MAJOR LEAGUE FOOTBALL INC - FORM 10-K

MAJOR LEAGUE FOOTBALL INC - FORM 10-K - August 15, 2011

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MAJOR LEAGUE FOOTBALL INC Reports

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EX-32 - EXHIBIT 32.2 - MAJOR LEAGUE FOOTBALL INC	ucm063011k_ex32z2.htm
EX-31 - EXHIBIT 31.1 - MAJOR LEAGUE FOOTBALL INC	ucm063011k_ex31z1.htm
EX-32 - EXHIBIT 32.1 - MAJOR LEAGUE FOOTBALL INC	ucm063011k_ex32z1.htm
EX-31 - EXHIBIT 31.2 - MAJOR LEAGUE FOOTBALL INC	ucm063011k_ex31z2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-K


(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2011


¨	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	20-1568059
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2601 Annand Drive, Suite 16 Wilmington, DE (Address of principal executive offices)	______19808____ (Zip Code)
Registrant’s telephone number, including area code: (302) 998-8824 :
Securities registered pursuant to Section 12(b) of the Act
Title of each class None	Name of each Exchange on which registered None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)

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

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

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

Cover Page (continued)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý. No ¨.

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated filer ý Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act of 1934). Yes ¨ No ý

As of the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $281,428. Such aggregate market value was computed by reference to the closing price of $0.08 per share for the registrant’s common stock on the OTC Bulletin Board on that date. For purposes of making this calculation only, the registrant has defined affiliates as including all directors, executive officers and beneficial owners of more than five percent of the common stock of the Company.

The number of shares of the registrant’s common stock outstanding as of August 15, 2011 was 5,912,426.

Universal Capital Management, Inc. (the “Company”) is filing this Annual Report on Form 10-K for the year ended April 30, 2011 with the Securities and Exchange Commission without audit by the Company’s principal auditors. As a result, the financial statements contained in this Annual Report may be subject to future adjustment. The Company intends to file an amendment to this Annual Report upon the Company’s principal auditor’s audit of the Company’s financial statements and this Annual Report.

Table of Contents


			Page
PART I			2
	Item 1.	Business	2
	Item 1A.	Risk Factors	12
	Item 1B.	Unresolved Staff Comments	21
	Item 2.	Properties	21
	Item 3.	Legal Proceedings	21

PART II			22
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
	Item 6	Selected Financial Information	25
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	29
	Item 8.	Financial Statements and Supplementary Data.	30
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	30
	Item 9A.	Controls and Procedures	30
	Item 9B.	Other Information	31
PART II			32
	Item 10.	Directors and Executive Officers of the Registrant	32
	Item 11.	Executive Compensation	34
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	35
	Item 13.	Certain Relationships and Related Transactions	40
	Item 14.	Principal Accountant Fees and Services	41
PART IV			42
	Item 15.	Exhibits and Financial Statement Schedules	42

PART I

Item 1.

Business.

Forward-Looking Statements

Some of the information presented in this report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are included throughout the report, including the section titled “Risk Factors,” and relate to our business strategy, our prospects and our financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “should” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. Specifically, forward-looking statements may include, among others, statements concerning:

our expectations of future results of operations or financial condition;

the timing, cost and expected impact on our market share and results of operations of our planned capital expenditures and;

expectations of the continued availability of capital resources.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, they are inherently subject to risks, uncertainties and assumptions about our Company, and accordingly, our forward-looking statements are qualified in their entirety by reference to the factors described below under the section titled “Risk Factors” and in the information incorporated by reference herein.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur.

Organization

Our Company was formed as a Delaware corporation on August 16, 2004 as a closed-end, non-diversified management investment company that had originally elected to be treated as a business development company under the Investment Company Act of 1940 (the “1940 Act”). In early 2010, we launched our first product under a new direct response management and marketing venture, which we are still in the process of getting to market. We are now in the process of reorganizing our business plan to be a direct response management and marketing company. We continue to be treated as a business development company under the Investment Company Act of 1940 (the “1940 Act”).

Our Company’s fiscal year ends April 30. At April 30, 2011, we had investments of $981,217 at fair value in seven companies.

Our offices are located at 2601 Annand Drive, Suite 16, Wilmington, DE 19808. Our Internet website is located at: www.unicapman.com.

Business Development Company Business

Universal Capital Management, Inc. (the “Company,” “we,” or “our”) is a publicly traded business development company. We were formed primarily to engage in the business of furnishing capital and making available managerial assistance to emerging companies with high growth potential that do not have ready access to capital through conventional financial channels. Recently our business plan has been evolving towards serving as a direct response management and marketing company that provides management, accounting and marketing services to our clients.

Under our business development company model we refer to the companies that we invest in and provide management services for as “portfolio companies,” and there are two types of portfolio companies, one is a portfolio holding

company and the other is an active portfolio company. A portfolio holding company is a company that we have invested in or provided management services to in the past, no longer have a valid management contract and therefore no longer provide any management services. An active portfolio company is one that we have a current management contract and continue to provide management services along with any additional services needed.

In exchange for our cash investment in a portfolio company, we receive securities issued by the portfolio company, typically common stock or warrants to purchase common stock. Upon providing management services to our portfolio company, we receive securities issued by the portfolio company, typically common stock or warrants to purchase common stock. Our investment objective is to generate capital appreciation, primarily through investments in the equity securities, or warrants to purchase the equity securities, of our portfolio companies. Our business development company business model provides our stockholders with the ability to retain the liquidity of a publicly traded stock while sharing in the possible benefits, if any, as well as the risks, of investing in small, early-stage companies.

We ceased our operations as a business development company late in 2010, with the last of our management contracts expiring in December 2010. Presently, our portfolio consists only of portfolio holding companies. We have no active portfolio companies in our portfolio and do not expect to enter into any new management contracts to provide any type of management or other services to any new or existing portfolio companies. We continue to be treated as a business development company under the Investment Company Act of 1940 (the “1940 Act”).

Direct Response Management and Marketing Business

As we stated above, our business plan has been evolving towards serving as a direct response management and marketing company that provides management, accounting and marketing services to our clients. Our Company identifies, advises in development and markets consumer products. We currently have one product that we are testing in the market.

Our strategy employs three primary channels: Direct Response Television (Infomercials), Television Shopping Networks and Retail Outlets. We seek to assist and enable entrepreneurs to introduce products to the consumer market. Entrepreneurs can leverage our experience and valuable business contacts in functions such as product selection, marketing development, media buying and direct response television production. Inventors and entrepreneurs submit products or business concepts for our input and advice. We generate revenues from two primary sources (i) management of the entire business cycle of the consumer product and (ii) sales of consumer products, for which we receive a share of net profits of consumer products sold. We do not manufacture any of our products. As of the date of this filing we have generated limited revenues and do not rely on any principal products. While the Company has received nominal revenues from management fees generated from the sales of several products, none of these fees have generated material revenues. We currently do not sell any internally developed or Company owned products.

The direct response marketing industry is a large, fragmented and competitive industry. Direct response incorporates various marketing formats including direct mail, telemarketing, television, radio, newspaper, magazines and others. Typically direct response television programs incorporate an infomercial in either short form (30 seconds to 5 minutes) or long form (28.5 minutes) direct response programs. The formats discuss and demonstrate products and provide a toll-free number or website for viewers to purchase. We have been able to establish business relationships with key people/companies in the industry that allows us to act as a management team for entrepreneurs and inventors. As a management team, we assume the day to day responsibilities of bringing a product to market from the manufacturing to the end sale to the consumer. We believe the principal competitive factors include authenticity of information, unique content and distinctiveness and quality of product, brand recognition and price.

Investments

We currently hold the securities of seven companies. We do not intend to make additional investments in new companies; however, we may provide managerial assistance from time to time for a small fee in cash, common stock or warrants to our current companies until we file an election with the U.S. Securities and Exchange Commission to formally cease to operate as a business development company. To date, our initial investment in each of our portfolio companies has been significantly less than $500,000. We have limited the size of our total investment in any one portfolio company, we hope to reduce and diversify our risk.

As a business development company, we are required to invest at least 70% of our assets in privately-held U.S. companies, thinly-traded U.S. public companies, certain high-quality debt, and cash. We are able to invest excess cash in U.S. government securities and high-quality debt maturing in one year or less; and we are able to invest up to 30% of our assets in opportunistic situations which are not subject to the limitations referred to above, in an effort to enhance returns to stockholders. These investments may include, but are not limited to, notes and bonds, distressed debt, bridge loans, private equity or securities of public companies.

We also invest in development stage or start-up businesses. Substantially all of our portfolio investments are in thinly-capitalized, unproven, small companies, many of which are in their development stage. These businesses also tend to lack management depth, to have limited or no history of operations, and not to have attained profitability, and in some cases, not to have any revenue. Because of the speculative nature of these investments, the securities we hold in these portfolio companies have a significantly greater risk of loss than traditional investment securities. Some of such venture capital investments are likely to be complete losses or unprofitable, and some will never realize their potential.

We provide a variety of services to portfolio companies, including the following:

providing management services and recruiting management;

formulating operating strategies and corporate goals;

formulating intellectual property strategies;

investing our investment capital;

assisting in obtaining outside capital;

introductions to investment bankers and other professionals;

mergers and acquisitions;

introductions to potential joint venture partners, suppliers and customer;

assisting in financial planning; and

assisting in investor relations.

We derive income from time to time from our portfolio companies for the performance of some of these services, which may be paid in cash or securities.

Portfolio Securities

The Company’s investments at April 30, 2011, were as follows:


			Approximate
			% of Class	% of	Number of
	Common Stock and Warrants - United States	Business	Owned	Portfolio	Shares Held	Fair Value

Affiliated Securities
	PR Specialists, Inc.	Shell	19.59%	0.25%	2,500,000	2,500

	BF Acquisition Group, Inc.	Shell	34.94%	0.36%	2,000,000	3,525

	Vystar Corporation	Natural rubber latex products	5.11%	16.94%	369,300	166,185

	Warrant to purchase shares of Vystar Corporation	Natural rubber latex products	3.86%	12.63%	600,000	124,000
	500,000 shares of common stock, expiring April 2013
	50,000 shares of common stock, expiring April 2012
	50,000 shares of common stock, expiring May 2012

	Innovation Industries	Direct sales	n/a	1.02%	n/a	10,000

	SIVOO Holdings, Inc. common stock	High speed internet media	2.30%	0.00%	664,501	-

	Warrants to purchase 605,000 shares of SIVOO Holdings, Inc.	High speed internet media
	200,000 warrants expiring November 14, 2011		0.67%	0.00%	200,000	-
	405,000 warrants expiring February 28, 2013		1.40%	0.00%	405,000	-
	4% of fully diluted common stock at exercise – TBD					-

	Total Affiliated Securities			31.20%		306,210

Non-affiliated Securities
	Lightwave Logic, Inc. common stock	Plastics engineering	0.12%	9.14%	100,817	89,707

	Warrant to purchase 357,500 shares of Lightwave Logic, Inc.	Plastics engineering	0.81%	31.50%	357,500	309,000
	common stock, expiring February 2012

	Warrant to purchase 1,000,000 shares of iVolution Medical	Medical billing and medical	2.93%	24.56%	1,000,000	241,000
	Group common stock, expiring July 2013	records software

	Warrant to purchase 500,000 shares of iVolution Medical	Medical billing and medical	1.47%	3.57%	500,000	35,000
	Group common stock, expiring July 2013	records software

	Other common stock	Other various investments	0.00%	0.03%		300

Total Non-Affiliated Securities				68.80%		675,007

Total Securities				100.00%		981,217

Innovation Industries (“Innovation”) is headquartered in Chester, Pennsylvania. The company’s Founder and President, William Wilkinson, is the largest inventor of fitness/exercise equipment and holds over 200 domestic and foreign patents. It has an impressive history of developing and marketing exceptional consumer products and is a leader in fitness and exercise equipment products.

Will is the inventor of Step aerobics and co-founder of Step Reebok, which started the modern fitness movement. He was also the lead developer of products for NordicTrack and invented Total Body/dual action exercise machines popularized in the early 90s. In addition, he co-developed, with National Media of Philadelphia, PA, the Bruce Jenner line of fitness equipment which included the PowerWalk Plus treadmill. Will’s latest blockbusters, Twist and ToneTM and the GetAGrip®, are first-to-market game changers that will redefine how we improve strength in hands, wrists, and forearms with virtually no competition in today’s marketplace.

The Twist and ToneTM was launched in July 2010 through an online marketing campaign and the infomercial is currently being re-worked and re-tested and should be launched sometime in the fall 2011. The GetAGripPro® is scheduled to be launched in the fall 2011 with the help of a very well-known golf celebrity, David Leadbetter, leading the way with his endorsement.

In the fall 2011, a medical kit that includes the GetAGripPro® will be introduced to the medical society as a therapeutic and rehabilitation tool for therapists and their clients.

Vystar Corporation (“Vystar”), a Georgia corporation, was founded in March 2000 and is headquartered in Duluth, Georgia. It is the creator and exclusive owner of the innovative technology to produce Vytex® Natural Rubber Latex (“NRL”). This technology reduces antigenic protein in natural rubber latex products to virtually undetectable levels in both liquid NRL and finished latex products. Vystar intends to introduce Vytex® NRL throughout the worldwide marketplace that uses NRL or latex substitutes as a component of manufactured products. Vystar intends for Vytex® NRL to become the standard source of latex and latex substitutes, not unlike a standard computer operating system on which many other applications can run. Vystar intends to introduce Vytex® NRL into the supply channels with aggressive, targeted marketing campaigns directed to end users.

On April 11, 2008, Vystar signed a definitive agreement with Revertex (Malaysia), Sdn. Bhd., a division of Yule Catto Far East and the world’s largest producer of pre-vulcanized natural rubber lattices for the production of Vytex® NRL. Revertex will be a non-exclusive, toll manufacturer for Vystar and has started full production mode to manufacture Vytex® NRL commercially. Vystar ran its first production February 2, 2008, and has successfully completed several subsequent production runs. To date, the production runs have entered the market as samples only of varying sizes to interested manufacturers.

On May 1, 2009, Vystar and Alatech Healthcare, LLC, a major United States condom manufacturer, received 510(k) clearance from the U.S. Food and Drug Administration to market and sell Alatech’s Envy™ condom manufactured with Vytex® NRL. The Envy condom will be the first medical product available in the United States made from Vystar’s patented Vytex® NRL, which has less than 2 micrograms/dm2, virtually undetectable levels, of the antigenic proteins that can cause an allergic response, while retaining and improving upon all the desirable qualities of latex. The Envy condom will carry labeling that will reflect the lowest antigenic protein content currently available in a natural rubber latex medical device in the United States. Vystar’s S-1 registration statement was declared effective by the Securities and Exchange Commission on August 7, 2009. Vystar began trading in December 2009 on the OTC:BB under the symbol “VYST”.

Lightwave Logic, Inc. (“Lightwave”) is headquartered in Newark, Delaware and is a publicly traded company trading under the symbol “LWLG” on the OTC.BB market. Lightwave Logic is a development stage research and development company that has developed and is continuing to develop high-activity, high-stability electro-optic polymers which they believe could have a broad range of applications in the electro-optic device market.

Electro-optic devices convert data from electric signals into optical signals for use in communications systems and in optical interconnects for high-speed data transfer. Lightwave Logic expects their patented and patent-pending technologies when completed and tested to be utilized by electro-optic device manufacturers, such as telecommunications component and systems manufacturers, networking and switching suppliers, semiconductor companies, aerospace companies and government agencies.Lightwave Logic’s electro-optic polymers (plastics) are property-engineered at the molecular level (nanotechnology level) to meet the exacting thermal, environment and performance specifications demanded by electro-optic devices. They believe that their patented technologies will enable them to design electro-optic polymers that are free from the numerous diverse inherent flaws that plague competitive polymer technologies employed by other companies and research groups. Lightwave Logic engineers its polymers with the intent to have temporal, thermal, chemical and photochemical stability within their patented molecular architectures. Lightwave Logic considers its proprietary intellectual property to be unique.

iVolution Medical Systems, Inc. (“IMS”), a Nevada corporation, was founded in May 2005 and is headquartered in Islandia, New York. IMS is a full service healthcare provider that offers a unique combination of advanced, user-friendly, highly-secure and affordable healthcare services and technology solutions to physicians. From technology solutions such as Electronic Medical Record (“EMR”) and a HIPAA-compliant “CHATiV” system to services such as medical billing and medical collection, iVolution is a healthcare supermarket that offers physicians a “One-Stop-Shop” to fulfill all their needs.

IMS has begun to expand the use of their software by acquiring small medical billing companies to acquire access to their physician patient databases and convert those to their automated system. IMS hopes to cross-sell their software to doctors' offices and market to significant consumer "gatekeepers." For doctors, they believe their suite of clinical and practice management software tools and customized consulting support will dramatically improve a practice's financial and administrative performance. They believe these can minimize the stress and distractions of business management and enable physicians to focus exclusively on their patients, secure in the knowledge that the practice's growth and profitability are performing at optimal levels.

SIVOO Holdings, Inc. (“SIVOO”), a Nevada corporation, is publicly traded under the symbol SIVO.PK on the OTC.PK market. SIVOO provides technology for streaming video that (i) allows video to be captured from any format or location like satellite, Internet stream, or electronic/hard media, (ii) programmatically transcodes video to any other format for TV, Internet VOD or streaming, and mobile delivery, and (iii) transports video wherever/however it needs to be distributed via embeddable HTML tags, RSS feeds, FTP, or push technology.

SIVOO’s approach uses software and computing resources in the cloud (Amazon S3), coupled with low-cost commodity net storage and bandwidth. The solution is made available to customers as a Web application. SIVOO’s goal is to turn video capture / management / distribution into a low-cost metered-utility that works equally well across TV, Internet, and mobile; e.g. for all digital media and anticipating that all media will be digital.

SIVOO was founded in 2000 and is headquartered in Philadelphia, PA. Its management team anticipates exceptional growth in the market adoption for streaming video content and advertising through the Internet, mobile, and IPTV distribution channels. Insight Research forecasts that in the US, streaming media will generate almost $70 billion in revenues by 2013. This refers to revenues derived from the transmission of digital audio and video files, whether they are over the Internet, an IPTV network or a mobile phone as either streams or VOD.

SIVOO’s Management has elected to market the company’s technology for sale rather than fund operations at this time.

PR Specialists, Inc. is a non-reporting, registered company with the SEC that currently has no operations and is a shell company.

BF Acquisition Group, Inc. is a non-reporting, non-trading, registered company with the SEC that currently has no operations and is a shell company.

Valuation

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

The Board of Directors is responsible for (i) determining overall valuation guidelines and (ii) ensuring the valuation of investments within the prescribed guidelines.

Fair value is generally defined as the amount for which an investment could be sold in an orderly disposition over a reasonable time. Generally, to increase objectivity in valuing assets, external measures of value, such as public markets or third-party transactions, are used whenever possible. Valuation is not based on long-term work-out value, or immediate liquidation value, or incremental value for potential changes that may take place in the future. The values assigned to Company investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as such amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated.

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

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

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

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

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

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

Determination of Net Asset Value

We determine the net asset value per share of our common stock at the end of each fiscal quarter and on such other dates as is necessary. The net asset value per share of our common stock is equal to the value of our Company’s assets minus its liabilities divided by the total number of shares of common stock outstanding.

The net asset value and net asset value per share of common stock of our Company at the end of each fiscal quarter is as follows:


		Net Asset Value
Date	Net Asset Value	Per Share

April 30, 2011	$1,769,636	$0.30

January 31, 2011	$2,332,625	$0.36

October 31, 2010	$2,756,658	$0.43

July 31, 2010	$3,688,672	$0.58

April 30, 2010	$4,174,316	$0.65

January 31, 2010	$3,551,085	$0.55

October 31, 2009	$3,500,248	$0.55

July 31, 2009	$4,323,332	$0.67

April 30, 2009	$4,268,861	$0.67

January 31, 2009	$3,341,565	$0.55

October 31, 2008	$2,218,331	$0.38

July 31, 2008	$4,959,096	$0.84

April 30, 2008	$5,599,232	$0.98

January 31, 2008	$3,217,402	$0.57

October 31, 2007	$3,323,505	$0.61

July 31, 2007	$2,667,599	$0.49

April 30, 2007	$4,097,464	$0.75

January 31, 2007	$3,873,969	$0.71

October 31, 2006	$4,052,654	$0.75

July 31, 2006	$2,426,652	$0.45

April 30, 2006	$2,243,790	$0.46

January 31, 2006	$2,304,214	$0.48

October 31, 2005	$2,164,418	$0.43

July 31, 2005	$1,921,122	$0.39

At April 30, 2011, approximately all of our Company’s investments were recorded at fair value.

Taxation

Our Company has elected not to be taxed as a regulated investment company under subchapter M of the Internal Revenue Code. As such, our Company is subject to corporate level income taxation on its income. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, and the amortization of discounts and fees. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation and amortization expense.

At April 30, 2011, our Company had current year taxable loss of $466,486 with a carryforward net operating loss of $218,496 from April 30, 2010.

Competition

Investments

Competition in the investment management and venture capital industries has become increasingly intense over the past several years, and many money managers, hedge funds, private equity funds, mutual funds, and other investment vehicles are actively competing for available investor capital and potentially profitable investments. To be successful in obtaining such capital, many competitors engage in expensive advertising and promotional campaigns that are unavailable to our Company. Moreover, many competitors have been in business for long periods of time - in some cases for as long as many decades - and have established reputations, brand names, track records, back office and managerial support systems, and other advantages that we cannot currently duplicate in the near term, if ever. In addition, many such competitors, by virtue of their longevity or capital resources, have established lines of distribution that we do not have access to. We compete with firms, including many larger securities and investment banking firms, which have substantially greater financial resources and research staffs than we do and therefore, we find fewer potentially profitable investments than many of these competitors, oftentimes with more difficulty. The disparity of resources puts us at a competitive disadvantage in investigating prospective investments.

Direct Response

We face significant competition within each merchandise category. The markets for our merchandise are highly competitive, and the recent growth in these markets has encouraged the entry of many new competitors as well as increased competition from established companies. There are no significant barriers to entry in the direct marketing industry. Our competitors include large and small retailers, other direct marketing companies, including some with direct response television programs. Furthermore, established brick-and-mortar retail competitors have recently made efforts to sell products through direct response marketing methods. Many of these competitors are larger and have significantly greater financial, marketing and other resources. Increased direct response marketing programs may adversely affect response rates to our direct response television marketing efforts, which would directly affect margins. Our failure to compete successfully would materially and adversely affect our financial condition and results of operations.

Employees and Management Fees

Our Company is internally managed and, although it does not pay fees to an advisor, it pays salaries to officers and employees. At such time, if ever, as our Company is externally managed, it shall comply with the requirements of Section 15 of the 1940 Act, including the requirement for stockholder approval of advisory fees. As of April 30, 2011 our Company employed one full-time employee.

Regulation

As a business development company, we are exempt from certain requirements of the 1940 Act, but other provisions of the 1940 Act apply to us. For example, a majority of our Board of Directors must be comprised of persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, our Company must maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a business development company, we must not offer to protect any director or officer against any liability to our Company or our stockholders arising

from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.

We must adopt and implement written policies and procedures reasonably designed to prevent violation of the Federal securities laws, review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief compliance officer to be responsible for administering the policies and procedures. We also must maintain a code of ethics that establishes procedures for personal investment and restricts certain transactions by our personnel.

As a business development company, to carry out our business, we must remain organized in the United States for the purpose of investing in or lending primarily to eligible portfolio companies and making managerial assistance available to them.

As a business development company, we may not acquire any asset other than “qualifying assets” unless, at the time we make the acquisition, the value of qualifying assets represents at least 70% of the value of total assets. The principal categories of qualifying assets are:

Securities purchased in transactions not involving any public offering, the issuer of which is an eligible portfolio company;

Securities received in exchange for or distributed with respect to securities described in the bullet above or pursuant to the exercise of options, warrants or rights relating to such securities; and

Cash, cash items, government securities or high quality debt securities (within the meaning of the 1940 Act), maturing in one year or less from the time of investment.

An eligible portfolio company is generally a domestic company that is not an investment company (other than a small business investment company wholly owned by a business development company) and that:

does not have a class of securities with respect to which a broker may extend margin credit at the time the acquisition is made;

is actively controlled by the business development company and has an affiliate of a business development company on its board of directors;

has total assets of not more than $4,000,000 and capital and surplus of not less than $2,000,000, except as may be adjusted by the Commission; or

meets such other criteria as may be established by the SEC.

Control, as defined by the 1940 Act, is presumed to exist where a business development company beneficially owns more than 25% of the outstanding voting securities of the portfolio company.

To include certain securities described above as qualifying assets for the purpose of the 70% test, a business development company must make available to the issuer of those securities significant managerial assistance such as providing significant guidance and counsel concerning the management, operations, or business objectives and policies of the portfolio company. Consequently, we offer to provide significant managerial assistance to our portfolio companies.

As a business development company, we can issue senior securities such as debt securities and preferred stock, as long as each class of senior security has asset coverage of at least 200% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders unless we meet the applicable asset coverage ratio at the time of the distribution.

We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of the members of our Board of Directors who are not interested persons and, in some cases, prior approval by the SEC.

Our Company has designated a chief compliance officer, Theresa Q. Hoffmann, and established a compliance program pursuant to the requirements of the 1940 Act.

Item 1A.

Risk Factors

Investing in our common stock involves significant risks relating to our business and investment objective. You should carefully consider the risks and uncertainties described below before you purchase any of our common stock. These risks and uncertainties are not the only ones we face. Unknown additional risks and uncertainties, or ones that we currently consider immaterial, may also impair our business. If any of these risks or uncertainties materializes, our business, financial condition or results of operations could be materially adversely affected. In this event, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Company.

Our cash expenses are very large relative to our cash resources and cash flow which requires us to continually sell new shares of common stock or securities of portfolio companies.

As of April 30, 2011, we had cash resources of $16,566. In the year ended April 30, 2011 we had revenues of $37,541, virtually all of which were received in the form accounting services provided to our clients. Consequently, we have been required either to sell new shares of our common stock or securities of portfolio companies to raise the cash necessary to pay ongoing expenses and to make new investments. This practice is likely to continue in the fiscal year ending April 30, 2012 and could lead to continuing dilution in the interest of existing Company stockholders. Moreover, we cannot assure you the launch of any products will be successful and provide the necessary revenues to sustain the business.

Because there is generally no established market in which to value our investments, our Board of Directors’ value determinations may differ materially from the values that a ready market or third party would attribute to these investments.

There is generally no public market for the equity securities in which we invest. Pursuant to the requirements of the 1940 Act, we value all of the private equity securities in our portfolio at fair value as determined in good faith by our Board of Directors pursuant to valuation procedures established by the Board of Directors. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment pursuant to specified valuation principles and processes. We are required by the 1940 Act to value specifically each individual investment on a quarterly basis and record unrealized depreciation for an investment that we believe has become impaired. Conversely, we must record unrealized appreciation if we believe that our securities have appreciated in value. Our valuations, although stated as a precise number, are necessarily within a range of values that vary depending on the significance attributed to the various factors being considered.

We use the Black-Scholes option pricing model to determine the fair value of warrants held in our portfolio. Option pricing models, including the Black-Scholes model, require the use of subjective input assumptions, including expected volatility, expected life, expected dividend rate, and expected risk-free rate of return. In the Black-Scholes model, variations in the expected volatility or expected term assumptions have a significant impact on fair value. Because the securities underlying the warrants in our portfolio are not publicly traded, many of the required input assumptions are more difficult to estimate than they would be if a public market for the underlying securities existed.

Without a readily ascertainable market value and because of the inherent uncertainty of valuation, the fair value that we assign to our investments may differ from the values that would have been used had an efficient market existed for the investments, and the difference could be material. Any changes in fair value are recorded in our consolidated statements of operations as a change in the "Net (decrease) increase in unrealized appreciation on investments."

In the venture capital industry, even when a portfolio of early-stage, high-technology venture capital investments proves to be profitable over the portfolio's lifetime, it is common for the portfolio's value to undergo a so-called "J-curve" valuation pattern. This means that when reflected on a graph, the portfolio’s valuation would appear in the shape of the letter "J," declining from the initial valuation prior to increasing in valuation. This J-curve valuation pattern results from write-downs and write-offs of portfolio investments that appear to be unsuccessful, prior to write-ups for portfolio investments that prove to be successful. Because early-stage companies typically have negative cash flow and are by their nature inherently fragile, a valuation process can more readily substantiate a loss of value than an increase in value. Even if our venture capital

investments prove to be profitable in the long run, such J-curve valuation patterns could have a significant adverse effect on our net asset value per share and the value of our common stock in the interim. Over time, as we continue to make additional investments, this J-curve pattern may be less relevant for our portfolio as a whole, because the individual J-curves for each investment, or series of investments, may overlap with previous investments at different stages of their J-curves.

Changes in valuations of our privately held, early stage companies tend to be more volatile than changes in prices of publicly traded securities.

Investments in privately held, early stage companies are inherently more volatile than investments in more mature businesses. Such immature businesses are inherently fragile and easily affected by both internal and external forces. Our portfolio companies can lose much or all of their value suddenly in response to an internal or external adverse event. Conversely, these immature businesses can gain suddenly in value in response to an internal or external positive development. Moreover, because our ownership interests in such investments are valued only at quarterly intervals by our Board of Directors, changes in valuations from one valuation point to another tend to be larger than changes in valuations of marketable securities which are revalued in the marketplace much more frequently, in some highly liquid cases, virtually continuously.

We expect to continue to experience material write-downs of securities of portfolio companies.

Write-downs of securities of our privately held companies have always been a by-product and risk of our business. We expect to continue to experience material write-downs of securities of privately held portfolio companies. Write-downs of such companies occur at all stages of their development. Such write-downs may increase in dollar terms, frequency and as a percentage of our net asset value as our investment activity in privately held companies continues to increase, and the number of such holdings in our portfolio continues to grow.

We are subject to the risks arising from adverse changes in general economic market conditions or any failure of the U.S. economy to recover from its recent recession. The U.S. economy remains extremely sluggish as it seeks to recover from a severe recession. The U.S. economy continues to suffer from market volatility, difficulties in the financial services sector, tight credit markets, softness in the housing markets, concerns of inflation, reduced corporate profits and capital spending, significant job losses, reduced consumer spending, and continuing economic uncertainties. The uncertainty about future economic conditions could negatively impact our current and prospective customers, including those in the direct response markets, adversely impact our expenses and ability to obtain financing of our operations, cause delays or other problems with key suppliers and increase the risk of counterparty failures. We cannot predict the timing, strength or duration of this severe global economic downturn or subsequent recovery. Consumer spending in the United States has been, and is expected to continue to be, negatively affected by these economic trends which, in turn, will negatively impact our results of operations. Furthermore, the uncertainly about future economic conditions could negatively affect our ability to obtain financing, which we will require to fund our operations in the event we do not increase our revenues.

We do not choose investments based on a strategy of diversification and the value of our business is subject to greater volatility than the value of companies with more broadly diversified investments.

We do not choose investments based on a strategy of diversification. Therefore, we may be more vulnerable to events affecting a single sector or industry and therefore subject to greater volatility than a company that follows a diversification strategy. Accordingly, an investment in our common stock may present greater risk to you than an investment in a diversified company. We attempt to allocate our investments among the securities of several different portfolio companies. However, a significant amount of our equity could be invested in the securities of only a few companies. This risk is particularly acute during our early stages of operations, which could result in significant concentration with respect to a particular issuer or industry. Any such concentration would also be worse during any time when we had a limited amount of available investment capital for the same reasons. The concentration of our portfolio in any one issuer or industry would subject us to a greater degree of risk with respect to the failure of one or a few issuers or with respect to economic downturns in such industry than would be the case with a more diversified portfolio. At April 30, 2011, approximately 25% of the Company's asset value resulted from a single portfolio holding.

Our operations are subject to the general risks of the direct response television industry including, but not limited to product liability claims, which could exceed our insurance coverage.

Our operations could be impacted by both genuine and fictitious claims regarding products we market. Although primarily all of the consumer products we market are not our property, we could potentially suffer losses from a significant product liability judgment against it. A significant product liability judgment could also result in a loss of consumer confidence

in our products and furthermore an actual or perceived loss of value of our brand, materially impacting consumer demand. Although Innovation Industries carries a limited amount of product liability insurance, the amount of liability from product liability claims may exceed the amount of any insurance proceeds received by Innovation Industries.

The market for venture capital investments is highly competitive.

We face substantial competition in our investing activities from many competitors, including but not limited to: private venture capital funds; investment affiliates of large industrial, technology, service and financial companies; small business investment companies; hedge funds; wealthy individuals; and foreign investors. Many sources of funding compete for a small number of attractive investment opportunities. Hence, we face substantial competition in sourcing good investment opportunities on terms of investment that are commercially attractive.

Regulations governing the operations of a business development company affect how we raise additional capital.

Under the provisions of the 1940 Act, we are permitted to issue senior securities only in amounts such that asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of senior securities. If the value of our portfolio assets declines, we may be unable to satisfy this test. In the event that happens, we may be required to sell a portion of our investments and, depending on the nature of our Company's leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous and result in unfavorable prices. Also, we may invest 70% of our assets only in privately held U.S. companies, small, publicly traded U.S. companies, certain high-quality debt, and cash.

Generally, we cannot issue and sell our common stock at a price below net asset value per share. We may, however, in certain instances, sell our common stock, warrants, options or rights to acquire our common stock, at prices below the current net asset value of our common stock if our Board of Directors determines that such sale is in the best interests of our Company and our stockholders approve such sale. In any such case, the price at which our Company's securities are to be issued and sold may not be less than a price which, in the determination of our Board of Directors, closely approximates the market value of such securities (less any distributing commission or discount).

Our business is subject to a variety of laws, rules and regulations that could subject us to claims or other harm to our business.

Government regulation of direct response, Internet and e-commerce is evolving and unfavorable changes could substantially harm our business and results of operations. We are subject to a variety of laws, including the Mail or Telephone Order Merchandise Rule and related regulations of the Federal Trade Commission. These regulations prohibit unfair methods of competition and unfair or deceptive acts or practices in connection with mail and telephone order sales and require sellers of mail and telephone order merchandise to conform to certain rules of conduct with respect to shipping dates and shipping delays. We are also subject to regulations of the U.S. Postal Service and various state and local consumer protection agencies relating to matters such as advertising, order solicitation, shipment deadlines and customer refunds and returns. In addition, imported merchandise is subject to import and customs duties and, in some cases, import quotas. The failure to comply with any of these laws, rules or regulations may subject us to consumer claims or result in delays in marketing products or changes in product marketing, which may reduce our revenues, increase our expenses and adversely affect our profitability.

We operate in a heavily regulated environment, and changes to, or non-compliance with, regulations and laws could harm our business.

We are subject to substantive SEC regulations as a business development company. Securities and tax laws and regulations governing our activities may change in ways adverse to our and our shareholders’ interests, and interpretations of these laws and regulations may change with unpredictable consequences. Any change in the laws or regulations that govern our business could have an adverse impact on us or on our operations. Changing laws, regulations and standards relating to corporate governance, valuation and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations, and new federal accounting standards, are creating additional expense and uncertainty for publicly held companies in general, and for business development companies in particular. These new or changed laws, regulations and standards are subject to varying interpretations in many cases because of their lack of specificity, and as a result, their application in practice may evolve over time, which may well result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Our efforts to comply with evolving laws, regulations and standards have and will continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Further, if our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies, our reputation may be harmed. Also, as business and financial practices continue to evolve, they may render the regulations under which we operate less appropriate and more burdensome than they were when originally imposed. This increased regulatory burden is causing us to incur significant additional expenses and is time consuming for our management, which could have a material adverse effect on our financial performance.

We rely upon trademark, copyright and trade secret laws to protect our proprietary rights and those of our clients, which may not provide adequate protection.

Our success and ability to compete depends to a significant degree upon the protection of intellectual property rights, including without limitation our trademarks, trade names and trade secrets and those of our client. We rely on trademark, copyright and trade secret laws, each of which affords only limited protection. To date we have not received any trademark protection. Our inability to protect intellectual property rights could seriously harm business, operating results and financial condition.

Litigation could become necessary in the future to enforce intellectual property rights.

Any litigation could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources, and materially harm our business, financial condition and results of operations.

From time to time, we may encounter disputes over rights and obligations concerning intellectual property. Such claims may be with or without merit. Any litigation to defend against claims of infringement or invalidity could result in substantial costs and diversion of resources. Furthermore, a party making such a claim could secure a judgment awarding substantial damages. A judgment could also include an injunction or other court order that could prevent us from selling products. Our business, operating results and financial condition would be harmed if any of these events occurred. We could incur substantial costs in our defense against infringement claims. In the event of a claim of infringement, we might be required to obtain one or more licenses from third parties. We might be unable to obtain necessary licenses from third parties at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any such required licenses could harm our business, operating results and financial condition.

We are dependent upon our chief executive officer for future success.

Our future success to a significant extent depends on the continued service of Michael Queen, our chief executive officer. The departure of Mr. Queen could materially adversely affect our ability to implement our business strategy. We do not maintain for our benefit any key-man life insurance on Mr. Queen or any of our other officers or employees.

Failure to retain and attract qualified personnel could harm our business.

Our success depends on our ability to attract, train and retain qualified personnel. Competition for qualified personnel is intense and we may not be able to hire sufficient personnel to support the anticipated growth of our business. If we fail to attract and retain qualified personnel, our business will suffer. Additionally, companies whose employees accept positions with competitors often claim that such competitors have engaged in unfair hiring practices. We may receive such claims in the future as we seek to hire qualified employees. We could incur substantial costs in defending against any such claims.

We may have difficulty managing any future growth.

For the implementation of our business objectives, we may need to grow rapidly; brisk growth would lead to increased responsibility for both existing and new management personnel. In an effort to manage such growth, we must maintain and enhance our financial and accounting systems and controls, hire and integrate new personnel and manage expanded operations. Despite systems and controls, growth is expected to place a significant strain on our management systems and resources. We will need to continue to improve our operational, managerial and financial controls, reporting systems and procedures, and will need to continue to expand, train and manage our work force. Failure to manage our future growth would have a material adverse effect on the quality of our operations, ability to retain customers and key personnel and operating results and financial condition.

We may not be successful in finding or marketing new products.

Our business operations and financial performance depends on the ability to attract and market new products on a consistent basis. In the direct marketing industry, the average product life cycle varies from six months to four years, based on numerous factors, including competition, product features, distribution channels utilized, cost of goods sold and effectiveness of advertising. Less successful products have shorter life cycles. The majority of products are submitted by inventors. There can be no assurance that we will be successful in acquiring rights to quality products. We will select new products based upon management’s expertise and limited market studies. As a result, we need to acquire the rights to quality products with sufficient margins and consumer appeal to justify the acquisition costs. There can be no assurance that chosen products will generate sufficient revenues to justify the acquisition costs.

Our financial performance is dependent on the products that we do not produce or manufacture.

Our business and results of operations are dependent on the success of products that we do not produce or manufacture. It is likely that the majority of the products we market may fail to generate sufficient revenues. Furthermore it is likely we will market more products which fail to generate significant revenues as opposed to products which generate significant revenues. Our sales and profitability will be adversely affected if we are unable to develop a sufficient number of successful products.

Our financial performance may be harmed if unfavorable economic conditions adversely affect consumer spending.

Our success depends to a significant extent upon a number of factors relating to discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment, business conditions, taxation and interest rates. Other events that adversely affect the economy may diminish consumer spending. There can be no assurance that consumer spending will not be affected by adverse economic conditions, thereby adversely affecting our business, financial condition and results of operations.

We face competition from many other types of companies for customers.

We may not be able to respond in a timely and cost effective manner to changes in consumer preferences.

Our merchandise is subject to changing consumer preferences. A shift in consumer preferences away from the merchandise we offer could have a material adverse effect on our financial condition and results of our operations. Our future success depends in part on our ability to anticipate and respond to changes in consumer preferences and there can be no assurance that we will respond in a timely or effective manner. Failure to anticipate and respond to changing consumer preferences could lead to, among other things, lower sales of products, significant markdowns or write-offs of inventory, increased merchandise returns and lower margins, which would have a material adverse effect on our financial condition and results of operations.

Our business would be harmed if manufactures and service provides are unable to deliver products or provide services in a timely and cost effective manner.

We do not have any long term contracts with manufacturers, supplies or other service providers. We do not produce or manufacture products we market. In addition, we utilize third party companies to fulfill consumer orders and provide telemarketing services. If manufacturers or suppliers are unable, either temporarily or permanently, to manufacture or deliver

products or provide services in a timely and cost effective manner, it could have an adverse effect on our financial condition and results of operations.

Disruption in our ability to fulfill orders would harm our financial performance.

Our ability to provide effective customer service and efficiently fulfill orders for merchandise depends, to a large degree, on the efficient and uninterrupted operation of the manufacturing and related call centers, distribution centers, and management information systems run by third parties. Furthermore we are dependent on the timely performance of other third party shipping companies. Any material disruption or slowdown in manufacturing, order processing or fulfillment systems resulting from strikes or labor disputes, telephone down times, electrical outages, mechanical problems, human error or accidents, fire, natural disasters, adverse weather conditions or comparable events could cause delays in our ability to receive and fulfill orders and may cause orders to be lost or to be shipped or delivered late. As a result, these disruptions could adversely affect our financial condition or results of operations.

We may experience merchandise returns or warranty claims in excess of our expectations.

Actual merchandise returns and warranty claims may exceed allowances. Any significant increase in merchandise returns or warranty claims would adversely affect our financial condition and results of operations.

Ineffective media purchases may inhibit our ability to sell products, build customer awareness and brand loyalty.

We work with companies who purchase direct response television programming on cable and broadcast networks, network affiliates and local stations. Significant increases in the cost of media time or significant decreases in the available access to media could adversely affect our financial condition and results of operations.

We do not choose investments based on a strategy of diversification. Therefore, we may be more vulnerable to events affecting a single sector or industry and therefore subject to greater volatility than a company that follows a diversification strategy. Accordingly, an investment in our common stock may present greater risk to you than an investment in a diversified company. We attempt to allocate our investments among the securities of several different portfolio companies. However, a significant amount of our equity could be invested in the securities of only a few companies. This risk is particularly acute during our early stages of operations, which could result in significant concentration with respect to a particular issuer or industry. Any such concentration would also be worse during any time when we had a limited amount of available investment capital for the same reasons. The concentration of our portfolio in any one issuer or industry would subject us to a greater degree of risk with respect to the failure of one or a few issuers or with respect to economic downturns in such industry than would be the case with a more diversified portfolio. At April 30, 2011, approximately 23% of the Company's asset value resulted from a single holding.

Market prices of our common stock will continue to be volatile.

We expect that the market price of our common stock price will continue to be volatile. The price of our common stock may be higher or lower than the price you pay for your shares, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include the following:

stock market and capital markets conditions;

internal developments in our Company with respect to our personnel, financial condition and compliance with all applicable regulations;

announcements regarding any of our portfolio companies;

general economic conditions and trends; and/or departures of key personnel.

We will not have control over many of these factors, but expect that our stock price may be influenced by them. As a result, our stock price may be volatile, and you may lose all or part of your investment.

Our quarterly results fluctuate and are not indicative of future quarterly performance.

Our quarterly operating results fluctuate as a result of a number of factors. These factors include, among others, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we and our portfolio companies encounter competition in our markets and general economic and capital markets conditions. As a result of these factors, results for any one quarter should not be relied upon as being indicative of performance in future quarters.

Investing in our stock is highly speculative and an investor could lose some or the entire amount invested.

Our investment objective and strategies result in a high degree of risk in our investments and may result in losses in the value of our investment portfolio. Our investments in portfolio companies are highly speculative and, therefore, an investor in our common stock may lose his or her entire investment. The value of our common stock may decline and may be affected by numerous market conditions, which could result in the loss of some or the entire amount invested in our common stock. The securities markets frequently experience extreme price and volume fluctuations that affect market prices for securities of companies in general, and technology and very small capitalization companies in particular. Because of our focus on the technology and very small capitalization sectors, and because we are a very small capitalization company ourselves, our stock price is especially likely to be affected by these market conditions. General economic conditions and general conditions in our portfolio companies’ industries may also affect the price of our common stock.

Risks Related To The Illiquidity Of Our Investments.

We invest in illiquid securities and may not be able to dispose of them when it is advantageous to do so, or ever.

Most of our investments are or will be equity or equity-linked securities acquired directly from small companies. These equity securities are generally subject to restrictions on resale or otherwise have no established trading market. The illiquidity of most of our portfolio of equity securities may adversely affect our ability to dispose of these securities at times when it may be advantageous for us to liquidate these investments. We may never be able to dispose of these securities. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize values significantly less than the values recorded for such investments. We may also face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have material non-public information regarding such portfolio company. If we are unable to sell our assets at opportune times, we might suffer a loss and/or reduce a gain. Restrictions on resale and limited liquidity are both factors our Board of Directors will consider in determining fair value of portfolio securities. Moreover, even investments in publicly-traded securities are likely to be relatively illiquid because the market for companies of the type in which we invest tend to be thin and usually cannot accommodate large volume trades.

Unfavorable economic conditions and regulatory changes could impair our ability to engage in liquidity events.

Our business of making private equity investments and positioning our portfolio companies for liquidity events might be adversely affected by current and future capital markets and economic conditions. The public equity markets currently provide less opportunity for liquidity events than at times in the past when there was more robust demand in the public equities markets. The potential for public market liquidity could further decrease and could lead to an inability to realize potential gains or could lead to financial losses in our portfolio and a decrease in our revenues, net income and assets. Recent government reforms affecting publicly traded companies, stock markets, investment banks and securities research practices have made it more difficult for smaller companies to successfully make securities offerings of their equity securities, and such reforms have increased the expense and legal exposure of being a public company. Slowdowns in the equities markets may also have an adverse effect on the frequency and prices of acquisitions of privately held companies. A lack of merger and/or acquisition opportunities for privately held companies also may have an adverse effect on the ability of these companies to raise capital from private sources. Public equity market response to smaller companies is uncertain. An inability to engage in liquidity events could negatively affect our liquidity, our reinvestment rate in new and follow-on investments and the value of our portfolio.

The returns on our investments in our portfolio companies that become publicly traded are uncertain.

When the securities of our portfolio companies become publicly traded, those securities are considered unseasoned issues. Unseasoned issues tend to be highly volatile and have uncertain liquidity, which may negatively affect their price. In addition, we may be subject to lock-up provisions that prohibit us from selling our investments into the public market for specified periods of time. The market price of securities that we hold may decline substantially before we are able to sell these securities. The market for unseasoned stocks is less liquid than other securities, especially those traded in the over-the-counter markets.

Risks Related To The Companies In Our Portfolio.

Investing in small, private companies involves a high degree of risk and is highly speculative.

A substantial portion of our assets consist of securities holdings in privately held development stage or start-up companies, the securities of which are inherently illiquid. These businesses tend to lack management depth, to have limited or no history of operations and to have not attained profitability. Because of the speculative nature of these investments, these securities have a significantly greater risk of loss than traditional investment securities. Some of our portfolio company holdings are likely to be complete losses or unprofitable, and some will never realize their potential. We have been and will continue to be risk seeking rather than risk averse in our approach to acquiring securities in portfolio companies. Neither our investments nor an investment in our common stock is intended to constitute a balanced investment program.

Our portfolio companies may not successfully develop, manufacture or market their products.

The technology of our portfolio companies is oftentimes new and in many cases unproven. Their potential products require significant and lengthy product development, manufacturing and marketing efforts. To date, many of our portfolio companies have not developed any commercially available products. In addition, our portfolio companies may not be able to manufacture successfully or to market their products in order to achieve commercial success. Further, the products may never gain commercial acceptance. If our portfolio companies are not able to develop, manufacture or market successful products, they will be unable to generate product revenue or build sustainable or profitable businesses.

Our portfolio companies working with proprietary technology may be particularly susceptible to intellectual property litigation.

The ownership of intellectual property of our portfolio companies may be subject to intellectual property disputes and litigation. Any litigation over the ownership of, or rights to, any of our portfolio companies’ technologies or products could have a material adverse effect on those companies’ values.

The value of our portfolio could be adversely affected if the technologies utilized by our portfolio companies are found, or even rumored or feared, to cause health or environmental risks, or if legislation is passed that limits the commercialization of any of these technologies.

Debate regarding the production of materials that could cause harm to the environment or the health of individuals could raise concerns in the public’s perception of certain of our portfolio companies, not all of which might be rational or scientifically based. Certain of our portfolio companies’ technology may be the subject of health and environmental impact research. If health or environmental concerns about such technology were to arise, whether or not they had any basis in fact, our portfolio companies might incur additional research, legal and regulatory expenses, and might have difficulty raising capital or marketing their products. Government authorities could, for social or other purposes, prohibit or regulate the use of such technology. Legislation could be passed that could circumscribe the commercialization of any of these technologies.

Risks Related to Our Common Stock.

Our shares might trade at discounts from net asset value or at premiums that are unsustainable over the long term.

Shares of business development companies like us may, during some periods, trade at prices higher than their net asset value and during other periods, as frequently occurs with closed-end investment companies, trade at prices lower than their net asset value. The possibility that our shares will trade at discounts from net asset value or at premiums that are unsustainable over the long term are risks separate and distinct from the risk that our net asset value per share will decrease. The risk of purchasing shares of a business development company that might trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively short period of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon changes in premium or discount levels than upon increases or decreases in net asset value per share. Our common stock may not trade at a price higher than or equal to net asset value per share.

Rules related to low-priced equity securities may make it harder for you to sell our common stock.

The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are defined by law generally as equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules place additional responsibilities on broker-dealers effecting transaction in such securities. These requirements may have the effect of reducing the level of trading activity in the secondary markets for a stock that is subject to the penny stock rules.

Our common stock trades on the OTC Pink Sheets which may make it more difficult for you to sell your stock.

Our common stock is quoted on the OTC Pink Sheets under the symbol “UCMT,” and it has a limited trading market. Accordingly, we cannot assure you as to the liquidity of any markets that may be available for our common stock, your ability to sell your Company common stock, or the price at which you may be able to sell your Company common stock.

Our Board of Directors may grant stock options to our employees pursuant to our Company's Equity Incentive Plan. When exercised, these options may have a dilutive effect on existing shareholders.

In accordance with our Company’s Equity Incentive Plan, our Board of Directors grants options from time to time to our employees. When options are exercised, net asset value per share will decrease if the net asset value per share at the time of exercise is higher than the exercise price. Alternatively, net asset value per share will increase if the net asset value per share at the time of exercise is lower than the exercise price. Therefore, existing shareholders will be diluted if the net asset value per share at the time of exercise is higher than the exercise price of the options. Even though issuance of shares pursuant to exercises of options increases our Company's capital, and regardless of whether such issuance results in increases or decreases in net asset value per share, such issuance results in existing shareholders owning a smaller percentage of the shares outstanding.

Item 1B.

Unresolved Staff Comments.

Not Applicable.

Item 2.

Properties.

Our Company leases on a month-to-month basis approximately 1,200 square feet of office space at 2601 Annand Drive, Suite 16, Wilmington, Delaware where we conduct our operations. Monthly rent for the space is $1,500.

Item 3.

Legal Proceedings

The following is a brief description material pending legal proceedings, other than ordinary, routine litigation incidental to our business, to which our Company is a party.

McCrae Associates LLC Lawsuit

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

In February 2011, the Company agreed to a settlement regarding the McCrae Associates, LLC lawsuit. In exchange for settlement of the lawsuit, the Company exchanged a warrant to purchase 42,500 shares of Lightwave Logic, Inc. common stock at an exercise price of $0.25 per share, expiring April 2012 for 500,000 shares of the Company’s common stock that McCrae holds. The legal documents were executed and the transaction was complete in March 2011.

MICCO World, Inc. Lawsuit

In July 2010, the Company filed a lawsuit against MICCO World, Inc. (formerly known as Constellation Group, Inc.) and its officers, Phil Lundquist, Steven Brisker and Tom Ridenour (collectively known as the “Defendants”). This lawsuit was filed in the Superior Court of Delaware in New Castle County. This lawsuit was filed in response to various activities by the Defendants that include misleading investors, making disparaging remarks about the Company, misrepresentation of capital structure, and misappropriation of funds.

The Company is seeking judgment in the amount of $611,000 plus costs, legal fees, pre- and post-judgment interest, plus other amounts and relief to be determined.

In March 2011, MICCO filed a motion to dismiss. In June 2011, the courts denied this motion to dismiss.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company’s common stock has been traded on the OTC Bulletin Board since June 15, 2006. Through March 2011, the Company’s common stock was trading under the symbol “UCMT”. In March 2011, the company moved to the pink sheets is now trading under the symbol “UCMT.PK”.

Market Information


			High		Low
			Bid	Asked	Bid	Asked

2010	1^st Quarter	$	0.34	0.49	0.14	0.30
	2^nd Quarter	$	0.58	0.75	0.11	0.32
	3^rd Quarter	$	0.54	0.87	0.25	0.36
	4^th Quarter	$	0.40	0.64	0.02	0.33

2011	1^st Quarter	$	0.27	0.70	0.02	0.22
	2^nd Quarter	$	0.15	0.58	0.00	0.00
	3^rd Quarter	$	0.031	0.15	0.00	0.00
	4^th Quarter	$	0.031	0.15	0.00	0.00

The above quotations reflect inter-dealer prices, without mark-up, mark-down or commission, and may not represent actual transactions.

Holders

As of July 29, 2011, the Company had approximately 599 holders of record of its Common Stock.

Penny Stock Rules

The shares of Company common stock are covered by Section 15(g) of the Securities Exchange Act of 1934 and SEC Rules 15g-1 through 15g-6, which impose additional sales practice requirements on broker-dealers who sell Company securities to persons other than established customers and accredited investors.

Rule 15g-2 declares unlawful any broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.

Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer the current quotation prices or similar market information concerning the penny stock in question.

Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.

Rule 15g-5 requires that a broker-dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons’ compensation.

Because a “penny stock” is, generally speaking, one selling for less than $5.00 per share, the Company’s common stock may be subject to the foregoing rules. The application of the penny stock rules may affect stockholders’ ability to sell their shares because some broker-dealers may not be willing to make a market in the Company’s common stock because of the burdens imposed upon them by the penny stock rules.

Dividends

Our Company currently anticipates that it will retain all of its earnings to finance the operation and expansion of its business, and therefore does not intend to pay dividends on its Common Stock in the foreseeable future. Since our inception, we have never declared or paid any cash dividends on its Common Stock. Any determination to pay dividends in the future is at the discretion of our Company’s Board of Directors and will depend upon the Company’s financial condition, results of operations, capital requirements, limitations contained in loan agreements and such other factors as the Board of Directors deems relevant. However, we may from time to time distribute shares or interests in portfolio companies. On July 24, 2006, we declared a dividend payable in the shares of the common stock of one of our portfolio companies, Theater Xtreme Entertainment Group, Inc. (“Theater”). The dividend was payable to our shareholders of record at the close of business on July 31, 2006, and was distributed on August 11, 2006. The dividend consisted of 0.055 shares of the common stock of Theater for each share of Company common stock owned on the record date or 299,064 Theater shares in the aggregate.

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plans as of April 30, 2011.


Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	600,000	$ 0.20	1,000,000
Equity compensation plans not approved by security holders	--	--	---
Total	600,000	$ 0.20	1,000,000

In May 8, 2006, our Company’s stockholders approved the 2006 Equity Incentive Plan for the benefit of our directors, officers, employees and consultants, and we have reserved 2,000,000 shares of our common stock for such persons pursuant to that plan.

COMPARATIVE STOCK PERFORMANCE

The graph below compares the cumulative total return during the period from April 30, 2005 to April 30, 2011, for the Company’s common stock, the Company’s Peer Group and the Russell Microcap Index. This graph assumes the investment of $100 in the Company’s common stock, the Company’s Peer Group and the stock in the companies comprising the [index] on April 30, 2005 and the reinvestment of all dividends.

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Item 6.

Selected Financial Information.

Reference is made to the Company’s financial statements included elsewhere in this Annual Report on Form 10-K. The following selected information is taken from those financial statements:

Financial Position as of:

April 30, 2011

April 30, 2010

April 30, 2009

April 30, 2008

April 30, 2007

April 30, 2006

Total assets

3,072,008

5,375,880

5,497,085

8,265,499

6,736,345

3,546,337

Total Liabilities

1,302,372

1,201,564

1,228,224

2,266,267

2,638,881

1,302,547

Net assets⁽¹⁾

1,769,636

4,174,316

4,268,861

5,599,232

4,097,464

2,243,790

Net asset value per outstanding share

0.30

0.65

0.67

0.98

0.75

0.46

Cash dividend paid

Cash dividends paid per outstanding shares

Shares outstanding, end of year⁽¹⁾

5,912,426

6,412,426

5,702,720

5,438,274

4,917,634

Operating Data for the Year Ending:

April 30, 2011

April 30, 2010

April 30, 2009

April 30, 2008

April 30, 2007

April 30, 2006

Total investment income

37,541

55,239

960,424

3,845,715

3,294,637

894,745

Total expenses⁽²⁾

536,203

846,861

2,038,412

1,164,201

2,246,754

990,802

Net operating income (loss)

(498,662)

(791,622)

(1,077,988)

2,681,514

1,047,883

(96,057)

Total tax benefit (expense)

940,500

953,000

949,000

(838,000)

(214,000)

585,000

Other income (expense)

(13,134)

(40,992)

(112,524)

(26,300)

267,924

Net realized (loss) income from
investments

(504,576)

(153,277)

(2,154,786)

(2,069,152)

(644,342)

Unrealized appreciation (depreciation) on investments

(2,308,692)

(218,492)

(323,709)

1,498,262

(406,953)

(1,376,456)

Net (decrease) increase in net
assets resulting from operations

(2,384,564)

(251,383)

(2,720,007)

1,246,324

50,512

(887,513)

Net Increase (Decrease) in
Net Assets Per Share

(0.40)

(0.04)

(0.45)

0.23

0.29

0.07

Item 7.

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

Introduction

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

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

The income that our Company derives from investments consists of management fees, interest income, and appreciation (net of depreciation) in the values of the Company holdings and management revenue from the management and marketing of the direct response products.

Consequently, our Company’s success or failure will depend on the ability to properly manage and market the products in the direct response market. There is no assurance that we will be able to do so.

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

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

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

Until December 2010, our Company was primarily a publicly traded business development company in which our primary business was to invest in emerging growth companies. Our Company assisted companies in strategic and financial planning, in market strategies and in trying to achieve prudent and profitable growth. Management had devoted most of its efforts to general business planning, raising capital, and seeking appropriate investments.

In December 2010, our Company’s primary business structure began to change due to economic factors and new opportunities and we now also identifies, advises in development and markets consumer products. Our strategy employs three primary channels: Direct Response Television (Infomercials), Television Shopping Networks and Retail Outlets. We seek to assist and enable entrepreneurs to introduce products to the consumer market. Entrepreneurs can leverage our experience and valuable business contacts in functions such as product selection, marketing development, media buying and direct response television production. Inventors and entrepreneurs submit products or business concepts for our input and advice. We generate revenues from two primary sources (i) management of the entire business cycle of the consumer product and (ii) sales of consumer products, for which we receive a share of net profits of consumer products sold. We do not manufacture any of our products. As of the date of this filing we have generated limited revenues and do not rely on any principal products. While the Company has received nominal revenues from management fees generated from the sales of several products, none of these fees have generated material revenues. We currently do not sell any internally developed or Company owned products

Financial Condition

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


	At and for the Year Ending April 30, 2011	At and for the Year Ending April 30, 2010

Total Assets	$3,072,008	$5,375,880
Net Assets	$1,769,636	$4,174,316
Net Asset Value Per Share	$0.30	$0.65
Net Unrealized Appreciation/(Depreciation) on Investments	($2,308,692)	($218,492)

The changes in total assets, net assets and net asset value per share for the year ended April 30, 2011 were primarily attributable to:

Vystar Corporation’s (“Vystar”) average valuation on restricted and unrestricted shares and warrants decreased from $0.95 to $0.45 per share during the year ending April 30, 2011 for a net unrealized depreciation of $936,996. Our Company’s total investment in Vystar was $290,185 at April 30, 2011 compared to $1,227,180 at April 30, 2010.

Lightwave Logic, Inc. (“LWLG”), average valuation on restricted and unrestricted shares and warrants decreased from $1.37 to $1.11 per share during the year ending April 30, 2011 for a net unrealized depreciation of $240,480. Our total investment in LWLG at April 30, 2011 was $398,707 compared to $758,742 at April 30, 2010.

PR Specialists, Inc. (“PR”) average valuation on restricted and unrestricted shares and warrants decreased from $0.50 to $0.02 per share during the year ending April 30, 2011 for a net unrealized depreciation of $636,475. Our total investment in BFAG at April 30, 2011 was $3,525 compared to $640,000 at April 30, 2010.

BF Acquisition Group V, Inc. (“BFAG”) average valuation on restricted and unrestricted shares and warrants decreased from $0.32 to $0.001 per share during the year ending April 30, 2011 for a net unrealized depreciation of $1,247,500. Our total investment in PR at April 30, 2011 was $2,500 compared to $1,250,000 at April 30, 2010.

The increase in cash of $9,999.

The increase in accounts payable and accrued expenses of $206,312.

The increase in net deferred tax asset of $754,000.

The decrease in deferred revenue of approximately $1,458, which is due mainly to management services revenue of $1,458 which was earned during the year ending April 30, 2011.

The decrease in current income taxes payable of approximately $192,000.

The decrease to Net Capital of $20,116 consists of the settlement of a lawsuit where the Company received 500,000 shares of its common stock in exchange for a warrant to purchase 42,500 shares of LWLG common stock of $27,750, offset by share-based compensation expense of $7,634.

At April 30, 2011 and April 30, 2010, $981,217 or approximately 32% and $4,179,222 or approximately 78% of our assets, respectively, consisted of investments, of which cumulative net unrealized appreciation (depreciation) before the

income tax effect were $(967,564) and $1,341,128, respectively. Deferred tax asset (liability) has been estimated at approximately $385,000 and $(533,000), at April 30, 2011 and 2010, respectively.

Results of Operations

Our financial statements have been prepared in conformity with the United States generally accepted accounting principles. On this basis, the principal measure of a Company’s financial performance is the net increase in net assets. Net assets comprise (i) income from operations, (ii) net realized gain or loss on investment, which is the difference between the proceeds received from dispositions of portfolio securities and their stated cost, and (iii) increase (decrease) in unrealized appreciation on investments.

Our Company expenses include salaries and wages (but officer salaries did not accrue until November 15, 2004 and then were contributed as capital during the year ended April 30, 2007), professional fees, insurance expense, interest expense and depreciation. General and administrative costs include rent, office, travel and entertainment and other overhead costs.

Year ended April 30, 2011 compared to the year ended April 30, 2010 and April 30, 2009

For the year ended April 30, 2011 we had revenue for services in the amount of $37,541 compared to $55,239 for the year ended April 30, 2010 and $960,424 for the year ended April 30, 2009. Approximately 4% of our revenue for services was received in the form of equity securities for the year ended April 30, 2011 compared to approximately 13% for the year ended April 30, 2010 and approximately 96% for the year ended April 30, 2009.

Total operating expenses for the year ended April 30, 2011 were $536,203, the principal components of which were professional fees of $103,322, of which $49,561 represents audit fees and approximately $37,389 of legal expense. Additionally, principal components of operating expenses include $252,373 for payroll which includes $7,634 of share based compensation expense, $94,096 of insurance expense, $31,554 of interest expense and $53,058 of general and administrative expense. By comparison, total operating expenses for the year ended April 30, 2010 were $846,861, the principal components of which were professional fees of $138,769, payroll expense of $388,995 ($5,088 was share based compensation expense), bad debt expense of $98,667, insurance expense of $104,133, and general and administrative expenses of $81,274. By comparison, total operating expenses for the year ended April 30, 2009 were $2,038,412, the principal components of which were payroll of $1,208,229, professional fees of $458,263, insurance of $97,172, bad debt expense of $140,765, $27,625 of interest expense and general and administrative expenses of $104,458.

We realized a loss from operations before taxes and interest of $498,662 for the year ended April 30, 2011 compared to a loss of $791,622 for the year ended April 30, 2010 and a loss from operations before taxes and interest of $1,077,988 for the year ended April 30, 2009.

Our Company had net unrealized depreciation of $2,308,692 for the year ended April 30, 2011, compared to a net unrealized depreciation of $218,492 for the year ended April 30, 2010 and a net unrealized appreciation of $323,709 at year end April 30, 2009.

For the year ending April 30, 2011, we had a recognized loss on disposal and sale of several of our portfolio company investments of $504,576.

For the year ending April 30, 2010, we had a recognized loss on disposal and sale of several of our portfolio company investments of $153,277, which consists mainly of $119,986 of a net loss from the sale of various portfolio companies’ common stock and $33,000 of loss from the write off of three portfolio company investments.

Our company had a recognized loss on disposal and sale of investments of $2,154,786 for the year ended April 30, 2009. This consists mainly of $1,907,213 of a net loss from the write off of three portfolio company investments and a net loss of $283,211 on the sale of various portfolio companies’ common stock, offset by a net gain of $35,730 on the exchange of two portfolio companies’ common stock for investor relations services.

Liquidity and Capital Resources

From inception, our Company has relied upon the infusion of capital through capital share transactions to obtain liquidity. We had $16,566 of cash at April 30, 2011. Consequently, payment of operating expenses will have to come similarly from equity capital to be raised from investors, from borrowed funds or from the success of our direct response products we are managing. There is no assurance that we will be successful in raising such additional equity capital or additional borrowings or if we can, that we can do so at a price that management believes to be appropriate. Under the Investment Company Act of 1940, as amended, our Company may not sell shares of common stock at less than our net asset value except in certain limited circumstances.

Recently, it was necessary for us to dispose of some of our current portfolio securities to meet our operational needs. In the future, we may be forced to continue to dispose of portfolio securities if it ever becomes short of cash. Any such dispositions may have to be made at inopportune times.

Critical Accounting Policies

Security Valuations

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

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

Stock-Based Compensation

On May 1, 2006, the Company adopted ASC 718 formerly, Statement of Financial Accounting Standard of Financial Accounting Standard No. 123(R) (“SFAS 123(R)”), Share-Based Payment (as amended), using the modified prospective method as permitted under SFAS 123(R). Under this transition method, compensation cost recognized in the first quarter of fiscal 2007 includes compensation cost for all share-based payments granted prior to but not yet vested as of April 30, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123. In accordance with the modified prospective method of adoption, the Company’s results of operations and financial position for the prior periods have not been restated.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Our Company’s business activities contain elements of risk. Neither our investments nor an investment in us is intended to constitute a balanced investment program.

A substantial portion of our assets is comprised of private development stage or start-up companies. These private businesses tend to be thinly capitalized, unproven, small companies that lack management depth and have not attained profitability or have no history of operations. Because of the speculative nature and the lack of a public market for these investments, there is significantly greater risk of loss than is the case with traditional investment securities. We expect that some of our investments will be a complete loss or will be unprofitable and that some will appear to be likely to become successful but never realize their potential. Even when our private equity investments become publicly traded, the market for the unseasoned publicly traded securities may be relatively illiquid.

Because there is typically no public market for our interests in the small privately held companies in which we invest, the valuation of the equity interests in that portion of our portfolio is determined in good faith by or under the direction of our Board of Directors, in accordance with our valuation procedures. In the absence of a readily ascertainable market value, the determined value of our portfolio of equity interests may differ significantly from the values that would be placed on the portfolio if a ready market for the equity interests existed. Any changes in valuation are recorded in our consolidated

statements of operations as “Net increase (decrease) in unrealized appreciation on investments.” Changes in valuation of any of our investments in privately held companies from one period to another may be volatile.

Item 8.

Financial Statements and Supplementary Data.

See attached Appendix A.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not Applicable.

Item 9A.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. The Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,) as of the end of the period covered by this Annual Report on Form 10-K required by Exchange Act Rules 13a-15(b) or 15d-15(b). The controls evaluation was conducted under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer. Based on this evaluation, the Company’s principal executive officer and principal financial officer have concluded that as of the end of the period covered by this report the Company’s Disclosure Controls were effective.

Disclosure controls are controls and procedures designed to reasonably assure that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed to reasonably assure that such information is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s disclosure controls include components of its internal control over financial reporting, which consists of control processes designed to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the U.S. To the extent that components of the Company’s internal control over financial reporting are included within its disclosure controls, they are included in the scope of the Company’s annual controls evaluation.

Management’s Report on Internal Control over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on criteria established in the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the Company’s management concluded that the Company’s internal control over financial reporting was effective as of as of as of April 30, 2011.

Limitations on the Effectiveness of Controls. The Company’s management, including the principal executive officer and principal financial officer, does not expect that the Company’s disclosure controls or internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or

procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B.

Other Information.

None.

PART III

Item 10.

Directors and Executive Officers and Corporate Governance.

(a)

Identity of directors, executive officers and significant employees.


Name	Age	Position	Term/ Period Served

Michael D. Queen	55	Director, Chief Executive Officer	1 yr/Since 2004
Theresa Q. Hoffmann	38	Vice President of Finance Secretary, Treasurer	1 yr/Since March 2009
Charles E. Hoover	55	Vice President	1 yr/Since May 2008
Robert G. Oberosler	54	Director	1 yr/Since October 2009
Steven P. Pruitt, Jr.	34	Director	1 yr/Since 2004
Jeffrey P. Muchow	63	Director	1 yr/Since 2004

Each Director of the Company holds such position until the next annual meeting of shareholders and until his successor is duly elected and qualified. The officers hold office until the first meeting of the board of directors following the annual meeting of shareholders and until their successors are chosen and qualified, subject to early removal by the board of directors.

(b)

Business experience of directors, executive officers, and significant employees.

Michael D. Queen, Chief Executive Officer and Director. Mr. Queen has been the Chief Executive Officer and a director of the Company since 2004 and was the President of the Company from 2004 through February 2009. Since founding UCM, Mr. Queen has worked with eighteen startup companies. He assisted these companies with their funding and was responsible for helping seven of those companies enter the public marketplace. Mr. Queen is considered an expert in the microcap arena with extensive knowledge of how these markets operate and has been extensively involved in the start-up businesses and initial capitalization plans.

Prior to UCM, Mr. Queen was the President, CEO and a director at Pennexx Foods, Inc., a publicly traded company. From 1994 to 1998, Mr. Queen was the President of Ocean King Enterprises, a start-up specialty food manufacturer. From 1978 to 1999, Mr. Queen was an executive in the supermarket industry serving the greater New York, New Jersey and Delaware region.

Theresa Q. Hoffmann, Vice President of Finance, Secretary and Treasurer. Mrs. Hoffmann has been Vice President of Finance, Secretary and Treasurer since March 2009. Previously, since March 2008, Mrs. Hoffmann, served as the registrant’s senior corporate controller where she was accountable for all of the registrant’s financial accounting and heading the staff of portfolio accountants and financial planners. Also, from July 2008 to December 2008, Mrs. Hoffmann served as the part-time interim chief financial officer and chief information officer of Theater Xtreme Entertainment Group, Inc., a previous registrant portfolio company. On December 15, 2008, Theater Xtreme Entertainment Group, Inc. filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 7 of Title 11 of the United States Code. From January 2007 to March 2008 she served as the registrant’s manager of portfolio accounting and financial planning, and from January 2006 to January 2007 she served as the registrant’s controller. From August 2005 to December 2005, Mrs. Hoffmann served as a controller at IPI Fundraising, Inc., and from July 2003 to August 2005, she worked as a Senior Accountant at Cetrulo & Morgan Group, PA. Mrs. Hoffmann holds a BS in Accounting from Virginia Tech.

Charles E. Hoover, Vice President. Mr. Hoover has been Vice President since May 2008. Mr. Hoover has over 20 years experience working with financial services and technology companies, focusing on marketing, business development and public relations. He spent more than 10 years in capital markets and real estate with firms including Nations Bank, Hall Financial Group, Days Inns of America and Interstate/Johnson Lane. He was also a key member of the core team that founded NetBank. Mr. Hoover holds a BBA from the University of Georgia and an MBA from Georgia State University.

Robert G. Oberosler, Director. Mr. Oberosler has been a Director since October 2009. Prior to that, he was President and Chief Operating Officer of the Company from February 2009 to April 2010. From April 2010 to the present, Mr. Oberosler holds the position of Group Vice President with Rite Aid Store Inc. From March 2008 to December 2008, Mr. Oberosler served as a turnaround professional for Theater Xtreme Entertainment Group, Inc., a distressed retailer of home theater packages and a franchise marketing company. During that period, Mr. Oberosler served as President and subsequently Chief Executive Officer of that company. On December 15, 2008, Theater Xtreme Entertainment Group, Inc. filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 7 of Title 11 of the United States Code. From 1998 to 2008, Mr. Oberosler held various officer positions with Pathmark Stores, Inc. Specifically, from 1998 to 2001, he served as Senior Vice President - Asset Management; from 2001 to 2005, he served as Senior Vice President - Store Operations; from 2005 to 2006, he served as Senior Vice President - Asset Management & Special Projects, from 2006 - February 2008, he served as Senior Vice President - Distribution, Logistics & Asset Management.

Steven P. Pruitt, Jr., Director. Mr. Pruitt is DuPont’s Internal Control Coordinator and is responsible for implementing Sarbanes-Oxley compliance procedures on a global basis. Mr. Pruitt also assists in the development and implementation of critical internal controls and business processes throughout the company. Prior to business school, Mr. Pruitt worked for five years with the DuPont company in their Internal Audit Group. As a Senior Auditor, he helped to lead and train business teams on assessing and improving their business models. He also spent a year overseas focusing on educating DuPont’s join ventures and subsidiaries on better business practices. Mr. Pruitt graduated with an MBA degree from the University of North Carolina-Flagler Business School. In addition to his Master’s Degree, he holds a BS in Accounting from the University of Delaware and passed the CPA exam in 1999.

Jeffrey P. Muchow, Director. Mr. Muchow is a veteran of the food and agricultural processing industries. Since 2001 he has served as an independent consultant in business startups, mergers and turnaround situations for food processing enterprises. From 2000 to 2001, he served as President of Vertia, Inc., a supply chain company engaged in supply chain services for perishable food companies, and from 1999 to 2000 he served as Vice President – Business Development of Working Machines, Inc. Mr. Muchow received his Master’s Degree in Agricultural Economics from the University of Missouri and an MBA from the University of Northern Colorado.

Independence of the Board of Directors

After review of all relevant information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and its senior management and independent auditors, the Board of Directors has determined affirmatively that Steven P. Pruitt Jr. and Jeffrey Muchow are independent directors (and not “interested persons” within the meaning of the Investment Company Act of 1940). Independent directors are those directors that are determined not to be interested persons within the meaning of the Investment Company Act of 1940. On June 4, 2009, Thomas Pickard, an independent member of the Board of Directors, resigned for health reasons. He was replaced in September 2009 by the appointment of Stephen J. Laukaitis. Due to potential conflicts of interest, Mr. Laukaitis resigned as a member of the Board of Directors in April 2010. In October 2009, Joseph Drennan resigned as a Vice President and a member of the Board of Directors for personal reasons. We currently have four board members, of which two are independent, which does not meet the requirement that our Board of Directors be comprised of a majority of independent directors.

Meetings of the Board of Directors and Committees

Directors do not receive compensation for their services as directors.

The Board of Directors held two meetings during fiscal year 2011. All Company directors are expected regularly to attend Board and committee meetings and stockholder meetings and to spend the time needed, and meet as frequently as necessary, to discharge their responsibilities properly. During fiscal year 2011 each member of the Board of Directors attended 100% of meetings of the Board of Directors and Committees of the Board of Directors on which he served, held during the period for which he was a director or committee member, respectively.

The sole standing committee of the Board is the Audit and Compliance Committee. The members of this committee are appointed by the Board.

The Board does not feel it is necessary to have a Nominating Committee because the Company does not anticipate the need to locate new board members on any repeated basis. The entire Board of Directors participates in the consideration of nominees. Accordingly, at the present time, the Board also will not accept director nominations from stockholders. Nominees

for director are selected on the basis of their integrity, experience, achievements, judgment, intelligence, person character, ability to make independent analytical inquiries, willingness to devote adequate time to Board duties and likelihood that he or she will be able to serve on the Board for a sustained period, and significantly, whether the nominee has industry specific experience in various industries that is relevant in light of the Company’s business.

The Board does not feel it is necessary to have a Compensation Committee because the Company has a small number of employees and has only three executive officers. Presently, the independent directors review and approve the compensation provided to the executive officers.

Audit and Compliance Committee

The Audit and Compliance Committee (the “Audit Committee”) is currently comprised of Steven P. Pruitt, Jr. (Chair) and Jeffrey Muchow. Each of the members of the Audit Committee is independent as currently defined under Rule 10A-13(b)(1)(iii) of the Securities Exchange Act of 1934, as amended, and no such member is an “interested person” of the Company within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended.

The Audit Committee is responsible for overseeing the adequacy of corporate accounting, financial and operating controls, and the engagement of the Company’s independent auditors.

The Board has determined that the Company has at least one Audit Committee Financial Expert (as defined by SEC rules) serving on its Audit Committee, and the name of such Audit Committee Financial Expert is Steven P. Pruitt, Jr.

During the 2010 fiscal year, the Audit Committee held 1 meeting.

Section 16(a) Beneficial Ownership Reporting Compliance

To the best of our knowledge, no officer, director and/or beneficial owner of more than 10% of our Common Stock, failed to file reports as required by Section 16(a) of the Exchange Act during the period covered by this report.

Code of Ethics

The Company has adopted a Code of Ethics that also applies to its principle executive officer and principal financial officer. The text of the Code of Ethics is available on the Company’s website at http://www.unicapman.com. Upon the written request to the Company mailed to the Company’s principal office, the Company shall provide to any person without charge a copy of our code of ethics.

Item 11.

Executive Compensation.

Compensation Discussion and Analysis

The Company does not have a compensation committee. The independent directors are responsible for reviewing and establishing compensation for senior executive.

The Company’s executive compensation program is designed to achieve the following objectives: (i) provide direct compensation and rewards program that are externally competitive to attract and retain the talent needed, (ii) motivate and reward executive officers whose knowledge, skills, performance and business relationships are critical to the Company’s success, (iii) motivate executive officers to increase stockholder value and reward executive officers when stockholder value increases, (iv) compensate the Company’s executive officers to manage the Company’s business to meet its long-range goals and (v) provide compensation that aligns with business objectives and shareholders’ interests.

For the fiscal year ended April 30, 2011, the principal components of compensation for the Company’s executive officers were annual base salary and long-term equity compensation. The independent directors subjectively apportion total compensation among these elements in such proportions as they determine are appropriate in the circumstances and, therefore, such apportionment may vary from time to time and among executives. The independent directors retain the flexibility to

consider various factors when making compensation decisions, including external market forces, individual circumstances and performance.

Base salaries for executives, including the Chief Executive Officer, are set according to the responsibilities of the position, the specific skills and experience of the individual, the individual’s performance and the competitive market for executive talent. The independent directors review salaries annually and adjust them as appropriate to reflect changes in market conditions and individual performance and responsibilities. The Chief Executive Officer of the Company participates in the determination of salaries of other executive officers.

The Company may award long-term equity incentive awards to executive officers, including the named executive officers, as part of its total compensation package. The independent directors review and approve the amount of each award to be granted to each named executive officer. Long-term equity incentive awards are made pursuant to the 2006 Equity Incentive Plan originally adopted in 2006 (the “2006 Plan”).

The Company’s long-term equity incentive is currently in the form of options to acquire its common stock. Stock option awards provide the Company’s executive officers with the right to purchase shares of its common stock at a fixed exercise price for a period of up to ten years under the 2006 Plan. Stock options are granted under the 2006 Plan at a price not less than the prevailing market price at the time of the grant and will have realizable value only if the Company’s stock price increases.

The independent directors will determine the amount and features of the stock options, if any, to be awarded to executive officers. They will evaluate a number of criteria, including the past service of such executive officer to the Company, the present and potential contributions of such executive officer to the Company’s success and such other factors as they shall deem relevant in connection with accomplishing the purposes of the 2006 Plan, including the executive officer’s current stockholdings, years of service, position with the Company and other factors. However, they will not apply a formula assigning specific weights to any of these factors when making such determination.

The executive officers are also eligible to participate in a health insurance program offered by the Company to its employees.

None of the Company’s executive officers have employment, severance or change-of-control agreements. The Company’s executive officers serve at the will of the Board, which enables the Company to terminate their employment with discretion as to the terms of any severance arrangement.

The base salaries paid to the Company’s named executive officers during the Company’s prior three fiscal years are set forth below in the “Summary Compensation Table”.

The independent directors from time to time determine whether to award options to purchase shares of the Company’s common stock to the Company’s executive officers, including its names executive officers. There were no stock option awards during the year ended April 30, 2011.

The table below summarizes all compensation awarded to, earned by, or paid to our executive officers for the fiscal years ended April 30, 2011, 2010 and 2009.


Summary Compensation Table
Name and principal position	Year Ending	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)

Michael D. Queen(1)	4/30/11	100,227	0	0	0	0	0	0	100,227
	4/30/10	0	0	0	0	0	0	0	0
	4/30/09	0	0	0	250,769	0	0	0	250,769

Robert G. Oberosler(2)	4/30/11	0	0	0	0	0	0	0	0
	4/30/10	0	0	0	0	0	0	0	0
	4/30/09	0	0	0	67,248	0	0	0	67,248

Theresa Q. Hoffmann(3)	4/30/11	49,045	0	0	0	0	0	0	49,045
	4/30/10	75,000	0	0	0	0	0	0	75,000
	4/30/09	11,540	0	0	0	0	0	0	11,540

Charles E. Hoover(4)	4/30/11	59,143	0	0	0	0	0	0	59,143
	4/30/10	75,000	0	0	0	0	0	0	75,000
	4/30/09	75,010	0	0	273,180	0	0	0	348,190

Joseph Drennan(5)	4/30/11	0	0	0	0	0	0	0	0
	4/30/10	0	0	0	0	0	0	0	0
	4/30/09	0	0	0	167,179	0	0	0	167,179

(1)

From inception to February 2009, Mr. Queen served as President. From inception to current, Mr. Queen served as Chief Executive Officer and as a director of the Company. On August 11, 2008, Mr. Queen received an option to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.87 per share, exercisable immediately and expiring on August 11, 2018. In February 2009, Mr. Queen rescinded all rights to his options.

(2)

Mr. Oberosler was appointed president and Chief Operating Officer on February 23, 2009. He received an option to purchase 375,000 shares of the Company’s common stock at an exercise price of $0.20 per share, exercisable immediately and expiring on February 23, 2019. Mr. Oberosler exercised the options on February 24, 2009 for $75,000. Mr. Oberosler resigned as our President and Chief Operating Officer on April 22, 2010.

(3)

Mrs. Hoffmann was appointed Vice President of Finance on March 11, 2009.

(4)

Mr. Hoover was appointed Vice President in May 2008. He received an option to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.96 per share, with 25,000 shares vesting immediately and the remaining 275,000 shares vest in increments of 25,000 shares at the end of every three month period beginning June 1, 2008. Mr. Hoover rescinded all rights to his options in February 2009.

(5)

From inception to March 2009, Mr. Drennan served as Chief Financial Officer, Secretary and Treasurer. From inception to October 2009, Mr. Drennan served as Vice President and as a director of the Company. On August 11, 2008, Mr. Drennan received an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.87 per share, exercisable immediately and expiring on August 11, 2018. In February 2009, Mr. Drennan rescinded all rights to his options. Mr. Drennan resigned as our Vice President on October 15, 2009.

Grants of Plan Based Awards

There were no grants of plan based awards during the year ending April 30, 2011.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning unexercised options for each named officer outstanding as of April 30, 2011:


Name	Number of Securities Underlying Unexercised Options (#) Exercisable ⁽¹⁾	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number Of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number Of Shares Or Units Of Stock That Have Not Yet Vested (#)	Market Value Of Shares Or Units Of Stock That Have Not Yet Vested (#)	Equity Incentive Plan Awards: Number Of Unearned Shares, Units Or Other Rights That Have Not Yet Vested (#)	Equity Incentive Plan Awards: Market Or Payout Value Of Unearned Shares, Units Or Other Rights That Have Not Vested ($)

Theresa Q. Hoffmann	300,000	---	---	$0.20	02/24/2019	---	---	---	---

Option Exercises and Stock Vested

There were no exercises or vesting during the year ending April 30, 2011.

Compensation of Directors

There was no compensation of directors for the year ending April 30, 2011.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Security Ownership of Certain Beneficial Owners

The following table sets forth, as of August 11, 2011, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of each person or group known to our Company to be the beneficial owner of more than five percent (5%) of our common stock. The address of each person in the table where no other address is specified is c/o Universal Capital Management, Inc., 2601 Annand Drive, Suite 16, Wilmington, DE 19808.


Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class Owned (1)(2)

Michael D. Queen	404,500(3)	6.84%

Robert G. Oberosler	409,000	6.92%

Joseph Drennan	400,000	6.77%

Theresa Q. Hoffmann	300,000(4)	5.07%

David Bovi 319 Clematis Street Suite 700 West Palm Beach, FL 33401	542,900	9.18%


(1)	This table is based on information supplied by officers, directors and principal stockholders of the Company and on any Schedules 13D or 13G filed with the SEC. On that basis, the Company believes that each of the stockholders named in this table has sole voting and dispositive power with respect to the shares indicated as beneficially owned and except as otherwise indicated in the footnotes to this table.

(2)	Applicable percentages are based on 5,912,426 shares outstanding on August 11, 2011, adjusted as required by rules promulgated by the SEC.

(3)	Includes 400,500 shares owned by Mr. Queen’s wife (of which 349,500 shares are owned by Zenith Holdings, Inc., 50,000 shares are owned by Zenith Enterprises and 5,500 are owned by her 401K plan) as to which he disclaims beneficial ownership.

(4)	An option to purchase 300,000 shares of the Company’s common stock at $0.20 per share exercisable within 60 days from the date hereof.

Security Ownership of Management

The following table sets forth, as of April 30, 2011, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of our common stock of each of our officers and directors, and officers and directors as a group:


Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class Owned (1)(2)

Michael D. Queen	404,500	(3)	6.84%
Robert G. Oberosler	409,000		6.92%
Theresa Q. Hoffmann	300,000	(4)	5.07%
Joseph T. Drennan	400,000		6.77%
Jeffrey P. Muchow	100,000		1.69%
Steven P. Pruitt, Jr.	100,000		1.69%

All executive officers and directors as a group (7 persons)	1,713,500	(3)	28.98%


(1)	This table is based on information supplied by officers, directors and principal stockholders of the Company and on any Schedules 13D or 13G filed with the SEC. On that basis, the Company believes that each of the stockholders named in this table has sole voting and dispositive power with respect to the shares indicated as beneficially owned and except as otherwise indicated in the footnotes to this table.

(2)	Applicable percentages are based on 5,912,426 shares outstanding on August 11, 2011, adjusted as required by rules promulgated by the SEC.

(3)	Includes 400,500 shares owned by Mr. Queen’s wife (of which 349,500 shares are owned by Zenith Holdings, Inc., 50,000 shares are owned by Zenith Enterprises and 5,500 are owned by her 401K plan) as to which he disclaims beneficial ownership.

(4)	Consists of an option to purchase 300,000 shares of common stock exercisable within 60 days from the date hereof.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

On November 1, 2008 the Company entered into a promissory note with Barbara Queen, Michael Queen’s wife, in the amount of $294,000. This amount was the total that was loaned to the Company over a period of two years prior, beginning in November 2006, on behalf of Mrs. Queen to fund Company operations. The promissory note calls for interest of eight percent (8%) annum beginning on November 2008. The promissory note is payable on demand.

In February 2009 the Company’s brokerage accounts were frozen. At that time, the Company’s operational activities were funded by the sale of its liquid portfolio company common stock in the open market. In order to continue Company operations, our Chief Executive Officer, Michael Queen, agreed to sell personal shares of portfolio company common stock that he owned to fund the Company’s operations until such time as the Company’s brokerage accounts were un-frozen with a stipulation that he would receive from the Company the same number of shares that he sold at a future time. In September 2009, 164,070 shares owed to Mr. Queen were returned to him in repayment for a total of $78,000 that he loaned to the Company, from February to April 2009, from the sale of his personal shares of portfolio company stock.

Review and Approval of Transactions with Related Persons

We do not have a formal, written policy solely for the review and approval of transactions with related parties. However, our Code of Ethics provides guidelines for reviewing and handling conflict of interest transactions with our directors, officers and employees. The Board of Directors including all of the directors who are not interested persons of the Company as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended are responsible for reviewing all related party transactions. Before approving any such transaction, the Board of Directors would take into account all relevant facts and circumstances that it deems appropriate, including, but not limited to, the risks, costs and benefits to the Company, the terms of the transaction, the availability of other sources for comparable services or products, and if applicable, the impact on a director’s independence. Only those transactions that, in light of known circumstances, are fair as to, and in the best interests of the Company and its shareholders, as the Board of Directors determines in the good faith exercise of its discretion, shall be approved. The affirmative vote of a majority of the Board of Directors and a majority of the directors that are not interested persons of the Company as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, is required to approve all related party transactions.

Director Independence

After review of all relevant information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and its senior management and independent auditors, the Board of Directors has determined affirmatively that Steven P. Pruitt Jr. and Jeffrey Muchow are independent directors (and not “interested persons” within the meaning of the Investment Company Act of 1940). Independent directors are those directors that are determined not to be interested persons within the meaning of the Investment Company Act of 1940. On June 4, 2009, Thomas Pickard, an independent member of the Board of Directors, resigned for health reasons. He was replaced in September 2009 by the appointment of Stephen J. Laukaitis. Due to potential conflicts of interest, Mr. Laukaitis resigned as a member of the Board of Directors in April 2010. We currently have four board members, of which two are independent, which does not meet the requirement that our board of directors to be comprised of a majority of independent directors.

Committees

The sole standing committee of the Board is the Audit and Compliance Committee. The members of this committee are appointed by the Board. The Audit and Compliance Committee (the “Audit Committee”) is currently comprised of Steven P. Pruitt, Jr. (Chair) and Jeffrey Muchow. Each of the members of the Audit Committee is independent as currently defined under Rule 10A-13(b)(1)(ii) of the Securities Exchange Act of 1934, as amended, and no such member is an “interested person” of the Company within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended. The Audit Committee is responsible for overseeing the adequacy of corporate accounting, financial and operating controls, and the engagement of the Company’s independent auditors. The Board has determined that the Company has at least one Audit Committee Financial Expert (as defined by SEC rules) serving on its Audit Committee, and the name of such Audit Committee Financial Expert is Steven P. Pruitt, Jr.

Item 14.

Principal Accountant Fees and Services.

Audit and Related Fees

Morison Cogen LLP has been the independent accounting firm and has audited the financial statements of the Company since August 16, 2004 (inception) through April 30, 2009.

The following table shows the aggregate fees billed to the Company by Morison Cogen LLP for professional services rendered for the fiscal years ended April 30, 2011, 2010 and 2009:


		For the Year Ending		For the Year Ending		For the Year Ending
Description of Fees		April 30, 2011		April 30, 2010		April 30, 2009

Audit Fees	$	-	$	-	$	30,000
Audit-Related Fees	$	-	$	-	$	-
Tax Fees	$	-	$	-	$	6,100
All Other Fees	$	-	$	-	$	-

	$	-	$	-	$	36,100

Salberg & Company, P.A. has been the independent accounting firm and has audited the financial statements of the Company for the fiscal year ended April 30, 2010 and has reaudited the Company’s financial statements for fiscal years ended April 30, 2009 and 2008.

The following table shows the aggregate fees billed to the Company by Salberg & Company, P.A. for professional services rendered during the fiscal years ended April 30, 2011:


		For the Year Ending		For the Year Ending		For the Year
Description of Fees		April 30, 2011		April 30, 2010		Ending April 30, 2009

Audit Fees	$	-	$	19,000	$	19,000
Audit-Related Fees	$	-	$	-	$	-
Tax Fees	$	-	$	-	$	-
All Other Fees	$	-	$	-	$	-

	$	-	$	19,000	$	19,000

Audit Fees

Represents fees for professional services provided for the audit of the Company’s annual financial statements and review of the Company’s financial statements included in the Company’s quarterly reports.

Audit-Related Fees

Represents fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements.

Tax Fees

Represents fees related to the tax audit and other advisory services, tax compliance and tax return preparation.

Audit Committee Pre-Approval Policies

The Audit Committee pre-approves all work done by its outside auditors.

PART IV

Item 15.

Exhibits and Financial Statement Schedules.

(a)(1)

The following financial statements are included in Item 8 of this Annual Report on Form 10-K:

Statement of Assets and Liabilities as of April 30, 2011 and April 30, 2010

Statement of Operations for the years ended April 30, 2011, April 30, 2010 and April 30, 2009.

Statement of Changes in Net Assets for the years ended April 30, 2011, April 30, 2010 and April 30, 2009

Schedule of Investments as of April 30, 2011 and April 30, 2010

Statement of Cash Flows for the years ended April 30, 2011, April 30, 2010 and April 30, 2009

Notes to Financial Statements

(2)

Schedules

None required.

(3)

Exhibits

The exhibits to this Annual Report on Form 10-K are listed on the accompanying Index to Exhibits and are incorporated herein by reference or are filed as part of this Annual Report on Form 10-K.


Number	Description of Documents
3.1	Certificate of Incorporation (incorporated by reference to the Registrant’s Form 10 filed on January 21, 2005)
3.2	By-Laws (incorporated by reference to the Registrant’s Form 10 filed on January 21, 2005)
4.1	Specimen copy of Common Stock Certificate (incorporated by reference to the Registrant’s Form 10-K for the fiscal year ended April 30, 2006 filed on July 28, 2006)
10.4*	2006 Equity Incentive Plan (incorporated by reference to the Registrant’s Form 10-K for the fiscal year ended April 30, 2006 filed on July 28, 2006)
14.1	Code of Ethics, as amended and restated as of September 30, 2005 (incorporated by reference to the Registrant’s Form 10-K for the fiscal year ended April 30, 2005 filed on July 28, 2005)
31.1#	Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 executed by the Principal Executive Officer of the Company
31.2#	Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 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

Compensation Plans and arrangements for executives and others.

Filed herewith

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Universal Capital Management, Inc.
	(Registrant)

August 15, 2011	By: /s/ Michael D. Queen
	Michael D. Queen, Chief Executive Officer
	(principal executive officer)

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


Signature	Title	Date

s/ Michael D. Queen Michael D. Queen	Chief Executive Officer and Director (principal executive officer)	August 15, 2011

/s/ Theresa Q. Hoffmann Theresa Q. Hoffmann	Vice President of Finance (principal financial officer)	August 15, 2011

/s/ Robert G. Oberosler Robert G. Oberosler	Director	August 15, 2011

/s/ Charles E. Hoover Charles E. Hoover	Vice President	August 15, 2011
/s/ Steven P. Pruitt, Jr. Steven P. Pruitt, Jr.	Director	August 15 2011
/s/ Jeffrey P. Muchow Jeffrey P. Muchow	Director	August 15, 2011

UNIVERSAL CAPITAL MANAGEMENT, INC.

FINANCIAL STATEMENTS

APRIL 30, 2011, 2010 AND 2009

CONTENTS


	PAGE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-1

STATEMENTS OF ASSETS AND LIABILITIES	F-2

STATEMENTS OF OPERATIONS	F-3

STATEMENTS OF CASH FLOWS	F-4

STATEMENT OF CHANGES IN NET ASSETS	F-5

FINANCIAL HIGHLIGHTS	F-6

SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2011	F-7

SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2010	F-8

NOTES TO FINANCIAL STATEMENTS	F-9 – F-24

F-1

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF ASSETS AND LIABILITIES


	April 30, 2011	April 30, 2010
ASSETS
Investments, at fair value
Non-affiliate investments (cost: $475,228 and $525,951)	$ 675,007	$ 1,052,042
Affiliate investments (cost: $1,473,552 and $2,312,143)	306,210	3,127,180
Total Investments	981,217	4,179,222

Cash and cash equivalents	16,566	6,567
Receivables
Note receivable - affiliates (net of allowance: $30,014 and $30,014)	-	-
Due from non-affiliates	49,221	11,601
Due from affiliates (net of allowance: $3,500 and $0)	259,787	228,678
Total Receivables	309,008	240,279

Prepaid expenses	26,131	26,131
Property and equipment, net	681	2,581
Current income tax asset	60,000	-
Deferred income tax	1,674,000	920,000
Rent deposit	1,100	1,100

TOTAL ASSETS	$ 3,072,008	$ 5,375,880

LIABILITIES
LIABILITIES
Accounts payable	$ 366,650	$ 320,785
Accounts payable, related parties	7,213	7,213
Accrued expenses	324,516	193,802
Current income taxes payable	-	132,000
Advances from shareholders	19,000	22,000
Notes payable	24,610	23,154
Note payable, related parties	396,870	367,372
Accrued interest	92,050	92,050
Accrued interest, related parties	71,463	41,730
	1,302,372	1,200,106
Deferred revenue
Non-affiliates	-	-
Affiliates	-	1,458
Total Deferred Revenue	-	1,458

TOTAL LIABILITIES	1,302,372	1,201,564

CONTINGENCIES (NOTE 13)

NET ASSETS	$ 1,769,636	$ 4,174,316

COMPOSITION OF NET ASSETS
Common stock, $0.001 par value, 50,000,000 shares authorized;
5,912,426 and 6,412,426 shares issued and outstanding at
April 30, 2011 and April 30, 2010	$ 5,912	$ 6,412
Additional paid-in capital	6,194,586	6,214,202
Accumulated income
Accumulated net operating income	2,167,507	1,738,803
Dividends paid	(448,596)	(448,596)
Net realized loss on investments	(5,526,133)	(5,021,557)
Net realized gain on dividend of portfolio stock	343,924	343,924
Net unrealized appreciation of investments	(967,564)	1,341,128

Net Assets	$ 1,769,636	$ 4,174,316

Equivalent per share value based on 5,912,426 and 6,412,426 shares of
common stock outstanding as of April 30, 2011 and April 30, 2010	$ 0.30	$ 0.65

See accompanying notes to these financial statements.

F-2

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF OPERATIONS


	For the Year Ending April 30, 2011	For the Year Ending April 30, 2010	For the Year Ending April 30, 2009

INCOME
Management services
Non-affiliates	$ -	$ 3,588	$ 888,328
Affiliates	1,458	3,442	26,500
Total Management Services	1,458	7,030	914,828

Interest income	-	1,009	9,596
Accounting services
Non-affiliates	-	1,500	30,000
Affiliates	13,200	45,700	6,000
Total Accounting Services	13,200	47,200	36,000

Other Income	22,883	-	-
Affiliates

TOTAL INCOME	37,541	55,239	960,424

COST AND EXPENSE
Bad debt	-	98,667	140,765
Salaries and wages	252,273	388,995	1,208,229
Professional fees	103,322	138,769	458,263
Insurance	94,096	104,133	97,172
Interest expense	31,554	33,123	27,625
General and administrative	53,058	81,274	104,458
Depreciation	1,900	1,900	1,900
TOTALCOST AND EXPENSE	536,203	846,861	2,038,412

Loss before income taxes and related interest	(498,662)	(791,622)	(1,077,988)

Income tax benefit	940,500	953,000	949,000
Penalties and interest	(13,134)	(27,842)	(86,224)
Interest expense	-	(13,150)	(26,300)

NET INCOME (LOSS) FROM OPERATIONS	428,704	120,386	(241,512)

Net realized and unrealized losses
Loss on disposal of portfolio stock	(504,576)	(153,277)	(2,154,786)
Unrealized depreciation on investments	(2,308,692)	(218,492)	(323,709)

NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS	$ (2,384,564)	$ (251,383)	$ (2,720,007)

Net increase (decrease) in net assets from operations per share:
Basic	$ (0.38)	$ (0.04)	$ (0.45)
Diluted	$ (0.38)	$ (0.04)	$ (0.45)

Weighted average shares:
Basic	6,360,371	6,412,426	6,025,951
Diluted	6,360,371	6,412,426	6,025,951

See accompanying notes to these financial statements.

F-3

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS


	For the Year Ending	For the Year Ending	For the Year Ending
	April 30, 2011	April 30, 2010	April 30, 2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in net assets resulting from operations	$ (2,384,564)	$ (251,383)	$ (2,720,007)
Adjustments to reconcile net decrease in net assets
resulting from operations to net cash used in operating activities:
Write-off due from portfolio company deemed uncollectible	-	97,087	138,755
Write-off accounts receivable	-	1,580	-
Write-off loan deemed uncollectible	-	-	2,010
Purchase of investment securities	-	(60,806)	(3,496)
Exercise of warrants	(25,000)	(10,000)	-
Loss on sale/disposal of portfolio stock	504,576	153,277	2,154,786
Stock (received) granted for interest	-	-	-
Investment securities received in exchange for management services	(1,458)	(7,030)	(914,828)
Cancellation of shares for services	-	-	-
Depreciation expense	1,900	1,900	1,900
Stock based compensation expense	7,634	5,088	983,288
Stock options granted for operating expense	-	-	67,848
Officers' compensation contributed as capital	-	151,750	-
Net unrealized (appreciation) depreciation on investments	2,308,692	218,492	323,709
Deferred income taxes	(754,000)	(953,000)	(708,000)
Current income taxes	(192,000)	(7,000)	(241,000)
(Increase) decrease in assets
Notes receivable non-affiliates	-	-	(7,547)
Notes receivable affiliates	-	(1,009)	(2,000)
Receivables non-affiliates	-	5,805	5,031
Due from affiliates	(31,109)	(162,272)	(72,261)
Due from non-affiliates	(37,620)	(21,360)	190
Prepaid expenses	21,296	2,015	5,165
Increase (decrease) in liabilities
Accounts payable	45,865	(48,076)	92,261
Accounts payable, related parties	-	5,802	1,411
Accrued expenses	130,714	46,578	76,224
Accrued interest	-	(24,037)	43,340
Accrued Interest, related parties	29,733	28,926	-
Net cash used in operating activities	(375,341)	(827,873)	(773,221)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of securities	381,987	651,186	548,824
Net cash provided by investing activities	381,987	651,186	548,824

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of promissory note	-	126,000	-
Proceeds (repayment) of advance from shareholder - related party	(3,000)	16,000	-
Repayment of debt	(23,145)	(24,177)	(119,451)
Proceeds from issuance of promissory note - related parties	29,498	50,000	-
Proceeds from exercise of employee options	-	-	75,000
Proceeds from issuance of common stock	-	-	263,500
Net cash provided by financing activities	3,353	167,823	219,049

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	9,999	(8,864)	(5,348)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	6,567	15,431	20,779

CASH AND CASH EQUIVALENTS - END OF YEAR	$ 16,566	$ 6,567	$ 15,431

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
CASH PAID FOR INCOME TAXES	$ 7,000	$ 7,000	$ 10,000

CASH PAID FOR INTEREST	$ 1,023	$ -	$ --

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Securities received in exchange for deferred revenue	$ -	$ 4,400	$ 332,000

Fin 48 for penalties and interest	$ -	$ -	$ 26,300

Settlement of McCrae Lawsuit – exchange of LWLG warrant for UCM common stock	$ 27,750	$ -	$ -

See accompanying notes to these financial statements.

F-4

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENT OF CHANGES IN NET ASSETS


	For the	For the	For the
	Year Ending	Year Ending	Year Ending
	April 30, 2011	April 30, 2010	April 30, 2009

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$ (2,384,564)	$ (251,383)	$ (2,720,007)

CAPITAL SHARE TRANSACTIONS
Issuance of common stock	-	-	263,500
Share-based compensation expense	7,634	5,088	983,288
Exercise of employee options	-	-	75,000
Settlement of funk lawsuit, common stock cancelled	(27,750)	-	-
Stock options granted for operating expenses	-	-	67,8488
Officers' compensation contributed as capital	-	151,7500	-

NET CAPITAL SHARE TRANSACTIONS	(20,116)	156,838	1,389,636

TOTAL DECREASE	(2,404,680)	(94,545)	(1,330,371)

NET ASSETS, BEGINNING OF YEAR	4,174,316	4,268,861	5,599,232

NET ASSETS, END OF YEAR	$ 1,769,636	$ 4,174,316	$ 4,268,861

See accompanying notes to these financial statements.

F-5

UNIVERSAL CAPITAL MANAGEMENT, INC.

FINANCIAL HIGHLIGHTS


	For the Year Ending April 30, 2011	For the Year Ending April 30, 2010	For the Year Ending April 30, 2009

PER SHARE INFORMATION

Net asset value, beginning of period	$ 0.65	$ 0.67	$ 0.98

Net income (loss) from operations, net of taxes ⁽¹⁾	(0.04)	(0.07)	(0.10)
Net realized loss on investments, net of taxes ⁽¹⁾	(0.05)	(0.01)	(0.22)
Net unrealized appreciation (depreciation) on investments, net of taxes⁽²⁾	(0.21)	0.04	(0.22)
Net increase from stock transactions ⁽¹⁾	(0.05)	0.02	0.23
	(0.35)	(0.02)	(0.31)

Net asset value, end of period	$ 0.30	$ 0.65	$ 0.67

Per share market value, end of period	$ 0.20	$ 0.40	$ 0.24

Investment return, based on net asset value at end of period	-53.85	-2.99%	-31.63%

RATIO/SUPPLEMENTAL DATA

Net assets, end of period	$ 1,769,636	$ 4,174,316	$ 4,268,861

Ratio of expenses to average net assets	18.04%	20,06%	41.31%
Ratio of net income (loss) from operations to average net assets	1.26%	1.31%	19,47%

Diluted weighted average number of shares outstanding during the period	6,360,371	6,412,426	6,025,951



(1)	Calculated based on diluted weighted average number of shares outstanding during the period
(2)	Calculated as a balancing amount necessary to reconcile the change in net assets value per share with the other per share information presented. This amount may not agree with the aggregate losses for the period because the difference in the net asset value at the beginning and end of period gains and does not inherently equal the per share changes of the line items disclosed.

See accompanying notes to these financial statements.

F-6

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

AS OF APRIL 30, 2011


				Number of
		Date of	% of	Units Held		Method of			Value at	% of
	Business	Acquisition	Portfolio	at April 30, 2011		Valuation (1)		Cost	April 30, 2011	Net Assets

Affiliate Investments (2)

PR Specialists, Inc. (5)(6)(7)	Public shell	Dec-09	0.25%	2,500,000		(M)		$ 2,500	$ 2,500	0.14%

BF Acquisition Group V, Inc.(5)(6)(7)	Public shell	April-05; Nov-09	0.17%	100,000		(M)		1,625	1,625	0.09%
		Nov-09	0.19%	1,900,000		(M)		1,900	1,900	0.11%

Vystar Corporation (4)(6)	Natural rubber latex	Mar-10	16.94%	369,300		(M)		738,600	166,185	9.39%
	products

Warrant to purchase 600,000 shares of Vystar Corporation	Natural rubber latex
500,000 shares common stock, expiring April 30, 2013 (5)(6)	products	Jul-08	9.17%	500,000	(I)			193,000	90,000	5.09%
50,000 shares common stock, expiring April 30, 2012 (5)(6)		Oct-10	1.73%	50,000	(i)		-	-	17,000	0.96%
50,000 shares common stock, expiring May 31, 2012 (5)(6)		Nov-10	1.73%	50,000	(i)			-	17,000	0.96%

Innovation Industries
Promissory note (6)(8)	Direct sales	Oct-09	1.02%			(C )		10,000	10,000	0.57%

SIVOO Holdings, Inc. (4)(6)	High speed internet media	Dec-05 to Nov-06	0.00%	664,501		(M)		319,725	-	0.00%

Warrants to purchase 605,000 shares of SIVOO Holdings, Inc.	High speed internet media
200,000 warrants expiring November 14, 2011 (5)(6)		Nov-06	0.00%	200,000		(I)		-	-	0.00%
405,000 warrants expiring February 28, 2013 (5)(6)		Feb-08	0.00%	405,000		(I)		206,202	-	0.00%
4% of fully diluted common stock at time of exercise - TBD (5)(6)		Oct-09	0.00%	TBD		(I)		-	-	0.00%


	Total Investments in Affiliates		31.20%					1,473,552	306,210	17,31%

Non-Affiliate Investments (3)
Lightwave Logic, Inc. (4)(6)(7)	Plastics engineering	Feb-07 to Jan-09	0.10%	817		(M)		678	907	0.05%
		Dec-10	9.05%	100,000	(5)	(M)		95,000	88,800	5.02%

Warrant to purchase 357,500 shares of Lightwave Logic,	Plastics engineering	Feb-08	31.49%	357,500		(I)		250,250	309,000	17.46%
Inc. common stock, expiring February 2012 (5)(6)(7)

Warrant to purchase 1,000,000 shares of iVolution Medical Systems, Inc. (privately held) common stock, expiring	Medical billing and medical	Jul-08	24.56%	1,000,000		(I)		112,000	241,000	13.62%
July 2013 (5)(6)	records software

Warrant to purchase 500,000 shares of iVolution Medical Systems,	Medical billing and medical	Jul-08	3.57%	500,000		(I)		17,000	35,000	1.98%
Inc. (privately held) common stock, expiring July 2013 (5)(6)	records software
Other (5)(6)(7)	Various	May-09	0.00%	3,000		(C )		300	300	0.02%

	Total Investments in Non-Affiliates		68.80%					475,228	675,007	38.15%

	Total Investments		100.00%					$ 1,948,780	$ 981,217	55.46%

	Cash and other assets, less liabilities								788,419	44.54%

	Net assets at April 30, 2011								$ 1,769,636	100.00%

Notes to Schedule of Investments

(1) Investments are valued using the (M) Market Approach, (I) Income Approach, which includes the Black-Scholes Method, or (C ) Cost.

(2) Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the voting securities.

(3) Non-affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns less than 5% of the voting securities.

(4) Unrestricted securities – liquid securities.

(5) Restricted securities - illiquid securities; total illiquid securities of $814,250 make up 46% of total net assets as of April 30, 2011.

(6) Represents a non-income producing security. Equity investments that have not paid dividends within the last 12 months are considered to be non-income producing.

(7) These investments are development stage companies. A development stage company is defined as a company that is devoting substantially all of its efforts to establishing a new business, and either it has
not yet commenced its planned principal operations, or it has commenced such operations but has not realized significant revenue from them.

(8) This represents a promissory note from Innovation Industries. Terms of the promissory note include a profit sharing on net profits. The promissory note is recorded at cost.

See accompanying notes to these financial statements.

F-7

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

AS OF APRIL 30, 2010


				Number of
		Date of	% of	Units Held		Method of		Value at	% of
	Business	Acquisition	Portfolio	at April 30, 2010		Valuation (1)	Cost	April 30, 2010	Net Assets
Affiliate Investments (2)

PR Specialists, Inc./Mediavix, Inc. (5)(6)(7)	Brand relationship management	Dec-09	29.91%	2,500,000		(M)	$ 2,500	$ 1,250,000	29.95%

BF Acquisition Group V, Inc./Incredible 3D, Inc.(5)(6)(7)	3D content production	April-05; Nov-09	0.77%	100,000		(M)	1,625	32,000	0.77%
		Nov-09	14.55%	1,900,000		(M)	1,900	608,000	14.57%
Vystar Corporation (4)(6)	Natural rubber latex	May-09	7.41%	193,238		(M)	376,191	309,180	7.41%
	products	Mar-10	18.38%	600,000	(5)	(M)	1,201,000	768,000	18.40%

Warrant to purchase 500,000 shares of Vystar Corporation	Natural rubber latex	Jul-08	3.59%	500,000		(I)	193,000	150,000	3.59%
common stock, expiring April 30, 2013 (5)(6)	products

Innovation Industries
Promissory note (6)(8)	Direct sales	Oct-09	0.24%			(C )	10,000	10,000	0.24%

SIVOO Holdings, Inc. (4)(6)	High speed internet media	Dec-05 to Nov-06	0.00%	664,501		(M)	319,725	-	0.00%

Warrants to purchase 805,000 shares of SIVOO Holdings, Inc.	High speed internet media
200,000 warrants expiring April 11, 2011 (5)(6)		Apr-06	0.00%	200,000		(I)	-	-	0.00%
200,000 warrants expiring November 14, 2011 (5)(6)		Nov-06	0.00%	200,000		(I)	-	-	0.00%
405,000 warrants expiring February 28, 2013 (5)(6)		Feb-08	0.00%	405,000		(I)	206,202	-	0.00%
4% of fully diluted common stock at time of exercise - TBD (5)(6)		Oct-09	0.00%	TBD		(I)	-	-	0.00%


	Total Investments in Affiliates		74.85%				2,312,143	3,127,180	74.93%

Non-Affiliate Investments (3)
Lightwave Logic, Inc. (4)(6)(7)	Plastics engineering	Feb-07 to Jan-09	1.91%	52,462		(M)	48,651	79,742	1.91%

Warrant to purchase 500,000 shares of Lightwave Logic,	Plastics engineering	Feb-08	16.26%	500,000		(I)	348,000	679,000	16.27%
Inc. common stock, expiring February 2012 (5)(6)(7)

Warrant to purchase 1,000,000 shares of iVolution Medical Systems, Inc. (privately held) common stock, expiring	Medical billing and medical	Jul-08	5.76%	1,000,000		(I)	112,000	241,000	5.77%
July 2013 (5)(6)	records software

Warrant to purchase 500,000 shares of iVolution Medical Systems,	Medical billing and medical	Jul-08	1.21%	500,000		(I)	17,000	52,000	1.25%
Inc. (privately held) common stock, expiring July 2013 (5)(6)	records software
Other (5)(6)(7)	Various	May-09	0.01%	3,000		(C )	300	300	0.01%

	Total Investments in Non-Affiliates		25.15%				525,951	1,052,042	25.21%

	Total Investments		100.00%				$ 2,838,094	$ 4,179,222	100.14%

	Cash and other assets, less liabilities							(4,906)	-0.14%

	Net assets at April 30, 2010							$ 4,174,316	100.00%

Notes to Schedule of Investments

(1) Investments are valued using the (M) Market Approach, (I) Income Approach, which includes the Black-Scholes Method, or (C ) Cost.

(2) Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the voting securities.

(3) Non-affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns less than 5% of the voting securities.

(4) Unrestricted securities – liquid securities.

(5) Restricted securities - illiquid securities; total illiquid securities of $3,780,300 make up 90.5% of total net assets as of April 30, 2010.

(6) Represents a non-income producing security. Equity investments that have not paid dividends within the last 12 months are considered to be non-income producing.

(8) This represents a promissory note from Innovation Industries. Terms of the promissory note include a profit sharing on net profits. The promissory note is recorded at cost.

See accompanying notes to these financial statements.

F-8

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History and Nature of Business

Universal Capital Management, Inc. (the “Company”, “we”, “us”, “our”) is a business development company. The Company is a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. We are a diversified, aggressive investment tool that assists early stage development companies in all aspects of the planning process from inception to entering the public marketplace. This includes assisting with the preparation of financial statements, capitalization tables, valuations, business plans and coordinating public/investor relations efforts. Our niche is to assist young companies preparing themselves for introduction to a diversified group of accredited investors in order to assist them with obtaining private debt and/or equity financing. Since we have differing clients in varied industries, our overall portfolio is extremely diversified, which we believe enables us to offer investors who invest in us a potentially higher return with less risk. For our management services we receive a block of common stock or warrants to purchase common stock which could result in a financial windfall for us and our shareholders. The Company refers to companies in which it invests as “portfolio companies.”

During the year ending April 30, 2011, we changed our business plan. Our Company identifies, advises in development and markets consumer products. Our strategy employs three primary channels: Direct Response Television (Infomercials), Television Shopping Networks and Retail Outlets. We seek to assist and enable entrepreneurs to introduce products to the consumer market. Entrepreneurs can leverage our experience and valuable business contacts in functions such as product selection, marketing development, media buying and direct response television production. Inventors and entrepreneurs submit products or business concepts for our input and advice. We generate revenues from two primary sources (i) management of the entire business cycle of the consumer product and (ii) sales of consumer products, for which we receive a share of net profits of consumer products sold. We do not manufacture any of our products. As of the date of this filing we have generated limited revenues and do not rely on any principal products. While the Company has received nominal revenues from management fees generated from the sales of several products, none of these fees have generated material revenues. We currently do not sell any internally developed or Company owned products.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments

Investments in securities of unaffiliated issuers represent holdings of less than 5% of the issuer's voting common stock. Investments in and advances to affiliates are presented as (i) majority-owned, if holdings, directly or indirectly, represent over 50% of the issuer's voting common stock, (ii) controlled companies if the holdings, directly or indirectly, represent over 25% and up to 50% of the issuer's voting common stock and (iii) other affiliates if the holdings, directly or indirectly, represent 5% to 25% of the issuer's voting common stock. Investments - other than securities represent all investments other than in securities of the issuer.

Security Valuations

Investments in securities or other than securities of privately held entities are initially recorded at their original cost as of the date the Company obtained an enforceable right to demand the securities or other investments purchased and incurred an enforceable obligation to pay the investment price.

For financial statement purposes, investments are recorded at their fair value. If at our reporting date, readily determinable fair values do not exist for our investments, such as restricted securities and other securities (small, privately-held companies), the fair value of these investments is determined in good faith by the Company's Board of Directors pursuant to a valuation policy and consistent valuation process. Due to the inherent uncertainty of these valuations, the estimates may differ significantly from the values that would have been used had a ready market for the investments existed and the differences may be material. Our valuation methodology includes the examination of among other things, the underlying portfolio company performance, financial condition and market changing events that impact valuation.

F-9

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Security Valuations (Continued)

Realized gains (losses) from the sale of investments and unrealized gains (losses) from the valuation of investments are reflected in operations during the period incurred.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ from the estimates. Significant estimates in the accompanying financial statements include the allowance for receivables, estimates of depreciable lives, valuation of property and equipment, valuation of securities, valuation of equity based instruments issued for other than cash, and the valuation allowance on deferred tax assets.

Cash Equivalents

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

Concentration of Credit Risk

Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash. At April 30, 2011 the Company did not have deposits with a financial institution that exceeded the FDIC deposit insurance coverage of $250,000.

Notes Receivable

Notes receivable consist of monies loaned to its portfolio companies evidenced by a note specifying a specific term, and interest rate and are reported at fair value. Notes receivable are presented as due from affiliated and non-affiliated issuers. Notes receivable from non-affiliated issuers represent notes from companies where we hold less than 5% of the issuer's voting common stock. Notes receivable from affiliated issuers represent notes from companies where we hold 5% or more of the issuer’s voting common stock. The Company provides an allowance for losses on notes receivable based on a review of the current status of existing receivables and management’s evaluation of periodic aging of accounts. The Company charges off notes receivable against the allowance for losses when an account is deemed to be uncollectible. The provision for doubtful accounts was approximately $30,014 and $30,014 as of April 30, 2011 and 2010, respectively.

F-10

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts Receivable

Accounts receivable consist of fees for services provided by the Company and are reported at fair value. Accounts receivable are presented as due from affiliated and non-affiliated issuers. Accounts receivable from unaffiliated issuers represent receivables from companies where we hold less than 5% of the issuer's voting common stock. Accounts receivable from affiliated issuers represent receivables from companies where we hold 5% or more of the issuer’s voting common stock. The Company provides an allowance for losses on trade receivables based on a review of the current status of existing receivables and management’s evaluation of periodic aging of accounts. The Company charges off accounts receivable against the allowance for losses when an account is deemed to be uncollectible. It is not the Company’s policy to accrue interest on past due receivables.

Due from Affiliates and Non-Affiliates

Due from affiliates and non-affiliates represent fees that the Company has paid on behalf of a portfolio company and is reported at fair value. Due from non-affiliated issuers represent due from companies where we hold less than 5% of the issuer's voting common stock. Due from affiliated issuers represent due from companies where we hold 5% or more of the issuer’s voting common stock.

Property and Equipment

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


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

Fair Value of Financial Instruments

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

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

Revenue Recognition

Product revenue

We recognize revenue from product sales in accordance with ASC 605 — Revenue Recognition. Following agreements or orders from customers, we ship product to our customers often through a third party facilitator. Revenue from product sales is only recognized when substantially all the risks and rewards of ownership have transferred to our customers, the selling price is fixed and collection is reasonably assured. Typically, these criteria are met when our customers order is received by them and we receive acknowledgment of receipt by a third party shipper.

We also offer our customers services consisting of managing, marketing and accounting to aid in the Direct Response marketing of their product or service. In these instances, revenue is recognized when the contracted services have been provided and accepted by the customer. Deposits, if any, on these services are recognized as deferred revenue until earned.

F-11

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Management Services for equity investments

The Company recognizes management services revenue for equity investments received as payment in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 505-50-05, Accounting by a Grantee for an Equity Instrument to be Received in Conjunction with Providing Goods or Services. The Company enters into a management service agreement with a portfolio company to provide services defined in a contract for equity instruments in the form of the portfolio company’s common stock or warrants to purchase common stock. The fair value of the common stock is the portfolio company’s current fair market value and the fair value of the warrant is determined using the Black-Scholes method of valuation. The fair value of the equity instruments is also the Company’s cost basis in the portfolio company’s securities and the income that is recognized for management services. The Company recognizes management services revenue for which payment is to be received in cash as services are provided and in accordance with the revenue recognition criteria of the Securities and Exchange Commission. ASC 605 states if persuasive evidence of an arrangement exists, if services have been rendered, the price is fixed or determinable and collectability is reasonably assured, revenue is amortized and recognized evenly over the life of the contract unless otherwise stated in the contract.

Accounting Services

The Company provides accounting and other administrative services to its companies. Upon entering into a contract with the company, the Company provides services as defined in the contract and revenue is recognized as incurred or as otherwise stated in the contract based on similar criteria as for management services discussed above.

Interest Income

The Company loans monies to its portfolio companies from time to time. These loans, which are evidenced by a note, are subject to interest accrued on a monthly basis. This interest income is recognized when accrued.

Income Taxes

We account for income taxes in accordance with FASB ASC 740 — Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of FASB ASC 740 — Income Taxes.

FASB ASC 740 requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

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

F-12

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Realized Gains or Losses and Net Changes in Unrealized Appreciation or Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the original cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized. The original cost basis of the securities we receive in connection with our management services is equal to the amount of revenue we recognize upon receipt of such securities. Net realized gains or losses are recognized as other income on the Company’s statement of operations for the period.

Net change in unrealized appreciation or depreciation of investments reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. Net change in unrealized appreciation or depreciation are recognized as other income on the Company’s statement of operations for the period.

Recoverability of Long Lived Assets

The Company follows ASC-360-10-20, Property, Plant and Equipment – Overall. This standard states that long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount over the estimated fair market value.

Reclassifications

Certain reclassifications were made to the April 30, 2010 and 2009 financial statements in order to conform to the April 30, 2011 financial statement presentation.

Recently Issued Pronouncements

The Company follows ASC 805, Business Combinations. This standard establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. It also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement is effective for the Company beginning May 1, 2009 and will change the accounting for business combinations on a prospective basis.

The Company follows ASC 820-10, Fair Value Measurements and Disclosure, that was adopted on May 1, 2008. This position provides additional guidance for fair value measures under ASC 820-10 in determining if the market for an assets or liability is inactive and, accordingly, if quoted market prices may not be indicative of fair value. In January 2010, there was an amendment to ASC 820-10 which the Company adopted on February 1, 2010. The adoption of this amendment did not have a material impact on the Company’s financial statements.

ASC 825-10-65, Interim Disclosures About Fair Value of Financial Instruments, extends the existing disclosure requirements related to the fair value of financial instruments, which were previously only required in annual financial statements, to interim periods. Given that ASC 825-10-65 provides for additional disclosures, its adoption did not have any impact on the Company’s financial statements. The disclosure requirements under ASC 825-10-65 are included in Note 3 to the financial statements.

ASC 855, Subsequent Events, sets forth principles and requirements for subsequent events, specifically (1) the period during which management should evaluate events or transactions that may occur for potential recognition and disclosure, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, and (3) the disclosures that an entity should make about events and transactions occurring after the balance sheet date. ASC 855 was effective for interim reporting periods ending after June 15, 2009. This standard was amended in February 2010, Amendments to Certain Recognition and Disclosure Requirements. The Company has adopted ASC 855 and it’s amendment, and this adoption did not have a material impact on its financial statements.

F-13

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Pronouncements (Continued)

In June 2009, the FASB issued ASC 105-10-65, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB No. 162, which will become the source of authoritative U.S. GAAP recognized by the FASB to be applied to non-governmental entities. On its effective date, ASC 105-10-65 will supersede all then-existing, non-SEC accounting and reporting standards. ASC 105-10-65 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company has adopted ASC 105-10-65, and this adoption did not have a material impact on its financial statements.

NOTE 2 – BUSINESS RISKS AND UNCERTAINTIES

A substantial portion of our assets are in privately held companies whose securities are inherently illiquid. These privately held companies tend to lack management depth, to have limited or no history of operations and to not have attained profitability. Because of the speculative nature and the lack of a public market for these investments, there is greater risk of loss than is the case with traditional investment securities.

Because there is typically no public market for our interest in these small privately held companies, the valuation of the equity in that portion of our portfolio is determined in good faith by our Valuation Committee, comprised of all the members of the Board of Directors, in accordance with our Valuation Procedures and is subject to significant estimates and judgments. In the absence of a readily ascertainable market value, the determined value of our portfolio equity interest may differ significantly from the values that would be placed on the portfolio if a ready market for the equity interests existed. Any changes in valuation are recorded in our Statement of Operations as “Unrealized appreciation (depreciation) on investments.” Changes in valuation of any of our investments in privately held companies from one period to another may be volatile.

During the year ending April 30, 2011, we have entered into a new business model. We do not manufacture any of our products. As of the date of this filing we have generated limited revenues and do not rely on any principal products. While the Company has received nominal revenues from management fees generated from the sales of several products, none of these fees have generated material revenues. We currently do not sell any internally developed or Company owned products.

NOTE 3– INVESTMENTS

As described in Note 1, the Company adopted ASC 820-10 on May 1, 2008. ASC 820-10, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 -

Observable inputs such as quoted prices in active markets;

Level 2 -

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

Level 3 -

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

F-14

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 3– INVESTMENTS (CONTINUED)

As described in Note 1, an amendment to ASC 820-10 was issued in January 2010. This amendment is effective for interim reporting periods beginning after December 15, 2009. The Company adopted this amendment on February 1, 2010 and it does not have a material affect on its financial statements.

At April 30, 2011, our financial assets were categorized as follows in the fair value hierarchy for ASC 820-10:


	Fair Value Measurement at Reporting Date Using:
		Quoted Prices in	Significant Other	Significant
		Active Markets for	Observable	Unobservable
	Fair Value	Identical Assets	Inputs	Inputs
	April 30, 2011	(Level 1)	(Level 2)	(Level 3)

Investments
Affiliate investments	$ 306,210	$ 176,185	$ -	$ 130,025
Non-affiliate investments	675,007	90,007	-	585,000

Total Investments in securities	$ 981,217	$ 266,192	$ -	$ 715,025

The following chart shows the components of change in the financial assets categorized as Level 3, for the year ending April 30, 2011:


	Fair Value Measurement Using
	Significant Unobservable Inputs
	(Level 3)

Beginning Balance, April 30, 2010	$ 1,122,000

Transfers out of Level 3	(97,750)	⁽¹⁾
Transfers into Level 3	1,890,000	⁽²⁾
Total unrealized losses included in change in net assets	(2,199,225)

Ending Balance, April 30, 2011	$ 715,025

The amount of total gains or losses for the period included in changes
in net assets attributable to the change in unrealized gains or losses
relating to assets still held at the reporting date.	$ (413,000)


(1)	Transfer out of $25,000 for exercise of a warrant to purchase Lightwave Logic, Inc. common stock, $72,750 for exchange of warrant for UCMT common stock.
(2)	Transfer in of $640,000 for BF Acquisition Group and $1,250,000 for PR Specialists.

NOTE 4 – INCOME TAXES

As an investment company organized as a corporation, the Company is taxable as a corporation. As discussed in Note 1, the Company utilizes the assets and liability method of accounting for income taxes in accordance with ASC 740-10 and ASC 740-30, Accounting for Income Taxes.

F-15

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 4 – INCOME TAXES (CONTINUED)

Under the provisions of ASC 740-10, Accounting for Income Taxes, the unrecognized tax provisions consisting of interest and penalties at April 30, 2011 was $92,050. The change in unrecognized tax provisions during the year ending April 30, 2011 amounted to $0 and the accrual at April 30, 2011 amounted to $92,050. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and is included on the Company’s balance sheet in accrued interest.

Tax years from 2005 (initial tax year) through 2011 remain subject to examination by major tax jurisdictions.

The income tax benefit for the years ending April 30, 2011, 2010 and 2009 have been included in the accompanying financial statements on the basis of an estimated annual federal and state effective rate of 34.0% and 8.7%, respectively, resulting in a blended effective rate of 39.75%. The Company’s income tax benefit differs from the “expected” income tax benefit for federal income tax purposes as follows:


	For the Year Ending April 30, 2011	For the Year Ending April 30, 2010	For the Year Ending April 30, 2009

Income taxes at U.S. Federal Income Tax rate	$ 910,000	$ 397,000	$ 1,145,000
State income taxes, net of federal benefit	209,500	117,000	153,000
Non-deductible share based compensation	-	-	(373,000)
Exercise of warrant	9,000	435,000	24,000
Worthless warrants	-	114,000	-
Realized losses	(188,000)	(110,000)	-
Change in valuation allowance	-	-	-

	$ 940,500	$ 953,000	$ 949,000

The income tax (provision) benefit consists of the following:


	For the Year Ending April 30, 2011	For the Year Ending April 30, 2010	For the Year Ending April 30, 2009

Current:
Federal	$ 145,000	$ (21,000)	$ 241,000
State	41,500	(6,000)	-

Total Current	$ 186,500	$ (27,000)	$ 241,000

Deferred:
Federal	$ 589,000	$ 765,000	$ 553,000
State	165,000	215,000	155,000

Total Deferred	$ 754,000	$ 980,000	$ 708,000

Total Income Tax Benefit	$ 940,500	$ 953,000	$ 949,000

F-16

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 4 – INCOME TAXES (CONTINIUED)

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


	April 30, 2011	April 30, 2010

Deferred tax (asset) liability
Deferred charges	$ (66,000)	$ (73,000)
Net operating loss	(87,000)	(88,000)
Unrealized gains	(385,000)	533,000
Capital loss carryforward	(1,231,000)	(1,418,000)
Stock-based compensation	(129,000)	(126,000)
Amortization of deferred revenue from warrants	319,000	347,000
Bad debt	(95,000)	(95,000)
Other	-	-

Total deferred tax (asset) liability, net	$ (1,674,000)	$ (920,000)

At April 30, 2011, the Company had a capital loss carryforward of approximately $3,098,563 which if not used will expire in 2015.

At April 30, 2011 there is an $181,700 accrual included in accrued expenses for estimated penalties and interest associated with the outstanding taxes payable for the year ended April 30, 2007.

Currently, the Company owes the IRS and the State of Delaware for taxes, penalties and interest from the tax year ending April 30, 2007 of approximately $300,000. The Company has agreements with both agencies to pay a minimum per month to avoid any collections or additional liens.

NOTE 5 – NOTES RECEIVABLE

Notes receivable consists of the following:


	April 30, 2011	April 30, 2010
Note Receivable - affiliated companies
SIVOO Holdings, Inc. ("SIVOO") - Principal of $25,000. This note bears interest
at 8% per year beginning on May 1, 2007. This note is payable upon demand.	$ 30,014	$ 30,014

Allowance for bad debt	(30,014)	(30,014)

Notes Receivable- affiliated companies	$ -	$ -

F-17

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 6 – DUE FROM NON-AFFILIATED AND AFFILIATED COMPANIES


	April 30, 2011	April 30, 2010
Due from Non-Affiliated Companies
MedicaView	$ 49,221	$ 11,601

Total Due from Non-Affiliated Companies	$ 49,221	$ 11,601

Due from Affiliated Companies
BF Acquisition Group V, Inc.	$ 147,013	$ 143,210
SIVOO Holdings	3,500	3,500
PR Specialists	112,774	81,736
Innovation Industries	-	3,732

Totals	263,287	232,178

Allowance for bad debt	(3,500)	(3,500)

Total Due from Affiliated Companies	$ 259,787	$ 228,678

NOTE 7 – DEFERRED REVENUE AND MANAGEMENT SERVICE REVENUE

The deferred revenue represents unearned management fee income. Income is amortized and recognized evenly over the life of the contract unless otherwise stated in the contract. In accordance with ASC Subtopic 505-50, since the shares received by the Company are non-refundable, the value of the contract is determined by the number of shares the Company receives at the closing market price on the day of the contract (commitment date). Warrants are valued using the Black-Scholes method. Deferred revenue consists of the following:


		April 30, 2011	April 30, 2010

Affiliates
PR Specialists, Inc.( PR")
	Received 2,500,000 shares of PR common stock for payment	$ -	$ 1,458
	of services per a one year contract dated December 2009,
	valued at $2,500, fair value and amortized over the life of
	the contract.

Total Affiliates		-	1,458

Total Deferred Revenue		$ -	$ 1,458

F-18

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 7 – DEFERRED REVENUE AND MANAGEMENT SERVICE REVENUE (CONTINUED)

Management service revenue recognized consists of:


		For the Year Ending April 30, 2011	For the Year Ending April 30, 2010	For the Year Ending April 30, 2009

Non-Affiliates
Vystar Corporation ("Vystar")
	Received a warrant to purchase 500,000 shares of Vystar	$ -	$ -	$ 193,000
	Corporation common stock for payment of services per a one year .
	contract dated April 2008, valued at $193,000, fair value

Lightwave Logic, Inc. ("LWLG")
	Received a warrant to purchase 400,000 shares of LWLG	-	-	276,666
	common stock for payment of services per one year contract
	dated February 28, 2008, valued at $332,000, fair value and
	amortized over the life of the contract.

iVolution Medical Systems ("iVolution")
	Received a warrant to purchase 1,000,000 shares of iVolution	-	-	112,000
	common stock for payment of services per a three month contract dated
	July 2008, valued at $112,000, fair value and amortized over the life of
	the contract.

	Received a warrant to purchase 500,000 shares of iVolution	-	3,588	13,412
	common stock for payment of services per a one year contract dated
	July 2008, valued at $17,000, fair value and amortized over the life of the
	contract.

MICCO Group ("MICCO")
	Received a warrant to purchase 1,000,000 shares of MICCO common	-	-	6,000
	stock for payment of services per a three month contract dated July 2008,
	valued at $6,000, fair value and amortized over the life of the contract.

Theater Xtreme Entertainment Group, Inc. ("TXEG")
	Received 650,000 shares of TXEG common stock for payment	-	-	66,084
	of services per one year contract dated July 2007, valued at
	$396,500, fair value and amortized over the life of the contract.

	Received a warrant to purchase 500,000 shares of TXEG	-	-	46,166
	common stock for payment of services per one year contract
	dated July 2007, valued at $277,000, fair value and amortized
	over the life of the contract.

	Received 2,500,000 shares of TXEG common stock for	-	-	175,000
	services per a one year contract dated July 2008, valued at
	$175,000, fair value and amortized over the life of the contract.

Total Non-Affiliates		$ -	$ 3,588	$ 888,328

F-19

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 7 – DEFERRED REVENUE AND MANAGEMENT SERVICE REVENUE (CONTINUED)


		For the Year Ending April 30, 2011	For the Year Ending April 30, 2010	For the Year Ending April 30, 2009

Affiliates
PR Specialists, Inc.("PR")
	Received 2,500,000 shares of PR common stock for payment	$ 1,458	$ 1,042	$ -
	of services per a one year contract dated December 2009,
	valued at $2,500, fair value and amortized over the life of
	the contract.

BFAG V, Inc. ("BFAG V")
	Received 1,900,000 shares of BFAG V common stock for payment	-	1,900	-
	of services per a three month contract dated November 2009
	valued at $1,900, fair value and amortized over the life of
	the contract.

Multi-View Technologies ("MVT")
	Received 2,000,000 shares of MVT common stock for payment of	-	-	20,000
	services per three month contract dated July 2008, valued at
	$20,000, fair value and amortized over the life of the contract.

	Received a warrant to purchase 500,000 shares of MVT common	-	250	750
	stock for payment of services per a one year contract dated July
	2008, valued at $1,000, fair value and amortized over the life of the
	contract.

Dominion Capital Management ("DCMC")
	Received a warrant to purchase 1,000,000 shares of DCMC	-	-	5,000
	common stock for payment of services per a three month contract
	dated April 2008, valued at $5,000, fair value and amortized over
	the life of the contract.

	Received a warrant to purchase 500,000 shares of DCMC common	-	250	750
	stock for payment of services per a one year contract dated July
	2008, valued at $1,000, fair value and amortized over the life of the
	contract.

Total Affiliates		1,458	3,442	26,500

Total Management Services Revenue		$ 1,458	$ 7,030	$ 914,828

F-20

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 8 – NOTES PAYABLE

Notes payable consists of the following:


	April 30, 2011	April 30, 2010

Notes payable
Notes payable. D&O Insurance Premium. Interest accrued at
9.2% for a period of ten (10) months. Payable in ten monthly
Installments of $2,414 per month.	$ 24,610	$ 23,154

Notes payable	$ 24,610	$ 23,154

Notes payable, related party
Notes payable, related party. Interest accrued at 8.0%
beginning on November 1, 2008. Principal and interest
payable on demand. (NOTE 12)	$ 322,068	$ 297,372

Notes payable, related party. Interest accrued at 8.0%
beginning on October 19, 2009 Principal and interest
payable on demand. (NOTE 12)	50,000	50,000

Promissory notes payable, related party. Interest accrued at
5.0% per annum. Principal and interest due September 30,
2010. (NOTE 12)	14,802	20,000

Notes payable, related party	$ 396,870	$ 367,372

NOTE 9 – ADVANCES FROM SHAREHOLDERS

Amount represents advances from shareholders to cover operating expenses. There are no stated interest rate or repayment terms. As of April 30, 2011and 2010, these advances totaled $19,000 and $22,000, respectively.

NOTE 10 – STOCK BASED COMPENSATION

In May 8, 2006, our Company’s stockholders approved the 2006 Equity Incentive Plan for the benefit of our directors, officers, employees and consultants, and which reserved 2,000,000 shares of our common stock for such persons pursuant to that plan. As of April 30, 2011, 1,000,000 are available for issuance.

During the year ending April 30, 2011, 2010 and 2009, the Company recognized $7,634, $5,088 and $1,051,136, respectively, of stock-based compensation expense. As of April 30, 2011, all compensation expense related to non-vested market-based share awards has been expensed

There were no employee stock options issued by the Company prior to May 1, 2006.

F-21

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 10 – STOCK BASED COMPENSATION (CONTINUED)

The following tables summarize all stock option activity of the Company since April 30, 2007:


	Stock Options Outstanding

		Weighted	Weighted Average
		Average	Remaining Contractual	Aggregate
	Number of Shares	Exercise Price	Life (Years)	Intrinsic Value

Outstanding, April 30, 2007	185,000	$ 2.00	2.00	$ -

Expired	(60,000)	$ 2.00

Outstanding, April 30, 2008	125,000	$ 2.00	1.00	$ -

Granted	1,925,000	$ 0.53	-	-
Rescinded	(925,000)	$ 1.05
Exercised	(375,000)	$ 0.20	-	-

Outstanding, April 30, 2009	750,000	$ 0.29	4.75	$ -

Expired	(100,000)	$ 0.87

Outstanding, April 30, 2010	650,000	$ 0.20	8.82	$ 130,000.00

Expired	(50,000)	$ 0.20	7.82	$ -

Exercisable, April 30, 2011	600,000	$ 0.20	7.82	$ -

In May 2008, the Company granted an option to purchase 300,000 shares of its common stock at a fair value of $273,180 to an executive officer. These options were included in the options that were rescinded in February 2009. Prior to the rescission, the Company recognized expense of $83,469.

In August 2008, the Company granted options to purchase 600,000 shares of its common stock at a fair value of $501,538 to executive officers and board members.

In February 2009, certain officers and advisors rescinded options to purchase 900,000 shares of its common stock. The unrecognized compensation relating to these stock options in the amount of $189,711 was expensed immediately.

In February 2009, the Company granted options to purchase 725,000 shares of its common stock at a fair value of $185,982 to executive officers, advisory board members and employees. The Company recognized expense of $173,260 for the year ended April 30, 2009.

In February 2009, an officer rescinded an option to purchase 25,000 shares of the Company’s common stock at $2.00 per share and received an option to purchase 300,000 shares of the Company’s common stock with an exercise price of $0.20 per share with 10 year expiration and vesting immediately. In accordance with SFAS 123R, the cancellation of the option and the issuance of the new option was deemed to be a modification of the original award. As such, $93,440 incremental cost of the modified option and the $9,718 of the remaining unamortized cost of the original option issuance was expensed.

F-22

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 10 – STOCK BASED COMPENSATION (CONTINUED)

In February 2009, an option to purchase 375,000 shares of the Company’s common stock was exercised by an officer for proceeds of $75,000.

NOTE 11 – CAPITAL SHARE TRANSACTIONS

During the year ended April 30, 2008, the Company converted notes payable, including interest, of $222,508 into 297,779 shares of the Company’s common stock.

During the year ended April 30, 2008, the Company recognized $9,336 of share-based compensation expense.

During the year ended April 30, 2008, 66,667 shares of the Company’s common stock were issued for proceeds of $50,000.

During the year ended April 30, 2008, the Company cancelled 100,000 shares of the Company’s common stock that were issued for services to consultants valued at $100. These services were never performed by the consultants.

During the year ended April 30, 2009, 334,706 shares of common stock were issued for proceeds of $263,500.

In February 2009, an officer exercised his option to purchase 375,000 shares of the Company’s common stock at an exercise price of $0.20 for proceeds of $75,000.

During the year ended April 30, 2009, the Company recognized $1,051,136 of share-based compensation expense.

During the year ended April 30, 2010, the Company recognized $5,088 of share-based compensation expense.

During the year ended April 30, 2010, the Chief Executive Officer contributed wages valued at $151,750 to capital.

During the year ended April 30, 2011, the Company recognized $7,634 of share-based compensation expense.

In March 2011, the Company finalized a settlement of the McCrae lawsuit, whereby would return 500,000 shares of Universal Capital Management, Inc. common stock to the Company in exchange for a warrant to purchase 42,500 shares of Lightwave Logic, Inc. at an exercise price of $0.25 per share, expiring in February 2012. The value of these warrants were determined using the black-scholes model and was $27,750, fair value.

NOTE 12 – RELATED PARTY TRANSACTIONS

During the year ending April 30, 2011, an officer loaned the Company $24,696 for operating expenses and is included in the Notes payable, related parties.

Notes payable, related parties were $332,068 and $367,372 at April 30, 2011 and 2010, respectively (NOTE 8).

At the end of April 30, 2011 and 2010, accounts payable, related parties are $7,213 and $7,213 respectively.

In February 2009 the Company’s brokerage accounts were frozen (NOTE 13). At that time, the Company’s operational activities were funded by the sale of its liquid portfolio company common stock in the open market. In order to continue Company operations, an officer agreed to sell personal shares of portfolio company common stock that he owned to fund the Company’s operations until such time as the Company’s brokerage accounts were un-frozen, with a stipulation that he would receive from the Company the same number of shares that he sold at a future time.

F-23

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 12 – RELATED PARTY TRANSACTIONS (CONTINUED)

In September 2009, 164,070 shares owed to the officer were returned to him in repayment for a total of $78,000 that he loaned to the Company, from February to April 2009, from the sale of his personal portfolio company stock.

NOTE 13 – CONTINGENCIES

McCrae Associates, LLC Lawsuit

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

Carlin and Wilson Lawsuit

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

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

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

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

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

F-24

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF APRIL 30, 2011

NOTE 13 – CONTINGENCIES (CONTINUED)

Carlin and Wilson Lawsuit (Continued)

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

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

MICCO World, Inc. Lawsuit

The Company is seeking judgment in the amount of $611,000 plus costs, legal fees, pre- and post-judgment interest, plus other amounts and relief to be determined.

In March 2011, MICCO filed a motion to dismiss. In June 2011, the courts denied this motion to dismiss.

NOTE 14 – SUBSEQUENT EVENTS

Management evaluated all activity of the Company through the issuance date of these financial statements and concluded that no additional subsequent events have occurred that would require recognition in the financial statements.

F-25

We completed offerings of our common stock as follows: 0 shares during the year ending April 30, 2011 and 2010; 709,706 shares during the year ending April 30, 2009; 264,446 shares during the year ending April 30, 2008; 520,640 shares during the year ending April 30, 2007; and 109,434 shares during the year ending April 30, 2006. In March 2011, the Company settled the McCrae lawsuit and received 500,000 shares of its common stock back in return for a warrant to purchase 42,500 shares of LWLG common stock at an exercise price of $0.25 per share, exercisable until February 2012.

Included in total expenses is non-cash, stock-based, compensation expense of $7,634 for the year ending April 30, 2011; $5,088 for the year ending April 30, 2010; $1,051,136 for the year ending April 30, 2009; $9,336 for the year ending April 30, 2008; $634,946 for the year ending April 30, 2007; and $0 for the year ending April 30, 2006.