<PAGE>



================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

   For the fiscal year ended March 31, 2005 Commission file number: 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
   incorporation or organization)                      Identification No.)


   600 Meadowlands Parkway, #20
       Secaucus, New Jersey                                   07094
------------------------------------               ----------------------------
       (Address of principal                                (Zip Code)
         executive offices)

                                 ---------------

       Registrant's telephone number, including area code: (201) 842-0288

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

  Title of each class                  Name of each exchange on which registered
  -------------------                  -----------------------------------------

Common Stock, par value                  Over-the-Counter (OTC) Bulletin Board
    $.01 per share

                                ---------------

         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 of
1934 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 the
filing requirements for the past 90 days.  Yes  [X]   No ___

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

         The issuer's total consolidated revenues for the fiscal year ended
March 31, 2005 were $1,850,954

         The aggregate market value of the common equity held by non-affiliates
of the registrant was $32,093,851 as of June 9, 2005

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

         The number of shares outstanding of the registrant's common equity as
of June 9, 2005 was 23,652,517 shares.

                                ---------------






<PAGE>




                               UNITED ENERGY CORP.

                         2005 FORM 10-KSB ANNUAL REPORT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----

                                                    PART I
<S>                                                                                                        <C>
   ITEM 1.     DESCRIPTION OF BUSINESS......................................................................  1
   ITEM 2.     DESCRIPTION OF PROPERTIES....................................................................  5
   ITEM 3.     LEGAL PROCEEDINGS............................................................................  6
   ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........................................  6

                                                    PART II

   ITEM 5.     MARKET FOR  COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
                  PURCHASES OF EQUITY SECURITIES............................................................  7
   ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.........  9

   ITEM 7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................................. 14
   ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE......... 14
   ITEM 8A.    CONTROLS AND PROCEDURES...................................................................... 14

                                                   PART III

   ITEM 9.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........................................... 16
   ITEM 10.    EXECUTIVE COMPENSATION....................................................................... 18
   ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS....................................................................... 20
   ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................... 22
   ITEM 13.    EXHIBITS..................................................................................... 22
   ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES....................................................... 23

</TABLE>






<PAGE>




                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

OVERVIEW

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

         o  KH-30 paraffin dispersant for the oil industry and related products;

         o  Uniproof specialty-coated proofing paper for the printing industry;
            and

         o  following additional testing, "Slick Barrier" underwater protective
            coatings for use in marine applications.

         Through our wholly-owned subsidiary, Green Globe Industries, Inc., we
provide the U.S. military with a variety of environmentally friendly,
non-hazardous, biodegradable solvents 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.

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

         A key component of our business strategy is to pursue collaborative
joint working and marketing arrangements with established international oil and
oil service companies. We intend to enter into these relationships to more
rapidly and economically introduce our KH-30 product line to the worldwide
marketplace for refinery, tank and pipeline cleaning services. We are currently
negotiating potential working arrangements with several companies.

         We provide specialty chemical and graphic arts products to our
customers and generated revenues of $1,850,954 for the fiscal year ended March
31, 2005 and $972,051 for the fiscal year ended March 31, 2004. As of March 31,
2005, we employed ten people and use the services of five other individuals
under consulting or product/production cooperation arrangements.

Organizational History

         We were originally incorporated in Nevada in 1971 as Aztec Silver
Mining Co. We engaged in the manufacturing and distribution of printing
equipment from 1995 through 1998. During that period, we began to develop
specialty chemical products for use in the printing industry. In March 1998, we
discontinued our printing equipment operations and changed our business focus to
the development of specialty chemical products.

Business Operations and Principal Products

         K-Product Line of Chemicals

         KH-30 is a mixture of modified oils, dispersants and oil-based
surfactants designed to control paraffin and asphaltene deposits in oil wells.
When applied in accordance with our recommended procedures, KH-30 has resulted
in substantial production increases of between two and five times in
paraffin-affected oil and gas wells by allowing for a faster penetration of
paraffin and asphaltene deposits. KH-30 disperses and suspends paraffin and
asphaltene in a free-flowing state and prevents solids from sticking to each
other or to oil well equipment. KH-30 is patented in the United States,
Australia, Russia, Nigeria, Venezuela, Vietnam and the OAPI (the Africa
Intellectual Property Organization, which includes the countries of
Burkina-Faso, Benin, Central African Republic, Congo, Ivory Coast, Cameroon,
Gabon, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, Chad and Togo).
We have twelve additional country patent applications pending in most of the
major oil-producing countries around the world (including the European Union and
Canada).







<PAGE>




         Although we believe that the application of our K-Line of products on a
continuous basis will result in higher production and lower lease operating
costs in oil wells, the introduction of our K-Line of products into the oil and
gas producing industry has been difficult. Many entrenched players such as the
"hot oilers" and the major oil service companies who benefit from high mark-ups
on their proprietary products have no incentive to promote the use of our K-Line
of products. Moreover, oil production engineers are reluctant to risk damage to
a well from a product that does not have the endorsement and backing of a major
enterprise. Consequently, the pace of introduction of our K-line of products has
been much slower than we initially anticipated. We believe that this situation
has begun to change as a result of our marketing efforts with several oil
service companies and well owners beginning to use our products after successful
trials.

         KX-91 is used for cleanup and stimulation of well bores. It works on
all gravities of crudes. Penetrates and disperses faster than KH-30 and has a
freeze point of -40F. KX-91 is good for tanks with buildup on the bottom and can
be used on pipelines with paraffin and asphaltene blockages.

         KH-30S is an outstanding flow enhancer. Used mainly on heavy crudes to
reduce the viscosity and reduce drag and friction. It has been very successful
in tanks with high bottoms and should be injected into the oil stream to help
enhance flow.

         KDR-75 is effective in reducing friction pressure of petroleum crude
and related oil products due to turbulent flow through pipelines and helps
restore laminar flow. As a result, an increase in flow rate and productivity
with reduced energy consumption can be achieved.

         KX-100 is a product where contact time is limited for removal of a
plug. It is fast acting and an outstanding dispersant that can be used in
temperatures as low as -25F. It can be used in nearly any application with great
results.

         KX-105DS-A Degreaser is a strong multi-functional, non-hazardous
chemical cleaning compound designed to dissolve and remove tough heavy organic
and sludge deposits. It possesses strong wetting, penetrating, dispersing and
solvating properties. Hence, safe for use in oil field cleaning applications.

         KX-104PDC is designed to reduce pour point, gel point, or cloud point
of crude oil and improve its cold flow property and pumpability in oil field
processing applications.

         KX-200-A Pentrant is a proprietary chemical composition, specifically
developed to handle problems with paraffin and asphaltene blockages and high
viscosity crude with flow impairment.

         KX-404 EB is specifically formulated to destabilize both, oil-in-water
and water-in-oil type emulsions when used in low treatment dosages of 50-100 PPM
with minimal contact time. It triggers kinetically and thermodynamically
unstable, weaker, transient emulsion phase into a sharp clean break down of oil
& water phase. The application of steam heat up to 150-200F will activate and
speed up demulsification.






                                       2







<PAGE>




         Additional Product Line of Chemicals

         AS-12 is an acidic cleaner in liquid form, which has been formulated to
aid in the removal of Iron Sulfide and mild depositions of Calcium Carbonate
from down-hole equipment surfaces and any other locations where a low pH may be
advisable. Due to its very low pH, it is recommended that general safety
precautions be observed while handling the concentrated material, wearing
suitable facial and skin precautions.

         CI-95 is formulated around an oil-soluble, water-dispersible filming
amine designed for use in sour gas and producing oil wells. It is a liquid
compound, which has been formulated to give a very tenacious film with an
extended persistency without undesirable "gunking" on the down-hole tubulars.

         SCI-97 Quatemary Surfacant is designed for use in down-hole cleanups in
producing oil wells. It is a quatemary ammonium chloride compound which has been
successfully used to clean the down-hole surfaces in producing wells, as well as
in salt water disposal and injections systems, while at the same time
water-wetting the solids to assist in removing these from the produced crude
oil.

         SI-15 Scale Inhibitor is a broad based spectrum, high-calcium tolerant,
water soluble scale inhibitor which has been formulated to inhibit the formation
and deposition of Calcium Carbonate scale in oil field brines. SI-15 will
complex well with the calcium cations, impeding crystal growth and subsequent
scale formation and deposition.

         HI-17 is an aqueous solution of an alkyl amine along with other
proprietary ingredients, which is used to prevent precipitation of sodium
chloride crystals from high chloride brines. It may be applied over the wide
range of temperatures and pressures, which are typically found in producing oil
and gas wells with little to no impact on performance.

         Uniproof Proofing Paper

         We have developed 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. We developed this formulation over several years of testing. The
formulation is technically in the public domain as being within the scope of an
expired patent of duPont. However, other companies have not duplicated the exact
formulation utilized by us, to the best of our knowledge, and we protect it as a
trade secret.

         We introduced our proofing paper in June 1999. Sales of Uniproof
proofing paper totaled $546,096 for the fiscal year ended March 31, 2005 and
$481,636 for the fiscal year ended March 31, 2004.

         Slick Barrier

         Slick Barrier is an underwater protective coating, which prevents the
adherence of barnacles to boat hulls. The product is environmentally friendly
and biodegradable, which we believe to be particularly appealing in fresh water
marine applications. The product is currently being tested on pleasure boats
throughout the United States and Europe. A patent application for "Slick
Barrier" was filed in 2003, and we are applying for trademark protection both
nationally and internationally. We expect to release this product at the end of
2005, although no specific date has been set.

         GreenGlobe Industries

         In November 1998, we acquired all of the outstanding shares of Green
Globe in exchange for 30,000 shares of our common stock. Green Globe is operated
as a separate subsidiary and sells its products under the trade name
Qualchem.'TM' The acquisition of Green Globe has given us 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. Of particular note in the Green Globe line was 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, and have received U.S. military approval, for the cleaning
of the instrument panels of combat aircraft.




                                       3







<PAGE>




Manufacturing and Sales

         All of the raw materials necessary for the manufacture of our products
are generally available from multiple sources, although we have negotiated
favorable arrangements with our current suppliers and would have to repeat the
process if one or more of our current suppliers were no longer to be able to
supply these raw materials to us. We do not own any special manufacturing
facilities. Our chemical products are generally manufactured by contract
blenders at a number of different locations. This method of manufacturing has
reduced the need for us to invest in facilities and to hire the employees to
staff them. Chemical blenders are relatively easy to replace and are bound by
confidentiality agreements, where appropriate, which obligate them not to
disclose or use our proprietary information.

         We are not responsible for any environmental expenditures with respect
to the manufacturing of our products. First, the chemical products that we use
are generally "environmentally friendly" products in that they are low in
toxicity and rank high in biodegradability. Further, any environmental issues
involved in manufacturing are the responsibility of the blending facilities,
provided they receive adequate and accurate information from us as to the
components of the chemicals involved.

         Currently, the photosensitive coating for our Uniproof proofing paper
is applied by an independent coater who is bound by a confidentiality agreement
that obligates it not to disclose or use our confidential information. We
believe this facility has the capacity to meet our production needs for the
foreseeable future and also meets all environmental manufacturing regulations
now or expected to be enacted. We believe that the services of this facility can
be duplicated by others. We believe the need for a contract with the coater is
obviated by the coater's clear economic benefit from continuing to provide
services to us. We are more concerned about a precipitous event, such as damage
to the coater's facility, which could result in an interruption of Uniproof
production. We believe that alternate coating sources do exist and that the
coater could be replaced, although with at least some interruption in production
flow.

         We sell our Uniproof proofing paper to three customers. The largest,
The Alameda Company of Anaheim, California, accounted for approximately 99% of
our graphic arts sales and 29.5% of our total customer sales for the fiscal year
ended March 31, 2005. In fiscal 2004, Alameda accounted for approximately 93% of
our graphic arts sales and 46.2% of our total customer sales. Revenue from
Alameda is expected to continue to decline as a percentage of our total
revenues. A decision by Alameda to discontinue its relationship with us could
result in a significant loss of revenue to us.

          In the fiscal year ended March 31, 2005, Bariven, S.A., purchased our
KH-30 and KX-91 oil well cleaning products, which accounted for approximately
39.4% of our total customer sales. In the fiscal year ended March 31, 2004,
Altena Cleaning B.V., accounted for 10.2% of our total customer sales.

         Except for these current and former customers, no other single entity
has accounted for more than 10% of our sales during any of the fiscal years
ended March 31, 2005 and 2004.

         All of our products are sold in U.S. dollars and, therefore, we have
had no foreign currency fluctuation risk.

         Our current operations do not require a substantial investment in
inventory other than minimum commitments to our distributors. However, we
anticipate that any growth in our business will require us to maintain higher
levels of inventory.

         Our order backlog at March 31, 2005 was insignificant as we generally
ship product as orders are received.

Marketing and Distribution

         We have engaged the services of independent contractors to market our
K-Product Line of chemicals. These contractors work under various non-exclusive
commission and distribution agreements and have substantial contacts among oil
well owners and major oil companies in the United States, Mexico, South America,
Africa, Europe and the Middle East. These contractors earn a commission based
upon the sales value of the products that they sell. These independent
contractors use our marketing materials, brochures and website to interest
clients and to describe the attributes of our products.

         Although we have not achieved the volume of sales we had anticipated
for the oil dispersant products, there have been significant barriers to entry
in this market. Most of these potential customers require substantial testing of
our product to prove its efficacy at cleaning wells, tanks and flow lines. In
many cases, additional laboratory testing is



                                       4







<PAGE>




required to prove that our chemical products are compatible with refinery
systems and will not interfere with certain chemical processes and safety
requirements of the potential clients. This process of testing has taken a great
deal longer than was originally anticipated. We believe that we have made
significant inroads and expect a higher volume of sales in the next fiscal year
ending March 31, 2006.

Research and Development

         Our K-Product Line of chemical products for the oil industry and
Uniproof proofing paper are developed and ready for market. Slick Barrier is in
testing. All of these products are the result of research and development
expenditures paid to vendors, excluding allocation of internal costs, estimated
to be $212,613 and $229,219, for the fiscal years ended March 31, 2005 and 2004
respectively. We have had available the services of one research chemist and one
analytical chemist, as well as one petroleum engineer, to lead in the
development of our products. A significant amount of market adaptation has taken
place in the field involving the development of application procedures for
products. We do not anticipate having to make significant research and
development expenditures on existing products in the future. However, we do
expect to continue to develop new products to complement our existing product
lines.

Competition

         We compete directly or indirectly with other producers of specialty
chemical products with similar uses, most of which are more established
companies and have greater resources than we have. Generally, we attempt to
compete by offering what we hope to be lower prices and better service. However,
our KH-30, KX-91 and KH-30S products for the oil industry are often more
expensive, and with these products we attempt to compete by emphasizing product
effectiveness and environmental safety.

         For our Uniproof proofing paper, our principal competition is E.I.
duPont de Nemours & Co., which controls in excess of 95% of the United States
proofing paper market estimated to be $80 million to $100 million per year.
Currently, we have been able to compete with duPont in terms of what we believe
to be better prices and service. We believe the market will continue to welcome
an alternative to duPont and we plan to continue our current marketing
practices.

Proprietary Technologies

         With respect to our formulations, which are proprietary, we have
patented our KH-30 oil well cleaner in the United States, Australia, Russia,
Nigeria, Venezuela, Vietnam and OAPI. We also have twelve additional country
patent applications pending in most of the major oil-producing countries around
the world (including the European Union and Canada). We believe our patent is
strong and will help our competitive position. However, we are aware that others
may try to imitate our product or invalidate our patents. We have in the past
vigorously enforced our trade secrets such as the one relating to our Uniproof
proofing paper, and intend to continue to do so in the future. However, we
recognize that intellectual property rights provide less than complete
protection. We believe that no other company is currently producing a product
similar to KH-30.

         In addition to applying for patent protection on our KH-30 product, we
have also registered "KH-30" as a trademark. Trademark protection has also been
obtained for the "Uniproof" name for our proofing paper. We anticipate applying
for both patent and trademark protection for our other products in those
jurisdictions where we deem such protection to be beneficial.

Employees

         As of March 31, 2005, we employed ten people and had available the
services of five other individuals under consulting or product/production
cooperation arrangements. The latter arrangement is meant to include a situation
where a chemist, engineer or significant marketing person is engaged by an
organization under contract with us to manufacture or market one or more of our
products.

         None of our employees is represented by a union. We consider our
relations with our employees to be good.

ITEM 2.  DESCRIPTION OF PROPERTIES

         We lease 9,600 square feet of office space at 600 Meadowlands Parkway,
#20, Secaucus, New Jersey 07094. Under the terms of the lease, which runs
through June 2007, the monthly rent was $8,635 through June 2004, then the



                                       5







<PAGE>




monthly rent increased to $9,035 for the remainder of the lease. In addition, we
lease office space of approximately 1,350 square feet in Midland, Texas as a
regional sales office at a rate of $759 per month. This lease runs through
September 2005.

         We use independent non-affiliated contract chemical blending and
manufacturing facilities in various locations around the United States for the
manufacture of our products. We contract the production of our products to
independent manufacturers and blenders and our products are therefore produced
at the manufacturing facilities of those entities. We do not own any
manufacturing facilities.

ITEM 3.  LEGAL PROCEEDINGS

         In July 2002, an action was commenced against us in the Court of Common
Pleas of South Carolina, Pickens County, brought by Quantum International
Technology, LLC and Richard J. Barrett. Plaintiffs allege that they were
retained as a sales representative of ours and in that capacity made sales of
our products to the United States government and to commercial entities.
Plaintiffs further allege that we failed to pay to plaintiffs agreed commissions
at the rate of 20% of gross sales of our products made by plaintiffs. The
complaint seeks an accounting, compensatory damages in the amount of all unpaid
commissions plus interest thereon, 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 yet been scheduled. We
believe we have meritorious defenses to the claims asserted in the action and
intend to vigorously defend the case. The outcome of this matter cannot be
determined at this time.

         No other legal proceedings are currently pending or threatened against
us.

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

No matters were submitted to a vote of security holders during the fourth
quarter of our fiscal year ended March 31, 2005.






                                       6







<PAGE>




                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
         AND ISSUER PURCHASES OF EQUITY SECURITIES

         As of June 9, 2005, there were approximately 450 record holders of our
common stock and there were 23,652,517 shares of our common stock outstanding.
We have not previously declared or paid any dividends on our common stock and do
not anticipate declaring any dividends in the foreseeable future.

         The following table shows the high and low bid prices of our common
stock as quoted on the OTC Bulletin Board by quarter during each of our last two
fiscal years ended March 31, 2005 and 2004 and for each quarter after March 31,
2005. These quotes reflect inter-dealer prices, without retail markup, markdown
or commissions and may not represent actual transactions. The information below
was obtained from those organizations, for the respective periods.

<TABLE>
<CAPTION>
        Fiscal Year
      ended March 31                       Quarter                                High             Low
      --------------                       -------                                ----             ---

<S>                         <C>                                                  <C>              <C>
           2004             First Quarter (April-June 2003)                      $1.43            $ .98
                            Second Quarter (July-September 2003)                  2.30              .80
                            Third Quarter (October-December 2003)                 1.75              .27
                            Fourth Quarter (January-March 2004)                   1.08              .40

           2005             First Quarter (April-June 2004)                      $1.08            $ .52
                            Second Quarter (July-September 2004)                  1.43              .86
                            Third Quarter (October-December 2004)                 1.25              .50
                            Fourth Quarter (January-March 2005)                   1.40              .46

           2006             First Quarter (through June 9)                       $1.81            $1.06
</TABLE>

         The high and low bid prices for shares of our common stock on June 9,
2005 were $1.81 and $1.67 per share, respectively, based upon bids that
represent prices quoted by broker-dealers on the OTC Bulletin Board. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not represent actual transactions. The aggregate market
value of our stock held by non-affiliates on June 9, 2005 was $32,093,851 (using
the closing price of $1.80 per share).

Dividend Policy

         While there are no restrictions on the payment of dividends, we have
not declared or paid any cash or other dividends on shares of our common stock
in the last two years, and we presently have no intention of paying any cash
dividends in the foreseeable future. Our current policy is to retain earnings,
if any, to finance the expansion of our business. The future payment of
dividends will depend on the results of operations, financial condition, capital
expenditure plans and other factors that we deem relevant and will be at the
sole discretion of our board of directors.






                                       7







<PAGE>




Equity Compensation Plan Information

         The following table provides information regarding the status of our
existing equity compensation plans at March 31, 2005.

<TABLE>
<CAPTION>
                                                                                                Number of securities
                                                                                                 remaining available
                                                                                                 for future issuance
                                                                                                     under equity
                                              Number of securities                               compensation plans
                                                to be issued upon         Weighted-average           (excluding
                                                   exercise of           exercise price of      securities reflected
                                              outstanding options,      outstanding option,         in the second
               Plan Category                   warrants and rights      warrants and rights            column)
               -------------                   -------------------      -------------------     --------------------
<S>                                                 <C>                        <C>                      <C>
Equity compensation plans approved by               3,455,000                  $1.20                    545,000
security holders

Equity compensation plans not approved by           5,125,000                  $1.63                     --
security holders

     Total                                          8,580,000                                           545,000

</TABLE>


Recent Sales of Unregistered Securities

         On March 18, 2005, we entered into a securities purchase agreement
(the "Agreement") with two private investors to issue shares of our common stock
and warrants. The Agreement provides for two types of units, designated as
Series A and Series B.

         The Series A Units each consist of 100,000 shares of our common stock
and a Series A Warrant to purchase 50,000 shares of our common stock at $1.00
per share, subject to adjustment. The Series A Warrants expire five (5) years
from the date they are issued. The purchase price for each Series A Unit is
$80,000. The Agreement provides for the sale of up to twenty (20) Series A
Units.

         The Series B Units each consist of ten (10) shares of a new class of
preferred stock that are convertible into 80,000 shares of our common stock in
the aggregate, subject to adjustment, and a Series B Warrant to purchase 40,000
shares of our common stock at $1.50 per share. The Series B Warrants expire five
(5) years from the date they are issued. The purchase price for each Series B
Unit is $80,000. The securities purchase agreement provides for the sale of up
to forty-two (42) Series B Units.

         On March 18, 2005, the contract date, we issued 8 Series A Units or
800,000 shares of our common stock for a purchase price of $640,000.
Subsequent closings under the agreement are contingent upon orders from our
customers, at the rate of one unit for each $100,000 of orders. The remaining
Series A units must be purchased first, followed by Series B units. The
investors have the right to purchase additional shares at any time. The
obligation of the investors to purchase units expires on March 17, 2006.

         The Agreement requires us to obtain shareholder approval for the
authorization of the preferred stock within 75 days, or by June 1, 2005. The
Agreement provides that the exercise price of the warrants is to be reduced by
$0.01 for each day that approval is delayed, but not below $0.05 per share. As
of June 9, 2005, we have not obtained the consent from the holders of a majority
of our outstanding shares. The exercise price, as of June 9, 2005, is currently
$0.92 per share.

         On February 28, 2005, we entered into an Amendment and Waiver with
Laurus Master Fund, Ltd., for the purpose of amending the terms of (i) the
Securities Purchase Agreement dated March 24, 2004, (ii) the Secured Convertible
Term Note and (iii) the Registration Rights Agreement.

         Laurus waived each payment default that may have arisen under the Term
Note, and we (i) paid to Laurus the interest accrued under the Term Note as of
February 28, 2005 of $7,233, (ii) prepaid interest under the Term Note of
$37,767 and (iii) issued a seven year warrant to Laurus to purchase 300,000
shares of our common stock with an exercise price of (x) $1.25 per share for the
first 100,000 shares, (y) a price of $1.50 per share for the next 100,000 shares
and (z) $1.75 per share for any additional shares acquired.






                                       8








<PAGE>


ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

         You should read the following description of our financial condition
and results of operations in conjunction with the financial statements and
accompanying notes included in this Report beginning on page F-1.

Overview

         We are primarily a specialty chemicals company because of our
determination in fiscal 1998 to close our printing equipment division and focus
on our KH-30 oil well cleaner and related products. However, a significant
portion of our revenues has been related to the printing and the graphic arts
industry. We believe that in the future our chemical sales will increase and
that our reliance on the graphic arts segment of the company will decrease.
During the past two fiscal years, we have derived additional revenues by acting
as a graphic arts products distributor.

         We do devote almost all of our time and effort into selling, promoting
and developing our chemical products and we are continuing to increase our
marketing efforts to develop new products as extensions of our original KH-30
product. We do believe that in the future our sales will increase. We also
believe that our reliance on the graphic arts segment of the company will
decrease.

         On March 18, 2005, we closed on the sale of eight Series A Units, which
included 800,000 shares of Common Stock and Series A Warrants to purchase
400,000 shares for an aggregate purchase price of $640,000.

Critical Accounting Policies and Estimates

         The preparation of consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America
requires us 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 ongoing basis, we evaluate our estimates, including those related
to product returns, bad debts, inventories, intangible assets, long-lived assets
and contingencies and litigation. We base our 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.

         Revenue Recognition

         Our primary source of revenue is from sales of our products. We
recognize revenue upon shipment and transfer of title.

         Allowance for Doubtful Accounts

         We monitor our accounts and note receivable balances on a monthly basis
to ensure they are collectible. On a quarterly basis, we use our historical
experience to determine our accounts receivable reserve. Our allowance for
doubtful accounts is an estimate based on specifically identified accounts, as
well as general reserves. We evaluate specific accounts where we have
information that the customer may have an inability to meet its financial
obligations. In these cases, management uses its judgment, based upon the best
available facts and circumstances, and records a specific reserve for that
customer against amounts due to reduce the receivable to the amount that is
expected to be collected. These specific reserves are re-evaluated and adjusted
as additional information is received that impacts the amount reserved. We also
establish a general reserve for all customers based upon a range of percentages
applied to aging categories. These percentages are based on historical
collection and write-off experience. If circumstances change, our estimate of
the recoverability of amounts due to us could be reduced or increased by a
significant amount. A change in estimated recoverability would be accounted for
in the period in which the facts that give rise to the change become known.





                                       9






<PAGE>


Results of Operations

Comparison of Fiscal Year Ended March 31, 2005 to Fiscal Year Ended March 31,
2004

         Sales. Sales increased to $1,850,954 for the year ended March 31, 2005
from $972,051 for the year ended March 31, 2004. The $878,903 or 90%, increase
in sales was due to higher sales of Specialty Chemicals and Uniproof proofing
paper. Sales for our specialty chemical products including KH-30 and KX-91, and
our Green Globe / Qualchem product line increased by 168%. The increase was
primarily related to a 199% increase in sales of our KH-30 family of oil field
dispersant products reflecting a higher level of orders. This was partially
offset by a 61% decline in the level of U.S. Military sales during the year. We
believe that last fiscal year the U.S. Government stocked up on orders and then
cut its orders during the 2005 fiscal year due to other military priorities. Our
three largest customers accounted for 72% of revenues for the year ended March
31, 2005 compared with 56% for the comparable period in 2004. Uniproof proofing
paper sales increased by 14% due to higher level of orders from our primary
customer.

         Cost of Goods Sold. Cost of goods sold increased to $759,064 or 41% of
sales, for the year ended March 31, 2005 from $516,647, or 53% of sales, for the
year ended March 31, 2004. The increase in cost of goods sold was due to the
increased sales of KH-30 products compared to the prior year and an increase in
the volume of Uniproof proofing paper sales compared to the prior fiscal year.

         Selling, General and Administrative Expenses. General and
administrative expenses decreased to $2,581,033 or 139% of sales, for the year
ended March 31, 2005 from $2,674,968, or 275% of sales, for the year ended March
31, 2004. The slight decrease in selling, general and administrative expenses
are primarily related to lower salaries and benefits due to the departure of
certain executives, lower travel and entertainment expenses, bad debts,
laboratory expenses and insurance partially offset by an increase in
professional fees.

         Oil Well Operating and Maintenance Cost - net. In April 2004, we sold
the oil well leases located in Laramie County, Wyoming for $15,000, and a 4.5%
royalty on all future oil sales from these wells. The Company recognized no gain
or loss on the sale of the oil well leases.

         Impairment loss. During the year ended March 31, 2005, we tested our
goodwill by estimating its fair value using a discounted cash flow analysis. As
a result, we recorded a goodwill impairment charge of $2,010 related to the
Green Globe segment. During the year ended March 31, 2004, we recorded a $51,310
impairment charge related to the Green Globe segment. We also recorded a $70,467
impairment loss related to the oil leases held by United Energy Oil Corp.

         Depreciation, Amortization and Depletion. Depreciation, amortization
and depletion decreased to $84,401 for the year ended March 31, 2005 from
$127,177 for the year ended March 31, 2004 reflecting additions to fixed assets
and capitalized legal costs related to patent filings, offset by the sale of the
oil leases. Depletion expenses was not material.

         Interest Expense. Interest expense increased to $287,118 for the year
ended March 31, 2005 compared with $6,683 for the year ended March 31, 2004. The
increase was due to interest on the $1,750,000 convertible term note issued
March 2004.

         Net Loss. For the year ended March 31, 2005, we incurred a net loss of
$1,854,876, or $0.08 per share, as compared to a net loss of $2,569,098 for the
year ended March 31, 2004, or $0.12 per share. The average number of shares of
common stock used in calculating earnings per share increased to 22,365,901 from
22,180,270 shares.


Liquidity and Capital Resources

         Since 1995, operations have been financed primarily through loans,
equity contributions from directors and executive officers and from third
parties supplemented by funds generated by our business. As of March 31, 2005,
we had $365,610 in cash and cash equivalents.

         Net Cash Used in Operating Activities. During the fiscal year ended
March 31, 2005, net cash used in operating activities was $1,887,981 compared
with $1,913,167 for the fiscal year ended March 31, 2004.





                                       10






<PAGE>


         Net Cash Used in Investing Activities. During the fiscal year ended
March 31, 2005, net cash used in investing activities decreased to $24,701
compared with $280,000 for the year ended March 31, 2004. The decrease was
primarily a result of a reduced level of expenditures for purchase of fixed
assets to support operations and capitalized legal fees required to file patent
applications for our KH-30, KX-91 and S2 system, as well as $15,000 in proceeds
from the sale of the oil wells.

         Net Cash Provided by Financing Activities. Net cash generated from
financing activities decreased to $760,267 resulting from $626,667 of proceeds
from our private placement in March 2005, as discussed below and a loan from the
Chairman of the Board of $133,600. This compares to cash provided from financing
activities of $1,590,250 for the year ended March 31, 2004 resulting from the
net proceeds from sale of a secured convertible term note on March 24, 2004 in
the amount of $1,750,000, which was partially offset by $159,750 of financing
costs.

         On March 18, 2005, we entered into a securities purchase agreement with
two private investors with the respect to the sale of shares of our common stock
and warrants. The agreement provides for two types of units, designated as
Series A and Series B.

         The Series A Units each consist of 100,000 shares of our common stock
and a Series A Warrant to purchase 50,000 shares of our common stock at $1.00
per share, subject to adjustment. The Series A Warrants expire five (5) years
from the date they are issued. The purchase price for each Series A Unit is
$80,000. the securities purchase agreement provides for the sale of up to twenty
(20) Series A Units.

         On March 18, 2005, the contract date, the company issued 8 Series A
Units or 800,000 shares of its common stock for a purchase price of $640,000.

         The Series B Units each consist of ten (10) shares of a new class of
preferred stock that will be converted into 80,000 shares of our common stock in
the aggregate, subject to adjustment, and Series B Warrant to purchase 40,000
shares of our stock at $1.50 per share. The Series B Warrants expire five (5)
years from the date they are issued. The purchase price for each Series B Unit
is $80,000. The securities purchase agreement provides for the sale of up to
forty-two (42) Series B Units.

         During the past two fiscal years ended March 31, 2005 and 2004, we have
recorded aggregate losses from operations of $4,423,974 and have incurred total
negative cash flows from operations of $3,801,148 for the same two-year period.
The report of the independent registered public accounting firm with respect to
our financial statements included in this Report includes a "going concern"
qualification, indicating that our recurring losses and negative cash flows from
operations raise substantial doubt about our 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
increased sales volumes, collection of existing receivables and the ability to
achieve profitability from the sale of our product lines. In order to increase
our cash flow, we are continuing our efforts to stimulate sales and cut back
expenses not directly supporting our sales and marketing efforts.

Contractual Obligations

         Below is a table which presents our contractual obligations commitments
at March 31, 2005:


<TABLE>
<CAPTION>
                                            Less than                                   After
Contractual Obligation          Total        1 Year       1-3 Years      4-5 Years     5 Years
----------------------------------------------------------------------------------------------
<S>                          <C>            <C>          <C>               <C>         <C>
Convertible note             $1,600,000     $583,330     $1,016,670        $    -      $     -
Operating leases                305,432      137,028        165,922         2,482            -
                             ----------     --------     ----------        ------      -------
Total contractual
     cash obligations        $1,905,432     $720,358     $1,182,592        $2,482      $     -
                             ==========     ========     ==========        ======      =======
</TABLE>



                                       11






<PAGE>


Reporting by Segments

         We are primarily a specialty chemicals company because of our
determination in fiscal 1998 to close our printing equipment division and focus
on our KH-30 oil well cleaner and related products. However, a significant
portion of our revenues has been related to the printing and the graphic arts
industry. We believe that in the future our chemical sales will increase and
that our reliance on the graphic arts segment of the company will decrease.
During the past two fiscal years, we have derived additional revenues by acting
as a graphic arts products distributor.

         We do devote almost all of our time and effort into selling, promoting
and developing our chemical products and we are continuing to increase our
marketing efforts to develop new products as extensions of our original KH-30
product. We do believe that in the future our sales will increase. We also
believe that our reliance on the graphic arts segment of the company will
decrease.

         The following table shows the proportion of total revenues by segment
in each of the last two fiscal years:

<TABLE>
<CAPTION>
                                                                                            Specialty
       Fiscal Year                                                         Graphic Arts     Chemicals
       -----------                                                         ------------     ----------
        <S>                                                                 <C>            <C>
         2004..........................................................      $486,075       $  485,976
         2005..........................................................      $549,462       $1,301,492
</TABLE>


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.

Inflation

         We do not believe that inflation in the cost of our raw materials has
had in the past or will have in the future any significant negative impact on
our operations.

Recently Issued Accounting Standards

         In December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 123 (Revised 2004), "Share-Based Payment" ("SFAS No. 123R").
This revised accounting standard eliminates the ability to account for
share-based compensation transactions using the intrinsic value method in
accordance with APB Opinion No. 25 and requires instead that such transactions
be accounted for using a fair-value-based method. SFAS No. 123R requires public
entities to record noncash compensation expense related to payment for employee
services by an equity award, such as stock options, in their financial
statements over the requisite service period. SFAS No. 123R is effective as of
the beginning of the first interim or annual period that begins after December
15, 2005 for small business issues. The Company does not plan to adopt SFAS No.
123R prior to its fourth-quarter of fiscal 2006. The Company expects that the
adoption of SFAS No. 123R will have a negative impact on the Company's
consolidated results of operations. The Company has historically provided pro
forma disclosures pursuant to SFAS No. 123 and SFAS No. 148 as if the fair value
method of accounting for stock options had been applied, assuming use of the
Black-Scholes option-pricing model. Although not currently anticipated, other
assumptions may be utilized when SFAS No. 123R is adopted.

Quantitative and Qualitative disclosures About Market Risk

         The market risk inherent in our market risk sensitive instruments and
positions are the potential losses arising from adverse changes in interest rate
and foreign currency exchange rates.

Interest Rates

         At March 31, 2005, the Company had a loan that had a variable interest
rate. The loan, which had an outstanding balance of $1,600,000 at March 31,
2005, was obtained in March 2004 and has a three-year term. The loan accrues
interest at the greater of the prime rate of interest (as published in the Wall
Street Journal) or 4% per annum. A one-percentage




                                       12






<PAGE>


point increase in the prime rate of interest affecting our term loan would
increase our net loss by $16,000 over the next fiscal year.

Foreign Currency Exchange Rates

         Although our business is international in scope, to date our product
sales have been all U.S. dollar-denominated. As we expand, we may be affected by
exchange rate fluctuations in foreign currencies relative to the U.S. dollar. We
do not currently use derivative financial instruments to hedge our exposure to
changes in foreign currency exchange rates

                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

         This Report contains forward-looking statements. These forward-looking
statements are based largely on our expectations and are subject to a number of
risks and uncertainties, many of which are beyond our control. Actual results
could differ materially from these forward-looking statements as a result of,
among other factors, risks related to the large amount of our outstanding term
loan; history of net losses and accumulated deficits; reliance on third parties
to market, sell and distribute our products; future capital requirements;
competition and technical advances; dependence on the oil services market for
pipe and well cleaners; ability to protect our patents and proprietary rights;
reliance on a small number of customers for a significant percentage of our
revenues; and other risks. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained in this Report
will in fact occur.




                                       13






<PAGE>


ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The response to this item is submitted as a separate section of this
Report beginning on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of the Company's Disclosure Controls

         As of the end of the period covered by this report, the Company has
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures ("disclosure controls"). This evaluation (the "controls
evaluation") was done under the supervision and participation of the Company's
management, including its chief executive officer (the "CEO") and interim chief
financial officer (the "CFO"). Rules adopted by the Securities and Exchange
Commission require that in this section of the report the Company present the
conclusions of its CEO and CFO about the effectiveness of the Company's
disclosure controls based on and as of the dated of the controls evaluation.

CEO and CFO Certifications

         Appearing as exhibits 31.1 and 31.2 to this report are "Certifications"
of the CEO and CFO. The certifications are required pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (the "Section 302 Certifications"). This section
of this report contains information concerning the controls evaluation referred
to in the Section 302 Certifications and this information should be read in
conjunction with the Section 302 Certifications for a more complete
understanding of the topics presented.

Disclosure Controls

         Disclosure controls are procedures that are designed with the objective
of ensuring that information required to be disclosed in the Company's reports
filed under the Securities Exchange Act, such as this report, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls are
also designed with the objective of ensuring that such information is
accumulated and communicated to the Company's management, including, without
limitation, the CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure.

Limitations on the Effectiveness of Controls

         The Company's management, including, without limitation, the CEO and
CFO, does not expect that the Company's disclosure controls will prevent all
error and fraud. A control system no matter how well conceived and operated can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations of all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been
detected.

Scope of Controls Evaluation

         The CEO/CFO evaluation of the Company's disclosure controls included a
review of the controls' objective and design, the controls' implementation by
the Company and the effect of the controls on the information generated for use
in this report. In the course of the controls evaluation, management sought to
identify data errors, controls problems or acts of fraud and to confirm that
appropriate corrective action, including process movements, was being
undertaken. This type of evaluation will be done on a quarterly basis so that
the conclusions concerning controls effectiveness can be reported in the
Company's quarterly reports on Form 10-QSB and annual report on Form 10-KSB. The
overall goals of these various review and evaluation activities are to monitor
the Company's disclosure controls and to make modifications, as necessary. In
this regard, the Company's intent is that the disclosure controls will be
maintained as dynamic controls systems that change (including improvements and
corrections) as conditions warrant.





                                       14






<PAGE>


Conclusions

         Based upon the controls evaluation, the Company's CEO and CFO have
concluded that, as of the end of the period covered by this report, the
Company's disclosure controls are effective to provide reasonable assurance that
information required to be disclosed in the Company's reports filed under the
Securities Exchange Act such as this report, is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.

         There has been no change in the Company's internal controls over
financial reporting during the fiscal quarter ended March 31, 2005 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal controls over financial reporting.



                                       15






<PAGE>


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table shows the positions held by our board of directors
and executive officers and their ages as of June 14, 2005.


<TABLE>
<CAPTION>
 Name                                     Age       Position
 ----                                     ---       --------
<S>                                       <C>       <C>
 Ronald Wilen                             65        Chairman of the Board and Director
 Brian King                               52        Chief Executive Officer
 James McKeever, CPA                      39        Interim Chief Financial Officer
 Louis Bernstein                          55        Director
 Andrea Pampanini                         64        Director
 Martin Rappaport                         68        Director
</TABLE>


         The principal occupations for the past five years (and, in some
instances, for prior years) of each of our executive officers and directors are
as follows:

         Ronald Wilen. Mr. Wilen has served as a member of our board since
October 1995. Mr. Wilen served as our Chief Executive Officer from October 1995
to September 2004, our President from October 1995 to August 2001 and has been
our Chairman of the Board since August 2001.

         Brian King. Mr. King was appointed as the company's Chief Executive
Officer in September 2004. Prior to joining United Energy he was employed by
Concord Camera Corp., a publicly traded company, from 1996 through 2004. During
his tenure with Concord, Mr. King held several senior level officer positions
including Chief Operating Officer and Senior Executive Vice President. Mr. King
holds a BS from the University of Maryland and an MBA from Long Island
University.

         James McKeever, CPA. Mr. McKeever has been our Interim Chief Financial
Officer since January 2004. He also continues to be a partner in the accounting
firm of Abrams & McKeever CPA's, which he joined in January 2000. Mr. McKeever
has more than 15 years' experience in public accounting and financial reporting,
and is a member of the American Institute of Certified Public Accountants.

         Louis Bernstein. Mr. Bernstein has served as a member of our board
since September 2003. Mr. Bernstein is currently the Assistant General Counsel
of Pfizer Inc., one of the world's largest pharmaceutical companies, where he
has served as Pfizer's corporate counsel since December 1975.

         Andrea Pampanini. Mr. Pampanini has served as a member of our board
since December 2001. Mr. Pampanini is an organizational advisor with extensive
restructuring, marketing and strategic planning experience serving, among other
industries, the chemical, petroleum, pharmaceutical, basic metals, electrical
equipment, power generation and heavy industrial goods sectors. In 1989, Mr.
Pampanini founded Turnaround Associates Inc., a consulting firm specializing in
the financial and operational organization of medium to large-sized companies.
Since 1998, Mr. Pampanini has been a member of Leadership Strategies LLC, a
group of professionals specializing in strategic planning and personal
leadership coaching. Mr. Pampanini has devoted a major portion of his career to
the Middle East, including serving as Executive Vice President of Development
Resources Corporation from 1971 to 1977, during which time he supervised the
final phases of the Dez hydroelectric power and irrigation project in Iran.

         Martin Rappaport. Mr. Rappaport has served as a member of our board
since June 2001. Mr. Rappaport is self-employed. For more than 30 years, he has
developed and managed commercial and residential real estate (including owning
the building where our office is located). Mr. Rappaport is an active supporter
and contributor to Blythedale Children's Hospital in Valhalla, New York.




                                       16






<PAGE>


         Directors are elected annually and serve until the next annual meeting
of the Company's stockholders, and until their successors have been elected and
have qualified. Officers are appointed to their positions, and continue in such
positions, at the discretion of the directors.

Committees of the Board

         We do not currently have any formal board committees.

Director Compensation

         Each non-employee director receives options for 10,000 shares of our
common stock in lieu of an annual retainer and meeting fees. Other than the
10,000 options granted there are no special fees, contracts entered into, or
payments made in consideration of any director's service as a director.

Indebtedness of Executive Officers and Directors

         No executive officer, director or any member of these individuals'
immediate families or any corporation or organization with whom any of these
individuals is an affiliate is or has been indebted to us since the beginning
of our last fiscal year.

Family Relationships

         There are no family relationships among our executive officers and
directors.

Legal Proceedings

         During the past five years, none of our executive officers, directors,
promoters or control persons has been involved in a legal proceeding material to
an evaluation of the ability or integrity of such person.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Act of 1934, as amended, requires our
directors and executive officers, and persons who own more than 10% our
outstanding common stock, to file with the SEC, initial reports of ownership and
reports of changes in ownership of our equity securities. These persons are
required by SEC regulations to furnish us with copies of all the reports they
file.

         To our knowledge, based solely on a review of the copies of the reports
furnished to us and written or oral representations that no other reports were
required for those persons during the fiscal year ended March 31, 2005, we
believe that all of our officers, directors and greater than 10% beneficial
owners complied with the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended.

Code of Ethics

         We are in the process of adopting a code of ethics that will apply to
all of our directors, officers, employees and independent contractors. The code
of ethics will also have specific provisions applicable to all employees with
access to, and responsibility for, matters of finance and financial management,
including our chief executive officer and interim chief financial officer. Once
adopted by our board of directors, the full text of the code of ethics will be
available at, and we intend to disclose any amendments to, or waivers from, any
provision of the code of ethics that applies to any of our executive officers or
directors by posting such information on our website at
www.unitedenergycorp.net, or provide a copy of the code of ethics, free of
charge, to those persons that make a request in writing (Attn: Robert M. Guinta)
or by e-mail (rguinta@unitedenergycorp.net).





                                       17






<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

         The following Summary Compensation Table sets forth, for the years
indicated, all cash compensation paid, distributed or accrued for services,
including salary and bonus amounts, rendered in all capacities by our chief
executive officer and all other executive officers who received or are entitled
to receive remuneration in excess of $100,000 during the stated periods.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                        Annual Compensation             Long-term Compensation
                                 -------------------------------- -----------------------------------
                                                        Other     Restricted  Securities
Name and                 Fiscal                        Annual       Stock       Underlying      LTIP     All other
Principal Position        year   Salary     Bonus    Compensation  Award(s)   Options/SARs    Payouts  Compensation
------------------       ------  ------     -----    ------------  --------   ------------    -------  ------------
                                  ($)        ($)         (1)                      (#)           ($)
<S>                      <C>    <C>          <C>        <C>         <C>        <C>             <C>       <C>
Ronald Wilen             2005   205,547        -         18,639(2)       -             -          -             -
Chairman                 2004   196,931        -         22,266(2)       -             -          -             -

Brian King  CEO (3)      2005    60,000        -              -          -     1,250,000          -             -

Sanford M. Kimmel (4)    2005         -        -              -          -             -
Chief Financial Officer  2004    88,467      3,014       12,485          -             -          -             -
</TABLE>

------------------------

(1) We pay for medical insurance for all employees. Included in the table is the
    amount of the premiums paid by us dependent on the coverage provided.

(2) During the fiscal years ended March 31, 2005 and 2004, we paid for the
    leases on two automobiles used by Mr. Wilen under monthly lease payments. We
    also paid for medical insurance for Mr. Wilen at a rate of $509.59 per
    month.

(3) Mr. King was appointed as our Chief Executive Officer in September 2004 with
    an annual salary of $104,000.

(4) Mr. Kimmel resigned as our Chief Financial Officer in December 2003.





                                       18









<PAGE>




Options/SAR Grants in Fiscal Year Ended March 31, 2005


<TABLE>
<CAPTION>
                                                     Percent of Total
                                                       Options/SARs
                          Number of Securities           Granted
                           Underlying Options/         to Employees           Exercise
Name                          SARs Granted            in Fiscal Year        or Base Price       Expiration
----                      --------------------       ----------------       -------------       ----------
                                   (#)                                         ($/Sh)
<S>                       <C>                        <C>                    <C>                 <C>
Ronald Wilen                          --                    --                   --                --
Chairman

Brian King  CEO (1)            1,250,000                   100%                $1.00               --
</TABLE>


(1) Mr. King was appointed as our Chief Executive Officer in September 2004.

Aggregated Option/SAR Exercises in Fiscal Year Ended March 31, 2005 and Fiscal
Year End Option/SAR Values


<TABLE>
<CAPTION>
                                                             Number of Securities        Value of Unexercised In-
                                                            Underlying Unexercised              The-Money
                                                            Options/SARs at Fiscal        Options/SARs at Fiscal
                          Shares Acquired      Value              Year End                       Year End
Name                        on Exercise       Realized     Exercisable/Unexercisable     Exercisable/Unexercisable
----                        -----------       --------     -------------------------     -------------------------
                                (#)             ($)                  (#)                            ($)
<S>                       <C>                 <C>          <C>                           <C>
Ronald Wilen                           --        --                   --                             --
Chairman

Brian King CEO (1)                     --        --                   --                             --
</TABLE>

(1) Mr. King was appointed as our Chief Executive Officer in September 2004.

Stock Option Plan

         In August 2001, our stockholders approved the 2001 Equity Incentive
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
our board's discretion. Under the 2001 Equity Incentive Plan, 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 date of the
grant to up to five years.

         An amendment and restatement of the 2001 Equity Incentive Plan
increasing the number of shares issuable under the plan to a total of 4,000,000
was approved by the Board of Directors on May 29, 2002 and was approved by our
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, non-employee director stock
options shall be exercisable in full twelve months after the date of grant
unless determined otherwise by the compensation committee.

         There were stock options to purchase 545,000 shares of our common stock
available for future grant as of March 31, 2005 under the 2001 Equity Incentive
Plan.


                                       19




<PAGE>



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

Beneficial Ownership Information

         The following table sets forth information regarding the number of
shares of our common stock beneficially owned on June 9, 2005, by each of our
directors, each of our executive officers named in the Summary Compensation
Table above, all of our executive officers and directors as a group, and by any
person or "group," as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, known to us to own beneficially more than 5% of the
outstanding shares of our common stock. Except as otherwise set forth below, the
address of each of the persons listed below is c/o United Energy Corp., 600
Meadowlands Parkway, #20, Secaucus, New Jersey 07094.

<TABLE>
<CAPTION>
                                                 Amount and
                                                 Nature of
         Name and Address                        Beneficial       Percent of
        of Beneficial Owner                      Ownership(1)     Class (1)
------------------------------------------------------------------------------
<S>                                              <C>              <C>
Ronald Wilen                                     4,087,000(2)     17.2%

Brian King                                         500,000(3)     2.1%

James McKeever, CPA                                  3,000        *

Louis Bernstein                                       --          *

Andrea Pampanini                                    52,500(4)     *

Martin Rappaport                                 3,020,100(5)     12.5%

Sanford M. Kimmel(6)                                  --          *

All current executive officers and directors
as a group (5 persons)                           7,652,600        30.8%

5% or Greater Stockholders:

UNRG Investments LLC                             1,500,000(7)     6.3%
3960 Howard Hughes Parkway, 5th Floor
Las Vegas, NV 89109

LSR Capital UNRG, LLC                            1,500,000(7)     6.3%
50 Charles Lindbergh Blvd., Suite 500
Uniondale, NY 11553

Robert L. Seaman                                 1,866,359(8)     7.9%
515 Madison Ave.
New York, NY 10022

Laurus Master Fund, Ltd.                         1,742,200(9)     7.3%
c/o Ironshore Corporate Services Ltd.
P.O. Box 1234 G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands

Joseph J. Grano, Jr.                             2,466,667(10)    10.1%
375 Park Avenue, Suite 2008
New York, NY 10152
</TABLE>



                                       20




<PAGE>


----------------

*    Less than 1% of outstanding shares.

(1)  Unless otherwise indicated in these footnotes, each stockholder has sole
     voting and investment power with respect to the shares beneficially owned.
     All share amounts reflect beneficial ownership determined pursuant to Rule
     13d-3 under the Exchange Act. All information with respect to beneficial
     ownership has been furnished by the respective director, executive officer
     or stockholder, as the case may be.

(2)  Includes (i) stock options to purchase 400,000 shares at an exercise price
     of $1.11 per share, and (ii) stock options to purchase 100,000 shares at an
     exercise price of $1.80 per share, which are currently exercisable.

(3)  Represents stock options to purchase 1,250,000 shares at an exercise price
     of $1.00 per share. Of the 1,250,000 shares covered by the stock options,
     500,000 shares are currently exercisable and 750,000 shares shall vest and
     become exercisable on September 7, 2005.

(4)  Includes stock options to purchase 10,000 shares at an exercise price of
     $.70 per share and 10,000 shares at an exercise price of $1.80 per share,
     which are currently exercisable.

(5)  Includes (i) stock options to purchase 10,000 shares at an exercise price
     of $.70 per share and 10,000 shares at an exercise price of $1.80 per
     share, which are currently exercisable, but are subject to reduction, on a
     proportional basis, if Mr. Rappaport voluntarily resigns as a director
     prior to November 2004; and (ii) stock options to purchase 50,000 shares at
     an exercise price of $1.11 per share and warrants to purchase 750,000
     shares of common stock at an exercise price of $2.00 per share, which are
     currently exercisable.

(6)  Mr. Kimmel resigned as our Chief Financial Officer in December 2003.

(7)  Includes 1,000,000 shares of common stock and warrants to purchase 500,000
     shares of common stock.

(8)  Includes (i) 1,366,359 shares held by Mr. Seaman; (ii) 100,000 shares held
     by the law firm Seaman & Wehle, of which Mr. Seaman is a member; and (iii)
     options to purchase 400,000 shares at an exercise price of $1.11 per share,
     all of which are currently exercisable.

(9)  Represents 1,142,200 shares which may be acquired immediately upon
     conversion of an outstanding secured convertible term note at a conversion
     price of $0.80 per share and 600,000 shares which may be purchased
     immediately upon exercise of an outstanding common stock purchase warrant
     at an average exercise price of $1.50 per share. The convertible note and
     warrant contain provisions which restrict Laurus from beneficially owning
     in excess of 4.9% of our outstanding shares of common stock. Laurus Capital
     Management, LLC, a Delaware limited liability company, may be deemed a
     control person of the shares owned by Laurus Master Fund, Ltd. David Grin
     and Eugene Grin are the principals of Laurus Capital Management, LLC. The
     address for Messrs. Grin is 825 Third Avenue, 14th Floor, New York, New
     York 10022.

(10) Includes 1,266,667 shares of common stock, warrants to purchase 500,000
     shares of common stock and warrants to acquire 700,000 shares of common
     stock.


                                       21




<PAGE>



Equity Compensation Plan Information

         The following table provides information regarding the status of our
existing equity compensation plans at March 31, 2005.

<TABLE>
<CAPTION>
                                                                                                Number of securities
                                                                                                 remaining available
                                                                                                 for future issuance
                                                                                                    under equity
                                              Number of securities                               compensation plans
                                                to be issued upon         Weighted-average      (excluding securities
                                                   exercise of           exercise price of        reflected in the
                                              outstanding options,      outstanding option,            second
               Plan Category                   warrants and rights      warrants and rights             column)
               -------------                   -------------------      -------------------     ---------------------
<S>                                            <C>                      <C>                     <C>
Equity compensation plans approved by               3,455,000                  $1.20                    545,000
security holders

Equity compensation plans not approved by           5,125,000                  $1.63                       --
security holders

     Total                                          8,580,000                                           545,000
</TABLE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Martin Rappaport, one of our directors, owns the building in which we
lease our principal executive offices in Secaucus, New Jersey. We pay
approximately $100,000 per year under the lease, excluding real estate taxes. We
believe that this transaction was advantageous to us and was on terms no less
favorable to us than could have been obtained from unaffiliated third parties.

ITEM 13.  EXHIBITS

         (a)(1) and (2): The response to this portion of Item 15 is submitted as
a separate section of this Report beginning on page F-1.

         (a)(3) Exhibits:

        Exhibit Number and Description
        ------------------------------

         3.1     Articles of Incorporation of United Energy Corp.(1)

         3.2     Amendment to the Articles of Incorporation.(2)

         3.3     By-Laws of United Energy Corp.(1)

         4.1     Articles of Incorporation: Articles Fourth, Fifth and
                 Seventh.(1)

         4.2     By-Laws: Article I: Sections: Six, Seven, Eight, Nine, Ten;
                 Article II: Section Nine: Article IV: Section Two.(1)

         4.3     Form of Stock Certificate of United Energy Corp.(1)

         4.4     Secured Convertible Term Note dated March 24, 2004.(4)

         10.1    Distribution Agreement and Option Agreement with International
                 Research and Development, dated August 25, 1999.(1)

         10.2    2001 Equity Incentive Plan, as amended on May 29, 2002.(5)

         10.3    Securities Purchase Agreement, dated March 24, 2004, between
                 United Energy Corp. and Laurus Master Fund, Ltd.(4)

         10.4    Secured Convertible Term Note, dated March 24, 2004.(4)

         10.5    Security Agreement, dated March 24, 2004, between United Energy
                 Corp. and Laurus Master Fund, Ltd.(4)

         10.6    Registration Rights Agreement, dated March 24, 2004, between
                 United Energy Corp. and Laurus Master Fund, Ltd.(4)

         10.7    Common Stock Purchase Warrant, dated March 24, 2004.(4)



                                       22




<PAGE>



         16.1    Letter re Change in Certifying Accountant.(3)

         31.1    Certification of Chief Executive Officer pursuant to Rule
                 13a-14(a) under the Exchange Act.

         31.2    Certification of Interim Chief Financial Officer pursuant to
                 Rule 13a-14(a) under the Exchange Act.

         32.1    Certification of Chief Executive Officer and Interim Chief
                 Financial Officer pursuant to Rule 13a-14(b) under the Exchange
                 Act and 18 U.S.C. Section 1350.

----------------------------

(1)  Incorporated by reference from the exhibits filed with the Form 10 on June
     20, 2000.

(2)  Incorporated by reference from the exhibits filed with the Form 10-Q for
     the period ended September 30, 2001.

(3)  Incorporated by reference from the exhibits filed with the Form 8-K filed
     on June 3, 2002.

(4)  Incorporated by reference from the exhibits filed with the Form 8-K filed
     on March 30, 2004.

(5)  Incorporated by reference from the exhibits filed with the Schedule 14A for
     the year ended March 31, 2003.

(6)  Incorporated by reference from the exhibits filed with the Registration
     Statement on Form SB-2 (No. 333-115484).



ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

         The aggregate fees billed or expected to billed by Imowitz, Koenig &
Co., LLP ("Imowitz") for professional services rendered for the audit of our
annual financial statements for the fiscal year ended March 31, 2005 and 2004
and for the reviews of the interim financial statements included in our
Quarterly Reports on Form 10-QSB for the fiscal years were approximately $65,800
and $47,400, respectively.

Audit-Related Fees

         No fees were billed by Imowitz for audit-related services rendered for
accounting consultations for the fiscal years ended March 31, 2005 and 2004.

Tax Fees

         No fees were billed by Imowitz for tax services rendered for the fiscal
years ended March 31, 2005 and 2004.

All Other Fees

         Imowitz did not render any other services, other than the services
described above under "Audit Fees," "Audit-Related Fees" and "Tax Fees" for the
fiscal year ended March 31, 2005 or for the fiscal year ended March 31, 2004.

Audit Committee

         Our board of directors has established a policy requiring its
pre-approval of all audit services and permissible non-audit services provided
by the independent auditors, along with the associated fees for those services.
The policy requires the specific pre-approval of all permitted services. When
considering the pre-approval of non-audit services, our board considers whether
the provision of such non-audit service is consistent with the auditor's
independence and the Securities and Exchange Commission rules regarding auditor
independence. Additionally, our board considers whether the independent auditors
are best positioned and qualified to provide the most effective and efficient
service, based on factors such as the independent auditors' familiarity with our
business, personnel, systems or risk profile and whether provision of the
service by the independent auditors would enhance our ability to manage or
control risk or improve audit quality or would otherwise be beneficial to us.


                                       23




<PAGE>




                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.


                               UNITED ENERGY CORP.


Date:  June 14, 2005           By: /s/ Brian King
                                   -------------------------------
                                    Brian King
                                    Chief Executive Officer
                                    (principal executive officer)


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



                                       24




<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.


                                            UNITED ENERGY CORP.



Date:  June 14, 2005                        By: /s/ Brian King
                                                --------------------------------
                                                 Brian King
                                                 Chief Executive Officer


                                            By: /s/ James McKeever
                                                --------------------------------
                                                 James McKeever
                                                 Interim Chief Financial Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


<TABLE>
<S>                                               <C>                                     <C>
/s/ Brian King                                   Chief Executive Officer and Director     June 14, 2005
--------------------------------------------     (principal executive officer)
Brian King


/s/ James McKeever                               Interim Chief Financial Officer          June 14, 2005
--------------------------------------------     (principal financial and accounting
James McKeever                                   officer)


                                                 Director                                 June 14, 2005
--------------------------------------------
Louis Bernstein


/s/ Andrea Pampanini                             Director                                 June 14, 2005
--------------------------------------------
Andrea Pampanini


/s/ Martin Rappaport                             Director                                 June 14, 2005
--------------------------------------------
Martin Rappaport
</TABLE>






<PAGE>



                      UNITED ENERGY CORP. AND SUBSIDIARIES

                                   FORM 10-KSB

                                     ITEM 7

                   INDEX OF FINANCIAL STATEMENTS AND SCHEDULES

         The following financial statements of United Energy Corp. and its
subsidiaries required to be included in Item 7 is listed below:

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>                                                                                <C>
Report of independent registered public accounting firm..........................      F-2

Consolidated balance sheets as of March 31, 2005 and March 31, 2004..............  F-3-F-4

For the periods ended March 31, 2005 and 2004:
         Consolidated statements of operations...................................      F-5
         Consolidated statements of stockholders' equity (deficit)...............      F-6
         Consolidated statements of cash flows................................... F-7- F-8
Notes to consolidated financial statements....................................... F-9-F-21
</TABLE>



                                      F-1




<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors of United Energy Corporation:

We have audited the accompanying consolidated balance sheets of United Energy
Corporation (a Nevada corporation) and subsidiaries as of March 31, 2005 and
March 31, 2004 and the related consolidated statements of income, cash flows and
stockholders' equity for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of United
Energy Corporation and subsidiaries as of March 31, 2005 and March 31, 2004 and
the consolidated results of their operations and their consolidated cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred recurring losses
and negative cash flows from operations. These matters raise substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.



/s/ IMOWITZ, KOENIG & CO., LLP
New York, New York
June 1, 2005



                                      F-2






<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                             March 31,          March 31,
                                                                               2005               2004
                                                                             ---------         ----------
<S>                                                                         <C>                <C>
                            ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                               $  365,610         $1,518,025
     Accounts receivable, net of allowance for doubtful                         783,004            393,941
       accounts of $22,192 and $45,736 respectively
     Inventory, net of allowance of $16,290 and                                 135,960            176,487
       $16,290, respectively
     Note receivable, net of reserve of $31,350 and                              28,650             63,650
       $31,350, respectively
     Prepaid expenses and other current assets                                  120,574             80,296
                                                                             ----------         ----------
          Total current assets                                                1,433,798          2,232,399

PROPERTY AND EQUIPMENT, net                                                     165,587            243,313

OTHER ASSETS:
     Goodwill, net                                                               15,499             17,509
     Patents, net of accumulated amortization of $92,486                        295,603            309,424
       and $67,032, respectively
     Loans receivable                                                               137              1,538
     Deposits                                                                     1,385             76,385
     Deferred financing costs, net of accumulated
       amortization of $104,303 and  $2,000, respectively                       206,590            310,893
                                                                             ----------         ----------
          Total assets                                                       $2,118,599         $3,191,461
                                                                             ==========         ==========
</TABLE>


The accompanying notes are an integral part of these consolidated statements



                                      F-3








<PAGE>



                      UNITED ENERGY CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                                 March 31,           March 31,
                                                                                   2005                2004
                                                                               ------------        ------------
<S>                                                                           <C>                  <C>
             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                                          $    258,940        $    276,115
     Accrued expenses                                                                96,106             379,098
     Convertible term note payable                                                  583,330             349,998
     Due to related parties                                                         377,741             244,141
                                                                               ------------        ------------
          Total current liabilities                                               1,316,117           1,249,352

LONG TERM LIABILITIES:
     Convertible term note payable                                                  672,268           1,120,133
                                                                               ------------        ------------
          Total liabilities                                                       1,988,385           2,369,485
                                                                               ------------        ------------

STOCKHOLDERS' EQUITY:
     Common stock: $0.01 par value 100,000,000 shares
      authorized; 23,255,267  and 22,180,270 shares                                 232,552             221,802
      issued and outstanding as of March 31, 2005
      and  March 31, 2004
     Additional paid-in capital                                                  12,308,963          11,143,266
     Stock subscription receivable                                                  (13,333)                  -
     Accumulated deficit                                                        (12,397,968)        (10,543,092)
                                                                               ------------        ------------
          Total stockholders' equity                                                130,214             821,976
                                                                               ------------        ------------
          Total liabilities and stockholders' equity                           $  2,118,599        $  3,191,461
                                                                               ============        ============
</TABLE>


The accompanying notes are an integral part of these consolidated statements



                                      F-4






<PAGE>



                      UNITED ENERGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004


<TABLE>
<CAPTION>
                                                                                  2005            2004
                                                                                  ----            ----
<S>                                                                           <C>             <C>
REVENUES, net                                                                 $ 1,850,954     $    972,051

COST OF GOODS SOLD                                                                759,064          516,647
                                                                              -----------      -----------
    Gross profit                                                                1,091,890          455,404
                                                                              -----------      -----------
OPERATING EXPENSES:
    Selling, general and administrative                                         2,581,033        2,674,968
    Oil well operating and maintenance cost-net                                         -          102,662
    Impairment loss                                                                 2,010          121,777
    Depreciation, amortization and depletion                                       84,401          127,177
                                                                              -----------      -----------
        Total operating expenses                                                2,667,444        3,026,584
                                                                              -----------      -----------
        Loss from operations                                                   (1,575,554)      (2,571,180)
                                                                              -----------      -----------
OTHER INCOME (EXPENSE), net:
        Interest income                                                             7,796            8,765
        Interest expense                                                         (287,118)          (6,683)
                                                                              -----------      -----------
            Total other (expense) income, net                                    (279,322)           2,082
                                                                              -----------      -----------
            Net loss                                                          $(1,854,876)     $(2,569,098)
                                                                              ===========      ===========
BASIC AND DILUTED LOSS PER SHARE:
            Total basic and diluted loss per share                            $     (0.08)     $     (0.12)
                                                                              ===========      ===========
WEIGHTED AVERAGE NUMBER OF SHARES,
       OUTSTANDING, basic and diluted                                          22,365,901       22,180,270
                                                                              ===========      ===========
</TABLE>


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





                                      F-5





<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>

                                             Common Stock          Additional                       Stock
                                          --------------------      Paid-In       Accumulated    Subscription
                                          Shares        Amount      Capital         Deficit       Receivable       Total
                                          ------        ------      -------         -------       ----------       -----
<S>                                      <C>           <C>         <C>             <C>            <C>           <C>
 BALANCE, April 1, 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
 Warrants granted in consideration
   for convertible term note                    --         --        281,670              --            --       281,670
 Warrants granted in consideration
   for finance services                         --         --        153,144              --            --       153,144
 Net loss                                       --         --             --      (2,569,098)           --    (2,569,098)
                                         ----------   -------     ----------     -----------       -------    ----------
 BALANCE, March 31, 2004                 22,180,270   221,802     11,143,266     (10,543,092)           --       821,976
 Warrants granted in lieu of
   accrued expenses                              --        --         75,000              --            --        75,000
 Common stock issued in
   consideration for services               112,500     1,125         84,375              --            --        85,500
 Warrants granted in consideration
   for services                                  --        --         48,240              --            --        48,240
 Common stock issued in
    conversion of note payable              150,000     1,500        148,500              --            --       150,000
 Common stock issued in
    consideration for interest expense       12,497       125         12,372              --            --        12,497
 Warrants granted in consideration
    for convertible term note                    --        --        165,210              --            --       165,210
 Common stock issued for
    private placement                       800,000     8,000        632,000              --       (13,333)      626,667
 Net loss                                        --        --             --      (1,854,876)           --    (1,854,876)
                                        -----------   -------     ----------     -----------       -------    ----------
 BALANCE, March 31, 2005                 23,255,267   232,552     12,308,963     (12,397,968)      (13,333)      130,214
                                        ===========   ========    ==========     ===========       =======    ==========

</TABLE>

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



                                      F-6




<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>

                                                              2005              2004
                                                              ----              ----
<S>                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $(1,854,876)   $(2,569,098)

Adjustments to reconcile net loss to net cash used in
operating activities
  Depreciation, amortization and depletion                     322,630        159,241
  Impairment loss                                                2,010        121,777
  Stock granted in consideration for services                   85,500           --
  Warrants granted in consideration for services                48,240           --
  Stock granted in consideration for interest expense           12,497           --
  Options granted in consideration for services                   --            9,700
Changes in operating assets and liabilities
  (Increase) decrease in accounts receivable, net             (389,063)       102,774
  Decrease in inventory                                         40,527         34,857
  Decrease in note receivable                                   35,000         85,384
  (Increase) decrease in prepaid expenses                      (40,279)        24,231
  Decrease (increase)  in deposits                              75,000        (45,000)
  (Decrease) increase in accounts payable and accrued
    expenses                                                  (225,167)       162,967
                                                           -----------    -----------

    Net cash used in operating activities                   (1,887,981)    (1,913,167)
                                                           -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Receipts from loans receivable-net                             1,401            538
  Proceeds from sale of fixed asset                             15,000           --
  Payments for acquisition of property and equipment-net       (29,469)      (177,843)
  Payments for patent                                          (11,633)      (102,695)
                                                           -----------    -----------

    Net cash used in investing activities                      (24,701)      (280,000)
                                                           -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from convertible term note                             --        1,750,000
  Proceeds from related party payable                          133,600
  Payments of finance costs                                       --         (159,750)
  Proceeds from issuance of common stock                       626,667           --
                                                           -----------    -----------

    Net cash provided by financing activities                  760,267      1,590,250
                                                           -----------    -----------

    Net decrease in cash and cash equivalents               (1,152,415)      (602,917)
CASH AND CASH EQUIVALENTS, beginning of period               1,518,025      2,120,942
                                                           -----------    -----------

CASH AND CASH EQUIVALENTS, end of period                   $   365,610    $ 1,518,025
                                                           ===========    ===========

</TABLE>



The accompanying notes are an integral part of these consolidated statements



                                      F-7





<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>

                                                        2005              2004
                                                        ----              ----
<S>                                                  <C>               <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period
  Interest                                           $  92,885         $  2,882
  Income taxes                                       $   1,520         $  2,154


Discount on convertible term loan                    $ 165,210         $281,670
Debt financing costs                                 $      --         $153,143
Conversion of note payable into common stock         $ 150,000         $     --
Conversion of accrued expenses due to a former
  employee into warrants                             $  75,000         $     --

</TABLE>

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




                                      F-8





<PAGE>


                      UNITED ENERGY CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2005 AND 2004


1.       DESCRIPTION OF BUSINESS AND BUSINESS PLAN


         United Energy Corp. ("United Energy" or the "Company") considers its
primary business focus to be the development, manufacture and sale of
environmentally friendly specialty K-Product Line of Chemicals.

         Green Globe is operated as a separate subsidiary of United Energy and
sells its products under the tradename Qualchem'TM'. Green Globe gives United
Energy 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. Green Globe developed a dual package of
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.

         United Energy'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. Our
FR-15 product has been developed and successfully tested by several municipal
fire departments. Underwriters Laboratories ("UL") did not have an approved test
for FR-15 as a dispersant. A reformulation of FR-15 was developed to pass the UL
fire extinguisher test. The reformulated product is being resubmitted for
testing and certification by Underwriters Laboratories ("UL"). We expect that
sales of FR-15 will commence when the product receives UL certification.

         United Energy also produces a specialty chemical product called
UNIPROOF'r', which is a photosensitive coating that is applied to paper to
produce what is known in the printing industry as proofing paper or "blue line"
paper.

         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 environmental products in that it is environmentally friendly and
biodegradable, which the Company believes to be particularly appealing in fresh
water marine applications. The product is still being tested on pleasure boats
throughout the United States and Europe. We expect to begin sales of the product
by the end of 2005. A patent application on this product is in process.

         During the past two fiscal years ended March 31, 2005 and 2004, we have
recorded aggregate losses from operations of $4,423,974 and have incurred total
negative cash flows from operations of $3,801,148 for the same two-year period.
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.

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





                                      F-9







<PAGE>


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

         The consolidated financial statements include the accounts of United
Energy Corp. and its wholly-owned subsidiary Green Globe Industries, Inc. and
currently inactive subsidiary, Nor-Graphic Industries. All intercompany
transactions and accounts have been eliminated in consolidation.

Use of Estimates

         The preparation of consolidated financial statements in accordance with
accounting principals generally accepted in the United States of America
requires United Energy 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, United Energy evaluates its estimates, including
those related to bad debts, inventories, intangible assets, contingencies and
litigation. United Energy 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.

Revenue Recognition

         The Company's primary source of revenue is from the sales of its
products. The Company recognizes revenue upon shipment and transfer of title.

Cash and Cash Equivalents

         Cash and cash equivalents consist of cash and highly liquid investments
with original maturities of three months or less.

Inventories

         Inventories consist predominately of finished goods. Inventories are
valued at the lower of cost (first-in, first-out method) or market.

Allowance for Doubtful Accounts

         The Company monitors its accounts and note receivable balances on a
monthly basis to ensure they are collectible. On a quarterly basis, the Company
uses its historical experience to determine its accounts receivable reserve. The
Company's allowance for doubtful accounts is an estimate based on specifically
identified accounts as well as general reserves. The Company evaluates specific
accounts where it has information that the customer may have an inability to
meet its financial obligations. In these cases, management uses its judgment,
based upon the best available facts and circumstances, and records a specific
reserve for that customer against amounts due to reduce the receivable to the
amount that is expected to be collected . These specific reserves are
reevaluated and adjusted as additional information is received that impacts the
amount reserved. The company also establishes a general reserve based upon a
range of percentages applied to aging categories. These percentages are based on
historical collection and write-off experience. If circumstances change, the
Company's estimate of the recoverability of amounts due the company could be
reduced or increased by a material amount. Such a change in estimated
recoverability would be accounted for in the period in which the facts that give
rise to the change become known.






                                      F-10





<PAGE>


Property and Equipment

         Property and equipment are stated at cost. Depreciation has been
calculated over the estimated useful lives of the assets ranging from 3 to 15
years. Leasehold improvements are amortized over the lives of the respective
leases (15 years), which are shorter than the useful life. The cost of
maintenance and repairs is expensed as incurred. Depreciation and amortization
expense for the years ended March 31, 2005 and 2004 was $92,196 and $132,660,
respectively.

Property and equipment consists of the following at March 31, 2005 and 2004:

<TABLE>
<CAPTION>
                                                                                          2005            2004
                                                                                          ----            ----
<S>                                                                                   <C>             <C>
         Furniture and fixtures.................................................      $    74,379     $    68,036
         Machinery and equipment................................................          288,450         366,098
         Vehicles...............................................................           82,139          78,986
         Leasehold improvements.................................................           26,203          26,203
                                                                                      -----------      ----------
              ..................................................................          471,171         539,323
         Less- Impairment loss..................................................               --         (70,467)
         Less- Accumulated depreciation and amortization........................         (305,584)       (225,543)
                                                                                      -----------     -----------
         Property and equipment, net............................................      $   165,587     $   243,313
                                                                                      ===========     ===========
</TABLE>

Goodwill

         The Company capitalized goodwill related to the acquisition of Green
Globe in September of 1998. Goodwill represents cost in excess of fair value on
the net assets acquired. Goodwill was amortized over a 15 year period using a
straight line amortization method until the adoption of SFAS No. 142 "Goodwill
and Other Intangible Assets," on April 1, 2002. Under SFAS No. 142, goodwill and
intangible assets with indefinite lives are no longer amortized but are reviewed
annually (or more frequently if impairment indicators arise) for impairment.
Separable intangible assets that are not deemed to have indefinite lives will
continue to be amortized over their useful lives (but with no maximum life).
Effective April 1, 2002, the Company adopted the provisions of SFAS No. 142,
which had no material effect on its results of operations and financial
position.

         As required by SFAS 142, the Company completed its transitional
impairment testing of intangible assets. Under SFAS 142, the goodwill impairment
exists if the net book value of a reporting unit exceeds its estimated fair
value. The impairment testing is performed in two steps: (i) the Company
determines impairment by comparing fair value of a reporting unit with its
carrying value, and (ii) if there is an impairment the Company measures the
amount of impairment loss by comparing the implied fair value of goodwill with
the carrying amount of that goodwill.

         As of March 31, 2005 the Company completed its annual impairment
testing of goodwill. The Company estimated the fair value of its goodwill by
using discounted cash flow analysis. As a result of the impairment tests, the
Company recorded a goodwill impairment charge of $2,010 related to the Green
Globe segment, during the year ended March 31, 2005. During the year ended March
31, 2004, the Company recorded a goodwill impairment charge of $51,310.

     Goodwill consists of the following at March 31, 2005 and 2004:

<TABLE>
<CAPTION>
                                                                                          2005            2004
                                                                                          ----            ----
<S>                                                                                   <C>             <C>
         Goodwill...............................................................      $    86,523     $    86,523
         Less: Impairment loss..................................................           53,320          51,310
         Less: Accumulated amortization.........................................           17,704          17,704
                                                                                      -----------     -----------

         Goodwill, net..........................................................      $    15,499     $    17,509
                                                                                      ===========     ===========
</TABLE>

Patents

         The Company capitalizes legal costs incurred to obtain patents.
Amortization begins when the patent is approved using the straight-line basis
over the estimated useful life of 15 years.




                                      F-11





<PAGE>


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. In addition to operating the wells, the Company used the wells to test
its products. During the year ended March 31, 2004, the Wyoming Wells produced
oil which generated $34,636 in revenues and incurred operating costs and
start-up maintenance and repair costs of $137,298.

         The Company capitalized $17,352 for the oil leases and $68,571 for
equipment, net of depreciation, amortization and depletion at March 31, 2004.
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."

         As of March 31, 2004 the company reviewed the carrying value of the oil
well leases held by United Oil Corp. The Company estimated that the carrying
value of the oil leases should be adjusted due to the sale of the oil well
leases in April 2004. As a result the Company recorded an oil leases' impairment
loss of $70,467.

         In April 2004, the Company sold their oil well leases located in
Laramie County, Wyoming for $15,000 and a 4.5% royalty on all future oil sales
from these wells. The company recognized no gain or loss on the sale of the oil
well leases. In May 2004, the state of Wyoming returned the $75,000 deposit made
by the company at the time the oil leases were purchased. There were no royalty
payments received during the year ended March 31, 2005.

Accounting for Long-Lived Assets

         The Company's long-lived assets include property and equipment and
patents.

         In accordance with SFAS 144, long-lived assets other than goodwill are
reviewed on a periodic basis for impairment whenever events or changes in
circumstances indicate that the carrying amounts of the assets may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.

Income Taxes

         The Company accounts for income taxes using the asset and liability
method. Under this method, deferred tax assets and liabilities are determined
based on the temporary differences between the financial statement and the
income tax bases of assets and liabilities and for net operating loss carry
forwards existing at the balance sheet date using enacted tax rates in effect
for the years in which the taxes are expected to be paid or recovered. A
valuation allowance is established when it is considered more likely than not
that such assets will not be realizable. The effect on deferred tax assets or
liabilities of a change in tax rates is recognized in the period in which the
tax change occurs.

Stock-Based Compensation

         At March 31, 2005, the Company has stock based compensation plans,
which are described more fully in Note 10. 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 cost for the years ended March 31, 2005 and 2004. 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 $208,740 and $9,700 for the years ended March 31, 2005 and
2004.




                                      F-12





<PAGE>


         The following table illustrates 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>
                                                                 2005                2004

<S>                                                          <C>                 <C>
Net loss as reported                                         $ (1,854,876)       $ (2,569,098)
Add:
Stock based compensation expenses included in
reported net loss                                                 208,740               9,700
Deduct:
Total stock based employee compensation expense
determined under fair value based method for all
awards                                                           (690,488)         (1,361,668)
                                                             ------------        ------------
Pro forma                                                    $ (2,336,624)       $ (3,921,066)
                                                             ============        ============
Basic and diluted loss per common share
As reported                                                       $ (0.08)            $ (0.12)
                                                                  =======             =======
Pro forma                                                         $ (0.10)            $ (0.18)
                                                                  =======             =======
</TABLE>


Recently Issued Accounting Standards

         In December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 123 (Revised 2004), "Share-Based Payment" ("SFAS No. 123R").
This revised accounting standard eliminates the ability to account for
share-based compensation transactions using the intrinsic value method in
accordance with APB Opinion No. 25 and requires instead that such transactions
be accounted for using a fair-value-based method. SFAS No. 123R requires public
entities to record noncash compensation expense related to payment for employee
services by an equity award, such as stock options, in their financial
statements over the requisite service period. SFAS No. 123R is effective as of
the beginning of the first interim or annual period that begins after December
15, 2005 for small business issues. The Company does not plan to adopt SFAS No.
123R prior to its fourth-quarter of fiscal 2006. The Company expects that the
adoption of SFAS No. 123R will have a negative impact on the Company's
consolidated results of operations. The company has historically provided pro
forma disclosures pursuant to SFAS No. 123 and SFAS No. 148 as if the fair value
method of accounting for stock options had been applied, assuming use of the
Black-Scholes option-pricing model. Although not currently anticipated, other
assumptions may be utilized when SFAS No. 123R is adopted.

Per Share Data

          SFAS No. 128 establishes standards for computing and presenting
earnings per share ("EPS"). The standard requires the presentation of basic EPS
and diluted EPS. Basic EPS is calculated by dividing income/loss available to
common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is calculated by dividing income/loss
available to common shareholders by the weighted average number of common shares
outstanding adjusted to reflect potentially dilutive securities. Diluted loss
per share for the years ended March 31, 2005 and 2004 does not include
8,580,000, and 6,430,000 stock options and warrants since the inclusion of the
outstanding stock options and warrants would be antidilutive.






                                      F-13





<PAGE>


Concentrations of Risk

Cash and Cash Equivalents

         The Company maintains cash balances at financial institutions insured
up to $100,000 by the Federal Deposit Insurance Corporation. Balances exceeded
these insured amounts during the year.

Accounts and Notes Receivable

         The Company had three customers which accounted for 87% and 50% of the
total accounts receivable at March 31, 2005 and 2004 respectively. One company
accounted for 14% and 50%, the second accounted for 56% and 0%, and the last
accounted for 17% and 0% at March 31, 2005 and 2004 respectively. Credit losses,
if any, have been provided for in the consolidated financial statements and are
based on management's expectations.

         At March 31, 2003, the Company converted an accounts receivable balance
of $179,034 to a one year note receivable. The note accrues interest at the rate
of 4.5%, was to be paid in 12 monthly installments and provides for a security
interest in the inventory held by this customer. During the year ended March 31,
2004, the customer returned goods in the amount of $30,226, which reduced the
note. Principal payments in the amount of $53,808 have also been received. In
addition, the Company increased the reserve by $1,350 to $31,350. No interest
has been paid to date. On March 28, 2004, the customer agreed to a balance of
$95,000, which was to be paid $5,000 per month. During the year ended March 31,
2005, the customer made seven monthly payments. The balance at March 31, 2005 is
$60,000, prior to the reserve of $31,350.

Significant Customers

         The Company's revenues from major customers, as a percentage of
revenues, for the years ended March 31, 2005 and 2004, are as follows:

<TABLE>
<CAPTION>
                                                                             2005           2004
                                                                             ----           ----

<S>                                                                          <C>            <C>
Customer A ...................................................                 3%            10%
Customer B ...................................................                30%            46%
Customer C ...................................................                39%             0%

</TABLE>


Vendors

         The Company purchased supplies from major venders for the years ended
March 31, 2005 and 2004, as follows:

<TABLE>
<CAPTION>
                                                                             2005           2004
                                                                             ----           ----

<S>                                                                          <C>            <C>
Vendor A   ...................................................                21%            27%
Vendor B   ...................................................                12%             8%
Vendor C   ...................................................                11%             0%

</TABLE>


Fair Value of Financial Instruments

         The carrying amounts of cash and cash equivalents, accounts receivable,
note and loan receivable, inventory, accounts payable and accrued expenses
approximate their fair values due to the short-term maturity of these
instruments.

Reclassification

         Certain amounts from the prior year consolidated financial statement
have been reclassified to conform to current year presentation with no effect on
net income.




                                      F-14





<PAGE>


3.       INVENTORY

         Inventory consists of the following as of March 31, 2005 and 2004:

<TABLE>
<CAPTION>
                                                                              2005           2004
                                                                              ----           ----

<S>                                                                       <C>             <C>
         Paper....................................................        $         -     $     4,416
         Blended chemical.........................................             80,380         104,668
         Raw materials............................................             55,580          67,403
                                                                          -----------     -----------
         Total inventory..........................................        $   135,960     $   176,487
                                                                          ===========     ===========
</TABLE>


4.       RELATED PARTY TRANSACTIONS

         The Company had an amount due to Robert Seaman, a major shareholder and
former director of the Company. The amount due as of March 31, 2005 and 2004 is
$244,141. This amount is unsecured, non-interest bearing and due upon demand.

         Martin Rappaport, a major shareholder and director of the Company, owns
the property from which United Energy leases the 9,600 square foot facility it
occupies in Secaucus, New Jersey. The Company pays approximately $108,000 per
year under the lease, excluding real estate taxes. The Company believes that the
lease is at fair market value with leases for similar facilities.

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

5.       CONVERTIBLE DEBT

         On March 24, 2004, the Company issued a secured convertible term note
(the "Term Note") in the amount of $1,750,000, which has a term of three years
and accrues interest at the greater of the prime rate of interest, currently
5.75% per year at March 31, 2005 (as published in the Wall Street Journal), or
4% per year. Interest is payable monthly in arrears commencing on May 1, 2004,
and on the first day of each consecutive calendar month after that date. Monthly
amortization payments commenced on October 1, 2004, at the rate of $58,333.

         The holder of the Term Note has the option to convert all or a portion
of the note (including principal, interest and penalties) into shares of common
stock at any time, subject to specified limitations, at a fixed conversion price
of $1.00 per share. The conversion price is subject to adjustment for stock
splits, stock dividends and similar events. On March 18, 2005, in connection
with the financing discussed in Note 7, the fixed conversion price was adjusted
to $0.80. The Company's obligations under the Term Note are secured by a first
priority security interest in the Company's assets. As of March 31, 2005, the
holder of the Term Note converted $150,000 in principal into 150,000 shares of
common stock. In addition, the holder of the Term Note received $12,497 of
interest in shares of common stock. Between April 1 and June 1, 2005, the
holder of the Term Note converted $117,800 in principal into 147,250 shares
of common stock.

         During December 2004, the Company defaulted on the Term Note by failing
to pay principal of $24,999. The Company also failed to pay principal of
$116,666 for January and February 2005. On February 28, 2005, the Company
entered into an Amendment and Waiver agreement (the "Amendment") with the holder
of the Term Note. The amendment included a waiver by the holder of the Term Note
of all Events of Default. In consideration for the waiver the Company, (i) paid
the holder unpaid interest, (ii) prepaid $37,777 of additional interest and
(iii) issued a seven year warrant to purchase 300,000 shares of Common Stock
with an exercise price ranging from $1.25 to $1.75. In addition, the holder
agreed to defer the principal payments scheduled to be paid from December 2004
through May 2005 until the date of Maturity. (see note 7)




                                      F-15





<PAGE>


<TABLE>
<S>                                                                                <C>
               Convertible term note                                               $1,600,000
               Discount on convertible term note                                     (344,402)
                                                                                   ----------
                                                                                    1,255,598
               Current portion                                                       (583,330)
                                                                                   ----------

               Long-Term Debt                                                      $  672,268
                                                                                   ==========

         Estimated maturities on long-term debt are as follows:
                      2005                                                         $  583,330
                      2006                                                         $  672,268
</TABLE>


6.       COMMITMENTS AND CONTINGENCIES


Litigation

Sales Commission Claim
----------------------

         In July 2002, an action was commenced against us in the Court of Common
Pleas of South Carolina, Pickens County, brought by Quantum International
Technology, LLC and Richard J. Barrett. Plaintiffs allege that they were
retained as a sales representative of ours and in that capacity made sales of
our products to the United States government and to commercial entities.
Plaintiffs further allege that we failed to pay to plaintiffs agreed commissions
at the rate of 20% of gross sales of our products made by plaintiffs. The
complaint seeks an accounting, compensatory damages in the amount of all unpaid
commissions plus interest thereon, 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 yet been scheduled. We
believe we have meritorious defenses to the claims asserted in the action and
intend to vigorously defend the case. The outcome of this matter cannot be
determined at this time.

Lease Commitments

         The Company leases office facilities, equipment and autos under
operating leases expiring on various dates through 2009. Certain leases contain
renewal options. The following is a schedule of future minimum lease payments
under operating leases having remaining terms in excess of one year as of March
31, 2005.

                                                      Operating
              Year                                      Leases
              ----                                      ------
              2006                                     137,028
              2007                                     119,956
              2008                                      45,966
              2009                                       2,482
                                                     ---------
              Total minimum lease payments           $ 305,432
                                                     =========

         Operating lease expense was $129,806 and $131,509 for the years ended
March 31, 2005 and 2004, respectively.

7.       STOCKHOLDERS' EQUITY

         On February 28, 2005, we entered into an amended agreement on the
  convertible term note (see note 5). The Company issued warrants to purchase up
  to 300,000 shares of the Company's common stock at an exercise price per share
  ranging from $1.25 to $1.75. The warrants are fully exercisable for seven
  years from the date of issuance. The estimated fair value of the warrants of
  $165,210 was recorded as a discount to the convertible term note and is being
  amortized to interest expense over the life of the note. The unamortized
  amount as of March 31, 2005 was $158,423. As of March 31, 2005, these warrants
  were unexercised and outstanding.




                                      F-16






<PAGE>


         On March 18, 2005, we entered into a securities purchase agreement
(the "Agreement") with two private investors to issue shares of our common stock
and warrants. The Agreement provides for two types of units, designated as
Series A and Series B. The Series A Units each consist of 100,000 shares of our
common stock and a Series A Warrant to purchase 50,000 shares of our common
stock at $1.00 per share, subject to adjustment. The Series A Warrants expire
five (5) years from the date they are issued. The purchase price for each
Series A Unit is $80,000. The Agreement provides for the sale of up to twenty
(20) Series A Units.

         The Series B Units each consist of ten (10) shares of a new class of
preferred stock that will be converted into 80,000 shares of our common stock in
the aggregate, subject to adjustment, and Series B Warrant to purchase 40,000
shares of our stock at $1.50 per share. The Series B Warrants expire five (5)
years from the date they are issued. The purchase price for each Series B Unit
is $80,000. The Agreement provides for the sale of up to forty-two (42) Series B
Units.

         On March 18, 2005, the contract date, we issued 8 Series A Units or
800,000 shares of our common stock for a purchase price of $640,000.
Subsequent closings under the agreement are contingent upon orders from our
customers, at the rate of one unit for each $100,000 of orders. The remaining
Series A units must be purchased first, followed by Series B units. The
investors have the right to purchase additional shares at any time.
The obligation of the investors to purchase units expires on March 17, 2006.

         The Agreement requires us to obtain shareholder approval for the
authorization of the preferred stock within 75 days, or by June 1, 2005. The
Agreement provides that the exercise price of the warrants is to be reduced by
$0.01 for each day that approval is delayed, but not below $0.05 per share. As
of June 1, 2005, we have not obtained the consent from the holders of a majority
of our outstanding shares.

         During the year ended March 31, 2005, the Company issued an aggregate
of 112,500 shares of common stock in exchange for consulting and legal services.
These issuances were recorded as an increase to equity and consulting and legal
expenses for the fair value of the shares of common stock on their respective
grant dates.

         During the year ended March 31, 2004, in connection with the
convertible term note (see note 5), the Company issued warrants to purchase up
to 300,000 shares of the Company's common stock at an exercise price per share
ranging from $1.00 to $1.50. The warrants are fully exercisable for seven years
from the date of issuance. The estimated fair value of the warrants of $281,670
was recorded as a discount to the convertible term note and is being amortized
to interest expense over the life of the note. The unamortized amount as of
March 31, 2005 was $185,979. As of March 31, 2005, these warrants were
unexercised and outstanding.

         During the year ended March 31, 2004, the Company issued warrants in
exchange for services provided in connection with the issuance of the
convertible term note to purchase up to 175,000 shares of the Company's common
stock at an exercise price per share of $1.50. The warrants are fully
exercisable for five years from the date of issuance. The estimated fair value
of $153,144 was recorded as a deferred financing cost and is being amortized
over the life of the note. The unamortized amount as of March 31, 2005 was
$101,116. As of March 31, 2005, these warrants were unexercised and outstanding.


8. INCOME TAXES

         Deferred income taxes are provided for the temporary difference between
the financial reporting basis and tax basis of the Company's assets and
liabilities including those assets and liabilities recorded in connection with
acquisitions. Deferred tax assets and liabilities result principally from
recording certain expenses or income in the financial statements in a different
period from recognition for income tax purposes. As of March 31, 2005, the
Company had a net operating loss carryforward for tax purposes of approximately
$10,429,000, which is available to reduce its future taxable income, and expires
at various dates through 2024. $106,000 is expiring in 2015, $820,000 expiring
in 2016, $889,000 expiring in 2017, $736,000 expiring in 2018, $100,000 expiring
in 2020, $782,000 expiring in 2021, $2,692,000 expiring in 2022, $2,404,000
expiring in 2023 and $1,900,000 expiring in 2024. A full valuation allowance has
been established against the deferred tax assets, which are mainly related to
the net loss carryforward, due to the uncertainties surrounding the utilization
of the carryforward and limitations resulting from a change in control. There
are no other significant timing differences.

         Utilization of the net operating loss carryforwards may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code and similar state provisions. The annual limitation
may result in the expiration of net operating loss carryforwards before
utilization.

9. 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.





                                      F-17






<PAGE>


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

         There were stock options to purchase 545,000 shares of common stock for
future grant as of March 31, 2005 under the 2001 equity incentive plan.

Fair Value of Stock Options

         For disclosure purposes under SFAS No. 123, 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:

<TABLE>
<CAPTION>
                                                                               2005              2004
                                                                               ----              ----
<S>                                                                        <C>               <C>
Expected life (in years)................................................        10                10
Risk-free interest rate.................................................      4.54%              4.54%
Volatility..............................................................    135.00             138.00
Dividend yield..........................................................         0%                 0%
</TABLE>


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 $1.20 and $1.32 for the years ended March 31, 2005 and 2004, respectively.

Summary Stock Option Activity

         The following table summarizes stock option information with respect to
all stock options for the year ended March 31, 2005 and 2004:


<TABLE>
<CAPTION>
                                                                                       Weighted
                                                                         Weighted       Average
                                                                         Average       Remaining
                                                           Number of     Exercise     Contractual
                                                             Shares       Price       Life (Years)
                                                           ----------   ----------   --------------
<S>                                                         <C>           <C>          <C>
Options outstanding March 31, 2003...................       2,445,020     $1.38
         Granted.....................................         475,000     $1.10
         Cancelled                                           (715,020)    $1.28
                                                            ---------
Options outstanding March 31, 2004.................         2,205,000     $1.32          8.32
                                                                                         ====
         Granted.....................................       1,250,000     $1.00
                                                            ---------
Options outstanding March 31, 2005.................         3,455,000     $1.20          7.98
                                                            =========                    ====
</TABLE>



         As of March 31, 2005, there were 2,921,442 options exercisable with
weighted average exercise price of $1.20 per share. Options outstanding at March
31, 2005 have an exercise price ranging between $0.70 to $2.00.

10.      SEGMENT REPORTING

         SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for the way that public companies report
information about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for disclosures
regarding products and services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by management in
deciding how to allocate resources and in assessing performance.



                                      F-18






<PAGE>


         The Company's total revenues, income from operations and identifiable
assets by segment for the year ended March 31, 2005 are as follows:

<TABLE>
<CAPTION>
                                                           Graphic         Specialty
                                                            Arts           Chemicals       Corporate           Total
                                                            ----           ---------       ---------           -----
<S>                                                       <C>             <C>             <C>               <C>
Revenues .......................................          $549,462        $1,301,492      $        --       $ 1,850,954
                                                          ========        ==========      ===========       ===========

Gross profit.....................................         $238,146        $  853,744      $        --       $ 1,091,890
Sales, general and administrative expenses.......          143,942         1,431,225        1,005,866         2,581,033
Depreciation, amortization and depletion.........               --            74,535            9,866            84,401
Impairment loss..................................               --             2,010               --             2,010
Interest expense (income)........................               --                --          279,322           279,322
                                                          --------        ----------    -------------       -----------
Income (loss) from continuing operations.........         $ 94,204        $ (654,026)   $  (1,295,054)      $(1,854,876)
                                                          ========        ==========    =============       ===========

Cash and cash equivalents........................         $     --        $       --    $     365,610       $   365,610
Accounts receivable..............................          140,617           642,387               --           783,004
Inventory........................................           20,080           115,880               --           135,960
Note receivable..................................           28,650                --               --            28,650
Loan receivable..................................               --                --              137               137
Prepaid expenses.................................               --                --          120,574           120,574
Fixed assets.....................................               --           143,633           21,954           165,587
Goodwill ........................................               --            15,499               --            15,499
Patent   ........................................               --           295,603               --           295,603
Deferred financing costs.........................               --                --          206,590           206,590
Deposits ........................................               --                --            1,385             1,385
                                                          --------        ----------    -------------       -----------
Total assets.....................................         $189,347        $1,213,002    $     716,250       $ 2,118,599
                                                          ========        ==========    =============       ===========
Capital expenditures.............................         $     --        $   23,018    $       6,451       $    29,469
                                                          ========        ==========    =============       ===========
</TABLE>


         The Company's total revenues, income from operations and identifiable
assets by segment for the year ended March 31, 2004, are as follows:


<TABLE>
<CAPTION>
                                                           Graphic         Specialty
                                                            Arts           Chemicals       Corporate           Total
                                                            ----           ---------       ---------           -----
<S>                                                       <C>             <C>             <C>               <C>
Revenues .......................................          $486,075        $  485,976      $        --       $   972,051
                                                          ========        ==========      ===========       ===========

Gross profit.....................................         $244,328        $  211,076      $        --       $   455,404
Sales, general and administrative expenses.......          146,351         1,270,148        1,258,469         2,674,968
Oil well operating and maintenance costs-net.....               --           102,662               --           102,662
Depreciation, amortization and depletion.........               --           109,627           17,550           127,177
Impairment loss..................................               --           121,777               --           121,777
Interest expense (income)........................            6,683                --           (8,765)           (2,082)
                                                          --------       -----------      -----------       -----------
Income (loss) from continuing operations.........         $ 91,294       $(1,393,138)     $(1,267,254)      $(2,569,098)
                                                          ========       ===========      ===========       ===========

Cash and cash equivalents........................         $     --       $        --      $ 1,518,025       $ 1,518,025
Accounts receivable..............................          229,997           163,944               --           393,941
Inventory........................................           42,452           134,035               --           176,487
Note receivable..................................           63,650                --               --            63,650
Loan receivable..................................               --                --            1,538             1,538
Prepaid expenses.................................               --                --           80,296            80,296
Fixed assets.....................................               --           211,492           31,821           243,313
Goodwill ........................................               --            17,509               --            17,509
Patent   ........................................               --           309,424               --           309,424
Deferred financing costs.........................               --                --          310,893           310,893
Deposits ........................................               --            75,000            1,385            76,385
                                                          --------        ----------      -----------       -----------
Total assets.....................................         $336,099        $  911,404      $ 1,943,958       $ 3,191,461
                                                          ========        ==========      ===========       ===========
Capital expenditures.............................         $     --        $  175,953      $     1,890       $   177,843
                                                          ========        ==========      ===========       ===========
</TABLE>




                                      F-19







<PAGE>


Geographic Information

<TABLE>
<CAPTION>
                                                                  2005           2004
                                                                  ----           ----
<S>                                                           <C>             <C>
U.S.                                                          $  938,504       $850,021
Venezuela                                                        729,575             --
Netherlands                                                       50,200         98,850
Other                                                            132,675         23,180
                                                              ----------       --------
Totals                                                        $1,850,954       $972,051
                                                              ==========       ========
</TABLE>



11. Subsequent Events

         On April 27, 2005, the Company entered into a consulting agreement to
provide advisory and business development services. In consideration for these
services, the Company issued warrants to purchase 500,000 shares of our common
stock at an exercise price of $1.34. The Company also issued warrants to
purchase an additional 500,000 shares of our common stock at an exercise price
of $2.00 per share. The warrants are fully exercisable for ten years. The
initial 100,000 warrants vest immediately. The estimated fair value of the
warrants of $129,720 will be recorded as consulting expense during the first
quarter of the year ended March 31, 2006. The remainder of the warrants will
vest, if it all, in increments of 100,000 warrants for each $5,000,000 of net
revenues recognized as a result of business generated through contacts that the
consultant brings to us.





                                      F-20


                             STATEMENT OF DIFFERENCES

The trademark symbol shall be expressed as...................'TM'
The registered trademark symbol shall be expressed as........'r'
The section symbol shall be expressed as.....................'SS'