U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB  x
        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended June 30, 2006  o
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from  Commission File No. 000-50814  UNIVERSAL FOG, INC. (Exact name of small business issuer as specified in its charter)  Delaware
        86-0827216(State or other jurisdiction of incorporation or organization)
        (I.R.S. Employer Identification No.)  1808 South 1st Avenue Phoenix, AZ 85003 (Address of Principal Executive Offices)  602/254-9114 (Issuers telephone number)   Edmonds 6, Inc. 10/31/05 (Former name, address and fiscal year, if changed since last report)  Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesxNoo  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes
        No
        X_   Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. YesxNoo  State the number of shares outstanding of each of the issuers classes of common equity, as of August 10, 2006: 38,652,300 shares of common stock.       UNIVERSAL FOG, INC.



FINANCIAL STATEMENTS



INDEX



Part I-- FINANCIAL INFORMATION




Item 1. Financial Statements


Item 2. Managements Discussion and Analysis of Financial Condition


Item 3. Control and Procedures

Part II-- OTHER INFORMATION




Item 1. Legal Proceedings


Item 2. Changes in Securities


Item 3. Defaults Upon Senior Securities


Item 4. Submission of Matters to a Vote of Security Holders


Item 5. Other Information


Item 6. Exhibits and Reports on Form 8-K

Signatures and Required Certifications



Item 1. Financial Information



BASIS OF PRESENTATION



The accompanying reviewed financial statements are presented in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the six months ended June 30, 2006are not necessarily indicative of results that may be expected for the year ending December 31, 2006. The financial statements are presented on the accrual basis.























FINANCIAL STATEMENTS



UNIVERSAL FOG, INC.



FINANCIAL STATEMENTS









As of June 30, 2006





UNIVERSAL FOG, INC.

Financial Statements

Table of Contents





FINANCIAL STATEMENTS




Page #


Consolidated Balance Sheet
        F-1


Consolidated Statements of Operations
        F-2


Consolidated Statements of Cash Flows
        F-3


Notes to the Consolidated Financial Statements
        F-4



















Universal Fog, Inc.



And Subsidiary



Consolidated Balance Sheet

(Unaudited)




June 30, 2006AssetsCurrent Assets:Cash and cash equivalents
        $
        43,430Accounts Receivable, net of allowancefor doubtful accounts of $32,572
        
        141,198Inventory
        
        163,409Total Current Assets
        
        348,037Property, Plant, and Equipment, net ofaccumulated depreciation of$114,110
        
        444,294Sundown Lighting Distributorship
        
        50,000Patent Rights, net of $3,444 ofaccumulated amortization
        
        46,774Total Assets
        $
        889,105Liabilities and Stockholders EquityCurrent Liabilities:Accounts Payable-trade
        $
        193,160Accrued Expenses
        
        90,164Advances from Stockholders
        
        24,185Note Payable
        
        141,870Total Current Liabilities
        
        449,379Stockholders Equity:Convertible preferred stock, $.0001 par value,10,000,000 shares authorized, 4,000,000shares issued and outstanding
        
        400Common stock, $.0001 par value,300,000,000 shares authorized,38,652,300 sharesissued and outstanding
        
        3,865Additional Paid-in Capital
        
        905,908Accumulated Deficit
        
        (470,447)Total Stockholders Equity
        
        439,726Total Liabilitiesand Stockholders Equity
        $
        889,105See Notes to Consolidated Financial Statements





Universal Fog, Inc.



and Subsidiary



Consolidated Statements of Operations

(Unaudited)






3 Mos. Ended June 30, 2006
        
        3 Mos. Ended
June 30, 2005
        
        6 mos. Ended
June 30, 2006
        
        6 mos. Ended
June 30, 2005Sales, net of returns
        $
        343,920
        $
        216,259
        $
        483,209
        $
        314,839Cost of Sales
        
        154,708
        
        87,096
        
        238,501
        
        103,896Gross Profit
        
        189,212
        
        129,163
        
        244,708
        
        210,943Operating Expenses:General and administrative expenses
        
        86,386
        
        114,270
        
        157,960
        
        146,327Advertising & Marketing
        
        3,583
        
        2,097
        
        6,229
        
        2,957Compensation Costs
        
        57,366
        
        71,789
        
        115,875
        
        101,942Total Operating Expenses
        
        147,335
        
        188,156
        
        280,064
        
        251,226Net Income (Loss) from operations
        $
        41,877
        $
        (58,993)
        $
        (35,356)
        $
        (40,283)Interest Expense
        
        6,892
        
        1,932
        
        9,703
        
        4,831Net Income (Loss) before income taxes
        
        34,985
        
        (60,925)
        
        (45,059)
        
        (45,114)Provision for Income Taxes
        
        0
        
        0
        
        0
        
        0Net Income (Loss)
        $
        34,985
        $
        (60,925)
        $
        (45,059)
        $
        (45,114)Earnings (Loss) Per Common Share:Basic
        $
        0.00
        $
        0.00
        $
        0.00
        $
        0.00Diluted
        $
        0.00
        $
        0.00
        $
        0.00
        $
        0.00



See Notes to Consolidated Financial Statements























UNIVERSAL FOG, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2006 and 2005






2006
        
        2005Cash flows from operating activities:Net cash provided by (used in) operatingactivities
        
        7,734
        
        (15,161)Cash flows from investing activities:Net cash provided by (used in)investing activities
        
        0
        
        1,000Cash flows from financing activities:Net cash provided by (used in)financing activities
        
        (9,163)
        
        93,437Net increase (decrease) in cash
        
        (1,429)
        
        79,276Cash at beginning of period
        
        44,859
        
        4,363Cash at end of period
        $
        43,430
        $
        83,639






See Notes to the consolidated financial statements.



















UNIVERSAL FOG, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005




Supplemental Cash Flows Disclosures2006
        
        2005Interest paid
        $
        9,703
        $
        4,831Income taxes paid
        $
        --
        $
        --Non-Cash Investing and Financing Activities2006
        
        2005Contribution of property and equipment,net of related note payable, asadditional paid in capital
        $
        --
        $
        250,562Common stock issued for services
        $
        --
        $
        33,400Preferred stock issued for patent rights
        $
        --
        $
        50,218Common stock issued in repaymentof advances from stockholder
        $
        --
        $
        129,424








See notes to the Consolidated Financial Statements



















UNIVERSAL FOG, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






1.
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Universal Fog, Inc. was incorporated in the state of Arizona on July 11, 1996 and was the successor of the business known as Arizona Mist, Inc. which began in 1989. On May 9, 2005, Universal Fog, Inc. entered into a Stock Purchase Agreement and Share Exchange (effecting a reverse merger) with Edmonds 6, Inc. (Edmonds 6) and its name was changed to Universal Fog, Inc. (hereinafter referred to as either UFI or the Company). Edmonds 6 was incorporated on August 19, 2004 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Pursuant to this agreement, Universal Fog, Inc. (which has been in continuous operation since 1996) became a wholly owned subsidiary of Edmonds 6.



The Company began manufacturing systems for outdoor cooling in Arizona and quickly expanded to distribute throughout the United States. As the Company grew, so did the need for more efficient, more effective, and higher quality commercial grade products.



All Universal Fog, Inc. high pressure fog systems are custom designed and manufactured for each specific application. We incorporate three different types of tubing in our systems enabling us to comply with nearly any design requirement. Our low profile 3/8 flexible nylon tubing utilizes our patented SLIP-LOK brass fittings allowing extreme versatility and easy installation. The use of 3/8 high-pressure nitrogenized copper is aesthetically very pleasing and enables us to conceal our mist lines behind walls, such as stucco, and meet certain building code requirements. In addition, we also produce systems using 3/8 stainless steel tubing, though copper systems are recommended, providing one of the most extensive product selections in the industry.



The concept is inherent in nature, such as water vapor, clouds, and fog, which manifest due to the earths environment. Universal Fog, Inc. high pressure fog systems can create the same environment where and when you want it. Using normal tap water and pressurizing it to 800 PSI with our high-pressure pump modules, we force water through a series of patented brass and stainless steel nozzles creating a micro-fine mist or fog. With droplets ranging in size from 4  40 microns, the fog flash evaporates, removing unwanted heat in the process. Temperature drops up to 400are typical in situations where high heat and low humidity exist.



The concept of fog and its benefits have been in use for over 50 years. While most commonly known for cooling, fog can be used for a variety of applications.

Principles of consolidation and basis of presentation



The accompanying consolidated financial statements included the general accounts of the Company, a Delaware corporation formerly Edmonds 6, Inc. (see above), and its wholly owned Arizona subsidiary, also named Universal Fog, Inc. All material intercompany transactions, accounts and balances have been eliminated in the consolidation.



For financial reporting purposes the reverse merger with Edmonds 6 (see above) has been treated as a recapitalization of UFI with Edmonds 6 being the legal survivor and UFI being the accounting survivor and the operating entity. That is, the historical financial statements prior to May 9, 2005 are those of UFI and its operations, even though they are labeled as those of the Company. Retained earnings of UFI related to its operations, is carried forward after the recapitalization. Operations prior to the recapitalization are those of the accounting survivor, UFI and its predecessor operations, which began July 11, 1996. Earnings per share for the periods prior to the recapitalization are restated to reflect the equivalent number of shares outstanding for the entire period operations were conducted. Upon completion of the reverse merger, the financial statements become those of the operating company, with
adjustments to reflect the changes in equity structure and receipt of the assets and liabilities of UFI.





Management estimates

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



Goodwill and intangible assets



In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141,Business Combinations, and No. 142,Goodwill and Other Intangible Assets, effective for fiscal years beginning after June 15, 2001. Under the new standards, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives.



On May 9, 2005, the Company was assigned the rights to two patents developed by Mr. Bontems, the Companys controlling stockholder, in exchange for the issuance of 4,000,000 convertible preferred stock shares (Notes 2 and 5). Because this transaction is one between entities under common control, the patent rights are carried on the Companys general accounts at their historical cost to Mr. Bontems pursuant to SFAS No. 141 and Staff Accounting Bulletin No. 48.



The patents rights are being amortized using the straight-line method over their remaining estimated lives of approximately six and sixteen years. For the six months ended June 30, 2006 amortization expense related to these patent rights totaled $1,476 for each of the next five years, management estimates amortization of these patent rights to approximate $3,000.

Income/loss per share

Basic income/loss per share amounts are computed by dividing the net income or loss by the weighted average number of common stock shares outstanding. Diluted income/loss per share amounts reflect the maximum dilution that would have resulted from the issuance of common stock through potentially dilutive securities. Other than the convertible preferred stock (Note 2), the Company does not have any convertible securities, outstanding options or warrants that could potentially dilute the earnings of its common stockholders. Diluted loss per share amounts are computed by dividing the net income/loss (the preferred shares do not contain dividend rights) by the weighted average number of common stock shares outstanding plus the assumed issuance of the convertible preferred stock. For the three and six months ended June 30, 2006 and 2005, basic income/loss per share amounts are based on 38,652,300, and
34,731,934, 34,000,000 and 34,000,000 weighted-average number of common stock shares outstanding, respectively. For the three and six months ended June 30, 2006, no effect has been given to the assumed conversion of the convertible preferred stock shares as the effect would be antidilutive.



2. CAPITAL STRUCTURE DISCLOSURES



The Companys capital structure is complex and consists of a series of convertible preferred stock and a general class of common stock. The Company is authorized to issue 310,000,000 shares of stock with a par value per share of $.0001, 10,000,000 of which have been designated as preferred shares and 300,000,000 of which have been designated as common shares.



Convertible preferred stock



On May 9, 2005, the Company issued 4,000,000 preferred stock shares to its majority common stockholder in exchange for the assignment of two patent rights (Notes 1 and 5). These shares are convertible into the Companys common stock at the option of the holder any time after one year from the date of issuance. Each share of convertible preferred stock is convertible into one share of common stock. In the event of liquidation, these shares also allow the holder to exchange the shares for the Companys office and manufacturing facilities (Notes 1 and 5). In addition, the shares will survive and not be affected by any recapitalization, reorganization or reverse stock split.





Common stock



Each common stock share contains one voting right and contains the rights to dividends if and when declared by the Board of Directors.



Stock options, warrants and other rights



As of June 30, 2006, the Company had not adopted any employee stock option plans and no other stock options, warrants or other stock rights have been granted or issued.






3.
        RISKS AND UNCERTAINTIES

The Company operates in a highly specialized industry. The concept is inherent in nature, such as water vapor, clouds and fog, which occur due to the earths environment. Universal Fog, Inc.s high pressure fog systems can create the same environment where and when you want it. Using normal tap water and pressurizing it to 800 PSI with our high-pressure pump modules, we force water through a series of patented brass and stainless steel nozzles creating a micro-fine mist or fog. With droplets ranging in size from 4  40 microns, the fog flash evaporates, removing unwanted heat in the process. Temperature drops up to 400Fahrenheit are typical in situations where high heat and low humidity exist.



The concept of fog and its benefits have been in use for over 50 years. While most commonly known for cooling, fog can be used for a variety of applications.



These products are marketed outside the United States, which subjects the Company to foreign currency fluctuation risks.




4.
        BORROWINGS

The Companys borrowings consist of a mortgage payable and interest bearing advances payable to a stockholder (Note 5).



The mortgage payable was assumed by UFI on January 3, 2005 when the land, office and manufacturing facilities were contributed to UFI as additional paid in capital by our majority stockholder. On March 29, 2006, the Company received approval of a refinancing of this mortgage. The new mortgage had a beginning principal balance of $142,279.34 and will bear interest at 8.34% with a balloon payment of $114,323.07 which will be due on May 30, 2011, and will have a term of five years and principal and interest will be payable monthly based on a fifteen year amortization. The mortgage is guaranteed by Tom and Steffani Bontems. The Company and the guarantors are required to submit annual tax returns, the Companys annual audited financial statements, quarterly Company prepared financials and personal financial statements of the guarantors. No financial covenants were required by the Lender.



Legal matters



The Company is subject to legal proceedings that arise in the ordinary course of business.



On January 16, 2006, Brian Hahn, COO, presented a proposed employment contract for Board of Directors approval. The Board, by unanimous vote, declined to approve the contract and part of a cost containment process, terminated Mr. Hahns services to the Company. Mr. Hahn filed suit alleging a contractual violation and requesting cash damages of $63,453.36 and common stock in the amount of 3,458,295 shares. The Company intends to vigorously defend the suit. The plaintiffs attorney as agreed to postponement of the Companys answer while good faith settlement discussions are ongoing. Management believes that a settlement will be reached that will not have a material affect on the financial statements. As of June 30, 2006, the Company has accrued a loss contingency of $17,510 relating to this matter.







5.
        RELATED PARTY TRANSACTIONSStockholders

On January 3, 2005, the Companys majority stockholder contributed as additional paid in capital the land, office and manufacturing facilities located at 1808 South First Avenue, Phoenix, Arizona to the Company. Because this transaction is one between entities under common control, these facilities were recorded into the Companys books and records at the stockholders historical cost of $401,117. These facilities are security for a note payable (Note 4), which was also transferred to and assumed by the Company.



Additionally, the Companys majority stockholder entered in to an agreement whereby he assigned certain patent rights to the Company in exchange for 4,000,000 shares of the Companys convertible preferred stock (Note 2). These patent rights were also recorded at the stockholders historical cost of $50,218.



At January 1, 2006, the Company owed its majority stockholder $48,174 from advances, net of repayments, made in prior years. During the six months ended June 30, 2006 no additional advances were made and $23,989 of advances were repaid. The advances are unsecured, non-interest bearing and due upon demand as funds are available.



Also, at January 1, 2003, the Company owed another stockholder $153,064 from advances, net of repayments, made in prior years. During the three and six months ended June 30, 2005 and each of the years ended December 31, 2004 and 2003, the Company repaid $4,282, $9,921 and $9,437, respectively, of these advances. The advances were unsecured and payable with interest at 5.0% in monthly payments of $1,406 through March 2015. On May 30, 2005, the outstanding advances totaling $129,424 plus expenses of $5,576 were repaid through the issuance of 540,000 common stock shares.



The Company made a private placement to Dennis McKee wherein Mr. McKee purchased 2,000,000 shares of the Companys common stock for $100,000 or $0.05 per share. $48,500 was tendered at the time of purchase and $12,822 was paid through payment of an outstanding invoice leaving a subscription receivable balance of $38,678. The share certificate was tendered prior to the receipt of the remaining funds. On December 5, 2005, in a negotiated transaction, Mr. McKee tendered 300,000 common stock shares to the Company in exchange for the remaining balance due of the subscription receivable. These shares were recorded as Treasury Stock in the amount of the subscription receivable balance ($38,678).







Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information set forth below should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I - Item I of this Quarterly Report and the Companys Annual Report on Form 10-KSB for the year ended December 31, 2005, which contains the audited consolidated financial statements and notes thereto and the Managements Discussion and Analysis of Financial Condition and Results of Operations for the December 31, 2005 Annual Report.

Some of the statements under Description of Business, Risk Factors, Managements Discussion and Analysis or Plan of Operation, and elsewhere in this Report and in the Companys periodic filings with the Securities and Exchange Commission constitute forward-looking statements. These statements involve known and unknown risks, significant uncertainties and other factors what may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward- looking statements. Such factors include, among other things, those listed under Risk Factors and elsewhere in this Report.

In some cases, you can identify forward-looking statements by terminology such as may, will, should, could, intends, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of such terms or other comparable terminology.

The forward-looking statements herein are based on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions that the Company will obtain or have access to adequate financing for each successive phase of its growth, that there will be no material adverse competitive or technological change in condition of the Companys business, that the Companys President and other significant employees will remain employed as such by the Company, and that there will be no material adverse change in the Companys operations, business or governmental regulation affecting the Company. The foregoing assumptions are based on judgments with respect to, among other things, further economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are
beyond the Companys control.

Although management believes that the expectations reflected in the forward-looking statements are reasonable, management cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither management nor any other persons assumes responsibility for the accuracy and completeness of such statements.



Critical accounting policies

Financial Reporting Release No. 60, which was released by the Securities and Exchange Commission (the SEC), encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. The Companys consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.



Use of Estimates  Managements discussion and analysis or plan of operation is based upon the Companys consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these estimates, including those related to allowances for doubtful accounts receivable and long-lived assets. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the
carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.





Management must determine at what point in the sales process to recognize revenue. We recognize revenue when title passes to the purchaser or when installation is complete and the customer is invoiced. Early or improper revenue recognition can affect the financial statements. We have established credit policies which, we believe will eliminate or substantially lower our uncollectible accounts receivable; however, management must make judgments regarding when and if to classify a receivable as uncollectible and this may affect the financial statements. The timing of purchase and the depreciation policies for property and equipment may affect the financial statements. Advertising costs can be deferred or may not be properly allocated to the proper accounting period and this can affect the financial statements.



We review the carrying value of property and equipment for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.



Effective January 1, 2006, we adopted the provisions of SFAS No. 123(R), Share-Based Payment, under the modified prospective method. SFAS No. 123(R) eliminates accounting for share-based compensation transactions using the intrinsic value method prescribed under APB Opinion No. 25, Accounting for Stock Issued to Employees, and requires instead that such transactions be accounted for using a fair-value-based method. Under the modified prospective method, we are required to recognize compensation cost for share-based payments to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied. During the 6 months ended June 30, 2006, we have not issued shares for services.



For periods prior to adoption, the financial statements are unchanged, and the pro forma disclosures previously required by SFAS No. 123, as amended by SFAS No. 148, will continue to be required under SFAS No. 123(R) to the extent those amounts differ from those in the Statement of Operations.



Plan of Operation



Universal Fog, Inc. was incorporated in the State of Arizona on July 11, 1996 and was the successor of the business known as Arizona Mist, Inc. which began in 1989. On May 9, 2005, Universal Fog, Inc. entered into a Stock Purchase Agreement and Share Exchange (effecting a reverse merger) with Edmonds 6, Inc. (Edmonds 6) and its name was changed to Universal Fog, Inc. (hereinafter referred to as either UFI or the Company). Edmonds 6 was incorporated on August 19, 2004 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Pursuant to this agreement, Universal Fog, Inc. (which has been in continuous operation since 1996) became a wholly owned subsidiary of Edmonds 6.



The Company began manufacturing systems for outdoor cooling in Arizona and quickly expanded to distribute throughout the United States. As the Company grew, so did the need for more efficient, more effective, and higher quality commercial grade products.











All Universal Fog high pressure fog systems are custom designed and manufactured for each specific application. We incorporate three different types of tubing in our systems enabling us to comply with nearly any design requirement. Our low profile 3/8 flexible nylon tubing utilizes our patented SLIP-LOK brass fittings allowing extreme versatility and easy installation. The use of 3/8 high-pressure nitrogenized copper is aesthetically very pleasing and enables us to conceal our mist lines behind walls, such as stucco, and meet certain building code requirements. In addition, we also produce systems using 3/8 stainless steel tubing, though copper systems are recommended, providing one of the most extensive product selections in the industry.



The concept is inherent in nature, such as water vapor, clouds, and fog, which manifest due to the earths environment. Universal Fog high pressure fog systems can create the same environment where and when you want it. Using normal tap water and pressurizing it to 800 PSI with our high-pressure pump modules, we force water through a series of patented brass and stainless steel nozzles creating a micro-fine mist or fog. With droplets ranging in size from 4  40 microns, the fog flash evaporates, removing unwanted heat in the process. Temperature drops up to 400are typical in situations where high heat and low humidity exist.



The concept of fog and its benefits have been in use for over 50 years. While most commonly known for cooling, fog can be used for a variety of applications.



The Company is currently investigating new sources of supply and is concentrating on controlling its costs to enhance its profitability. The Company is fully staffed with highly qualified individuals to fulfill the current and increased demand for product. As a result of this staffing, the Company has increased its sales and production capabilities and believes the Company is well positioned to experience new growth. The Company believes there will not be any significant increase in selling, general and administrative expenses as it implements its business plan.



Results of Operations



Comparison of the Three-Month Periods Ended June 30, 2006 and 2005



Revenues. The Companys revenues are derived from the assembly of components used in misting systems and installations of these systems in commercial and residential applications and through the sales to distributors in various states and foreign countries.



Revenues for the three-month period ended June 30, 2006 were $343,920 compared to $216,259 for the three-month period ended June 30, 2005. This increase was due to continued sales calls by our sales force locally and sales by our Texas distributor.



Cost of Sales. The Companys cost of sales consists of materials used in misting systems and labor for the assembly of components and in the local area; labor for installation.



Cost of sales for the three-month period ended June 30, 2006 were $154,708, compared to $87,096 for the three-month period ended June 30, 2006. The increase is the result of the increased revenues and additional labor and material costs compared to the corresponding quarter of 2005.



Operating Expenses. Operating expenses for the three-month period ended June 30, 2006 were $147,335 compared to $188,156 for the three-month period ended June 30, 2005. This decrease is due to a cost containment effort which included reducing administrative expenses. Selling and marketing expenses increased from $2,097 during these three months in 2005 to $3,583 for the same three months in 2006. General and Administrative expenses decreased from $114,270 in the three-month period ended June 30, 2005 to $86,386 in the same period in 2006. This decrease was also due to a concentrated cost containment effort. Compensation expense decreased for the three-month period ended June 30, 2006  to $57,366 from $71,789 in the period ended June 30, 2005 due to more efficient use of personnel.







Depreciation and Amortization. Depreciation and amortization are included in General and Administrative expenses. For the three-month period ended June 30, 2006, these costs were $4,038, compared to $2,518 for the three-month period ended July 31, 2005.



Comparison of the Six-Month Periods Ended June 30, 2006 and 2005



Revenues. The Companys revenues are derived from the assembly of components used in misting systems and installations of these systems in commercial and residential applications and through the sales to distributors in various states and foreign countries.



Revenues for the six-month period ended June, 2006 were $483,209 compared to $314,839 for the same period ended June 30, 2005. The increase in revenues in 2006 was due to increased efforts by our sales person who has approached members of the local homebuilding and landscaper market and sales to our distributor network. We expect to see additional sales results in the ensuing calendar quarter.



Cost of Sales. The Companys cost of sales consists of materials used in misting systems and labor for the assembly of components and in the local area; labor for installation.



Cost of sales for the six-month period ended June 30, 2006 were $238,500 compared to $103,896 for the six-month period ended June 30, 2005. This increase is from higher revenues which required additional assembly labor and materials costs.



Operating Expenses. Operating expenses for the six-month period ended June 30, 2006 were $280,064, compared to $251,226 for the six-month period ended June 30, 2005. Selling and marketing expenses increased from $2,957 during these six months in 2005 to $6,299 for the same six months in 2006. Compensation increased from $101,942 in the six-month period of 2005 to $ 115,875 in the same six-month period in 2006 due to increased sales and the commissions paid thereon. General and Administrative expenses increased from $146,327 in the six-month period ended June 30, 2005 to $ 157,960 in the same period of 2006. This increase was due to costs associated with becoming a reporting company which include additional professional services such as auditing.



Depreciation and Amortization. Depreciation and amortization are included in General and Administrative expenses. For the six-month period ended June 30, 2006, these costs were $ 7,061, compared to $4,258 for the six-month period ended June 30, 2005. This increase was due to depreciation added by the acquisition of our facilities.



Liquidity and Capital Resources



We funded our cash requirements for the six-month period ended June 30, 2006 through operations and $28,678 from the sale of treasury stock. The Company does not have any material commitments for capital expenditures as of the date of this report.  Management is continuing to seek additional equity capital to fund its various activities and as part of a capital procurement plan, filed a form SB2 registration statement with the SEC on October 5, 2005 to sell 4,000,000 shares of its stock to the public. The filing is not currently effective and will expire on December 31, 2006. Management has also eliminated or reduced unnecessary costs



Cash decreased by $1,429 during the six-month period ended June 30, 2006. Over the same period in 2005, cash increased by $79,276 due a private placement during that period.



The Company has suffered an operating loss for the six-month period ending June 30, 2006 of $45,059. This loss was primarily the result of the higher expenses which include attorneys fees and audit and accounting fees. If the Company does not raise adequate funds from the SB2 registration statement, we will curtail our expansion plans and, if necessary, will seek a line of credit which will allow the Company to continue as a going concern since our core business was not affected.





Related Party Transactions



On January 3, 2005, the Companys majority stockholder contributed as additional paid in capital the land, office and manufacturing facilities located at 1808 South First Avenue, Phoenix, Arizona to the Company. Because this transaction is one between entities under common control, these facilities were recorded into the Companys books and records at the stockholders historical cost of $401,117. These facilities are security for a note payable (Note 4), which was also transferred to and assumed by the Company.



Additionally, the Companys majority stockholder entered in to an agreement whereby he assigned certain patent rights to the Company in exchange for 4,000,000 shares of the Companys convertible preferred stock (Note 2). These patent rights were also recorded at the stockholders historical cost of $50,218.



At January 1, 2006, the Company owed its majority stockholder $48,174 from advances, net of repayments, made in prior years. During the six months ended June 30, 2006 no additional advances were made and $23,989 of advances were repaid. The advances are unsecured, non-interest bearing and due upon demand as funds are available.



Also, at January 1, 2003, the Company owed another stockholder $153,064 from advances, net of repayments, made in prior years. During the six months ended June 30, 2005 and each of the years ended December 31, 2004 and 2003, the Company repaid $4,282, $9,921 and $9,437, respectively, of these advances. The advances were unsecured and payable with interest at 5.0% in monthly payments of $1,406 through March 2015. On May 30, 2005, the outstanding advances totaling $129,424 and expenses of $5,576 were repaid through the issuance of 540,000 common stock shares.



In May of 2005, the Company made a private placement of 2,000,000 shares of its restricted common stock to a beneficial stockholder at $0.05 per share.  On December 5, 2005, Dennis McKee (a beneficial stockholder) returned 300,000 shares to the Company. The Company resold the 300,000 shares of Treasury Stock as follows: 52,000 shares of treasury stock were sold for $13,000 on December 29, 2005 and 40,000 shares of treasury stock were sold on January 9, 2006 for $10,000. In addition the remaining 208,000 shares of treasury stock were sold on March 31, 2006 for $18,678. The aggregate price received for all of the treasury stock was $41,678.



Item 3. Controls and Procedures



(a) Evaluation of disclosure controls and procedures.



Our Chief Executive Officer and Chief Financial Officer (collectively the Certifying Officers) maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management timely. Under the supervision and with the participation of management, the Certifying Officers evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)] under the Exchange Act) within 90 days prior to the filing date of this report. Based upon that evaluation, the Certifying Officers concluded that our disclosure controls and procedures are effective in timely alerting them to material information relative to our company required to be disclosed in our periodic filings with the SEC. The Certifying Officers concluded that
our disclosure controls and procedures are also effective to ensure that information required to be disclosed by the Company in reports that it files under the Exchange act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.



(b) Changes in internal controls.



Our scope of internal control is intended to extend to policies, procedures, processes, systems, activities, initiatives, and endeavors required of a company with our transactions, expenses, and operations. To this end, management has made changes to internal controls and procedures, including corrective actions with regard to significant deficiencies or material weaknesses identified in the Companys audit for the period ending May 31, 2005 and the years ended December 31, 2004 and 2003, respectively. As of this date, it is the belief of management that, given the Companys operations, our revised disclosure controls and procedures will be effective.





a.
        There were two significant deficiencies which were found during the audit of the five months ended May 31, 2005 and the years ended December 31, 2004 and 2003. One included the failure to record accrual entries during the above periods as the general ledgers were kept on a cash basis. The other involved the lack of timely recording of non-cash equity transactions. Collectively, these deficiencies represent a material weakness. UFI has contracted with a Certified Public Accountant to review monthly the recordation procedures and to provide assistance in compliance with generally accepted accounting principles. UFI has employed an independent stock transfer agent to record transactions in the Companys equity securities and will rely on the assistance of the contract CPA to provide timely recording in the Companys general ledger of any equity security.b.
        The material weakness was identified by the independent auditor during the audit field work and it was related to the equity contribution by Tom Bontems in January of 2005.c.
        The recordation of equity transactions will be reviewed by the contract CPA each month and the company will compare its records with the stock transfer agents records on an on-going basis.d.
        Other than the changes to internal controls listed above, there have been no changes that have materially affected or reasonable likely to materially affect our internal controls over financial reporting.



PART II - OTHER INFORMATION


Item 1.
        Legal Proceedings.

The Company is currently not a party to any new legal proceedings and no such action by, or to the best of its knowledge, against the Company has been threatened. There have been no changes to any previously reported

existing litigation.




Item 2.
        Changes in Securities.

$28,678 was raised from the sale of 248,000 shares of treasury stock in a private placement during the first quarter of 2006




Item 3.
        Defaults Upon Senior Securities.


None


Item 4.
        Submission of Matters to a Vote of Security Holders.

No matter was submitted during the quarter ending June 30, 2006, covered by this report to a vote of the Companys shareholders, through the solicitation of proxies or otherwise.




Item 5.
        Other Information.


None


Item 6.
        Exhibits and Reports of Form 8-K.


(a)
        Exhibits

31.1 Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002



32.1 Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002




(b)
        Reports of Form 8-K







SIGNATURES



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




Universal Fog, Inc.Registrant


Date: August 10 , 2006
        By: /s/ Tom BontemsTom BontemsPresident