----

----

**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

**FORM      10-QSB**

|  x | QUARTERLY                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT                OF 1934                **FOR THE QUARTERLY PERIOD ENDED                SEPTEMBER                30, 2005** |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**             **

|  o | TRANSITION                  REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIESEXCHANGE                  ACT OF 1934 **FOR                      THE TRANSITION FROM ________                      TO** ____ |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Commission      file number **
**000-27853**

**UNIVERSAL      FOOD & BEVERAGE COMPANY**

----

|  **Nevada**                                              |   |  **86-0913555**                                               |
|---------------------------------------------------------------|--------|--------------------------------------------------------------------|
| (State                or other jurisdiction of incorporation) |   | (I.R.S.                Employer Identification                No.) |

|  **3830                Commerce Drive, St. Charles, Illinois** |   |   **60174**     |
|---------------------------------------------------------------------|--------|---------------------------|
| (Address                of principal executive offices)             |   | (Zip                Code) |

**630-584-8670**

----

| YES                  x |   | NO                  o |
|------------------------|--------|-----------------------|

| YES                    o |   | NO                    x |
|--------------------------|--------|-------------------------|

**Transitional      Small Business Disclosure Format**

| YES                      o |   | NO                      x |
|----------------------------|--------|---------------------------|

----

----

----

**Special      Note on Forward-Looking Statements**

| ·   | uncertainties                relating to the Company’s ability to complete the upgrade of its                facilities in a timely and cost-effective manner in order to pursue                its                business strategy; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | uncertainties                relating to the Company’s liquidity, including its ability to generate                positive cash flow from operations, or to otherwise obtain funds                from                borrowings or equity sales, in order to fund its debt obligations                and                working capital and capital expenditure                requirements; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | acceptance                of the Company's products in the                marketplace; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | changes                in the non-alcoholic beverages business environment, including actions                of                competitors and changes in consumer preferences; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | uncertainties                relating to the Company's ability to continue to compete effectively                with                other producers of non-alcoholic beverages and producers of alternative                non-alcoholic beverage products with greater financial and management                resources; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | uncertainties                relating to the Company's ability to develop and distribute new                proprietary products to respond to market needs in a timely manner                and the                Company's ability to continue to protect its proprietary product                information and technology; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | uncertainties                relating to the Company's ability to consummate its business strategy,                including the unavailability of suitable acquisition candidates,                or the                Company's inability to finance general operating activities or future                acquisitions or successfully realize synergies and cost savings from                the                integration of acquired businesses; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                in the costs and availability of raw materials and the Company's                ability                to adjust selling prices to reflect those                changes; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                Company's reliance on existing senior management and the impact of                the                loss of any of those persons or its inability to continue to identify,                hire and retain qualified management                personnel; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adverse                weather conditions; |
|--------------------|--------------------------------------------|

| ·   | regulatory                and legal changes; |
|--------------------|----------------------------------------------|

| ·   | the                effectiveness of our advertising and marketing                programs; |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | dependence                upon third-party vendors; |
|--------------------|-----------------------------------------------------|

| ·   | our                ability to achieve earnings                forecasts; |
|--------------------|--------------------------------------------------------------------------|

| ·   | ability                to sustain and manage growth; and |
|--------------------|----------------------------------------------------------|

----

| ·   | changes                  in economic and political                  conditions. |
|--------------------|---------------------------------------------------------------------------------|

----

**Part      I - Financial Information**

**Introductory      Note **

| ·   | UFBC                became a wholly owned subsidiary of the                Company; |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | the                historical financial statements of UFBC are now the historical financial                statements of the Company; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                Company changed its name to Universal Food & Beverage                Company; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | the                former UFBC shareholders collectively were issued 24,634,345 shares                of our                common stock representing approximately 90.19% of our 27,313,554                issued                and outstanding shares after the share exchange;                and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                outstanding rights, warrants and options to acquire UFBC common stock                became rights, warrants and options to acquire shares of our common                stock                on a one-for-one basis on the same economic                terms. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      1. Financial Statements**

**UNIVERSAL          FOOD & BEVERAGE COMPANY AND SUBSIDIARIES**

**UNAUDITED        CONSOLIDATED BALANCE SHEETS**

**SEPTEMBER        30, 2005 and DECEMBER 31, 2004**

| **ASSETS**                                                      |   |          |       |           |   |
|-----------------------------------------------------------------|--------|---------------|------------|----------------|--------|
|                                                            |   | **9/30/2005** |       | **12/31/2004** |   |
|                                                            |   |          |       |           |   |
| CURRENT                  ASSETS                                 |   |          |       |           |   |
| Cash                                                            |   |          | 38,452     |           |   | 243,161 |   |
| Trade                  and other receivables, net               |   |          | 282,705    |           |   | 4,093 |   |
| Inventories                                                     |   |          | 406,284    |           |   | 161,294 |   |
| Prepaid                  expenses                               |   |          | 65,848     |           |   | 7,821 |   |
| Total                  Current Assets                           |   |          | 793,289    |           |   | 416,369 |   |
|                                                            |   |          |       |           |   |   |   |
| PROPERTY,                  PLANT AND EQUIPMENT- NET             |   |          | 7,670,351  |           |   | 1,274,470 |   |
|                                                            |   |          |       |           |   |   |   |
| OTHER                  ASSETS                                   |   |          |       |           |   |   |   |
| Deposits,                  note receivable and sundry           |   |          | 326,054    |           |   | 476,336 |   |
| Intangibles                  and water rights                   |   |          | 1,928,930  |           |   |   |   |
| Total                  Other Assets                             |   |          | 2,254,984  |           |   | 476,336 |   |
| **Total                  Assets**                               |   | $             | 10,718,624 |           | $      | 2,167,175 |   |
|                                                            |   |          |       |           |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**       |   |          |       |           |   |   |   |
|                                                            |   |          |       |           |   |   |   |
| CURRENT                  LIABILITIES                            |   |          |       |           |   |   |   |
| Short-term                  debt                                |   |          | 1,787,774  |           |   | 62,769 |   |
| Current                  portion of long-term debt              |   |          | 61,300     |           |   | — |   |
| Accounts                  payable                               |   |          | 1,860,758  |           |   | 109,426 |   |
| Accrued                  expenses                               |   |          | 936,739    |           |   | 551,309 |   |
| Deferred                  Revenue                               |   |          | 105,145    |           |   |   |   |
| Total                  Current Liabilities                      |   |          | 4,751,716  |           |   | 723,504 |   |
|                                                            |   |          |       |           |   |   |   |
| LONG-TERM                  LIABILITIES                          |   |          |       |           |   |   |   |
| Long-term                  debt, less current portion           |   |          | 2,423,085  |           |   | — |   |
| Other                  long-term liabilities                    |   |          | 375,000    |           |   | — |   |
| Total                  Long-Term Liabilities                    |   |          | 2,798,085  |           |   | — |   |
|                                                            |   |          |       |           |   |   |   |
| Total                  Liabilities                              |   |          | 7,549,801  |           |   | 723,504 |   |
|                                                            |   |          |       |           |   |   |   |
| STOCKHOLDERS'                  EQUITY                           |   |          |       |           |   |   |   |
| Common                  stock                                   |   |          | 308,642    |           |   | 23,138 |   |
| Paid                  in Capital                                |   |          | 8,705,725  |           |   | 4,860,458 |   |
| Paid                  in Capital- Warrants                      |   |          | 803,280    |           |   | — |   |
| Accumulated                  Deficit                            |   |          | (6,648,824 | )              |   | (3,379,925 | ) |
| Note                  Receivable - Stockholder                  |   |          | —    |           |   | (60,000 | ) |
|                                                            |   |          |       |           |   |   |   |
| Total                  Stockholders' Equity                     |   |          | 3,168,823  |           |   | 1,443,671 |   |
|                                                            |   |          |       |           |   |   |   |
| **Total                  Liabilities and Stockholders' Equity** |   | $             | 10,718,624 |           | $      | 2,167,175 |   |

----

**UNIVERSAL        FOOD & BEVERAGE COMPANY AND SUBSIDIARIES**

**UNAUDITED            CONSOLIDATED STATEMENTS OF OPERATIONS**

**FOR          THE THREE AND NINE MONTHS ENDED**

**SEPTEMBER        30, 2005 AND THE PERIOD FROM JULY 19, 2004 (INCEPTION) TO SEPTEMBER 30,        2004**

|                                                           |   | **Three                    months** |       | **7/19/2004 ** |   | **Nine                    months** |   |
|----------------------------------------------------------------|--------|-------------------------------------|------------|---------------------|--------|------------------------------------|--------|
|                                                           |   | **ended**                           |       | **to**         |   | **ended**                          |   |
|                                                           |   | **9/30/2005**                       |       | **9/30/2004**       |   | **9/30/2005**                      |   |
|                                                           |   |                                |       |                |   |                               |   |
| Net                    Sales                                   |   | $                                   | 486,716    |                | $      | 118,680                            |   | $ | 859,703 |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Cost                    of Goods Sold                          |   |                                | 1,095,406  |                |   | 160,021                            |   |   | 1,980,174 |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Gross                    Deficit                               |   |                                | (608,690   | )                   |   | (41,341                            | )      |   | (1,120,471 | ) |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Operating                    Expenses                          |   |                                |       |                |   |                               |   |   |   |   |
| Selling                    expenses                            |   |                                | 41,466     |                |   | 7,303                              |   |   | 126,633 |   |
| Office                    and administrative expenses          |   |                                | 521,332    |                |   | 88,927                             |   |   | 1,867,152 |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Total                    Operating Expenses                    |   |                                | 562,798    |                |   | 96,230                             |   |   | 1,993,785 |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Loss                    from Operations                        |   |                                | (1,171,488 | )                   |   | (137,571                           | )      |   | (3,114,256 | ) |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Other                    Expense                               |   |                                |       |                |   |                               |   |   |   |   |
| Interest                    expense                            |   |                                | 82,804     |                |   | 373                                |   |   | 149,343 |   |
| Other                    expense                               |   |                                | 2,162      |                |   | 180                                |   |   | 5,300 |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Total                    Other Expense                         |   |                                | 84,966     |                |   | 553                                |   |   | 154,643 |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Loss                    Before Income Taxes                    |   |                                | (1,256,454 | )                   |   | (138,124                           | )      |   | (3,268,899 | ) |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Provision                    for Income Taxes                  |   |                                | —    |                |   | —                            |   |   | — |   |
| **Net                    Loss**                                |   | $                                   | (1,256,454 | )                   | $      | (138,124                           | )      | $ | (3,268,899 | ) |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Basic                    and Diluted Net Loss per Common Share |   | $                                   | (0.04      | )                   | $      | (0.01                              | )      | $ | (0.11 | ) |
|                                                           |   |                                |       |                |   |                               |   |   |   |   |
| Weighted                    Average Common Shares Outstanding  |   |                                | 30,860,491 |                |   | 17,898,493                         |   |   | 28,677,037 |   |

----

**UNIVERSAL        FOOD & BEVERAGE COMPANY AND SUBSIDIARIES**

**UNAUDITED        CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**

**NINE        MONTHS ENDED **

**SEPTEMBER        30, 2005**

|                                                                                                                    |   | Common                  stock Par value- $.01 ($.001 prior to reverse acquisition 3/2/05)                  100,000,000 shares authorized  |       | Paid                in |   | Paid                  in capital- |   | Accumulated |      | Note Receivable- |   |        |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|--------|-----------------------------------|--------|-------------|-----------|-----------------------|--------|-------------|--------|
|                                                                                                                    |   | Shares                                                                                                                                         |       | Amount                 |   | Capital                           |   | Warrants    |      | deficit               |   | Stockholder |   | Total |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |
| Balance                at January 1, 2005                                                                               |   |                                                                                                                                           | 23,137,677 |                   | $      | 23,138                            |   | $           | 4,860,458 |                  | $      | —     |   | $ | (3,379,925 | ) | $ | (60,000 | ) | $ | 1,443,671 |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common shares and warrants through private placement                  offering             |   |                                                                                                                                           | 1,496,670  |                   |   | 14,967                            |   |        | 1,107,533 |                  |   | —     |   |   | — |   |   | — |   |   | 1,122,500 |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common shares and recapitalization in connection with reverse                  acquisition |   |                                                                                                                                           | 2,679,239  |                   |   | 235,031                           |   |        | (315,031  | )                     |   | —     |   |   | — |   |   | — |   |   | (80,000 | ) |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common shares and warrants in                                                                |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| connection                with acquisition agreement                                                                    |   |                                                                                                                                           | 3,000,000  |                   |   | 30,000                            |   |        | 2,220,000 |                  |   | 660,000     |   |   | — |   |   | — |   |   | 2,910,000 |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Exercise                of common stock warrants                                                                        |   |                                                                                                                                           | 72,000     |                   |   | 720                               |   |        | —   |                  |   | 143,280     |   |   | — |   |   | — |   |   | 144,000 |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common shares through                                                                        |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| private                placement offerings                                                                              |   |                                                                                                                                           | 478,600    |                   |   | 4,786                             |   |        | 832,765   |                  |   | —     |   |   | — |   |   |   |   |   | 837,551 |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Payment                of shareholder receivable                                                                        |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   | 60,000 |   |   | 60,000 |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Net                loss for period                                                                                      |   |                                                                                                                                           | —    |                   |   | —                           |   |        | —   |                  |   | —     |   |   | (3,268,899 | ) |   | — |   |   | (3,268,899 | ) |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                    |   |                                                                                                                                           |       |                   |   |                              |   |        |      |                  |   |        |   |   |   |   |   |   |   |   |   |   |
| Balance                at September 30, 2005                                                                            |   |                                                                                                                                           | 30,864,186 |                   | $      | 308,642                           |   | $           | 8,705,725 |                  | $      | 803,280     |   | $ | (6,648,824 | ) | $ | — |   | $ | 3,168,823 |   |

----

**UNIVERSAL              FOOD & BEVERAGE COMPANY AND SUBSIDIARIES**

**UNAUDITED            CONSOLIDATED STATEMENT OF CASH FLOWS**

**FOR          THE NINE MONTHS ENDED**

**September          30, 2005 AND THE PERIOD FROM JULY 19, 2004 (INCEPTION) TO SEPTEMBER 30,          2004**

|                                                                                                                                                                                                                                                                                        |   | **2005** |       | **2004** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |
| CASH                      FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                                                                   |   |     |       |     |   |
| Net                      loss                                                                                                                                                                                                                                                               |   | $        | (3,268,899 | )        | $      | (138,124 | ) |
| Adjustments                      to reconcile net loss to                                                                                                                                                                                                                                   |   |     |       |     |   |   |   |
| net                      cash (used in) provided by operating activities -                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
| Depreciation                      and amortization                                                                                                                                                                                                                                          |   |     | 133,832    |     |   | — |   |
| Bad                      Debt Expense                                                                                                                                                                                                                                                       |   |     | 134,680    |     |   | — |   |
| Changes                      in operating assets and liabilities -                                                                                                                                                                                                                          |   |     | —    |     |   | — |   |
| Trade                      receivables                                                                                                                                                                                                                                                      |   |     | (284,544   | )        |   | (79,887 | ) |
| Inventories                                                                                                                                                                                                                                                                                 |   |     | (244,989   | )        |   | (155,044 | ) |
| Prepaid                      expenses and other assets                                                                                                                                                                                                                                      |   |     | (18,493    | )        |   | — |   |
| Accounts                      payable                                                                                                                                                                                                                                                       |   |     | 1,603,761  |     |   | 43,073 |   |
| Accrued                      expenses                                                                                                                                                                                                                                                       |   |     | 385,433    |     |   | 376,669 |   |
| Deferred                      Revenue                                                                                                                                                                                                                                                       |   |     | 105,145    |     |   | — |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Net                      Cash (used in) provided by Operating Activities                                                                                                                                                                                                                    |   |     | (1,454,074 | )        |   | 46,687 |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| CASH                      FLOWS FROM INVESTING ACTIVITIES                                                                                                                                                                                                                                   |   |     |       |     |   |   |   |
| Increase                      in deposits and note receivable                                                                                                                                                                                                                               |   |     | (168,000   | )        |   | (50,000 | ) |
| Acquisition                      of Cardinal Minerals, Inc.                                                                                                                                                                                                                                 |   |     | (80,000    | )        |   | — |   |
| Business                      acquisition                                                                                                                                                                                                                                                   |   |     | (3,175,074 | )        |   | — |   |
| Capital                      expenditures                                                                                                                                                                                                                                                   |   |     | (1,226,000 | )        |   | (406,126 | ) |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Net                      Cash used in Investing Activities                                                                                                                                                                                                                                  |   |     | (4,649,074 | )        |   | (456,126 | ) |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| CASH                      FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                                                                                   |   |     |       |     |   |   |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Proceeds                      from government grants                                                                                                                                                                                                                                        |   |     | 375,000    |     |   | — |   |
| Proceeds                      from short-term debt                                                                                                                                                                                                                                          |   |     | 900,000    |     |   | 138,901 |   |
| Proceeds                      from long-term debt                                                                                                                                                                                                                                           |   |     | 2,500,000  |     |   | — |   |
| Payments                      on long-term debt                                                                                                                                                                                                                                             |   |     | (40,611    | )        |   | — |   |
| Receipt                      of Receivable                                                                                                                                                                                                                                                  |   |     | 60,000     |     |   | — |   |
| Capital                      contributions                                                                                                                                                                                                                                                  |   |     | 2,104,050  |     |   | 295,000 |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Net                      Cash Provided By Financing Activities                                                                                                                                                                                                                              |   |     | 5,898,439  |     |   | 433,901 |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| NET                      CHANGE IN CASH                                                                                                                                                                                                                                                     |   |     | (204,709   | )        |   | 24,462 |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| CASH                      -                                                                                                                                                                                                                                                                 |   |     |       |     |   |   |   |
| Beginning                      of period                                                                                                                                                                                                                                                    |   |     | 243,161    |     |   | — |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| End                      of period                                                                                                                                                                                                                                                          |   | $        | 38,452     |     | $      | 24,462 |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Supplemental                      disclosures of cash flow information                                                                                                                                                                                                                      |   |     |       |     |   |   |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Cash                      paid during the period for:                                                                                                                                                                                                                                       |   |     |       |     |   |   |   |
| Income                      taxes                                                                                                                                                                                                                                                           |   | $        | —    |     | $      | — |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Interest                                                                                                                                                                                                                                                                                    |   |     | 98,117     |     |   | — |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| Supplemental                      schedule of non-cash investing                                                                                                                                                                                                                            |   |     |       |     |   |   |   |
| and                      financing activities                                                                                                                                                                                                                                               |   |     |       |     |   |   |   |
|                                                                                                                                                                                                                                                                                        |   |     |       |     |   |   |   |
| In                      connection with the business acquisition (see note 16), a portion                      of the                      purchase price was funded by stock and warrants valued at $2,910,000                      and                      seller financing of $850,000. |   |

----

| 1. | BASIS                  OF PRESENTATION |
|----|----------------------------------------|

|   | The                  accompanying consolidated financial statements reflect all normal                  recurring adjustments which, in the opinion of management, are                  necessary                  for a fair presentation of the financial position and the results                  of                  operations for the interim periods presented. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On                      March 2, 2005, the registrant, f/k/a Cardinal Minerals, Inc.                      ("Company")                      completed the share exchange with Universal Food & Beverage Company                      ("UFBC") shareholders contemplated by a Share Purchase Agreement                      and Plan                      of Reorganization ("Reorganization Agreement") dated September                      28, 2004.                      The Company acquired all of the outstanding shares and other                      rights with                      respect to UFBC common stock for shares of common stock, $.01                      par value,                      of the Company. Immediately prior to the share exchange, the                      Company                      effected a one (1)-for ten (10) reverse stock split for its                      shares of                      common stock then outstanding. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                  a result of the share exchange and other transactions contemplated                  by the                  Reorganization Agreement and accounting for the reverse acquisition: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -                  UFBC became a wholly owned subsidiary of the Company. |
|--------|--------------------------------------------------------------------------|

|   | -                  The historical financial statements of UFBC are presented as the                  historical financial statements of the registrant (Company). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -                  The Company changed it's name to Universal Food & Beverage Company |
|--------|-------------------------------------------------------------------------------------------|

|   | -                  the former UFBC shareholders collectively were issued 24,634,345                  shares of                  the Company's common stock representing approximately 90.19% of                  the                  27,313,554 issued and outstanding shares immediately following                  the share                  exchange. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -                  the outstanding rights, warrants and options of UFBC common stock                  became                  rights, warrants and options to acquire shares of the registrant's                  common                  stock on a one-for-one basis on the same economic terms. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -                  the one year term for all existing warrants was amended to begin                  as of                  March 2, 2005. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                  reverse acquisition was treated for financial accounting purposes                  as a                  recapitalization of UFBC and therefore the accompanying financial                  statements are those of UFBC rather than the historical financial                  statements of Cardinal Minerals, Inc. Since UFBC was formed on                  July 19,                  2004, and had no activity until September 2004, there are no prior                  year                  comparative financials until the third quarter of 2004 and the                  results of                  operations for the three and nine month periods are actually just                  the                  month of September. At the closing, $80,000 of the former Cardinal                  Minerals Inc. liabilities were assumed and then paid as a result                  of the                  reverse acquisition. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | GOING                  CONCERN |
|----|--------------------------------|

|   | The                  accompanying consolidated financial statements have been prepared                  on a                  going-concern basis, which presumes that the Company will be able                  to                  continue to meet its obligations and realize its assets in the                  normal                  course of business. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                  shown on the accompanying consolidated financial statements, the                  Company                  has incurred operating losses since it's inception. Additionally,                  cash                  flow difficulties have resulted in the Company deferring payment                  of both                  vendor and employee obligations. Management believes that the Company                  will                  continue to incur operating losses until Company revenues can sustain                  the                  business. As of September 30, 2005, the Company has a working capital                  deficit of approximately $4.0 million, and positive stockholders'                  equity                  of approximately $3.2 million. The Company is dependent upon continuing                  cash infusions to fund on-going start-up operations. The Company                  is                  approaching various banks and financial institutions as well as                  equity                  investors about obtaining funding to finance the ongoing operating                  loss                  and the growth of working capital as revenues increase and inventory                  and                  receivables levels rise in addition to additional required capital                  expenditures. These discussions are on-going and include discussions                  with                  equity and secured lenders to provide the above mentioned fundings,                  as                  well as discussions with existing lendors about refinancing debt                  that is                  currently due and payable during the fourth                  quarter. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | While                  the Company believes that existing and prospective shareholders                  and                  prospective financial institutions will provide the required funding,                  there can be no assurance that the equity and debt funding required                  can be                  obtained, or if obtained that it will be on terms that will not                  dilute                  existing shareholders. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                    inability to obtain required equity funding would materially                    affect the                    Company's ability to continue and would adversely impact the                    current                    equity value of the Company. The accompanying financial statements                    do not                    include any adjustments that might result from the outcome of                    these                    uncertainties. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. | MANAGEMENT                  AGREEMENT           |
|----|---------------------------------------------------------------------------------------------------|

|   | On                  September 1, 2004, UFBC entered into a Management Agreement with                  Independence Water Group, LLC ("IWG"), whereby UFBC was to manage                  the                  water bottling business of IWG. UFBC was responsible for sales                  and all                  costs of the facility, including normal debt payments of IWG, maintenance                  of the plant and equipment, insurance, taxes, etc. during the term                  of the                  agreement. The original expiration of the agreement was December                  1, 2004,                  but the agreement was informally extended through March 31, 2005.                  The                  intention of the parties was to allow UFBC to manage the business                  until                  such time that UFBC could acquire the business in accordance with                  it's                  strategic plan. As described in note 16, IWG's net assets were                  purchased                  by the Company on March 31, 2005. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                  connection with the Management Agreement, UFBC issued IWG an option                  to                  receive 1,000,000 units, each unit consisting of one share of common                  stock                  and one warrant to purchase an additional share of stock. The option                  was                  exercisable with no consideration after the consummation of an                  acquisition                  agreement. The warrants were to be priced at $2.00 for 90 days                  and $2.50                  for the next 275 days. The warrant pricing was modified in the                  final                  acquisition agreements to be exercisable over three years for $1.00.                  The                  fair value of the shares and warrants are included in the purchase                  price                  of IWG (see note 16).           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | SUMMARY                  OF SIGNIFICANT ACCOUNTING POLICIES |
|----|-------------------------------------------------------------|

|   | Nature                  of Business - The Company is a Nevada corporation and a manufacturer                  and marketer of food and beverage products.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Basis                  of Financial Statement Presentation - The consolidated financial                  statements include the accounts of the Company and its wholly owned                  subsidiaries. All significant intercompany transactions and accounts                  have                  been eliminated.   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Inventories                  - Inventories are valued at the lower of cost or market using the                  first-in, first-out (FIFO) method of valuation.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Property,                  Plant and Equipment - Property and equipment are recorded at cost.                  Depreciation is computed using the straight line method over the                  estimated                  useful lives (5-7 years for equipment; 25 years for buildings)                  of the                  assets. Depreciation expense was $83,199 and $133,624 for the three                  and                  nine months ended September 30,                  2005. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Long                  Lived Assets - The Company reviews the carrying value of its                  long-lived and identifiable intangible assets for possible impairment                  whenever events or changes in circumstances indicate that the carrying                  amount of assets may not be recoverable. To date, the Company has                  not                  recognized any assets which are impaired.  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Intangibles/Water                  Rights - The Company acquired certain intangibles and water rights                  from IWG (see note 16). The Company believes that these rights                  have                  indefinite lives and are therefore not being amortized. These rights                  are                  reviewed for impairment annually.  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Revenue                  Recognition - Revenue is recognized when merchandise is shipped to the                  customer. Funds received per contract prior to shipment are recorded                  as                  Deferred Revenue on the balance                  sheet. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Shipping                  and Handling Fees and Costs - The Company classifies shipping and                  handling costs billed to customers as net sales; costs related                  to shipping                  are classified as cost of goods sold.   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income                  Taxes - The Company and its wholey owned subsidiaries file                  consolidated federal and state income tax returns.            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                    Company accounts for income taxes under the provisions of Statement                    of                    Financial Accounting Standards ("SFAS") No. 109, "Accounting                    for Income                    Taxes". Deferred tax assets and liabilities are provided for                    temporary                    differences between financial reporting basis and the tax basis                    of the                    Company's assets and liabilities at enacted tax rates expected                    to be in                    effect when such amounts are realized or settled, subject to                    a valuation                    allowance when it is more likely than not that some or all of                    the deferred                    tax asset will not be realized.      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4. | SUMMARY                    OF SIGNIFICANT ACCOUNTING POLICIES- CONTINUED  |
|----|--------------------------------------------------------------------------------|

|   | Stock                    Based Compensation - The Company accounts for stock based compensation                    in accordance with FASB No. 123R, *Share-Based Payment*, which                    requires the fair value method of recording such items. There                    are                    currently no options outstanding.          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Research                        and Development Costs - Research and development costs are expensed as                        incurred.          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loss                      per Share - Basic loss per share is computed by dividing the net                      loss                      applicable to common stockholders by the weighted average common                      shares                      outstanding during the period. Diluted loss attributable to                      common                      stockholders adjusts basic loss per share for the effects of                      stock                      options, warrants and other potentially dilutive financial                      instruments,                      only in such periods in which such effect is dilutive.          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Since                    the Company is in a net loss position, basic and dilutive net                    loss per                    share are the same since the inclusion of other common stock                    equivalents                    would be anti-dilutive.          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Accounts                        and Notes Receivable - The Company makes judgments as to                        the                        collectibility of accounts and notes receivable based on                        historic trends                        and future expectations. Management estimates an allowance                        for doubtful                        receivables, which reflects its current assessment of the                        collectibility                        of the receivables. Management believes that the current                        specific and                        general receivable reserves aggregating $149,280 is adequate                        as of                        September 30, 2005. The reserve was $14,600 at December 31,                        2004.         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  Use                      of Accounting Estimates - The preparation of financial statements                      in                      conformity with generally accepted accounting principles requires                      management to make estimates and assumptions that affect the                      reported                      amounts of assets and liabilities and disclosure of contingent                      assets and                      liabilities at the date of the financial statements and reported                      amounts                      of revenues and expenses during the reporting period. Actual                      results could                      differ from those estimates. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.                        INVENTORIES                                        |   |      |      |       |   |
|----------------------------------------------------------------------------------------|--------|-----------|-----------|------------|--------|
|                                                                                   |   |      |      |       |   |
| Inventories,                      consist of the following:                            |   | 9/30/2005 |      | 12/31/2004 |   |
| Raw                      materials                                                     |   | $         | 374,952   |       | $      | 78,180 |   |
| Finished                      goods                                                    |   |      | 31,332    |       |   | 83,114 |   |
|                                                                                   |   | $         | 406,284   |       | $      | 161,294 |   |
|                                                                                   |   |      |      |       |   |   |   |
| 6.                        PROPERTY,                      PLANT AND EQUIPMENT |   |      |      |       |   |   |   |
|                                                                                   |   |      |      |       |   |   |   |
| Property,                      plant and equipment consist of the following:           |   |      | 9/30/2005 |       |   | 12/31/2004 |   |
| Leasehold                      improvements                                            |   | $         | 114,629   |       | $      | 195,361 |   |
| Furniture                      and office equipment                                    |   |      | 55,054    |       |   | 51,534 |   |
| Equipment                      and improvements in progress                            |   |      | 2,908,690 |       |   | 1,033,162 |   |
| Buildings                                                                              |   |      | 999,190   |       |   | - |   |
| Land                                                                                   |   |      | 3,732,000 |       |   | - |   |
|                                                                                   |   |      | 7,809,563 |       |   | 1,280,057 |   |
| Less:                      accumulated depreciation and amortization                   |   |      | 139,212   |       |   | 5,587 |   |
|                                                                                   |   | $         | 7,670,351 |       | $      | 1,274,470 |   |

| 7. | NOTE                    RECEIVABLE          |
|----|------------------------------------------------------------------------------------------|

|   | The                    note receivable consists of advances of $400,067 to a business                    partner.                    The notes bear interest at 5% with scheduled interest and principal                    payments beginning April 1, 2005 and payable over a 12 month                    period. The                    managements of both companies are negotiating a business arrangement                    whereby interest and principal payments may be made through a                    profit                    sharing arrangement of shared business opportunities. As these                    negotiations are continuing, no payments have been received as                    of November                    14, 2005. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 8. | SHORT-TERM                          DEBT          |
|----|------------------------------------------------------------------------------------------------|

|   | Short-term                        debt consists of the following:          |
|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | -                        An equipment loan in the amount of $500,000 with a commercial                        bank                        obtained in connection with acquisition of IWG (see note                        16). The note is                        due on December 31, 2005, with monthly interest only payments                        at prime                        plus one percent (effectively 7.75% at September 30, 2005)                        and is                        collateralized by certain equipment in the Virginia facility.         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -                          An equipment loan in the amount of $850,000 with the sellers                          of the                          business acquisition (see note 16). The loan is due on                          March 31, 2006,                          with interest only payments at six percent for six months                          then converting                          to twelve percent until maturity and is secured by a second                          position on                          certain equipment and real estate in Virginia. The Company                          has received a                          waiver from this lender to postpone interest payments until                          further                          notified by the lender.         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -                          Installment note payable for equipment, with twelve monthly                          payments of                          $6,472, including interest at 8%, through October                          2005. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -Four                      short term promissory notes provided by shareholders totaling                      $400,000                      (two totaling $300,000 were issued during the third quarter                      of 2005) with                      interest accruing at 6%. The total principal and interest is                      due at                      various times during the fourth quarter of 2005.         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | LONG-TERM                          DEBT          |
|----|-----------------------------------------------------------------------------------------------|

|   | Effective                      March 31, 2005, in conjunction with the Asset Purchase Agreement                      (see note                      16), the Company borrowed $2,500,000 in mortgage financing                      secured by the                      real estate of the Company's Virginia subsidiary. The mortgage                      maturity                      date is March 31, 2025 and requires amortizing principle and                      interest                      payments over 20 years with interest at prime plus one percent                      (effectively 7.75% at September 30, 2005). The annual principal                      payments                      will vary based upon changing interest rates over time.          |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | ACCRUED                        EXPENSES          |
|-----|-----------------------------------------------------------------------------------------------|

|   | Included                      in accrued expenses are deferred salaries of executive officers                      of                      approximately $581,000 and $142,000 as of September 30, 2005                      and December                      31, 2004, respectively. The officers agreed to defer 50% of                      their                      compensation until the operations of the bottling facility                      reaches an                      annual revenue rate of $4,000,000.          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | INCOME                        TAXES          |
|-----|-------------------------------------------------------------------------------------------|

|                                                  |   | 9/30/2005 |       | 12/31/2004 |   |
|-------------------------------------------------------|--------|-----------|------------|------------|--------|
| Deferred                      tax assets              |   |      |       |       |   |
| Net                      operating loss carry forward |   | $         | 2,527,000  |       | $      | 1,284,000 |   |
| Total                      deferred tax assets        |   |      | 2,527,000  |       |   | 1,284,000 |   |
| Valuation                      allowance              |   |      | (2,527,000 | )          |   | (1,284,000 | ) |
| Net                      deferred tax asset           |   | $         | -          |       | $      | - |   |

|   | At                    September 30, 2005 and December 31, 2004, the Company has net                    operating                    loss carry forwards for Federal and state income tax purposes                    totaling                    approximately $6,649,000 and $3,380,000, respectively, available                    to offset                    future taxable income. These loss carry forwards expire in years                    beginning                    in 2024, unless utilized sooner. Cardinal Minerals Inc.,                    prior to the                    stock exchange had net loss carry forwards of as much                    as $2,000,000.                    Due to IRS regulations with respect to changes of control, the                    amount                    available to be utilized on an annual basis will be limited (and                    is                    therefore not included in the table above). In addition, the                    ability to                    use the registrant's prior carry forwards before they expire                    is uncertain,                    so a valuation allowance for the entire benefit has been                    provided. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 12. | OTHER                      LONG-TERM LIABILITIES |
|-----|--------------------------------------------------|

|   | Other                      long-term liabilities consists of two grants from the State                      of Virginia in                      the amount of $375,000, which were provided to the Company                      for the purpose                      of constructing a new bottling plant and increasing local employment.                      Due                      to the uncertainty of meeting the specific terms of the agreements,                      the                      Company has classified these grants as liabilities. The terms                      of the                      grants require that the Company employee a certain number of                      employees and                      spend certain capital amounts for facility expansion. After                      a 30 month                      period, the Company must account for these events or return                      a prorated                      amount of the grant funding. The 30 month period expires October                      2007. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | PRIVATE                      PLACEMENT OFFERINGS |
|-----|--------------------------------------------------|

|   | The                      Company (as UFBC) conducted a private placement offering, which                      began in                      September, 2004 and was terminated March 1, 2005, the day prior                      to the                      reverse acquisition described in note 1. The offering was for                      a maximum of                      $7,500,000, consisting of 10,000,000 units priced at $.75.                      Each unit                      consisted of one share of common stock and one warrant. The                      exercise price                      of the warrants was $2.00 for the first 90 days after subscription                      and                      $2.50 for the balance of a one year period. For the period                      from January 1,                      2005 through March 1, 2005, the Company issued 1,496,670 units                      or                      $1,122,500. In total, the Company issued 4,962,345 units for                      $3,721,744                      under this agreement. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                      terms of the Reorganization Agreement called for the conversion                      of the                      former existing warrants to warrants of the new merged company.                      In                      addition, the Company modified the warrants to restart the                      365 day term of                      the warrant agreement effective the date of the merger. There                      was no                      financial statement effect based on this                      modification. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During                      the period from March 2, 2005 to September 30, 2005 (post merger),                      the                      Company sold 478,600 shares of common stock for $837,551 through                      a private                      placement offering. The Company is continuing its efforts to                      raise funds                      through private placements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | WARRANTS |
|-----|----------|

|   | During                      the nine months ended September 30, 2005, the Company had the                      following                      activity related to stock warrants: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   | Number                      of |      | Range                      of        |   |
|----------------------------------------------------|--------|--------------------------------|-----------|--------------------------------------|--------|
|                                               |   | Warrants                       |      | Exercise                      Prices |   |
| Balance                      at January 1, 2005    |   |                           | 4,487,677 |                                 | $      | 2.00                      - 2.50 |   |
| Issued                                             |   |                           | 4,496,668 |                                 | $      | 1.00                      - 2.50 |   |
| Exercised                                          |   |                           | (72,000   | )                                    | $      | 2.00 |   |
| Forfeited                                          |   |                           | —   |                                 |   |  |   |
| Balance                      at September 30, 2005 |   |                           | 8,912,345 |                                 | $      | 1.00                      - 2.50 |   |

|   | All                      warrants are fully exercisable at September 30, 2005. Subsequent                      to                      September 30, 2005, a shareholder exercised 55,000 warrants                      with an                      exercise price of $1.00/share.          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15. | LEASES |
|-----|--------|

|   | In                      December 2004, the Company entered into a five year lease for                      its                      executive offices. The lease requires minimum monthly payments                      ranging                      from $6,199 to $7,059 during the term of the lease. The lease                      also                      provides for two three year                      extensions. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                      October 2004, the Company entered into a one year lease for                      a warehouse in                      Virginia. The lease requires minimum monthly payments ranging                      from $3,000                      to $6,000 per month. The lease also provides for a six month                      or five year                      renewal at $7,500 per month. The Company has exercised it's                      six month                      renewal option.  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                      Company also leases various equipment on operating leases.                      Total rent                      expense for the nine months ended September 30, 2005 was approximately                      $153,000. Minimum annual rental payments under operating leases                      are as                      follows for the years ended September 30,          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2006   |   | $       | 99,130        |   |
|--------|--------|---------|---------------|--------|
| 2007   |   |    | 100,724       |   |
| 2008   |   |    | 80,451        |   |
| 2009   |   |    | 83,487        |   |
| 2010   |   |    | 21,340        |   |
|   |   | $  |  385,132 |   |

----

| 16. | BUSINESS                        ACQUISITION |
|-----|---------------------------------------------|

|   | On                          March 31, 2005, the Company's wholly-owned Virginia subsidiary,                          Universal                          Food & Beverage Company of Virginia, completed the purchase from                          Independence Water Group, LLC ("IWG"), of the assets of                          IWG’s water                          bottling business pursuant to the terms of an asset purchase                          agreement and                          real estate purchase agreement ("Asset Purchase Agreement")                          with IWG. The                          assets consisted of approximately 620 acres of forestland,                          certain water                          rights, a fully equipped and operational water bottling                          facility, a                          distribution warehouse and a home.          |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | The purchase price consisted                        of the                        following:   |
|--------|----------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | - $650,000 in cash, including                        a $150,000                        deposit previously provided   |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | -                          3,000,000 unregistered shares of Company stock, including                          1,000,000 option                          shares in connection with the management agreement (see                          note                          3)  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | - 3,000,000 unregistered                          warrants of                          Company stock, including 1,000,000 warrants in connection                          with the                          management agreement (see note 3), which are exercisable                          over three years                          at a price of $1.00 per                          share   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | -                           Proceeds from a 20 year mortgage note from a local                          bank in the                          amount of $2,500,000.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | -                          Note payable to IWG in the amount of $850,000, which bears                          interest at a                          rate of 6 % annually for the first six months and 12% thereafter,                          and is                          payable in full on March 31,                          2006.   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | The                          fair value of the 3,000,000 shares of stock issued was                          calculated at                          $.75/share or $2,250,000 based upon a third party valuation                          approved by                          the Company's Board of Directors. The fair value of the                          3,000,000 warrants                          was calculated as $660,000 using the Black Scholes option                          pricing model                          with the following weighted average assumptions: expected                          dividend yield                          0%; risk-free interest rate of 3.96%; expected volatility                          of 55%, and an                          expected life of 3 years. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| The                          aggregate consideration paid for the acquisition was as                          follows: |   |   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|

| Fair                          value of common stock issued |   | $       | 2,250,000       |   |
|------------------------------------------------------------|--------|---------|-----------------|--------|
| Fair                          value of warrants issued     |   |    | 660,000         |   |
| Cash                          consideration                |   |    | 650,000         |   |
| Transaction                          costs                 |   |    | 175,074         |   |
| Payables                          assumed                  |   |    | 147,570         |   |
| Payment                          of seller mortgage        |   |    | 2,500,000       |   |
| Note                          due to seller                |   |    | 850,000         |   |
|                                                       |   | $  |  7,232,644 |   |

|   | The                        cash portion of the acquisition was in part funded through                        the proceeds                        from a $2,500,000 long-term note and a $500,000 short-term                        note. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                        acquisition has been accounted for as a purchase and the                        purchase price,                        including the direct costs of acquisition, have been allocated                        as                        follows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Land                                                  |   | $      | 3,732,000 |   |
|-------------------------------------------------------|--------|--------|-----------|--------|
| Buildings                                             |   |   | 905,900   |   |
| Equipment                                             |   |   | 665,400   |   |
| Intangibles                          and water rights |   |   | 1,929,344 |   |
|                                                  |   | $      | 7,232,644 |   |

|   | The                        excess of the purchase price over the estimated fair values                        of the                        tangible assets acquired and liabilities assumed has been                        allocated to                        intangibles/water rights. These allocations are subject to                        revision when                        the Company receives final information, including appraisals                        and other                        analyses. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Since                        the business was acquired on March 31, 2005, the Company's                        results of                        operations does not include the results of IWG prior to March                        31, 2005. If                        the acquisition had occurred at the beginning of the period                        presented, the                        loss before income taxes and net loss for the nine months                        ended September                        30, 2005 would have been higher by approximately $33,000.This                        additional                        loss would not change the loss per share amounts.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17. | SUBSEQUENT                        EVENT |
|-----|-----------------------------------------|

|   | On                        October 18, 2005 the Company registered 3,250,000 shares                        of commons stock                        on Form S-8. On October 19, 2005 the Company filed a form                        8K stating that                        the Company had issued 2,412,500 of these S-8 shares to 22                        consultants who                        have agreed to provide a variety of future consulting services                        in return                        for this stock compensation. These services will be provided                        over varying                        terms over a two year period. The Company has valued these                        shares at $1.05                        per share, the last trading price for the five days prior                        to their                        issuance. The Company will expense these services as they                        are                        provided. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Overview**

**Results      of Operations**

|                                                         |   | **Three                  months** |       | **Three                  months** |   |                                 |   |
|--------------------------------------------------------------|--------|-----------------------------------|------------|-----------------------------------|--------|--------------------------------------|--------|
|                                                         |   | **ended**                         |       | **ended**                         |   | **Change**                           |   |
|                                                         |   | **9/30/2005**                     |       | **6/30/2005**                     |   | **Better/                  (Worse)** |   |
|                                                         |   |                              |       |                              |   |                                 |   |
| Net                  Sales                                   |   | $                                 | 486,716    |                              | $      | 296,617                              |   | $ | 190,099 |   |
| Cost                  of Goods Sold                          |   |                              | 1,095,406  |                              |   | 706,770                              |   |   | (388,636 | ) |
| Gross                  Deficit                               |   |                              | (608,690   | )                                 |   | (410,153                             | )      |   | (198,537 | ) |
| Total                  Operating Expenses                    |   |                              | 562,798    |                              |   | 898,463                              |   |   | 335,665 |   |
| Loss                  from Operations                        |   |                              | (1,171,488 | )                                 |   | (1,308,616                           | )      |   | 137,128 |   |
| Total                  Other Expense                         |   |                              | 84,966     |                              |   | 67,241                               |   |   | (17,725 | ) |
| Loss                  Before Income Taxes                    |   |                              | (1,256,454 | )                                 |   | (1,375,857                           | )      |   | 119,403 |   |
| Provision                  for Income Taxes                  |   |                              | —    |                              |   | —                              |   |   |   |   |
| **Net                  Loss**                                |   | $                                 | (1,256,454 | )                                 | $      | (1,375,857                           | )      | $ | 119,403 |   |
| Basic                  and Diluted Net Loss per Common Share |   | $                                 | (0.04      | )                                 | $      | (0.05                                | )      | $ | 0.01 |   |
| Weighted                  Average Common Shares Outstanding  |   |                              | 30,860,491 |                              |   | 30,420,258                           |   |   | (440,233 | ) |

----

*Sales*

*Cost      of Goods Sold*

*Gross      Margin*

*Selling,      Office and Administrative Expenses*

*Other      Expense*

*Loss      Before Income Taxes*

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*Tax*

*Net      Loss*

**Liquidity      and Capital Resources**

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**Item      3. Controls and Procedures**

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**Part      II - Other Information**

**Item      2. Unregistered Sales of Securities and Use of Proceeds**

**Item      6. Exhibits **

|  | 10.1 | Promissory                Note dated August 10, 2005 in the original principal amount of $250,000                payable to DNV LLC. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------|

|  | 10.2 | Promissory                Note dated September 2, 2005 in the original amount of $50,000 payable                to                Samual J Balistreri. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 31.1 | Certification                of CEO and CFO pursuant to Section 302 of the Sarbanes-Oxley Act                of                2002. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------|

|  | 32.1 | Certification                of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act                of                2002. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------|

**SIGNATURES**

|         |                                                                                                                                                 |                                    |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|
|         | **UNIVERSAL                FOOD & BEVERAGE COMPANY**                                                                                             |
|    |                                                                                                                                            |                               |
| Date:   | By:                                                                                                                                        | /s/                 Duane N Martin |
|         | Duane                N Martin                                                                                                                        |
|         | Chairman                  and Chief Executive Officer(Principal Executive Officer and Principal                  Financial                  Officer) |

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