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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2001

                                       OR

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

               FOR THE TRANSITION PERIOD FROM ________ TO ________

                          COMMISSION FILE NO. 000-30841

                            UNITED ENERGY CORPORATION
             (Exact name of Registrant as specified in its charter)

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                     NEVADA                                  22-3342379
         -------------------------------               ----------------------
         (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                Identification Number)
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                             600 MEADOWLANDS PARKWAY
                              SECAUCUS, N.J. 07094
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

               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:
                     COMMON STOCK, PAR VALUE $.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 such filing
requirements for the past 90 days.      [X] Yes [ ] 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-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the registrant's common stock held by
nonaffiliates on June 15, 2001 (based on the average of the bid and asked prices
of the Common Stock on the over-the-counter market on such date) was $9,358,778

As of June 15, 2001 there were 15,830,270 shares of the registrant's common
stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                    (Please see list of Exhibits on page 21)
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                               UNITED ENERGY CORP.

                       INDEX TO ANNUAL REPORT ON FORM 10-K


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PART I

Item 1.          Business......................................................................................        3

Item 2.          Properties....................................................................................        9

Item 3.          Legal Proceedings.............................................................................        9

Item 4.          Submission of Matters to a Vote of Security Holders...........................................        9

                 Executive Officers of the Registrant..........................................................        9

PART II

Item 5.          Market for Registrant's Common Equity and Related Stockholder Matters.........................       10

Item 6.          Selected Financial Data.......................................................................       11

Item 7.          Management's Discussion and Analysis of Financial Condition and Results of Operations.........       11

Item 7A.         Quantitative and Qualitative Disclosures about Market Risk....................................       17

Item 8.          Consolidated Financial Statements and Supplementary Data......................................       18

Item 9.          Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .........       19

PART III

Item 10.         Directors and Executive Officers of the Registrant............................................       20

Item 11.         Executive Compensation .......................................................................       21

Item 12.         Security Ownership of Certain Beneficial Owners and Management ...............................       22

Item 13.         Certain Relationships and Related Transactions................................................       22

PART IV.

Item 14.         Exhibits, Financial Statement Schedules, and Reports on Form 8-K..............................       23

                 Signatures....................................................................................       25
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ITEM I. BUSINESS

BUSINESS OF THE COMPANY

         The principal executive offices of United Energy Corp. are located at
600 Meadowlands Parkway, Secaucus, New Jersey 07094 and the telephone number at
that location is (201) 842-0288.

HISTORY

         United Energy Corp. (referred to variously as the "Company", "United
Energy" and "we") was incorporated in 1971 as Aztec Silver Mining Co., a Nevada
corporation. For several years thereafter, the Company pursued its basic
business through the acquisition of silver mining claims but without any
commercial success. In the late 1970's the Company decided to change its primary
business focus to the acquisition and exploitation of coal and oil shale leases
in Wyoming. Coincident with that change in its business focus, the Company
changed its name from Aztec Silver Mining Co. to United Energy Corp. Despite
early successes, the oil and coal operations ultimately proved to be
unsuccessful, and, as a result, the Company abandoned its leases, paid off its
debts and became a dormant organization.

         The Company first became a publicly held corporation in 1972-73 through
a Regulation A offering of a total of 3,000,000 shares of its common stock, to
raise a total of $300,000. As a result, through subsequent sales and resales of
the publicly held stock, by the time the Company became a dormant organization,
it had approximately 290 shareholders holding a total of 12,549,480 shares of
common stock.

         The Company continued in this dormant state until October of 1995 when
control of the Company was acquired by Mr. Ronald Wilen and Mr. Robert Seaman
and several other investors. The purpose of the acquisition in 1995 was to
enable Mr. Wilen and his associates to place certain privately held assets
already owned by them into United Energy Corp. which would allow public
investors to acquire an interest in such assets. In return the private investors
could hope to achieve liquidity and a fair market valuation for their
investments. The initial transfer of assets took place in March of 1996 with the
acquisition of 100% of the shares of Nor Industries, Inc. and the Scitech Group,
Inc. and resulted in the issuance of 1,050,000 additional shares to Mr. Wilen
and his associates. As a result of the acquisition of these assets in March
1996, United Energy Corp. became engaged primarily in the manufacture and sale
of pressroom equipment for the printing industry.

         While the manufacturing and distribution of printing equipment provided
substantial cash flows and revenues during the Company's fiscal year ended March
31, 1997, the operations of this business also produced significant expenses and
required considerable capital. Also, as the equipment was placed in service, the
Company was faced with the prospect of having to increase its product liability
coverage significantly.

         During the same time that the Company was engaged in the manufacture of
printing equipment, it was also developing certain chemical products useful to
the printing industry. In particular, the Company developed an
environmentally-safe press wash to be used in cleaning ink from printing
presses. When the Company discovered that a very small amount of the cleaning
compound could be used to remove oil-based ink from an entire printing press,
the Company began to explore the application of the compound to the cleaning and
maintenance of producing oil and gas wells. All of the tests of this cleaning
product, now re-named KH-30(R), proved to be highly successful and resulted in
production increases of between two and five times from paraffin-affected oil
and gas wells. After consulting petroleum engineering firms, the Company decided
to focus its energy on the manufacturing and marketing of its KH-30(R) oil well
cleaner and, at the same time, decided to shut down the relatively expensive
printing equipment manufacturing operation. This operation was discontinued
during the fiscal year ended March 31, 1998.

         During the Company's four fiscal years ended March 31, 1996, 1997, 1998
and 1999, the efforts to achieve profitable operations through the sale of
pressroom equipment, and research and development and initial marketing expense
for the Company's current product lines resulted in cumulative losses totaling
$2,044,587. During fiscal year 2000, the Company

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achieved net income of $145,445. During the fiscal year ended March 31, 2001 the
Company continued to have positive income from operations. However, the
unusually high professional fees during that year, primarily related to the
preparation of materials for filing with the Securities and Exchange Commission
in order to become a 1934 Act reporting company, and an unusual litigation
settlement and related litigation costs totaling $231,981 combined to produce a
net loss for the year of $154,316.

         During its fiscal year ended March 31, 2000, the Company sold
approximately $1,700,000 worth of its UNIPROOF(R) proofing paper where there had
been no sales of this product in the previous fiscal year. During the fiscal
year ending March 31, 2001 the Company's sales of its UNIPROOF(R) proofing paper
totaled $2,921,345. In June of 2000 the Company obtained a $1,000,000 line of
credit from Fleet Bank in order to provide working capital to support higher
levels of UNIPROOF(R) sales. Also during the second quarter of fiscal 2001, the
Company entered into a distribution agreement with the Alameda Company of
Anaheim, California calling for the distribution of certain minimum amounts of
UNIPROOF(R). As a result of these developments, the Company believes it is now
in a position to concentrate its efforts more directly on the sale of its
specialty chemical and cleaning products, particularly its KH-30(R) oil and gas
well cleaner.

CURRENT BUSINESS OPERATIONS AND PRINCIPAL PRODUCTS

         The Company's KH-30(R) oil and gas cleaning product was first tested in
a producing oil and gas well in 1995 by Charles Bitters of Mineral Wells, Texas.
Mr. Bitters' reaction was very favorable. Mr. Bitters then engaged a Petroleum
Engineer, Mr. P.C. Gwaltney, who issued several reports during 1995 which were
also very favorable with respect to KH-30(R)'s ability to remove paraffin. Among
the next users of the product was Liberty Operating Company of Lake Dallas,
Texas and Pefley Oil and Gas of West Falls, New York. Each used the product
successfully during 1996.

         Thereafter, during 1997 and 1998 KH-30(R) was tested in a series of
in-well applications initiated by Mark Voss, an engineer and chemist formerly
with the Petrolite Corporation, during which United Energy worked with major oil
companies and independents. Also through Mr. Voss, the KH-30(R) product was
included in treatment programs carried out by Baker Petrolite and Champion
International, two large firms providing chemical treatment programs to the oil
and gas industry.

         As mentioned later in this Form 10-K, ChemTech, which is now owed by
Smith International, has achieved favorable results with the KH-30(R) product
for several years and now wishes to achieve a more formalized relationship with
United Energy.

         During the fiscal year ended March 31, 1998 the Company put in place a
number of distributors for its KH-30(R) oil and gas well cleaner, entered into
testing and evaluation arrangements with oil service companies both in the
United States and internationally and proceeded to file patent applications on
KH-30(R) in most of the major oil-producing countries around the world. As a
result of these activities, KH-30(R) has been utilized in over 200 oil and gas
wells, having many different characteristics, and located in many different
regions of the world. When applied in accordance with United Energy's
recommended procedures, KH-30(R) has generally resulted in production increases
of between two and five times in paraffin-affected oil and gas wells.. KH-30(R)
is now patented in OAPI (Africa) which includes these countries: Burkina-Faso,
Benin, Central African Republic, Congo, Cote d'Ivoire, Cameroon, Gabon, Guinea,
Guinea-Bissau, Mali, Mauritania, Niger, Senegal, Chad and Togo. It is also
separately patented in the United States, Venezuela and Nigeria. The Company has
15 additional country patent applications (including European Community and
Canada) pending.

DESCRIPTION OF KH-30

         KH-30(R) is an environmentally-safe, non-petroleum based product that
is non-toxic and biodegradeable. Moreover, the use of KH-30(R) in a well has
additional beneficial effects "downstream" resulting in cleaner flow lines and
holding tanks. KH-30(R) has also been tested to be refinery compatible in that
it contains no materials that are harmful to the refining process.

         A recent application of KH-30(R) performed by ChemTech (now a division
of Smith International, Inc.) as reported in the American Oil and Gas Reporter
of January 2001 at page 143, describes the treatment of a well in southern
Louisiana that had

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dwindled to one barrel a day of production as a result of heavy paraffin
accumulation. Hot oil treatments offered only short term relief. After ChemTech
applied United Energy's KH-30(R) paraffin dispersing chemical in the well,
production climbed to 26 barrels a day and then leveled off at approximately 18
barrels a day, which level the well thereafter maintained for more than three
months.

MARKETING OF KH-30

         Although United Energy believes that the application of KH-30(R) on a
continuous basis will result in higher production and lower lease operating
costs, the introduction of KH-30(R) into the oil and gas producing industry has
been extremely 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 KH-30(R).
Moreover, oil production engineers are extremely 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 KH-30(R) has been much
less rapid than the Company initially expected.

         In March 2000, a joint marketing agreement was entered into between
United Energy and ChemTech, a company operating world-wide in the design and
administration of chemical treatment programs for the oil and gas industry.
ChemTech is located in the Louisiana oil and gas belt with easy access to the
Gulf of Mexico. ChemTech is a division of Smith International Inc., a New York
Stock Exchange- listed company and a major player in the oil service industry
worldwide. There are two elements of the marketing arrangement which should
prove beneficial to United Energy. The first is that neither ChemTech nor Smith
International has an in-house product which competes directly with KH-30(R), and
the second is that the world-wide reputation of Smith International should help
to provide credibility for United Energy's KH-30(R) product in the universe of
the major oil producers. Through the end of our fiscal year ended March 31, 2001
our sales of KH-30(R) to or through ChemTech have amounted to approximately
$290,000.

         Under the terms of the joint marketing agreement both United Energy and
ChemTech will undertake to develop oil field chemical treatment projects which
will utilize either or both of United Energy's KH-30(R) product and the chemical
treatment products of ChemTech. For those projects introduced by United Energy
which utilize products and services of ChemTech, United Energy is to receive a
fee equal to 10% of the project gross profit. On projects which require the use
of KH-30(R), the project will buy the KH-30(R) at United Energy's standard
prices unless otherwise agreed. ChemTech will receive agreed upon service fees
and a percentage of revenues.

OTHER PRODUCTS AND SERVICES OF UNITED ENERGY

         United Energy considers its primary business focus to be the
development, manufacture and sale of environmentally-safe specialty chemical
products. In this regard, the Company first developed a follow-on product to
KH-30(R) using much of the same technology to provide an enhanced means for
cleaning asphalt mixing and recycling plants. This product, called AD-30, and
its companion product AC-30 for compressed asphalt, have been test marketed by a
major asphalt equipment manufacturer, Gentec(R) Asphalt Equipment, and are now
ready for distribution.

         Also, in further pursuit of the above goal, United Energy acquired in
November 1998 all of the outstanding shares of Green Globe Industries, Inc. in
exchange for 30,000 shares of United Energy common stock. GreenGlobe is operated
as a separate subsidiary of United Energy and sells its products under the
tradename Qualchem(TM). The acquisition of Green Globe gives United Energy
access to the chemistry and product lines of Green Globe which include
environmentally-safe 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 for, and have received U.S.
Military approval for, the cleaning of the instrument panels of combat aircraft.

         United Energy's chemists have recently developed an
environmentally-safe 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. A fire, once

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sprayed with an FR-15 mixture, will not re-ignite. 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
fully developed and tested by several municipal fire departments. However,
because we anticipate applying for Underwriters Laboratory specifications with
respect to the product, we have not had any sales of the product during the
fiscal year ended March 31, 2001, but we do expect sales of FR-15 during the
fiscal year ending March 21, 2002, although we cannot predict sales levels at
this time.

         Another one of United Energy's specialty chemical products is a
photo-sensitive coating that is applied to paper to produce what is known in the
printing industry as proofing paper or "blue line" paper. The Company developed
this formulation over several years of testing. The Company's patent attorneys
have informed the Company that the formulation is technically within the public
domain as being within the scope of an expired duPont patent. However, the exact
formulation utilized by the Company, to the best of the Company's knowledge, has
not been able to be duplicated by others and is protected by the Company as a
trade secret.

         The Company introduced its proofing paper product in June of 1999. By
March of 2000, sales of the product had increased to more than $200,000 per
month and amounted to a total of $1,724,695 during the fiscal year ended March
31, 2000. Sales of UNIPROOF(R) proofing paper totaled $2,921,345 for the fiscal
year ended March 31, 2001.

         In January 2001, the Company introduced a marine growth inhibitor at
the National Boat Show at the Javits Center in New York City. The marine growth
inhibitor, which the Company has named "Bye Bye Barnacles"(TM), is another in
the Company's line of environmental products in that it is non-toxic and
biogradable, characteristics which the Company believes to be particularly
appealing in fresh water marine applications, although the product has proven to
be effective in both fresh and saltwater environments. The Company has begun
marketing the product in advance of the summer boating season through marine
product distributors. A patent application on this product is in process. We
expect to begin to generate sales of this product in our fiscal year ended March
31, 2002, but cannot at this time predict what the level of those sales might
be.

MARKETING

         United Energy markets its products primarily through independent
distributors. This is particularly true of our UNIPROOF(R) proofing paper
product where there are many well established distributors in the printing and
graphic arts business.

         On September 22, 2000 we entered into an agreement with the Alameda
Company of Anaheim, California which grants them exclusive distribution rights
in the Western Hemisphere (North, South and Central America and the Caribbean)
for our UNIPROOF(R) proofing paper. As part of the arrangement, Alameda bought
all of our existing UNIPROOF(R) inventory for $798,100, and we are turning over
to them all of our existing customers within the above territory.

         The contract with Alameda covers the calendar years 2001 and 2002 and
is renewable annually thereafter provided they meet certain minimum product
purchase levels. To maintain exclusivity for 2001 and 2002 they must purchase
from us a total of 13,394,641 sq. ft ($3,348,660) in 2001 and 16,073,568 sq. ft.
($4,018,392) in 2002. Future minimums and prices are to be agreed upon.

         In the past we have marketed our KH-30(R) oil well cleaner primarily
through independent distributors and have followed the pattern in our
arrangement with ChemTech (a division of Smith International) pursuant to our
joint marketing agreement with them.

         Thus far, we have no special inventory requirements with respect to our
principal products. We are committed to our distributors to maintain a
reasonable supply of products as needed to meet their anticipated levels of
sales and, as our business grows we will have to maintain higher levels of
inventory. We have been able to shift some portion of the inventory requirement

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for our UNIPROOF(R) proofing paper to the Alameda Company. Our five largest
customers accounted for $3,206,465 (92%) and our largest customer (Alameda)
accounted for $1,717,190 (49%) of our total fiscal year 2001 revenues of
$3,482,915.

         All of our products up to this point are sold domestically in US
dollars and, therefore, we have had no foreign currency fluctuation risk.

PARTICULAR CIRCUMSTANCES RELATED TO THE MANUFACTURE AND SALE OF THE COMPANY'S
PRODUCTS

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

         The Company is not responsible for any environmental expenditures with
respect to the manufacturing of its products. First of all, the chemical
products on which the Company concentrates are generally "environmentally-safe"
products in that they are low in toxicity and rank high in biodegradability.
Secondly, any environmental issues involved in manufacturing are the
responsibility of the blending facilities, provided they receive adequate and
accurate information from the Company as to the constituents of the chemicals
involved.

         Currently, the photosensitive coating for the Company's UNIPROOF(R)
proofing paper is applied by an independent coater who is bound by a
confidentiality agreement which obligates the recipient not to disclose or use
confidential information of the Company. We believe this facility has the
capacity to meet our production needs for the foreseeable future and also meets
all environmental manufacturing restrictions now or expected to be enacted.

RISKS ASSOCIATED WITH CONCENTRATION OF CUSTOMERS AND SUPPLIERS

         As stated above, even though the Company receives its raw materials
from a limited number of suppliers, it believes that the materials are not
unique and can be obtained from other sources. All of the Company's UNIPROOF(R)
proofing paper is manufactured at one location. This does create a certain
degree of risk in the event that something should happen to curtail production
at that location. However, the Company has chosen to limit production sources
for UNIPROOF(R) because of the confidential nature of the formulation for the
photosensitive coating. The Company believes that the services of this one
facility can be duplicated by others. In our opinion, the need for a contract
with the coater is obviated by the coater's clear economic benefit from
continuing to provide services to us. The Company is more concerned about a
precipitous event, such as damage to the coater's facility which could result in
an interruption of UNIPROOF(R) production. The Company believes that alternate
coating sources do exist and that the coater could be replaced, albeit with at
least some interruption in production flow.

         There were in the fiscal year ended March 31, 2001 four major customers
for the Company's products: The Alameda Company (49% of revenues); International
Film Distributors (32%), Hennigan Graphics, (4%) for the Company's graphic arts
(UNIPROOF(R)) products, and ChemTech (4%) for the Company's KH-30(R) oil well
cleaning product. The Company believes that these customers can be replaced if
they were to cease to act as distributors, although the arrangement with
ChemTech for the sale of KH-30(R) is viewed as particularly advantageous by the
Company. Most of the graphic arts dealers are well established companies and
create little risk as to non-payment. By virtue of the contract signed on
September 22, 2000 the Company expects that the Alameda Company will become the
largest customer for the Company's Graphic Arts products.

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EMPLOYEES

         At March 31, 2001, the Company employed ten persons and had available
the services of five others 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 the Company to manufacture or market one or more of the
Company's products.

         None of the Company's employees is represented by a union. The Company
considers its relations with its employees to be good.

RESEARCH AND DEVELOPMENT

         All of the Company's principal products are fully developed and ready
for market. This is the result of research and development expenditures
averaging in excess of $250,000 per year over the last three fiscal years. The
Company has had available the services of two research chemists and one
production chemist, as well as two petroleum geologists, to aid in the
development of its 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.

BACKLOG

         Our order backlog both at the beginning of the last fiscal year and at
the end of such year was insignificant as we generally ship product as orders
are received.

COMPETITION

         With respect to all of our specialty chemical products, we compete
directly or indirectly with other producers of products with similar uses most
of which are more established companies and have greater resources than we have.
Generally, we compete with others by offering lower prices and better service.
However, our KH-30(R) and AD-30 cleaners are more expensive, and with these
products we have to compete by emphasizing product effectiveness and
environmental safety.

         With respect to our formulations which are proprietary, as described
above, we have attempted to patent our KH-30(R) oil well cleaner in the
principal oil producing countries world-wide. We believe the basic patent to be
strong and that it 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(R) proofing paper, and intend to continue to do so in the future.
However, we recognize that intellectual property rights provide less than
complete protection. To the best of our knowledge no one else is currently
producing a product similar to KH-30(R).

         In the case of our UNIPROOF(R) proofing paper, our principal
competition is E.I. duPont de Neumours and Co. which controls in excess of 95%
of the U.S. proofing paper market of $80-$100 million per year. Currently we
have been able to compete with duPont in terms of better prices and service. We
believe the market will welcome an alternative to duPont and we plan to continue
our current marketing practices.

         In addition to applying for patent protection on our KH-30(R) product,
we have also undertaken to register "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 "Bye Bye
Barnacles" product in those jurisdictions where we deem such protection to be
beneficial.

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ITEM 2.  PROPERTIES

         As of March 31, 2001, the Company had $96,695 in cash, inventory of
$121,753, receivables of $970,433, patents valued at $139,511 and other assets
totaling $1,585, as listed on its balance sheet. It rents 9,600 sq. feet of
space at 600 Meadowlands Parkway, Secaucus, New Jersey 07094 at a monthly rent
of $7,720. The Company uses independent non-affiliated contract chemical
blending and manufacturing facilities in various locations around the United
States for the manufacture of its products. The Company contracts the production
of many of its products to independent manufacturers and blenders and its
products are therefore produced at the manufacturing facilities of such
entities.

ITEM 3.  LEGAL PROCEEDINGS.

         In the opinion of management there are no material legal proceedings in
process against the Company and none are threatened.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year ended March 31, 2001.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below are the names, ages, titles with United Energy, and
present and past positions of the persons currently serving as executive
officers of United Energy.

<TABLE>
<CAPTION>
                                            HAS BEEN
                                            OFFICER
NAME                       AGE              SINCE             POSITION OR OFFICE
----                       ---              -----             ------------------
<S>                        <C>              <C>               <C>
Ronald Wilen               63               1995              President and Chief Executive Officer

Robert Seaman              59               1995              Executive Vice President and Chief Financial Officer
</TABLE>

RONALD WILEN

         Since October 1995 Mr. Wilen has been primarily engaged as the chief
executive officer of United Energy Corp., serving as its President and as one of
its two directors. Mr. Wilen has also served during the period as the President
of Nor Industries, Inc., the principal subsidiary of United Energy. In the
period from April 1995 through October 1995 Mr. Wilen was primarily engaged in
overseeing the development of the assets which are now part of United Energy,
assembling the team of administrative and technical personnel to run United
Energy and in arranging for the acquisition of the Company which took place in
October 1995.

         Mr. Wilen spends 100% of his business time on the affairs of United
Energy.

ROBERT SEAMAN

         Since October 1995 Mr. Seaman has served as the Executive Vice
President, Secretary/Treasurer and General Counsel of United Energy Corp. From
April through October of 1995, Mr. Seaman assisted in the acquisition of United
Energy.

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         For the same five-year period Mr. Seaman has continued to serve a
number of clients as a private corporate attorney practicing from an office at
515 Madison Ave. New York, NY 10022 as a member of the firm of Seaman & Wehle,
attorneys. Mr. Seaman has been a practicing attorney in New York. since 1969,
primarily in the areas of corporate, securities and commercial law. Mr. Seaman
spends approximately 40% of his business time on the affairs of United Energy.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         As of June 15, 2001, there were 468 record holders of the Company's
common stock and there were 15,830,270 shares outstanding. In addition, as of
such date, there were a further 750,000 shares held in the name of the Company
as treasury shares which were pledged as partial collateral for the Company's
$1,000,000 credit line with Fleet Bank. The Company has not previously declared
or paid any dividends on its common stock and does not anticipate declaring any
dividends in the foreseeable future. Moreover, the Company's credit line with
Fleet Bank does not allow the payment of dividends.

         The following table shows United Energy's high and low bid prices as
quoted on the NASD Bulletin Board by quarter during each of the Company's last
three fiscal years and on the OTC "Pink Sheets" since May 3, 2000. Such quotes
reflect inter-dealer prices, without retail markup, mark-down or commissions and
may not represent actual transactions. This information below was obtained from
those organizations, for the respective periods.

<TABLE>
<CAPTION>
       FISCAL YEAR                 QUARTER                                     HIGH BID                   LOW BID
<S>        <C>                     <C>                                         <C>                        <C>
           1999                    First Quarter                               3.5625                     2.3125
                                   Second Quarter                              2.96875                    1.3125
                                   Third Quarter                               2.9375                     0.84375
                                   Fourth Quarter                              2.5                        1.4375
           2000                    First Quarter                               1.875                      1.125
                                   Second Quarter                              4.0625                     1.75
                                   Third Quarter                               2.9375                     1.71875
                                   Fourth Quarter                              3.531                      1.5
           2001                    First Quarter                               3.875                      1.75
                                   Second Quarter                              2.70                       1.40
                                   Third Quarter                               3.0                        1.02
                                   Fourth Quarter                              1.81                       1.02
           2002                    First Quarter*                              1.11                        .75
</TABLE>

*Through   6/15/01

         The Company's common stock has been traded on the NASD Bulletin Board
since 1995 under the symbol UNRG. On May 3, 2000 the Company's common stock
began trading on the over-the-counter market. The change to the OTC ("pink
sheets") market has disturbed many stockholders who fear their liquidity will be
diminished. Thus far, the impact on the Company's ability to attract capital has
been minimal. On June 15, 2001, the Company's stock price closed at $.81 per
share. The aggregate market value of the stock held by non-affiliates on June
15, 2001 was $9,358,778. For information concerning principal shareholders,
please see "Security Ownership of Certain Beneficial Owners and Management".

         There have been no sales of unregistered securities during the fiscal
year ended March 31, 2001. Management believes that of those persons or entities
which acquired restricted shares within the last two years, approximately
380,000 of such shares which remain unsold are capable of being sold immediately
under Rule 144. In addition, management is currently able to utilize

                                                                              10
<PAGE>   11
Rule 144 to effect immediate sales of up to 316,604 shares, although management
currently has no intention of making any such sales.

ITEM 6.  SELECTED FINANCIAL DATA.

         The following selected consolidated financial information for the
fiscal years ended March 31, 1997, 1998 (revised), 1999, 2000 and 2001 is
derived from our audited financial statements and the notes thereto. The
statement of operations information for the three-year period ended March 31,
2001 and the balance sheet information as of March 31, 2000 and 2001 is derived
from the consolidated financial statements of United Energy Corporation, which
have been audited by Arthur Andersen LLP, independent public accountants, and
are included elsewhere in this annual report on Form 10-K. The statement of
operations information for the years ended March 31, 1997, and the balance sheet
information as of March 31, 1997 and 1998 (revised), is derived from the
consolidated financial statements of United Energy Corporation, which have been
audited by Jones, Jensen and Company, independent public accountants, and which
are not included in this report. The information presented below should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the audited consolidated financial statements and
accompanying notes included elsewhere.

       FISCAL YEAR ENDED MARCH 31, 2001, 2000, 1999, 1998 (REVISED), 1997

<TABLE>
<CAPTION>
            CONSOLIDATED                                                                        (REVISED)
    STATEMENT OF OPERATIONS DATA                         2001           2000        1999          1998             1997
    ----------------------------                         ----           ----        ----          ----             ----
<S>                                                   <C>          <C>           <C>           <C>             <C>
Operating Revenues...............................      3,482,915    2,585,556     1,191,583     1,942,142       1,172,551
Cost of goods sold...............................      2,325,652    1,368,727     1,115,779     1,729,968         694,706
Gross profit.....................................      1,157,263    1,216,829        75,804       212,174         477,845
Selling, G&A.....................................      1,052,790    1,051,494       774,056       766,931         727,796
Interest income (expense), net...................         10,236       (2,424)        3,402       (14,427)         (3,159)
Income (loss) before discontinued operations.....       (154,316)     145,445      (702,284)     (571,616)       (256,724)
(Loss) income from discontinued operations.......              0            0       (35,333)      279,301        (480,321)
Income tax.......................................              0            0             0             0               0
Net income (loss)................................       (154,316)     145,445      (737,617)     (292,315)       (737,045)
Retained earnings (deficit)beginning.............     (1,899,142)  (2,044,587)   (1,306,970)   (1,014,655)       (277,610)
Retained Earnings (deficit) end                       (2,053,458)  (1,899,142)   (2,044,587)   (1,306,970)     (1,014,655)
Earnings (loss) per share                                  (0.01)        0.01         (0.05)        (0.02)          (0.06)
Cash dividends paid..............................              0            0             0             0               0
</TABLE>

<TABLE>
<CAPTION>
                                        AS OF MARCH 31, 2001, 2000, 1999, 1998, 1997

            CONSOLIDATED
         BALANCE SHEET DATA                              2001         2000          1999         1998             1997
         ------------------                              ----         ----          ----         ----             ----
<S>                                                  <C>          <C>            <C>          <C>            <C>
Total working capital............................        172,118      318,651        41,448       199,142        (129,733)
Total assets.....................................      1,411,699    1,314,843       565,749       569,762         257,835
Total liabilities................................      1,016,763      765,591       289,232       301,628         342,686
Total long term debt.............................              0            0             0             0               0
Total stockholder's equity.......................        394,936      549,252       276,517       268,134         (84,851)
Total shares outstanding.........................     15,830,270   15,830,270    15,681,270    15,149,936      14,408,616
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

          The following management's discussion and analysis of financial
condition and results of operations should be read in conjunction with our
consolidated financial statements and notes to those statements appearing
elsewhere in this report on Form 10-K. In addition to historical information,
the management's discussion and analysis of financial condition and results of
operations as well as other parts of this report on Form 10-K may contain
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the forward-looking
statements.

                                                                              11
<PAGE>   12
OVERVIEW

          During fiscal 1998, we changed our business to focus on
environmentally-safe, specialty chemicals and closed our printing equipment
division. Also during fiscal 1998, we had substantial revenues from a graphic
arts distributorship. This activity added approximately $1,000,000 to our fiscal
1998 revenues but produced very little profit. We ceased to act as a distributor
in 1999 when we began to manufacture our UNIPROOF(R) proofing paper. We are now
selling this product to many of the customers we had serviced as a graphic arts
distributor. During the Company's four fiscal years ended March 31, 1996, 1997,
1998 and 1999, the efforts to achieve profitable operations through the sale of
pressroom equipment, and research and development and initial marketing expenses
for the Company's current product lines resulted in cumulative losses totaling
$2,044,587. During fiscal year 2000, the Company achieved a net income of
$145,445. During the fiscal year ended March 31, 2001, the Company continued to
have positive operating income. However, the unusually high professional fees
during that year, primarily related to the preparation and filing of materials
with the Securities and Exchange Commission in order to become a 1934 reporting
company and an unusual litigation settlement and related litigation costs
totaling $231,981, combined to produce a net loss for the year of $154,316.

         The Company's business plan is to use UNIPROOF(R) proofing paper sales
to provide the cash flow to support world wide marketing efforts for its
KH-30(R) oil well cleaner and, to a lesser extent, the other specialty chemical
products developed by the Company which are described above.

         In order to provide working capital to build UNIPROOF(R) sales, in June
2000 the Company entered into a $1,000,000 Line of Credit Agreement with Fleet
Bank, N.A., in June 2000 the material terms of which are described below under
"Liquidity and Capital Resources."

         On September 22, 2000 the Company entered into an agreement with the
Alameda Company of Anaheim, California which grants them exclusive distribution
rights in the Western Hemisphere (North, South and Central America and the
Caribbean) for UNIPROOF(R) proofing paper. As part of the arrangement Alameda
bought all existing UNIPROOF(R) inventory for $798,100. The Company is turning
over to Alameda all existing customers within the above territory.

         The contract with Alameda covers the years 2001 and 2002 and is
renewable annually thereafter provided they meet certain minimum product
purchase levels. To maintain exclusivity for 2001 and 2002 they must purchase a
total of 13,394,641 sq. ft ($3,348,660) in 2001 and 16,073,568 sq. ft.
($4,018,392) in 2002. Future minimums and prices are to be agreed upon.

          We believe the Alameda agreement will prove beneficial to the Company
inasmuch as it requires certain minimum sales levels in order to maintain
exclusivity within the territories covered. In addition, since pursuant to the
terms of the agreement we manufacture and ship to Alameda's order, our inventory
requirements have been reduced because we have shifted a portion of that
carrying cost to Alameda . Because our relationship with Alameda is relatively
new, we do not wish to make a prediction as to future sales levels until such
time as there is demonstrated historical support for such a statement.

         Our largest customers accounted for 49%, 41% and 23% of revenues in
each of the fiscal years ended March 31, 2001, 2000 and 1999. Our second largest
customers accounted for 32%, 9.5% and 1.7%, respectively, in each of such years.
No other customer accounted for more than 10% of our revenues during the same
periods. Please see page 7 of this Form 10-K for a listing of our recent
principal customers. Also please note that the recent contract with the Alameda
Company will likely continue to have the effect of making them our largest
customer.

                                                                              12
<PAGE>   13
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

          In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. SFAS No. 133 (as
amended by SFAS No. 137) is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. The Company does not enter into derivative
instruments or engage in hedging activities as defined in SFAS No. 133.
Accordingly, management has determined that adoption of this standard has had
no impact on the Company's financial statements.

          During March 2000, the FASB issued interpretation No. 44, "Accounting
for Certain Transactions Involving Stock Compensation," which clarifies the
application of APB Opinion No. 25, regarding (a) the definition of an employee
for purposes of applying APB Opinion No. 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. Interpretation No. 44 is effective on July 1,
2000. Certain events as defined by Interpretation No. 44, may require earlier
consideration if they occurred after December 14, 1998 or January 12, 2000,
depending on the event, although no financial statement effect would be
recognized until July 1, 2000. The effects of applying Interpretation No. 44 are
recognized prospectively. The Company has reviewed its stock compensation events
and does not believe that Interpretation No. 44 has had a material impact on its
financial position or its results of operations.

          In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No.
101, "Revenue Recognition in Financial Statements." SAB No. 101 expresses the
views of the SEC staff in applying generally accepted accounting principles to
certain revenue recognition issues. In June 2000, the SEC issued SAB No. 101B to
defer the effective date of the implementation of SAB No. 101 until the fourth
quarter of fiscal 2000. The Company is currently evaluating the impact of
adopting this SAB, but does not believe that this SAB will have a material
impact on its financial position or its results of operations.

          The Company has not provided any current or deferred US federal, state
or foreign income tax provision or benefit for any of the periods presented
because we have experienced operating losses since inception. Utilization of our
net operating loss carryforwards, which begin to expire in 2010, may be subject
to certain limitations under Section 382 of the Internal Revenue Code of 1986,
as amended and other limitations under state tax laws. We have provided a full
valuation allowance on the deferred tax asset, consisting primarily of net
operating loss carryforwards, because of uncertainty regarding its reliability.

RESULTS OF OPERATIONS

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 2001 TO FISCAL YEAR ENDED MARCH 31,
2000

          SALES

          Sales increased to $3,482,915 for the year ended March 31, 2001 from
$2,585,556 for the year ended March 31, 2000. The $897,359, or 35%, increase in
sales was derived principally from sales of our UNIPROOF(R) proofing paper. Our
largest two customers accounted for 81 % of revenues for the year ended March
31, 2001 compared with 50% for the year ended March 31, 2000.

          COST OF SALES

          Cost of sales increased to $2,325,652 or 67% of sales, for the year
ended March 31, 2001 from $1,368,727 or 53% of sales, for the year ended March
31, 2000. The higher percentage in fiscal 2001 was primarily due to the slightly
lower average UNIPROOF(R) selling prices under our arrangement with the Alameda
Company.

                                                                              13
<PAGE>   14
          OPERATING COSTS AND EXPENSES

          General and Administrative Expenses. General and administrative
expenses increased to $1,052,790, or 30% of sales, for the year ended March 31,
2001 from $1,051,495 or 41% of sales, for the year ended March 31, 2000. The
percentage decrease was due primarily to a higher level of sales as compared to
the relatively stable level of expenses.

         Interest Expense, Net of Interest Income. Interest expense and interest
income were not significant in either fiscal year.

          Net Income (Loss). For the year ended March 31, 2001, we had a net
loss of $154,316, as compared to income of $145,445 or 6% of sales for the year
ended March 31, 2000. The fiscal 2001 loss is the result of several factors. The
primary factor was that we incurred unusual non-recurring costs related to our
filings with the Securities and Exchange Commission in order to become a 1934
Act Reporting Company, primarily in the areas of unusually high accounting and
filing fees. The second factor contributing to the loss was a litigation
settlement and associated legal costs arising out of a lawsuit to which the
Company believed it had substantial defenses but elected to settle because of
the prospect of substantial additional legal defense costs. Together, these
unusual costs amounted to more than $350,000.

RESULTS OF OPERATIONS

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 2000 TO FISCAL YEAR ENDED MARCH 31,
1999

          SALES

          Sales increased to $2,585,556 for the year ended March 31, 2000 from
$1,191,583 for the year ended March 31, 1999. The $1,393,973, or 117%, increase
in sales was derived principally from sales of our UNIPROOF(R) proofing paper,
which was introduced in June 1999 and accounted for $1,724,695 in revenues. Our
three largest customers accounted for 59 % of revenues for the year ended March
31, 2000 compared with 42% for the year ended March 31, 1999.

          COST OF SALES

          Cost of sales increased to $1,368,727 but dropped to 53% of sales, for
the year ended March 31, 2000 from $1,115,779 or 94% of sales, for the year
ended March 31, 1999. This was primarily due to production and sale of the
proofing paper, which has a higher gross margin relative to our other products.

          OPERATING COSTS AND EXPENSES

          General and Administrative Expenses. General and administrative
expenses increased to $1,051,495, or 41% of sales, for the year ended March 31,
2000 from $774,056, or 65% of sales, for the year ended March 31, 1999. This
increase was attributable primarily to the hiring of additional employees and
outside consultants.

          Interest Expense, Net of Interest Income. Interest expense and
interest income were not significant in either fiscal year.

          Net Income (Loss). For the year ended March 31, 2000, our net income
totaled $145,445, or 6% of sales, as compared to a loss of $737,617 for the year
ended March 31, 1999. This increase is the result of improvements in sales
volume and production of higher margin products, in particular the UNIPROOF(R)
proofing paper. The loss from discontinued operations was zero in fiscal 2000
compared to $35,333 in fiscal 1999 Excluding the loss from discontinued
operations of $35,533 in fiscal 1999 would have resulted in a net loss from
continuing operations in such year of $702,284.

                                                                              14
<PAGE>   15
COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1999 TO FISCAL YEAR ENDED MARCH
31,1998

          SALES

          Sales decreased to $1,191,583 for the year ended March 31, 1999 from
$1,942,142 for the year ended March 31, 1998. The $750,559, or 39%, decrease in
sales was mainly attributed to decreased sales of printing equipment, due to the
closing of that division. Our three largest customers accounted for 42% of
revenues for the year ended March 31, 1999 compared with 68% for the year ended
March 31, 1998.

          COST OF SALES

          Cost of sales for the year ended March 31, 1999 were $1,115,779 or 94%
of sales, compared to $1,729,968 for the year ended March 31, 1998, or 89% of
sales. The decrease in amount resulted primarily from the cessation of equipment
manufacturing, and the increase in percentage of sales occurred because of
reduced fiscal 1999 revenues.

          OPERATING COSTS AND EXPENSES

          General and Administrative Expenses. General and administrative
expenses increased to $774,056, or 65% of sales, for the year ended March 31,
1999, from $766,931, or 39% of sales, for the year ended March 31, 1998. This
increase of $7,125 stemmed primarily from increased research and development and
the Company's efforts to introduce its KH-30(R) oil well cleaner. The increase
in percentage of sales was due primarily to lower sales while these activities
were occurring.

          Interest Expense, Net of Interest Income. Interest expense and
interest income were not significant in either fiscal year.

          Net Loss. For the year ended March 31, 1999, our net loss totaled
$737,617 as compared to a net loss of $292,315 for the year ended March 31,
1998. This increase in the amount of loss can be attributed to lower overall
sales and to increased expenditures in fiscal 1999 related to efforts to
introduce KH-30(R) and development expenses for the UNIPROOF(R) proofing paper.
The fiscal 1999 loss from discontinued operations was $35,333 compared with a
fiscal 1998 gain of $279,301. Excluding the loss from discontinued operations in
fiscal 1999 would have resulted in an overall loss in such year from continuing
operations of $702,284. The loss from continuing operations would have been
$571,616 for fiscal 1998 except for the extraordinary gain of $325,000
experienced in fiscal 1998 due to the cancellation of a portion of the
consideration initially issued for the acquisition of Nor.

LIQUIDITY AND CAPITAL RESOURCES

          Since the acquisition of United Energy in 1995, we have financed our
operations through loans and equity contributions from principals (namely Mr.
Ronald Wilen and Mr. Robert Seaman), and from third parties supplemented by
funds generated by our business. As of March 31, 2001, we had $96,695 in cash,
accounts receivable of $970,433 and inventories of $121,753.

          Net Cash Provided by Financing Activities. Net cash generated from
financing activities decreased to $(406) for the year ended March 31, 2001 from
$356,271 for the year ended March 31, 2000, a net decrease of $356,677. The
higher amount in 2000 had been needed to cover increased accounts receivable and
increased inventory over the prior year.

          Accounts payable and accrued expenses increased $251,578 to $636,754
at fiscal year end 2001 from $385,176 in 2000. However, in 2001, due to our
expanding business, sales increased to approximately $3,482,915 in 2001 from
$2,585,556 in 2000.

                                                                              15
<PAGE>   16
          At March 31, 2001, accounts receivable increased to $970,433, a
$524,484, or 118% increase, over the balance at March 31, 2000 of $445,949. Most
of the increase was related to the increased sales volume of our UNIPROOF(R)
proofing paper during fiscal 2001. Also, there were a number of large orders
shipped in the fourth quarter of fiscal 2001 for which payment had not been
received at fiscal year end.

          Inventories at March 31, 2001 were $121,753, a decrease of $470,532
from the balance of $592,285 at March 31, 2000. Most of the decrease was due
shipments to the Alameda Company just before fiscal year end.

          Our capital requirements have grown, consistent with the growth of our
operations and staffing. We expect our capital requirements to continue to
increase in order to expand and maintain our growth and to become a competitive
force in the proofing paper and specialty chemical industries. Until 2001 we
have incurred continuing significant negative cash flows from operations.
Continued operations have relied primarily on financing activities. Our market
shares in these markets are not currently quantifiable, although we believe them
to be very small. We believe that the capital currently available to us will be
sufficient to sustain our current level of operations. However, to be able to
grow and to take advantage of anticipated opportunities we will need additional
capital. We believe such capital will be available to us on reasonable terms.

          In June 2000, the Company obtained a $1,000,000 line of credit from
Fleet Bank, N.A. Borrowings under the credit line bearing interest at the bank's
prime rate, payable monthly. Amounts owed under the credit line are subject to
repayment on demand at any time and for any reason. Borrowings under the line
must be reduced to zero for a period of 30 consecutive days in any twelve month
period. Amounts borrowed under the credit line are secured by the following:

          (i) A continuing security interest in all accounts and accounts
receivable, contracts, contract rights, general intangibles, instruments,
documents, chattel paper, all obligations, in whatever form, owing to the
Company and all rights in the merchandise or services which gave rise to any of
the foregoing, whether now existing or hereafter arising, now or hereafter
received by or belonging or owing to the Company and in the proceeds thereof,
and in all goods including (a) all inventory, including raw materials, work in
process, and other tangible personal property held for sale or lease or
furnished or to be furnished under contracts of service or used or consumed in
the Company's business, wherever located, whether now existing or hereafter
arising, now or hereafter received by or belonging to the Company, and in the
proceeds and products thereof, and (b) all machinery, equipment, furnishings,
fixtures and other tangible personal property (with all accessions thereto) used
or bought for use primarily in business, wherever located, whether now existing
or hereafter arising, now or hereafter received by or belonging to the Company,
and in the proceeds and products thereof, including without limitation tax
refunds and insurance proceeds on any of the foregoing.

          (ii) a pledge of 750,000 shares of the Company's common stock held in
escrow and

          (iii) the guarantee of a shareholder of the Company.

          The credit line also carries certain income and balance sheet tests
that the Company must meet quarterly and annually. The several documents setting
forth the Company's rights and obligations with respect to the credit line are
filed as exhibits to our registration statement on Form 10 and readers are
referred to them for more complete information.

          To date, the Company has borrowed a maximum of $160,000 under the
credit line for working capital to fill orders for its UNIPROOF(R) proofing
paper. This amount was subsequently repaid. Any projections of future cash needs
and cash flows are subject to substantial uncertainty. We believe that our
current cash, cash equivalents and available borrowings under our credit
facility will be sufficient to meet our working capital and capital expenditures
requirements for at least the next twelve months. There were no amounts due at
March 31, 2001 and the full line was available to use.

          Furthermore, the increasing revenues from the Company's UNIPROOF(R)
proofing paper have reduced the need for outside financing, except to the extent
that additional working capital is required to support such increasing sales.
One of the beneficial effects of the Alameda contract is to diminish the need
for the Company to carry ever higher levels of UNIPROOF(R) inventory, thereby
reducing its working capital needs.

                                                                              16
<PAGE>   17
REPORTING BY SEGMENTS

          The Company considers itself to be primarily a specialty chemicals
company because of its decision in fiscal 1998 to close its printing equipment
division and focus primarily on the sale of its KH-30(R) oil well cleaner and
related products. However, a significant portion of its revenues has been
related to the printing and the graphic arts industry. This will continue to be
the case in the future if sales of our UNIPROOF(R) proofing paper continue to
increase. Also, during the past three fiscal years, the Company has derived
additional revenues by acting as a graphic arts products distributor.

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

<TABLE>
<CAPTION>
                                                                  SPECIALTY
              FISCAL YEAR             GRAPHIC ARTS                CHEMICALS
<S>                                <C>                          <C>
                  1999             $         890,458            $     301,125
                  2000                     1,970,701                  614,855
                  2001                     3,190,824                  292,091
</TABLE>

STATEMENT REGARDING INFLATION

          The Company does not believe that inflation in the cost of its raw
materials has had or will have any significant negative impact on its operations
in the past or in the future.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The Company does not engage in any transactions involving financial
instruments or in hedging transactions with respect to its operations.

                                                                              17
<PAGE>   18
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Consolidated financial statements as of March 31, 2001 and 2000, and
for the fiscal years ended March 31, 2001, 2000 and 1999, are included as part
of this annual report on Form 10-K.

Certain quarterly information is presented below.

<TABLE>
<CAPTION>
                                                                Unaudited Quarterly Financial Data
                                                                     Consolidated Statements
                                                                          of Operations
                                                                 Fiscal Year ended March 31, 2001

                                             1st Quarter       2nd Quarter       3rd Quarter       4th Quarter       Fiscal Year
                                             -----------       -----------       -----------       -----------       -----------
<S>                                         <C>               <C>               <C>               <C>               <C>
Operating revenues                          $    836,332      $    736,763      $  1,281,608      $    628,212      $  3,482,915
Cost of goods sold                               546,330           524,896           894,717           359,709         2,325,652
Gross profit                                     290,002           211,867           386,891           268,503         1,157,263
General and administrative                       303,344           158,053           261,955           329,438         1,052,790
Depreciation and amortization                      4,385             4,385             4,385             3,417            16,572
Interest expense (income)                            934             3,995             3,945             1,361            10,236
Legal settlement                                      --                --                --          (231,981)         (231,981)
Income from continuing operations                (18,661)           45,434           116,606          (297,694)         (154,316)
Income tax                                            --                --                --                --                --
Net income (loss)                           $    (18,661)     $     45,434      $    116,606      $   (297,694)     $   (154,316)
Retained earnings (deficit), beginning      $ (1,899,142)     $ (1,917,803)     $ (1,872,369)     $ (1,755,763)     $ (1,899,142)
Retained Earnings (deficit), ending         $ (1,917,803)     $ (1,872,369)     $ (1,755,763)     $ (2,053,458)     $ (2,053,458)

Per share information:
Earnings (loss) per share -                 $      (0.01)     $       0.01      $       0.01      $      (0.01)     $      (0.01)
basic and diluted
Weighted average shares outstanding           15,830,270        15,830,270        15,830,270        15,830,270        15,830,270
Cash dividends paid                         $         --      $         --      $         --      $         --      $         --
</TABLE>

                                                                              18
<PAGE>   19

<TABLE>
<CAPTION>
                                                               Unaudited Quarterly Financial Data
                                                                     Consolidated Statements
                                                                          of Operations
                                                                    Fiscal Year ended March 31, 2000

                                            1st Quarter        2nd Quarter        3rd Quarter        4th Quarter           Year
                                            -----------        -----------        -----------        -----------           ----
<S>                                        <C>                <C>                <C>                <C>                <C>
Operating revenues                         $    502,616       $    394,633       $    868,747       $    819,560       $  2,585,556
Cost of goods sold                              280,261            203,676            496,857            387,934          1,368,727
Gross profit                                    222,355            190,957            371,890            431,626          1,216,829
General and administrative                      189,721            200,013            255,280            406,480          1,051,494
Depreciation and amortization                     4,553              3,915              4,555              4,443             17,466
Interest expense (income)                        (1,343)             1,002                993              1,772              2,424
Income from continuing operations                29,424            (13,973)           111,062             18,931            145,445
Income tax                                           --                 --                 --                 --                 --
Net income (loss)                          $     29,424       $    (13,973)      $    111,062       $     18,931       $    145,445
Retained Earning (deficit), beginning      $ (2,044,587)      $ (2,015,163)      $ (2,029,136)      $ (1,918,074)      $ (2,044,587)
Retained Earning (deficit), ending         $ (2,015,163)      $ (2,029,136)      $ (1,918,074)      $ (1,899,142)      $ (1,899,142)

Per share information:
Earnings (loss) per share -                $       0.01       $      (0.01)      $       0.01       $       0.01       $       0.01
basic and diluted
Weighted average shares outstanding          15,703,770         15,726,270         15,761,053         15,784,180         15,740,853
Cash dividends paid                        $         --       $         --                 --                 --                 --
</TABLE>


The unaudited quarterly data for the retained earnings (deficit)as filed with
our Form 10Q's for all periods differs from the unaudited quarterly data that is
shown above. The difference resulted from an adjustment in fiscal year 1998 that
was made to record a gain on the cancellation of 400,000 shares that were issued
in connection with the Nor acquisition. The gain of $325,000 has been accounted
for in our Form 10 Amendment Number 2 that was filed on May 25, 2001 with the
Securities and Exchange Commission. All balances for the retained earnings
(deficit) as shown above have been adjusted to reflect the gain accordingly.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         There have been no disagreements between the Company and our
accountants on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.

                                                                              19
<PAGE>   20
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


                        DIRECTORS AND EXECUTIVE OFFICERS



<TABLE>
<CAPTION>
                                                NAME & ADDRESS               AMOUNT OF AND NATURE
TITLE OF CLASS                                OF BENEFICIAL OWNER            BENEFICIAL OWNERSHIP        PERCENT OF CLASS*
<S>                                    <C>                                   <C>                         <C>
Common Stock                           Ronald Wilen                             3,570,600                 22.5%
                                       United Energy Corp.                      (Direct)
                                       600 Meadowlands Pkwy.
                                       Secaucus, N.J. 07094

Common Stock                           Robert L. Seaman                         1,861,627                 11.8%
                                       515 Madison Ave. (Direct)                (Direct)
                                       New York, NY 10022

Total of all shareholdings                                                      5,431,627                 34.3%
of greater than 5%
</TABLE>


          There are no arrangements known to the Company which could result in a
change of control of the Company.

          The following table shows the positions held by the Company's
executive officers and directors during the fiscal year ended March 31, 2001.
Directors are appointed 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.

<TABLE>
<CAPTION>
NAME                   AGE      POSITION                           HELD SUCH POSITIONS SINCE
<S>                    <C>      <C>                                <C>
Ronald Wilen            63      President,                                   1995
                                Director

Robert Seaman           59      Executive Vice President,                    1995
                                Secretary/Treasurer, Director
</TABLE>

There are no family relationships among Officers and/or Directors.

RONALD WILEN

         Since October 1995 Mr. Wilen has been primarily engaged as the chief
executive officer of United Energy Corp., serving as its President and as one of
its two directors. Mr. Wilen has also served during the period as the President
of Nor Industries, Inc., the principal subsidiary of United Energy. In the
period from April 1995 through October 1995 Mr. Wilen was primarily engaged in
overseeing the development of the assets which are now part of United Energy,
assembling the team of administrative and technical personnel to run United
Energy and in arranging for the acquisition of the Company which took place in
October 1995.

         Mr. Wilen spends 100% of his business time on the affairs of United
Energy.

                                                                              20
<PAGE>   21
ROBERT SEAMAN

         Since October 1995 Mr. Seaman has served as the Executive Vice
President, Secretary/Treasurer and General Counsel of United Energy Corp. From
April through October of 1995, Mr. Seaman assisted in the acquisition of United
Energy.

         For the same five-year period Mr. Seaman has continued to serve a
number of clients as a private corporate attorney practicing from an office at
515 Madison Ave. New York, NY 10022 as a member of the firm of Seaman & Wehle,
attorneys. Mr. Seaman has been a practicing attorney in New York since 1969,
primarily in the areas of corporate, securities and commercial law. Mr. Seaman
spends approximately 40% of his business time on the affairs of United Energy.

         Mr. Seaman serves on the boards of directors of several private,
non-public companies. Also, since January 1999 he has held the position of
President and Director of Quantitative Methods Corporation. Quantitative has a
class of securities registered under Section 15(d) of the Securities Exchange
Act and is publicly traded. Quantitative is an early development stage company
headquartered in Montreal, Canada which hopes to acquire and develop a portfolio
of emerging e-commerce companies. Mr. Seaman spends approximately 10% of his
business time on the affairs of Quantitative Methods.

         There are no family relationships among the directors and/or executive
officers of United Energy Corp. There are no persons other than Mr. Wilen and
Mr. Seaman who could be deemed either "promoters" or "controlling persons" with
respect to United Energy Corp.

ITEM 11. EXECUTIVE COMPENSATION

         During the three fiscal years ended March 31, 2001 the Company had no
arrangements for the remuneration of its officers and directors, except that
they were entitled to receive reimbursement for actual, demonstrable
out-of-pocket expenses, including travel expenses, if any, made on the Company's
behalf. The Company will pay compensation to the officers and directors elected
in 2001, if at all, at a rate yet to be determined by the board of directors.

         The following table sets forth the compensation, if any, and the nature
of such compensation, received from the Company by Mr. Wilen and Mr. Seaman, the
only two executive officers of the Company during each of the last three fiscal
years.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                            ANNUAL COMPENSATION                    LONG-TERM COMPENSATION
NAME                                                          OTHER                      SECURITIES                      ALL
AND                                                          ANNUAL    RESTRICTED        UNDERLYING                     OTHER
PRINCIPAL                  FISCAL                            COMPEN-      STOCK            OPTIONS          LTIP       COMPEN-
POSITION                    YEAR        SALARY     BONUS     SATION       AWARD             SARS           PAYOUTS     SATION
--------                    ----        ------     -----     ------       -----             ----           -------     ------
<S>                        <C>          <C>        <C>       <C>       <C>         <C>                     <C>         <C>
Ronald Wilen,..........    2001            0         0        (1)            0             750,000             0         0
   President
                           2000            0         0        (1)            0                0                0         0
                           1999            0         0        (1)            0                0                0         0
Robert Seaman,.........    2001            0         0                       0             750,000             0         0
Executive
   Vice President......    2000            0                    0            0                0                0
                           1999            0         0                       0                0                0         0
</TABLE>

         (1) The Company pays for an automobile used by Mr. Wilen under a
monthly lease of $450. It also pays medical insurance for Mr. Wilen at a rate of
$556.59 per month.

         On May 3, 1999 the Company adopted a comprehensive stock option plan
for its officers employees and consultants. Also, on May 3, 1999 the board of
directors of the Company acting in its capacity as the stock option committee
awarded options to purchase 750,000 shares of the Company's common stock to each
of Mr. Wilen and Mr. Seaman. The options so granted were

                                                                              21
<PAGE>   22
exercisable at a price of $1.50 per share (the closing price on the date of
grant) and were valid for a term of 10 years. However, none of such options were
exercised because the option plan was not approved by the shareholders by May 3,
2001.

         The Company expects to submit a substitute plan to the stockholders for
approval no later than September 30, 2001.

                         OPTIONS/SAR GRANTS IN LAST YEAR

<TABLE>
<CAPTION>
                           INDIVIDUAL GRANTS

                          NUMBER OF      PERCENT OF
                         SECURITIES    TOTAL OPTIONS/                                         POTENTIAL REALIZATION
                         UNDERLYING         SARS                                              VALUE AT ASSUMED RATES OF
                          OPTIONS/       GRANTED TO        EXERCISE OF                        STOCK PRICE APPRECIATION
                            SARS          EMPLOYEES        BASE PRICE     EXPIRATION                  FOR
     NAME                  GRANTED     IN FISCAL YEAR        ($/SH)          DATE                 OPTION TERM
                                                                                           5% ($)              10% ($)
                                                                                           ------              -------
<S>                      <C>           <C>                 <C>            <C>              <C>                 <C>

Ronald Wilen-  none

Robert Seaman-  none
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

          The following table sets forth, as of June 1, 2001, information
regarding the beneficial ownership of shares by each person known by the Company
to own more than five percent of the outstanding shares.

                       HOLDERS OF GREATER THAN 5% OF CLASS


<TABLE>
<CAPTION>
                                              NAME & ADDRESS               AMOUNT OF AND NATURE
TITLE OF CLASS                              OF BENEFICIAL OWNER            BENEFICIAL OWNERSHIP        PERCENT OF CLASS*
--------------                              -------------------            --------------------        -----------------
<S>                                    <C>                                 <C>                         <C>
Common Stock                           Ronald Wilen                             3,570,600                 22.5%
                                       United Energy Corp.                      (Direct)
                                       600 Meadowlands Pkwy.
                                       Secaucus, N.J. 07094

Common Stock                           Robert L. Seaman                         1,861,627                 11.8%
                                       515 Madison Ave. (Direct)                (Direct)
                                       New York, NY 10022

Total of all shareholdings                                                      5,431,627                 34.3%
of directors and officers
</TABLE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         During the last fiscal year no officer, director, nominee for election
as a director or associate of such officer, director or nominee is, or was,
indebted to the Company or engaged in any other transactions with the Company.
No such transactions are proposed.

                                                                              22
<PAGE>   23
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         The financial statement schedules and exhibits filed as a part of this
annual report on Form 10-K are as follows:

         FINANCIAL STATEMENT SCHEDULES      NONE

         EXHIBITS:         ALL OF THE EXHIBITS LISTED BELOW ARE INCORPORATED BY
                           REFERENCE AS FOLLOWS.

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            ITEM
<S>              <C>
(3)              (I)        Articles of Incorporation*

                 (II)       By-Laws*

(4)              Instruments Defining the Rights of Security Holders

                 (a)        Articles of Incorporation: Articles Fourth, Fifth
                            and Seventh*

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

                 (c)        Form of Stock Certificate of the Company*

(10)             Material Contracts

                 (a)        1999 Comprehensive Stock Option Plan*

                 (b)        Distribution Agreement and Option Agreement with
                            International Research and Development dated August
                            25, 1999*

                 (c)        Joint Marketing Agreement with ChemTech (a Division
                            of Smith International) dated March 2, 2000*

                 (d)        Credit Line Agreement (with related documents) with
                            Fleet Bank, N.A entered into during June 2000**

                 (e)        Distribution Agreement with the Alameda Company
                            dated September 22, 2000**

(11)             Statement re Computation of Per Share Earnings*

(12)             Statement re Computation of Ratios (not applicable)

(13)             Annual Report to Shareholders (no such report has yet been
                 produced)
</TABLE>

                                                                              23
<PAGE>   24
<TABLE>
<S>              <C>
(16)             Letter re Change in Certifying Accountant*

(18)             Letter re Accounting Principles (not applicable)

(21)             List of Subsidiaries**

                 *filed with original Form 10 on June 20, 2000.
                 **filed with Amendment No.1 to Form 10 on December 15, 2000
</TABLE>



         REPORTS ON FORM 8-K:        NONE

                                                                              24
<PAGE>   25
                                   SIGNATURES

         Pursuant to the requirements of Sections 12 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 CORPORATION
--------------------------------------------------------------------------------
                                  (Registrant)

By                \s\ Ronald Wilen                           6/22/01
         -----------------------------------------------------------------------
         RONALD WILEN, President                             Date


By                \s\ Robert L. Seaman                       6/22/01
         -----------------------------------------------------------------------
         ROBERT L. SEAMAN, Principal Financial Officer       Date


         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.


                  \s\ Ronald Wilen                           6/22/01
         -----------------------------------------------------------------------
         RONALD WILEN, Director                              Date



                  \s\ Robert L. Seaman                       6/22/01
         -----------------------------------------------------------------------
         ROBERT L. SEAMAN, Director                          Date


                  \s\ Reginald L. Babcock                    6/22/01
         -----------------------------------------------------------------------
         REGINALD L. BABCOCK, Director                       Date

                  \s\ Martin Rappaport                       6/22/01
         -----------------------------------------------------------------------
         MARTIN RAPPAPORT, Director                          Date



                  \s\ Thomas F. Spencer                      6/22/01
         -----------------------------------------------------------------------
         THOMAS F. SPENCER, Director                         Date

                                                                              25
<PAGE>   26

UNITED ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2001 AND 2000
TOGETHER WITH AUDITORS' REPORT


                                                                              26
<PAGE>   27
UNITED ENERGY CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                              PAGE
                                                                              ----

<S>                                                                       <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS................................      F-2

CONSOLIDATED FINANCIAL STATEMENTS:
   Consolidated Balance Sheets as of March 31, 2001 and 2000............      F-3
   Consolidated Statements of Operations for the Years Ended
     March 31, 2001, 2000 and 1999 .....................................      F-4
   Consolidated Statements of Stockholders' Equity for the Years Ended
      March 31, 2001, 2000 and 1999.....................................      F-5
   Consolidated Statements of Cash Flows for the Years Ended
     March 31, 2001, 2000 and 1999......................................      F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..............................   F-7-F-16

SCHEDULE II - Schedule of Valuation and Qualifying Accounts ............  Schedule II
</TABLE>


                                                                             F-1
<PAGE>   28
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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, 2001 and
2000, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall 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 financial position of United Energy
Corporation and subsidiaries as of March 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years then ended, in
conformity with accounting principles generally accepted in the United States.


Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of valuation and qualifying
accounts - Schedule II of this Form 10-K for the three years ended March 31,
2001 is presented for the purpose of complying with the Securities and Exchange
Commissions rules and is not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



New York, New York                                  \s\  ARTHUR ANDERSEN LLP
June 12, 2001


                                                                             F-2
<PAGE>   29
UNITED ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                             2001               2000
                                                                                          -----------        -----------
<S>                                                                                       <C>                <C>
                                        ASSETS
CURRENT ASSETS:
   Cash and cash equivalents ......................................................       $    96,695        $    46,008
   Accounts receivable, net of allowance for doubtful accounts
      of  $71,656 and $18,260, respectively .......................................           970,433            445,949
   Inventory ......................................................................           121,753            592,285
                                                                                          -----------        -----------
         Total current assets .....................................................         1,188,881          1,084,242
PROPERTY AND EQUIPMENT, net of accumulated depreciation
   and amortization of $19,847 and $17,320, respectively ..........................             7,134              9,661
OTHER ASSETS:
   Goodwill, net of accumulated amortization of $11,935 and
      $7,957, respectively ........................................................            74,588             78,566
   Patent, net of accumulated amortization of $19,545 and $9,479
      respectively ................................................................           139,511            140,789
   Other assets ...................................................................             1,585              1,585
                                                                                          -----------        -----------
         Total assets .............................................................       $ 1,411,699        $ 1,314,843
                                                                                          ===========        ===========


                          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Revolving line of credit .......................................................       $        --        $     5,697
   Accounts payable and accrued expenses ..........................................           636,754            385,176
   Accounts payable to shareholder ................................................           350,000            350,000
   Related party loans payable ....................................................            30,009             24,718
                                                                                          -----------        -----------
         Total current liabilities ................................................         1,016,763            765,591
                                                                                          -----------        -----------


COMMITMENTS AND CONTINGENCIES (Note 7)


STOCKHOLDERS' EQUITY:
   Common stock: $0.01 par value 100,000,000 shares authorized; 16,580,270 and
   15,830,270 shares issued and 15, 830,270 and 15,830,270 shares outstanding as of
   March 31, 2001 and 2000, respectively ..........................................           158,302            158,302
   Additional paid-in capital .....................................................         2,315,092          2,315,092
   Stock subscription receivable ..................................................           (25,000)           (25,000)
   Accumulated deficit ............................................................        (2,053,458)        (1,899,142)
                                                                                          -----------        -----------
         Total stockholders' equity ...............................................           394,936            549,252
                                                                                          -----------        -----------
         Total liabilities and stockholders' equity ...............................       $ 1,411,699        $ 1,314,843
                                                                                          ===========        ===========
</TABLE>



The accompanying notes are an integral part of these consolidated balance
sheets.


                                                                             F-3
<PAGE>   30
UNITED ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999



<TABLE>
<CAPTION>
                                                            2001                2000                1999
                                                        ------------        ------------        ------------
<S>                                                     <C>                 <C>                 <C>
REVENUES, net ...................................       $  3,482,915        $  2,585,556        $  1,191,583
COST OF GOODS SOLD ..............................          2,325,652           1,368,727           1,115,779
                                                        ------------        ------------        ------------
         Gross profit ...........................          1,157,263           1,216,829              75,804
                                                        ------------        ------------        ------------
OPERATING EXPENSES:
   General and administrative ...................          1,052,790           1,051,495             774,056
   Depreciation and amortization ................             16,572              17,465               7,434
                                                        ------------        ------------        ------------
         Total operating expenses ...............          1,069,362           1,068,960             781,490
                                                        ------------        ------------        ------------
         Income (loss) from operations ..........             87,901             147,869            (705,686)
                                                        ------------        ------------        ------------
OTHER INCOME (EXPENSE), net:
   Interest income ..............................              1,581              10,028               4,770
   Interest expense .............................            (11,817)            (12,452)             (1,368)
   Legal settlement .............................           (231,981)                 --                  --
                                                        ------------        ------------        ------------
         Total other income (expense), net ......           (242,217)             (2,424)              3,402
                                                        ------------        ------------        ------------
         Income (loss) from continuing operations           (154,316)            145,445            (702,284)
INCOME (LOSS) FROM DISC. OPERATIONS (Note 10) ...                 --                  --             (35,333)
                                                        ------------        ------------        ------------
         Net income (loss) ......................       $   (154,316)       $    145,445        $   (737,617)
                                                        ============        ============        ============
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
   Income (loss) from continuing operations .....       $      (0.01)       $       0.01        $      (0.05)
                                                        ------------        ------------        ------------
   Income (loss) from discontinued operations ...                 --                  --               (0.00)
                                                        ------------        ------------        ------------
         Total basic income (loss) per share ....       $      (0.01)       $       0.01        $      (0.05)
                                                        ============        ============        ============


WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING,
   basic and diluted ............................         15,830,270          15,740,853          15,355,635
                                                        ============        ============        ============
</TABLE>


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


                                                                             F-4
<PAGE>   31
UNITED ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2001, 2000, AND 1999



<TABLE>
<CAPTION>
                                               COMMON STOCK           ADDITIONAL        STOCK
                                          -----------------------       PAID-IN      SUBSCRIPTION   ACCUMULATED
                                            SHARES        AMOUNT        CAPITAL       RECEIVABLE       DEFICIT           TOTAL
                                          ----------     --------     -----------      ---------      -----------      ---------
<S>                                       <C>            <C>          <C>            <C>            <C>                <C>
BALANCE, March 31, 1998 .............     15,149,936     $151,499     $ 1,526,605      $(103,000)     $(1,306,970)     $ 268,134
   Common stock issued ..............        400,000        4,000         496,000             --               --        500,000
   Common stock issued to acquire
     Green Globe Industries, Inc. ...         30,000          300          50,700             --               --         51,000
   Common stock issued to former
     shareholder ....................          1,334           13             (13)            --               --             --
   Common stock issued for services
     received .......................        100,000        1,000         139,000             --               --        140,000
   Receipt of cash from and write-off
     of portion of stock subscription
     receivable .....................             --           --         (23,000)        78,000               --         55,000
   Net loss .........................             --           --              --             --         (737,617)      (737,617)
                                          ----------     --------     -----------      ---------      -----------      ---------
BALANCE, March 31, 1999 .............     15,681,270      156,812       2,189,292        (25,000)      (2,044,587)       276,517
   Common stock issued for
     services received ..............        149,000        1,490         125,800             --               --        127,290
   Net income .......................             --           --              --             --          145,445        145,445
                                          ----------     --------     -----------      ---------      -----------      ---------
BALANCE, March 31, 2000 .............     15,830,270      158,302       2,315,092        (25,000)      (1,899,142)       549,252
   Net loss .........................             --           --              --             --         (154,316)      (154,316)
                                          ----------     --------     -----------      ---------      -----------      ---------
BALANCE, March 31, 2001 .............     15,830,270     $158,302     $ 2,315,092      $ (25,000)     $(2,053,458)     $ 394,936
                                          ==========     ========     ===========      =========      ===========      =========
</TABLE>



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


                                                                             F-5
<PAGE>   32
UNITED ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                             2001              2000              1999
                                                                          ---------         ---------         ---------
<S>                                                                       <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss) .............................................        $(154,316)        $ 145,445         $(737,617)
   Adjustments to reconcile net income (loss) to
      net cash provided by operating activities-
        Depreciation and amortization ............................           16,572            17,465             7,434
        Noncash consulting expense ...............................               --           127,290           140,000
    Changes in operating assets and liabilities-
      (Increase) decrease in accounts receivable .................         (524,484)         (336,212)           37,942
      Decrease (increase) in inventory ...........................          470,532          (543,790)          (19,366)
      Decrease (increase) in other assets ........................               --             3,154              (939)
      Increase (decrease) in accounts payable and accrued expenses          251,578           120,088           (55,646)
                                                                          ---------         ---------         ---------
           Net cash provided by (used in) operating activities ...           59,882          (466,560)         (628,192)
                                                                          ---------         ---------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Payments for acquisition of property and equipment ............               --                --            (1,506)
   Payments for patent ...........................................           (8,789)          (16,151)          (76,744)
                                                                          ---------         ---------         ---------
           Net cash used in investing activities .................           (8,789)          (16,151)          (78,250)
                                                                          ---------         ---------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on line of credit ....................................         (165,697)           (6,370)           (6,949)
   Proceeds from line of credit ..................................          160,000                --                --
   Proceeds from loans payable to
      related party ..............................................            5,291            12,641             6,577
   Proceeds from accounts due to shareholder .....................               --           350,000                --
   Proceeds from stock subscription receivable ...................               --                --            55,000
   Proceeds from issuance of common stock ........................               --                --           500,000
                                                                          ---------         ---------         ---------
           Net cash (used in) provided by financing activities ...             (406)          356,271           554,628
                                                                          ---------         ---------         ---------
           Net increase (decrease) in cash and cash
             equivalents .........................................           50,687          (126,440)         (151,814)
CASH AND CASH EQUIVALENTS, beginning of year .....................           46,008           172,448           324,262
                                                                          ---------         ---------         ---------
CASH AND CASH EQUIVALENTS, end of year ...........................        $  96,695         $  46,008         $ 172,448
                                                                          =========         =========         =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for-
      Interest ...................................................        $  11,198         $  12,452         $   1,368
   Income taxes ..................................................            5,066               800               600
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
   Forgiveness of stock subscription receivable ..................        $      --         $      --         $  23,000
   Common stock issued for acquisition of Green
      Globe Industries, Inc. .....................................               --                --            51,000
DETAILS OF ACQUISITION:
   Fair value of assets acquired .................................        $      --         $      --         $   8,099
   Goodwill ......................................................               --                --            86,523
   Liabilities assumed ...........................................               --                --           (43,622)
                                                                          ---------         ---------         ---------
           Fair value of common stock issued .....................        $      --         $      --         $  51,000
                                                                          =========         =========         =========
</TABLE>



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


                                                                             F-6

<PAGE>   33
UNITED ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001, 2000 AND 1999

1.  DESCRIPTION OF BUSINESS

United Energy (the "Company") considers its primary business focus to be the
development, manufacture and sale of environmentally safe specialty chemical
products, in particular its KH-30(R) oil well cleaner. The Company first
developed a follow on product to KH-30(R) using much of the same technology to
provide an enhanced means for cleaning asphalt mixing and recycling plants. This
product, called AD-30, and its companion product AC-30 for compressed asphalt,
have been test marketed by a major asphalt equipment manufacturer, Gentec(R)
Asphalt Equipment, and are now ready for distribution.

Green Globe Industries Inc. ("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 safe 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 recently developed an environmentally safe 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. A fire, once
sprayed with an FR-15 mixture, will not reignite. This product can also be used
to reduce odors, such as those from decomposing garbage and for soil remediation
following petroleum based contamination. The FR-15 product has been fully
developed and tested by several municipal fire departments.

United Energy also produces a specialty chemical product 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.

In January 2001, the Company introduced a marine growth inhibitor at the
National Boat Show at the Javits Center in New York City. The marine growth
inhibitor, which the Company has named "Bye Bye Barnacles"(TM), is another in
the Company's line of environmental products in that it is non-toxic and
biodegradable, characteristics which the Company believes to be particularly
appealing in fresh water marine applications, although the product has proven to
be effective in both fresh and saltwater environments.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the Unites States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.


                                                                             F-7
<PAGE>   34
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 equivalents consist of cash and highly liquid investments with
original maturities of three months or less.

INVENTORIES

Inventories consist principally of raw materials and are valued at the lower of
cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, net of accumulated depreciation and
amortization. Expenditures made to maintain the assets are expensed in the year
incurred while expenditures for upgrades are capitalized and depreciated over
their estimated useful lives. Depreciation of the computer equipment is computed
on a straight-line basis over its estimated useful life of five years. All other
equipment is depreciated on a straight-line basis over an estimated useful life
of seven years. The leasehold improvements are amortized using the straight-line
basis over the shorter of their estimated useful lives or the remaining term of
the lease. Depreciation and amortization expense for the years ended March 31,
2001, 2000 and 1999 was $2,527, $4,009 and $7,434, respectively.

Property and equipment consists of the following at March 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                               2001             2000
                                                             --------         --------
<S>                                                          <C>              <C>
      Furniture and fixtures ........................        $ 18,707         $ 18,707
      Machinery and equipment .......................           5,597            5,597
      Leasehold improvement .........................           2,677            2,677
                                                             --------         --------
                                                               26,981           26,981
      Less- Accumulated depreciation and amortization         (19,847)         (17,320)
                                                             --------         --------
      Property and equipment, net ...................        $  7,134         $  9,661
                                                             ========         ========
</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.

ACCOUNTING FOR LONG-LIVED ASSETS

The Company accounts for long-lived assets in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of." This statement establishes financial accounting and reporting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used, and for long-lived assets
and certain identifiable intangibles to be disposed of. The Company reviews
long-lived assets and certain identifiable intangibles to be held and used for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset exceeds the fair value of the asset. If other events
or changes in circumstances indicate that the carrying amount of an asset that
the Company expects to hold and use may not be recoverable, the company will
estimate the future cash flows expected to result from the use of the asset and
its


                                                                             F-8
<PAGE>   35
eventual disposition. Management has performed a review of all long-lived assets
and has determined that no impairment of their carrying values has occurred as
of March 31, 2001.

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 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. 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.


                                                                             F-9
<PAGE>   36
STOCK-BASED COMPENSATION

The Company adopted SFAS No. 123, "Accounting for Stock Based Compensation," and
has chosen to continue to account for stock-based compensation awards to
employees using the intrinsic value method prescribed in Accounting Principles
Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations. Accordingly, compensation cost for stock options
awarded to employees and directors is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of grant over the amount
an employee or director must pay to acquire the stock.

As required, the Company follows SFAS No. 123 to account for stock-based
compensation awards to nonemployees. Accordingly, compensation costs for stock
option awards granted to nonemployees is measured at the date of grant based on
the fair value of the award using the Black-Scholes option pricing model.

PER SHARE DATA

During 1997, SFAS No. 128, "Earnings Per Share," was issued and became effective
for the Company's March 31, 1998 financial statements. SFAS No. 128 establishes
new standards for computing and presenting earnings per share ("EPS"). The new
standard requires the presentation of basic EPS and diluted EPS. Basic EPS is
calculated by dividing income 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 available to common shareholders by the
weighted average number of common shares outstanding adjusted to reflect
potentially dilutive securities. The Company has no outstanding equity
instruments that would be considered common stock equivalents under SFAS No.
128; therefore, there is no difference between basic and diluted per-share data.

CONCENTRATIONS OF RISK

      Accounts Receivable

      The Company has one customer which accounted for 94% and another customer
      which accounted for 42% of the total accounts receivable at March 31, 2001
      and 2000, respectively. Credit losses, if any, have been provided for in
      the financial statements and are based on management's expectations. The
      Company does not believe that it is subject to any unusual risks, nor
      significant risks, in the normal course of business.

      Significant Customers

      The Company's revenues from major customers, as a percentage of revenues,
      for the years ended March 31, 2001, 2000 and 1999, are as follows:

<TABLE>
<CAPTION>
                                                     2001         2000       1999
                                                     ----         ----       ----
<S>                                                  <C>          <C>       <C>
       Customer A..............................        0%            0%        23%
       Customer B..............................       32            40         17
       Customer C..............................        0             0          2
       Customer D..............................       49             0          0
</TABLE>

       Vendors

       The Company has one vendor, which accounts for over 37%, 31% and 89% of
       the Company's supplies purchases for the years ended March 31, 2001, 2000
       and 1999, respectively.


                                                                            F-10
<PAGE>   37
FAIR VALUE OF FINANCIAL INSTRUMENTS

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

RECLASSIFICATIONS

Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the current year presentation.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133") which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
SFAS 133 (as amended by SFAS No. 137) is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. The Company does not enter into
derivative instruments or engage in hedging activities as defined in SFAS No.
133. Accordingly, management has determined that adoption of this standard has
had no impact on the Company's financial statements.

During March 2000, the FASB issued Interpretation No. 44, (FIN 44) "Accounting
for Certain Transactions Involving Stock Compensation," which clarifies the
application of APB Opinion No. 25, regarding (a) the definition of an employee
for purposes of applying APB Opinion No. 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 became effective on July 1, 2000.
Certain events as defined by FIN 44 may require earlier consideration if they
occurred after December 14, 1998 or January 12, 2000, depending on the event,
although no financial statement effect would be recognized until July 1, 2000.
The effects of applying FIN 44 are recognized prospectively. The Company has
reviewed its stock compensation events and believes FIN 44 has not had a
material impact on its financial position or its results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101, ("SAB 101")
"Revenue Recognition in Financial Statements." SAB 101 expresses the views of
the SEC staff in applying generally accepted accounting principles to revenue
recognition. In June 2000, the SEC issued SAB 101B to defer the effective date
of the implementation of SAB 101 until the fourth quarter of fiscal 2000. The
Company believes that implementation of this SAB has not had any material
changes on its financial position or its results of operations.

3. INVENTORY

Inventory consists of the following as of March 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                 2001               2000
                                               --------           --------
<S>                                            <C>                <C>
      Paper ........................           $ 59,190           $507,987
      Blended chemical .............             59,955             76,601
      Film .........................                 --              5,040
      Other raw materials ..........              2,608              2,657
                                               --------           --------
      Total inventory ..............           $121,753           $592,285
                                               ========           ========
</TABLE>


The inventory is valued at the lower of cost or market.

4. EXCLUSIVE DISTRIBUTION AGREEMENT


                                                                            F-11
<PAGE>   38
On September 22, 2000, the Company and Alameda Company ("Alameda") entered into
an exclusive distribution agreement (the "Alameda Agreement"), whereby Alameda
will purchase from the Company various products from the graphics arts division
(meeting certain minimum purchase requirements and at guaranteed fixed prices as
defined in the Alameda Agreement) through December 31, 2002, and distribute
these products exclusively throughout the USA, Canada, Puerto Rico, Mexico,
Central America, South America and the Caribbean.

No products were shipped and no revenue was recognized under the Alameda
Agreement prior to October 2000.

5. REVOLVING LINE OF CREDIT

The revolving line of credit allows the Company to borrow up to $1,000,000 from
Fleet Bank. Borrowings under the credit line bear interest at prime (8% at March
31, 2001). Interest is payable monthly. Borrowings under the line of credit must
be reduced to zero for a period of 30 consecutive days in any 12-month period.
Amounts outstanding under the line of credit are subject to repayment on demand
at any time and for any reason and are secured by accounts receivable,
inventory, furniture and fixtures, machinery and equipment and a pledge of
750,000 shares of the Company's common stock which have been placed in escrow.
The line is also secured by the personal guarantee of a shareholder of the
Company. There were no amounts outstanding at March 31, 2001.

The line of credit is subject to certain covenants, including financial
covenants to which the Company must adhere on a quarterly or annual basis. At
March 31, 2001, the Company was not in compliance with the financial covenants.
The bank provided the Company with a letter acknowledging the default of the
covenants as of March 31, 2001. Although the bank has not exercised its rights
to demand payment in full of the amounts due and owing at this time, which is
$0, the bank reserves all of its rights and remedies at law, in equity, under
the loan agreement, including the rights with respect to the collateral.

The company has continued to draw on the line subsequent to March 31, 2001.

6. RELATED PARTY PAYABLE

The Company had a loan payable to an individual who is a major shareholder. The
loan payable as of March 31, 2001 and 2000 is $30,009 and $24,718, respectively.
This note is unsecured, noninterest bearing and due upon demand. At March 31,
2001 and 2000, the Company was indebted to a separate shareholder for $350,000
for amounts to be issued as equity in the future. The amount has been shown as
due to shareholder on the balance sheet.


                                                                           F-12
<PAGE>   39
7. COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company, in its normal course of business, is subject to certain litigation.
In the opinion of the Company's management, settlements of litigation will not
have a material adverse effect on the Company's results of operations, financial
position or cash flows.

In August 2000, one of the Company's customer commenced an action against the
Company and its Green Globe subsidiary claiming damages from the faulty
installation of a paint stripping system. The Company believed that they had
substantial defenses in the case, however, in an attempt to minimize litigation
costs they elected to mediate the case. This resulted in a settlement agreement
pursuant to which the Company will pay the customer a total of $154,000 and
legal fees for approximately $ 78,000. The settlement occurred in 2001 and the
Company recorded all costs related to the settlement in the current year's
financials under other income and expense.

During the year ended March 31, 2000, the Company reached a settlement with a
former consultant of the Company, in reference to a lawsuit filed by the former
consultant. The Company issued 45,000 shares of restricted common stock to this
individual as settlement. These shares were recorded as issued on the date of
the settlement at 70% of the then listed fair market value of the underlying
unrestricted common stock. As such, the Company recognized approximately $50,000
of consulting expense, included in general and administrative expense in the
accompanying consolidated statement of operations for the year ended March 31,
2000.

8. STOCKHOLDERS' EQUITY

During year ended March 31, 2000, the Company issued an aggregate of 149,000
shares of common stock in exchange for consulting services. These issuances were
recorded as an increase to equity and consulting expense for the fair value of
the shares of common stock on their respective grant dates. No shares were
issued in the fiscal year ended March 31, 2001.

10. INCOME (LOSS) FROM DISCONTINUED OPERATIONS

On June 10, 1997, the Board of Directors of the Company decided to discontinue
the operations of the equipment division and concentrate its efforts on the sale
of proprietary products. The disposal was effected by discontinuing efforts
associated with the equipment division. The equipment division generated general
and administrative expenses of $35,333 during the year ended March 31, 1999,
resulting in a loss from discontinued operations. The Company retains no assets,
which were attributable to the equipment division and has incurred no additional
expenses as a result of the discontinuation related to the division.

11.  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.
Deferred tax assets result principally from recording certain expenses in the
financial statements which are not currently deductible for tax purposes, and
differences between tax and book bases of assets and liabilities recorded in
connection with the acquisitions. As of March 31, 2001, the Company had a net
operating loss carryforward of approximately $2,700,000, which is available to
reduce its future taxable income and expires at various dates through 2017. A
full valuation allowance of approximately $1,080,000, has been established
against the deferred tax assets 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.


                                                                            F-13
<PAGE>   40
12. 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.

The Company's total revenues, income from operations and identifiable assets by
segment for the year ended March 31, 2001, are as follows:

<TABLE>
<CAPTION>
                                                    GRAPHIC           SPECIALTY
                                                     ARTS             CHEMICALS           CORPORATE              TOTAL
                                                     ----             ---------           ---------              -----
<S>                                               <C>                 <C>                 <C>                 <C>
Revenues ...............................          $3,190,824          $ 292,091           $      --           $ 3,482,915
                                                  ==========          =========           =========           ===========
Gross profit ...........................          $1,027,922          $ 129,341           $      --           $ 1,157,263
General and administrative expenses ....             216,076            210,211             626,503             1,052,790
Depreciation and amortization ..........                  --             15,095               1,477                16,572
Interest expense (income) ..............              11,817                 --              (1,581)               10,236
Legal settlement .......................                  --                 --             231,981               231,981
                                                  ----------          ---------           ---------           -----------
Income (loss) from continuing operations          $  800,029          $ (95,965)          $(858,380)          $  (154,316)
                                                                      =========           =========           ===========

Accounts receivable ....................          $  928,135          $  42,298           $      --           $   970,433
Inventory ..............................              59,190             62,563                  --               121,753
Fixed assets ...........................                  --                 --               7,134                 7,134
Goodwill ...............................                  --             74,588                  --                74,588
Patent .................................                  --            139,511                  --               139,511
Other assets ...........................                  --                 --              98,280                98,280
                                                  ----------          ---------           ---------           -----------
Total assets ...........................          $  987,325          $ 318,960             105,414           $ 1,411,699
                                                  ==========          =========           =========           ===========
</TABLE>

The Company's total revenues and loss from operations and identifiable assets by
segment for the year ended March 31, 2000, are as follows:

<TABLE>
<CAPTION>
                                                   GRAPHIC           SPECIALTY
                                                     ARTS             CHEMICALS           CORPORATE              TOTAL
                                                     ----             ---------           ---------              -----
<S>                                               <C>                 <C>                 <C>                 <C>
Revenues ...............................          $1,970,701          $ 614,855           $      --           $2,585,556
                                                  ==========          =========           =========           ==========
Gross profit ...........................          $  958,538          $ 258,291           $      --           $1,216,829
General and administrative expenses ....             224,723            366,871             459,901            1,051,495
Depreciation and amortization ..........                  --             15,704               1,761               17,465
Interest expense (income) ..............              12,452                 --             (10,028)               2,424
                                                  ----------          ---------           ---------           ----------
Income (loss) from continuing operations          $  721,363          $(124,284)          $(451,634)          $  145,445
                                                  ==========          =========           =========           ==========
Accounts receivable ....................          $  303,104          $ 142,845           $      --           $  445,949
Inventory ..............................             548,797             43,488                  --              592,285
Fixed assets ...........................                  --                 --               9,661                9,661
Goodwill ...............................                  --             78,566                  --               78,566
Patent .................................                  --            140,789                  --              140,789
Other assets ...........................                  --                 --              47,593               47,593
                                                  ----------          ---------           ---------           ----------
Total assets ...........................          $  851,901          $ 405,688           $  57,254           $1,314,843
                                                  ==========          =========           =========           ==========
</TABLE>


                                                                            F-14
<PAGE>   41
The Company's total revenues and loss from operations by segment for the year
ended March 31, 1999, are as follows:

<TABLE>
<CAPTION>
                                        GRAPHIC          SPECIALTY
                                         ARTS            CHEMICALS           CORPORATE             TOTAL
                                         ----            ---------           ---------             -----
<S>                                    <C>               <C>                 <C>                 <C>
Revenues ....................          $890,458          $ 301,125           $      --           $ 1,191,583
                                       ========          =========           =========           ===========
Gross profit ................          $ 59,602          $  16,202           $      --           $    75,804
General and administrative ..            43,547            215,043             515,466               774,056
Depreciation and amortization                --              5,336               2,098                 7,434
Interest expense ............             1,368                 --              (4,770)               (3,402)
                                       --------          ---------           ---------           -----------
Income (loss) from continuing
  operations ................          $ 14,687          $(204,177)          $(512,794)          $  (702,284)
                                       ========          =========           =========           ===========
</TABLE>

13.  SEC REGISTRATION EXPENSES

During the year ended March 31, 2001, the Company incurred additional accounting
fees and filing costs in connection with the preparation and filing of the
Company's Form 10 Registration Statement with the Securities and Exchange
Commission. The Form 10 was filed by the Company in order for it to become a
reporting company under the Securities Exchange Act of 1934. These costs were
approximately $100,000 to $120,000 and have been included in General and
Administrative expenses.


                                                                            F-15
<PAGE>   42
SCHEDULE II

                           UNITED ENERGY CORPORATION
                 SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                             BALANCE AT       CHARGED
                                             BEGINNING        TO COSTS AND                             BALANCE AT
                                             OF YEAR          EXPENSES            DEDUCTIONS           END OF YEAR
                                             ----------       ------------        -----------          -----------
<S>                                          <C>               <C>                 <C>                 <C>
For the fiscal year ended March 31, 2001:
  Allowance for doubtful accounts .......    $18,260             $53,396             $ --                $71,656
                                             -------             -------             ----                -------
For the fiscal year ended March 31, 2000:
  Allowance for doubtful accounts .......    $18,260             $ --                $ --                $18,260
                                             -------             -------             ----                -------
For the fiscal year ended March 31, 1999:
  Allowance for doubtful accounts .......    $18,260             $ --                $ --                $18,260
                                             -------             -------             ----                -------
</TABLE>



                                                                            F-16