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 June 30,
2010




or




 ̈
            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
                incorporation
      or organization)
              (I.R.S.
      Employer Identification No.)




600
Meadowlands Parkway #20, Secaucus,
N.J.  07094


(Address
of principal executive offices)




(800)
327-3456


(Registrant's
telephone number, including area code)




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




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈  No þ




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large
      accelerated filer  ̈
                        Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
                        Smaller
      reporting company þ




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




As of
August 13, 2010, 31,504,449 shares of common stock, par value $.01 per share,
were outstanding.







INDEX




PART
      I.  FINANCIAL INFORMATIONItem
      1.
                Financial
      StatementsConsolidated
      balance sheets June 30, 2010 (Unaudited) and March 31,
2009
                3-4Consolidated
      statements of operations for the three months ended June 30, 2010
      (Unaudited) and 2009 (Unaudited)
                5Consolidated
      statement of stockholders' equity for the three months ended June 30, 2010
      (Unaudited)
                6Consolidated
      statements of cash flows for the three months ended June 30, 2010
      (Unaudited) and 2009 (Unaudited)
                7-8Notes
      to consolidated financial statements
                9-13Item
      2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                14-16Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                16Item
      4.
                Controls
      and Procedures
                16PART
      II.  OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                17Item
      1A.
                Risk
      Factors
                17Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                17Item
      3.
                Defaults
      Upon Senior Securities
                17Item
      4.
                (Removed
      and Reserved)
                17Item
      5.
                Other
      Information
                17Item
      6.
                Exhibits
                17Signatures
                18


2




Item
1. Financial
Statements





UNITED
ENERGY CORP.  AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS




June 30,
                                
                                
                                March 31,2010
                                
                                
                                2010(Unaudited)ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                                
                                $
                                22,134
                                
                                
                                $
                                311,506Accounts
      receivable, net of allowance for doubtful accounts of $79,487 and $77,211,
      respectively
                                
                                
                                448,027
                                
                                
                                
                                190,915Inventory
                                
                                
                                88,382
                                
                                
                                
                                80,870Prepaid
      expenses and other current assets
                                
                                
                                39,882
                                
                                
                                
                                62,827Loan
      receivable, net of reserve of $25,000
                                
                                
                                25,000
                                
                                
                                
                                25,000Total
      current assets
                                
                                
                                623,425
                                
                                
                                
                                671,118PROPERTY
      AND EQUIPMENT, net of accumulated depreciation and amortization of
      $497,449 and $492,121 respectively
                                
                                
                                73,722
                                
                                
                                
                                79,050OTHER
      ASSETS:Goodwill,
      net
                                
                                
                                15,499
                                
                                
                                
                                15,499Patents,
      net of accumulated amortization of $289,964 and $280,306,
      respectively
                                
                                
                                307,660
                                
                                
                                
                                317,318Loans
      receivable
                                
                                
                                36,608
                                
                                
                                
                                35,793Deposits
                                
                                
                                1,385
                                
                                
                                
                                1,385Total
      assets
                                
                                $
                                1,058,299
                                
                                
                                $
                                1,120,163




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


3




UNITED
ENERGY CORP.  AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS




June 30,
                                
                                
                                March 31,2010
                                
                                
                                2010(Unaudited)LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                                
                                $
                                314,218
                                
                                
                                $
                                234,948Accrued
      expenses
                                
                                
                                270,178
                                
                                
                                
                                362,925Convertible
      term note payable
                                
                                
                                30,000
                                
                                
                                
                                30,000Due
      to related parties
                                
                                
                                464,781
                                
                                
                                
                                453,781Total
      current liabilities
                                
                                
                                1,079,177
                                
                                
                                
                                1,081,654STOCKHOLDERS'
      EQUITY:Series
      A Convertible Preferred Stock:$8,000
      stated value; 100,000 shares  authorized; 3 shares issued and
      outstanding as of June 30, 2010 and March 31, 2010
                                
                                
                                24,000
                                
                                
                                
                                24,000Common
      stock: $0.01 par value 100,000,000 shares authorized; 31,504,449 shares
      issued and  outstanding as of  June 30, 2010 and March
      31, 2010
                                
                                
                                315,045
                                
                                
                                
                                315,045Additional
      paid-in capital
                                
                                
                                23,245,892
                                
                                
                                
                                23,245,536Accumulated
      deficit
                                
                                
                                (23,605,815
                                )
                                
                                
                                (23,546,072
                                )Total
      stockholders' equity
                                
                                
                                (20,878
                                )
                                
                                
                                38,509Total
      liabilities and stockholders' equity
                                
                                $
                                1,058,299
                                
                                
                                $
                                1,120,163




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 MonthsEnded June 30,2010
                            
                            
                            2009(Unaudited)REVENUES,
      net
                            
                            $
                            443,505
                            
                            
                            $
                            394,004COST
      OF GOODS SOLD
                            
                            
                            172,465
                            
                            
                            
                            153,714Gross
      profit
                            
                            
                            271,040
                            
                            
                            
                            240,290OPERATING
      EXPENSES:Selling,
      general and administrative
                            
                            
                            268,712
                            
                            
                            
                            351,032Research
      and developement
                            
                            
                            35,156
                            
                            
                            
                            51,496Depreciation
      and amortization
                            
                            
                            11,568
                            
                            
                            
                            12,077Total
      operating expenses
                            
                            
                            315,436
                            
                            
                            
                            414,605Loss
      from operations
                            
                            
                            (44,396
                            )
                            
                            
                            (174,315
                            )OTHER
      INCOME (EXPENSE), net:Interest
      income
                            
                            
                            6
                            
                            
                            
                            7Interest
      expense
                            
                            
                            (14,993
                            )
                            
                            
                            (7,545
                            )Total
      other expense, net
                            
                            
                            (14,987
                            )
                            
                            
                            (7,538
                            )Net
      loss
                            
                            
                            (59,383
                            )
                            
                            
                            (181,853
                            )PREFERRED
      DIVIDENDS
                            
                            
                            (360
                            )
                            
                            
                            (360
                            )Net
      loss applicable to common shareholders
                            
                            $
                            (59,743
                            )
                            
                            $
                            (182,213
                            )BASIC
      AND DILUTED LOSS PER SHARE,
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.01
                            )BASIC
      AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
                            
                            
                            31,504,449
                            
                            
                            
                            31,180,991




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 THREE MONTHS ENDED JUNE 30, 2010 (UNAUDITED)




AdditionalCommon Stock
                          
                          
                          Preferred
                          
                          
                          Paid-In
                          
                          
                          AccumulatedShares
                          
                          
                          Amount
                          
                          
                          Stock
                          
                          
                          Capital
                          
                          
                          Deficit
                          
                          
                          TotalBALANCE,
      April 1, 2010
                          
                          
                          31,504,449
                          
                          
                          $
                          315,045
                          
                          
                          $
                          24,000
                          
                          
                          $
                          23,245,536
                          
                          
                          $
                          (23,546,072
                          )
                          
                          $
                          38,509Compensation
      expense associatedwith
      options
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          356
                          
                          
                          
                          -
                          
                          
                          
                          356Dividends
      accrued onpreferred
      shares
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (360
                          )
                          
                          
                          (360
                          )Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (59,383
                          )
                          
                          
                          (59,383
                          )BALANCE,
      June 30, 2009
                          
                          
                          31,504,449
                          
                          
                          $
                          315,045
                          
                          
                          $
                          24,000
                          
                          
                          $
                          23,245,892
                          
                          
                          $
                          (23,605,815
                          )
                          
                          $
                          (20,878
                          )




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 THREE MONTHS ENDED JUNE 30, 2010 AND 2009




2010
                            
                            
                            2009(Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss from continuing operations
                            
                            $
                            (59,383
                            )
                            
                            $
                            (181,853
                            )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
      and amortization
                            
                            
                            14,986
                            
                            
                            
                            17,292Allowance
      for doubtful accounts
                            
                            
                            2,275
                            
                            
                            
                            3,008Compensation
      expense associated with warrants
                            
                            
                            -
                            
                            
                            
                            39,802Compensation
      expense associated with warrants
                            
                            
                            356
                            
                            
                            
                            356Changes
      in operating assets and liabilitiesAccounts
      receivable
                            
                            
                            (259,388
                            )
                            
                            
                            (27,619
                            )Inventory
                            
                            
                            (7,511
                            )
                            
                            
                            36,588Prepaid
      expenses and other current assets
                            
                            
                            22,081
                            
                            
                            
                            16,180Accounts
      payable and accrued expenses
                            
                            
                            (13,478
                            )
                            
                            
                            (2,781
                            )Net
      cash used in operating activities
                            
                            
                            (300,062
                            )
                            
                            
                            (99,027
                            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Employee
      loans
                            
                            
                            50
                            
                            
                            
                            (150
                            )Net
      cash proveded by (used in) investing activities
                            
                            
                            50
                            
                            
                            
                            (150
                            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from related party loans
                            
                            
                            11,000
                            
                            
                            
                            153,781Preferred
      stock dividend
                            
                            
                            (360
                            )
                            
                            
                            (360
                            )Net
      cash provided by financing activities
                            
                            
                            10,640
                            
                            
                            
                            153,421Net
      (decrease) increase in cash and cash equivalents
                            
                            
                            (289,372
                            )
                            
                            
                            54,244CASH
      AND CASH EQUIVALENTS, beginning of period
                            
                            
                            311,506
                            
                            
                            
                            56,372CASH
      AND CASH EQUIVALENTS, end of period
                            
                            $
                            22,134
                            
                            
                            $
                            110,616




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 THREE MONTHS ENDED JUNE 30, 2010 AND 2009




2010
                        
                        
                        2009(Unaudited)SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Cash
      paid during the periodInterest
                        
                        $
                        893
                        
                        
                        $
                        580Income
      taxes
                        
                        $
                        -
                        
                        
                        $
                        1,040SUPPLEMENTAL
      DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:Conversion
      of note into common stock
                        
                        $
                        -
                        
                        
                        $
                        35,000




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


8


UNITED
ENERGY CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


JUNE
30, 2010 (Unaudited)




1.           BASIS
OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis
of presentation




Interim
Financial Statements




The
accompanying unaudited consolidated financial statements of United Energy Corp.
(“we”, “United Energy” or the “Company”) have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, the unaudited interim financial statements furnished herein
include all adjustments necessary for a fair presentation of the Company's
financial position at June 30, 2010 (unaudited) and the results of its
operations for the three months ended June 30, 2010 and 2009 (unaudited) and
cash flows for the three months ended June 30, 2010 and 2009 (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 ended June 30,
2010 are not necessarily indicative of the operating results that may be
expected for the year ending March 31, 2011.




The
consolidated balance sheet as of March 31, 2010 has been derived from the
audited financial statements at that date but does not include all of the
information and notes required by accounting principles generally accepted in
the United States for complete financial statements.




For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2010.




Going
Concern– The accompanying
consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
contemplate continuation of the Company as a going concern. However, the Company
has year end losses from operations and has an accumulated deficit of
$23,605,815 as of June 30, 2010.During the three months ended June 30,
2010 the Company experienced a net loss from operations of $59,383 and a
negative cash flow from operations of $300,062.  These matters raise
substantial doubt about the Company’s ability to continue as a going concern.
Our consolidated financial statements do not include any adjustment that might
result from the outcome of this uncertainty.




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





There can
be no assurance that we will be successful in stimulating sales or reducing
expenses to levels sufficient to generate cash flow sufficient to fund our
anticipated liquidity requirements. There also can be no assurance that
available financing will be available, or if available, that such financing will
be on terms acceptable to us.





2           NET
LOSS PER SHARE




Basic net
loss per share is computed based upon the weighted average number of common
shares outstanding during the periods and is computed by dividing net loss by
the adjusted weighted average number of shares during the
periods.


9




3
            RECENTLY
      ISSUED ACCOUNTING STANDARDS




Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting
Principles




In June 2009, the Financial Accounting
Standards Board (FASB) amended its accounting guidance on the consolidation of
variable interest entities (VIE). Among other things, the new guidance requires
a qualitative rather than a quantitative assessment to determine the primary
beneficiary of a VIE based on whether the entity (1) has the power to
direct matters that most significantly impact the activities of the VIE and
(2) has the obligation to absorb losses or the right to receive benefits of
the VIE that could potentially be significant to the VIE. In addition, the
amended guidance requires an ongoing reconsideration of the primary beneficiary.
The provisions of this new guidance were effective as of the beginning of our
2010 fiscal year, and the adoption did not have a material impact on our
financial statements.





In
October 2009, the FASB issued updated guidance on multiple-deliverable
revenue arrangements. Specifically, the guidance amends the existing criteria
for separating consideration received in multiple-deliverable arrangements,
eliminates the residual method of allocation and requires that arrangement
consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method. The guidance also
establishes a hierarchy for determining the selling price of a deliverable,
which is based on vendor-specific objective evidence; third-party evidence; or
management estimates. Expanded disclosures related to multiple-deliverable
revenue arrangements will also be required. The new guidance is effective for
revenue arrangements entered into or materially modified on and after
January 1, 2011. The Company does not expect the application of this new
standard to have a significant impact on its consolidated financial
statements.




In
December 2009, the FASB issued ASU No. 2009-17 (formerly Statement No. 167),
“Consolidations (Topic 810) –
Improvements to Financial Reporting for Enterprises involved with Variable
Interest Entities”. ASU 2009-17 amends the consolidation guidance
applicable to variable interest entities. The amendments to the consolidation
guidance affect all entities, as well as qualifying special-purpose entities
(QSPEs) that are currently excluded from previous consolidation guidance. ASU
2009-17 was effective as of the beginning of the first annual reporting period
that begins after November 15, 2009. ASU 2009-17 did not have an impact on our
financial condition, results of operations, or disclosures.




In
December 2009, the FASB issued ASU No. 2009-16 (formerly Statement No. 166),
“Transfers and Servicing
(Topic 860) – Accounting for Transfers of Financial Assets”. ASU 2009-16
amends the derecognition accounting and disclosure guidance. ASU 2009-16
eliminates the exemption from consolidation for QSPEs and also requires a
transferor to evaluate all existing QSPEs to determine whether they must be
consolidated. ASU 2009-16 was effective as of the beginning of the first annual
reporting period that begins after November 15, 2009. ASU 2009-16 did not have
an impact on our financial condition, results of operations, or
disclosures.




In January 2010, the FASB issued
Accounting Standards Update (“ASU”) 2010-06 which is intended to improve
disclosures about fair value measurements. The guidance requires entities to
disclose significant transfers in and out of fair value hierarchy levels, the
reasons for the transfers and to present information about purchases, sales,
issuances and settlements separately in the reconciliation of fair value
measurements using significant unobservable inputs (Level 3). Additionally, the
guidance clarifies that a reporting entity should provide fair value
measurements for each class of assets and liabilities and disclose the inputs
and valuation techniques used for fair value measurements using significant
other observable inputs (Level 2) and significant unobservable inputs (Level 3).
The Company has applied the new disclosure requirements as of January 1,
2010, except for the disclosures about purchases, sales, issuances and
settlements in the Level 3 reconciliation, which will be effective for interim
and annual periods beginning after December 15, 2010. The adoption of this
guidance has not had and is not expected to have a material impact on the
Company’s consolidated financial statements.




In
February 2010, the FASB issued ASU 2010-09 which requires that an SEC
filer, as defined, evaluate subsequent events through the date that the
financial statements are issued. The update also removed the requirement for an
SEC filer to disclose the date through which subsequent events have been
evaluated in originally issued and revised financial statements. The adoption of
this guidance on January 1, 2010 did not have a material effect on the
Company’s consolidated financial statements.


10





4.           CONVERTIBLE
DEBT




On
November 6, 2009, the Company issued a convertible term note in the amount of
$30,000, which accrues interest at 7% per year. Principal and interest is
payable on demand. The holder of this term note has the option to convert all or
a portion of the note (including principal and interest) into shares of common
stock at any time at a conversion price of $0.21 per share. The conversion price
is subject to adjustment for stock splits, stock dividends and similar
events.




5.           USE
OF ESTIMATES




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




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




6.           FAIR
VALUE MEASUREMENT




Fair
value of certain of the Company’s financial instruments including cash and cash
equivalents, inventory, account payable, accrued expenses, notes payables, and
other accrued liabilities approximate cost because of their short maturities.
The Company measures and reports fair value in accordance with ASC 820, “Fair
Value Measurements and Disclosure” defines fair value, establishes a framework
for measuring fair value in accordance with generally accepted accounting
principles and expands disclosures about fair value investments.




Fair
value, as defined in ASC 820, is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value of an asset should reflect
its highest and best use by market participants, principal (or most
advantageous) markets, and an in-use or an in-exchange valuation premise. The
fair value of a liability should reflect the risk of nonperformance, which
includes, among other things, the Company’s credit risk.




Valuation
techniques are generally classified into three categories: the market approach;
the income approach; and the cost approach. The selection and application of one
or more of the techniques may require significant judgment and are primarily
dependent upon the characteristics of the asset or liability, and the quality
and availability of inputs. Valuation techniques used to measure fair value
under ASC 820 must maximize the use of observable inputs and minimize the use of
unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and
resulting measurement as follows:




Level
1




Quoted
prices (unadjusted) in active markets that are accessible at the measurement
date for identical assets or liabilities;




Level
2




Quoted
prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets or liabilities in markets that are not active;
inputs other than quoted prices that are observable for the asset or liability;
and inputs that are derived principally from or corroborated by observable
market data for substantially the full term of the assets or liabilities;
and


11


Level
3




Unobservable
inputs for the asset or liability that are supported by little or no market
activity and that are significant to the fair values.




Fair
value measurements are required to be disclosed by the Level within the fair
value hierarchy in which the fair value measurements in their entirety fall.
Fair value measurements using significant unobservable inputs (in Level 3
measurements) are subject to expanded disclosure requirements including a
reconciliation of the beginning and ending balances, separately presenting
changes during the period attributable to the following: (i) total gains or
losses for the period (realized and unrealized), segregating those gains or
losses included in earnings, and a description of where those gains or losses
included in earning are reported in the statement of income.





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:




2010
                            
                            
                            2009Expectedlife (in
      years)
                            
                            
                            10
                            
                            
                            
                            10Risk-free
      interest rate
                            
                            
                            4.54
                            %
                            
                            
                            4.54
                            %Volatility
                            
                            
                            191.2
                            
                            
                            
                            147.3Dividend
      yield
                            
                            
                            0
                            %
                            
                            
                            0
                            %




Utilizing
these assumptions, the weighted average fair value of options granted with an
exercise price equal to their fair market value at the date of the grant is
$1.05 for the three months ended June 30, 2010.


12




Summary
Stock Option Activity




The following table summarizes stock
option information with respect to all stock options for the quarter ended June
30, 2010:




Number of
                      Shares
                  
                  
                  Weighted
                      Average
                      Exercise
                    Price
                  
                  
                  Weighted
                      Average
                      Remaining
                      Contractual
                      Life (Years)
                  
                  
                  Aggregate
                      Intrinsic
                      ValueOptions
      outstanding April 1, 2010
                  
                  
                  3,287,500
                  
                  
                  $
                  1.05
                  
                  
                  
                  4.67Granted
                  
                  
                  —Expired
                  
                  
                  (40,000
                  )
                  
                  $
                  0.12Options
      outstanding June 30, 2010
                  
                  
                  3,247,500
                  
                  
                  $
                  1.06
                  
                  
                  
                  4.48Vested
      and expected to vest–end of quarter
                  
                  
                  3,247,500
                  
                  
                  $
                  1.06
                  
                  
                  
                  4.48
                  
                  
                  $
                  —Exercisable–end
      of quarter
                  
                  
                  3,160,000
                  
                  
                  $
                  1.09
                  
                  
                  
                  4.41
                  
                  
                  $
                  —




Pursuant
to the terms of an employment agreement with Ronald Wilen, Chief Executive
Officer, President, Secretary and Director of the Company dated April 17, 2007,
for each of the next five (5) years of the term of the agreement (commencing
with April 17, 2008), Mr. Wilen will receive an option to purchase fifty
thousand (50,000) shares of common stock of the Company. The exercise price with
respect to any option granted pursuant to the employment agreement shall be the
fair market value of the common stock underlying such option on the date such
option was granted.





Options
outstanding at June 30, 2010 have an exercise price ranging between $0.09 to
$2.05.




The
aggregate intrinsic value in the table above represents the total intrinsic
value (the difference between United Energy’s closing stock price on June 30,
2010 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 June 30, 2010. This amount changes based upon changes
in the fair market value of United Energy’s stock. As of June 30, 2010, $2,489
of the total unrecognized compensation costs related to stock options is
expected to be recognized over a period of three years and six
months.




8.           SUBSEQUENT
EVENT




The Company did not have any material
subsequent events to disclose from the balance sheet date to the filing date.
The Company evaluated subsequent events through August 13,
2010.


13




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




CAUTIONARY
STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS





The
matters discussed in this Form 10-Q contain certain forward-looking statements
and involve risks and uncertainties (including changing market conditions,
competitive and regulatory matters, etc.) detailed in the disclosure contained
in this Form 10-Q and the other filings with the Securities and Exchange
Commission made by us from time to time. The discussion of our liquidity,
capital resources and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to our operations. Accordingly, actual results could differ
materially from those projected in the forward-looking statements as a result of
a number of factors, including those identified herein and those discussed under
the heading “Risk Factors” in the Company’s 10-K for the fiscal year ended March
31, 2010. This item should be read in conjunction with the financial statements
and other items contained elsewhere in the report. Unless the context otherwise
requires, “we”, “our”, “us”, the “Company” and similar phrases refer to United
Energy Corp.




Overview




We
develop and distribute environmentally friendly specialty chemical products with
applications in several industries and markets.  Our current line of
products includes our K-Line of Chemical Products for the oil industry and
related products.




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




A key
component of our business strategy is to pursue collaborative joint working and
marketing arrangements with established international oil and oil service
companies.  We intend to enter into these relationships to more
rapidly and economically introduce our K-Line of Chemical Products to the
worldwide marketplace for refinery, tank and pipeline cleaning
services.




We
provide our K-Line of Chemical Products and our Green Globe Products to our
customers and generated revenues of $443,505 for the quarterly period ended June
30, 2010 and $394,004 for the quarterly period ended June 30, 2009.




RESULTS
OF OPERATIONS




Three
Months Ended June 30, 2010 Compared to the Three Months Ended June 30,
2009




Revenues.  Revenues
for the three months ended June 30, 2010 were $443,505, a $49,501, or 13%
increase from revenues of $394,004 in the comparable three months of
2009.  Revenues from our K-Line of Chemical Products increased by
$95,675 to $411,353 or 30% compared to $315,678 in the comparable three months
ended June 30, 2009, offset by revenues from our Green Globe/Qualchem military
sales which decreased by $46,174 to $32,152 or 59% compared to $78,326 in the
comparable three months ended June 30, 2009.




Cost of Goods
Sold.  Cost of goods sold increased $18,781, or 12%, to
$172,465, or 39% of revenue, for the three months ended June 30, 2010 from
$153,714, or 39% of revenues for the three months ended June 30, 2009. Cost of
goods sold from our K-Line of Chemical Products sales increased by $38,492 to
$157,600 or 32% compared to $119,108 in the comparable three months ended June
30, 2009, offset by a decrease of $19,741 to $14,865 or 57% compared to $34,606
in the comparable three months ended June 30, 2009 in cost of goods sold of our
Green Globe/Qualchem military sales.




Gross
Profit.  Gross profit for the three months ended June 30, 2010,
increased by $30,750, or 13% to $271,040 or 61% of revenues compared with
$240,290 or 61% of revenues in the prior period. The increase in gross profit
reflects the higher levels of sales of our K-Line of Chemical Products, offset
by a decrease in our Green Globe/Qualchem military sales.


14


Operating
Costs and Expenses




Selling, General and Administrative
Expenses. Selling, general and administrative expenses decreased $82,320
to $268,712 or 61% of sales for the three months ended June 30, 2010 compared
with $351,032 or 89% of sales for the three months ended June 30,
2009.  The decrease in selling, general and administrative expenses is
primarily related to a decrease in salaries, marketing, insurance, professional
fees and travel and entertainment expenses.




Research and Development.
Research and development expenses decreased $16,340 to $35,156 or 8% of sales
for the three months ended June 30, 2010 compared with $51,496 or 13% of sales
for the three months ended June 30, 2009. The decrease in research and
development expenses was related to a decrease in lab supplies and
salaries.




Depreciation and
Amortization.  Depreciation and amortization remained
relatively constant for the three months ended June 30, 2010 as compared with
June 30, 2009.




Interest
Income.  Interest income remained relatively constant for the
three months ended June 30, 2010 as compared with June 30, 2009.




Interest
Expense.  The Company had interest expense of $14,993 for the
three months ended June 30, 2010 compared with $7,545 in the corresponding
period in 2009. The increase was due to the indebtedness outstanding on the
director loans.




Net Loss.  The
three months ended June 30, 2010 resulted in a net loss of $59,383 or $0.00 per
share as compared to a net loss of $181,853 or $0.01 per share for the three
months ended June 30, 2009. The average number of shares of common stock used in
calculating earnings per share increased 323,458 shares to 31,504,449 as a
result of 298,472 shares issued in connection with the conversion of the
convertible note and 175,862 shares issued in the connection with the exercise
of warrants.




Liquidity
and Capital Resources




As of
June 30, 2010, the Company had $22,134 in cash and cash equivalents, as compared
to $311,506 at March 31, 2010.




The
$289,372 decrease in cash and cash equivalents was due to net cash used in
operations of $300,062, net cash provided by investing activities of $50 and net
cash provided by financing activities of $10,640. Cash provided by investing
activities consisted of employee loans of $50.  Cash provided by
financing activities consisted of related party loans of $11,000, offset by
preferred stock dividends of $360.




As of
June 30, 2010 the Company’s backlog included $43,320 of chemical
sales.  Backlog represents products that the Company’s customers have
committed to purchase. The Company’s backlog is subject to fluctuations and is
not necessarily indicative of future sales.




The accompanying consolidated financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America which contemplate continuation of the
Company as a going concern. However, the Company has year end losses from
operations and has an accumulated deficit of $23,605,815 as of June 30,
2010.During
the three months ended June 30, 2010 the Company experienced a net loss from
operations of $59,383 and a negative cash flow from operations of
$300,062.  These matters raise substantial doubt about the Company’s
ability to continue as a going concern. Our consolidated financial statements do
not include any adjustment that might result from the outcome of this
uncertainty.




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


15





There can
be no assurance that we will be successful in stimulating sales or reducing
expenses to levels sufficient to generate cash flow sufficient to fund our
anticipated liquidity requirements. There also can be no assurance that
available financing will be available, or if available, that such financing will
be on terms acceptable to us.




Concentration
of Risk




Sales to our top two customers,
accounted for approximately 82% of revenue, or $363,313, for the three-month
period ending June 30, 2010 and sales to our top three customers, accounted for
approximately 81% of our revenue, or $320,326, for the three-month period ending
June 30, 2009.




Sales to our top customer, for the
three-month period ending June 30, 2010 were $259,363.




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
4.            Controls and
Procedures.




Evaluation
of the Company's Disclosure Controls and Procedures




We
carried out an evaluation, under the supervision and with the participation of
the Company's management, including our Chief Executive Officer and our
Principal Accounting Officer (Interim Chief Financial Officer), of the
effectiveness of our “disclosure controls and procedures” (as defined in Rules
13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of
June 30, 2010.  Based upon that evaluation, the Chief Executive
Officer and the Principal Accounting Officer (Interim Chief Financial Officer)
concluded that our disclosure controls and procedures are effective, in all
material respects, with respect to the recording, processing, summarizing, and
reporting, within the time periods specified in the Securities and Exchange
Commission's rules and forms, of information required to be disclosed by us in
the reports that we file or submit under the Exchange Act. In designing and
evaluating our “disclosure controls and procedures” (as defined in Rules
13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended),
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurances of achieving the
desired control objectives, as ours are designed to do, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.





Changes
      in Control Over Financial Reporting




Management
has not identified any change in our internal control over financial reporting
that occurred during the fiscal quarter ended June 30, 2010 that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.




16




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.            (Removed and
Reserved)




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).




17


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:
      August 13, 2010
              UNITED
      ENERGY CORP.By:
              /s/ Ronald WilenRonald
      Wilen,Chief
      Executive Officer(as
      principal executive officer)





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


18