`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, 2007


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

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

                               UNITED CAPITAL CORP.
                               --------------------
              (Exact name of registrant as specified in its charter)


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


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

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

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

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


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

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

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

The registrant had 8,300,543 shares of common stock, $.10 par value,  outstanding
as of August 13, 2007.



                      UNITED CAPITAL CORP. AND SUBSIDIARIES

                                      INDEX


                                                                            PAGE
                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

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

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

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

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

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS .....................14-19

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE OF
            MARKET RISK ..........................................................19

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

                           PART II - OTHER INFORMATION

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

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ..........20

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

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

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


                                        2


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


                                                           June 30,   December 31
                                                             2007         2006
                                                           --------   -----------
                                                         (Unaudited)
ASSETS

Current assets:
  Cash and cash equivalents                                 $ 76,114    $ 76,688
  Marketable securities                                       49,249      62,917
  Notes and accounts receivable, net                          18,670       8,833
  Inventories                                                  5,152       4,894
  Prepaid expenses and other current assets                    1,751       1,659
  Deferred income taxes                                          164         583
  Current assets of discontinued operations                     --            13
                                                            --------    --------

   TOTAL CURRENT ASSETS                                      151,100     155,587
                                                            --------    --------

Property, plant and equipment, net                             6,551       6,250
Real property held for rental, net                            64,030      49,183
Investment in joint venture                                    6,415       6,711
Noncurrent notes receivable                                      509       1,694
Other assets                                                   3,690       2,976
Noncurrent assets of discontinued operations                      82       1,199
                                                            --------    --------

   TOTAL ASSETS                                             $232,377    $223,600
                                                            ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term debt                      $    684    $    471
  Accounts payable and accrued liabilities                    10,775       9,598
  Income taxes payable                                         2,424       5,253
  Current liabilities of discontinued operations                --            66
                                                            --------    --------

   TOTAL CURRENT LIABILITIES                                  13,883      15,388
                                                            --------    --------

Long-term debt                                                13,539      11,669
Other long-term liabilities                                   15,373      14,277
Deferred income taxes                                          4,738       2,793
                                                            --------    --------

   TOTAL LIABILITIES                                          47,533      44,127
                                                            --------    --------

Commitments and contingencies

Stockholders' equity:
  Common stock, $.10 par value, authorized 17,500
   shares; issued and outstanding
   8,300 and 8,278 shares, respectively                          830         828
  Retained earnings                                          181,145     176,520
  Accumulated other comprehensive income, net of tax           2,869       2,125
                                                            --------    --------
   TOTAL STOCKHOLDERS' EQUITY                                184,844     179,473
                                                            --------    --------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $232,377    $223,600
                                                            ========    ========


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


                                       3


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


                                                    Three Months Ended       Six Months Ended
                                                          June 30,               June 30,
                                                   -------------------    --------------------
                                                      2007       2006        2007        2006
                                                   --------   --------    --------    --------
REVENUES:
  Net sales                                        $  9,659   $  9,643    $ 19,587    $ 18,940
  Revenues from real estate operations                8,037      7,486      14,954      14,149
                                                   --------   --------    --------    --------
     Total revenues                                  17,696     17,129      34,541      33,089
                                                   --------   --------    --------    --------

COSTS AND EXPENSES:
  Cost of sales                                       7,335      7,250      14,755      14,243
  Real estate operations:
    Mortgage interest expense                           200        200         395         402
    Depreciation expense                                741        583       1,453       1,113
    Other operating expenses                          3,582      3,033       6,771       6,169
  General and administrative expenses                 1,570      1,916       3,189       4,161
  Selling expenses                                      842        883       1,751       1,948
                                                   --------   --------    --------    --------

     Total costs and expenses                        14,270     13,865      28,314      28,036
                                                   --------   --------    --------    --------

     Operating income                                 3,426      3,264       6,227       5,053
                                                   --------   --------    --------    --------
OTHER INCOME (EXPENSE):
  Interest and dividend income                        1,780      1,441       3,588       2,781
  Other income and expense, net                         773       (487)      6,484        (323)
                                                   --------   --------    --------    --------

     Total other income                               2,553        954      10,072       2,458
                                                   --------   --------    --------    --------

  Income from continuing operations
    before income taxes                               5,979      4,218      16,299       7,511

  Provision for income taxes                          2,248      1,475       5,918       2,675
                                                   --------   --------    --------    --------

  INCOME FROM CONTINUING OPERATIONS                   3,731      2,743      10,381       4,836
                                                   --------   --------    --------    --------

DISCONTINUED OPERATIONS:
  Income (loss) from discontinued operations,
    net of tax provision (benefit) of $3, ($6),
    ($3) and ($9), respectively                           4         (7)         (5)        (12)
  Net gain on disposal of discontinued
    operations, net of tax provision of
    $69, $311, $701 and $311, respectively              105        465       1,052         465
                                                   --------   --------    --------    --------

  INCOME FROM DISCONTINUED OPERATIONS                   109        458       1,047         453
                                                   --------   --------    --------    --------


  NET INCOME                                       $  3,840   $  3,201    $ 11,428    $  5,289
                                                   ========   ========    ========    ========

BASIC EARNINGS PER SHARE:
  Income from continuing operations                $    .45   $    .33    $   1.25    $    .58
  Income from discontinued operations                   .01        .06         .13         .06
                                                   --------   --------    --------    --------
  NET INCOME PER SHARE                             $    .46   $    .39    $   1.38    $    .64
                                                   ========   ========    ========    ========

DILUTED EARNINGS PER SHARE:
  Income from continuing operations                $    .36   $    .27    $   1.00    $    .48
  Income from discontinued operations                   .01        .05         .10         .04
                                                   --------   --------    --------    --------

  NET INCOME PER SHARE ASSUMING DILUTION           $    .37   $    .32    $   1.10    $    .52
                                                   ========   ========    ========    ========


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


                                               4


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


                                                                         Six Months Ended
                                                                               June 30,
                                                                        ----------------------
                                                                           2007         2006
                                                                        --------      --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                            $ 11,428      $  5,289
  Adjustments to reconcile net income to net cash
   (used in) provided by operating activities:
     Depreciation and amortization                                         1,687         1,336
     Non-cash stock-based compensation                                      --             807
     Contribution to pension plan                                           (700)         --
     Net (gain) loss on sale ofavailable-for-sale securities                (654)          782
     Income from equity investment                                           (95)         (139)
     Net gain from condemnation award                                     (5,665)         --
     Gain on disposal of discontinued operations, net of tax              (1,052)         (465)
     Net realized and unrealized gain on
      derivative instruments                                                (163)          (62)
     Other, net                                                               89           134
     Changes in assets and liabilities:
      Notes and accounts receivable, net                                 (10,025)          176
      Inventories                                                           (258)         (414)
      Prepaid expenses and other current assets                              (92)         (362)
      Deferred income taxes                                                1,964          (227)
      Other assets                                                          (151)         (239)
      Accounts payable and accrued liabilities                             1,217           701
      Income taxes payable                                                (2,403)         (288)
      Other long-term liabilities                                            (31)          (27)
                                                                        --------      --------
        Net cash (used in) provided by operating
          activities of continuing operations                             (4,904)        7,002
        Operating activities of discontinued
          operations                                                         (38)            6
                                                                        --------      --------

        NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES               (4,942)        7,008
                                                                        --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of available-for-sale securities                              (12,927)      (22,251)
  Proceeds from sale of available-for-sale
   securities                                                             28,427         9,004
  Proceeds from sale of real estate assets                                 2,855         1,701
  Net proceeds from condemnation award                                     5,665          --
  Proceeds from sale of derivative instruments                               156            67
  Purchase/issuance of notes receivable                                     --            (873)
  Principal payments on notes receivable                                   1,373         1,395
  Acquisition of property, plant and equipment                              (111)         (670)
  Acquisition of/additions to real estate assets                         (14,428)       (9,989)
  Distributions from joint venture                                           391           390
                                                                        --------      --------
        Net cash provided by (used in) investing
          activities of continuing operations                             11,401       (21,226)
        Investing activities of discontinued
          operations                                                        --             (15)
                                                                        --------      --------

        NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES               11,401       (21,241)
                                                                        --------      --------


                                                                                      Continued


                                               5



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


                                                                         Six Months Ended
                                                                               June 30,
                                                                        ----------------------
                                                                           2007         2006
                                                                        --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on mortgage obligations                                (232)         (428)
  Purchase and retirement of common stock                                (15,681)      (13,626)
  Proceeds from exercise of stock options                                  4,936           753
  Tax benefit from exercise of employee stock options                      3,944           568
                                                                        --------      --------
        NET CASH USED IN FINANCING ACTIVITIES                             (7,033)      (12,733)
                                                                        --------      --------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                   (574)      (26,966)

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

CASH AND CASH EQUIVALENTS, END OF PERIOD                                $ 76,114      $ 72,662
                                                                        ========      ========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid during the period for:

      Interest                                                          $    388      $    404
                                                                        ========      ========

      Taxes                                                             $  2,285      $  2,596
                                                                        ========      ========

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

  Accounts payable and accrued liabilities incurred for
    unsettled available-for-sale securities and
    acquisition of/additions to real estate assets                      $   --        $  3,048
                                                                        ========      ========

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


                                               6



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

1.  BASIS OF PRESENTATION

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

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

2.  STOCKHOLDERS' EQUITY

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

Repurchases  of the Company's  common stock may be made from time to time in the
open market at prevailing market prices and may be made in privately  negotiated
transactions,  subject to available resources. Future proceeds from the issuance
of common  stock in excess of par value will be credited  to  retained  earnings
until such time that previously recorded reductions have been recovered.  During
the six months ended June 30, 2007 and 2006,  the Company  received  proceeds of
$4,936 and $753 from the exercise of 544 and 97 stock options, respectively. The
Company  recorded a tax benefit of $3,994 and $568 to retained  earnings related
to the exercise of stock  options  during the six months ended June 30, 2007 and
2006, respectively.

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

3.  EARNINGS PER SHARE

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


                                                          Three Months Ended  Six Months Ended
                                                               June 30,           June 30,
                                                          -----------------   -----------------
                                                            2007      2006      2007      2006
                                                          -------   -------   -------   -------
Numerator:
  Income from continuing operations                       $ 3,731   $ 2,743   $10,381   $ 4,836
                                                          =======   =======   =======   =======

Denominator:
  Basic - weighted-average shares outstanding               8,285     8,288     8,282     8,321
  Dilutive effect of employee stock options                 1,966     1,767     2,084     1,837
                                                          -------   -------   -------   -------
  Diluted - weighted-average shares outstanding            10,251    10,055    10,366    10,158
                                                          =======   =======   =======   =======
Basic earnings per share - continuing operations          $   .45   $   .33   $  1.25   $   .58
                                                          =======   =======   =======   =======

Diluted earnings per share - continuing operations        $   .36   $   .27   $  1.00   $   .48
                                                          =======   =======   =======   =======


                                               7


4.  STOCK-BASED COMPENSATION

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

On January 1, 2006,  the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 123 (Revised 2004) - "Share-Based Payment" ("SFAS No. 123R") using
the modified  prospective  transition method. SFAS No. 123R requires the Company
to measure  all  employee  stock-based  compensation  awards  using a fair value
method and record the related expense in the financial statements.  The adoption
of SFAS No. 123R reduced income from continuing  operations  before income taxes
and net income by $350 and $227,  respectively,  for the three months ended June
30, 2006.  For the six months ended June 30, 2006, the adoption of SFAS No. 123R
reduced income from continuing  operations before income taxes and net income by
$807 and $518, respectively. All options previously granted were fully vested as
of June 30, 2006.  Therefore,  no  compensation  costs  relating to  share-based
payments were recognized during the six months ended June 30, 2007.

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

                                                                            Weighted
                                                              Weighted-    -average
                                                               average     Remaining    Aggregate
                                                 Number of    Exercise    Contractual   Intrinsic
                                                  Shares       Price         Term         Value
                                                 ---------   ----------   -----------   ---------
Outstanding at January 1, 2007                    5,299      $   11.61
Exercised                                          (544)     $    9.07
                                                  -----
Outstanding and exercisable at June  30, 2007     4,755      $   11.90     3.5 Years      $80,121
                                                  =====                                   =======

The  aggregate  intrinsic  value in the table above  represents  the  difference
between the  Company's  closing  stock price on June 30, 2007  ($28.75)  and the
exercise price of each stock option,  multiplied by the number of "in-the-money"
options.  This amount  changes based upon the fair market value of the Company's
stock.  The total  intrinsic  value of options  exercised  during the six months
ended  June  30,  2007 was  $11,421  based  on the  market  price on the date of
exercise.

5.  MARKETABLE SECURITIES

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

                                             Gross         Gross         Fair
                                           Unrealized    Unrealized      Market
                                 Cost        Gains         Losses        Value
                               --------     --------      --------      --------
JUNE 30, 2007:
  Equity securities            $ 43,242     $  4,994      $ (1,771)     $ 46,465
  Bonds                           2,786           19           (21)        2,784
                               --------     --------      --------      --------
                               $ 46,028     $  5,013      $ (1,792)     $ 49,249
                               ========     ========      ========      ========
DECEMBER 31, 2006:
  Equity securities            $ 57,708     $  4,778      $ (2,741)     $ 59,745
  Bonds                           3,131           43            (2)        3,172
                               --------     --------      --------      --------
                               $ 60,839     $  4,821      $ (2,743)     $ 62,917
                               ========     ========      ========      ========


                                       8


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

                                       Six Months Ended
                                           June 30,
                                    -----------------------
                                      2007          2006
                                    --------      ---------
Proceeds                            $ 28,427      $  9,004
                                    ========      ========
Gross realized gains                $  2,259      $    701
                                    ========      ========
Gross realized losses               $ (1,605)     $ (1,483)
                                    ========      ========

Included  in notes and  accounts  receivable,  net as of June 30, 2007 is $8,985
related to the sale of marketable securities which settled subsequent to the end
of the quarter.

6.  INVENTORIES

The components of inventories are as follows:

                                   June 30,     December 31,
                                     2007          2006
                                   --------     -----------
Raw materials                       $2,510        $2,197
Work in process                        429           506
Finished goods                       2,213         2,191
                                    ------        ------
                                    $5,152        $4,894
                                    ======        ======

7.  REAL ESTATE

    PROPERTY ACQUISITIONS

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

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

    PROPERTY SALES

During the six months ended June 30, 2007, the Company  divested  itself of five
commercial  properties  and one other  property  which  had a net book  value of
$1,102 from its real estate  investment  and management  segment.  The aggregate
proceeds from these transactions were $2,855 resulting in a gain of $1,052, on a
net of tax basis.

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


                                       9




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

                                          Three Months Ended   Six Months Ended
                                                June 30,            June 30,
                                          ------------------   ----------------
                                            2007      2006      2007     2006
                                          -------   --------   ------   -------
Revenues from real estate operations       $   2    $  55      $  20    $ 110
Depreciation expense                        --         16          3       32
Other operating expenses                       6       63         47      122
                                           -----    -----      -----    -----
Loss from operations                       $  (4)   $ (24)     $ (30)   $ (44)
                                           =====    =====      =====    =====


    PROPERTIES HELD FOR SALE

As of June 30, 2007,  the Company  considered  one other  property from its real
estate and  investment  management  segment to be held for sale and  reported as
discontinued operations.  The results of operations of this property,  primarily
consisted  of revenues of $11 for each of the three  months  ended June 30, 2007
and 2006 and $22 for each of the six months  ended June 30, 2007 and 2006,  have
been  reclassified  to  discontinued  operations,  on a net of tax basis, in the
Condensed  Consolidated  Statements  of  Income.  In  addition,  the  assets and
liabilities  associated  with this  property,  which  primarily  consist of real
property,   net  of  accumulated   depreciation,   have  been   reclassified  to
discontinued operations in the Condensed Consolidated Balance Sheets at June 30,
2007 and December 31, 2006.

8.  DERIVATIVE FINANCIAL INSTRUMENTS

Management maintains a diversified portfolio of cash equivalents and investments
in a variety of securities,  primarily U.S.  investments in common and preferred
equity issues,  as well as corporate  bonds, and participates on a limited basis
in transactions  involving  derivative  financial  instruments,  including short
stock sales and put and/or call options. At June 30, 2007 and December 31, 2006,
the fair value of such derivatives was ($12) and ($20),  respectively,  which is
recorded as a  component  of accounts  payable  and accrued  liabilities  in the
Condensed  Consolidated  Balance  Sheets.  These  instruments do not qualify for
hedge  accounting  and  therefore  changes  in the  derivatives'  fair value are
recognized in earnings.  The Company recognized $163 and $62 in net realized and
unrealized  gains from derivative  instruments for the six months ended June 30,
2007 and 2006, respectively, which are included in other income and expense, net
in the Condensed Consolidated Statements of Income.

9.  INCOME TAXES

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

At the  date of the  adoption,  the  Company  had a total  of  $4,324  of  gross
unrecognized tax benefits. Substantially the entire amount, if recognized, would
favorably  effect  the  Company's  effective  tax rate in  future  periods.  The
adoption of FIN 48 did not result in a cumulative  effect adjustment to retained
earnings.  As of June 30,  2007,  the  Company  had a total of  $4,741  of gross
unrecognized tax benefits.

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

The Company's  recognizes  interest and penalties  related to  unrecognized  tax
positions as a component of income tax expense.  As of June 30, 2007 and January
1, 2007,  the Company had  approximately  $2,183 and  $2,076,  respectively,  of
accrued interest and penalties related to uncertain tax positions.

The  Company is subject to U.S.  federal  income  tax,  as well as income tax in
multiple states. For all major taxing jurisdictions,  the tax years 2003 through
2006 remain  open to  examination.  As of June 30,  2007,  the Company  does not
anticipate that total unrecognized tax benefits will significantly change during
the next twelve months.


                                       10


10. PENSION PLAN

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

Net periodic pension expense consists of the following:

                                           Three Months Ended   Six Months Ended
                                                June 30,            June 30,
                                           ------------------- ------------------
                                             2007      2006      2007     2006
                                           --------  --------- --------  --------
Service cost                                $ (95)    $ (76)    $(165)    $(146)
Interest cost                                (164)     (164)     (329)     (329)
Expected return on plan assets                236      (318)      371         6
Net amortization and deferral                 (52)      487      --         335
                                            -----     -----     -----     -----
Net periodic pension expense                $ (75)    $ (71)    $(123)    $(134)
                                            =====     =====     =====     =====

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

11. NET GAIN FROM CONDEMNATION AWARD

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

12. COMPREHENSIVE INCOME

The components of comprehensive income are as follows:

                                             Three Months Ended       Six Months Ended
                                                   June 30,               June 30,
                                           --------------------    --------------------
                                              2007        2006        2007        2006
                                           --------    --------    --------    --------
Net income                                 $  3,840    $  3,201    $ 11,428    $  5,289
Other comprehensive income, net of tax:
  Change in net unrealized gain (loss)
    on available-for-sale securities,
    net of tax effect of ($732), $621,
    ($595) and $14 respectively               1,359      (1,153)      1,107         (26)

  Reclassification adjustment for net
    (gains) losses realized in net
    income, net of tax effect of $204,
    ($330), $195 and ($275) respectively       (379)        613        (363)        508

  Amortization of unrecognized net gains
    from pension plan, net of tax effect
    of ($18)                                     34        --          --          --
                                           --------    --------    --------    --------
Comprehensive income                       $  4,854    $  2,661    $ 12,172    $  5,771
                                           ========    ========    ========    ========

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

                                                              June 30,  December 31,
                                                                2007        2006
                                                              --------  -----------
Net unrealized gains on available-for-sale
  securities, net of tax effect of
  $1,127 and $728, respectively                                $2,094      $1,350

Unrecognized net gains from pension plan, net of
  tax effect of $417                                              775         775
                                                               ------      ------
Accumulated other comprehensive income, net of tax             $2,869      $2,125
                                                               ======      ======

13. BUSINESS SEGMENTS

The Company operates through three business segments: real estate investment and
management, hotel operations and engineered products. The real estate investment
and  management  segment is engaged in the business of investing in and managing
real  estate  properties   located  throughout  the  United  States.  The  hotel


                                       11


operations  segment owns and operates three hotels located in the United States.
Engineered products are manufactured  through  wholly-owned  subsidiaries of the
Company and  primarily  consist of knitted  wire  products  and  components  and
transformer products sold worldwide.

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

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

                                                          Three Months Ended       Six Months Ended
                                                                June 30,               June 30,
                                                         --------------------    --------------------
                                                            2007        2006        2007        2006
                                                         --------    --------    --------    --------
Net revenues and sales:
  Real estate investment and management                  $  4,996    $  5,247    $  9,820    $  9,929
  Hotel operations                                          3,041       2,239       5,134       4,220
  Engineered products                                       9,659       9,643      19,587      18,940
                                                         --------    --------    --------    --------
                                                         $ 17,696    $ 17,129    $ 34,541    $ 33,089
                                                         ========    ========    ========    ========

Operating income (loss):
  Real estate investment and management                  $  3,039    $  3,497    $  5,983    $  6,408
  Hotel operations                                            475         173         352          57
  Engineered products                                         636         758       1,392       1,175
  General corporate expenses                                 (724)     (1,164)     (1,500)     (2,587)
                                                         --------    --------    --------    --------
                                                            3,426       3,264       6,227       5,053

Other income, net                                           2,553         954      10,072       2,458
                                                         --------    --------    --------    --------

Income from continuing operations before income taxes    $  5,979    $  4,218    $ 16,299    $  7,511
                                                         ========    ========    ========    ========

14. COMMITMENTS AND CONTINGENCIES

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

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

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

The foregoing  estimates may also be revised by the Company as new or additional
information  in these  matters  become  available  or should  the NJDEP or other
regulatory agencies require additional or alternative remediation efforts in the
future. Although such events are not expected to change these estimates, adverse
decisions or events,  particularly as to the merits of the Company's factual and
legal basis,  could cause the Company to change its  estimate of liability  with
respect to such matters in the future. The Company had approximately  $9,564 and
$9,700 recorded in accounts payable and accrued  liabilities and other long-term
liabilities at June 30, 2007 and December 31, 2006, respectively,  to cover such
matters.

The Company has an employment  agreement with its Chairman,  President and Chief
Executive  Officer (the "Officer")  which provides for a base salary of $800 per


                                       12


annum plus a  discretionary  bonus as determined by the  Compensation  and Stock
Option  Committee of the Board of Directors.  In the event of  termination  or a
change in  control,  as  defined in the  employment  agreement,  the  Company is
required to pay the Officer a lump sum  severance  payment  equal to three years
salary and purchase  outstanding  options. The employment agreement provides for
successive  one-year  terms,  unless either the Company or the Officer gives the
other  written  notice that the  employment  agreement is  terminated,  and also
provides a death benefit which the Company secures through an insurance policy.

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

15. RECENT ACCOUNTING PRONOUNCEMENTS

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

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

16. USE OF ESTIMATES

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

17. RECLASSIFICATIONS

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


                                       13


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

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

RESULTS OF OPERATIONS:  THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006

Income from continuing operations for the quarter ended June 30, 2007 was $3,731
or $.45 per basic share, an increase of $988 or 36%,  compared to $2,743 or $.33
per basic share for the quarter ended June 30, 2006.  Total  revenues  increased
$567 or 3% for the second  quarter of 2007 to  $17,696,  compared to $17,129 for
the   comparative   quarter  of  2006.   During  this  quarter,   net  gains  on
available-for-sale  securities  were  $1,622  higher  than that  reported in the
second  quarter  of 2006.  Net income for the  quarter  ended June 30,  2007 was
$3,840  or $.46 per basic  share  compared  to net  income of $3,201 or $.39 per
basic share for the comparative quarter of 2006.

Net income  increased  $6,139 or 116% for the six months  ended June 30, 2007 to
$11,428,  compared to $5,289 for the six months  ended June 30,  2006.  On a per
share  basis,  net income was $1.38 per basic  share for the first half of 2007,
compared to $.64 per basic share for the comparable 2006 period.  Total revenues
increased  $1,452 or 4% to  $34,541  for the six  months  ended  June 30,  2007,
compared to $33,089 for the comparable  period of 2006,  while operating  income
increased 23% in the current period to $6,227,  compared to the first six months
of 2006.

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

The results of the second  quarter and first half of 2006  include  compensation
expense  associated  with unvested  stock options ($350 and $807,  respectively)
recorded in  connection  with the adoption of SFAS No. 123R (see Note 4 of Notes
to Condensed Consolidated Financial Statements).

REAL ESTATE OPERATIONS

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

                                          Three Months Ended                    Six Months Ended
                                            June 30, 2007                        June 30, 2007
                                 ---------------------------------      ---------------------------------
                                  Real          Hotel                    Real        Hotel
                                 Estate      Operations     Total       Estate     Operations      Total
                                 -------     ----------    -------      -------    ----------     -------
Revenues                         $ 4,996      $ 3,041      $ 8,037      $ 9,820      $ 5,134      $14,954
Mortgage interest expense             62          138          200          126          269          395
Depreciation expense                 487          254          741          906          547        1,453
Other operating  expenses          1,408        2,174        3,582        2,805        3,966        6,771
                                 -------      -------      -------      -------      -------      -------
Income from operations           $ 3,039      $   475      $ 3,514      $ 5,983      $   352      $ 6,335
                                 =======      =======      =======      =======      =======      =======

                                          Three Months Ended                    Six Months Ended
                                            June 30, 2006                        June 30, 2006
                                 ---------------------------------      ---------------------------------
                                  Real          Hotel                    Real        Hotel
                                 Estate      Operations     Total       Estate     Operations      Total
                                 -------     ----------    -------      -------    ----------     -------

Revenues                         $ 5,247      $ 2,239      $ 7,486      $ 9,929      $ 4,220      $14,149
Mortgage interest  expense            67          133          200          136          266          402
Depreciation expense                 387          196          583          721          392        1,113
Other operating expenses           1,296        1,737        3,033        2,664        3,505        6,169
                                 -------      -------      -------      -------      -------      -------
Income from operations           $ 3,497      $   173      $ 3,670      $ 6,408      $    57      $ 6,465
                                 =======      =======      =======      =======      =======      =======


                                                        14


    REAL ESTATE INVESTMENT AND MANAGEMENT

Revenues from the real estate investment and management segment decreased $251or
4.8% to $4,996 for the  quarter  ended June 30,  2007 and $109 or 1.1% to $9,820
for the six months ended June 30, 2007, compared to the corresponding periods in
2006.  The decrease for the current  quarter was primarily the result of revenue
recognized for a  non-recurring  amount ($321) during the second quarter of 2006
and a decrease in the timing of tenant reimbursements  ($142),  partially offset
by new leases and/or renewals at higher rents ($337).  For the six month period,
the decrease was primarily the result of the  recognition of additional  revenue
from a non-recurring  transaction ($500) in 2006 and a decrease in the timing of
tenant reimbursements ($155),  partially offset by new leases and/or renewals at
higher rents ($630). In general,  rental revenues from the Company's real estate
properties do not  fluctuate  significantly  due to the long-term  nature of the
Company's  leases.  However,  future rental  revenues could be affected by lease
renewals, terminations,  step-ups and escalations and by the purchase or sale of
additional properties.

Mortgage  interest  expense  continued  to  decrease  as a result of  continuing
mortgage  amortization.  Such expense decreased $5 or 7.5% for the quarter ended
June 30, 2007 and $10 or 7.4% for the six months ended June 30,  2007,  compared
to the  corresponding  periods in 2006.  Mortgage  interest  expense on existing
obligations of the Company's real estate investment and management  segment will
continue to decline with scheduled principal reductions.

Depreciation  expense  associated with real properties held for rental increased
$100 or 25.8% for the quarter  ended June 30, 2007 and $185 or 25.7% for the six
months ended June 30, 2007, compared to the corresponding periods in 2006. These
increases were primarily attributable to depreciation expense ($144 and $275 for
the three and six month  periods,  respectively)  related to  additions  to real
estate assets over the past twelve  months,  partially  offset by a reduction in
depreciation  expense  ($46  and $92  for  the  three  and  six  month  periods,
respectively)  associated with certain properties or improvements becoming fully
depreciated in the current and prior year. Depreciation expense on the Company's
properties for the full year of 2007 should be higher than that reported in 2006
due to the May 2006 purchase of a commercial property and other expenditures for
capital improvements incurred during the current and prior years, but the second
half of 2007 should be more comparable to that of 2006.

Other  operating  expenses  associated  with the  management of real  properties
increased $112 or 8.6% for the three months ended June 30, 2007 and $141 or 5.3%
for the six months  ended June 30,  2007,  compared to the same periods in 2006,
primarily related to an increase in property  maintenance expenses ($65 and $136
for the three and six month periods, respectively). In addition, the increase in
the quarter is also due to an increase in utility expenses ($49).

    HOTEL OPERATIONS

Hotel revenues increased $802 or 35.8% to $3,041 for the three months ended June
30,  2007 and $914 or 21.7% to $5,134  for the six months  ended June 30,  2007,
compared to the same periods of 2006, primarily as the result of stronger demand
at the Company's hotels related to recent renovations and improvements which has
allowed the Company to increase  average room rates.  In  addition,  the Company
received  additional  hotel  revenues from the May 2007  acquisition  of a hotel
located in Utica, New York (the "Utica Hotel").

Mortgage  interest expense for the current quarter and six months ended June 30,
2007  increased,  compared  to the  same  periods  of 2006,  as a result  of the
mortgage assumed with the acquisition of the Utica Hotel.

Depreciation  expense  associated with the Company's hotel operations  increased
$58 or 29.6% for the  quarter  ended June 30, 2007 and $155 or 39.5% for the six
months  ended June 30,  2007,  compared  to the  corresponding  periods in 2006,
primarily  attributable to  depreciation  expense related to the renovations and
improvements completed during the second half of 2006.

Other  operating  expenses  related to the  management of the  Company's  hotels
increased  $437 or 25.2% to $2,174  for the  second  quarter of 2007 and $461 or
13.2% to  $3,966  for the  first  half of 2007,  compared  to the  corresponding
periods  of  2006.  Other  operating  expenses  increased  for the  quarter  and
year-to-date periods primarily due to the acquisition of the Utica Hotel.

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


                                       15



    ENGINEERED PRODUCTS

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

                                                         Three Months Ended     Six Months Ended
                                                               June 30,            June 30,
                                                          -----------------   -----------------
                                                            2007      2006      2007     2006
                                                          -------   -------   -------   -------
Net sales                                                 $ 9,659   $ 9,643   $19,587   $18,940
Cost of sales                                               7,335     7,250    14,755    14,243
Selling, general and administrative expenses                1,688     1,635     3,440     3,522
                                                          -------   -------   -------   -------

Operating income                                          $   636   $   758   $ 1,392   $ 1,175
                                                          =======   =======   =======   =======

Net sales of the  engineered  products  segment  increased  less than 1% for the
quarter ended June 30, 2007.  For the six months ended June 30, 2007,  net sales
of the engineered  products  segment  increased $647 or 3.4%,  compared with the
results of the corresponding 2006 period. This increase was primarily the result
of increased demand in the Company's  transformer and engineered  product lines.
Sales of the  Company's  automotive  product  line  decreased  during the second
quarter of 2007, compared to the second quarter of 2006,  primarily related to a
program completed during 2006.  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 less than 1% for both the three
and six months ended June 30,  2007,  compared to the  corresponding  periods of
2006.  The Company  has  experienced  an increase in the cost of raw  materials,
primarily copper and steel components,  which,  where possible,  has been passed
along to customers. To offset the effect of material cost increases and maintain
a  relatively  stable  gross  margin,  the  Company has  improved  manufacturing
efficiencies by managing overhead and labor costs.

Selling,  general and administrative expenses of the engineered products segment
increased  $53 or 3.2% for the quarter  ended June 30, 2007 and decreased $82 or
2.3% for the six  months  ended June 30,  2007,  compared  to the  corresponding
periods of 2006.  The increase for the quarter was  primarily due to an increase
in  professional  fees  ($105),  partially  offset by a decrease  in payroll and
payroll  related  expenses  ($74).  On a  year-to-date  basis,  the decrease was
primarily  related to a decrease in payroll and payroll related expenses ($248),
partially  offset by an increase in  professional  fees ($75) and European sales
office expenses ($54).

    GENERAL AND ADMINISTRATIVE EXPENSES

General  and  administrative  expenses  not  associated  with the  manufacturing
operations  decreased  $440 or 38% for the second  quarter of 2007 and $1,087 or
42% for the first  half of 2007,  compared  to such  expenses  incurred  for the
comparable  2006  periods.  These  decreases  primarily  relate to  compensation
expense  associated with unvested stock options ($350 and $807 for the three and
six month periods,  respectively)  recorded  during 2006 in connection  with the
adoption  of SFAS  No.  123R  (see  Note 4 of Notes  to  Condensed  Consolidated
Financial  Statements).  No compensation costs relating to share-based  payments
were recognized in 2007.


                                       16




    OTHER INCOME AND EXPENSE, NET

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

                                                              Three Months Ended     Six Months Ended
                                                                    June 30,             June 30,
                                                              ------------------    ------------------
                                                                2007       2006       2007       2006
                                                              -------    -------    -------    -------
Net gain from condemnation award                              $  --      $  --      $ 5,665    $  --
Net gain (loss) on sale of available-for-sale securities          679       (943)       654       (782)
Net realized and unrealized gain on derivative instruments         92         30        163         62
Litigation Settlement                                            --          422       --          422
Equity in losses of hotel venture                                --         --         --          (35)
Other, net                                                          2          4          2         10
                                                              -------    -------    -------    -------
                                                              $   773    $  (487)   $ 6,484    $  (323)
                                                              =======    =======    =======    =======


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

    DISCONTINUED OPERATIONS

Income from  operations on properties sold or held for sale and accounted for as
discontinued  operations  was $4, on a net of tax  basis,  for the three  months
ended June 30, 2007,  compared to a loss from  operations on properties  sold or
held for sale of $7, on a net of tax basis,  for the three months ended June 30,
2006.  Loss  from  operations  on  properties  sold or held for sale for the six
months  ended June 30, 2007 and 2006 was $5 and $12,  respectively,  on a net of
tax basis.  Prior year  amounts  have been  reclassified  to reflect  results of
operations of real  properties  held for sale as of June 30, 2007 or sold during
2007 and 2006 as  discontinued  operations.  As of June 30,  2007,  the  Company
classified  one  property  as held for sale.  Net gains on the  disposal of real
estate assets accounted for as discontinued  operations were $105 and $1,052, on
a net of tax  basis,  for  the  three  and  six  months  ended  June  30,  2007,
respectively,  and $465 for each of the three and six months ended June 30, 2006
(see Note 7 of Notes to Condensed Consolidated Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating  activities  was $4,942 for the six months ended June
30, 2007,  compared to net cash  provided by operating  activities of $7,008 for
the same period of 2006. This change in operating cash flow results  principally
from an increase in notes and accounts  receivables,  net ($10,201),  due to the
timing of cash receipts of certain items  including  proceeds  received from the
sale of marketable securities ($8,985) and other assets.

Net cash provided by investing  activities  was $11,401 for the six months ended
June 30, 2007 versus net cash used in  investing  activities  of $21,241 for the
six months ended June 30, 2006. This change primarily results from the timing of
the  purchase  or  sale  of  available-for-sale  securities  ($28,747),  and net
proceeds  received from a  condemnation  award  ($5,665) and sale of real estate
assets ($1,154), partially offset by an increase in acquisition of/ additions to
real estate assets  ($4,439),  which includes the purchase of the Utica Hotel in
May 2007, net of the related mortgage.

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

Net cash used in  financing  activities  was $7,033 and  $12,733  during the six
months ended June 30, 2007 and 2006, respectively. The decrease in cash used for
financing  activities  primarily  results  from  additional  proceeds  from  the
exercise of stock options  ($4,183) and the additional  tax benefits  related to
such  exercises  ($3,376),  partially  offset by an increase in the purchase and
retirement  of common stock during the first half of 2007  ($2,055)  versus that
purchased during the same period of 2006.


                                       17


Previous  purchases of the  Company's  common  stock have reduced the  Company's
additional  paid-in capital to zero and have also reduced  retained  earnings by
amounts in excess of par value. Any future purchases in excess of par value will
also reduce retained earnings.  Repurchases of the Company's common stock may be
made from time to time in the open market at prevailing market prices and may be
made in  privately  negotiated  transactions,  subject to  available  resources.
Future proceeds from the issuance of common stock in excess of par value will be
credited  to  retained  earnings  until  such  time  that  previously   recorded
reductions have been recovered.

At June 30, 2007, the Company's cash and  marketable  securities  totaled $125.4
million and working  capital was $137.2 million  compared to cash and marketable
securities of $139.6  million and working  capital of $140.2 million at December
31, 2006. Included in notes and accounts receivable,  net as of June 30, 2007 is
$8,985 related to the sale of marketable  securities which settled subsequent to
the end of the  quarter.  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.

The equity  method of  accounting  is used for  investments  in 20% to 50% owned
joint  ventures in which the  Company  has the  ability to exercise  significant
influence, but not control. These investments are recorded initially at cost and
subsequently  adjusted  for  equity  in  earnings  and  cash  contributions  and
distributions.  The debt of the joint venture in which the Company currently has
an ownership interest is a non-recourse  obligation and is collateralized by the
entity's real  property.  The Company  believes that the value of the underlying
property and its operating cash flows are sufficient to satisfy its obligations.
The  Company  is not  obligated  for the debts of the joint  venture,  but could
decide to satisfy them in order to protect its  investment.  In such event,  the
Company's  capital  resources and financial  condition  would be reduced and, in
certain  instances,  the  carrying  value of the  Company's  investment  and its
results of operations would be negatively impacted.

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

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

Funds of the Company in excess of that needed for  working  capital,  purchasing
real estate and arranging financing for real estate acquisitions are invested by
the Company in corporate equity  securities,  corporate  notes,  certificates of
deposit, government securities and other financial instruments.  Changes in U.S.
interest  rates  affect  the  interest  earned  on the  Company's  cash and cash
equivalent balances and other interest bearing  investments.  Given the level of
cash and other interest bearing investments held by the Company, changes in U.S.
interest rates could impact the Company's earnings.

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

The Company  manufactures its products in the United States and Mexico and sells
its products in those markets as well as in Europe, South America and Asia. As a
result,  the  Company's  operating  results could be affected by factors such as
changes in foreign  currency  exchange rates or weak economic  conditions in the
foreign  markets in which the  Company  distributes  its  products.  Most of the
Company's  sales are  denominated  in U.S.  dollars.  Net sales of the Company's
engineered  products  segment  denominated  in Euros  were 9.3% and 9.0% for the


                                       18


three and six months ended June 30, 2007 and 5.3% and 5.9% for the three and six
months ended June 30, 2006,  respectively.  As such, a portion of the  Company's
receivables  are exposed to  fluctuations  with the U.S.  dollar.  However,  the
Company  does not believe  this risk to be  material  to its  overall  financial
position.  Since the Euro has historically been relatively stable in relation to
the U.S. dollar, the Company's results have not been  significantly  impacted by
foreign exchange gains or losses in the past.  Accordingly,  the Company has not
entered into forward exchange contracts to hedge this exposure. If such exposure
increased in the future, the Company may reexamine this practice to minimize the
associated risks.

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

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

RELATED PARTY TRANSACTIONS

During 2007,  certain officers and directors of the Company exercised options to
purchase 522 shares of the  Company's  common stock at exercise  prices  between
$8.50 and  $12.58 and sold such  shares to the  Company  at  purchase  prices of
$29.30 and $34.40 per share.

CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES

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

Refer to the  Company's  2006 Annual Report on Form 10-K for a discussion of the
Company's critical  accounting  policies,  which include revenue recognition and
accounts   receivable,   marketable   securities,   inventories,   real  estate,
discontinued operations, long-lived assets and pension plans. Also see Note 9 of
Notes to  Condensed  Consolidated  Financial  Statements  included  herein for a
discussion  on the adoption of FIN 48 effective  January 1, 2007.  There were no
other material changes to the Company's critical  accounting policies during the
six months ended June 30, 2007.

RECENT ACCOUNTING PRONOUNCEMENTS

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


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

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


                                       19


ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report,  the Company  carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls and procedures  pursuant to Exchange Act Rule 13a-15(e) and
15d-15(e).  Based upon that  evaluation,  the Chief Executive  Officer and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to the Company (including its consolidated subsidiaries) required to be
included  in the  Company's  periodic  reports.  There have been no  significant
changes in the Company's internal controls over financial  reporting or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.


                           PART II - OTHER INFORMATION


ITEM 1A. RISK FACTORS

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

FORWARD-LOOKING STATEMENTS

Certain  statements in this Report on Form 10-Q and other statements made by the
Company  or its  representatives  that are not  strictly  historical  facts  are
"forward-looking"  statements  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995 that should be  considered as subject to the many
risks and  uncertainties  that exist in the  Company's  operations  and business
environment.  The forward-looking  statements are based on current  expectations
and involve a number of known and  unknown  risks and  uncertainties  that could
cause the actual  results,  performance  and/or  achievements  of the Company to
differ  materially  from  any  future  results,   performance  or  achievements,
expressed or implied, by the forward-looking  statements.  Readers are cautioned
not to place undue  reliance on these  forward-looking  statements,  and that in
light of the significant  uncertainties inherent in forward-looking  statements,
the inclusion of such statements  should not be regarded as a representation  by
the Company or any other person that the objectives or plans of the Company will
be achieved. The Company also assumes no obligation to publicly update or revise
its  forward-looking  statements or to advise of changes in the  assumptions and
factors on which they are based.  See the  Company's  2006 Annual Report on Form
10-K for a discussion  of risk  factors  that could impact our future  financial
performance  and/or  cause  actual  results to differ  significantly  from those
expressed or implied by such statements.


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

The following table details the Company's repurchases of common stock during the
three months ended June 30, 2007:

                      ISSUER PURCHASES OF EQUITY SECURITIES
                      (In thousands, except per share data)


                                                          Total
                                                          Number     Approximate
                                                        of Shares       Dollar
                                                        Purchased       Value
                                                         as Part      That May
                                  Total      Average       of          Yet be
                                  Number      Price      Publicly     Purchased
                                   of         Paid      Announced     Under the
                                  Shares       Per       Plans or     Plans or
Period                          Purchased     Share      Programs     Programs
-----------------------------  -----------  --------  ------------  ------------

June 1, 2007 -- June 30, 2007      449      $  29.30        --         $3,962
                                   ===      ========    ========       ======

As previously  announced,  the Board of Directors have approved repurchase plans
for 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,  2007,  $3,962  remains  to  be  purchased  under  such  plans.  These
authorizations are ongoing and do not have an expiration date.



                                       20


ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

On June 19, 2007,  the Company held its Annual Meeting of  Stockholders,  wereby
the stockholders voted to elect Directors as follows:

                                                             For      Withheld
                                                          ---------   ---------
A.F. Petrocelli ........................................  7,645,149   347,099
Michael T. Lamoretti ...................................  7,629,959   362,289
Howard M. Lorber .......................................  7,604,564   387,684
Robert M. Mann .........................................  7,843,916   148,332
Anthony J. Miceli ......................................  7,604,222   388,026
Arnold S. Penner .......................................  7,842,696   149,552
Michael J. Weinbaum ....................................  7,629,959   362,289


ITEM 6.  EXHIBITS

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


                                   SIGNATURES

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

                                     UNITED CAPITAL CORP.

Date: August 13, 2007

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


                                       21`