MAJOR LEAGUE FOOTBALL INC - Annual Report: 2009 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-K

For the fiscal year ended April 30, 2009

OR

For the transition period from                          to                          

Commission File Number 000-51132

Universal Capital Management, Inc.

(Exact name of registrant as specified in its charter)

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  ý.    No ¨.

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  x    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  x

As of August 12, 2009, the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $879,462.  Such aggregate market value was computed by reference to the closing price of $0.25 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 12, 2009 was 6,412,246.

Table of Contents

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:

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our expectations of future results of operations or financial condition;

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

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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.

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Introduction

Universal Capital Management, Inc. (the “Company,” “we,” or “our”) is a publicly traded business development company.  We are primarily engaged 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. We refer to the companies that we invest in and provide management services for as “portfolio companies.”  We have two types of portfolio companies, portfolio holding company and 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 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.

Our 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 (the “1940 Act”).  Our Company was formed as a Delaware corporation on August 16, 2004.  Our offices are located at 2601 Annand Drive, Suite 16, Wilmington, DE 19808.  Our Internet website is located at: www.unicapman.com.

Our Company’s fiscal year ends April 30.  At April 30, 2009, we had investments of approximately $5,310,972 at fair value in eight portfolio companies

Investments

We currently hold the securities of eight portfolio companies and we intend to make additional investments in companies that require capital for technology development or growth, and that will probably require managerial assistance.  Our primary focus is on making non-control investments in small, privately-held companies or public companies with what management believes are valuable products, processes or franchises. Generally, our Company limits total cash investments in any individual portfolio company to the lesser of $500,000 or an amount equal to 10% of our Company’s net assets at the time of investment. Because of our Company’s small size, our investments may not always satisfy this criterion.   To date, our initial investment in each of our portfolio companies has been significantly less than $500,000. By limiting the size of total investment in any one portfolio company, we hope to reduce and diversify our risk.

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As a business development company, we make it possible for our stockholders to participate at an early stage in emerging fields.  We offer our stockholders an in-house team of professionals who operate under the general supervision of our board of directors.  They include three full-time members of management who vote on all purchases and sales of portfolio company securities and prospective investments and who collectively have expertise in venture capital investing to evaluate and monitor investments.  We believe our stockholders benefit when our officers and employees, rather than outside investment advisors, manage our operations.

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:

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providing management services and recruiting management;

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formulating operating strategies and corporate goals;

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formulating intellectual property strategies;

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investing our investment capital;

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assisting in obtaining outside capital;

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introductions to investment bankers and other professionals;

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mergers and acquisitions;

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introductions to potential joint venture partners, suppliers and customer;

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assisting in financial planning; and

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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.

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Portfolio Securities

The Company’s investments at April 30, 2009, were as follows:

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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, the Company 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.  It expects to publicly trade under the symbol “VNRL” on the OTC.BB market.

Lightwave Logic, Inc. (“Lightwave”) is headquartered in Wilmington, 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.

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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.

MICCO Group, Inc. (“MICCO”), a Georgia corporation, was founded in 2008 and is headquartered in Alpharetta, Georgia.  MICCO is a software solutions provider for the music and entertainment industries that supports advanced business and media management.  MICCO has created a platform for media and entertainment companies to help management generate more revenue reduce costs and interact with their customers and employees more efficiently.

MICCO strives to be the foundation of a new generation of media and entertainment services by enabling professionals to focus on their core business, creating innovative new revenue models in a dynamic, changing market, while they solve the various digital, mobile, technical collaboration and data analysis issues faced by management.

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MICCO simplifies the world for its clients by reducing the wide and growing world of tools, services, applications and logins into a single dashboard with a single login.  Through this dashboard, they unify all of the activities that their client are engaged in on a daily basis so they can have a more comprehensive view of their business in a cost-effective and time-efficient way without having to build and support anything new internally.  MICCO amplifies the power of its client’s message by providing real-time connections to distribution and rich business intelligence around any of its activities so that no decision would need to be made in a vacuum or without fully understanding the demands of the consumer audience.

Multi-View Technologies, Inc. (“MVT”), is a development stage corporation formed under the laws of the state of Delaware in July of 2008. They are a digital media company that uses a unique, proprietary hardware and software technology to create and distribute dynamic 3D-content, which is displayed on a Liquid Crystal Display (“LCD”) screen that can be viewed without special eyewear.  The 3D content appears to magically float in front of the screen. Eyewear-free 3D technology, considered the  “holy grail” of media messaging, is poised for explosive growth and will revolutionize several industries in the coming years - including digital signage, gaming, entertainment, medical, as well as commercial and consumer display markets.  

MVT’s mission is to provide the end user with improved communication impact by designing, developing, and enhancing electronic entertainment viewing experiences through the utilization of 3D stereoscopic sciences and content. In order to achieve and sustain this mission, the company will stay on the leading edge of development and strive to set industry standards.

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.

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Dominion Capital Management Corporation (“Dominion”), a Texas corporation, was formed in March 2008 and is headquartered in Houston, Texas.  Dominion is a development stage company that has licensed a proprietary risk-mitigating process to offer contract purchase order financing solutions to small business contractors nationwide.  The company will offer its credit facilities through a national network of factoring companies that will provide commercial credit facilities to small businesses.

The company will issue short-term standby letters of credit to participating factoring companies or suppliers to induce the extension of commercial credit or funding to meet contracted delivery expenses.

BF Acquisition Group V, Inc. is a Florida corporation which currently is inactive and has no business.

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, nor immediate liquidation value, nor 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.

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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.

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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:

At April 30, 2009, approximately all of our Company’s investments were recorded at fair value.

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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, 2009, our Company had a current year taxable loss of $287,000.

Competition

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.

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, 2009, our Company employed six full-time employees.

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Regulation

As a business development company, we are exempt from certain of the 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 to 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:

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

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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

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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.

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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:

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

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

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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

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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.

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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 materialize, 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, 2009, we had cash resources of $15,431.  In the year ended April 30, 2009 we had revenues of $960,424, virtually all of which were received in the form of shares or warrants of portfolio companies. 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, 2010 and could lead to continuing dilution in the interest of existing Company stockholders. Moreover, we cannot assure you that we will be able to find investors willing to purchase new Company shares or securities of portfolio companies at a price and on terms acceptable to our Company, in which case, we could deplete our cash resources.  

Because there is generally no established market in which to value our investments, our Board of Director’s 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.

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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.

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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 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, 2009, approximately 40% of the Company's asset value resulted from a single portfolio holding and over 79%, from two portfolio holdings.

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.

We will need to hire additional employees as the size of our portfolio increases.

We anticipate that it will be necessary for us to add additional professionals with expertise in venture capital and administrative and support staff to accommodate the increasing size of our portfolio. There is competition for highly qualified personnel. We may not be successful in our efforts to recruit and retain highly qualified personnel because we may not be able to afford the expense of such personnel.

17

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).

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.   

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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.

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.

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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 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.

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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 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 less liquid than they might be otherwise, 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.

21

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.

Unfavorable general economic conditions, as well as unfavorable conditions specific to the venture capital industry or a segment of portfolio companies, could result in the inability of our portfolio companies to access additional capital, leading to financial losses in our portfolio.

Our portfolio companies are susceptible to economic slowdowns or recessions. An economic slowdown or adverse capital or credit market conditions may affect the ability of any or all of our portfolio companies to raise additional capital from venture capital or other sources or to engage in a liquidity event such as spin-off or merger. Certain portfolio companies may have a harder time accessing capital if their industries are out of favor. Adverse economic, capital or credit market conditions may lead to financial losses in our portfolio.

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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.

Investing in privately held companies may be riskier than investing in publicly traded companies due to the lack of available public information.

We frequently invest in privately-held companies that may be subject to higher risk than investments in publicly traded companies. Generally, little public information exists about privately held companies, and we will be required to rely on the ability of our management to obtain adequate information to evaluate the potential risks and returns involved in investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose some or all of the money we invest in these companies. These factors could subject our Company to greater risk than investments in publicly traded companies and negatively affect investment returns.

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.

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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 Bulletin Board which may make it more difficult for you to sell your stock.

Our common stock is quoted on the OTC Bulletin Board 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 prices 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 1.

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.

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Legal Proceedings

Other than as described below, the Company is a party to certain proceedings incidental to the ordinary course of its business, none of which, in the current opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

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.

The Company believes that McCrae’s claims lack merit and intends to defend against such claims vigorously.

Ronald R. Genova Lawsuit

During July 2007, Ronald R. Genova (plaintiff) filed a lawsuit in Philadelphia County, Court of Common Pleas against Defendants Lightwave Logic, Inc., (formerly Third-Order Nanotechnologies, Inc.), PSI-TEC Holdings, Inc. (which subsequently merged into Lightwave Logic, Inc.) and Universal Capital Management, Inc.  The lawsuit was dismissed in May 2008 against all defendants with Lightwave Logic, Inc. making a payment $47,500 to the plaintiff.

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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.  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.

Item 4.

Submission of Matters to a Vote of Security Holders.

No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of Company stockholders.

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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.  The Company’s common stock trades under the symbol “UCMT”.

Market Information

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

Holders

As of August 13, 2009, the Company had approximately 602 holders of record of its Common Stock.

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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.  

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Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plans as of April 30, 2009.

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.

Purchases and Sales of Company Common Stock

The following table sets forth for the calendar months indicated, information regarding sales of the Company’s common stock:

 The Company did not repurchase any shares of common stock during the fiscal year covered by this report.

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COMPARATIVE STOCK PERFORMANCE

The graph below compares the cumulative total return during the period from April 30, 2005 to April 30, 2009, 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:

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.

Our Company is a public venture capital company. Our primary business is to invest in emerging growth companies.  Our 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.

Our Company’s primary investment objective is to increase its net assets by adding value to the portfolio companies and thus, increasing stockholder value. Management believes that our 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.

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The income that our 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 portfolio securities will most likely make up most of our Company’s cash revenues.

Consequently, our Company’s success or failure will depend on investing in companies which appreciate in value more than other companies in which our Company invests depreciate in value. 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.

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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:

The changes in total assets, net assets and net asset value per share for the year ended April 30, 2009 were primarily attributable to:

·

Our Company’s investment in Vystar warrants were valued at $2,268,000 at April 30, 2009 compared to $1,854,000 at April 30, 2008 for a net unrealized appreciation of $414,000 for the year ending April 30, 2009.  

·

During July 2008, our Company signed a management services agreement with a new portfolio company, iVolution Medical Systems (“IMS”).  Our Company received a warrant to purchase 1,000,000 shares of IMS common stock valued at $112,000 and a warrant to purchase 500,000 shares of IMS common stock, valued at $17,000.  At April 30, 2009, the combined value of these warrants was $646,000 for an unrealized appreciation of $517,000 for the year ending April 30, 2009.

·

During July 2008, our Company signed a management services agreement with a new portfolio company, MICCO Group (“MG”).  Our Company received a warrant to purchase 1,000,000 shares of MG common stock valued at $6,000 and a warrant to purchase 500,000 shares of MG common stock, valued at $0 upon issuance.  At April 30, 2009, the combined value of these warrants was $605,000 for an unrealized appreciation of $599,000 for the year ending April 30, 2009.

·

During July 2008, our Company signed a management services agreement with a new portfolio company, Multi-View Technologies (“MVT”).  Our Company received 2,000,000 shares of MVT common stock valued at $20,000.  Our Company also received a warrant to purchase 500,000 shares of MVT common stock, valued at $1,000.  At April 30, 2009, the warrants were valued at $245,000 and the common stock was valued at $1,000,000 for an unrealized appreciation of $1,224,000 for the year ending April 30, 2009.

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·

Lightwave Logic, Inc. (“LWLG”), average valuation on restricted and unrestricted shares decreased from $2.55 to $0.42 per share during the year ending April 30, 2009.  During the year ending April 30, 2009, our Company sold 499,995 shares (which equates to approximately 9,615 shares sold per week) for a sales price of $367,192 with a cost of $289,997 for a realized gain of $77,195.  The Company also exchanged 60,000 shares of LWLG common stock for investor relations services for LWLG in the amount of $75,600.  The Company purchased 3,000 shares of LWLG on the open market at a cost of $2,010.  Our Company’s investment in LWLG common stock had a net unrealized depreciation of $1,972,988 for the year ending April 30, 2009.  Our Company’s investment in LWLG warrants were valued at $209,000 at April 30, 2009 compared to $2,208,000 at April 30, 2008, for a net unrealized depreciation of $975,000 for the year ending April 30, 2009.  Our Company exercised a warrant to purchase 400,000 shares of LWLG stock in January 2009 at $0.001 per share or $400.

·

During the year ending April 30, 2009, our Company signed a management services agreement with Dominion Capital Management Corporation (“DCMC”) for a warrant to purchase 500,000 shares of DCMC common stock valued at $1,000.  In addition to this warrant, the Company has a warrant to purchase 1,000,000 shares of DCMC common stock that was valued at $5,000 at April 30, 2008.  At April 30, 2009, the combined value of these warrants was $5,500 for an unrealized depreciation of $500 for the year ending April 30, 2009.  

·

SIVOO Holdings, Inc. (“SIVOO”) average valuation on restricted and unrestricted shares decreased from $0.21 to $0.015 per share during the year ending April 30, 2009.  During the year ending April 30, 2009, our Company sold 10,000 shares of SIVOO for a sales price of $329 with a cost of $2,500 for a realized loss of $2,171.  The Company exchanged 300,000 shares of SIVOO common stock for investor relations services for SIVOO in the amount of $96,000.  Our Company’s investment in SIVOO common stock had a net unrealized depreciation of $198,527 for the year ending April 30, 2009.  Our Company’s investment in SIVOO warrants were valued at $10,800 at April 30, 2009 compared to $241,000 at April 30, 2008, for a net unrealized depreciation of $230,200 for the year ending April 30, 2009.  

·

Theater Xtreme Entertainment Group, Inc. (“TXEG”) declared bankruptcy in December 2008.  During July 2008, our Company received 2,500,000 shares pursuant to one year management services contract with a cost of $175,000. Due to TXEG declaring bankruptcy, our Company’s investment in TXEG common stock and warrants was written off and there was a net realized loss of $900,788 for the year ending April 30, 2009.  

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·

During the year ending April 30, 2009, the Company learned that Creative Energy Solutions, Inc. (“CES”) was no longer interested in becoming a public entity and they were not following the original business plan.  CES bought back the company’s holdings of their 2,000,000 shares of common stock for $200 for a net realized loss of $999,800 for the year ending April 30, 2009.

·

During the year ending April 30, 2009, our Company sold 221,429 shares of Gelstat Corp. for a sales price of $10, with a cost of $350,000, for a realized loss of $349,990.

·

During the year ending April 30, 2009, our Company sold 47,619 shares of Neptune Industries for a sales price of $9,493 with a cost of $20,000 for a realized loss of $10,507.

·

During the year ending April 30, 2009, our Company wrote off its investment in IPI Fundraising, Inc. for a realized loss of $6,625.  IPI has been out of business since December 2005 and is no longer a valid portfolio company.

·

The decrease in cash of $5,348.

·

The increase in accounts payable and accrued expenses of $169,896.

·

The decrease in deferred tax liability of $708,000.

·

The decrease in deferred revenue of approximately $583,000, which is due mainly to an increase in deferred revenue of $332,000 ($175,000 for TXEG, $1,000 for DCMC, which our Company is to earn over a twelve month period beginning July 2008, $6,000 for MG, which is to be earned over a twelve month period beginning July 2008, $112,000 for IMS, which is to be earned over a three month period beginning July 2008, $17,000 for IMS, which is to be earned over a twelve month period beginning July 2008, $20,000 for MVT, which is to be earned over a three month period beginning July 2008 and $1,000 for MVT, which is to be earned over a twelve month period beginning July 2008) offset by $914,828 ($276,666 for LWLG, $287,250 for TXEG, $125,412 for iVolution, $193,000 for Vystar, $20,750 for Multi-View, $6,000 for Micco Group and $5,750 for DCMC) which was earned during the year ending April 30, 2009.

·

The decrease in current income taxes payable of approximately $241,000.

·

The addition to Net Capital of $1,389,636 which consists of the issuance of 334,706 shares of common stock pursuant to a private offering of $263,500, exercise of employee options of $75,000 and share-based compensation expense of $1,051,136.

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Our unrealized appreciation (depreciation) varies significantly from year to year as a result of the wide fluctuation in the value of the Company’s portfolio securities. For example, we suffered a cumulative unrealized depreciation of $358,451 on our holdings of Lightwave Logic, Inc. for the year ended April 30, 2009 compared to a cumulative unrealized appreciation of $3,291,150 for the year ending April 30, 2008 as a result of an decrease of $2.13 in the average value of the portfolio shares during such time period, the sale of 499,995 shares of Lightwave Logic, Inc., exchange of 60,000 shares of Lightwave Logic, Inc. for investor relations services for LWLG and an exercise of a warrant to purchase 400,000 shares of Lightwave Logic, Inc. to the portfolio.

We had cumulative unrealized appreciation of $1,559,621 at April 30, 2009 compared to cumulative unrealized appreciation of $1,883,330 at April 30, 2008.

At April 30, 2009 and April 30, 2008, $5,310,972 or approximately 95% and $8,002,795 or approximately 96.8% of our assets, respectively, consisted of investments, of which net unrealized appreciation (depreciation) before the income tax effect were ($323,709) and $1,498,262, respectively.  Deferred tax liability has been estimated at approximately $33,000 and $741,000, at the years ending April 30, 2009 and 2008, 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, 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.

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Year ended April 30, 2009 compared to the year ended April 30, 2008 and April 30, 2007

For the year ended April 30, 2009 we had revenue for services in the amount of $960,424 compared to $3,845,715 for the year ended April 30, 2008 and $3,294,637 for the year ended April 30, 2007.  Approximately 96% of our revenue for services was received in the form of equity securities for the year ended April 30, 2009 compared to approximately 98% for the year ended April 30, 2008 and approximately 97% for the year ended April 30, 2007.

 Total operating expenses for the year ended April 30, 2009 were $2,038,412, the principal components of which were professional fees of $458,263, of which $187,668 represents investor relations expense (for our portfolio companies that we paid with our shares of those companies), approximately $130,614 of legal expense, and approximately $50,100 in auditing and accounting expense.  Additionally, principal components of operating expenses include $1,208,229 for payroll which includes $1,051,136 of share based compensation expense, $140,765 in bad debt expense, $97,172 of insurance expense and $33,794 of travel and entertainment expense.  By comparison, total operating expenses for the year ended April 30, 2008 were $1,164,201, the principal components of which were professional fees of $854,132, payroll expense of $105,104, insurance expense of $76,821, and travel and entertainment expenses of $26,146.  By comparison, total operating expenses for the year ended April 30, 2007 were $2,246,754, the principal components of which were payroll of $706,934, professional fees of $1,279,295, insurance of $68,410 and travel and entertainment of $48,337.  

We realized a loss from operations of ($1,077,988) for the year ended April 30, 2009 compared to income of $2,681,514 for the year ended April 30, 2008 and a profit from operations of $1,047,883 for the year ended April 30, 2007.

Our Company had net unrealized depreciation of ($323,709) at year end April 30, 2009, compared to a net unrealized appreciation of $1,498,262 at year end April 30, 2008 and a cumulative net unrealized depreciation of ($406,953) at year end April 30, 2007.

Our company had a recognized loss of $2,154,786 for the year ended April 30, 2009.  This consists of a loss of $999,800 for the buyback of 2,000,000 shares of Creative Energy Solutions, Inc. for $200 with a cost of $1,000,000, a loss of $900,788 for the disposal of 3,225,844 shares of Theater Xtreme Entertainment Group and a warrant to purchase 500,000 shares of TXEG at a total cost of $900,788, a loss of $349,990 for the sale of 221,429 shares of Geltat Corporation for $10 with a cost of $350,000, a loss of $10,507 for the disposal of 47,619 shares of Neptune Industries for $9,493 with a cost of $20,000, a loss of $6,625 for the disposal of 575,000 shares of IPI with a cost of $6,625, a loss of $5,070 for the sale/investor relations of 310,000 shares of SIVOO for $96,329 with a cost of $101,399, offset by a gain of $77,196 for the sale of 499,995 shares of Lightwave Logic, Inc. for $367,192 with a cost of $289,996 and the gain of $40,800 on the exchange of shares for investor relations services for Lightwave Logic, Inc. of 60,000 shares for $75,600 with a cost of $34,800.

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For the year ending April 30, 2008, our company had a recognized loss of $2,069,152.  This loss consists of $1,813,687 for the sale of 2,000,000 shares of Extreme Visual Technologies for $200 with a cost of $1,813,887, $287,883 for the sale of 305,000 shares of Lightwave Logic, Inc. for $357,016 with a cost of $644,899 and $20,290 for the sale of 500,000 shares of Theater Xtreme for $324,000 with a cost of $344,290, offset by a gain of $52,708 for the sale of 389,900 shares of SIVOO, Inc. for $157,683 with a cost of $104,975.

For the year ending April 30, 2007, our company had a recognized loss of $644,342.  This loss consists of $ $999,900 for the sale of 1,000,000 shares of Accelapure Corporation for $100 with a cost of $1,000,000, offset by the gain of $61,644 for the sale of 92,500 shares of Lightwave Logic, Inc. for $63,911 with a cost of $2,267 and a gain of $293,914 for the exchange of shares for investor relations services for Lightwave Logic, Inc. of 495,000 shares for $326,550 with a cost of $32,636.  

Liquidity and Capital Resources

From inception, our Company has relied upon the infusion of capital through capital share transactions to obtain liquidity.  We had $15,431 of cash at April 30, 2009.   Consequently, payment of operating expenses and cash with which to make investments will have to come similarly from equity capital to be raised from investors or from borrowed funds. For the year ending April 30, 2009, we have had an officer exercise an option to purchase 375,000 shares of the Company’s common stock for a total of $75,000 and received $81,372 in advances from shareholders. 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.  

Our Company raised an additional $116,000 in funds through note holders through July 2009.

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.

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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 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

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Item 9.

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

Not Applicable.

Item 9A (T).

 Controls and Procedures.

Evaluation of Disclosure Controls and Procedures: As of April 30, 2009, the Company evaluated the effectiveness and design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are the controls and other procedures that the Company designed to ensure that it records, processes, summarizes, and reports in a timely manner the information that it must disclose in reports that the Company files with or submits to the Securities and Exchange Commission. Michael D. Queen, the principal executive officer of the Company, and Theresa Q. Hoffmann, the principal financial officer, reviewed and participated in this evaluation. Based on this evaluation, the Company made the determination that its disclosure controls were not effective due to its inability to allocate a sufficient amount of its capital resources to adequately review its financial statements, which occurred as a result of the Company’s limited cash position during its 2009 fiscal year.

Management's Report on Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including Michael D. Queen, the principal executive officer of the Company, and Theresa Q. Hoffmann, the principal financial officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). In making this assessment, our management considered the limited cash on hand, and the resultant inability to allocate a sufficient amount of capital resources to adequately review our financial statements.  Based on this evaluation, our management, with the participation of Michael D. Queen, the principal executive officer of the Company, and Theresa Q. Hoffmann, the principal financial officer, concluded that, as of as of April 30, 2009, the Company’s internal control over financial reporting is not effective, which may increase the risks of errors in our financial reporting.

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We are currently in the process of acquiring a sufficient amount of funds to commit the cash resources to adequately review our financial statements, which should provide our Company with an effective design and operation of disclosure controls and procedures. While funded with sufficient capital resources, our Company's internal control over financial reporting includes policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of our Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

This annual report does not include an attestation report of our Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit our Company to provide only management's report in this annual report.

Limitations on Controls: Our management, including Michael D. Queen, the principal executive officer of the Company, and Theresa Q. Hoffmann, the principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors 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. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. In addition, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and controls may become inadequate if conditions change. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes to company internal controls: In our opinion, there were no material changes in our Company's internal controls over financial reporting during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B.

Other Information.

None.

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PART III

Item 10.

Directors and Executive Officers and Corporate Governance.

(a)  Identity of directors, executive officers and significant employees.

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.

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(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.

Robert G. Oberosler, President and Chief Operating Officer.  Mr. Oberosler has been President and Chief Operating Officer of the Company since February 2009. 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. 

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.

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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.

Joseph T. Drennan, Vice President and Director.  Mr. Drennan has been Vice President and a director of the Company since 2004 and was the Treasurer from 2004 through March 2009.  Mr. Drennan has more than 30 years of experience in management, marketing and finance in the financial services and information technology industries.  He has directed and implemented business turnarounds, crisis management and strategic planning for customers and clients ranging in size from $5 million in revenue to Fortune 100 companies in a variety of industries.  From 2001 to 2004 Mr. Drennan was a partner in a management consulting firm serving small and mid-market companies in a variety of industries with emphasis on operational analysis, strategic and operational planning and implementation solutions and processes.  From 1996 to 2000 Mr. Drennan served as Vice President and Secretary for CoreTech Consulting Group, Inc., a leading information technology consulting firm.  His responsibilities included planning, marketing, finance, legal and facilities management.  Mr. Drennan currently serves on the Board of Directors of United Bank of Philadelphia and serves on its Audit and Capital and Planning Committees.  He is a past Chairman of the Board of St. Joseph’s Prep, the Jesuit high school in Philadelphia.

Steven P. Pruitt, Jr., Director.  Mr. Pruitt is DuPont’s Internal Control Coordinator and is responsible to 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.

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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 perisable 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.

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 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.  We are currently seeking a replacement independent director so that we can properly conform to the Investment Company Act of 1940 that requires our board of directors to 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 2009.  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 2009, 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.

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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 five executive officers.  Presently, the independent directors review and approve the compensation provided to the executive officers.

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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)(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.  

During the 2009 fiscal year, the Audit Committee held 2 meetings.

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.

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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, 2009, 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.

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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.  The stock option awards made to the Company’s named executive officers during the fiscal year ended April 30, 2009, are set forth below in “Grants of Plan-Based Awards”.

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       The table below summarizes all compensation awarded to, earned by, or paid to our current executive officers for the fiscal years ended April 30, 2009, 2008 and 2007.

(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)

During the fiscal year ending April 30, 2007, the officers and directors of the Company surrendered their rights to compensation that has been deferred in that current year as well as all previous years.  Such deferred compensation is reflected as contributed capital in the Company’s financial statements.

(3)

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.

(4)

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

(5)

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.

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(6)

From inception to March 2009, Mr. Drennan served as Chief Financial Officer, Secretary and Treasurer.  From inception to current, 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.

Grants of Plan Based Awards

The following table sets forth information concerning each grant of an award made to a named executive officer in the fiscal year ending April 30, 2009 under any plan:

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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, 2009:

OPTION EXERCISES AND STOCK VESTED

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Compensation of Directors

The table below summarizes all of the outstanding equity awards for our directors for the year ending April 30, 2009:

(1)  In August 2008, Mr. Pickard received an option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.87, exercisable immediately and expiring August 2018.  Mr. Pickard resigned from the Company’s Board of Directors on June 4, 2009 and has 90 days to exercise his options from that date.

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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 July 31, 2009, 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.

(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 6,412,426 shares outstanding on April 30, 2009, adjusted as required by rules promulgated by the SEC.

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(3)

Includes 350,000 shares owned by Mr. Queen’s wife (of which 300,000 shares are owned by Zenith Holdings, Inc.) as to which he disclaims beneficial ownership.

(4)

Includes 200,000 shares owned by Liberator, LLC, which the Company believes is under common control with McCrae Associates LLC.  The Company has taken the position in litigation among the parties that Liberator LLC is not entitled to such 200,000 shares and that McCrae is not entitled to the 300,000 shares set forth in the Security Ownership table.

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Security Ownership of Management

The following table sets forth, as of July 31, 2009, 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:

(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 6,412,426 shares outstanding on April 30, 2009, adjusted as required by rules promulgated by the SEC.

(3)

Includes 350,000 shares owned by Mr. Queen’s wife (of which 300,000 shares are owned by Zenith Holdings Inc.) 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.

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Item 13.

 Certain Relationships and Related Transactions.

On November 1, 2008 the Company entered into a promissory note with Barbara Queen, wife of Mr. Queen, 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.

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.

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).

The following table shows the aggregate fees billed to the Company by Morison Cogen LLP for professional services rendered during the fiscal years ended April 30, 2009 and 2008:

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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, 2009 and April 30, 2008

Schedule of Investments as of April 30, 2009

Statement of Operations for the years ended April 30, 2009, April 30, 2008 and April 30, 2007.

Statement of Changes in Net Assets for the years ended April 30, 2009, April 30, 2008 and April 30, 2007

Statement of Cash Flows for the years ended April 30, 2009, April 30, 2008 and April 30, 2007

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.

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*

Compensation Plans and arrangements for executives and others.

#

Filed herewith

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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 13, 2009

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.

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UNIVERSAL CAPITAL MANAGEMENT, INC.

FINANCIAL STATEMENTS

APRIL 30, 2009, 2008 AND 2007

UNIVERSAL CAPITAL MANAGEMENT, INC.

CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Universal Capital Management, Inc.

Wilmington, DE

We have audited the accompanying statements of net assets of Universal Capital Management, Inc. as of April 30, 2009 and 2008, including the schedule of investments as of April 30, 2009, and the related statements of operations, changes in net assets and cash flows, and the financial highlights (contained in Note 12 to the financial statements) for each of the three years in the period ended April 30, 2009.  These financial statements and financial highlights are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor were we engaged to perform, and audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal controls over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Universal Capital Management, Inc. as of April 30, 2009 and 2008, and the results of its operations, its cash flows, changes in net assets and financial highlights for each of the three years in the period ended April 30, 2009 in conformity with accounting principles generally accepted in the United States.

/s/ MORISON COGEN LLP

Bala Cynwyd, Pennsylvania

August 12, 2009

F-1

UNIVERSAL CAPITAL MANAGEMENT, INC.

STATEMENTS OF ASSETS AND LIABILITIES

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

F-2

UNIVERSAL CAPITAL MANAGEMENT, INC.

SCHEDULE OF INVESTMENTS

APRIL 30, 2009