`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 JUNE 30, 2005


                         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.  [X] Yes   [ ] No

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).  [ ] Yes   [X] No

The registrant had 8,737,242 shares of common stock, $.10 par value, outstanding
as of August 4, 2005.



                      UNITED CAPITAL CORP. AND SUBSIDIARIES

                                      INDEX

                                                                            PAGE
                                                                            ----
                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

           Consolidated Balance Sheets as
           of June 30, 2005 (Unaudited) and December 31, 2004..................3

           Consolidated Statements of Income for the Three and
           Six Months Ended June 30, 2005 and 2004 (Unaudited).................4

           Consolidated Statements of Cash Flows for the
           Six Months Ended June 30, 2005 and 2004 (Unaudited)...............5-6

           Notes to Consolidated Financial Statements (Unaudited)...........7-15

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................15-20

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

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

                           PART II - OTHER INFORMATION

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS........21

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................21

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


SIGNATURES ...................................................................22

                                       2


                                   UNITED CAPITAL CORP. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS
                                              (In thousands)

                                                                     June 30,             December 31
                                                                       2005                  2004
                                                                 ---------------        ---------------
                                                                   (Unaudited)
ASSETS

Current assets:
   Cash and cash equivalents                                        $ 83,618               $ 84,783
   Marketable securities                                              46,336                 54,456
   Notes and accounts receivable, net                                  7,349                  7,350
   Inventories                                                         4,614                  4,132
   Prepaid expenses and other current assets                           1,190                    892
   Deferred income taxes                                                 902                    354
                                                                    --------               --------

      TOTAL CURRENT ASSETS                                           144,009                151,967
                                                                    --------               --------

Property, plant and equipment, net                                     3,115                  2,337
Real property held for rental, net                                    30,881                 30,576
Investments in joint ventures                                         19,085                 19,398
Noncurrent notes receivable                                            4,605                  4,462
Other assets                                                           1,979                  2,051
Noncurrent assets of discontinued operations                           1,883                  1,933
                                                                    --------               --------

      TOTAL ASSETS                                                  $205,557               $212,724
                                                                    ========               ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt                             $  1,564               $  2,368
   Accounts payable and accrued liabilities                            9,221                 10,137
   Income taxes payable                                                6,150                  7,014
   Current liabilities of discontinued operations                         35                     40
                                                                    --------               --------

      TOTAL CURRENT LIABILITIES                                       16,970                 19,559
                                                                    --------               --------

Long-term debt                                                         4,428                  4,929
Other long-term liabilities                                           30,228                 30,316
Deferred income taxes                                                  3,042                  2,739
Noncurrent liabilities of discontinued operations                      1,098                  1,112
                                                                    --------               --------

      TOTAL LIABILITIES                                               55,766                 58,655
                                                                    --------               --------

Commitments and contingencies

Stockholders' equity:
   Common stock $.10 par value, authorized 17,500 shares;
      issued and outstanding 8,737 and 9,130 shares, respectively        874                    913
   Retained earnings                                                 148,785                152,266
   Accumulated other comprehensive income, net of tax                    132                    890
                                                                    --------               --------

      TOTAL STOCKHOLDERS' EQUITY                                     149,791                154,069
                                                                    --------               --------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $205,557               $212,724
                                                                    ========               ========


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

                                                     3


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

                                                                 Three Months Ended                Six Months Ended
                                                                      June 30,                         June 30,
                                                              --------------------------      --------------------------
                                                                 2005            2004            2005            2004
                                                              ----------      ----------      ----------      ----------
REVENUES:
    Net sales                                                  $ 10,010        $ 10,178        $ 20,103        $ 19,468
    Rental revenues from real estate operations                   5,882           5,265          11,036          10,501
                                                               --------        --------        --------        --------

          Total revenues                                         15,892          15,443          31,139          29,969
                                                               --------        --------        --------        --------

COSTS AND EXPENSES:
    Cost of sales                                                 7,329           7,103          14,783          13,784
    Real estate operations:
       Mortgage interest expense                                     98             149             209             318
       Depreciation expense                                         501             590             967           1,180
       Other operating expenses                                   2,119           1,777           4,190           3,523
    General and administrative expenses                           1,717           1,429           3,371           2,948
    Selling expenses                                                977             945           1,949           1,961
                                                               --------        --------        --------        --------

          Total costs and expenses                               12,741          11,993          25,469          23,714
                                                               --------        --------        --------        --------

          Operating income                                        3,151           3,450           5,670           6,255
                                                               --------        --------        --------        --------

OTHER INCOME (EXPENSE):
    Interest and dividend income                                  1,005             398           2,149             784
    Interest expense                                               (110)           (109)           (243)           (229)
    Other income and expense, net                                   641             419           1,430           2,054
                                                               --------        --------        --------        --------

          Total other income                                      1,536             708           3,336           2,609
                                                               --------        --------        --------        --------

Income from continuing operations before income taxes             4,687           4,158           9,006           8,864

Provision for income taxes                                        1,642             703           3,143           1,954
                                                               --------        --------        --------        --------

INCOME FROM CONTINUING OPERATIONS                                 3,045           3,455           5,863           6,910
                                                               --------        --------        --------        --------

DISCONTINUED OPERATIONS:
    Income from discontinued operations, net of tax
       provision of $10, $49, $21 and $100, respectively             14              78              31             151
    Net gain on disposal of discontinued operations, net
       of provision of $148, $4,212, $168 and $4,156,
       respectively                                                 221           6,316             251           6,233
                                                               --------        --------        --------        --------

INCOME FROM DISCONTINUED OPERATIONS                                 235           6,394             282           6,384
                                                               --------        --------        --------        --------

NET INCOME                                                     $  3,280        $  9,849        $  6,145        $ 13,294
                                                               ========        ========        ========        ========

Basic earnings per share:
    Income from continuing operations                          $    .34        $    .38        $    .65        $    .76
    Income from discontinued operations                             .02             .70             .03             .70
                                                               --------        --------        --------        --------
    NET INCOME PER SHARE                                       $    .36        $   1.08        $    .68        $   1.46
                                                               ========        ========        ========        ========

DILUTED EARNINGS PER SHARE:
    Income from continuing operations                          $    .28        $    .32        $    .53        $    .64
    Income from discontinued operations                             .02             .60             .03             .59
                                                               --------        --------        --------        --------
    NET INCOME PER SHARE ASSUMING DILUTION                     $    .30        $    .92        $    .56        $   1.23
                                                               ========        ========        ========        ========

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

                                                            4


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

                                                                                            Six Months Ended
                                                                                                June 30,
                                                                                 --------------------------------------
                                                                                      2005                    2004
                                                                                 ---------------        ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                     $   6,145               $  13,294
   Adjustments to reconcile net income
      to net cash provided by operating activities:
         Depreciation and amortization                                                1,412                   1,676
         Net gain on sale of available-for-sale securities                             (721)                   (845)
         Gain on sale of other assets                                                    --                    (363)
         Equity in earnings of joint ventures                                           (76)                   (223)
         Net gain on disposal of discontinued operations, net of tax                   (251)                 (6,233)
         Net realized and unrealized (gain) loss on derivative instruments             (664)                      7
         Tax benefit from employee stock options                                         80                      --
         Changes in assets and liabilities:
            Notes and accounts receivable, net                                         (217)                   (983)
            Inventories                                                                (482)                    620
            Prepaid expenses and other current assets                                  (298)                      8
            Deferred income taxes                                                       163                    (925)
            Other assets                                                                 58                     167
            Accounts payable and accrued liabilities                                   (334)                    727
            Income taxes payable                                                     (1,032)                 (1,272)
            Other long-term liabilities                                                 (88)                   (296)
            Discontinued operations - noncash charges and working
               capital changes                                                           (7)                   (909)
                                                                                  ---------               ---------

                     NET CASH PROVIDED BY OPERATING ACTIVITIES                        3,688                   4,450
                                                                                  ---------               ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of available-for-sale securities                                         (4,755)                (14,042)
   Proceeds from sale of available-for-sale securities                               12,430                  11,186
   Proceeds from sale of other assets                                                    --                   1,363
   Proceeds from sale of real estate assets                                             457                  11,889
   Purchase of derivative instruments                                                    --                     (13)
   Proceeds from sale of derivative instruments                                          82                      12
   Purchase/issuance of notes receivable                                             (2,810)                 (1,000)
   Acquisition of property, plant and equipment                                      (1,208)                   (108)
   Principal payments on notes receivable                                             2,885                      38
   Acquisition of/additions to real estate assets                                    (1,273)                   (793)
   Distributions from joint ventures                                                    389                     389
                                                                                  ---------               ---------

                     NET CASH PROVIDED BY INVESTING ACTIVITIES                        6,197                   8,921
                                                                                  ---------               ---------


                                                           5


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

                                                                                            Six Months Ended
                                                                                                June 30,
                                                                                 --------------------------------------
                                                                                      2005                    2004
                                                                                 ---------------        ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on mortgage obligations                                        (1,305)                 (1,627)
   Purchase and retirement of common stock                                           (9,951)                     --
   Proceeds from exercise of stock options                                              206                     145
                                                                                  ---------               ---------

                     NET CASH USED IN FINANCING ACTIVITIES                          (11,050)                 (1,482)
                                                                                  ---------               ---------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                 (1,165)                 11,889

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                       84,783                  59,210
                                                                                  ---------               ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $  83,618               $  71,099
                                                                                  =========               =========





SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

   Cash paid during the period for:

            Interest                                                              $     414               $     542
                                                                                  =========               =========

            Taxes                                                                 $   3,952               $   4,224
                                                                                  =========               =========





NON-CASH INVESTING AND FINANCING ACTIVITIES:

   Issuance of note receivable in connection with sale of real property           $      --               $     800
                                                                                  =========               =========



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


                                                           6


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

1.   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 Company's  Annual Report on Form 10-K filed with the  Securities
and Exchange Commission ("SEC") for the year ended December 31, 2004.

In the opinion of management,  all  adjustments,  consisting  only of normal and
recurring adjustments,  necessary for a fair presentation 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.

2.   STOCKHOLDERS' EQUITY

Previous  purchases of the  Company's  common  stock have reduced the  Company's
additional  paid-in-capital  to zero and,  accordingly,  any future purchases in
excess of par value will also reduce  retained  earnings.  During the six months
ended  June 30,  2005,  the  Company  purchased  and  retired  425 shares of the
Company's common stock,  representing  almost 5% of the outstanding  shares, for
$9,951  which  resulted in a  comparable  reduction  to retained  earnings.  The
Company did not purchase any shares of the Company's common stock during the six
months ended June 30, 2004.  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 six months ended June 30, 2005 and
2004, the Company received proceeds of $206 and $145 from the exercise of 32 and
22 stock options, respectively.

3.   EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share from continuing operations:
                                                            Three Months Ended               Six Months Ended
                                                                 June 30,                        June 30,
                                                        --------------------------      --------------------------
                                                           2005            2004            2005            2004
                                                        ----------      ----------      ----------      ----------
Numerator:
    Income from continuing operations                     $ 3,045         $ 3,455         $ 5,863         $ 6,910
                                                          =======         =======         =======         =======

Denominator:
    Basic - weighted-average shares outstanding             9,020           9,112           9,081           9,105
    Dilutive effect of employee stock options               1,870           1,546           1,869           1,702
                                                          -------         -------         -------         -------
    Diluted - weighted-average shares outstanding          10,890          10,658          10,950          10,807
                                                          =======         =======         =======         =======

Basic earnings per share - continuing operations          $   .34         $   .38         $   .65         $   .76
                                                          =======         =======         =======         =======
Diluted earnings per share - continuing operations        $   .28         $   .32         $   .53         $   .64
                                                          =======         =======         =======         =======

Employee stock options to purchase 756 shares of the Company's  common stock for
each of the three and six months  ended June 30,  2004 were not  included in the
computation of diluted  earnings per share in the respective  periods  presented
because their effect would be anti-dilutive.

                                       7


4.   STOCK-BASED COMPENSATION

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.  The Company has issued  stock  options
with an exercise price equal to the market value of the underlying  stock on the
date of grant.  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," ("SFAS No. 123") to stock-based employee compensation.

                                                            Three Months Ended               Six Months Ended
                                                                 June 30,                        June 30,
                                                        --------------------------      --------------------------
                                                           2005            2004            2005            2004
                                                        ----------      ----------      ----------      ----------
Net income, as reported                                  $  3,280        $  9,849        $  6,145        $ 13,294
Deduct: Total stock-based employee
    compensation expense determined under
    fair value based method for all awards,
    net of related tax effects                               (449)           (676)           (946)         (1,402)
                                                         --------        --------        --------        --------
Pro forma net income                                     $  2,831        $  9,173        $  5,199        $ 11,892
                                                         ========        ========        ========        ========

Earnings per share:
    Basic - as reported                                  $    .36         $  1.08         $   .68         $  1.46
                                                         ========        ========        ========        ========
    Basic - pro forma                                    $    .31         $  1.01         $   .57         $  1.31
                                                         ========        ========        ========        ========

    Diluted - as reported                                $    .30         $   .92         $   .56         $  1.23
                                                         ========        ========        ========        ========
    Diluted - pro forma                                  $    .26         $   .88         $   .48         $  1.13
                                                         ========        ========        ========        ========

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

The  Black-Scholes  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.

As discussed  in Note 15,  "Recent  Accounting  Pronouncements,"  the  Financial
Accounting  Standards  Board  ("FASB")  issued  SFAS  No.  123  (revised  2004),
"Share-Based  Payment" in December  2004.  The  provisions of this statement are
effective as of the  beginning of the first annual period that begins after June
15, 2005, as amended by the SEC, which would be January 1, 2006 for the Company.

                                       8


5.   MARKETABLE SECURITIES

The cost, gross unrealized gains,  gross unrealized losses and fair market value
of marketable securities by type are as follows:

                                                       Gross                 Gross                Fair
                                                    Unrealized            Unrealized              Market
                                  Cost                 Gains                Losses                Value
                             ---------------      ---------------       ---------------       ---------------
June 30, 2005:
--------------
Available-for-sale:
    Equity securities           $ 46,127             $  2,684              $ (2,480)             $ 46,331
    Bonds                              5                   --                    --                     5
                                --------             --------              --------              --------
                                $ 46,132             $  2,684              $ (2,480)             $ 46,336
                                ========             ========              ========              ========

December 31, 2004:
------------------
Available-for-sale:
    Equity securities           $ 48,081             $  4,371              $ (3,001)             $ 49,451
    Bonds                          5,005                   --                    --                 5,005
                                --------             --------              --------              --------
                                $ 53,086             $  4,371              $ (3,001)             $ 54,456
                                ========             ========              ========              ========

Proceeds from the sale of available-for-sale  securities and the resulting gross
realized gains included in the determination of net income are as follows:

                                                          Six Months Ended
                                                              June 30,
                                                     ---------------------------
                                                        2005            2004
                                                    ------------    ------------
           Available-for-sale securities:
               Proceeds                               $ 12,430        $ 11,186
               Gross realized gains                        721             845

6.   INVENTORIES

The components of inventories are as follows:
                                                      June 30,      December 31,
                                                        2005            2004
                                                    ------------    ------------
               Raw materials                          $  2,127        $  1,985
               Work in process                             440             361
               Finished goods                            2,047           1,786
                                                    ----------      ----------
                                                      $  4,614        $  4,132
                                                    ==========      ==========

7.   REAL ESTATE

     PROPERTY SALES

During the six months ended June 30, 2005,  the Company  divested  itself of two
commercial  properties  which had a net book  value of $38 from its real  estate
investment  and   management   segment.   The  aggregate   proceeds  from  these
transactions were $457 resulting in a gain of $251, on a net of tax basis.

During the six months ended June 30, 2004, the Company  divested itself of three
commercial  properties which had a net book value of $1,970 from its real estate
investment and  management  segment.  The cash proceeds from these  transactions
were $893. In addition,  the Company received an $800 purchase money mortgage in
connection  with  the  sale of one of these  properties.  Two of the  commercial
properties were contributed to charitable  organizations in the first quarter of
2004 for a nominal  amount.  In  addition,  the Company sold one of its shopping
centers  during the  second  quarter of 2004 which had a net book value of $328.
Net proceeds from the sale were $10,994, resulting in a gain of $6,400, on a net
of tax basis.

                                       9


The result of operations for these properties for the three and six months ended
June 30, 2005 and 2004 have been reclassified to discontinued  operations,  on a
net of tax basis. In addition,  the assets and liabilities associated with these
properties have been reclassified to discontinued operations in the accompanying
Consolidated Balance Sheet at December 31, 2004. 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 is as follows:

                                                            Three Months Ended               Six Months Ended
                                                                 June 30,                        June 30,
                                                        --------------------------      --------------------------
                                                           2005            2004            2005            2004
                                                        ----------      ----------      ----------      ----------
Rental revenues from real estate
   operations                                            $     --        $    329        $     12        $    636
Mortgage interest expense                                      --              --              --             (18)
Depreciation expense                                           --             (23)             --             (46)
Other operating expenses                                      (12)           (251)            (12)           (462)
                                                         --------        --------        --------        --------

(Loss) income from operations                            $    (12)       $     55        $     --        $    110
                                                         ========        ========        ========        ========

     PROPERTIES HELD FOR SALE

As of June 30, 2005, the Company  considered two commercial  properties from its
real estate and investment  management  segment to be held for sale and reported
as discontinued  operations.  The results of operations of these properties have
been  reclassified  to  discontinued  operations,  on a net of tax basis, in the
Consolidated  Statements  of Income for the three and six months  ended June 30,
2005 and 2004. In addition,  the assets and  liabilities  associated  with these
properties,   primarily   consisting  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
accompanying Consolidated Balance Sheets at June 30, 2005 and December 31, 2004.

Summarized financial  information for properties held for sale and accounted for
as discontinued operations is as follows:
                                                 Three Months Ended               Six Months Ended
                                                      June 30,                        June 30,
                                             --------------------------      --------------------------
                                                2005            2004            2005            2004
                                             ----------      ----------      ----------      ----------
Rental revenues from real estate
   operations                                 $     80        $    114        $    156        $    224
Mortgage interest expense                          (22)            (22)            (45)            (46)
Depreciation expense                                (5)            (17)            (11)            (34)
Other operating expenses                           (17)             (3)            (48)             (3)
                                              --------        --------        --------        --------

Income from operations                        $     36        $     72        $     52        $    141
                                              ========        ========        ========        ========

8.   INVESTMENTS IN JOINT VENTURES

Investments in joint ventures consist of the following:

                                                      June 30,      December 31,
                                                        2005            2004
                                                    ------------    ------------

            Investments in hotel ventures             $ 11,668        $ 11,771
            Lease financing                              7,417           7,627
                                                      --------        --------

                                                      $ 19,085        $ 19,398
                                                      ========        ========


                                       10



     INVESTMENTS IN HOTEL VENTURES

The Company has a 40% interest in two joint  ventures which each own and operate
a hotel.  The hotels are located in New Jersey (the "Hotel Venture") and Quebec,
Canada (the "Quebec  Venture").  The New Jersey hotel secures a $25,000 mortgage
loan (the "Mortgage") with a bank. In connection with the Mortgage,  the Company
and another joint venture partner entered into a direct guaranty  agreement with
the bank whereby they, 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.  Accordingly,  the fair value of the guarantee was
determined to be insignificant and, therefore, no liability has been recorded.

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  (losses) of these  hotel  ventures  was $252 and
($103) for the three and six months ended June 30, 2005 and $151 and $10 for the
three and six months ended June 30, 2004, respectively.

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.
Currency adjustments relating to results of operations are generally included in
the equity in earnings (losses) reported by the Company while the translation of
balance sheet accounts do not generally affect the Company's investment in joint
ventures.

Summarized financial  information of the Hotel Venture and Quebec Venture are as
follows:

                                                      June 30,      December 31,
                                                        2005            2004
                                                    ------------    ------------
Balance Sheets:
        Current assets                                $  4,293        $  4,073
                                                      ========        ========
        Property, plant and equipment, net            $ 59,363        $ 60,778
                                                      ========        ========
        Other non-current assets                      $    116        $    179
                                                      ========        ========
        Current liabilities                           $  3,010        $  2,807
                                                      ========        ========
        Long-term liabilities                         $ 29,049        $ 29,766
                                                      ========        ========
        Equity                                        $ 31,713        $ 32,457
                                                      ========        ========

                                     Three Months Ended               Six Months Ended
                                          June 30,                        June 30,
                                 --------------------------      --------------------------
                                    2005            2004            2005            2004
                                 ----------      ----------      ----------      ----------
Operating results:
        Revenues                  $  7,404        $  6,345        $ 12,931        $ 11,918
                                  ========        ========        ========        ========
        Operating profit          $  1,948        $  1,501        $  2,306        $  2,231
                                  ========        ========        ========        ========
        Net income (loss)         $    630        $    377        $   (257)       $     24
                                  ========        ========        ========        ========

     LEASE FINANCING

Lease  financing  consists  of a 50%  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 $89 and $179 for the  three and six
months  ended June 30, 2005 and $107 and $214 for the three and six months ended
June  30,  2004,  respectively,   and  is  included  in  rental  income  in  the
Consolidated Statements of Income.

                                       11


9.   DERIVATIVE FINANCIAL INSTRUMENTS

The Company recognizes all derivative financial instruments,  such as 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 value 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,  participate  in put
and/or call options and enter into interest rate swap agreements.

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 December 31, 2004,  the fair value of such  derivatives
was ($581)  which is  recorded as a  component  of accounts  payable and accrued
liabilities  in the  Consolidated  Balance  Sheet.  The  Company  held  no  such
derivatives  as of June 30,  2005.  These  instruments  do not qualify for hedge
accounting and therefore changes in the derivatives fair value are recognized in
income.  The Company  recognized  $664 and ($7) in net realized  and  unrealized
gains  (losses) from  derivative  instruments  for the six months ended June 30,
2005 and 2004, respectively, which are included in other income and expense, net
in the Consolidated Statements of Income.

10.  RELATED PARTY TRANSACTIONS

The  Company  has  a  50%  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% interest
in this entity (See Note 8).

The  Company's  two hotel  properties,  as well as the hotels owned by the Hotel
Venture and the Quebec  Venture,  are managed by BREP IV Hotel L.L.C.  ("BREP"),
the successor to Prime Hospitality Corp. ("Prime"). The Company's Board Chairman
and another Director were directors  and/or an executive  officer of Prime prior
to its  sale to BREP in  October  2004.  Fees  paid  for the  management  of the
Company's two hotel  properties  are based upon a percentage of revenue and were
approximately $39 for the six months ended June 30, 2004.

11.  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 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

                                       12


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 $10,000 and
$10,200 recorded in accounts payable and accrued liabilities and other long-term
liabilities at June 30, 2005 and December 31, 2004, respectively,  to cover such
matters.

The Company is subject to various other  litigation,  legal,  regulatory and tax
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.  At June 30, 2005 and December 31, 2004,  the Company
had approximately  $20,000 recorded in other long-term  liabilities  relating to
such matters. None of these matters are expected to result in a material adverse
effect  on  the  Company's   consolidated   financial  position  or  results  of
operations.

As a result of the Company's present level of liquidity,  the Company terminated
its  revolving  credit  facility in July 2005.  The Company may  establish a new
facility in the future if the Company  believes it were to become  necessary and
cost effective to do so.

12.  COMPREHENSIVE INCOME

The components of comprehensive income are as follows:
                                                                 Three Months Ended               Six Months Ended
                                                                      June 30,                        June 30,
                                                             --------------------------      --------------------------
                                                                2005            2004            2005            2004
                                                             ----------      ----------      ----------      ----------
Net income                                                    $  3,280        $  9,849        $  6,145        $ 13,294
Other comprehensive income, net of tax:
    Change in net unrealized gain (loss) on available
       for sale securities, net of tax effect of ($548),
       $881, $289 and ($746), respectively                       1,019          (1,635)           (536)          1,387

    Reclassification adjustment for net gains realized
       in net income, net of tax effect of $97, $87, $119
       and $295, respectively                                     (180)           (162)           (222)           (548)
                                                              --------        --------        --------        --------

Comprehensive income                                          $  4,119        $  8,052        $  5,387        $ 14,133
                                                              ========        ========        ========        ========


Accumulated other comprehensive  income included as a component of stockholders'
equity at June 30, 2005 and December 31, 2004 consists of net  unrealized  gains
on available-for-sale  securities of $132 and $890, which is net of $71 and $479
of taxes, respectively.

13.  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  located  throughout  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 which
are sold worldwide.

                                       13


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

                                                                 Three Months Ended               Six Months Ended
                                                                      June 30,                        June 30,
                                                             --------------------------      --------------------------
                                                                2005            2004            2005            2004
                                                             ----------      ----------      ----------      ----------
Net revenues and sales:
    Real estate investment and management                     $  5,882        $  5,265        $ 11,036        $ 10,501
    Engineered products                                         10,010          10,178          20,103          19,468
                                                              --------        --------        --------        --------
                                                              $ 15,892        $ 15,443        $ 31,139        $ 29,969
                                                              ========        ========        ========        ========
Operating income:
    Real estate investment and management                     $  3,164        $  2,749        $  5,670        $  5,480
    Engineered products                                            872           1,350           1,773           2,189
    General corporate expenses                                    (885)           (649)         (1,773)         (1,414)
                                                              --------        --------        --------        --------
                                                                 3,151           3,450           5,670           6,255

Other income, net                                                1,536             708           3,336           2,609
                                                              --------        --------        --------        --------
Income from continuing operations before
    income taxes                                              $  4,687        $  4,158        $  9,006        $  8,864
                                                              ========        ========        ========        ========

14.  PENSION PLAN

The Company  accounts for its defined  benefit  pension plan in accordance  with
Statement of Financial Accounting  Standards No. 87, "Employers'  Accounting for
Pensions"  ("SFAS No.  87"),  which  requires  that  amounts  recognized  in the
financial  statements be determined on an actuarial basis. SFAS No. 87 generally
reduces  the  volatility  of future  income  (expense)  from  changes in pension
liability  discount rates and the performance of the pension plan's assets.  The
Company uses December 31 as the measurement date for its pension plan.

Net periodic pension expense consists of the following:

                                                                 Three Months Ended               Six Months Ended
                                                                      June 30,                        June 30,
                                                             --------------------------      --------------------------
                                                                2005            2004            2005            2004
                                                             ----------      ----------      ----------      ----------
Service cost                                                  $    (74)       $    (71)       $   (148)       $   (142)
Interest cost                                                     (165)           (162)           (330)           (325)
Actual return on plan assets                                       121             (46)            (83)            119
Net amortization and deferral                                       45             249             439             228
                                                              --------        --------        --------        --------
Net periodic pension expense                                  $    (73)       $    (30)       $   (122)       $   (120)
                                                              ========        ========        ========        ========

The Company did not  contribute  to the pension plan during the six months ended
June 30, 2005 as the plan is overfunded.

15.  RECENT ACCOUNTING PRONOUNCEMENTS

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment"  ("SFAS No. 123R"),  which replaces SFAS No. 123 and supercedes APB No.
25. SFAS No. 123R requires that the  compensation  cost relating to  share-based
payment  transactions be recognized in financial statements based on alternative
fair value models.  The share-based  compensation cost will be measured based on
the fair value of the equity or liability  instruments  issued.  Per APB No. 25,
compensation  expense was recognized only to the extent the fair value of common
stock  exceeded the stock option  exercise  price at the  measurement  date.  In
addition,  the pro forma disclosures  previously permitted under SFAS No. 123 no
longer will be an alternative to financial statement recognition.  SFAS No. 123R
also   requires  the  benefits  of  tax   deductions  in  excess  of  recognized
compensation  cost to be  reported  as a  financing  cash flow rather than as an
operating  cash flow as required under current  literature.  Under the effective
date provisions  included in SFAS No. 123R, the Company would have been required
to implement  SFAS No. 123R as of the first interim or annual period that begins
after June 15, 2005. On April 14, 2005, the SEC delayed the effective date which
allows companies to implement SFAS No. 123R at the beginning of the first fiscal
year after June 15, 2005,  which would be January 1, 2006 for the  Company.  The


                                       14


Company is  evaluating  the  requirements  of SFAS No. 123R and expects that the
adoption will have a material impact on the  consolidated  results of operations
and earnings per share similar to the current  pro-forma  disclosures under SFAS
No. 123 (see Note 4).

16.  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.

17.  RECLASSIFICATIONS

Certain  prior year  amounts have been  reclassified  to present them on a basis
consistent with the current year presentations.


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS
           (In thousands, except as otherwise noted)

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 AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

Income from continuing operations before income taxes for the quarter ended June
30, 2005 was  $4,687,  an  increase  of $529 or 12.7% from the  comparable  2004
period. Total revenues were $15,892 for the three months ended June 30, 2005, an
increase of $449 or 2.9% from the  comparable  2004  period.  Net income for the
second quarter of 2005 was $3,280 or $.36 per basic share compared to net income
of $9,849 or $1.08 per basic share for the second  quarter of 2004.  The Company
recognized  interest and  dividend  income of $1,005 and $398 during the quarter
ended June 30, 2005 and 2004, respectively.  The 152.5% increase in interest and
dividend  income  was  primarily  the  result of higher  interest  rates and the
increased  investments in dividend paying  securities.  The results of the three
months ended June 30, 2004 include  $6,095 in gains on sale of real estate,  net
of tax, above those recognized in the current year period.

Total revenues for the six months ended June 30, 2005 were $31,139,  an increase
of  $1,170 or 3.9% from the  comparable  2004  period.  Income  from  continuing
operations  before  income  taxes during the first six months of 2005 was $9,006
versus $8,864 during the same six month period of 2004. Net income for the first
half of 2005 was  $6,145  or $.68 per  basic  share  compared  to net  income of
$13,294 or $1.46 for the same period of 2005.  The Company  recognized  interest
and dividend income of $2,149 and $784 during the six months ended June 30, 2005
and 2004, respectively.  The 174.1% increase in interest and dividend income was
primarily the result of higher  interest rates and the increased  investments in
dividend  paying  securities.  The results of the six months ended June 30, 2004
include  $5,982  in  gains  on sale  of real  estate,  net of tax,  above  those
recognized in the current year period.

     REAL ESTATE INVESTMENT AND MANAGEMENT

Rental  revenues from real estate  operations  increased $617 or 11.7% to $5,882
for the  quarter  ended June 30,  2005 and $535 or 5.1% to  $11,036  for the six
month period ended June 30, 2005, compared to the corresponding periods in 2004.
The  increase  for  the  quarter  is  primarily  attributable  to  increases  in
percentage   rents   ($243),   hotel   operating   revenue   ($189)  and  tenant
reimbursements  ($105).  For the six  month  period  ended  June 30,  2005,  the

                                       15


increase is primarily  attributable  to an increase in hotel  operating  revenue
($380) and tenant  reimbursements  ($135),  partially offset by the receipt of a
non-recurring  amount ($165) in 2004. The increases in hotel operating  revenues
are the result of improved  lodging demand due to a stronger U.S.  economy and a
reduction in the supply of new hotels, which is expected to continue through the
remainder of the year.

Mortgage  interest  expense  decreased $51 or 34.2% to $98 for the quarter ended
June 30, 2005 and $109 or 34.3% to $209 for the six months  ended June 30, 2005,
compared to the corresponding periods in 2004. These decreases are the result of
continuing  mortgage  amortization.  At June 30, 2005, the outstanding  mortgage
balance on the Company's real estate  properties  held for rental was reduced to
$6,000.  Mortgage  interest  expense on existing  obligations  will  continue to
decline with scheduled principle reductions.

Depreciation  expense  associated with real properties held for rental decreased
$89 or 15.1% for the  quarter  ended June 30, 2005 and $213 or 18.1% for the six
months ended June 30, 2005, compared to the corresponding periods in 2004. These
decreases are primarily  attributable to reduced depreciation expense associated
with certain  properties  or  improvements  becoming  fully  depreciated  in the
current and prior year. Unless the Company experiences significant  expenditures
for capital  improvements,  it is expected that depreciation  expense related to
real  properties  held  for  rental  will  continue  to  decline  as  additional
properties and improvements become fully depreciated.

Other  operating  expenses  associated  with the  management of real  properties
increased  $342 or 19.2% for the three  months  ended June 30,  2005 and $667 or
18.9% for the six months  ended June 30,  2005,  compared to the same periods in
2004.  The increase for the three months ended June 30, 2005 was  primarily  the
result of increased  property  maintenance  ($108) and hotel operating  expenses
($102),  which is attributable to the increased  revenues,  noted above. For the
six months ended June 30,  2005,  the increase  was  primarily  attributable  to
increased  hotel  operating  expenses  ($311),  reported real estate tax expense
($162) and  property  maintenance  ($148),  which is the result of the timing of
certain repairs and renovations on real property.

     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               Six Months Ended
                                                                June 30,                        June 30,
                                                       --------------------------      --------------------------
                                                          2005            2004            2005            2004
                                                       ----------      ----------      ----------      ----------
Net sales                                               $ 10,010        $ 10,178        $ 20,103        $ 19,468
Cost of sales                                              7,329           7,103          14,783          13,784
Selling, general and administrative expenses               1,809           1,725           3,547           3,495
                                                        --------        --------        --------        --------
Operating income                                        $    872        $  1,350        $  1,773        $  2,189
                                                        ========        ========        ========        ========

Net sales of the engineered  products segment decreased slightly for the quarter
ended June 30, 2005 to $10,010 from $10,178 for the quarter  ended June 30, 2004
primarily due to decreased  demand in the Company's  automotive  and  engineered
product lines offset by a sizeable increase in transformer  products brought out
by a general improvement in the U.S. economy and an increase in capital spending
which is expected to slow down  through the end of the year.  On a  year-to-date
basis, net sales from this segment increased $635 or 3.3% from that of the first
six months of 2004  primarily  due to a  significant  increase in demand for the
transformer  product  line  partially  offset by a  decrease  in the  automotive
product line.  The decrease in the  automotive  product line in both the quarter
and six month  periods  is  primarily  a result of a  softening  of sales in the
automotive  industry.  Although management believes that sales of its engineered
products  segment  are  directly  influenced  by  general  economic  conditions,
worldwide  automotive demand and industrial  capital  spending,  future sales of
this segment 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 3.4% and 2.7% in the three and
six months  ended June 30,  2005,  respectively,  compared to the  corresponding
periods in 2004. These increases are primarily due to rework and  nonconformance

                                       16


costs  associated  with a new product line, the shift in segment sales, as noted
above, to transformers,  which  historically have had a lower gross margin,  and
increases in the cost of raw materials, primarily steel components.

Selling,  general and administrative expenses of the engineered products segment
remained  relatively  consistent,  increasing  $84 or 4.9% for the three  months
ended  June 30,  2005 and $52 or 1.5% for the six months  ended  June 30,  2005,
compared to the corresponding periods in 2004. For the quarter, the increase was
primarily  due to  increases in  professional  fees ($139)  partially  offset by
decreases  in payroll and payroll  related  expenses  ($61).  For the six months
ended June 30, 2005,  the increase was  primarily  attributable  to increases in
professional fees ($177) and travel expenses ($43) partially offset by decreases
in payroll and payroll related expenses ($145).

     GENERAL AND ADMINISTRATIVE EXPENSES

General  and  administrative  expenses  not  associated  with the  manufacturing
operations  increased $236 or 36.4% for the quarter ended June 30, 2005 and $359
or 25.4% for the six  months  ended June 30,  2005,  compared  to such  expenses
incurred for the comparable 2004 periods.  The increases for the quarter and six
month periods are the result of increased  compensation  and benefits  ($129 and
$212, respectively) and travel expenses ($122 and $188, respectively).

     OTHER INCOME AND EXPENSE, NET

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

                                                           Three Months Ended               Six Months Ended
                                                                June 30,                        June 30,
                                                       --------------------------      --------------------------
                                                          2005            2004            2005            2004
                                                       ----------      ----------      ----------      ----------
Net gain on sale of available-for-sale securities       $    276        $    251        $    721        $    845
Net realized and unrealized gain (loss) on
   derivative instruments                                     59              (4)            664              (7)
Equity in earnings (losses) of hotel ventures                252             151            (103)             10
Gain on sale of other assets                                  --              --              --             363
Casualty insurance settlement                                 --              --              --             831
Other, net                                                    54              21             148              12
                                                        --------        --------        --------        --------
                                                        $    641        $    419        $  1,430        $  2,054
                                                        ========        ========        ========        ========

     INCOME TAXES

The effective tax rate from  continuing  operations for the three and six months
ended June 30, 2004 reflects the benefits of the donation of certain  properties
to qualified charitable organizations in 2004.

     DISCONTINUED OPERATIONS

Income from  operations on properties sold or held for sale and accounted for as
discontinued  operations  was $14 and $31, on a net of tax basis,  for the three
and six months  ended June 30, 2005,  respectively,  versus $78 and $151 for the
comparable  2004 periods.  Prior year amounts have been  reclassified to reflect
results of operations of real  properties  held for sale as of June 30, 2005, or
disposed of during 2005 and 2004, as discontinued  operations.  Net gains on the
disposal of real estate assets  accounted for as  discontinued  operations  were
$221 and $251 for the three and six months  ended  June 30,  2005 and $6,316 and
$6,233 for the three and six months ended June 30, 2004, respectively,  on a net
of tax basis.

LIQUIDITY AND CAPITAL RESOURCES

The Company  experienced a net cash inflow from operations of $3,688 for the six
months ended June 30, 2005 versus $4,450 for the six months ended June 30, 2004.
The $762 decrease in operating cash flow during these periods primarily resulted
from a  reduction  in  operating  income,  combined  with  changes  in levels of

                                       17


inventories  and accounts  payable and accrued  liabilities  which  reduced cash
flows from  operations,  partially  offset by changes  in current  and  deferred
income taxes.

Net cash provided by investing activities for the six months ended June 30, 2005
was $6,197,  primarily derived from the timing of certain transactions including
the purchase or sale of  available-for-sale  securities  ($8,214) and  principal
payments  received  on  notes  receivable   ($2,885)  partially  offset  by  the
purchase/issuance of notes receivable ($2,810) and additions of property,  plant
and equipment and real estate assets ($2,481).

Net cash provided by investing activities for the six months ended June 30, 2004
was $8,921,  which  consisted  primarily of $13,252 in proceeds from the sale of
real  estate  and other  assets,  partially  offset by the  purchase  or sale of
available-for-sale   securities   ($2,857),   the   purchase/issuance  of  notes
receivable ($1,000) and the additions to property,  plant and equipment and real
estate assets ($901).

Net cash used in financing  activities was $11.0 million and $1.5 million during
the six months ended June 30, 2005 and 2004, respectively.  The increase in cash
used for financing activities primarily results from the purchase and retirement
of $9,951 of the Company's common stock during the second quarter of 2005.

At June 30, 2005, the Company's cash and  marketable  securities  totaled $130.0
million and working  capital was $127.0 million  compared to cash and marketable
securities of $139.2  million and working  capital of $132.4 million at December
31,  2004.  Management  continues  to  believe  that the real  estate  market is
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.  As a result of the Company's present
level of liquidity, the Company terminated its revolving credit facility in July
2005.  The  Company may  establish  a new  facility in the future if the Company
believes it were to become necessary and cost effective to do so.

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 ventures in which the Company currently has
an ownership interest are non-recourse obligations and are collateralized by the
entity's  real  property.  In one  instance,  the Company and another party have
jointly and severally guaranteed not more than $4 million of the joint venture's
mortgage obligation.  The Company believes,  in each case, that the value of the
underlying  property and its operating  cash flows are sufficient to satisfy its
obligations.  Except for this  guarantee,  the Company is not  obligated for the
debts of the joint  ventures,  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 will 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
understandings  with  respect to the  acquisition  of real  properties  or other
companies in exchange for its equity securities or any 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.

                                       18


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 and the recent
increase in U.S.  interest  rates,  the Company's  earnings have been  favorably
impacted.

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  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 7.6% and 8.4% for the
three and six months ended June 30, 2005 and 9.5% and 9.2% for the three and six
months ended June 30, 2004,  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 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 were to
increase 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 cost associated
therewith. See Note 11 of Notes to Consolidated Financial Statements for further
discussion of this matter.

The Company is subject to various other  litigation,  legal  regulatory  and tax
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  Consolidated   Financial  Statements,   depending  on  the
anticipated  payment date.  At June 30, 2005 and December 31, 2004,  the Company
had approximately  $20,000 recorded in other long-term  liabilities  relating to
such matters. None of these matters are expected to result in a material adverse
effect  on  the  Company's   consolidated   financial  position  or  results  of
operations.

Previous  purchases of the  Company's  common  stock have reduced the  Company's
additional  paid-in capital to zero and,  accordingly,  any future  purchases in
excess of par value will also reduce  retained  earnings.  During the six months
ended  June 30,  2005,  the  Company  purchased  and  retired  425 shares of the
Company's common stock,  representing  almost 5% of the outstanding  shares, for
$9,951  which  resulted in a  comparable  reduction  to retained  earnings.  The
Company did not purchase any shares of the Company's common stock during the six
months ended June 30, 2004.  Repurchases  of the  Company's  common stock may be
made from  time to time in the open  market at  prevailing  market  prices or 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.

RELATED PARTY TRANSACTIONS

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

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

                                       19


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  2004 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 six
months ended June 30, 2005, 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  2004 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

See Note 9 of Notes to  Consolidated  Financial  Statements  for a discussion of
derivative  financial activity since December 31, 2004. 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, 2004, which is incorporated herein by reference.


ITEM 4.    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.

                                       20


                           PART II - OTHER INFORMATION


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

The following  table details the Company's  purchases of common stock during the
three months ended June 30, 2005:


                      Issuer Purchases of Equity Securities
                      (In thousands, except per share data)

                                                                                       Total Number
                                                                                        of Shares               Approximate
                                                                                       Purchased as            Dollar Value
                                                                                     Part of Publicly          that May Yet
                                       Total Number                                     Announced              Be Purchased
                                        of Shares            Average Price               Plans or             Under the Plans
Period                                  Purchased            Paid per Share              Programs               or Programs
--------------------------------    ------------------    --------------------    ----------------------    ----------------------
April 1, 2005 - April 30, 2005                 --                     --                     --                    $6,778
May  1, 2005 - May  31, 2005                   --                     --                     --                    $6,778
June  1, 2005 - June  30, 2005                425              $   23.42                     --                    $6,778
                                           ------              ---------
Total                                         425              $   23.42
                                           ======              =========

In June 2005, the Board of Directors authorized the repurchase and retirement of
425 shares of the  Company's  common  stock.  This  purchase was  completed in a
privately negotiated transaction and was independent of the Company's previously
announced stock repurchase plans.

As previously announced,  the Board of Directors have approved the repurchase of
the  Company's  common  stock  which  may be made  from time to time in the open
market at prevailing market prices or in privately negotiated  transactions.  At
June  30,  2005,   $6,778  remains  to  be  purchased  under  such  plans.  This
authorization is ongoing and does not have an expiration date.


ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

On June 14, 2005, the Company held its Annual Meeting of  Stockholders,  whereby
the stockholders voted to elect Directors as follows:

                                            For                    Withheld
                                     -----------------         ----------------
        A.F. Petrocelli                  7,776,252                  777,746
        Michael T. Lamoretti             7,775,252                  778,746
        Howard M. Lorber                 7,655,769                  898,229
        Robert M. Mann                   8,095,113                  458,885
        Anthony J. Miceli                7,767,479                  786,519
        Arnold S. Penner                 8,095,116                  458,882
        Michael J. Weinbaum              7,775,252                  778,746


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.

                                       21


                                   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:  August 4, 2005

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



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