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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________
Commission File No. 000-30841
UNITED ENERGY CORP.
-------------------
(Exact name of registrant as specified in its charter)
NEVADA 22-3342379
- ------------------------------ ------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No. )
incorporation or organization)
600 Meadowlands Parkway, Secaucus, N.J. 07094
- --------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
(201) 842-0288
------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [ X ] Yes [ ] No
The number of shares outstanding of each of the Issuer's classes of common
stock, as of the latest practicable date.
UNITED ENERGY CORP.
Class Outstanding as of December 31, 2000
- ------------------------------ -----------------------------------
Common Stock, $.01 par value 15,830,270 shares
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INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
(Unaudited)......................................................... 3
Consolidated balance sheets
December 31, 2000 and March 31, 2000................................ 4
Consolidated statements of operations for the three months and nine
months ended December 31, 2000 and 1999;............................ 5
Consolidated statements of cash flows for the
nine months ended December 31, 2000 and 1999........................ 6
Notes to consolidated financial statements
December 31, 2000.................................................. 7-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......... 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................... 18
Item 2. Changes in Securities and Use of Proceeds........................... 18
Item 3. Defaults upon Senior Securities..................................... 18
Item 4. Submission of Matters to a Vote of Security Holders................. 18
Item 6. Exhibits and Reports on Form 8-K.................................... 18
Signatures...................................................................... 19
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
----
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 31, 2000 (Unaudited) and
March 31, 2000 4
Consolidated Statements of Operations for the Three and Nine Months
Ended December 31, 2000 and 1999 5
Consolidated Statements of Cash Flows for the Nine Months Ended
December 31, 2000 and 1999 (Unaudited) 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
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UNITED ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 (Unaudited)
AND MARCH 31, 2000
December 31, March 31,
2000 2000
----------- -----------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents ................................................ $ 275,218 $ 46,008
Accounts receivable, net of allowance for doubtful accounts
of $71,656 and $18,260, respectively ................................... 857,600 445,949
Inventory ................................................................ 129,156 592,285
Prepaid expenses ......................................................... 401 --
----------- -----------
Total current assets ............................................ 1,262,375 1,084,242
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of $20,128 and $17,320, respectively ........................ 7,004 9,661
OTHER ASSETS:
Goodwill, net of accumulated amortization of $10,942 and
$7,957, respectively ................................................... 75,581 78,566
Patent, net of accumulated amortization of $16,991 and
$9,479, respectively ................................................... 133,276 140,789
Other assets ............................................................. 1,385 1,585
----------- -----------
Total assets .................................................... $ 1,479,621 $ 1,314,843
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses .................................... $ 250,844 $ 385,176
Accounts payable to shareholders ......................................... 350,000 350,000
Related party loans payable .............................................. 26,148 24,718
Short-term bank loan and revolving line of credit ........................ 160,000 5,697
----------- -----------
Total current liabilities ....................................... 786,992 765,591
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock; 100,000,000 shares authorized of $0.01 par value, 15,830,270
shares issued and outstanding as of December 31 and March 31, 2000,
respectively ........................................................... 158,302 158,302
Additional paid-in capital ............................................... 2,640,092 2,640,092
Stock subscription receivable ............................................ (25,000) (25,000)
Accumulated deficit ...................................................... (2,080,765) (2,224,142)
----------- -----------
Total stockholders' equity ...................................... 692,629 549,252
----------- -----------
Total liabilities and stockholders' equity ...................... $ 1,479,621 $ 1,314,843
=========== ===========
The accompanying notes are an integral part of these consolidated balance
sheets.
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UNITED ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
DECEMBER 31, 2000 AND 1999 (Unaudited)
For the Three Months For the Nine Months
Ended December 31, Ended December 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
REVENUES, net $ 1,281,608 $ 868,747 $ 2,854,703 $ 1,765,996
COST OF GOODS SOLD 894,717 496,857 1,965,943 980,793
------------ ------------ ------------ ------------
Gross profit 386,891 371,890 888,760 785,203
------------ ------------ ------------ ------------
OPERATING EXPENSES:
General and administrative 261,955 255,280 723,352 645,014
Depreciation and amortization 4,385 4,555 13,155 13,023
------------ ------------ ------------ ------------
Total operating expenses 266,340 259,835 736,507 658,037
------------ ------------ ------------ ------------
Income from operations 120,551 112,055 152,253 127,166
------------ ------------ ------------ ------------
OTHER (EXPENSE) INCOME, net:
Interest income -- 3,133 -- 7,884
Interest expense (3,945) (4,126) (8,875) (8,536)
------------ ------------ ------------ ------------
Total other expense, net (3,945) (993) (8,875) (652)
------------ ------------ ------------ ------------
Net income $ 116,606 $ 111,062 $ 143,378 $ 126,514
============ ============ ============ ============
BASIC AND DILUTED INCOME
PER SHARE $ 0.00 $ 0.00 $ 0.00 $ 0.00
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, basic
and diluted 15,830,270 15,761,053 15,830,270 15,726,656
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated statements.
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UNITED ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
DECEMBER 31, 2000 AND 1999 (Unaudited)
For the Nine Months
Ended December 31,
-------------------------------
2000 1999
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................ $ 143,378 $ 126,514
Adjustments to reconcile net income to net cash used in
operating activities-
Depreciation and amortization ....................... 13,155 13,023
Changes in operating assets and liabilities-
Decrease (increase) in accounts receivable, net ..... (411,652) (260,445)
Increase in inventory ............................... (463,129) (406,889)
Increase in prepaid expenses ........................ (201) --
Decrease (increase) in other assets ................. -- 3,161
Increase (decrease) in accounts payable and accrued
expenses .......................................... (134,331) 168,599
--------- ---------
Net cash used in operating activities ........ (852,780) (356,037)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for patent ................................... -- (14,359)
--------- ---------
Net cash used in investing activities ........ -- (14,359)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on line of credit ............................ 160,000 165,000
Payments on bank loan ................................. (5,697) (5,455)
Proceeds from loans payable to related party .......... 1,430 362,478
--------- ---------
Net cash provided by financing activities .... 155,733 522,023
--------- ---------
Net increase in cash and cash equivalents .... 229,210 151,647
CASH AND CASH EQUIVALENTS, beginning of period ........... 46,008 172,448
--------- ---------
CASH AND CASH EQUIVALENTS, end of period ................. $ 275,218 $ 324,095
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period-
Interest ............................................ $ 7,585 $ 7,281
========= =========
Income taxes ........................................ $ 5,066 $ 460
========= =========
The accompanying notes are an integral part of these consolidated statements.
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UNITED ENERGY CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited interim
financial statements furnished herein include all adjustments necessary for a
fair presentation of the Company's financial position at December 31, 2000 and
March 31, 2000 and the results of its operations for the three months and the
nine months ended December 31, 2000 and 1999 and cash flows for the nine months
ended December 31, 2000 and 1999. All such adjustments are of normal recurring
nature. Interim financial statements are prepared on a basis consistent with the
Company's annual financial statements. Results of operations for the three-month
and for the nine-month periods ended December 31, 2000 are not necessarily
indicative of the operating results that may be expected for the year ending
March 31, 2001.
The consolidated balance sheet as of March 31, 2000 has been derived from
the audited financial statements at that date but does not include all of the
information and notes required by accounting principles generally accepted in
the United States for complete financial statements.
For further information, refer to the consolidated financial statements and
notes thereto included in the Company's Registration statement on Form 10 filed
with the Securities and Exchange Commission on June 20, 2000.
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2. STOCK OPTION PLAN
On May 3, 1999, the Board of Directors approved the 1999 Comprehensive
Stock Option Plan (the "1999 Plan"). Under the 1999 Plan, the Company is
authorized to grant stock options, the exercise of which would allow up to an
aggregate of 2,000,000 shares of the Company's common stock to be acquired by
the holders of said awards. The awards can take the form of Incentive Stock
Options ("ISOs") or Nonstatutory Stock Options ("NSOs"). ISOs and NSOs are to be
granted in terms not to exceed ten years. The exercise price of the ISOs and
NSOs will be no less than the market price of the Company's common stock on the
date of grant. Adoption of the 1999 Plan is pending shareholder approval.
The Company has no options outstanding.
3. EXCLUSIVE DISTRIBUTION AGREEMENT
On September 22, 2000 the Company and Alameda Company entered into an
exclusive Distribution agreement (the "Agreement"), whereby Alameda will
purchase from the Company various products from the graphic arts division
(meeting certain minimum purchase requirements) at guaranteed fixed prices
through December 31,2002 and distribute these products exclusively throughout
the USA, Canada, Puerto Rico, Mexico, Central America, South America and the
Caribbean.
No products were shipped and no revenue was recognized under the Alameda
Agreement prior to October 2000.
4. CREDIT LINE AGREEMENT
In June 2000, the Company obtained a $1,000,000 line of credit from Fleet
Bank. Borrowings under the credit line bear interest at prime. Interest is
payable monthly. Amounts outstanding under the line of credit are subject to
repayment on demand 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 held in escrow. The line is also secured by the personal
guarantee of a shareholder of the Company.
The line of credit is subject to certain covenants, including financial
covenants to which the Company must adhere on a quarterly or annual basis.
Borrowings under the line of credit must be reduced to zero for a period of 30
consecutive days in any twelve-month period.
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5. SEGMENT INFORMATION
Under the provision of SFAS No. 131 the Company's activities fall within
two operating segments: Graphic Arts and Specialty Chemicals. The following
tables set forth the Company's industry segment information for the three and
nine months ended December 31, 2000 and 1999:
The Company's total revenues, net income and identifiable assets by segment
for the three months ended December 31, 2000, are as follows:
Graphic Specialty
Arts Chemicals Corporate Total
---------- ---------- ---------- ----------
Revenues $1,224,826 $ 56,782 $ -- $1,281,608
========== ========== ========== ==========
Gross profit $ 362,723 $ 24,168 $ -- $ 386,891
General and administrative 49,619 97,368 114,968 261,955
Depreciation and amortization -- 4,020 365 4,385
Interest expense 3,945 -- -- 3,945
---------- ---------- ---------- ----------
Net income/(loss) $ 309,159 $ (77,220) $ (115,333) $ 116,606
========== ========== ========== ==========
Cash $ -- -- $ 275,218 $ 275,218
Accounts receivable, net 826,130 31,471 -- 857,600
Inventory 94,335 34,821 -- 129,156
Prepaid Expenses -- -- 401 401
Fixed assets, net -- -- 7,004 7,004
Goodwill, net -- 75,581 -- 75,581
Patent, net -- 133,276 -- 133,276
Other assets -- -- 1,385 1,385
---------- ---------- ---------- ----------
Total assets $ 920,465 $ 275,149 $ 284,008 $1,479,621
========== ========== ========== ==========
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The Company's total revenue and net income by segment for the nine months ended
December 31, 2000, are as follows:
Graphic Specialty
Arts Chemicals Corporate Total
---------- ---------- ---------- ----------
Revenues $2,671,401 $ 183,302 $ -- $2,854,703
========== ========== ========== ==========
Gross profit $ 816,018 $ 72,742 $ -- $ 888,760
General and administrative 178,897 158,931 385,524 723,352
Depreciation and amortization -- 11,908 1,247 13,155
Interest expense 8,875 -- -- 8,875
---------- ---------- ---------- ----------
Net income/(loss) $ 628,246 $ (98,097) $ (386,771) $ 143,378
========== ========== ========== ==========
The Company's total revenues and net loss by segment for the three months ended
December 31, 1999, are as follows:
Graphic Specialty
Arts Chemicals Corporate Total
--------- --------- --------- ---------
Revenues $ 657,506 $ 211,241 $ -- $ 868,747
========= ========= ========= =========
Gross profit $ 282,205 89,685 $ -- $ 371,890
General and administrative 78,000 64,603 112,677 255,280
Depreciation and amortization -- 4,115 440 4,555
Interest expense (income) 4,126 -- (3,133) 993
--------- --------- --------- ---------
Loss from continuing operations $ 200,079 $ 20,967 $(109,984) $ 111,062
========= ========= ========= =========
The Company's total revenues and net income by segment for the nine months ended
December 31, 1999, are as follows:
Graphic Specialty
Arts Chemicals Corporate Total
---------- ---------- ---------- ----------
Revenues $1,373,481 $ 392,515 $ -- $1,765,996
========== ========== ========== ==========
Gross profit $ 639,814 $ 145,389 $ -- $ 785,203
General and administrative 171,005 156,314 317,695 645,014
Depreciation and amortization -- 11,703 1,320 13,023
Interest expense (income) 8,536 -- (7,884) 652
---------- ---------- ---------- ----------
Net Income $ 460,273 $ (22,628) $ (311,131) $ 126,514
========== ========== ========== ==========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
United Energy considers its primary focus to be the development,
manufacture and sale of environmentally safe specialty chemical products. The
Company considers its leading product in terms of future earnings potential to
be its KH-30(R) oil and gas well cleaning product.
KH-30(R) is an environmentally-safe, non-petroleum based product that
is non-toxic and will biodegrade. KH-30(R) has a period of operational
effectiveness in an oil or gas well that exceeds the effectiveness period of
other products currently in use, usually lasting between 60-90 days before
retreatment is required. Moreover, the use of KH-30(R) in the well has
additional beneficial effects "downstream" resulting in cleaner flow lines and
holding tanks. KH-30(R) has also been tested to be refinery compatible in that
it contains no materials that are harmful to the refining process. This product
has yet to achieve any significant market penetration.
One of United Energy's specialty chemical products is a
photo-sensitive coating that is applied to paper to produce what is known in the
printing industry as proofing paper or "blue line" paper. The Company developed
this formulation over several years of testing. The Company's patent attorneys
have informed the Company that the formulation is technically within the public
domain as being within the scope of an expired duPont patent. However, the exact
formulation utilized by the Company has not
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been able to be duplicated by others and is protected by the Company as a trade
secret. The product is marketed under the trade name UNIPROOF(R).
The Company introduced its UNIPROOF(R) proofing paper 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. UNIPROOF(R) sales totaled $1,209,547 for the quarter ended
December 31, 2000 and $2,452,569 for the nine months ended December 31, 2000.
Sales of UNIPROOF(R) for the third quarter included a one-time inventory sale to
the Alameda company in the amount of $798,100 and are, therefore, not indicative
of results to be expected in future fiscal quarters.
The Company's business plan is to use UNIPROOF(R) proofing paper
sales to provide the cash flow to support world wide marketing efforts for its
KH-30(R) oil well cleaner and, to a lesser extent, the other specialty chemical
products developed by the Company which are described in its Form 10 filed with
the U.S. Securities and Exchange Commission on June 20, 2000.
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 material terms of which are described below under
"Liquidity and Capital Resources."
On September 22, 2000 the Company entered into an agreement with the
Alameda Company of Anaheim California which grants them exclusive distribution
rights in the Western Hemisphere (North, South and Central America and the
Caribbean) for UNIPROOF(R) proofing paper. As part of the arrangement Alameda
agreed to buy all existing UNIPROOF(R) inventory for $798,100. The Company is
turning over to Alameda all existing customers within the above territory. Sales
of UNIPROOF(R) for the third quarter included the one-time inventory sale to the
Alameda company in the amount of $798,100 and are, therefore, not indicative of
results to be expected in future fiscal quarters.
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The contract with Alameda covers the years 2001 and 2002 and is
renewable annually thereafter provided they meet certain minimum product
purchase levels. To maintain exclusivity for 2001 and 2002 they must purchase a
total of 13,394,641 sq. ft ($3,348,660) in 2001 and 16,073,568 sq. ft.
($4,018,392) in 2002. Future minimums and prices are to be agreed upon. For more
information, please see our agreement with Alameda which is included as an
exhibit to our report on Form 10-Q for the period ended September 30, 2000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
REVENUES Revenues for the third quarter of fiscal 2001 were
$1,281,608, a $412,861 or 48% increase over revenues of $868,747 in the third
quarter of fiscal 2000. The increase in revenues was primarily due to an
increase in UNIPROOF(R) sales, particularly impacted by the one-time sale of
$798,100 of UNIPROOF(R) inventory to the Alameda Company.
COST OF GOODS SOLD Cost of goods sold increased to $894,717 or 70% of
revenues, for the quarter ended December 31, 2000 from $496,857 or 57% of sales,
for the quarter ended December 31, 1999. This was primarily due to increased
production of UNIPROOF(R) proofing paper.
GROSS PROFIT Gross profit for the December 31 quarter of fiscal year
2001 was $386,891, a $15,001 or 4% increase from $371,890 in the corresponding
period of fiscal 2000. This increase was primarily attributable to increased
UNIPROOF(R) sales. Gross profit as a percentage of sales was 30% in the fiscal
2001 quarter compared with 43% in the fiscal 2000 period, due to an increase in
cost of goods sold.
OPERATING COSTS AND EXPENSES
General and Administrative Expenses. General and administrative
expenses increased to $261,955, or 20% of revenues for the quarter ended
December 31, 2000
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from $255,280, or 29% of revenues for the quarter ended December 31, 1999. The
percentage decrease in the fiscal 2001 period was largely the result of
significantly higher revenues in that period, while the increase in dollar terms
was primarily due to higher professional fees associated with the preparation
and filing of materials with the Securities and Exchange Commission to become a
1934 Act reporting entity.
INTEREST EXPENSE, NET OF INTEREST INCOME. The Company had interest
expense of $3,945 for the quarter ended December 31, 2000 compared with net
interest expense of $993 in the corresponding 1999 period. The increase was the
result of borrowings under the credit line obtained in June 2000 which were not
offset by funds on deposit.
NET INCOME. For the quarter ended December 31, 2000, net income
totaled $116,606, or 9% of revenues, as compared to income of $111,062 or 13% of
revenues for the quarter ended December 31, 1999.
NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999
REVENUES Revenues for the first nine months of fiscal 2001 were
$2,854,703, a $1,088,707 or 62% increase over revenues of $1,765,996 in the
first nine months of fiscal 2000. The increase in revenues was primarily due to
an increase in UNIPROOF(R) sales, particularly impacted by the one-time sale of
$798,100 of inventory to the Alameda Company.
COST OF GOODS SOLD Cost of goods sold increased to $1,965,943 or 69%
of sales, for the nine months ended December 31, 2000 from $980,793 or 55% of
sales, for the nine months ended December 31, 1999. This was primarily due to
increased production of UNIPROOF(R) proofing paper.
GROSS PROFIT Gross profit for the first nine months of fiscal year
2001 was $888,760, a $103,557 or 13% increase from $ 785,203 in the
corresponding period of
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fiscal 2000. This increase was primarily attributable to increased UNIPROOF(R)
sales, offset by the increase in cost of goods sold.
OPERATING COSTS AND EXPENSES
General and Administrative Expenses. General and administrative
expenses increased to $723,352, or 25% of revenues for the nine months ended
December 31, 2000 from $645,014, or 37% of revenues for the nine months ended
December 31, 1999. The nine month 2000 figure also included a $53,396 net
addition to the allowance for doubtful accounts receivable and higher
professional fees related to filings with the U.S. Securities and Exchange
Commission
INTEREST EXPENSE, NET OF INTEREST INCOME. The Company had interest
expense of $8,875 for the first nine months ended December 31, 2000 compared
with net interest expense of $652 in the corresponding 1999 period. The change
was due to borrowings under the Company's credit line.
NET INCOME. For the nine months ended December 31, 2000, net income
totaled $143,378, or 5% of revenues, as compared to net income of $126,514 or 7%
of revenues for the nine months ended December 31, 1999. The increase in dollar
terms is primarily the result of the higher volume of UNIPROOF(R) sales.
LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has
financed its operations through equity contributions from principals and from
third parties supplemented by funds generated from its business. As of March 31,
2000, we had $46,008 in cash, accounts receivable of $445,949 and inventories of
$592,285. As of December 31, 2000 we had $275,218 in cash, accounts receivable
of $857,600 and inventory of $129,156. The high receivables and low inventory
figures at December 31, 2000 reflect the execution of the contract with the
Alameda Company on September 22, 2000 and their purchase of all UNIPROOF(R)
inventory on extended terms. Accounts receivable as of March 31, 2000 and
December 31, 2000 are net of allowances for doubtful accounts in the amounts of
$18,260 and $71,656, respectively.
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Cash Provided by Financing Activities. Net cash generated from
financing activities decreased to $155,733 for the nine month period ended
December 31, 2000 from $522,023 for the period ended December 31, 1999, a net
decrease of $366,290. The higher amount in 1999 had been needed to cover
increases in inventory in that period over the preceding periods.
Inventories at March 31, 2000 were $592,285, and decreased to
$129,156 at December 31, 2000, a decrease of $463,129. The decrease is primarily
the result of the execution of the contract with the Alameda Company on
September 22, 2000 and their purchase of all UNIPROOF(R) inventory.
Accounts receivable increased from $445,949 on March 31, 2000 to
$857,600 on December 31, 2000. This $411,651 or 92% increase was primarily the
result of our one-time sale of UNIPROOF(R) finished goods inventory to the
Alameda Company which was done on extended payment terms. Accounts receivable as
of March 31, 2000 and December 31, 2000 are net of allowances for doubtful
accounts in the amounts of $18,260 and $71,656, respectively.
Capital expenditures were negligible during the nine months ended
December 31, 2000 and during the corresponding period of 1999. United Energy has
no material commitments for future capital expenditures. However, our need for
working capital will continue to grow if we continue to achieve higher levels of
sales.
As a result, in June 2000, the Company closed on an agreement for a
$1.0 million revolving credit facility with Fleet Bank, N.A. The credit line,
which is collaterialized by substantially all of the assets of the Company,
accrues interest at a rate equal to the prime rate. As of December 31, 2000,
$160,000 was outstanding under the credit line, the same amount as at June 30,
2000.
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The credit line is further secured by a pledge of 750,000 shares of
the Company's common stock held in treasury and by the guarantee of a
shareholder of the Company.
United Energy believes that its existing cash and credit facility
will be sufficient to enable it to meet its foreseeable future capital needs.
GOING CONCERN From its inception in 1995 through March 31, 1999 the
Company accumulated losses of $2,369,587 before achieving net income of $145,445
for the fiscal year ended March 31, 2000. Currently, results for the first three
quarters of fiscal 2001 approximate results for the full year 2000. The Company
also has in place a $1,000,000 credit facility and a distribution arrangement
with the Alameda Company for its UNIPROOF(R) proofing paper. Because of these
developments, the Company is currently not concerned about its ability to
continue in business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
United Energy does not expect its operating results, cash flows, or
credit available to be affected to any significant degree by a sudden change in
market interest rates. Furthermore, the Company does not engage in any
transactions involving financial instruments or in hedging transactions with
respect to its operations.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the opinion of management, there are no material legal proceedings
in process against the Company and none are threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's
security holders during the quarter ended December 31, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. None.
(b) Reports on Form 8-K. None.
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UNITED ENERGY CORP.
FORM 10-Q
DECEMBER 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED ENERGY CORPORATION
Dated: February 14, 2001
By: \s\ Robert Seaman
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Robert L. Seaman,
Executive Vice President and Principal
Financial Officer
19