, our Company’s stockholders approved the 2006 Equity Incentive Plan for the benefit of our directors, officers, employees and consultants, and which reserved 2,000,000 shares of our common stock for such persons pursuant to that plan. As of October 31, 2010, 1,000,000 are available for issuance.

The Plan has a term of 10 years and no Option shall be exercisable more than 10 years after the date of grant, or such lesser period of time as is set forth in the Award Agreement. If for any reason other than death or disability, an Optionee of the Plan who at time of the grant of an Option under the Plan was an Employee ceases to be an Employee (such event being called a “Termination”), Options held at the date of Termination (to the extent then exercisable) may be exercised in whole or in part at any time within three months of the date of such Termination; provided, however, that if such exercise of the Option would result in liability for the Optionee under Section 16(b) of the Securities Exchange Act of 1934, then such three-month period automatically shall be extended until the tenth day following the last date upon which Optionee has any liability under Section 16(b) (but in no event after the expiration date of such Option).

During the six months ending October 31, 2011 and 2010, the Company’s net income was approximately zero and $2,544 lower as a result of stock-based compensation expense. As of October 31, 2011, there was no unrecognized compensation expense related to non-vested market-based share awards.

F-18

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 9 – STOCK BASED COMPENSATION (CONTINUED)

The following tables summarize all stock option activity of the Company since April 30, 2011:

	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding, April 30, 2011		600,000	$	0.20		7.82	$	130,000
No activity
Outstanding, October 31, 2011		600,000	$	0.20		7.32	$	-
Exercisable, October 31, 2011		600,000	$	0.20		7.32	$	130,000

NOTE 10 – CAPITAL SHARE TRANSACTIONS

During the six months ending October 31, 2011 and 2010, the Company recognized zero and $2,544 of share-based compensation expense.

NOTE 11 – RELATED PARTY TRANSACTIONS

Notes payable, related parties were $353,870 and $396,870 at October 31, 2011 and April 30, 2011, respectively (See Note 8 – Advances from Shareholders).

NOTE 12 – CONTINGENCIES

McCrae Associates, LLC Lawsuit

In July 2006, McCrae Associates, LLC (“McCrae) filed a lawsuit against the Company and its directors and officers in the United States District Court for the District of Connecticut. The lawsuit alleged that McCrae is the owner of 300,000 shares of the Company’s common stock and that the Company did not deliver to and is wrongfully withholding such shares from McCrae. The lawsuit alleged that the directors and officers conspired with the Company to deprive McCrae of such shares, and that the directors and officers owed a fiduciary duty to McCrae that they violated by refusing to tender the shares to McCrae upon demand. The lawsuit also alleged that all of the defendants violated the Connecticut Unfair Trade Practices Act. McCrae sought delivery of a stock certificate covering the shares, unspecified monetary damages, including treble damages, attorney fees and punitive damages.

The Company vigorously defended the action and filed a counter-claim against McCrae and a third-party claim against Stephen Funk seeking to rescind the issuance of shares to McCrae and to recover monetary damages on fraud and breach of contract theories. The Company also filed similar claims in the Chancery Court in Wilmington, Delaware seeking to rescind the issuance of 200,000 shares of common stock to Liberator, LLC, and a company it believes is controlled by Stephen Funk. The parties agreed to the voluntary dismissal of the action in Delaware with the express understanding that Liberator would be bound by the decision of the Court in Connecticut with respect to the McCrae shares. Efforts by the Company and McCrae to settle the litigation were unsuccessful and the parties commenced discovery.

In February 2011, the Company agreed to a settlement regarding the McCrae lawsuit. In exchange for settlement of the lawsuit, the Company exchanged a warrant to purchase 42,500 shares of Lightwave Logic, Inc. common stock at an exercise price of $0.25 per share, expiring February 2012 for 500,000 shares of the Company’s common stock that McCrae holds. The legal documents were executed and the transaction was complete in March 2011. The Company has determined that the settlement should be accounted for at fair value of instruments received and instruments paid with a resulting gain or loss on settlement. As a result, the Company recorded a $65,000 gain on settlement as of April 30, 2011.

F-19

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 12 – CONTINGENCIES (CONTINUED)

Stradley Ronon Stevens & Young, LLP

On May 9, 2009 the law firm of Stradley, Ronon Stevens & Young, LLP filed a lawsuit against the Company in the U.S. District Court for the District of Delaware for failure of the Company to pay legal fees owed in the amount of $166,129. On April 2, 2009, in order to avoid the cost of litigation, the Company agreed to a Consent of Judgment against it in the amount of $166,129 and the Company has recorded this amount as accounts payable as of October 31, 2011.

MICCO Lawsuit

In July 2010, the Company filed a lawsuit against MICCO World, Inc. (formerly known as Constellation Group, Inc.) and its officers, Phil Lundquist, Steven Brisker and Tom Ridenour (collectively known as the “Defendants”). This lawsuit was filed in the Superior Court of Delaware in New Castle County. This lawsuit was filed in response to various activities by the Defendants that include misleading investors, making disparaging remarks about the Company, misrepresentation of capital structure, and misappropriation of funds.

The Company was seeking judgment in the amount of $611,000 plus costs, legal fees, pre- and post-judgment interest, plus other amounts and relief to be determined. In March 2011, MICCO filed a motion to dismiss and in June 2011, the courts denied this motion to dismiss. See Note 13 – Subsequent Events.

Unpaid Taxes and Penalties

At October 31, 2011, the Company owed the State of Delaware approximately $128,000 for unpaid state income taxes from the tax year ended April 30, 2007. The unpaid state income taxes are included as current state income taxes payable in accompanying unaudited financial statements. Additionally, the Company owes the IRS and the State of Delaware for penalties and interest from the tax year ending April 30, 2007 of approximately $181,610. The interest and penalties are included as accrued expenses in the accompanying unaudited financial statements at October 31, 2011. The Company has agreements with both agencies to pay a minimum per month to avoid any collections or additional liens.

NOTE 13 – SUBSEQUENT EVENTS

On November 1, 2011, the Company filed Form N-54C notification of withdrawal of election to be regulated as a Business Development Company (“BDC”). The withdrawal was effective upon receipt of the Form N-54C notification by the SEC, and our Company is no longer subject to regulation as a BDC.

We have no intention to invest in securities or meet the definition of an investment company, as described in Section 3 of the 1940 Act. Our Company will be managed so it will not be deemed to be an investment company as defined in the 1940 Act. Our company will maintain its registration under the 1934 Act and we will continue to be obligated to file regular reports as required thereunder.

On March 16, 2012, pursuant to a private offering, the Company issued 7,375,000 shares of its restricted common stock, in exchange for officer and director services performed by the registrant’s current and former directors and officers, and professional services provided by the registrant’s service providers. The shares were valued at the quoted trade price on the grant date of $0.27 per share for a total expense of $1,991,250.

On June 25, 2012, in relation to the MICCO World, Inc. lawsuit (See Note 12 – Contingencies), the Company dismissed the suit against the defendants with prejudice.

On August 12, 2012, the Company privately issued 1,500,000 shares of its restricted common stock, in exchange for services performed by two consultants for the Company. The shares were valued at the quoted trade price of $0.14 per share on the grant date resulting in an expense of $210,000.

On August 21, 2012, the Company privately issued 2,200,000 shares of its restricted common stock, in exchange for services performed by the Company’s current and former employees and professional service providers. The shares were valued at the quoted trade price of $0.07 per share on the grant date resulting in an expense of $154,000.

F-20

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 13 – SUBSEQUENT EVENTS (CONTINUED)

On August 22, 2012, the Company entered into a memorandum of understanding (“MOU”) with New Bastion Development, Inc., a Florida corporation (“New Bastion”) to document the business terms of a deal to enter into a joint development relationship for the construction of a nitrogen fertilizer plant capable of producing approximately 4,000 MT of granulated urea on a daily basis. This project will be completed by New Bastion Regeneration, Inc. (“NBR”), which is a New Bastion subsidiary company that was formed by New Bastion for the sole purpose of completing the project. Pursuant to the terms of the MOU: (i) the Company agreed to purchase from New Bastion 100,000 issued and outstanding shares of NBR held by New Bastion, representing approximately 12.7% of the outstanding shares of NBR in exchange for 5,000,000 newly issued restricted shares of Universal issued upon the execution of the MOU and $500,000 pursuant to the following schedule: $100,000 within 15 days of execution of the memorandum of understanding; and $400,000 within 60 days of execution of the Agreement.

The Company also received an option to purchase up to 240,000 additional shares of NBR currently owned by New Bastion, which will represent a total ownership including the previous 12.7% ownership purchased of approximately 43% of NBR owned by the Company for an additional $4.8 million cash and 15,000,000 of common stock of the Company under terms to be mutually negotiated, assuming no additional shares of NBR are issued. These shares of common stock were issued and are being held by the Company in accordance with the option discussed previously to acquire additional ownership in NBR for an additional $4.8 million. As a result, the 15,000,000 shares of common stock are contingently returnable and not considered outstanding as of July 8, 2013.

The 5,000,000 shares specified in the MOU were valued at $0.07 per share (closing bid price of Universal on August 21, 2012) or a total of $350,000. Additionally, the $100,000 of cash consideration was not paid within the 15 day period specified, nor was the $400,000 paid within the 60 day requirement.

On October 1, 2012, New Bastion provided a revised framework to Universal within the existing MOU. The revised framework included: $500,000 of cash consideration to be paid pursuant to the following schedule: a) $25,000 on or before October 31, 2012; b) $75,000 on or before December 15, 2012; and c) $400,000 on or before January 15, 2013. The revised framework provided that the dates for the cash consideration may be adjusted by mutual agreement and that New Bastion, at its sole discretion, may elect to accept additional shares of Universal common stock for all or part of the final $400,000 payment.

As of January 31, 2013, the Company fully paid the first scheduled payment of $25,000, the second scheduled payment of $75,000 and $10,000 of third scheduled payment of $400,000 to New Bastion. Additionally, 1) in February 2013, the Company paid New Bastion $140,000, net of $3,500 of expenses paid, 2) in March 2013, the Company paid New Bastion $15,000, 3) in April 2013, the Company paid New Bastion $20,000, and 4) in May 2013, the Company paid New Bastion $20,000, net of $3,500 of expenses paid, all of these in accordance with the August 22, 2012 MOU. As a result of the payments, the original $500,000 balance owed to New Bastion has been reduced to $195,000 as of July 8, 2013.

On July 24, 2013, the Company and New Bastion agreed to renegotiate and modify the revised framework and finalize the business transaction as follows: 1) no further cash consideration will be paid by the Company to New Bastion, 2) the $305,000 of cash consideration previously paid by the Company will be exchanged for 50,000 shares of New Bastion common stock, representing approximately 5.62% of the outstanding shares of NBR common stock and 3) the previously 5,000,000 shares and the 15,000,000 contingently returnable shares to New Bastion will be cancelled and returned to the Company.

Effective September 10, 2012, the Company commenced a private offering of up to 7,500,000 shares of common stock contained within seventy-five (75) Units. Each Unit consists of 100,000 shares of common stock at an offering price of $10,000 per Unit or $0.10 per share. The total proposed proceeds from the private offering to the Company are $750,000. From November 19, 2012 through July 8, 2013, the Company received subscriptions of 6,200,000 shares of common stock for $620,000 of gross proceeds. the securities in the private offering were offered and sold only to (i) accredited Investors and (ii) persons who are not “U.S. Persons,” The securities offered and sold are intended to be exempt from securities law registration pursuant to the Securities Act of 1933, Regulation D, Regulation S and other regulatory exemptions, including the state securities laws and regulations where the securities are being offered.

F-21

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 14 – RESTATEMENT

The Company’s Financial Statements included in a Quarterly Report on Form 10-Q for the period ended October 31, 2011 (the “Original Report”) with the Securities and Exchange Commission (“SEC”) on December 20, 2011 were not reviewed by the Company’s Independent Registered Public Accounting Firm and a note to that effect was inserted at the beginning of the Original Report. This Amendment No. 1 to Annual Report on Form 10-Q/A (the “Amended Report”) deletes the note inserted at the beginning of the Original Report stating that the Financial Statements contained in the Original Report were not reviewed by the Company’s Independent Registered Public Accounting Firm.

The note inserted at the beginning of the Original Report stating that the Financial Statements contained in the Original Report were not reviewed by the Company’s independent registered public accounting firm is deleted. There were several adjustments to the Company’s October 31, 2011 Financial Statements included in the Original Report, primarily related to investments valuation, accruals and income taxes. The following tables provide the change from the Original Report as compared to the Amended Report for the statement of assets and liabilities, statement of operations and statement of cash flows.

F-22

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 14 – RESTATEMENT (CONTINUED)

Statement of Assets and Liabilities

	At October 31, 2011
	As Reported			Adjustments			As Restated
ASSETS
Investments, at fair value
Non-affiliate investments (cost: $475,267 and $475,228)	$	476,345		$	(269,000	)	$	207,345
Affiliate investments (cost: $1,234,952 and $1,473,552)		83,692			(49,725	)		33,967
Total Investments		560,037			(318,725	)		241,312
Cash and cash equivalents		15,383			-			15,383
Receivables:
Accounts receivable		49,296			-			49,296
Due from non-affiliates		49,221			(49,221	)		-
Due from affiliates (net of allowance of $3,500)		259,787			(259,787	)		-
Total Receivables		358,304			(309,008	)		49,296
Prepaid expenses		24,687			-			24,687
Property and equipment, net		82			-			82
Current income tax asset		65,000			(65,000	)		-
Deferred income tax		1,555,000			(1,555,000	)		-
Notes receivable – related party, net		-			-			-
Rent deposit		1,100			-			1,100
TOTAL ASSETS	$	2,579,593		$	(2,247,733	)	$	331,860
LIABILITIES
Accounts payable	$	366,378		$	12.264		$	378,642
Accounts payable, related parties		7,213			-			7,213
Accrued expenses		316,606			(134,996	)		181,610
Current state income taxes payable		-			128,000			128,000
Advances from shareholders		19,000			-			19,000
Notes payable		19,811			-			19,811
Notes payable, related parties		353,870			-			353,870
Accrued payroll and payroll taxes		-			139,906			139,906
Accrued interest		92,050			-			92,050
Accrued interest, related parties		85,572			1			85,573
TOTAL LIABILITIES	$	1,260,500		$	145,175		$	1,405,675
CONTINGENCIES (NOTE 12)
NET ASSETS (LIABILITIES)	$	1,319,093		$	(2,392,908	)	$	(1,073,815	)
COMPOSITION OF NET ASSETS (LIABILITIES)
Common stock, $0.001 par value, 60,000,000 shares authorized; 5,912,426 shares issued and outstanding at October 31, 2011 and April 30, 2011	$	5,912		$	-		$	5,912
Additional paid-in capital		6,194,586			(37,251	)		6,157,335
Accumulated income (loss):
Accumulated net operating loss		2,060,850			(2,073,925	)		(13,075	)
Dividends paid		(448,596	)		-			(448,596	)
Net realized loss on investments		(5,906,514	)		(301,033	)		(6,207,547	)
Net realized gain on dividend of portfolio stock		343,924			-			343,924
Net unrealized depreciation of investments		(931,069	)		19,301			(911,768	)
NET ASSETS (LIABILITIES)	$	1,319,093		$	(2,392,907	)	$	(1,073,815	)
Equivalent per share value based on 5,912,426 shares of capital stock outstanding as of October 31, 2011 and April 30, 2011	$	0.22		$	(0.40	)	$	(0.18	)

F-23

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 14 – RESTATEMENT (CONTINUED)

Statement of Operations

	Three Months Ended October 31, 2011
	As Reported			Adjustments			As Restated
Revenue
Management services
Affiliates	$	45,804		$	49,348		$	95,152
Total Management Services		45,804			49,348			95,152
Other Income
Affiliates		49,348			(49,348	)		-
Total Revenue		95,152			-			95,152
Operating Expenses
Salaries and wages		10,233			-			10,233
Professional fees		8,699			-			8,699
Insurance		13,180			-			13,180
Interest expense		4,804			-			4,804
General and administrative		11,983			(79	)		11,904
Depreciation		125			-			125
Total Operating Expenses		49,024			(79	)		48,945
Operating Income before income taxes		46,128			79			46,207
Income tax benefit (provision)		(25,000	)		25,000			-
Miscellaneous income		-			300			300
Operating Income		21,128			25,378			46,507
Net realized and unrealized gains (losses)
Loss on disposal of portfolio stock		(195,000	)		-			(195,000	)
Unrealized appreciation (depreciation) on investments		(88,095	)		80,301			(7,795	)
Net Increase (Decrease) in Net Assets (Liabilities) Resulting from Operations		(261,967	)		105,679			(156,288	)
Net Increase (Decrease) in Net Assets (Liabilities) from Operations Per Share:
Basic	$	(0.04	)	$	0.01		$	(0.03	)
Diluted	$	(0.04	)	$	0.01		$	(0.03	)
Weighted average shares:
Basic		5,912,426			-			5,912,426
Diluted		5,912,426			-			5,912,426

F-24

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 14 – RESTATEMENT (CONTINUED)

Statement of Operations

	Six Months Ended October 31, 2011
	As Reported			Adjustments			As Restated
Revenue
Management services
Affiliates	$	67,504		$	49,348		$	116,852
Total Management Services		67,504			49,348			116,852
Other Income
Affiliates		49,348			(49,348	)		-
Total Revenue		116,852			-			116,852
Operating Expenses
Salaries and wages		18,161			-			18,161
Professional fees		12,626			-			12,626
Insurance		33,058			-			33,058
Interest expense		14,193			-			14,193
General and administrative		30,871			44			30,915
Depreciation		600			(1	)		599
Total Operating Expenses		109,509			43			109,552
Operating Income (Loss) before income taxes		7,343			(43	)		7,300
Income tax benefit (provision)		(114,000	)		114,000			-
Miscellaneous income		-			1,420			1,420
Operating Income (Loss)		(106,657	)		115,377			8,720
Net realized and unrealized gains (losses)
Loss on disposal of portfolio stock		(380,339	)		-			(380,339	)
Unrealized appreciation (depreciation) on investments		36,495			97,300			133,795
Net Increase (Decrease) in Net Assets (Liabilities) Resulting from Operations		(450,501	)		212,677			(237,824	)
Net Increase (Decrease) in Net Assets (Liabilities) from Operations Per Share:
Basic	$	(0.08	)	$	0.04		$	(0.04	)
Diluted	$	(0.08	)	$	0.04		$	(0.04	)
Weighted average shares:
Basic		5,912,426			-			5,912,426
Diluted		5,912,426			-			5,912,426

F-25

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF OCTOBER 31, 2011

NOTE 14 – RESTATEMENT (CONTINUED)

Statement of Cash Flows

	Six Months Ended October 31, 2011
	As Reported			Adjustments			As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets (liabilities) resulting from operations	$	(450,501	)	$	212,677		$	(237,824	)
Adjustments to reconcile net decrease in net assets (liabilities) resulting from operations to net cash provided by operating activities:
Sale of investment securities		77,336			(300	)		77,036
Purchase of investment securities		-			-			-
Loss on sale of portfolio stock		380,339			-			380,339
Depreciation expense		599			-			599
Net unrealized (appreciation) depreciation on investments		(36,537	)		(97,258	)		(133,795	)
Deferred income taxes		119,000			(119,000	)		-
Current income taxes		(5,000	)		5,000			-
(Increase) decrease in assets:
Accounts receivable		(49,296	)		-			(49,296	)
Prepaid expenses		4,749			-			4,749
Increase (decrease) in liabilities:
Accounts payable		(272	)		-			(272	)
Accrued payroll and payroll taxes		-			(2,910	)		(2,910	)
Accrued expenses		(7,910	)		2,910			(5,000	)
Accrued interest, related parties		14,109			2			14,111
Net cash provided by operating activities		46,616			1,121			47,737
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt		(4,799	)		-			(4,799	)
Repayment of promissory note - related parties		(43,000	)		-			(43,000	)
Net cash used in financing activities		(47,799	)		-			(47,799	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		(1,183	)		1,121			(62	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		16,566			(1,121	)		15,445
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	15,383		$	-		$	15,383
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
CASH PAID FOR INCOME TAXES	$	5,000		$	-		$	5,000

F-26