- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to ___________

Commission file number: 000-50284

UNIVERSAL ENERGY CORP.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other Jurisdiction of Incorporation or Organization)

80-0025175

(IRS Employer I.D. No.)

30 Skyline Drive

Lake Mary, Florida 32746

(800) 975-2076

(Address and telephone number of

principal executive offices)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ¨ No

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 ¨ No

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ YES x NO

The number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding as of July 25, 2009 was 6,458,314,465 and there were 460 stockholders of record.

UNIVERSAL ENERGY CORP.

FORM 10-Q

INDEX

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2009 (unaudited) and December 31, 2008	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2009 and 2008	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2009 and 2008	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Controls and Procedures	29

Item 4T.	Controls and Procedures	29

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Submission of Matters to a Vote of Security Holders	32
Item 5.	Other Information	32
Item 6.	Exhibits	33

SIGNATURE PAGE		36

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	March 31,			December 31,
	2009			2008
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	56,953		$	82,524
Accounts receivable		73,969			116,416
Debt issuance costs, net of accumulated amortization of $664,588 and $602,132		135,538			197,994
Prepaid expenses		3,931			6,280

Total current assets		270,391			403,214

Prepaid drilling and completion costs		24,392			24,392
Oil and gas properties, proven (Note 4)		1,822,325			1,914,821
Property and equipment, net of accumulated depreciation of $7,117 and $6,131		6,420			7,406
Security deposit		1,545			1,545

Total assets	$	2,125,073		$	2,351,378

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	220,970		$	232,604
Accrued expenses		197,992			163,020
Accrued interest		123,173			68,487
Promissory notes to stockholders (Note 5)		350,000			350,000
Promissory notes to stockholders, net of discounts of $90,040 and $113,800
(Note 6)		184,960			161,200
September 2007 Convertible Debentures, net of discounts
of $285,733 and $628,813 (Note 7)		1,574,923			1,325,869
November 2007 Convertible Debentures, net of discounts
of $165,544 and $288,409 (Note 8)		643,384			563,947
May 2008 Convertible Debentures, net of discounts
of $768,372 and $920,528 (Note 9)		300,486			282,038
October 2008 Convertible Debentures, net of discounts
of $647,135 and $745,671 (Note 10)		84,041			35,505

Total current liabilities		3,679,929			3,182,670

Asset retirement obligation (Note 4)		4,550			2,270

Total liabilities		3,684,479			3,184,940

Commitments and contingencies (Note 15)

Stockholders’ deficit:
Common stock, $0.0001 par value, 6,500,000,000 shares
authorized, 6,458,301,965 and 3,254,175,258 shares issued and outstanding		645,833			325,419
Additional paid-in capital		14,146,476			13,639,741
Accumulated deficit		(16,351,715	)		(14,798,722	)

Total stockholders’ deficit		(1,559,406	)		(833,562	)

Total liabilities and stockholders’ deficit	$	2,125,073		$	2,351,378

See accompanying notes to unaudited condensed consolidated financial statements.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

	For the three months ended March 31,
	2009			2008

Revenue, net	$	142,387		$	86,529

Cost of revenue		49,580			13,745

Gross profit		92,807			72,784

Operating expenses
Depreciation, amortization and depletion		158,571			137,061
General and administrative expenses		481,241			684,536
Impairment loss on oil and gas properties		-			26,907
		639,812			848,504

Loss from continuing operations		(547,005	)		(775,720	)

Other income (expense)
Excess derivative value		(581,723	)		(892,737	)
Change in fair value of derivatives		-			2,738,889
Loss on conversion of debentures		(158,714	)		-
Accretion of discounts on convertible debentures		(158,674	)		(250,762	)
Interest expense, net		(106,877	)		(224,831	)
Total other income (expense)		(1,005,988	)		1,370,559

Net income (loss) before income taxes		(1,552,993	)		594,839

Provision for income taxes		-			-

Net income (loss)	$	(1,552,993	)	$	594,839

Weighted average shares outstanding – basic		5,587,551,541			29,860,317
– diluted		5,587,551,541			29,860,317

Total Net income (loss) per share
– basic	$	(0.00	)	$	0.02
– diluted	$	(0.00	)	$	0.02

See accompanying notes to unaudited condensed consolidated financial statements.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARY

Consolidated Statements of Cash Flows

	Three Months Ended March 31,
	2009			2008
Cash flows from operating activities:

Net income (loss)	$	(1,552,993	)	$	594,839

Adjustments to reconcile net loss to net cash used in continuing operating activities:
Accretion of discounts on convertible debentures		158,674			250,762
Change in fair value of derivatives		-			(2,738,889	)
Excess derivative value		581,723			892,737
Loss on debenture conversions		158,714			-
Amortization of fair value of warrants issued with promissory notes					81,446
Stock issued for interest		2,064			-
Stock compensation expense – advisory board stock grants		3			19,250
Stock compensation expense – stock options		345,207			345,207
Charges related to the impairment of oil and gas properties		-			26,907
Depreciation, amortization and depletion		158,571			137,061
(Increase) decrease in operating assets:
Prepaid drilling and completion costs		-			164,290
Accounts receivable		42,447			(71,821	)
Prepaid expenses		2,349			25,693
Increase (decrease) in operating liabilities:
Accounts payable		(11,635	)		432,721
Accrued expenses		34,972			14,982
Accrued interest		54,686			98,181
Asset retirement obligation		2,280			-
Net cash used in operating activities		(22,938	)		273,366

Cash flows from investing activities:
Investment in oil and gas properties		(2,633	)		(903,024	)
Security deposit		-			-
Purchase of property and equipment		-			(1,803	)
Net cash used in investing activities		(2,633	)		(904,827	)

Cash flows from financing activities:
Proceeds from issuance of promissory notes		-			600,000
Repayments of promissory note		-			(125,000	)
Net cash provided by financing activities		-			475,000

Net decrease in cash and cash equivalents		(25,571	)		(156,461	)

Cash and cash equivalents, beginning of period	$	82,524		$	234,984

Cash and cash equivalents, end of period	$	56,953		$	78,523

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	51,682		$	136,683
Non cash financing activities
Issuance of 3,204,114,207 and - shares of common stock in conversion of convertible debentures	$	321,163

See accompanying notes to unaudited condensed consolidated financial statements.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 – ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

Reporting Entity. Universal Energy Corp. and Subsidiaries (“Universal” or the “Company”) were incorporated in the State of Delaware on January 4, 2002, January 24, 2002 and February 26, 2007, respectively. The Company is authorized to issue 6,500,000,000 shares of common stock, par value $0.0001. The Company’s office is located in Lake Mary, Florida. Universal Energy Corp. is an independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States.

Principles of Consolidation. The Company’s consolidated financial statements for the periods ended March 31, 2009 and 2008, include the accounts of its wholly owned subsidiaries UT Holdings, Inc. and Universal Explorations Corp., both Delaware corporations. All intercompany balances and transactions have been eliminated.

NOTE 2 – BASIS OF PRESENTATION

The accompanying interim unaudited condensed consolidated financial statements have been prepared by Universal Energy Corp. (the “Company”) without audit, pursuant to the rules and regulations of the U. S. Securities and Exchange Commission for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. Interim results are not necessarily indicative of the results that may be expected for the year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, for the year ended December 31, 2008, contained in the Company’s December 31, 2008 Annual Report on Form 10-K.

The Company's condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses since January 4, 2002 (date of inception), which losses have caused an accumulated deficit of approximately $16,351,700 as of March 31, 2009. In addition, the Company has consumed cash in its continuing operating activities of approximately $22,900 for three months ended March 31, 2009. These factors, among others, could raise substantial doubt about the Company's ability to continue as a going concern.

Management has been able, thus far, to finance the losses, as well as the growth of the business, mostly through private placements of the Company’s common stock and debt offerings. The Company is continuing to seek other sources of financing and attempting to increase production of their prospects that have been drilled and completed. Conversely, the ongoing development of the Company’s oil and natural gas prospects in Louisiana and Texas will likely result in operating losses for the foreseeable future.

There are no assurances that the Company will be successful in achieving its goals. In view of these conditions, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and future plans provide an opportunity to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Reclassifications. Certain prior periods’ balances have been reclassified to conform to the current year consolidated financial statement presentation. These reclassifications had no impact on previously reported consolidated results of operations, stockholders’ deficit, or cash flows.

Cash and Cash Equivalents. The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Concentration of Credit Risk. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents with high credit quality financial institutions.

Accounts Receivable. The Company has receivables for sales of oil, gas and natural gas liquids. Management has established an allowance for doubtful accounts. The allowance is evaluated by management and is based on management’s periodic review of the collectability of the receivables in light of historical experience, the nature and volume of the receivables, and other subjective factors.

Full Cost Method. The Company utilizes the full-cost method of accounting for petroleum and natural gas properties. Under this method, the Company capitalizes all costs associated with acquisition, exploration and development of oil and natural gas reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties, interest and costs of drilling of productive and non-productive wells into the full cost pool. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made, the Company assesses quarterly whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties.

All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to amortization.

Debt Issue Costs . In accordance with the Accounting Principles Board Opinion 21 “Interest on Receivables and Payables”, the Company recognizes debt issue costs on the balance sheet as deferred charges, and amortizes the balance over the term of the related debt. The Company follows the guidance in the EITF 95-13 “Classification of Debt Issue Costs in the Statement of Cash Flows” and classifies cash payments for debt issue costs as a financing activity.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Valuation of Derivative Instruments . FAS 133, "Accounting for Derivative Instruments and Hedging Activities" requires bifurcation of embedded derivative instruments and measurement of fair value for accounting purposes. In determining the appropriate fair value, the Company used a Black Scholes model. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Change in Fair Value of Derivatives. In addition, the fair values of freestanding derivative instruments such as warrant derivatives are valued using Black Scholes models.

Revenue Recognition . The Company derives revenue primarily from the sale of produced natural gas and crude oil. The Company reports revenue as the net amount received after taking into account royalties. Production taxes and transportation costs are reported as separate expenses. Each month we record revenue based on the actual sales of crude oil and natural gas. The estimates we make relate to the average price received throughout the month for those sales. As the production is relatively steady throughout the month, the estimates for the price received for those sales are relatively accurate as the daily prices for the oil and natural gas sold are readily available. Variances between our estimates and the actual amounts received are recorded in the month payment is received.

Stock Based Compensation. Effective January 1, 2006, the Company adopted SFAS No. 123(R), “Share-Based Payment,” which requires the Company to record as an expense in its financial statements the fair value of all stock-based compensation awards. The Company currently utilizes a standard option pricing model (i.e., Black-Scholes) to measure the fair value of stock options granted to employees using the “modified prospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS No. 123(R) for all share-based payments granted after that date, and based on the requirements of SFAS No. 123(R) for all unvested awards granted prior to the effective date of SFAS No. 123(R).

Income Taxes. The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. The Company has net operating loss carryforwards that may be offset against future taxable income. Due to the uncertainty regarding the success of future operations, management has valued the deferred tax asset allowance at 100% of the related deferred tax assets. The Company’s financial position, results of operations or cash flows were not impacted by the adoption of FASB Interpretation No. 48, “Accounting for Uncertain Tax Positions.”

The Company has not recognized a liability as a result of the implementation of FIN 48. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit as of the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of FIN 48.

Income (Loss) per Share. The Company utilizes Financial Accounting Standards Board Statement No. 128, “Earnings Per Share.” Statement No. 128 requires the presentation of basic and diluted loss per share on the face of the statement of operations. Basic and diluted income (loss) per share has been calculated using the weighted average number of common shares outstanding during the period. For the periods ending March 31, 2009 and March 31, 2008, any outstanding options or warrants were excluded from the diluted loss per share computation since their effect is anti-dilutive.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Fair Value Instruments. Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements. This Statement defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance applies to other accounting pronouncements that require or permit fair value measurements. On February 12, 2008, the FASB finalized FASB Staff Position (FSP) No. 157-2, Effective Date of FASB Statement No. 157. This Staff Position delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 had no effect on the Company’s consolidated financial position or results of operations.

The Company partially adopted SFAS 157 on January 1, 2008, delaying application for non-financial assets and non-financial liabilities as permitted. This statement establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active exchange-traded securities and exchange-based derivatives.

Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.

Level 3 — unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models.

In accordance with SFAS 157, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table presents derivative liabilities, the Company’s only financial assets measured and recorded at fair value on the Company’s Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy during the three month period ended March 31, 2009:

Fair Value

As of March 31, 2009

Level 1

Level 2

Level 3

Total

Derivative liabilities

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

The following table reconciles, for the period ended March 31, 2009, the beginning and ending balances for financial instruments that are recognized at fair value in the consolidated financial statements:

Balance of Derivative Liabilities at December 31, 2008		$	-
Balance at March 31, 2009		$	-

The valuation of the derivatives are calculated using a Black-Scholes pricing model that is based on changes in the volatility of the Company’s shares, its stock price, the probability of a reduction in exercise and conversion price, and the time to conversion of the related financial instruments. See Note 7, Note 8, Note 9 and Note 10 for more information on the valuation methods used.

Recently Issued Accounting Standards. On December 31, 2008, the Securities and Exchange Commission (SEC) adopted major revisions to its rules governing oil and gas company reporting requirements. These include provisions that permit the use of new technologies to determine proved reserves and that allow companies to disclose their probable and possible reserves to investors. The current rules limit disclosure to only proved reserves. The new disclosure requirements also require companies to report the independence and qualifications of the person primarily responsible for the preparation or audit of reserve estimates, and to file reports when a third party is relied upon to prepare or audit reserves estimates. The new rules also require that oil and gas reserves be reported and the full-cost ceiling value calculated using an average price based upon the prior 12-month period. The new oil and gas reporting requirements are effective for annual reports on Form 10-K for fiscal years ending on or after December 31, 2009, with early adoption not permitted. We are in the process of assessing the impact of these new requirements on the Company’s financial position, results of operations and financial disclosures.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“FAS 165”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FAS 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. FAS 165 is effective for interim and annual periods ending after June 15, 2009 and will be effective for the Company beginning with its interim period ended June 30, 2009. Since FAS 165 at most requires additional disclosures, the Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for the Company in the interim period ending September 30, 2009 and it does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.

In December 2008, the FASB approved “Emerging Issues Task Force (EITF) 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock”. The objective of EITF 07-5 is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. EITF 07-5 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. We are in the process of assessing the impact of these new requirements on the Company’s financial position, results of operations and financial disclosure.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 4 – OIL AND GAS PROPERTIES, PROVEN

The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost center) basis. Capitalized costs, less estimated salvage value, are depleted using the units-of-production method whereby historical costs and future development costs are amortized over the total estimated proved reserves. Costs of acquiring and evaluating unproven properties and major development projects are initially excluded from the depletion and depreciation calculation until it is determined whether or not proved reserves can be assigned to such properties. These costs are assessed periodically to ascertain whether impairment has occurred (i.e., "impairment tests”). All of the Company’s oil and gas properties are located in the United States. The following table summarizes information regarding the Company's proved oil and gas acquisition, exploration and development activities:

	Net Carrying Value
	December 31, 2008		Additions		Depletion			March 31, 2009
Proven properties
United States	$	1,914,821	$	2,633	$	(95,129	)	$	1,822,325

In the United States, depletion expense for the three months ended March 31, 2009 was $95,129 (2008 - $0). During the year ended December 31, 2008, the Company’s proved properties in the United States exceeded their estimated realizable value which resulted in a $1,504,112 non-cash impairment loss being recognized.

Natural gas and oil reserves- United States

The following table summarizes the changes in the Company’s proved natural gas and oil reserves for the year ended December 31, 2008 and for the three months ended March 31, 2009. The Company had four producing wells at the beginning of fiscal 2008 that were not assigned proved reserves. The gas and oil reserve quantities owned by the Company were prepared by an independent petroleum engineering firm.

	Liquids (Bbls) 1			Gas (Mcf) 2			Total (Mcfe) 3
Proved reserves, January 1, 2008		-			-			-
Extensions, discoveries and other additions		3,682			619,839			641,931
Revisions of previous estimates		-			-			-
Production		(682	)		(64,019	)		(68,111	)
Proved reserves, December 31, 2008		3,000			555,820			573,820
Proved reserves, January 1, 2009		-			-			-
Extensions, discoveries and other additions		-			-			-
Revisions of previous estimates		-			-			-
Production		(264	)		(26,924	)		(28,508	)
Proved reserves, March 31, 2009		2,736			528,896			545,312

Proved reserves:
Beginning of year		3,000			555,820			573,820
End of period		2,736			528,896			545,312

(1)

Bbls – Barrels

(2)

Mcf – Thousands of cubic feet

(3)

Mcfe – Thousands of cubic feet equivalent (1 Bbls = 6 Mcf = 6,000 Mcfe)

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 4 – OIL AND GAS PROPERTIES, PROVEN, CONTINUED

Asset Retirement Obligations.

In accordance with SFAS 143, asset retirement obligations associated with producing wells are accrued over the life of the well. The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and natural gas properties is recorded when a liability is incurred, generally through a lease construction or acquisition or completion of a well. The current estimated costs are escalated at an inflation rate and discounted to present value at a credit adjusted risk-free rate over the estimated economic life of the properties. Such costs are capitalized as part of the basis of the related asset and are depleted as part of the applicable full cost pool. The associated liability is recorded initially as a long-term liability. Subsequent adjustments to the initial asset and liability are recorded to reflect revisions to estimated future cash flow requirements. In addition, the liability is adjusted to reflect accretion expense as well as settlements during the period. A reconciliation of the changes in the asset retirement obligations is as follows:

	March 31, 2009
Balance, beginning of year	$	2,270
Liabilities incurred		-
Accretion		2,280
Total asset retirement obligations	$	4,550

The asset retirement obligations were estimated based on a discount rate of 10%, an inflation rate of 3.0% and settlement period of 3.25 years.

NOTE 5 – PROMISSORY NOTES, OCTOBER 2007

Promissory Note - $200,000 . On October 4, 2007, the Company issued an unsecured promissory note in the amount of $200,000 to Billy Raley, the Company’s CEO and Director. Interest accrued on the outstanding principal balance from October 4, 2007 at a rate of 11 percent per annum. Interest was calculated on the basis of a 360-day year, and was charged on the principal outstanding from time to time for the actual number of days elapsed. The Company was required to pay the holder all accrued interest and the outstanding principal on the maturity date of April 4, 2008. The note was not paid on maturity and is therefore in default.

Promissory Note - $150,000. On October 4, 2007, the Company issued an unsecured promissory note in the amount of $150,000 to Dyron M. Watford, the Company’s CFO and Chairman. Interest accrued on the outstanding principal balance from and after October 4, 2007 at a rate of 11 percent per annum. Interest was calculated on the basis of a 360-day year, and was charged on the principal outstanding from time to time for the actual number of days elapsed. The Company was required to pay the holder all accrued interest and the outstanding principal on the maturity date of April 4, 2008. The note was not paid on maturity and is therefore in default.

Contemporaneous with the issuance of the promissory notes totaling $350,000, 350,000 warrants were issued at an exercise price of $1.05. The warrants vest immediately and have a 5 year term from the date of the promissory note. If at any time after one year from the initial exercise date there was no effective registration statement registering, or no current prospectus available for, the resale of the warrant shares by the holder, then this warrant may also be exercised at such time by means of a “cashless exercise” in which the holder shall be entitled to receive a certificate for the number of warrant shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where (A) = the volume weighted average price on the trading day immediately preceding the date of such election; (B) = the exercise price of the warrant, as adjusted; and (X) = the number of warrant shares issuable upon exercise of the warrant in accordance with the terms of the warrant by means of a cash exercise rather than a cashless exercise.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 6 – PROMISSORY NOTES, MARCH 2008

Promissory Notes - $600,000 . On or about March 13, 2008, the Company issued promissory notes in the amount of $600,000 to certain investors. Interest accrues on the outstanding principal balance of this note at the rate of 12% per annum. Interest is calculated on the basis of a 365-day year, and is charged on the principal outstanding for the actual number of days elapsed. The Company pays each holder all accrued interest on a calendar quarterly basis, commencing at the end of the first calendar quarter following the purchase of this note. The Company will begin making monthly cash principal payments on the first business day of each calendar month beginning on the first business day of the thirteenth full calendar month following purchase of the note. The amount of the monthly payment is based on a two-year amortization of the note. The holder has the right to convert the outstanding principal balance (in whole and not in part) into such number of securities by dividing the outstanding balance by $0.50.

The conversion feature in effect during the time the loan is outstanding, allows the note holder to convert outstanding principal and interest into common stock. The conversion price is subject to the pricing of certain stock offerings. During June 2008, two of the note holders exchanged $200,000 of principal balance of their note into the May 2008 Debenture financing. During November 2008, one of the note holders exchanged $125,000 of principal balance of their note into the October 2008 Debenture financing.

NOTE 7 – CONVERTIBLE DEBENTURES – SEPTEMBER 2007

On or about September 13, 2007, the Company consummated a securities purchase agreement (the “September 2007 SPA”) in which the Company received aggregate proceeds of $4,000,000 reflecting a 20% original issue discount to the purchasers. Pursuant to the September 2007 SPA, the Company issued:

an aggregate of $5,110,294 of Senior Debentures (the “Senior Debentures”), convertible into shares of the Company’s common stock at $0.80 per share;

A Warrants to purchase up to an aggregate of 6,387,868 shares of the Company’s common stock at an exercise price of $0.88 per share, for a period of 5 years from the closing date of the financing;

B Warrants to purchase up to an aggregate of 6,387,868 units, each unit consisting of a share of the Company’s common stock and one C Warrant, at exercise price of $0.80 per unit, for a period of 1 year from the effective date of the initial registration statement; the C Warrants permit the holders thereof to purchase one share of the Company’s common stock at a price of $0.88 per share.

The Senior Debentures are due and payable on August 31, 2009, and will begin to amortize monthly commencing on September 1, 2008. The Senior Debentures bear interest at a rate of eight percent per annum. The amortization may be effected through cash payments, or at the Company’s option subject to certain conditions, through the issuance of shares of the Company’s common stock, based on a price per share equal to 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment.

Until the maturity date of the Senior Debentures, the purchasers have the right to convert the Senior Debentures, in whole or in part, into shares of the Company’s common stock at a price $0.80, which was subsequently adjusted downward to $0.50 in March 2008 (upon issuance of certain promissory notes discussed in Note 6 – Promissory Notes) and further adjusted to the lesser of $0.25 or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment in June 2008 (upon issuance of the May 2008 Debentures discussed in Note 9). The conversion price may be adjusted downward under circumstances set forth in the Senior Debentures. If so adjusted, the aggregate number of shares issuable, upon conversion in full, will increase.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 7 – CONVERTIBLE DEBENTURES – SEPTEMBER 2007, CONTINUED

The Senior Debentures include customary default provisions and an event of default includes, among other things, a change of control, the sale of all or substantially all of the Company’s assets, the failure to file and have a registration statement declared effective on or before the deadlines set forth in the Registration Rights Agreement, or the lapse of the effectiveness of registration statements for more than 20 consecutive trading days or 30 non-consecutive days during any 12-month period (with certain exceptions) which results in such indebtedness being accelerated. Upon the occurrence of an event of default, each Debenture may become immediately due and payable, either automatically or by declaration of the holder of such Debenture. The aggregate amount payable upon an acceleration by reason of an event of default shall be equal to the greater of 125% of the principal amount of the Senior Debentures to be prepaid or the principal amount of the Senior Debentures to be prepaid, divided by the conversion price on the date specified in the Debenture, multiplied by the closing price on the date set forth in the Debenture.

The purchasers also received A Warrants to purchase 6,387,868 additional shares of common stock at a price of $0.88 per share exercisable for five years. The investors also received B Warrants to purchase 6,387,868 additional shares of common stock at a price of $0.80 per share exercisable for one year after the registration statement is declared effective. The investors will also receive a C Warrant with the exercise of the B Warrant that will allow the investors to purchase 6,387,868 additional shares of common stock at a price of $0.88 per share exercisable for a period of five years. The exercise price of the warrants may be adjusted downward under the circumstances set forth in the warrants. All warrants vest immediately upon issuance. If so adjusted, the aggregate number of shares issuable, upon exercise in full, will be increased so that the total aggregate cash exercise price remains constant.

Upon the occurrence of an event of default, the holder of the warrant can demand payment for their warrants at fair value.

The debenture agreements also have certain milestones that the Company has agreed to that if not met, results in the re-pricing of the conversion rate and warrant exercise price. One such milestone was a revenue target to be achieved by March 31, 2008. This milestone was not met. However, the conversion rates and exercise prices had been previously adjusted due to a subsequent rights offering in conjunction with a financing transaction to a price below the market value of the common stock at March 31, 2008.

The Company’s obligations to the holders in the September 2007 Financing are secured by a senior security interest and lien granted upon all of the Company’s assets pursuant to the terms of a Security Agreement entered into in connection with the closing. The Senior Debentures and the September 2007 Warrants contain anti-dilution provisions.

In connection with this transaction, each purchaser has contractually agreed to restrict its ability to convert the Senior Debentures, exercise the warrants and additional investment rights and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such conversion or exercise.

The fair values derivative instruments related to the Debentures were valued as of September 13, 2007, the date of issuance using the Black-Scholes model, resulting in an initial fair value of approximately $8,621,400. The excess of the fair value over the transaction price of the Debentures was recorded through the results of operations in September 2007 as a debit of approximately $4,621,400 to Charges Related to Issuance of September 2007 Convertible Debentures and Warrants.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 7 – CONVERTIBLE DEBENTURES – SEPTEMBER 2007, CONTINUED

The derivatives outstanding at December 31, 2008 were again valued at fair value using the Black Scholes model, resulting in a decrease in the fair value of the liability of approximately $7,272,000, which was recorded through the results of operations as a credit to adjustments to fair value of derivatives.

In connection with this financing, the Company paid cash fees to a broker-dealer of $120,000 and issued a warrant to purchase 280,000 shares of common stock at an exercise price of $0.88 per share. The initial fair value of the warrant was estimated at approximately $147,900 using the Black Scholes pricing model. The assumptions used in the Black Scholes model were as follows: (1) dividend yield of 0%, (2) expected volatility of 64.45%, (3) risk-free interest rate of 5.09%, and (4) expected life of 2 years. Cash fees paid, and the initial fair value of the warrant, have been capitalized as debt issuance costs and are being amortized over 24 months using the effective interest rate method. The following table summarizes the September 2007 Convertible Debentures and discounts outstanding at December 31, 2008:

September 2007 Debentures at fair value	$	5,110,294
Penalties		76,537
Conversions		(3,326,175	)
Warrant derivative discount		(223,653	)
Original issue discount		(62,080	)
Net convertible debentures	$	1,574,923

NOTE 8 – CONVERTIBLE DEBENTURES – NOVEMBER 2007

On or about November 29, 2007 the Company consummated a Securities Purchase Agreement (the “November SPA”) in which the Company received aggregate proceeds of $1,350,000 reflecting a 20% original issue discount to the purchasers. Pursuant to the November SPA, the Company issued:

an aggregate of $1,742,647 of Junior Debentures convertible into shares of the Company’s common stock at $0.80 per share;

D Warrants to purchase up to an aggregate of 2,178,309 shares of the Company’s common stock at an exercise price of $0.88 per share, for a period of 5 years from the closing date of the November 2007 Financing;

E Warrants to purchase up to an aggregate of 2,178,309 units, each unit consisting of a share of the Company’s common stock and one F Warrant, at exercise price of $0.80 per unit, for a period of 1 year from the effective date of the initial registration statement; the F Warrants permit the holders thereof to purchase one share of the Company’s common stock at a price of $0.88 per share.

G Warrants to purchase up to an aggregate of 2,178,309 shares at $1.00 per share for a period of five years from the closing date of the November 2007 financing.

The outstanding principal balances of the Junior Debentures are due and payable on October 31, 2009, and will begin to amortize monthly commencing on November 1, 2008. The Junior Debentures bear interest at a rate of 8 percent per annum. The amortization may be effected through cash payments, or at the Company’s option subject to certain conditions, through the issuance of shares of the Company’s common stock, based on a price per share equal to 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 8 – CONVERTIBLE DEBENTURES – NOVEMBER 2007, CONTINUED

Until the maturity date of the Junior Debentures, the purchasers have the right to convert the Junior Debentures, in whole or in part, into shares of the Company’s common stock at a price $0.80, which was subsequently adjusted downward to $0.50 in March 2008 (upon issuance of certain promissory notes discussed in Note 5 – Promissory Notes) and further adjusted to the lesser of $0.25 or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment in June 2008 (upon issuance of the May 2008 Debentures discussed in Note 9).

The Junior Debentures include customary default provisions and an event of default includes, among other things, a change of control, the sale of all or substantially all of the Company’s assets, the failure to file and have a registration statement declared effective on or before the deadlines set forth in the Registration Rights Agreement, or the lapse of the effectiveness of registration statements for more than 20 consecutive trading days or 30 non-consecutive days during any 12-month period (with certain exceptions) which results in such indebtedness being accelerated. Upon the occurrence of an event of default, each Debenture may become immediately due and payable, either automatically or by declaration of the holder of such Debenture. The aggregate amount payable upon an acceleration by reason of an event of default shall be equal to the greater of 125% of the principal amount of the Junior Debentures to be prepaid or the principal amount of the Junior Debentures to be prepaid, divided by the conversion price on the date specified in the Debenture, multiplied by the closing price on the date set forth in the Debenture.

The purchasers also received D Warrants to purchase 2,178,309 additional shares of common stock at a price of $0.88 per share exercisable for five (5) years. The investors also received E Warrants to purchase 2,178,309 additional shares of common stock at a price of $0.80 per share exercisable for one year after the registration statement is declared effective. The investors will also receive a F Warrant with the exercise of the E Warrant that will allow the investors to purchase 2,178,309 additional shares of common stock at a price of $0.88 per share exercisable for a period of five (5) years. The Purchases also received a G Warrants that will allow the purchase of up 2,178,309 of additional shares of common stock at a price of $1.00 per share. All warrants vest immediately upon issuance. Upon the occurrence of an event of default, the holder of the warrant can demand payment for their warrants at fair value.

The debenture agreements also have certain milestones that the Company has agreed to that if not met, results in the repricing of the conversion rate and warrant exercise price. One such milestone was a revenue target to be achieved by March 31, 2008. This milestone was not met. However, the conversion rates and exercise prices had been previously adjusted due to a subsequent rights offering in conjunction with a financing transaction to a price below the market value of the common stock at March 31, 2008.

The Junior Debentures and the warrants contain anti-dilution provisions.

In connection with this transaction, each purchaser has contractually agreed to restrict its ability to convert the Junior Debentures, exercise the warrants and additional investment rights and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such conversion or exercise.

The fair values derivative instruments related to the debentures were valued as of November 29, 2007, the date of issuance using the Black-Scholes model, resulting in an initial fair value of approximately $3,234,400. The excess of the fair value over the transaction price of the Debentures was recorded through the results of operations in 2007 as a debit of approximately $1,884,400 to Charges Related to Issuance of November 2007 Convertible Debentures and Warrants.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 8 – CONVERTIBLE DEBENTURES – NOVEMBER 2007, CONTINUED

The derivatives outstanding at December 31, 2008 were again valued at fair value using the Black-Scholes model, resulting in a decrease in the fair value of the liability of approximately $3,643,800 which was recorded through the results of operations as a credit to adjustments to fair value of derivatives.

In connection with this financing, the Company paid cash fees to a broker-dealer of $94,500 and issued a warrant to purchase 135,000 shares of Common Stock at an exercise price of $0.88 per share. The initial fair value of the warrant was estimated at approximately $73,100 using the Black-Scholes pricing model. The assumptions used in the Black-Scholes model were as follows: (1) dividend yield of 0%, (2) expected volatility of 145.14%, (3) risk-free interest rate of 5.09%, and (4) expected life of 1 year. Cash fees paid, and the initial fair value of the warrant, have been capitalized as debt issuance costs and are being amortized over 24 months using the effective interest rate method. The following table summarizes the November 2007 Convertible Debentures and discounts outstanding at December 31, 2008:

November 2007 Debentures at fair value	$	1,742,647
Conversions		(933,719	)
Warrant derivative discount		(128,244	)
Original issue discount		(37,300	)
Net convertible debentures	$	643,384

NOTE 9 – CONVERTIBLE DEBENTURES – MAY 2008

On or about June 9, 2008 the Company consummated a Securities Purchase Agreement (the “May 2008 SPA”) in which the Company received the following proceeds reflecting a 20% original issue discount to the purchasers. Pursuant to the May 2008 SPA, the Company issued:

an aggregate of $1,006,618 of Junior Debentures (the “May 2008 Debentures”) convertible into shares of the Company’s common stock at the lesser of $0.25 per share or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment;

An aggregate of $250,000 of May 2008 Debentures convertible into shares of the Company’s common stock at the lesser of $0.25 per share or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment (from conversion features which were in effect during the time certain promissory notes were outstanding, allows the note holder to convert outstanding principal and interest into future financings -see Note 5 – Promissory Notes).

I Warrants to purchase up to an aggregate of 5,026,471 shares of the Company’s common stock at an exercise price of $0.25 per share, for a period of 5 years from the closing date of the May 2008 Financing;

The outstanding principal balances of the May 2008 Debentures are due and payable on April 30, 2010. The May 2008 Debentures bear interest at a rate of 8 percent per annum.

Until the maturity date of the debentures, the purchasers have the right to convert their Debentures, in whole or in part, into shares of the Company’s common stock at a price equal to the lesser of $0.25 or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment. The conversion price may be adjusted downward under circumstances set forth in the May 2008 Debentures. If so adjusted, the aggregate number of shares issuable, upon conversion in full, will increase.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 9 – CONVERTIBLE DEBENTURES – MAY 2008, CONTINUED

The May 2008 Debentures include customary default provisions and an event of default includes, among other things, a change of control, the sale of all or substantially all of the Company’s assets, the failure to file and have a registration statement declared effective on or before the deadlines set forth in the Registration Rights Agreement, or the lapse of the effectiveness of registration statements for more than 20 consecutive trading days or 30 non-consecutive days during any 12-month period (with certain exceptions) which results in such indebtedness being accelerated. Upon the occurrence of an event of default, each Debenture may become immediately due and payable, either automatically or by declaration of the holder of such Debenture. The aggregate amount payable upon an acceleration by reason of an event of default shall be equal to the greater of 125% of the principal amount of the May 2008 Debentures to be prepaid or the principal amount of the May 2008 Debentures to be prepaid, divided by the conversion price on the date specified in the Debenture, multiplied by the closing price on the date set forth in the Debenture.

The purchasers also received I Warrants to purchase 5,026,471 additional shares of common stock at a price of $0.25 per share exercisable for five (5) years. All warrants vest immediately upon issuance. Upon the occurrence of an event of default, the holder of the warrant can demand payment for their warrants at fair value.

The May 2008 Debentures and the warrants contain anti-dilution provisions.

In connection with this transaction, each purchaser has contractually agreed to restrict its ability to convert the May 2008 Debentures, exercise the warrants and additional investment rights and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such conversion or exercise.

The fair values of the derivative instruments related to the debentures were valued as of June 9, 2008, the date of issuance using the Black-Scholes model, resulting in an initial fair value of approximately $1,723,600. The excess of the fair value over the transaction price of the Debentures was recorded through the results of operations in 2008 as a debit of approximately $753,600 to Charges Related to Issuance of May 2008 Convertible Debentures and Warrants.

The derivatives outstanding at December 31, 2008 were again valued at fair value using the Black Scholes model, resulting in a decrease in the fair value of the liability of approximately $1,723,600, which was recorded through the results of operations as a credit to adjustments to fair value of derivatives.

In connection with this financing, the Company paid cash fees to a broker-dealer of $53,450 and issued warrants to purchase 294,000 shares of Common Stock at an exercise price of $0.25 per share. The initial fair value of the warrant was estimated at approximately $71,100 using the Black Scholes pricing model. The assumptions used in the Black Scholes model were as follows: (1) dividend yield of 0%, (2) expected volatility of 121.44%, (3) risk-free interest rate of 3.41%, and (4) expected life of 3 years. Cash fees paid, and the initial fair value of the warrants, have been capitalized as debt issuance costs and are being amortized over 24 months using the effective interest rate method.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 9 – CONVERTIBLE DEBENTURES – MAY 2008, CONTINUED

The following table summarizes the May 2008 Convertible Debentures and discounts outstanding at March 31, 2009:

May 2008 Debentures at fair value	$	1,256,618
Conversions		(187,759	)
Warrant derivative discount		(593,117	)
Original issue discount		(175,256	)
Net convertible debentures	$	300,486

NOTE 10 – CONVERTIBLE DEBENTURES – OCTOBER 2008

On or about November 19, 2008 the Company consummated a Securities Purchase Agreement (the “October 2008 SPA”) in which the Company received the following proceeds reflecting a 20% original issue discount to the purchasers. Pursuant to the October 2008 SPA, the Company issued:

an aggregate of $652,206 of Junior Debentures (the “October 2008 Debentures”) convertible into shares of the Company’s common stock at the lesser of $0.25 per share or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment;

An aggregate of $156,250 of October 2008 Debentures convertible into shares of the Company’s common stock at the lesser of $0.25 per share or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment (from conversion features which were in effect during the time certain promissory notes were outstanding, allows the note holder to convert outstanding principal and interest into future financings -see Note 5 – Promissory Notes in the Consolidated Financial Statements).

J Warrants to purchase up to an aggregate of 3,108,824 shares of the Company’s common stock at an exercise price of $0.25 per share, for a period of 5 years from the closing date of the October 2008 Financing;

The outstanding principal balances of the October 2008 Debentures are due and payable on September 30, 2010. The October 2008 Debentures bear interest at a rate of 8 percent per annum.

Until the maturity date of the debentures, the purchasers have the right to convert their Debentures, in whole or in part, into shares of the Company’s common stock at a price equal to the lesser of $0.25 or 80% of the lowest three (3) closing bid prices of the common stock over the 20 trading days immediately preceding the date of such payment. The conversion price may be adjusted downward under circumstances set forth in the October 2008 Debentures. If so adjusted, the aggregate number of shares issuable, upon conversion in full, will increase.

The October 2008 Debentures include customary default provisions and an event of default includes, among other things, a change of control, the sale of all or substantially all of the Company’s assets, the failure to file and have a registration statement declared effective on or before the deadlines set forth in the Registration Rights Agreement, or the lapse of the effectiveness of registration statements for more than 20 consecutive trading days or 30 non-consecutive days during any 12-month period (with certain exceptions) which results in such indebtedness being accelerated. Upon the occurrence of an event of default, each Debenture may become immediately due and payable, either automatically or by declaration of the holder of such Debenture. The aggregate amount payable upon an acceleration by reason of an event of default shall be equal to the greater of 125% of the principal amount of the October 2008 Debentures to be prepaid or the principal amount of the October 2008 Debentures to be prepaid, divided by the conversion price on the date specified in the Debenture, multiplied by the closing price on the date set forth in the Debenture.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 10 – CONVERTIBLE DEBENTURES – OCTOBER 2008, CONTINUED

The purchasers also received J Warrants to purchase 3,108,824 additional shares of common stock at a price of $0.25 per share exercisable for five (5) years. All warrants vest immediately upon issuance. Upon the occurrence of an event of default, the holder of the warrant can demand payment for their warrants at fair value.

The October 2008 Debentures and the warrants contain anti-dilution provisions.

In connection with this transaction, each purchaser has contractually agreed to restrict its ability to convert the October 2008 Debentures, exercise the warrants and additional investment rights and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such conversion or exercise.

The fair values of the derivative instruments related to the debentures were valued as of November 19, 2008, the date of issuance using the Black-Scholes model, resulting in an initial fair value of approximately $1,094,900. The excess of the fair value over the transaction price of the Debentures was recorded through the results of operations in 2008 as a debit of approximately $464,900 to Charges Related to Issuance of October 2008 Convertible Debentures and Warrants.

The derivatives outstanding at December 31, 2008 were again valued at fair value using the Black Scholes model, resulting in a decrease in the fair value of the liability of approximately $1,094,900, which was recorded through the results of operations as a credit to adjustments to fair value of derivatives.

The following table summarizes the October 2008 Convertible Debentures and discounts outstanding at March 31, 2009:

October 2008 Debentures at fair value	$	808,456
Conversions		(77,280	)
Warrant derivative discount		(504,289	)
Original issue discount		(142,846	)
Net convertible debentures	$	84,041

NOTE 11 –DERIVATIVE LIABILITIES

As described more fully in Note 7, Note 8, Note 9 and Note 10, the provisions of the Company’s convertible debenture financings completed in September 2007, November 2007, May 2008 and October 2008 respectively, permit the Company to make monthly redemption payments in shares of the Company’s common stock rather than cash upon satisfaction of certain conditions. Under the terms of the debenture agreements, the price per share is variable dependent upon the actual closing price of the Company’s common stock. Accordingly, the total number of shares to retire outstanding principal is variable and the Company can not be assured that there are adequate authorized shares to settle all contractual obligations under the debenture agreement, and other option and warrant agreements outstanding. In accordance with the provisions of SFAS 133, Accounting for Derivative Instruments” and EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock” the Company has reviewed all instruments previously recorded as permanent equity under this literature.

As a result of a significant decline in the price of the Company’s common stock, the amount of derivative liabilities as calculated using the Black-Scholes model is $0 at March 31, 2009 and December 31, 2008, respectively.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 12 – STOCKHOLDERS’ DEFICIENCY

During 2008, the Company converted approximately $5,195,800 in debt and accrued interest into 3,254,175,258 shares of our Common Stock.

During 2008, the Company issued a total of 150,000 shares to members of its advisory board. The securities were exempt from registration pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

During the three months ended March 31, 2009, the Company converted approximately $323,227 in debt and accrued interest into 3,204,114,207 shares of our Common Stock.

During 2008, the Company issued a total of 12,500 shares to members of its advisory board. The securities were exempt from registration pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

NOTE 13 – WARRANTS

A summary of warrant activity for the year ended March 31, 2009 is presented below:

	Number of Shares		Aggregate Intrinsic Value
Outstanding, January 1, 2009		155,027,863		-
Issued		-		-
Exercised		-		-
Anti-dilution adjustments		-		-
Expired/canceled		-		-
Outstanding, March 31, 2009		155,027,863		-

Warrants Outstanding								Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.25		154,477,864		3.58	$	0.25		154,477,864	$	0.25
$	0.50		550,000		1.95	$	0.50		550,000	$	0.50

The aggregate intrinsic value in the table above is based on the difference between the exercise price of the warrants and the quoted price of the Company’s common stock as of the reporting date.

NOTE 14 – STOCK OPTION PLAN

The 2006 Non-Statutory Stock Option Plan was adopted by the Board of Directors on September 13, 2006. Under this plan, a maximum of 37,500,000 shares of the Company’s common stock, par value $0.0001, were authorized for issue. The vesting and terms of all of the options are determined by the Board of Directors and may vary by optionee; however, the term may be no longer than 10 years from the date of grant.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 14 – STOCK OPTION PLAN, CONTINUED

In September 2006, the Company awarded 12,500,000 stock options to certain employees, officers, and directors for services rendered. Under FASB Statement No. 123R, “Share-Based Payment,” these options were valued at fair value at the date of grant. The fair value of the options issued was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 4.65%; no dividend yields; volatility factors of the expected market price of the Company’s common stock of 71%; an estimated forfeiture rate of 15%; and an expected life of the options of 3 years. This generated a price of $0.39 per option based on a strike price of $0.78 at the date of grant, which was September 15, 2006.

As a result, approximately $1,380,800 of compensation expense and additional paid-in capital was recorded during the years ended December 31, 2007 and 2008 relating to the vesting of 4,166,664 options awarded, respectively. For the three months ended March 31, 2009 and 2008, approximately $345,200 of compensation expense and additional paid-in capital was recorded relating to the vesting of 1,041,666 options awarded, respectively. As of March 31, 2009, a total of 1,909,728 non-vested shares remained outstanding with a weighted average price of $0.78 and a grant date value of $0.39 per share. At March 31, 2009, a total of 10,590,272 vested shares remained outstanding with a weighted average price of $0.78 and a weighted average years remaining of 3.375 years. At March 31, 2009, the aggregate intrinsic value of the stock options issued and vested was $0, as the market value of the underlying stock was below the average exercise price of all options.

Options	Number of Shares		Option Price Per Share
Outstanding January 1, 2009		12,500,000	$	0.78

Granted		-		-
Exercised		-		-
Cancelled		-		-

Outstanding March 31, 2009		12,500,000	$	0.78

NOTE 15 – COMMITMENTS AND CONTINENGENCIES

The Company has various commitments to oil and gas exploration and production capital expenditures related to its’ properties and projects in Texas and Louisiana, arising out of the normal course of business.

The Company is currently not involved in any material litigation matters arising from our oil and gas exploration and production activities and as such has accrued no liability with respect to litigation.

The Company is subject to various legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have material adverse effect on its financial position, results of operations or liquidity. Consequently, the Company has not recorded any reserve for legal matters.

NOTE 16 – SUBSEQUENT EVENTS

Authorized Shares . In February 2009, the Company reached its authorized share limit due to the amount of debenture conversions received. Within the sixty day contractual period for its various debentures, the Company filed a preliminary proxy statement and is using its best efforts in increasing the authorized shares pursuant to stock purchase agreements. On July 24, 2009, the Company filed an amended preliminary proxy statement with the Securities and Exchange Commission to address certain disclosures in the Company initial filing.

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

Certain statements in this Form 10-Q, including, but not limited to, statements made in "Management's Discussion and Analysis," are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors including, but not limited to, those described in Universal Energy Corp.’s 2008 Annual Report on Form 10-K under "Risk Factors."

Plan of Operation

We are a small independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States. We pursue oil and gas prospects in partnership with oil and gas companies with exploration, development and production expertise. Our prospect areas currently consist of land in Louisiana and Texas.

As of March 31, 2009, we have participated in drilling the following wells with the interests and results indicated as follows:

	Interest						Approximate
Well Name	Working			Net Revenue			Depth		Current Status
Amberjack		7.500	%		4.05	%		10,000’	In production as of December 2007
Lake Campo		12.50	%		6.75	%		10,000’	In production as of January 2008, Shut-in and worked over during fall 2008, returned to production in November 2008
Caviar #1		10.00	%		5.40	%		10,600’	In production as of July 2008
W. Rosedale		15.00	%		7.92	%		10,300’	Plugged and abandoned in Nov. 2007
Caviar #4		10.00	%		5.40	%		10,800’	In production as of July 2008
East OMG		17.50	%		9.45	%		16,500’	Plugged and abandoned in Dec. 2007
Lone Oak #1		5.000	%		2.93	%		12,600’	Plugged and abandoned in July 2008

We plan to grow our business by acquiring (i) low risk in-field oil and gas rights that are primarily developmental in nature that offset existing production and (ii) energy companies that when combined with our management expertise in that area will display strong top line growth and cash flows. As we expand our business we will eventually seek to act as the operator of those properties in which we have an interest.

We believe that we will require additional funds to operate throughout the next 12 months. Furthermore any expansion beyond our current plans, will require additional capital funding. We intend to continue to seek drilling opportunities on the acreage in which we currently have an interest or in other acreage and to consider the possible acquisition of producing properties. We do not have funds to undertake any of these activities and would have to obtain funding from external sources.

We estimate the drilling and completion costs to operate our prospects and our business for the next twelve months are as follows:

Caviar	$	200,000
Amberjack		125,000
Lake Campo		175,000
Lone Oak #2		800,000
General and administrative		750,000
Total	$	2,050,000

Since inception, we have funded our operations primarily from private placements of our common stock and debt issuances. Although we expect that, during the next 12 months, our operating capital needs will be met from our current economic resources and by additional private capital stock transactions, there can be no assurance that funds required will be available on terms acceptable to us or at all. Without additional financing, we do not expect that our current working capital will be able to fund our operations through 2009. If we are unable to raise sufficient funds on terms acceptable to us, we may be unable to complete our business plan. If equity financing is available to us on acceptable terms, it could result in additional dilution to our stockholders.

RESULTS OF OPERATIONS

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

	Three Months Ended March 31,
	2009			2008
Revenues, net	$	142,387		$	86,529
Cost of revenue		49,580			13,745
Gross Profit		92,807			72,784
Operating expenses		639,812			848,504
Other income (expense)		(1,005,988	)		1,370,559
Net income (loss)	$	(1,552,993	)	$	594,839

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008.

Daily Sales Volumes, Working Interest after royalties

		Three Months Ended March 31,
		2009		2008
Caviar #1	(Mcfe/day)		83		-
Caviar #4	(Mcfe/day)		119		-
Amberjack	(Mcfe/day)		63		8
Lake Campo	(Mcfe/day)		52		76
Total daily sales volumes			317		84

* Barrels of oil converted into Thousand Cubic Feet Equivalent (“Mcfe”) on a basis of 6:1

Daily sales volumes for the three months ended March 31, 2009 and 2008 increased 277 percent to approximately 317 Mcfe from 84 Mcfe, respectively. The increase was attributable to the successful completion of the Caviar #1 and Caviar #4 wells that began production in July 2008. In August 2008, the Company’s four producing wells in Louisiana (Caviar #1, Caviar #4, Amberjack and Lake Campo) were shut-in as ordered by the State of Louisiana for storm preparations. Production facilities at all four wells were damaged during the hurricane. Caviar #1, Caviar #4 and Amberjack were returned into production in late October 2008. When Lake Campo was returned to production, excessive water production created disposal well capacity problems and was shut-in after a few days. A workover on Lake Campo was performed in November 2008 to perforate the Tex W-5 sand which returned the well to production. Subsequent production volumes after Lake Campo was returned to production were less than before the hurricane which has resulted in a decline from the previous year.

Net Operating Results

		Three Months Ended March 31,
		2009			2008
Volumes	Mcfe		28,508			7,590
Price	$/Mcfe	$	6.83		$	14.91
Revenue		$	194,781		$	113,174
Royalties			(52,394	)		(26,645	)
Revenue, net of royalties			142,386			86,529
Production expenses			49,580			13,745
Gross profit		$	92,807		$	72,784

For the three months ended March 31, 2009, we recorded $142,386 in net revenue from sales of natural gas and natural gas liquids compared to $86,529 in the prior year. The average price received per Mcfe decreased approximately 54 percent as oil and natural gas prices reached significant highs during June and early July of 2008 and have declined significantly since that time. Our financial condition and the results of our operations are significantly affected by oil and natural gas commodity prices, which, can fluctuate dramatically. We experienced a decline in our operating margins in the first quarter of 2009, compared with the same period in 2008, due to a decrease in commodity prices and increases in operating costs.

Depletion, Depreciation and Amortization

	Three Months Ended March 31,
	2009		2008
Depletion – oil and gas properties, proven	$	95,129	$	-
Amortization of debt issuance costs		62,456		136,208
Depreciation – property and equipment		986		853
Total	$	158,571	$	137,061

Depletion per Mcfe	$	3.34	$	-

Depletion expense per Mcfe related to oil and gas properties in the three month period ended March 31, 2009 increased as compared with the same period of the prior year as a result of reclassifying our unproven reserves to proven. Unproven property costs prior to October 1, 2008 were excluded from costs subject to depletion. The amortization of debt issuance costs relate to the initial fair value of broker warrants issued in connection with certain financings during 2007 and 2008. These costs have been capitalized as debt issuance costs and are being amortized over 24 months using the effective interest rate method.

General and Administrative (“G&A”)

	Three Months Ended March 31,
	2009			2008
Stock-based compensation	$	345,210		$	364,457
Salaries and benefits		119,935			118,598
Public company costs		27,593			141,168
Office expenses		20,697			60,313
Miscellaneous		(32,194	)		-
Total G&A	$	481,241		$	684,536

General and administrative expenses have decreased $203,295 in the three month period ended March 31, 2009 compared to the same period of the prior year primarily due to management implementing a cost control program. Public company costs decreased $113,575 due to a reduction in investor relation costs as part of that program.

Other income (expense)

	Three Months Ended March 31,
	2009			2008
Excess derivative value	$	(581,723	)	$	(892,737	)
Adjustments in fair value of derivatives		-			2,738,889
Loss on conversion of debentures		(158,714	)		-
Accretion of discounts on convertible debentures		(158,674	)		(250,762	)
Interest expense, net		(106,877	)		(224,831	)
Total other income (expense)	$	(1,005,988	)	$	1,370,559

Other income (expense) for the three months ended March 31, 2009 and 2008 was ($1,005,988) and $1,370,559, respectively. The change in other income (expense) in the three months ended March 31, 2009, compared to that of the earlier period, relates primarily to adjustments to fair value of derivatives related to the Convertible Debenture financings. The decrease in excess derivative value and accretion of discounts on convertible debentures in the three months ended March 31, 2009, compared to the earlier period relates primarily to amortization of remaining debt discounts and deferred financing costs for all of our outstanding debentures. Interest expense was $106,877, and $224,831 during the three months ended March 31, 2009 and 2008, respectively. Interest expense was lower in the three months ended March 31, 2009 than in the three months ended March 31, 2008 due to the lower debt balances during the period.

Liquidity and Capital Resources

The following table sets forth a summary of our cash flows for the periods indicated below:

	Three Months Ended March 31,
	2009			2008
Net cash used in operating activities	$	(22,938	)	$	273,366
Net cash used in investing activities		(2,633	)		(904,827	)
Net cash provided by financing activities		-			475,000
Net decrease in cash and cash equivalents		82,524			234,984
Cash and cash equivalents, end of the period	$	56,953		$	78,523

As reflected in the accompanying financial statements, we have losses from operations, negative cash flows from operations, a substantial stockholders’ deficit and current liabilities that exceed current assets. We may thus not be able to continue as a going concern and fund cash requirements for operations through the next 12 months with current cash reserves. The Company was able to raise additional cash during 2008 through the sale of the May 2008 Debentures and the October 2008 Debentures. Notwithstanding success in raising capital, there continues to be substantial doubt about the Company’s ability to continue as a going concern.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon our continued operations, which, in turn, is dependent upon our ability to continue to raise capital and ultimately generate positive cash flows from operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should we be unable to continue in existence.

With the exception of 2008, when a decline in the price of our common stock resulted in a substantial increase in non-cash other income, we have incurred substantial net losses each year since inception as a result of drilling costs and general and administrative expenses in support of our operations. We anticipate incurring substantial net losses in the future.

Our cash and cash equivalents are limited. In the short term, we will require substantial additional funding prior to December 31, 2009 in order to maintain our current level of operations. If we are unable to raise additional funding, we will be forced to either substantially scale back our business operations or curtail our business operations entirely.

On a longer term basis, we anticipate generating our revenues from the sale of oil and gas products from our proven oil and gas wells in Louisiana. Our future cash requirements will depend on many factors, including the pace and scope of our drilling programs, the costs involved in replacing depleted reserves, and other costs associated with growing our oil and gas operations. We intend to seek additional funding primarily through public or private financing transactions. If we are unable to raise additional funds, we will be forced to either scale back our business efforts or curtail our business activities entirely. We anticipate that our available cash and expected income will be sufficient to finance most of our current activities for at least four months from the date we file these financial statements, although certain of these activities and related personnel may need to be reduced. We cannot assure you that public or private financing will be available on acceptable terms, if at all. Several factors will affect our ability to raise additional funding, including, but not limited to, the volatility of our common stock.

Contractual Obligations

The following table summarizes our significant contractual obligations as of March 31, 2009:

	Payment Due by Period
	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More Than 5 Years
Debt obligations (1,2)	$	5,461,764	$	3,157,855	$	2,303,909	$	-	$	-

(1)

Amounts represent total anticipated payments, including anticipated interest payments that are not recorded on the consolidated balance sheets. Any future settlement of convertible debt would reduce anticipated interest and/or principal payments. Amounts exclude fair value adjustments such as discounts or premiums that affect the amount recorded on the consolidated balance sheets.

(2)

The expected timing of payments of the obligations above are estimates based on current information. Timing of payments and actual amounts paid may be different, depending on certain circumstances, or changes to agreed-upon amounts for some obligations.

Variables and Trends

We have a limited operating history with respect to our acquisition and development of oil and gas properties. In the event we are able to obtain the necessary financing to move forward with our business plan, we expect our expenses to increase significantly as we grow our business. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of our future performance and must be considered in light these circumstances.

Critical Accounting Policies and Estimates

We are engaged in the exploration, exploitation, development, acquisition, and production of natural gas and crude oil. Our discussion of financial condition and results of operations is based upon the information reported in our consolidated financial statements. The preparation of these consolidated financial statements requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses as well as the disclosure of contingent assets and liabilities as of the date of our financial statements. We base our decisions affecting the estimates we use on historical experience and various other sources that are believed to be reasonable under the circumstances. Actual results may differ from the estimates we calculate due to changes in business conditions or unexpected circumstances. Policies we believe are critical to understanding our business operations and results of operations are detailed below. For additional information on our significant accounting policies refer to Note 3 - Summary of Significant Accounting Policies, Note 4 - Oil and Gas Properties and Note 11 - Derivative Liabilities.

Oil and gas reserve quantities. Estimated reserve quantities and the related estimates of future net cash flows are critical estimates for an exploration and production company because they affect the perceived value of our Company, are used in comparative financial analysis ratios and are used as the basis for the most significant accounting estimates in our financial statements. The significant accounting estimates include the periodic calculations of depletion, depreciation and impairment of our proved oil and gas properties. Future cash inflows and future production and development costs are determined by applying benchmark prices and costs, including transportation, quality, and basis differentials, in effect at the end of each period to the estimated quantities of oil and gas remaining to be produced as of the end of that period. Expected cash flows are reduced to present value using a discount rate that depends upon the purpose for which the reserve estimates will be used. For example, the standardized measure calculations required by SFAS No. 69, Disclosures about Oil and Gas Producing Activities, requires a ten percent discount rate to be applied. Although reserve estimates are inherently imprecise, and estimates of new discoveries and undeveloped locations are more imprecise than those of established producing oil and gas properties, we make a considerable effort in estimating our reserves, including using independent reserve engineering consultants. We expect that periodic reserve estimates will change in the future as additional information becomes available or as oil and gas prices and operating and capital costs change. We evaluate and estimate our oil and gas reserves at December 31 of each year. For purposes of depletion, depreciation, and impairment, reserve quantities are adjusted at all interim periods for the estimated impact of additions and dispositions. Changes in depletion, depreciation, or impairment calculations caused by changes in reserve quantities or net cash flows are recorded in the period that the reserve estimates change.

Revenue recognition . Our revenue recognition policy is significant because revenue is anticipated to be a key component of our results of operations and our forward-looking statements contained in our analyses of liquidity and capital resources. Each month we record revenue based on the actual sales of crude oil and natural gas. The estimates we make relate to the average price received throughout the month for those sales. As the production is relatively steady throughout the month, the estimates for the price received for those sales are relatively accurate as the daily prices for the oil and natural gas sold are readily available. Variances between our estimates and the actual amounts received are recorded in the month payment is received.

Asset retirement obligations. We are required to recognize an estimated liability for future costs associated with the abandonment of our oil and gas properties. We base our estimate of the liability on our historical experience in abandoning oil and gas wells projected into the future based on our current understanding of federal and state regulatory requirements. Our present value calculations require us to estimate the economic lives of our properties, assume what future inflation rates apply to external estimates, and determine what credit adjusted risk-free rate to use. The impact to the consolidated statement of operations from these estimates is reflected in our depreciation, depletion, and amortization calculations and occurs over the remaining life of our oil and gas properties.

Full Cost Method. Generally accepted accounting principles provide for two alternative methods for the oil and gas industry to use in accounting for oil and gas producing activities. These two methods are generally known in our industry as the full cost method and the successful efforts method. Both methods are widely used. The methods are different enough that in many circumstances the same set of facts will provide materially different financial statement results within a given year. We have chosen the full cost method of accounting for our oil and gas producing activities, and a detailed description is included in Note 4 – Oil and gas properties of Part I of this report.

Derivative Liabilities . We record derivatives at their fair values on the date that they meet the requirements of a derivative instrument and at each subsequent balance sheet date using the Black-Scholes model. This model is dependent upon key inputs estimated by management, including the expected term of an option and the expected volatility of our common stock price over the expected term. Changes in the subjective assumptions could materially affect the estimated fair value of an option and consequently the amount of stock option expense recognized in the Company's results of operations. Any change in fair value will be recorded as non-operating, non-cash income or expense at each reporting date.

Income taxes. We provide for deferred income taxes on the difference between the tax basis of an asset or liability and its carrying amount in our financial statements in accordance with SFAS No. 109. This difference will result in taxable income or deductions in future years when the reported amount of the asset or liability is recovered or settled, respectively. Considerable judgment is required in determining when these events may occur and whether recovery of an asset is more likely than not. Additionally, our federal and state income tax returns are generally not filed before the consolidated financial statements are prepared, therefore, we estimate the tax basis of our assets and liabilities at the end of each period as well as the effects of tax rate changes, tax credits, and net operating and capital loss carryforwards and carrybacks. Adjustments related to differences between the estimates we used and actual amounts we report are recorded in the periods in which we file our income tax returns. These adjustments and changes in our estimates of asset recovery and liability settlement could have an impact on our results of operations.

Recently Issued Accounting Standards

Please see Note 3 – Summary of Significant Accounting Policies in Part I, Item 1 of this report for accounting matters.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Environmental

Universal Energy Corp.’s compliance with applicable environmental regulations has not resulted in any significant capital expenditures or materially adverse effects to our liquidity or results of operations. We believe we are in substantial compliance with environmental regulations and do not currently foresee that material expenditures will be required in the future. However, we are unable to predict the impact that future compliance with regulations may have on future capital expenditures, liquidity, and results of operations.

Forward-Looking Statements

When describing future business conditions in this Form 10-Q, including, but not limited to, descriptions in the section titled "Management's Discussion and Analysis," the Company makes certain statements that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ materially from those included in the forward-looking statements, which are indicated by words such as "believe," "expect," "anticipate," "intend," "estimate," "may increase," "may fluctuate," and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could."

These forward-looking statements are based on management's current expectations and involve external risks and uncertainties including, but not limited to, those described under "Risk Factors" in Universal Energy Corp.’s 2008 Annual Report on Form 10-K. Other risks and uncertainties disclosed herein include, but are not limited to:

uncertainties about the estimates of reserves;

our ability to increase our production of oil and natural gas income through exploration and development;

the number of well locations to be drilled and the time frame within which they will be drilled;

the timing and extent of changes in commodity prices for natural gas and crude oil;

domestic demand for oil and natural gas;

the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing capacity; and

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 - CONTROLS AND PROCEDURES

Not applicable.

ITEM 4T - CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of March 31, 2009. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weaknesses described below, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is not accumulated nor communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:

We did not have sufficient personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate reviewing of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis; and

We did not maintain sufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of US GAAP commensurate with our complexity and our financial accounting and reporting requirements. This control deficiency is pervasive in nature and specifically resulted in us restating previously filed annual and quarterly financial statements as a result of errors in the accounting for convertible debentures and warrants. Further, there is a reasonable possibility that material misstatements of the consolidated financial statements including disclosures will not be prevented or detected on a timely basis as a result.

Management believes that hiring additional knowledgeable personnel with technical accounting expertise will remedy the material weaknesses. Due to the fact that our accounting staff consists of a Chief Financial Officer and accounting clerk, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. We believe this will greatly decrease any control and procedure issues we may encounter in the future. To compensate for the current limited number of personnel in the accounting and reporting group, we focus on audit committee oversight and the use of external consultants for complex accounting matters. Furthermore, we will continue to engage consultants in the future as necessary in order to ensure proper accounting treatment of complex transactions.

Management will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. As part of this commitment, we will continue to assess our current personnel resources and technical accounting expertise within the accounting function. As our activities levels increase, we will look to increase our personnel resources to increase segregation of duties and provide in-house non-routine or complex accounting expertise. When funds are available to us and as operations increase, we will hire additional knowledgeable personnel with technical accounting expertise to further support our current accounting personnel, which management estimates could cost approximately $100,000 per annum.

(b) Changes in internal control over financial reporting.

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

The Company is not a party to any pending legal proceedings nor is any of its property subject to pending legal proceedings.

Item 1A.

Risk Factors

You should carefully consider the following risk factors, the other information included herein and the information included in our other reports and filings. Our business, financial condition, and the trading price of our common stock could be adversely affected by these and other risks.

IF WE FAIL TO COMPLY WITH THE TERMS AND CONDITIONS OF THE DEBENTURES, WARRANTS, THE REGISTRATION RIGHTS AGREEMENTS, OR THE SECURITIES AGREEMENT, WE MAY BE OBLIGATED TO PAY THE PURCHASERS OF THE DEBENTURES DAMAGES.

We have various obligations to file and obtain the effectiveness of certain registration statements which include certain outstanding common stock and common stock underlying outstanding Debentures and common stock underlying the warrants. If we fail to meet any obligations we have to have effective and current registration statements available (including the current registration statement related to the common stock underlying our Debentures and warrants), we may become obligated to pay damages to investors to the extent they may be entitled to such damages. In addition, to the filing of registration statements in connection with both the September 2007 and November 2007 Debentures and the Related Registration Rights Agreements and the Securities Agreement we may be required to file additional registration statements at various times in the future. We are initially seeking to register a number of shares which exceeds 33 percent of our currently issued and outstanding shares of common stock. Because of the Securities and Exchange Commission's recent interpretation of Rule 415, we cannot offer any assurances that we will be able to obtain the effectiveness of any registration statements or post-effective amendments to existing registration that we may file.

BOTH THE SEPTEMBER 2007 FINANCING, THE NOVEMBER 2007 FINANCING, THE MAY 2008 FINANCING AND THE OCTOBER 2008 FINANCING IMPOSE CERTAIN RESTRICTIONS ON HOW WE CONDUCT OUR BUSINESS. IN ADDITION, ALL OF OUR ASSETS, INCLUDING OUR INTELLECTUAL PROPERTY, ARE PLEDGED TO SECURE THIS INDEBTEDNESS. IF WE FAIL TO MEET OUR OBLIGATIONS UNDER THE SENIOR DEBENTURES, OUR PAYMENT OBLIGATIONS MAY BE ACCELERATED AND THE COLLATERAL SECURING THE DEBT MAY BE SOLD TO SATISFY THESE OBLIGATIONS.

The financing documents relating to each of the September 2007 Financing, November 2007 Financing, and May 2008 Financing contain various provisions that restrict our operating flexibility. Pursuant to the agreement, we may not directly or indirectly, among other things:

pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock or make any other payment or distribution in respect of our capital stock;

redeem, repay, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) any shares of our capital stock;

by amendment of our charter documents, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Debentures;

enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

other than permitted liens, enter into, create, incur, assume or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by us or any of our subsidiaries;

enter into any transaction with any of our affiliates;

redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any indebtedness; or

effect any type of variable price financing.

These provisions could have important consequences for us, including (i) making it more difficult for us to obtain additional debt or equity financing from another lender, or obtain new debt financing on terms favorable to us, and or (ii) causing us to use a portion of our available cash for debt repayment and service rather than other corporate purposes.

IT MAY BE MORE DIFFICULT FOR US TO RAISE FUNDS IN SUBSEQUENT STOCK OFFERINGS AS A RESULT OF THE SALES OF OUR COMMON STOCK BY THE HOLDERS IN CONNECTION WITH THE SENIOR DEBENTURES AND JUNIOR DEBENTURES.

As noted above, sales by the Holders likely will result in substantial dilution to the holdings and interest of current and new shareholders. Additionally, as noted above, the volume of shares sold by the Holders could depress the market price of our stock. These factors could make it more difficult for us to raise additional capital through subsequent offerings of our common stock, which could have a material adverse effect on our operations.

THE ISSUANCE OF SHARES UPON CONVERSION OF THE DEBENTURES AND EXERCISE OF OUTSTANDING WARRANTS WILL CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION TO OUR EXISTING STOCKHOLDERS.

The issuance of shares upon conversion of the Debentures and exercise of warrants will result in substantial dilution to the interests of other stockholders since the purchasers may ultimately convert and sell the full amount issuable on conversion or exercise as the case may be. Although no single purchaser may convert its Debentures and/or exercise its warrants if such conversion or exercise would cause it to own more than 4.99% of our outstanding common stock, this restriction does not prevent each purchaser from converting and/or exercising some of its holdings and then converting the rest of its holdings. In this way, each purchaser could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued which will have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock, including investors in this offering. In addition, the issuance of the Debentures and the warrants triggered certain anti-dilution rights for certain third parties currently holding our securities resulting in substantial dilution to the interests of other stockholders.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

Not applicable.

(b)

Not applicable.

(c)

For the three months ended March 31, 2009, the Company issued 12,500 shares of restricted common stock to members of the Company’s advisory board. At the date of each issuance, the shares were valued at the closing price. The securities were exempt from registration pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended

Item 3.

Defaults Upon Senior Securities.

Not Applicable.

Item 4.

Submission of Matters to a Vote of Security Holders.

Not Applicable.

Item 5.

Other Information.

Not Applicable.

Item 6. Exhibits

EXHIBIT NUMBER		DESCRIPTION
3.1		Form of Articles of Incorporation of Universal Tanning Ventures, Inc. (previously filed in registration statement on Form SB-2 File No. 333-101551, filed with the Securities and Exchange Commission on November 27, 2002).
3.2		By-laws of Universal Tanning Ventures (previously filed in registration statement on Form SB-2 File No. 333-101551, filed with the Securities and Exchange Commission on November 27, 2002).
3.3		Certificate of Renewal and Revival, filed September 23, 2006 (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
3.4		Certificate of Amendment of Certificate of Incorporation, filed September 23, 2006 (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.1		Investment Advisory Agreement, dated as of May 5, 2006, by and among Universal Tanning Ventures, Inc. and Galileo Asset Management SA (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.2		Stock Purchase Agreement, dated as of May 6, 2006, by and among Universal Tanning Ventures, Inc. and Rhino Island Capital, Ltd. (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.3		Share Deposit Escrow Agreement, dated as of May 6, 2006, by and among Universal Tanning Ventures, Inc., Rhino Island Capital, Ltd. and Madison Stock Transfer, Inc. (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.4		Stock Purchase Agreement, dated August 14, 2006, between Universal Energy Corp. and Mr. Isaac Rotnemer (previously filed on Form 8-K, filed with the Securities and Exchange Commission on August 18, 2006).
10.5		2006 Non-Statutory Stock Option Plan, dated September 13, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.6		Employment Agreement, dated as of September 14, 2006, by and between Universal Energy Corp. and Dyron M. Watford (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.7		Stock Option Agreement between Universal Energy Corp. and Dyron M. Watford, dated September 14, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.8		Employment Agreement, dated as of September 15, 2006, by and between Universal Energy Corp. and Billy Raley (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.9		Stock Option Agreement between Universal Energy Corp. and Billy Raley, dated September 15, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.10		Seismic Option, Farmout and Net Carried Interest Agreement between 1097885 Alberta Ltd., 0700667 BC Ltd., and Universal Energy Corp., dated September 22, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 26, 2006).
10.11		Employment Agreement, dated as of October 6, 2006, by and between Universal Energy Corp. and Kevin Tattersall (previously filed on Form 8-K, filed with the Securities and Exchange Commission on October 12, 2006).
10.12		Participation Agreement, dated as of March 28, 2007, by and Between Universal Explorations Corp. and Yuma Exploration And Production Company, Inc. (previously filed on Form 8-K, filed with the Securities and Exchange Commission on April 5, 2007)
10.13		Agreement, dated as of May 2, 2007, by and Between Universal Energy Corp. and Capital Financial Media, LLC (previously filed on Form 10Q-SB, filed with the Securities and Exchange Commission on August 20, 2007).
10.14		Participation Agreement, dated as of May 2, 2007, by and Between Universal Explorations Corp. and Yuma Exploration And Production Company, Inc. (previously filed on Form 8-K, filed with the Securities and Exchange Commission on May 8, 2007)

EXHIBIT NUMBER		DESCRIPTION
10.15		Participation Agreement, dated as of May 2, 2007, by and Between Universal Explorations Corp. and Yuma Exploration And Production Company, Inc. (previously filed on Form 8-K, filed with the Securities and Exchange Commission on May 8, 2007)
10.16		Agreement, dated as of June 11, 2007, by and Between Universal Energy Corp. and Capital Financial Media, LLC (previously filed on Form 10Q-SB, filed with the Securities and Exchange Commission on August 20, 2007).
10.17		Form of Senior Secured Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.18		Form of Registration Rights Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.19		Form of “A” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.20		Form of “B” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.21		Form of “C” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.22		Form of Security Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.23		Form of Subsidiary Guarantee (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.24		Form of Pledge Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.25		Form of Limited Standstill Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.26		Form of Securities Purchase Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.27		Form of Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.28		Form of “D” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.29		Form of “E” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.30		Form of “F” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.31		Form of “G” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.32		Form of Securities Purchase Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.33		Form of Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.34		Form of “I” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.35		Form of Consent and Amendment Agreement – September 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.36		Form of Consent and Amendment Agreement – November 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.37		Form of Amended Registration Rights Agreement – September 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.38		Form of Amended Registration Rights Agreement – November 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.39		Form of Securities Purchase Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).
10.40		Form of Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).

EXHIBIT NUMBER		DESCRIPTION
10.41		Form of “J” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).
10.42		Form of Limited Standstill Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).
14		Code of Ethics (previously filed on Form 10-KSB, filed with the Securities and Exchange Commission on March 29, 2004).
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*

* Filed herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 12, 2009

	Universal Energy Corp.

	By:	/s/Billy Raley
	Name: Billy Raley
	Title: Chief Executive Officer

	By:	/s/ Dyron M. Watford
	Name: Dyron M. Watford
	Title: Chief Financial Officer

EXHIBIT INDEX

EXHIBIT NUMBER		DESCRIPTION
3.1		Form of Articles of Incorporation of Universal Tanning Ventures, Inc. (previously filed in registration statement on Form SB-2 File No. 333-101551, filed with the Securities and Exchange Commission on November 27, 2002).
3.2		By-laws of Universal Tanning Ventures (previously filed in registration statement on Form SB-2 File No. 333-101551, filed with the Securities and Exchange Commission on November 27, 2002).
3.3		Certificate of Renewal and Revival, filed September 23, 2006 (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
3.4		Certificate of Amendment of Certificate of Incorporation, filed September 23, 2006 (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.1		Investment Advisory Agreement, dated as of May 5, 2006, by and among Universal Tanning Ventures, Inc. and Galileo Asset Management SA (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.2		Stock Purchase Agreement, dated as of May 6, 2006, by and among Universal Tanning Ventures, Inc. and Rhino Island Capital, Ltd. (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.3		Share Deposit Escrow Agreement, dated as of May 6, 2006, by and among Universal Tanning Ventures, Inc., Rhino Island Capital, Ltd. and Madison Stock Transfer, Inc. (previously filed with Form 10-QSB, filed with the Securities and Exchange Commission on August 14, 2006).
10.4		Stock Purchase Agreement, dated August 14, 2006, between Universal Energy Corp. and Mr. Isaac Rotnemer (previously filed on Form 8-K, filed with the Securities and Exchange Commission on August 18, 2006).
10.5		2006 Non-Statutory Stock Option Plan, dated September 13, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.6		Employment Agreement, dated as of September 14, 2006, by and between Universal Energy Corp. and Dyron M. Watford (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.7		Stock Option Agreement between Universal Energy Corp. and Dyron M. Watford, dated September 14, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.8		Employment Agreement, dated as of September 15, 2006, by and between Universal Energy Corp. and Billy Raley (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.9		Stock Option Agreement between Universal Energy Corp. and Billy Raley, dated September 15, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 18, 2006).
10.10		Seismic Option, Farmout and Net Carried Interest Agreement between 1097885 Alberta Ltd., 0700667 BC Ltd., and Universal Energy Corp., dated September 22, 2006 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 26, 2006).
10.11		Employment Agreement, dated as of October 6, 2006, by and between Universal Energy Corp. and Kevin Tattersall (previously filed on Form 8-K, filed with the Securities and Exchange Commission on October 12, 2006).
10.12		Participation Agreement, dated as of March 28, 2007, by and Between Universal Explorations Corp. and Yuma Exploration And Production Company, Inc. (previously filed on Form 8-K, filed with the Securities and Exchange Commission on April 5, 2007)
10.13		Agreement, dated as of May 2, 2007, by and Between Universal Energy Corp. and Capital Financial Media, LLC (previously filed on Form 10Q-SB, filed with the Securities and Exchange Commission on August 20, 2007).
10.14		Participation Agreement, dated as of May 2, 2007, by and Between Universal Explorations Corp. and Yuma Exploration And Production Company, Inc. (previously filed on Form 8-K, filed with the Securities and Exchange Commission on May 8, 2007)

EXHIBIT NUMBER		DESCRIPTION
10.15		Participation Agreement, dated as of May 2, 2007, by and Between Universal Explorations Corp. and Yuma Exploration And Production Company, Inc. (previously filed on Form 8-K, filed with the Securities and Exchange Commission on May 8, 2007)
10.16		Agreement, dated as of June 11, 2007, by and Between Universal Energy Corp. and Capital Financial Media, LLC (previously filed on Form 10Q-SB, filed with the Securities and Exchange Commission on August 20, 2007).
10.17		Form of Senior Secured Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.18		Form of Registration Rights Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.19		Form of “A” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.20		Form of “B” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.21		Form of “C” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.22		Form of Security Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.23		Form of Subsidiary Guarantee (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.24		Form of Pledge Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.25		Form of Limited Standstill Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on September 19, 2007).
10.26		Form of Securities Purchase Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.27		Form of Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.28		Form of “D” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.29		Form of “E” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.30		Form of “F” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.31		Form of “G” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2007).
10.32		Form of Securities Purchase Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.33		Form of Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.34		Form of “I” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.35		Form of Consent and Amendment Agreement – September 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.36		Form of Consent and Amendment Agreement – November 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.37		Form of Amended Registration Rights Agreement – September 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.38		Form of Amended Registration Rights Agreement – November 2007 (previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2007).
10.39		Form of Securities Purchase Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).
10.40		Form of Convertible Debenture (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).

EXHIBIT NUMBER		DESCRIPTION
10.41		Form of “J” Warrant to Purchase Common Stock (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).
10.42		Form of Limited Standstill Agreement (previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2008).
14		Code of Ethics (previously filed on Form 10-KSB, filed with the Securities and Exchange Commission on March 29, 2004).
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*

* Filed herewith.

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