UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES ACT OF 1934

For the quarterly period ended September 30, 2008

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

OF THE SECURITIES ACT OF 1934

For the transition period from ___________to ____________

Commission File Number 333-123465

UNIVERSAL BIOENERGY, INC.

(Exact name of Registrant as specified in its charter)

Nevada		20-1770378
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

19800 Mac Arthur Blvd. Suite 300

Irvine, CA 92612

(Address, including zip code, of principal executive offices)

(888) 263-2009

(Issuer’s telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes ¨ No x

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, non–accelerated filer or a small reporting company. See definition of “accelerated filer large accelerated filer” and “smaller reporting company” in Rule 12b–2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non–Accelerated filer ¨ 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 ¨ No x

Transitional Small Business Disclosure Format (check one): Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at March 15, 2010
Common stock, $0.001 par value		35,625,000

UNIVERSAL BIOENERGY, INC.

INDEX

INDEX TO FORM 10-Q FILING

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND OCTOBER 31, 2007 GIVING THE EFFECT OF THE CHANGE IN YEAR END.

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

		PAGE

PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statement of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management Discussion & Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Reserved	41
Item 5	Other information	41
Item 6.	Exhibits	41

CERTIFICATIONS

Exhibit 31 – Management certification	20-24

Exhibit 32 – Sarbanes-Oxley Act	20-24

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL BIOENERGY, INC.

(An Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEET

	(Unaudited)			(Audited)
				Restated
	September 30, 2008			December 31, 2007

ASSETS: (Substantially pledged)

CURRENT ASSETS

Cash	$	29,572		$	133,177
Prepaid expenses		-			178,076
Total current assets		29,572			311,253

PROPERTY AND EQUIPMENT		290,000			1,945,972

Intangible assets		-			1,650,000
Deposit		3,100			3,100
TOTAL ASSETS	$	322,672		$	3,910,325

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	45,533		$	87,218
Accrued interest		-			97,850
Convertible note, net of debt discount - affiliate		-			-
Derivative liability - affiliate		-			7,867
Note payable- affiliate		100,000			304,047
Note payable		-			162,250

Total current liabilities		145,533			659,231

Derivative liability - affiliate		-			300,000
Note payable - affiliate		-			44,000
Note payable		-			1,487,750
TOTAL LIABILITIES		145,533			2,490,981

STOCKHOLDERS' EQUITY:
Preferred A stock, $.001 par value, 1,000,000 shares authorized; 100,000 and none issued and outstanding shares September 30, 2008 and December 31, 2007		100			-
Preferred B stock, $.001 par value, 1,000,000 shares authorized; 232,080 and none issued and outstanding shares September 30, 2008 and December 31, 2007		232			-
Common stock, $.001 par value, 200,000,000 shares authorized; 21,515,000 and 22,500,000 issued and outstanding as of September 30, 2008 and December 31, 2007		21,525			22,500
Additional paid-in capital		12,976,282			10,045,900
Accumulated deficit - development stage company		(12,820,999	)		(8,649,056	)
Total stockholders' equity		177,140			1,419,344

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	322,672		$	3,910,325

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

UNIVERSAL BIOENERGY, INC.

(An Development Stage Company)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - unaudited

									For the Period
	For the Three Months Ended				For the Nine Months Ended				from August 13, 2004
	September 30		October 31		September 30,		October 31,		(inception) through
	2008		2007		2008		2007		September 30, 2008


Revenue	$	-	$	-	$	-	$	-	$	-
Total		-		-		-		-		-

OPERATING EXPENSES:
General and administrative		115,672		53,015		560,259		91,325		702,112
Sales and marketing expenses		1,392		-		10,144		-		10,144
Depreciation and amortization expense		-		-		-		-		2,390
Impairment of assets		-		-		3,484,048		-		11,970,692
Total operating expenses		117,063		53,015		4,054,450		91,325		12,685,337

OTHER (INCOME) AND EXPENSES:
Interest expense		35,877		-		117,493		-		117,662
Total other expense		35,877		-		117,493		-		117,662

NET LOSS	$	152,940	$	53,015	$	4,171,943	$	91,325	$	12,802,999

NET LOSS PER SHARE:
Basic and diluted loss per share	$	0.01	$	0.00	$	0.19	$	0.00

Weighted average of shares outstanding		21,515,000		22,500,000		22,170,074		22,500,000

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

UNIVERSAL BIOENERGY, INC.

(An Development Stage Company)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - unaudited

							For the Period
	For the Nine Months Ended						from August 13, 2004
	September 30,			October 31,			(inception) through
	2008			2007			September 30, 2008

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(4,171,943	)	$	(91,325	)	$	(12,802,999	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
In kind rent		1,800			1,800			9,000
Impairment of assets		3,484,048			-			11,970,692
Common stock issued for services		57,428						57,428
Changes in assets and liabilities:
Prepaid expenses		-			(400	)		-
Accounts payable		(41,685	)		11,459			(41,685	)
Accrued expenses		117,493			(2,400	)		117,708
Notes payable		-			-			-
Net cash used by operating activities		(552,859	)		(80,866	)		(689,856	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash from acquisition		-			-			108,974
Net cash used in investing activities		-			-			108,974

CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred stock issued for the conversion of debt		-						-
Common stock converted to preferred shares		-						-
Proceeds from the issuance of common stock		-			-			23,200
Proceeds from notes payable		449,254			78,046			587,254
Net cash provided by financing activities		449,254			78,046			610,454

INCREASE IN CASH		(103,605	)		(2,820	)		29,572
CASH, BEGINNING OF YEAR		133,177			2,820			-
CASH, END OF YEAR	$	29,572		$	-		$	29,572

SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid	$	-		$	-
Taxes paid	$	-		$	-

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

UNIVERSAL BIOENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

It is management’s opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

NOTE 2 - GOING CONCERN ISSUES

The accompanying financial statements, the Company is in the development stage with limited resources, and had a loss as of September 30, 2008 of $4,171,943 and accumulated loss since inception of $12,802,999. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations, development and sale of biodiesel. The Company cannot reasonably be expected to earn revenue in the development stage of operations. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.

NOTE 3 - - ORGANIZATION

Universal Bioenergy North America, Inc (a development stage company) (“UBNA”) was incorporated in the State of Nevada on January 23, 2007.

Universal Bioenergy, Inc. (UB) f/k/a Palomine Mining, Inc. was incorporated on August 13, 2004 under the laws of the State of Nevada.

UBNA was organized to operate and produce biodiesel fuel using primarily soybean and other vegetable oil and grease in a refining process to yield biodiesel fuel and a marketable byproduct of glycerin. The Company is located in Nettleton, Mississippi. UBNA and UB are hereafter referred to as “(the Company)”.

On October 24, 2007, the Company changed its name to Universal Bioenergy, Inc. to better reflect its business plan.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

Principle of Consolidation

The condensed consolidated financial statements include the accounts of Universal Bioenergy, Inc. and Universal Bioenergy North America, Inc. Intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.

These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Revenue and Cost Recognition

Revenue includes product sales. The Company recognizes revenue from the sale of Biodiesel fuel and related byproducts at the time title to the product transfers, the amount is fixed and determinable, evidence of an agreement exists and the customer bears the risk of loss, net of provision for rebates and sales allowances in accordance with Topic 605 “Revenue Recognition in Financial Statements”.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2008, cash and cash equivalents include cash on hand and cash in the bank.

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.

The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow:

Asset Category		Depreciation/ Amortization Period
Furniture and Fixture		3 Years
Office equipment		3 Years
Leasehold improvements		5 Years

Goodwill and Other Intangible Assets

The Company adopted Statement of Financial Accounting Standard (“FASB”) Accounting Standards Codification (“ASC”) Topic 350 Goodwill and Other Intangible Assets, effective July 1, 2002. In accordance with (“ASC Topic 350”) "Goodwill and Other Intangible Assets," goodwill, represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method, acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are no longer amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if events and circumstances indicate impairment may have occurred in accordance with ASC Topic 350. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value. The Company impaired its intangible assets by $1,650,000 as the impairment was due to the expirations of permits and Environmental Protection Agency status.

Impairment of Long-Lived Assets

In accordance with ASC Topic 365, long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were events or changes in circumstances that necessitated an impairment of long lived assets. The Company impaired its long lived assets based on the value of the Land, Equipment and building facility by $1,655,972. Due to the reduction in valuations in Mississippi of land and building and diminished economic viability of biodiesel production the total valuations of that acquisition has reduced significantly in overall value of the assets to $290,000.

Income Taxes

Deferred income taxes are provided based on the provisions of ASC Topic 740, "Accounting for Income Taxes", to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of ASC Topic 740; "Accounting For Uncertainty In Income Taxes-An Interpretation Of ASC Topic 740 ("ASC Topic 740"). ASC Topic 740 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At September 30, 2008, the Company did not record any liabilities for uncertain tax positions.

Concentration of Credit Risk

The Company maintains its operating cash balances in banks located in Irvine California. The Federal Depository Insurance Corporation (FDIC) insures accounts at each institution up to $250,000.

Earnings Per Share

Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Diluted loss per share is the same as basic loss per share, because the effects of the additional securities, a result of the net loss would be anti-dilutive.

Fair Value of Financial Instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation.

The carrying amounts of the Company’s financial instruments, including cash, accounts payable and accrued liabilities, income tax payable and related party payable approximate fair value due to their most maturities.

Reclassification

Certain prior period amounts have been reclassified to conform to current year presentations.

Derivative Liabilities

Convertible debt is accounted for in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities (“Topic 815”) and ASC Topic 815. 40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock, (“Topic 815.40”). According to these pronouncements, we have recorded the embedded conversion option related to our convertible debt at fair value on the reporting date, resulting in the convertible instrument itself being recorded at a discount from the face amount.

Business Segments

The Company operates in one segment and therefore segment information is not presented.

Advertising and Promotional Expense

Advertising and other product-related costs are charged to expense as incurred. For the three months ended September 30, 2008 and October 31, 2007 advertising expense was $1,965, and $0, respectively.

Recent Accounting Pronouncements

Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.

Accounting Standards Codification

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (the “Codification”). This standard replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes only two levels of U.S. generally accepted accounting principles (“GAAP”), authoritative and nonauthoritative. The FASB ASC has become the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants. All other nongrandfathered, non-SEC accounting literature not included in the Codification will become nonauthoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September 15, 2009. The adoption of the Codification changed the Company’s references to GAAP accounting standards but did not impact the Company’s results of operations, financial position or liquidity.

Participating Securities Granted in Share-Based Transactions

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 260, Earnings Per Share (formerly FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities). The new guidance clarifies that non-vested share-based payment awards that entitle their holders to receive nonforfeitable dividends or dividend equivalents before vesting should be considered participating securities and included in basic earnings per share. The Company’s adoption of the new accounting standard did not have a material effect on previously issued or current earnings per share.

Business Combinations and Noncontrolling Interests

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 805, Business Combinations (formerly SFAS No. 141(R), Business Combinations). The new standard applies to all transactions or other events in which an entity obtains control of one or more businesses. Additionally, the new standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement date for all assets acquired and liabilities assumed; and requires the acquirer to disclose additional information needed to evaluate and understand the nature and financial effect of the business combination. The Company’s adoption of the new accounting standard did not have a material effect on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 810, Consolidations (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements). The new accounting standard establishes accounting and reporting standards for the noncontrolling interest (or minority interests) in a subsidiary and for the deconsolidation of a subsidiary by requiring all noncontrolling interests in subsidiaries be reported in the same way, as equity in the consolidated financial statements. As such, this guidance has eliminated the diversity in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. The Company’s adoption of this new accounting standard did not have a material effect on the Company’s consolidated financial statements.

Fair Value Measurement and Disclosure

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (formerly FASB FSP No 157-2, Effective Date of FASB Statement No. 157), which delayed the effective date for disclosing all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis (at least annually). This standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued new guidance for determining when a transaction is not orderly and for estimating fair value when there has been a significant decrease in the volume and level of activity for an asset or liability. The new guidance, which is now part of ASC 820 (formerly FSP 157-4,

Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly), requires disclosure of the inputs and valuation techniques used, as well as any changes in valuation techniques and inputs used during the period, to measure fair value in interim and annual periods. In addition, the presentation of the fair value hierarchy is required to be presented by major security type as described in ASC 320,

Investments — Debt and Equity Securities. The provisions of the new standard were effective for interim periods ending after June 15, 2009. The adoption of the new standard on April 1, 2009 did not have a material effect on the Company’s consolidated financial statements.

In April 2009, the Company adopted a new accounting standard included in ASC 820, (formerly FSP 107-1 and Accounting Principles Board (“APB”) 28-1, Interim Disclosures about Fair Value of Financial Instruments). The new standard requires disclosures of the fair value of financial instruments for interim reporting periods of publicly traded companies in addition to the annual disclosure required at year-end. The provisions of the new standard were effective for the interim periods ending after June 15, 2009. The Company’s adoption of this new accounting standard did not have a material effect on the Company’s consolidated financial statements.

In August 2009, the FASB issued new guidance relating to the accounting for the fair value measurement of liabilities. The new guidance, which is now part of ASC 820, provides clarification that in certain circumstances in which a quoted price in an active market for the identical liability is not available, a company is required to measure fair value using one or more of the following valuation techniques: the quoted price of the identical liability when traded as an asset, the quoted prices for similar liabilities or similar liabilities when traded as assets, or another valuation technique that is consistent with the principles of fair value measurements. The new guidance clarifies that a company is not required to include an adjustment for restrictions that prevent the transfer of the liability and if an adjustment is applied to the quoted price used in a valuation technique, the result is a Level 2 or 3 fair value measurement. The new guidance is effective for interim and annual periods beginning after August 27, 2009. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Derivative Instruments and Hedging Activities

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 815, Derivatives and Hedging (SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133). The new accounting standard requires enhanced disclosures about an entity’s derivative and hedging activities and is effective for fiscal years and interim periods beginning after November 15, 2008. Since the new accounting standard only required additional disclosure, the adoption did not impact the Company’s consolidated financial statements.

Other-Than-Temporary Impairments

In April 2009, the FASB issued new guidance for the accounting for other-than-temporary impairments. Under the new guidance, which is part of ASC 320, Investments — Debt and Equity Securities (formerly FSP 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments), an other-than-temporary impairment is recognized when an entity has the intent to sell a debt security or when it is more likely than not that an entity will be required to sell the debt security before its anticipated recovery in value. The new guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities and is effective for interim and annual reporting periods ending after June 15, 2009. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Subsequent Events

In May 2009, the FASB issued new guidance for subsequent events. The new guidance, which is part of ASC 855, Subsequent Events (formerly SFAS No. 165, Subsequent Events) is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The new guidance is effective for fiscal years and interim periods ended after June 15, 2009 and will be applied prospectively. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements. The Company evaluated subsequent events through the date the accompanying financial statements were issued, which was March 31, 2010.

Accounting Standards Not Yet Effective

Accounting for the Transfers of Financial Assets

In June 2009, the FASB issued new guidance relating to the accounting for transfers of financial assets. The new guidance, which was issued as SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140, was adopted into Codification in December 2009 through the issuance of Accounting Standards Updated (“ASU”) 2009-16. The new standard eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. The new guidance is effective for fiscal years beginning after November 15, 2009. The Company will adopt the new guidance in 2010 and is evaluating the impact it will have to the Company’s consolidated financial statements.

Accounting for Variable Interest Entities

In June 2009, the FASB issued revised guidance on the accounting for variable interest entities. The revised guidance, which was issued as SFAS No. 167, Amending FASB Interpretation No. 46(R), was adopted into Codification in December 2009 through the issuance of ASU 2009-17. The revised guidance amends FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, in determining whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance, and the obligation to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable interest entity. The revised guidance requires ongoing reassessments of whether an enterprise is the primary beneficiary and eliminates the quantitative approach previously required for determining the primary beneficiary. The Company does not expect that the provisions of the new guidance will have a material effect on its consolidated financial statements.

Revenue Recognition

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable based on the relative selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE or third-party evidence is available. ASU 2009-13 is effective for revenue arrangements entered into in fiscal years beginning on or after June 15, 2010. The Company does not expect that the provisions of the new guidance will have a material effect on its consolidated financial statements. In October 2009, the FASB issued Accounting Standards Update No. 2009-14, "Certain Revenue Arrangements That Include Software Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends guidance included within ASC Topic 985-605 to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to follow the guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact of adopting the provisions of ASU No. 2009-14.

NOTE 5 - STOCKHOLDERS’ EQUITY

On November 3, 2007, the Company amended its articles of incorporation and authorized 200,000,000 shares of common stock, at $.001 par value and 21,515,000 are issued and outstanding as of September 30, 2008.

On November 3, 2007, the Company authorized 1,000,000 preferred A shares, at $.001 par value and there are 232,080 were issued and outstanding as of September 30, 2008.

On September 2, 2008, the Company authorized 1,000,000 preferred B shares, at $.001 par value and there are 100,000 issued and outstanding as of September 30, 2008.

FORWARD SPLIT

On November 3, 2007, the Company authorized a 5 for 1 forward split of its 4,500,000 issued and outstanding treated as a stock dividend. After the 5 for 1 forward split the Company has 22,500,000 issued and outstanding on December 31, 2007.

The Company issued 2,000,000 shares in the acquisition of UBNA and cancelled 9,000,000 shares from a related party.

Common Stock Issued for Cash

During January 2007, the Company issued 10,000,000 shares of common stock for $500,000.

Common Stock Issued for Services

On February 13, 2008 the Company granted 10,000 shares of common stock for consulting services having a fair value of $50,100 based upon fair value on the date of grant. As of March 31, 2008 the Company recorded $50,100 as an expense.

On September 29, 2008 the Company issued 7,500 common shares to Traci Plaxico for services rendered as officer and director of the Company. The shares were trading at $.1185 per share and the Company expensed $889.

On September 29, 2008 the Company issued 7,500 common shares to James Earnest for services rendered as officer and director of the Company. The shares were trading at $.1185 per share and the Company expensed $889.

Mortenson Financial, Inc. surrendered 1,000,000 common shares to 100,000 preferred B shares and valued the exchange at the fair value of the shares at the date of the exchange on September 29, 2008.

In kind contribution

For the nine months ended September 30, 2008, a shareholder of the Company contributed office space with a fair value of $1,800 and there was no consideration paid or owed for this contribution.

NOTE 6 - PROPERTY AND EQUIPMENT

The Company has fixed assets as of September 30, 2008 and December 31, 2007 as follows:

	September 30, 2008		December 31, 2007
Equipment	$	165,000	$	1,698,362
Land		50,000		150,000
Building		75,000		100,000
Accumulated depreciation				(2,390	)

Total	$	290,000	$	1,945,972

Depreciation expense for the three months ended September 30, 2008 and period ended December 31, 2007 was $0 and $2,390 respectively. The Company has not recorded any depreciation expense related to its processing facility as it has not been placed in service as of September 30, 2008.

NOTE 7 – ACQUISITON

Palomine Mining, Inc. ("Palomine" or "we") consummated its acquisition of Universal Bioenergy North America, Inc., a Nevada Corporation, ("Universal"), at a closing held on December 6, 2007. Such acquisition was consummated pursuant to and in accordance with the Stock Purchase and Agreement (the "Agreement"), dated October 24, 2007, among Palomine, Universal and Mortensen Financial Limited, a shareholder of Palomine ("Mortensen").

As a result of the closing, Universal has become a wholly owned subsidiary of Palomine. In exchange for all of the issued and outstanding shares of Universal, Palomine issued to the shareholders of Universal 2,000,000 shares of common stock of Palomine. Mortensen, a shareholder of Palomino contributed 1,800,000 shares of common stock of Palomine to the amount of shares being delivered to Universal shareholders by Palomine. Such issuance represents an issuance of 44% of the issued and outstanding shares of Palomine. In addition, pursuant to the terms of the Agreement, an amendment to the certificate of incorporation of Palomine was filed with the State of Nevada whereby: (i) the name of the company has been changed to Universal Bioenergy, Inc., (ii) the shares of common stock of Palomine issued and outstanding at the time of the closing (4,500,000 shares) were increased by a forward stock split in the amount of five (5) shares for each share of Palomine issued and outstanding (resulting in 22,500,000 shares issued and outstanding); and (ii) the authorized shares of Palomine were increased to 200,000,000 shares of common stock with a par value of $0.001 per share; and 1,000,000 shares of preferred stock with a par value of $0.001 per share. As a result the company has treated this acquisition under the purchase method of accounting, whereas the company issued 2,000,000 shares at the five day average of the value of the stock given to the seller. The five day average of the values of stock was $5.01 during the closing of the purchase of the Companies subsidiary Universal Bioenergy North America, Inc.

Prior to the Agreement, Universal Bioenergy North American, Inc. purchased assets out of bankruptcy. The purchase of those assets determined the value of the stock exchange in the Agreement.

Purchase Price Allocation	December 6, 2007
Tangible Assets Allocation
Land	$	150,000
Equipment and capital improvements		1,695,972
Building		100,000
Prepaid expenses		178,076
Deposits		3,100
Cash		108,974
Intangible Asset Allocation
Permits		225,000
Environmental Protection Agency approvals (EPA)		650,000
Mississippi Department of Environmental Quality (MDEQ)		225,000
National Biodiesel Board membership		50,000
Intellectual property rights to operate the refinery		500,000
Liabilities
Accounts payables		(45,533	)
Accrued expenses		(83,366	)
Convertible notes payables		(307,867	)
Notes payables		(1,650,000	)
Fair values of net assets		1,533,356
Total Purchase price		10,020,000

Goodwill	$	8,486,644

Proforma Statement of Operations:

The Company’s Proforma statement of operations if the companies were consolidated as of January 1, 2007 would be as follows:

Proforma Statement of Operations
	For the Twelve Months ended December 31, 2007
Operating Expenses
General & Administrative	$	605,335
Impairment of assets		8,486,644
Total Operating Expense		9,091,979
Other Income (Expenses)
Fair value of derivative		4,094
Interest Expense		(98,948	)
Interest Income		2,827
Total Other Income (Expenses)		(92,027	)
Net Loss	$	(9,184,006	)
Proforma Loss per Share		(.041	)
Proforma Weighted Average Shares Outstanding		22,500,000

NOTE 8- GOODWILL AND OTHER INTANGIBLE ASSETS

The Company assessed the allocation of the purchase price, primarily through the determination of the fair value and remaining useful lives of the 2007 Acquisitions' respective intangible assets. As of December 31, 2007 the Company recorded intangible assets for a total amount of $1,650,000.

The Company has not amortized the intangible assets since the Company has not started operation of its Refinery and has no revenues through September 30, 2008 and still a development stage company. The Company will calculate the weighted average of the average amortization period, in total and by major define-lived intangible asset on a straight-line basis over the estimated useful lives of the related assets that is ten years.

Intangible Assets	September 30, 2008			December 31, 2007

Other Intangible Assets	$	1,650,000		$	1,650,000

Total Intangibles Assets		1,650,000			1,650,000

Impairment Intangible Assets		(1,650,000	)		-
Accumulated Amortization		-			-

Net Intangible Assets	$	-		$	1,650,000

NOTE 9 – CONVERTIBLE NOTES

	September 30, 2008		December 31, 2007
During October 2007, the Company issued a $300,000 convertible note payable. The note is convertible at the option of the holder by taking the average bid price of the common stock for the five day period preceding the conversion and multiplying by 75%. The interest rate is 6.5% per annum. The note is unsecured and requires payments of accrued interest and principal by October 31, 2010. On April 30, 2008 and October 31, 2008, all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, the Company is to pay $75,000 in semiannual installments. The Company converted the entire note to Preferred Series B Stock on September 18, 2008.	$	-	$	307,867

Total long-term note payable		-		307,867
Less current portion		-		7,867
Long-term portion of note payable	$	-	$	300,000

For the above convertible notes, pursuant to ASC Topic 470, the Company first reviewed and determined that no beneficial conversion feature existed. The Company then evaluated the convertible notes to determine if there was an embedded conversion option requiring bifurcation under ASC Topic 815 and ASC Topic 815.40. We determined that fair value accounting for an embedded conversion option was required and that a derivative liability would be recorded. The fair value of the conversion option is initially computed at its issuance date, then on subsequent reporting periods, marked-to-market. The change in fair value is recorded in the statement of operations. Upon conversion of a derivative instrument, the instrument is marked to fair value at the conversion date and the related fair value is reclassified to equity.

NOTE 10 – NOTE PAYABLE AND NOTE PAYABLE AFFILIATES

Notes payable affiliates comprise the following as of:

	September 30, 2008		December 31, 2007
During December 2007, the Company entered into an $88,000 unsecured note payable to Mortensen Financial Limited, a related party. The interest rate is 6.5% per annum. The note requires payment of accrued interest and principal by December 31, 2010. On April 30, 2008 and October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, the Company is to pay $22,000 in semiannual installments. During the period from inception to September 30, 2008, the Company incurred interest expense of approximately $3,041. The Company converted the entire note to Preferred Series B Stock on September 18, 2008.	$	-	$	88,000

During October 2007, the Company entered into a $250,000 unsecured note payable to Mortensen Financial Limited, a related party. The interest rate is 6.5% per annum. The note requires payment of accrued interest and principal by December 31, 2008. During the period from inception to September 30, 2008, the Company incurred interest expense of approximately $10,867. The Company converted the entire note to Preferred Series B Stock on September 18, 2008.		-		250,000

During December 2007, the Company received a $10,046 advance from an affiliate. Pursuant to the terms of the advance, the advance is non interest bearing, unsecured, and due on demand. The Company converted the entire note to Preferred Series B Stock on September 18, 2008.		-		10,047

In February 2008 the Company did not issue the required stock for the $100,000 bonus and the Company issued a note payable that has no interest rate and is due upon demand		100,000		-
Total long-term note payable		100,000		348,047
Less current portion		100,000		304,047
Long-term portion of note payable	$	-	$	44,000

Notes payable comprise of the following as of:

	September 30, 2008		December 31, 2007
During January 2007, the Company entered into a $1,650,000 secured note payable. The note payable is secured by all assets of the Company. The interest rate is 6% per annum and the note is secured by all the assets of the Company. The note requires semi annual principle payments of $103,125 plus interest on June and December of each year. During the period from inception to September 30, 2008, the Company incurred interest expense of approximately $141,312. The Company is delinquent and was required to make its first semi annual payment on September 30, 2008 and has not. The note is accordingly classified as current. The Company converted the entire note to Preferred Series B Stock on September 18, 2008.	$	-	$	1,650,000

Total long-term note payable		-		1,650,000
Less current portion		-		162,250
Long-term portion of note payable	$	-	$	1,487,750

On September 18, 2008 the Company converted the following debt to preferred shares:

Converting	Preferred B		Debt & Accrued		Common Stock
Parties	Shares issued		Interest Converted		Surrendered
Mortenson Financial, Inc.		34,000		745,991		-
LaCroix Financial, Inc.		82,500		1,818,821		-
Mortenson Financial, Inc.		15,850		300,000		-
Mortenson Financial, Inc.		100,000		-		(1,000,000	)

In September 18, 2008 the Company converted the Notes payables Lacroix International Holdings, Ltd. in the amount of $1,818,821 of principle and accrued interest for 82,500 preferred Series B shares.

On September 18, 2008 Mortenson Financial Ltd. in the amount of $745,991 of principle and accrued interest for 34,000 of preferred Series B shares and converted another note in the amount of $300,000 to 15,850 of preferred Series B Shares. .

On September 18, 2008 Mortenson Financial Ltd converted 1,000,000 common shares to 100,000 of preferred Series B Shares.

NOTE 11 - COMMITMENTS

On February 26, 2008, the Company entered into a one-year employment agreement with the Company’s Chief Executive Officer. The employment agreement renews annually. Pursuant to this employment agreement, the Company will pay an annual base salary of $60,000 for the period February 26, 2008 through February 26, 2009. In addition, on February 27, 2009 the officer was to have received a signing bonus of 19,763 shares of Company common stock with a fair value of $100,000 based on the value of the Company’s common stock on the effective date of the agreement. The officer never received the shares of Company common stock and the $100,000 stock bonus was converted to a note payable at no interest. As of September 30, 2008 the note payable is still outstanding. The agreement also calls for increase in the officer’s base compensation upon the Company reaching certain milestones:

For every $1,000,000 in Company’s profit the Executive is eligible for an annual performance bonus equal to 1% of the profit in cash and 4% of the profit on Common Stock.

For each successfully completed Transaction, which includes a merger or acquisition, the Company will pay 1% of the transaction value, of which 10% is to be paid in cash and 90% in Common Stock.

On January 15, 2008 the Company appointed a board of advisors for a twelve month period. The Advisors are to be paid a total of $10,000 per month of which $2,500 is in cash and the remaining $7,500 in shares of common stock. Upon the execution of the agreement, the Company paid an advance of $7,500 and will issue 4,491 shares of Company common stock with a fair value of $22,500. For the quarter ended March 31, 2008; $18,750 is recorded as a consulting expense. The Company never issued the shares of Company common stock and the Company and the parties terminated the contract in January 2008.

During 2007, as part of the sale of the facility by the bankruptcy court, the Company assumed an agreement entered into by the former operators of the biodiesel facility with the state of Mississippi Commission on Environmental Quality. The agreement requires the Company to deposit $50,000 into a trust fund to be used by the state of Mississippi for closure of the facility in the event the Company ceases operations. In addition, the Company is required to obtain approval from the state of Mississippi and meet certain environmental operating criteria as agreed to in the settlement agreement prior to beginning operations at the facility. As of the date of this report, the Company has not completed its obligations to the state of Mississippi and has not received approval to begin operations

On November 20, 2007, the Company entered into an agreement with an unrelated party to provide consulting services. The term of the services to be provided is from November 20, 2007 to October 22, 2008. As compensation for services received the Company is required to pay an annual fee of $200,000, a staffing fee up to $78,000 per month, a $10,000 travel and other expense allowance, and up to $30,000 per month for two months of Internet Campaign. The Company and the parties mutually terminated this agreement early January 2008.

On December 17, 2007, the Company entered into a consulting agreement. The Consultant is to be paid $100 per hour of which $50 is in cash and the remaining $50 is in Common Stock. As part of compensation, the Company issued shares of common stock with a fair value of $50,600 based on the stock price within 45 days of the agreement. The agreement is to be in effect until canceled by either party. On February 13, 2008 the Company issued 10,000 shares of common with a fair value of $50,100 on the grant date.

NOTE 12 - RELATED PARTY TRANSACTIONS

On March 18, 2008, the Company issued a $43,556 convertible note payable to Mortensen Financial Limited, a related party. The interest rate is 6.5 % per annum. The note is convertible at the option of the holder by taking the average bid price of the common stock for the five day period preceding the conversion and multiplying by 75%. The interest rate is 6.5% per annum. The note requires payments of accrued interest and principal by October 31, 2010. On October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, the Company is to pay $10,889 in semiannual installments.

During December 2007, the Company entered into an $88,000 note payable with Mortensen Financial Limited, a related party. The interest rate is 6.5% per annum. The note requires payment of accrued interest and principal by December 31, 2010. On April 30, 2008 and October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, Company is to pay $22,000 semiannual installments.

During October 2007, the Company issued a $300,000 convertible note payable to Mortensen Financial Limited, a related party. The note is convertible at the option of the holder by taking the average bid price of the common stock for the five day period preceding the conversion and multiplying by 75%. The interest rate is 6.5% per annum. The note requires payments of accrued interest and principal by October 31, 2010. On April 30, 2008 and October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010 Company is to pay $75,000 in semiannual installments.

During October 2007, the Company entered into a $250,000 note payable to Mortensen Financial Limited, a related party. The interest rate is 6.5% per annum. The note requires payment of accrued interest and principal by December 31, 2008.

On April 7, 2008, the Company issued a $300,000 unsecured convertible note payable to Mortensen Financial Limited, a related party. The note is convertible at the option of the holder by taking the average bid price of the common stock for the five day period preceding the conversion and multiplying by 75%. The interest rate is 6.5% per annum. The note requires payments of accrued interest and principal by October 31, 2010. On October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010 Company is to pay $75,000 in semiannual installments.

For the nine months ended September 30, 2008, a shareholder of the Company contributed office space with a fair value of $1,800.

During the year ended December 31, 2007, the Company received $10,046 from a stockholder. Pursuant to the terms of the loan, the loan is non interest bearing, unsecured and due on demand.

NOTE 13 - SUBSEQUENT EVENTS

In September 2008 the Company allowed the temporary operating permits to expire, effectively discontinued the biodiesel operations.

On April 14, 2009 the Company issued 2,200,000 to each officer and director of the Company with a total shares issued of 8,800,000. The stock was trading at $.035 and the Company expensed $77,000 for each issuance of shares of stock with a total expense of $308,000.

In March 2009 the Company entered into a Lease Agreement with MIPCO. The lease with MIPCO required the Company to retrofit the building and update the permits. MIPCO paid a deposit of $10,000 and failed to fulfill the Agreement and the Lease Agreement has been terminated.

On September 30, 2009 the Company converted the outstanding notes of $100,000 owed to four unrelated entities to 5,000,000 common shares of stock. The stock was trading at $.1185 and $100,000 was applied to the reduction of debt and the remaining balance of $492,500 was expensed to interest expense.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of software licenses and recurring revenue. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.

Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K/A 2nd Amendment for the year ended December 31, 2007, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

Overview

Universal Bioenergy North America, Inc. is a start-up Nevada corporation formed on January 23, 2007 which was acquired by Universal Bioenergy, Inc. (the “Company”) in December 2007, for the purpose of operating a biodiesel plant in Nettleton, Mississippi to produce biodiesel fuel and a marketable byproduct of glycerin. The biodiesel plant was acquired by Universal Bioenergy North America out of a bankruptcy action. We do not expect to generate any revenue until the plant is completely operational. As of the date of this report, we have not manufactured any biodiesel fuel.

Based upon estimates of management, the plant will be able to produce annually approximately 10 million, 20 million, and 50 million gallons of fuel grade biodiesel from soybean oil (or other suitable feedstock) per the first 12, 24, and 36 month periods respectively after the start of production pending successful raising of capital for feedstocks, reagents, and equipment expansion. Additionally, the plant will produce corresponding amounts (10% by biodiesel production volume) of marketable glycerin. As of the date of this report, we are still in the development phase, and until the proposed biodiesel plant is operational, we will generate no revenue. We anticipate that accumulated losses will continue to increase until the biodiesel plant is operational.

The original expected production start date was slated for January 2008, but due to some difficulty in attainment of required permits from the State of Mississippi to commence operations, the plant did not begin production. In addition, we require certain raw materials including plant oils/animal fats, catalyst, and alcohol in order to commence production. As of the date of this report, we have not acquired any raw materials to engage in production. We are gathering information and negotiating pricing with vendors, but have not secured any agreements with providers of such raw materials.

Provisional permits from the State of Mississippi were received in May 2008, but start date of actual production can not be accurately predicted based on current economic environment in the marketplace. The provisional permits allow the processing of typical batch sizes to characterize the waste water emissions that will be produced. Testing of these emissions will determine the necessary pre-treatment (if any) required before disposal into local sewage system (subsequent to final connection to our system) or have the waste water transported to larger treatment facilities in a nearby city. With a formalized plan for handling the waste water, management feels confident that full permitting will be obtainable but are not certain of the time it will take.

The high cost of virgin feedstock materials makes it unprofitable to use these as sole or primary feedstock choices. Alternative feedstock types are being investigated which are at a lower cost than the virgin feedstocks, but the high cost of similar commodities has also increased the cost of these feedstock sources. If sufficient quantities can be located and favorable price including shipping negotiated, the process operation can produce revenues in excess of processing costs. Management anticipates that allocated funds from recently acquired debt from Mortensen Financial Limited, a shareholder and substantial debt holder of the Company, will be sufficient to acquire feedstocks, reagents, and manufacturing costs for approximately two batches (20-24,000 gallons each). The revenues from the sale of the fuel once the State approves the fuel can be then cycled to acquire additional feedstocks and reagents to continue a low volume processing level (significantly less than the 10 million gallons per year). As of the date of this report, the Company has no agreements to sell any of its products once production begins nor secured economically viable feedstock sources. Management anticipates that in order to reach sustainable profitability, a monthly volume in excess of 300,000 gallons will be required. Management believes in the next twelve months approximately $4,000,000 of working capital will be needed with the greatest portion allocated for feedstock and reagent costs including shipping with an estimated average cost of $3,000,000 barring extreme fluctuations in commodity prices; further anticipated equipment acquisitions, installation, and site modifications based on effluent emission results and fuel quality estimated at $400,000; and normal operating overhead expenses of $600,000. This capital will bring production close to the 10 MGPY first-stage level. The Company can give no assurances as to the success of or the time it will take to raise the necessary capital; therefore, Universal may not be able to meet the first-stage production goal within the twelve month period slated or predict how long it will take to achieve the first-stage goal.

Over the past year and three months, the plant has undergone site improvement and development. General clean up and improvements of the site have taken place utilizing the debt financing previously obtained through LaCroix International and Mortensen Financial Limited, related parties.

An environmental order allowing provisional permitted production was received from the State of Mississippi Department of Environmental Quality in May 2008 to allow the Company to begin processing and scale-up phase of production to reach the nominal first-stage 10 million gallons per year (MGPY) goal subject to confirmation of effluent emissions. Pending confirmation of these effluent emissions (or appropriate treatments of emissions) from the State of Mississippi after production has started and verification of fuel quality, the plant will work to increase production to the meet the first-stage goal over the subsequent twelve month period. During this early stage, Universal is planning to sell biodiesel products to the refinery's prior customer base, truck stops, and local distributors. We currently do not have any agreements to sell its biodiesel products.

In an attempt to satisfy the provisional permit requirements for processing, management has sought feedstocks that would allow economical production of biodiesel and allow characterization of effluent emissions as required. Virgin feedstock plant oils increased in price to a point that made using them as a primary feedstock uneconomical for the company. Lower cost feedstock sources were sought and a supplier identified that could supply waste vegetable oils for our trial processing runs. Upon receiving the initial shipment of feedstock, it was found that the material did not meet the required quality specifications to allow production of biodiesel that would meet American Society of Testing And Materials specifications using the present production equipment on site. During further attempts to identify a new supplier, the time limitations for the provisional permits expired in September 2008. Due to the high cost of feedstocks at that time and the economic downturn in the biofuels marketplace, it was deemed by management unprofitable to pursue production of biodiesel until feedstock costs became more economically practical or petroleum prices rising to a point that would make biodiesel more competitive overall in the marketplace. There is no certainty as to when such conditions will exist if at all.

Management anticipates that as production is scaled up to the 20 MGPY level and above when the market conditions improve, pending the raising of sufficient capital in subsequent months after the first-stage goal is reached, export to the European market is expected with the higher production volume as it is anticipated that this production volume will exceed the needs of the local/regional distribution area. Scale-up of the facility to the first and second stage goal is subject to securing sufficient funding to cover capital expenditures and feedstock costs for this expansion of production capacity.

Expansion of the plant to increase production capacity to the second-stage goal of 20 MGPY using already acquired equipment and subsequent purchases and installation will require the successful raising of further capital through further stock offerings and additional debt if necessary. There is no certainty that this capital can be raised.

Reaching the 20 MGPY second-stage production level will require additional storage capacity of both pre and post processing materials and products and improvements to logistics on the site. Not all costs have been determined or quoted to achieve this stage; however, Management estimates such cost to be between $500,000 and $1,000,000, but information and pricing regarding costs is still being acquired and may vary greatly from the stated estimates. To reach the 50 MGPY third-stage production level will require further expansion of storage capacity and the building of a rail spur at the site or require additional land purchase adjacent to the site, which in preliminary discussions with knowledgeable rail transportation personnel could cost as much as $1,000,000 for such a rail spur not including land costs. With this in mind and in the present volatile economic environment, management is contemplating the need to move the plant to a location better suited logistically for the necessary movement of large volumes of materials and products in and out of the facility, making more possible the attainment of the higher production level goals. This likely will require the plant to be located near an active waterway or port to allow barge transport of materials and products. Costs for such a move have not been investigated to date.

Management further believes our cash reserves will be insufficient to cover such costs for the next 12 months and may require restructuring its present debt. The Company is working with vendors to establish credit for feedstock materials and further plans to raise needed capital through the further sale of stock in the Company, revenue from sales of products, and if necessary through additional debt financing until sufficient production volume can be reached to cover operating costs and debt service. The raising of such capital through stock issuance, proceeds, or debt is uncertain at best due to the present volatility in the marketplace primarily in feedstock and transportation costs. Failure by the Company to raise the required capital will limit the overall production capacity of the site and the Company will not be able to sustain the losses incurred due to the limited production.

The economic uncertainty in the present economy and biofuels marketplace necessitated that management determine a new direction for our company in order to secure and increase shareholder value. In December 2009, management decided to diversify the direction and product/service offerings of our company. These include development of feedstock programs for biofuels to better stabilize and reduce feedstock costs, seek other value-added products from biodiesel production byproducts, and seek merger and acquisitions that will allow diversification into solar, wind, synthetic fuels, energy efficiency technology, and other related technologies and services that can better facilitate the development of a vertically integrated energy production/service company. Management is seeking acquisition and merger candidates and other companies that can play a synergistic role in our diversification strategy and increase shareholder value. There is no certainty that such candidates and companies will or can be found and if found, successfully acquired or merged into our company.

Results of Operations

Universal Bioenergy North America, Inc. is a developmental stage company and operating subsidiary of the Company. The Company has generated no revenues as Universal Bioenergy North America, Inc. was not in production as of September 30, 2008 and will continue to accrue operating losses until sufficient production levels can be reached to meet all liabilities.

For the nine months ended September 30, 2008 we generated no revenue. Our future revenue plan is uncertain and is dependent on our ability to effectively refine our products, generate sales, and obtain contract feedstock opportunities. There are no assurances of the ability of our Company to begin to start refining feedstock. The cost of modifying our refinery is cost intensive so it is critical for us to raise appropriate capital to implement our business plan. The Company incurred losses of approximately $4,171,943 from January 1, 2008 to September 30, 2008. Our losses since our inception through September 30, 2008 amount to $12,802,999.

Part of these losses and need for impairment as determined by management is due in part to a decrease in value of assets related to the economic downturn in the local area and in the commercial real estate marketplace. Management feels that there has been a 30% or greater reduction in the value of real property at the Nettleton, MS plant site due to these conditions. There is no guarantee that such asset reduction will be recouped as economic conditions improve.

Liquidity and Capital Resources

As of September 30, 2008, our current assets were $133,009, as compared to $311,253 at December 31, 2007. The reduction in assets is due to the increase in expenses particularly the increase in salaries by adding Dr. Craven as Chief Executive Officer and associated expenses pursuant to his employment agreement, purchase of fixed assets, and increase in expenses in consulting costs to secure environmental permits and in costs associated with securing further operational debt. As of September 30, 2008, our current liabilities were $145,533, as compared to $659,231 at December 31, 2007. The LaCroix note is classified as current since it is in default.

As reflected in the accompanying financial statements, we are in the development stage with limited resources, used cash in operations of $1,274,754 from inception, a working capital deficiency of $115,961 and have an accumulated deficit during the development stage of $12,802,999. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Debt

Non-Convertible

During December 2007, we entered into an $88,000 note payable in favor of Mortensen Financial Limited, a shareholder of our company. The interest rate is 6.5% per annum. The note requires payment of accrued interest and principal by December 31, 2010. On April 30, 2008 and October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, we are to pay $22,000 in semiannual installments.

During October 2007, we entered into a $250,000 note payable in favor of Mortensen Financial Limited, a shareholder our company. The interest rate is 6.5% per annum. The note requires payment of accrued interest and principal by December 31, 2008. On September 18, 2008 the company converted this debt to preferred B shares.

During January 2007, we entered into a $1,650,000 note payable in favor of Lacroix International Holdings, Inc. The interest rate is 6% per annum and the note is secured by all the assets of the Company. The note requires semi-annual principle payments of $103,125 plus interest on June and December of each year. During the period from inception to September 30, 2008, we incurred interest expense of approximately $116,359. On September 30, 2008, a payment of $103,000 was due to Lacroix International Holdings, Inc. pursuant to the note. It is uncertain that the company will be able to make an interest payment since it may not be officially in permitted production at that time. The interest will accrue until the next planned payment date. We are delinquent in the required semi-annual payments effective September 30, 2008 and have not made any principle reduction of this note.

During the year ending December 31, 2007, we received an advance in the amount of $10,046 from Mortensen Financial Limited, a stockholder of our company. Pursuant to the terms of the advance, the advance is non interest bearing, unsecured and due on demand.

Convertible Debt

On March 18, 2008, we issued a $43,555.50 convertible note payable in favor of Mortensen Financial Limited, a shareholder of our company. The note is convertible at the option of the holder by taking the average bid price of the common stock for the five day period preceding the conversion and multiplying by 75%. The interest rate is 6.5% per annum. The note requires payments of accrued interest and principal by October 31, 2010. On October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, we are to pay $10,889 in semiannual installments. On September 18, 2008 the company converted this debt to preferred B shares.

During October 2007, we issued a $300,000 convertible note payable in favor of Mortensen Financial Limited, a shareholder of our Company. The note is convertible at the option of the holder by taking the average bid price of the common stock for the five day period preceding the conversion and multiplying by 75%. The interest rate is 6.5% per annum. The note requires payments of accrued interest and principal by October 31, 2010. On April 30, 2008 and October 31, 2008 all accrued interest must be paid. Beginning April 30, 2009 and semiannually thereafter through October 31, 2010, we are to pay $75,000 in semiannual installments.

On September 18, 2008 the company converted all the of the above mention debt to 132,350 preferred B shares.

On September 18, 2008 the Company converted the following debt to preferred shares:

Converting	Preferred B		Debt & Accrued		Common Stock
Parties	Shares issued		Interest Converted		Surrendered
Mortenson Financial, Inc.		34,000		745,991		-
LaCroix Financial, Inc.		82,500		1,818,821		-
Mortenson Financial, Inc.		15,850		300,000		-
Mortenson Financial, Inc.		100,000		-		(1,000,000	)

In September 18, 2008 the Company converted the Notes payables Lacroix International Holdings, Ltd. in the amount of $1,818,821 of principle and accrued interest for 82,500 preferred Series B shares.

On September 18, 2008 Mortenson Financial Ltd converted 1,000,000 common shares to 100,000 of preferred Series B Shares.

Critical Accounting Policies

Use of Estimates and Assumptions

Revenue and Cost Recognition

Revenue includes product sales. The Company recognizes revenue from the sale of Biodiesel fuel and related byproducts at the time title to the product transfer, the amount is fixed and determinable, evidence of an agreement exists and the customer bears the risk of loss, net of provision for rebates and sales allowances in accordance with Topic 605 “Revenue Recognition in Financial Statements”

Cash and Cash Equivalents

Property and Equipment

The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow:

Asset Category		Depreciation/ Amortization Period
Furniture and Fixture		3 Years
Office equipment		3 Years
Leasehold improvements		5 Years

Income Taxes

Derivative Liabilities

Convertible debt is accounted for in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities (“Topic 815”) and ASC Topic 815, 40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock, (“Topic 815.40”). According to these pronouncements, we have recorded the embedded conversion option related to our convertible debt at fair value on the reporting date, resulting in the convertible instrument itself being recorded at a discount from the face amount.

WHERE YOU CAN FIND MORE INFORMATION

You are advised to read this Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10Q, Annual report on Form 10-K, and Current Reports on Form 8-K, including all amendments that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not hold any derivative instruments that engage in any hedging activities. Most of our activity is in the development stage of our refining of feedstock.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Chief Executive Officer and Chief Financial Officer, has designed the Company’s disclosure controls and procedures to provide reasonable assurance of achieving the desired objectives. As required by SEC Rule 13a-15(b), in connection with filing this Quarterly Report on Form 10-Q, the Chief Executive Officer and Chief Financial Officer conducted an evaluation with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as of September 30, 2008, the end of the period covered by this report.

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the consolidated financial statements of the Company in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Based upon the evaluation conducted by our Chief Executive Officer and our Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2008 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation and the material weaknesses described below, management concluded that the Company did not maintain effective internal control over financial reporting as of September 30, 2008 based on the specified criteria. Our Chief Executive Officer and Chief Financial Officer identified control deficiencies regarding 1) lack of segregation of duties; 2) lack of timely completion of financial control and reporting processes; and 3) need for stronger internal control environment. We believe that these material weaknesses are due to the small size of the Company’s accounting staff. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.

The ineffectiveness of internal controls as of September 30, 2008 stemmed in large part from several significant changes within the Company. The organization structure was changing as we hired additional management and were restructuring the company obtaining new financing, adopting new accounting procedures, and discontinuing operations. This placed additional stress on the organization and our internal reporting and controls as financial personnel adjusted to the many changes instituted within the company. Although we believe the time to adapt in the first quarter has better positioned us to provide improved internal control functions into the future, during the transition, these changes caused control deficiencies, which in the aggregate resulted in a material weakness.

These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.

In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the quarter ending September 30, 2008 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our financial statements for the three months ending September 30, 2008 are fairly stated, in all material respects, in accordance with US GAAP.

We may in the future identify further material weaknesses or significant deficiencies in our internal control over financial reporting that we have not discovered to date. We plan to refine our internal control over financial reporting to meet the internal control reporting requirements included in Section 404 of the Sarbanes-Oxley Act (SOX 404) to have effective internal controls by December 31, 2009. The effectiveness of the measures we implement in this regard will be subject to ongoing management review supported by confirmation and testing by management, as well as audit committee oversight. As a result, we expect that additional changes could be made to our internal control over financial reporting and disclosure controls and procedures.

b) Changes in Internal Control over Financial Reporting.

During the Quarter ended September 30, 2008, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 1A - Risk Factors

Risk Factors

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this report, including the consolidated financial statements and the related notes appearing at the end of this quarterly report on Form 10-Q, with respect to any investment in shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations, and future prospects would likely be materially and adversely affected. In that event, the market price of our common stock could decline and you could lose all or part of your investment. There have been no material changes in the risk factors previously disclosed in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2007. However, the following risk factors, in addition to risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 should be considered

Risk Factors Related to Our Business

The Company Has No Revenues Which Make It Difficult To Forecast Our Future Results. As a result of having no sales or revenues, it is impossible to predict the Company's future performance or the period of time in which it can sustain its existence.

As we have had no operating history as a producer of biodiesel, investors have no basis to evaluate our ability to operate profitably. The Company has a limited operating history as the company was formed in August 13, 2004 and its operating subsidiary, Universal Bioenergy North America, Inc., was formed in January 2007. The Company has not earned any revenues in our contemplated biodiesel business. Accordingly, it may be difficult for investors to evaluate its business prospects.

The Company’s business is dependent upon the implementation of our business plan, including our ability to make agreements with suppliers, customers, and with respect to future investments. There can be no assurance that the Company’s efforts will ultimately be successful or result in revenues or profits.

Moreover, the Company’s prospects must be considered in light of the risks and uncertainties encountered by an early-stage company and in rapidly evolving markets, such as other alternative energy and biofuels markets, where supply and demand may change significantly in a short amount of time. The volatility in these markets may lead to increases in costs for feedstock materials, reagents, and for transportation of same to a point where production will be wholly unprofitable once production has commenced if at all.

Some of these risks relate to the Company’s business plan and potential inability to:

effectively manage our contemplated business operations;

recruit and retain key personnel;

successfully create and maintain relationships with vegetable oil producers and fat renderers and develop reliable feedstock and reagent supplies; and

develop new products that complement our contemplated business and long term stability.

If we cannot successfully address these risks, our contemplated business and the results of our contemplated operations and financial position would suffer potentially to the point where the company may need to cease operations.

The loss of our Chief Executive Officer and/or President could limit our ability to execute our growth strategy, resulting in a slower rate of growth.

The Company is largely dependent upon its officer, Dr. Richard Craven, for management and direction. The Company does not maintain “key person” life insurance for Dr. Craven . The loss of Dr. Craven or other officer could adversely affect the Company’s contemplated operations and results as the loss could cause a cessation of operations until qualified replacements can be found and/or a loss of expertise difficult to replace in a given time frame.

Our ability to successfully execute our business depends on certain conditions, the satisfaction of which, are not under our control. There is no certainty that we will be able to achieve satisfaction of any or these conditions.

The Company’s ability to successfully execute our business plan depends on the satisfaction of several conditions. The Company’s ability to satisfy these conditions may be, in part or in whole, beyond our control. The principal conditions to be satisfied include:

reaching definitive agreements for reliable feedstock supplies for biodiesel at prices that permit profitable production;

entering into satisfactory agreements for the sale of biodiesel at prices that are competitive in the market and allow for sufficient revenues to sustain the business;

entering into satisfactory agreements for the expansion of the existing manufacturing facility which are tied closely to costs of said expansions and our ability to secure financing of these planned expansions;

Since the Company has yet to begin full operation as a business but is close to doing so pending successful acquisition of funding, there is no certainty that we will be able to achieve satisfaction of any or all of the above conditions in addition to production volume and costs control.

Petroleum diesel, vegetable oils, waste oils and animal fats, and other commodity prices are volatile, and changes in prices of such commodities could have in the future a material adverse impact on our business.

The results of operations, financial position, and business outlook of the Company’s planned business are highly dependent on commodity prices, which are subject to significant volatility and uncertainty, and influence the availability of supplies especially for smaller producers. Accordingly, any results of our contemplated business could fluctuate substantially and even reach cost levels that could cause a cessation of operations.

Anticipated results are substantially dependent on commodity prices, especially prices for vegetable oils, waste oils, animal fats, and also petroleum diesel. The only help in this area is secure contracts at acceptable prices and terms for these materials, but no assurance is possible that such agreements can be obtained, especially without adequate funding.

As a result of the volatility of the prices for commodities, anticipated results may fluctuate substantially, and we may experience periods of declining prices for our products and increasing costs for our raw materials, which could result in operating losses or cessation of operations entirely.

The Company’s contemplated business is likely to be highly sensitive to feedstock and reagent prices, and generally we will be unable to pass on increases in these prices to our customers.

The principal raw materials we expect to use to produce biodiesel are plant oil and/or animal fat feedstocks. As a result, changes in the price of feedstock can significantly affect our contemplated business. In general, rising feedstock prices produce lower profit margins. Because biodiesel competes with fossil-based fuels, the Company is not likely to be able to pass along increased feedstock costs to customers unless there are corresponding price increases in petroleum commodities. At certain levels, feedstock prices may make biodiesel uneconomical to use in fuel markets. Such lack of economy could have detrimental effects on our ability to maintain production.

Weather conditions and other factors affecting crop yields, farmer planting decisions, and general economic, market and regulatory factors all influence the price of feedstocks. Government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply also impact the price. The significance and relative effects of these factors on the price of plant oils and other feedstocks are difficult to predict. Any event that tends to negatively affect the supply of feedstock, such as adverse weather or crop disease, could increase feedstock prices and potentially harm our business.

Fluctuations in the selling price and production cost of diesel may reduce the Company’s anticipated profit margins, if profits are achieved.

Historically, the price of a gallon of petroleum diesel has been lower than the cost to produce a gallon of biodiesel. Biodiesel prices are influenced by the supply and demand for diesel, and our anticipated results of operations and financial position may be materially adversely affected if diesel demand or price decreases.

The Company’s anticipated business will be subject to seasonal fluctuations.

The Company anticipated operating results are likely to be influenced by seasonal fluctuations in the price of our primary operating input, feedstocks, and the price of our primary product, biodiesel. Biodiesel prices are substantially correlated with the price of petroleum diesel, especially in connection with our indexed, gas-plus sales contracts. The price of petroleum diesel tends to rise during each summer and winter. Given our lack of operating history, we do not know yet how these seasonal fluctuations, especially the lows in spring and fall, will affect our results over time.

Growth in the sale and distribution of biodiesel is dependent on the changes to and expansion of related infrastructure which may not occur on a timely basis, if at all, and the Company’s contemplated operations could be adversely affected by infrastructure disruptions.

Substantial development of infrastructure will be required by persons and entities outside the Company’s control for our contemplated operations, and the renewable fuel industry generally, to grow. Areas requiring expansion include, but are not limited to:

o	additional storage facilities for biodiesel;

o	expansion of refining and blending facilities to produce biodiesel and form blends with petroleum diesel; and

o	growth in service stations equipped to handle biodiesel fuels.

Substantial investments required for these infrastructure changes and expansions may not be made or they may not be made on a timely basis in time to benefit the Company. Any delay or failure in making the changes to or expansion of infrastructure could hurt the demand or prices for the Company’s contemplated products, impede delivery of those products, impose additional costs on us, or otherwise have a material adverse effect on our results of contemplated operations or financial position. The Company’s contemplated business will be highly dependent on the continuing availability of infrastructure, and any infrastructure disruptions could have a material adverse effect on our business.

We may not be able to compete effectively in the U.S. and foreign biodiesel industries.

In the U.S., the Company’s contemplated business would compete with other existing biodiesel producers and refineries. A number of competitors are divisions of substantially larger enterprises and have substantially greater financial resources than the Company has or plans to have, making the larger suppliers more able to weather market volatility, whereas, our smaller size would not. These smaller competitors operate smaller facilities which do not affect the local price of soybeans grown in the proximity to the facility as much as larger facilities. In addition, institutional investors and high net worth individuals could heavily invest in biodiesel production facilities and oversupply the demand for biodiesel, resulting in lower biodiesel price levels that might adversely affect the results of the Company’s contemplated operations and financial position.

Any increase in domestic competition could result in reduced biodiesel prices. As a result, we could be forced to take other steps to compete effectively, if at all, which could adversely affect the results of our contemplated operations and financial position.

The U.S. renewable fuel industry is highly dependent upon federal and state legislation, regulation, and subsidies/incentives and any changes in legislation or regulation or subsidies/incentives could materially and adversely affect the results of the Company’s contemplated operations and financial position.

The cost of producing biodiesel is made significantly more competitive with petroleum diesel by federal tax incentives. The elimination or significant reduction in such federal tax incentives or other programs benefiting biodiesel may have a material adverse effect on the results of the Company’s contemplated operations and financial position. Smaller producers due to lack of bargaining ability and production economies of size are more susceptible to changes in these federal tax incentives.

We may be adversely affected by environmental, health and safety laws, regulations and liabilities.

As we pursue our business plan, we will become subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of our employees. In addition, some of these laws and regulations require our suppliers and our contemplated distribution facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can have a material adverse effect on our business.

We may not be able to secure the required zoning and permits to operate and produce biodiesel.

Although the Company has been granted a provisional permit from the State of Mississippi, there is no guarantee that we will be able to obtain the required zoning and permits to operate and commence production at the levels that are required in order to become profitable. This could significantly affect the Company’s ability to generate revenues and would have a material adverse effect on our business.

Risk Factors Related to Our Stock

Because We Are Quoted On The OTCBB “Pink Sheets” Instead Of An Exchange Or National Quotation System, Our Investors May Have A Tougher Time Selling Their Stock Or Experience Negative Volatility On The Market Price Of Our Stock.

Our common stock is traded on the OTCBB “Pink Sheets”. The OTCBB “Pink Sheets” is often highly illiquid, in part because it does not have a national quotation system by which potential investors can follow the market price of shares except through information received and generated by a limited number of broker-dealers that make markets in particular stocks. There is a greater chance of volatility for securities that trade on the OTCBB “Pink Sheets” as compared to a national exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. Investors in our common stock may experience high fluctuations in the market price and volume of the trading market for our securities. These fluctuations, when they occur, have a negative effect on the market price for our securities. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our common stock improves.

Our Common Stock Is Subject To Penny Stock Regulation

Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on the NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant's net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be "penny stock", trading in the shares will be subject to additional sales practice requirements on broker/dealers who sell penny stock to persons other than established customers and accredited investors.

FINRA Sales Practice Requirements May Also Limit A Stockholder's Ability To Buy And Sell Our Stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

We May Not Have Access To Sufficient Capital To Pursue Our Business And Therefore Would Be Unable To Achieve Our Planned Future Growth.

We intend to pursue a growth strategy that includes development of the Company business and technology. Currently we have limited capital which is insufficient to pursue our plans for development and growth. Our ability to implement our growth plans will depend primarily on our ability to obtain additional private or public equity or debt financing. We are currently seeking additional capital. Such financing may not be available at all, or we may be unable to locate and secure additional capital on terms and conditions that are acceptable to us. Our failure to obtain additional capital will have a material adverse effect on our business.

Nevada Law And Our Articles Of Incorporation Protect Our Directors From Certain Types Of Lawsuits, Which Could Make It Difficult For Us To Recover Damages From Them In The Event Of A Lawsuit.

Nevada law provides that our directors will not be liable to our company or to our stockholders for monetary damages for all but certain types of conduct as directors. Our Articles of Incorporation require us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require our company to use our assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

Failure To Achieve And Maintain Effective Internal Controls In Accordance With Section 404 Of The Sarbanes-Oxley Act Could Have A Material Adverse Effect On Our Business And Operating Results.

It may be time consuming, difficult and costly for us to develop and implement the additional internal controls, processes and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal auditing and other finance staff in order to develop and implement appropriate additional internal controls, processes and reporting procedures. If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires of publicly traded companies.

If we fail to comply in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2009, we will be required to prepare assessments regarding internal controls over financial reporting and beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2009, furnish a report by our management on our internal control over financial reporting. We have begun the process of documenting and testing our internal control procedures in order to satisfy these requirements, which is likely to result in increased general and administrative expenses and may shift management time and attention from revenue-generating activities to compliance activities. While our management is expending significant resources in an effort to complete this important project, there can be no assurance that we will be able to achieve our objective on a timely basis. There also can be no assurance that our auditors will be able to issue an unqualified opinion on management’s assessment of the effectiveness of our internal control over financial reporting. Failure to achieve and maintain an effective internal control environment or complete our Section 404 certifications could have a material adverse effect on our stock price.

In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover “material weaknesses” in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The PCAOB defines “significant deficiency” as a deficiency that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential will not be prevented or detected.

In the event that a material weakness is identified, we will employ qualified personnel and adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our financial process and reporting in the future.

Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we may identify or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

The Notes to Our Financial Statements Contain Explanatory Language That Substantial Doubt Exists About Our Ability To Continue As A Going Concern

Our financial statements contain explanatory language that substantial doubt exists about our ability to continue as a going concern. The notes discloses that we are in the development stage with limited resources, used cash in operations of $1,411,751 from inception, a working capital deficiency of $2,355,381 and have an accumulated deficit during the development stage of $12,802,999. This raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

The failure to raise additional capital and implement its business plan could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to obtain sufficient financing in the near term or achieve profitability, then we would, in all likelihood, experience severe liquidity problems and may have to curtail our operations. If we curtail our operations, we may be placed into bankruptcy or undergo liquidation, the result of which will adversely affect the value of our common shares.

We Do Not Intend To Pay Dividends

We do not anticipate paying cash dividends on our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Even if funds are legally available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board of directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends are rapid, there is no assurance with respect to the amount of any such dividend.

SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 13, 2008 the Company issued 10,000 shares of common stock for consulting services having a fair value of $50,100 based upon fair value on the date of issue. As of March 31, 2008, $50,100 has been expensed to consulting services. The offer and sale of such shares of our common stock were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act of 1933 (the “Securities Act”) and in Section 4(2) of the Securities Act, based on the following: (a) the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; and (e) a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

Item 3. Defaults Upon Senior Securities

There were no defaults upon senior securities during the period ended September 30, 2008.

Item 4. Reserved.

Item 5. Other Information

There is no information with respect to which information is not otherwise called for by this form.

Item 6. Exhibits

10.3 Universal Bioenergy Inc. promissory note in favor of Mortensen Financial Limited in the amount of $43,555.50 dated as of March 18, 2007 (1).

10.4 Universal Bioenergy Inc. promissory note in favor of Mortensen Financial Limited in the amount of $300,000 dated as of April 7, 2007.(1)

31.1 Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act.(2)

31.2 Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act.(2)

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act.(2)

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act.(2)

(1) Previously disclosed on Form 10-Q for the period end September 30, 2008, filed on May 30, 2008.

(2) File herewith.

SIGNATURES

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

	UNIVERSAL BIOENERGY, INC.

Dated: March 25, 2010		By	/s/ Richard Craven
			Richard Craven
		Chief Executive Officer (Principle Executive Officer)
		Principle Financial Officer, and President

Registrant Date: March 25, 2010		Universal Bioenergy, Inc. By: /s/ Richard Craven

		Richard Craven
		Chief Executive Officer (Principle Executive Officer)