The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements of United Capital Corp. (the "Company") and related notes thereto.

Results of Operations: Three Months Ended March 31, 2009 and 2008

Total revenues for the three months ended March 31, 2009 were $13,800, compared to $18,676 for the three months ended March 31, 2008. Operating income for the current quarter dropped $1,570 to $1,032 primarily as a result of the weakened economy and its consequences on the Company's engineered products and hotel operations segments. Net income for the quarter ended March 31, 2009 was $1,117 or $.13 per basic share, compared to net income of $2,688 or $.32 per basic share for the corresponding period of 2008.

The ongoing weakness in the economy continues to impact the results of the Company's engineered products and hotel operations segments. These factors are expected to continue to impact the Company for the remainder of the year.

Real Estate Operations

The Company's real estate operations consist of the real estate investment and
management and hotel operations segments. The operating results for these
segments are as follows:

                              Three Months Ended March 31, 2009                 Three Months Ended March 31, 2008
                           Real              Hotel                           Real              Hotel
                          Estate           Operations         Total         Estate           Operations         Total
Revenues                $     4,900       $      3,116      $   8,016     $     5,107       $      3,670      $   8,777
Mortgage interest
expense                          60                472            532              59                455            514
Depreciation expense            652                385          1,037             578                358            936
Other operating
expenses                      1,392              2,687          4,079           1,405              2,961          4,366
Income (loss) from
operations              $     2,796       $       (428 )    $   2,368     $     3,065       $       (104 )    $   2,961

Real Estate Investment and Management

Revenues from the real estate investment and management segment were $4,900 for the three months ended March 31, 2009, a decrease $207 or 4.1%, compared to $5,107 for the corresponding 2008 period. The decrease was primarily the result of two vacancies in our retail portfolio ($210), the result of the weakened economy. Revenues from the Company's real estate portfolio are generally derived from properties with single tenant, long-term leases. Therefore, rental revenues recognized under GAAP do not fluctuate significantly, but are affected by lease renewals, terminations and the purchase or sale of additional properties.

Mortgage interest expense increased slightly in the first quarter of 2009, as compared to that reported in the first quarter of 2008, due to a mortgage obtained in connection with the purchase of a commercial property in the second quarter of 2008, partially offset by continued mortgage amortization. Mortgage interest expense on existing obligations of the Company's real estate investment and management segment will continue to decline with scheduled principal reductions. At March 31, 2009, the outstanding mortgage balance on the Company's three real estate investment properties which are currently encumbered is below $2,300.

Depreciation expense associated with real properties held for rental increased $74 for the quarter ended March 31, 2009, compared to the corresponding 2008 quarter, primarily attributable to depreciation expense ($85) related to additions to real estate assets over the past twelve months. As the result of the purchase of a commercial property and certain capital improvements during 2008, the Company expects that depreciation expense on the Company's properties for each of the quarters and full year of 2009 should be higher than that reported in the corresponding 2008 periods.

Other operating expenses associated with the management of real properties decreased less than 1% for the quarter ended March 31, 2009, compared to the corresponding 2008 period. Fluctuations within this category did occur however, a decline in the cost of utilities ($43) was the most significant contributor to the decline. Due to the extent of property age, location and vacancies, certain operating expenses could fluctuate in the future from those previously incurred.

Hotel Operations

Hotel revenues decreased $554 or 15.1% to $3,116 for the three months ended March 31, 2009, compared to the corresponding 2008 period, primarily related to the overall weakness in the U.S. economy which has resulted in a reduction in both consumer and business travel. As a result, the Company expects lodging demand to continue to decline through the remainder of 2009, which will likely result in lower reported revenues from this segment for the balance of the year.

Mortgage interest expense related to the Company's hotel properties increased $17 for the first quarter of 2009, compared to the corresponding quarter of 2008, as a result of a mortgage obtained on one of the Company's hotels in the prior year period. Mortgage interest expense related to the Company's other two hotel properties decreased due to continued mortgage amortization. Mortgage interest expense related to the Company's hotel operations should decline for the full year of 2009 with scheduled principal reductions.

Depreciation expense associated with the Company's hotel operations increased $27 for the three months ended March 31, 2009, compared to the corresponding 2008 period, primarily attributable to additional depreciation expenses ($39) related to renovations and improvements during the past twelve months at two of the Company's hotels. As a result of these renovations and improvements, and additional renovations and improvements currently occurring at one of the hotels, depreciation expense for each of the quarters and the full year of 2009 should be higher than that reported in the corresponding 2008 periods.

Other operating expenses related to the management of the Company's hotels decreased $274 to $2,687 for the 2009 quarter, compared to the corresponding 2008 quarter, primarily as a result of the lower revenues, noted above. The growing weakness in the economy has pressured results in the Company's hotel operations. This condition is expected to continue to impact this segment for the remainder of 2009. The Company is working to streamline operations, control expenses and maximize cash flow from operations. The success of these efforts and the depth and duration of the current negative economic environment and its impact on future hotel operations remain uncertain.

Engineered Products

The operating results of the engineered products segment are as follows:

                                                 Three Months Ended
                                                      March 31,
                                                  2009          2008
Net sales                                      $    5,784      $ 9,899
Cost of sales                                       4,512        7,534
Selling, general and administrative expenses        1,591        1,816
Operating (loss) income                        $     (319 )    $   549

Net sales of the engineered products segment decreased $4,115 or 41.6% for the three months ended March 31, 2009, compared with the results of the corresponding 2008 period. Sales of the Company's automotive product line declined over 50% in the quarter. These declines are the result of a significant reduction in North American automotive production, especially from General Motors, our largest customer, and the general slowdown in the global vehicle market. Announced plant closings by the automotive companies, the bankruptcy filing of Chrysler and the uncertainty regarding the future of General Motors has had, and will continue to have, a significant adverse affect on our engineered products segment.

Cost of sales as a percentage of net sales increased 1.9% in the three months ended March 31, 2009, compared to the corresponding 2008 period. This increase is primarily attributable to the significant reduction in net sales, as noted above, which led to lower absorption of incurred manufacturing costs. The increase in costs of sales as a percentage of net sales was partially offset by a reduction in the cost of raw materials (3.7% as a percentage of net sales). As a result of the significant decline in sales and ongoing uncertainty, the Company has taken significant steps to reduce its operating costs, including the reduction of over 25% of its direct and indirect positions since the beginning of the year. To minimize the consequences from dramatically lower sales forecasted for the remainder of 2009, management is carefully monitoring this situation and will continue to work to reduce costs in-line with any further reductions in sales.

Selling, general and administrative expenses of the engineered products segment decreased $225 or 12.4% for the three month period ended March 31, 2009, compared to the corresponding 2008 period. This decrease was primarily related to decreases in payroll and payroll related expenses ($120), professional fees ($62) and freight charges ($54). These reductions are part of the Company's efforts to streamline operations, control expenses and maximize cash flow in light of the significant decline in sales.

General and Administrative Expenses

General and administrative expenses not associated with the manufacturing operations increased $109 for the first quarter of 2009, compared to such expenses incurred in the comparable 2008 period. This is attributable to the increase in net periodic pension expense ($152) which results from the significant decline in the fair value of the Company's pension plan assets in 2008.

Other Income and Expense, Net

The components of other income and (expense), net in the Condensed Consolidated
Statements of Income are as follows:

                                                                Three Months Ended
                                                                     March 31,
                                                                 2009           2008
Net loss on available-for-sale securities                     $      (104 )     $   -
Net realized and unrealized gains on derivative instruments             5          30
Other, net                                                            (10 )        (7 )
                                                              $      (109 )     $  23

Discontinued Operations

Income from operations on properties sold and accounted for as discontinued operations was $32, on a net of tax basis, for the three months ended March 31, 2008. Such amounts have been reclassified to reflect results of operations of real properties sold during 2008 as discontinued operations. The Company did not consider any of its properties to be held for sale as of March 31, 2009 and no properties have been sold during the three months ended March 31, 2009.

Liquidity and Capital Resources

Net cash provided by operating activities declined $2,970 in the three months ended March 31, 2009 ($1,543) from that provided in the first quarter of 2008 ($4,513). This reduction in cash is primarily the result of lower operating income before depreciation of $1,489 and interest and dividend income ($719) in the current year period than realized in the prior year. Other changes in working capital, including a reduction in accounts payable and accrued liabilities also contributed to the decline.

Net cash used in investing activities was $4,417 and $7,768 for the three months ended March 31, 2009 and 2008, respectively. This change primarily results from decreases in the acquisition of/additions to real estate assets ($13,305) and purchase of available-for-sale securities ($5,625), partially offset by the release of proceeds held in escrow on the sale of real estate in 2008 ($15,000).

Net cash provided by financing activities was $3,619 for the three months ended March 31, 2009, compared to net cash used in financing activities of $626 for the same period of 2008. This change primarily results from proceeds from the exercise of stock options ($4,219) and the tax benefits related to such exercise ($1,452) in the current year, offset by an increase in principal payments on mortgage obligations ($1,736) in the current year.

Previous purchases of the Company's common stock have reduced the Company's additional paid-in capital to zero and have also reduced retained earnings by amounts in excess of par value. Any future purchases in excess of par value will also reduce retained earnings. Repurchases of the Company's common stock may be made from time to time in the open market at prevailing market prices and may be made in privately negotiated transactions, subject to available resources. Future proceeds from the issuance of common stock in excess of par value will be credited to retained earnings until such time that previously recorded reductions have been recovered.

At March 31, 2009, the Company's cash and marketable securities totaled $150.2 million and working capital was $159.6 million compared to cash and marketable securities of $147.3 million and working capital of $153.9 million at December 31, 2008. While there has been a decline in the value of certain real estate properties in the United States, the recession could cause real estate prices to drop even further. Management has limited acquisitions to those select properties that meet the Company's stringent financial requirements. Management believes that opportunities to acquire additional properties at favorable prices may soon be available and the Company's available working capital provides a considerable advantage to fund acquisitions and grow its portfolio, if and when attractive long-term opportunities become available. The tightened credit market however, could limit the Company's ability to leverage future acquisitions.

The equity method of accounting is used for investments in 20% to 50% owned joint ventures in which the Company has the ability to exercise significant influence, but not control. These investments are recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions. The debt of the joint venture in which the Company currently has an ownership interest is a non-recourse obligation and is collateralized by the entity's real property. The Company believes that the value of the underlying property and its operating cash flows are sufficient to satisfy its obligations. The Company is not obligated for the debts of the joint venture, but could decide to satisfy them in order to protect its investment. In such event, the Company's capital resources and financial condition would be reduced and, in certain instances, the carrying value of the Company's investment and its results of operations would be negatively impacted.

The cash needs of the Company have been satisfied from funds generated by current operations. It is expected that future operational cash needs will also be satisfied from existing cash balances, marketable securities, ongoing operations or borrowings. The primary source of capital to fund additional real estate acquisitions and to make additional high-yield mortgage loans may come from existing funds, the sale, financing and refinancing of the Company's properties and from third party mortgages and purchase money notes obtained in connection with specific acquisitions.

In addition to the acquisition of properties for consideration consisting of cash and mortgage financing proceeds, the Company may acquire real properties in exchange for the issuance of the Company's equity securities. The Company may also finance acquisitions of other companies in the future with borrowings from institutional lenders and/or the public or private offerings of debt or equity securities. The Company currently has no agreements, commitments or understandings with respect to the acquisition of real properties or other companies in exchange for its equity or debt securities.

Funds of the Company in excess of that needed for working capital, purchasing real estate and arranging financing for real estate acquisitions are invested by the Company in corporate equity securities, corporate notes, certificates of deposit, government securities and other financial instruments. Although these excess funds are invested in investment grade securities, they are subject to significant fluctuations in fair value due to the volatility of the stock market and changes in general economic conditions. Changes in U.S. interest rates affect the interest earned on the Company's cash and cash equivalent balances and other interest bearing investments. Given the level of cash and other interest bearing investments held by the Company, declines in U.S. interest rates have adversely impacted the Company's earnings in 2009.

In strategies designed to hedge overall market risk, the Company may sell common stock short and participate in put and/or call options. These instruments do not qualify for hedge accounting and therefore changes in such derivatives fair value are recognized in earnings. These derivatives are recorded as a component of accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets.

Globally, automakers and their suppliers continue to experience significant difficulties from a weakened economy and tightening credit markets. General Motors, Chrysler and several Tier 1 suppliers sought government sponsored financial assistance to avoid bankruptcy proceedings. The U.S. government auto task force rejected General Motors and Chrysler's restructuring plans and provided them with limited additional time to determine an acceptable restructuring plan to justify continued emergency loan funding requests. Subsequently, on April 30, 2009, Chrysler filed for bankruptcy protection under Title 11 of the United States Code. General Motors, the largest customer of the engineered products segment, could still face possible bankruptcy. This could have a significant adverse affect on the realization of certain of the segment's assets, especially accounts receivable and inventory, as well as future sales and operating results. Announced plant closings by the automotive companies, the bankruptcy filing of Chrysler and the uncertainty regarding the future of General Motors has had, and will continue to have, a significant adverse affect on our engineered products segment.

The U.S. Department of Treasury recently announced the Auto Supplier Support Program (the "Program"). The intent of the Program is to provide suppliers to the U.S. automotive industry with access to government-backed protection, ensuring that money owed to the suppliers for products sold to participating U.S. automotive companies will be paid even in the event of a bankruptcy. Suppliers that agree to maintain qualifying commercial terms will have the opportunity to request this government-backed protection relating to sales made after being accepted into the Program. If granted, the supplier would pay a small fee for the right to participate in the Program. The U.S. Treasury Department has made available up to $5 billion in financing under the Program. The Company has completed the necessary documentation to request participation in the Program with General Motors which will be effective in May 2009. This Program covers only receivables pertaining to shipments to General Motors' U.S. assembly plants. The Company will still be at risk for any other accounts receivable from General Motors, including those incurred prior to acceptance into the Program.

The Company manufactures its products in the United States and Mexico and sells its products in those markets as well as in Europe, South America and Asia. As a result, the Company's operating results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company distributes its products. Most of the Company's sales are denominated in U.S. dollars. Net sales of the Company's engineered products segment denominated in Euros were 8.4% and 9.3% for the three months ended March 31, 2009 and 2008, respectively. As such, a portion of the Company's receivables are exposed to fluctuations with the U.S. dollar. However, the Company does not believe this risk to be material to its overall financial position as the Company's historical results have not been significantly impacted by foreign exchange gains or losses. Accordingly, the Company has not entered into forward exchange contracts to hedge this exposure. If such exposure increased in the future, the Company may reexamine this practice to minimize the associated risks.

The growing weakness in the economy, exacerbated by recent credit market turmoil, together with higher year-over-year raw material, energy, freight and other costs, has pressured results of the Company's engineered products and hotel segments. These factors are expected to continue to impact the Company throughout the year. The Company is working to further streamline operations, control expenses and maximize cash flow from operations. While the depth and duration of the current negative economic environment and its impact on the Company are uncertain, management believes the Company's strong balance sheet together with the significant cash flow generated from its core real estate portfolio, should allow the company to weather this downturn.

The Company has undertaken the completion of environmental studies and/or remedial action at the Company's two New Jersey facilities and has recorded a liability for the estimated investigation, remediation and administrative costs associated therewith. See Note 13 of Notes to Condensed Consolidated Financial Statements for further discussion of this matter.

The Company is subject to various other litigation, legal, regulatory and tax matters that arise in the ordinary course of business activities. When management believes it is probable that liabilities have been incurred and such amounts are reasonably estimable, the Company provides for amounts that include judgments and penalties that may be assessed. These liabilities are usually included in accounts payable and accrued liabilities or other long-term liabilities in the Condensed Consolidated Financial Statements, depending on the anticipated payment date. Based on the facts presently available, the Company does not believe that the disposition of matters that are pending or asserted will have a material adverse effect on the Company's consolidated financial position or results of operations. However, new or additional facts or an adverse judgment by a court, arbitrator or a settlement could adversely impact the Company's results of operations in any given period.

Critical Accounting Policies and Management Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Certain of the estimates and assumptions required to be made relate to matters that are inherently uncertain as they pertain to future events. While management believes that the estimates and assumptions used were the most appropriate, actual results could differ significantly from those estimates under different assumptions and conditions.

Refer to the Company's 2008 Annual Report on Form 10-K for a discussion of the Company's critical accounting policies, which include revenue recognition and accounts receivable, marketable securities, inventories, real estate, discontinued operations, long-lived assets and pension plans. There were no material changes to the Company's critical accounting policies during the three months ended March 31, 2009.