MAJOR LEAGUE FOOTBALL INC - Quarter Report: 2007 January (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2007

¨ 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)		20-1568059 (I.R.S. Employer Identification No.)

2601 Annand Drive Suite 16 Wilmington, DE (Address of principal executive offices)		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 x 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 o Accelerated filer o 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 ¨ No x

The number of shares of the registrant’s Common Stock outstanding as of March 19, 2007 was 5,438,274

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENT OF ASSETS AND LIABILITIES

	January 31, 2007		April 30, 2006
	(Unaudited)		(Audited)
ASSETS
Investment in Securities, at fair value (cost: $5,733,816 and $2,539,600)	$	6,049,265	$	3,331,620
Cash and Cash Equivalents		895		84,272
Notes Receivable		95,000		60,000
Due from Portfolio Companies		63,805		26,873
Miscellaneous Receivables		12,505		-
Due from Affiliates		36,239		24,646
Prepaid Expenses		5,262		7,648
Property and Equipment, net		8,754		10,178
Rent Deposit		1,100		1,100
TOTAL ASSETS	$	6,272,825	$	3,546,337

LIABILITIES
Accounts Payable and Accrued Expenses		689,232		195,114
Notes Payable		425,000		100,000
Due to Officer		50,000		-
Deferred Revenue		899,424		939,433
Income Taxes		209,800		-
Deferred Income Taxes		125,400		68,000
TOTAL LIABILITIES	$	2,398,856	$	1,302,547

NET ASSETS	$	3,873,969	$	2,243,790

ANALYSIS OF NET ASSETS:
Net Capital Paid in on Shares of Capital Stock		3,365,937		2,140,640
Distributable Earnings		508,032		103,150
Net Assets	$	3,873,969	$	2,243,790

Equivalent per share value based on 5,438,274 shares
of capital stock outstanding as of January 31, 2007
and 4,917,634 shares of capital stock outstanding
as of April 30, 2006	$	0.71	$	0.46

(The accompanying notes are an integral part of these financial statements.)

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

January 31, 2007

(Unaudited)

			% of			Number of
Common Stocks & Other Investments United States - 100%	Business		Portfolio			Shares			Fair Value

BF Acquisition Group V, Inc.*		Inactive company		0.03	%		100,000	**	$	1,625

AccelaPure Corporation*		Bio-Pharma and purification services		16.53	%		1,000,000	**		1,000,000

Creative Energy Solutions, Inc.*		Develops alternative energy technologies		16.53	%		2,000,000	**		1,000,000

Extreme Visual Technologies, Inc.*		Develops unique graphics imaging technologies		33.06	%		2,000,000	**		2,000,000

SIVOO, Inc.* (formerly BroadRelay Holdings, Inc.)		High speed internet media		13.54	%		1,364,4010	**		818,640

Warrants to purchase 200,000 shares of SIVOO, Inc.* at an exercise price of $0.65 per share expiring December 15, 2010.		High speed internet media		1.70	%					103,000

Warrants to purchase 200,000 shares of SIVOO, Inc.* at an exercise price of $0.65 per share expiring November 11, 2011.		High speed internet media		1.77	%					107,000

Subtotal affiliated companies				83.16	%					5,030,265

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

Gelstat Corporation		Consumer health care		0.31	%		221,429			18,821

Neptune Industries, Inc.		Seafood production		0.10	%		47,619			6,190

Third Order Nanotechnologies, Inc. (formerly PSI-TEC Holdings, Inc.)		Plastics engineering		8.91	%		787,500	***		539,000
Theatre Xtreme Entertainment Group, Inc.		Home theater sales/installation		7.52	%		575,936			454,989


Total (aggregate cost $5,733,816)				100.00	%				$	6,049,265

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

**	restricted

***	200,000 of such shares are restricted

(The accompanying notes are an integral part of these financial statements)

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENT OF OPERATIONS

FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 31, 2007 AND 2006

(Unaudited)

	Three months ended			Three months ended			Nine months ended			Nine months ended
	January 31, 2007			January 31, 2006			January 31, 2007			January 31, 2006
Income
Management Services	$	897,055		$	329,517		$	2,390,010		$	572,817
Interest Income		1,916			-			20,251			-
		898,971			329,517			2,410,261			572,817
Expenses
Bad Debt		-			19,350			543			19,350
Depreciation		475			475			1,424			1,425
Dues and Subscriptions		-			-			-			420
Fees and Commissions		3,639			2,563			17,577			12,124
Interest Expense		9,045			168			18,082			1,097
Insurance		17,794			15,673			55,306			47,763
Licenses and permits		75			75			75			75
Marketing		8,190			-			20,779			400
Office Expenses and Supplies		777			5,344			2,388			6,983
Payroll		152,271			109,153			375,604			341,653
Payroll Taxes		5,303			4,485			20,516			17,411
Postage, Delivery and Shipping		1,236			940			3,091			2,646
Professional Fees		152,271			33,962			849,017			189,225
Rent		4,200			4,200			12,600			12,400
Telephone		1,418			610			3,582			2,484
Travel and Entertainment		1,977			22,956			32,030			45,011
Share Based Compensation Expense		2,334			-			185,612			-
Taxes - Franchise		-			-			4,814			-
Utilities		809			1,952			2,493			3,349
		326,876			221,906			1,605,533			703,816

Income (Loss) from Operations		572,095			107,611			804,728			(130,999	)

Net Realized Gain on Dividend of Portfolio Stock		-			-			343,924			-

Unrealized Appreciation (Depreciation) on Investments		(872,414	)		(54,031	)		(476,570	)		(784,140	)

Income Tax Benefit (Provision)		119,300			(20,100	)		(267,200	)		363,400

Net Increase (Decrease) in Net Assets Resulting from Operations	$	(181,019	)	$	33,480		$	404,882		$	(551,739	)

(The accompanying notes are an integral part of these financial statements)

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENT OF CHANGES IN NET ASSETS

FOR THE NINE MONTHS ENDED JANUARY 31, 2007

(Unaudited)

INCREASE IN NET ASSETS FROM OPERATIONS
Income from operations	$	804,728
Unrealized (Depreciation) on investments, net of taxes		(743,770	)
Net realized gain on Dividend of Portfolio Stock		343,924

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		404,882

CAPITAL SHARE TRANSACTIONS
Issuance of Common Stock		1,041,280
Share-based Compensation Expense		185,612
Stock Options granted for Operating Expenses		447,000
Dividend of Portfolio Stock		(448,595	)

NET CAPITAL SHARE TRANSACTIONS		1,225,297

TOTAL INCREASE		1,630,179

NET ASSETS, BEGINNING OF YEAR		2,243,790

NET ASSETS, END OF PERIOD	$	3,873,969

(The accompanying notes are an integral part of these financial statements)

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2007 AND 2006

(Unaudited)

	Nine months ended January 31, 2007			Nine months ended January 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations	$	404,882		$	(551,739	)
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:
Gain on Dividend of Portfolio stock		(343,924	)		-
Stock received for interest		(13,888	)		-
Investment securities received in exchange for management services		(2,340,007	)		(572,817	)
Depreciation expense		1,424			1,425
Share based compensation expense		185,612			-
Stock Options granted for operating expenses		447,000			-
Net unrealized (appreciation) depreciation on investments		476,570			784,140
Income Taxes		209,800			-
Deferred Income Taxes		57,400			(363,400	)
Net changes in miscellaneous receivables		(12,505			300
Net changes in due from portfolio companies		(51,932	)		-
Net changes in due from affiliates		(11,593	)		(24,925	)
Prepaid expenses		2,386			4,084
Net changes in accounts payable and accrued expenses		494,118			13,872
Net cash used in operating activities		494,657			(689,710	)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in note to shareholder		50,000			-
Increase in notes receivable		(55,000	)		-
Net cash used by investing activities		(5,000	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt		425,000			-
Repayment of debt		(250,000	)		-
Proceeds from issuance of common stock		241,280			559,915
Net cash provided by financing activities		416,280			559,915

NET INCREASE (DECREASE) IN CASH		(83,377	)		(129,795	)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		84,272			158,453

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	895		$	28,658

NON-CASH INVESTING AND FINANCING ACTIVITIES

In July, 2006 common stock was issued upon exercise of stock options granted for services rendered. The stock was issued in exchange for a note receivable in the face amount of $800,000. In October 2006, the note receivable was exchanged for 1,000,000 shares of Extreme Visual Technologies, Inc. stock.

In October 2006, a $20,000 note receivable to SIVOO, Inc. formerly BroadRelay Holdings, Inc. was converted to 40,000 shares of SIVOO, Inc.

In November 2006, a $15,000 note receivable to SIVOO, Inc. formerly BroadRelay Holdings, Inc. was converted into 60,000 shares of SIVOO, Inc.

(The accompanying notes are an integral part of these financial statements)

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim period financial statements of Universal Capital Management, Inc. (the “Company”) are unaudited pursuant to certain rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results 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, 2006 as filed with the Securities and Exchange Commission.

Nature of Business

The Company is a recently 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 Stock 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

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.

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payment ("SFAS 123R"). SFAS 123(R) supersedes APB Opinion No. 25 ("APB25") Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach of SFAS 123(R) is similar to the approach described in SFAS 123. However SFAS 123(R) requires share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values at the date of grant. Pro Forma disclosure is no longer an alternative. SFAS 123 (R) is effective at the beginning of the next fiscal year that begins after December 15, 2005 for a small business issuer. The Company adopted SFAS 123(R) effective May 1, 2006.

Prior to May 1, 2006 the Company followed the provisions of SFAS 123 which allowed companies to either expense the estimated fair value of the stock options or continue to follow the intrinsic value method set forth in APB 25, but disclose the pro forma effects on net income had the fair value of the options been expensed. The Company elected to apply APB 25 in accounting for its stock option incentive plans and grants of stock options. There were no employee stock options granted prior to May 1, 2006.

Reclassifications

Certain reclassifications have been made to the April 30, 2006 statement of assets and liabilities to conform to the January 31, 2007 presentation.

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Recently Issued Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. FIN 48 will be effective for fiscal years beginning after December 15, 2006 (our fiscal year 2008) and the provisions of FIN 48 will be applied to all tax positions under Statement No. 109 upon initial adoption. The cumulative effect of applying the provisions of this interpretation will be reported as an adjustment to the opening balance of retained earnings for that fiscal year. The Company is currently evaluating the potential impact of FIN 48 on its consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB No. 108”). SAB No. 108 addresses the process and diversity in practice of quantifying financial statement misstatements resulting in the potential build up of improper amounts on the balance sheet. The Company will be required to adopt the provisions of SAB No.108 in fiscal 2008. The Company currently does not believe that the adoption of SAB No. 108 will have a material impact on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. The Statement is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company does not believe that the adoption of the provisions of SFAS No. 157 will materially affect its financial position or results of operations.

UNIVERSAL CAPITAL MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 2 - INVESTMENTS

Portfolio Companies consist of the following:

	Number of
	Shares held at				Value at		Unrealized
	Jan 31, 2007		Cost		Jan 31, 2007		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		-
Creative Energy Solutions, Inc.		2,000,000		1,000,000		1,000,000		-
Extreme Visual Technologies, Inc.		2,000,000		1,813,888		2,000,000		186,112
SIVOO, Inc.**		1,364,401		526,100		818,640		292,540
Warrants to purchase 400,000 shares of SIVOO, Inc.
warrants expiring December 15, 2010		200,000		-		103,000		103,000
warrants expiring July15, 2011		200,000		-		107,000		107,000

Total Affiliated Securities				4,341,613		5,030,265		688,652


Non-affiliated Securities
IPI Fundraising, Inc.		575,000		6,625		-		(6,625	)
Gelstat Corporation		221,429		350,000		18,821		(331,179	)
Neptune Industries, Inc.		47,619		20,000		6,190		(13,810	)
Third Order Nanotechnologies, Inc.***		787,500		619,000		539,000		(80,000	)
Theater Xtreme Entertainment Group, Inc.		575,936		396,578		454,989		58,411

Total Non-Affiliated Securities				1,392,203		1,019,000		(373,203	)

Total Securities			$	5,733,816	$	6,049,265	$	315,449

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

**	Formerly known as BroadRelay Holdings, Inc.

***	Formerly known as PSI-TEC Holdings, Inc.

UNIVERSAL CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS

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).

Income taxes consist of the following:
Deferred:
Federal	$	44,800
State		12,600

Total Deferred	$	57,400

Current
Federal	$	163,800
State		46,000

Total Current	$	209,800


Total Income Taxes	$	267,200


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


Income tax at statutory rate	$	228,500
State income taxes, net of federal taxes		38,700

	$	267,200

Deferred income taxes reflect the net effect of unrealized gains on investments and current income taxes reflect the
net effect of operating income. 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 liabilities are as follows:

Unrealized gains	$	(125,400	)

Total	$	(125,400	)

UNIVERSAL CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - DUE FROM AFFILIATES

	Due from affiliates consist of the following:

Due from BF Acquisition Group V, Inc	$	36,239

Total	$	36,239

NOTE 5 - ACCRUED EXPENSES

At January 31, 2007 accrued expenses includes $477,521 of deferred Officer Compensation

NOTE 6 - NOTES PAYABLE

During the months of July and August 2006 the Company issued notes payable totaling $325,000. Interest accrued at the prime rate of interest. Principal and interest are payable on demand.

In November 2006 the Company issued a note payable totaling $100,000, Interest accrues at the prime rate of interest. Principal and interest are payable on or before April 30, 2007.

In May, 2006 the Company repaid a $100,000 note.

The prime rate of interest was 8.25% on January 31, 2007.

NOTE 7 - EMPLOYEE STOCK OPTIONS

On May 8, 2006 the Company’s Stockholders approved the 2006 Equity Incentive Plan and authorized the issuance of 2,000,000 shares of common stock of the Company pursuant to such Plan.

In May, 2006 the Company granted to an officer of the Company options to purchase 50,000 of the Company’s Common stock at an exercise price of $2.00, which vest immediately and expire in ten years.

In May, 2006 the Company granted to two employees and one shareholder of the Company options to purchase 135,000 in the aggregate shares at an exercise price of $2.00, of which 110,000 shares vest immediately and 25,000 shares vest over three years. All of the options expire in ten years.

As of January 31, 2007 there was $21,388 of total stock option compensation expense related to unvested awards not yet recognized which, is expected to be recognized over a period of three years.

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions: no dividend yield, expected volatility of 34%, risk free interest rate of 5.10% and expected option life of ten years.

NOTE 8 - CAPITAL SHARE TRANSACTIONS

During the nine months ended January 31, 2007, 120,640 shares of common stock of the Company were issued for cash proceeds of $241,280. In May,2006, the Company granted to a stockholder of the company options to purchase 400,000 shares of the Company’s common stock at an option price of $2.00 per share. On June 15, 2006, this stockholder exercised the option in full and paid for the shares with a promissory note in the face amount of $800,000. The promissory note called for monthly payments of principal and interest over 12 months and was secured by a pledge of the purchased shares. On October 25, 2006, the Company entered into an agreement with the stockholder to accept 1,000,000 shares of Extreme Visual Technologies, Inc. common stock in Exchange for $800,000 principal and $13,888 interest on the promissory note.

On July 20, 2006, the Board of Directors of the Company declared a dividend to shareholders of record on July 31, 2006 in the form of .055 shares of the common stock of Theater Xtreme Entertainment Group, Inc., a Company portfolio company. This dividend in kind was distributed in August 2006 but for accounting purposes was recorded as of July 31, 2006. The total number of shares of Theater Xtreme distributed was 299,064 for a total value of $448,595.

NOTE 9 - FINANCIAL HIGHLIGHTS

Per Share Operating Performance
Net asset value, beginning of period	$	0.46

Income from operations, net of tax benefit		0.08
Unrealized depreciation on investment, net of taxes		(0.05	)
Realized gain on dividend of Portfolio stock		0.03
		0.06

Add capital share transactions		0.19

Net asset value, end of period	$	0.71



Total Return		26.3	%

Average Net Assets as a percentage of :
Expenses (annualized)		70.1	%
Management income (annualized)		104.3	%

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, 2006 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 assists these companies in strategic and financial planning, in market strategies and assists 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 $6,272,825 and its net assets were $3,873,969 at January 31, 2007, compared to $3,546,337 and $2,243,790, respectively, at April 30, 2006. Net assets increased by $1,630,179 for the nine months ended January 31, 2007, and net asset value per share was $0.71 at January 31, 2007 and $0.46 per share at April 30, 2006.

The changes in total assets and net assets during the nine months ended January 31, 2007 were primarily attributable to:

The increase of 400,000 shares in the Company’s investment in SIVOO, Inc.

The increase of 936 shares in the Company’s investment in Theater Xtreme Entertainment Group, Inc.

The Company’s investment in 2,000,000 shares of Creative Energy Solutions Inc.

The Company’s investment in 1,000,000 shares of Extreme Visual Technologies, Inc.

The acquisition of 200,000 SIVOO, Inc. warrants to expire in 2011.

The decrease in unrealized appreciation on same share investments from April 30, 2006 to January 31, 2007 of approximately $625,352 mainly due to a decrease in value of shares of Third-Order Nanotechnologies, Inc,, Gelstat Corporation, Neptune Industries, Inc. and Theater Xtreme Entertainment Group, Inc, offset in part by an increase in the value of the shares of SIVOO, Inc. and the increase in the value of 200,000 SIVOO, Inc. warrants expiring in 2010.

The increase in accounts payable and accrued expenses of approximately $494,000 which is mainly due to an increase in deferred compensation for officers consisting of payroll and payroll taxes of approximately $325,000.

An increase in notes payable of $325,000.

The increase in due to Officer of $50,000,

The decrease in deferred revenue of approximately $40,000 which is due mainly to an increase in deferred revenue of $1,000,000 for Extreme Visual Technologies, Inc. which the Company will earn over the twelve month period beginning July 12, 2006 and an increase in deferred revenue of $1,000,000 for Creative Energy Solutions, Inc. which the company earned over the six month period beginning August 1, 2006 offset by a decrease in deferred revenue of approximately $2,040,000 ($1,000,000 for Creative Energy Solutions, Inc., $558,900 for Extreme Visual Technologies, Inc., $375,000 for Accelapure Corporation and $106,100 for Third-Order Nanotechnologies, Inc.) which was earned during the period.

The increase in deferred taxes of $267,200.

The sale of 120,640 of the Company’s common shares for proceeds of $241,280.

The declaration of a dividend paid in the form of 299,064 shares of the common stock of Theater Xtreme Entertainment Group, Inc., a portfolio company, for a total value of $448,595.

The net realized gain of $343,924 on the dividend of shares of common stock of Theater Xtreme Entertainment Group, Inc.

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 ($664,875) on its holdings of Third Order Nanotechnologies, Inc. in the nine months ended January 31, 2007 as a result of a decline in the value of the portfolio shares from $1,203,875 to $539,000 during such time period. By contrast, the Company incurred an unrealized gain of $188,151 on its same share holdings of SIVOO, Inc. in the nine months ending January 31, 2007 as a result of the increase of the value of the portfolio shares and warrants from $493,489 to $681,640 during such time period.

The Company had unrealized (depreciation) of ($743,770), net of taxes, at January 31, 2007 compared to unrealized (depreciation) of ($420,740), net of taxes, at January 31, 2006 and unrealized (depreciation) of ($791,456), net of taxes for the year ended April 30, 2006.

In May, 2006 the Company granted to a stockholder of the Company options to purchase 400,000 shares of the Company’s common stock at an exercise price of $2.00 per share. On June 15, 2006 this stockholder exercised the option in full and paid for the shares with a promissory note in the face amount of $800,000. The promissory note bore interest at 4.8% per annum, called for monthly payments of principal and interest over 12 months, and was secured by a pledge of the purchased shares. If any installment of principal or interest was not paid within fifteen (15) days of the date when due, the Company may have declared all remaining installments of principal immediately due and payable and proceeded to collect the same at once. Under accounting rules applicable to the Company the face amount of this receivable was not included in the July 31, 2006 balance sheet because the note had not been paid. On October 25, 2006, the Company entered into an agreement with the above shareholder to accept 1,000,000 shares of Extreme Visual Technologies, Inc. common stock in exchange for $800,000 principal and $13,888 interest on the promissory note. The remaining value of $186,112 has been accounted for as unrealized appreciation on investments.

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, 2007, $6,049,265 or 96.4% of the Company’s assets consisted of investments, of which net unrealized gains before the income tax effect was $315,449. Deferred taxes on account of unrealized gains have been estimated at approximately $125,400. At January 31, 2007, the Company’s holdings of Extreme Visual Technologies, Inc., Creative Energy Solutions, Inc. and AccelaPure Corporation were valued at $2,000,000, $1, 000,000 and $1,000,000 respectively, which represented in the aggregate approximately 66% 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 may find it difficult 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 or depreciation on investments.

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

Three months ended January 31, 2007 compared to the three months ended January 31, 2006.

The Company generated revenue of $898,971 for the three months ended January 31, 2007 compared to $329,517 for the three months ended January 31, 2006. 99.8% of the Company’s revenue was generated for services and 0.2% was for interest for the three months ended January 31, 2007 and 100% of the Company’s revenue was generated for services for the three months ended January 31, 2006. 100% of the Company’s revenue for services was received in the form of equity securities of portfolio companies for the three months ended January 31, 2007 and January 31, 2006.

Total operating expenses for the three months ended January 31, 2007 were $326,876, the principal components of which were payroll of $117,332, professional fees of $152,271, which consisted primarily of legal, accounting and consulting fees. These expenses compared to $221,906 for the three months ended January 31, 2006, 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.

The Company realized income from operations of $572,095 for the three months ended January 31, 2007 compared to income from operations of $107,611 for the three months ended January 31, 2006.

Nine months ended January 31, 2007 compared to the nine months ended January 31, 2006.

The Company generated revenue of $2,410,261 for the nine months ended January 31, 2007 compared to $572,817 for the nine months ended January 31, 2006. 99.2% of the Company’s revenue was generated for services and 0.8% was for interest for the nine months ended January 31, 2007. 100% of the Company’s revenue was generated for services for the nine months ended January 31, 2006. 100% of the Company’s revenue for services was received in the form of equity securities for the nine months ended January 31, 2007 and January 31, 2006.

Total operating expenses for the nine months ended January 31, 2007 were $1,605,533, the principal components of which were payroll of $375,604, professional fees of $849,017, of which $447,000 represents options expense and professional fees of $402,017 which consisted primarily of legal, accounting and consulting fees, and $185,612 of share based compensation expense. These expenses compare to $703,816 for the nine months ended January 31, 2006 the principal components of which were payroll of $341,653 and professional fees of $189,225 which consisted primarily of legal, accounting and consulting fees.

The Company realized a profit from operations of $804,728 for the nine months ended January 31, 2007 compared to a loss from operations of ($130,999) for the nine months ended January 31, 2006.

Liquidity and Capital Resources

The Company’s cash expenses approximate $90,000 per month. Because Company revenues, when received, are usually in the form of portfolio securities rather than cash, such revenues are not of a type capable of being used to satisfy the Company’s ongoing monthly cash requirements. Consequently, for the Company to be able to avoid having to defer expenses, sell portfolio companies’ securities to raise cash to pay operating expenses, or default on its obligations, it needs to sell at least $90,000 per month of common stock. There is no assurance that the Company will be able to do so and in fact, the Company has not sold any common stock since June, 2006.

As a result of the Company’s failure to generate cash from operations or to sell shares since the first fiscal quarter of the year, at January 31, 2007 the Company’s cash and liquid assets declined to only about $1,000. Because of a shortage of cash, the Company has financed operations by allowing accounts payable and accrued expenses to increase from $195,114 at April 30, 2006 to $689,232 at January 31, 2007.

In an effort to meet its obligations the Company is currently attempting to raise cash through the sale of common stock. Indeed, from inception, the Company has relied for liquidity on the infusion of capital through capital share transactions. If the Company is not successful in this effort, it will attempt to dispose of shares of some of its portfolio companies’ securities to the extent necessary to pay its ongoing monthly operating expenses and accounts payable. 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.

Needless to say, 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

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 Stock 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, 2006.

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 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 19, 2007	By:	/s/ Michael D. Queen
		Michael D. Queen, President


	Universal Capital Management, Inc.

Date: March 19, 2007	By:	/s/ Joseph T. Drennan
		Joseph T. Drennan, Treasurer