UNITED
STATES
  SECURITIES
AND EXCHANGE COMMISSION
  Washington,
D.C. 20549
  
  FORM
10-Q
  þ
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the quarterly period ended
September 30, 2009
  or
  o
              TRANSITION REPORT PURSUANT TO
      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 registrant 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
                (Registrant's telephone number, including area code)
  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 Exchange Act 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.  þYes o
No
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes £ No þ
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
  Large
      accelerated filer  ̈
                  
                  Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
                  
                  Smaller
      reporting company þ
  Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the Exchange Act.  Yes  ̈ No þ
  As of
November 16, 2009, 31,328,587 shares of common stock, par value $.01 per share,
were outstanding.
  
  INDEX
  PART
      I.  FINANCIAL INFORMATIONItem
      1.
                    Financial
      StatementsConsolidated
      balance sheets September 30, 2009 (Unaudited) and March 31,
      2009
                    
                    3-4Consolidated
      statements of operations for the three months and six months ended
      September 30, 2009 (Unaudited) and 2008 (Unaudited)
                    
                    5Consolidated
      statement of stockholders' equity for the six months ended September 30,
      2009 (Unaudited)
                    
                    6Consolidated
      statements of cash flows for the six months ended September 30, 2009
      (Unaudited) and 2008 (Unaudited)
                    
                    7-8Notes
      to consolidated financial statements
                    
                    9-14Item
      2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    
                    15-18Item
      3.
                    Quantitative
      and Qualitative Disclosures About Market Risk
                    
                    18Item
      4.
                    Controls
      and Procedures
                    
                    19PART
      II.  OTHER INFORMATIONItem
      1.
                    Legal
      Proceedings
                    
                    20Item
      1A.
                    Risk
      Factors
                    
                    20Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    
                    20Item
      3.
                    Defaults
      Upon Senior Securities
                    
                    20Item
      4.
                    Submission
      of Matters to a Vote of Security Holders
                    
                    20Item
      5.
                    Other
      Information
                    
                    20Item
      6.
                    Exhibits
                    
                    20Signatures
                    
                    
                    21
  2
  Item
1. Financial
Statements
 
 UNITED
ENERGY CORP.  AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
  September 30,
                          
                          
                          March 31,2009
                          
                          
                          2009(Unaudited)ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                          
                          $
                          110,880
                          
                          
                          $
                          56,372Accounts
      receivable, net of allowance for doubtfulaccounts
      of $25,711 and $7,032, respectively
                          
                          
                          343,036
                          
                          
                          
                          140,531Inventory
                          
                          
                          125,335
                          
                          
                          
                          155,427Prepaid
      expenses and other current assets
                          
                          
                          31,589
                          
                          
                          
                          79,237Loan
      receivable, net of reserve of $25,000
                          
                          
                          25,000
                          
                          
                          
                          25,000Total
      current assets
                          
                          
                          635,840
                          
                          
                          
                          456,567PROPERTY
      AND EQUIPMENT, net of accumulateddepreciation
      and amortization of $477,682 and$462,091
      respectively
                          
                          
                          93,489
                          
                          
                          
                          108,094OTHER
      ASSETS:Goodwill,
      net
                          
                          
                          15,499
                          
                          
                          
                          15,499Patents,
      net of accumulated amortization of $261,103and
      $242,000, respectively
                          
                          
                          332,257
                          
                          
                          
                          347,661Loans
      receivable
                          
                          
                          4,865
                          
                          
                          
                          3,843Deposits
                          
                          
                          1,385
                          
                          
                          
                          1,385Total
      assets
                          
                          $
                          1,083,335
                          
                          
                          $
                          933,049
 
 The
accompanying notes are an integral part of these consolidated financial
statements
  3
  UNITED
ENERGY CORP.  AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
  September 30,
                              
                              
                              March 31,2009
                              
                              
                              2009(Unaudited)LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                              
                              $
                              228,179
                              
                              
                              $
                              189,609Accrued
      expenses
                              
                              
                              70,731
                              
                              
                              
                              107,622Convertible
      term note
                              
                              
                              -
                              
                              
                              
                              35,000Due
      to related parties
                              
                              
                              453,781
                              
                              
                              
                              150,000Total
      current liabilities
                              
                              
                              752,691
                              
                              
                              
                              482,231STOCKHOLDERS'
      EQUITY:Preferred
      Stock: 100,000 shares authorized;Series
      A Convertible Preferred Stock: $8,000stated
      value, 3 shares issued and outstandingas
      of September 30, 2009 and March 31, 2009
                              
                              
                              24,000
                              
                              
                              
                              24,000Common
      stock: $0.01 par value 100,000,000 sharesauthorized;
      31,328,587 and 31,030,115shares
      issued and outstanding as ofSeptember
      30, 2009 and March 31, 2009
                              
                              
                              313,286
                              
                              
                              
                              310,301Additional
      paid-in capital
                              
                              
                              22,753,369
                              
                              
                              
                              22,196,257Accumulated
      deficit
                              
                              
                              (22,760,011
                              )
                              
                              
                              (22,079,740
                              )Total
      stockholders' equity
                              
                              
                              330,644
                              
                              
                              
                              450,818Total
      liabilities and stockholders' equity
                              
                              $
                              1,083,335
                              
                              
                              $
                              933,049
 
 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 Six MonthsEnded September 30,
                        
                        
                        Ended September 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008(Unaudited)
                        
                        
                        (Unaudited)
                        
                        
                        (Unaudited)
                        
                        
                        (Unaudited)REVENUES,
      net
                        
                        $
                        613,202
                        
                        
                        $
                        384,356
                        
                        
                        $
                        1,007,206
                        
                        
                        $
                        597,994COST
      OF GOODS SOLD
                        
                        
                        231,845
                        
                        
                        
                        166,100
                        
                        
                        
                        385,559
                        
                        
                        
                        274,634Gross
      profit
                        
                        
                        381,357
                        
                        
                        
                        218,256
                        
                        
                        
                        621,647
                        
                        
                        
                        323,360OPERATING
      EXPENSES:Selling,
      general and administrative
                        
                        
                        790,606
                        
                        
                        
                        419,225
                        
                        
                        
                        1,141,638
                        
                        
                        
                        761,858Research
      and development
                        
                        
                        64,143
                        
                        
                        
                        80,031
                        
                        
                        
                        115,639
                        
                        
                        
                        154,107Depreciation
      and amortization
                        
                        
                        12,435
                        
                        
                        
                        12,631
                        
                        
                        
                        24,512
                        
                        
                        
                        24,902Total
      operating expenses
                        
                        
                        867,184
                        
                        
                        
                        511,887
                        
                        
                        
                        1,281,789
                        
                        
                        
                        940,867Loss
      from operations
                        
                        
                        (485,827
                        )
                        
                        
                        (293,631
                        )
                        
                        
                        (660,142
                        )
                        
                        
                        (617,507
                        )OTHER
      INCOME (EXPENSE), net:Interest
      income
                        
                        
                        7
                        
                        
                        
                        121
                        
                        
                        
                        14
                        
                        
                        
                        923Interest
      expense
                        
                        
                        (11,878
                        )
                        
                        
                        (273
                        )
                        
                        
                        (19,423
                        )
                        
                        
                        (874
                        )Total
      other income (expense), net
                        
                        
                        (11,871
                        )
                        
                        
                        (152
                        )
                        
                        
                        (19,409
                        )
                        
                        
                        49Net
      loss
                        
                        
                        (497,698
                        )
                        
                        
                        (293,783
                        )
                        
                        
                        (679,551
                        )
                        
                        
                        (617,458
                        )PREFERRED
      DIVIDENDS
                        
                        
                        (360
                        )
                        
                        
                        (360
                        )
                        
                        
                        (720
                        )
                        
                        
                        (720
                        )Net
      loss applicable to common shareholders
                        
                        $
                        (498,058
                        )
                        
                        $
                        (294,143
                        )
                        
                        $
                        (680,271
                        )
                        
                        $
                        (618,178
                        )BASIC
      AND DILUTED LOSS PER SHARE:
                        
                        $
                        (0.02
                        )
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.02
                        )
                        
                        $
                        (0.02
                        )BASIC
      AND DILUTED WEIGHTED AVERAGENUMBER
      OF SHARES OUTSTANDING:
                        
                        
                        31,328,587
                        
                        
                        
                        31,030,115
                        
                        
                        
                        31,255,192
                        
                        
                        
                        31,030,115
 
 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 SIX MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
  AdditionalCommon Stock
                                  
                                  
                                  Preferred
                                  
                                  
                                  Paid-In
                                  
                                  
                                  AccumulatedShares
                                  
                                  
                                  Amount
                                  
                                  
                                  Stock
                                  
                                  
                                  Capital
                                  
                                  
                                  Deficit
                                  
                                  
                                  TotalBALANCE,
      April 1, 2009
                                  
                                  
                                  31,030,115
                                  
                                  
                                  $
                                  310,301
                                  
                                  
                                  $
                                  24,000
                                  
                                  
                                  $
                                  22,196,257
                                  
                                  
                                  $
                                  (22,079,740
                                  )
                                  
                                  $
                                  450,818Compensation
      expense associated
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  .with
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  712
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  712Compensation
      expense associatedwith
      warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  524,385
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  524,385Conversion
      of convertible noteinto
      common stock
                                  
                                  
                                  298,472
                                  
                                  
                                  
                                  2,985
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  32,015
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  35,000Dividends
      accrued onpreferred
      shares
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (720
                                  )
                                  
                                  
                                  (720
                                  )Net
      loss
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (679,551
                                  )
                                  
                                  
                                  (679,551
                                  )BALANCE,
      September 30, 2009
                                  
                                  
                                  31,328,587
                                  
                                  
                                  $
                                  313,286
                                  
                                  
                                  $
                                  24,000
                                  
                                  
                                  $
                                  22,753,369
                                  
                                  
                                  $
                                  (22,760,011
                                  )
                                  
                                  $
                                  330,644
 
 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 SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
  2009
                  
                  
                  2008(Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss from continuing operations
                  
                  $
                  (679,551
                  )
                  
                  $
                  (617,458
                  )Adjustments
      to reconcile net loss to net cash used in operating
      activitiesDepreciation
      and amortization
                  
                  
                  34,694
                  
                  
                  
                  31,747Allowance
      for doubtful accounts
                  
                  
                  18,680
                  
                  
                  
                  (12,848
                  )Compensation
      expense associated with warants
                  
                  
                  524,385
                  
                  
                  
                  -Compensation
      expense associated with options
                  
                  
                  712
                  
                  
                  
                  12,571Changes
      in operating assets and liabilitiesAccounts
      receivable
                  
                  
                  (221,185
                  )
                  
                  
                  59,834Inventory
                  
                  
                  30,092
                  
                  
                  
                  4,272Prepaid
      expenses and other current assets
                  
                  
                  47,648
                  
                  
                  
                  116,686Accounts
      payable and accrued expenses
                  
                  
                  1,679
                  
                  
                  
                  (9,972
                  )Net
      cash used in operating activities
                  
                  
                  (242,846
                  )
                  
                  
                  (415,168
                  )CASH
      FLOWS FROM INVESTING ACTIVITIES:Employee
      loans
                  
                  
                  (1,023
                  )
                  
                  
                  885Payments
      for acquisition of property and equipment
                  
                  
                  (985
                  )
                  
                  
                  (82,267
                  )Payments
      for patents
                  
                  
                  (3,699
                  )
                  
                  
                  (7,294
                  )Cash
      used in investing activities
                  
                  
                  (5,707
                  )
                  
                  
                  (88,676
                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from related party payable
                  
                  
                  303,781
                  
                  
                  
                  -Preferred
      stock dividend
                  
                  
                  (720
                  )
                  
                  
                  (720
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  303,061
                  
                  
                  
                  (720
                  )Net
      increase (decrease) in cash and cash equivalents
                  
                  
                  54,508
                  
                  
                  
                  (504,564
                  )CASH
      AND CASH EQUIVALENTS, beginning of period
                  
                  
                  56,372
                  
                  
                  
                  858,575CASH
      AND CASH EQUIVALENTS, end of period
                  
                  $
                  110,880
                  
                  
                  $
                  354,011
 
 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 SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
  2009
                  
                  
                  2008(Unaudited)SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Cash
      paid during the periodInterest
                  
                  $
                  886
                  
                  
                  $
                  874Income
      taxes
                  
                  $
                  1,040
                  
                  
                  $
                  1,560SUPPLEMENTAL
      DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:Conversion
      of note payable into common stock
                  
                  $
                  35,000
                  
                  
                  $
                  -
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  8
  UNITED
ENERGY CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009 (Unaudited)
  1.
              BASIS
      OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES
  Basis
of presentation
  Interim
Financial Statements
  The
accompanying unaudited consolidated financial statements of United Energy Corp.
(“we”, “United Energy” or the “Company”) have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes 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 September 30, 2009 (unaudited) and the results of its
operations for the three and six months ended September 30, 2009 and 2008
(unaudited) and cash flows for the three and six months ended September 30, 2009
and 2008 (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 and
six months ended September 30, 2009 and 2008 are not necessarily indicative of
the operating results that may be expected for the year ending March 31,
2010.
  The
consolidated balance sheet as of March 31, 2009 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-K for the fiscal year
ended March 31, 2009.
  Going
Concern– The accompanying
consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
contemplate continuation of the Company as a going concern. However, the Company
has year-end losses from operations and has an accumulated deficit of
$22,760,011 as of September 30, 2009.During the six months ended September
30, 2009 the Company experienced a net loss from operations of $679,551 and a
negative cash flow from operations of $242,846.  These matters raise
substantial doubt about the Company’s ability to continue as a going concern.
Our consolidated financial statements do not include any adjustment that might
result from the outcome of this uncertainty.
  Our
continued existence is dependent upon several factors, including raising
additional funds through loans, additional sales of its equity securities,
increased sales volumes and the ability to achieve profitability from the sales
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.
 
 There can
be no assurance that we will be successful in stimulating sales or reducing
expenses to levels sufficient to generate cash flow sufficient to fund our
anticipated liquidity requirements. There also can be no assurance that
available financing will be available, or if available, that such financing will
be on terms acceptable to us.
 
 2
              NET
      LOSS PER SHARE
  Basic net
loss per share is computed based upon the weighted average number of common
shares outstanding during the periods and is computed by dividing net loss by
the adjusted weighted average number of shares during the
periods.
  9
  3
              RECENTLY
      ISSUED ACCOUNTING STANDARDS
  Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting
Principles
 
 In June 2009, the Financial Accounting
Standards Board (FASB) issued its final Statement of Financial Accounting
Standards (SFAS) No. 168,“The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles a Replacement of FASB StatementNo. 162”.
SFAS No. 168 made the FASB Accounting Standards Codification (the
Codification) the single source of U.S. GAAP used by nongovernmental
entities in the preparation of financial statements, except for rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws, which are sources of authoritative
accounting guidance for SEC registrants. The Codification is meant to simplify
user access to all authoritative accounting guidance by reorganizing
U.S. GAAP pronouncements into roughly 90 accounting topics within a
consistent structure; its purpose is not to create new accounting and reporting
guidance. The Codification supersedes all existing non-SEC accounting and
reporting standards and was effective for the Company beginning July 1,
2009. Following SFAS No. 168, the Board will not issue new standards
in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force
Abstracts; instead, it will issue Accounting Standards Updates (ASU). The FASB
will not consider ASUs as authoritative in their own right; these updates will
serve only to update the Codification, provide background information about the
guidance, and provide the bases for conclusions on the change(s) in the
Codification.
  In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
“Fair Value Measurements and Disclosures—Overall”. The update provides
clarification that in circumstances, in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the techniques provided for in this
update. The amendments in this ASU clarify that a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the liability and
also clarifies  that both a quoted price in an active market for the
identical liability at the measurement date and the quoted price for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The guidance provided in this ASU is effective for the first
reporting period, including interim periods, beginning after
issuance.  The adoption of this standard did not have a material
impact on the Company’s consolidated financial position and results of
operations.
  In
September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740),
”Implementation Guidance on Accounting for Uncertainty in Income Taxes and
Disclosure Amendments for Nonpublic Entities”, which provides implementation
guidance on accounting for uncertainty in income taxes, as well as eliminates
certain disclosure requirements for nonpublic entities.  For entities
that are currently applying the standards for accounting for uncertainty in
income taxes, this update shall be effective for interim and annual periods
ending after September 15, 2009. For those entities that have deferred the
application of accounting for uncertainty in income taxes in accordance with
paragraph 740-10-65-1(e), this update shall be effective upon adoption of those
standards. The adoption of this standard is not expected to have an impact on
the Company’s consolidated financial position and results of operations since
this accounting standard update provides only implementation and disclosure
amendments.
  In
September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements
and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10,
“Fair Value Measurements and Disclosures – Overall”, to permit a reporting
entity to measure the fair value of certain investments on the basis of the net
asset value per share of the investment (or its equivalent). This ASU also
requires new disclosures, by major category of investments including the
attributes of investments within the scope of this amendment to the
Codification. The guidance in this Update is effective for interim and annual
periods ending after December 15, 2009. Early application is
permitted.   The Company is in the process of evaluating the
impact of this standard on its consolidated financial position and results of
operations. The adoption of this standard is not expected to have a material
impact on the Company’s consolidated financial position and results of
operations.
  10
  In
October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic
605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products
or services (deliverables) separately rather than as a combined unit.
Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue
Recognition-Multiple-Element Arrangements”, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have a material impact on the
Company’s consolidated financial position and results of
operations.
  In
October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain
Revenue Arrangements that Include Software Elements” and changes the accounting
model for revenue arrangements that include both tangible products and software
elements. Under this guidance, tangible products containing software components
and nonsoftware components that function together to deliver the tangible
product's essential functionality are excluded from the software revenue
guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition,
hardware components of a tangible product containing software components are
always excluded from the software revenue guidance.  The guidance in
this ASU is effective prospectively for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010. Early
adoption is permitted.  The adoption of this standard is not expected
to have a material impact on the Company’s consolidated financial position and
results of operations.
  4.
              CONVERTIBLE
      DEBT
  On
January 28, 2009, the Company issued a convertible term note (the “Term Note”)
in the amount of $35,000, which accrues interest at 7% per year. Principal and
interest is payable on the maturity date of June 30, 2009. The holder of the
Term Note has the option to convert all or a portion of the note (including
principal and interest) into shares of common stock at any time at a conversion
price of $0.12 per share. The conversion price is subject to adjustment for
stock splits, stock dividends and similar events.
  On June
2, 2009, the conversion was exercised. In consideration for the conversion, the
Company issued to the holder of the note, warrants to acquire 140,000 shares of
Common Stock at an exercise price of $0.12.
  5.
              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.
  6.
              RECLASSIFICATIONS
  Certain amounts in the September 30,
2008 consolidated financial statements have been reclassified to conform to the
September 30, 2009 presentation.
  7.
              PROPERTY
      AND EQUIPMENT
  Property and equipment are stated at
cost.  Depreciation has been calculated over the estimated useful
lives of the assets ranging from 3 to 15 years.  Leasehold
improvements are amortized over the lives of the respective leases, which are
shorter than the useful life.  The cost of maintenance and repairs is
expensed as incurred.  Depreciation and amortization expense for the
period ended September 30, 2009 and the year ended March 31, 2009 were $15,591
and $26,714, respectively.
  11
  Property
and equipment consists of the following:
  September 30,
                      
                      
                      March 31,2009
                      
                      
                      2009Furniture
      and fixtures
                      
                      $
                      83,355
                      
                      
                      $
                      83,355Machinery
      and equipment
                      
                      
                      419,612
                      
                      
                      
                      418,626Vehicles
                      
                      
                      42,001
                      
                      
                      
                      42,001Leasehold
      improvements
                      
                      
                      26,203
                      
                      
                      
                      26,203571,171
                      
                      
                      
                      570,185Less:
      Accumulated depreciation and amortization
                      
                      
                      (477,682
                      )
                      
                      
                      (462,091
                      )Property
      and equipment, net
                      
                      $
                      93,489
                      
                      
                      $
                      108,094
 
 8.
              INVENTORY
 
 Inventory consists of the
following:
 
 September 30,
                      
                      
                      March 31,2009
                      
                      
                      2009Blended
      chemicals
                      
                      $
                      58,971
                      
                      
                      $
                      92,944Raw
      materials
                      
                      
                      66,364
                      
                      
                      
                      62,483Total
      inventory
                      
                      $
                      125,335
                      
                      
                      $
                      155,427
 
 9.
              RELATED-PARTY
      TRANSACTIONS
 
 In March
2009, Ronald Wilen, a director, the President and the Chief Executive Officer,
Martin Rappaport, a director, and Sherleigh Associates Profit Sharing Plan
(“Sherleigh”), a trust of which Jack Silver, a director, is the trustee,
provided the Company with short term loans in the amount of $50,000 each, and
each received warrants to purchase up to 200,000 shares of common stock at an
exercise price of $.125 per share which warrants are exercisable for a period of
five (5) years.
  Subsequently,
in May 2009, the loan by Sherleigh was repaid, and Messrs Wilen and Rappaport
loaned the Company an additional $50,000 each, and Hilltop Holding Company, L.P.
(“Hilltop”), a limited partnership of which Mr. Silver is the managing partner,
loaned the Company $101,017.  Thereafter, in June 2009, the Company
amended the Messrs Wilen’s and Rappaport’s March 2009 notes into secured
convertible notes (the “Amended March Loan Notes”) and issued to Messrs Wilen
and Rappaport and Hilltop secured convertible notes (the “May Loan Notes”) for
their May 2009 loans to the Company.  The amended notes extended the
maturity date of the Amended March Loan Notes to July 13, 2009.  In
consideration for agreeing to extend the maturity date and for making the May
2009 loans, Messrs Wilen, Rappaport and Hilltop each received warrants to
purchase up to 400,000 shares of common stock at an exercise price of $.12 per
share, which warrants are exercisable for a period of five (5)
years.
  Thereafter,
in July 2009, Messrs Wilen and Rappaport and Hilltop agreed to extend the
maturity date of the Amended March Loan Notes and the May Loan Notes from July
13, 2009 to August 13, 2009 and as consideration for such extension received in
the warrants to purchase in the aggregate up to 611,825 shares of common stock
at an exercise price of $.12 per share, which warrants are exercisable for a
period of five (5) years.
  Thereafter,
in August 2009, Messrs Wilen and Rappaport and Hilltop each loaned the Company
an additional $50,000.  In October 2009, the Company issued to Messrs
Wilen and Rappaport and Hilltop secured convertible notes (the “August Loan
Notes”) for their August 2009 loans to the Company.  In connection
with the August 2009 loans, Messrs Wilen and Rappaport and Hilltop agreed to
extend the maturity date of the Amended March Loan Notes and the May Loan Notes
to January 29, 2010.  In consideration agreeing to extend the maturity
date and for making the August 2009 loans, Messrs Wilen, Rappaport and Hilltop
each received warrants to purchase up to 400,000 shares of common stock at an
exercise price of $.09 per share, which warrants are exercisable for a period of
five (5) years.  In addition, the conversion price of the Amended
March Loan Notes and the May Loan Notes from $.12 per share to $.09 per
share.  As a result of the foregoing, each of the Amended March Loan
Notes, the May Loan Notes and the August Loan Notes are convertible into common
stock of the Company at a conversion price of $.09 per share, bear interest at
12% per annum, are due January 2010 and are secured by substantially all the
assets of the Company.
  12
  The
issuance of the August Loan Notes and the warrants in October 2009 and the
reduction of the conversion price of the Amended March Loan Notes, the May Loan
Notes triggered the anti-dilution provisions of the Company’s outstanding Series
A Warrants, Series B Warrants, Series C Warrants and Series A Convertible
Preferred Stock.  As a result, in October 2009, the Company entered
into an Anti-Dilution Waiver Agreement with the holders of Series A Warrants,
Series B Warrants, Series C Warrants and Series A Convertible Preferred Stock,
including Sherleigh, whereby the exercise price of the Series A Warrants, the
Series B Warrants and the Series C Warrants were reduced from $0.12 to $0.09 per
share; however, such holders agreed to waive any increase in the number of
shares underlying the Series A Warrants, Series B Warrants and Series C Warrants
as a result of such reduction in the exercise price.  In addition,
Sherleigh, as the sole holder of the Series A Convertible Preferred Stock,
agreed to waive the anti-dilution provisions of the Series A Convertible
Preferred Stock.
  10.
              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.
  Fair
Value of Stock Options
 For disclosure purposes under FASB
guidance now codified as ASC Topic 505 , 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:
  2009
                    
                    
                    2008Expected
      life (in years)
                    
                    
                    10
                    
                    
                    
                    10Risk-free
      interest rate
                    
                    
                    4.54
                    %
                    
                    
                    4.54
                    %Volatility
                    
                    
                    169.4
                    
                    
                    
                    143.7Dividend
      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
$1.05 for the six months ended September 30, 2009.
  13
  Summary
Stock Option Activity
  The following table summarizes stock
option information with respect to all stock options for the quarter ended
September 30, 2009:
  Number of
                      Shares
                  
                  
                  Weighted
                      Average
                      Exercise
                      Price
                  
                  
                  Weighted
                      Average
                      Remaining
                      Contractual
                      Life (Years)
                  
                  
                  Aggregate
                      Intrinsic
                      ValueOptions
      outstanding April 1, 2009
                  
                  
                  3,287,500
                  
                  
                  $
                  1.24
                  
                  
                  
                  6.16Granted
                  
                  
                  —Exercised
                  
                  
                  —Options
      outstanding September 30, 2009
                  
                  
                  3,287,500
                  
                  
                  $
                  1.05
                  
                  
                  
                  5.17Vested
      and expected to vest–end of quarter
                  
                  
                  3,287,500
                  
                  
                  $
                  1.05
                  
                  
                  
                  5.17
                  
                  
                  $
                  —Exercisable–end
      of quarter
                  
                  
                  3,162,500
                  
                  
                  $
                  1.09
                  
                  
                  
                  5.08
                  
                  
                  $
                  —
  Pursuant to the terms of an
employment agreement with Ronald Wilen, Chief Executive Officer, President,
Secretary and Director of the Company dated April 17, 2007, for each of the next
five (5) years of the term of the agreement (commencing with April 17, 2008),
Mr. Wilen will receive an option to purchase fifty thousand (50,000) shares of
common stock of the Company. The exercise price with respect to any option
granted pursuant to the employment agreement shall be the fair market value of
the common stock underlying such option on the date such option was
granted.
  Options
outstanding at September 30, 2009 have an exercise price ranging between $0.09
to $2.05.
  The aggregate intrinsic
value in the table above represents the total intrinsic value (the difference
between United Energy’s closing stock price on September 30, 2009 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 September 30, 2009. This amount changes based upon changes in
the fair market value of United Energy’s stock. As of September 30, 2009, $3,557
of the total unrecognized compensation costs related to stock options is
expected to be recognized over a period of two years and six
months.
  11.
              COMMITMENTS
      AND CONTINGENCIES
  Litigation
  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.
  14
  Item
      2
              Management's Discussion and
      Analysis of Financial Condition and Results of
      Operations
  CAUTIONARY
STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS
 
 The matters discussed in this Form
10-Q 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-Q 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-K for the fiscal year ended March 31, 2009. 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.
  Overview
  We
develop and distribute environmentally friendly specialty chemical products with
applications in several industries and markets.  Our current line of
products includes our K-Line of Chemical Products for the oil industry and
related products.
  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, which are renewable at the option of the U.S.
Military.
  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 K-Line of Chemical Products to the
worldwide marketplace for refinery, tank and pipeline cleaning
services.
  We
provide our K-Line of Chemical Products and our Green Globe Products to our
customers and generated revenues of $1,007,206 for the six-month period ended
September 30, 2009 and $597,994 for the six-month period ended September 30,
2008.
  15
  RESULTS
OF OPERATIONS
  Three
Months Ended September 30, 2009 Compared to the Three Months Ended September 30,
2008
  Revenues.  Revenues
for the three months ended September 30, 2009 were $613,202, a $228,846, or 60%
increase from revenues of $384,356 in the comparable three months of
2008.  Revenues from our K-Line of Chemical Products increased by
$189,007 to $551,880 or 52% compared to $362,873 in the comparable three months
ended September 30, 2008, and revenues from our Green Globe/Qualchem military
sales increased by $39,839 to $61,322 or 186% compared to $21,483 in the
comparable three months ended September 30, 2008.
  Cost of Goods Sold. Cost of
goods sold increased $65,745, or 40% to $231,845 or 38% of revenues, for the
three months of September 30, 2009 from $166,100 or 44% of revenues, for the
three months of September 30, 2008.  The increase in cost of goods
sold and the decrease in cost of goods sold as a percentage of revenue was due
to the higher sales level in the period compared to the comparable period in
2008. Cost of goods sold from our K-Line of Chemical Products increased by
$57,942 to $206,095 or 39% compared to $148,153 in the comparable three months
ended September 30, 2008, and cost of goods sold by our Green Globe/Qualchem
military sales increased by $7,803 to $25,750 or 43% compared to $17,947 in the
comparable three months ended September 30, 2008.
  Gross
Profit.  Gross profit for the three months ended September 30,
2009, increased by $163,101, or 75% to $381,357 or 62% of sales compared with
$218,256 or 56% of sales in the prior period. The increase in gross profit and
gross profit percentage reflects the higher levels of sales.
  Operating
Costs and Expenses
  Selling, General and Administrative
Expenses. Selling, general and administrative expenses increased $371,381
to $790,606 or 129% of sales for the three months ended September 30, 2009
compared with $419,225 or 109% of sales for the three months ended September 30,
2008.  The increase in general and administrative expenses is
primarily related to an increase in financing costs associated with the issuance
of warrants, offset by a decrease in professional fees, salaries, employee
benefits and travel and entertainment.
  Research and Development.
Research and development expenses decreased $15,888 to $64,143 or 10% of sales
for the three months ended September 30, 2009 compared with $80,031 or 21% of
sales for the three months ended September 30, 2008. The decrease in research
and development expenses was primarily related to a decrease in salaries,
partially offset by a slight increase in lab supplies.
  Depreciation and
Amortization.  Depreciation and amortization remained
relatively constant for the three months ended September 30, 2009 as compared
with September 30, 2008.
  Interest
Income.  The Company had interest income of $7 for the three
months ended September 30, 2009 compared with $121 in the corresponding period
in 2008. The decrease was due to the use of cash received in connection with the
private placement in March 2006.
  Interest
Expense.  The Company had interest expense of $11,878 for the
three months ended September 30, 2009 compared with $273 in the corresponding
period in 2008. The increase was due to the indebtedness outstanding on the
loans by directors and other affiliates.
  Net Loss.  The
three months ended September 30, 2009 resulted in a net loss of $497,698 or
$0.02 per share as compared to a net loss of $293,783 or $0.01 per share for the
three months ended September 30, 2008. The average number of shares of common
stock used in calculating earnings per share increased 298,472 shares to
31,328,587 as a result of 298,472 shares issued in connection with the
conversion of the convertible note.
  16
  Six
Months Ended September 30, 2009 Compared to the Six Months Ended September 30,
20087
  Revenues.  Revenues
for the six-month period ended September 30, 2009 were $1,007,206, a $409,212 or
68% increase from revenues of $597,994 in the comparable six-month period ended
September 30, 2008.  Revenues from our K-Line of Chemical Products
increased by $298,711 to $867,558 or 53% compared to $568,847 in the comparable
six months ended September 30, 2008, and revenues from our Green Globe/Qualchem
military sales increased by $110,501 to $139,648 or 379% compared to $29,147 in
the comparable six months ended September 30, 2008.
  Cost of Goods Sold. Cost of
goods sold increased $110,925, or 40% to $385,559 or 38% of revenues, for the
six-month period ended September 30, 2009 from $274,634 or 46% of revenues, for
the six-month period ended September 30, 2008.  The increase in cost
of goods sold and the decrease in cost of goods sold as a percentage of revenue
was due to the higher sales level in the period compared to the comparable
period in 2008. Cost of goods sold from our K-Line of Chemical Products
increased by $70,735 to $325,203 or 28% compared to $254,468 in the comparable
six months ended September 30, 2008, and cost of goods sold from our Green
Globe/Qualchem military sales increased by $40,190 to $60,356 or 199% compared
to $20,166 in the comparable six months ended September 30, 2008.
  Gross
Profit.  Gross profit for the six months ended September 30,
2009, increased by $298,287, or 92% to $621,647 or 62% of revenues compared with
$323,360 or 54% 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 increased $379,780
to $1,141,638 or 113% of revenues for the six months ended September 30, 2009
compared with $761,858 or 127% of revenues for the six months ended September
30, 2008. The increase in selling, general and administrative expenses was
primarily related to an increase in financing costs associated with the issuance
of warrants and in marketing and insurance expenses, partially offset by a
decrease in professional fees, salaries, employee benefits and travel and
entertainment.
 Research and Development.
Research and development expenses decreased $38,468 to $115,639 or 11% of sales
for the six months ended September 30, 2009 compared with $154,107 or 26% of
sales for the six months ended September 30, 2009. The decrease in research and
development expenses was related to a decrease in lab supplies and
salaries.
  Depreciation and
Amortization. Depreciation and amortization remained relatively constant
for the six months ended September 30, 2009 as compared with September 30,
2008.
  Interest
Income.  The Company had interest income of $14 for the six
months ended September 30, 2009 compared with $923 in the corresponding period
in 2008. The decrease was due to the use of cash received in connection with the
private placement in March 2006.
  Interest Expense. The Company
had interest expense of $19,423 for the six months ended September 30, 2009
compared with $874 in the corresponding period in 2008. The increase was due to
the indebtedness outstanding on the loans by directors and their
affiliates.
  Net Loss.  The six
months ended September 30, 2009 resulted in a net loss of $679,551 or $0.02 per
share as compared to a net loss of $617,458 or $0.02 per share for the six
months ended September 30, 2008. The average number of shares of common stock
used in calculating earnings per share increased 225,077 shares to 31,255,192 as
a result of 298,472 shares issued in connection with the conversion of the
convertible note.
  17
  Liquidity
and Capital Resources
  As of
September 30, 2009, the Company had $110,880 in cash and cash equivalents, as
compared to $56,372 at March 31, 2009.
  The
$54,508 increase in cash and cash equivalents was due to net cash used in
operations of $242,846, net cash used in investing activities of $5,707 and net
cash provided by financing activities of $303,061. Cash used in investing
activities consisted of fixed asset purchases of $985, patent purchases of
$3,699 and employee loans of $1,023.  Cash provided by financing
activities consisted of related party loans of $303,781, offset by preferred
stock dividends of $720.
  As of
September 30, 2009 the Company’s backlog included $338,950 of 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.
  The accompanying consolidated financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America which contemplate continuation of the
Company as a going concern. However, the Company has year-end losses from
operations and has an accumulated deficit of $22,760,011 as of September 30,
2009.During
the six months ended September 30, 2009 the Company experienced a net loss from
operations of $679,551 and a negative cash flow from operations of
$242,846.  These matters raise substantial doubt about the Company’s
ability to continue as a going concern. Our consolidated financial statements do
not include any adjustment that might result from the outcome of this
uncertainty.
  Our
continued existence is dependent upon several factors, including raising
additional funds through loans, additional sales of its equity securities,
increased sales volumes and the ability to achieve profitability from the sales
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.
 
 There can
be no assurance that we will be successful in stimulating sales or reducing
expenses to levels sufficient to generate cash flow sufficient to fund our
anticipated liquidity requirements. There also can be no assurance that
available financing will be available, or if available, that such financing will
be on terms acceptable to us.
  Concentration
of Risk
  Sales to our top four customers,
accounted for approximately 85% of revenue, or $854,786, for the six-month
period ending September 30, 2009 and sales to our top three customers, accounted
for approximately 60% of our revenue, or $359,381, for the three-month period
ending September 30, 2008.
  Sales to our top customer, for the
six-month period ending September 30, 2009 were $370,518.
  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.
  Item
      3.
              Quantitative and Qualitative
      Disclosures About Market
Risks.
  Not
applicable
  18
  Item
      4.
              Controls and
      Procedures.
  Evaluation
of the Company's Disclosure Controls and Procedures
  We carried out an evaluation, under
the supervision and with the participation of the Company's management,
including our Chief Executive Officer and our Principal Accounting Officer
(Interim Chief Financial Officer), of the effectiveness of 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) as of September 30,
2009.  Based upon that evaluation, the Chief Executive Officer and the
Principal Accounting Officer (Interim Chief Financial Officer) concluded that
our disclosure controls and procedures are effective, in all material respects,
with respect to the recording, processing, summarizing, and reporting, within
the time periods specified in the Securities and Exchange Commission's rules and
forms, of information required to be disclosed by us in the reports that we file
or submit under the Exchange Act. 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.
 
 Changes
in Control Over Financial Reporting
  Management
has not identified any change in our internal control over financial reporting
that occurred during the second quarter ended September 30, 2009 that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
  19
  PART
II
  OTHER
INFORMATION
  Item
      1.
              Legal
      Proceedings
  None.
  Item
      1A.
              Risk
      Factors
  Not applicable.
  Item
      2.
              Unregistered Sales of Equity
      Securities and Use of
Proceeds
  In June 2009, the Company issued
298,472 shares of Common Stock upon conversion of a $35,000 note, plus accrued
interest.  In consideration for the agreement to convert such note,
the Company issued to the holder of the note warrants to acquire 140,000 shares
of Common Stock at an exercise price of $0.12.
  In June
2009, the Company issued Secured Convertible Promissory Notes in the aggregate
principal amount of $201,017, convertible at a conversion price of $0.12 per
share, which conversion price was subsequently reduced to $0.09 per share, and
warrants to acquire in the aggregate 800,000 shares of Common Stock at an
exercise price of $0.12 a share.  In June 2009, the Company also
issued warrants to acquire 400,000 shares of Common Stock at an exercise price
of $0.12 per share in consideration for, among other things, extending the
maturity date of outstanding notes.
  In June
2009, the Company issued warrants to acquire 900,000 shares of Common Stock in
the aggregate to members of its Board of Directors as compensation for their
services.
  In July
2009, the Company issued warrants to acquire in the aggregate 611,825 shares of
Common Stock at an exercise price of $0.12 per share in consideration for
extending the maturity date of previously outstanding notes.
  All of
the foregoing transactions were conducted pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act of
1933.
  Item
      3.
              Defaults Upon Senior
      Securities
  None
  Item
      4.
              Submission of Matters to a
      Vote of Security Holders
  None
  Item
      5.
              Other
      Information
  None
 
 Item
      6.
              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).
  20
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this Report to be signed on its behalf by the undersigned thereunto
duly authorized.
  Dated:     November
      16, 2009
                  
                  UNITED
      ENERGY CORP.By:
                  /s/ Ronald WilenRonal
      Wilen,Chief
      Executive Officer(as
      principal executive officer)By:
                  /s/
      James McKeeverJames
      McKeever,Interim
      Chief Financial Officer(as
      principal financial and accounting
officer)
  21