`UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
                                     of 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007


                         COMMISSION FILE NUMBER: 1-10104
                         -------------------------------

 -------------------------------------------------------------------------------

                              UNITED CAPITAL CORP.
                              --------------------
             (Exact name of registrant 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, NY                       11021
        ----------------------------                       -----
  (Address of principal executive offices)              (Zip Code)


                                  516-466-6464
                                  ------------
              (Registrant'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 registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.                               Yes |X|  No |_|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer or a  non-accelerated  filer.  See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the  Exchange  Act.
Large accelerated filer |_|  Accelerated filer |_|  Non-accelerated filer |X|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).                                 Yes |_|  No |X|

The registrant had 8,298,943 shares of common stock, $.10 par value, outstanding
as of November 8, 2007.



                           UNITED CAPITAL CORP. AND SUBSIDIARIES

                                           INDEX


                                                                                        PAGE
                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

            Condensed Consolidated Balance Sheets as of
            September 30, 2007 (Unaudited) and December 31, 2006 ........................3

            Condensed Consolidated Statements of Income for the
            Three and Nine Months Ended September 30, 2007 and 2006(Unaudited) ..........4

            Condensed Consolidated Statements of Cash Flows for the
            Nine Months Ended September 30, 2007 and 2006 (Unaudited) .................5-6

            Notes to Condensed Consolidated Financial Statements (Unaudited)..........7-13

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...........................13-20

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE OF
            MARKET RISK ................................................................20

ITEM 4T.    CONTROLS AND PROCEDURES ....................................................20

                           PART II - OTHER INFORMATION

ITEM 1A.    RISK FACTORS ...............................................................20

ITEM 6.     EXHIBITS ...................................................................21

SIGNATURES  ............................................................................21


                                             2


                           UNITED CAPITAL CORP. AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED BALANCE SHEETS
                           (In thousands, except per share data)


                                                           September 30,  December 31,
                                                               2007          2006
                                                             --------      --------
                                                           (Unaudited)
Assets

Current assets:
  Cash and cash equivalents                                  $126,837      $ 76,688
  Marketable securities                                        23,905        62,917
  Notes and accounts receivable, net                           24,444         8,833
  Inventories                                                   5,292         4,894
  Prepaid expenses and other current assets                     1,666         1,659
  Deferred income taxes                                          --             583
  Current assets of discontinued operations                      --              13
                                                             --------      --------

   TOTAL CURRENT ASSETS                                       182,144       155,587
                                                             --------      --------

Property, plant and equipment, net                              6,412         6,250
Real property held for rental, net                             65,237        49,183
Investment in joint venture                                     6,267         6,711
Noncurrent notes receivable                                       580         1,694
Other assets                                                    3,698         2,976
Noncurrent assets of discontinued operations                     --           1,199
                                                             --------      --------

   TOTAL ASSETS                                              $264,338      $223,600
                                                             ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term debt                       $    905      $    471
  Accounts payable and accrued liabilities                     11,489         9,598
  Income taxes payable                                          3,467         5,253
  Deferred income taxes                                            44          --
  Current liabilities of discontinued operations                 --              66
                                                             --------      --------

   TOTAL CURRENT LIABILITIES                                   15,905        15,388
                                                             --------      --------

Long-term debt                                                 25,152        11,669
Other long-term liabilities                                    15,284        14,277
Deferred income taxes                                          10,143         2,793
                                                             --------      --------

   TOTAL LIABILITIES                                           66,484        44,127
                                                             --------      --------

Commitments and contingencies

Stockholders' equity:
  Common stock, $.10 par value, authorized 17,500
   shares; issued and outstanding 8,300 and 8,278
   shares,respectively                                            830           828
  Retained earnings                                           193,810       176,520
  Accumulated other comprehensive income, net of tax            3,214         2,125
                                                             --------      --------
   TOTAL STOCKHOLDERS' EQUITY                                 197,854       179,473
                                                             --------      --------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $264,338      $223,600
                                                             ========      ========


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


                                             3


                                       UNITED CAPITAL CORP. AND SUBSIDIARIES
                                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                    (Unaudited)
                                       (In thousands, except per share data)

                                                                       Three Months Ended      Nine Months Ended
                                                                          September 30,          September 30,
                                                                     --------------------    --------------------
                                                                       2007        2006        2007        2006
                                                                     --------    --------    --------    --------
REVENUES:
   Net sales                                                         $  9,332    $  9,285    $ 28,919    $ 28,225
   Revenues from real estate operations                                 9,879       7,080      24,833      21,229
                                                                     --------    --------    --------    --------

        Total revenues                                                 19,211      16,365      53,752      49,454
                                                                     --------    --------    --------    --------

COSTS AND EXPENSES:
   Cost of sales                                                        7,241       6,839      21,996      21,082
   Real estate operations:
     Mortgage interest expense                                            266         199         661         601
     Depreciation expense                                                 849         612       2,302       1,725
     Other operating expenses                                           4,432       3,320      11,203       9,489
   General and administrative expenses                                  1,612       1,552       4,801       5,713
   Selling expenses                                                       815         865       2,566       2,813
                                                                     --------    --------    --------    --------

        Total costs and expenses                                       15,215      13,387      43,529      41,423
                                                                     --------    --------    --------    --------
        Operating income                                                3,996       2,978      10,223       8,031
                                                                     --------    --------    --------    --------

OTHER INCOME (EXPENSE):
   Interest and dividend income                                         1,859       1,919       5,447       4,700
   Other income and expense, net                                         (994)         62       5,490        (261)
                                                                     --------    --------    --------    --------
        Total other income                                                865       1,981      10,937       4,439
                                                                     --------    --------    --------    --------

   Income from continuing operations before income taxes                4,861       4,959      21,160      12,470

   Provision (benefit) for income taxes                                 1,140     (15,666)      7,058     (12,991)
                                                                     --------    --------    --------    --------
   INCOME FROM CONTINUING OPERATIONS                                    3,721      20,625      14,102      25,461
                                                                     --------    --------    --------    --------

DISCONTINUED OPERATIONS:
   Loss from discontinued operations, net of tax benefit of $5,
     $1, $8 and $10, respectively                                          (6)         (1)        (11)        (13)
   Net gain on disposal of discontinued operations, net of tax
     provision of $5,967, $6,668 and $311, respectively                 8,950        --        10,002         465
                                                                     --------    --------    --------    --------

   INCOME (LOSS) FROM DISCONTINUED OPERATIONS                           8,944          (1)      9,991         452
                                                                     --------    --------    --------    --------

   NET INCOME                                                        $ 12,665    $ 20,624    $ 24,093    $ 25,913
                                                                     ========    ========    ========    ========

BASIC EARNINGS PER SHARE:
   Income from continuing operations                                 $    .45    $   2.49    $   1.70    $   3.07
   Income from discontinued operations                                   1.08        --          1.21         .05
                                                                     --------    --------    --------    --------
   NET INCOME PER SHARE                                              $   1.53    $   2.49    $   2.91    $   3.12
                                                                     ========    ========    ========    ========

DILUTED EARNINGS PER SHARE:
   Income from continuing operations                                 $    .37    $   2.01    $   1.38    $   2.50
   Income from discontinued operations                                    .89        --           .97         .04
                                                                     --------    --------    --------    --------
   NET INCOME PER SHARE ASSUMING DILUTION                            $   1.26    $   2.01    $   2.35    $   2.54
                                                                     ========    ========    ========    ========


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


                                                         4


                                 UNITED CAPITAL CORP. AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (Unaudited)
                                             (In thousands)

                                                                                  Nine Months Ended
                                                                                    September 30,
                                                                                 --------------------
                                                                                   2007        2006
                                                                                 --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                    $ 24,093    $ 25,913
   Adjustments to reconcile net income to net cash provided by
     operating activities:
       Depreciation and amortization                                                2,656       2,062
       Non-cash stock-based compensation                                             --           807
       Contribution to pension plan                                                  (700)       --
       Net loss on sale of available-for-sale securities                              316         577
       Income from equity investment                                                 (143)       (209)
       Net gain from condemnation award                                            (5,665)       --
       Gain on disposal of discontinued operations, net of tax                    (10,002)       (465)
       Net realized and unrealized (gain) loss on derivative instruments             (149)         69
       Other, net                                                                     156         208
       Changes in assets and liabilities:
          Notes and accounts receivable, net                                         (864)        183
          Inventories                                                                (398)       (430)
          Prepaid expenses and other current assets                                    (7)          2
          Deferred income taxes                                                     1,916      (1,737)
          Other assets                                                               (246)       (307)
          Accounts payable and accrued liabilities                                  1,885         792
          Income taxes payable                                                     (2,051)        (58)
          Other long-term liabilities                                                  79     (15,650)
                                                                                 --------    --------
            Net cash provided by operating activities of continuing
               operations                                                          10,876      11,757
            Operating activities of discontinued operations                           (54)         43
                                                                                 --------    --------

            NET CASH PROVIDED BY OPERATING ACTIVITIES                              10,822      11,800
                                                                                 --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of available-for-sale securities                                      (12,927)    (28,431)
   Proceeds from sale of available-for-sale securities                             53,344      10,859
   Proceeds from sale of real estate assets                                        17,855       1,701
   Proceeds held in escrow                                                        (15,000)       --
   Net proceeds from condemnation award                                             5,665        --
   Proceeds from sale of derivative instruments                                       188       1,576
   Purchase/issuance of notes receivable                                             --        (1,119)
   Principal payments on notes receivable                                           1,367       2,413
   Acquisition of property, plant and equipment                                      (297)     (1,149)
   Acquisition of/additions to real estate assets                                 (16,271)    (11,618)
   Distributions from joint venture                                                   587         586
                                                                                 --------    --------
            Net cash provided by (used in) investing activities of
               continuing operations                                               34,511     (25,182)
            Investing activities of discontinued operations                            15         (30)
                                                                                 --------    --------

            NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                    34,526     (25,212)
                                                                                 --------    --------

                                                                                              Continued


                                                   5


                                 UNITED CAPITAL CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                              (Unaudited)

                                                                                  Nine Months Ended
                                                                                    September 30,
                                                                                 --------------------
                                                                                   2007        2006
                                                                                 --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from mortgage obligations                                               12,000        --
   Principal payments on mortgage obligations                                         (398)       (539)
   Purchase and retirement of common stock                                         (15,681)    (13,626)
   Proceeds from exercise of stock options                                           4,936         753
   Tax benefit from exercise of employee stock options                               3,944         696
                                                                                 ---------   ---------
            NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                      4,801     (12,716)
                                                                                 ---------   ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                50,149     (26,128)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      76,688      99,628
                                                                                 ---------   ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                         $ 126,837   $  73,500
                                                                                 =========   =========




SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

   Cash paid during the period for:

          Interest                                                               $     653   $     603
                                                                                 =========   =========

          Taxes                                                                  $   2,937   $   3,941
                                                                                 =========   =========


NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES:
   Mortgage obligation assumed in connection with acquisition of
     hotel property (see Note 7)                                                 $   2,315   $       --
                                                                                 =========   ==========


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


                                                   6


                      UNITED CAPITAL CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)
                                   (Unaudited)

1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America ("GAAP") for interim financial information and with the
instructions  to Form 10-Q and Article 10 of Regulation  S-X, as  promulgated by
the Securities and Exchange Commission ("SEC"). Accordingly, they do not include
all  information  and  footnotes   required  by  GAAP  for  complete   financial
statements.

In the  opinion  of  management,  all  adjustments,  consisting  only of  normal
recurring adjustments,  necessary for a fair presentation of the results for the
interim periods  presented have been recorded.  These financial  statements have
been  prepared in  conformity  with the  accounting  principles,  and methods of
applying  those  accounting  principles,  as reflected in the audited  financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-K for the year ended  December  31,  2006 and  should be read in  conjunction
therewith.  The  results  of  operations  for  the  periods  presented  are  not
necessarily indicative of the results to be expected for the full year.

2.  STOCKHOLDERS' EQUITY

Previous  purchases of the  Company's  common  stock have reduced the  Company's
additional  paid-in-capital  to zero and have also reduced retained  earnings by
amounts in excess of par value. Any future purchases in excess of par value will
also reduce retained earnings.

Repurchases  of the Company's  common stock may 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. Future proceeds from the issuance
of common  stock in excess of par value will be credited  to  retained  earnings
until such time that previously recorded reductions have been recovered.  During
the nine months ended September 30, 2007 and 2006, the Company received proceeds
of $4,936 and $753 from the exercise of 544 and 97 stock options,  respectively.
During the nine months ended September 30, 2007 and 2006, the Company recorded a
tax benefit of $3,994 and $696,  respectively,  to retained  earnings related to
the exercise of stock options.

During the nine months ended September 30, 2007 and 2006, the Company  purchased
and retired 522 and 14 shares of common stock for an aggregate purchase price of
$15,681 and $303, respectively.  In addition, during November 2005, the Board of
Directors  authorized a "Dutch Auction" self-tender offer for up to 1,000 shares
of the  Company's  common stock  resulting in the January  2006  repurchase  and
retirement  of 544 shares of common  stock for an  aggregate  purchase  price of
$13,323 or $24.50 per share.

3.  EARNINGS PER SHARE

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

                                                            Three Months Ended     Nine Months Ended
                                                               September 30,         September 30,
                                                            ------------------    ------------------
                                                              2007       2006       2007       2006
                                                            -------    -------    -------    -------
Numerator:
   Income from continuing operations                        $ 3,721    $20,625    $14,102    $25,461
                                                            =======    =======    =======    =======
Denominator:
   Basic - weighted-average shares outstanding                8,301      8,276      8,288      8,306
   Dilutive effect of employee stock options                  1,755      1,972      1,975      1,882
                                                            -------    -------    -------    -------
   Diluted - weighted-average shares outstanding             10,056     10,248    $10,263     10,188
                                                            =======    =======    =======    =======

Basic earnings per share - continuing operations            $   .45    $  2.49    $  1.70    $  3.07
                                                            =======    =======    =======    =======

Diluted earnings per share - continuing operations          $   .37    $  2.01    $  1.38    $  2.50
                                                            =======    =======    =======    =======


                                       7


4.  STOCK-BASED COMPENSATION

The Company has two stock option plans,  the Incentive and  Non-Qualified  Stock
Option Plan and the 1988 Joint  Incentive and  Non-Qualified  Stock Option Plan,
under which qualified and non-qualified  options may be granted to key employees
to purchase the  Company's  common stock at the fair market value on the date of
grant. Under both plans, the options typically become exercisable in three equal
installments, beginning one year from the date of grant. Stock options generally
expire  ten  years  from the date of  grant.  Currently,  there  are no  options
available for grant under these plans.

On January 1, 2006,  the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 123 (Revised 2004) - "Share-Based Payment" ("SFAS No. 123R") using
the modified  prospective  transition method. SFAS No. 123R requires the Company
to measure  all  employee  stock-based  compensation  awards  using a fair value
method and record the related expense in the financial statements.  The adoption
of SFAS No. 123R reduced income from continuing  operations  before income taxes
and net  income  by $807  and  $518,  respectively,  for the nine  months  ended
September 30, 2006. All options  previously granted were fully vested as of June
30, 2006. Therefore, no compensation costs relating to share-based payments were
recognized  during the second half of 2006 or in the nine months ended September
30, 2007.

A summary of the activity of the  Company's  outstanding  stock  options for the
nine months ended September 30, 2007 is as follows:

                                                                                Weighted-
                                                                   Weighted-     average
                                                                    average     Remaining    Aggregate
                                                      Number of    Exercise    Contractual   Intrinsic
                                                        Shares       Price        Term         Value
                                                      ---------    ---------   -----------   ---------
Outstanding at January 1, 2007                          5,299      $   11.61
Exercised                                                (544)     $    9.07
                                                        -----
Outstanding and exercisable at September 30, 2007       4,755      $   11.90    3.2 Years     $69,423
                                                        =====                                 =======

The  aggregate  intrinsic  value in the table above  represents  the  difference
between the Company's closing stock price on September 30, 2007 ($26.50) and the
exercise price of each stock option,  multiplied by the number of "in-the-money"
options.  This amount  changes based upon the fair market value of the Company's
stock.  The total  intrinsic value of options  exercised  during the nine months
ended  September  30, 2007 was $11,421  based on the market price on the date of
exercise.

5.  MARKETABLE SECURITIES

The cost, gross unrealized gains,  gross unrealized losses and fair market value
of available-for-sale marketable securities are as follows:

                                             Gross        Gross        Fair
                                          Unrealized    Unrealized    Market
                               Cost          Gains        Losses       Value
                             ---------     ---------     ---------    ---------
SEPTEMBER 30, 2007:
   Equity securities         $  17,967     $   3,827     $       --    $  21,794
   Bonds                         2,185             7           (81)       2,111
                             ---------     ---------     ---------    ---------
                             $  20,152     $   3,834     $     (81)   $  23,905
                             =========     =========     =========    =========
DECEMBER 31, 2006:
   Equity securities         $  57,708     $   4,778     $  (2,741)   $  59,745
   Bonds                         3,131            43            (2)       3,172
                             ---------     ---------     ---------    ---------
                             $  60,839     $   4,821     $  (2,743)   $  62,917
                             =========     =========     =========    =========


                                       8


Proceeds from the sale of available-for-sale  securities and the resulting gross
realized  gains and losses  included in the  determination  of net income are as
follows:
                                Nine Months Ended
                                  September 30,
                              --------------------
                                2007        2006
                              --------    --------
Proceeds                      $ 53,344    $ 10,859
                              ========    ========
Gross realized gains          $  2,954    $    906
                              ========    ========
Gross realized losses         $ (3,270)   $ (1,483)
                              ========    ========


6.  INVENTORIES

The components of inventories are as follows:

                           September 30,   December 31,
                               2007          2006
                              ------        ------
Raw materials                 $2,538        $2,197
Work in process                  461           506
Finished goods                 2,293         2,191
                              ------        ------
                              $5,292        $4,894
                              ======        ======


7.  REAL ESTATE

    PROPERTY ACQUISITIONS

During May 2007,  the Company  purchased a hotel located in Utica,  New York for
approximately  $16,000  plus  closing  costs,  including  the  assumption  of an
underlying mortgage of $2,315, of which $872 of the purchase price was allocated
to  furniture,  fixtures and  equipment  and is included in property,  plant and
equipment in the Condensed  Consolidated  Balance  Sheet.  The mortgage  assumed
bears  interest at 7.5% per annum,  with  monthly  installments  of interest and
principal of $30 through December 2015. The total cost of the acquisition,  less
the assumption of the mortgage, is reflected in acquisition of/additions to real
estate assets in the Condensed Consolidated  Statements of Cash Flows. In August
2007, the Company obtained an additional mortgage on this property in the amount
of $12,000.  This mortgage bears interest at 6.18% per annum, is payable monthly
based on a 25-year amortization and matures in August 2017.

During May 2006, the Company purchased,  for cash, a commercial property located
in Long Island City, New York for $8,531.

    PROPERTY SALES

During the nine months ended September 30, 2007, the Company  divested itself of
five commercial  properties and two other  properties which had a net book value
of $1,185 from its real estate investment and management segment.  The aggregate
proceeds from these transactions were $17,855 resulting in a gain of $10,002, on
a net of tax basis.

Proceeds from the sale of one of the other properties,  amounting to $15,000, is
being held in escrow by a third-party, on behalf of the Company,  potentially to
acquire a property in connection with a Section 1031 tax-deferred  exchange, and
is included in notes and accounts receivable,  net in the accompanying Condensed
Consolidated  Balance  Sheet.  If  completed,  the  acquisition  would defer the
payment of some or all of the income  taxes  related to the gain on the property
sold. If an  acquisition  does not occur within six months of the sale, the cash
proceeds will be remitted to the Company.

During the nine months ended September 30, 2006, the Company  divested itself of
a  commercial  property  which had a net book value of $925 from its real estate
investment  and  management  segment.  The proceeds from this  transaction  were
$1,701 resulting in a gain of $465, on a net of tax basis.


                                       9


The results of operations  of  properties  sold prior to September 30, 2007 have
been  reclassified to discontinued  operations,  on a net of tax basis,  for the
three and nine months ended  September 30, 2007 and 2006.  Summarized  financial
information of properties sold and accounted for as  discontinued  operations is
as follows:

                                                 Three Months Ended    Nine Months Ended
                                                   September 30,        September 30,
                                                 ------------------    ------------------
                                                    2007     2006        2007     2006
                                                   -----    -----       -----    -----
Revenues from real estate operations               $   3    $  73       $  45    $ 205
Depreciation expense                                --         15           3       47
Other operating expenses                              14       60          61      181
                                                   -----    -----       -----    -----
Loss from operations                               $ (11)   $  (2)      $ (19)   $ (23)
                                                   =====    =====       =====    =====

    PROPERTIES HELD FOR SALE

As of September 30, 2007, there were no properties  considered by the Company to
be held for sale.

8.  DERIVATIVE FINANCIAL INSTRUMENTS

Management maintains a diversified portfolio of cash equivalents and investments
in a variety of securities,  primarily U.S.  investments in common and preferred
equity issues,  as well as corporate  bonds, and participates on a limited basis
in transactions  involving  derivative  financial  instruments,  including short
stock sales and put and/or call options.  At September 30, 2007 and December 31,
2006,  the fair value of such  derivatives  was ($59) and  ($20),  respectively,
which is recorded as a component of accounts payable and accrued  liabilities in
the Condensed  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  $149 and ($69) in net realized
and unrealized  gains (losses) from  derivative  instruments for the nine months
ended  September  30, 2007 and 2006,  respectively,  which are included in other
income and expense, net in the Condensed Consolidated Statements of Income.

9.  INCOME TAXES

On January 1, 2007,  the Company  adopted  Financial  Accounting  Standard Board
("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation  of FASB  Statement  No. 109" ("FIN  48"),  which  clarifies  the
accounting  for  uncertainty  in tax  positions  by  prescribing  a  recognition
threshold  for  positions  taken or  expected  to be taken in a tax return  that
result in a benefit.

At the  date of the  adoption,  the  Company  had a total  of  $4,324  of  gross
unrecognized tax benefits. Substantially the entire amount, if recognized, would
favorably  effect  the  Company's  effective  tax rate in  future  periods.  The
adoption of FIN 48 did not result in a cumulative  effect adjustment to retained
earnings.  As of September 30, 2007,  the Company had a total of $4,834 of gross
unrecognized tax benefits.

FIN 48 also  requires  companies  to  reclassify  uncertain  tax  positions  not
expected to be settled within one year to long-term liabilities.  Therefore upon
adoption of FIN 48, the Company  reclassed  $1,128 from income taxes  payable to
other long-term liabilities.

The Company  recognizes  interest  and  penalties  related to  unrecognized  tax
positions  as a component of income tax  expense.  As of September  30, 2007 and
January 1, 2007, the Company had approximately $2,132 and $2,076,  respectively,
of accrued interest and penalties related to uncertain tax positions.

The  Company is subject to U.S.  federal  income  tax,  as well as income tax in
multiple states. For all major taxing jurisdictions,  the tax years 2004 through
2006 remain open to examination.  As of September 30, 2007, the Company does not
anticipate that total unrecognized tax benefits will significantly change during
the next twelve months.


                                       10


10. PENSION PLAN

The Company  has a  noncontributory  defined  benefit  pension  plan that covers
substantially  all full-time  employees  and the former  employees of one of the
Company's  discontinued   manufacturing  segments.  The  plan  provides  defined
benefits based on years of service and compensation level.

Net periodic pension expense consists of the following:

                                           Three Months Ended  Nine Months Ended
                                              September 30,      September 30,
                                           ------------------  -----------------
                                             2007      2006      2007      2006
Service cost                                $ (95)    $ (77)    $(260)    $(223)
Interest cost                                (164)     (163)     (493)     (492)
Expected return on plan assets                180       325       551       331
Net amortization and deferral                --        (159)     --         176
                                            -----     -----     -----     -----
Net periodic pension expense                $ (79)    $ (74)    $(202)    $(208)
                                            =====     =====     =====     =====

The Company  contributed  $700 to the pension  plan during the nine months ended
September 30, 2007.

11. NET GAIN FROM CONDEMNATION AWARD

Included in other income and expense, net during the nine months ended September
30, 2007 is $5,665 in net gain from a  condemnation  award related to a property
taken by the City of New York in 2001.

12. COMPREHENSIVE INCOME

The components of comprehensive income are as follows:

                                            Three Months Ended     Nine Months Ended
                                               September 30,         September 30,
                                           --------------------    -------------------
                                             2007        2006        2007       2006
                                           --------    --------    --------   --------
Net income                                 $ 12,665    $ 20,624    $ 24,093   $ 25,913
Other comprehensive income, net of tax:
  Change in net unrealized (loss) gain
    on available-for-sale securities,
    net of tax effect of $153, ($2,777),
    ($425) and ($2,764), respectively          (285)      5,157         789      5,131

  Reclassification adjustment for net
    losses (gains) realized in net
    income, net of tax effect of ($340),
    $72, ($161) and ($202), respectively        630        (133)        300        375
                                           --------    --------    --------   --------

Comprehensive income                       $ 13,010    $ 25,648    $ 25,182   $ 31,419
                                           ========    ========    ========   ========


The  components of accumulated  other  comprehensive  income,  net of tax are as
follows:


                                                             September 30, December 31,
                                                                 2007          2006
                                                             ------------- ------------
Net unrealized gains on available-for-sale securities,
    net of tax effect of $1,314 and $728, respectively          $2,439        $1,350

Unrecognized net gains from pension plan, net of
    tax effect of $417                                             775           775
                                                                ------        ------
Accumulated other comprehensive income, net of tax              $3,214        $2,125
                                                                ======        ======


13. BUSINESS SEGMENTS

The Company operates through three business segments: real estate investment and
management, hotel operations and engineered products. The real estate investment
and  management  segment is engaged in the business of investing in and managing
real  estate  properties   located  throughout  the  United  States.  The  hotel
operations  segment owns and operates three hotels located in the United States.
Engineered products are manufactured  through  wholly-owned  subsidiaries of the
Company and  primarily  consist of knitted  wire  products  and  components  and
transformer products sold worldwide.


                                       11


The  accounting  policies  of the  Company's  segments  are the  same  as  those
described  in the Summary of  Significant  Accounting  Policies  included in the
Notes to  Consolidated  Financial  Statements in the Company's  Annual Report on
Form 10-K for the year ended December 31, 2006.

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

                                                              Three Months Ended       Nine Months Ended
                                                                  September 30,           September 30,
                                                                2007        2006        2007        2006
                                                              --------    --------    --------    --------
Net revenues and sales:
   Real estate investment and management                      $  4,993    $  4,643    $ 14,813    $ 14,572
   Hotel operations                                              4,886       2,437      10,020       6,657
   Engineered products                                           9,332       9,285      28,919      28,225
                                                              --------    --------    --------    --------
                                                              $ 19,211    $ 16,365    $ 53,752    $ 49,454
                                                              ========    ========    ========    ========

Operating income (loss):

   Real estate investment and management                      $  3,201    $  2,691    $  9,184    $  9,099
   Hotel operations                                              1,131         258       1,483         315
   Engineered products                                             393         790       1,785       1,965
   General corporate expenses                                     (729)       (761)     (2,229)     (3,348)
                                                              --------    --------    --------    --------
                                                                 3,996       2,978      10,223       8,031

Other income, net                                                  865       1,981      10,937       4,439
                                                              --------    --------    --------    --------

Income from continuing operations before income taxes         $  4,861    $  4,959    $ 21,160    $ 12,470
                                                              ========    ========    ========    ========


14. COMMITMENTS AND CONTINGENCIES

The Company has  undertaken  the  completion  of  environmental  studies  and/or
remedial action at Metex' (as hereafter  defined) two New Jersey  facilities and
has  recorded a  liability  for the  estimated  investigation,  remediation  and
administrative costs associated therewith.

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  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. Although such events are not expected to change these estimates, 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 had approximately  $9,500 and
$9,700 recorded in accounts payable and accrued  liabilities and other long-term
liabilities at September 30, 2007 and December 31, 2006, respectively,  to cover
such matters.

The Company has an employment  agreement with its Chairman,  President and Chief
Executive  Officer (the "Officer")  which provides for a base salary of $800 per
annum plus a  discretionary  bonus as determined by the  Compensation  and Stock
Option  Committee of the Board of Directors.  In the event of  termination  or a
change in  control,  as  defined in the  employment  agreement,  the  Company is
required to pay the Officer a lump sum  severance  payment  equal to three years
salary and purchase  outstanding  options. The employment agreement provides for


                                       12


successive  one-year  terms,  unless either the Company or the Officer gives the
other  written  notice that the  employment  agreement is  terminated,  and also
provides a death benefit which the Company secures through an insurance policy.

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
Condensed  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.

15. RECENT ACCOUNTING PRONOUNCEMENTS

In  September  2006,  the FASB issued SFAS No.  157,  "Fair Value  Measurements"
("SFAS No. 157").  SFAS No. 157 defines fair value,  establishes a framework for
measuring fair value in generally accepted  accounting  principles,  and expands
disclosures  about fair value  measurements.  SFAS No. 157  applies  under other
accounting  pronouncements  that require or permit fair value  measurements and,
accordingly,  does not require any new fair value measurements.  SFAS No. 157 is
effective  for  financial  statements  issued for fiscal years  beginning  after
November 15, 2007, and interim periods within those fiscal years, which would be
the first quarter of 2008 for the Company.  The Company is currently  evaluating
the effect,  if any, that SFAS No. 157 will have on its  consolidated  financial
position or results of  operations.  However,  the  Company  does not expect the
adoption of SFAS No. 157 to have a material  effect on the  Company's  financial
position or results of operations.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets  and  Financial  Liabilities-Including  an  Amendment  of FASB
Statement No. 115" ("SFAS No. 159").  SFAS No. 159 permits entities to choose to
measure many  financial  instruments  and certain other items at fair value that
are not  currently  required  to be  measured  at fair  value.  SFAS No.  159 is
effective for fiscal years beginning after November 15, 2007, which would be the
first quarter of 2008 for the Company.  The Company is currently  evaluating the
effect,  if any,  that  SFAS No.  159 will  have on its  consolidated  financial
position or results of operations.

16. USE OF ESTIMATES

The  preparation of  consolidated  financial  statements in conformity with GAAP
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.

17. RECLASSIFICATIONS

Certain  prior year  amounts have been  reclassified  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 or as otherwise noted)

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

RESULTS OF  OPERATIONS:  THREE  AND NINE MONTHS ENDED  SEPTEMBER  30, 2007 AND
2006

Total  revenues  for the  quarter  ended  September  30, 2007 were  $19,211,  an
increase of $2,846 or 17% from the comparable 2006 period,  primarily due to the
acquisition of a hotel in May 2007.  Income from  continuing  operations  before
income  taxes during the current  quarter was $4,861  versus  $4,959  during the
three months ended  September 30, 2006. Net income for the third quarter of 2007
was $12,665 or $1.53 per basic share  compared to net income of $20,624 or $2.49


                                       13


per basic share for the  comparative  quarter of 2006.  The results of the three
months  ended  September  30, 2007  include  $8,950 in gains on the sale of real
estate,  net of tax. The Company did not sell any real estate  properties during
the third quarter of 2006.

For the nine months ended  September 30, 2007,  total revenues were $53,752,  an
increase of $4,298 or 9%,  compared to the comparable  2006 period.  Income from
continuing  operations before income taxes for the first nine months of 2007 was
$21,160,  an increase of $8,690 or 70%, compared to the same period of 2006. Net
income for the nine  months  ended  September  30, 2007 was $24,093 or $2.91 per
basic share,  compared to net income of $25,913 or $3.12 per basic share for the
nine months  ended  September  30,  2006.  The results of the nine months  ended
September 30, 2007 include $9,537 in gains on the sale of real estate,  on a net
of tax basis, above those recognized in the prior year period.

Included in other  income and  expense,  net during the nine month  period ended
September 30, 2007 is $5,665 in net gain from a condemnation  award related to a
property taken by the City of New York in 2001.

The three  and nine  month  periods  ended  September  30,  2006 were  favorably
impacted by the  reversal of  approximately  $17,000 in  long-term  and deferred
income tax  liabilities  related to certain tax matters for which the statute of
limitations has expired.

REAL ESTATE OPERATIONS

The Company's real estate  operations  consist of the real estate investment and
management  and hotel  operations  segments.  The  operating  results  for these
segments are as follows:

                                    Three Months Ended                      Nine Months Ended
                                    September 30, 2007                     September 30, 2007
                             ---------------------------------      ---------------------------------
                               Real         Hotel                     Real       Hotel
                              Estate     Operations     Total        Estate    Operations     Total
                             -------     ----------    -------      -------    ----------     -------
Revenues                     $ 4,993      $ 4,886      $ 9,879      $14,813      $10,020      $24,833
Mortgage interest expense         62          204          266          188          473          661
Depreciation expense             492          357          849        1,398          904        2,302
Other operating expenses       1,238        3,194        4,432        4,043        7,160       11,203
                             -------      -------      -------      -------      -------      -------
Income from operations       $ 3,201      $ 1,131      $ 4,332      $ 9,184      $ 1,483      $10,667
                             =======      =======      =======      =======      =======      =======

                                    Three Months Ended                      Nine Months Ended
                                    September 30, 2006                     September 30, 2006
                             ---------------------------------      ---------------------------------
                               Real         Hotel                     Real       Hotel
                              Estate     Operations     Total        Estate    Operations     Total
                             -------     ----------    -------      -------    ----------     -------
Revenues                     $ 4,643      $ 2,437      $ 7,080      $14,572      $ 6,657      $21,229
Mortgage interest expense         68          131          199          204          397          601
Depreciation expense             412          200          612        1,133          592        1,725
Other operating expenses       1,472        1,848        3,320        4,136        5,353        9,489
                             -------      -------      -------      -------      -------      -------
Income from
  operations                 $ 2,691      $   258      $ 2,949      $ 9,099      $   315      $ 9,414
                             =======      =======      =======      =======      =======      =======


    REAL ESTATE INVESTMENT AND MANAGEMENT

Revenues from the real estate  investment and management  segment increased $350
or 7.5% to $4,993 for the quarter  ended  September 30, 2007 and $241 or 1.7% to
$14,813  for  the  nine  months  ended  September  30,  2007,  compared  to  the
corresponding  periods  in  2006.  The  increase  for the  current  quarter  was
primarily the result of revenue  received for a  non-recurring  amount ($200) in
2007.  For the nine month  period,  the increase was primarily the result of new
leases and/or renewals at higher rents ($927), partially offset by non-recurring
transactions  ($300)  and a  decrease  in the  timing of  tenant  reimbursements
($166). Revenues from the Company's real estate properties are generally derived
from  properties  with single tenant and  long-term  leases.  Therefore,  rental
revenues recognized under GAAP do not fluctuate significantly,  but are affected
by future lease renewals, terminations and by the purchase or sale of additional
properties.


                                       14


Mortgage  interest expense  decreased $6 or 8.8% for the quarter ended September
30, 2007 and $16 or 7.8% for the nine months ended September 30, 2007,  compared
to the  corresponding  periods  in 2006,  as a  result  of  continuing  mortgage
amortization.  At September 30, 2007, the  outstanding  mortgage  balance on the
Company's  real  estate  investment  properties  was  reduced  to below  $4,100.
Mortgage  interest expense on existing  obligations of the Company's real estate
investment  and  management  segment  will  continue to decline  with  scheduled
principal reductions.

Depreciation  expense  associated with real properties held for rental increased
$80 or 19.4% for the quarter ended  September 30, 2007 and $265 or 23.4% for the
nine months ended September 30, 2007,  compared to the corresponding  periods in
2006. These increases were primarily  attributable to depreciation expense ($122
and  $397 for the  three  and  nine  month  periods,  respectively)  related  to
additions to real estate assets over the past twelve months, partially offset by
a reduction in  depreciation  expense ($41 and $133 for the three and nine month
periods,  respectively)  associated  with  certain  properties  or  improvements
becoming fully depreciated in the current and prior year.  Depreciation  expense
on the Company's properties for the full year of 2007 should be higher than that
reported in 2006 due to the May 2006 purchase of a commercial property and other
expenditures  for  capital  improvements  incurred  during the current and prior
year.

Other  operating  expenses  associated  with the  management of real  properties
decreased $234 or 15.9% for the current quarter ended September 30, 2007 and $93
or 2.2% for the nine  months  ended  September  30,  2007,  compared to the same
periods  in 2006.  The  decrease  for the  quarter  was  primarily  related to a
decrease in property  maintenance  expenses ($109),  professional fees ($60) and
real  estate tax  expense  ($52).  The  decrease  for the nine month  period was
primarily related to a decrease in professional fees ($134).

    HOTEL OPERATIONS

Hotel revenues  increased  $2,449 or 100.5% to $4,886 for the three months ended
September  30,  2007 and $3,363 or 50.5% to $10,020  for the nine  months  ended
September  30,  2007,  compared to the same  periods of 2006,  primarily  as the
result of additional hotel revenues  received from the May 2007 acquisition of a
hotel located in Utica, New York (the "Utica Hotel"). In addition, revenues from
the  Company's  Connecticut  and Georgia  hotels  increased  in the 2007 periods
primarily due to recent renovations and improvements to these properties.

Mortgage  interest  expense  for the  current  quarter  and  nine  months  ended
September 30, 2007 increased,  compared to the same periods of 2006, as a result
of the mortgage  assumed with the  acquisition of the Utica Hotel.  In addition,
during August 2007,  the Company  obtained an  additional  mortgage on the Utica
Hotel in the amount of $12,000. This mortgage bears interest at 6.18% per annum,
is payable monthly based on a 25-year amortization and matures in August 2017.

Depreciation  expense  associated with the Company's hotel operations  increased
$157 for the quarter ended September 30, 2007 and $312 for the nine months ended
September 30, 2007,  compared to the  corresponding  periods in 2006,  primarily
attributable  to  depreciation  expense  related to the Utica Hotel  acquired in
2007. In addition,  increased  depreciation expense results from renovations and
improvements to the Company's two other hotels  completed during the second half
of 2006.

Other  operating  expenses  related to the  management of the  Company's  hotels
increased  $1,346 to $3,194  for the third  quarter of 2007 and $1,807 to $7,160
for the nine months  ended  September  30, 2007,  compared to the  corresponding
periods of 2006,  primarily due to additional  operating expenses related to the
acquisition of the Utica Hotel. In addition,  other operating expenses increased
at the Company's two other hotels during these periods  primarily as a result of
higher revenues, as noted above.

Future hotel revenues and expenses will vary based on demand and desirability of
these  properties  compared to others in their  immediate  proximity  and may be
influenced by local and other  economic  conditions,  including the room rate of
the hotels.


                                       15


    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:

                                              Three Months Ended     Nine Months Ended
                                                 September 30,         September 30,
                                                2007      2006        2007      2006
                                              -------   -------     -------   -------
Net sales                                     $ 9,332   $ 9,285     $28,919   $28,225
Cost of sales                                   7,241     6,839      21,996    21,082
Selling, general and administrative expenses    1,698     1,656       5,138     5,178
                                              -------   -------     -------   -------

Operating income                              $   393   $   790     $ 1,785   $ 1,965
                                              =======   =======     =======   =======


Net sales of the  engineered  products  segment  increased  less than 1% for the
quarter ended  September 30, 2007. For the nine months ended September 30, 2007,
net sales of this segment  increased $694 or 2.5%,  compared with the results of
the corresponding  2006 period,  primarily the result of increased demand in the
Company's  transformer and engineered  product lines.  Sales of this segment are
directly influenced by general economic conditions,  worldwide automotive demand
and  industrial  capital  spending  and could  also be  affected  by  changes in
technology, competitive forces or challenges to its intellectual property.

Cost of sales as a percentage of sales  increased 3.9% and 1.4% in the three and
nine  months  ended   September   30,  2007,   respectively,   compared  to  the
corresponding  periods in 2006,  primarily related to an increase in the cost of
raw materials, primarily copper and steel components, which, where possible, has
been passed along to customers. To offset the effect of material cost increases,
the Company has concentrated its efforts to improve  manufacturing  efficiencies
by managing overhead and labor costs.

Selling,  general and administrative expenses of the engineered products segment
increased  $42 or 2.5% for the quarter  ended  September  30, 2007 and decreased
less than 1% for the nine  months  then  ended,  compared  to the  corresponding
periods of 2006.  The increase for the quarter was  primarily due to an increase
in  professional  fees  ($66),  partially  offset by a decrease  in payroll  and
payroll related expenses ($24). On a year-to-date  basis, the major fluctuations
were  primarily a decrease in payroll and payroll  related  expenses  ($279) and
increases in professional fees ($140) and European sales office expenses ($66).

    GENERAL AND ADMINISTRATIVE EXPENSES

General  and  administrative  expenses  not  associated  with the  manufacturing
operations  decreased $32 or 4.2% for the three months ended September 30, 2007.
For the nine  months  ended  September  30,  2007,  general  and  administrative
expenses not associated with the  manufacturing  operations  decreased $1,119 or
33.4%,  compared to such  expenses  incurred  for the  comparable  2006  period,
primarily related to compensation expense associated with unvested stock options
($807)  recorded  during 2006 in  connection  with the adoption of SFAS No. 123R
(see  Note 4 of  Notes  to  Condensed  Consolidated  Financial  Statements).  No
compensation costs relating to share-based payments were recognized in 2007.


                                       16


    OTHER INCOME AND EXPENSE, NET

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

                                                              Three Months Ended   Nine Months Ended
                                                                 September 30,       September 30,
                                                              2007       2006        2007      2006
                                                            -------    -------     -------    -------
Net gain from condemnation award                            $  --      $  --       $ 5,665    $  --
Net (loss) gain on sale ofavailable-for-sale securities        (970)       205        (316)      (577)
Net realized and unrealized (loss) gain on derivative
   instruments                                                  (14)      (131)        149        (69)
Litigation Settlement                                          --         --          --          422
Equity in losses of hotel venture                              --         --          --          (35)
Other, net                                                      (10)       (12)         (8)        (2)
                                                            -------    -------     -------    -------
                                                            $  (994)   $    62     $ 5,490    $  (261)
                                                            =======    =======     =======    =======


Included in other income and expense, net during the nine months ended September
30, 2007 is $5,665 in net gain from a  condemnation  award related to a property
taken by the City of New York in 2001.

    INCOME TAXES

The effective tax rate from continuing and discontinued operations for the three
and nine months ended September 30, 2007 was 35.9% and 36.3%, respectively.  For
the three and nine months ended  September 30, 2006,  the effective tax rate was
favorably  impacted by the reversal of  approximately  $17,000 in long-term  and
deferred  income tax  liabilities  related to certain  tax matters for which the
statue of limitations  has expired.  Excluding this reversal,  the effective tax
rate from continuing and  discontinued  operations for the three and nine months
ended September 30, 2006 was 33.5% and 35.1%, respectively.

    DISCONTINUED OPERATIONS

Losses from  operations  on properties  sold and  accounted for as  discontinued
operations was $6 and $11, on a net of tax basis,  for the three and nine months
ended  September 30, 2007,  respectively,  versus $1 and $13 for the  comparable
2006 periods.  Prior year amounts have been  reclassified  to reflect results of
operations  of real  properties  sold  during  2007  and  2006  as  discontinued
operations.  As of September  30, 2007,  the Company did not consider any of its
properties to be held for sale.  Net gains on the disposal of real estate assets
accounted for as discontinued  operations  were $8,950 and $10,002,  on a net of
tax basis, for the three and nine months ended September 30, 2007, respectively,
and $465 for nine  months  ended  September  30,  2006  (see  Note 7 of Notes to
Condensed Consolidated Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating  activities was $10,822 for the nine months ended
September  30,  2007,  a decline  of $978 from  that  provided  in the same 2006
period.  Changes in the  components of cash provided from  operating  activities
vary widely in each year.  Operating income before  depreciation was $12,879 for
the first nine months of 2007 versus $10,093 in the comparable  2006 period.  In
addition,  interest  and dividend  income was $747 higher in the current  period
than that of 2006.  The  provision for income  taxes,  before the  non-recurring
adjustment in 2006,  offset these  increases  ($2,719).  A  contribution  to the
Company's  defined  benefit  pension  plan in 2007  ($700)  and  changes  in the
components of working capital account for the remaining differences.

Net cash provided by investing  activities was $34,526 for the nine months ended
September  30, 2007 versus net cash used in investing  activities of $25,212 for
the nine months ended September 30, 2006. This change primarily results from the
timing of the purchase or sale of available-for-sale  securities ($57,989),  net
proceeds received from a condemnation award ($5,665) and the sale of real estate
assets  ($1,154),  net of proceeds  which are held in escrow by a third-party in
connection  with a Section  1031  tax-deferred  exchange.  These  increases  are
partially  offset by an increase in  acquisition  of/  additions  to real estate
assets ($4,653), which includes the purchase of the Utica Hotel in May 2007, net
of the related mortgage assumed.


                                       17


During May 2007, the Company purchased the Utica Hotel for approximately $16,000
plus closing  costs,  including  the  assumption  of an  underlying  mortgage of
$2,315, of which $872 of the purchase price was allocated to furniture, fixtures
and equipment and is included in property,  plant and equipment in the Condensed
Consolidated  Balance  Sheet.  The mortgage  assumed bears  interest at 7.5% per
annum,  with  monthly  installments  of interest  and  principal  of $30 through
December  2015.  The total cost of the  acquisition,  less the assumption of the
mortgage, is reflected in acquisition  of/additions to real estate assets in the
Condensed  Consolidated  Statements of Cash Flows.  In August 2007,  the Company
obtained an additional mortgage on this property in the amount of $12,000.  This
mortgage  bears  interest  at 6.18% per  annum,  is payable  monthly  based on a
25-year amortization and matures in August 2017.

Net cash provided by financing  activities  was $4,801 for the nine months ended
September 30, 2007, compared to net cash used in financing activities of $12,716
for the same nine months of 2006. This change in financing  activities primarily
results from  proceeds  received  from  additional  financing of the Utica Hotel
($12,000) and from the exercise of stock options ($4,183) and the additional tax
benefits  related to the exercise of stock options  ($3,248)  during the current
and prior years,  partially offset by an increase in the purchase and retirement
of common  stock  during  the first nine  months of 2007  ($2,055)  versus  that
purchased during the same period of 2006.

Previous  purchases of the  Company's  common  stock have reduced the  Company's
additional  paid-in capital to zero and have also reduced  retained  earnings by
amounts in excess of par value. Any future purchases in excess of par value will
also reduce retained earnings.  Repurchases of the Company's common stock may 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.
Future proceeds from the issuance of common stock in excess of par value will be
credited  to  retained  earnings  until  such  time  that  previously   recorded
reductions have been recovered.

At September 30, 2007,  the Company's  cash and  marketable  securities  totaled
$150.7  million and  working  capital  was $166.2  million  compared to cash and
marketable securities of $139.6 million and working capital of $140.2 million at
December 31, 2006. Included in notes and accounts  receivable,  net at September
30, 2007 is $15,000 in proceeds from the sale of one of the Company's properties
which is being  held in escrow  by a  third-party,  on  behalf  of the  Company,
potentially to acquire a property in connection with a Section 1031 tax-deferred
exchange.  If completed,  the acquisition would defer the payment of some or all
of the income taxes related to the gain on the property  sold. If an acquisition
does not occur within six months of the sale, the cash proceeds will be remitted
to the  Company.  Management  continues  to believe  that while there has been a
decline in the values of certain  real  estate  properties  in some areas of the
United States the real estate market  continues to be overvalued and accordingly
acquisitions  have  been  limited  to  those  select  properties  that  meet the
Company's  stringent  financial  requirements.   Management  believes  that  the
available  working  capital  puts the Company in an  opportune  position to fund
acquisitions  and  grow  its  portfolio,   if  and  when  attractive   long-term
opportunities become available.

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. These investments are recorded initially at cost and
subsequently  adjusted  for  equity  in  earnings  and  cash  contributions  and
distributions.  The debt of the joint venture in which the Company currently has
an ownership interest is a non-recourse  obligation and is collateralized by the
entity's real  property.  The Company  believes that the value of the underlying
property and its operating cash flows are sufficient to satisfy its obligations.
The  Company  is not  obligated  for the debts of the joint  venture,  but could
decide to satisfy them in order to protect its  investment.  In such event,  the
Company's  capital  resources and financial  condition  would be reduced and, in
certain  instances,  the  carrying  value of the  Company's  investment  and its
results of operations would be negatively impacted.

The cash  needs of the  Company  have been  satisfied  from funds  generated  by
current operations.  It is expected that future operational cash needs will also
be  satisfied  from  existing  cash  balances,  marketable  securities,  ongoing
operations or borrowings.  The primary source of capital to fund additional real
estate  acquisitions and to make additional  high-yield  mortgage loans may come
from  existing  funds,  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


                                       18


understandings  with  respect to the  acquisition  of real  properties  or other
companies in exchange for its equity or debt 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.  Changes in U.S.
interest  rates  affect  the  interest  earned  on the  Company's  cash and cash
equivalent balances and other interest bearing  investments.  Given the level of
cash and other interest bearing investments held by the Company, changes in U.S.
interest rates could impact the Company's earnings.

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  Condensed  Consolidated
Balance Sheets.

The Company  manufactures its products in the United States and Mexico and sells
its products in those markets as well as in Europe, South America and Asia. As a
result,  the  Company's  operating  results could be affected by factors such as
changes in foreign  currency  exchange rates or weak economic  conditions in the
foreign  markets in which the  Company  distributes  its  products.  Most of the
Company's  sales are  denominated  in U.S.  dollars.  Net sales of the Company's
engineered  products  segment  denominated  in Euros  were 7.3% and 8.5% for the
three and nine months ended  September  30, 2007 and 5.6% and 5.8% for the three
and nine months ended  September 30, 2006,  respectively.  As such, a portion of
the Company's  receivables  are exposed to  fluctuations  with the U.S.  dollar.
However,  the Company  does not believe  this risk to be material to its overall
financial  position.  Since the Euro has historically  been relatively stable in
relation to the U.S. dollar,  the Company's results have not been  significantly
impacted  by  foreign  exchange  gains or losses in the past.  Accordingly,  the
Company has not entered into forward exchange  contracts to hedge this exposure.
If such  exposure  increased  in the  future,  the Company  may  reexamine  this
practice to minimize the associated risks.

The Company has  undertaken  the  completion  of  environmental  studies  and/or
remedial action at Metex' two New Jersey facilities and has recorded a liability
for the estimated investigation, remediation and administrative costs associated
therewith.  See Note 14 of Notes to Condensed  Consolidated Financial Statements
for further discussion of this matter.

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 liabilities have 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
Condensed  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.

CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES

The  preparation  of  consolidated   financial  statements  in  accordance  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.

Refer to the  Company's  2006 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. Also see Note 9 of
Notes to  Condensed  Consolidated  Financial  Statements  included  herein for a
discussion  on the adoption of FIN 48 effective  January 1, 2007.  There were no
other material changes to the Company's critical  accounting policies during the
nine months ended September 30, 2007.


                                       19


RECENT ACCOUNTING PRONOUNCEMENTS

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


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

See  Note 8 of  Notes  to  Condensed  Consolidated  Financial  Statements  for a
discussion of derivative  financial activity since December 31, 2006. There have
been no other material changes in quantitative and qualitative market risks from
those  disclosed in Item 7A of the Company's  Annual Report on Form 10-K for the
year ended December 31, 2006, which is incorporated herein by reference.


ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by 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-15(e) and
15d-15(e).  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 over financial  reporting or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.


                           PART II - OTHER INFORMATION


ITEM 1A. RISK FACTORS

The significant  factors known to the Company that could  materially  effect the
Company's  business,  financial  position or results of operations are set forth
under  Item 1A of the  Company's  Annual  Report on Form 10-K for the year ended
December 31, 2006, which are incorporated herein by reference.

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  2006 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.


                                       20


ITEM 6.  EXHIBITS

31.1  Certification of the Chief Executive  Officer pursuant to Rule 13a-15(e)
      and 15d-15(e).
31.2  Certification   of  the  Chief  Financial   Officer   pursuant  to  Rule
      13a-15(e) and 15d-15(e).
32.1  Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2  Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.


                                   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.

Date:  November 8, 2007

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