**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, 2008**




**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. þ Yes
□
      No




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 filero
            Accelerated
                fileroNon-accelerated
                filero(Do not check if a smaller reporting company)
            Smaller
                reporting companyþ




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




As
      of the
      close of business on November 14, 2008, 31,030,115 shares of common stock,
      par
      value $.01 per share, were outstanding.





**INDEX**




**PART
                I. FINANCIAL INFORMATION**Item
                1.
            Financial
                StatementsConsolidated
                balance sheets September 30, 2008 (Unaudited) andMarch
                31, 2008
            3-4Consolidated
                statements of operations for the three months and six months ended
                September 30, 2008 (Unaudited) and 2007 (Unaudited)
            5Consolidated
                statement of stockholders' equity for the six months ended September
                30,
                2008 (Unaudited)
            6Consolidated
                statements of cash flows for the six months ended September 30, 2008
                (Unaudited) and 2007 (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
                4T.
            Controls
                and Procedures
            18-19**PART
                II. OTHER INFORMATION**Item
                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,****2008**
            
            **2008****(Unaudited)****ASSETS**CURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            354,011
            
            $
            858,575Accounts
                receivable, net of allowance for doubtful accounts of $12,481 and
                $25,329,
                respectively
            
            
            200,761
            
            
            247,747Inventory
            
            
            137,396
            
            
            141,667Prepaid
                expenses and other current assets
            
            
            45,569
            
            
            162,255Loan
                receivable, net of reserve of $25,000
            
            
            25,000
            
            
            25,000Total
                current assets
            
            
            762,737
            
            
            1,435,244PROPERTY
                AND EQUIPMENT, net of accumulated depreciation and amortization of
                $447,832 and $435,377 respectively
            
            
            121,168
            
            
            51,356OTHER
                ASSETS:Goodwill,
                net
            
            
            15,499
            
            
            15,499Patents,
                net of accumulated amortization of $212,622 and $193,330,
                respectively
            
            
            374,689
            
            
            386,687Loans
                receivable
            
            
            4,137
            
            
            5,023Deposits
            
            
            1,385
            
            
            1,385Total
                assets
            
            $
            1,279,615
            
            $
            1,895,194





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,****2008**
            
            **2008****(Unaudited)****LIABILITIES
                AND STOCKHOLDERS' EQUITY**CURRENT
                LIABILITIES:Accounts
                payable
            
            $
            234,263
            
            $
            167,913Accrued
                expenses
            
            
            37,376
            
            
            113,698Due
                to related parties
            
            
            244,141
            
            
            244,141Total
                current liabilities
            
            
            515,780
            
            
            525,752STOCKHOLDERS'
                EQUITY:Preferred
                Stock: 100,000 shares authorized; Series A Convertible Preferred
                Stock:
                $8,000 stated value, 3 shares issued and outstanding as of September
                30,
                2008 and March 31, 2008
            
            
            24,000
            
            
            24,000Common
                stock: $0.01 par value 100,000,000 shares authorized; 31,030,115
                shares
                issued and outstanding as of September 30, 2008 and March 31,
                2008
            
            
            310,301
            
            
            310,301Additional
                paid-in capital
            
            
            21,787,775
            
            
            21,775,204Accumulated
                deficit
            
            
            (21,358,241
            )
            
            (20,740,063
            )Total
                stockholders' equity
            
            
            763,835
            
            
            1,369,442Total
                liabilities and stockholders' equity
            
            $
            1,279,615
            
            $
            1,895,194





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 Months****Ended
                September 30,**
            
            **Ended
                September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)**REVENUES,
                net
            
            $
            384,356
            
            $
            113,777
            
            $
            597,994
            
            $
            390,017COST
                OF GOODS SOLD
            
            
            166,100
            
            
            71,608
            
            
            274,634
            
            
            189,098Gross
                profit
            
            
            218,256
            
            
            42,169
            
            
            323,360
            
            
            200,919OPERATING
                EXPENSES:Selling,
                general and administrative
            
            
            499,256
            
            
            622,992
            
            
            915,965
            
            
            1,279,027Depreciation
                and amortization
            
            
            12,631
            
            
            18,922
            
            
            24,902
            
            
            37,522Total
                operating expenses
            
            
            511,887
            
            
            641,914
            
            
            940,867
            
            
            1,316,549Loss
                from operations
            
            
            (293,631
            )
            
            (599,745
            )
            
            (617,507
            )
            
            (1,115,630
            )OTHER
                INCOME (EXPENSE), net:Interest
                income
            
            
            121
            
            
            22,765
            
            
            923
            
            
            51,641Interest
                expense
            
            
            (273
            )
            
            (437
            )
            
            (874
            )
            
            (1,321
            )Total
                other income (expense), net
            
            
            (152
            )
            
            22,328
            
            
            49
            
            
            50,320Net
                loss
            
            
            (293,783
            )
            
            (577,417
            )
            
            (617,458
            )
            
            (1,065,310
            )Preferred
                dividends
            
            
            (360
            )
            
            (360
            )
            
            (720
            )
            
            (720
            )Net
                loss applicable to common shareholders
            
            $
            (294,143
            )
            $
            (577,777
            )
            $
            (618,178
            )
            $
            (1,066,030
            )BASIC
                AND DILUTED LOSS PER SHARE:Total
                basic and diluted loss per share
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )
            $
            (0.03
            )WEIGHTED
                AVERAGE NUMBER OF SHARES,OUTSTANDING,
                basic and diluted
            
            
            31,030,115
            
            
            31,030,115
            
            
            31,030,115
            
            
            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, 2008 (UNAUDITED)**





**Additional****Common Stock**
            
            **Preferred**
            
            **Paid-In**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Stock**
            
            **Capital**
            
            **Deficit**
            
            **Total**BALANCE,
                April 1, 2008
            
            
            31,030,115
            
            $
            310,301
            
            $
            24,000
            
            $
            21,775,204
            
            $
            (20,740,063
            )
            $
            1,369,442Compensation
                expense associated with
                options
            
            
            —
            
            
            —
            
            
            -
            
            
            12,571
            
            
            —
            
            
            12,571Dividends
                accrued on preferred shares
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (720
            )
            
            (720
            )Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (617,458
            )
            
            (617,458
            )BALANCE,
                September 30, 2008
            
            
            31,030,115
            
            $
            310,301
            
            $
            24,000
            
            $
            21,787,775
            
            $
            (21,358,241
            )
            $
            763,835





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, 2008 AND 2007**





**2008**
            
            **2007****(Unaudited)**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss from continuing operations
            
            $
            (617,458
            )
            $
            (1,065,310
            )Adjustments
                to reconcile net loss to net cash used in operating activitiesDepreciation
                and amortization
            
            
            31,747
            
            
            45,697Compensation
                expense associated with options
            
            
            12,571
            
            
            116,216Asset
                transferred in legal settlement
            
            
            -
            
            
            5,003Changes
                in operating assets and liabilitiesDecrease
                (increase) in accounts receivable, net
            
            
            46,986
            
            
            (22,770
            )Decrease
                (increase) in inventory, net
            
            
            4,272
            
            
            (59,412
            )Decrease
                in prepaid expenses and other current assets
            
            
            116,686
            
            
            14,810(Decrease)
                increase in accounts payable and accrued expenses
            
            
            (9,972
            )
            
            16,278Net
                cash used in continuing operations
            
            
            (415,168
            )
            
            (949,488
            )CASH
                FLOWS FROM DISCONTINUED OPERATIONS:Decrease
                in accounts receivable, net
            
            
            -
            
            
            31Decrease
                in note receivable, net
            
            
            -
            
            
            4,476Net
                cash provided by discontinuing operations
            
            
            -
            
            
            4,507Net
                cash used in operating activities
            
            
            (415,168
            )
            
            (944,981
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Employee
                loans
            
            
            885
            
            
            (4,377
            )Payments
                for acquisition of property and equipment
            
            
            (82,267
            )
            
            (4,896
            )Payments
                for patents
            
            
            (7,294
            )
            
            (38,926
            )Cash
                used in investing activities
            
            
            (88,676
            )
            
            (48,199
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Preferred
                stock dividend
            
            
            (720
            )
            
            (720
            )Net
                cash used in financing activities
            
            
            (720
            )
            
            (720
            )Net
                decrease in cash and cash equivalents
            
            
            (504,564
            )
            
            (993,900
            )CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            858,575
            
            
            2,863,906CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            354,011
            
            $
            1,870,006





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, 2008 AND 2007**





**2008**
            
            **2007****(Unaudited)**SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Cash
                paid during the periodInterest
            
            $
            874
            
            $
            1,321Income
                taxes
            
            $
            1,560
            
            $
            2,150





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


8


**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 (Unaudited)**




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




*Basis
      of presentation*




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. 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 September 30,
      2008 (unaudited) and the results of its operations for the three months and
      six
      months ended September 30, 2008 and 2007 (unaudited) and cash flows for the
      three months and six months ended September 30, 2008 and 2007 (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 six months
      ended September 30, 2008 are not necessarily indicative of the operating results
      that may be expected for the year ending March 31, 2009.




The
      consolidated balance sheet as of March 31, 2008 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 for the fiscal
      year ended March 31, 2008.




*Going
      Concern* –
During
      the past two
      fiscal years ended March 31, 2008 and 2007, we have recorded aggregate losses
      from continuing operations of $4,313,181 and have incurred total negative cash
      flows from operations of $4,027,022 for the same two-year period. During the
      six
      months ended September 30, 2008 the Company experienced a net loss from
      operations of $601,722 and a negative cash flow from operations of $415,168.
      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 capital through equity or debt financing, increased sales volumes,
      collection of existing receivables 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.





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.** **RECENTLY
          ISSUED ACCOUNTING STANDARDS**





In
      June 2008, the Financial Accounting Standards Board (“FASB”) issued FSP
      Emerging Issues Task Force (“EITF”) Issue No. 03-6-1, “Determining Whether
      Instruments Granted in Share-Based Payment Transactions Are Participating
      Securities.” The FSP addresses whether instruments granted in share-based
      payment transactions are participating securities prior to vesting and,
      therefore, need to be included in the earnings allocation in computing earnings
      per share under the two-class method. The FSP affects entities that accrue
      dividends on share-based payment awards during the awards’ service period when
      the dividends do not need to be returned if the employees forfeit the award.
      This FSP is effective for fiscal years beginning after December 15, 2008.
      The Company is currently assessing the impact of FSP EITF 03-6-1 on its
      consolidated financial position and results of operations.


9


**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





In
      June
      2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether an Instrument
      (or an Embedded Feature) Is Indexed to an Entity's Own Stock" (EITF 07-5).
      EITF
      07-5 provides that an entity should use a two step approach to evaluate whether
      an equity-linked financial instrument (or embedded feature) is indexed to its
      own stock, including evaluating the instrument's contingent exercise and
      settlement provisions. It also clarifies on the impact of foreign currency
      denominated strike prices and market-based employee stock option valuation
      instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning
      after December 15, 2008. The Company is currently assessing the impact of EITF
      07-5 on its consolidated financial position and results of
      operations.





In
      May 2008, the FASB issued FSP Accounting Principles Board (“APB”) Opinion
      No. 14-1, “Accounting for Convertible Debt Instruments That May Be
      Settled in Cash upon Conversion (Including Partial Cash Settlement).” The FSP
      clarifies the accounting for convertible debt instruments that may be settled
      in
      cash (including partial cash settlement) upon conversion. The FSP requires
      issuers to account seperately for the liability and equity components of certain
      convertible debt instruments in a manner that reflects the issuer's
      nonconvertible debt (unsecured debt) borrowing rate when interest cost is
      recognized. The FSP requires bifurcation of a component of the debt,
      classification of that component in equity and the accretion of the resulting
      discount on the debt to be recognized as part of interest expense in our
      consolidated statement of operations. The FSP requires retrospective application
      to the terms of instruments as they existed for all periods presented. The
      FSP
      is effective for us as of January 1, 2009 and early adoption is not permitted.
      The Company is currently evaluating the potential impact of FSP APB 14-1 upon
      its consolidated financial statements.




In
      May
      2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
      Accounting Principles" (FAS No.162). SFAS No. 162 identifies the sources of
      accounting principles and the framework for selecting the principles used in
      the
      preparation of financial statements. SFAS No. 162 is effective 60 days following
      the SEC's approval of the Public Company Accounting Oversight Board amendments
      to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally
      Accepted Accounting Principles". The implementation of this standard will not
      have a material impact on the Company's consolidated financial position and
      results of operations.




In
      April
      2008, FASB issued FASB Staff Position on Financial Accounting Standard (“FSP
      FAS”) No. 142-3, “Determination of the Useful Life of Intangible Assets”, which
      amends the factors that should be considered in developing renewal or extension
      assumptions used to determine the useful life of intangible assets under
      SFAS No. 142 “Goodwill and Other Intangible Assets”.  The intent of this
      FSP is to improve the consistency between the useful life of a recognized
      intangible asset under SFAS No. 142 and the period of the expected cash flows
      used to measure the fair value of the asset under SFAS No. 141 (revised 2007)
      “Business Combinations” and other U.S. generally accepted accounting
      principles.    The Company is currently evaluating the potential
      impact of FSP FAS No. 142-3 on its consolidated financial
      statements.




In
      March
      2008, the FASB issued SFAS No. 161, *“* Disclosure
      about Derivative Instruments and Hedging Activities *,* an
      amendment of SFAS No. 133”, (SFAS 161). This statement requires that objectives
      for using derivative instruments be disclosed in terms of underlying risk and
      accounting designation. The Company is required to adopt SFAS No. 161 on January
      1, 2009. The Company is currently evaluating the potential impact of SFAS No.
      161 on the Company’s consolidated financial statements.




In
      February 2008, the FASB issued FSP FAS No. 157-2, “Effective Date of FASB
      Statement No. 157”. This FSP delays the effective date of SFAS No. 157 for
      all nonfinancial assets and nonfinancial liabilities, except those that are
      recognized or disclosed at fair value on a recurring basis (at least annually)
      to fiscal years beginning after November 15, 2008, and interim periods
      within those fiscal years. The impact of adoption was not material to the
      Company’s consolidated financial condition or results of
      operations.


10




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**


**3.**  **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.




**4.**  **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
      31, 2008 and the year ended March 31, 2008 were $12,455 and $38,108,
      respectively.




Property
      and equipment consists of the following::




**September 30,**
            
            **March 31,****2008**
            
            **2008**Furniture
                and fixtures
            
            $
            82,169
            
            $
            81,642Machinery
                and equipment
            
            
            418,627
            
            
            336,887Vehicles
            
            
            42,001
            
            
            42,001Leasehold
                improvements
            
            
            26,203
            
            
            26,203569,000
            
            
            486,733Less:
                Accumulated depreciation and amortization
            
            
            (447,832
            )
            
            (435,377
            )Property
                and equipment, net
            
            $
            121,168
            
            $
            51,356





**5.**  **INVENTORY**





Inventory
      consists of the following:




**September 30,**
            
            **March 31,****2008**
            
            **2008**Blended
                chemicals
            
            $
            74,871
            
            $
            85,615Raw
                materials
            
            
            62,525
            
            
            56,052Total
                inventory
            
            $
            137,396
            
            $
            141,667





**6.
      RELATED-PARTY TRANSACTIONS**




The
      Company has an amount due to Robert Seaman, a shareholder and former director
      of
      the Company. Amount due to the related party as of September 30, 2008 and 2007
      is $244,141. This amount is unsecured, non-interest bearing and due upon demand.




11




**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




Martin
      Rappaport, a major shareholder and director of the Company, owned the property
      through September 2007 from which United Energy leases the 9,600 square foot
      facility it occupies in Secaucus, New Jersey. The Company pays approximately
      $126,000 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
      April 2007, the Company entered into an employment agreement with the Chairman
      of the Board, Ron Wilen.




**7.**  **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 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:




**2008**
            
            **2007**Expectedlife
                (in years)
            
            
            10
            
            
            10Risk-free
                interest rate
            
            
            4.54
            %
            
            4.54
            %Volatility
            
            
            109.0
            
            
            84.4Dividend
                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
      $1.15 for the six months ended September 30, 2008.




12


**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




*Summary
      Stock Option Activity* **




The
      following table summarizes stock option information with respect to all stock
      options for the quarter ended September 30, 2008:


**Number of**
                **Shares**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life (Years)**
              
              **Aggregate**
                **Intrinsic**
                **Value**Options outstanding April 1, 2008
              
              
              3,787,500
              
              $
              1.15
              
              
              6.36Granted
              
              
              —Exercised
              
              
              —Options
                  outstanding September 30, 2008
              
              
              3,787,500
              
              $
              1.15
              
              
              6.11Vested
                  and expected to vest–end of quarter
              
              
              3,787,500
              
              $
              1.15
              
              
              6.11
              
              $
              —Exercisable–end
                  of quarter
              
              
              3,607,432
              
              $
              1.16
              
              
              5.71
              
              $
              —




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. The initial grant of 50,000 stock options was granted out
      of
      the 2001 Equity Incentive Plan on April 17, 2008. In addition, the stock option
      to purchase 135,000 shares has been reserved for Mr. Wilen out of the 2001
      Equity Incentive Plan. After the reservation described in the immediately
      preceding sentence, no shares remain available for grant out of the 2001 Equity
      Incentive Plan. Thus, the remaining stock options to purchase 65,000 shares
      granted to Mr. Wilen will be non-qualified stock options, unless the Company
      amends the 2001 Equity Incentive Plan in order to increase the number of shares
      that may be granted pursuant to such plan or adopts a new stock option plan.




Options
      outstanding at September 30, 2008 have an exercise price ranging between $0.70
      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, 2008 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, 2008. This amount changes
      based
      upon changes in the fair market value of United Energy’s stock. As of September
      30, 2008, $66,850 of the total unrecognized compensation costs related to stock
      options is expected to be recognized over a period of three years and six
      months.


13


**UNITED
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Continued)**




**8.**  **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.




In
      March
      2007, the Company commenced an action against Applied Force and Samuel Miller
      III in the Superior Court of New Jersey, Law Division - Bergen County for the
      recovery of two of the Company’s vehicles and certain additional claims. The
      defendants, Applied Force and Samuel Miller III, have filed a counterclaim
      for
      recovery of alleged storage fees in the amount of $126,784 and certain alleged
      service fees in the amount of $1,275. A settlement agreement and mutual release
      was entered into during August 2007 and the action was dismissed on September
      18, 2007. As part of the settlement the Company transferred title of a truck
      to
      the defendant.


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-KSB for the fiscal year ended
      March 31, 2008. 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.




We
      have
      developed a system referred to as our “S2 system,” to work with our
      environmentally friendly paraffin dispersants products. This 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. Our patent on the S2 system expired in January 2007; however,
      we
      have filed a patent application with respect to certain improvements,
      modifications and enhancements to the S2 system.




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
      entered into an amended and restated non-exclusive distribution agreement with
      Champion Technologies Inc. for the sale and distribution of our K-Line of
      Chemical Products. The agreement is for a term of three (3) years and grants
      Champion Technologies Inc. certain rights to blend, dilute and utilize our
      products to manufacture and sell different products. We also entered into a
      non-exclusive Master Purchase Agreement with Petrobras America Inc. for the
      sale
      and distribution of our K-Line of Chemical Products. 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 will be successful. There also can
      be
      no assurance that the agreements with Champion Technologies and Petrobras
      America will be successful.




We
      provide our K-Line of Chemical Products and our Green Globe Products to our
      customers and generated revenues of $597,994 for the six month period ended
      September 30, 2008 and $390,017 for the six month period ended September 30,
      2007.


15


**RESULTS
      OF OPERATIONS**




**Three
      Months Ended September 30, 2008 Compared to the Three Months Ended September
      30,
      2007**




*Revenues* .
      Revenues for the three months ended September 30, 2008 were $384,356, a
      $270,579, or 238% increase from revenues of $113,777 in the comparable three
      months of 2007. Revenues from our K-Line of Chemical Products increased by
      $319,362 to $362,873 or 734% compared to $43,511 in the comparable three months
      ended September 30, 2007, offset by a decrease of $48,783 to $21,483 or 70%
      compared to $70,266 in the comparable three months ended September 30, 2007
      in
      our Green Globe/Qualchem military sales.




*Cost
      of Goods Sold* .
      Cost of
      goods sold increased $94,492, or 132% to $166,100 or 44% of revenues, for the
      three months of September 30, 2008 from $71,608 or 63% of revenues, for the
      three months of September 30, 2007. The increase in cost of goods sold was
      due
      to the higher sales level in the period compared to the comparable period in
      2007. The decrease in cost of goods sold as a percentage of revenues was due
      to
      the lower sales of our Green Globe/Qualchem military sales. Cost of goods sold
      from our K-Line of Chemical Products increased by $113,255 to $148,153 or 325%
      compared to $34,898 in the comparable three months ended September 30, 2007,
      offset by an decrease of $18,763 to $17,947 or 52% compared to $36,710 in the
      comparable three months ended September 30, 2007 in cost of goods sold of our
      Green Globe/Qualchem military sales.




*Gross
      Profit* .
      Gross
      profit for the three months ended September 30, 2008, increased by $176,087,
      or
      418% to $218,256 or 56% of sales compared with $42,169 or 37% 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***




*General
      and Administrative Expenses* .
      General
      and administrative expenses decreased $123,736 to $499,256 or 130% of sales
      for
      the three months ended September 30, 2008 compared with $622,992 or 548% of
      sales for the three months ended September 30, 2007. The decrease in general
      and
      administrative expenses is primarily related to a decrease in professional
      fees,
      salaries due to the reduction of employees and a reduction in option costs
      charged for employees.




*Depreciation
      and Amortization* . Depreciation
      and amortization decreased to $12,631 for
      the
      three months ended September 30, 2008 from
      $18,922 for
      the
      three months ended September 30, 2007, reflecting the Company’s use of an
      accelerated method of depreciation, offset by an increase in fixed assets.




*Interest
      Income* .
      The
      Company had interest income of $121 for the three months ended September 30,
      2008 compared with $22,765 in the corresponding period in 2007. The decrease
      was
      due to the use of cash received in connection with the private placement in
      March 2006.




*Interest
      Expense* .
      Interest expense remained relatively constant for the three months ended
      September 30, 2008 as compared to September 30, 2007.




*Net
      Loss* .
      The
      three months ended September 30, 2008 resulted in a net loss of $293,783 or
      $0.01 per share as compared to a net loss of $577,417 or $0.02 per share for
      the
      three months ended September 30, 2007. The average number of shares of common
      stock used in calculating earnings per share remained the same at
      31,030,115.


16


**Six
      Months Ended September 30, 2008 Compared to the Six Months Ended September
      30,
      2007**




*Revenues* .
      Revenues for the six-month period ended September 30, 2008 were $597,994, a
      $207,977 or 53% increase from revenues of $390,017 in the comparable six-month
      period ended September 30, 2007. Revenues from our K-Line of Chemical Products
      increased by $385,006 to $568,847 or 209% compared to $183,841 in the comparable
      six months ended September 30, 2007, offset by a decrease of $177,029 to $29,147
      or 86% compared to $206,176 in the comparable six months ended September 31,
      2007 in our Green Globe/Qualchem military sales.




*Cost
      of Goods Sold* .
      Cost of
      goods sold increased $85,536, or 45% to $274,634 or 46% of revenues, for the
      six-month period ended September 30, 2008 from $189,098 or 48% of revenues,
      for
      the six-month period ended September 30, 2007. The increase in cost of goods
      sold was due to the higher sales level in the period compared to the comparable
      period in 2007. The decrease in cost of goods sold as a percentage of revenues
      was due to the lower sales of our Green Globe/Qualchem military sales. Cost
      of
      goods sold from our K-Line of Chemical Products increased by $164,667 to
      $254,468 or 183% compared to $89,802 in the comparable six months ended
      September 30, 2007, offset by an decrease of $79,130 to $20,166 or 80% compared
      to $99,296 in the comparable six months ended September 30, 2007 in cost of
      goods sold of our Green Globe/Qualchem military sales.




*Gross
      Profit* .
      Gross
      profit for the six months ended September 30, 2008, increased by $122,441,
      or
      61% to $323,360 or 54% of revenues compared with $200,919 or 52% 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 $363,062 to $915,965
      or
      154% of revenues for the six months ended September 30, 2008 compared with
      $1,279,027 or 328% of revenues for the six months ended September 30, 2007.
      The
      decrease in selling, general and administrative expenses was primarily related
      to a decrease in professional fees, salaries due to the reduction of employees
      and a reduction in option costs charged for employees, partially offset by
      a
      slight increase in rent and travel expense.




*Depreciation
      and Amortization* .
      Depreciation and amortization decreased to $24,902 for the six months ended
      September 30, 2008 from $37,522 for the six months ended September 30, 2007
      reflecting the Company’s use of an accelerated method of depreciation, offset by
      an increase in fixed assets.




*Interest
      Income* .
      The
      Company had interest income of $923 for the six months ended September 30,
      2008
      compared with $51,641 in the corresponding period in 2007. The decrease was
      due
      to the use of cash received in connection with the private placement in March
      2006.




*Interest
      Expense* .
      Interest expense remained relatively constant for the six months ended September
      30, 2008 as compared to September 30, 2007.




*Net
      Loss* .
      The six
      months ended September 30, 2008 resulted in a net loss of $617,458 or $0.02
      per
      share as compared to a net loss of $1,066,030 or $0.03 per share for the six
      months ended September 30, 2007. The average number of shares of common stock
      used in calculating earnings per share remained the same at
      31,030,115.


17


***Liquidity
      and Capital Resources***




As
      of
      September 30, 2008, the Company had $354,011 in cash and cash equivalents,
      as
      compared to $858,575 at March 31, 2008.




The
      $504,564 decrease in cash and cash equivalents was due to net cash used in
      operations of $415,168, net cash used in investing activities of $88,676 and
      net
      cash used in financing activities of $720. Cash used in investing activities
      consisted of fixed asset purchases of $82,267 and patent purchases of $7,294,
      offset by employee loans of $885. Cash used in financing activities consisted
      of
      preferred stock dividends of $720.




As
      of
      September 30, 2008 the Company’s backlog included $74,206 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.




During
      the past two
      fiscal years ended March 31, 2008 and 2007, we have recorded aggregate losses
      from continuing operations of $4,313,181 and have incurred total negative cash
      flows from operations of $4,027,022 for the same two-year period. During the
      six
      months ended September 30, 2008 the Company experienced a net loss from
      operations of $617,458 and a negative cash flow from operations $415,168. 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 capital through equity or debt financing, increased sales volumes,
      collection of existing receivables 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.





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
      three of our customers, accounted for approximately 60% and sales to two of
      our
      customers, accounted for approximately 75% of our sales for the six months
      ending September 30, 2008 and 2007. ******




***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




**Item
      4T.**   ***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, 2008. 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.


18


**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 of the fiscal year ended March 31,
      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***




None




**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 Act32.1
            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 14, 2008
            
            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