- Amended Quarterly Report (10-Q/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q/A

(Amendment No. 1)

__________________________

(Mark One)

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

For the quarterly period ended September 30, 2007

o	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 o 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). o YES x NO

The number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding as of November 16, 2007 was 29,727,181 and there were 496 stockholders of record.

EXPLANATORY NOTE

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

An aggregate of $5,110,294 of Senior Debentures, convertible into shares of our common stock at $0.80 per share;

A Warrants to purchase up to an aggregate of 6,387,868 shares of our common stock at an exercise price of $0.88 per share, for a period of 5 years from the closing date of the September 2007 financing;

B Warrants to purchase up to an aggregate of 6,387,868 units, each unit consisting of a share of our 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 our common stock at a price of $0.88 per share.

During the course of the audit for the fiscal year ending December 31, 2007, the Company’s Chief Financial Officer discussed the accounting for the September debenture financing with Cross, Fernandez & Riley, LLP. As a result, the Company determined that the accounting for the September debenture was incorrect and the effect of such misstatements was material. As a result, the Company decided it will restate its previously filed quarterly report on Form 10-QSB for the quarter ended September 30, 2007. The restatements are required to properly reflect the Company’s financial results for certain non-cash and non-operational related charges or credits to earnings associated with both embedded and freestanding derivative liabilities.

Historically, the Company recorded the fair value of the warrants and intrinsic value of the beneficial conversion features of these convertible debentures as a credit to equity with a corresponding discount to the notes payable. The Company reviewed its compliance with the SEC’s interpretation of EITF 00-19 as it relates to these convertible securities, detachable warrants and registration rights. The Company has determined that it should have recorded a derivative liability equal to the fair value of both the detachable warrants and the embedded convertible feature for certain debentures and then marked to market these derivative liabilities at the end of each quarter and fiscal period.

For the convenience of the reader, this Form 10-Q/A sets forth the original Form 10-QSB in its entirety. However, this Form 10-Q/A only amends our financial statements and the footnotes to our financial statements, along with the corresponding changes to our Management’s Discussion and Analysis. We also corrected typographical errors and have revised our controls and procedures disclosure as a result of these restatements. No other information in the original Form 10-Q is amended hereby. In addition, pursuant to the rules of the SEC, Item 6 of Part II to the Initial Filing has been amended to contain currently dated certifications from our Principal Executive Officer and Principal Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications of our Principal Executive Officer and Principal Financial Officer are attached to this Form 10Q/A as Exhibits 31.1, 31.2, 32.1 and 32.2, respectively.

UNIVERSAL ENERGY CORP.

FORM 10-Q

INDEX

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheet (unaudited) at September 30, 2007	4
	Consolidated Statements of Operations (unaudited) for the Three Months and Nine Months Ended September 30, 2007 and 2006	5
	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2007 and 2006	6
	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Controls and Procedures	24

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
Item 5.	Other Information	26
Item 6.	Exhibits	27

SIGNATURE PAGE		29

Universal Energy Corp.

And Subsidiaries

Consolidated Balance Sheet

Assets
	September 30,
	2007
	(unaudited)
Current assets:
Cash	$	314,730
Prepaid expenses		12,815

Total current assets		327,545

Oil and gas properties (Note 4)
Prepaid drilling costs		2,297,481
Oil and gas properties, unproven		1,773,834
Deferred loan costs		460,676
Property and equipment, net		8,743
Other assets		1,545

Total assets	$	4,869,824

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	152,782
Accrued expenses		47,050
Accrued interest		33,000
Promissory notes		925,005
September 2007 Convertible Debentures, net of discounts
of $4,962,035		148,259
Embedded derivative liabilities		7,402,527

Total current liabilities		8,708,623

Commitments and contingencies (Note 6)

Stockholders’ equity:
Common stock, $0.0001 par value, 250,000,000 shares
authorized, 29,588,119 shares issued and outstanding		2,973
Additional paid-in capital		4,692,447
Accumulated deficit		(8,534,219	)

Total stockholders’ equity		(3,838,799	)

Total liabilities and stockholders’ equity	$	4,869,824

See accompanying notes to unaudited consolidated financial statements.

Universal Energy Corp.

And Subsidiaries

Consolidated Statements of Operations

	For the three months ended September 30,						For the nine months ended September 30,
	2007			2006			2007			2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

Revenue	$	-		$	-		$	-		$	-

Cost of revenue		-			-			-			-

Gross profit		-			-			-			-

Stock compensation expense		470,924			-			1,412,376			-
Investor/public relations expenses		52,862			-			1,353,780			-
Selling, general and administrative expenses		222,667			45,516			643,652			106,120

Loss from continuing operations		(746,453	)		(45,516	)		(3,409,808	)		(106,120	)

Other income (expense)
Charges related to issuance of Sept. 2007 Convertible Debentures & Warrants		(4,621,371	)		-			(4,621,371	)		-
Excess embedded derivative value		(116,047	)		-			(116,047	)		-
Accretion of discounts on convertible debentures		(32,212	)		-			(32,212	)		-
Change in fair value of embedded derivative		1,218,844			-			1,218,844			-
Interest expense, net		(142,581	)		-			(165,860	)		-

Total other expense		(3,693,367	)		-			(3,716,646	)		-

Net loss before discontinued operations		(4,439,820	)		(45,516	)		(7,126,454	)		(106,120	)

Discontinued operations (Note 9)
Income (loss) from operations of discontinued operations		-			7,247			(34,186	)		21,219
Gain (loss) from discontinued operations		-			7,247			(34,186	)		21,219

Net loss	$	(4,439,820	)	$	(38,269	)	$	(7,160,640	)	$	(84,901	)

Weighted average common shares outstanding		29,633,969			20,296,515			28,551,593			19,383,995

Net loss per share from continuing operations
– basic and diluted	$	(0.15	)	$	(0.00	)	$	(0.25	)	$	(0.01	)
Net gain (loss) per share from discontinued operations
– basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

See accompanying notes to unaudited consolidated financial statements.

Universal Energy Corp.

And Subsidiaries

Consolidated Statements of Cash Flows

	Nine months ended September 30,
	2007			2006
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net loss	$	(7,160,640	)	$	(84,901	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discounts on convertible debentures		32,212			-
Change in fair value of embedded derivatives		(1,218,844	)		-
Charges related to the issuance of Sept. 2007 Convertible Debentures & Warrants		4,621,371			-
Excess embedded derivative value		116,047			-
Amortization of fair value of warrants issued with promissory notes		112,493			-
Amortization of debt issuance costs		9,345			-
Stock compensation expense – advisory board stock grants		134,225			-
Stock compensation expense – employee stock grants		242,531			-
Stock compensation expense – employee stock option grants		1,035,620			-
Depreciation and amortization		1,397			-
Increase in operating assets:
Prepaid drilling costs		(2,297,481	)		-
Escrow – Seismic funds		25,206			(135,500	)
Prepaid expenses		131			-
Increase in operating liabilities:
Accounts payable		122,883			15,541
Accrued expenses		33,207			2,066
Accrued interest		33,000			-
Net cash used in operating activities		(4,157,297	)		(202,794	)
Net cash provided by discontinued operations		(42,598	)		21,508
Net cash used in operations		(4,199,895	)		(181,286	)
Cash flows from investing activities:
Oil and gas properties, unproven		(1,666,905	)		-
Purchase of property and equipment		(10,140	)		-
Security deposit		(1,545	)		-
Net cash used in investing activities of continuing operations		(1,678,590	)		-
Net cash provided by investing activities of discontinued operations		7,600			-
Net cash used in investing activities		(1,670,990	)		-
Cash flows from financing activities:
Proceeds from issuance of debentures		3,677,878			-
Proceeds from issuance of promissory notes		1,000,000			-
Net proceeds from issuance of common stock		1,056,887			246,977
Proceeds from advances from stockholder		-			11,880
Repayment of advances from stockholder		-			(29,880	)
Net cash provided by financing activities		5,734,765			228,977
Net increase (decrease) in cash		(136,120	)		47,691
Cash, beginning of period		450,850			-
Cash, end of period	$	314,730		$	47,691
Supplemental schedule of non-cash financing activities:
Cash paid during the period for:
Interest	$	21,666		$	12
Non cash financing activities:
Fair value of warrants issue to private placement agents	$	147,901		$	-

See accompanying notes to unaudited consolidated financial statements.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

September 30, 2007

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 250,000,000 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 and Canada.

Principles of Consolidation. The Company’s consolidated financial statements for the periods ended September 30, 2007 and 2006, include the accounts of its wholly owned subsidiaries UT Holdings, Inc. and Universal Explorations Corp. (new in 2007), both Delaware corporations. All intercompany balances and transactions have been eliminated.

Discontinued Operations. Due to our inability to expand our tanning operations, on May 21, 2006, the Board of Directors approved changing the business direction from operating our single tanning salon to fully pursuing plans to acquire and develop oil and natural gas properties. The Company sold the assets and ceased operations of its tanning business in February 2007. The results of operations from the tanning salon are included in discontinued operations on the consolidated statements of operations.

Name Change. On May 21, 2006 a majority of the stockholders approved changing the name of the Company from “Universal Tanning Ventures, Inc.” to “Universal Energy Corp.” and increasing the number of shares of our capital stock we are authorized to issue to 250,000,000 shares, of which all 250,000,000 shares will be Common Stock.

Stock-Split. On February 20, 2007, the Company declared a two and one-half-for-one stock split in the form of a stock dividend, payable March 14, 2007 to stockholders of record as of March 13, 2007. The Company retained the current par value of $0.0001 for all shares of common stock. Stockholders’ equity has been restated to give retroactive recognition to the stock split in prior periods by reclassifying from additional paid-in-capital to common stock the par value of the 16,826,885 shares arising from the split. Except where and as otherwise stated to the contrary in this annual report, all share and prices per share have been adjusted to give retroactive effect to the change in the price per share of the common stock resulting from the two and one-half-for-one forward split of the common stock that took effect on March 14, 2007.

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 or stockholders’ equity.

NOTE 2 – BASIS OF PRESENTATION

The accompanying unaudited 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 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 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 operation, for the year ended December 31, 2006, contained in the Company’s December 31, 2006 Annual Report on Form 10-KSB.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 2 – BASIS OF PRESENTATION, CONTINUED

The Company’s 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 $8,534,200 as of September 30, 2007. These factors, among others, 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 our common stock, promissory notes and debt offerings. The Company continues to seek other sources of financing and is attempting to increase revenues by acquiring additional domestic oil and gas prospects while completing the drilling on the prospects the Company currently has an interest in.

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 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.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

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 loss per share has been calculated using the weighted average number of common shares outstanding during the period. The Company’s common stock warrants and options have been excluded from the diluted loss per share computation since their effect is anti-dilutive.

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 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.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

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). During 2005, no share-based payments were granted under the Company’s stock option plan and therefore the Company did not have any share-based compensation expense under the modified prospective method for that period.

Fair Value of Financial Instruments. The carrying amount of accounts payable, accrued expenses and promissory notes approximates fair value because of the short maturity of those instruments.

NOTE 4 – OIL AND GAS PROPERTIES, UNPROVEN

At September 30, 2007, the Company had paid the following drilling costs for the following prospects and is included in the caption on the Company’s balance sheet as Prepaid Drilling Costs.

Prospect	Amount as of September 30,2007
East OMG	$	1,839,775
Lake Campo		366,535
Caviar #1		37,314
Amberjack		53,857

Balance, September 30, 2007	$	2,297,481

The total costs incurred and excluded from amortization are summarized as follows:

							Net Carrying Value September 30,
	Acquisition		Exploration		Impairment Loss		2007		2006
Canada	$	-	$	131,174	$	-	$	131,174	$	-
United Sates		750,811		891,849		-		1,642,660		-

Totals	$	750,811	$	1,023,023	$	-	$	1,773,834	$	-

All of the Company’s oil and gas properties are unproven and are located in Louisiana, Texas and Alberta, Canada.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 5 – PROMISSORY NOTES

Promissory Note with Stockholder - $250,000 . On June 12, 2007, the Company issued an unsecured promissory note in the amount of $250,000 to a stockholder. Interest accrues on the outstanding principal balance from and after June 12, 2007 at a rate of 11 percent per annum. Interest shall be calculated on the basis of a 360-day year, and shall be charged on the principal outstanding from time to time for the actual number of days elapsed. The Company shall pay the Holder all accrued interest and the outstanding principal on the maturity date. The maturity date of the note is December 12, 2007.

Promissory Notes - $750,000 . On or about June 12, 2007, the Company issued unsecured promissory notes in the amount of $750,000 to certain investors. Interest accrues on the outstanding principal balance from and after June 12, 2007 at a rate of 11 percent per annum. Interest shall be calculated on the basis of a 360-day year, and shall be charged on the principal outstanding from time to time for the actual number of days elapsed. The Company shall pay the Holders all accrued interest and the outstanding principal on the maturity date. The maturity date of the notes is December 12, 2007.

Contemporaneous with the issuance of the promissory notes, a total of 750,000 warrants were issued at an exercise price of $1.25. The warrants have 5 year term from the date of the promissory note. If at any time after one year from the Initial Exercise Date there is no effective registration statement (“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 (“VWAP”) on the Trading Day immediately preceding the date of such election; (B) = the Exercise Price of this Warrant, as adjusted; and (X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

The fair value of the warrants 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 5.13%; no dividend yields; volatility factors of the expected market price of our common stock of 23.12; an estimated forfeiture rate of 15%; and an expected life of the warrants of 5 years. This generates a price of $0.39 per warrants based on a strike price of $1.25 at the date of grant, which was June 12, 2007. As a result, approximately $187,500 of discount on promissory notes and additional paid-in capital was recorded during the nine month period ended September 30, 2007 relating to the issuance of promissory notes.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

On September 14, 2006, the Company entered into a three-year employment agreement with Mr. Dyron Watford to be its chief financial officer and chairman. The employment agreement provides for a base salary of $6,000 per month subject to certain increases throughout the term of the contract. Pursuant to the agreement, Mr. Watford received 6,250,000 options to purchase common stock in the company at a price of $0.78 per share. The options will vest monthly over the term of the employment agreement and will expire five years after the vesting date. The Board of Directors amended Mr. Watford’s annual base salary to $180,000 in March 2007.

On September 15, 2006, the Company entered into a three-year employment agreement with Mr. Billy Raley to be its chief executive officer. The employment agreement provides for a base salary of $8,000 per month subject to certain increases throughout the term of the contract. Pursuant to the agreement, Mr. Raley received 6,250,000 options to purchase common stock in the company at a price of $0.78 per share. The options will vest monthly over the term of the employment agreement and will expire five years after the vesting date. The Board of Directors amended Mr. Raley’s annual base salary to $225,000 in March 2007.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 6 – COMMITMENTS AND CONTINGENCIES, CONTINUED

On October 6, 2006, the Company entered into a two-year employment agreement with Mr. Kevin Tattersall to be its chief exploration officer. The employment agreement provides for a base salary of $5,000 per month. Pursuant to the agreement, Mr. Tattersall received 812,500 shares of common stock in the company. The stock issued to Mr. Tattersall is restricted as defined by the Securities Act of 1933, as amended. The shares will vest monthly over the term of the employment agreement and vesting is contingent upon continued employment with the Company. Any remaining unvested shares of common stock at the time of termination or resignation from the Company will be forfeited by the executive.

NOTE 7 – CONVERTIBLE DEBENTURES – SEPTEMBER 2007

An aggregate of $5,110,294 of Senior Debentures, convertible into shares of our common stock at $0.80 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 our option subject to certain conditions, through the issuance of shares of our 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 our common stock at a price $0.80. 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.

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 our 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. Since a registration statement was not filed timely, the debentures are in technical default and have therefore been recorded as a current liability.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 7 – CONVERTIBLE DEBENTURES – SEPTEMBER 2007, CONTINUED

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 (5) 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 (5) 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 repricing of the conversion rate and warrant exercise price. One such milestone was a revenue target to be achieved by March 31, 2008.

Our obligations to the Holders in the September 2007 financing are secured by a senior security interest and lien granted upon all of our 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 our common stock such that the number of shares of our common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such conversion or exercise.

The agreements included a number of other embedded derivative instruments, and the Company has applied the provisions of FAS 155 “Accounting for Certain Hybrid Financial Instruments”, to record the fair values of the convertible debentures, and related derivatives, as of September 13, 2007, the date of issuance. The fair values of the debentures and related derivative instruments were valued using the Black-Scholes model, resulting in an initial fair value of approximately $8,621,400. The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments. The excess of the fair value over the transaction price of the Debentures was recorded through the results of operations as a debit of approximately $4,621,400 to Charges Related to Issuance of September 2007 Convertible Debentures and Warrants.

The 2007 Convertible Debentures and related derivatives outstanding at September 30, 2007 were again valued at fair value using a combination of Binomial and Black Scholes models, resulting in a decrease in the fair value of the liability of approximately $1,218,800, which was recorded through the results of operations as a credit to adjustments to fair value of embedded derivatives.

In connection with this financing, we 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 are 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.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 7 – CONVERTIBLE DEBENTURES – SEPTEMBER 2007, CONTINUED

The following table summarizes the September 2007 Secured Convertible Debentures and discounts outstanding at September 30, 2007:

September 2007 Debentures at fair value	$	5,110,294
Warrant derivative discount		(3,883,953	)
Original issue discount		(1,078,082	)
Net convertible debentures	$	148,259

NOTE 8 – STOCKHOLDERS’ EQUITY

On February 20, 2007, the Company declared a two and one-half-for-one stock split in the form of a stock dividend, payable March 14, 2007 to stockholders of record as of March 13, 2007. The Company retained the current par value of $0.0001 for all shares of common stock. Stockholders’ equity has been restated to give retroactive recognition to the stock split in prior periods by reclassifying from additional paid-in-capital to common stock the par value of the 16,531,285 shares arising from the split. Except where and as otherwise stated to the contrary in this report, all share and prices per share have been adjusted to give retroactive effect to the change in the price per share of the common stock resulting from the two and one-half-for-one forward split of the common stock that took effect on March 14, 2007.

Between January 2007 and May 2007, the Company issued 976,038 shares of restricted common stock to offshore investors and was exempt from registration pursuant to Regulation S for net proceeds of $283,886.

On October 15, 2006 we offered for sale $1,500,000 in $15,000 units. The offering closed in February 2007 and the all of the warrants were redeemed in April 2007. Pursuant to this offering, the Company sold 2,070,000 shares of restricted stock to investors for net proceeds of $773,000 between January and April 2007. Each investor had access to and was provided with relevant information concerning the company. 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.

On October 6, 2006, the Company entered into a two-year employment agreement with Mr. Kevin Tattersall to be its chief exploration officer. As part of his compensation and pursuant to the agreement, we issued Mr. Tattersall 812,500 shares of common stock in the company. The stock issued to Mr. Tattersall is restricted as defined by the Securities Act of 1933, as amended. The shares will vest monthly over the term of the employment agreement and vesting is contingent upon continued employment with the Company. Any remaining unvested shares of common stock at the time of termination or resignation from the Company will be forfeited by the executive. At the date of issuance, the shares were valued at the closing bid price on October 6, 2006 at $0.80. For the nine month period ended September 30, 2007, the Company recorded approximately $242,500 as compensation expense under this agreement for the vesting of 304,686 shares.

During 2007, the Company issued 75,000 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 bid price. For the nine month period ended September 30, 2007, the Company recorded approximately $134,200 as compensation expense under these agreements.

UNIVERSAL ENERGY CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

NOTE 9 – STOCK OPTION PLAN

The 2006 Non-Statutory Stock Option Plan was adopted by the Board of Directors on September 13, 2006. Under this plan, options for a maximum of 37,500,000 shares of our 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.

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 our common stock of 0.71; an estimated forfeiture rate of 15%; and an expected life of the options of 3 years. This generates 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 $1,035,600 of compensation expense and additional paid-in capital was recorded during the nine month period ended September 30, 2007 relating to the vesting of 2,083,334 options awarded. As of September 30, 2007, a total of 8,159,724 nonvested shares remained outstanding with a weighted average price of $0.78 and a grant date value of $0.39 per share. At September 30, 2007, the aggregate intrinsic value of the stock options issued and vested was $3,125,000 and $1,085,100, respectively.

Options	Number of Shares		Option Price
Granted		12,500,000	$	0.78
Exercised		-		-
Cancelled		-		-

Outstanding September 30, 2007		12,500,000	$	0.78

NOTE 10 – DISCONTINUED OPERATIONS

The Property and equipment, formerly classified as current assets of discontinued operations in our financial statements, was sold in February 2007 for net proceeds of $7,600. Contemporaneous with the sale of the assets the business operations of the tanning salon ceased.

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

The following discussion of our plan of operation, financial condition and results of operations should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, included elsewhere herein. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed in this Quarterly Report. See “Special Note Regarding Forward Looking Statements” included elsewhere in this Quarterly Report. Additional risk factors are also identified in our annual report to the U. S. Securities and Exchange Commission filed on Form 10-KSB and in other SEC filings.

Corporate History

We were incorporated in the State of Delaware on January 4, 2002, under the name of "Universal Tanning Ventures, Inc." From inception until 2006, we owned and operated a single indoor tanning salon business that offered a full range of indoor tanning products and services to our customers. On May 21, 2006, we changed our name to "Universal Energy Corp." and focused our operations on the acquisition and development of oil and natural gas properties.

Plan of Operation

We are an independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States and Canada. We pursue oil and gas prospects in partnership with oil and gas companies with exploration, development and production expertise. Our minority working interests in drilling prospects currently consist of land in Alberta, Canada, Louisiana and Texas. As we expand our business we will eventually seek to act as the operator of those properties in which we have an interest.

We have working interests ranging from 7.5% to 95.00% in the various prospects in which we are a participant. A “working interest” is a percentage of ownership in an oil and gas lease granting its owner the right to explore, drill, and produce oil and gas from a tract of property. Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing, and operating a well or unit. After royalties are paid, the working interest also entitles its owner to share in production revenues with other working interest owners based on the percentage of working interest owned. A “net revenue interest” is a share of production after all burdens, such as royalties, have been deducted from the working interest. It is the percentage of production that each party actually receives.

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 expect that our current working capital will be able to fund our operations through November 2007. 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.

As of September 30, 2007, although we have completed the drilling and are currently completing production of certain well, we are still considered to have no proved reserves. From inception to September 30, 2007, we have accumulated losses of approximately $8,414,000 and expect to incur further losses in the development of our business, all of which casts doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due.

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

Pembina Nisku	$	75,000
Caviar (#3, #4, #5)		1,200,000
Amberjack		-
Lake Campo		225,000
East OMG		845,000
Lone Oak		1,300,000
General and administrative		750,000
Total	$	4,395,000

As of September 30, 2007, we have participated in drilling the following wells with the interests and results indicated as of the date of this prospectus:

	Interest						Approximate
Well Name	Working			Net Revenue			Depth		Formation	Status

Amberjack		7.50	%		4.05	%		10,000’	Miocene	Awaiting production
Caviar #1		10.00	%		5.40	%		10,600’	Miocene	Awaiting production
Lake Campo		12.50	%		6.75	%		10,000’	Tex W	Awaiting production
East OMG		17.50	%		9.45	%		16,500’	Miogyp	Currently drilling to 16,500’

Our U.S. Prospects

We currently have interests in the following properties:

Agreement	Approximate Acreage		Universal’s Interest		Location
1097885 Alberta Ltd. (Nisku Reef)		480		95.0% ^*		Canada, Alberta
Caviar		932		10.0% ^*		Louisiana, USA
Amberjack		840		7.5% ^*		Louisiana, USA
Lake Campo		190		12.5% ^*		Louisiana, USA
East OMG		923		17.5% ^*		Louisiana, USA
Lone Oak		3,526		12.5% ^*		Texas, USA
W. Rosedale		204		15.0% ^*		Louisiana, USA

* Working interest before casing point

Nisku Reef Prospect – Alberta, Canada

In September 2006, we acquired a working interest in the Nisku Reef project which is situated in the Pembina oil field. We have an agreement to earn a 95% working interest in 480 acres of leased lands by drilling a test well to the base of the Nisku formation, subject to a convertible 15.0% GORR (gross overriding royalty) to the lease holder. The allowable 160 acre spacing does permit for up to three wells to be drilled on this prospect.

We have performed 3-D seismic programs and magneto telluric programs on our prospect during the 4 ^th quarter of 2006 and the first quarter of 2007. We anticipate seeking joint venture partners for this prospect. We do not have any arrangements with any third party regarding the drilling program on this property.

Caviar Prospects – Plaquemines Parish, Louisiana

In March 2007 , we signed a participation agreement that expanded our oil and gas exploration and production activities into Southeastern Louisiana. The agreement allowed us to earn a 10% working interest before casing point and a 7.5% interest after casing point based on the participation in the drilling of a test well. If we satisfy our obligation, we then have the right to participate in three remaining wells to be drilled within the prospect. This prospect, named Caviar, lies in the prolific Middle Miocene Trend, which stretches across most of Southeastern Louisiana. Drilling on the first well was completed in September 2007 and the subsequent election was made by well participants to complete the well. Production casing has been set and the well is expected to start production in December 2007, as soon as the gas pipeline is installed to the prospect.

East OMG Prospect – Cameron Parish, Louisiana

We signed a participation agreement in August 2007 that gives us the right to earn a 17.5% working interest before casing point and a 13.125% interest after casing point based on the participation in the drilling of a well on the East OMG Prospect. Wells adjacent to the East OMG Prospect such as Chalkley Miogyp field and S. Lake Arthur, have cumulative production of 500 billion BCFE and 800 billion BCFE, respectively; however, you should note that proximity of these fields to our property provides no assurance that we will establish any reserves on our property.

Production from the adjacent wells listed above is from the same Upper Miogyp sandstones that are the main objective of the East OMG Prospect. The combined reserve potential of the four principal objective sandstones that comprise the East OMG prospect is estimated to be greater than 59 BCFE. The project began drilling in October 2007 and is scheduled to conclude drilling in December 2007.

Lake Campo Prospect – Plaquemines Parish, Louisiana

We have a 9.375% interest after casing point in the Lake Campo Prospect; this prospect is an established productive structure that produces gas from water drive sands down-dip to the proposed drill location. Lake Campo also lies in the prolific Middle Miocene Trend. Drilling was completed on the test well in October 2007 and the election was made to complete the well.

W. Rosedale Prospect –Ibervile Parish, Louisiana

We have the right to earn a 15.0% working interest before casing point and a 12.0% interest after casing point based on the participation in the drilling of a test well. This prospect, named W. Rosedale, is a 3-D and sub-surface supported, multiple objective, 10,150’ normal pressured drilling prospect located 20 miles west of Baton Rouge, Louisiana. Drilling on the prospect began in October 2007 and is scheduled to be completed in November 2007.

Lone Oak Prospect – Galveston Bay, Texas

We have the right to earn a 12.5% working interest before casing point and a 9.375% interest after casing point based on the participation in the drilling of a test well. This prospect, named Lone Oak, is a 3,526 acre prospect located in the inland waters of Galveston Bay, Texas. Drilling of this 13,000 foot well is scheduled to begin in late November 2007.

Miscellaneous

We are not obligated to provide quantities of oil or gas in the future under existing contracts or agreements. We have not filed any reports containing oil or gas reserve estimates with any federal or foreign governmental authority or agency within the past 12 months.

CONSOLIDATED FINANCIAL INFORMATION

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
Investor/public relations expense	$	52,900		$	-		$	1,353,800		$	-
Stock compensation expense	$	470,900		$	-		$	1,412,400		$	-
Selling, general and administrative	$	222,700		$	45,500		$	643,700		$	106,100
Other income (expense)	$	(3,693,400	)	$	-		$	(3,716,600	)	$	-
Gain (loss) from discontinued operations	$	-		$	(7,200	)	$	(34,200	)	$	(21,200	)

Comparison of Three Months Ended September 30, 2007 and September 30, 2006.

Investor/public relations Expense . Investor/public relations expenses for the three months ended September 30, 2007 increased $52,900 to approximately $52,900 from $0 for the same period in 2006. The increase was primarily attributable to investor/public awareness campaigns to help develop a brand name for the Company.

Stock Compensation Expense . Stock compensation expenses for the three months ended September 30, 2007 increased $470,900 to approximately $470,900 from $0 for the same period in 2006. The increase was primarily attributable to stock option awards to our executive officers and advisory board members.

Selling, General and Administrative . Selling, general and administrative expenses for the three months ended September 30, 2007 increased $177,200 (or 389%) to approximately $222,700 from approximately $45,500 for the same period in 2006. The increase was primarily attributable to increased wages, travel and other acquisition costs associated with changing the direction of the Company to pursue oil and gas prospects.

Other expenses . Other expenses for the three months ended September 30, 2007 increased $3,693,400 to $3,693,400 from $0 for the same period in 2006. The majority of the increase was attributable to accounting charges associated with the valuation of the debentures and warrants that were issued during 2007. Additionally, the remainder of the increase was related to the increased debt of the company and the interest charges associated with that debt.

Discontinued Operations . Gain (loss) from discontinued operations for the three months ended September 30, 2007 decreased $7,200 to $0 from $7,200 for the same period in 2006. During the three months ended September 30, 2007, there were no further operations of the discontinued operations.

Net Loss. Net loss for the three months ended September 30, 2007 was approximately $4,439,800 compared to $38,300 for 2006. The increase in our net loss was due to the reasons described herein above.

Comparison of Nine Months Ended September 30, 2007 and September 30, 2006.

Investor/public relations Expense . Investor/public relations expenses for the nine months ended September 30, 2007 increased $1,353,800 to approximately $1,353,800 from $0 for the same period in 2006. The increase was primarily attributable to investor/public awareness campaigns to help develop a brand name for the Company.

Stock Compensation Expense . Stock compensation expenses for the nine months ended September 30, 2007 increased $1,412,400 to approximately $1,412,400 from $0 for the same period in 2006. The increase was primarily attributable to stock option awards to our executive officers and advisory board members.

Selling, General and Administrative . Selling, general and administrative expenses for the nine months ended September 30, 2007 increased $537,600 (or 507%) to approximately $643,700 from approximately $106,100 for the same period in 2006. The increase was primarily attributable to increased wages, travel and other acquisition costs associated with changing the direction of the Company to pursue oil and gas prospects.

Other expenses . Other expenses for the three months ended September 30, 2007 increased $3,716,600 to $3,716,600 from $0 for the same period in 2006. The majority of the increase was attributable to accounting charges associated with the valuation of the debentures and warrants that were issued during 2007. Additionally, the remainder of the increase was related to the increased debt of the company and the interest charges associated with that debt.

Discontinued Operations . Loss from discontinued operations for the nine months ended September 30, 2007 increased $13,000 to $34,200 from $21,200 for the same period in 2006. During February 2007, this segment was discontinued and no further operations of the discontinued operations were performed.

Net Loss. Net loss for the nine months ended September 30, 2007 was approximately $7,160,600 compared to $84,900 for 2006. The increase in our net loss was due to the reasons described herein above.

Liquidity and Capital Resources

Net cash used in operating activities totaled approximately $4,157,300 during the nine months ended September 30, 2007, compared to net cash used in operating activities of approximately $202,800 for the same period in 2006. Net cash used in discontinued operating activities totaled approximately $42,600 during the nine months ended September 30, 2007, compared to net cash provided by discontinued operations of approximately $21,500 for the same period in 2006.

Cash used in investing activities from operating activities totaled $1,678,600 and $- during the nine months ended September 30, 2007 and 2006, respectively. Capital expenditures in 2007 were primarily comprised of drilling and completion costs associated with our oil and gas prospects.

Net cash provided by financing activities totaled approximately $5,734,800 and $229,000 during the nine months ended September 30, 2007 and 2006, respectively. During the nine months ended September 30, 2007, financing activities consisted of proceeds from the sale of debentures by the company.

At September 30, 2007 we had cash balances in the amount of approximately $314,700. Our principal source of funds has been cash generated from financing activities. We have been unable to generate significant liquidity or cash flow from our current operations. We anticipate that cash flows from continuing operations or discontinued operations will be insufficient to fund our business operations for the full year 2007 and that we must continue attempting to raise additional capital to fund our operations and implement our business plan.

Variables and Trends

We have no 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

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available to us. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Net operating loss carryforwards . As of September 30, 2007, we have incurred a net operating loss of approximately $8,534,200 since inception. This net operating loss may be used to reduce future federal income taxes, if any. No provision for federal or state income taxes has been recorded, and we have not recorded any benefit was not recognized due to the possibility that the net operating loss carryforward would not be utilized, for various reasons, including the potential that we might not have sufficient profits to use the carryforward or that the carryforward may be limited as a result of changes in our equity ownership. We intend to use this carryforward to offset our future taxable income. If we were to use any of this net operating loss carryforward to reduce our future taxable income and the Internal Revenue Service were to then successfully assert that our carryforward is subject to limitation as a result of capital transactions occurring in 2002 or otherwise, we may be liable for back taxes, interest and, possibly, penalties prospectively.

Impairment of Long Lived Assets. We assess the impairment of long-lived assets on an ongoing basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable based upon an estimate of future undiscounted cash flows. Factors we consider that could trigger an impairment review include the following: (i) significant underperformance relative to expected historical or projected future operating results; (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; (iii) significant negative industry or economic trends; (iv) significant decline in our stock price for a sustained period; and (v) our market capitalization relative to net book value.

When we determine that the carrying value of any long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure impairment based on the difference between an asset’s carrying value and an estimate of fair value, which may be determined based upon quotes or a projected discounted cash flow, using a discount rate determined by our management to be commensurate with our cost of capital and the risk inherent in our current business model, and other measures of fair value.

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 and costs of drilling of productive and non-productive wells into the full cost pool. As of September 30, 2007, the Company had no properties with proven reserves. 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 annually whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties.

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.

Glossary of Industry Terms

The following is a description of the meanings of some of the natural gas and oil industry terms used in this prospectus..

Bcf . Billion cubic feet of natural gas.

Casing Point. The location, or depth, at which drilling an interval of a particular diameter hole ceases, so that casing of a given size can be run and cemented.

Completion . An indefinite term, but including those steps in attempting to bring a well into production after the well has been drilled to total depth through a prospective pay zone. Such steps include running and cementing a production string of casing, perforating, running tubing, acidizing or fracturing, swabbing, etc.

Development Well . A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

Discovery Well . An exploratory well that encounters a new and previously untapped oil or gas reservoir; it may open a new field, or a previously unknown reservoir (pool) in an old field.

Field . An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field, which are separated vertically by intervening impervious state, or laterally by local geologic barriers, or by both.

Gross acres or gross wells . The total acres or wells, as the case may be, in which a working interest is owned.

Mcf . Thousand cubic feet of natural gas.

Mcfe . Thousand cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.

MMcf . Million cubic feet of natural gas.

Net . "Net" oil and gas wells or "net" acres are determined by multiplying gross wells or acres by our working interest in those wells or acres.

Oil and gas producing activities . Such activities include: (a) The search for crude oil, including condensate and natural gas liquids, or natural gas in their natural states and original locations.(b) The acquisition of property rights or properties for the purpose of further exploration and/or for the purpose of removing the oil or gas from existing reservoirs on those properties. (c) The construction, drilling and production activities necessary to retrieve oil and gas from its natural reservoirs, and the acquisition, construction, installation, and maintenance of field gathering and storage systems-including lifting the oil and gas to the surface and gathering, treating, field processing (as in the case of processing gas to extract liquid hydrocarbons) and field storage.

Operator . In a joint venture for the execution of works or as defined in a joint operating agreement, the "Operator" entity charged with the responsibility for the execution of all works and is normally responsible to authorities for the representation and legal execution of all related agreements and contracts.

Producing Well . A well from which hydrocarbon or non- hydrocarbons in a fluid or gaseous state flow or are extracted on a daily basis.

Prospect . A specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.

Proved developed oil and gas reserves . Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery should be included as “proved developed reserves” only after testing by a pilot project or after the operation of an installed program has confirmed through production responses that increased recovery will be achieved.

Proved oil and gas reserves . The estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Reservoirs are considered proved if economic producibility is supported by either actual production or conclusive formation test. The area of a reservoir considered proved includes (a) that portion delineated by drilling and defined by gas-oil and/or oil-water contacts, if any, and (b) the immediately adjoining portions not yet drilled, but which can be reasonably judged as economically productive on the basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower proved limit of the reservoir. Reserves which can be produced economically through application of improved recovery techniques (such as fluid injection) are included in the “proved” classification when successful testing by a pilot project, or the operation of an installed program in the reservoir, provides support for the engineering analysis on which the project or program was based. Estimates of proved reserves do not include the following: (a) oil that may become available from known reservoirs but is classified separately as “indicated additional reserves”; (b) crude oil, natural gas and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics or economic factors; (c) crude oil, natural gas and natural gas liquids that may occur in undrilled prospects; and (d) crude oil, natural gas and natural gas liquids that may be recovered from oil shales, coal, gilsonite and other such sources.

Proved properties . Properties with proved reserves.

Proved undeveloped reserves . Reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Proved undeveloped reserves may not include estimates attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.

Unproved properties . Properties with no proved reserves.

Working interest . The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production.

3-D Seismic . The term applied to describe the method of acquiring seismic data that result in a three-dimensional grid of data (x,y,time) of the subsurface. 3D seismic data is usually acquired as a complete grid and interpreted within this specialized grid that allows the interpreter to generate three-dimensional maps of the subsurface.

Off Balance Sheet Arrangements

Special Note Regarding Forward Looking Statements

This report includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included in this report, other than statements of historical facts, address matters that the Company reasonably expects, believes or anticipates will or may occur in the future. Forward-looking statements may relate to, among other things:

· the Company’s future financial position, including working capital and anticipated cash flow;

· amounts and nature of future capital expenditures;

· operating costs and other expenses;

· wells to be drilled or reworked;

· oil and natural gas prices and demand;

· existing fields, wells and prospects;

· diversification of exploration;

· estimates of proved oil and natural gas reserves;

· reserve potential;

· development and drilling potential;

· expansion and other development trends in the oil and natural gas industry;

· the Company’s business strategy;

· production of oil and natural gas;

· effects of federal, state and local regulation;

· insurance coverage;

· employee relations;

· investment strategy and risk; and

· expansion and growth of the Company’s business and operations.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Disclosure of important factors that could cause actual results to differ materially from the Company’s expectations, or cautionary statements, are included under “Risk Factors” and elsewhere in this report , including, without limitation, in conjunction with the forward-looking statements. The following factors, among others that could cause actual results to differ materially from the Company’s expectations, include:

· unexpected changes in business or economic conditions;

· significant changes in natural gas and oil prices;

· timing and amount of production;

· unanticipated down-hole mechanical problems in wells or problems related to producing reservoirs or infrastructure;

· changes in overhead costs; and

· material events resulting in changes in estimates.

All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on the Company’s behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

A more comprehensive list of such factors and related discussion are set forth in our Annual Report on Form 10-KSB and our other filings made with the SEC from time to time.

ITEM 3 - CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of September 30, 2007. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as a result of a material weakness in internal controls as of September 30, 2007 in ensuring that information that is required to be disclosed by us in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act). Even an effective system of internal control over financial reporting, no matter how well designed, has inherent limitations, including the possibility of human error, circumvention or overriding of controls and, therefore, can provide only reasonable assurance with respect to reliable financial reporting. Furthermore, the effectiveness of a system of internal control over financial reporting in future periods can change as conditions change.

(b) Changes in internal control over financial reporting . Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2007. We have determined that a material weakness in our internal control over the reporting of the valuation of our September and November debentures existed during the third and fourth quarter of 2007. The control deficiency resulted from the lack of effective detective and monitoring controls within internal control over financial reporting over these accounts. In addition, as previously disclosed, the Company only has two employees and therefore, an adequate segregation of duties is difficult. Solely as a result of this material weakness, we concluded that our disclosure controls and procedures were not effective as of September 30, 2007. We have taken and will take the following actions to enhance our internal controls: retain additional specialized staff in the preparation of annual and interim financial statements and implement a system of segregation of duties in the processing of transactions within the recording cycle. Other than with respect to the identification of this weakness in internal control procedures, there was no change in our internal control over financial reporting during the quarter and year ended September 30, 2007 that materially affected, or is 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 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

Not applicable.

(b)

Not applicable.

(c)

In 2007, the Company issued 976,038 shares of restricted common stock to offshore investors and was exempt from registration pursuant to Regulation S for net proceeds of $283,886.

In 2007, the Company sold 2,070,000 shares of restricted stock to investors for net proceeds of $773,000. Each investor had access to and was provided with relevant information concerning the company. 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 2007, the Company issued 75,000 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 bid price. For the period ended September 30, 2007, the Company recorded approximately $134,200 as compensation expense under these agreements.

An aggregate of $5,110,294 of Senior Debentures, convertible into shares of our common stock at $0.80 per share;

The proceeds from the above stock issuances were used for general and administrative expenses as well as the acquisition of oil and gas properties.

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 June 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 June 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 *
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 *
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 Principal 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 Principal 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: November 12 , 2008

	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

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 June 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 June 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 *
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
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 Principal 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 Principal 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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