Edgar Filing: UNITED ENERGY CORP /NV/

================================================================================

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, 2002

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

For the transition period from _______ to ___________

Commission File No. 000-30841

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

Nevada 22-3342379
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

600 Meadowlands Parkway #20
Secaucus, N.J. 07094
---------------------------
(Address of Principal Executive Offices and Zip Code)

Registrant's Telephone Number, Including Area Code: (800) 327-3456
--------------

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 July 1, 2002 (based on the average of the bid and asked prices
of the Common Stock on the OTC Bulletin Board on such date) was $30,343,200.

As of July 1, 2002 there were 22,180,270 shares of the registrant's common
stock outstanding.

Documents incorporated by reference: Portions of the Company's definitive proxy
statement expected to be filed pursuant to Regulation 14A of the Securities
Exchange Act of 1934 have been incorporated by reference into Part III of this
report.

================================================================================

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Annual Report on Form 10-K discuss our
plans and strategies for our business or state other forward-looking statements,
as this term is defined in the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company, or industry results to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; the Company's ability to create
markets for its products; the Company's ability to generate meaningful revenues;
the Company's continuing operating losses; the Company's reliance on third
parties to market, sell and/or distribute the Company's products; the need for
future capital; availability, terms and deployment of capital; the Company's
reliance on a small number of customers for its revenues; the loss of any
significant customers; changes in business strategy or development plans; any
adverse impact as a result of environmental laws; changes in, or the failure to
comply with, government regulations; competition; the integration of the
Company's new management team; and the Company's ability to protect its patents
and proprietary rights; quality of management; business abilities and judgment
of personnel; availability of qualified personnel.

ITEM 1 - BUSINESS

General

United Energy Corp. (the "Company" or "United Energy") develops and distributes
a diverse group of environmentally friendly specialty chemical products having
various applications in several industries and markets. The Company's current
list of products includes:

o KH-30(R)paraffin dispersant for the oil industry;

o UNIPROOF(R)specialty coatings for the printing industry;

o FR-15 fire retardants for the potential use in a multitude of
industries; and

o "Slick Barrier" underwater protective coatings for use in marine
applications.

The Company, through its wholly owned subsidiary Green Globe Industries, Inc.
provides the United States Military with a variety of environmentally friendly,
non-hazardous, biodegradable solvents, cleaners and paint strippers under our
trade name "Qualchem." Green Globe Industries, Inc. is a qualified supplier for
the United States Military and has sales contracts currently in place.

United Energy provides specialty chemical products to five major customers with
revenues for the fiscal year ended March 31, 2002 of $1,387,851. As of March 31,
2002, the Company employed four persons and had available the services of five
others under consulting or product/production cooperation arrangements.

Our principal executive offices are located at 600 Meadowlands Parkway,
Secaucus, New Jersey 07094 and the telephone number at that location is (201)
842-0288. Our website address is www.unitedenergycorp.net. Information contained
on our website is not incorporated by reference into this document and should
not be considered a part of this document.

Background

The Company was incorporated in Nevada in 1971 as Aztec Silver Mining Co. The
Company engaged in the manufacturing and distribution of printing equipment from
1995 through 1998. During that period, the Company

began to develop specialty chemical products for use in the printing industry.
In March 1998, the Company discontinued its printing equipment operations and
changed our business focus to the development of specialty chemical products.

Current Business Operations and Principal Products

KH-30

KH-30(R) is an environmentally friendly, non-petroleum-based product that is
non-toxic and biodegradable. When applied in accordance with United Energy's
recommended procedures, KH-30(R) has resulted in substantial production
increases of between two and five times in paraffin-affected oil and gas wells.
In addition, KH-30(R) has proven effective in "downstream applications" which
result 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. KH-30(R) is patented in the United States, Australia, Russia,
Nigeria, Venezuela, Vietnam and OAPI (Africa - which includes the countries of:
Burkina-Faso, Benin, Central African Republic, Congo, Cote d'Ivoire, Cameroon,
Gabon, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, Chad and Togo).
The Company has 12 additional country patent applications pending in most of the
major oil-producing countries around the world (including European Community and
Canada).

In March 2000, a joint marketing agreement was entered into between United
Energy and ChemTech, a company that operates 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 factor 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, 2002
our sales of KH-30(R) to or through ChemTech have amounted to approximately
$451,000.

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.

The Company first entered into agreements with a number of distributors for its
KH-30(R) oil and gas well cleaner during the fiscal year ended March 31, 1998.
As of March 31, 2002, 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. 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.

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.

To increase sales of our KH-30(R) product we are currently expanding our
marketing efforts by producing a professional marketing brochure and
supplemental sales material. We expect to develop additional applications for
our KH-30(R) product before the calendar year end 2002 which may stimulate sales
and interest globally.

AD-30; AC-30

The Company has developed AD-30, 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, 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.

UNIPROOF(R)

United Energy has developed a photo-sensitive coating that is applied to paper
to produce what is known in the printing industry as proofing paper or "blue
line" paper. 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, and $1,033,574 in the fiscal year ended March 31, 2002.

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 turned over to them all
of our existing customers within the above territory.

To maintain exclusivity for 2001 and 2002 Alameda was required to 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. Due to a severe decline of publishing industry advertising
pages, Alameda was unable to meet the 2001 quota and the exclusivity portion of
the agreement has been terminated. Alameda will continue to market UNIPROOF(R)on
a non-exclusive basis.

FR-15

United Energy's chemists have also developed an environmentally friendly
fire-retardant agent named FR-15. FR-15 begins as a concentrate which can be
mixed with varying amounts of water, depending on the anticipated use. FR-15
mixture also resists re-ignition once a fire has been extinguished. This product
can also be used to reduce odors, such as those from decomposing garbage, and
for soil remediation following petroleum-based contamination. Our FR-15 product
has been fully developed and tested by several municipal fire departments. We
are in the process of getting FR-15 certified by Underwriters Laboratories
("UL"). We expect that sales of FR-15 will commence when the product receives UL
certification. Additionally, we are in preliminary talks with foreign marine and
fire extinguisher distributors who may be willing to purchase FR-15 without UL
certification.

"Slick Barrier"

In January 2001, the Company introduced an underwater protective coating at the
National Boat Show at the Javits Center in New York City. The underwater
protective coating which the Company formally named "Bye Bye

Barnacles" and now called "Slick Barrier," is another in the Company's line of
environmental products in that it is environmentally friendly 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. During fiscal year 2002 the Company's
chemists have developed a new version of the product with improved coating
characteristics and durability. A patent application on this product is in
process.

We are applying for trademark protection both nationally and internationally for
our "Slick Barrier" and "Barrier Coating 566" products. We hope to conclude our
testing of the products during our second fiscal quarter of 2002, and we have
begun discussions with leading foreign distributors of marine products.

GreenGlobe Industries, Inc.

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 friendly paint strippers and cleaners, many
of which have been qualified for use by the U.S. Military. Of particular note in
the Green Globe line was the development of dual package cleaning and drying
"wipes" which produce a clear, non-reflective coating on glasses, computer
screens and instrument panels. The "wipes" were developed for, and have received
U.S. Military approval for, the cleaning of the instrument panels of combat
aircraft.

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 owns no manufacturing facilities
itself. 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 friendly" 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 components 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. The Company believes
that the services of this 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, 2002 five major customers for the
Company's products: The Alameda Company (74.5% of revenues); General Services
Administration and Defense Supply Center (combined), (10.4%) for aircraft
cleaning products and paint removers, ChemTech (11.5%) for the Company's
KH-30(R) oil well cleaning

product, and VIP Offset (1%) for graphic arts products. The Company believes
that those of its customers who are not end-users 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. All of
our products up to this point are sold domestically in US dollars and,
therefore, we have had no foreign currency fluctuation risk.

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

Our order backlog 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.

Employees

As of July 14, 2002, the Company employed 10 persons and had available the
services of four 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 developed and ready for market. This
is the result of research and development expenditures paid to vendors,
excluding allocation of internal costs, estimated to be $71,500, $69,400 and
$58,300 for the three fiscal years ended March 31, 2000, 2001 and 2002.
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.

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 attempt to compete by offering what we hope to be lower prices and better
service. However, our KH-30(R) and AD-30 cleaners are more expensive, and with
these products we attempt to compete by emphasizing product effectiveness and
environmental safety.

Proprietary Technologies

With respect to our formulations which are proprietary, we have patented our
KH-30(R) oil well cleaner patented in the United States, Australia, Russia,
Nigeria, Venezuela, Vietnam and OAPI (Africa - which includes the countries of:
Burkina-Faso, Benin, Central African Republic, Congo, Cote d'Ivoire, Cameroon,
Gabon, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, Chad and Togo).
We also haves 12 additional country patent applications pending in most of the
major oil-producing countries around the world (including European Community and
Canada). We believe our patent is strong and will help our competitive position.
However, we are aware that others may try to imitate our product or invalidate
our patents. We have in the past vigorously enforced our trade secrets such as
the one relating to our UNIPROOF(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 what we hope to be better prices and service. We
believe the market will continue to welcome an alternative to duPont and we plan
to continue our current marketing practices.

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

Item 2 - Properties

The Company rents 9,600 sq. feet of office space at 600 Meadowlands Parkway,
Secaucus, New Jersey 07094 at a monthly rent of $7,720. See Item 13 - Certain
Relationships and Related Transactions. 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 its products to independent
manufacturers and blenders and its products are therefore produced at the
manufacturing facilities of such entities. The Company owns no manufacturing
facilities itself.

Item 3 - Legal Proceedings

During the fiscal year ended March 31, 1997, litigation was commenced by SMK
Industries ("SMK") against Nor Graphics Inc. (a United Energy Subsidiary)
("Nor") relating to the equipment division of Nor. SMK was a supplier and joint
venture partner of Nor with respect to the production of printing equipment. SMK
sued Nor in the amount of $119,694.62 claiming that such amount was due and
payable for machining services and supplies with respect to equipment produced
for Nor's equipment division. Nor counterclaimed stating that SMK overcharged
Nor when compared to the agreement between the parties for machining services to
be rendered and also improperly marked up parts supplied to Nor. The offsets
claimed by Nor more than cover the damages allegedly accrued by SMK. In
addition, Nor discovered the machine as to which SMK and Nor were to be joint
venture partners was not in fact owned by SMK. Consequently, Nor has alleged in
a counterclaim that it was fraudulently induced into a joint venture agreement
with SMK and the machine in question could never have been sold free and clear
of encumbrances. Because of all the above defenses, Nor believes that it will
prevail in the lawsuit brought by SMK and, consequently, has limited if any
exposure. The matter was referred to binding arbitration in 1998, but the
arbitration never took place. Subsequent to March 31, 2002 counsel for SMK filed
a motion to re-open the matter despite the long period of inaction. On June 7,
2002 the court ordered that the matter be sent to arbitration. The Company
believes the claim is without merit and intends to vigorously defend this
action.

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, 2002.

PART II

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

As of July 1, 2002, there were 463 record holders of the Company's common stock
and there were 22,180,270 shares outstanding. 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.

The following table shows United Energy's high and low bid prices as quoted on
the OTC Bulletin Board by quarter during each of the Company's last three fiscal
years and on the OTC "Pink Sheets" after May 3, 2000. As of April 26, 2002, the
Company's stock began being quoted once again on the OTC Bulletin Board. Such
quotes reflect inter-dealer prices, without retail markup, markdown or
commissions and may not represent actual transactions. The information below was
obtained from those organizations, for the respective periods.

FISCAL YEAR QUARTER HIGH BID LOW BID

2001 First Quarter 4.13 1.82
Second Quarter 3.00 1.41
Third Quarter 3.25 1.00
Fourth Quarter 1.81 1.02
2002 First Quarter 1.23 0.75
Second Quarter 1.85 0.66
Third Quarter 1.20 0.65
Fourth Quarter 1.70 0.83
2003 First Quarter 3.85 1.17
Second Quarter* 2.30 1.75

_______________________

* Through July 11, 2002.

On July 1, 2002 the Company's stock price closed at $2.10 per share. The
aggregate market value of the stock held by non-affiliates on July 1, 2002 was
$30,343,200. For information concerning principal shareholders, please see
"Security Ownership of Certain Beneficial Owners and Management."

RECENT SALES OF UNREGISTERED SECURITIES

On March 4, 2002, 100,000 shares of unregistered common stock were issued to the
firm of Seaman & Wehle as partial consideration for legal services rendered
during the fiscal year ended March 31, 2002. The closing price on that date was
$1.11, for an aggregate value of $111,000. This transaction was exempted from
the registration requirements of the Securities Act of 1933 by virtue of Section
4(2) of such Act. The above issuance was the only sale of unregistered
securities during the two-year period prior to March 31, 2002. Consequently,
there are no such shares outstanding which may be sold under the provisions of
Rule 144. However, management is, as of June 15, 2002, able to utilize Rule 144
to effect immediate sales of up to 665,406 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, 1998, 1999, 2000, 2001 and 2002 is derived from our audited
financial statements and the notes thereto. The statement of operations
information for the four-year period ended March 31, 2001 and the balance sheet
information as of the end of each of the four fiscal years ended March 31, 2001
is derived from the consolidated financial statements of United Energy Corp.,
which have been audited by Arthur Andersen LLP, independent public accountants,
and in this annual report on Form 10-K. The statement of operations information
for the year ended March 31, 2002, and the balance sheet information as of March
31, 2002, is derived from the consolidated financial statements of United Energy
Corp., which have been audited by Grant Thornton LLP, independent public
accountants. 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 in this Form 10K.

FISCAL YEAR ENDED MARCH 31,

CONSOLIDATED
STATEMENT OF OPERATIONS DATA 2002 2001 2000 1999 1998
---------------------------- ---- ---- ---- ---- ----

Operating Revenues............................... 1,387,851 3,482,915 2,585,556 1,191,583 1,942,142
Cost of goods sold............................... 756,391 2,325,652 1,368,727 1,115,779 1,729,968
Gross profit..................................... 631,468 1,157,263 1,216,829 75,804 212,174
Selling, G&A..................................... 1,763,446 1,052,790 1,099,705 877,806 766,931
Executive Services Contributed by Management..... 187,500 250,000 250,000 250,000 250,000
Interest income (expense), net................... (4,408) (10,236) (2,424) 3,402 (14,427)

Net Income (Loss) before discontinued operations. (1,364,576) (404,316) (152,765) (1,056,034) (821,616)
Income (Loss) from discontinued operations....... 0 0 0 (35,333) 279,301
Income tax....................................... 0 0 0 0 0

Net Income (Loss)................................ (1,364,576) (404,316) (152,765) (1,091,367) (542,315)
Retained deficit beginning....................... (3,780,418) (3,376,102) (3,223,337) (2,131,970) (1,589,655)
Retained deficit end............................. (5,144,994) (3,780,418) (3,376,102) (3,223,337) (2,131,970)
Loss per share................................... (0.09) (0.03) (0.01) (0.07) (0.04)
Cash dividends paid.............................. 0 0 0 0 0

AS OF MARCH 31,

CONSOLIDATED
BALANCE SHEET DATA 2002 2001 2000 1999 1998
------------------ ---- ---- ---- ---- ----

Total working capital............................ 821,500 1,188,881 318,651 41,448 199,142
Total assets..................................... 1,037,972 1,411,699 1,314,843 565,749 569,762
Total liabilities................................ 903,212 1,016,763 765,591 289,232 301,628
Total long term debt............................. 0 0 0 0 0
Total stockholder's equity....................... 134,760 394,936 549,252 276,517 268,134
Total shares outstanding......................... 16,180,270 15,830,270 15,830,270 15,731,270 15,199,936

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

The following is a summary of the quarterly operations for the years ended March
31, 2000, 2001 and 2002.

UNAUDITED QUARTERLY FINANCIAL DATA
CONSOLIDATED STATEMENTS
OF OPERATIONS
FISCAL YEAR ENDED MARCH 31, 2002

1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER FISCAL YEAR

Operating revenues...................... $ 589,692 $ 92,595 $ 450,055 $ 255,509 $ 1,387,851
Cost of goods sold...................... 329,277 21,640 235,602 169,872 756,391
Gross profit............................ 260,415 70,955 214,453 85,637 631,460
General and administrative.............. 195,303 390,525 323,593 854,025 1,763,446
Executive Services...................... 62,500 62,500 62,500 -- 187,500
Depreciation and amortization........... 4,134 4,579 5,936 5,382 20,031
Interest expense (income)............... 787 1,222 1,238 1,161 4,408
Legal settlement........................ -- -- -- (20,651) (20,651)
Income(Loss)from continuing operations.. (2,309) (387,871) (178,814) (795,582) (1,364,576)
Income tax.............................. -- -- -- -- --
Net income (loss)....................... (2,309) (387,871) (178,814) (795,582) (1,364,576)
Retained earnings (deficit), beginning.. $ (3,780,418) $ (3,782,727) $ (4,170,598) $ (4,349,412) $ (3,780,418)
Retained Earnings (deficit), ending..... $ (3,782,727) $ (4,170,598) $ (4,349,412) $ (5,144,994) $ (5,144,994)
Per share information:
Earnings (loss) per share -
basic and diluted..................... $ (0.00) $ (0.03) $ (0.01) $ (0.05) $ (0.09)
Weighted average shares outstanding..... 15,841,259 16,080,270 16,080,270 16,086,937 16,022,325
Cash dividends paid..................... $ 0.00 $ 0.00 $ 0.00 $ 0.00 0.00

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

UNAUDITED QUARTERLY FINANCIAL DATA
CONSOLIDATED STATEMENTS
OF OPERATIONS
FISCAL YEAR ENDED MARCH 31, 2001

1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER FISCAL YEAR

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
Executive Services...................... 62,500 62,500 62,500 62,500 250,000
Depreciation and amortization........... 4,385 4,385 4,385 3,417 16,572
Interest expense (income)............... 934 3,995 3,945 1,362 10,236
Legal settlement........................ -- -- -- (231,981) (231,981)
Income(Loss)from continuing operations.. (81,161) (17,066) 54,106 (360,195) (404,316)
Income tax.............................. -- -- -- -- --
Net income (loss)....................... (81,161) (17,066) 54,106 (360,195) (404,316)
Retained earnings (deficit), beginning.. $ (3,376,102) $ (3,457,263) $ (3,474,329) $ (3,420,223) $ (3,376,102)
Retained Earnings (deficit), ending..... $ (3,457,263) $ (3,474,329) $ (3,420,223) $ (3,780,418) $ (3,780,418)
Per share information:
Earnings (loss) per share -
basic and diluted..................... $ (0.01) $ 0.00 $ 0.00 $ (0.02) $ (0.03)
Weighted average shares outstanding..... 15,830,270 15,830,270 15,830,270 15,830,270 15,830,270
Cash dividends paid..................... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

UNAUDITED QUARTERLY FINANCIAL DATA
CONSOLIDATED STATEMENTS
OF OPERATIONS
FISCAL YEAR ENDED MARCH 31, 2000

1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER FISCAL YEAR

Operating revenues...................... $ 502,616 $ 394,633 $ 868,747 $ 819,560 $ 2,585,556
Cost of goods sold...................... 280,260 203,676 496,857 387,934 1,368,727
Gross profit............................ 222,356 190,957 371,890 431,626 1,216,829
General and administrative.............. 189,721 200,013 255,280 454,691 1,099,705
Executive Services...................... 62,500 62,500 62,500 62,500 250,000
Depreciation and amortization........... 4,553 3,915 4,555 4,442 17,465
Interest expense (income)............... (1,343) 1,002 992 1,773 2,424
Income (loss) from continuing
operations............................ (33,075) (76,473) 48,563 (91,780) (152,765)
Income tax.............................. -- -- -- -- --
Net income (loss)....................... (33,075) (76,473) 48,563 (91,780) (152,765)
Retained Earning (deficit), beginning... $ (3,223,337) $ (3,256,412) $ (3,332,885) $ (3,284,322) $ (3,223,337)
Retained Earning (deficit), ending...... $ (3,256,412) (3,332,885) $ (3,284,322) $ (3,376,101) $ (3,376,101)
Per share information:
Earnings (loss) per share - basic and
diluted.............................. $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ (0.01)
Weighted average shares outstanding..... 15,753,770 15,776,270 15,811,053 15,834,180 15,790,853
Cash dividends paid..................... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

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.

Revision of Consolidated Financial Statements

Subsequent to the issuance of its March 31, 2001 financial statements, the
Company recorded compensation for executives' services that were contributed by
management in the amount of $250,000 for each fiscal year commencing in 1996
until December 31, 2001. Previously, no compensation expense was reflected, as
none was paid. Generally Accepted Accounting Principles require that the fair
value of these services be reflected as an expense with the offset reflected in
additional paid-in-capital. Such expense has now been reflected retroactively to
1996.

Accordingly, the 2001 and 2000 financial statements have been revised for the
above, the effect of which increased the previously reported expenses $250,000
in each year for 2001 and 2000. The Company also recorded additional non-cash
compensation expense for stock given to outside consultants during fiscal 2000
amounting to $48,210. These adjustments resulted in losses of $404,316 and
$152,765 for the years ended 2001 and 2000. There was no related tax effect on
the respective year's financial statements. These revisions were reflected in a
Form 10-K/A filing on February 13, 2002.

The above resulted in losses per share amounts of $.03 and $.01 in 2001 and
2000, respectively.

None of the above impacted working capital or total stockholders' equity at
March 31, 2000 and 2001.

Overview

During fiscal 1998, we changed our business to focus on environmentally
friendly, 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 period from 1995 through March 31, 2002 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 $5,144,994.

The senior officers of United Energy Corp. have drawn no salaries from the
Company during the several year period they have been managing the Company until
the fourth quarter of fiscal year 2002. During this period, one of the
executives began to draw a salary and was paid $79,500 through the end of the
year ended March 31, 2002. In accordance with an accounting interpretation, the
Company imputed salaries for senior officers even though no salaries were paid,
which imputed salaries were charged to operating income. This practice was
terminated in the fourth quarter of 2002, when the two executives were granted
options for their services and one began drawing a salary.

The Company's previously issued certified financial statements listed its
cumulative operating loss since inception and through March 31, 2001 as
$2,053,458. The accounting interpretation of imputing unpaid salaries of senior
officers, along with other adjustments, results in a cumulative deficit of
$3,780,418 as of that date, or an increase of $1,726,960. However, the same
accounting interpretation allows the Company to treat the imputed salaries,
which were never paid, along with other adjustments, as a contribution to
capital. Consequently, the net result is that shareholders' equity as of March
31, 2001 remained unchanged at $394,936.

The Company's business plan during fiscal 2000 and fiscal 2001 was 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.
The Company owed $150,000 under the credit line as of March 31, 2002, which was
subsequently repaid. Upon repayment of the loan in May, 2002, the line of credit
was cancelled.

On September 22, 2000 the Company entered into an agreement with the Alameda
Company of Anaheim, California which granted Alameda 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. At that time, the
Company turned over to Alameda all existing customers within the above
territory.

To maintain exclusivity for 2001 and 2002 Alameda was required to 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. Due to declines in advertising pages in the publishing
industry, Alameda was unable to meet 2001 minimums and United Energy cancelled
the exclusivity portion of the contract. Alameda continues to distribute
UNIPROOF(R) on a non-exclusive basis. 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.

Our largest customers accounted for 74.5%, 49% and 41% of revenues in each of
the fiscal years ended March 31, 2002, 2001 and 2000. Our second largest
customers accounted for 11.5%, 32% and 9%, respectively, in each of such years.
No other customer accounted for more than 10% of our revenues during the same
periods.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141, Business Combinations
("SFAS 141") and No. 142, Goodwill and Other Intangible Assets ("SFAS 142").
SFAS 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. Under FAS 142, goodwill and intangible
assets with indefinite lives are no longer amortized but are reviewed annually
(or more frequently if impairment indicators arise) for impairment. Separable
intangible assets that are not deemed to have indefinite lives will continue to
be amortized over their useful lives (but with no maximum life). The
amortization provisions of SFAS 142 apply to goodwill and intangible assets
acquired after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, the Company is required to adopt SFAS 142
effective April 1, 2002. The Company believes the effect that adoption of the
provisions of SFAS 142 that are effective April 1, 2002 has no material effect
on its results of operations and financial position.

December 15, 2001. SFAS 144 supersedes certain provisions of Accounting
Principles Board (APB) Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions and
supersedes SFAS 121. The Company does not expect the adoption of SFAS 144 to
have a material effect on our consolidated financial position or results of
operations.

RESULTS OF OPERATIONS

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 2002 TO FISCAL YEAR ENDED
MARCH 31, 2001

Sales

Sales decreased to $1,387,851 for the year ended March 31, 2002 from $3,482,915
for the year ended March 31, 2001. The $2,095,064, or 60%, decrease in sales was
due principally to a 67% decrease in sales of our UNIPROOF(R) proofing paper due
to a general decline in the printing business and a 12% increase in sales in its
Green Globe / Qualchem product line. Our largest two customers accounted for 86%
of revenues for the year ended March 31, 2002 compared with 81% for the year
ended March 31, 2001.

Cost of Sales

Cost of sales decreased to $756,391 or 55% of sales, for the year ended March
31, 2002 from $2,325,652 or 67% of sales, for the year ended March 31, 2001. The
lower percentage in fiscal 2002 was primarily due to the decreased cost in the
production of UNIPROOF(R).

Operating Costs and Expenses

General and Administrative Expenses. General and administrative expenses
increased to $1,970,977 or 142% of sales, for the year ended March 31, 2002 from
$1,319,362 or 38% of sales, for the year ended March 31, 2001. The percentage
increase was due primarily to lower gross sales and higher expenses primarily
related to the value of options granted to consultants ($455,900) for services
rendered to the Company. In June 2002, Mr. Seaman, a current Director and
former general counsel to the Company, submitted multiple invoices in amounts
totaling $141,487 for legal fees and funds advanced on behalf of the
Company for periods dating back to 1997. Such amounts have been accrued in
amounts due related parties and charged to General and Administrative expense,
except for approximately $50,000 which has been included in prepaid offering
expenses in the financial statements. However, the amounts are in dispute.

Executive Services Contributed by Management. Each of the years ended 2001
and 2000 included an expense of $250,000 related to imputed but unpaid salaries
for services contributed by senior management. In 2002, such amount was $187,500
representing the first three quarters of the year. In the 4th quarter of fiscal
year 2002 each of the two officer received options for the value of their
services and one of the officers began to draw a salary.

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

Legal Settlement. The year ended March 31, 2001 included the settlement of
litigation for $231,981, which is now fully settled. During the year ended March
31, 2002, the Company settled another litigation matter in the amount of $
20,651.

Net Loss. For the year ended March 31, 2002, the Company incurred a net
loss of $1,364,576, or $0.09 per share as compared to a loss of $404,316 for the
year ended March 31, 2001 or $0.03 per share. The increased loss is primarily a
result of lower sales and higher expenses for the year. The average number of
shares used in calculating earnings per share increased 192,055 to 16,022,325
shares primarily as a result of shares issued to an outside

investor in the 2nd quarter of the fiscal year and additional shares issued in
the 4th quarter of the fiscal year for services provided by an officer.

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.

Operating Costs and Expenses

General and Administrative Expenses. General and administrative expenses
decreased to $1,319,362 or 38% of sales, for the year ended March 31, 2001 from
$1,367,170 or 53% 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.

Executive Services Contributed by Management. Each of the years included an
expense of $250,000 related to imputed but unpaid salaries for services
contributed by senior management.

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, 2001, we had a net loss of $404,316,
as compared to a loss of $152,765 for the year ended March 31, 2000. The greater
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.

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 and 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 $1,367,170, or 53% of sales, for the year ended March 31, 2000 from
$1,135,240, or 96% of sales, for the year ended March 31, 1999. This increase
was attributable primarily to the hiring of additional employees and outside
consultants.

Executive Services Contributed by Management. Each of the years included an
expense of $250,000 related to imputed but unpaid salaries for services
contributed by senior management.

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, 2000, our net loss totaled $152,765,
as compared to a loss of $1,091,367 for the year ended March 31, 1999. This
smaller loss 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 $35,333 in
fiscal 1999 would have resulted in a net loss from continuing operations in such
year of $1,056,034.

LIQUIDITY AND CAPITAL RESOURCES

Since the acquisition of United Energy in 1995, operations have been
financed primarily 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, 2002, the
Company had $198,412 in cash, accounts receivable of $218,104, inventories of
$287,857, and prepaid offering costs of $117,127.

Net Cash Provided by Operating Activities. During the fiscal year ended
March 31, 2002 net cash used in operating activities was $34,874 compared with
$59,882 provided by operating activities for the fiscal year ended March 31,
2001, a total decrease in cash flow of $94,756. This was primarily a result of
the lower level of sales activities and higher expense levels during the year.

Net Cash Provided by Financing Activities. Net cash generated from
financing activities increased to $150,000 primarily for draw downs against the
line of credit for the year ended March 31, 2002. This increased from a use of
funds of $(406) for the year ended March 31, 2001, a net increase of $150,406.
The higher amount in 2002 had been needed to cover increased losses compared to
the prior year.

At March 31, 2002, accounts receivable decreased to $218,104, a $752,329,
or 78% decrease from the balance at March 31, 2001 of $970,433. Most of the
decrease was related to the decreased sales volume of our UNIPROOF(R) proofing
paper during fiscal 2002.

At March 31, 2002, the Company incurred prepaid offering costs of $117,127
which constituted legal and other costs incurred in the preparation of the
private placement offering documents.

Inventories at March 31, 2002 were $287,857, an increase of $166,104 from
the balance of $121,753 at March 31, 2001. Most of the increase in inventory was
due to orders in process of production and finished goods awaiting shipment at
end of year. For the year ended March 31, 2002, the Company established a
inventory valuation reserve of $16,290 for certain slow moving finished goods.

Our capital requirements have grown because of our recent losses. We expect
our capital requirements to continue to increase if we are able to expand and
become a competitive force in the proofing paper and specialty chemical
industries. Our market shares in these markets are not currently quantifiable,
although we believe them to be very small. Through fiscal 2002 we have incurred
continuing significant negative cash flows from operations. Continued operations
have relied primarily on financing activities. 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 bear 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.

At March 31, 2002, the Company owed $150,000 under the credit line for
working capital to fill orders for its UNIPROOF(R) proofing paper. This amount
outstanding at March 31, 2002 was subsequently repaid with the proceeds of the
private financing.

Accounts payable and accrued expenses decreased $25,029 to $611,725 at
fiscal year end 2002 from $636,754 in 2001, due primarily to decreased cash flow
from operations. Additionally, the Company accrued certain legal and other
expenses owed to related parties in the amount of $141,487 as of March 31, 2002
compared with $30,009 in the prior year.

In June 2001, the balance of a loan of $350,000 due to a shareholder was
converted to 250,000 shares of common stock in full settlement of the debt.

Any projections of future cash needs and cash flows are subject to
substantial uncertainty. We believe that our current cash and cash equivalents
(including the proceeds of the May 2002 financing described below) will be
sufficient to meet our working capital and capital expenditures requirements for
at least the next twelve months.

SUBSEQUENT FINANCING AND NEW MANAGEMENT

On May 14, 2002, the Company issued, in a private placement, an aggregate
of 6,000,000 shares of its common stock at an aggregate price of $6,000,000. In
connection with the common stock issuance, the Company issue warrants to
purchase 3,000,000 of the Company's common stock at an exercise price of $2 per
share exercisable for a five-year period. The Company incurred an estimated
$450,000 in issuance expenses in connection with the financing. In addition, the
Company issued 750,000 additional warrants to purchase 750,000 of Company's
common stock at an exercise price of $0.60 per share with a five year term but
not exercisable during the first two years from the grant date for relinquishing
rights of immediate exercise of 500,000 warrants issued in connection with the
private placement.

As part of the private financing transaction, the Company began the process
of identifying and making employment offers to a new management team to focus on
the sales and marketing of KH-30 and other products. Three of four of the new
management team have accepted employment starting in May 2002. Each of these
executives has employment agreements with terms from one to three years. These
agreements provide, among

other things, for annual base salaries and bonuses totaling $728,000, $635,000,
$324,000 and $28,000 in fiscal 2003, 2004, 2005 and 2006.

The Company intends to use the proceeds of the offering for office
equipment, leasehold improvements, working capital and to finance the marketing
of its products.

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. 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.

SPECIALTY
FISCAL YEAR GRAPHIC ARTS CHEMICALS
----------- ------------ ---------
2000............................... 1,970,701 614,855
2001............................... 3,190,824 292,091
2002............................... 1,061,317 326,534

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 material transactions involving financial
instruments.

Item 8 - Consolidated Financial Statements and Supplementary Data

The Consolidated Financial Statements required by this Item 8 are set forth
as indicated in the index following Item 14(a)(1).

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. In May 2002, United Energy changed accounting firms
from Arthur Andersen, LLP to Grant Thornton, LLP.

PART III

The information required by this Part III (items 10, 11, 12, and 13) is hereby
incorporated by reference from the Company's definitive proxy statement which is
expected to be filed pursuant to Regulation 14A of the Securities Exchange Act
of 1934 not later than 120 days after the end of the fiscal year covered by this
report.

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:

(a) Financial Statement Schedules: Schedule II - Schedule of Valuation and
Qualifying Accounts

(b) Reports on Form 8-K: No reports were filed on Form 8-K in the last
quarter of fiscal year 2002.

(3) (I) Articles of Incorporation*
(IA) Amendment adopted August 22, 2001***
(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**
(f) 2001 Equity Incentive Plan adopted August 22, 2001***

(11) Statement re Computation of Per Share Earnings*

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

(13) Annual Report to Shareholders

(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 20, 2000
***filed with Form 10-Q for period ended September 30, 2001
and incorporated herein by reference.
****filed with Form 8-K regarding change of Auditors,
June 3, 2002

INDEX TO EXHIBITS

Exhibit
Number Item

(3) (I) Articles of Incorporation*
(IA) Amendment adopted August 22, 2001***
(II) By-Laws*

(11) Statement re Computation of Per Share Earnings*

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

(13) Annual Report to Shareholders

(16) Letter re Change in Certifying Accountant****

(18) Letter re Accounting Principles (not applicable)

(21) List of Subsidiaries*

Reports on Form 8-K:

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 CORP.
(REGISTRANT)

By \s\ Ronald Wilen July 15, 2002
--------------------------------------------------------- -------------
Ronald Wilen, President (Principal Executive Officer) Date

By \s\ Sanford M. Kimmel July 15, 2002
--------------------------------------------------------- -------------
Sanford M. Kimmel, Chief Financial Officer Date
(Principal Accounting Officer)

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

\s\ Ronald Wilen July 15, 2002
--------------------------------- -------------
Ronald Wilen, Director Date

\s\ Robert L. Seaman July 15, 2002
--------------------------------- -------------
Robert L. Seaman, Director Date

July 15, 2002
--------------------------------- -------------
Reginald L. Babcock, Director Date

\s\ Andrea Pampanini July 15, 2002
--------------------------------- -------------
Andrea Pampanini, Director Date

\s\ Martin Rappaport July 15, 2002
--------------------------------- -------------
Martin Rappaport, Director Date

\s\Thomas F. Spencer July 15, 2002
--------------------------------- -------------
Thomas F. Spencer, Director Date

\s\ Robert Deak July 15, 2002
--------------------------------- -------------
Robert Deak, Director Date

\s\ Andrew D. Lundquist July 15, 2002
--------------------------------- -------------
Andrew D. Lundquist, Director Date

\s\ Rodney Woods July 15, 2002
--------------------------------- -------------
Rodney Woods, Director Date

UNITED ENERGY CORP. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

PAGE

REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......................................... F-2-F-3

CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of March 31, 2002 and 2001............................... F-4
Consolidated Statements of Operations for the Years Ended March 31, 2002, 2001
and 2000............................................................................ F-5
Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 2002,
2001 and 2000....................................................................... F-6
Consolidated Statements of Cash Flows for the Years Ended March 31, 2002, 2001
and 2000............................................................................ F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................................... F-8-F-18

SCHEDULE II - Schedule of Valuation and Qualifying Accounts.................................. S-1

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of United Energy Corporation:

We have audited the accompanying consolidated balance sheet of United Energy
Corporation (a Nevada corporation) and subsidiaries as of March 31, 2002 and the
related consolidated statement of operations, stockholders' equity and cash
flows for the year 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 audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides 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, 2002 and the results of their
operations and their cash flows for the year ended March 31, 2002, in conformity
with accounting principles generally accepted in the United States of America.

We have also audited the schedule II for the year ended March 31, 2002. In our
opinion, this schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information therein.

/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
New York, New York
June 14, 2002

F-2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of United Energy Corp.:

We have audited the accompanying consolidated balance sheets of United Energy
Corp. (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.

Subsequent to the issuance of its March 31, 2001 financial statements, the
Company recorded compensation for the executives' services that were contributed
by management in the amount of $250,000 for each fiscal year commencing in 1996.
In addition, certain other adjustments were reflected, as discussed in Note 14.
None of these adjustments impacted working capital or total stockholders'
equity. The financial statements presented have been revised to reflect the
above.

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/A for the three years ended March 31,
2001 is presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has 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 (except with respect to the matters discussed in Note 14, as to
which the date is July 20, 2001, respectively).

This Report of Independent Certified Public Accountants is a copy of a
previously issued Arthur Anderson LLP ("Anderson") report and has not been
reissued by Anderson. The inclusion of this previously issued Anderson report is
pursuant to the "Temporary Final Rule and Final Rule: Requirements for Arthur
Anderson LLP Auditing Clients," issued by the U.S. Securities Exchange and
Exchange Commission in March 2002. Note that this previously issued Anderson
report includes references to certain fiscal years, which are not required to be
presented in the accompanying consolidated financial as of and for the fiscal
years ended March 31, 2002.

F-3

UNITED ENERGY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2002 AND 2001

2002 2001
-------------- --------------

ASSETS

CURRENT ASSETS:

Cash and cash equivalents........................................................ $ 198,412 $ 96,695
Accounts receivable, net of allowance for doubtful accounts of
$4,795 and $71,656, respectively........................................... 218,104 970,433
Inventory, net of allowance of $16,290 in 2002................................... 287,857 121,753
Prepaid offering costs........................................................... 117,127 --
-------------- -------------
Total current assets ................................................ 821,500 1,188,881
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of $23,507 and $19,847, respectively................................ 16,883 7,134
OTHER ASSETS:
Goodwill, net of accumulated amortization of $17,704 and $11,935, respectively... 68,819 74,588
Patent, net of accumulated amortization
of $30,148 and $19,545 respectively.................................................... 128,908 139,511
Other assets..................................................................... 1,862 1,585
-------------- -------------
Total assets......................................................... $ 1,037,972 $ 1,411,699
============== =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit.........................................................$ 150,000 $ --
Accounts payable and accrued expenses............................................ 611,725 636,754
Due to shareholder............................................................... -- 350,000
Due to related parties........................................................... 141,487 30,009
--------------- -------------
Total current liabilities............................................ 903,212 1,016,763
--------------- -------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY:
Common stock: $0.01 par value 100,000,000 shares authorized; 16,180,270
and 15,830,270 shares issued and outstanding as of March 31, 2002
and 2001, respectively..................................................... 161,802 158,302
Additional paid-in capital ...................................................... 5,117,952 4,042,052
Stock subscription receivable.................................................... -- (25,000)
Accumulated deficit.............................................................. (5,144,994) (3,780,418)
---------------- --------------
Total stockholders' equity........................................... 134,760 394,936
--------------- -------------
Total liabilities and stockholders' equity ..........................$ 1,037,972 $ 1,411,699
=============== =============

F-4

UNITED ENERGY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000

2002 2001 2000
--------- ----------- ----------

REVENUES, net ........................................... $ 1,387,851 $ 3,482,915 $ 2,585,556
COST OF GOODS SOLD........................................ 756,391 2,325,652 1,368,727
------------------ ------------------ ------------------
Gross profit........................................... 631,460 1,157,263 1,216,829
------------------ ------------------ ------------------

OPERATING EXPENSES:
General and administrative............................. 1,763,446 1,052,790 1,099,705
Executive services contributed by management........... 187,500 250,000 250,000
Depreciation and amortization......................... 20,031 16,572 17,465
------------------ ------------------ ------------------
Total operating expenses................... 1,970,977 1,319,362 1,367,170
------------------ ------------------ ------------------
(Loss) from operations..................... (1,339,517) (162,099) (150,341)
------------------- ------------------- --------------------

OTHER INCOME (EXPENSE):
Interest income........................................ 1,792 1,581 10,028
Interest expense....................................... (6,200) (11,817) (12,452)
Legal settlement....................................... (20,651) (231,981) --
------------------ ------------------- ------------------
Total other (expense)...................... (25,059) (242,217) (2,424)
------------------ ------------------ -------------------
Net (loss)................................. $ (1,364,576) $ (404,316) $ (152,765)
=================== =================== ===================

BASIC AND DILUTED LOSS PER SHARE:

Total basic and diluted (loss) per share... $ (0.09) $ (0.03) $ (0.01)
================== ================== ==================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING, basic and diluted......................... 16,022,325 15,830,270 15,790,853
================== ================== ==================

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

F-5

UNITED ENERGY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2002, 2001, AND 2000

ADDITIONAL STOCK
COMMON STOCK PAID-IN SUBSCRIPTION ACCUMULATED
SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT TOTAL

BALANCE, March 31, 1999.......... 15,731,270 $157,312 $3,367,542 $(25,000) $ (3,223,337) $276,517
Common stock issued for
services received........ 99,000 990 174,510 -- -- 175,500
Executive services
contributed by management -- -- 250,000 -- -- 250,000
Net loss..................... -- -- -- -- (152,765) (152,765)
---------- ------- --------- -------- -------------- -----------
BALANCE, March 31, 2000.......... 15,830,270 158,302 3,792,052 (25,000) (3,376,102) 549,252

Executive services
contributed by management -- -- 250,000 -- -- 250,000
Net loss..................... -- -- -- -- (404,316) (404,316)
---------- ------- --------- -------- -------------- -----------
BALANCE, March 31, 2001.......... 15,830,270 158,302 4,042,052 (25,000) (3,780,418) 394,936
Common stock issued for
conversion of due to
shareholder.............. 250,000 2,500 347,500 -- -- 350,000
Write-off of subscription
receivable............... (25,000) 25,000 -- --
Common stock issued for services
received................. 100,000 1,000 110,000 -- -- 111,000
Options granted in consideration
For consulting services.. 455,900 455,900
Executive services
contributed by management -- -- 187,500 -- -- 187,500
Net loss..................... -- -- -- -- (1,364,576) (1,364,576)
---------- ------- --------- -------- -------------- -----------
BALANCE, March 31, 2002.......... 16,180,270 $161,802 $5,117,952 $ -- $ (5,144,994) $ 134,760
========== ======== ========== ======== ============= ==========

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

F-6

UNITED ENERGY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000

2002 2001 2000
----------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss .......................................................... $ (1,364,576) $ (404,316) $ (152,765)
Adjustments to reconcile net loss to net cash
provided by operating activities-
Depreciation and amortization................................... 20,031 16,572 17,465
Noncash consulting expense...................................... 111,000 -- 175,500
Options granted in consideration for
Consulting services............................................. 455,900 -- --
Executive services contributed by management.................... 187,500 250,000 250,000
Changes in operating assets and liabilities-
Decrease (increase) in accounts receivable...................... 752,329 (524,484) (336,212)
(Increase) decrease in inventory................................ (166,104) 470,532 (543,790)
Increase in prepaid offering costs.............................. (5,649) -- --
(Increase) decrease in other assets............................. (277) -- 3,154
(Decrease) increase in accounts payable and accrued
expenses.................................................. (25,028) 251,578 120,088
--------------- ------------ -------------
Net cash (used in) provided by operating activities....... (34,874) 59,882 (466,560)
--------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisition of property and equipment.................... (13,409) -- --
Payments for patent................................................... -- (8,789) (16,151)
-------------- ------------ -------------
Net cash used in investing activities..................... (13,409) (8,789) (16,151)
-------------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on line of credit............................................ -- (165,697) (6,370)
Proceeds from line of credit.......................................... 150,000 160,000 --
Proceeds from related party........................................... -- 5,291 12,641
Proceeds from due to shareholder...................................... -- -- 350,000
-------------- ------------ -------------
Net cash provided by (used in) financing activities....... 150,000 (406) 356,271
-------------- ------------ -------------
Net increase (decrease) in cash and cash equivalents.. 101,717 50,687 (126,440)
CASH AND CASH EQUIVALENTS, beginning of year............................. 96,695 46,008 172,448
-------------- ------------ -------------
CASH AND CASH EQUIVALENTS, end of year................................... $ 198,412 $ 96,695 $ 46,008
============== ============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for-
Interest........................................................ $ 6,266 $ 11,198 $ 12,452
Income taxes.................................................... 720 5,066 800

Conversion of accounts due to a shareholder into
common stock.................................................... $ 350,000 $ -- $ --

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

F-7

UNITED ENERGY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002 2001 AND 2000

1. DESCRIPTION OF BUSINESS

United Energy (the "Company") considers its primary business focus to be
the development, manufacture and sale of environmentally friendly 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 friendly paint
strippers and cleaners, many of which have been qualified for use by the U.S.
Military. Green Globe developed a dual package of cleaning and drying "wipes"
which produce a clear, non-reflective coating on glasses, computer screens and
instrument panels. The "wipes" were developed for, and have received U.S.
Military approval for, the cleaning of the instrument panels of combat aircraft.

United Energy's chemists have also developed an environmentally friendly
fire retardant agent named FR-15. FR-15 begins as a concentrate, which can be
mixed with varying amounts of water, depending on the anticipated use. FR-15
mixture also resists re-ignition once a fire has been extinguished. This product
can also be used to reduce odors, such as those from decomposing garbage and for
soil remediation following petroleum-based contamination. The FR-15 product has
been fully developed and tested by several municipal fire departments.

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

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 formally named "Bye Bye Barnacles"(TM) and now
called "Slick Barrier" 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
Corp. and its wholly-owned subsidiaries Green Globe Industries, Inc. and
currently inactive subsidiary, Nor-Graphic Industries. All intercompany
transactions and accounts have been eliminated in consolidation.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

F-8

reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities.

REVENUE RECOGNITION

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

CASH AND CASH EQUIVALENTS

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

INVENTORIES

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

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. 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, 2002, 2001 and 2000 was $3,660, $2,527 and $4,009,
respectively.

Property and equipment consists of the following at March 31, 2002 and
2001:

2002 2001
---- ----

Furniture and fixtures................................................. $ 27,670 $ 18,707
Machinery and equipment................................................ 7,097 5,597
Leasehold improvement.................................................. 5,623 2,677
------------- -------------
40,390 26,981
Less- Accumulated depreciation and amortization........................ (23,507) (19,847)
------------- -------------
Property and equipment, net............................................ $ 16,883 $ 7,134
============= =============

GOODWILL

The Company capitalized goodwill related to the acquisition of Green
Globe Industries, Inc. in September of 1998. Goodwill represents cost in excess
of fair value on the net assets acquired. Goodwill is amortized over a 15 year
period using a straight line amortization method.

F-9

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 such as
sales forecasts related to those assets indicate that the carrying amount of an
asset exceeds the fair value of the asset. 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, 2002.

INCOME TAXES

The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are determined based on
the temporary differences between the financial statement and the income tax
bases of assets and liabilities and for net operating losses 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 valuation allowance is
established when it is considered more likely than not that such assets will not
be realizable. The effect on deferred tax assets or liabilities of a change in
tax rates is recognized in the period in which the tax change occurs.

STOCK-BASED COMPENSATION

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

SFAS No. 128 establishes standards for computing and presenting earnings
per share ("EPS"). The standard requires the presentation of basic EPS and
diluted EPS. Basic EPS is calculated by dividing income 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. Diluted loss
per share has not been presented since the inclusion of the outstanding stock
options would be antidilutive.

F-10

CONCENTRATIONS OF RISK

Accounts Receivable

The Company has one customer which accounted for 75% and another customer
which accounted for 94% of the total accounts receivable at March 31, 2002 and
2001, 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, 2002, 2001 and 2000, are as follows:

2002 2001 2000
---- ---- ----

Customer A ................................................... 0 32 40
Customer B ................................................... 12 0 0
Customer C ................................................... 74 49 0

Vendors

The Company has one vendor, which accounts for over 38%, 37% and 31% of the
Company's supplies purchases for the years ended March 31, 2002, 2001 and 2000,
respectively. The Company believes they can obtain the products from other
vendors on terms suitable to the Company.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable,
inventory, revolving line of credit, 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.

RECENTLY ISSUED ACCOUNTING STANDARDS

F-11

In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets ("SFAS 144"), which is effective for fiscal years beginning after
December 15, 2001. SFAS 144 supersedes certain provisions of Accounting
Principles Board (APB) Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions and
supersedes SFAS 121. The Company does not expect the adoption of SFAS 144 to
have a material effect on our consolidated financial position or results of
operations.

3. INVENTORY

Inventory consists of the following as of March 31, 2002 and 2001:

2002 2001
---- ----

Paper.......................... $ 182,046 $ 59,190
Blended chemical............... 89,862 59,955
Other raw materials............ 15,949 2,608
------------- -------------
Total inventory................ $ 287,857 $ 121,753
============= =============

4. EXCLUSIVE DISTRIBUTION AGREEMENT

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. Due to a severe
decline of publishing industry advertising pages, Alameda was unable to meet the
2001 quota and the exclusivity portion of the agreement has been terminated.
Alameda will continue to market UNIPROOF(R) on a non-exclusive basis.

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 (4.75%
at March 31, 2002). 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. At March 31, 2002 the outstanding amount was $150,000.

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, 2002, 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, 2002. Although the bank has not exercised its rights
to demand payment in full of the amounts due and owing at March 31, 2002, which
is $150,000, 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.

F-12

The Company has repaid the line of credit in May 2002 with the proceeds
received from the private placement, see subsequent events footnote for more
information on the private placement.

6. RELATED PARTY TRANSACTIONS

The Company had an amount due to Robert Seaman who is a major shareholder
and director of the Company. The amount due to related parties as of March 31,
2002 and 2001 is $141,487 and $30,009, respectively. These amounts are
unsecured, noninterest bearing and due upon demand. At March 31, 2001, the
Company was indebted to Relevant Investments Ltd. for $350,000. In June 2001,
250,000 shares were issued to Relevant Investments Ltd. in full satisfaction of
the amount due. The amount has been shown as due to shareholder on the balance
sheet as of March 31, 2001.

Martin Rappaport, a major shareholder and director of the Company owns the
property from which United Energy leases the 9,600 square foot facility it
occupies in Secaucus, New Jersey. The Company pays $92,640 per year under the
lease.

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 customers 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
of $150,000, which was paid during the period of April 2001 through November
2001. The Company incurred legal fees of approximately $78,000. The settlement
occurred in 2001 and the Company recorded all costs related to the settlement in
the 2001 fiscal year's financials under other income and expense.

8. STOCKHOLDERS' EQUITY

During year ended March 31, 2000, the Company issued an aggregate of 99,000
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, except for treasury shares.
During the year ended March 31, 2002, 350,000 additional shares were issued.

Until December 31, 2001, the CEO and CFO provided services to the Company
for which they had not received any compensation. The financial statements
through that date reflect a charge and associated credit to shareholders' equity
reflecting the fair value of such contributed services. Both these individuals
received option and/or cash compensation commencing in the fourth quarter and
accordingly the Company ceased reflecting the value of contributed services as
of January 1, 2002

9. INCOME TAXES

Deferred income taxes are provided for the temporary difference between the
financial reporting basis and tax basis of the Company's assets and liabilities
including those assets and liabilities recorded in connection with acquisitions.
Deferred tax assets and liabilities result principally from recording certain
expenses or income in the financial statements in a different period from
recognition for income tax purposes. As of March 31, 2002, the

F-13

Company had a net operating loss carryforward of approximately $3,330,000,
which is available to reduce its future taxable income and expires at various
dates through 2022. A full valuation allowance 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.

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

10. EMPLOYEE BENEFITS PLAN

Stock Option Plans

In August, 2001, the Company's stockholders approved, the 2001 Equity
Incentive Plan (the "2001 Plan"), which provides for the grant of stock options
to purchase up to 2,000,000 shares of common stock to any employee, non-employee
director, or consultant at the Board's discretion. Under the 2001 Plan, these
options may be exercised for a period up to ten years from the date of grant.
Options issued to employees are exercisable upon vesting, which can range
between the date of the grant to up to 5 years.

An amendment and restatement of the 2001 Equity Incentive Plan increasing
the number of shares for a total of 4,000,000 was approved by the Board of
Directors on May 29, 2002 and will be presented to the shareholders for approval
at the annual meeting.

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

There were 1,075,000 options available for future grant at March 31, 2002.
The company issues options from time to time outside the plan described above.

Fair Value of Stock Options

For disclosure purposes under SFAS No. 123, the fair value of each option
grant is estimated on the date of grant using the Black-Scholes option valuation
model with the following weighted-average assumptions:

2002
----

Expected life (in years)........................................... 7
Risk-free interest rate............................................ 5.39%
Volatility......................................................... 100.6
Dividend yield..................................................... 0%

Utilizing these assumptions, the weighted average fair value of options granted
with an exercise price equal to their fair market value at the date of the grant
is $0.94 for the years ended March 31, 2002.

Under the above model, the total value of stock options granted would be
amortized on a pro forma basis over the option-vesting period. Had the Company
determined compensation expense for these stock options under the fair value
method of SFAS No. 123, the Company's net loss attribute to common stockholders'
would have been increased to the following pro forma amounts:

F-14

YEAR ENDED
MARCH 31,
2002

Pro forma net loss attributable to common stockholders'... $1,777,863
==========

Pro forma basic and diluted, net loss per share
attributable to common stockholders'............. $ (0.11)
========

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options. The effects of
applying SFAS No. 123 in this pro forma disclosure are not indicative of future
amounts as additional stock option awards are anticipated in future years.

Summary Stock Option Activity

The following table summarizes stock option information with respect to all
stock options for the year ended March 31, 2002:

WEIGHTED WEIGHTED
AVERAGE AVERAGE REMAINING
NUMBER OF EXERCISE CONTRACTUAL
SHARES PRICE LIFE (YEARS)

Options outstanding, April 1, 2001............... - - -
Granted................................. 1,110,000 $1.10 9.9
--------- ----- ---
Options outstanding March 31, 2002............... 1,110,000 $1.10 9.9
========= ====== ===

As of March 31, 2002 there were 935,000 options exercisable with weighted
average exercise price of $1.09 per share.

11. SEGMENT REPORTING

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

F-15

The Company's total revenues, income from operations and indentifiable assets for the year ended March 31, 2002, are as
follows:

GRAPHIC SPECIALTY
ARTS CHEMICALS CORPORATE TOTAL
-------------- --------------- --------------- ---------------

Revenues .................................... $ 1,061,317 $ 326,534 $ -- $ 1,387,851
============== =============== =============== ==============

Gross profit.................................... $ 496,385 $ 135,075 $ -- $ 631,460
General and administrative expenses............. 241,097 274,802 1,247,547 1,763,446
Depreciation and amortization................... -- 19,053 978 20,031
Interest expense (income)....................... 6,200 -- (1,792) 4,408
Legal settlement................................ -- 20,651 -- 20,651
Executive services contributed by management.... -- -- 187,500 187,500
-------------- --------------- --------------- --------------
Income (loss) from continuing operations........ $ 249,088 $ ( 179,431) $ ( 1,434,233) $ (1,364,576)
============== =============== =============== ==============

Cash and cash equivalents....................... $ -- $ -- $ 198,412 $ 198,412
Accounts receivable............................. 162,961 55,143 -- 218,104
Inventory .................................... 182,046 105,811 -- 287,857
Prepaid offering costs.......................... -- -- 117,127 117,127
Fixed assets.................................... -- -- 16,883 16,883
Goodwill .................................... -- 68,819 -- 68,819
Patent .................................... -- 128,908 -- 128,908
Other assets.................................... -- -- 1,862 1,862
-------------- --------------- --------------- --------------
Total assets.................................... $ 345,007 $ 358,681 334,284 $ 1,037,972
============== =============== =============== ==============

F-16

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

GRAPHIC SPECIALTY
ARTS CHEMICALS CORPORATE TOTAL
--------------- --------------- ------------ --------------

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
Executive services contributed by management...... -- -- 250,000 250,000
--------------- --------------- ------------ --------------

Income (loss) from continuing operations.......... $ 800,029 $ ( 95,965) $ (1,108,380) $ (404,316)
=============== =============== ============ ===============

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
=============== =============== ============ ==============

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

GRAPHIC SPECIALTY
ARTS CHEMICALS CORPORATE TOTAL
--------------- --------------- ------------ --------------

Revenues ...................................... $ 1,970,701 $ 614,855 $ -- $ 2,585,556
=============== =============== ============ ==============

Gross profit ..................................... $ 958,538 $ 258,291 $ -- $ 1,216,829
General and administrative........................ 224,723 366,871 508,111 1,099,705
Depreciation and amortization .................... -- 15,704 1,761 17,465
Interest expense.................................. 12,452 -- (10,028) 2,424
Executive services contributed by management...... -- -- 250,000 250,000
--------------- --------------- ------------ --------------
Income (loss) from continuing operations.......... $ 721,363 $ (124,284) $ (749,844) $ (152,765)
=============== =============== ============ ==============

12. 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-17

13. SUBSEQUENT FINANCING AND NEW MANAGEMENT

On May 14, 2002, the Company issued, in a private placement, an aggregate
of 6,000,000 shares of its common stock at an aggregate price of $6,000,000. In
connection with the common stock issuance, the Company issued warrants to
purchase 3,000,000 of the Company's common stock at an exercise price of $2 per
share exercisable for a five year period. The Company incurred an estimated
$450,000 in issuance expenses in connection with the financing. In addition, the
Company issued 750,000 additional warrants to purchase 750,000 of the Company's
common stock at an exercise price of $0.60 per share with a five year term but
not exercisable during the first two years from the grant date for relinquishing
rights of immediate exercise of 500,000 warrants issued in connection with the
private placement.

F-18

SCHEDULE II

UNITED ENERGY CORP.
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

BALANCE AT CHARGED BALANCE AT
BEGINNING TO COSTS AND BALANCE AT
OF YEAR EXPENSES DEDUCTIONS END OF YEAR

For the fiscal year ended March 31, 2002:
Allowance for doubtful accounts......... $ 71,656 $ 4,795 $ 71,656 $ 4,795
------------- ------------- ------------- -------------

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, 2002:
Reserve for inventory obsolescence..... -- $ 16,290 $ -- $ 16,290
------------- ------------- ------------- -------------

S-1