----

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

----

**FORM      10-Q**

**(Mark      One)**

**ý**
**      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**For      the quarterly period ended **
**October      31, 2005**

**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 ofIncorporation                or Organization) **2601                Annand Drive****Suite                16****     Wilmington,                DE     **(Address                of principal executive offices) | **          20-1568059        **(I.R.S.                EmployerIdentification                No.)   **19808**(Zip                Code) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

----

----

**PART      I**

**FINANCIAL      INFORMATION**

| **Item                1.** | **Financial                Statements** |
|----------------------------|-----------------------------------------|

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**(A      BUSINESS DEVELOPMENT COMPANY)**

**STATEMENT      OF ASSETS AND LIABILITIES**

|                                                                                                     |   |                                |      |                              |   |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------|--------|
|                                                                                                     |   | **October                31, 2005** |      | **April                30, 2005** |   |
|                                                                                                     |   | **(Unaudited)**                     |      | **(Audited)**                     |   |
|                                                                                                     |   |                                |      |                              |   |
| **ASSETS**                                                                                               |   |                                |      |                              |   |
| **Investment                in Securities, at fair value (cost: $1,339,600 and                614,500)** |   |                                | 2,777,967 |                              |   | 2,782,976 |   |
| **Cash                and Cash Equivalents**                                                             |   |                                | 100,601   |                              |   | 158,453 |   |
| **Miscellaneous                Receivables**                                                             |   |                                | 46,145    |                              |   | 27,095 |   |
| **Due                from Affiliates**                                                                   |   |                                | 10,425    |                              |   | 19,820 |   |
| **Prepaid                Expenses**                                                                      |   |                                | 7,775     |                              |   | 9,371 |   |
| **Property                and Equipment, net**                                                           |   |                                | 11,127    |                              |   | 12,077 |   |
| **Rent                Deposit**                                                                          |   |                                | 1,100     |                              |   | 1,100 |   |
| **TOTAL                ASSETS**                                                                          |   | $                                   | 2,955,140 |                              | $      | 3,010,892 |   |
|                                                                                                     |   |                                |      |                              |   |   |   |
| **LIABILITIES**                                                                                          |   |                                |      |                              |   |   |   |
| **Accounts                Payable and Accrued Expenses**                                                 |   |                                | 39,422    |                              |   | 61,854 |   |
| **Deferred                Revenue**                                                                      |   |                                | 481,800   |                              |   | - |   |
| **Deferred                Income Taxes**                                                                 |   |                                | 269,500   |                              |   | 653,000 |   |
| **TOTAL                LIABILITIES**                                                                     |   | $                                   | 790,722   |                              | $      | 714,854 |   |
|                                                                                                     |   |                                |      |                              |   |   |   |
| **NET                ASSETS**                                                                            |   | $                                   | 2,164,418 |                              | $      | 2,296,038 |   |
|                                                                                                     |   |                                |      |                              |   |   |   |
| **ANALYSIS                OF NET ASSETS:**                                                               |   |                                |      |                              |   |   |   |
| **Net                Capital Paid in on Shares of Capital Stock**                                        |   |                                | 1,758,975 |                              |   | 1,305,375 |   |
| **Distributable                Earnings**                                                                |   |                                | 405,443   |                              |   | 990,663 |   |
| **Net                Assets**                                                                            |   | $                                   | 2,164,418 |                              | $      | 2,296,038 |   |
|                                                                                                     |   |                                |      |                              |   |   |   |
| **Equivalent                per share value based on 5,076,800 shares**                                  |   |                                |      |                              |   |   |   |
| **of                capital stock outstanding as of October 31, 2005**                                   |   |                                |      |                              |   |   |   |
| **and                4,808,200 shares of capital stock outstanding**                                     |   |                                |      |                              |   |   |   |
| **as                of April 30, 2005**                                                                  |   | $                                   | 0.43      |                              | $      | 0.48 |   |

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**(A      BUSINESS DEVELOPMENT COMPANY)**

**SCHEDULE      OF INVESTMENTS**

**OCTOBER      31, 2005**

**(Unaudited)**

|                                                    |   |                                     |   | %                of |   | Number                of |   |                      |
|---------------------------------------------------------|--------|------------------------------------------|--------|---------------------|--------|--------------------------|--------|---------------------------|
| Common                Stocks - United States - 100%     |   | Business                                 |   | Portfolio           |   | Shares                   |   | Fair                Value |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| BF                Acquisition Group V, Inc.             |   | Inactive                company          |   | 0.06%               |   | 100,000                  |   | $1,625                    |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| IPI                Fundraising, Inc.                    |   | Sales                and distribution of |   | 0.36%               |   | 575,000                  |   | 9,958                     |
|                                                    |   | fundraising                products      |   |                |   |                     |   |                      |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| Gelstat                Corporation                      |   | Consumer                health care      |   | 1.99%               |   | 221,429                  |   | 55,357                    |
|                                                    |   | Company                                  |   |                |   |                     |   |                      |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| Neptune                Industries, Inc.                 |   | Seafood                production        |   | 0.29%               |   | 47,619                   |   | 8,095                     |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| PSI                - TEC Holdings, Inc.                 |   | Plastics                engineering      |   | 45.36%              |   | 787,500                  |   | 1,260,000                 |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| Theatre                Xtreme Entertainment Group, Inc. |   | Home                theater sales and    |   | 7.24%               |   | 575,000                  |   | 201,250                   |
|                                                    |   | Installation                             |   |                |   |                     |   |                      |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| BroadRelay                Holdings, Inc.                |   | High                speed internet media |   | 44.70%              |   | 564,401                  |   | 1,241,682                 |
|                                                    |   |                                     |   |                |   |                     |   |                      |
|                                                    |   |                                     |   |                |   |                     |   |                      |
| Total                (aggregate cost $1,339,600)        |   |                                     |   | 100.00%             |   |                     |   | $2,777,967                |

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**(A      BUSINESS DEVELOPMENT COMPANY)**

**STATEMENT      OF OPERATIONS**

**FOR      THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 2005 AND FOR THE PERIOD AUGUST      16, 2004 (DATE OF INCEPTION) TO OCTOBER 31, 2004**

**(Unaudited)**

|                                                                                              |   | **Three                months ended** |    | **Six                months ended** |   |
|---------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|-------------------------------------|--------|
|                                                                                              |   |                                  |    | **August                16, 2004**  |   |   |   |
|                                                                                              |   |                                  |    | **(Inception)                to**   |   |   |   |
|                                                                                              |   | **October                31, 2005**   |    | **October                31, 2004** |   | **October                31, 2005** |   |
|                                                                                              |   |                                  |    |                                |   |   |   |
| **Income**                                                                                        |   |                                  |    |                                |   |   |   |
| **Management                Services**                                                            |   | $                                     | 243,300 |                                | $      | 10,000 |   | $ | 243,300 |   |
|                                                                                              |   |                                  |    |                                |   |   |   |   |   |   |
| **Expenses**                                                                                      |   |                                  |    |                                |   |   |   |   |   |   |
| **Depreciation**                                                                                  |   |                                  | 119     |                                |   | 350 |   |   | 950 |   |
| **Dues                and Subscriptions**                                                         |   |                                  | 285     |                                |   | 250 |   |   | 420 |   |
| **Fees                and Commissions**                                                           |   |                                  | 5,358   |                                |   | 19 |   |   | 9,561 |   |
| **Interest                Expense**                                                               |   |                                  | 466     |                                |   | - |   |   | 929 |   |
| **Insurance**                                                                                     |   |                                  | 15,943  |                                |   | - |   |   | 32,090 |   |
| **Marketing**                                                                                     |   |                                  | -       |                                |   | - |   |   | 400 |   |
| **Office                Expenses and Supplies**                                                   |   |                                  | (760    | )                                   |   | 8,579 |   |   | 1,639 |   |
| **Payroll**                                                                                       |   |                                  | 125,192 |                                |   | - |   |   | 232,500 |   |
| **Payroll                Taxes**                                                                  |   |                                  | 5,339   |                                |   | - |   |   | 12,927 |   |
| **Postage,                Delivery and Shipping**                                                 |   |                                  | 711     |                                |   | 236 |   |   | 1,706 |   |
| **Professional                Fees**                                                              |   |                                  | 60,409  |                                |   | 13,905 |   |   | 155,263 |   |
| **Rent**                                                                                          |   |                                  | 4,300   |                                |   | 5,020 |   |   | 8,200 |   |
| **Telephone**                                                                                     |   |                                  | 741     |                                |   | 1,157 |   |   | 1,874 |   |
| **Travel                and Entertainment**                                                       |   |                                  | 8,275   |                                |   | 2,001 |   |   | 22,055 |   |
| **Utilities**                                                                                     |   |                                  | 593     |                                |   | 622 |   |   | 1,397 |   |
|                                                                                              |   |                                  | 226,971 |                                |   | 32,139 |   |   | 481,911 |   |
|                                                                                              |   |                                  |    |                                |   |   |   |   |   |   |
| **Income                (Loss) from Operations**                                                  |   |                                  | 16,329  |                                |   | (22,139 | ) |   | (238,611 | ) |
|                                                                                              |   |                                  |    |                                |   |   |   |   |   |   |
| **Unrealized                Appreciation (Depreciation) on Investments**                          |   |                                  | (62,734 | )                                   |   | 1,204,196 |   |   | (730,109 | ) |
|                                                                                              |   |                                  |    |                                |   |   |   |   |   |   |
| **Income                Tax Benefit (Deferred)**                                                  |   |                                  | 16,900  |                                |   | (470,000 | ) |   | 383,500 |   |
|                                                                                              |   |                                  |    |                                |   |   |   |   |   |   |
| **Net                Increase (Decrease) in Net Assets Resulting from                Operations** |   | $                                     | (29,505 | )                                   | $      | 712,057 |   | $ | (585,220 | ) |

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**(A      BUSINESS DEVELOPMENT COMPANY)**

**STATEMENT      OF CHANGES IN NET ASSETS**

**FOR      THE SIX MONTHS ENDED OCTOBER 31, 2005**

**(Unaudited)**

| **INCREASE                IN NET ASSETS FROM OPERATIONS**               |   |   |      |
|-------------------------------------------------------------------------|--------|--------|-----------|
| **Loss                from operations**                                 |   | $      | (238,611  | ) |
| **Unrealized                depreciation on investments, net of taxes** |   |   | (346,609  | ) |
|                                                                    |   |   |      |   |
| **NET                DECREASE IN NET ASSETS RESULTING FROM OPERATIONS** |   |   | (585,220  | ) |
|                                                                    |   |   |      |   |
| **CAPITAL                SHARE TRANSACTIONS**                           |   |   | 453,600   |   |
|                                                                    |   |   |      |   |
| **TOTAL                DECREASE**                                       |   |   | (131,620  | ) |
|                                                                    |   |   |      |   |
| **NET                ASSETS, BEGINNING OF PERIOD**                      |   |   | 2,296,038 |   |
|                                                                    |   |   |      |   |
| **NET                ASSETS, END OF PERIOD**                            |   | $      | 2,164,418 |   |

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**(A      BUSINESS DEVELOPMENT COMPANY)**

**STATEMENT      OF CASH FLOWS**

**FOR      THE SIX MONTHS ENDED OCTOBER 31, 2005 AND FOR THE PERIOD AUGUST 16, 2004 (DATE      OF INCEPTION) TO OCTOBER 31, 2004**

**(Unaudited)**

|                                                                                                 |   |                                |     | **August                16, 2004 (Inception)** |   |
|------------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|------------------------------------------------|--------|
|                                                                                                 |   | **October                31, 2005** |     | **to                October 31, 2004**         |   |
|                                                                                                 |   |                                |     |                                           |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                              |   |                                |     |                                           |   |
| **Net                increase (decrease) in net assets resulting from                operations**    |   | $                                   | (585,220 | )                                              | $      | 712,057 |   |
| **Adjustments                to reconcile net decrease in net assets from**                          |   |                                |     |                                           |   |   |   |
| **operations                to net cash used in operating activities:**                              |   |                                |     |                                           |   |   |   |
| **Purchase                of investment securities**                                                 |   |                                | -        |                                           |   | (300,000 | ) |
| **Investment                securities received in exchange for management                services** |   |                                | (243,300 | )                                              |   | (10,000 | ) |
| **Depreciation                expense**                                                              |   |                                | 950      |                                           |   | 350 |   |
| **Net                unrealized (appreciation) depreciation on                investments**          |   |                                | 730,109  |                                           |   | (1,204,196 | ) |
| **Deferred                Income Taxes**                                                             |   |                                | (383,500 | )                                              |   | 470,000 |   |
| **Net                changes in miscellaneous receivables**                                          |   |                                | (19,050  | )                                              |   | - |   |
| **Net                changes in due from affiliates**                                                |   |                                | 9,395    |                                           |   | (47,829 | ) |
|                                                                                                 |   |                                |     |                                           |   |   |   |
| **Prepaid                expenses**                                                                  |   |                                | 1,596    |                                           |   | - |   |
| **Net                changes in accounts payable and accrued expenses**                              |   |                                | (22,432  | )                                              |   | 10,487 |   |
| **Net                cash used in operating activities**                                             |   |                                | (511,452 | )                                              |   | (369,131 | ) |
|                                                                                                 |   |                                |     |                                           |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                              |   |                                |     |                                           |   |   |   |
| **Purchase                of property and equipment**                                                |   |                                | -        |                                           |   | (9,801 | ) |
| **Lease                deposit**                                                                     |   |                                | -        |                                           |   | (1,100 | ) |
| **Net                cash used in investing activities**                                             |   |                                | -        |                                           |   | (10,901 | ) |
|                                                                                                 |   |                                |     |                                           |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                              |   |                                |     |                                           |   |   |   |
| **Proceeds                from issuance of common stock**                                            |   |                                | 453,600  |                                           |   | 419,600 |   |
|                                                                                                 |   |                                |     |                                           |   |   |   |
| **NET                DECREASE IN CASH**                                                              |   |                                | (57,852  | )                                              |   | 39,568 |   |
|                                                                                                 |   |                                |     |                                           |   |   |   |
| **CASH,                BEGINNING OF YEAR**                                                           |   |                                | 158,453  |                                           |   | - |   |
|                                                                                                 |   |                                |     |                                           |   |   |   |
| **CASH,                END OF PERIOD**                                                               |   | $                                   | 100,601  |                                           | $      | 39,568 |   |

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**NOTES      TO FINANCIAL STATEMENTS**

**(Unaudited)**

**NOTE      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis      of Presentation**

**Nature      of Business**

**Security      Valuations**

**Use      of Estimates**

**Cash      and Equivalents**

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**NOTES      TO FINANCIAL STATEMENTS**

**(Unaudited**

**NOTE      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Property      and Equipment**

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

**Income      Taxes**

**Concentrations      of Credit Risk**

**Recently      Issued Accounting Pronouncements**

----

| **UNIVERSAL                  CAPITAL MANAGEMENT, INC.** |
|---------------------------------------------------------|
| **NOTES                  TO FINANCIAL STATEMENTS**      |
| **(Unaudited)**                                         |
|                                                    |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |
| **NOTE                  2 - INVESTMENTS**               |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |
|                                                    | Portfolio                  Companies consist of the following: |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                                                                                        |   | Number                      ofShares Heldat October 31, 2005 |    | Cost   |   | Value                    atOctober 31, 2005 |   | UnrealizedGain                  / (Loss) |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|--------|--------|---------------------------------------------|--------|------------------------------------------|-----------|
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |
| Affiliated                  Securities*                                                                                                                                                                                     |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|  BF                  Acquisition Group V, Inc.                                                                                                                                                                         |   |                                                         | 100,000 |   | $      | 1,625                                       |   | $                                        | 1,625     |   | $ | - |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
| Total                  Affiliated Securities                                                                                                                                                                                |   |                                                         |    |   |   | 1,625                                       |   |                                     | 1,625     |   |   | - |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
| Non-affiliated                  Securities                                                                                                                                                                                  |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|  IPI                  Fundraising, Inc.***                                                                                                                                                                             |   |                                                         | 575,000 |   |   | 6,625                                       |   |                                     | 9,958     |   |   | 3,333 |   |
|  Gelstat                  Corporation                                                                                                                                                                                  |   |                                                         | 221,429 |   |   | 350,000                                     |   |                                     | 55,357    |   |   | (294,643 | ) |
|  Neptune                  Industries, Inc.**                                                                                                                                                                           |   |                                                         | 47,619  |   |   | 20,000                                      |   |                                     | 8,095     |   |   | (11,905 | ) |
|  PSI                  - TEC Holdings, Inc.                                                                                                                                                                             |   |                                                         | 787,500 |   |   | 619,000                                     |   |                                     | 1,260,000 |   |   | 641,000 |   |
|  Theater                  Xtreme Entertainment Group, Inc.                                                                                                                                                             |   |                                                         | 575,000 |   |   | 201,250                                     |   |                                     | 201,250   |   |   | 0 |   |
|  BroadRelay                  Holdings, Inc.                                                                                                                                                                            |   |                                                         | 564,401 |   |   | 141,100                                     |   |                                     | 1,241,682 |   |   | 1,100,582 |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
| Total                  Non-Affiliated Securities                                                                                                                                                                            |   |                                                         |    |   |   | 1,337,975                                   |   |                                     | 2,776,342 |   |   | 1,438,367 |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
| Total                  Securities                                                                                                                                                                                           |   |                                                         |    |   | $      | 1,339,600                                   |   | $                                        | 2,777,967 |   | $ | 1,438,367 |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|                                                                                                                                                                                                                        |   |                                                         |    |   |   |                                        |   |                                     |      |   |   |   |   |
|  *                  Investments in portfolio companies in which the Company owns 5%                  or more of                  the outstanding voting securities are deemed an "affiliated                  person." |   |                                                         |    |
|                     ** On June 9, 2005, there was a six for one reverse split on Neptune                  Industries, Inc. shares.                                                                                |   |                                                         |    |
| ***                  BF Acquisition Group III, Inc. and FundraisingDirect.com merged                  into IPI                  Fundraising Inc. in October 2005.                                                           |   |                                                         |    |

----

**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**NOTES      TO FINANCIAL STATEMENTS**

**(Unaudited)**

|  **NOTE                  3 - 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                  Statement of Financial Accounting Standards No. 109 (SFAS                  109).                                                          |   |   |   |   |   |
|                                             |                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
|                                             | The                  deferred income tax benefit consists of the following:                                                                                     |   |   |   |   |   |   |

|  Deferred:                         |   |   |     |   |
|-----------------------------------------|--------|--------|----------|--------|
|  Federal                           |   | $      | (301,300 | )      |
|  State                             |   |   | (82,200  | )      |
|                                    |   |   |     |   |
|  Total                    Deferred |   | $      | (383,500 | )      |
|                                    |   |   |     |   |

| The                      effective tax rate differs from the U.S. statutory federal                      income tax rate                      of 34% as described below: |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |

|  Income                        tax at statutory rate             |   | $      | (329,800 | )      |
|-----------------------------------------------------------------------|--------|--------|----------|--------|
|  State                        income taxes, net of federal taxes |   |   | (53,700  | )      |
|                                                                  |   |   |     |   |
|                                                                  |   | $      | (383,500 | )      |
|                                                                  |   |   |     |   |

| Deferred                          income taxes reflect the net effect of unrealized gains                          on investments and                          an operating loss carryforward. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| There                          are no other significant temporary differences between                          the carrying amount                          of assets and liabilities for      |   |
| financial                          reporting purposes and the amount used for income tax                          purposes.                                                                    |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| The                          components of the deferred assets (liabilities) are as                          follows:                                                                          |   |   |   |   |   |

|  Unrealized                            gains   |   | $      | (574,500 | )      |
|-----------------------------------------------------|--------|--------|----------|--------|
|  Net                            operating loss |   |   | 305,000  |   |
|                                                |   |   |     |   |
|  Total                                         |   | $      | (269,500 | )      |
|                                                |   |   |     |   |

| At                            October 31, 2005, the Company had a net operating loss                            carryforward of                            approximately $763,671, which if not |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| used                            will expire in 2025.                                                                                                                                            |   |   |   |   |   |   |   |   |

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**UNIVERSAL      CAPITAL MANAGEMENT, INC.**

**NOTES      TO FINANCIAL STATEMENTS**

**(Unaudited)**

|                                                           |
|----------------------------------------------------------------|
|                                                           |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| **NOTE                  4 - DUE FROM AFFILIATES**              |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| Due                  from affiliates consist of the following: |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |

| Due                    from BF Acquisition Group V, Inc |   | $      | 10,425 |   |
|---------------------------------------------------------|--------|--------|--------|--------|
|                                                    |   |   |   |   |
| Total                                                   |   | $      | 10,425 |   |

| **NOTE                      5 - CAPITAL SHARE TRANSACTIONS** |                                                                                                                                                              |   |   |   |   |   |
|--------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                         |                                                                                                                                                              |   |   |   |   |   |   |   |   |
|                                                         | During                      the six months ended October 31, 2005, 268,600 shares were                      issued for                      proceeds of $453,600. |
|                                                         |                                                                                                                                                              |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                                                              |   |   |   |   |   |   |   |   |
| **NOTE                      6 - FINANCIAL HIGHLIGHTS**       |                                                                                                                                                              |   |   |   |   |   |   |
|                                                         |                                                                                                                                                              |   |   |   |   |   |   |   |   |

| Per                      Share Operating Performance                     |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|
| Net                      asset value, beginning of period                |   | $      | 0.48   |   |
|                                                                     |   |   |   |   |
| Income                      from operations, net of tax benefit          |   |   | (0.03  | )      |
| Unrealized                      depreciation on investment, net of taxes |   |   | (0.11  | )      |
|                                                                     |   |   | (0.14  | )      |
| Add                      capital share transactions                      |   |   | 0.09   |   |
|                                                                     |   |   |   |   |
| Net                      asset value, end of period                      |   | $      | 0.43   |   |
|                                                                     |   |   |   |   |
|                                                                     |   |   |   |   |
|                                                                     |   |   |   |   |
| Total                      Return                                        |   |   | -9.9   | %      |
|                                                                     |   |   |   |   |
| Average                      Net Assets as a percentage of :             |   |   |   |   |
| Expenses                      (annualized)                               |   |   | 39.8   | %      |
| Management                      income (annualized)                      |   |   | 20.1   | %      |

----

**Item      2. **

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

**Business      Overview**

----

**Financial      Condition**

| ·   | The                reduction of unrealized appreciation on investments of approximately                $730,000 mainly due to a decrease in value of shares of PSI-TEC Holdings,                Inc., Gelstat Corporation, and Neptune Industries, Inc. offset in                part by                an unrealized gain on the recently acquired shares of BroadRelay                Holdings,                Inc. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                increase by 200,000 shares in the Company’s investment in PSI-TEC                Holdings, Inc. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company’s investment in 564,401 shares of BroadRelay Holdings,                Inc. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | The                increase in deferred revenue of                $481,800. |
|--------------------|-----------------------------------------------------------------------------|

| ·   | The                reduction in deferred taxes of                $383,500. |
|--------------------|----------------------------------------------------------------------------|

| ·   | The                sale of 268,600 of the Company’s common shares for proceeds of                $453,600. |
|--------------------|------------------------------------------------------------------------------------------------------------------|

----

**Results      of Operations**

**Three      months ended October 31, 2005 compared to the period August 16, 2004 (Date      of      Inception) to October 31, 2004.**

**Six      months ended October 31, 2005 **

----

**Liquidity      and Capital Resources **

|                                  | November                30, 2005  | October                31, 2005  | April                30, 2005  |
|---------------------------------------|----------------------------------------|---------------------------------------|-------------------------------------|
| Number                of shares  | 346,460                           | 328,800                          | 142,700                        |
| Proceeds                of sale  | $692,920                          | $655,600                         | $285,400                       |

**Critical      Accounting Estimates**

----

| **Item                3** | **Quantitative                and Qualitative Disclosures About Market                Risk** |
|---------------------------|----------------------------------------------------------------------------------------------|

| **Item                4** | **Controls                and Procedures** |
|---------------------------|--------------------------------------------|

| **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.  |

----

**SIGNATURES**

|                                   | Universal                Capital Management, Inc. |
|----------------------------------------|---------------------------------------------------|
|                                   |                                              |   |
| Date:                December 15, 2005 | By:                                               | /s/                Michael D. Queen |
|                                   |                                              | Michael                D. Queen, President |
|                                   |                                              |   |
|                                   |                                              |   |
| Date:                December 15, 2005 | By:                                               | /s/                Joseph T. Drennan |
|                                   |                                              | Joseph                T. Drennan, Treasurer |

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