**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**









**Form
      10-QSB/A**


**(Mark
      One)**




x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**For
      the quarterly period ended December 31, 2006**




o
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**  **For
              the transition period from ________ to
              __________**




**Commission
      File No. 000-30841**







**UNITED
      ENERGY CORP.**


(Exact
      name of small business issuer as specified in its charter)




**Nevada**
              *(State
                or other jurisdiction of*
              *incorporation
                or organization)*
            **22**-**3342379**
              *(I.R.S.
                Employer Identification No.)***600
                Meadowlands Parkway #20, Secaucus, N.J. 07094**
              *(Address
                of principal executive offices)***(800)
                327-3456**
              *(Issuer's
                telephone number, including area
                code)*




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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 o
      No




Indicate
      by check mark whether the registrant is a shell company (as defined in rule
      12b-2 of the Exchange Act.  Yes o No x




As
      of the
      close of business on February 14, 2007, 31,030,115 shares of common stock,
      par
      value $.01 per share, were outstanding.




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




Explanatory
      Note




We
      are
      filing this Amendment No.1 on Form-10QSB/A for the quarter ended December 31,
      2006 (the “First Amendment”) in response to comments received from the
      Securities and Exchange Commission (“SEC”). This First Amendment revises and
      restates our financial statements to adjust the opening balance of stockholders
      equity as a result of the amendment of our Form 10KSB/A for the year ended
      March
      31, 2006. In addition, the First amendment includes updated certificates from
      our Chief Executive Officer (CEO) and Interim Chief Financial Officer (CFO)
      as
      exhibits 31.1 and 31.2









**INDEX**




**PART
                I. FINANCIAL INFORMATION**Item
                1.
            Financial
                StatementsConsolidated
                balance sheets December 31, 2006 (Unaudited) andMarch
                31, 2006
            3-4Consolidated
                statements of operations for the three months and nine months ended
                December 31, 2006 (Unaudited) and 2005 (Unaudited)
            5Consolidated
                statement of stockholders' equity for the nine months ended December
                31,
                2006 (Unaudited)
            6Consolidated
                statements of cash flows for the nine months ended December 31, 2006
                (Unaudited) and 2005 (Unaudited)
            7-8Notes
                to consolidated financial statements
            9-15Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            16-20Item
                3
            Controls
                and Procedures
            21Item
                5
            Other
                information
            21**PART
                II. OTHER INFORMATION**Item
                6.
            Exhibits
            23Signatures
            
            24




2




**Item
                1.*****Financial
                Statements***




**UNITED
      ENERGY CORP. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2006 AND MARCH 31, 2006**




**December
                31,**
            
            **March
                31,****2006**
            
            **2006****(Unaudited)****ASSETS**CURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            3,413,145
            
            $
            5,194,748Accounts
                receivable, net of allowance for doubtful accounts of $2,509 and
                $5,018,
                respectively
            
            
            88,061
            
            
            91,557Inventory,
                net of allowance of $16,290 and $16,290, respectively
            
            
            115,023
            
            
            106,957Note
                receivable, net of allowance for doubtful accounts of $10,525 and$10,525,
                respectively
            
            
            4,476
            
            
            19,476Prepaid
                expenses and other current assets
            
            
            88,473
            
            
            84,657Total
                current assets
            
            
            3,709,178
            
            
            5,497,395PROPERTY
                AND EQUIPMENT, net of accumulated depreciation and amortization of
                $419,951 and $373,080 respectively
            
            
            103,833
            
            
            146,994OTHER
                ASSETS:Goodwill,
                net
            
            
            15,499
            
            
            15,499Patents,
                net of accumulated amortization of $142,744 and $119,794,
                respectively
            
            
            344,853
            
            
            327,572Loans
                receivable
            
            
            2,704
            
            
            364Deposits
            
            
            1,385
            
            
            1,385Total
                assets
            
            $
            4,177,452
            
            $
            5,989,209




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





3




**UNITED
      ENERGY CORP. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2006 AND MARCH 31, 2006**




**December
                31,**
            
            **March
                31,****2006**
            
            **2006****(Unaudited)****LIABILITIES
                AND STOCKHOLDERS' EQUITY**CURRENT
                LIABILITIES:Accounts
                payable
            
            $
            235,290
            
            $
            279,303Accrued
                expenses
            
            
            87,915
            
            
            134,286Due
                to related parties
            
            
            244,141
            
            
            444,141Total
                current liabilities
            
            
            567,346
            
            
            857,730STOCKHOLDERS'
                EQUITY:Series
                A Convertible Preferred Stock: $8,000 stated value, 420 shares authorized;
                3 shares issued and outstanding as of December 31 2006 and March
                31,
                2006
            
            
            24,000
            
            
            24,000Common
                stock: $0.01 par value 100,000,000 shares authorized; 31,030,115
                and
                31,017,615 shares issued and outstanding as of December 31, 2006
                and March
                31, 2006
            
            
            310,301
            
            
            310,176Additional
                paid-in capital
            
            
            21,471,191
            
            
            21,221,471Accumulated
                deficit
            
            
            (18,195,386
            )
            
            (16,424,168
            )Total
                stockholders' equity
            
            
            3,610,106
            
            
            5,131,479Total
                liabilities and stockholders' equity
            
            $
            4,177,452
            
            $
            5,989,209




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




4




**UNITED
      ENERGY CORP. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**




**For
                the Three Months**
            
            **For
                the Nine Months****Ended
                December 31,**
            
            **Ended
                December 31,****2006**
            
            **2005**
            
            **2006**
            
            **2005****(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)**REVENUES,
                net
            
            $
            113,459
            
            $
            225,220
            
            $
            637,811
            
            $
            390,295COST
                OF GOODS SOLD
            
            
            67,863
            
            
            113,705
            
            
            277,120
            
            
            250,504Gross
                profit
            
            
            45,596
            
            
            111,515
            
            
            360,691
            
            
            139,791OPERATING
                EXPENSES:Selling,
                general and administrative
            
            
            716,979
            
            
            615,999
            
            
            2,206,592
            
            
            2,409,362Depreciation
                and amortization
            
            
            19,473
            
            
            17,326
            
            
            56,881
            
            
            51,986Total
                operating expenses
            
            
            736,452
            
            
            633,325
            
            
            2,263,473
            
            
            2,461,348Loss
                from operations
            
            
            (690,856
            )
            
            (521,810
            )
            
            (1,902,782
            )
            
            (2,321,557
            )OTHER
                INCOME (EXPENSE), net:Interest
                income
            
            
            41,157
            
            
            9
            
            
            134,655
            
            
            32Interest
                expense
            
            
            (696
            )
            
            (726
            )
            
            (1,925
            )
            
            (576,894
            )Total
                other income (expense), net
            
            
            40,461
            
            
            (717
            )
            
            132,730
            
            
            (576,862
            )Net
                loss
            
            
            (650,395
            )
            
            (522,527
            )
            
            (1,770,052
            )
            
            (2,898,419
            )Preferred
                dividends
            
            
            (360
            )
            
            -
            
            
            (1,166
            )
            
            -Net
                loss applicable to common shareholders
            
            $
            (650,755
            )
            $
            (522,527
            )
            $
            (1,771,218
            )
            $
            (2,898,419
            )BASIC
                AND DILUTED LOSS PER SHARE:Total
                basic and diluted loss per share
            
            $
            (0.02
            )
            $
            (0.02
            )
            $
            (0.06
            )
            $
            (0.12
            )WEIGHTED
                AVERAGE NUMBER OF SHARES, OUTSTANDING, basic and diluted
            
            
            31,030,115
            
            
            25,782,241
            
            
            31,029,070
            
            
            24,791,025





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




5




**UNITED
      ENERGY CORP. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY**


**FOR
      THE NINE MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED)**




**Additional****Common
                Stock**
            
            **Preferred**
            
            **Paid-In**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Stock**
            
            **Capital**
            
            **Deficit**
            
            **Total**BALANCE,
                April 1, 2006
            
            
            31,017,615
            
            
            310,176
            
            $
            24,000
            
            $
            21,221,471
            
            $
            (16,424,168
            )
            $
            5,131,479Exercise
                of stock options
            
            
            12,500
            
            
            125
            
            
            -
            
            
            13,750
            
            
            —
            
            
            13,875Compensation
                expense associated with options
            
            
            —
            
            
            —
            
            
            -
            
            
            235,970
            
            
            —
            
            
            235,970Dividends
                paid and accrued on preferred shares
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,166
            )
            
            (1,166
            )Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,770,052
            )
            
            (1,770,052
            )BALANCE,
                December 31, 2006
            
            
            31,030,115
            
            
            310,301
            
            $
            24,000
            
            $
            21,471,191
            
            $
            (18,195,386
            )
            $
            3,610,106





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




6




**UNITED
      ENERGY CORP. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE NINE MONTHS ENDED DECEMBER 30, 2006 AND 2005**




**2006**
            
            **2005****(Unaudited)**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (1,770,052
            )
            $
            (2,898,419
            )Adjustments
                to reconcile net loss to net cash used in operating activitiesDepreciation
                and amortization
            
            
            69,821
            
            
            620,508Warrants
                granted in consideration for services
            
            
            -
            
            
            129,720Stock
                granted in consideration for interest expense
            
            
            -
            
            
            492Compensation
                expense associated with options
            
            
            235,970
            
            
            387,000Changes
                in operating assets and liabilitiesDecrease
                in accounts receivable, net
            
            
            3,496
            
            
            663,758(Increase)
                decrease in inventory, net
            
            
            (8,066
            )
            
            201Decrease
                in note receivable, net
            
            
            15,000
            
            
            11,150(Increase)
                decrease in prepaid expenses and other current assets
            
            
            (3,816
            )
            
            70,289Decrease
                in accounts payable and accrued expenses
            
            
            (90,384
            )
            
            (14,807
            )Increase
                in employee loans
            
            
            (2,340
            )
            
            (22
            )Net
                cash used in operating activities
            
            
            (1,550,371
            )
            
            (1,030,130
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Payments
                for acquisition of property and equipment
            
            
            (3,710
            )
            
            (30,709
            )Payments
                for patents
            
            
            (40,231
            )
            
            (25,846
            )Cash
                used in investing activities
            
            
            (43,941
            )
            
            (56,555
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from related party
            
            
            -
            
            
            200,000Payments
                of related party payable
            
            
            (200,000
            )
            
            (133,600
            )Proceeds
                from the exercise of stock options
            
            
            13,875
            
            
            345,000Proceeds
                from the issuance of common stock
            
            
            -
            
            
            380,000Proceeds
                from stock subscription receivable
            
            
            -
            
            
            13,333Preferred
                stock dividend
            
            
            (1,166
            )
            
            -Net
                cash (used in) provided by financing activities
            
            
            (187,291
            )
            
            804,733Net
                decrease in cash and cash equivalents
            
            
            (1,781,603
            )
            
            (281,952
            )CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            5,194,748
            
            
            365,610CASH
                  AND CASH EQUIVALENTS, end of period
            
            $
            3,413,145
            
            $
            83,658




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


7




**UNITED
      ENERGY CORP. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE NINE MONTHS ENDED DECEMBER 31, 2006 AND 2005**




**2006**
            
            **2005****(Unaudited)**SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Cash
                paid during the periodInterest
            
            $
            1,925
            
            $
            1,756Income
                taxes
            
            $
            1,235
            
            $
            1,434SUPPLEMENTAL
                DISCLOSURES OF NON-CASH INVESTING AND FINANCING
                ACTIVITIES:Conversion
                of note payable into common stock
            
            $
            -
            
            $
            1,600,000





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




8




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006 (Unaudited)**




**1.**
            **BASIS
                OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES**




*Basis
      of presentation*




The
      accompanying unaudited consolidated financial statements of United Energy Corp.
      (the “Company”) have been prepared in accordance with generally accepted
      accounting principles for interim financial information and with the
      instructions to Form 10-QSB of Regulation S-B. Accordingly, they do not include
      all of the information and notes required by generally accepted accounting
      principles for complete financial statements. In the opinion of management,
      the
      unaudited interim financial statements furnished herein include all adjustments
      necessary for a fair presentation of the Company's financial position at
      December 31, 2006 (unaudited) and the results of its operations for the three
      months and nine months ended December 31, 2006 and 2005 (unaudited) and cash
      flows for the nine months ended December 31, 2006 and 2005 (unaudited). All
      such
      adjustments are of a normal and recurring nature. Interim financial statements
      are prepared on a basis consistent with the Company's annual financial
      statements. Results of operations for the three months and nine months ended
      December 31, 2006 are not necessarily indicative of the operating results that
      may be expected for the year ending March 31, 2007.




The
      consolidated balance sheet as of March 31, 2006 has been derived from the
      audited financial statements at that date but does not include all of the
      information and notes required by accounting principles generally accepted
      in
      the United States for complete financial statements.




For
      further information, refer to the consolidated financial statements and notes
      thereto included in the Company's Annual Report on Form 10-KSB/A for the fiscal
      year ended March 31, 2006.




The
      Company currently anticipates that its available cash on hand and cash resources
      from expected revenues will be sufficient to meet its anticipated working
      capital and capital expenditure requirements for at least the next twelve
      months.




Our
      continued existence is dependent upon several factors, including increased
      sales
      volumes and the ability to achieve profitability from the sale of our product
      lines. In order to increase our cash flow, we are continuing our efforts to
      stimulate sales and cut back expenses not directly supporting our sales and
      marketing efforts.





*Stock-Based
      Compensation*




Effective
      January 1, 2006, the Company adopted the fair value recognition provision of
      Statement of Financial Standards (“SFAS”) No. 123 (revised 2004), *Shared-based
      Payments,* (“SFAS
      123(R)”) using the modified prospective transition method and therefore has not
      restated results for prior periods. Under this transition method, stock based
      compensation expense for the second quarter of fiscal year 2007 includes
      compensation expense for all stock-based compensation awards granted prior
      to,
      but not yet vested as of January 1, 2006, based on the grant date fair value
      estimated in accordance with the original provision of SFAS No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      123”). Stock-based compensation expense for all stock-based compensation awards
      granted after January 1, 2006 is based on the grant-date fair value estimated
      in
      accordance with the provisions of SFAS 123(R).




9




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




At
      December 31, 2006, the Company has stock based compensation plans. As permitted
      by SFAS No.123, Accounting for Stock Based Compensation, the Company accounted
      for stock-based compensation arrangements with employees in accordance with
      provisions of Account Principles Board (APB) Opinion No. 25, Accounting for
      Stock Issued to Employees through December 31, 2005. On
      January 1, 2006, the Company adopted SFAS No. 123(R), which requires
      public entities to record noncash compensation expense related to payment for
      employee services by an equity award, such as stock options. Compensation
      expense for stock options issued to employees is based on the difference on
      the
      date of grant, between the fair value of the Company’s stock and the exercise
      price of the option. As a result of adopting SFAS 123(R), net loss for the
      nine
      months ended December 31, 2006 was higher by $136,730 than if the Company had
      not adopted SFAS 123(R). There was minimal impact on both the basic and diluted
      loss per share for the nine months ended December 31, 2006. The Company
      accounted for equity instruments issued to non-employees in accordance with
      the
      provisions of SFAS No. 123 and Emerging Issues Task Force (EITF) Issue No.
      96-18, “Accounting for Equity Instruments That Are Issued to Other Than
      Employees for Acquiring, or in Conjunction with Selling, Goods or Services”
until the adoption of SFAS 123(R) which does not cover non-employees. All
      transactions in which goods or services are the consideration received for
      the
      issuance of equity instruments are accounted for based on the fair value of
      the
      consideration received or the fair value of the equity instrument issued,
      whichever is more reliably measurable. Stock based compensation for
      non-employees was $90,615 and $129,720 for the nine months ended December 31,
      2006 and 2005, respectively.




**2.**
            **USE
                OF ESTIMATES**




The
      preparation of consolidated financial statements in accordance with accounting
      principals generally accepted in the United States of America requires the
      Company to make estimates and judgments that affect the reported amounts of
      assets, liabilities, revenues and expenses, and related disclosure of contingent
      assets and liabilities.




On
      an
      on-going basis, the Company evaluates its estimates, including those related
      to
      option and warrant values, bad debts, inventories, intangible assets,
      contingencies and litigation. The Company bases its estimates on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities that are not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.




10




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




**3.**
            **SEGMENT
                INFORMATION**




Under
      the
      provision of SFAS No. 131, the Company's activities fall within two operating
      segments: Graphic Arts and Specialty Chemicals. The following tables set forth
      the Company's industry segment information for the three months and nine months
      ended December 31, 2006 and 2005.




The
      Company’s total revenues and net income (loss) by segment for the three month
      period ended December 31, 2006 and identifiable assets as of December 31, 2006
      are as follows:




Graphic
                Arts
            
            Specialty
              Chemicals
            
            Corporate
            
            TotalRevenues
            
            $
            616
            
            $
            112,843
            
            $
            —
            
            $
            113,459Gross
                profit
            
            $
            35
            
            $
            45,561
            
            $
            —
            
            $
            45,596Selling,
                general and administrative
            
            
            —
            
            
            303,389
            
            
            413,590
            
            
            716,979Depreciation
                and amortization
            
            
            —
            
            
            17,824
            
            
            1,649
            
            
            19,473Interest
                income
            
            
            —
            
            
            —
            
            
            41,157
            
            
            41,157Interest
                expense
            
            
            —
            
            
            —
            
            
            696
            
            
            696Net
                income (loss)
            
            $
            35
            
            $
            (275,652
            )
            $
            (374,778
            )
            $
            (650,395
            )Cash
                and cash equivalents
            
            $
            —
            
            $
            —
            
            $
            3,413,145
            
            $
            3,413,145Accounts
                receivable, net
            
            
            118
            
            
            87,943
            
            
            —
            
            
            88,061Inventory,
                net
            
            
            7,545
            
            
            107,478
            
            
            —
            
            
            115,023Note
                receivable, net
            
            
            4,476
            
            
            —
            
            
            —
            
            
            4,476Prepaid
                expenses
            
            
            —
            
            
            34,505
            
            
            53,968
            
            
            88,473Property
                and equipment, net
            
            
            —
            
            
            71,336
            
            
            32,497
            
            
            103,833Goodwill,
                net
            
            
            —
            
            
            15,499
            
            
            —
            
            
            15,499Patents,
                net
            
            
            —
            
            
            344,853
            
            
            —
            
            
            344,853Loan
                receivable, net
            
            
            —
            
            
            —
            
            
            2,704
            
            
            2,704Deposits
            
            
            —
            
            
            —
            
            
            1,385
            
            
            1,385Total
                assets
            
            $
            12,139
            
            $
            661,614
            
            $
            3,503,699
            
            $
            4,177,452Capital
                Expenditures (9 months)
            
            $
            —
            
            $
            3,710
            
            $
            —
            
            $
            3,710




The
      Company's total revenues and net loss by segment for the nine month period
      ended
      December 31, 2006, are as follows:




Graphic
                Arts
            
            Specialty
              Chemicals
            
            Corporate
            
            TotalRevenues
            
            $
            1,127
            
            $
            636,684
            
            $
            —
            
            $
            637,811Gross
                profit
            
            $
            68
            
            $
            360,623
            
            $
            —
            
            $
            360,691Selling,
                general and administrative
            
            
            15,968
            
            
            1,039,898
            
            
            1,150,726
            
            
            2,206,592Depreciation
                and amortization
            
            
            —
            
            
            51,930
            
            
            4,951
            
            
            56,881Interest
                income
            
            
            —
            
            
            —
            
            
            134,655
            
            
            134,655Interest
                expense
            
            
            —
            
            
            —
            
            
            1,925
            
            
            1,925Net
                loss
            
            $
            (15,900
            )
            $
            (731,205
            )
            $
            (1,022,947
            )
            $
            (1,770,052
            )




11




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




The
      Company’s total revenues and net loss by segment for the three month period
      ended December 31, 2005 and identifiable assets as of December 31, 2005 are
      as
      follows:




Graphic
                Arts
            
            Specialty
              Chemicals
            
            Corporate
            
            TotalRevenues
            
            $
            106,259
            
            $
            118,961
            
            $
            —
            
            $
            225,220Gross
                profit
            
            $
            44,747
            
            $
            66,768
            
            $
            —
            
            $
            111,515Selling,
                general and administrative
            
            
            60,251
            
            
            254,696
            
            
            301,052
            
            
            615,999Depreciation
                and amortization
            
            
            —
            
            
            15,756
            
            
            1,570
            
            
            17,326Interest
                income
            
            
            —
            
            
            —
            
            
            9
            
            
            9Interest
                expense
            
            
            —
            
            
            —
            
            
            726
            
            
            726Net
                loss
            
            $
            (15,504
            )
            $
            (203,684
            )
            $
            (303,339
            )
            $
            (522,527
            )Cash
                and cash equivalents
            
            $
            —
            
            $
            —
            
            $
            83,658
            
            $
            83,658Accounts
                receivable, net
            
            
            46,019
            
            
            73,227
            
            
            —
            
            
            119,246Inventory,
                net
            
            
            7,737
            
            
            128,022
            
            
            —
            
            
            135,759Note
                receivable, net
            
            
            17,500
            
            
            —
            
            
            —
            
            
            17,500Prepaid
                expenses
            
            
            —
            
            
            —
            
            
            50,285
            
            
            50,285Property
                and equipment, net
            
            
            —
            
            
            111,705
            
            
            35,355
            
            
            147,060Goodwill,
                net
            
            
            —
            
            
            15,499
            
            
            —
            
            
            15,499Patents,
                net
            
            
            —
            
            
            301,168
            
            
            —
            
            
            301,168Loan
                receivable, net
            
            
            —
            
            
            —
            
            
            159
            
            
            159Deposits
            
            
            —
            
            
            —
            
            
            1,385
            
            
            1,385Total
                assets
            
            $
            71,256
            
            $
            629,621
            
            $
            170,842
            
            $
            871,719Capital
                Expenditures (9 months)
            
            $
            —
            
            $
            17,529
            
            $
            13,180
            
            $
            30,709




The
      Company's total revenues and net loss by segment for the nine month period
      ended
      December 31, 2005, are as follows:




Graphic
                Arts
            
            Specialty
              Chemicals
            
            Corporate
            
            TotalRevenues
            
            $
            106,741
            
            $
            283,554
            
            $
            —
            
            $
            390,295Gross
                profit
            
            $
            44,959
            
            $
            94,832
            
            $
            —
            
            $
            139,791Selling,
                general and administrative
            
            
            138,777
            
            
            1,446,679
            
            
            823,906
            
            
            2,409,362Depreciation
                and amortization
            
            
            —
            
            
            45,756
            
            
            6,230
            
            
            51,986Interest
                income
            
            
            —
            
            
            —
            
            
            32
            
            
            32Interest
                expense
            
            
            —
            
            
            —
            
            
            576,894
            
            
            576,894Net
                loss
            
            $
            (93,818
            )
            $
            (1,397,603
            )
            $
            (1,406,998
            )
            $
            (2,898,419
            )




GEOGRAPHICAL
                INFORMATION
            
            REVENUE2006
            
            2005U.S.
            
            $
            508,008
            
            $
            321,863Non
                U.S.
            
            
            129,803
            
            
            68,432Total
                revenue
            
            $
            637,811
            
            $
            390,295




12




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




**4.**
            **INVENTORY**





Inventory
      consists of the following:


**Dec.
                  31,**
              
              **March
                  31,****2006**
              
              **2006**Blended
                  chemicals
              
              $
              62,965
              
              $
              68,255Raw
                  materials
              
              
              52,058
              
              
              38,702Total
                  inventory
              
              $
              115,023
              
              $
              106,957





**5.**
            **RELATED-PARTY
                TRANSACTIONS**




The
      Company has an amount due to Robert Seaman, a shareholder and former director
      of
      the Company. The amount due to the related party as of December 31, 2006 and
      2005 is $244,141. This amount is unsecured, non-interest bearing and due upon
      demand.




Martin
      Rappaport, a major shareholder and director of the Company, owns the property
      from which United Energy leases the 9,600 square foot facility it occupies
      in
      Secaucus, New Jersey. The Company pays approximately $115,200 per year under
      the
      lease, excluding real estate taxes. The Company believes that the lease is
      at
      fair market value with leases for similar facilities.




During
      January and February 2005, the Company’s Chairman of the Board, Ron Wilen,
      loaned the Company $133,600. The loan was unsecured, non interest bearing and
      due upon demand. This loan was repaid in April 2005.




During
      August 2005, the Chairman of the Board, Ron Wilen, and the Chief Executive
      Officer, Brian King, each loaned the Company $100,000. The loans were both
      unsecured, non-interest bearing and due upon demand. These loans were repaid
      in
      April 2006.




**6.**
            **EMPLOYEE
                BENEFITS PLAN**




*Stock
      Option Plans*




In
      August
      2001, the Company’s stockholders approved the 2001 Equity Incentive Plan (the
“2001 Plan”), which provides for the grant of stock options to purchase up to
      2,000,000 shares of common stock to any employee, non-employee director, or
      consultant at the Board’s discretion. Under the 2001 Plan, these options may be
      exercised for a period up to ten years from the date of grant. Options issued
      to
      employees are exercisable upon vesting, which can range between the dates of
      the
      grant to up to 5 years .




An
      amendment and restatement of the 2001 Equity Incentive Plan increasing the
      number of shares for a total of 4,000,000 was approved by the Board of Directors
      on May 29, 2002 and was approved by the
      shareholders at the annual meeting.




Under
      the
      2001 Plan, options are granted to non-employee directors upon election at the
      annual meeting of stockholders at a purchase price equal to the fair market
      value on the date of grant. In addition, the non-employee director stock options
      shall be exercisable in full twelve months after the date of grant unless
      determined otherwise by the compensation committee.




There
      were 225,000 shares of common stock available for future grant as of December
      31, 2006 under the 2001 equity incentive plan.




13




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




***Fair
      Value of Stock Options***




For
      disclosure purposes under SFAS No. 123 and SFAS No. 123(R), the fair value
      of
      each option grant is estimated on the date of grant using the Black-Scholes
      option valuation model with the following weighted-average
      assumptions:


**2006**
              
              **2005**Expectedlife
                  (in years)
              
              
              10
              
              
              10Risk-free
                  interest rate
              
              
              4.5
              %
              
              4.5
              %Volatility
              
              
              98.5
              
              
              119.7Dividend
                  yield
              
              
              0
              %
              
              0
              %




Utilizing
      these assumptions, the weighted average fair value of options granted with
      an
      exercise price equal to their fair market value at the date of the grant is
      $1.17 for the nine months ended December 31, 2006.




*Summary
      Stock Option Activity* **




The
      following table summarizes stock option information with respect to all stock
      options for the quarter ended December 31, 2006:




**Number
                of**
              **Shares**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual**
              **Life
                (Years)**
            
            **Aggregate**
              **Intrinsic**
              **Value**Options
                outstanding April 1, 2006
            
            
            3,185,000
            
            $
            1.11
            
            
            8.48Granted
            
            
            300,000
            
            $
            1.84Cancelled
            
            
            (10,000
            )Exercised
            
            
            (12,500
            )Options
                outstanding December 31, 2006
            
            
            3,462,500
            
            $
            1.17
            
            
            7.38Vested
                and expected to vest-end of quarter
            
            
            3,462,500
            
            $
            1.17
            
            
            7.38
            
            $
            —Exercisable-end
                of quarter
            
            
            3,139,027
            
            $
            1.18
            
            
            7.24
            
            $
            —




Options
      outstanding at December 31, 2006 have an exercise price ranging from $0.70
      to
      $2.05.




14




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




The
      aggregate intrinsic value in the table above represents the total intrinsic
      value (the difference between United Energy’s closing stock price on December
      31, 2006 and the exercise price, multiplied by the number of in-the-money
      options) that would have been received by the option holders had vested option
      holders exercised their options on December 31, 2006. This amount changes based
      upon changes in the fair market value of United Energy’s stock. As of December
      31, 2006, $148,498 of the total unrecognized compensation costs related to
      stock
      options is expected to be recognized over a period of one year and nine
      months.




The
      following table illustrates the effect on net loss and earnings per share for
      the three months and nine months ended December 31, 2005 as if the Company
      had
      applied the fair value recognition provisions of SFAS No. 123 to stock-based
      employee compensation:




For the Three
              months Ended
                December 31,
              2005
            
            For the Nine
              months Ended
                December 31,
              2005Net
                loss as reported
            
            $
            (522,527
            )
            $
            (2,898,419
            )Add:Stock
                based employee compensation expenseIncluded
                in reported net loss
            
            
            —
            
            
            387,000Deduct:Total
                            stock based employee compensation expense determined
                            under fair value
                            based method for all
                            awards
            
            
            (45,954
            )
            
            (343,691
            )Pro
                forma loss
            
            $
            (568,481
            )
            $
            (2,855,110
            )Basic
                and diluted loss per common shareAs
                reported
            
            $
            (0.02
            )
            $
            (0.12
            )Pro
                forma
            
            $
            (0.02
            )
            $
            (0.12
            )




**7.**
            **COMMITMENTS
                AND CONTINGENCIES**




Sales
      Commission Claim




In
      July
      2002, an action was commenced against us in the Court of Common Pleas of South
      Carolina, Pickens County, brought by Quantum International Technology, LLC
      and
      Richard J. Barrett. Plaintiffs allege that they were retained as a sales
      representative of ours and in that capacity made sales of our products to the
      United States government and to commercial entities. Plaintiffs further allege
      that we failed to pay to plaintiffs agreed commissions at the rate of 20% of
      gross sales of our products made by plaintiffs. The complaint seeks an
      accounting, compensatory damages in the amount of all unpaid commissions plus
      interest thereon, and punitive damages in an amount triple the compensatory
      damages, plus legal fees and costs. Plaintiffs maintain that they are entitled
      to receive an aggregate of approximately $350,000 in compensatory and punitive
      damages, interest and costs. In June 2003, the action was transferred from
      the
      court in Pickens County to a Master in Equity sitting in Greenville, South
      Carolina and was removed from the trial docket. The action, if tried, will
      be
      tried without a jury. No trial date has been scheduled. We believe, based on
      the
      advice of counsel, we have meritorious defenses to the claims asserted in the
      action and intend to vigorously defend the case. The outcome of this matter
      cannot be determined at this time.




15




**Item
      2** ***Management's
      Discussion and Analysis or Plan of Operation***




**CAUTIONARY
      STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS**





The
      matters discussed in this Form 10-QSB/A contain certain forward-looking
      statements and involve risks and uncertainties (including changing market
      conditions, competitive and regulatory matters, etc.) detailed in the disclosure
      contained in this Form 10-QSB/A and the other filings with the Securities and
      Exchange Commission made by us from time to time. The discussion of our
      liquidity, capital resources and results of operations, including
      forward-looking statements pertaining to such matters, does not take into
      account the effects of any changes to our operations. Accordingly, actual
      results could differ materially from those projected in the forward-looking
      statements as a result of a number of factors, including those identified herein
      and those discussed under the heading “Risk Factors” in the Company’s 10-KSB/A
      for the fiscal year ended March 31, 2006. This item should be read in
      conjunction with the financial statements and other items contained elsewhere
      in
      the report. Unless the context otherwise requires, “we”, “our”, “us”, the
“Company” and similar phrases refer to United Energy Corp.





**Recent
      Development**




On
      March
      18, 2005, we entered into a securities purchase agreement with two private
      investors with the respect to the sale of shares of our common stock and
      warrants. The agreement provides for two types of units, designated as Series
      A
      and Series B. The Series A Units each consist of 100,000 shares of our common
      stock and a Series A Warrant to purchase 50,000 shares of our common stock
      at
      $1.00 per share, subject to adjustment. The Series A Warrants expire five (5)
      years from the date they are issued. The purchase price for each Series A Unit
      is $80,000. The securities purchase agreement provides for the sale of up to
      twenty (20) Series A Units. The Series B Units each consist of ten (10) shares
      of a new class of preferred stock that will be converted into 80,000 shares
      of
      our common stock in the aggregate, subject to adjustment, and Series B Warrant
      to purchase 40,000 shares of our stock at $1.50 per share. The Series B Warrants
      expire five (5) years from the date they are issued. The purchase price for
      each
      Series B Unit is $80,000. The securities purchase agreement provides for the
      sale of up to forty-two (42) Series B Units.




On
      January 26, 2006, the Company entered into the first amendment to the securities
      purchase agreement dated March 18, 2005 (the “First Amendment”). The First
      Amendment changed, among other provisions, the expiration date of the securities
      purchase agreement to the earlier of March 18, 2008 or thirty (30) days after
      notice of termination from the holder of a majority of the shares issued under
      the agreement; and, that for so long as the purchasers hold 1,500,000 shares
      of
      common stock equivalents (meaning shares of common stock and other securities
      convertible to or exercisable for common stock), the Majority Holder, Sherleigh
      Associates Inc. Profit Sharing Plan (“Sherleigh”), shall have the right to
      designate a majority of the members of our Board of Directors in the event
      of
      any of the following, referred to as triggering events:


(i)
                if we fail to have gross revenue of at least $5,000,000 for the six
                months
                ended September 30, 2006;(ii)
                if we breach any of our representations, warranties, agreements,
                covenants, terms or obligations under the securities purchase agreement
                or
                ancillary agreements; or(iii)
                if the investors purchase an aggregate of twenty one or more Series
                B
                Units




On
      March
      9, 2006, we entered into the Second Amendment to Securities Purchase Agreement
      dated March 18, 2005. Pursuant to the second amendment, Sherleigh agreed to
      purchase three-tenths of one Series B Unit, consisting of 3 shares of preferred
      stock and Series B Warrants to purchase 12,000 shares of our common stock,
      for
      an aggregate purchase price of $24,000. In addition, the investors agreed to
      waive all existing defaults under the purchase agreement, including our failure
      to timely file a Certificate of Designations for the Preferred Stock and to
      timely issue common stock certificates and warrants.




We
      and
      the investors also agreed to terminate all further obligations of the investors
      to purchase and our obligation to sell any remaining Series B Units. The
      remaining Series B Units would have consisted of 417 shares of preferred stock
      convertible into an aggregate of 3,336,000 shares of common stock at a
      conversion price of $1.00 and of warrants to purchase 1,668,000 shares of common
      stock at an exercise price of $1.00 per share. Instead we agreed to issue to
      Sherleigh Series C Warrants to purchase 5,004,000 shares of our common stock
      at
      an exercise price of $1.00. The Series C Warrant, as well as the preferred
      stock
      and the Series B Warrant, are subject to anti-dilution provisions in the event
      that we issue shares of common stock at a price less than the conversion price
      or the exercise price and contain provisions limiting the holder’s right to
      convert or exercise if doing so would cause such holder and its affiliates
      to
      beneficially own more than 9.99% of the outstanding common stock.




16




For
      so
      long as the investors hold 1,500,000 shares of common stock equivalents (meaning
      shares of common stock and other securities convertible to or exercisable for
      common stock), Sherleigh shall have the right to designate a majority of the
      members of our Board of Directors in the event of any of the following, referred
      to as triggering events:


(i)
                if we fail to have gross revenue of at least $5,000,000 for the six
                months
                ending September 30, 2006; or(ii)
                if we breach any of our representations, warranties, agreements,
                covenants, terms or obligations under the securities purchase agreement
                or
                ancillary agreements.




On
      March
      24, 2006, we raised $5,100,000 in gross cash proceeds from the sale in a private
      placement of 4,250,000 shares of our common stock at a price of $1.20 per
      share.




We
      failed
      to have gross revenues of at least $5,000,000 for the six months ended September
      30, 2006 and therefore, Sherleigh has the right to designate a majority of
      the
      members of our Board of Directors. To date, Sherleigh has not elected to
      designate a majority of the members of our Board of Directors and there is
      no
      assurance that Sherleigh will not elect to designate a majority of the members
      of our Board of Directors. If Sherleigh decides to designate a majority of
      the
      members of our Board of Directors, such directors will have the authority to
      exercise control over matters relating to us, including without limitation,
      (i)
      discretion over our day to day affairs and our management and (ii) decisions
      relating or affecting our capital structure, including the issuance of
      additional capital stock, debt and the declaration of dividends.




**Overview**




**** We
      develop and distribute environmentally friendly specialty chemical products
      with
      applications in several industries and markets. Our current line of products
      includes:


o
            KH-30
                paraffin dispersant for the oil industry and related products;o
            Uniproof
                specialty-coated proofing paper for the printing industry; ando
            following
                additional testing, “Slick Barrier” underwater protective coatings for use
                in marine applications.




Through
      our wholly owned subsidiary, Green Globe Industries, Inc., we provide the U.S.
      military with a variety of solvents, paint strippers and cleaners under our
      trade name “Qualchem.” Green Globe is a qualified supplier for the U.S. military
      and has sales contracts currently in place with no minimum purchase requirements
      that are renewable at the option of the U.S. military.




We
      have
      developed and patented a system referred to as our “S2 system,” to work with our
      environmentally friendly paraffin dispersants products. This patented technology
      produces high volumes of steam and heat at variable pressures and temperatures
      to completely dissolve most deposits of paraffin and asphaltene within oil
      wells, pipelines or storage tanks. The S2 system apparatus is portable, compact
      and easy to use. We are further developing the process to enhance and support
      sales of KH-30 and its related products for the oil industry and for other
      potential applications.




A
      key
      component of our business strategy is to pursue collaborative joint working
      and
      marketing arrangements with established international oil and oil service
      companies. We intend to enter into these relationships to more rapidly and
      economically introduce our KH-30 product line to the worldwide marketplace
      for
      refinery, tank and pipeline cleaning services. We have recently entered into
      a
      non-exclusive distribution agreement with Champion Technologies Inc. and a
      non-exclusive Master Purchase Agreement with Petrobras America Inc. for the
      sale
      and distribution of our K-Line of patented specialty chemical solutions. In
      June
      2006 and September 2006, Petrobras America Inc. placed Specialty Chemical orders
      of $123,772 and $167,092, respectively. The agreements do not provide for any
      minimum amounts to be purchased. We are also currently negotiating potential
      working arrangements with several other companies however, there can be no
      assurance that any of these arrangements will be entered into or, if entered
      into, (as well as the agreements with Champion Technologies and Petrobras
      America Inc.) will be successful.




17




We
      provide Specialty Chemicals and graphic arts products to our customers and
      generated revenues of $637,811 for the nine months ended December 31, 2006
      and
      $390,295 for the nine months ended December 31, 2005.




**RESULTS
      OF OPERATIONS**




**Three
      Months Ended** **December
      31, 2006 Compared to the Three Months Ended December 31,
      2005**




*Revenues* .
      Revenues for the three months ended December 31, 2006 were $113,459, a $111,761,
      or 50% decrease from revenues of $225,220 in the comparable three months of
      2005. The decrease in revenues was due to no sales of our Uniproof proofing
      paper during the three months ended December 31, 2006 as compared to $106,259
      in
      the comparable three months ended December 31, 2005. Specialty Chemicals
      revenues, which includes sales of our KH-30 products and Green Globe/Qualchem
      military sales, slightly decreased by $6,118 to $112,843, or 5% from the
      comparable three months of 2005 compared to $118,961 in the comparable three
      months in 2005. This decrease was due primarily to lower sales of our KH-30
      family of oil field dispersant products.




*Cost
      of Goods Sold* .
      Cost of
      goods sold decreased $45,842, or 40% to $67,863 or 60% of revenues, for the
      three months ended December 31, 2006 from $113,705, or 50% of revenues for
      the
      three months ended December 31, 2005. The decrease in cost of goods sold (which
      accounted for higher percentage of revenues) was due to the lower sales levels
      in the period compared to the comparable period in 2005.




*Gross
      Profit* .
      Gross
      profit for the three months ended December 31, 2006, decreased by $65,919,
      or
      59% to $45,596 or 40% of revenues compared with $111,515 or 50% of sales in
      the
      prior period. The decrease in gross profit and gross profit percentage reflects
      the lower levels of sales of Specialty Chemicals and no sales of our Uniproof
      proofing paper during the three months ended December 31, 2006.




***Operating
      Costs and Expenses***




*Selling,
      General and Administrative Expenses* .
      Selling, general and administrative expenses increased $100,980 to $716,979
      or
      632% of sales for the three months ended December 31, 2006 compared with
      $615,999 for the three months ended December 31, 2005. The increase in selling,
      general and administrative expenses was primarily related to higher salaries
      due
      to increased payroll and the expensing of options, and higher professional
      fees,
      partially offset by a decrease in bad debts.




*Depreciation
      and Amortization* .
      Depreciation and amortization remained relatively constant for the three months
      ended December 31, 2006 as compared to December 31, 2005.




*Interest
      Income* .
      The
      Company had interest income of $41,157 for the three months ended December
      31,
      2006 compared with $9 in the corresponding period in 2005. The increase was
      due
      to the increased cash level in connection with the private placement completed
      in March 2006.




*Interest
      Expense* .
      Interest expense remained relatively constant for the three months ended
      December 31, 2006 as compared to December 31, 2005.




*Net
      Loss* .
      The
      three months ended December 31, 2006 resulted in a net loss of $650,395 or
      $0.02
      per share as compared to a net loss of $522,527 or $0.02 per share for the
      three
      months ended December 31, 2005. The  average
      number of shares of common stock used in calculating net loss per share
      increased 5,247,874 shares to 31,030,115 as a result of 2,000,000 shares issued
      for the conversion of the note payable, 312,500 shares issued in connection
      with
      the exercise of stock options and 5,450,000 shares issued in connection with
      the
      private placements.




18




**Nine
      months Ended December 31, 2006 Compared to the Nine months Ended December 31,
      2005**




*Revenues* .
      Revenues for the nine months ended December 31, 2006 were $637,811, a $247,516
      or 63% increase from revenues of $390,295 in the comparable nine months ended
      December 31, 2005. The increase in revenues was due to higher sales of Specialty
      Chemicals, primarily to three customers, Petrobras America Inc., Interchem
      Limited and Castor Petroleum LTD. Specialty Chemicals revenues, which include
      sales of our KH-30 products and Green Globe/Qualchem products, increased by
      $353,130 to $636,684, or 125% compared to $283,554 in the comparable nine months
      ended December 31, 2005. This increase was primarily related to higher sales
      of
      our KH-30 family of oil field dispersant products. There were no sales of our
      Uniproof proofing paper during the nine months ended December 31, 2006 as
      compared to $106,741 in the comparable nine months ended December 31, 2005.




*Cost
      of Goods Sold* .
      Cost of
      goods sold increased $26,616, or 11% to $277,120 or 43% of revenues, for the
      nine months ended December 31, 2006 from $250,504 or 64% of revenues, for the
      nine months ended December 31, 2005. The increase in cost of goods sold (which
      accounted for a lower percentage of revenues) was due to the higher sales level
      in the period compared to the comparable period in 2005.




*Gross
      Profit* .
      Gross
      profit for the nine months ended December 31, 2006, increased by $220,900,
      or
      158% to $360,691 or 57% of revenues compared with $139,791 or 36% of revenues
      in
      the prior period. The increase in gross profit and gross profit percentage
      reflects the higher levels of sales of Specialty Chemicals.




***Operating
      Costs and Expenses***




*Selling,
      General and Administrative Expenses* .
      Selling, general and administrative expenses decreased $202,770 to $2,206,592
      or
      346% of revenues for the nine months ended December 31, 2006 compared with
      $2,409,362 for the nine months ended December 31, 2005. The decrease in selling,
      general and administrative expenses was primarily related to lower salaries
      due
      to the exercise of options in the prior comparable period offset partially
      by an
      increase in payroll and the expensing of options, a decrease in professional
      fees, lower marketing expenses, and lower travel and entertainment expenses,
      partially offset by an increase in bad debts.




*Depreciation
      and Amortization* .
      Depreciation and amortization remained relatively constant for the nine months
      ended December 31, 2006 as compared to December 31, 2005.




*Interest
      Income* .
      The
      Company had interest income of $134,655 for the nine months ended December
      31,
      2006 compared with $32 in the corresponding period in 2005. The increase was
      due
      to the increased cash level in connection with the private placement completed
      in March 2006.




*Interest
      Expense* .
      The
      Company had interest expense of $1,925 for the nine months ended December 31,
      2006 compared with interest expense of $576,894 in the corresponding period
      in
      2005. The decrease was due to the lower principal amount of indebtedness
      outstanding as a result of the convertible term note being satisfied in August
      2005.




*Net
      Loss* .
      The
      nine months ended December 31, 2006 resulted in a net loss of $1,770,052 or
      $0.06 per share as compared to a net loss of $2,898,419 or $0.12 per share
      for
      the nine months ended December 31, 2005. The  average
      number of shares of common stock used in calculating earnings per share
      increased 6,238,045 shares to 31,029,070 as a result of 2,000,000 shares issued
      for the conversion of the note payable, 312,500 shares issued in connection
      with
      the exercise of stock options and 5,450,000 shares issued in connection with
      the
      private placements.




19




***Liquidity
      and Capital Resources***




As
      of
      December 31, 2006, the Company had $3,413,145 in cash and cash equivalents,
      as
      compared to $5,194,748 at March 31, 2006.




The
      $1,781,603 decrease in cash and cash equivalents at December 31, 2006 compared
      to March 31, 2006 was due to net cash used in operating activities of
      $1,550,371, net cash used in investing activities of $43,941 and net cash used
      in financing activities of $187,791 during the nine months ended December 31,
      2006. Cash used in investing activities consisted of fixed asset purchases
      of
      $3,710 and patent purchases of $40,231. Cash used in financing activities during
      the nine months ended December 31, 2006 consisted of the payment of a related
      party payable of $200,000 and preferred stock dividends of $1,166, partially
      offset by the receipt from the exercise of stock options of
      $13,875.




As
      of
      December 31, 2006 the Company’s backlog included $80,452 of Specialty Chemical
      sales. Backlog represents products that the Company’s customers have committed
      to purchase. The Company’s backlog is subject to fluctuations and is not
      necessarily indicative of future sales.




We
      currently anticipate that our available cash in hand and cash resources from
      expected revenues will be sufficient to meet our anticipated working capital
      and
      capital expenditure requirements for at least the next twelve
      months.




***Concentration
      of Risk***




We
      currently sell our Uniproof proofing paper to one customer, the Alameda Company
      of Anaheim, California. There were no sales to this customer during the nine
      months ended December 31, 2006 and $106,019 in sales during the nine months
      ended December 31, 2005. Revenue from sales of our proofing paper is expected
      to
      continue to decline due to the paper technology switching to a digital
      technology. A decision by Alameda to discontinue its relationship with us could
      result in a significant loss of revenue to us.




We
      sold
      our Specialty Chemicals to four customers, which comprised 74.3% of our sales
      of
      Specialty Chemicals for the nine months ended December 31, 2006. For the nine
      months ended December 31, 2005, we sold our Specialty Chemicals to three
      customers, which comprised 35.4% of our sales of Specialty Chemicals.




***Off-Balance
      Sheet Arrangements***




We
      do not
      currently have any off-balance sheet arrangements that have or are reasonably
      likely to have a current or future effect on our financial condition, changes
      in
      financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that are material to our
      stockholders.




***Quantitative
      and Qualitative Disclosures about Market Risk***




There
      were no material changes from the information presented in the Company’s Annual
      Report on Form 10-KSB for the fiscal year ended March 31, 2006, with
      respect to the Company’s quantitative and qualitative disclosures about market
      risks.




20




**Item
      3.** **Controls
      and Procedures.**




As
      of
      December 31, 2006 (the end of the period covered by this report), our management
      carried out an evaluation, with the participation of our Chief Executive Officer
      and Interim Chief Financial Officer, of the effectiveness of our disclosure
      controls and procedures. The evaluation process, including the inherent
      limitations on the effectiveness of such controls and procedures, is more fully
      discussed below. Based upon that evaluation, the Chief Executive Officer and
      Interim Chief Financial Officer concluded that as of the end of the period
      covered by this report, our disclosure controls were not effective due to the
      material weakness in our internal controls over the financial reporting process,
      as described below. In designing and evaluating our disclosure controls and
      procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities
      Exchange Act of 1934, as amended), management recognized that any controls
      and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurances of achieving the desired control objectives, as ours
      are
      designed to do, and management necessarily was required to apply its judgment
      in
      evaluating the cost-benefit relationship of possible controls and procedures.




In
      connection with the audit by our independent registered public accounting firm
      of our financial statements, as of March 31, 2006 and for the year then ended,
      our independent registered public accounting firm notified our management and
      the Board of Directors that they had identified a deficiency that they
      considered a material weakness in our internal controls over the financial
      reporting process relating to the communication between the Chairman of the
      Board of Directors, the CEO and the interim CFO. Adjustments were identified
      during the audit process relating to the recording of options that the Company
      issued during 2006 and 2005. These adjustments were made to the consolidated
      financial statements for the year ended March 31, 2006 and 2005.




The
      reportable conditions have been discussed in detail among management and our
      independent registered public accounting firm, and we are committed to resolving
      the issue. We have taken the appropriate steps in correcting the matter by
      enhancing the communications process among the members of management to ensure
      more timely notification of current issues, including through the institution
      of
      more regularly scheduled meetings among management.




There
      are
      no changes in our internal controls over financial reporting that occurred
      during the period covered by this report that have materially affected, or
      are
      reasonably likely to materially affect our internal control over financial
      reporting.




**Item
      5** ***Other
      Information.***




On
      March
      18, 2005, we entered into a securities purchase agreement with two private
      investors (the "Purchasers") with the respect to the sale of shares of our
      common stock and warrants. The agreement provides for two types of units,
      designated as Series A and Series B. On January 26, 2006, the Company entered
      into the first amendment to the securities purchase agreement dated March 18,
      2005 (the “First Amendment”). The First Amendment amended, among other
      provisions, the expiration date of the securities purchase agreement to the
      earlier of March 18, 2008 or thirty (30) days after notice of termination from
      the holder of a majority of the shares issued under the agreement; and, that
      for
      so long as the purchasers hold 1,500,000 shares of common stock equivalents
      (meaning shares of common stock and other securities convertible to or
      exercisable for common stock), the Majority Holder, Shereigh Associates Inc
      Profit Sharing Plan (“Sherleigh”) shall have the right to designate a majority
      of the members of our Board of Directors in the event of any of the following,
      referred to as triggering events:


(i)
                if we fail to have gross revenue of at least $5,000,000 for the six
                months
                ended September 30, 2006;(ii)
                if we breach any of our representations, warranties, agreements,
                covenants, terms or obligations under the securities purchase agreement
                or
                ancillary agreements; or(iii)
                if the investors purchase an aggregate of twenty one or more Series
                B
                Units




21




On
      March
      9, 2006, we entered into the Second Amendment to Securities Purchase Agreement
      dated March 18, 2005. Pursuant to the second amendment, Sherleigh agreed to
      purchase three-tenths of one Series B Unit, consisting of 3 shares of preferred
      stock and Series B Warrants to purchase 12,000 shares of our common stock,
      for
      an aggregate purchase price of $24,000. In addition, the investors agreed to
      waive all existing defaults under the purchase agreement, including our failure
      to timely file a Certificate of Designations for the Preferred Stock and to
      timely issue common stock certificates and warrants.




We
      and
      the investors also agreed to terminate all further obligations of the investors
      to purchase and our obligation to sell any remaining Series B Units. The
      remaining Series B Units would have consisted of 417 shares of preferred stock
      convertible into an aggregate of 3,336,000 shares of common stock at a
      conversion price of $1.00 and of warrants to purchase 1,668,000 shares of common
      stock at an exercise price of $1.00 per share. Instead we agreed to issue to
      Sherleigh Series C Warrants to purchase 5,004,000 shares of our common stock
      at
      an exercise price of $1.00. The Series C Warrant, as well as the preferred
      stock
      and the Series B Warrant, are subject to anti-dilution provisions in the event
      that we issue shares of common stock at a price less than the conversion price
      or the exercise price and contain provisions limiting the holder’s right to
      convert or exercise if doing so would cause such holder and its affiliates
      to
      beneficially own more than 9.99% of the outstanding common stock.




For
      so long as the investors hold 1,500,000 shares of common stock equivalents
      (meaning shares of common stock and other securities convertible to or
      exercisable for common stock), Sherleigh shall have the right to designate
      a
      majority of the members of our Board of Directors in the event of any of the
      following, referred to as triggering events:


(i)
                if we fail to have gross revenue of at least $5,000,000 for the six
                months
                ending September 30, 2006; or(ii)
                if we breach any of our representations, warranties, agreements,
                covenants, terms or obligations under the securities purchase agreement
                or
                ancillary agreements.




On
      March
      24, 2006, we raised $5,100,000 in gross cash proceeds from the sale in a private
      placement of 4,250,000 shares of our common stock at a price of $1.20 per
      share.




We
      failed
      to have gross revenues of at least $5,000,000 for the six months ended September
      30, 2006 and therefore, Sherleigh has the right to designate a majority of
      the
      members of our Board of Directors. To date, Sherleigh has not elected to
      designate a majority of the members of our Board of Directors and there is
      no
      assurance that Sherleigh will not elect to designate a majority of the members
      of our Board of Directors. If Sherleigh decides to designate a majority of
      the
      members of our Board of Directors, such directors will have the authority to
      exercise control over matters relating to us, including without limitation,
      (i)
      discretion over our day to day affairs and our management and (ii) decisions
      relating or affecting our capital structure, including the issuance of
      additional capital stock, debt and the declaration of dividends.




22





**PART
      II**




**OTHER
      INFORMATION**




**Item
      6.** **Exhibits**




(a) Exhibits.




31.1
            Chief
                Executive Officer’s Certificate, pursuant to Rule 13a-14(a)/ 15d-14(a) of
                the Exchange Act.




31.2
            Chief
                Financial Officer’s Certificate, pursuant to Rule 13a-14(a)/ 15d-14(a) of
                the Exchange Act.




32.1
            Chief
                Executive Officer’s Certificate, pursuant to Section 1350 of Chapter 63 of
                Title 18 of the United States Code (18 U.S.C.
                1350).




32.2
            Chief
                Financial Officer’s Certificate, pursuant to Section 1350 of Chapter 63 of
                Title 18 of the United States Code (18 U.S.C.
                1350).




23




**SIGNATURES**




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


Dated:August
              10, 2007
            UNITED
              ENERGY
              CORP.By:
            /s/
              Brian KingBrian
              King,Chief
              Executive Officer(as
              principal executive officer)


By:
            /s/
              James McKeeverJames
              McKeever,Interim
              Chief Financial Officer(as
              principal financial and accounting
              officer)




24