UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended January 31, 2009

OR

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

For the transition period from _________ to _________

Commission File Number 000-51132

Universal Capital Management, Inc.

(Exact name of registrant as specified in its charter)

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

19808
(Zip Code)
|Registrants telephone number, including area code: (302) 998-8824                                                                                        



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

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

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

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

The number of shares of the registrants Common Stock outstanding as of August 13, 2009 was 6,412,426.













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TABLE OF CONTENTS



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|-------------------------------------------------------------------------------------------- | ----
|                                                                                             | Page
|Explanatory Note                                                                             |     
|                                                                                             |     
|PART I  FINANCIAL INFORMATION                                                              
|                                                                                             |     
|Item 1
Financial Statements                                                                  | 1   
|                                                                                             |     
|Item 2
Managements Discussion and Analysis of Financial Condition and Results of Operations | 1   
|                                                                                             |     
|Item 4
Controls and Procedures                                                               | 7   
|                                                                                             |     
|PART II  OTHER INFORMATION                                                                 
|                                                                                             |     
|Item 6
Exhibits                                                                              | 8   
|                                                                                             |     



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EXPLANATORY NOTE

Universal Capital Management, Inc. (the Company, our or we) filed a Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2009 (the Quarterly Report) with the Securities and Exchange Commission (SEC) on March 13, 2009. On May 15, 2009, management concluded that the unaudited Statements Of Assets and Liabilities, Schedule of Investments, Statements of Operations For The Three and Nine Months Ending January 31, 2009 and 2008, Statements Of Changes In Net Assets For The Nine Months Ending January 31, 2009, Statements of Cash Flows For The Nine Months Ending January 31, 2009 and 2008, and Notes 2 to 5 and 12 to 14 of Notes To Financial Statements, as presented in the Quarterly Report, contained errors and need to be restated.

As more fully described in Note 2 of Notes to Financial Statements (Unaudited), the following adjustments have been made in the restated financial statements contained in this Amendment No. 1 to the Quarterly Report:

The accompanying January 31, 2009 financial statements have been restated for subsequent events of the type that require adjustments since the conditions existed at the date of the balance sheet, but prior to the filing of Form 10-Q, and without review by the Companys independent registered public accounting firm. The effect of this restatement was that the net decrease in net assets resulting from operations increased from $2,867,798 to $3,113,176, for a total increase of $245,378. Net assets also decreased from $3,586,943 to $3,341,565 for a total decrease of $245,378. The equivalent per share decreased from $0.59 to $0.55 per share for a total decrease of $0.04 per share.

On December 15, 2008, Theater Extreme Entertainment Group, Inc. (TXEG) filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code. This subsequent event is identified as a condition existing at the balance sheet date and requires an adjustment of the financial statements. This was originally recorded as an unrealized loss on investment of $900,788 and should have been recorded as a realized loss on investment of $900,788. For the nine months ending January 31, 2009, the loss on disposal of portfolio stock increased from $241,516 to $1,142,304, for a total increase of $900,788. This restatement reflects a net decrease in the unrealized depreciation on investments of $900,788 for the nine months ending January 31, 2009.

The methodology used to value the warrants of Vystar Corporation and iVolution Medical Systems was modified to align the volatility factor to the remaining life of the warrants.  For the three months ended January 31, 2009, the restatement reflects a net decrease in unrealized appreciation of investments of $12,888. For the nine months ended January 31, 2009, the restatement reflects a net increase in the unrealized depreciation of investments of $486,500. At January 31, 2009, this restatement reflects a net decrease in investments of $486,500.

In May 2009, the Company was notified that Scientific Products and Systems, Inc. (SPS) filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware, seeking relief under Chapter 7 of Title 11 of the United States Code. This was identified as a condition existing at the Balance Sheet date and requires an adjustment on the financial statements. Since the Company believes that SPS has intellectual property that may alleviate the debt, an allowance for the accounts receivable and notes receivable has been set up. Originally interest was accrued through January 31, 2009, however once the allowance was set up, interest ceased accruing at October 31, 2008. At January 31, 2009, this restatement reflects a net decrease in receivables from $293,075 to $151,421, for a total decrease of $141,654. For the three months ended January 31, 2009, income from operations and interest income decreased $2,899 due to this restatement. For the nine months ended January 31, 2009, interest income decreased $2,899 and loss from operations increased $141,654.



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EXPLANATORY NOTE (CONTINUED)

For the three months ended January 31, 2009, the Company originally wrote off the accrued expenses of $76,000 that were accrued for the 4/30/07 tax return. It was the understanding that the penalties and interest were waived at the time of the original filing of the January 31, 2009 Form 10-Q. In June 2009, the Company received notices from the federal and state tax agencies for interest and penalties on the 4/30/07 tax returns. For the three months ended January 31, 2009, the restatement reflects an increase in the other expense of $76,000. For the nine months ended January 31, 2009, the restatement reflects an increase of $162,224 in the other expense. At January 31, 2009, the restatement reflects an increase in accrued expenses from $0 to $147,224 for a total increase of $147,224.

In January 2009, the Company filed amended federal tax returns to carryback capital losses and net operating losses to the years ending April 30, 2005, 2006 and 2007. This resulted in eliminating the income tax of $526,106 for the year ended April 30, 2007. In addition to this amendment and with the above-mentioned adjustments, the effect of the restatement for the nine months ended January 31, 2009 was a decrease in current income tax asset of $177,000 and a decrease in the deferred income tax liability of $707,000. For the three months ended January 31, 2009, the effect of this restatement was a decrease in the income tax provision of $233,000. For the nine months ended January 31, 2009, the effect of this restatement was an increase in the income tax benefit of $545,000.

In addition to restating the financial statements in this Amendment No. 1, we have revised Part I, Item 2 Management Discussion and Analysis of Financial Condition and Results of Operations to reflect the changes made in the restatement. Additionally, Part II, Item 6 Exhibits reflects the filing of currently dated certifications of our principal executive officer and our principal financial and accounting officer.

This Amendment No. 1 continues to speak as of the date of the Quarterly Report, and we have not updated or amended the disclosures contained herein to reflect events that have occurred since the filing of the Quarterly Report, or modified or updated those disclosures in any way, other than as described in the preceding paragraphs. Accordingly, this Amendment No. 1 should be read in conjunction with our filings made with the SEC subsequent to the filing of the Quarterly Report on March 13, 2009, as information in such filings may update or supersede certain information contained in this Amendment No. 1.



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PART I  FINANCIAL INFORMATION

Item 1

Financial Statements

See F-1 to F-22

Item 2

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

Introduction

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

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

Our Company is a public venture capital company whose primary business is to invest in emerging growth companies. Our Company assists these companies in strategic and financial planning, in market strategies and to assist them in trying to achieve prudent and profitable growth.

Our Companys primary investment objective is to increase its net assets by adding value to our portfolio companies and thus, increasing our stock value. In order to achieve this objective, we focus on investments in companies that are most likely to benefit from our management's expertise in finance, strategic planning, operations, and technology.

The income that our Company derives from investments in portfolio companies consists of management fees, interest income, and appreciation (net of depreciation) in the values of portfolio companies. At the time of disposition, the disposition proceeds of these portfolio securities will most likely make up most of our Companys cash revenues.

Consequently, our Companys success depends on us investing in more companies that appreciate in value rather than companies that depreciate in value. We cannot assure you that our Company will be successful in doing so.

Pursuant to the requirements of the Investment Company Act of 1940, as amended (1940 Act), our Board of Directors is responsible for determining in good faith the fair value of the securities and assets held by our Company for which market quotations are not readily available. In making its determination, our Board of Directors may consider valuation appraisals provided by independent financial experts. Our Company expects to pay a professional fee each time such a valuation is provided. With respect to private equity securities, each investment is valued using industry valuation benchmarks, and then the value may be assigned a discount reflecting the particular nature of the investment.



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

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

Financial Condition

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



|                                                          |                                       |                                 
|--------------------------------------------------------- | ------------------------------------- | --------------------------------
|                                                          | At the Quarter Ended
January 31, 2009 | At the Year Ended
April 30, 2008
|TOTAL ASSETS                                              | $4,633,742                            | $8,265,499                      
|NET ASSETS                                                | $3,341,565                            | $5,599,232                      
|NET ASSET VALUE PER SHARE                                 | $0.55                                 | $0.98                           
|NET UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS | ($2,431,803)                          | $1,498,262                      



The changes in total assets, net assets and net asset value per share for the nine months ended January 31, 2009 were primarily attributable to:

·

Our Companys investment in Vystar warrants were valued at $2,268,000 at January 31, 2009 compared to $1,854,000 at April 30, 2008 for a net unrealized appreciation of $407,000 for the nine months ended January 31, 2009.

·

During the nine months ended January 31, 2009, our Company signed a management services agreement with a new portfolio company, iVolution Medical Systems (IMS). Our Company received a warrant to purchase 1,000,000 shares of IMS common stock valued at $112,000 and a warrant to purchase 500,000 shares of IMS common stock, valued at $17,000. At January 31, 2009, the combined value of these warrants was $643,000 for an unrealized appreciation of $514,000 for the nine months ended January 31, 2009.

·

During the nine months ended January 31, 2009, our Company signed a management services agreement with a new portfolio company, Micco Group (MG). Our Company received a warrant to purchase 1,000,000 shares of MG common stock valued at $6,000 and a warrant to purchase 500,000 shares of MG common stock, valued at $0 upon issuance. At January 31, 2009, the combined value of these warrants was $604,000 for an unrealized appreciation of $598,000 for the nine months ended January 31, 2009.



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·

Lightwave Logic, Inc. (LWLG), average valuation on restricted and unrestricted shares decreased from $2.55 to $0.52 per share during the nine months ended January 31, 2009. During the nine months ended January 31, 2009, our Company sold 365,552 shares for a sales price of $342,696 with a cost of $212,020 for a realized gain of $130,676. Our Companys investment in LWLG common stock had a net unrealized depreciation of $1,797,377 for the nine months ended January 31, 2009. Our Companys investment in LWLG warrants were valued at $240,000 at January 31, 2009 compared to $2,208,000 at April 30, 2008, for a net unrealized depreciation of $944,000 for the nine months ended January 31, 2009. Our Company exercised a warrant to purchase 400,000 shares of LWLG stock in January 2009 at $0.001 per share or $400.

·

During the nine months ended January 31, 2009, our Company signed a management services agreement with a new portfolio company, Multi-View Technologies (MVT). Our Company received 2,000,000 shares of MVT common stock valued at $20,000. Our Company also received a warrant to purchase 500,000 shares of MVT common stock, valued at $1,000. At January 31, 2009, the warrants were valued at $1,000 and the common stock was valued at $20,000.

·

During the nine months ended January 31, 2009, our Company signed a management services agreement with Dominion Capital Management Corporation (DCMC) for a warrant to purchase 500,000 shares of DCMC common stock valued at $1,000. In addition to this warrant, the Company has a warrant to purchase 1,000,000 shares of DCMC common stock that was valued at $5,000 at April 30, 2008. At January 31, 2009, the combined value of these warrants was $5,000 for an unrealized depreciation of $1,000 for the nine months ended January 31, 2009.

·

SIVOO Holdings, Inc. (SIVOO) average valuation on restricted and unrestricted shares decreased from $0.21 to $0.039 per share during the nine months ended January 31, 2009. During the nine months ending January 31, 2009, our Company sold 310,000 shares of SIVOO for a sales price of $96,329 with a cost of $101,400 for a realized loss of $5,071. Our Companys investment in SIVOO common stock had a net unrealized depreciation of $182,580 for the nine months ended January 31, 2009. Our Companys investment in SIVOO warrants were valued at $28,000 at January 31, 2009 compared to $241,000 at April 30, 2008, for a net unrealized depreciation of $213,000 for the nine months ending January 31, 2009.

·

Theater Xtreme Entertainment Group, Inc. (TXEG) declared bankruptcy in December 2008. The average valuation on restricted and unrestricted shares decreased from $0.15 to $0.00 per share during the nine months ended January 31, 2009. During July 2008, our Company received 2,500,000 shares pursuant to one year management services contract with a cost of $175,000. Due to TXEG declaring bankruptcy, our Companys investment in TXEG common stock had a net realized loss of $900,788 for the nine months ended January 31, 2009.

·

During the nine months ending January 31, 2009, the Company learned that Creative Energy Solutions, Inc. (CES) was no longer interested in becoming a public entity and they were not following the original business plan. The Company has an unrealized depreciation of $1,000,000 for the nine months ended January 31, 2009.

·

During the nine months ended January 31, 2009, our Company sold 221,429 shares of Gelstat Corp. for a sales price of $10, with a cost of $350,000, for a realized loss of $349,990.

·

During the nine months ended January 31, 2009, our Company sold 47,619 shares of Neptune Industries for a sales price of $9,493 with a cost of $20,000 for a realized loss of $10,507.

·

During the nine months ended January 31, 2009, our Company wrote off its investment in IPI Fundraising, Inc. for a realized loss of $6,625. IPI has been out of business since December 2005 and is no longer a valid portfolio company.



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·

The decrease in cash of $13,714.

·

The increase in accounts payable and accrued expenses of $162,630.

·

The decrease in deferred tax liability of $893,000.

·

The decrease in deferred revenue of approximately $502,000, which is due mainly to an increase in deferred revenue of $332,000 ($175,000 for TXEG, which our Company is to earn over a twelve month period beginning July 2008, $1,000 for DCMC, which our Company is to earn over a twelve month period beginning July 2008, $6,000 for MG, which is to be earned over a twelve month period beginning July 2008, $112,000 for IMS, which is to be earned over a three month period beginning July 2008, $17,000 for IMS, which is to be earned over a twelve month period beginning July 2008, $20,000 for MVT, which is to be earned over a three month period beginning July 2008 and $1,000 for MVT, which is to be earned over a twelve month period beginning July 2008) offset by $834,000 ($249,000 for LWLG, $287,250 for TXEG, $121,000 for iVolution, $144,750 for Vystar, $20,500 for Multi-View, $6,000 for Micco Group and $5,500 for DCMC) which was earned during the nine months ended January 31, 2009.

·

The decrease in current income taxes payable of approximately $250,000.

·

The addition to Net Capital of $855,509 which consists of the issuance of 334,706 shares of common stock per a private placement memorandum of $263,500 and share-based compensation expense of $592,009.

Our Companys unrealized appreciation (depreciation) varies significantly from period to period as a result of the wide fluctuation in the value of our Companys portfolio securities, as well as the acquisition and sale of shares during the period.

Our Company had unrealized depreciation on investments of $2,431,803 at January 31, 2009 compared to unrealized depreciation on investments of $1,073,305 at January 31, 2008 and unrealized appreciation on investments of $1,498,262 at April 30, 2008.



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

At January 31, 2009, $4,315,545 or 93% of our Company's assets consisted of investments, of which net unrealized losses before the income tax effect were $548,473. A deferred tax asset on account of unrealized losses has been estimated at approximately $218,000. At January 31, 2009, our Companys holdings of Vystar Corporation, iVolution Medical Systems, MICCO Group and Lightwave Logic, Inc. were valued at $2,261,000, $643,000, $604,000 and $724,873, respectively, which represented in the aggregate approximately 98% of the total Company portfolio at that date. Vystar Corporation is a privately held company that is currently going through the registration process with the Securities and Exchange Commission. Vystar, iVolution and MICCOs valuations were based on their ability to raise capital funds through recent private placement memorandums.

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



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Results of Operations

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

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

Three months ended January 31, 2009 compared to the three months ended January 31, 2008

For the three months ended January 31, 2009 the Company had revenue for services in the amount of $276,753 compared to $412,305 for the three months ending January 31, 2008. During the three months ended January 31, 2009, 97% of our Companys revenue for services was received in the form of equity securities compared to 97% for the three months ended January 31, 2009.

Total operating expenses for the three months ended January 31, 2009 were $151,594, the principal components of which were professional fees of $38,200, consisting primarily of $19,922 of legal expense and $12,500 of audit fees, payroll of $62,054 (which includes $489 of share based compensation expense), $23,141 of insurance expense and $9,207 of interest expense. By comparison, total operating expenses for the three months ended January 31, 2008 were $210,539, the principal components of which were professional fees of $132,625, payroll of $28,416, insurance of $16,104 and interest of $8,059.

Our Company realized a gain from operations of $125,159 for the three months ended January 31, 2009 compared to a gain from operations of $201,766 for the three months ended January 31, 2008.

Nine months ended January 31, 2009 compared to the nine months ended January 31, 2008

For the nine months ended January 31, 2009 our Company had revenue for services in the amount of $870,263 compared to $1,355,709 for the nine months ended January 31, 2008. During the nine months ended January 31, 2009, 96% of our Companys revenue for services was received in the form of equity securities compared to 96% for the nine months ended January 31, 2008.

Total operating expenses for the nine months ended January 31, 2009 were $1,446,383, the principal components of which were professional fees of $372,270, consisting primarily of $184,071 of investor relations expense, approximately $127,290 of legal expense and approximately $44,000 of audit fees, payroll of $763,758 (which includes $592,009 of share based compensation expense), bad debt expense of $138,755, $71,629 of insurance expense and $18,648 of interest expense. By comparison, total operating expenses for the nine months ended January 31, 2008 were $957,910, the principal components of which were professional fees of $726,618, payroll of $80,450, insurance of $56,480 and interest of $28,411.

Our Company realized a loss from operations of $576,120 for the nine months ended January 31, 2009 compared to a gain from operations of $377,799 for the nine months ended January 31, 2008.



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Liquidity and Capital Resources

From inception, our Company has relied upon the infusion of capital through capital share transactions for liquidity. Our Company had approximately $7,065 of cash at January 31, 2009. Consequently, payment of operating expenses and cash with which to make investments will similarly have to come from equity capital to be raised from investors or from borrowed funds. During the nine months ended January 31, 2009, our Company issued 334,706 shares of its common stock for proceeds of $263,500. There is no assurance that our Company will be successful in raising such additional equity capital or additional borrowings or if it can, that it can do so at a price that management believes to be appropriate. Under the Investment Company Act of 1940, as amended (1940 Act), our Company may not sell shares of common stock at less than its net asset value except in certain limited circumstances.

At January 31, 2009, $4,127,772 or 96% of our investments are illiquid securities that do not have a market or they are restricted and therefore cannot be traded or sold.

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

On October 31, 2008, the Company entered into a Letter of Intent to acquire Dominion Capital Management Corporation, who is currently seeking funding.

.Critical Accounting Estimates

Valuation

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

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

Fair value is generally defined as the amount for which an investment could be sold in an orderly disposition over a reasonable time. Generally, to increase objectivity in valuing assets, external measures of value, such as public markets or third-party transactions, are used whenever possible. Valuation is not based on long-term work-out value, nor immediate liquidation value, nor incremental value for potential changes that may take place in the future. The values assigned to Company investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as such amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated.

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

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

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



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

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

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



Item 4

Controls and Procedures.

Effectiveness of Disclosure Controls and Procedures



An evaluation was performed under the supervision and with the participation of the Company's principal executive officers and financial officers of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Company made the determination that its disclosure controls were not effective due to its inability to allocate a sufficient amount of its capital resources to adequately review its financial statements, which occurred as a result of the Companys limited cash position during its 2009 fiscal year.





Changes in Internal Control over Financial Reporting



Our management, with the participation of the Company's principal executive officer and financial officer, evaluated whether there were any changes in the effectiveness of our internal control over financial reporting as of the end of our last fiscal quarter. In making this assessment, our management considered the limited cash on hand, and the resultant inability to allocate a sufficient amount of capital resources to adequately review our financial statements.  Based on this evaluation, our management, with the participation of Michael D. Queen, the principal executive officer of the Company, and Theresa Q. Hoffmann, the principal financial officer, concluded that, as of as of January 31, 2009, the Companys internal control over financial reporting is not effective, which may increase the risks of errors in our financial reporting.



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PART II  OTHER INFORMATION

Item 6

Exhibits.

The following exhibits are included herein:

31.1

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company.

31.2

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company.

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer of the Company.

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Financial Officer of the Company.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                |                                                  |                        
|--------------- | ------------------------------------------------ | -----------------------
|                | Universal Capital Management, Inc.              
|                |                                                 
|                |                                                 
|August 13, 2009 | By:                                              | /s/ Michael D. Queen   
|                | Michael D. Queen, Principal Executive Officer   
|                |                                                 
|                |                                                 
|August 13, 2009 | By:                                              | /s/ Theresa Q. Hoffmann
|                | Theresa Q. Hoffmann, Principal Financial Officer









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UNIVERSAL CAPITAL MANAGEMENT, INC.

FINANCIAL STATEMENTS

JANUARY 31, 2009 AND 2008

(UNAUDITED)









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UNIVERSAL CAPITAL MANAGEMENT, INC.

















CONTENTS

|                                     |           
|------------------------------------ | ----------
|                                     | PAGE      
|                                     |           
|STATEMENTS OF ASSETS AND LIABILITIES | F-1       
|SCHEDULE OF INVESTMENTS              | F-2       
|STATEMENTS OF OPERATIONS             | F-3       
|STATEMENT OF CHANGES IN NET ASSETS   | F-4       
|STATEMENTS OF CASH FLOWS             | F-5       
|NOTES TO FINANCIAL STATEMENTS        | F-6 - F-22











---

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF ASSETS AND LIABILITIES





|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ---------- | -------------- | - | --------- | 
|                                                                                                                                                                                 |  | January 31, 2009 |            | April 30, 2008 |  
|                                                                                                                                                                                 |  | (Restated)       |            | (Audited)      |  
|                                                                                                                                                                                 |  | (Unaudited)      |            |                |   |          
|ASSETS                                                                                                                                                                           |  |                  |            |                |   |           | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|Investments in securities, at fair value                                                                                                                                         |  |                  |            |                |   |           | 
|Non-affiliated companies (cost:  $3,309,466 and $2,306,513)                                                                                                                      |  | $                | 4,234,004  |                | $ | 4,697,675 | 
|Affiliated companies (cost:  $1,554,552 and $3,812,952)                                                                                                                          |  |                  | 81,541     |                |   | 3,305,120 | 
|                                                                                                                                                                                 |  |                  | 4,315,545  |                |   | 8,002,795 | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|Cash and cash equivalents                                                                                                                                                        |  |                  | 7,065      |                |   | 20,779    | 
|Receivables                                                                                                                                                                      |  |                  |            |                |   |           | 
|Notes receivable - non-affiliated companies (net of allowance: $126,655 and $0)                                                                                                  |  |                  | -          |                |   | 116,208   | 
|Note receivable - affiliated companies                                                                                                                                           |  |                  | 28,518     |                |   | 27,005    | 
|Receivables - non-affiliated companies (net of allowance: $15,000 and $0)                                                                                                        |  |                  | 12,562     |                |   | 27,416    | 
|Due from non-affiliated companies                                                                                                                                                |  |                  | 2,000      |                |   | 2,200     | 
|Due from affiliated companies                                                                                                                                                    |  |                  | 108,341    |                |   | 51,459    | 
|Total Receivables                                                                                                                                                                |  |                  | 151,421    |                |   | 224,288   | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|Prepaid expenses                                                                                                                                                                 |  |                  | 1,656      |                |   | 10,157    | 
|Property and equipment, net                                                                                                                                                      |  |                  | 4,955      |                |   | 6,380     | 
|Deferred income tax asset                                                                                                                                                        |  |                  | 152,000    |                |   | -         | 
|Rent deposit                                                                                                                                                                     |  |                  | 1,100      |                |   | 1,100     | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|TOTAL ASSETS                                                                                                                                                                     |  | $                | 4,633,742  |                | $ | 8,265,499 | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|LIABILITIES                                                                                                                                                                      |  |                  |            |                |   |           | 
|LIABILITIES                                                                                                                                                                      |  |                  |            |                |   |           | 
|Accounts payable                                                                                                                                                                 |  | $                | 358,125    |                | $ | 276,800   | 
|Accrued expenses                                                                                                                                                                 |  |                  | 147,224    |                |   | 76,000    | 
|Current income taxes payable - federal                                                                                                                                           |  |                  | -          |                |   | 278,000   | 
|Current income taxes payable - state                                                                                                                                             |  |                  | 130,000    |                |   | 97,000    | 
|Advances from shareholders                                                                                                                                                       |  |                  | 6,000      |                |   | 300,000   | 
|Notes payable                                                                                                                                                                    |  |                  | 452,372    |                |   | 225,000   | 
|Accrued interest                                                                                                                                                                 |  |                  | 113,743    |                |   | 85,551    | 
|                                                                                                                                                                                 |  |                  | 1,207,464  |                |   | 1,338,351 | 
|Deferred revenue                                                                                                                                                                 |  |                  |            |                |   |           | 
|Non-affiliated companies                                                                                                                                                         |  |                  | 83,713     |                |   | 581,916   | 
|Affiliated companies                                                                                                                                                             |  |                  | 1,000      |                |   | 5,000     | 
|Total Deferred Revenue                                                                                                                                                           |  |                  | 84,713     |                |   | 586,916   | 
|Deferred income taxes                                                                                                                                                            |  |                  | -          |                |   | 741,000   | 
|TOTAL LIABILITIES                                                                                                                                                                |  |                  | 1,292,177  |                |   | 2,666,267 | 
|NET ASSETS                                                                                                                                                                       |  | $                | 3,341,565  |                | $ | 5,599,232 | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|ANALYSIS OF NET ASSETS                                                                                                                                                           |  |                  |            |                |   |           | 
|Net capital paid in on shares of capital stock                                                                                                                                   |  |                  | 5,054,755  |                |   | 4,199,246 | 
|Distributable earnings (losses)                                                                                                                                                  |  |                  | (1,713,190 | )              |   | 1,399,986 | 
|                                                                                                                                                                                 |  |                  |            |                |   |           | 
|NET ASSETS                                                                                                                                                                       |  | $                | 3,341,565  |                | $ | 5,599,232 | 
|Equivalent per share value based on 6,037,426 shares of capital stock outstanding as of January 31, 2009 and 5,702,720 shares of  capital stock outstanding as of April 30, 2008 |  | $                | 0.55       |                | $ | 0.98      | 



See accompanying notes to these financial statements.

F-1



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

JANUARY 31, 2009

(UNAUDITED)





|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|-------------------------------------------------------------- |  | --------------------------- |  | -------------- |  | ------------------------------------------ | --- | ---- | --------- | -------------------------- | ---------- | --------- | 
|                                                               |  | Business                    |  | % of
Portfolio |  | Number of
Shares Held
at January 31, 
2009 |     | Cost |           | Value at
January 31, 
2009 |           
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            | (Restated) |          
|Affiliated Company Securities (1)                              |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Creative Energy Solutions, Inc. (3)                            |  | Develops alternative energy |  | 0.00%          |  | 2,000,000                                  | (2) | $    | 1,000,000 |                            | $          | -         | 
|                                                               |  | technologies                |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|SIVOO Holdings, Inc.                                           |  | High speed internet media   |  | 0.60%          |  | 664,501                                    | (4) |      | 319,725   |                            |            | 25,916    | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrants to purchase 805,000 shares of SIVOO Holdings, Inc.    |  | High speed internet media   |  |                |  |                                            |     |      |           |                            |            |           | 
|250,000 warrants expiring April 11, 2011                       |  |                             |  | 0.16%          |  | 250,000                                    | (2) |      | -         |                            |            | 7,000     | 
|150,000 warrants expiring November 14, 2011                    |  |                             |  | 0.12%          |  | 150,000                                    | (2) |      | -         |                            |            | 5,000     | 
|405,000 warrants expiring February 28, 2013                    |  |                             |  | 0.37%          |  | 405,000                                    | (2) |      | 206,202   |                            |            | 16,000    | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Multi-View Technologies, Inc.                                  |  | 3D graphics imaging         |  | 0.46%          |  | 2,000,000                                  | (2) |      | 20,000    |                            |            | 20,000    | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 500,000 shares of Multi-View Technologies, |  | 3D graphics imaging         |  | 0.02%          |  | 500,000                                    | (2) |      | 1,000     |                            |            | 1,000     | 
|Inc. common stock expiring July 28, 2013                       |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 1,000,000 shares of Dominion               |  | SBA lending                 |  | 0.12%          |  | 1,000,000                                  | (2) |      | 5,000     |                            |            | 5,000     | 
|Capital Management, Inc. common stock expiring April 2013      |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 500,000 shares of Dominion                 |  | SBA lending                 |  | 0.00%          |  | 500,000                                    | (2) |      | 1,000     |                            |            | -         | 
|Capital Management, Inc. common stock expiring July 2013       |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|BF Acquisition Group V, Inc.                                   |  | Inactive company            |  | 0.04%          |  | 100,000                                    | (2) |      | 1,625     |                            |            | 1,625     | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Total Affiliated Company Securities                            |  |                             |  | 1.89%          |  |                                            |     |      | 1,554,552 |                            |            | 81,541    | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Non-Affiliated Company Securities                              |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 1,000,000 shares of Vystar Corporation (5) |  | Natural rubber latex        |  | 46.14%         |  | 1,000,000                                  | (2) |      | 1,991,000 |                            |            | 1,991,000 | 
|common stock expiring January 31, 2013                         |  | products                    |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 500,000 shares of Vystar Corporation (5)   |  | Natural rubber latex        |  | 6.26%          |  | 500,000                                    | (2) |      | 193,000   |                            |            | 270,000   | 
|common stock expiring April 30, 2013                           |  | products                    |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Lightwave Logic, Inc.                                          |  | Plastics engineering        |  | 3.72%          |  | 532,448                                    | (4) |      | 309,090   |                            |            | 160,726   | 
|                                                               |  |                             |  | 7.51%          |  | 400,000                                    | (2) |      | 332,400   |                            |            | 324,147   | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 500,000 shares of Lightwave Logic, Inc.    |  | Plastics engineering        |  | 5.56%          |  | 500,000                                    | (2) |      | 348,000   |                            |            | 240,000   | 
|common stock expiring February 28, 2012                        |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 1,000,000 shares of iVolution Medical      |  | Medical billing and medical |  | 11.38%         |  | 1,000,000                                  | (2) |      | 112,000   |                            |            | 491,000   | 
|Systems, Inc. common stock expiring July 2013                  |  | records software            |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 500,000 shares of iVolution Medical        |  | Medical billing and medical |  | 3.52%          |  | 500,000                                    | (2) |      | 17,000    |                            |            | 152,000   | 
|Systems, Inc. common stock expiring July 2013                  |  | records software            |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 1,000,000 shares of MICCO Group            |  | Content and intellectual    |  | 11.38%         |  | 1,000,000                                  | (2) |      | 6,000     |                            |            | 491,000   | 
|common stock expiring July 2013                                |  | property distributor        |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Warrant to purchase 500,000 shares of MICCO Group              |  | Content and intellectual    |  | 2.62%          |  | 500,000                                    | (2) |      | -         |                            |            | 113,000   | 
|common stock expiring July 2013                                |  | property distributor        |  |                |  |                                            |     |      |           |                            |            |           | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Other investments                                              |  |                             |  | 0.03%          |  |                                            |     |      | 976       |                            |            | 1,131     | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Total Non-Affiliated Company Securities                        |  |                             |  | 98.11%         |  |                                            |     |      | 3,309,466 |                            |            | 4,234,004 | 
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |           | 
|Total Securities                                               |  |                             |  | 100.00%        |  |                                            |     | $    | 4,864,018 |                            | $          | 4,315,545 | 

(1)

Each portfolio company in which the Company owns 5% or more of the outstanding voting securities is deemed an "affiliated company".

(2)

Restricted shares - illiquid securities; total illiquid securities of $4,127,772 make up 124.42% of total net assets as of January 31, 2009

(3)

Private company - valued by the Board of Directors

(4)

Unrestricted shares - liquid securities

(5)

Private company -valued by an independent third-party



See accompanying notes to these financial statements.

F-2



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS

ENDED JANUARY 31, 2009 AND 2008

(UNAUDITED)





|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|--------------------------------------------------------------- |  | ------------------------------------------- | --------- | ------------------------------------------- | - | ------------------------------------------ | ---------- | ------------------------------------------ | ---------- | - | - | ---------- | -
|                                                                |  | For the Three
Months Ended
January 31, 2009 |           | For the Three
Months Ended
January 31, 2008 |   | For the Nine
Months Ended
January 31, 2009 |            | For the Nine
Months Ended
January 31, 2008 |           
|                                                                |  |                                             |           |                                             |  
|                                                                |  |                                             |           |                                             |  
|                                                                |  | (Restated)                                  |           |                                             |   |                                            | (Restated) |                                            |            |   |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|INCOME                                                          |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|Management services                                             |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|Non-affiliated companies                                        |  | $                                           | 266,749   |                                             | $ | 400,375                                    |            | $                                          | 808,203    |   | $ | 1,088,875  |  
|Affiliated companies                                            |  |                                             | 500       |                                             |   | -                                          |            |                                            | 26,000     |   |   | 197,255    |  
|Total Management Services                                       |  |                                             | 267,249   |                                             |   | 400,375                                    |            |                                            | 834,203    |   |   | 1,286,130  |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|Interest income                                                 |  |                                             | 504       |                                             |   | 2,930                                      |            |                                            | 9,060      |   |   | 8,179      |  
|Accounting services                                             |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|Non-affiliated companies                                        |  |                                             | 9,000     |                                             |   | 9,000                                      |            |                                            | 27,000     |   |   | 35,000     |  
|Affiliated companies                                            |  |                                             | -         |                                             |   | -                                          |            |                                            | -          |   |   | 6,400      |  
|Total Accounting Services                                       |  |                                             | 9,000     |                                             |   | 9,000                                      |            |                                            | 27,000     |   |   | 41,400     |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|                                                                |  |                                             | 276,753   |                                             |   | 412,305                                    |            |                                            | 870,263    |   |   | 1,335,709  |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|COST AND EXPENSE                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|Bad debt                                                        |  |                                             | -         |                                             |   | -                                          |            |                                            | 138,755    |   |   | 6,000      |  
|Depreciation                                                    |  |                                             | 475       |                                             |   | 475                                        |            |                                            | 1,425      |   |   | 1,425      |  
|Dues and subscriptions                                          |  |                                             | 749       |                                             |   | 640                                        |            |                                            | 1,239      |   |   | 2,017      |  
|Fees and commissions                                            |  |                                             | 841       |                                             |   | -                                          |            |                                            | 2,381      |   |   | 3,220      |  
|Insurance                                                       |  |                                             | 23,141    |                                             |   | 16,104                                     |            |                                            | 71,629     |   |   | 56,480     |  
|Interest expense                                                |  |                                             | 9,207     |                                             |   | 8,059                                      |            |                                            | 18,648     |   |   | 28,411     |  
|Miscellaneous general and administrative                        |  |                                             | 3,521     |                                             |   | 1,090                                      |            |                                            | 22,970     |   |   | 3,906      |  
|Office expenses and supplies                                    |  |                                             | 1,352     |                                             |   | 2,685                                      |            |                                            | 4,336      |   |   | 5,333      |  
|Payroll and payroll taxes                                       |  |                                             | 62,054    |                                             |   | 28,416                                     |            |                                            | 763,758    |   |   | 80,450     |  
|Postage, delivery and shipping                                  |  |                                             | 375       |                                             |   | 1,321                                      |            |                                            | 3,538      |   |   | 3,498      |  
|Professional fees                                               |  |                                             | 38,200    |                                             |   | 132,625                                    |            |                                            | 372,270    |   |   | 726,618    |  
|Rent                                                            |  |                                             | 4,500     |                                             |   | 4,200                                      |            |                                            | 13,000     |   |   | 12,600     |  
|Taxes - Other                                                   |  |                                             | -         |                                             |   | 6,000                                      |            |                                            | -          |   |   | 6,034      |  
|Telephone                                                       |  |                                             | 1,115     |                                             |   | 1,243                                      |            |                                            | 2,943      |   |   | 3,875      |  
|Travel and entertainment                                        |  |                                             | 5,249     |                                             |   | 6,760                                      |            |                                            | 27,542     |   |   | 15,909     |  
|Utilities                                                       |  |                                             | 815       |                                             |   | 921                                        |            |                                            | 1,949      |   |   | 2,134      |  
|                                                                |  |                                             | 151,594   |                                             |   | 210,539                                    |            |                                            | 1,446,383  |   |   | 957,910    |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|INCOME (LOSS) FROM OPERATIONS                                   |  |                                             | 125,159   |                                             |   | 201,766                                    |            |                                            | (576,120   | ) |   | 377,799    |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|OTHER INCOME (EXPENSE)                                          |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|Gain (Loss) on disposal of portfolio stock                      |  |                                             | (5,425    | )                                           |   | (205,038                                   | )          |                                            | (1,142,304 | ) |   | (395,677   | )
|Unrealized appreciation (depreciation) on investments           |  |                                             | 927,587   |                                             |   | (264,731                                   | )          |                                            | (2,431,803 | ) |   | (1,073,305 | )
|Interest and penalties                                          |  |                                             | -         |                                             |   | -                                          |            |                                            | (86,224    | ) |   | -          |  
|Interest expense                                                |  |                                             | (6,575    | )                                           |   | (6,575                                     | )          |                                            | (19,725    | ) |   | (19,725    | )
|Income tax benefit (provision)                                  |  |                                             | (24,000   | )                                           |   | 1,000                                      |            |                                            | 1,143,000  |   |   | 85,000     |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|                                                                |  |                                             |           |                                             |   |                                            |            |                                            |            |   |   |            |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |  | $                                           | 1,016,746 |                                             | $ | (273,578                                   | )          | $                                          | (3,113,176 | ) | $ | (1,025,908 | )





See accompanying notes to these financial statements.

F-3



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE NINE MONTHS ENDED JANUARY 31, 2009

(UNAUDITED)





|                                                                |                                            |            |  
|--------------------------------------------------------------- | ------------------------------------------ | ---------- | -
|                                                                | For the Nine
Months Ended
January 31, 2009 |           
|                                                                |                                           
|                                                                |                                           
|                                                                |                                            | (Restated) |  
|                                                                |                                            |            |  
|                                                                |                                            |            |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $                                          | (3,113,176 | )
|                                                                |                                            |            |  
|CAPITAL SHARE TRANSACTIONS                                      |                                            |            |  
|Issuance of common stock                                        |                                            | 263,500    |  
|Share-based compensation expense                                |                                            | 592,009    |  
|                                                                |                                            |            |  
|NET CAPITAL SHARE TRANSACTIONS                                  |                                            | 855,509    |  
|                                                                |                                            |            |  
|TOTAL DECREASE                                                  |                                            | (2,257,667 | )
|                                                                |                                            |            |  
|NET ASSETS, BEGINNING OF PERIOD                                 |                                            | 5,599,232  |  
|                                                                |                                            |            |  
|NET ASSETS, END OF PERIOD                                       | $                                          | 3,341,565  |  











See accompanying notes to these financial statements.

F-4



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2009 AND 2008

(UNAUDITED)





|                                                                                                                         |  |                                            |            |                                            |   |            |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------ | ---------- | ------------------------------------------ | - | ---------- | -
|                                                                                                                         |  | For the Nine
Months Ended
January 31, 2009 |            | For the Nine
Months Ended
January 31, 2008 |  
|                                                                                                                         |  |                                            |           
|                                                                                                                         |  |                                            |           
|                                                                                                                         |  |                                            | (Restated) |                                            |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                     |  |                                            |            |                                            |   |            |  
|Net decrease in net assets resulting from operations                                                                     |  | $                                          | (3,113,176 | )                                          | $ | (1,025,908 | )
|Adjustments to reconcile net decrease in net assets 
resulting from operations to net cash used in operating activities: |  |                                            |            |                                            |   |            |  
|Bad debt expense                                                                                                         |  |                                            | 138,755    |                                            |   | -          |  
|Stock granted for interest                                                                                               |  |                                            | -          |                                            |   | 15,144     |  
|Loss on sale of portfolio stock                                                                                          |  |                                            | 1,142,304  |                                            |   | 395,677    |  
|Investment securities received in exchange for management services                                                       |  |                                            | (834,203   | )                                          |   | (1,286,130 | )
|Depreciation expense                                                                                                     |  |                                            | 1,425      |                                            |   | 1,425      |  
|Stock based compensation expense                                                                                         |  |                                            | 592,009    |                                            |   | 7,002      |  
|Net unrealized depreciation on investments                                                                               |  |                                            | 2,431,803  |                                            |   | 1,073,305  |  
|Deferred income taxes                                                                                                    |  |                                            | (893,000   | )                                          |   | 122,000    |  
|Income taxes                                                                                                             |  |                                            | (250,000   | )                                          |   | (206,000   | )
|(Increase) decrease in assets                                                                                            |  |                                            |            |                                            |   |            |  
|Notes receivable - non-affiliated companies                                                                              |  |                                            | (7,547     | )                                          |   | (8,179     | )
|Notes receivable - affiliated companies                                                                                  |  |                                            | (1,513     | )                                          |   | 3,773      |  
|Receivables - non-affiliated companies                                                                                   |  |                                            | (146       | )                                          |   | 11,895     |  
|Receivables - affiliated companies                                                                                       |  |                                            | -          |                                            |   | (8,220     | )
|Due from non-affiliated companies                                                                                        |  |                                            | 200        |                                            |   | -          |  
|Due from affiliated companies                                                                                            |  |                                            | (56,882    | )                                          |   | -          |  
|Prepaid expenses                                                                                                         |  |                                            | 8,501      |                                            |   | 29,989     |  
|Increase (decrease) in liabilities                                                                                       |  |                                            |            |                                            |   |            |  
|Accounts payable                                                                                                         |  |                                            | 77,939     |                                            |   | 64,438     |  
|Accrued expenses                                                                                                         |  |                                            | 84,691     |                                            |   | (3,115     | )
|Accrued interest                                                                                                         |  |                                            | 19,725     |                                            |   | 19,725     |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|Net cash used in operating activities                                                                                    |  |                                            | (659,115   | )                                          |   | (793,179   | )
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                     |  |                                            |            |                                            |   |            |  
|Proceeds from sale of securities                                                                                         |  |                                            | 448,529    |                                            |   | 567,409    |  
|Loans for notes receivable                                                                                               |  |                                            | -          |                                            |   | (25,000    | )
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|Net cash provided by investing activities                                                                                |  |                                            | 448,529    |                                            |   | 542,409    |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                     |  |                                            |            |                                            |   |            |  
|Proceeds from advance from shareholder                                                                                   |  |                                            | 3,372      |                                            |   | 146,000    |  
|Repayment of debt                                                                                                        |  |                                            | (70,000    | )                                          |   | -          |  
|Proceeds from issuance of common stock                                                                                   |  |                                            | 263,500    |                                            |   | -          |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|Net cash provided by financing activities                                                                                |  |                                            | 196,872    |                                            |   | 146,000    |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                                                |  |                                            | (13,714    | )                                          |   | (104,770   | )
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                                          |  |                                            | 20,779     |                                            |   | 110,739    |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|CASH AND CASH EQUIVALENTS - END OF PERIOD                                                                                |  | $                                          | 7,065      |                                            | $ | 5,969      |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOWS                                                                                    |  |                                            |            |                                            |   |            |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|CASH PAID FOR INCOME TAXES                                                                                               |  | $                                          | 10,000     |                                            | $ | -          |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                                                   |  |                                            |            |                                            |   |            |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|Securities received in exchange for deferred revenue                                                                     |  | $                                          | 332,000    |                                            | $ | 2,958,500  |  
|                                                                                                                         |  |                                            |            |                                            |   |            |  
|Fin 48 for penalties and interest                                                                                        |  | $                                          | 19,725     |                                            | $ | 26,300     |  



See accompanying notes to these financial statements.

F-5



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim period financial statements of Universal Capital Management, Inc. (the Company) are unaudited pursuant to certain rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results of the periods indicated. Such results, however, are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended April 30, 2008, as filed with the Securities and Exchange Commission. The interim operating results for the three and nine months ended January 31, 2009 are not necessarily indicative of operating results expected for the full year.

History and Nature of Business

Universal Capital Management, Inc. (the Company) is a business development company. The Company is a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company is primarily engaged in the business of furnishing capital and making available managerial assistance to companies that do not have ready access to capital through conventional channels. The Company refers to companies in which it invests as portfolio companies.

Security Valuations

Investments in securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation; other securities traded in the over-the-counter market (such as OTC BB, Pink Sheets, etc) and listed securities for which no sale was reported on that date are stated at the last quoted bid price. Restricted securities and other securities (small, privately-held companies) for which quotations are not readily available are valued at fair value as determined by the board of directors.

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

Estimates

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

Cash Equivalents

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

Concentration of Credit Risk

Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash. At January 31, 2009 the Company did not have deposits with a financial institution that exceeded the FDIC deposit insurance coverage of $250,000.





F-6



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

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

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



Fair Value of Financial Instruments

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

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

Income Taxes

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

Recoverability of Long Lived Assets

The Company follows SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets (Statement 144). Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the excess of the assets carrying amount.

Reclassifications

Certain reclassifications were made to the April 30, 2008 financial statements in order to conform to the January 31, 2009 financial statement presentation.



F-7



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Pronouncements

During September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements (SFAS 157), which is effective for fiscal years beginning after November 15, 2007 with earlier adoption encouraged. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until January 1, 2009.  The Company adopted SFAS 157 on May 1, 2008 for all financial assets and liabilities, but the implementation did not require additional disclosures or have a significant impact on the Company's financial statements. The Company has not yet determined the impact the implementation of SFAS 157 will have on the Companys non-financial assets and liabilities which are not recognized or disclosed on a recurring basis. However, the Company does not anticipate that the full adoption of SFAS 157 will significantly impact their consolidated financial statements.

During February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment of FASB Statement No. 115 (SFAS 159), which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company has adopted SFAS 159 on May 1, 2008 and has elected not to measure any additional financial assets, liabilities or other items at fair value.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement is effective for the Company beginning May 1, 2009 and will change the accounting for business combinations on a prospective basis.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of Accounting Research Bulletin No. 51 (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This statement is effective for the Company beginning May 1, 2009. This statement is not currently applicable since there are no subsidiaries.

In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), which is effective May 1, 2009. SFAS 161 requires enhanced disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entitys financial position, financial performance, and cash flows. Among other things, SFAS 161 requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant. SFAS 161 is not currently applicable to the Company since the Company does not have derivative instruments or hedging activity.





F-8



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Pronouncements (Continued)

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The Hierarchyof Generally Accepted Accounting Principles(FAS 162"). This Standard identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles. FAS 162 directs thehierarchy to the entity, rather than the independent auditors, as the entity is responsible for selecting accounting principles for financial statements that are presented in conformity with generally accepted accounting principles. The Standard was effective November 15, 2008 and is not expected to have an impact on the financial statements.

In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets.This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. Application of this FSP is not expected to have a significant impact on the financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this FSP is not expected to have an effect on the Company's financial reporting.

In May 2008, the FASB issued FASB Staff Position (FSP) APB 14-1, Accounting for Convertible Debt That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)("FSP 14-1"). FSP 14-1 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The FSP includes guidance that convertible debt instruments that may be settled in cash upon conversion should be separated between the liability and equity components, with each component being accounted for in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. FSP 14-1 is not currently applicable to the Company since the Company does not have convertible debt.



F-9



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Pronouncements (Continued)

In June 2008, the FASB issued EITF Issue No. 07-5, EITF 07-Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock(EITF Issue No. 07-5) which is effective for financial statements for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Issue addresses the determination of whether an instrument (or an embedded feature) is indexed to an entitys own stock, which is the first part of the scope exception in Paragraph 11(a) of SFAS No. 133 for the purpose of determining whether the instrument is classified as an equity instrument or accounted for as a derivative instrument which would be recognized either as an asset or liability and measured at fair value. The guidance shall be applied to outstanding instruments as of the beginning of the fiscal year in which this Issue is initially applied. Any debt discount that was recognized when the conversion option was initially bifurcated from the convertible debt instrument shall continue to be amortized. The cumulative effect of the change in accounting principles shall be recognized as an adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact of EITF Issue No. 07-5 on its consolidated financial statements and footnote disclosure.

In October 2008, the FASB issued FAS Staff Position (FSP) 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active." This is effective upon issuance, including prior periods for which financial statements have not been issued. This FSP applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with Statement 157.This FSP clarifies the application of Statement 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP 1573 did not have an impact on the companys financial statements.

NOTE 2- RESTATEMENT

As of and for the three and nine months ended January 31, 2009

The accompanying January 31, 2009 financial statements have been restated for subsequent events of the type that require adjustments since the conditions existed at the date of the balance sheet, but prior to the filing of Form 10-Q, and without review by the Companys independent registered public accounting firm. The effect of this restatement was that the net decrease in net assets resulting from operations increased from $2,867,798 to $3,113,176, for a total increase of $245,378. Net assets also decreased from $3,586,943 to $3,341,565 for a total decrease of $245,378. The equivalent per share decreased from $0.59 to $0.55 per share for a total decrease of $0.04 per share.

On December 15, 2008, Theater Extreme Entertainment Group, Inc. (TXEG) filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code. This subsequent event is identified as a condition existing at the balance sheet date and requires an adjustment of the financial statements. This was originally recorded as an unrealized loss on investment of $900,788 and should have been recorded as a realized loss on investment of $900,788. For the nine months ending January 31, 2009, the loss on disposal of portfolio stock increased from $241,516 to $1,142,304, for a total increase of $900,788. This restatement reflects a net decrease in the unrealized depreciation on investments of $900,788 for the nine months ending January 31, 2009.



F-10



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 2- RESTATEMENT (CONTINUED)

As of and for the three and nine months ended January 31, 2009 (Continued)

The methodology used to value the warrants of Vystar Corporation and iVolution Medical Systems was modified to align the volatility factor to the remaining life of the warrants. For the three months ended January 31, 2009, the restatement reflects a net decrease in unrealized appreciation of investments of $12,888. For the nine months ended January 31, 2009, the restatement reflects a net increase in the unrealized depreciation of investments of $486,500. At January 31, 2009, this restatement reflects a net decrease in investments of $486,500.

In May 2009, the Company was notified that Scientific Products and Systems, Inc. (SPS) filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware, seeking relief under Chapter 7 of Title 11 of the United States Code. This was identified as a condition existing at the balance sheet date and requires an adjustment on the financial statements. Since the Company believes that SPS has intellectual property that may alleviate the debt, an allowance for the accounts receivable and notes receivable has been set up. Originally interest was accrued through January 31, 2009, however once the allowance was set up, interest ceased accruing at October 31, 2008. At January 31, 2009, this restatement reflects a net decrease in receivables from $293,075 to $151,421, for a total decrease of $141,654. For the three months ended January 31, 2009, income from operations and interest income decreased $2,899 due to this restatement. For the nine months ended January 31, 2009, interest income decreased $2,899 and loss from operations increased $141,654.

For the three months ended January 31, 2009, the Company originally wrote off the accrued expenses of $76,000 that were accrued for the 4/30/07 tax return. It was the understanding that the penalties and interest were waived at the time of the original filing of the January 31, 2009 Form 10-Q. In June 2009, the Company received notices from the federal and state tax agencies for interest and penalties on the 4/30/07 tax returns. For the three months ended January 31, 2009, the restatement reflects an increase in the other expense of $76,000. For the nine months ended January 31, 2009, the restatement reflects an increase of $162,224 in the other expense. At January 31, 2009, the restatement reflects an increase in accrued expenses from $0 to $147,224 for a total increase of $147,224.

In January 2009, the Company filed amended federal tax returns to carryback capital losses and net operating losses to the years ending April 30, 2005, 2006 and 2007. This resulted in eliminating the income tax of $526,106 for the year ended April 30, 2007. In addition to this amendment and with the above-mentioned adjustments, the effect of the restatement for the nine months ended January 31, 2009 was a decrease in current income tax asset of $177,000 and a decrease in the deferred income tax liability of $707,000. For the three months ended January 31, 2009, the effect of this restatement was a decrease in the income tax provision of $233,000. For the nine months ended January 31, 2009, the effect of this restatement was an increase in the income tax benefit of $545,000.

The following is a summary of the restatement in the statement of assets and liabilities, statements of operations, and statement of changes in net assets as of and for the three and nine months ending January 31, 2009:





F-11



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 2- RESTATEMENT (CONTINUED)

As of and for the three and nine months ended January 31, 2009 (Continued)

|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|---------------------------------------------------- |  | -------------------------------------------- | ---------- | ------------------------------------------- | - | ---------- | - | -------------------- | --------- | ------------ | - | ---------- | - | - | ---------- | - | - | -------- | -
|Statement of Assets and Liabilities                  |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|                                                     |  | January 31, 2009                             |            |                                             |   |            |   |                      |           |              |   |           
|                                                     |  | As Originally 
Filed                         |            | As 
Restated                                |   | Change     |   |                      |           |              |   |            |   |   |            |  
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|Investments in securities, at fair value             |  | $                                            | 4,802,045  |                                             | $ | 4,315,545  |   | $                    | (486,500  | )            |   |            |   |   |            |   |   |          |  
|Receivables                                          |  | $                                            | 293,075    |                                             | $ | 151,421    |   | $                    | (141,654  | )            |   |            |   |   |            |   |   |          |  
|Current income tax asset (liability)                 |  | $                                            | 47,000     |                                             | $ | (130,000   | ) | $                    | (177,000  | )            |   |            |   |   |            |   |   |          |  
|Deferred tax asset (liability)                       |  | $                                            | (555,000   | )                                           | $ | 152,000    |   | $                    | (707,000  | )            |   |            |   |   |            |   |   |          |  
|Total Assets                                         |  | $                                            | 5,156,896  |                                             | $ | 4,633,742  |   | $                    | (523,154  | )            |   |            |   |   |            |   |   |          |  
|Accrued expenses                                     |  | $                                            | -          |                                             | $ | 147,224    |   | $                    | 147,224   |              |   |            |   |   |            |   |   |          |  
|Total Liabilities                                    |  | $                                            | 1,569,953  |                                             | $ | 1,292,177  |   | $                    | (277,776  | )            |   |            |   |   |            |   |   |          |  
|Net Assets                                           |  | $                                            | 3,586,943  |                                             | $ | 3,341,565  |   | $                    | (245,378  | )            |   |            |   |   |            |   |   |          |  
|Equivalent per share value                           |  | $                                            | 0.59       |                                             | $ | 0.55       |   | $                    | (0.04     | )            |   |            |   |   |            |   |   |          |  
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|Statement of Operations                              |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|                                                     |  | For the Three Months Ending January 31, 2009 |            | For the Nine Months Ending January 31, 2009 |  
|                                                     |  | As Originally 
Filed                         |            | As 
Restated                                |   | Change     |   | As Originally 
Filed |           | As 
Restated |   | Change     |  
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|Interest income                                      |  | $                                            | 3,403      |                                             | $ | 504        |   | $                    | (2,899    | )            | $ | 11,959     |   | $ | 9,060      |   | $ | (2,899   | )
|Bad debt expense                                     |  | $                                            | -          |                                             | $ | -          |   | $                    | -         |              | $ | -          |   | $ | 138,755    |   | $ | 138,755  |  
|Income (Loss) From Operations                        |  | $                                            | 128,058    |                                             | $ | 125,159    |   | $                    | (2,899    | )            | $ | (434,466   | ) | $ | (576,120   | ) | $ | (141,654 | )
|Gain (Loss) on disposal of portfolio stock           |  | $                                            | (5,425     | )                                           | $ | (5,425     | ) | $                    | -         |              | $ | (241,516   | ) | $ | (1,142,304 | ) | $ | (900,788 | )
|Unrealized depreciation on investments               |  | $                                            | 39,087     |                                             | $ | 927,587    |   | $                    | 888,500   |              | $ | (2,846,091 | ) | $ | (2,431,803 | ) | $ | 414,288  |  
|Penalties and interest                               |  | $                                            | 76,000     |                                             | $ | -          |   | $                    | (76,000   | )            | $ | 76,000     |   | $ | (86,224    | ) | $ | (162,224 | )
|Income tax benefit (provision)                       |  | $                                            | (257,000   | )                                           | $ | (24,000    | ) | $                    | 233,000   |              | $ | 598,000    |   | $ | 1,143,000  |   | $ | 545,000  |  
|Net decrease in net assets resulting from operations |  | $                                            | (25,855    | )                                           | $ | 1,016,746  |   | $                    | 1,042,601 |              | $ | (2,867,798 | ) | $ | (3,113,176 | ) | $ | (245,378 | )
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|Statement of Net Assets                              |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|                                                     |  | For the Nine Months Ending January 31, 2009  |            |                                             |   |            |   |                      |           |              |   |           
|                                                     |  | As Originally 
Filed                         |            | As 
Restated                                |   | Change     |   |                      |           |              |   |            |   |   |            |  
|                                                     |  |                                              |            |                                             |   |            |   |                      |           |              |   |            |   |   |            |   |   |          |  
|Net decrease in net assets resulting from operations |  | $                                            | (2,867,798 | )                                           | $ | (3,113,176 | ) | $                    | (245,378  | )            |   |            |   |   |            |   |   |          |  
|Total decrease                                       |  | $                                            | (2,012,289 | )                                           | $ | (2,257,667 | ) | $                    | (245,378  | )            |   |            |   |   |            |   |   |          |  
|Net Assets, End of Period                            |  | $                                            | 3,586,943  |                                             | $ | 3,341,565  |   | $                    | (245,378  | )            |   |            |   |   |            |   |   |          |  





F-12



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS







NOTE 3  INVESTMENTS

Portfolio companies consist of the following at January 31, 2009:

|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|-------------------------------------------------------------- |  | --------------------------- |  | -------------- |  | ------------------------------------------ | --- | ---- | --------- | -------------------------- | ---------- | ------------------------ | ---------- | - | ---------- | -
|                                                               |  | Business                    |  | % of
Portfolio |  | Number of
Shares Held
at January 31, 
2009 |     | Cost |           | Value at
January 31, 
2009 |            | Unrealized
Gain / (Loss) |           
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            | (Restated) |                          | (Restated) |  
|Affiliated Company Securities (1)                              |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Creative Energy Solutions, Inc. (3)                            |  | Develops alternative energy |  | 0.00%          |  | 2,000,000                                  | (2) | $    | 1,000,000 |                            | $          | -                        |            | $ | (1,000,000 | )
|                                                               |  | technologies                |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|SIVOO Holdings, Inc.                                           |  | High speed internet media   |  | 0.60%          |  | 664,501                                    | (4) |      | 319,725   |                            |            | 25,916                   |            |   | (293,809   | )
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrants to purchase 805,000 shares of SIVOO Holdings, Inc.    |  | High speed internet media   |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|250,000 warrants expiring April 11, 2011                       |  |                             |  | 0.16%          |  | 250,000                                    | (2) |      | -         |                            |            | 7,000                    |            |   | 7,000      |  
|150,000 warrants expiring November 14, 2011                    |  |                             |  | 0.12%          |  | 150,000                                    | (2) |      | -         |                            |            | 5,000                    |            |   | 5,000      |  
|405,000 warrants expiring February 28, 2013                    |  |                             |  | 0.37%          |  | 405,000                                    | (2) |      | 206,202   |                            |            | 16,000                   |            |   | (190,202   | )
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Multi-View Technologies, Inc.                                  |  | 3D graphics imaging         |  | 0.46%          |  | 2,000,000                                  | (2) |      | 20,000    |                            |            | 20,000                   |            |   | -          |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 500,000 shares of Multi-View Technologies, |  | 3D graphics imaging         |  | 0.02%          |  | 500,000                                    | (2) |      | 1,000     |                            |            | 1,000                    |            |   | -          |  
|Inc. common stock expiring July 28, 2013                       |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 1,000,000 shares of Dominion               |  | SBA lending                 |  | 0.12%          |  | 1,000,000                                  | (2) |      | 5,000     |                            |            | 5,000                    |            |   | -          |  
|Capital Management, Inc. common stock expiring April 2013      |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 500,000 shares of Dominion                 |  | SBA lending                 |  | 0.00%          |  | 500,000                                    | (2) |      | 1,000     |                            |            | -                        |            |   | (1,000     | )
|Capital Management, Inc. common stock expiring July 2013       |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|BF Acquisition Group V, Inc.                                   |  | Inactive company            |  | 0.04%          |  | 100,000                                    | (2) |      | 1,625     |                            |            | 1,625                    |            |   | -          |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Total Affiliated Company Securities                            |  |                             |  | 1.89%          |  |                                            |     |      | 1,554,552 |                            |            | 81,541                   |            |   | (1,473,011 | )
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |           
|Non-Affiliated Company Securities                              |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 1,000,000 shares of Vystar Corporation (5) |  | Natural rubber latex        |  | 46.14%         |  | 1,000,000                                  | (2) |      | 1,991,000 |                            |            | 1,991,000                |            |   | -          |  
|common stock expiring January 31, 2013                         |  | products                    |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 500,000 shares of Vystar Corporation (5)   |  | Natural rubber latex        |  | 6.26%          |  | 500,000                                    | (2) |      | 193,000   |                            |            | 270,000                  |            |   | 77,000     |  
|common stock expiring April 30, 2013                           |  | products                    |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Lightwave Logic, Inc.                                          |  | Plastics engineering        |  | 3.72%          |  | 532,448                                    | (4) |      | 309,090   |                            |            | 160,726                  |            |   | (148,364   | )
|                                                               |  |                             |  | 7.51%          |  | 400,000                                    | (2) |      | 332,400   |                            |            | 324,147                  |            |   | (8,253     | )
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 500,000 shares of Lightwave Logic, Inc.    |  | Plastics engineering        |  | 5.56%          |  | 500,000                                    | (2) |      | 348,000   |                            |            | 240,000                  |            |   | (108,000   | )
|common stock expiring February 28, 2012                        |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 1,000,000 shares of iVolution Medical      |  | Medical billing and medical |  | 11.38%         |  | 1,000,000                                  | (2) |      | 112,000   |                            |            | 491,000                  |            |   | 379,000    |  
|Systems, Inc. common stock expiring July 2013                  |  | records software            |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 500,000 shares of iVolution Medical        |  | Medical billing and medical |  | 3.52%          |  | 500,000                                    | (2) |      | 17,000    |                            |            | 152,000                  |            |   | 135,000    |  
|Systems, Inc. common stock expiring July 2013                  |  | records software            |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 1,000,000 shares of MICCO Group            |  | Content and intellectual    |  | 11.38%         |  | 1,000,000                                  | (2) |      | 6,000     |                            |            | 491,000                  |            |   | 485,000    |  
|common stock expiring July 2013                                |  | property distributor        |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Warrant to purchase 500,000 shares of MICCO Group              |  | Content and intellectual    |  | 2.62%          |  | 500,000                                    | (2) |      | -         |                            |            | 113,000                  |            |   | 113,000    |  
|common stock expiring July 2013                                |  | property distributor        |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Other investments                                              |  |                             |  | 0.03%          |  |                                            |     |      | 976       |                            |            | 1,131                    |            |   | 155        |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Total Non-Affiliated Company Securities                        |  |                             |  | 98.11%         |  |                                            |     |      | 3,309,466 |                            |            | 4,234,004                |            |   | 924,538    |  
|                                                               |  |                             |  |                |  |                                            |     |      |           |                            |            |                          |            |   |            |  
|Total Securities                                               |  |                             |  | 100.00%        |  |                                            |     | $    | 4,864,018 |                            | $          | 4,315,545                |            | $ | (548,473   | )

(1)

Each portfolio company in which the Company owns 5% or more of the outstanding voting securities is deemed an "affiliated company".

(2)

Restricted shares - illiquid securities; total illiquid securities of $4,127,772 make up 124.42% of total net assets as of January 31, 2009

(3)

Private company - valued by the Board of Directors

(4)

Unrestricted shares - liquid securities

(5)

Private company -valued by an independent third-party



F-13



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 3  INVESTMENTS (CONTINUED)

As described in Note 1, the Company partially adopted SFAS No. 157 on May 1, 2008. SFAS No. 157, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1

Observable inputs such as quoted prices in active markets;

Level 2

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

Level 3

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

Assets measured at fair value on a recurring basis are as follows:

|                                |  |                             |           |                                                                |   |                                               |  |                                           |   |  |   |           | 
|------------------------------- |  | --------------------------- | --------- | -------------------------------------------------------------- | - | --------------------------------------------- |  | ----------------------------------------- | - |  | - | --------- | 
|                                |  | Fair Value
January 31, 2009 |           | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) |   | Significant Other
Observable
Inputs
(Level 2) |  | Significant
Unobservable
Inputs
(Level 3) |  
|                                |  |                             |           |                                                                |   |                                               |  |                                           |   |  |   |          
|Investments in securities       |  |                             |           |                                                                |   |                                               |  |                                           |   |  |   |           | 
|Affiliated companies            |  | $                           | 81,541    |                                                                | $ | 47,541                                        |  | $                                         | - |  | $ | 34,000    | 
|Non-affiliated companies        |  |                             | 4,234,004 |                                                                |   | 486,004                                       |  |                                           | - |  |   | 3,748,000 | 
|                                |  |                             |           |                                                                |   |                                               |  |                                           |   |  |   |           | 
|Total Investments in securities |  | $                           | 4,315,545 |                                                                | $ | 533,545                                       |  | $                                         | - |  | $ | 3,782,000 | 



|                                                     |  |  |                                 |   |            |   |  | 
|---------------------------------------------------- |  |  | ------------------------------- | - | ---------- | - |  | 
|                                                     |  |  | Fair Value Measurement Using    |  
|                                                     |  |  | Significant Unobservable Inputs |  
|                                                     |  |  | (Level 3)                       |  
|                                                     |  |  |                                 |  
|Beginning Balance, April 30, 2008                    |  |  |                                 | $ | 5,384,625  |   |  | 
|                                                     |  |  |                                 |   |            |   |  | 
|Total gains or losses (realized/unrealized)          |  |  |                                 |   |            |   |  | 
|included in changes in net assets                    |  |  |                                 |   | (1,602,625 | ) |  | 
|Purchases, issuance and settlements                  |  |  |                                 |   | -          |   |  | 
|                                                     |  |  |                                 |   |            |   |  | 
|Ending Balance, January 31, 2009                     |  |  |                                 | $ | 3,782,000  |   |  | 
|                                                     |  |  |                                 |   |            |   |  | 
|                                                     |  |  |                                 |   |            |   |  | 
|The amount of total gains or losses for the period   |  |  |                                 |   |            |   |  | 
|included in changes in net assets attributable       |  |  |                                 |   |            |   |  | 
|to the change in unrealized gains or losses          |  |  |                                 |   |            |   |  | 
|relating to assets still held at the reporting date. |  |  |                                 | $ | (1,602,625 | ) |  | 









F-14



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 4  INCOME TAXES

As an investment company organized as a corporation, the Company is taxable as a corporation. As discussed in Note 1, the Company utilizes the assets and liability method of accounting for income taxes in accordance with SFAS 109.

Under the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), the unrecognized tax benefits consisting of interest and penalties at April 30, 2008 was $52,600. The change in unrecognized tax benefits during the nine months ended January 31, 2009 amounted to $19,725 and the accrual at January 31, 2009 amounted to $72,325. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense.

Tax years from 2005 (initial tax year) through 2008 remain subject to examination by major tax jurisdictions.

The income tax benefit for the nine months ended January 31, 2009 and 2008 have been included in the accompanying financial statements on the basis of an estimated annual effective rate of 26.8 and 7.6%. The estimated annual effective rate differs from the U.S. Statutory rate primarily due to the changes in the valuation allowance.

The components of deferred tax (assets) liabilities are as follows:

|                                               |                  |            |   | 
|---------------------------------------------- | ---------------- | ---------- | - | 
|                                               | January 31, 2009 |           
|                                               | (Restated)       |           
|Deferred tax asset                             |                  |            |   | 
|Net operating loss                             | $                | (55,000    | )
|Deferred charges                               |                  | (82,700    | )
|Unrealized loss                                |                  | (218,000   | )
|Capital loss carryforward                      |                  | (1,184,000 | )
|Stock-based compensation                       |                  | (314,000   | )
|Amortization of deferred revenue from warrants |                  | 1,224,700  |  
|Bad debt                                       |                  | (55,000    | )
|Other                                          |                  | (2,000     | )
|                                               |                  |            |  
|Total deferred tax asset                       |                  | (686,000   | )
|                                               |                  |            |  
|Provision for deferred taxes                   |                  | 534,000    |  
|                                               |                  |            |  
|Total deferred tax asset                       | $                | (152,000   | )



At April 30, 2008, the Company had a capital loss carryforward of approximately $2,370,000 which if not used will expire in 2013.

At January 31, 2009, there is a $147,224 accrual for estimated penalties and interest associated with the outstanding taxes payable for the year ended April 30, 2007. In addition, the Company may be subjected to federal and state late filing penalties of up to approximately $180,000 due to filing extensions with no payment.









F-15



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 5  NOTES RECEIVABLE

Notes receivable consists of the following:

|                                                                                       |                  |        |                |   |         | 
|-------------------------------------------------------------------------------------- | ---------------- | ------ | -------------- | - | ------- | 
|                                                                                       | January 31, 2009 |        | April 30, 2008 |  
|                                                                                       |                  |        |                |   |         | 
|Notes Receivable - non-affiliated companies                                            |                  |        |                |   |         | 
|Scientific Products and Systems, Inc. ("SPS") - Total principal of $110,778.  These    |                  |        |                |   |         | 
|notes bear interest at 8% per year up through August 31, 2007 at which time the        |                  |        |                |   |         | 
|Company demanded payment.  No payment was received and the notes then began            |                  |        |                |   |         | 
|began to bear interest at 10%.  The Company filed a lawsuit in August 2008 against     |                  |        |                |   |         | 
|SP&S demanding payment.  SP&S responded in September 2008 to the lawsuit and           |                  |        |                |   |         | 
|in October 2008, the Company requested for production of documents, which it has       |                  |        |                |   |         | 
|not received.  SP&S filed for bankruptcy in May 2009.  An allowance has been           |                  |        |                |   |         | 
|established in the amount of $123,755.                                                 | $                | -      |                | $ | 116,208 | 
|                                                                                       |                  |        |                |   |         | 
|Note Receivable - affiliated companies                                                 |                  |        |                |   |         | 
|SIVOO Holdings, Inc. ("SIVOO") - Principal of $25,000.  This note bears interest at 8% |                  |        |                |   |         | 
|per year beginning on May 1, 2007.  This note is payable upon demand.                  | $                | 28,518 |                | $ | 27,005  | 



NOTE 6  DUE FROM AFFILIATED COMPANIES

|                                        |  |  |                  |         | 
|--------------------------------------- |  |  | ---------------- | ------- | 
|                                        |  |  | January 31, 2009 |        
|                                        |  |  |                  |         | 
|BF Acquisition Group V, Inc.            |  |  | $                | 52,987  | 
|Dominion Capital Management Corporation |  |  |                  | 53,813  | 
|Multi-View Technologies                 |  |  |                  | 1,541   | 
|                                        |  |  |                  |         | 
|Total Due from Affiliated Companies     |  |  | $                | 108,341 | 







F-16



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 7  DEFERRED REVENUE

The deferred revenue represents unearned management fee income. Income is amortized and recognized evenly over the life of the contract unless otherwise stated in the contract. In accordance with EITF 96-18, since the shares received by the Company are non-refundable, the value of the contract is determined by the number of shares the Company receives at the closing market price on the day of the contract (commitment date). Warrants are valued using the Black-Scholes method. Deferred revenue consists of the following:

|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ | -------------- | - | ------- | 
|                                                                                                                                                                                                                      |  | January 31, 2009 |        | April 30, 2008 |  
|                                                                                                                                                                                                                      |  | (Restated)       |        |                |   |        
|Non-Affiliated Companies                                                                                                                                                                                              |  |                  |        |                |   |         | 
|Vystar Corporation ("Vystar")                                                                                                                                                                                         |  |                  |        |                |   |         | 
|Received a warrant to purchase 500,000 shares of Vystar common stock for payment of services per one year contract dated April 2008, valued at $193,000, fair value.                                                  |  | $                | 48,250 |                | $ | 193,000 | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Lightewave Logic, Inc. ("LWLG")                                                                                                                                                                                       |  |                  |        |                |   |         | 
|Received a warrant to purchase 400,000 shares of LWLG common stock for payment of services per one year contract dated February 2008, valued at $332,000, fair value and amortized over the life of the contract.     |  |                  | 27,672 |                |   | 276,666 | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Theater Xtreme Entertainment Group, Inc. ("TXEG")                                                                                                                                                                     |  |                  |        |                |   |         | 
|Received 650,000 shares of TXEG common stock for payment of services per one year contract dated July 2007, valued at $396,500, fair value and amortized over the life of the contract.                               |  |                  | -      |                |   | 66,084  | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Received a warrant to purchase 500,000 shares of TXEG common stock for payment of services per one year contract dated July 2007, valued at $277,000, fair value and amortized over the life of the contract.         |  |                  | -      |                |   | 46,166  | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|iVolution Medical Systems ("IMS")                                                                                                                                                                                     |  |                  |        |                |   |         | 
|Received a warrant to purchase 500,000 shares of IMS common stock for payment of services per a one year contract dated July 2008, valued at $17,000, fair value and amortized over the life of the contract.         |  |                  | 7,791  |                |   | -       | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Total Non-Affiliated Companies                                                                                                                                                                                        |  |                  | 83,713 |                |   | 581,916 | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Affiliated Companies                                                                                                                                                                                                  |  |                  |        |                |   |         | 
|Multi-View Technologies, Inc. ("MVT")                                                                                                                                                                                 |  |                  |        |                |   |         | 
|Received a warrant to purchase 500,000 shares of MVT common stock for payment of services per a one year contract dated July 2008, valued at $1,000, fair value and amortized over the life of the contract.          |  |                  | 500    |                |   | -       | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Dominion Capital Management Corporation ("DCMC")                                                                                                                                                                      |  |                  |        |                |   |         | 
|Received a warrant to purchase 1,000,000 shares of DCMC common stock for a payment of services per a three month contract dated April 2008, valued at $5,000, fair value and amortized over the life of the contract. |  |                  | -      |                |   | 5,000   | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Received a warrant to purchase 500,000 shares of DCMC common stock for payment of services per a three month contract dated July 2008, valued at $1,000, fair value and amortized over the life of the contract.      |  |                  | 500    |                |   | -       | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Total Affiliated Companies                                                                                                                                                                                            |  |                  | 1,000  |                |   | 5,000   | 
|                                                                                                                                                                                                                      |  |                  |        |                |   |         | 
|Total Deferred Revenue                                                                                                                                                                                                |  | $                | 84,713 |                | $ | 586,916 | 





F-17



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 7  DEFERRED REVENUE (CONTINUED)

Management service revenue recognized consists of:

|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | ------- | ------------------------------------------- | - | ------------------------------------------ | ---------- | ------------------------------------------ | ------- |  | - | --------- | 
|                                                                                                                                                                                                                          |  | For the Three
Months Ended
January 31, 2009 |         | For the Three
Months Ended
January 31, 2008 |   | For the Nine
Months Ended
January 31, 2009 |            | For the Nine
Months Ended
January 31, 2008 |        
|                                                                                                                                                                                                                          |  | (Restated)                                  |         |                                             |   |                                            | (Restated) |                                            |         |  |  
|Non-Affiliated Companies                                                                                                                                                                                                  |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Vystar Corporation ("Vystar")                                                                                                                                                                                             |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 500,000 shares of Vystar Corporation common stock for payment of services per a one year contract dated April 2008, valued at $193,000, fair value.                                        |  | $                                           | 48,250  |                                             | $ | -                                          |            | $                                          | 144,750 |  | $ | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Lightwave Logic, Inc. ("LWLG")                                                                                                                                                                                            |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received 1,000,000 shares of LWLG common stock for payment of services per one year contract dated February 28, 2007, valued at $580,000, fair value and amortized over the life of the contract.                         |  |                                             | -       |                                             |   | 145,000                                    |            |                                            | -       |  |   | 435,000   | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 500,000 shares of LWLG common stock for payment of services per one year contract dated February 28, 2007, valued at $348,000, fair value and amortized over the life of the contract.     |  |                                             | -       |                                             |   | 87,000                                     |            |                                            | -       |  |   | 261,000   | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 400,000 shares of LWLG common stock for payment of services per one year contract dated February 2008, valued at $332,000, fair value and amortized over the life of the contract.         |  |                                             | 82,998  |                                             |   | -                                          |            |                                            | 248,994 |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Theater Xtreme Entertainment Group, Inc. ("TXEG")                                                                                                                                                                         |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received 650,000 shares of TXEG common stock for payment of  services per one year contract dated July 2007, valued at $396,500, fair value and amortized over the life of the contract.                                  |  |                                             | -       |                                             |   | 99,126                                     |            |                                            | 66,084  |  |   | 231,294   | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 500,000 shares of TXEG common stock for payment of services per one year contract dated July 2007, valued at $277,000, fair value and amortized over the life of the contract.             |  |                                             | -       |                                             |   | 69,249                                     |            |                                            | 46,166  |  |   | 161,581   | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received 2,500,000 shares of TXEG common stock for payment of services per a one year contract dated July 2008, valued at $175,000, fair valule and amortized over the life of the contract.                              |  |                                             | 131,250 |                                             |   | -                                          |            |                                            | 175,000 |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|iVolution Medical Systems ("iVolution")                                                                                                                                                                                   |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 1,000,000 shares of iVolution common stock for payment of services per a three month contract dated July 2008, valued at $112,000, fair value and amortized over the life of the contract. |  |                                             | -       |                                             |   | -                                          |            |                                            | 112,000 |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 500,000 shares of iVolution common stock for payment of services per a one year contract dated July 2008, valued at $17,000, fair value and amortized over the life of the contract.       |  |                                             | 4,251   |                                             |   | -                                          |            |                                            | 9,209   |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|MICCO Group ("MICCO")                                                                                                                                                                                                     |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 1,000,000 shares of MICCO common stock for payment of services per a three month contract dated July 2008, valued at $6,000, fair value and amortized over the life of the contract        |  |                                             | -       |                                             |   | -                                          |            |                                            | 6,000   |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Total Non-Affiliated Companies                                                                                                                                                                                            |  |                                             | 266,749 |                                             |   | 400,375                                    |            |                                            | 808,203 |  |   | 1,088,875 | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Affiliated Companies                                                                                                                                                                                                      |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Extreme Visual Technologis, Inc. ("EVT")                                                                                                                                                                                  |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received 1,000,000 shares of EVT common stock for payment of services per a one year contract dated July 2006, valued at $1,000,000, fair value and amortized over the life of the contract.                              |  |                                             | -       |                                             |   | -                                          |            |                                            | -       |  |   | 197,255   | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Multi-View Technologies ("MVT")                                                                                                                                                                                           |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received 2,000,000 shares of MVT common stock for payment of services per three month contract dated July 2008, valued at $20,000, fair value and amortized over the life of the contract.                                |  |                                             | -       |                                             |   | -                                          |            |                                            | 20,000  |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 500,000 shares of MVT common stock for payment of services per a one year contract dated July 2008, valued at $1,000, fair value and amortized over the life of the contract.              |  |                                             | 250     |                                             |   | -                                          |            |                                            | 500     |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Dominion Capital Management ("DCMC")                                                                                                                                                                                      |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 1,000,000 shares of DCMC common stock for payment of services per a three month contract dated April 2008, valued at $5,000, fair value and amortized over the life of the contract.       |  |                                             | -       |                                             |   | -                                          |            |                                            | 5,000   |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Received a warrant to purchase 500,000 shares of DCMC common stock for payment of services per a one year contract dated July 2008, valued at $1,000, fair value and amortized over the life of the contract.             |  |                                             | 250     |                                             |   | -                                          |            |                                            | 500     |  |   | -         | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Total Affiliated Companies                                                                                                                                                                                                |  |                                             | 500     |                                             |   | -                                          |            |                                            | 26,000  |  |   | 197,255   | 
|                                                                                                                                                                                                                          |  |                                             |         |                                             |   |                                            |            |                                            |         |  |   |           | 
|Total Management Services Revenue                                                                                                                                                                                         |  | $                                           | 267,249 |                                             | $ | 400,375                                    |            | $                                          | 834,203 |  | $ | 1,286,130 | 



F-18



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 8  NOTE PAYABLE

Notes payable consists of the following:



|                                                        |  |                  |         | 
|------------------------------------------------------- |  | ---------------- | ------- | 
|                                                        |  | January 31, 2009 |        
|                                                        |  |                  |         | 
|Notes payable.  Interest accrued at the                 |  |                  |         | 
|prime rate of interest, 8.25% at January 31, 2009.      |  |                  |         | 
|Principal and interest are payable on demand. (NOTE 11) |  | $                | 155,000 | 
|                                                        |  |                  |         | 
|Notes payable.  Interest accrued at 8% beginning on     |  |                  |         | 
|November 1, 2008.  Principal and interest are payable   |  |                  |         | 
|on demand (NOTE 11)                                     |  |                  | 297,372 | 
|                                                        |  |                  |         | 
|                                                        |  | $                | 452,372 | 



NOTE 9  ADVANCES FROM SHAREHOLDER

Amount represents advances from shareholder to cover operating expenses. There are no stated interest rate or repayment terms.

NOTE 10  STOCK BASED COMPENSATION

The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of options awarded during the nine months ended January 31, 2009, with the following assumptions: no dividend yield, expected volatility of 126%, risk-free interest rate of 3.27% and expected option life of ten years.

During the nine months ended January 31, 2009, the Company granted options to purchase 900,000 shares of its common stock at a fair value of $774,718 to its certain executive officers and members of the board of directors.

As of January 31, 2009, there was approximately $192,427 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through May 2011.

The following tables summarize all stock option activity of the Company since April 30, 2008:

|                              |                           |  |                |  |                 
|----------------------------- | ------------------------- |  | -------------- |  | ----------------
|                              | Stock Options Outstanding
|                              |                           |  |                |  | Weighted Average
|                              | Number of Shares          |  | Exercise Price |  | Exercise Price  
|                              |                           |  |                |  |                 
|Outstanding, April 30, 2008   | 125,000                   |  | $2.00          |  | $2.00           
|                              |                           |  |                |  |                 
|Granted                       | 900,000                   |  | $0.87 - $0.96  |  | $0.90           
|                              |                           |  |                |  |                 
|Outstanding, January 31, 2009 | 1,025,000                 |  | $0.87 - $2.00  |  | $1.03           
|                              |                           |  |                |  |                 
|Exercisable, January 31, 2009 | 744,364                   |  | $0.87 - $2.00  |  | $1.05           











F-19



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 10  STOCK BASED COMPENSATION (CONTINUED)

|                          |  |                       |  |                  |  |                          
|------------------------- |  | --------------------- |  | ---------------- |  | -------------------------
|Stock Options Outstanding
|                          |  | Number Outstanding    |  | Weighted Average |  | Weighted Average         
|Range of                  |  | Currently Exercisable |  | Remaining        |  | Exercise Price of Options
|Exercise Prices           |  | at January 31, 2009   |  | Contractual Life |  | Currently Exercisable    
|                          |  |                       |  |                  |  |                          
|$0.87 - $2.00             |  | 744,364               |  | 2.85 years       |  | $1.05                    



NOTE 11  CAPITAL STOCK TRANSACTIONS

During the nine months ended January 31, 2009, 334,706 shares of common stock were issued for proceeds of $263,500.



NOTE 12  CONTINGENCY

McCrae Associates, LLC Lawsuit

In July 2006, McCrae Associates, LLC (McCrae) filed a lawsuit against the Company and its directors and officers in the United States District Court for the District of Connecticut. The lawsuit alleges that McCrae is the owner of 300,000 shares of the Companys common stock and that the Company did not deliver to and is wrongfully withholding such shares from McCrae. The lawsuit alleges that the directors and officers conspired with the Company to deprive McCrae of such shares, and that the directors and officers owed a fiduciary duty to McCrae that they violated by refusing to tender the shares to McCrae upon demand. The lawsuit also alleges that all of the defendants violated the Connecticut Unfair Trade Practices Act. McCrae seeks delivery of a stock certificate covering the shares, unspecified monetary damages, including treble damages, attorney fees and punitive damages. The Company is vigorously defending the action and has filed a counter-claim against McCrae and a third-party claim against Stephen Funk seeking to rescind the issuance of shares to McCrae and to recover monetary damages on fraud and breach of contract theories. The Company also filed similar claims in the Chancery Court in Wilmington, Delaware seeking to rescind the issuance of 200,000 shares of common stock to Liberator, LLC, a company it believes is controlled by Stephen Funk. Recently, the parties agreed to the voluntary dismissal of the action in Delaware with the express understanding that Liberator would be bound by the decision of the Court in Connecticut with respect to the McCrae shares. Recent efforts by the Company and McCrae to settle the litigation have been unsuccessful and the parties have commenced discovery.

The Company believes that McCraes claims lack merit and intends to defend against such claims vigorously.

Carlin and Wilson Lawsuit

During February 2008, Leo Carlin Jr. (Carlin) and Richard H. Wilson, III (Wilson) filed a lawsuit in New Castle County, Delaware, Superior Court. Carlin and Wilson are the Plaintiffs and UCM is the Defendant.



F-20



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 12  CONTINGENCY (CONTINUED)

Carlin and Wilson Lawsuit (Continued)

On or around June 2006, Carlin and Wilson loaned the Company a total of $175,000 which was evidenced by two promissory notes payable (Notes), due with interest, on or before October 15, 2006. These funds were for short-term financing for the Company. Carlin and Wilson sued demanding payment, claiming that three weeks after the Notes were executed and delivered, the Company failed to send the plaintiffs a subscription agreement for shares of the Companys common stock at $2.50 per share in exchange for the cancellation of the notes.

On or around March 2008, a judgment was placed on the Company for the amounts owed.

As of October 31, 2008, the outstanding notes payable balance was $155,000 and the accrued interest payable on those notes was $32,925.

In December 2008, the Company was served a notice to attend an additional discovery hearing on January 12, 2009. At this discovery hearing additional documents were provided by the Company as requested.

In February 2009, the judgment was ordered into effect and the Companys investment accounts were seized.

In March 2009, the Plaintiffs and the Company agreed to settle the Notes over a four month payment. The Company made a $100,000 payment in March 2009 and two additional payments of $30,823 in each April and May 2009. The final payment of $30,823 was made in June 2009, which was a complete settlement of all interest and principle.



NOTE 13  FINANCIAL HIGHLIGHTS

|                                                    |                  |        |  
|--------------------------------------------------- | ---------------- | ------ | -
|                                                    | January 31, 2009 |       
|                                                    | (Restated)       |       
|                                                    |                  |        |  
|Per Share Operating Performance                     |                  |        |  
|Net asset value, beginning of period                | $                | 0.98   |  
|                                                    |                  |        |  
|Loss from operations, net of taxes                  |                  | (0.06  | )
|Unrealized depreciation on investment, net of taxes |                  | (0.23  | )
|Gain on property dividend, net of taxes             |                  | -      |  
|Loss on sale of stock                               |                  | (0.11  | )
|                                                    |                  | 0.58   |  
|                                                    |                  |        |  
|Capital share transactions                          |                  | 0.14   |  
|                                                    |                  |        |  
|Net asset value, end of period                      | $                | 0.55   |  
|                                                    |                  |        |  
|                                                    |                  |        |  
|Total Return                                        |                  | -43.88 | %
|                                                    |                  |        |  
|Average Net Assets as a percentage of:              |                  |        |  
|Expenses                                            |                  | 43.14  | %
|Management income                                   |                  | 25.96  | %













F-21



---

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS





NOTE 14  SUBSEQUENT EVENTS

In February 2009, certain officers and advisors rescinded stock options that were granted in May 2005 and 2008. The unrecognized compensation relating to these stock options in the amount of $189,711 was expensed.

In February 2009, the Company appointed a new President and Chief Operating Officer. An option was granted to this officer to purchase 375,000 shares of the Companys common stock at an exercise price of $0.20, valued at $67,248, fair value. These options were exercised in February 2009 for proceeds of $75,000.

In February 2009, an employee rescinded an option to purchase 25,000 shares of the Companys common stock at $2.00 per share and received an option to purchase 300,000 shares of the Companys common stock with an exercise price of $0.20 per share with 10 year expiration and vesting immediately. In accordance with SFAS 123R, the cancellation of the option and the issuance of the new option was deemed to be a modification of the original award. As such, $93,440 incremental cost of the modified option and the $2,716 of the remaining unamortized cost of the original option issuance was expensed.

In February 2009, the Company granted employees options to purchase 150,000 shares of the Companys common stock at $0.20 per share, valued at $50,886, fair value.

In February 2009, the Company granted advisors options to purchase 200,000 shares of the Companys common stock at $0.20 per share, valued at $67,848, fair value.

In March 2009, the Chief Financial Officer resigned and a new Chief Financial Officer was appointed.

In May 2009, the Company exercised a warrant to purchase 400,000 shares of Vystar Corporation common stock at $0.01 per share valued at $4,000, fair value.

In May 2009, the Company was notified that Scientific Products and Systems, Inc. filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware, seeking relief under Chapter 7 of Title 11 of the United States Code.

In June 2009, an independent member of the board of directors resigned for health reasons.

In June and July 2009, the Company entered into promissory notes of $116,000. The holders of these promissory notes have the option to receive payment in shares of Vystar Corporation common stock that the Company owns at $1.00 per share.







F-22