UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                              _____________________

                                    FORM 10-Q

                                   (MARK ONE)

|X|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

[ ]      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                                   22-3342379
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

         600 MEADOWLANDS PARKWAY #20, SECAUCUS, N.J.            07094
          (Address of principal executive offices)            (Zip Code)

                                 (800) 327-3456
              (Registrant's telephone number, including area code)

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

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

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                Class                        Outstanding as of December 2, 2003
         Common Stock, $.01 par value                  22,180,270 shares


<PAGE>


                                      INDEX

PART I.  FINANCIAL INFORMATION

Item 1.          Consolidated Financial Statements

                 Consolidated balance sheets September 30, 2003
                 (Unaudited) and March 31, 2003                                3

                 Consolidated statements of operations for the three
                 months and six months ended September 30, 2003
                 (Unaudited) and 2002 (Unaudited)                              4

                 Consolidated statement of stockholders' equity for the
                 six months ended September 30, 2003 (Unaudited)               5

                 Consolidated statements of cash flows for the six
                 months ended September 30, 2003 (Unaudited) and 2002
                 (Unaudited)                                                   6

                 Notes to consolidated financial statements                    7

Item 2.          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                          14

Item 3.          Quantitative and Qualitative Disclosures About
                 Market Risk                                                  20

Item 4           Controls and Procedures                                      20

PART II.  OTHER INFORMATION

Item 1.          Legal Proceedings                                            21

Item 2.          Changes in Securities and Use of Proceeds                    21

Item 3.          Defaults upon Senior Securities                              21

Item 4.          Submission of Matters to a Vote of Security Holders          21

Item 5.          Other Information                                            21

Item 6.          Exhibits and Reports on Form 8-K.                            21

Signatures                                                                    22

Certifications                                                                23

                                       2


<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                           SEPTEMBER 30,      MARCH 31,
                                                                                               2003              2003
                                                                                           -------------     -------------
                                                                                            (UNAUDITED)

                                  ASSETS

CURRENT ASSETS:
<S>                                                                                              <C>            <C>
Cash and cash equivalents                                                                        $ 795,842      $ 2,120,942
Accounts receivable, net of allowance for doubtful accounts                                        567,058          496,715
       of $66,488 and $48,113, respectively
Inventory, net of allowance of $16,290 and $16,290, respectively                                   188,702          211,344
Note receivable, net of reserve of $40,857 and $30,000,                                             82,952          149,034
       respectively

Prepaid expenses and other current assets                                                           61,559          104,527
                                                                                              -------------     -------------
     Total current assets                                                                        1,696,113        3,082,562


PROPERTY AND EQUIPMENT, net of accumulated depreciation
               and amortization of $157,592 and $93,032, respectively                              411,874          268,597
OTHER ASSETS:
Goodwill, net of accumulated amortization of $17,704 and                                            68,819           68,819
       $17,704, respectively
Patents, net of accumulated amortization of $54,649 and                                            269,952          229,508
       $44,253, respectively
Loan receivable, net of reserve of $107,705 and                                                        676            2,076
       $107,705, respectively
Deposits                                                                                            76,385           31,385
                                                                                               ------------     -------------
Total assets                                                                                   $ 2,523,819      $ 3,682,947
                                                                                               ============     ===========


                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                                                 $ 401,122        $ 158,048
Accrued expenses                                                                                   182,561          334,198
Due to related party                                                                               244,141          244,141
                                                                                                -------------     -------------
Total current liabilities                                                                          827,824          736,387

Asset retirement obligation                                                                         30,000               --
                                                                                                -------------     -------------
        Total liabilities                                                                          857,824          736,387
                                                                                                -------------     -------------
STOCKHOLDERS' EQUITY:
    Common stock; 100,000,000 shares authorized of $0.01 par value,
                     22,180,270 shares issued and outstanding
                     at September 30, 2003 and March 31, 2003                                      221,802          221,802
Additional paid-in capital                                                                      10,708,452       10,698,752
Accumulated deficit                                                                             (9,264,259)      (7,973,994)
                                                                                                -------------     -------------
Total stockholders' equity                                                                       1,665,995        2,946,560
                                                                                                -------------     -------------
Total liabilities and stockholders' equity                                                     $ 2,523,819      $ 3,682,947
                                                                                               ==============   ===============


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


                                       3

</TABLE>


<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                        FOR THE THREE MONTHS ENDED                  FOR THE SIX MONTHS ENDED
                                                             ENDED SEPTEMBER 30,                       ENDED SEPTEMBER 30,

                                                      2003               2002                 2003                   2002
                                                      ----               ----                 ----                   ----
                                                              (UNAUDITED)                           (UNAUDITED)

<S>                                               <C>                 <C>                   <C>                   <C>
REVENUES, net                                     $  66,401           $ 625,612             $ 695,142             $ 1,364,609

COST OF GOODS SOLD                                   32,404             320,498               358,326                 853,120
                                                -----------         ------------          -----------            ------------

Gross profit                                         33,997             305,114               336,816                 511,489
                                                -----------         ------------          -----------            ------------

OPERATING EXPENSES:
  General and administrative                        793,221           1,058,976             1,466,825               1,487,172
  Oil well operating and maintenance cost-net        32,872                 -                  90,867                      -
  Depreciation, amortization and depletion           37,673              23,245                74,956                  33,037
                                                -----------         ------------          -----------            ------------
        Total operating expenses                    863,766           1,082,221             1,632,648               1,520,209
                                                -----------         ------------          -----------            ------------

        Loss from operations                       (829,769)           (777,107)           (1,295,832)             (1,008,720)
                                                -----------         ------------          -----------            ------------

OTHER INCOME (EXPENSE), net:
        Interest income                               2,638              19,056                 7,269                  36,124
        Interest expense                               (809)                 -                 (1,702)                 (1,168)
                                                -----------         ------------          -----------            ------------
        Total other income (expense), net             1,829              19,056                 5,567                  34,956
                                                -----------         ------------          -----------            ------------

            Net loss                            $  (827,940)        $  (758,051)          $(1,290,265)            $  (973,764)
                                                ===========         ============          ===========            ============

BASIC AND DILUTED LOSS PER SHARE                $     (0.04)        $     (0.03)          $     (0.06)           $      (0.05)
                                                ===========         ============          ===========            ============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING,
       basic and diluted                         22,180,270          22,180,270            22,180,270              20,737,647
                                                ===========         ============          ===========            ============


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


                                      4


<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
             FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED)
<TABLE>
<CAPTION>

                                                    Common Stock                    Additional
                                                                                     Paid-In          Accumulated
                                               Shares              Amount             Capital           Deficit             Total
                                               ------              ------             -------           -------             -----

<S>                                          <C>                <C>              <C>                 <C>               <C>
BALANCE, March 31, 2003                       22,180,270         $ 221,802        $ 10,698,752        $ (7,973,994)     $ 2,946,560
Options granted in
     consideration for services                       --                --               9,700                 --              9,700

Net loss                                              --                --                  --          (1,290,265)      (1,290,265)
                                             ---------------------------------------------------------------------------------------
BALANCE, September 30, 2003                   22,180,270         $ 221,802        $ 10,708,452        $ (9,264,259)     $ 1,665,995
                                             =======================================================================================


 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


                                       5


<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                                  FOR THE SIX MONTHS
                                                                                                  ENDED SEPTEMBER 30,
                                                                                              ----------------------------
                                                                                               2003                  2002
                                                                                               ----                  ----
                                                                                                      (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                    <C>                      <C>
    Net loss                                                                           $    (1,290,265)         $  (973,764)

Adjustments to reconcile net loss to net cash used in operating activities
      Depreciation and amortization                                                             74,956               33,037
      Options granted in consideration for services                                              9,700                   -
Changes in operating assets and liabilities
      Increase in accounts receivable, net                                                     (70,343)            (330,866)
      Decrease in inventory, net                                                                22,642               18,119
      Decrease in note receivable                                                               66,082                   -
      Decrease in prepaid expenses                                                              42,968               27,305
      Increase in other assets                                                                 (45,000)              (1,041)
      Increase in related party payable                                                            --               102,654
      Increase in accounts payable and accrued expenses                                         91,437               84,946
                                                                                           ------------         ------------

            Net cash used in operating activities                                           (1,097,823)          (1,039,610)
                                                                                           ------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments on loan receivable                                                                 1,400             (112,333)
     Payments for patents                                                                      (50,840)             (63,558)
     Payments for acquisition of property and equipment                                       (177,837)            (314,221)
                                                                                           ------------         ------------
        Net cash used in investing activities                                                 (227,277)            (490,112)
                                                                                           ------------         ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments of line of credit                                                                     -              (150,000)
     Payments of private placement costs                                                            -              (484,200)
     Proceeds from issuance of common stock                                                         -             6,000,000
                                                                                           ------------         ------------

         Net cash provided by financing activities                                                  -             5,365,800
                                                                                           ------------         ------------

         Net (decrease) increase  in cash and cash equivalents                              (1,325,100)           3,836,078

CASH AND CASH EQUIVALENTS, beginning of period                                               2,120,942              198,412
                                                                                           ------------         ------------
CASH AND CASH EQUIVALENTS, end of period                                               $       795,842          $ 4,034,490
                                                                                           ===========          ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      Cash paid during the period
          Interest                                                                     $         1,702                1,168
                                                                                            ==========                =====
          Income taxes                                                                 $         1,780                   -
                                                                                            ==========                =====


        The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


                                       6


<PAGE>


                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2003 (UNAUDITED)

1.    BASIS OF PRESENTATION AND GOING CONCERN

      The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. 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, 2003
(unaudited) and the results of its operations for the three months and six
months ended September 30, 2003 and 2002 (unaudited) and cash flows for the six
months ended September 30, 2003 and 2002(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, 2003 are not
necessarily indicative of the operating results that may be expected for the
year ending March 31, 2004.

      The consolidated balance sheet as of March 31, 2003 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, as
amended.

      Going Concern - During the past two fiscal years ended March 31, 2003 and
2002, the Company has recorded aggregate losses from operations of $4,194,000
and has incurred total negative cash flow from operations of $3,034,000 for the
same two-year period. During the six months ended September 30, 2003 the Company
experienced a net loss from operations of $1,290,265 and negative cash flow from
operating activities of $1,097,823. The Company does not currently have an
operating line of credit. These matters raise substantial doubt about the
Company's ability to continue as a going concern. The Company's consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

      Liquidity - The Company's continued existence is dependent upon several
factors, including increased sales volume, collection of existing receivables
and the ability to achieve profitability from the sale of the Company's product
lines. In order to increase its cash flow, the Company is continuing its efforts
to stimulate sales and cut back expenses not directly supporting its sales and
marketing efforts. The Company is currently investigating with certain major
shareholders to provide for additional sources of capital.

2.    SEGMENT INFORMATION

      Under the provision of SFAS No. 131, the Company's activities fall within
two operating segments: Graphic Arts and Specialty Chemicals. The following
tables set forth the Company's industry segment information for the three months
and six months ended September 30, 2003 and 2002.


                                       7


<PAGE>


                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

      The Company's total revenues and net loss by segment for the three month
period ended September 30, 2003 and identifiable assets as of September 30, 2003
are as follows:

<TABLE>
<CAPTION>
                                                              Specialty
                                             Graphic Arts     Chemicals       Corporate          Total
                                             ------------     ---------       ---------          -----
<S>                                           <C>             <C>            <C>              <C>
Revenues                                      $   1,810       $   64,591     $        --      $    66,401
                                              =========       ==========     ===========      ===========
Gross profit                                  $     676       $   33,321     $        --      $    33,997
General and administrative                       64,842          353,673         374,706          793,221
Oil well operating and maintenance cost-net          --           32,872              --           32,872
Depreciation, amortization and depletion             --           33,286           4,387           37,673
Interest income                                      --               --          (2,638)         ( 2,638)
Interest expense                                     --              113             696              809
                                              ---------       ----------      ----------      -----------
     Net loss                                 $ (64,166)      $ (386,623)     $ (377,151)     $  (827,940)
                                              =========       ==========      ==========      ===========
Cash and cash equivalents                     $      --       $       --      $  795,842      $   795,842
Accounts receivable, net                        496,982           70,076              --          567,058
Inventory, net                                   26,162          162,540              --          188,702
Note receivable, net                             82,952               --              --           82,952
Prepaid expenses                                     --               --          61,559           61,559
Property and equipment, net                          --          371,277          40,597          411,874
Goodwill, net                                        --           68,819              --           68,819
Patents, net                                         --          269,952              --          269,952
Loan receivable, net                                 --               --             676              676
Deposits                                             --               --          76,385           76,385
                                              ---------       ----------      ----------      -----------
     Total assets                             $ 606,096        $ 942,664      $  975,059       $2,523,819
                                              =========        =========      ==========       ==========
</TABLE>


         The Company's total revenues and net income (loss) by segment for the
six month period ended September 30, 2003, are as follows:

<TABLE>
<CAPTION>

                                                              Specialty
                                             Graphic Arts     Chemicals       Corporate          Total
                                             ------------     ---------       ---------          -----
<S>                                           <C>             <C>             <C>             <C>
Revenues                                      $ 485,357       $  209,785      $       --      $   695,142
                                              =========       ==========     ===========      ===========
Gross profit                                  $ 244,230       $   92,586      $       --      $   336,816
General and administrative                      110,075          640,366         716,384        1,466,825
Oil well operating and maintenance cost-net                       90,867                           90,867
Depreciation, amortization and depletion             --           66,181           8,775           74,956
Interest income                                      --               --          (7,269)         (7,269)
Interest expense                                     --              113           1,589            1,702
                                              ---------       ----------      ----------      -----------
     Net income (loss)                        $ 134,155        $(704,941)     $ (719,479)     $(1,290,265)
                                              =========        =========      ==========      ===========

</TABLE>


                                       8
<PAGE>


                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

      The Company's total revenues and net income (loss) by segment for the
three month period ended September 30, 2002 and identifiable assets as of
September 30, 2002, are as follows:

<TABLE>
<CAPTION>
                                                              Specialty
                                             Graphic Arts     Chemicals       Corporate          Total
                                             ------------     ---------       ---------          -----
<S>                                           <C>             <C>             <C>             <C>
Revenues                                      $ 542,519       $   83,093      $       --      $   625,612
                                              =========       ==========     ===========      ===========
Gross profit                                  $ 221,070       $   84,044      $       --      $   305,114
General and administrative                       46,620          619,810         392,546        1,058,976
Depreciation, amortization and depletion             --           12,785          10,460           23,245
Interest income                                      --               --         (19,056)         (19,056)
                                              ---------       ----------      ----------      -----------
     Net income (loss)                        $ 174,450       $ (548,551)     $ (383,950)     $  (758,051)
                                              =========       ==========      ==========      ===========
Cash and cash equivalents                     $      --               --      $4,034,490      $ 4,034,490
Accounts receivable, net                        493,448           55,522              --          548,970
Inventory, net                                  110,752          158,986              --          269,738
Loans receivable, net                                --          100,000          12,333          112,333
Prepaid expenses                                     --           84,306           5,516           89,822
Property and equipment, net                          --          252,865          51,489          304,354
Goodwill, net                                        --           68,819              --           68,819
Patents, net                                         --          186,179              --          186,179
Other assets                                         --               --           2,903            2,903
                                              ---------       ----------      ----------      -----------
Total assets                                  $ 604,200       $  906,677      $4,106,731      $ 5,617,608
                                              =========       ==========      ==========      ===========


      The Company's total revenues and net income (loss) by segment for the six
month period ended September 30, 2002, are as follows:

                                                              Specialty
                                             Graphic Arts     Chemicals       Corporate          Total
                                             ------------     ---------       ---------          -----

Revenues                                      $ 989,922       $  374,687      $       --      $ 1,364,609
                                              =========       ==========      ==========      ===========
Gross profit                                  $ 331,421       $  180,068      $       --      $   511,489
General and administrative                       96,083          807,590         583,499        1,487,172
Depreciation, amortization and depletion             --           17,243          15,794           33,037
Interest income                                      --               --         (36,124)         (36,124)
Interest expense                                  1,168               --              --            1,168
                                              ---------       ----------      ----------      -----------
     Net income (loss)                        $ 234,170        $(644,765)     $ (563,169)     $  (973,764)
                                              =========       ==========      ==========      ===========

</TABLE>

3.    ACQUISITION OF OIL WELL LEASES

      On April 4, 2003, the Company purchased oil leases for six oil wells in
Laramie County, Wyoming (the "Wyoming Wells") for an aggregate purchase price of
$97,616. The Company intends to operate the Wyoming Wells and use the wells for
testing of its products. During the six months ended September 30, 2003, the
Wyoming Wells produced oil which generated $26,053 in revenues and incurred
operating costs and start-up maintenance and repair costs of $116,920, much of
which is expected to be non-recurring. The Company has capitalized $17,486 for
the oil leases and $74,286 for equipment, net of depreciation, amortization and
depletion at September 30, 2003. The Company recorded an asset retirement
obligation of $30,000 to cover the cost of capping the wells in accordance with
SFAS No. 143, "Accounting for Asset Retirement Obligations." The Company
maintains a refundable, interest-bearing deposit of $75,000 with the State of
Wyoming to cover the costs of eventual capping the wells in the event they are
no longer operated or abandoned.


                                        9
<PAGE>

                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

4.    NEW ACCOUNTING PRONOUNCEMENTS

      In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 146, "Accounting for
Exit or Disposal Activities." SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized at their fair values
when the liabilities are incurred. Under previous guidance, liabilities for
certain exit costs were recognized at the date that management committed to an
exit plan, which is generally before the actual liabilities are incurred. SFAS
No. 146 is effective prospectively for exit or disposal activities initiated
after December 31, 2002. This statement had no effect on the Company's
consolidated financial statements.

      In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." This statement amends the
disclosure and certain transition provisions of Statement 123, "Accounting for
Stock-Based Compensation." Its disclosure provisions, which apply to all
entities with employee stock-based compensation, are effective for fiscal years
ending after December 15, 2002. SFAS 148:

         o    requires all entities with stock-based employee compensation
              arrangements to provide additional disclosures in their summary
              of significant accounting policies note for entities that use the
              intrinsic value method of APB No. 25, "Accounting for Stock
              Issued to Employees", to account for employee stock compensation
              for any period presented, their accounting policies note should
              include a tabular presentation of pro forma net income and
              earnings per share using the fair value method.

         o    permits entities changing to the fair value method of accounting
              for employee stock compensation to choose from one of three
              transition methods - the prospective method, the modified
              prospective method, or the retroactive restatement method. The
              prospective transition method, however, will not be available for
              entities that initially apply the fair value method in fiscal
              years beginning after December 15, 2003.

         o    requires interim-period pro forma disclosures if stock-based
              compensation is accounted for under the intrinsic value method in
              any period presented. The Company does not currently expect the
              adoption of this statement to have a material impact on its
              financial statements.

      In November 2002, the FASB issued Interpretation No. 45, "Guarantors'
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guaranties of Indebtedness of Others." The Interpretation elaborates on the
disclosures to be made by a guarantor in its financial statements about its
obligations under certain guarantees that it has issued. It also clarifies that
a guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. This Interpretation does not prescribe a specific approach for
subsequently measuring the guarantor's recognized liability over the term of the
related guarantee. The disclosure provisions of this Interpretation were
effective for the Company's March 31, 2003 consolidated financial statements.
The initial recognition and initial measurement provisions of this
Interpretation are applicable on a prospective basis to guarantees issued or
modified after March 31, 2003. This Interpretation had no effect on the
Company's consolidated financial statements.

      In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." This Interpretation clarifies the application of
existing accounting pronouncements to certain entities in which equity investors
do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. The provisions of
the Interpretation are immediately effective for all variable interests in
variable interest entities created after January 31, 2003, and the Company will
need to apply its provisions to any existing variable interests in variable
interest entities no later than July 1, 2003. This Interpretation had no effect
on the Company's consolidated financial statements.


                                       10
<PAGE>

                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

5.    RELATED-PARTY TRANSACTIONS

      Martin Rappaport, a significant shareholder and director of the Company,
owns the property from which the Company leases the 9,600 square foot facility
it occupies in Secaucus, New Jersey. The Company pays approximately $100,000 per
year under the lease, excluding real estate taxes. We believe that the lease is
at fair market value with comparable leases for similar facilities.

6.    STOCK-BASED COMPENSATION

      At September 30, 2003, the Company has stock-based compensation plans. As
permitted by SFAS No.123, "Accounting for Stock Based Compensation", the Company
accounts for stock-based compensation arrangements with employees in accordance
with provisions of Account Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees." Compensation expense for stock options issued to
employees is based on the difference on the date of grant, between the fair
value of the Company's stock and the exercise price of the option. There was no
stock-based employee compensation charged to expense for the six months ended
September 30, 2003 and 2002. The Company accounts for equity instruments issued
to non-employees in accordance with the provisions of SFAS No.123 and Emerging
Issues Task Force (EITF) Issue No. 96-18, "Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction With
Selling, Goods or Services." All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. Stock-based
compensation for non-employees was $9,700 and $0 for the six months ended
September 30, 2003 and 2002, respectively.


                                       11
<PAGE>


                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

The following table illustrated the effect on net loss and loss per share if the
Company had applied the fair value recognition provisions of SFAS No. 123 to all
stock-based compensation:

<TABLE>
<CAPTION>
                                                  For the Three Months               For the Six Months
                                                  Ended September 30,                Ended September 30,
                                                  2003            2002               2003            2002
                                             --------------------------         ---------------------------
<S>                                          <C>              <C>               <C>             <C>
Net Loss  as reported                        $  (827,940)     $(758,051)        $(1,290,265)    $  (973,764)

Deduct:
Total stock based employee compensation
Expense determined under fair value based
method for all awards                         (1,144,763)      (201,891)         (1,168,013)     (1,158,766)
                                             -----------      ---------         -----------     -----------
Pro forma loss                               $(1,972,703)     $(959,942)        $(2,458,278)    $(2,132,530)
                                             -----------      ---------         -----------     -----------

Basic and diluted loss per common share

As reported                                       $(0.04)        $(0.03)             $(0.06)         $(0.05)

Pro forma                                         $(0.09)        $(0.04)             $(0.11)         $(0.10)

</TABLE>

7.    COMMITMENTS AND CONTINGENCIES

      The Company and its subsidiaries, in the normal course of their respective
businesses, are parties to certain litigation. In the opinion of the Company's
management, settlements of litigation will not have a material adverse effect on
the Company's results of operations, financial position or cash flows.

Texas Oil Field Accident

On October 29, 2002, an accident occurred at an oil well site near Odessa,
Texas, where the Company's equipment and products were being used in the
treatment of an oil well. There are two lawsuits pending against the Company in
Texas state court in Crane County, arising from this incident. (1) Hurst, et
ano. v. United Energy Corp., et al. Stephen Hurst, who lost an arm and sustained
serious other injuries in the accident and his wife have commenced a suit
against the Company and other defendants including the owner of the oil well and
an oil well servicing company. (2) Simmons, et ano. v. United Energy Corp., et
al. Larry Simmons, whose injuries were not as serious as those of Mr. Hurst, and
his wife have also commenced a suit against the Company. Both actions are in the
discovery stage. The Company anticipates that additional actions may be
commenced by other individuals who suffered less serious injuries in the
accident. The Company cannot at this time quantify or estimate the impact of
this litigation on the Company's operations as of September 30, 2003.

In addition to the above-described litigation, OSHA commenced an investigation
into the accident. On April 8, 2003, OSHA issued its Citation and Notification
of Penalty which found that the Company had committed violations of certain
applicable rules, including having failed to provide at or in proximity to the
site a person or persons adequately trained to render first aid with adequate
first aid supplies available and having failed to develop, implement or maintain
at the site a written hazard communication program describing how safety
criteria will be met. OSHA proposed a fine of $3,000 for these violations, which
the Company has paid.

Litigation Concerning A Former Employee

On or about May 16, 2003, the Company commenced an action against Jon Hebert, a
former employee of the Company in the United States District Court for the
District of New Jersey, seeking preliminary and permanent


                                       12
<PAGE>

                               UNITED ENERGY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


injunctive and other relief for violations by Mr. Hebert of employment and
non-disclosure agreements between him and the Company, resulting in alleged
disclosures by Hebert of the Company's confidential and proprietary information
and wrongful solicitation of the Company's customers. The Company alleges that
sales of products manufactured or distributed by Hebert's new employer may, in
addition, infringe the Company's patents. After a hearing on the Company's
motion for a preliminary injunction, the Court denied the motion, but ordered
expedited proceedings in the matter.

On or about May 27, 2003, Mr. Hebert's current employer, Fluid Sciences, L.L.C.,
commenced two actions against the Company and one of its wholly-owned
subsidiaries, Nor Industries, Inc. One of the actions was commenced in the 15th
Judicial District Court, Lafayette Parish, Louisiana. This action seeks a
declaratory judgment that the agreements between the Company and Mr. Hebert are
not enforceable against Fluid Sciences, L.L.C as a matter of Louisiana's public
policy and laws. In addition the action seeks judgment that the Company's
efforts to enforce its agreements with Mr. Hebert are in restraint of trade and
constitute unfair competition entitling Fluid Sciences, L.L.C. to injunctive
relief and damages. In June, 2003, the Company moved this action to the United
States District Court for the Western District of Louisiana. In October 2003,
the action was administratively stayed pending the outcome of the action
described in the preceding paragraph which was brought in the United States
District Court for the District of New Jersey by the Company against Mr. Hebert.

On or about May 27, 2003, a second action was commenced in the United States
District Court for the Western District of Louisiana, entitled Fluid Sciences,
L.L.C. v. United Energy Corp. and Nor Industries, Inc. The complaint in this
action alleges that Fluid Sciences is entitled to a declaratory judgment that
its products do not infringe on the patents of the Company. The Company and its
subsidiary intend vigorously to defend the litigation brought by Fluid Sciences,
L.L.C.

Sales Commission Claim

On or about July 26, 2002, an action was commenced against the Company 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 the sales representative to the Company and in that
capacity made sales of the Company's products to the United States government
and to commercial entities. Plaintiffs further allege that the Company failed to
pay to plaintiffs agreed commissions at the rate of 20% of gross sales of the
Company's products made by plaintiffs. The complaint seeks an accounting,
compensatory damages in the amount of all unpaid commissions plus interest
thereon, punitive damages in an amount treble 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. The Company believes it has meritorious
defenses to the claims asserted in the action and intends vigorously to defend
the case.

SMK Industries, Inc. v. Nor Graphics, Inc.

In its Form 10-K for the fiscal year ended March 31, 2002, the Company reported
an action commenced against it in 1997 by SMK Industries seeking damages for
breach of contract of approximately $120,000. On June 18, 2003, the Company and
plaintiff reached an agreement to settle and discontinue the lawsuit. As part of
the settlement, the Company paid $75,000.



                                       13
<PAGE>


ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

CAUTIONARY STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS

      Some of the statements contained in this Report on Form 10-Q discuss our
plans and strategies for our business or state other forward-looking statements,
as this term is defined in the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company, or industry results to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; industry capacity; marketing and other
industry trends; demographic changes; competition; the loss of any significant
customers; availability of working capital, inability to raise additional
capital, failure to achieve sales objectives, ability to control expenses,
inability to manufacture products, reliance on third parties for raw materials,
risks related to compliance to environmental laws, changes in business strategy
or development plans; retention of clients not under long-term contract; quality
and retention of management; business abilities and judgment of personnel;
availability of qualified personnel; protection of proprietary rights, patents
and trade secrets and changes in, or the failure to comply with, government
regulations.

OVERVIEW

      The Company considers its primary focus to be the development, manufacture
and sale of environmentally friendly specialty chemical products. The Company
considers its leading product in terms of future earnings potential to be its
KH-30(R) multifunctional dispersant and its family of related products KX-91(R),
KH-305(R), KX-100(R) and KX-101D(R) used as oil and gas well, pipeline and
storage tank cleaners.

      KH-30(R) and its related family of products is an environmentally
friendly, non-petroleum based product that is biodegradable. When applied in
accordance with the Company's recommended procedures, KH-30(R) has resulted in
substantial production increases of between two and five times in paraffin and
asphaltene-affected oil and gas wells. In addition, KH-30(R) has proven
effective as a "downstream application" which results in cleaner flow lines and
holding tanks. KH-30(R) has also been tested to be refinery compatible in that
it contains no materials that are harmful to the refining process. This product
has yet to achieve any significant market penetration; however, the Company has
recently received a number of requests for promotional samples from prospective
customers in several countries throughout the world and many states in the U.S.

      On October 9, 2002, the Company announced the filing of a comprehensive
patent for its new S2 System. The S2 System employs new technology to maintain
the flow of oil and gas throughout all phases of the production, transportation,
refinery and storage process in the oil and gas industry. The S2 System is a
light-weight, compact, mobile device, which can economically generate high
volumes of steam at controllable pressures and temperatures using non-petroleum
based fuel. In conjunction with the injection of KH-30(R) and its related family
of products, the S2 System will be used to melt paraffin and asphaltene
deposits, and to inhibit the formation of new blockages, maintaining peak
performance of equipment for an extended time period. The Company also believes
that this system has applications in other non-petroleum based uses where large
volumes of high temperature steam are required.

      One of the Company's graphic arts products is a photo-sensitive coating
that is applied to paper to produce what is known in the printing industry as
proofing paper or "blue line" paper. The Company developed this formulation over
several years of testing. The Company's patent attorneys have informed the
Company that the formulation is technically within the public domain as being
within the scope of an expired DuPont patent. However, the exact formulation
utilized by the Company has not been able to be duplicated by others and is
protected by the Company as a trade secret. The product is marketed under the
trade name UNIPROOF(R). Most recently UNIPROOF(R) has been made in a thinner
configuration so it can now be used by book publishers as well as other
printers.

      The Company's business plan is to use UNIPROOF(R) proofing paper sales to
provide the cash flow to support world wide marketing efforts for its KH-30(R)
and, to a lesser extent, the other specialty chemical products developed by the
Company. The Company has an arrangement with Alameda Company of Anaheim,
California to



                                       14
<PAGE>


distribute UNIPROOF(R) proofing paper on a non-exclusive basis. The Company
seeks additional distributors to sell the UNIPROOF(R) product.

      The Company's chemists have also developed an environmentally friendly
fire-retardant agent named FR-15. FR-15 begins as a concentrate which can be
mixed with varying amounts of water, depending on the anticipated use. FR-15
mixture also resists re-ignition once a fire has been extinguished. This product
can also be used to reduce odors, such as those from decomposing garbage, and
for soil remediation following petroleum-based contamination. The FR-15 has been
developed and successfully tested by several municipal fire departments. The
Company does not have any current plans to market this product in the United
States.

      Slick Barrier is an underwater protective coating which prevents the
adherence of barnacles to boat hulls. The product is another in the Company's
line of environmentally friendly products that are biodegradable, which the
Company believes to be particularly appealing in fresh water marine
applications. The product is being tested on pleasure boats throughout the
United States and Europe. A patent application on this product has been filed,
and the Company is applying for trademark protection both nationally and
internationally for the "Slick Barrier" product.

      In November 1998, the Company acquired all of the outstanding shares of
Green Globe in exchange for 30,000 shares of the Company's common stock. Green
Globe is operated as a separate subsidiary of the Company and sells its products
under the trade name Qualchem(TM). The acquisition of Green Globe gives the
Company access to the chemistry and product lines of Green Globe, which include
environmentally friendly paint strippers and cleaners, many of which have been
qualified for use by the U.S. Military. The Green Globe product line includes
the development of dual package cleaning and drying "wipes" which produce a
clear, non-reflective coating on glasses, computer screens and instrument
panels. The wipes were developed for, and have received U.S. Military approval
for, the cleaning of the instrument panels of combat aircraft.


                                       15
<PAGE>


RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2002

      Revenues. Revenues for the three months ended September 30, 2003 were
$66,401, a $559,211, or 89% decrease from revenues of $625,612 in the comparable
three months of 2002. The decrease in revenues was primarily a result of no
UNIPROOF(R) sales during the quarter. UNIPROOF(R) sales tend to be seasonal with
more requests for the product in the first through third quarters of the fiscal
year. However, our largest customer did not place any orders for additional
UNIPROOF(R) paper in the second quarter. As a result of constraints on
scheduling for additional paper production, no additional deliveries of
UNIPROOF(R) paper can be made until after December 31, 2003, when supplies of
raw paper stock may be available from our vendors. Specialty Chemicals, which
includes sales of our KH-30(R) products and Green Globe/Qualchem military sales,
decreased by $18,502 to $64,591, or 22% compared to $83,093 in the comparable
three months in the previous year. This decrease was due primarily to a decrease
in Green Globe/Qualchem military sales. We believe that in 2002, the U.S.
Government stocked up on orders and then cut its orders in 2003 due to other
military priorities. Sales of our KH-30(R) family of oil field dispersant
products were almost identical to the sales in the comparable period in the
prior year.

      Cost of Goods Sold. Cost of goods sold decreased $288,094, or 90% to
$32,404 or 49% of sales, for the three months ended September 30, 2003 from
$320,498, or 51% of sales for the three months ended September 30, 2002. The
decrease in cost of goods sold and lower percentage of sales was primarily due
to the lower sales levels and margins on UNIPROOF(R) paper sales.

      Gross Profit. Gross profit for the three months ended September 30, 2003,
decreased by $271,117, or 89% to $33,997 or 51% of sales compared with $305,114
or 49% of sales in the prior year. The decrease in gross profit reflects the
lower level of sales on UNIPROOF(R) paper.

         OPERATING COSTS AND EXPENSES

      General and Administrative Expenses. General and administrative expenses
decreased $265,755 or 25.0% to $793,221 for the three months ended September 30,
2003 compared with $1,058,976 for the three months ended September 30, 2002. The
decrease in general and administrative expenses is primarily related to lower
salaries and benefits due to the departure of certain executives and the
reduction in certain marketing expenses that were incurred to develop product
branding, logos, brochures and website in 2002. This was in part offset by
higher legal costs, including certain litigation expenses, insurance and travel
costs related to marketing and client development.

      Depreciation, Amortization and Depletion. Depreciation, amortization and
depletion increased to $37,673 from $23,245 reflecting additions to fixed assets
for manufacture of additional S2 System equipment and capitalized legal costs
related to patent filings for our S2 System and KH-30(R) family of products, and
acquisition of fixed assets related to the Company's oil wells. Depletion
expense was not material.

      Oil Well Operating and Maintenance Cost - net. During the three months
ended September 30, 2003, the Company's wells produced oil which generated
$4,849 in revenues and incurred operating costs and maintenance and repair costs
of $37,721.

      Interest Income, Net of Interest Expense. The Company had net interest
income of $1,829 for the three months ended September 30, 2003 compared with net
interest income of $19,056 in the corresponding period in 2002. The decrease was
due primarily to the lower investment earnings on the reduced remaining funds
raised from the Company's private placement in May 2002.

      Net Loss. The three months ended September 30, 2003 resulted in a net loss
of $(827,940) or $(0.04) per share as compared to a net loss of $(758,051) or
$(0.03) per share for the three months ended September 30, 2002. The increase in
the loss in the quarter ended September 30, 2003 was the result of a lower level
of sales as a result of a decreased level of UNIPROOF(R) paper sales and the
related lower margins, the relatively lower level of general and administrative
expenses and certain additional expenses related to the operation of the oil
wells. The average number of shares of common stock used in calculating earnings
per share remained the same at 22,180,270 shares.


                                       16
<PAGE>


SIX MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE SIX MONTHS ENDED
SEPTEMBER 30, 2002

      Revenues. Revenues for the six-month period ended September 30, 2003 were
$695,142, a $669,467 or 49% decrease from revenues of $1,364,609 in the
comparable six-month period ended September 30, 2002. The decrease in revenues
was primarily due to decreased sales of UNIPROOF(R) proofing paper compared with
the six-month period ended September 30, 2002. During 2003, there was a
substantial decline in sales of UNIPROOF(R) especially during the second fiscal
quarter due to a lower level of orders from the Company's primary customer. For
the six-month period ended September 30, 2002, Specialty Chemical sales, which
includes sales of our KH-30(R) products and Green Globe/Qualchem military sales
decreased 44% to $209,785 from $374,687 in the prior six-month period ended
September 30, 2002. The decline was primarily related to a 74% decrease in Green
Globe/Qualchem military sales. We believe, in 2002, the U.S. Government stocked
up on orders and then cut its orders in 2003 due to other military priorities.
The decline in Green Globe/Qualchem military sales was partially offset by a 15%
increase in sales of our KH-30(R) family of oil field dispersant products
reflecting a higher level of orders.

      Cost of Goods Sold. Cost of goods sold decreased 58% to $358,326 or 52% of
sales, for the six-month period ended September 30, 2003 from $853,120 or 63% of
sales, for the six-month period ended September 30, 2002. The decrease in cost
of goods sold was primarily due to the reduced volume of UNIPROOF(R) proofing
paper sales and change in the mix of products sold reflecting margins on
UNIPROOF(R) paper sales compared to the prior year and increased costs related
to providing samples of KH-30(R) to prospective customers during 2002.

      Gross Profit. Gross profit for the six-month period ended September 30,
2003 was 48% or $336,816, a $174,673 or 34% decrease from a 37% gross profit or
$511,489 in the corresponding period of fiscal 2002. The decrease in gross
profit and the increase in the gross profit percentage reflects the level on
UNIPROOF(R) paper sales, the higher volume but average lower gross profit level
of Green Globe/Qualchem military and KH-30(R) sales. The gross profit was also
adversely affected in 2002 by the cost of providing promotional samples of
KH-30(R) to prospective customers.

         OPERATING COSTS AND EXPENSES

      General and Administrative Expenses. General and administrative expenses
decreased $20,347, or 1% to $1,466,825, or 211% of revenues for the six-month
period ended September 30, 2003 from $1,487,172, or 109% of revenues for the
six-month period ended September 30, 2002. The slight decrease in general and
administrative expenses was primarily related to a reduction in salaries and
benefits of the new executive staff added beginning in May 2002 (three
individuals left the company from February through April 2003), a reduction in
non-recurring marketing expenses incurred in 2002 related to developing
promotional brochures, logos and product branding, design and implementation
costs of a new Company website, which was offset by increases in certain legal
services partially related to litigation, and increased level of travel related
to meeting with potential customers and customer trials on oil wells and storage
tanks.

      Depreciation, Amortization and Depletion. Depreciation, amortization and
depletion increased to $74,956 from $33,037 reflecting additions to fixed assets
for additional S2 System equipment and capitalized legal costs related to patent
filings for our S2 System and KH-30(R) products.

      Oil Well Operating and Maintenance Cost-net. During the six months ended
September 30, 2003, the wells produced oil which generated $26,053 in revenues
and incurred operating costs and maintenance and repair costs of $116,920.

      Interest Income, Net of Interest Expense. The Company had net interest
income of $5,567 for the six-month period ended September 30, 2003 compared with
net interest income of $34,956 in the corresponding period in 2002. The decrease
was due primarily to the investment earnings on the lower level of remaining
funds raised from the Company's private placement in May 2002.

      Net Loss. The six month period ended September 30, 2002 resulted in a net
loss of $(1,290,265) or $(0.06) per share compared to a net loss of $(973,764)
or $(0.05) per share for the comparable period ended September 30, 2002. The
increase in the loss in the six-month period ended September 30, 2003 was the
result a slightly increased level of total operating expenses offset by lower
sales levels. The average number of shares of common stock used


                                       17
<PAGE>


in calculating earnings per share increased by 1,442,623 to 22,180,270 shares at
September 30, 2003 compared with 20,737,647 at September 30, 2002. The increase
resulted from 6,000,000 shares issued in the Company's private placement in May
2002.

LIQUIDITY AND CAPITAL RESOURCES

      As of September 30, 2003, the Company had $795,842 in cash and cash
equivalents, accounts receivable, net of $567,058, inventory, net of $188,702,
note receivable, net of $82,952 and prepaid expenses and other current assets of
$61,559 for a total of $1,696,113 of current assets. As of March 31, 2003, the
Company had $2,120,942 in cash, accounts receivable, net of $496,715, inventory,
net of $211,344, note receivable, net of $149,034 and prepaid expenses and other
current assets of $104,527 for a total of $3,082,562 of current assets.

      Accounts receivable, net increased to $567,058 at September 30, 2003 from
$496,715 at March 31, 2003 reflecting a reduced level of collections due to
extended payment terms to certain customers as incentives. The allowance for
doubtful accounts was increased to $66,488 at September 30, 2003 from $48,113 at
March 31, 2003 reflecting the increased risk of collection on certain accounts.

      Inventory, net at September 30, 2003 was $188,702 compared with $211,344
at March 31, 2003, a decrease of $22,642. The lower inventory levels were
indicative of lower levels of finished UNIPROOF(R) paper stock on hand and usage
out of pre-stocked inventory to meet our KH-30(R) family of oil field dispersant
products sales during the period to meet customer orders. UNIPROOF(R) and Green
Globe/Qualchem products are typically shipped as soon as produced.

      The note receivable, net from one customer decreased to $82,952 at
September 30, 2003 from $149,034 at March 31, 2003, a decrease of $66,082 due to
payments on the note, a credit for the return of certain inventory sold to
another client and an increase in the reserve due to slow payments on the note.

      Prepaid expenses declined to $61,559 at September 30, 2003 from $104,527
at March 31, 2003, a decline of $42,968 resulting from the timing of
amortization on prepaid insurance.

      Property and Equipment net of accumulated depreciation increased to
$411,874 at September 30, 2003 from $268,597 at March 31, 2003 reflecting a net
increase of $143,277. This reflects expenditures for production equipment of
approximately $73,500 and $97,616 for six oil wells and related lease and
equipment in Wyoming primarily for testing our oil dispersant products.

      On April 4, 2003 the Company purchased oil leases for six oil wells in
Laramie County, Wyoming for an aggregate purchase price of $97,616. The Company
intends to operate the Wyoming Wells and use the wells for testing its products.
During the six months ended September 30, 2003, the Wyoming Wells produced oil
which generated $26,053 in revenues and incurred operating costs and start-up
maintenance and repair costs of $116,920, much of which is expected to be
non-recurring. The Company has capitalized $17,486 for the oil leases and
$74,286 for equipment, net of depreciation, amortization and depletion at
September 30, 2003. The Company maintains a refundable, interest-bearing deposit
of $75,000 with the State of Wyoming to cover the costs of eventually capping
the wells in the event they are no longer operated or are abandoned.

      Patents increased to $269,952 at September 30, 2003 from $229,508 at March
31, 2003, reflecting expenditures of $50,840 consisting of legal expenses in
support of patent applications for our KH-30(R) and S2 System products net of
accumulated depreciation.

      Deposits increased to $76,385 at September 30, 2003 from $31,385 at March
31, 2003 reflecting refundable deposits under pledge agreements of $75,000 made
with the Wyoming Oil & Gas Conservation Commission to cover the cost of capping
oil wells if abandoned. At March 31, 2003, deposits included $30,000 advanced to
the seller of the wells.

      Current liabilities increased by $91,437 to $827,824 at September 30, 2003
from $736,387 at March 31, 2003. The increase was primarily due to the increase
in accounts payable reflecting the timing of payment of bills.



                                       18
<PAGE>


Accrued expenses decreased to $182,561 at September 30, 2003 from $334,198 at
March 31, 2003 as a result of a reduction in bonus accruals applicable to
certain executives who had left the Company. In addition, current liabilities
include certain accrued legal and other expenses primarily associated with the
Company's private placement and obligations owed to related parties in the
amount of $244,141 as of September 30, 2003 and March 31, 2003 which remain
unpaid and in dispute with a former related party.

      Net Cash Used in Operating Activities. Net cash used in operating
activities increased by $58,213 to $1,097,823 in the six-months ended September
30, 2003 compared to $1,039,610 for the six-month period ended September 30,
2002. The increase in net cash used in operations resulted primarily from an
increase in the operating loss to $1,290,265 for the six months ended September
30, 2003 compared with a loss of $973,764 for the comparable period in 2002.

      Cash Flows from Investing Activities. The Company expended $228,677 during
the six months ended September 30, 2003 for non-recurring capital expenditures.
This consisted of $97,616 for the acquisition of six oil leases and related
production equipment in Wyoming. The remainder was primarily for legal fees for
patents related to its KH-30(R) family of oil field dispersant products and the
manufacture of several S2 System production units. This compared to $377,779
during the six-month period ended September 30, 2002 used primarily for
furniture, computer equipment, leasehold improvements and patent application
costs. In addition, the Company received $1,400 of payments on loans made to
employees during the six months ended September 30, 2003, as compared to
$112,333 of loans extended to employees during the six months ended September
30, 2002. As of September 30, 2003, the Company had no material commitments for
future capital expenditures.

      Cash Provided by Financing Activities. There was no net cash provided by
financing activities during the six months ended September 30, 2003 compared
with $5,365,800 during the six-month period ended September 30, 2002, reflecting
the net proceeds from the company's private placement offset by the repayment of
the $150,000 balance of its line of credit in May 2002.

      During the past two fiscal years ended March 31, 2003 and 2002, the
Company has recorded aggregate losses from operations of $4,194,000 and has
incurred total negative cash flow from operations of $3,034,000 for the same
two-year period. During the six months ended September 30, 2003, the Company
experienced a net loss from operations of $1,290,265 and negative cash flow from
operating activities of $1,097,823. The Company does not currently have an
operating line of credit. These matters raise substantial doubt about the
Company's ability to continue as a going concern. The Company's consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

      The Company's continued existence is dependent upon several factors,
including increased sales volume, collection of existing receivables and the
ability to achieve profitability from the sale of the Company's product lines.
In order to increase its cash flow, the Company is continuing its efforts to
stimulate sales and cut back expenses not directly supporting its sales and
marketing efforts. The Company is currently investigating with certain major
shareholders to provide for additional sources of capital.



                                       19
<PAGE>


CONCENTRATION OF RISK

      The Company sells its UNIPROOF(R) proofing paper to three customers. One
of these customers constitutes 93% of Graphic Arts sales and 72% of total
customer sales for the six-month period ended September 30, 2003. Although our
relationship with this customer continues to be excellent, loss of this customer
would have adverse financial consequences to the Company. We have provided
liberal credit terms to these customers and there is a risk that a certain
amount of these receivable balances may prove to be uncollectable. The Company
believes that these customers wish to purchase additional product and the
Company would use that as leverage to collect any outstanding balances.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company does not expect its operating results, cash flows, or credit
available to be affected to any significant degree by a sudden change in market
interest rates. Further, the Company does not engage in any transactions
involving financial instruments or in hedging transactions with respect to its
operations.

ITEM 4.  CONTROLS AND PROCEDURES

      The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) as of the end of the period covered by this report.  Based on such
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
have concluded that, as of the end of such period, the Company's disclosure
controls and procedures are effective.

        There have not been any changes in the Company's internal control over
financial reporting during the fiscal quarter to which this Report relates that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                       20
<PAGE>


                                     PART II
                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

      See Note 7, Commitments and Contingencies to the Consolidated Financial
Statements.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not Applicable

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

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

         Not Applicable

ITEM 5.   OTHER INFORMATION

         Not Applicable

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits.

               31.1     Written Statement of the Chief Executive Officer
                        Pursuant to 18 U.S.C.ss.1350 Sec. 302

               31.2     Written Statement of the Chief Financial Officer
                        Pursuant to 18 U.S.C.ss.1350 Sec. 302

               32.1     Written Statement of the Chief Executive Officer
                        Pursuant to 18 U.S.C.ss.1350 Sec. 906

               32.2     Written Statement of the Chief Financial Officer
                        Pursuant to 18 U.S.C.ss.1350 Sec. 906

         (b)   Reports on Form 8-K.

                 None


<PAGE>


                               UNITED ENERGY CORP.
                                    FORM 10-Q
                               SEPTEMBER 30, 2003

                                   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:    December 2, 2003           UNITED ENERGY CORP.


                                              By: /s/ Sanford M. Kimmel
                                                  ------------------------
                                                  Sanford M. Kimmel,
                                                  Chief Financial Officer
                                                  (as principal financial
                                                   officer and on behalf
                                                   of the Registrant)