UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-K /A

(X) ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31,
2012

OR

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

EXCHANGE ACT OF 1934

For the transition period from N/A
to N/A

Commission File Number: 333-123465



Universal Bioenergy, Inc.

(Name of registrant as specified in its
charter)



|Nevada                 |  | 20-1770378                     
|---------------------- |  | -------------------------------
|State of Incorporation |  | IRS Employer Identification No.



19800 Mac Arthur Blvd., Suite 300

Irvine, CA 92612

(Address of principal executive offices)



(949)-559-5017

(Issuer’s telephone number)



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

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

Common Stock, $0.001 par value per share

(Title of Class)

Common Stock, $.001 Par Value



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.£Yes£No



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.£Yes£No



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]



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 during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes [ ]  No [ X ]



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



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 large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):



|Large accelerated filer£
        Non-accelerated filer£ |  | Accelerated filer£
        Smaller
        Reporting company£ |  | 
|------------------------------------------------------- |  | ------------------------------------------------------------- |  | 





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



The aggregate market
value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2012, the last business day of the
registrant’s most recently completed second fiscal quarter was approximately $2,934,025



Solely for purposes of the foregoing calculation,
all of the registrant’s directors and officers as of December 31, 2012, are deemed to be affiliates. This determination of
affiliate status for this purpose does not reflect a determination that any persons are affiliates for any other purposes.



State the number of shares outstanding of each
of the issuer’s classes of equity securities, as of the latest practicable date: As at April 15, 2013, there were 2,459,071,693
shares of Common Stock, $0.001 par value per share issued and outstanding and 232,080 Series B preferred stock $.001 par value
per share outstanding.



(1)









Documents Incorporated By Reference -None





Explanatory
Note



We
are filing this amendment to modify certain disclosures in the descriptive text set forth in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations. There are no modifications to any financial disclosures.
In accordance with Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, currently dated certifications of our principal executive
officer and our principal financial officer are attached to this Form 10-K/A as Exhibits 31.1, 31.2, 32.1 and 32.2. Except for
the foregoing amended information, we have not updated the disclosures contained in the Form 10-K/A to reflect events that have
occurred subsequent to the filing date of the Original 10-K.  Accordingly, this Form 10-K/A should be read in conjunction
with the Original 10-K and our subsequent filings with the SEC.



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION



The following discussion and analysis presents
management’s perspective of our business, financial condition, and overall performance. This information is intended to provide
investors with an understanding of our past performance, current financial condition, and outlook for the future; and should be
read in conjunction with “Item 8: Financial Statements and Supplementary Data” of this report.



Included in this annual report are "forward-looking"
statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") as well as historical
information.



As used below, “we”, “us”,
“our”, “Universal”, “Universal Bioenergy”, “Company”, or “our company”,
refers to Universal Bioenergy, Inc. and all of its subsidiaries.



Management’s Discussion and Analysis
contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain
statements included in this Form 10-K, including, without limitation, statements related to anticipated cash flow sources and uses;
and words including, but not limited to, “anticipates”, “believes”, “plans”, “expects”,
“future”, and similar statements or expressions, identify forward looking statements. Any forward-looking statements
herein are subject to certain risks and uncertainties in the Company’s business, including, but not limited to, reliance
on key customers and competition in its markets, market demand, technological developments, maintenance of relationships with key
suppliers, difficulties of hiring or retaining key personnel, and any changes in current accounting rules, planned capital expenditures,
potential increases in prospective production costs, future cash flows and borrowings, pursuit of potential acquisition opportunities,
the possibility that the industry may be subject to future regulatory or legislative actions (including additional taxes, changes
in environmental regulation, and disclosure requirements under the Dodd-Frank Wall Street Reform and the Jobs Act of 2012 ), our
financial position, business strategy, and other plans, objectives, for future operations, difficulties of hiring or retaining
key personnel, and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company
adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines
of the SEC in terms of recognition of software licenses and recurring revenue. Management will elect additional changes to revenue
recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with
other similar markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth therein.



We claim the protection afforded by the safe
harbor for forward-looking statements provided by the PSLRA.



Forward-looking statements involve risks, uncertainties,
and other factors which may cause our actual results, performance, or achievements, to be materially different from those expressed
or implied by such forward-looking statements. Factors and risks that could affect our results and achievements, and cause them
to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk
Factors” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011, as well as other factors
that we are currently unable to identify or quantify; but that may exist in the future.



We based the forward-looking statements on
our current expectations, estimates and projections about ourselves and the industries in which we operate in general. We caution
you these statements are not guarantees of future performance as they involve assumptions that, while made in good faith, may prove
to be incorrect, and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements
on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially
from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors,
including the following:



A 	Fluctuations in
crude oil, natural gas, and natural gas liquids prices, refining, and marketing margins.

B 	Potential failures or delays
in achieving expected reserve or production levels from existing and future oil and gas development projects due to operating hazards,
drilling risks, and the inherent uncertainties in predicting oil and gas reserves, and oil and gas reservoir performance.

C 	Failure of new
products and services to achieve market acceptance.

D Unexpected technological
or commercial difficulties in manufacturing, refining, or transporting our products.

E Lack of, or disruptions in, adequate
and reliable transportation for our crude oil, natural gas, natural gas liquids, liquefied natural gas (LNG), and refined products.

F Inability to timely obtain or maintain
permits, including those necessary for construction projects; or to comply with government regulations; or make capital expenditures
required to maintain compliance.

G Failure to complete definitive
agreements and feasibility studies for, and to timely complete construction of, announced and future exploration and production,
LNG, and transportation projects.

H Potential disruption or interruption
of our operations due to accidents, extraordinary weather events, civil unrest, political events, or terrorism.

I International monetary
conditions and exchange controls.

J Substantial investment
or reduced demand for products as a result of existing or future environmental rules and regulations.

K Liability resulting from
litigation.

L General domestic and international
economic and political developments, including armed hostilities; expropriation of assets; changes in governmental policies relating
to crude oil, natural gas, natural gas liquids, or refined product pricing, regulation, or taxation; other political, economic
or diplomatic developments; and international monetary fluctuations.

M Changes in tax and other
laws, regulations (including alternative energy mandates), or royalty rules applicable to our business.

N Limited access to capital
or significantly higher cost of capital related to uncertainty in the domestic or international financial markets.

O Inability to obtain economical
financing for projects, construction, or modification of facilities, and general corporate purposes.



In addition, the foregoing factors may affect
generally our business, results of operations, and financial position. Forward-looking statements speak only as of the date the
statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.



(2)









Overview of Our Company



Universal Bioenergy Inc. is an independent
diversified energy company, headquartered in Irvine, California. Our common stock is presently listed on the OTC Markets Group
under the trading symbol “UBRG”. Universal Bioenergy Inc. was incorporated on August 13, 2004, in the State of Nevada,
under the name of Palomine Mining Inc. On October 24, 2007, the Company changed its name from Palomine Mining Inc. to Universal
Bioenergy Inc. to better reflect its new business plan and strategic direction.



Our primary business focus is the production,
marketing, and sales of natural gas, propane, coal, oil, and alternative energy. Through our subsidiary, NDR Energy Group, located
in Charlotte, North Carolina, we presently sell natural gas. Through NDR Energy Group we have contracts signed with 30 major utility
companies in the United States with strong Standard & Poor’s credit ratings. NDR Energy Group markets and distributes
natural gas and propane to 30 of the largest public utilities, electric power producers, and local gas distribution companies that
serve millions of commercial, industrial, and residential customers, throughout the country. Our customers include Southern California
Gas Company, Pacific Gas & Electric, CenterPoint Energy Resources, Baltimore Gas & Electric, Memphis Light Gas & Water,
Duke (Ohio & Kentucky), Michigan Consolidated, and National Grid. Our gas suppliers include EDF Trading, Pacific Summit Energy,
Chevron Texaco, Conoco Phillips, Chesapeake Energy Marketing, and Anadarko.



We are also engaged in the acquisition of oil
and gas fields, lease acquisitions, and development of newly discovered, or recently discovered oil and gas fields, re-entering
existing wells, and the transmission and marketing of the products to our customer base. We are continuing our growth through an
ongoing series of acquisitions.



Energy Market’s Impact on Universal’s
Operations and Revenues



Our primary revenues from this period are from
the sale of natural gas. Our revenues for the twelve months period ended December 31, 2012, decreased due to the following conditions
in the U.S. energy market:



U.S. Natural Gas Market



During 2012, natural gas traded at prices we
have not experienced for a decade. These low prices are the result of a significant imbalance between supply and demand in North
America. On the supply side, new technologies, particularly hydraulic fracturing and horizontal drilling, have enabled natural
gas producers to bring on line meaningful new supplies of natural gas around North America. On the demand side, the past winter
was one of the warmest on record, which reduced demand for natural gas. Consequently, North America has an unusually high amount
of gas in storage that will continue to oversupply the market.



According to the Energy Information Administration,
the unseasonably warm weather for the winter of December 2011, through March 2012, resulted in natural gas working inventories
that continued to set new record seasonal highs. EIA’s average 2012 Henry Hub natural gas spot price forecast was $3.17 per
million British thermal units (MMBtu); a decline of about $0.83 per MMBtu from the 2011 average spot price. EIA expected that Henry
Hub spot prices will average $3.96 per MMBtu in 2013.



For the same winter period, according to Bloomberg/Business
week, “The price of natural gas is at a 10-year low after a surprising jump in supplies. But the government says natural
gas inventories expanded more than expected following a recent production boom. Supplies are currently 59 percent above the five-year
average, and they're expected to keep growing over the next few months.”



Our revenue, profitability and cash flow substantially
depend upon the prices and demand for natural gas. The natural gas market is very volatile, and a drop in prices can significantly
affect our financial results and impede our growth. Changes in natural gas prices had a significant impact on our revenues and
on our cash flow for this reporting period. Prices for natural gas can fluctuate widely in response to relatively minor changes
in the supply of and demand for natural gas, market uncertainty and a variety of additional factors that are beyond our control,
such as:



a. weather conditions and fluctuating and seasonal
demand;

b. technological advances affecting energy
consumption;

c. the level of supply and consumer product
demand;

d. the impact of energy conservation efforts;

e. the overall economic environment; and

f. the price and availability of alternative
fuels.



In the past, the prices of natural gas has
been extremely volatile, and we expect this volatility to continue. For example, during the year ended December 31, 2012, the NYMEX
Henry Hub natural gas index price ranged from a high of $3.90 per MMBtu to a low of $1.91 per MMBtu, which is a decline of $1.99
per MMBtu or -51%. Between January 1, 2013 and February 25, 2013, the NYMEX Henry Hub natural gas index price ranged from a high
of $3.57 per MMBtu to a low of $3.11 per MMBtu, or a difference of $0.46 per MMBtu or 13%.



NDR Energy Group sold 13,148,883 MMBtus of
gas in 2010, and generated $52.48 million in revenues. Through NDR, we generated $71.74 million in revenues in 2011. In 2012 we
sold 16,572,329 MMBtus of gas and generated $50.51 million in revenues. However, due the unseasonably warm winter, our sales of
gas for the first quarter declined from 5,052,704 MMBtus in 2011, to 3,443,668 MMBtus in 2012, or by 1,609,016 MMBtus, or 32%.
However, in spite of the negative market conditions, we had significant increases in sales volumes of natural gas for the balance
of the year. Had we sold our gas in 2012 at the same average prices of $4.29 MMBtu as in 2011, then our revenues from natural gas
sales would have been approximately $71.01 million.



The United States energy market has experienced
a significant increase in in the quantity natural gas production related to new and increased drilling for deeper natural gas formations
and the implementation of new exploration and production techniques, including horizontal and multiple fracturing techniques. The
increase in the supply of natural gas has put a downward pressure on domestic natural gas prices.



However, there are some favorable trends. Utilities
around the country are switching from coal to natural gas at a meaningful rate. New petro-chemical plants are being built and other
industries are expanding in the U.S. Looking to 2013, increased demand should cause natural gas prices to stabilize or possibly
to increase moderately from 2012 levels. As a result of the low natural gas prices, the Company has been focusing more on sales
of coal in the international market, sales of petroleum, refined petroleum products, wholesale electric power and alternative energy.



We intend to use revenues from these energy
products to maintain a diversified product portfolio and explore other opportunities to maximize shareholder value, including monetization
of our existing assets or entering into new ventures or acquisitions.





(3)







U.S. Coal Market



Our results during 2012 were impacted substantially
by weak market conditions. Challenging coal markets significantly impacted our results in 2012. Global benchmark metallurgical
prices declined 50% since their peak in mid-2011, while U.S. thermal coal consumption declined to levels not seen since the mid-1990s.



Driving the weakness in the domestic demand
for thermal coal during 2012 was reduced coal-fired generation resulting from an unseasonably warm 2011/2012 winter coupled with
low natural gas prices, which resulted in the substitution of natural gas for coal by power generators. As a result, coal stockpiles
at generators remain at higher than normal levels, though levels declined during the second half of 2012. A rise in natural gas
prices relative to the last year should increase output at coal-fueled power plants.



According to the EIA, coal accounted for approximately
37% of U.S. electricity generation from January through November 2012. This is a decrease of approximately 5% from full-year 2011,
as increased competition between fuels and an unseasonably warm winter led to lower electricity demand and therefore lower consumption
of fossil fuels. The warm winter also pushed coal stockpiles higher at electric power plants. Inventories remained above the 5-year
average through November 2012. Coal consumption has improved month on month after last year's warm winter decreased overall electricity
generation requirements and impacted generation fuels, including coal and natural gas.



In response to these weak market conditions,
we, along with many other domestic producers, took steps to control costs in a reduced-volume environment. This led us to rationalize
our supply through periodic idling or temporary closure of the Whitesburg Friday Branch Mine, and production curtailments. We believe,
these efforts will help position us for expected market recovery in the metallurgical and thermal export markets.



Thermal coal exports somewhat offset the weakness
in domestic markets in 2012. Colder winter temperatures in major coal-burning regions of Asia, as well as coal's competitive advantage
versus other power generation fuels in Europe, should help support U.S. coal exports in 2013.



As a result of the weak domestic coal market,
the Company has been focusing more on sales of coal in the international market, metallurgical coal, sales of petroleum, refined
petroleum products, wholesale electric power and alternative energy.





Whitesburg Friday Branch Mine LLC Thermal
Coal Mining Operations



On February 20, 2012, the Company completed
the closing of the Whitesburg Friday Branch Mine transaction. Previously on October 17, 2011, our company and Whitesburg Friday
Branch Mine LLC, a Kentucky limited liability company (“Whitesburg”), entered into a Member Interest Exchange Agreement,
(the “Exchange Agreement”). Pursuant to the Exchange Agreement, and subject to the conditions set forth therein, our
Company will acquired, subject to the terms and conditions of the Exchange Agreement, 40% of the Member Interests and assets of
Whitesburg Friday Branch Mine LLC, of Kentucky, a privately held company from JLP and Partners LLC, a Kentucky Limited Liability
Company (“JLP”), for a total consideration of $2.7 million. The Whitesburg Friday Branch Mine, operates, mines, and
produces, thermal coal in eastern Kentucky for sale to electric utilities for use in coal fired generation, steam plant electric
power production.



This acquisition was reported on the Company
Report on Form 8-K, filed with the Securities and Exchange Commission on February 28, 2012.





(4)









NDR Energy Group LLC.



In April 2010, we expanded into the natural
gas energy market by the acquisition of a 49% stake in NDR Energy Group LLC, in Charlotte, North Carolina (“NDR Energy”).
NDR Energy Group was established in the State of Maryland on September 28, 2005. Through NDR Energy, we have contracts signed with
30 major utility companies in the United States with strong Standard & Poor’s credit ratings. NDR Energy Group markets
and distributes natural gas and propane to 30 of the largest public utilities, electric power producers, and local gas distribution
companies that serve millions of commercial, industrial, and residential customers throughout the country. Our customers include
Southern California Gas Company, Pacific Gas & Electric, CenterPoint Energy Resources, Baltimore Gas & Electric, Memphis
Light Gas & Water, Duke (Ohio & Kentucky), Michigan Consolidated, and National Grid. Our gas suppliers include EDF Trading,
Pacific Summit Energy, Chevron Texaco, Conoco Phillips, Chesapeake Energy Marketing, and Anadarko.



Our Business Strategy



Our primary objective is be one of the top
independent energy companies in the U.S., and to deliver maximum value to our shareholders, and generate increasing revenues and
solid earnings for the long-term growth of our Company. By building on our successes in 2012 we plan, although we cannot provide
assurances as to timing and attainment, to achieve these future objectives by pursuing the following strategies:



In the year 2010, management totally re-organized
and re-structured the Company with a new strategic direction and business plan, of which these strategies were implemented in 2011
and are ongoing. Our primary objective is to exploit changes in the energy market, with the intent to propel the Company to a dominant
market position, and be one of the top independent energy companies in the United States. Another major objective in our revised
business plan is to finding new ways to create more value for our shareholders and investors. Our management intends to deliver
greater value to our shareholders and investors by generating increasing revenues, producing solid earnings, and improving returns
on invested capital for the long-term growth of our Company. We believe this is the ultimate measure of our success.



Mergers and Acquisitions



Management has determined that it is in our
best interests to chart a strategic course for the Company to grow faster by more mergers and acquisitions. Management is planning
for expansion, by additional mergers and acquisitions to generate greater revenues and profits, and by shifting our focus to invest
in far more profitable natural and alternative energy technologies. We anticipate, but can provide no assurances, of acquiring
5 to 10 “bolt on” acquisitions of additional new companies with revenues in the $10 million to $80 million range with
stable cash flows and EBITDA’s in the $1 million to $8 million range in the next 1 to 3 years. The potential target’s
profile will primarily include companies with well-established marketing and distribution channels, a defensible competitive position,
and strong growth opportunities. This will also include companies that have a strong asset base with hard or fixed assets, property,
plant, equipment, proprietary technologies, patents, and exclusive licenses. We are aggressively seeking potential acquisition
targets to meet these objectives.



Some companies being targeted are, oil producers,
oil drilling companies, refined oil product producers, natural gas producers, gas marketers, pipeline companies, pipeline construction
companies, gas storage facilities, propane producers, high wall surface coal mines, refined oil product producers, and the acquisition
of energy technology patents and licenses. We’re also looking at acquiring producing petroleum and gas wells, assets/properties,
and related energy companies. Acquiring interests in properties in these areas will work very well with our strategic plans for
the expansion of our subsidiary Texas Gulf Oil & Gas Inc. We have adapted our business strategy to become a more vertically
integrated company, to give us greater management control over our supply chain from the producer, through marketing, distribution,
and directly to the customer. We believe, but can provide no assurances, that this will bring even greater revenues for our Company,
solid earnings, and bring more value to our shareholders.



Vertical Integration



We have adapted our business strategy to become
a more vertically integrated company to give us greater management control over our supply chain from the producer, through marketing,
distribution, and directly to our customer.



(5)









Oil and Gas Field Development



We intend to pursue the acquisition of more
oil and gas properties and assets. This includes existing oil and gas fields, development of newly discovered or recently discovered
oil and gas fields, re-entering existing capped wells, and lease acquisitions. We especially have a high level of interest in the
development of existing fields whereby we can re-enter previously drilled capped wells to extract the oil and gas using new drilling/extraction
methods and techniques. Fields with previously drilled capped wells would be of highest priority for us since they had been “proven
wells” before, and would therefore have lower development costs and lower associated financial risks.



Own Our Oil and Gas Supply



We plan to own and/or control our own natural
gas supply by obtaining the gas at the wellhead from suppliers with large reserves and inventories, to market and distribute directly
to our growing customer base.



Increase Operating Income



We intend to increase our operating income
and earnings by obtaining our gas at the wellhead at the producers’ price, and aggregating the purchase of our gas supply
through a large number of independent producers with long-term purchase agreements to supply to our customers.



CORPORATE FINANCE



The Company’s Capital Structure



In management’s efforts to grow and expand
the Company we must obtain the necessary capital to achieve those objectives, decide on the best methods to obtain that capital,
and the capital structure of the Company. The primary ways a company will raise capital is either through debt financing (borrowing
money), or equity financing (selling a portion of the company via shares of stock), or a combination of both. The type of capital
chosen (debt or equity), and methods of raising the capital, depend on a number of factors including; the company’s life
cycle stage, e.g., start-up, development, high-growth or maturity, future growth prospects, strength of the national economy, and
the credit markets.



Potential investors in any company, including
ours, will consider those factors and the relative risks to their investment capital. To limit their risks, these investors may
limit the size of their investment, or provide it to the company in stages that is contingent upon the company reaching stated
goals, e.g., production, marketing, distribution and revenues. The ultimate question for management is: How do you get the investors
to commit to making what could be a high risk investment for them, although one that would correspondingly benefit the Company;
however, one that the investor could lose if the Company were to fail? Management considered both the equity and the debt financing
options based on the Company’s life cycle stage, economy, credit markets, and other circumstances at the time, and reached
the following conclusions:



Equity Financing - Management
decided not to raise capital through an equity offering in its initial start-up and development stage for a variety of reasons.



(1) The Company would have had to go through
the process of filing a registration statement.



(2) The direct and indirect flotation costs
of the issuance of an equity capital raise could have run $250,000 or more, and the Company did not have those funds available.



(3) It would have been very difficult to get
an investment banker to underwrite a new issuance for a development stage company with a limited operating history and revenues.



(4) Many investors did not want to take an
equity position in the Company at that time, and the corresponding risks of ownership.



(5) The issuance of equity to these investors,
after resolving the potential regulatory hurdles, legal issues, time constraints, and costs, would have resulted in immediate dilution
for the other shareholders, giving them only limited hopes that value would be created.



Therefore, due to the above stated reasons,
the economic climate, and the Company’s circumstances at that time, management elected not to pursue raising capital through
an equity offering at that time.





(6)









Debt Financing – Management
elected to raise capital for the Company through debt financing for the following reasons.





(1) Due to the Companies rapid growth, it had
immediate and continuous need for capital.



(2) The investors were more willing to invest
funds more expeditiously, and take a creditor’s position, instead of as an owner by taking an equity position.



(3) With those immediately available funds,
management could grow the Company rapidly and create short-term economic value to the Company by closing on several target mergers
and acquisitions prior to any equity dilution taking place.



(4) The investors were issued Promissory Notes
that were unsecured without any collateral (taking a high risk).



(5) The Notes required no monthly payments;
which allowed us to use that free cash flow for operating expenses, reduced our cash outlays, interest payments, and improve our
budget plans, and forecast our cash flow.



(6) The investor received the potential upside
of conversion of the Notes into equity while protecting our downside with the use of the cash flow.



(7) Should the investors decide to convert
the Notes into common stock, then the Company’s debt would be eliminated from its balance sheet.



(8) The tax benefits of debt financing are
that it’s less expensive. While the Company is taxed on earnings, it is not generally taxed on borrowed money, and the interest
on the Notes is tax deductible.



(9) Since the investors do not have any equity
interests, it has no voting rights or other control over the management of the Company, its operations, and no claim to its future
earnings.



(10) If the Company ever suffers a negative
financial situation, it is much easier to re-negotiate the terms of the Notes with the individual investors than with a bank, or
a group of investors through an equity or bond offering.



Based on the reasons above, and since the Company
required immediate capital to rapidly expand, grow, restructure its operations, enter new markets, finance new acquisitions, and
execute its marketing plans; raising capital through debt financing was our best alternative. This strategy resulted in our gaining
a greater share of the energy market, increased revenues, increased assets, market capitalization value, and our shareholders owning
a portion of a much larger and more valuable company. As the Company continues to advance and develop through the different stages
of its business life cycle management will evaluate options, alternatives, and make strategic decisions for the best investment
opportunities, financing, and capital structure at that time.



Accounts Receivables



We are currently seeking to obtain additional
accounts receivable financing, and commercial letters of credit, to significantly improve our revenues and profits for the purchase
and sale of natural gas. We currently invoice our customers between the 10th and 15th of the month for the previous month’s
gas sales. The customer, in accordance with our “Purchase Agreement”, sends us full payment via wired funds by the
25th of the month, or 10 to15 days after receipt of our invoice.



Presently NDR Energy turns over its accounts
receivables for the sale of natural gas about 7 to 12 times per year, or every 30 to 40 days. We are currently in the process of
re-negotiating our agreements with our electric utility customers to change the invoicing and payment terms from 30 to 40 days,
to invoicing them on a weekly basis. While there can be no guarantees, management believes that, if implemented, this will increase
the accounts receivables turnover times to 52 times per year, and will shorten the collection time that we receive payment on our
customer’s invoices. This change coupled with the use of an accounts receivables factoring line will give NDR Energy the
ability to purchase gas from our suppliers at larger discounts, thereby increasing the overall profit margin to as much as $0.07
to $0.20 per mcf (MMBtu) in the sale of gas to our existing customers.



The growth and position of NDR Energy will
be further enhanced once the company is able to sell off its account receivables. NDR will then have the ability to purchase and
sell gas more often; for example, on a daily and weekly basis instead of just on a monthly basis or longer. This would also allow
us to generate more accounts receivables and purchase even larger quantities of gas. The profit margins for the sales of gas on
the daily “Spot Market”, and the weekly sales of gas is significantly higher; by as much as $1.00 to $5.00 or more
in the winter months than the margins on the NYMEX futures market. Therefore, it is critical that NDR Energy have access to accounts
receivables (AR) funding line and Letters of Credit so it may take advantage of opportunities and discounts to sell gas on the
daily and weekly time frames. It will also enable NDR to develop new gas supplier relationships and agreements with better terms,
conditions, and less restrictive repayment policies. There can be no assurances that these objectives can be attained.



(7)









Recent Developments and Significant Accomplishments



Acquisition of Whitesburg Friday Branch
Mine LLC Thermal Coal Mining Operations



On February 20, 2012, the Company completed
the closing of the Whitesburg Friday Branch Mine transaction. Previously on October 17, 2011, our company and Whitesburg Friday
Branch Mine LLC, a Kentucky limited liability company (“Whitesburg”), entered into a Member Interest Exchange Agreement,
(the “Exchange Agreement”). Pursuant to the Exchange Agreement, and subject to the conditions set forth therein, our
Company will acquired, subject to the terms and conditions of the Exchange Agreement, 40% of the Member Interests and assets of
Whitesburg Friday Branch Mine LLC, of Kentucky, a privately held company from JLP and Partners LLC, a Kentucky Limited Liability
Company (“JLP”), for a total consideration of $2.7 million. The Whitesburg Friday Branch Mine operates, mines, and
produces, thermal coal in eastern Kentucky for sale to electric utilities for use in coal fired generation, steam plant electric
power production.



Steam plant electrical power production is
highly dependent on thermal coal. Thermal coal is used as a primary source of energy for coal fired steam powered generators in
electric utility plants. The Whitesburg mining operations are the surface and high wall mining type, and do not include any underground
mining. Whitesburg already owns the leases for the coal mineral rights, and has the required mining permits from the State of Kentucky.
Since NDR Energy Group already sells natural gas to our electric utility customers to generate electricity, we believe thermal
coal would give us another energy related product to sell to our current and expanding customer base to increase our revenues.
The Exchange Agreement also includes provisions for us to develop the oil and natural gas potential on the mine property if these
resources are discovered. According to the Energy Information Administration, coal as a fuel source for electricity generation
will increase 25% by 2035 in the United States. As petroleum reserves diminish, gas to liquid process can use coal as a source
for many chemical compounds for the chemical, polymer, and other industries. Additionally, we believe an advantage of using clean
coal technology will be to increase demand for coal as the source to produce synthetic natural gas (syngas). According to Whitesburg
Friday Branch Mine LLC, the mine is projected to produce over $264 million in revenues from the sale of coal in the next 5 years.
No assurances can be provided that such revenues will transpire.



This acquisition closed on February 20, 2012,
and was reported on the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 28, 2012.



The Whitesburg Friday Branch Mine (“WFBM”)
began full production and coal mining operations in March 2012. Whitesburg has a full assortment of heavy coal mining equipment
operating on the site; including Caterpillar Bulldozer’s with Single Shank Rippers and SU-Blade and Rippers, Hydraulic Excavators,
Loaders, Trucks, and other equipment. Whitesburg has begun to drill and blast two areas of the mine, and to remove the overburden
of soil and rock from the coal by means of explosives; which is then removed by heavy power loaders and trucks. The overburden
of rock and soil has been removed to expose the coal seam to make the coal accessible, which is drilled, fractured, and systematically
mined in strips. Coal is expected to be on the ground this week. The coal will then be loaded on to large trucks for transport
to the customers.



WFBM is in negotiations with other land owners
for the property adjacent to our mine to obtain coal mineral leases surrounding the property in an effort to add to the revised
high wall mining Permit; which we believe, but cannot guarantee, will be in the first half of 2013. WFBM management is working
toward a target date for completion of the high wall revision to the Permit. Engaging the services of a high wall mining contractor
could significantly increase the operations, production, and revenues from the sales of coal.



(8)









NDR Energy Awarded $11.47 Million Gas Supply
Contract with Southern California Gas



On March 1, 2012, the Company announced that
NDR Energy Group was awarded a contract to supply natural gas to Southern California Gas Company, a subsidiary of Sempra Energy.
According to Southern California Gas Company, Southern California Gas Company is the nation’s largest natural gas distribution
utility, with 20.9 million customers. Under the terms of the contract, NDR Energy Group is to supply the customer with an estimated
25,000 mcf per day, or a total of 4.5 billion cubic feet (bcf) of natural gas for six months, from April through October, with
an estimated value of $11,475,000. Since most of these contracts are for delivery of gas from between 1 to 12 months in the future,
due to price fluctuations in gas supplies, transportation, and other factors, the final net profit cannot be determined until after
the delivery, invoicing, and payment of the gas from the customer. The resultant profit will be reflected in the Company’s
financials for the corresponding period after the delivery, invoicing, and payment of the gas.



NDR Energy Awarded Gas Storage Contract
with Southern California Gas Company



On April 1, 2012, NDR Energy Group signed a
Master Core Secondary Market Services Agreement with Southern California Gas Company (“SoCal”) under their Park, Loan
and Wheel Program for natural gas storage facility services. Under the terms of the Agreement, SoCal, which owns and operates 134
billion cubic feet of underground gas storage facilities, will provide the storage capacity, and Universal / NDR Energy Group will
purchase, supply, and transport, the natural gas from the gas fields to the facility for storage. NDR Energy Group will sell the
natural gas in the marketplace to meet seasonal load imbalances, engage in futures contracts, and spot market sales, physical gas
trading, and financial gas trading; including hedging, and the use of natural gas derivatives and other financial instruments to
generate greater revenues and profits.



NDR Energy Awarded Gas Supply Contract with
Pacific Gas & Electric



On April 2, 2012, the Company announced that
NDR Energy Group was awarded a gas supply contract with Pacific Gas & Electric’s Electric Fuel Division Corporation.
Under the terms of the contract, NDR Energy Group is to deliver natural gas supplies for the customer’s electric power generation
plants for one to three months, starting on July 1, 2012. The contract is projected, but not guaranteed, to generate millions of
dollars in revenue.



NDR Energy Group Opens New Offices in Houston



On May 8, 2012, the Company announced that
NDR Energy Group opened new offices in the Houston, Texas area. The new offices were opened as part of its major expansion and
growth strategy, refine its national footprint, and to meet the future demands of its growing customer base. The offices are located
in the prestigious master planned community of The Woodlands, just north of Houston. Houston is recognized worldwide for its energy
industry; including oil and gas exploration, basic petroleum refining, petrochemical production, and renewable energy sources;
including wind and solar. This is a critical development in light of our many contractual and informal relationships with natural
gas producers, suppliers, and end-users in the Houston area. It also will help us better serve our expanding customer base and
accelerate our growth in this region.



(9)









NDR Energy Group Signs Natural Gas Supply
Agreement with Pacific Summit Energy



On May 23, 2012, the Company announced that
NDR Energy Group signed an agreement to obtain natural gas supplies with Pacific Summit Energy. This agreement will give NDR Energy
Group strategic access to major supplies of natural gas to supply its electric utility customer’s gas for distribution, power
generation, and for NDR Energy’s gas storage requirements. Pacific Summit Energy focuses on supply aggregation, transacts
with producers, industrial and commercial end-use customers, electric generators, gas distribution utilities, and wholesale customers
in natural gas, electric power, and related energy businesses. Pacific Summit Energy is a subsidiary of Sumitomo Corporation; which
reported revenues of over $6.44 billion in its 2011 Annual Report. Pacific Summit Energy is headquartered in Tokyo, Japan; and
has offices in 73 countries around the world, with offices in 10 major U.S. cities and throughout the American hemisphere. It is
actively involved in projects for oil and natural gas development as well as long-term projects for LNG. It also has production
in the North Sea, Indonesia, the Middle East, the United States, and is working to acquire further production and exploration interests
in Asia and Oceania.



NDR Energy Completes First Transaction with
Pacific Summit Energy



On May 24, 2012, the Company announced that
NDR Energy completed its first major transaction to purchase gas from Pacific Summit Energy. NDR Energy Group will sell the gas
to Pacific Gas and Electric Company (PG&E), one of the largest combination natural gas and electric utilities in the United
States. PG&E serves approximately 5.2 million electricity distribution customers and approximately 4.3 million natural gas
distribution customers throughout a 70,000 square mile service area on the west coast. Its parent company is traded on the NYSE
and reported revenues of $15.0 billion in its 2011 annual report. NDR Energy Group is to deliver the natural gas supplies to PG&E
for its electric power generation plant in northern California for the month of June 2012, with an estimated 20,000 mcf per day,
or a total of 600 million cubic feet of gas.



Universal Bioenergy Starts Coal Sales from
Whitesburg Friday Branch Coal Mine



On June 15, 2012, the Company announced we
had begun selling commercial coal from the Whitesburg Friday Branch Mine in Whitesburg, Kentucky, and is expected to begin generating
cash flow. Although no assurances can be provided, our management forecasts the sales of coal should generate an estimated average
of $52.80 million in revenues and an estimated $5 million to $8 million in earnings annually. The Whitesburg Mine opened for full
operations in March 2012, and began to stockpile inventories of coal. The mine is now in full operations six days per week for
the mining of coal. The coal is being processed and blended from different qualities to obtain the maximum price for the coal.



NDR Energy Signs Gas Supply Contract with
Los Angeles Department of Water and Power



On June 18, 2012, the Company announced that
NDR Energy Group signed a contract to supply natural gas to the Los Angeles Department of Water and Power (LADWP). LADWP is headquartered
on the West Coast, and is the largest municipal water and power utility in the nation that delivers reliable, safe, water and electricity
to 3.8 million residents and businesses in its service area. NDR Energy will be aggressively pursuing more municipalities, and
large commercial and industrial users of natural gas, to diversify its customer portfolio.



NDR Energy Group Launches New Refined Energy
Products Division



On June 19, 2012, the Company announced NDR
Energy Group established a new division to market and distribute refined petroleum based energy products to generate greater revenues
and higher profit margins for the Company. The new division will market and distribute refined petroleum based energy products
including industrial fuels, diesel fuels, kerosene, jet fuel, aviation fuels, Jet A and Jet A-1, motor oils, and other lubricants.
NDR Energy Group will be contracting directly with manufacturers and producers of the energy products to market through its distribution
channels. The products will be sold in bulk to its existing customer base, and its expanding customer base; which will include
federal and state agencies, U.S. military, cities, municipalities, and large commercial and industrial companies. Refined oil energy
products typically have relatively high profit margins, and we believe should generate additional streams of revenues and profits
for the Company.



(10)









NDR Energy Group Signs Contract with Space
City Energy Marketing LLC



On June 22, 2012, the Company announced that
NDR Energy Group signed a contract in a joint venture with Houston based Space City Energy Marketing LLC. Space City Energy Marketing
will market and distribute NDR Energy Group’s expanding energy products line; including natural gas, propane, and refined
petroleum products, through Space City’s distribution channels. Space City Energy will market and distribute the energy products
to its existing customer relationships in the energy industry, and provide NDR Energy with the management of natural gas and power
transactions for its gas storage program. Space City Energy has represented that the executives at Space City Energy have over
40 years of combined experience in natural gas storage, gas procurement, storage exchange transactions, power purchasing, daily
balancing, nominations, scheduling, and other aspects of energy asset management. We believe that the joint venture will create
a strong symbiotic relationship for NDR Energy and Space City Energy, and establish a solid platform to expand horizontally, and
rapidly market their energy products throughout the U.S.



NDR Energy Group Establishes New Electric
Power Division



On July 2, 2012, the Company announced NDR
Energy Group established a new division to market and distribute wholesale electric power throughout the U.S. The new division
will market and distribute bulk wholesale electric power to NDR’s current electric utility customers, and its expanding customer
base; which will include federal and state agencies, U.S. military, cities, municipalities, and large commercial and industrial
companies. NDR Energy Group will be able to offer integrated energy solutions that will assist its growing customer base to buy,
manage, and use electricity and natural gas. Although no assurances can be provided, our management forecasts the sales of wholesale
electric power should generate an estimated $96 million to $384 million in revenues annually.



NDR Energy Awarded Gas Supply Contract with
Pacific Gas & Electric



On July 3, 2012, the Company announced that
NDR Energy Group was awarded a gas supply contract with Pacific Gas & Electric. Under the terms of the contract, NDR Energy
Group is to deliver an estimated 35,000 mcf per day, or 1.085 billion cubic feet of natural gas to PG&E for the month of July
2012.



NDR Energy Group Plans to Register on Federal
Interstate Pipelines



On July 6, 2012, the Company announced that
NDR Energy Group is planning to register the company on several interstate natural gas pipelines. Natural gas transportation is
one of many new profit centers the Company is planning to pursue to increase its earnings. The registration on the pipelines will
allow the Company to engage in Gas Transmission and Delivery via the interstate pipeline system to the Local Utility customers,
Natural Gas Scheduling for tracking nominations, confirmations product movement and verification, Gas Nominations, Capacity Releases
for the release of transportation capacity on interstate natural gas pipelines, and Pipeline Balancing to match the customer's
daily usage with the customer's confirmed pipeline delivery.



NDR Energy Group Sets New Natural Gas Sales
Record for July



On July 9, 2012, the Company announced that
NDR Energy Group sold over 1.86 billion cubic feet (Bcf) of natural gas, setting a new record for the month July. The volume of
natural gas sold by NDR Energy set a new record for July, and is the highest in the Company’s history for July. It also tops
the previous record sales of 971.13 million cubic feet of gas in July of 2006. The 1.86 billion cubic feet of natural gas sold
in July is a 300.37% increase over the 619.24 million cubic feet of natural gas sold for the month of July 2011. These sales have
already been booked and sold, and the gas is currently being shipped to its electric utility customers and local distribution companies
(LDC) for July.



NDR Energy Group Awarded Contract with Washington
Gas Light Company



On July 10, 2012, NDR Energy was awarded a
contract to supply propane gas to Washington Gas Light Company, headquartered in Washington, DC. According to Washington Gas Light
Company (Washington Gas Company), they deliver natural gas to more than one million residential, commercial, and industrial customers
throughout Washington, DC, and the surrounding region. Washington Gas is a regulated subsidiary of WGL Holdings, Inc., a public
utility holding company. As part of our new business model we are positioning the Company to be a huge player in the propane gas
market. We believe this will be another major profit center for the Company.



(11)









Universal Completes Live Shareholder Conference
Call



On July 13, 2012, the Company completed its
scheduled live conference call with its shareholders and investors. The call discussed past operations and current business operations
of the Company, the future outlook and long-term plans of the Company, plans to up-list to NASDAQ, the special stock dividend,
and the status of Depository Trust (DTC) “Chill”. Formal notification of the conference call was filed with U.S. Securities
and Exchange Commission (SEC) in a Form 8-K Report on July 10, 2012.



NDR Energy Group Submits Application for
FERC License



On July 17, 2012, the company announced NDR
Energy Group submitted its application for approval to the Federal Energy Regulatory Commission, (FERC), to become an electricity
“Power Marketer”, and to be granted a “power marketers license” to engage in the interstate trade, buying,
and selling, of electric power.



Approval and Issuance of Stock Dividend



On July 20, 2012, the Company issued 78,161,209
shares of common stock as a stock dividend to all registered shareholders of record in accordance with the Company’s Resolution
and declaration. Two (2) shares of stock were issued for every ten (10) of common stock owned by the shareholders. The stock closing
price was $0.0190 on the record date.



Previously, on June 6, 2012, the Company passed
a Resolution to distribute a common stock dividend to all shareholders of record on, or before, July 13, 2012, on a 10 for 2 basis.
The Company received the final notification and confirmation from FINRA on June 29, 2012, announcing the final approval to distribute
the common stock dividend to our shareholders. The final notification was posted on FINRA’s OTC Bulletin Board website at
www.otcbb.com, under the tab “Daily List”, and the “Headlines By Date” 2012 Daily List Index for dividends
for June 29, 2012.



The payment of a dividend in stock instead
of cash helps the Company to maintain its cash and still reward our shareholders with a dividend. Some shareholders may view this
action as a potential for dilution and a devaluation of their shares; however, we believe there are many valuable benefits to our
shareholders. Our shareholders will receive an immediate 20% increase in the quantity of the shares they own and a 20% return on
their investment. We feel this will reward our loyal shareholders for their ongoing support, and to give them a greater stake in
our Company.



NDR Energy Awarded Gas Supply Contract with
Xcel Energy



On August 13, 2012, the company announced that
NDR Energy Group was awarded a contract to supply natural gas to Xcel Energy, a major U.S. electric and natural gas company with
annual revenues of $10.3 billion, that operates in eight states. Xcel provides a comprehensive portfolio of energy-related products
and services to 3.4 million electricity customers and 1.9 million natural gas customers. They also operate major generating facilities
that use a variety of fuel sources including coal, natural gas, nuclear fuel, water (hydro), oil, and refuse; and also have facilities
that generate electricity from the wind and sun. In total, their plants are capable of producing more than 17,000 megawatts (MW)
of electricity.



(12)









NDR Energy Group Sales Volume of Natural
Gas up 46.67% for August



On August 24, 2012, the Company announced that
NDR Energy Group sold over 1.70 billion cubic feet (Bcf) of natural gas for the month of August. The volume of natural gas sold
by NDR Energy was exceptional given the soft market conditions in the industry for the first half of 2012. The 1.70 billion cubic
feet of natural gas sold in August is a 46.67% increase over the 1.16 billion cubic feet of natural gas sold for the month of August
2011.



Universal Plans to Hire New Chief Financial
Officer



On September 14, 2012, the Company announced
that it is planning to hire a new Chief Financial Officer to assist the Company in its drive for growth, expansion, and to build
a stronger professional management team as it prepares to position itself to up-list to a major stock exchange such as NASDAQ or
AMEX/Equities. The Company has initiated a search, and has been reviewing potential qualified candidates for the critical position.
The primary goals of the new CFO will be to provide strong financial leadership, help build a stronger financial structure for
the company, improve its Balance Sheet, reduce its debt, raise additional capital, assist with mergers and acquisitions, and manage
all accounting operations, financial planning, financial reporting, internal controls, and preparation of its SEC Reports and Filings.
No Chief Financial Officer has been hired as of the date of this report.



NDR Energy Sells Record 2.07 Billion Cubic
Feet of Natural Gas for August



On September 25, 2012, the Company announced
that NDR Energy Group sold over 2.07 billion cubic feet (Bcf) of natural gas, setting a new record for the month of August. The
volume of natural gas sold by NDR Energy is the highest in the Company’s history for the month of August, and tops the previous
record sales of 1.16 billion cubic feet of gas sold in August of 2011. The 2.07 billion cubic feet of natural gas sold in August
represents an increase of 78.45%, or nearly one billion cubic feet of sales higher than the month of August of 2011.



NDR Energy Group Secures a $10 Million Funding
Line with Pacific Summit Energy



On September 25, 2012, the Company announced
that NDR Energy Group received a $10 million funding line commitment with Pacific Summit Energy, a major natural gas supplier on
the west coast. The total aggregate value of the line is $120 million annually. This funding or trade credit line will give NDR
Energy Group strategic access to purchase major supplies of natural gas for its electric utility customer’s on the west coast.
Pacific Summit Energy focuses on supply aggregation, transacts with producers, industrial and commercial end-use customers, electric
generators, gas distribution utilities, wholesale customers in natural gas, electric power, and related energy businesses. Pacific
Summit Energy is a subsidiary of Sumitomo Corporation, headquartered in Tokyo, Japan, which reported revenues of over $6.44 billion
in its 2011 Annual Report, and has offices in 73 countries around the world, with offices in 10 major U.S. cities and throughout
the American hemisphere.



NDR Energy Group Sells 1.24 Bcf of Natural
Gas in October 2012



On October 5, 2012, the Company announced that
its subsidiary, NDR Energy Group, located in Charlotte, NC, sold over 1.24 billion cubic feet (Bcf) of natural gas for the month
of October 2012. The volume of natural gas sold by NDR Energy is anticipated to be the highest in NDR Energy’s history for
the month of October, and tops the previous record sales of 1.08 billion cubic feet (Bcf) of gas sold in October of 2011. The 1.24
billion cubic feet (Bcf) of natural gas sold in October represents an increase of 14.29%, or over 155 million cubic feet more than
the amount of gas sold during the same month in 2011.



The Depository Trust Company (DTC) Lifts
the Deposit Restrictions or “Chill” From Universal’s Stock



On October 23, 2012, we announced that the
Depository Trust Company (DTC) lifted the “Deposit Chill” on the Company’s stock, and it resumed accepting deposits
of the stock for book entry transfer services. All deposit restrictions were removed and the Company is now fully “DTC Eligible”,
and has resumed full electronic trading of the Company’s common stock. The DTC requested that Universal demonstrate that
the sale and transfer of certain shares of its common stock were made pursuant to an effective registration statement under the
Securities Act, or the shares did not require registration there under. Universal’s independent legal counsel provided full
documentation to the DTC to the effect that the shares were freely tradable without restriction under the securities laws.



The Depository Trust Company (DTC) is a subsidiary
of the Depository Trust & Clearing Corporation. The DTC manages the electronic clearing and settlement of stocks and other
securities, similar to an escrow agent. Securities that are eligible to be electronically cleared and settled through the DTC are
considered "DTC eligible". Universal’s stock has been “DTC eligible” for the Deposit/Withdrawal At
Custodian (DWAC), and the Fast Automated Securities Transfer (FAST) program (an electronic method of transferring shares), in the
secondary market for many years.



Previously, on July 27, 2011, the DTC’s
Corporate Compliance Department notified our transfer agent Corporate Stock Transfer, who subsequently notified the Company, that
the DTC had imposed a “Chill”, or minor deposit restriction/suspension, on Universal’s stock on July 22, 2011,
and the Company was removed from the DWAC/FAST Program. The “Chill” did not affect our normal business operations.
However, shareholders with internet brokerage accounts such as TD Ameritrade or E*Trade were not be able to purchase our stock,
although they were able to sell our stock through these internet brokers. Full service stock brokerage firms were still able to
clear and settle our stock manually, and the shares could be traded as freely as usual without any DTC imposed restrictions.



The DTC's removal of the Chill allows all shareholders
with online brokerage accounts with firms such as Scottrade, ETRADE, TD Ameritrade, and all other full service brokerage firms,
to purchase, sell, and execute their trades in Universal’s stock in the standard electronic trading process. We believe this
should increase the trading volume, liquidity, and create a broader distribution of the Company’s stock over a greater number
of shareholders, stockbrokers, and Market Makers in the investment community.





(13)







NDR Energy Awarded Contract with Direct
Energy



On November 20, 2012, the Company announced
that NDR Energy Group entered into a supply contract with Direct Energy, one of the largest competitive retailers of natural gas
in North America. According to Direct Energy, they are the largest competitive retailer of energy and related services in North
America, and they provide electricity, natural gas, and other energy services to more than 13 million residential homes and businesses
across North America each day. With their corporate headquarters in Canada, they also have offices in Texas, and Pennsylvania.
Direct Energy is an indirect wholly owned subsidiary of a major energy company traded on the London Stock Exchange, headquartered
in Great Britain, and is a leading supplier of energy and home services. The parent company reported revenues of over $36.28 billion
in their 2011 annual report.



NDR Energy Group Signs MOU with All Nations
Bakken Reserve to Develop Major Energy Project in the Bakkens Shale Formation



On November 27, 2012, the Company announced
that NDR Energy Group has signed a Memorandum of Understanding (MOU) with All Nations Bakken Reserve LLC (ANBR) in a joint venture
to develop an oil and gas play in the Bakken oil and gas field located in North Dakota and Montana.



The joint venture will pursue the development
of four distinct businesses that will include:



a. Land Acquisition – optimizing land
identification, structure and pricing

b. Financing – obtaining the required
financing, optimizing debt and equity capital structures

c. Drilling and Capture – exploration,
extraction, and maintenance operations

d. Distribution – marketing, sales, and
distribution of the oil and gas products for maximum profit



The Bakken oil and gas
Shale formation occupies about 200,000 square miles of the subsurface of the Williston Basin, underlying parts of Montana and North
Dakota in the U.S., and Saskatchewan and Manitoba in Canada. On April 2008, the United States Geological Survey (USGS) report estimated
the amount of technically recoverable oil using technology readily available at the end of 2007 within the Bakken Formation at
3.0 to 4.3 billion barrels, with a mean of 3.65 billion. The state of North Dakota also released a report that month which estimated
that there are 2.1 billion barrels of technically recoverable oil in the Bakken. Various other estimates place the total reserves,
recoverable and non-recoverable with today's technology, at up to 24 billion barrels. The most recent estimate places the figure
at 18 billion barrels.





NDR Energy Group Signs Contract with Texican
Natural Gas Company



On November 28, 2012, the Company announced
that NDR Energy Group signed an agreement with Texican Natural Gas Company. NDR Energy also launched a new sales division to begin
marketing natural gas to large commercial and industrial customers in the southern United States geographical market. This agreement
will allow NDR Energy to horizontally sell its natural gas to its industrial customers, large commercial customers, and independent
municipalities in North and South Carolina, Georgia, Alabama, Mississippi, Louisiana, Tennessee, Kentucky, and Ohio.



Universal Bioenergy Announces Plans to Reduce
Debt, and Increase Profitability and Shareholder Returns



On December 4, 2012, the Company announced
the Company’s Board of Directors is reviewing proposals to reduce its debt, improve shareholder returns, and drive the Company
toward profitability. The Company’s management is considering various proposals as part of its plans for growth, positioning
itself to be more attractive to institutional investors, and in its plans to qualify for NASDAQ or other major stock exchange.
The proposals under consideration include greatly reducing or eliminating some, or all, its debts and liabilities; consolidation
and negotiations of some creditors Notes with more favorable terms; and converting some or all of the long debt and liabilities
to shares of preferred stock for issuance to the various Note Holders and creditors. Management believes this should result in
a significant improvement in the Company’s Balance Sheet, reduce debt, lower operating costs, improve working capital, improve
cash flow, and increase profitability and shareholder returns.



Universal Bioenergy Increases Authorized
Shares of Common Stock to 3 Billion Shares



On December 26, 2012, the Company filed with
the Nevada Secretary of State a Certificate of Amendment to the Company’s Articles of Incorporation. The Amendment was approved
by a Unanimous Written Consent of all the Directors of Universal Bioenergy, Inc., on December 19, 2012, pursuant to the authority
granted them by a “Written Consent Of The Holders Of A Majority Of The Voting Shares Of Universal Bioenergy, Inc.”,
dated June 18, 2010; which granted to the Board of Directors the full right and authority to increase, or otherwise change, the
authorized shares of Common Stock and Preferred Stock. The information regarding this issue was fully disclosed in the Company’s
Form 8-K Report filed on December 28, 2012. The information regarding this issue was originally fully disclosed in the Company’s
Form 10-Q Reports that were filed for the quarterly periods ending June 30, 2011 and September 30, 2011, and the Form 8-K Report
filed on May 19, 2011. A complete copy of the Amendment was attached as Exhibit 3.1 to the form 8K. The Amendment incorporated
the following changes:



A. Increased the number of authorized shares
of the Corporation’s common stock from 1,000,000,000 to a total of 3,000,000,000 shares.

B. The total number of shares of "Preferred
Stock" that the Corporation is authorized to issue is 10,000,000 shares with a par value of $0.001 per share.



With reference to the Amendment, Management
does not intend to actually issue all of these authorized shares to the public, as they will primarily remain within the corporate
treasury until needed. Some shareholders may view this action as a potential for dilution and a devaluation of their shares; however,
we believe there are many valuable benefits to our shareholders.



Management believes that the shareholders would
likely receive greater potential financial rewards by means of increased revenues, earnings, a significant increase in the price
of the stock, greater market value of the Company, increased assets, and more liquidity. The Company is aggressively preparing
for rapid growth and expansion through some planned major mergers and acquisitions. Additionally, based on the type and size of
transactions that the Company is working on, it needs to have the shares available to it and the flexibility to meet those need
and goals. The purpose of increasing the number of shares of common stock is to use them for business and financial purposes; including
raising capital, for mergers and acquisitions, acquiring products or services in exchange for stock, attracting and retaining employees,
increasing our shareholder base, and being able to respond rapidly to opportunities that arise in the marketplace. The raising
of additional capital through the sale of equity may result in a dilution of the current shareholders interests. However, management
anticipates that the shareholders would likely receive greater potential financial rewards by means of a significant increase in
the price of the stock, greater market value of the Company, and more liquidity.



(14)









Company Terminated Agreements



There are no terminated agreements to report
for this reporting period.



THE COMPANY’S
FUTURE PLANS AND OUTLOOK



Stock Dividends and Distributions



Due to management’s strong confidence
in the current and future growth and expansion of the Company, it is considering additional ways to bring more value to our shareholders.
We are considering, but can provide no assurances as to implementation, the following proposals for dividends and distributions:



A 	A special dividend
in the form of common stock.



B 	Regular dividends
issued in stock or cash (subject to the Company’s future earnings and availability of funds).



C. A dividend in the form
of Preferred stock, or Preferred stock with the option to convert them to common stock. The issuance of any options or its exercise
at a cost would be subject to SEC guidelines and a possible registration of an offering



D 	The issuance of warrants
or options to buy additional shares from the Company (subject to SEC guidelines).



In addition to potential price appreciation
of the common stock, this could provide the shareholders with additional current income, cash flow, and (although we cannot guarantee
it) the potential to earn higher returns from these stock dividends and distributions than they might earn on their other investments.



The Company’s management is currently
evaluating the above proposals and others in this regard, and its potential benefits to the shareholders and impacts on the Company.
However, no decisions have been made regarding this matter. We believe this will reward our loyal shareholders for their ongoing
support, and give them a greater stake in our Company.



Universal Bioenergy Considers Changing Its
Name



The Company is presently considering changing
its name to reflect its current business model and its future growth as it continues to expand its marketing of natural gas, propane,
petroleum, and thermal coal. The name Universal Bioenergy reflected our Company’s original plans to produce and market “green”
energy technologies, such as biodiesel fuel, solar, wind, wave, and other technologies. In December 2009, after conducting its
business summit in Las Vegas, Nevada, on January 12, 2010, we announced that it was charting a bold new course for the Company.
We shut down our biodiesel refinery in Nettleton, Mississippi in 2010; and later on March 31, 2011, we completed the dismantling
of the facilities structures and plant equipment at the biodiesel refinery. This marked our exit from green energy technologies,
and to grow and expand into more profitable conventional energy products and technologies. The name “Universal Bioenergy”
has also caused some confusion in the minds of potential shareholders, and investors because we no longer market and produce “green
energy” products. We believe a strategic name change will help us to build a better “brand”, improve our image,
attract more shareholders and investors, and more fully reflect the emphasis of our current and future business trends in the marketplace.
On June 18th 2010, the majority of the shareholders, and the Board of Directors, each approved separate Resolutions to amend the
Articles of Incorporation granting the Board of Directors the right to change our Company’s name. On May 9, 2011, we filed
a Certificate of Amendment with the Nevada Secretary of State, to amend our Articles of Incorporation; which granted the Board
of Directors the full right and authority to change the name of the Corporation at a future date without out any shareholder action
or approval.



Universal Bioenergy Considers Options for
Merger, Acquisition or Consolidation



Our management is considering the possibility
of completing a merger or consolidation with another company to increase its market share, share price, market value, expand horizontally
into other national or international geographical markets, expand vertically, and create more value for its shareholders. Our Company’s
management is currently evaluating the possibility of a merger or consolidation, and its potential benefits and impacts on our
Company; however, no decisions have been made regarding this matter. Any final proposals regarding this matter would be presented
to the Board of Directors and the shareholders for approval as required by Federal and State laws, guidelines, and our corporate
By-Laws.



The issues and benefits that would have to
be considered include.



1 The potential value of
the synergies and strategic fit of the target or acquiring company

2 	The financial, accounting,
tax, and legal effects.

3 	The acquisition,
or sell, of stock and/or assets of either company.

4 	Consideration of
a merger or consolidation with another company to create a new stronger more valuable company.

5 	Completion of a horizontal
acquisition of a competitor or other company in our industry.

6 Completion of a vertical
acquisition with another company either upstream or downstream in our industry that may include exploration companies, producers,
distributors, and marketers.

7 Consideration of a triangular,
or a reverse triangular, merger with a strong operating company on another exchange such as the NASDAQ, NYSE/AMEX or OTCBB.



8 	The potential increase
in the price of our common stock.

9 	Economies of scale
from the two companies combined resources.

10 	The potential reductions
in operating costs.

11 	The potential to
increase the earnings, and earnings per share, of the Company.

12 	The potential to
create more value for our shareholders



(15)









Plans to Up-List to NASDAQ or other National
Stock Exchange



Based on our growth by mergers, acquisitions,
revenues, and future plans for expansion, our management is evaluating and positioning the Company to potentially qualify, and
apply to up-list, to a major national stock exchange; which stock exchanges list similarly situated energy technology companies,
such as NASDAQ, NYSE Amex Equities, or others. Our management has already been in discussions with several investment bankers,
advisory firms, and our securities counsel, to review the exchange requirements, legal issues involved, improving our capital structure,
procedural guidelines, and other related issues, to qualify to be listed on one of the major national exchanges. Management believes
that if we can successfully position our company to qualify to meet the listing requirements for one of the stock exchanges it
would greatly increase our market value, and should make it attractive to more retail and institutional investors. We also feel
this would be of great benefit to our shareholders. No assurances can be provided that this aspect of our long-term business plan
will be achieved.





Consideration of Reverse Stock Split



As an additional requirement to qualify to
be listed on one of the major national stock exchanges management, in consultation with its accountants, auditors, investment advisors,
and securities counsel, is considering the options of the benefits of implementing a reverse split of its common stock. If a reverse
stock split were effected it would result in a reduction in the number of the Company’s outstanding shares, and a corresponding
increase in the price of our stock, or its earnings per share. Some of the factors under consideration are:



| | 1. | Improving the liquidity and marketability of the stock to a more popular trading range to make it more attractive to institutional and other major investors.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Increase the price to a range to reflect the revenues, growth, and stability, of the Company.                                                                



| | 3  | Increase the price to qualify for the minimum share price requirements to qualify for a major stock exchange such as NASDAQ or NYSE/AMEX.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------
| | 4. | The Company may consider purchasing the shares of some of the minority shareholders.                                                     
| | 5. | Allow the Company to raise more capital for its growth and expansion.                                                                    





Management believes
that the current stock price is currently undervalued, and the share price does not fully reflect its true value in proportion
to its operating fundamentals; and based on the Company’s rapid growth, revenues, acquisitions, and plans for expansion.
Many institutional investors and investment funds have guidelines that prevent them from investing in our common stock at the current
prices that the stock trades at. With a high stock price it is possible that many institutional investors, larger private equity
firms, hedge funds, pensions, and trusts that were previously prohibited from acquiring our shares, could then purchase our shares.
The reverse stock split of our shares of common stock may also help to create greater investor interest in the Company by producing
a share price for the common stock of our Company that is more consistent with other high growth companies of our size in the market
place. If a reverse stock split was implemented it would reduce the amount of outstanding shares, increaseour share price, and help the Company qualify to up-list to a major stock exchange such as NASDAQ, or NYSE/AMEX. Management believes
this would be beneficial to our shareholders.



Our management is currently evaluating the
possibility of a reverse stock split, and its potential benefits and impacts on our Company; however, no decisions have been made
regarding this matter. Any final proposals regarding this matter would be presented to the Board of Directors and the shareholders
for approval as required by Federal and State laws, guidelines, and our corporate By-Laws.



Interest from Companies Wanting to Acquire
Universal Bioenergy or its Assets



Management has on occasion received unsolicited
letters of interest from several companies over the past few months that have expressed an interest in acquiring the Company, acquiring
a large equity stake in the Company, or in purchasing some of its assets; such as our outstanding corporate debt, or electric utility
customer contracts. These have come from companies that include, but are not limited to, our creditors, our investors, and other
parties. The offers have been made either directly from those companies, or through their representatives, in which case some of
the companies have desired to remain anonymous for a period of time.



Management cannot initially determine the validity
of the offer, and the strength of the companies expressing an interest in a potential acquisition, without opening some exploratory
discussions and some reasonable measure of preliminary due diligence. Management will typically review all of these potential inquiries,
or expressed interest, to ascertain if the offer is genuine, their true motivations, and attempt to gauge the real level of interest
of the offer, prior to presenting it to the Board of Directors. In the event that management determines that an offer is serious
it may open discussions and sign appropriate non-disclosure documents, obtain a Letter of Intent or Term Sheet from the interested
party, and begin its due diligence. Some of the factors that we will consider will be the financial strength of the company making
the offer, obtaining the “best price” for the acquisition or the assets, the potential economic benefit to our shareholders,
tax liability, legal issues, accounting and financial impacts, and the potential synergies and strategic fit of the acquiring company.



Acquisitions can take up a great deal of time
and expense, and require that we engage our mergers and acquisitions (M&A) team of experts; including our experienced investment
bankers, accountants, auditors, lawyers, and other technical personnel to assist in the due diligence and closing the potential
transaction. Control of, and proper disclosure of, factual information in these matters are critical; and unfounded rumors can
have a potential negative impact on the Company, and the transaction. Although we review and consider all unsolicited offers, no
decisions have been made on any of these offers; and furthermore, we can provide no assurances that we would pursue, or otherwise
enter into, a formal agreement for any of these transactions.



Therefore, when these potential transactions
elevate to a situation whereby the Company either engages in serious discussions or negotiations; executes a Term Sheet or Letter
of Intent; or it otherwise is deemed to be a material event, the Company will take the appropriate steps to timely disclose the
information to the public and its shareholders in its regulatory filings.



(16)









New Business Model



Mergers and Acquisitions



Management has determined that it is in our
best interests to chart a strategic course for the Company to grow faster by more mergers and acquisitions. Management is planning
for expansion by additional mergers and acquisitions to generate greater revenues and profits, and by shifting our focus to invest
in far more profitable natural and alternative energy technologies. We anticipate, but can provide no assurances, of acquiring
5 to 10 “bolt on” acquisitions of additional new companies with revenues in the $10 million to $80 million range, with
stable cash flows and EBITDA’s in the $1 million to $8 million range, in the next 1 to 3 years. The potential targets profile
will primarily include companies with well-established marketing and distribution channels, a defensible competitive position,
and strong growth opportunities. This will also include companies that have a strong asset base with hard or fixed assets, property,
plant, equipment, proprietary technologies, patents, and exclusive licenses. We are aggressively seeking potential acquisition
targets to meet these objectives.



Some companies being targeted are oil producers,
oil drilling companies, refined oil product producers, natural gas producers, gas marketers, pipeline companies, pipeline construction
companies, gas storage facilities, propane producers, high wall surface coal mines, and the acquisition of energy technology patents
and licenses. We’re also looking at acquiring producing petroleum and gas wells, assets/properties and related energy companies.
Acquiring interests in properties in these areas will work very well with our strategic plans for the expansion of our subsidiary
Texas Gulf Oil & Gas Inc. We have adapted our business strategy to become a more vertically integrated company to give us greater
management control over our supply chain from the producer, through marketing, distribution, and directly to the customer. We believe,
but can provide no assurances, that this will bring even greater revenues for our Company, solid earnings, and bring more value
to our shareholders.



Termination of Acquisitions



As part of our business strategy we review
acquisition and strategic investment prospects that we believe would complement our current product offerings, augment our market
coverage, enhance our technological capabilities, or otherwise offer growth opportunities. From time to time we review investments
in new businesses. We expect to make investments in, and to acquire, businesses, products, or technologies in the future. We expect
to continue pursuing selective acquisitions of businesses. Very often during the acquisition and due diligence process management
will not be able to consummate the transaction because we cannot close it on terms and conditions acceptable to us, or because
of other negative factors as described below.



In the event that management and its acquisitions
team have identified a strong potential target company we will issue a Letter of Intent to start the due diligence process to acquire
that company. Afterwards, our legal counsel will prepare a definitive agreement with all of the final terms and conditions to complete
the acquisition. Proper due diligence for proper technical, financial, and legal review, can be very expensive and time consuming.
Often during the due diligence process we discover that the representations and warranties made by the target company regarding
its business, operations, assets, financials, books, records, properties, contracts, liabilities, pending litigation, permits,
licenses, and business status, are not accurate or complete; there may be misrepresentations, or there is an adverse material change
in the business prior to the closing of the acquisition. In that event management will elect to terminate that acquisition to avoid
any negative impacts on our operations, avoid any adverse legal and financial exposure to the Company, and to protect our shareholders.
Due to these factors we, and other companies that pursue other companies as acquisition targets, do not expect that they will close
on every potential acquisition target.



Market Expansion



Management believes that there are currently
3,240 utilities in the United States. Through NDR Energy we have firm contracts signed with 30 of these major utilities. Our plans
are to develop an aggressive sales force to obtain agreements with a total of 100 utilities and other customers; including Federal
and State Departments and Agencies, Cities, Municipalities, and large commercial and industrial corporate clients, in the next
12 to 24 months. This will give us a much greater market share, and more customers for our gas supply division; thereby further
increasing our revenues and profits.



(17)









Forecast of Projected Revenues and Earnings
and Market Value



Our primary objective is to exploit changes
in the energy market to propel the Company to a dominant market position, and be one of the top independent energy companies in
the United States. Another major goal is to find new ways to create more value, maximize the wealth of our shareholders, and bring
increased value to our stakeholders and the investment community. The financial projections presented below are estimates based
on Management’s analysis of the present targeted market segments of the energy industry we are involved in, future industry
trends, our current and growing customer base, our strategic joint ventures, strategic alliances, and other capital development
projects we are pursuing. The financial plan is intended for rapid but controlled growth and required Management to make certain
assumptions and estimates.



Focus on Earnings



We achieved sales revenue of $50,513,644, for
the year ending December 31, 2012, as compared to $71,747,840 for the same period in 2011; which is a decrease of 29.60%. . From
2010 through 2012, while building our business, we focused on generating substantial sales revenues, a broad customer base, and
gaining the greatest share of the market in the shortest period of time. That strategy affected how we obtained our supplies, their
relative cost, and how we priced our products for sell to our customers. To gain a great market share in a short period of time
initially resulted in higher cost of goods sold, and selling the product at, or slightly below, our costs; and that directly impacted
our profitability. This caused almost negligible gross profit and negative earnings from 2010 through 2012. This strategy was only
a temporary measure while we were building greater market share in those years.



A major goal for the fiscal 2013 year and beyond
is to begin to generate earnings for the Company. We intend to increase our operating income and earnings through current and future
acquisitions in the energy industry, and high profit centers; which will include gas storage, physical and financial gas trading,
transportation, management; and higher sales of natural gas, propane, oil, electric power, refined energy products, and coal.

Our management’s plans for increasing
earnings include the following:





• First, we are changing our strategy
for obtaining our supplies of natural gas; and have expanded our sales of natural gas beyond just base load transactions to include
term transactions, and sales for electric power generation.



• Second, we are negotiating with independent
oil and gas producers to obtain our supplies at the wellhead, and aggregating the supply under long-term supply agreements to market
to our customers.



• Third, we are attempting to obtain more
bank funding, lines of credit, and Letters of Credit, as opposed to using the suppliers “trade credit” to purchase
the gas.



• Forth, we will be re-negotiating our
existing supplier agreements to purchase the gas in larger quantities with greater economies of scale, on better terms, at lower
purchase costs, and reduce the high financing costs. This should drive our costs down, and potentially produce higher profit margins
for our company.



• Fifth, our management has decided to
expand into the coal energy sector of the energy industry. Thermal/Steam non-coking coal is used as a primary source of energy
for coal fired powered plant electric generation. Universal plans to mine, produce, and market “Thermal/Steam” coal
to sale to other major coal producers and electric utility customers for power generation.



• Sixth, our Company, through NDR Energy
Group, has expanded its product mix to include the sales and distribution of propane due to the higher profit margins.



• Seventh, we intend to expand into gas
storage, physical and financial gas trading, transportation, and gas management.



• Eighth, we have expanded our sales of
natural gas beyond just base load transactions to include monthly term transactions, spot market sales, and sales gas for electric
power generation.



Additional Profit Centers



We also plan to increase our revenues and profits
by engaging in some, or all, of the services indicated below. These services are currently being provided to us by our natural
gas suppliers; and the cost for these services are charged to us, and are included in the price of the gas that we purchase from
them. Implementing these new profit centers may generate an additional $0.05 to $0.25 in revenue per mcf of natural gas that we
sell to our customers. These services include:



1. Scheduling - tracking nominations,
confirmations, product movement, and verification.

2. Gas Nominations - delivery
of a specified volume over a defined period of time.

3. Capacity Releases - release
of transportation capacity on interstate natural gas pipelines.

4. Gas Transmission - Delivery
via the interstate pipeline system to the Local Utility and customers.

5. Pipeline Balancing - matching
customer's daily usage with the customer's confirmed pipeline delivery.

6. Risk Management – developing
supply pricing strategy, options, demand, daily and futures contracts.

7. Gas Storage - match seasonal
load variations, and production over periods of fluctuating demand.

8. Gas Trading - physical trading,
financial trading, and hedging of gas futures.



(18)









Value of Our Customer Contracts



Our customer contracts are a very valuable
asset for us. Through NDR Energy we presently sell natural gas to 30 of the largest public utilities, electric power producers,
and local gas distribution companies, that serve millions of commercial, industrial, and residential customers throughout the United
States. Since they are regulated by various Federal and/or State agencies they must guarantee a constant uninterruptible supply
of natural gas and electricity to their customers; which include private homes, commercial and industrial users, medical facilities,
educational facilities, federal/ state buildings, the military, and many more. Therefore, the public gas and electric utility companies
have very stringent guidelines about the suppliers and vendors they do business with. The pursuit and acquisition of new customers
by us can be time consuming and very costly; especially when you are attempting to transact business with large national and multinational
companies with very strict guidelines. They usually require us, and NDR Energy, to respond to a very rigorous Request for Qualifications
(RFQ) or Request for Proposals (RFP) process; which includes extensive background information on the Company, it officers, operations
staff, financial stability, credit worthiness, track record, and our ability to deliver them a firm, reliable, uninterruptible
supply of natural gas. We are responsible for transportation of the gas to their contracted delivery points, any shortages; and
the gas must meet certain standards in terms of quality, pressure, and heat content. There can also be substantial legal and monetary
damages to us for failure to pay our suppliers for the gas; and for failure to deliver the gas to the utilities, because they could
not supply electricity and gas to the general public.



Management believes, but
cannot guarantee, each of our customer contracts would have a potential to generate an estimated $12+ million annually in natural
gas sales. We believe the retail value of each of these contracts could be very significant if someone were to purchase one or
more these contracts based on their potential sales value over a period of 5 to 10 years or more.



Future Capital Funding



To ensure our ability to develop a long term
profitable business, management is planning to raise additional funds in debt or equity capital to fund the growth of our company.
We anticipate using the proceeds to purchase some of the companies we have targeted for future acquisitions, and some for working
capital. Management believes, although we cannot guarantee, that we should be successful in raising additional capital to fund
the Company’s plans for growth and expansion.



The purpose of increasing the number of shares
of common stock is to use them for business and financial purposes; including raising capital for mergers and acquisitions, acquiring
products or services in exchange for stock, attracting and retaining employees, increasing our shareholder base, and being able
to respond rapidly to opportunities that arise in the marketplace.



The raising of additional capital through the
sale of equity may result in a dilution of the current shareholders interests. However, management anticipates that the shareholders
would likely receive greater potential financial rewards by means of a significant increase in the price of the stock, greater
market value of the Company, and more liquidity.



Financial Restructuring Plan



On February 25, 2011, the Board of Directors
approved a Resolution and a “Financial Restructuring Plan” to reduce debt and improve the companies “Balance
Sheet”. The plan calls for our company to reduce its debt, and convert the balance of the outstanding debt on the Balance
Sheet to shares of our Common Stock to our various Note Holders and creditors. This will result in an additional issuance of shares
of our Common Stock that will likely increase the issued and outstanding shares of our Common Stock to an undeterminable amount
of shares. Many of the existing Notes carry interest rates that are very high, and that are above the current market rates. The
benefit to us is to eliminate the outstanding debt and liabilities owed by our company, reduce interest expenses, enhance our financial
position, strengthen the Balance Sheet, and increase our liquidity. Management believes that taking these actions will improve
our profitability, and allow us to pursue our strategies for our growth and expansion. We believe that this should also be very
beneficial to our shareholders.



Amendment to Company’s Articles of
Incorporation



On December 26, 2012, the Company filed with
the Nevada Secretary of State a Certificate of Amendment to the Company’s Articles of Incorporation. The Amendment was approved
by a Unanimous Written Consent of all the Directors of Universal Bioenergy, Inc., on December 19, 2012, pursuant to the authority
granted them by a “Written Consent Of The Holders Of A Majority Of The Voting Shares Of Universal Bioenergy, Inc.”,
dated June 18, 2010; which granted to the Board of Directors the full right and authority to increase or otherwise change the authorized
shares of Common Stock and Preferred Stock. The information regarding this issue was fully disclosed in the Company’s Form
8-K Report, filed on December 28, 2012. The information regarding this issue was originally fully disclosed in the Company’s
Form 10-Q Reports that were filed for the quarterly periods ending June 30, 2011 and September 30, 2011, and the Form 8-K Report
filed on May 19, 2011. A complete copy of the Amendment is attached as Exhibit 3.1 to the form 8K filed on December 28, 2012. The
Amendment incorporated the following changes:



a. Increased the number of authorized shares
of the Corporation’s common stock from 1,000,000,000 to a total of 3,000,000,000 shares.



b. The total number of shares of "Preferred
Stock" that the Corporation is authorized to issue is 10,000,000 shares with a par value of $0.001 per share.



(19)









Our Beneficial Shareholders



On December 31, 2012, there were 673,521,813
shares of our Common Stock issued and outstanding, and there were approximately 78 shareholders of record of our common stock on
the records of our transfer agent. See Part II, Item 5. The shareholder of record is the name of an individual or entity that an
issuer or transfer agent carries in its records as the registered holder (not necessarily the beneficial owner) of the issuer's
securities. Dividends and other distributions are paid only to shareholders of record.



The actual “Beneficial Shareholder”
(the true owner of the shares) will generally have their shares held in the “street name” of their nominee within a
brokerage account, a mutual fund, or a custodian bank, for safety and convenience of trading; with the bank or broker holding title
to the shares. The Depository Trust Company (DTC), through its partnership nominee CEDE & Company, is the largest shareholder
of record of our shares of Common Stock. CEDE & Company, as nominee, holds 394,064,000 million shares of our common stock for
its Broker Dealers and other members on behalf of their beneficial shareholders. Management believes based on its tracking of the
transactional record data of OTC Markets of the total volume of stock trades, and number of executed trades, that the estimated
amount of beneficial shareholders of our stock is in the range of 3000 to 4000+.



Management Incentive Programs



The Company has an incentive program for the
Officers, in accordance with their Employment Agreements, whereby they may receive bonuses and equity awards based on the “economic
value added” that they bring to the Company. This may include increases in revenues, earnings, cash flow, debt reduction,
return on net assets, return on stockholders equity, return on assets, return on capital, stockholder returns, return on sales,
gross or net profit margin, productivity, expense, margins, operating efficiency, objective measures of customer satisfaction,
working capital, financing, earnings per share, market share, inventory turns, acquisitions or strategic transactions, or other
means of bringing additional value to the Company. Since management has deferred most, or all, of their compensation, provisions
have been made to issue them long-term Notes for their salary; with the option to convert the Notes into to common stock of the
Company.



Our present management team inherited a development
stage company that in previous years had no revenue, earnings, limited operations, and very little volume and liquidity in its
stock. They built a good, solid, operating company with strong revenues in a short period of time, during the worst economic downturn
the United States has experienced since the “Great Depression”.



Voting Trust and Control of NDR Energy Group
LLC



On March 12, 2012, the Company and Varlos Energy
Holdings LLC entered into a Voting Trust, via a Voting Trust Agreement, whereby Varlos Energy granted and transferred its two (2%)
percent member interests to the Company and its Voting Trustee, Vince M. Guest, for the purpose of having the Company to vote Varlos
Energy’s member interests in NDR Energy Group LLC for any corporate lawful act for a period not to exceed Ten (10) years.
This Voting Trust vests in the Company, and the Trustee, Fifty One (51%) percent (the “Majority”) of the control of
the membership ownership interests of NDR Energy Group LLC, and the authority over all of its management and operations decisions;
with the combination of the Company’s Forty Nine (49%) percent member interests, the voting rights, and control of Varlos
Energy’s Two (2%) percent member interests.





(20)









Discontinued Operations



There are no discontinued
operations to report for this period.



RESULTS OF OPERATIONS





Fiscal Years Ended December 31, 2012 compared
to December 31, 2011



Review and Analysis
of Current Results of Operations



Revenues



Our revenues for the twelve months period ended
December 31, 2012, decreased due to the following conditions in the U.S. energy market:



According to the Energy Information Administration,
the warm weather this winter has resulted in natural gas working inventories that continue to set new record seasonal highs. EIA’s
average 2012 Henry Hub natural gas spot price forecast is $3.17 per million British thermal units (MMBtu); a decline of about $0.83
per MMBtu from the 2011 average spot price. EIA expects that Henry Hub spot prices will average $3.96 per MMBtu in 2013.



According to Bloomberg/Business week, “The
price of natural gas is at a 10-year low after a surprising jump in supplies. But the government says natural gas inventories expanded
more than expected following a recent production boom. Supplies are currently 59 percent above the five-year average, and they're
expected to keep growing over the next few months.”



Our primary revenues from this period are from
the sale of natural gas and propane. Our revenues for the twelve months ended December 31, 2012, were $50,513,644 as compared to
$71,747,840 for the same period in 2011. This resulted in an decrease of $21,234,196 in revenues, or 29.60% from the previous year.
Our Cost of Sales for this period was $50,435,011. This has resulted in a gross profit margin for this period of $78,633. The high
proportionate cost of sales relative to the gross revenues reflected in this period is due to purchasing the gas from some of the
suppliers at near retail cost, and high financing costs added to the gas by the suppliers. Management plans are to reduce the purchasing
cost of the gas, and the financing cost, by obtaining our own credit facility and lines of credit, and obtaining our gas at the
wellhead. This will allow us to purchase the gas in larger quantities with greater economies of scale, on better terms, at lower
costs, and reduce the high financing costs; thereby significantly increasing our gross profit.



Additionally in 2012, while building our business,
we focused on generating substantial sales revenues, a broad customer base, and gaining the greatest share of the market in the
shortest period of time. That strategy affected how we obtained our supplies, their relative cost, and how we priced our products
for sale to our customers. To gain a great market share in a short period of time initially resulted in higher cost of goods sold,
and selling the product at, or slightly below, our costs; which directly impacted our profitability. This caused almost negligible
gross profit and negative earnings in 2012. This strategy was only a temporary measure while we were building greater market share.
See the sections “New Business Strategy”, “Focus on Earnings”, and “New Profits Centers” above.



We incurred losses of $3,152,009 for the twelve
months ended December 31, 2012, and $2,037,042 for the same period in 2011. Our accumulated deficit since our inception through
December 31, 2012, amounts to $22,402,379. We issued 13,127,925 of common shares for services with an aggregate fair value of approximately
$143,500 that was included in the $1,734,864 in general and administrative expenses for the twelve month period ended December
31, 2012. Excluding the value of the common shares of $143,500 from the general and administrative expenses of $1,734,864 would
reduce the actual net G&A expenses to $1,591,364. We also incurred interest expenses of $1,933,323. Excluding the value of
the common stock that was issued for services, and interest expenses which together totaled $2,076,823 , would correspondingly
reduce our net loss of $1,075,186 to an adjusted net loss of $1,075,186 for the period ending December 31, 2012. Based on an adjusted
net loss of $1,075,186, this loss equals only 2.13% of our total revenues of $50,513,644 for the period ended December 31, 2012,
as compared to 1.97% for the same period ended 2011*.



*This disclosure of information as presented
is a non-GAAP accounting measure, and is not based on GAAP accounting principles or guidelines.



Note! “Regarding Increase in Expenses
and Losses”



This increase in operating expenses, and the
resulting net loss, was primarily due to increases in accrued interest, the current portion of long term debt, and in embedded
derivative liability costs as indicated below.



The Company issued convertible Promissory Notes,
and determined that the conversion features contained in the Notes represent freestanding derivative instruments that meet the
requirements for liability classification under Financial Accounting Standard Board (“FASB”), U.S. GAAP, Accounting
Standards Codification, Derivatives and Hedging (Topic ASC 815). As a result, the fair value of the derivative financial instruments
in the Promissory Notes is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial
instruments of the convertible Notes and warrants was measured at the inception date of the Promissory Notes and warrants, and
each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating,
non-cash income; or expense at each balance sheet date.



The Company valued the conversion features
in its convertible Promissory Notes using the Black-Scholes model. Included in our Statements of Operations for the twelve months
ended December 31, 2012, are $39,690, and $973,879 in non-cash charges totaling $1,013,839 pertaining to the derivative liability
as it pertains to change in derivative liability and amortization of debt discount, respectively.





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Operating Costs and Expense



Our Cost of Sales for the twelve months ended
December 31, 2012, were $50,513,644 as compared to $71,604,210 for the same period in 2011. Our primary business operations consist
of the marketing and distribution of natural gas and propane to our major customers nationwide. Our general and administrative
expenses for the twelve months ended December 31, 2012, were $1,734,864 as compared to $1,312,624 for 2011. We pay our employees
and consultants largely in common shares as our cash availability is currently limited.



Our total operating expenses (increased) from
$1,216,860 for the period ending 2011 by a total of $567,004, or by 46.60%, to $1,783,864 for the period ending December 31, 2012.
Based on our plans for growth and expansion, and increasing revenues through sales of natural and other products, we believe we
will soon reduce our net losses down to zero; and then move our company toward solid profitability. Since we are a high growth
company, growing by mergers and acquisitions, we expect to have corresponding increases in costs reflected in our operating expenses.



Based on business our plans for growth and
expansion, and increasing revenues through sales of natural and other products, we believe we will reduce our net losses down to
zero, and then move our company toward solid profitability.



Assets



Our “total assets” have decreased
by $3,215,014, or 28.67%, to $7,997,832 for the period ending December 31, 2012, compared to $11,212,845 for the same period in
2011. A total of $5,203,156 of that resulted from a reduction in the amount of our Accounts Receivables from the sales of natural
gas due to the unseasonably warm winter on the east coast, a reduced demand in natural gas for heating, a decline in natural gas
prices, and an increase in natural gas working inventories.



Our Property and Equipment and long-term physical
assets were also reduced by $126,209 due to the discontinued operations of our biodiesel refinery in Nettleton, Mississippi. However,
this reduction in our “total assets” was offset somewhat by an increase in our investment in the Whitesburg Friday
Branch Mine, LLC acquisition. Oil and gas companies generally book their inventories and supplies of oil and gas reserves as assets
on their balance sheets since these are very valuable assets owned by the company.



Liquidity and Capital Resources



Our management looks to a variety of funding
sources to meet our short and long-term liquidity requirements. We currently generate the majority of our consolidated revenues
and cash flow from the marketing, sales, and distribution, of natural gas to our 28 electric utility customers through our NDR
Energy Group subsidiary. Our present revenue, profitability, and future growth, are largely dependent on a number of factors; including
the prevailing and future prices for natural gas which is also dependent, or influenced by, numerous factors beyond our control;
such as regulatory developments, changing economic conditions, and competition from other energy sources. As we further diversify
into the marketing and distribution of propane, oil, and coal, our future revenues and profitability will come from multiple sources,
and they will be less dependent on the sales of natural gas alone.



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Working Capital



Our working capital requirements increased
significantly, and we incurred significant fluctuations in our working capital for this period. This resulted in a working capital
deficit of $1,444,295 for the period ending December 31, 2012, as compared to a working capital deficit of $414,481 for the period
ending December 31, 2011. This increased our working capital deficit by $1,029,814 , or by 248.56% . The working capital
deficit was due to the costs of pursuing acquisitions, funding of NDR Energy’s operating expenses, the amount of funds borrowed
from our creditors, purchase of natural gas inventories, our capital spending exceeding our cash flows from operations, and from
the increase in accrued expenses.



We typically have positive cash flow and working
capital each month to meet our capital requirements. The negative working capital for the period ending December 31, 2012, is an
occasional event experienced by many companies and has not had a significant negative effect on our operations. This is due to
our ability to raise capital, the contracts we have with our utility customers, their strong S&P credit ratings, and their
consistent payment of our invoices on schedule. Due to the timing of the transactions, we are able to maximize the efficiency of
the billing and payment cycles, thereby minimizing the impact of any occasional periods of negative working capital. Additionally,
as we purchase gas at the wellhead, obtain lines of credit and accounts receivable facilities, this should enable us to greatly
improve our cash flow and increase our working capital.





Cash Flows



The prices and margins in the energy industry
are normally volatile, and are driven to a great extent by market forces over which we have no control. Taking into consideration
other extenuating factors, as these prices and margins fluctuate, this would result in a corresponding change in our revenues and
operating cash flows. Our cash flows for the twelve months ended December 31, 2012, and 2011 were as follows:



Cash Flows from Operating Activities



Our cash used in operating activities for the
twelve months ended December 31, 2012 was ($2,047,769) as compared to ($1,141,272) for the twelve months ended December 31, 2011.
The decrease was primarily attributable to the accruing of certain management salaries, issuing stock for professional services
in lieu of cash payments, the reduction of Notes payable, and interest with stock in lieu of cash payments.



Cash Flows from Investing Activities



Cash used in investing activities for the year
ended December 31, 2012, was $0 as compared to cash used in investing activities of $889,500 for the twelve months ended December
31, 2011. This was an decrease of $889,500, or an decrease of 889,500%, due to our cash needs to grow by means of acquisitions.



Cash Flows from Financing Activities



Our cash provided by financing activities for
the year ended December 31, 2012, was $2,171,337 as compared to $2,034,478 for the year ended December 30, 2011. The net cash provided
by financing activities is primarily attributable to our Notes Payables issued and the investment in the Whitesburg Friday Branch
Mine.



Liabilities / Indebtedness



Current liabilities decreased to $4,346,734
for the twelve months ended December 31, 2012, compared to $10,594,870 for the same period in 2011. This 58.97% decrease was primarily
due to a $5,116,184 decrease in accounts payable from the purchasing costs and supplies of natural gas. Our long term liabilities
are $3,196,134 for the period ending December 31, 2012, compared to $322,086 for the year ending December 2011. This increase was
primarily due to the conversion of the accrued compensation, expenses of certain officers and employees into long term notes payable,
to reduce our current liabilities, improve our cash flow, and improve the Balance Sheet.



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DEBT



Debt and Debt Financing



Long-Term Debt and Promissory Notes - In its
efforts to expand and grow, the Company borrowed direct cash funds from various investors to raise capital, and the Company issued
them debt instruments in the form of Promissory Notes to evidence that debt. These are long-term Notes with various rates and maturities
that grant the Note Holder the right (but not the obligation) to convert them into common stock of the Company in lieu of receiving
payment in cash. The issued Notes are primarily unsecured obligations. The principal amount of the Notes may be prepaid at the
option of Maker, in whole or part at any time, together with all accrued interest upon written notice to Holder.





Many of these Notes have above market interest
rates, and high price conversion discounts rates to market. Management issued the Notes primarily for the following reasons:



a. Universal was considered a development stage
company with a limited operating history, and had limited revenues and earnings.





b. The investors that accepted a Note, with
deferred payments, with the option to convert the Note to high risk penny stock, for the cash obligation, felt they were taking
an extremely high risk.



c. The investors’ concern about the historically
high inherent risks in penny stocks.



d. The investors’ concern about the lack
of liquidity and limited trading volume in the Company’s stock.



e. The investors’ concern about the volatility
of the stock price at that time.



f. A significant price discount to market was
required by them to offset declines in the stock price to cover the risk of partial, or even total, loss.



g. The investors had very limited, or no, collateral
for their investments or loans to the Company.



h. Many of the Notes were issued when the Company’s
stock was trading in the 2 cent to 3 cent range.



i. The loans were made on the best possible
terms we could get from the investors at that time because of the high risks, the recessionary economy, and tight credit lending
market at that time.



j. Due to these inherent risk factors and their
potential effect on the investors, the Board of Directors approved the conversion prices for the Notes in a range of $.005 to $.05
per share, or at a 30% to 50% discount to market.



The investors have provided us with critical
short and long-term funds that we have used for operations, working capital, and investment capital for our business acquisitions,
to expand and grow our Company. These investors invested funds in our Company when it was still a development stage company with
a limited operating history, limited revenues, negative earnings, and limited stock liquidity. They accepted Promissory Notes with
the option to convert them to shares of common stock, and were taking what was considered to be a high risk investment at that
time. We retain the right to re-negotiate the terms and conditions of the Notes, including increasing the conversion prices if
the stock price rises considerably and consistently over time, on terms that would be more favorable to us and our shareholders.
It could take several years to convert all of the Notes to stock if all of the investors requested it. It is possible that some
may never convert their Notes to stock and may take cash only when we are in the best position to settle the obligation on a cash
basis. No additional consideration was paid to convert any Note.



Most of the Notes that some of the investors
elected to convert were not converted at the stated amount in the Note; but were converted at a 30% to 50% discount to the market
price at the time of conversion to reflect a re-negotiated conversion price due to a modification of the terms of the Note.



Should the investors decide to convert their
respective Notes into common stock then the corresponding debt represented by that Note would be eliminated from the Company’s
balance sheet. The respective investors typically will convert the principal balance on their Notes in 25% to 33% portions, and
usually will not convert their Notes into more than 4.99% of the Company’s outstanding shares of stock at any time.



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List of Notes



List of Notes from October 1, 2012 through
December 31, 2012



On October 10, 2012, the Company entered into
a nine (9) month convertible Promissory Note with a non-related creditor for $42,500 at 8% interest. The Holder has the right to
convert the Note to common stock after six months at a variable conversion price at 50% discount to the market price at the time
of conversion.



On October 30, 2012, the Company entered into
a three (3) year Promissory Note with a non-related creditor for $15,403 at 12% interest. The Holder has the right to convert the
Note to common stock at a fixed conversion price of $0.002 per share.



On November 30, 2012, the Company entered into
a three (3) year Promissory Note with a non-related creditor for $135,100 at 12% interest. The Holder has the right to convert
the Note to common stock at a fixed conversion price of $0.002 per share.





On December 5, 2012, the Company entered into
an seven (7) month convertible Promissory Note with a non-related creditor for $51,500 at 12% interest. The Holder has the right
to convert the Note to common stock after six months at a variable conversion price at 50% discount to the market price at the
time of conversion.



On December 30, 2012, the Company entered into
a three (3) year Promissory Note with a non-related creditor for $110,150 at 12% interest. The Holder has the right to convert
the Note to common stock at a fixed conversion price of $0.002 per share.



On December 31, 2012, the Company entered into
an eight (8) month convertible Promissory Note with a non-related creditor for $42,500 at 8% interest. The Holder has the right
to convert the Note to common stock after six months at a variable conversion price at 50% discount to the market price at the
time of conversion.



On December 31, 2012, the Company entered into
a two (2) year convertible Promissory Note with its Vice President, Solomon Ali, for $162,500 at 10% interest for the accrued compensation
owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right to convert the Note
to common stock at $0.0025.



On December 31, 2012 the Company entered into
a two (2) year convertible Promissory Note with its Manager of Business Development, Don Deluna, for $50,400 at 10% interest for
the accrued compensation owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right
to convert the Note to common stock at $0.0025.



On December 31, 2012, the Company entered into
a two (2) year convertible Promissory Note with its President and CEO, Vince M. Guest, for $130,000 at 10% interest for the accrued
compensation owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right to convert
the Note to common stock at $0.0025.



On December 31, 2012, the Company entered into
a two (2) year convertible Promissory Note with a non-related creditor for $39,851.60 at 12% interest for consulting services provided
to the Company in accordance with their Consulting Agreement. The holder has the right to convert the Note to common stock at $0.0025.



If all of these Notes were converted to common
stock it could take several years; and the amount of stock that could be issued cannot be determined. This would result in a dilution
of the proportional, or percentage of ownership of the shareholders; however, we do not believe the value of the shareholders stock
would be adversely affected. In an effort to build a strong operating company, the officers and some our employees have not taken
their salaries for the last few years, and have become creditors of the Company. The accrued compensation due them by the Company
has become a debt or liability on the books. We have issued them Promissory Notes that include an option to convert the notes to
shares of common stock to reflect these liabilities. This has reduced some of the need to borrow from outside creditors. They have
also taken on the very same risks upon themselves as the outside lenders and creditors. The officers would prefer to be paid in
cash as opposed to shares of common stock. If the officers ever elect to convert their Notes into shares of common stock the shares
will be subject to Rule 144 restrictions as control securities when selling them into the market.



Off-Balance Sheet Arrangements



We have no off-balance sheet arrangements;
including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support, or other
benefits.



WHERE YOU CAN FIND MORE INFORMATION



You are advised to read this Form 10-K in conjunction
with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports
on Form 10-Q, Annual report on Form 10-K, and Current Reports on Form 8-K; including all amendments that we file from time to time.
You may obtain copies of these reports directly from us, or from the SEC at the SEC’s Public Reference Room at 100 F Street,
N.E. Washington, D.C. 20549; and you may obtain information about obtaining access to the Reference Room by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.



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Exhibit Index



|Exhibit No. |   | Exhibit                                                                                                       
|----------- | - | --------------------------------------------------------------------------------------------------------------
|31.1        | * | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. (6)(6 (2)         
|31.2        | * | Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
|32.1        | * | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.                   
|32.2        | * | Certification of Chief Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.                  



*filed herewith





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SIGNATURES



In accordance with Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there
unto duly authorized.



|Registrant
        
        
        Date: July 24, 2013 |  | UNIVERSAL BIOENERGY, INC.
        
        
        By: /s/VINCE M. GUEST                                    
|-------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------
|                                                         |  | Vince M. Guest                                                                                               
|                                                         |  | President and Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director





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



|                    |     |                                                                                                                               | 
|------------------- | --- | ----------------------------------------------------------------------------------------------------------------------------- | 
|Date: July 24, 2013 | By: | /s/VINCE M.  GUEST                                                                                                            | 
|                    |     | Vince M. Guest                                                                                                                | 
|                    |     | President and Chief Executive Officer,
        Principle Financial Officer, Principal
        Accounting Officer and Director | 
|                    |     |                                                                                                                               | 
|Date: July 24, 2013 | By: | /s/SOLOMON ALI                                                                                                                | 
|                    |     | Solomon Ali                                                                                                                   | 
|                    |     | Senior Vice President and Director                                                                                            | 
|                    |     |                                                                                                                               |