MAJOR LEAGUE FOOTBALL INC - Quarter Report: 2006 January (Form 10-Q)

Universal Capital Management, Inc. 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2006

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-51132

Universal Capital Management, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of Incorporation or Organization) 2601 Annand Drive Suite 16 Wilmington, DE (Address of principal executive offices)	20-1568059 (I.R.S. Employer Identification No.) 19808 (Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required 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 ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one). Large accelerated filer _ Accelerated filer _ Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ Noý

The number of shares of the registrant’s Common Stock outstanding as of March 16, 2006 was 4,851,234

PART I FINANCIAL INFORMATION
Item 1. Financial Statements

UNIVERSAL CAPITAL MANAGEMENT, INC. (A BUSINESS DEVELOPMENT COMPANY)
STATEMENT OF ASSETS AND LIABILITIES

	January 31, 2006		April 30, 2005
	(Unaudited)		(Audited)
ASSETS
Investment in Securities, at fair value (cost: $2,539,600 and $614,500)	$	3,923,936	$	2,782,976
Cash and Cash Equivalents		28,658		158,453
Miscellaneous Receivables		26,795		27,095
Due from Affiliates		25,395		19,820
Prepaid Expenses		5,287		9,371
Property and Equipment, net		10,063		12,077
Rent Deposit		1,100		1,100
TOTAL ASSETS	$	4,021,824	$	3,010,892

LIABILITIES
Accounts Payable and Accrued Expenses		75,726		61,854
Note Payable		100,000		-
Deferred Revenue		1,252,284		-
Deferred Income Taxes		289,600		653,000
TOTAL LIABILITIES	$	1,717,610	$	714,854

NET ASSETS	$	2,304,214	$	2,296,038

ANALYSIS OF NET ASSETS:
Net Capital Paid in on Shares of Capital Stock		1,865,290		1,305,375
Distributable Earnings		438,924		990,663
Net Assets	$	2,304,214	$	2,296,038

Equivalent per share value based on 4,779,959 shares
of capital stock outstanding as of January 31, 2006
and 4,808,200 shares of capital stock outstanding
as of April 30, 2005	$	0.48	$	0.48

See accompanying notes to financial statements.

UNIVERSAL CAPITAL MANAGEMENT, INC.

(A BUSINESS DEVELOPMENT COMPANY)

SCHEDULE OF INVESTMENTS

JANUARY 31, 2006

(Unaudited)

			Approx %			% of			Number of
Common Stocks - United States - 100%	Business		Owned			Portfolio			Shares		Fair Value		Share Listing

BF Acquisition Group V, Inc.*		Inactive company		9.9	%		0.04	%		100,000	$	1,625		Private

AccelaPure Corporation*		Pharmaceutical purification service company		12.5	%		25.48	%		1,000,000		1,000,000		Private

Subtotal affiliates							25.53	%				1,001,625

IPI Fundraising, Inc.		Sales and distribution of fundraising products		1.1	%		0.00	%		575,000		-		Private

Gelstat Corporation		Consumer health care Company		1.6	%		1.69	%		221,429		66,428		OTCBB

Neptune Industries, Inc.		Seafood production		0.3	%		0.29	%		47,619		11,439		OTCBB

PSI - TEC Corporation		Plastics engineering		2.1	%		28.57	%		787,500		1,121,250		Pink Sheets

Theatre Xtreme Entertainment Group, Inc.		Home theater sales and Installation		3.2	%		14.65	%		575,000		575,000		Private

BroadRelay Holdings, Inc.		High speed internet media		3.8	%		29.26	%		964,401		1,148,194		Pink Sheets
Subtotal non-affiliates							74.47	%				2,922,311

Total (aggregate cost $2,539,600)							100.00	%			$	3,923,936


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

See accompanying notes to financial statements.

UNIVERSAL CAPITAL MANAGEMENT, INC.

(A BUSINESS DEVELOPMENT COMPANY)

STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JANUARY 31, 2006 AND 2005 AND THE NINE MONTHS ENDED JANUARY 31, 2006 AND

THE PERIOD AUGUST 16, 2004 (DATE OF INCEPTION) TO JANUARY 31, 2005

(Unaudited)


	Three months ended			Three months ended			Nine months ended			August 16, 2004 (Inception) to
	January 31, 2006			January 31, 2005			January 31, 2006			January 31, 2005
Income
Management Services	$	329,517		$	-		$	572,817		$	10,000

Expenses
Bad Debt		19,350			-			19,350			-
Depreciation		475			393			1,425			743
Dues and Subscriptions		-			35			420			285
Fees and Commissions		2,563			1,833			12,124			1,833
Interest Expense		168			-			1,097			-
Insurance		15,673			3,358			47,763			8,239
Licenses and permits		75			221			75			240
Marketing		-			-			400			-
Office Expenses and Supplies		5,344			1,315			6,983			5,013
Payroll		109,153			104,500			341,653			104,500
Payroll Taxes		4,485			8,333			17,411			8,333
Postage, Delivery and Shipping		940			3,462			2,646			3,698
Professional Fees		33,962			32,066			189,225			45,971
Rent		4,200			3,825			12,400			8,845
Telephone		610			490			2,484			1,647
Travel and Entertainment		22,956			2,103			45,011			4,104
Utilities		1,952			357			3,349			979
		221,906			162,291			703,816			194,430

Income (Loss) from Operations		107,611			(162,291	)		(130,999	)		(184,430	)

Unrealized Appreciation (Depreciation) on Investments		(54,031	)		(379,042	)		(784,140	)		825,154

Income Tax Benefit (Provision)		(20,100	)		142,200			363,400			(327,800	)

Net Increase (Decrease) in Net Assets Resulting from Operations	$	33,480		$	(399,133	)	$	(551,739	)	$	312,924

See accompanying notes to financial statements.

UNIVERSAL CAPITAL MANAGEMENT, INC.

(A BUSINESS DEVELOPMENT COMPANY)

STATEMENT OF CHANGES IN NET ASSETS

FOR THE NINE MONTHS ENDED JANUARY 31, 2006

(Unaudited)

INCREASE IN NET ASSETS FROM OPERATIONS
Income (Loss) from operations	$	(130,999	)
Unrealized depreciation on investments, net of taxes	$	(420,740	)

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS		(551,739	)

CAPITAL SHARE TRANSACTIONS		559,915

TOTAL INCREASE		8,176

NET ASSETS, BEGINNING OF YEAR		2,296,038

NET ASSETS, END OF PERIOD	$	2,304,214

See accompanying notes to financial statements.

UNIVERSAL CAPITAL MANAGEMENT, INC.

(A BUSINESS DEVELOPMENT COMPANY)

STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2006 AND FOR THE PERIOD AUGUST 16, 2004 (DATE OF INCEPTION) T0

JANUARY 31, 2005

(Unaudited)

	Nine months ended			(August 16, 2004 (Inception)
	January 31, 2006			to January 31, 2005

CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations	$	(551,739	)	$	312,924
Write-off of due from affiliate, deemed uncollectible		19,350
Adjustments to reconcile net decrease in net assets from
operations to net cash used in operating activities:
Purchase of investment securities		-			(300,000	)
Investment securities received in exchange for management services		(572,817	)		(10,000	)
Depreciation expense		1,425			743
Net unrealized (appreciation) depreciation on investments		784,140			(825,154	)
Deferred Income Taxes		(363,400	)		327,800
Net changes in miscellaneous receivables		300			-
Net changes in due from affiliates		(24,925	)		(58,129	)

Prepaid expenses		4,084			-
Net changes in accounts payable and accrued expenses		13,872			35,860
Net cash used in operating activities		(689,710	)		(515,956	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment					(11,000	)
Lease deposit					(1,100	)
Net cash used in investing activities		-			(12,100	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock		559,915			581,200

NET INCREASE (DECREASE) IN CASH		(129,795	)		53,144

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		158,453			-

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	28,658		$	53,144

In January, the Company entered into a promissory note agreement with BroadRelay Holdings, Inc. in the amount of $100,000.

See accompanying notes to financial statements.

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim period financial statements of Universal Capital Management, Inc. (the “Company”) are unaudited pursuant to certain rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results for the periods indicated. Such results, however, are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2005 as filed with the Securities and Exchange Commission.

Nature of Business

The Company is a newly organized (inception date of August 16, 2004), closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company is primarily engaged in the business of furnishing capital and making available managerial assistance to companies that do not have ready access to capital through conventional channels. The Company refers to companies in which it invests as “portfolio companies.”

Security Valuations

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

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

Use of Estimates

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

Cash and Equivalents

For purposes of the Statement of Cash Flows, the Company considers all investment instruments purchased with a maturity of three months or less to be cash and cash equivalents.

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Property and Equipment

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

Furniture and fixtures 5 to 7 years

Computer and office equipment 3 to 7 years

Income Taxes

Deferred tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Deferred income taxes arise principally from the recognition of unrealized gains or losses from appreciation in investment value for financial statement purposes, while for income tax purposes, gains or losses are only recognized when realized (i.e., on 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 or refundable for the period plus or minus the change during the period in deferred tax assets or liabilities.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. At times, the Company’s balances with financial institutions may exceed the insured amount provided by the Federal Deposit Insurance Corporation.

Recently issued Accounting Pronouncements

In December 2004, the FASB revised SFAS 123, “Accounting for Stock-Based Compensation” to require all companies to expense the fair value of employee stock options. SFAS 123R is effective at the beginning of the next fiscal year that begins after December 15, 2005 for a small business issuer.

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 - INVESTMENTS

Portfolio Companies consist of the following:

		Number of
		Shares held at		Value at	Unrealized
		Jan 31, 2006	Cost	Jan 31, 2006	Gain / (Loss)

Affiliated Securities*
	BF Acquisition Group V, Inc.	100,000	$ 1,625	$ 1,625	$ -
	AccelaPure Corporation	1,000,000	1,000,000	1,000,000	-

Total Affiliated Securities			$1,001,625	$1,001,625	-


Non-affiliated Securities
	IPI Fundraising, Inc.***	575,000	6,625	-	(6,625)
	Gelstat Corporation	221,429	350,000	66,428	(283,572)
	Neptune Industries, Inc.**	47,619	20,000	11,439	(8,561)
	PSI - TEC Corporation	787,500	619,000	1,121,250	502,250
	Theater Xtreme Entertainment Group, Inc.	575,000	201250	575,000	373,750
	BroadRelay Holdings, Inc.	964,401	341,100	1,148,194	807,094

Total Non-Affiliated Securities			1,437,975	2,922,311	1,384,336



Total Securities			$2,539,600	$3,923,936	$1,384,336

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

**On June 9, 2005, there was a six for one reverse split on Neptune Industries, Inc. shares.

***BF Acquisition Group III, Inc. and FundraisingDirect.com, Inc. merged into IPI Fundraising Inc.

UNIVERSAL CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)



NOTE 3 - INCOME TAXES

As an investment company organized as a corporation, the Company is taxable as a corporation. As discussed in Note 1, the Company utilizes the assets and liability method of accounting for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109).

	The deferred income tax benefit consists of the following:


Deferred:
Federal	$	283,700
State		79,700

Total Deferred	$	363,400

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



Income tax at statutory rate	$	311,100
State income taxes, net of federal taxes		52,300

	$	363,400


Deferred income taxes reflect the net effect of unrealized gains on investments and an operating loss carryforward.
There are no other significant temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amount used for income tax purposes.

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

Unrealized gains	$	(550,300	)
Net operating loss		260,700

Total	$	(289,600	)

At January 31, 2006, the Company had a net operating loss carryforward of approximately $656,060 which, if not used, will expire in 2025.

UNIVERSAL CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


NOTE 4 - DUE FROM AFFILIATES

Due from affiliates consist of the following:


Due from BF Acquisition Group V, Inc	$	25,395

Total	$	25,395

NOTE 5 - SUBSCRIPTION AGREEMENT

On January 25, 2006, the Company entered into a subscription agreement for common stock and warrants with BroadRelay Holdings, Inc. In the agreement the Company subscribed for 400,000 shares of common stock of BroadRelay Holdings, Inc. and warrants to purchase an additional 200,000 shares of common stock exercisable at $1.00 per share. The warrants expire on December 15, 2006.

In order to pay for the securities subscribed, the Company signed a promissory note payable to BroadRelay Holdings, Inc. in the amount of $100,000. Interest shall accrue at the prime rate of interest. Principal and Accrued interest on the note are payable on or before May 31, 2006. The prime rate of interest was 7.50% at January 31, 2006.

NOTE 6 - CAPITAL SHARE TRANSACTIONS

During the nine months ended January 31, 2006, 321,759 shares of common stock of the Company were issued for proceeds of $559,915. On January 31, 2006 pursuant to a Share Contribution Agreement, David Bovi and William Colucci contributed 200,000 and 150,000 shares of common stock of the Company, respectively, to the Company. These shares were received by them in the merger of BF Acquisition Group IV, Inc. with the Company were contributed to the Company without further consideration being received by either party.

NOTE 7 - BAD DEBT

On January 31, 2006, the Company determined a Note Receivable from IPI Fundraising Inc, in the amount of $19,350 to be uncollectible. The note was written off directly to bad debt expense. The Company believes that all other receivable balances at January 31, 2006 are fully collectible and no allowance for bad debts has been established.

UNIVERSAL CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)




NOTE 8 - FINANCIAL HIGHLIGHTS


Per Share Operating Performance
Net asset value, beginning of period	$	0.48

Income from operations, net of tax benefit		(0.02	)
Unrealized depreciation on investment, net of taxes		(0.10	)
		(0.12	)
Add capital share transactions		0.12

Net asset value, end of period	$	0.48



Total Return		-5.7	%

Average Net Assets as a percentage of :
Expenses (annualized)		40.7	%
Management income (annualized)		33.2	%

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

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 the 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 the Company’s financial statements and the notes thereto, and the Management’s Discussion and Analysis section for the fiscal year ended April 30, 2005 included in the Company’s Annual Report on Form 10-K

Business Overview

The Company’s primary business is to invest in emerging growth companies. The Company intends to assist these companies in strategic and financial planning, in market strategies and to assist them in trying to achieve prudent and profitable growth. Management is devoting most of its efforts to general business planning, raising capital, and seeking appropriate investments.

The Company’s primary investment objective is to increase its net assets by adding value to the portfolio companies and thus, to shareholder value. Management believes that the Company will be able to achieve these objectives by concentrating on investments in companies which are most likely to benefit from management’s expertise in finance, strategic planning, operations, and technology.

The income that the Company derives from investments in portfolio companies consists of management fees, interest income, and appreciation (net of depreciation) in the values of portfolio companies. At the time of disposition, the disposition proceeds of these securities of portfolio companies will most likely make up most of the Company’s revenues. Consequently, the Company’s success or failure will depend on investing in portfolio companies the securities of which appreciate in value more than the sum of Company operating expenses and the amount by which portfolio company securities depreciate in value. There is no assurance that the Company will be able to do so.

Pursuant to the requirements of the Investment Company Act of 1940, as amended, the Board of Directors is responsible for determining in good faith the fair value of the securities and assets held by the Company for which market quotations are not readily available. In making its determination, the Board of Directors may consider valuation appraisals provided by independent financial experts although doing so does not relieve the Board of its obligations to determine fair value. 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.

The Board of Directors bases its determination 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 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 stock market.

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.

The Company may retain a professional valuation consulting firm to provide it with valuations of the securities of portfolio companies. The Company expects to pay a professional fee each time such a valuation is provided.

Financial Condition

The Company’s total assets were $4,021,824 and its net assets were $2,304,214 at January 31, 2006, compared to $3,010,892 and $2,296,038, respectively, at April 30, 2005. Net assets increased by $8,176 for the nine months ended January 31, 2006, and net asset value per share was $0.48 per share at January 31, 2006 and $0.48 per share at April 30, 2005.

The changes in total assets and net assets during the nine months ended January 31, 2006 were primarily attributable to:

The decrease in unrealized appreciation on investments of approximately $784,000 mainly due to a decrease in value of shares of PSI-TEC Holdings, Inc., Gelstat Corporation, and Neptune Industries, Inc. offset in part by an increase in the value of the shares of Theater Xtreme Entertainment Group, Inc and BroadRelay Holdings, Inc.

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

·	The Company’s investment in 964,401 shares of BroadRelay Holdings, Inc.

·	The Company’s investment in 1,000,000 shares of AccelaPure Corporation.

·	The increase in deferred revenue of $1,252,284.

·	The decrease in deferred taxes of $363,400.

·	The sale of 321,759 of the Company’s common shares for proceeds of $559,915.

The Company’s unrealized appreciation (depreciation) varies significantly from period to period as a result of the wide fluctuations in value of the Company’s portfolio securities. For example, the Company suffered an unrealized loss of $1,111,250 on its holdings of PSI-TEC Holdings, Inc. in the nine months ended January 31, 2006 as a result of a decline in the value of the portfolio shares from $2,232,500 to $1,121,250 during such time period. By contrast, the Company incurred an unrealized gain as a result of the listing of the shares of BroadRelay Holdings, Inc. for trading on the Pink Sheets and the increase in the price of the portfolio shares to $1,148,194 on January 31, 2006.

The Company had unrealized appreciation of $834,036, net of taxes, at January 31, 2006 compared to unrealized appreciation of $497,354, net of taxes, at January 31, 2005.

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

At January 31, 2006, $3,923,936 or 98.0% of the Company’s assets consisted of investments, of which net unrealized gains before the income tax effect was $1,384,336. Deferred taxes on account of unrealized gains have been estimated at approximately $550,300. At January 31, 2006, the Company’s holdings of PSI-TEC Holdings, Inc., BroadRelay Holdings, Inc. and AccelaPure Corporation were valued at $1,121,250, $1,148,194 and $1,000,000 respectively, which represented in the aggregate approximately 83% of the total Company portfolio at that date.

Because the portfolio companies tend to be at early stages of their business development, and because there are no markets for the securities of some portfolio companies, the Company does not expect to liquidate any of its investments in the near future.

Results of Operations

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

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

Three months ended January 31, 2006 compared to the three months ended January 31, 2005.

The Company generated revenue for services of $329,517 for the three months ended January 31, 2006 compared to $0.00 for the three months ended January 31, 2005. 100% of the Company’s revenue for services was received in the form of equity securities for the three months ended January 31, 2006.

Total operating expenses for the three months ended January 31, 2006 were $221,906, the principal components of which were payroll of $109,153, professional fees of $33,962, travel and entertainment of $22,956, bad debt of $19,350 and insurance of $15,673. These expenses compared to $162,291 for the three months ended January 31, 2005, the principal components of which were payroll of $104,500, and professional fees of $32,066.

The Company realized income from operations of $107,611 for the three months ended January 31, 2006 compared to a loss from operations of ($162,291) for the three months ended January 31, 2005.

Nine months ended January 31, 2006 compared to the nine months ended January 31, 2005.

The Company generated revenue for services of $572,817 for the nine months ended January 31, 2006 compared to $10,000 for the period August 16, 2004 (date of inception) to January 31, 2005. 100% of the Company’s revenue for services was received in the form of equity securities for the nine months ended January 31, 2006 and for the period August 16, 2004 (date of inception) to January 31, 2005.

Total operating expenses for the nine months ended January 31, 2006 were $703,816, the principal components of which were payroll of $341,653, professional fees of $189,225, insurance of $47,763 and travel and entertainment of $45,011. These expenses compared to $194,430 for the period August 16, 2004 (date of inception) to January 31, 2005 the principal components of which were payroll of $104,500 and professional fees of $45,971.

The Company realized a loss from operations of ($130,999) for the nine months ended January 31, 2006 compared to a loss from operations of ($184,430) for the period August 16, 2004 (date of inception) to January 31, 2005.

The Company had unrealized depreciation of $(420,740), net of taxes, for the nine months ended January 31, 2006 compared to unrealized appreciation of $497,354, net of taxes, for the period August 16, 2004 (date of inception) to January 31, 2005.

On January 31, 2006, the Company had a net operating loss carry-forward of approximately $656,060 which, if not used, will expire in 2025.

Liquidity and Capital Resources

From inception, the Company has relied for liquidity on the infusion of capital through capital share transactions.

The Company does not plan to dispose of any of its current portfolio securities to meet operational needs. However, despite its plans, the Company may be forced to dispose of a portion of these securities if it ever becomes short of cash. Any such dispositions may have to be made at inopportune times and there is no assurance that, in light of the lack of liquidity in such shares, they could be sold at all, or if sold, could bring values approximating the estimates of fair value set forth in the Company financial statements.

The Company’s cash expenses approximate $70,000 per month. Because Company revenues, when received, tend to be in the form of portfolio securities, such revenues are not of a type capable of being used to satisfy the Company’s ongoing monthly expenses. Consequently, for the Company to be able to avoid having to defer expenses or sell portfolio companies’ securities to raise cash to pay operating expenses, it will need to sell at least $70,000 per month of common stock. There is no assurance that the Company will be able to do so. The Company will be unable to make any new investments unless it succeeds in raising cash in excess of the amounts needed for ongoing operations. At January 31, 2006 the Company had approximately $30,000 in cash and liquid assets.

The Company is currently offering to sell, on a best efforts basis, up to $4,000,000 of its common stock, $.001 par value per share at a price of not less than $2.00 per share pursuant to Regulation E promulgated under the Securities Act of 1933. The offering is open only to appropriate investors in states where the Company has complied with the appropriate Blue Sky laws. Potential investors have been referred to the Company by current shareholders and acquaintances of its Board of Directors and Board of Advisors.

The Company provides its prospective investors with its Offering Circular dated March 15, 2006 and a Subscription Agreement governed by the laws of the State of Delaware. At the following dates the Company had sold the respective number of shares indicated pursuant to the offering:

	February 28, 2006	January 31, 2006	April 30, 2005
Number of shares	631,434	577,759	339,500
Proceeds of sale	$1,066,068	$958,718	$482,200

Management believes that the Company will continue to be successful in its fundraising efforts and in attracting new portfolio companies because of expressions of interest received by the Company from attractive development stage companies seeking funding and because of the Company’s success in raising funds thus far.

The Company’s note payable to BroadRelay Holdings, Inc. in the face amount of $100,000 comes due on May 31, 2006. The Company does not currently have the cash to pay its obligations under this note. The only means the Company has to obtain such cash is through the sale of additional shares of Company common stock or the sale of portfolio securities. There is no assurance that the Company will be able to sell enough shares before the maturity date of the note to pay its ongoing cash obligations and the amount due under the note.

Critical Accounting Estimates

Valuation

The Investment Company Act of 1940 requires periodic valuation of each investment in the Company’s portfolio to determine the Company’s net asset value. Under the Investment Company Act of 1940, 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 the Board of Directors.

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

Fair value is generally defined as the amount for which an investment could be sold in an orderly disposition over a reasonable time. Generally, to increase objectivity in valuing assets, external measures of value, such as public markets or third-party transactions, are used whenever possible. Valuation is not based on long-term work-out value, 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.

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

Cost: The cost method is based on the 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: (1) a major recapitalization; (2) a major refinancing; (3) a significant third-party transaction; (4) the development of a meaningful public market for such company’s common stock; and (5) significant changes in such company’s business.

Private Market: The private market method uses actual, executed, historical transactions in a portfolio 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. However, the Company discounts market value for securities that are subject to significant legal or contractual restrictions. Other 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 a securities exchange 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.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s quantitative and qualitative disclosure about market risk since the Company’s Annual Report on Form 10-K filed for the fiscal year ended April 30, 2005.

Item 4. Controls and Procedures

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, the principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information

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

At the following dates the Company had sold the respective number of shares of its common stock indicated, pursuant to Rule 601 to Rule 609 of Regulation E promulgated under the Securities Act of 1933. No underwriters were involved and all securities were sold for cash.

DATE OF SALE	NUMBER OF SHARES		SALES PROCEEDS
03/01/2005 to 03/31/2005		196,800	$	196,800
04/01/2005 to 04/30/2005		142,700	$	285,400
05/01/2005 to 05/31/2005		7,950	$	15,900
06/01/2005 to 06/30/2005		40,700	$	81,400
07/01/2005 to 07/31/2005		-0-	$	0.00
08/01/2005 to 08/31/2005		112,800	$	225,600
09/01/2005 to 09/30/2005		12,700	$	25,400
10/01/2005 to 10/31/2005		10,000	$	20,000
11/01/2005 to 11/30/2005		18,660	$	37,320
12/01/2005 to 12/31/2005		22,649	$	45,298
01/01/2006 to 01/31/2006		12,800	$	25,600
TOTALS		577,759	$	958,718

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

The Company held its Annual Meeting of Stockholders on Wednesday, December 7, 2005. Shareholders voted on three matters, the substance of these matters and the results of the voting on each such matter are described below. The record date was October 13, 2005, at which time there were 5,076,800 shares outstanding and entitled to vote at the annual meeting.

The first proposal was to elect five Directors: Michael D. Queen, Joseph T, Drennan, Jeffrey Muchow, Steven P. Pruitt, Jr. and Thomas M. Pickard, Sr. to serve until the date of the 2006 annual meeting and until their successors are respectively duly elected and qualified. Messrs. Queen, Drennan, Muchow, Pruitt and Pickard received 3,853,800, 3,853,800, 3,853,800, 3853,800 and 3,853,800 votes, respectively. 0 shares were voted against and 1,223,000 shares abstained.

The second proposal brought for a vote was the ratification of Cogen Sklar, LLP as the Company’s Independent Auditors for the 2006 fiscal year. 3,853,800 shares were voted for, 0 shares were voted against and 1,223,000 shares abstained.

The third proposal brought for a vote was the ratification of the merger of the Company with and into BF Acquisition Group IV, Inc. 3,853,800 shares were voted for, 0 shares were voted against and 1,223,000 shares abstained. In addition, 1,903,800 non-affiliated shares were voted for, 0 non-affiliated shares were voted against and 923,000 non-affiliated shares abstained.

Item 6. Exhibits.

The following exhibits are included herein:

31.1	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company.
31.2	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer of the Company.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Financial Officer of the Company.

SIGNATURES

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

	Universal Capital Management, Inc.

Date: March 16, 2006	By: /s/ Michael D. Queen
	Michael D. Queen, President


Date: March 16, 2006	By: /s/ Joseph T. Drennan
	Joseph T. Drennan, Treasurer