`SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
    Act of 1934

For the quarterly period ending                           March 31, 2003
--------------------------------------------------------------------------------

                                       or

[  ]    Transition  Report  Pursuant  to Section  13 or 15(d) of the  Securities
        Exchange Act of 1934

        For the transition period from                    to
                                      ------------------------------------------

        Commission File Number:                          1-10104
                             ---------------------------------------------------

                              United Capital Corp.
--------------------------------------------------------------------------------
               (Exact name of Company as specified in its charter)

          Delaware                                       04-2294493
--------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

     9 Park Place, Great Neck, New York                   11021
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)


                                  516-466-6464
--------------------------------------------------------------------------------
                (Company's telephone number, including area code)


                                      N/A
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

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

Indicate by check mark whether the Company is an accelerated filer.
                                                                  [ ] Yes [X] No

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

            Common stock, $.10 par value 4,506,705 shares outstanding
                               as of May 12, 2003.


                                  Page 1 of 26



                      UNITED CAPITAL CORP. AND SUBSIDIARIES

                                      INDEX


                          PART I FINANCIAL INFORMATION
                                                                            PAGE
                                                                            ----



ITEM 1. FINANCIAL STATEMENTS

        Consolidated Balance Sheets as
        of March 31, 2003 (Unaudited) and December 31, 2002                  3

        Consolidated Statements of Income for the
        Three Months Ended March 31, 2003 and 2002 (Unaudited)               4

        Consolidated Statements of Cash Flows for the
        Three Months Ended March 31, 2003 and 2002 (Unaudited)             5-6

        Notes to Consolidated Financial Statements                        7-18

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS                    18-23

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF
        MARKET RISK                                                         23

ITEM 4. CONTROLS AND PROCEDURES                                             23


                            PART II OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                    24


SIGNATURES                                                                  24

CERTIFICATIONS                                                           25-26



                                  Page 2 of 26



                      UNITED CAPITAL CORP. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
             AS OF MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002
                                 (In Thousands)

                                                                       2003         2002
                                                                    ---------    ---------
ASSETS

Current assets:
   Cash and cash equivalents                                        $  54,250    $  48,893
   Marketable securities                                               19,108       25,893
   Notes and accounts receivable, net                                   6,632        5,716
   Inventories                                                          3,159        3,677
   Prepaid expenses and other current assets                              945        1,477
   Deferred income taxes                                                2,977          207
   Current assets of discontinued operations                               14           72
                                                                    ---------    ---------

      Total current assets                                             87,085       85,935
                                                                    ---------    ---------

Property, plant and equipment, net                                      3,494        3,569
Real property held for rental, net                                     44,008       44,761
Investments in joint ventures                                          31,686       31,389
Noncurrent notes receivable                                             2,976        2,994
Other assets                                                            3,570        3,707
Noncurrent assets of discontinued operations                            2,277        4,192
                                                                    ---------    ---------

      TOTAL ASSETS                                                  $ 175,096    $ 176,547
                                                                    =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt                             $   4,733    $   3,977
   Accounts payable and accrued liabilities                             8,283        9,263
   Income taxes payable                                                 7,775        5,260
   Current liabilities of discontinued operations                         213          445
                                                                    ---------    ---------

      Total current liabilities                                        21,004       18,945
                                                                    ---------    ---------

Long-term debt                                                         10,533       12,347
Other long-term liabilities                                            31,187       31,016
Deferred income taxes                                                   2,084        2,605
                                                                    ---------    ---------

      TOTAL LIABILITIES                                                64,808       64,913
                                                                    ---------    ---------

Commitments and contingencies

Stockholders' equity:
   Common stock $.10 par value, authorized 7,500 shares;
      issued and outstanding 4,514 and 4,519 shares, respectively         451          452
   Retained earnings                                                  113,319      110,096
   Accumulated other comprehensive income (loss), net of tax           (3,482)       1,086
                                                                    ---------    ---------

      TOTAL STOCKHOLDERS' EQUITY                                      110,288      111,634
                                                                    ---------    ---------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $ 175,096    $ 176,547
                                                                    =========    =========



The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                  Page 3 of 26



                      UNITED CAPITAL CORP. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (UNAUDITED)
                      (In Thousands, Except Per Share Data)


                                                                   2003        2002
                                                                 --------    --------

REVENUES:
   Net sales                                                     $  8,156    $  8,240
   Rental revenues from real estate operations                      6,077       6,065
                                                                 --------    --------

                     Total revenues                                14,233      14,305
                                                                 --------    --------

COSTS AND EXPENSES:
   Cost of sales                                                    6,060       6,303
   Real estate operations:
      Mortgage interest expense                                       286         366
      Depreciation expense                                            780         833
      Other operating expenses                                      2,066       1,716
   General and administrative expenses                              1,437       1,374
   Selling expenses                                                   866         909
                                                                 --------    --------

                     Total costs and expenses                      11,495      11,501
                                                                 --------    --------

   Operating income                                                 2,738       2,804
                                                                 --------    --------

OTHER INCOME (EXPENSE):
   Interest and dividend income                                       333         557
   Interest expense                                                  (108)       (166)
   Other income and expense, net                                      629       2,497
                                                                 --------    --------

                     Total other income                               854       2,888
                                                                 --------    --------

   Income from continuing operations before income taxes            3,592       5,692

   Provision for income taxes                                       1,370       2,099
                                                                 --------    --------

   INCOME FROM CONTINUING OPERATIONS                                2,222       3,593
                                                                 --------    --------

DISCONTINUED OPERATIONS:
   Income from discontinued operations, net of tax
      provision of $93 and $110, respectively                         139         165
   Net gain on disposal of discontinued operations, net of tax
      provision of $756                                             1,135           0
                                                                 --------    --------

   INCOME FROM DISCONTINUED OPERATIONS                              1,274         165
                                                                 --------    --------

   NET INCOME                                                    $  3,496    $  3,758
                                                                 ========    ========

BASIC EARNINGS PER SHARE:
   Income from continuing operations                             $    .49    $    .78
   Income from discontinued operations                                .28         .03
                                                                 --------    --------
   NET INCOME PER SHARE                                          $    .77    $    .81
                                                                 ========    ========

DILUTED EARNINGS PER SHARE:
   Income from continuing operations                             $    .42    $    .73
   Income from discontinued operations                                .24         .03
                                                                 --------    --------
   NET INCOME PER SHARE ASSUMING DILUTION                        $    .66    $    .76
                                                                 ========    ========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                  Page 4 of 26



                      UNITED CAPITAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (UNAUDITED)
                                 (In Thousands)


                                                                               2003         2002
                                                                             --------    --------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                $  3,496    $  3,758
   Adjustments to reconcile net income
      to net cash provided by operating activities:
         Depreciation and amortization                                          1,119       1,162
         Net loss on sale of available-for-sale securities                          0       1,005
         Net gain on sale of real estate assets                                  (141)     (5,378)
         Equity in earnings of joint ventures                                    (235)       (169)
         Net gain on disposal of discontinued operations, net of tax           (1,135)          0
         Net realized and unrealized (gain) loss on derivative instruments       (315)      1,862
         Proceeds from sale of trading securities                                 884           0
         Net realized and unrealized gain on trading securities                   (57)          0
         Changes in assets and liabilities  (A)                                  (469)     (1,029)
                                                                             --------    --------

                     NET CASH PROVIDED BY OPERATING ACTIVITIES                  3,147       1,211
                                                                             --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of available-for-sale securities                                     (550)     (1,349)
   Proceeds from sale of available-for-sale securities                              0         268
   Proceeds from sale of real estate assets                                     3,947         560
   Proceeds from sale of derivative instruments                                   461           0
   Acquisition of property, plant and equipment                                  (245)        (81)
   Principal payments on notes receivable                                          18           5
   Acquisition of/additions to real estate assets                                 (27)        (87)
   Investment in joint ventures, net of distributions                             (62)        195
                                                                             --------    --------

                     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES        3,542        (489)
                                                                             --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on mortgage commitments, notes
      and loans                                                                (1,058)     (1,054)
   Net repayments under credit facilities                                           0        (175)
   Purchase and retirement of common shares                                      (420)     (1,279)
   Proceeds from exercise of stock options                                        146           7
                                                                             --------    --------

                     NET CASH USED IN FINANCING ACTIVITIES                     (1,332)     (2,501)
                                                                             --------    --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            5,357      (1,779)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                 48,893      68,170
                                                                             --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $ 54,250    $ 66,391
                                                                             ========    ========


                                  Page 5 of 26



                      UNITED CAPITAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (CONTINUED)
                                   (UNAUDITED)




                                                                    2003       2002
                                                                   -------    -------

SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:

   Interest                                                        $   311    $   462
                                                                   =======    =======

   Taxes                                                           $ 2,585    $ 2,591
                                                                   =======    =======


(A)  Changes in assets and liabilities for the three months ended March 31, 2003
     and 2002 are as follows:

                                                                    2003       2002
                                                                   -------    -------


   Accounts receivable, net                                        ($  916)   ($  698)
   Inventories                                                         518        793
   Prepaid expenses and other current assets                            12          2
   Deferred income taxes                                              (831)     1,448
   Other assets                                                        118         20
   Accounts payable and accrued liabilities                         (1,126)      (643)
   Income taxes payable                                              1,759     (1,705)
   Other long-term liabilities                                         171        (30)
   Discontinued operations - noncash charges and working capital
      changes                                                         (174)      (216)
                                                                   -------    -------

            Total                                                  ($  469)   ($1,029)
                                                                   =======    =======

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                  Page 6 of 26



                      UNITED CAPITAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (In Thousands, Except Per Share Data)
                                   (UNAUDITED)

BASIS OF PRESENTATION
---------------------

            The accompanying  unaudited  Consolidated  Financial Statements have
been  prepared  in  accordance  with  the  instructions  to Form  10-Q  used for
quarterly  reports under Section 13 or 15(d) of the  Securities  Exchange Act of
1934, as amended,  and therefore,  do not include all  information and footnotes
necessary for a fair presentation of financial  position,  results of operations
and cash flows in conformity with accounting  principles  generally  accepted in
the United States of America.

            The consolidated  financial  information included in this report has
been  prepared  in  conformity  with the  accounting  principles  and methods of
applying those accounting  principles,  reflected in the Consolidated  Financial
Statements  included in the Annual Report on Form 10-K filed with the Securities
and Exchange Commission for the year ended December 31, 2002.

            All  adjustments,  all of which  are  normal  and  recurring  in the
opinion of  management,  necessary  for a fair  statement of the results for the
interim periods presented have been recorded.

            The  results  of  operations  for  the  periods  presented  are  not
necessarily indicative of the results to be expected for the full year.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

            In April 2002,  the Financial  Accounting  Standards  Board ("FASB")
issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB  Statement No. 13, and  Technical  Corrections"  ("SFAS No. 145").  This
statement   eliminates   the   requirement  to  report  gains  and  losses  from
extinguishment  of debt as  extraordinary  unless they meet the  criteria of APB
Opinion 30. SFAS No. 145 also  requires  sale-leaseback  accounting  for certain
lease   modifications   that  have   economic   effects   that  are  similar  to
sale-leaseback  transactions.  The  changes  related  to  lease  accounting  are
effective for transactions  occurring after May 15, 2002 and the changes related
to debt  extinguishment  are effective for fiscal years  beginning after May 15,
2002.  The  adoption  of SFAS No.  145 did not  have a  material  impact  on the
Company's financial position or results of operations.

            In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs
Associated  with Exit or Disposal  Activities"  ("SFAS No.  146").  SFAS No. 146
nullifies  Emerging  Issues  Task  Force  Issue  No.  94-3 and  requires  that a
liability for a cost associated with an exit or disposal  activity be recognized
when the liability is incurred.  This statement also establishes that fair value
is the  objective  for initial  measurement  of the  liability.  SFAS No. 146 is
effective for exit or disposal  activities that are initiated after December 31,
2002.  The  adoption  of SFAS No.  146 did not  have a  material  impact  on the
Company's financial position or results of operations.

            In December  2002,  the FASB issued  SFAS No. 148,  "Accounting  for
Stock-Based  Compensation  -  Transition  and  Disclosure,  an amendment of FASB
Statement  No.  123"  ("SFAS  No.  148").  SFAS No.  148  amends  SFAS No.  123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition for an entity that voluntarily changes to the fair value based method
of  accounting  for  stock-based  employee  compensation.  It  also  amends  the
disclosure  provisions of that Statement to require  prominent  disclosure about
the effects on reported net income of an entity's  accounting  policy  decisions


                                  Page 7 of 26



with respect to  stock-based  employee  compensation.  The Company has chosen to
continue to account  for  stock-based  compensation  using the  intrinsic  value
method prescribed in APB Opinion No. 25 and related  interpretations as provided
for under SFAS No. 148.  Accordingly,  compensation  expense is only  recognized
when the market value of the  Company's  stock at the date of grant  exceeds the
amount an  employee  must pay to acquire  the stock.  The  Company  adopted  the
interim  disclosure  provisions of SFAS No. 148 in its financial reports for the
quarter  ended  March 31,  2003.  The  adoption  of SFAS No.  148 did not have a
material impact on the Company's financial position or results of operations.

            In  November  2002,  the FASB  issued  FASB  Interpretation  No. 45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that
upon  issuance of a guarantee,  a guarantor  must  recognize a liability for the
fair value of an  obligation  assumed  under a guarantee.  FIN 45 also  requires
additional  disclosures  by a  guarantor  in its  interim  and annual  financial
statements  about  the  obligations   associated  with  guarantees  issued.  The
recognition  provisions  of FIN 45 are effective  for any  guarantees  issued or
modified after December 31, 2002. The disclosure  requirements are effective for
financial  statements  of interim or annual  periods  ending after  December 15,
2002. As a result of adopting the  disclosure  provisions of FIN 45, the Company
has  provided  additional   disclosures  herein  as  required  (See  "Subsequent
Events").

             In  January  2003,  the FASB  issued  FASB  Interpretation  No.  46
"Consolidation of Variable Interest Entities" ("FIN 46"). In general, a variable
interest  entity  is a  corporation,  partnership,  trust,  or any  other  legal
structure  used for  business  purposes  that  either  (a) does not have  equity
investors  with voting  rights or (b) has equity  investors  that do not provide
sufficient  financial  resources  for the entity to support  its  activities.  A
variable  interest  entity  often holds  financial  assets,  including  loans or
receivables,  real estate or other property.  A variable  interest entity may be
essentially passive or it may engage in activities on behalf of another company.
Until now, a company  generally has included  another entity in its consolidated
financial  statements only if it controlled the entity through voting interests.
FIN 46 changes that by requiring a variable  interest  entity to be consolidated
by a company if that  company is subject to a majority  of the risk of loss from
the variable interest  entity's  activities or entitled to receive a majority of
the entity's residual returns or both. FIN 46's consolidation requirements apply
immediately to variable  interest entities created or acquired after January 31,
2003. The consolidation requirements apply to older entities in the first fiscal
year or interim period beginning after June 15, 2003.  Certain of the disclosure
requirements  apply in all financial  statements  issued after January 31, 2003,
regardless of when the variable  interest  entity was  established.  The Company
adopted FIN 46 effective January 31, 2003. The adoption of FIN 46 did not have a
material impact on the Company's financial condition or results of operations.

MARKETABLE SECURITIES

            The cost, gross unrealized  gains,  gross unrealized losses and fair
market value of marketable securities by type at March 31, 2003 and December 31,
2002 are as follows:

                                                   Gross            Gross            Fair
                                                 unrealized       unrealized         market
         March 31, 2003:            Cost           gains            losses           value
                                 --------        --------         --------         --------

     Available-for-sale:
        Equity securities        $ 24,459        $    594         ($ 5,950)        $ 19,103
        Bonds                           5               0                0                5
                                 --------        --------         --------         --------
                                 $ 24,464        $    594         ($ 5,950)        $ 19,108
                                 ========        ========         ========         ========


                                  Page 8 of 26



                                                      Gross            Gross             Fair
                                                   unrealized        unrealized         market
         December 31, 2002:           Cost            gains            losses           value
                                    --------        --------         --------         --------

         Available-for-sale:
           Equity securities        $ 23,389        $  2,119         ($   447)        $ 25,061
           Bonds                           5               0                0                5
                                    --------        --------         --------         --------
                                      23,394           2,119             (447)          25,066

         Trading:
           Equity securities             792              35                0              827
                                    --------        --------         --------         --------

                                    $ 24,186        $  2,154         ($   447)        $ 25,893
                                    ========        ========         ========         ========

Included in  marketable  securities  at March 31, 2003 and December 31, 2002 was
$12,917 and $20,402,  respectively, of common stock in a publicly-traded company
for which the Board Chairman and another  Director of the Company are directors.
In April 2003, the Company purchased an additional 450 shares of common stock in
this company for $2,400.

Proceeds  from the sale of  available-for-sale  and trading  securities  and the
resulting gross realized gains and losses included in the  determination  of net
income for the three months ended March 31, 2003 and 2002 are as follows:

                                          2003                 2002
                                       ----------            ---------

Available-for-sale securities:
   Proceeds                            $     0               $   268
   Gross realized losses                     0                (1,005)
Trading securities:
   Proceeds                            $   884               $     0
   Gross realized gains                     57                     0

INVENTORIES
-----------

            The components of inventory are as follows:

                                March 31, 2003         December 31, 2002
                                --------------         -----------------

Raw materials                      $1,501                    $1,765
Work in process                       441                       367
Finished goods                      1,217                     1,545
                                   ------                    ------
                                   $3,159                    $3,677
                                   ======                    ======

REAL ESTATE
-----------

Property sales:
---------------

            The  Company  adopted  the  provisions  of  Statement  of  Financial
Accounting  Standards  No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived  Assets"  ("SFAS No. 144") in 2002.  SFAS No. 144  requires  that the
operating  results  through  the  date of  sale,  as well as the  gains on sales
generated on properties  sold or held for sale be  reclassified  as discontinued
operations for all periods presented.  As the statement requires  implementation
on a prospective basis,  properties which were identified as held for sale prior
to implementation  are presented in the Consolidated  Financial  Statements in a
manner consistent with the prior periods' presentation.


                                  Page 9 of 26



            During the  quarter  ended  March 31,  2003,  the  Company  sold two
commercial  properties  from its real estate  investment and management  segment
which  had a total  net  book  value of $27.  The  properties  were  sold for an
aggregate sales price of $787, resulting in gains of $456 on a net of tax basis.
The Company  also sold a shopping  center from its real  estate  investment  and
management  segment  which had a total net book value of $136.  The property was
sold for an aggregate  sales price of $3,020,  resulting in gains of $1,730 on a
net of tax basis. One shopping center from the Company's real estate  investment
and management  segment was donated during the first quarter of 2003 which had a
total net book value of $60. The Company  received no proceeds from the donation
and recorded a loss of $36 on a net of tax basis.

            The results of operations for these  properties for the three months
ended March 31, 2003 and 2002 have been reclassified to discontinued operations,
on a net of tax basis, in accordance with SFAS No. 144. In addition,  the assets
and  liabilities  associated  with these  properties  have been  reclassified to
discontinued  operations in the Consolidated Balance Sheet at December 31, 2002.
These  amounts   primarily   consist  of  real  property,   net  of  accumulated
depreciation,  rents  receivable,  prepaid  or  accrued  charges,  and  mortgage
obligations, if any.

            Summarized  financial  information for properties sold and accounted
for as  discontinued  operations  for the three  months ended March 31, 2003 and
2002, respectively, is as follows:

                                                               2003          2002
                                                             --------      ---------

           Rental revenues from real estate operations        $ 39          $ 74
           Mortgage interest expense                             0            (1)
           Depreciation expense                                  0            (2)
           Other operating expenses                            (12)           (2)
                                                              ----          ----

           Income from operations                             $ 27          $ 69
                                                              ====          ====

Properties held for sale:
------------------------

            As of March 31, 2003, in accordance  with the provisions of SFAS No.
144, the Company considered a total of eight commercial properties from its real
estate and  investment  management  segment to be held for sale and  reported as
discontinued operations.

            In accordance with SFAS No. 144, the results of operations for these
properties  for the  three  months  ended  March  31,  2003 and 2002  have  been
reclassified  to  discontinued  operations,  on a  net  of  tax  basis,  in  the
Consolidated  Statements  of Income.  In  addition,  the assets and  liabilities
associated with these properties,  which primarily consist of real property, net
of accumulated depreciation,  rents receivable,  prepaid or accrued charges, and
mortgage obligations,  if any, have been reclassified to discontinued operations
in the Consolidated Balance Sheets at March 31, 2003 and December 31, 2002.

            Summarized  financial  information  for properties held for sale and
accounted for as  discontinued  operations  for the three months ended March 31,
2003 and 2002, respectively, is as follows:

                                 Page 10 of 26



                                                          2003           2002
                                                        -------        ---------

           Rental revenues from real estate operations   $ 216           $ 235
           Mortgage interest expense                        (3)            (17)
           Depreciation expense                              0              (6)
           Other operating expenses                         (8)             (6)
                                                         -----           -----

           Income from operations                        $ 205           $ 206
                                                         =====           =====

INVESTMENTS IN JOINT VENTURES
-----------------------------

            Investments in joint ventures  consist of the following at March 31,
2003 and December 31, 2002:

                                                        2003              2002
                                                       -------          -------

          Investment in joint ventures (a)              $23,496          $23,128
          Lease financing (b)                             8,190            8,261
                                                       -------          -------


                                                       $31,686          $31,389
                                                       =======          =======

(a)  In December 2002,  the Company  purchased a 50% interest in a joint venture
     (the "Hotel  Venture") for $23,128 together with Prime  Hospitality,  Corp.
     ("Prime"), a publicly-traded company for which the Company's Board Chairman
     and another  Director of the Company are directors.  The Hotel Venture owns
     and  operates a hotel in New Jersey.  In March 2003,  the Company and Prime
     each sold a 10% interest in the Hotel Venture to an unrelated  third party,
     at cost. See "Subsequent Events."

     In January  2003,  the Company  purchased a 50% interest in a joint venture
     (the "Quebec  Venture") for $6,114 together with Prime.  The Quebec Venture
     owns and operates a hotel in Quebec, Canada. In March 2003, the Company and
     Prime each sold a 10% interest in the Quebec Venture to an unrelated  third
     party,  at cost.  There is  currently  no debt  outstanding  in this  joint
     venture.

     The equity method of accounting is used for investments in 20% to 50% owned
     joint ventures in which the Company has the ability to exercise significant
     influence,  but not control.  Under the  operating  agreements of the Hotel
     Venture and Quebec Venture, all significant operating and capital decisions
     are made jointly and  operating  profits are  allocated  based on ownership
     interests.  These  investments  were  initially  recorded  at cost  and are
     subsequently   adjusted   for  equity  in   earnings   (losses)   and  cash
     contributions and distributions.  The Company's equity in earnings of these
     joint ventures was $113 for the three months ended March 31, 2003.

     Summarized  financial  information of the joint ventures is as follows:

                                                March 31, 2003      December 31, 2002
                                                --------------      -----------------

      BALANCE SHEET:
      Property, plant and equipment, net            $59,523               $46,397
                                                    =======               =======
      Current assets                                $ 1,248               $   347
                                                    =======               =======
      Current liabilities                           $   897               $   500
                                                    =======               =======

The  accounts  of the Quebec  Venture are  recorded in Canadian  dollars and are
translated  into U.S.  dollars,  the reporting  currency of the Quebec  Venture.
Translation adjustments relating to results of operations are generally included
in the equity in earnings  reported by the Company while  translation of balance
sheet  accounts do not generally  affect the  Company's  investment in the joint
venture.

                                 Page 11 of 26



                                                  March 31, 2003
                                                  ----------------

          STATEMENT OF OPERATIONS:
            Revenues                                       $2,859
            Expenses                                      ( 2,633)
                                                          --------
            Net income                                       $226
                                                          ========

     (b)  Lease financing consists of a 50.0% interest in a limited  partnership
          whose principal  assets are two  distribution  centers leased to Kmart
          Corporation  ("Kmart"),  which are accounted for as leveraged  leases.
          The Company's  share of income  arising from this  investment was $122
          and  $169  for the  three  months  ended  March  31,  2003  and  2002,
          respectively,  and is  included in rental  income in the  Consolidated
          Statements of Income.

DERIVATIVE FINANCIAL INSTRUMENTS
--------------------------------

            The Company recognizes all derivative financial instruments, such as
its short stock sales and put and/or call options, in the Consolidated Financial
Statements  at fair value  regardless  of the  purpose or intent for holding the
instrument.  Changes in the fair value of derivative  financial  instruments are
either  recognized  periodically  in  income  or in  stockholders'  equity  as a
component of accumulated  other  comprehensive  income  depending on whether the
derivative  financial  instrument  qualifies  for hedge  accounting,  and if so,
whether it qualifies as a fair value or cash flow hedge.  Generally,  changes in
the fair value of derivatives accounted for as fair value hedges are recorded in
income  along with the  portions of the changes in the fair values of the hedged
items that relate to the hedged risks.  Changes in the fair value of derivatives
accounted  for as cash flow hedges,  to the extent they are effective as hedges,
are recorded in accumulated  other  comprehensive  income net of deferred taxes.
Changes in the fair value of  derivatives  not qualifying as hedges are reported
in income.

            In strategies  designed to hedge overall market risks and manage its
interest rate exposure,  the Company may sell common stock short and participate
in put and/or call options.

            Management maintains a diversified portfolio of cash equivalents and
investments  in a variety of  securities,  primarily  U.S.  investments  in both
common and  preferred  equity  issues  and  participates  on a limited  basis in
transactions involving derivative financial  instruments,  including short stock
sales and put and/or call options.  At March 31, 2003 and December 31, 2002, the
fair value of such  derivatives  was ($268) and ($122),  respectively,  which is
recorded as a  component  of accounts  payable  and accrued  liabilities  in the
Consolidated  Balance  Sheets.  These  instruments  do  not  qualify  for  hedge
accounting and therefore changes in the derivatives fair value are recognized in
earnings.  The  Company  recognized  $315  and  ($1,862)  in  net  realized  and
unrealized gains (losses) from derivative instruments for the three months ended
March 31, 2003 and 2002,  respectively,  which are  included in other income and
expense, net in the Consolidated Statements of Income.

RELATED PARTY TRANSACTIONS
--------------------------

            The  Company  has a  50.0%  interest  in an  unconsolidated  limited
liability  corporation,  whose  principal  assets are two  distribution  centers
leased to Kmart. A group that includes the wife of the Company's Board Chairman,
two  Directors of the Company and the wife of one of the  Directors  has an 8.0%
interest in this entity (see "Investments in Joint Ventures").


                                 Page 12 of 26



            The Company's two hotel  properties,  as well as the hotels owned by
the Hotel Venture and Quebec  Venture,  are managed by Prime, a  publicly-traded
company for which the Board  Chairman  and  another  Director of the Company are
directors.  Fees paid for the  management of the Company's two hotel  properties
are based upon a percentage  of revenue and were  approximately  $26 and $31 for
the three months ended March 31, 2003 and 2002,  respectively.  See "Investments
in Joint  Ventures."  Included in  marketable  securities  at March 31, 2003 and
December  31, 2002 was $12,917 and  $20,402,  respectively,  of common  stock in
Prime which represents  approximately 5.6% of Prime's outstanding shares in both
periods. In April 2003, the Company purchased an additional 450 shares of common
stock in Prime for $2,400.

COMMITMENTS AND CONTINGENCIES
-----------------------------

            The  Company  is a  lessor  of  eight  department  stores  that  are
currently  leased to Kmart,  which filed for protection  under Chapter 11 of the
U.S.  Bankruptcy Code on January 22, 2002. In addition,  the Company holds a 50%
interest in a joint  venture  that owns two  distribution  centers that are also
leased to Kmart. As part of its  reorganization,  Kmart announced the closure of
approximately  600  of  its  stores  during  the  past  year.  Kmart's  plan  of
reorganization was approved in April 2003 and became effective in May 2003.

            The Company has undertaken the completion of  environmental  studies
and/or  remedial  action at Metex' two New Jersey  facilities.  The  Company has
recorded a liability,  which is included in other long-term liabilities,  in the
Consolidated  Financial Statements for the estimated potential remediation costs
at these facilities.

            The process of remediation  has begun at one facility  pursuant to a
plan filed with the New Jersey Department of Environmental Protection ("NJDEP").
Environmental  experts  engaged  by the  Company  estimate  that  under the most
probable  remediation  scenario the  remediation  of this site is anticipated to
require initial  expenditures of $860,  including the cost of capital equipment,
and $86 in annual operating and maintenance costs over a 15 year period.

            Environmental   studies  at  the  second   facility   indicate  that
remediation  may  be  necessary.  Based  upon  the  facts  presently  available,
environmental  experts  have  advised the Company  that under the most  probable
remediation  scenario,  the estimated cost to remediate this site is anticipated
to require $2,300 in initial costs,  including capital  equipment  expenditures,
and $258 in annual operating and maintenance costs over a 10 year period.  These
estimated costs of future expenses for environmental remediation obligations are
not discounted to their present value.  The Company may revise such estimates in
the future due to the uncertainty regarding the nature, timing and extent of any
remediation  efforts  that may be required at this site,  should an  appropriate
regulatory agency deem such efforts to be necessary.

            The foregoing estimates may also be revised by the Company as new or
additional  information in these matters become available or should the NJDEP or
other regulatory agencies require additional or alternative  remediation efforts
in the future.  It is not currently  possible to estimate the range or amount of
any such liability.

            Although the Company  believed  that it was entitled to full defense
and indemnification with respect to environmental  investigation and remediation
costs under its insurance policies, the Company's insurers denied such coverage.
Accordingly,  the Company filed an action  against  certain  insurance  carriers
seeking defense and  indemnification  with respect to all prior and future costs
incurred in the investigation  and remediation of these sites.  Settlements have
been reached with all carriers in this matter.


                                 Page 13 of 26



            In the opinion of management,  amounts  recovered from its insurance
carriers  under the terms of its settlement  agreements  should be sufficient to
address  these  matters  and  amounts  needed in  excess,  if any,  will be paid
gradually over a period of years.  Accordingly,  they should not have a material
adverse  effect  upon the  business,  liquidity  or  financial  position  of the
Company. However, adverse decisions or events,  particularly as to the merits of
the  Company's  factual  and legal  basis  could cause the Company to change its
estimate of liability with respect to such matters in the future.

            The  Company  is  subject to  various  other  litigation,  legal and
regulatory  matters  that arise in the ordinary  course of business  activities.
When  management  believes it is probable that a liability has been incurred and
such  amounts are  reasonably  estimable  the Company  provides for amounts that
include  judgments and penalties  that may be assessed.  These  liabilities  are
usually included in accounts payable and accrued  liabilities or other long-term
liabilities  in  the  Consolidated   Financial  Statements,   depending  on  the
anticipated  payment  date.  None of these  matters are  expected to result in a
material  adverse  effect on the Company's  consolidated  financial  position or
results of operations.

STOCKHOLDERS' EQUITY
--------------------

            Previous  purchases of the  Company's  common stock have reduced the
Company's  additional  paid-in-capital  to zero  and  accordingly  current  year
purchases  in excess of par value have  reduced  retained  earnings.  During the
three months ended March 31, 2003 and 2002, the Company purchased and retired 12
and 53 shares of the Company's  common stock for $420 and $1,279,  respectively.
Future  repurchases  of the  Company's  common  stock will also reduce  retained
earnings  by amounts in excess of the par value.  Repurchases  of the  Company's
common  stock  will be made from time to time in the open  market at  prevailing
market prices and may be made in privately negotiated  transactions,  subject to
available resources.

EARNINGS PER SHARE
------------------

            The following  table sets forth the computation of basic and diluted
earnings per share from continuing operations:

                                                                         Three Months Ended March 31,
                                                                         ----------------------------

                                                                        2003                      2002
                                                                       ------                    ------

Numerator:
   Income from continuing operations                                   $2,222                    $3,593
                                                                       ======                    ======
Denominator:
   Denominator for basic earnings per
           share - weighted-average shares                              4,515                     4,622
Effect of dilutive securities:
   Employee stock options                                                 748                       340
                                                                       ------                    ------
   Denominator for diluted earnings per
           share - adjusted weighted-average shares
           and assumed conversions                                      5,263                     4,962
                                                                       ======                    ======

Basic earnings per share - continuing operations                       $  .49                    $  .78
                                                                       ======                    ======

Diluted earnings per share - continuing operations                     $  .42                    $  .73
                                                                       ======                    ======

                                 Page 14 of 26



            Employee stock options to purchase 29 shares of the Company's common
stock that were  outstanding  during the three  months ended March 31, 2002 were
not included in the  computation  of diluted  earnings per share  because  their
effect would have been anti-dilutive.

STOCK-BASED COMPESATION
-----------------------

            The  Company  accounts  for  stock-based   compensation   using  the
intrinsic value method in accordance with  Accounting  Principles  Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related  Interpretations
("APB No.  25") and has  adopted  the  disclosure  provisions  of  Statement  of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure,  an amendment of FASB Statement No. 123" ("SFAS No.
148"). Under APB No. 25, compensation expense is only recognized when the market
value  of the  underlying  stock  at the date of grant  exceeds  the  amount  an
employee must pay to acquire the stock. Accordingly, no compensation expense has
been  recognized in the  Consolidated  Financial  Statements in connection  with
employee stock option grants.

            The  following  table  illustrates  the  effect  on net  income  and
earnings per share had the Company applied the fair value recognition provisions
of  Statement  of  Financial  Accounting  Standards  No.  123,  "Accounting  for
Stock-Based Compensation," to stock-based employee compensation.

                                                                   Three Months Ended March 31,
                                                                -----------------------------------

                                                                 2003                          2002
                                                                ------                    ---------
Net income, as reported                                         $3,496                    $   3,758
Deduct: Total stock-based employee
       compensation expense determined
       under fair value based method for all
       awards, net of related tax effects                         (550)                        (454)
                                                                ------                    ---------
Pro forma net income                                            $2,946                    $   3,304
                                                                ======                    =========
Earnings per share:
          Basic - as reported                                   $  .77                    $     .81
                                                                ======                    =========
          Basic - pro forma                                     $  .65                    $     .71
                                                                ======                    =========

          Diluted - as reported                                 $  .66                    $     .76
                                                                ======                    =========
          Diluted - pro forma                                   $  .57                    $     .68
                                                                ======                    =========

            Pro forma  compensation  expense may not be  indicative of pro forma
expense in future  periods.  For purposes of  estimating  the fair value of each
option on the date of grant,  the  Company  utilized  the  Black-Scholes  option
pricing model.

            The  Black-Scholes  option  valuation model was developed for use in
estimating the fair value of traded options,  which have no vesting restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly  different from those of traded options and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.


                                 Page 15 of 26



            The weighted-average  option fair values and the assumptions used to
estimate these values for grants issued during 2002 are as follows:


            Expected life (years)                               5
            Risk free interest rate                           4.4%
            Expected volatility                              34.2%
            Dividend yield                                    0.0%
            Weighted-average option fair value             $ 9.17

COMPREHENSIVE INCOME (LOSS)
---------------------------

            The components of comprehensive income (loss) are as follows:

                                                                         Three Months Ended March 31,
                                                                         ----------------------------

                                                                               2003         2002
                                                                             -------      -------

Net income                                                                   $ 3,496      $ 3,758

Other comprehensive income (loss), net of tax:
   Changein net unrealized gain (loss) on available-for-sale
      securities, net of tax benefit (provision) of $2,460 and ($1,914),
      respectively
                                                                              (4,568)       3,555

   Change in fair value of cash flow hedge, net of tax provision of $2             0            4
                                                                             -------      -------

Comprehensive income (loss)                                                  ($1,072)     $ 7,317
                                                                             =======      =======

 The components of accumulated other comprehensive income (loss) are as follows:

                                                                        March 31, 2003   December 31, 2002
                                                                        --------------   -----------------

Net unrealized gain (loss) on available-for-sale securities, net
   of tax benefit (provision) of
   $1,874 and ($586), respectively
                                                                             ($3,482)     $ 1,086
                                                                             =======      =======

BUSINESS SEGMENTS
-----------------

            The Company  operates  through two  business  segments:  real estate
investment and management and engineered  products.  The real estate  investment
and  management  segment is engaged in the business of investing in and managing
real estate properties and the making of high-yield, short-term loans secured by
desirable properties.  Engineered products are manufactured through wholly-owned
subsidiaries  of the Company and primarily  consist of knitted wire products and
components and transformer products.


                                 Page 16 of 26



Operating results of the Company's business segments are as follows:


                                                      Three Months Ended March 31,
                                                      ----------------------------

                                                         2003             2002
                                                       --------         --------
Net revenues and sales:
   Real estate investment and management               $  6,077         $  6,065
   Engineered products                                    8,156            8,240
                                                       --------         --------

                                                       $ 14,233         $ 14,305
                                                       ========         ========

Operating income:
   Real estate investment and management               $  2,945         $  3,150
   Engineered products                                      479              221
   General corporate expenses                              (686)            (567)
                                                       --------         --------

                                                          2,738            2,804

Other income, net                                           854            2,888
                                                       --------         --------

Income from continuing operations before income
   taxes                                               $  3,592         $  5,692
                                                       ========         ========

SUBSEQUENT EVENTS
-----------------

            In April 2003,  the Hotel  Venture  entered into a $25,000  mortgage
loan (the "Mortgage") with a bank, secured by the underlying hotel. The proceeds
of the loan were distributed to the partners of the Hotel Venture based on their
ownership interest,  thereby reducing their respective investment. In connection
with the  Mortgage,  the  Company  and  Prime  entered  into a  direct  guaranty
agreement  with the bank whereby the Company and Prime,  jointly and  severally,
guaranteed not more than $4,000 of the Mortgage.  Amounts due under the guaranty
are reduced by the scheduled principal payments under the Mortgage. The guaranty
is  enforceable  upon the occurrence of certain  events,  including a default as
defined in the Mortgage and expires upon satisfaction of the loan in April 2006.
Pursuant to the operating agreement,  any payments made under the guaranty would
increase the  guarantors'  ownership  interest.  The Company  believes  that the
collateral of the underlying  hotel is sufficient to repay the Mortgage  without
requiring  enforcement of the guaranty.  The Company is currently in the process
of evaluating the effect that reporting this guaranty in accordance  with FIN 45
will have in subsequent financial statements.

            In April 2003,  the Company  purchased an  additional  450 shares of
common stock in Prime for $2,400.

USE OF ESTIMATES
----------------

            The preparation of consolidated  financial  statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires  management to use judgment in making  estimates and  assumptions  that
affect the reported  amounts of assets,  liabilities,  revenues and expenses and
related  disclosure  of  contingent  assets  and  liabilities.  Certain  of  the
estimates  and  assumptions  required  to be made  relate  to  matters  that are
inherently uncertain as they pertain to future events. While management believes
that the  estimates  and  assumptions  used  were the most  appropriate,  actual
results  could  differ   significantly  from  those  estimates  under  different
assumptions and conditions.


                                 Page 17 of 26



RECLASSIFICATIONS
-----------------

            Certain   amounts   have  been   reclassified   in  the  prior  year
Consolidated Financial Statements to present them on a basis consistent with the
current year.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS
         (In Thousands, Except Per Share Data)

            The  following  discussion  should be read in  conjunction  with the
Consolidated  Financial  Statements of United Capital Corp.  (the "Company") and
related notes thereto.

RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
------------------------------------------

            Revenues  for the three  months  ended March 31,  2003 were  $14,233
compared to comparable  2002 revenues of $14,305.  Operating  income during this
period was $2,738 versus $2,804 for the comparable  2002 period.  Net income for
the first  quarter was $3,496 or $.77 per basic share  compared to net income of
$3,758 or $.81 per basic share for the same period in 2002.

            Included in the results for the three months ended March 31, 2003 is
income from discontinued  operations,  net of tax,  resulting from the Company's
adoption of Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), in 2002. SFAS
No. 144 requires that the operating results,  as well as gains or losses on real
estate  assets  sold or to be  disposed  of, as  defined,  be  reflected  in the
Consolidated  Statements of Income as  discontinued  operations.  The results of
operations for  properties  that have been reported as  discontinued  operations
during  the three  months  ended  March  31,  2003  have  been  reclassified  to
discontinued  operations for the three months ended March 31, 2002 in accordance
with SFAS No. 144.

REAL ESTATE INVESTMENT AND MANAGEMENT
-------------------------------------

            Rental  revenues  from real estate  operations  remained  relatively
consistent with the prior year, totaling $6,077 for the three months ended March
31, 2003, compared to $6,065 for the corresponding 2002 period.  Rental revenues
from 2003 property  sales and properties  held for sale have been  classified as
discontinued  operations in  accordance  with SFAS No. 144.  Property  sales and
properties  held for sale prior to the  implementation  of SFAS No. 144 have not
been similarly reclassified to discontinued operations.

            Mortgage  interest  expense  continues  to  decrease  as a result of
continuing  mortgage  amortization.  For the three  months ended March 31, 2003,
mortgage interest expense was $286 compared to $366 for the  corresponding  2002
period, a decline of 21.9% or $80.

            Depreciation expense associated with real properties held for rental
decreased  $53 or 6.4% for the three months ended March 31, 2003 compared to the
same period in 2002.  Such  decline was  primarily  due to reduced  depreciation
expense associated with fully depreciated properties and properties sold in 2002
and not  accounted for as  discontinued  operations.  Depreciation  expense from
property sales and  properties  held for sale in 2003 has been  reclassified  as
discontinued  operations  in  accordance  with SFAS No.  144.  Such  expenses on
property sales and properties held for sale prior to the  implementation of SFAS
No. 144 have not been similarly reclassified to discontinued operations.


                                 Page 18 of 26



            Other  operating  expenses  associated  with the  management of real
properties  increased  $350 or 20.4% for the three  months ended March 31, 2003,
compared to the same period in 2002.  Such  increase is primarily  the result of
increased   hotel  operating   expenses  and  increased   payroll  and  property
maintenance expenses, including insurance and real estate taxes.

ENGINEERED PRODUCTS
-------------------

            The  Company's  engineered  products  segment  includes  Metex  Mfg.
Corporation  ("Metex")  and AFP  Transformers,  LLC  ("AFP  Transformers").  The
operating results of the engineered products segment are as follows:

            (In Thousands)                                     Three Months Ended March 31,
                                                               ----------------------------

                                                                 2003          2002
                                                                ------        ------

            Net Sales                                           $8,156        $8,240
                                                                ======        ======

            Cost of Sales                                       $6,060        $6,303
                                                                ======        ======

            Selling, General and Administrative Expenses        $1,617        $1,716
                                                                ======        ======

            Operating Income                                    $  479        $  221
                                                                ======        ======

            Net sales of the  engineered  products  segment for the three months
ended March 31, 2003 remained relatively  consistent with the corresponding 2002
period.  Sales continue to increase for the Company's automotive product line as
a result of increased marketing and sales efforts while demand for the Company's
engineered  component and transformer product lines decreased as a result of the
struggling economy.

            Cost of sales as a percentage of sales  decreased 2.9% for the three
months  ended  March 31,  2003,  compared to the  corresponding  period in 2002,
principally due to the  implementation of cost containment  measures and the mix
of products sold.

            Selling,  general  and  administrative  expenses  of the  engineered
products segment decreased $99 or 5.8% for the three months ended March 31, 2003
versus the comparable 2002 period.  This decrease is primarily a result of lower
professional fees, as well as management's continuing cost containment efforts.

GENERAL AND ADMINISTRATIVE EXPENSES
-----------------------------------

            General  and   administrative   expenses  not  associated  with  the
manufacturing  operations  increased  $119 or 21.0% for the three  months  ended
March 31, 2003  compared  to such  expenses  incurred  for the  comparable  2002
period. The increase is mainly due to higher pension related expenses and salary
and salary related expenses.


                                 Page 19 of 26



OTHER INCOME AND EXPENSE, NET
-----------------------------

            The components of other income and expense,  net in the Consolidated
Statements of Income are as follows:

       (In Thousands)                                                       Three Months Ended March 31,
                                                                           -----------------------------

                                                                                 2003            2002
                                                                               --------        --------

       Net gain on sale of real estate assets                                   $   141         $ 5,378

       Net loss on sale of available-for-sale securities                              0          (1,005)

       Net realized and unrealized gain on trading securities                        57               0

       Net realized and unrealized gain (loss) on derivative
          instruments                                                               315          (1,862)

       Other, net                                                                   116             (14)
                                                                                -------         -------

                                                                                $   629         $ 2,497
                                                                                =======         =======

DISCONTINUED OPERATIONS
-----------------------

            Operating income from properties sold or held for sale and accounted
for as  discontinued  operations  was $139 on a net of tax  basis  for the three
months ended March 31, 2003,  versus $165 for the comparable 2002 period.  Prior
year amounts have been  reclassified  to reflect  results of  operations of real
properties  sold in 2003 or held for sale as of March 31,  2003 as  discontinued
operations.  Net gains on real estate  accounted for as discontinued  operations
were $1,135 on a net of tax basis for the three  months  ended  March 31,  2003.
Prior to the adoption of SFAS No. 144, gains on sales of real estate assets were
not accounted for as discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

            The Company  experienced  a net cash inflow from  operations of $3.1
million for the three  months  ended March 31, 2003 versus $1.2  million for the
three months ended March 31, 2002.  The $1.9 million  increase in operating cash
flow  primarily  results  from  changes in working  capital  and $.9  million in
proceeds  from the sale of trading  securities  in 2003.  The  components of the
working capital changes are set forth in detail in the  Consolidated  Statements
of Cash Flows.

            For the three months ended March 31, 2003, $3.5 million was provided
by investing  activities which consisted  primarily of proceeds from the sale of
real estate  assets of $3.9  million and  proceeds  from the sale of  derivative
instruments of $.5 million  partially offset by purchases of  available-for-sale
securities of $.6 million.

            For the three months  ended March 31, 2002,  $.5 million was used in
investing  activities which consisted  primarily of $1.1 million of purchases of
available-for-sale  securities  net of proceeds  received  from the sale of such
securities.  This was offset by proceeds  from the sale of real estate assets of
$.6 million.


                                 Page 20 of 26



            Net cash used in  financing  activities  was $1.3  million  and $2.5
million  during the three  months  ended March 31, 2003 and 2002,  respectively.
This use of cash  flow was  primarily  attributable  to debt  reduction  and the
purchase and retirement of the Company's common stock.

            At March 31, 2003, the Company's cash and marketable securities were
$73.4  million  and  working  capital  was $66.1  million  compared  to cash and
marketable  securities of $74.8 million and working  capital of $67.0 million at
December 31, 2002.  Management  continues to believe that the real estate market
is overvalued and  accordingly  recent  acquisitions  have been limited to those
select  properties  that meet the Company's  stringent  financial  requirements.
Management  believes  that the  available  working  capital along with the $80.0
million of availability on the revolving credit facility,  discussed below, puts
the Company in an opportune position to fund acquisitions and grow its portfolio
of real estate properties if and when attractive long-term  opportunities become
available.

            The  cash  needs of the  Company  have  been  satisfied  from  funds
generated by current  operations.  It is expected that future  operational  cash
needs and the cash required to repurchase  the Company's  common stock will also
be  satisfied  from  existing  cash  balances,  marketable  securities,  ongoing
operations  and  borrowings  under the Revolver (as  hereinafter  defined).  The
primary source of capital to fund  additional  real estate  acquisitions  and to
make  additional  high-yield  mortgage  loans  will  come from  existing  funds,
borrowings  under the  Revolver,  the sale,  financing  and  refinancing  of the
Company's  properties  and from third party  mortgages and purchase  money notes
obtained in connection with specific acquisitions.

            In addition  to the  acquisition  of  properties  for  consideration
consisting of cash and mortgage financing proceeds, the Company may acquire real
properties in exchange for the issuance of the Company's equity securities.  The
Company may also  finance  acquisitions  of other  companies  in the future with
borrowings from institutional  lenders and/or the public or private offerings of
debt or equity securities. The Company currently has no agreements,  commitments
or  understandings  with respect to the  acquisition of real properties or other
companies in exchange for equity securities.

            Funds of the Company in excess of that  needed for working  capital,
purchasing real estate and arranging  financing for real estate acquisitions are
invested  by the  Company  in  corporate  equity  securities,  corporate  notes,
certificates of deposit, government securities and other financial instruments.

            The  Company  is the  lessor  of eight  department  stores  that are
currently  leased to Kmart  Corporation  ("Kmart"),  which filed for  protection
under Chapter 11 of the U.S.  Bankruptcy  Code on January 22, 2002. In addition,
the Company holds a 50% interest in a joint  venture  (which is accounted for by
the Company on the equity  basis) that owns two  distribution  centers  that are
also leased to Kmart. As part of its reorganization, Kmart announced the closure
of  approximately  600 of its  stores  during  the past  year.  Kmart's  plan of
reorganization was approved in April 2003 and became effective in May 2003.

            Effective  December  10,  2002,  the Company  entered  into a credit
agreement with five banks which provides for an $80.0 million  revolving  credit
facility ("Revolver"). The Revolver may be increased under certain circumstances
and expires on December 31, 2005.

            Under the Revolver,  the Company will be provided  with  eligibility
based  upon the sum of (i)  60.0% of the  aggregate  annualized  and  normalized
year-to-date  net  operating  income of  unencumbered  eligible  properties,  as
defined,  capitalized  at 10.0%,  (ii)  60.0% of the  aggregate  annualized  and
normalized  year-to-date  net operating  income of  unencumbered  eligible hotel
properties, as defined,  capitalized at 10.5%, not to exceed the lesser of $10.0
million or 10% of total eligibility,  (iii) the lesser of $20.0 million or 50.0%


                                 Page 21 of 26



of the aggregate annualized and normalized  year-to-date net operating income of
encumbered eligible properties,  as defined,  capitalized at 12.0%, (iv) the sum
of 75.0% of eligible accounts receivable,  50.0% of eligible inventory,  and 50%
of  eligible  loans,  as  defined,  (v) cash and cash  equivalents  in excess of
working capital, as defined, and (vi) 50% of marketable securities,  as defined.
At March 31, 2003,  eligibility under the Revolver was $80.0 million, based upon
the above terms and there were no amounts  outstanding  under the Revolver.  The
credit agreement contains certain financial and restrictive covenants, including
minimum  consolidated  equity,  interest  coverage,  debt  service  coverage and
capital   expenditures  (other  than  for  real  estate),   and  limitations  on
indebtedness.  The Company was in  compliance  with all  covenants  at March 31,
2003.  The credit  agreement also contains  provisions  which allow the banks to
perfect a security  interest in certain  operating and real estate assets in the
event of a default,  as defined in the credit  agreement.  Borrowings  under the
Revolver,  at the  Company's  option,  bear interest at the bank's prime lending
rate or at the London Interbank Offered Rate ("LIBOR") (1.29% at March 31, 2003)
plus   2.0%  for  non  cash   collateralized   borrowings   and  1.0%  for  cash
collateralized borrowings.

            In strategies designed to hedge overall market risk, the Company may
sell  common  stock short and  participate  in put and/or  call  options.  These
instruments do not qualify for hedge  accounting  and therefore  changes in such
derivatives  fair  value are  recognized  in  earnings.  These  derivatives  are
recorded as a  component  of accounts  payable  and accrued  liabilities  in the
Consolidated Balance Sheets.

            The Company has undertaken the completion of  environmental  studies
and/or remedial  action at Metex' two New Jersey  facilities and filed an action
against certain insurance  carriers seeking recovery of costs incurred and to be
incurred in these  matters.  Settlements  have been reached with all carriers in
this  matter.  See  Notes  to  Consolidated  Financial  Statements  for  further
discussion on this matter.

            The Company is subject to various  litigation,  legal and regulatory
matters  that  arise  in  the  ordinary  course  of  business  activities.  When
management  believes it is probable  that a liability has been incurred and such
amounts are reasonably  estimable the Company  provides for amounts that include
judgments  and penalties  that may be assessed.  These  liabilities  are usually
included  in  accounts  payable  and  accrued  liabilities  or  other  long-term
liabilities  in  the  Consolidated   Financial  Statements,   depending  on  the
anticipated  payment  date.  None of these  matters are  expected to result in a
material  adverse  effect on the Company's  consolidated  financial  position or
results of operations.

            The current  liabilities  of the  Company  have at times in the past
exceeded its current assets principally due to the financing of long-term assets
utilizing short-term  borrowings and from the classification of current mortgage
obligations without the corresponding current asset for such properties.  Future
financial  statements  may  reflect  current  liabilities  in excess of  current
assets.   Management  is  confident   that  through  cash  flow  generated  from
operations,  together with borrowings  available under the Revolver and the sale
of select assets, all obligations will be satisfied as they come due.

RELATED PARTY TRANSACTIONS
--------------------------

            Refer to Notes to Consolidated Financial Statements for a discussion
of related party transactions.


                                 Page 22 of 26



CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES
-----------------------------------------------------

            Refer  to the  Company's  2002  Annual  Report  on Form  10-K  for a
discussion of the Company's critical accounting policies,  which include revenue
recognition and accounts receivable,  marketable securities,  inventories,  real
estate, discontinued operations, long-lived assets and pension plans. During the
first quarter of 2003, there were no material changes to these policies.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

            Refer to Notes to Consolidated Financial Statements for a discussion
of recent accounting pronouncements.

FORWARD-LOOKING STATEMENTS
--------------------------

            Certain  statements in this Report on Form 10-Q and other statements
made by the  Company or its  representatives  that are not  strictly  historical
facts  are  "forward-looking"  statements  within  the  meaning  of the  Private
Securities Litigation Reform Act of 1995 that should be considered as subject to
the many risks and  uncertainties  that exist in the  Company's  operations  and
business  environment.  The  forward-looking  statements  are  based on  current
expectations  and involve a number of known and unknown risks and  uncertainties
that could cause the actual  results,  performance  and/or  achievements  of the
Company  to  differ   materially  from  any  future   results,   performance  or
achievements,  expressed or implied, by the forward-looking statements.  Readers
are cautioned not to place undue reliance on these  forward-looking  statements,
and that in light of the significant  uncertainties  inherent in forward-looking
statements,  the  inclusion  of such  statements  should  not be  regarded  as a
representation  by the Company or any other person that the  objectives or plans
of the Company will be  achieved.  The Company  also  assumes no  obligation  to
publicly update or revise its forward-looking statements or to advise of changes
in the assumptions  and factors on which they are based.  See the Company's 2002
Annual  Report on Form 10-K for a  discussion  of risk factors that could impact
our  future  financial   performance  and/or  cause  actual  results  to  differ
significantly from those expressed or implied by such statements.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

            The  information  called  for by this  item is  provided  under  the
caption "Derivative Financial  Instruments" under Item 1 - Notes to Consolidated
Financial Statements.

ITEM 4.   CONTROLS AND PROCEDURES

            Within the 90 days  prior to the date of this  report,  the  Company
carried out an evaluation,  under the supervision and with the  participation of
the Company's  management,  including the Company's Chief Executive  Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure  controls  and  procedures  pursuant to Exchange  Act Rule
13a-14.  Based  upon that  evaluation,  the Chief  Executive  Officer  and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to the Company (including its consolidated subsidiaries) required to be
included  in the  Company's  periodic  reports.  There have been no  significant
changes  in the  Company's  internal  controls  or in other  factors  that could
significantly affect these controls subsequent to the date of their evaluation.


                                 Page 23 of 26



PART II OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Reports on Form 8-K. None

     (b)  Exhibits

          99.1 Certification of the Chief Executive Officer
          99.2 Certification of the Chief Financial Officer



                                   SIGNATURES

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

                                       UNITED CAPITAL CORP.

Dated:  May 12, 2003                   By: /s/ Anthony J. Miceli
                                       -----------------------------------------
                                       Anthony J. Miceli
                                       Vice President, Chief Financial Officer
                                       and Secretary of the Company


                                 Page 24 of 26



          CERTIFICATION PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14
          -------------------------------------------------------------


I, A. F. Petrocelli, certify that:

1.    I have  reviewed  this  quarterly  report on Form  10-Q of United  Capital
      Corp.;

2.    Based on my knowledge,  this quarterly  report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the  circumstances  under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  quarterly  report,  fairly  present in all
      material respects the financial condition,  results of operations and cash
      flows of the  registrant  as of, and for,  the periods  presented  in this
      quarterly report;

4.    The  registrant's  other  certifying  officers and I are  responsible  for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed,  based on
      our most recent  evaluation,  to the  registrant's  auditors and the audit
      committee of the registrant's board of directors:

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.    The registrant's  other  certifying  officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other  factors  that could  significantly  affect  internal
      controls  subsequent to the date of our most recent evaluation,  including
      any  corrective  actions  with  regard  to  significant  deficiencies  and
      material weaknesses.


Date: May 12, 2003

                                /s/ A. F. Petrocelli
                                ------------------------------------------------
                                A. F. Petrocelli
                                Chairman, President and Chief Executive Officer

                                 Page 25 of 26



          CERTIFICATION PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14
          -------------------------------------------------------------


I, Anthony J. Miceli, certify that:

1.    I have  reviewed  this  quarterly  report on Form  10-Q of United  Capital
      Corp.;

2.    Based on my knowledge,  this quarterly  report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the  circumstances  under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  quarterly  report,  fairly  present in all
      material respects the financial condition,  results of operations and cash
      flows of the  registrant  as of, and for,  the periods  presented  in this
      quarterly report;

4.    The  registrant's  other  certifying  officers and I are  responsible  for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed,  based on
      our most recent  evaluation,  to the  registrant's  auditors and the audit
      committee of the registrant's board of directors:

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.    The registrant's  other  certifying  officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other  factors  that could  significantly  affect  internal
      controls  subsequent to the date of our most recent evaluation,  including
      any  corrective  actions  with  regard  to  significant  deficiencies  and
      material weaknesses.


Date: May 12, 2003

                             /s/ Anthony J. Miceli
                             ---------------------------------------------------
                             Anthony J. Miceli
                             Chief Financial Officer



                                 Page 26 of 26`