SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended 11/30/02
Commission file number 000-30239
UNICO, INCORPORATED
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Arizona 86-0205130
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
6475 Grandview Avenue
P.O. Box 777
Magalia, California 95954
----------------------------------------
(Address of principal executive offices)
(530) 873-4394
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(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
As of January 8, 2003, the issuer had outstanding 75,122,974 shares of
its Common Stock, $0.10 par value per share.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited consolidated balance sheet of Unico, Incorporated, an
Arizona corporation, as of November 30, 2002 and the related audited
consolidated balance sheet of Unico, Incorporated as of February 28, 2002, the
unaudited related consolidated statements of operations for the three and nine
month periods ended November 30, 2002 and November 30, 2001 and from inception
of the development stage on March 1, 1997 through November 30, 2002, the
unaudited related consolidated statements of stockholders' equity for the
period from February 28, 2001 through November 30, 2002, the unaudited related
consolidated statements of cash flows for the nine month periods ended
November 30, 2002 and November 30, 2001 and from inception of the development
stage on March 1, 1997 through November 30, 2002, and the notes to the
financial statements are attached hereto as Appendix "A" and incorporated
herein by reference.
The accompanying financial statements reflect all adjustments which are,
in the opinion of management, necessary to present fairly the financial
position of Unico, Incorporated consolidated with HydroClear, Ltd. and Silver
Bell Mining Company, Incorporated, its wholly-owned subsidiaries. The names
"Unico", "we", "our" and "us" used in this report refer to Unico, Incorporated
and its subsidiaries.
Unico was formed as an Arizona corporation on May 27, 1966. It was
incorporated under the name of Red Rock Mining Co., Incorporated. It was
later known as Industries International, Incorporated and I.I. Incorporated
before the name was eventually changed to Unico, Incorporated in 1979.
Deer Trail Mine.
On March 30, 1992, Unico entered into a Mining Lease and Option to
Purchase agreement with Deer Trail Development Corporation, with headquarters
in Dallas, Texas. Deer Trail Development Corporation is now known as Crown
Mines, L.L.C. The lease was to run for a period of 10 years, and cover 28
patented claims, 5 patented mill sites and 171 unpatented claims located
approximately 5 miles South of Marysvale, Utah. It includes mine workings
known as the Deer Trail Mine, the PTH Tunnel and the Carisa and Lucky Boy
mines. There are no known, proven or probable reserves on the property.
2
Effective December 1, 2001, a new lease agreement was entered into
between the parties covering the same property for a period of thirty (30)
months. It expires in May 2004. The new lease agreement is referred to in
this report as the "Deer Trail Lease". The Deer Trail Lease requires Unico to
make monthly lease payments and pay a 3% net smelter return on ore removed
from the Deer Trail Mine.
Unico acquired the necessary permits to commence mining activities,
provided that the surface disturbance from the mining activities does not
exceed 10 acres for both mine and mill. Unico plans to seek a permit for
large scale mining operations.
Unico worked for more than two years to reopen the Deer Trail Mine.
Unico commenced mining activities in late March or early April 2001 on the
Deer Trail Mine. To date, the mining activities have been fairly limited.
Unico presently has eight full time employees. There have been between 2 and
5 miners at various times working full time in the Deer Trail Mine both on
mine development work and production work. Their efforts have been
concentrated in the 3400 Area of the mine, from which they have recently been
removing approximately 1,000 tons of ore per month. The ore is being stock-
piled for now. Some of the ore has also been crushed. Some of the employees
have worked on mine maintenance.
Unico has completed a mill on site at the Deer Trail Mine. In November
2001 Unico began milling activities.
We believe that there are a variety of mining companies and other
mineral companies that are potential purchasers for the lead concentrates and
zinc concentrates which we intend to sell as the end product from our Deer
Trail Mine mining and milling operations
Unico signed an agreement with H & H Metals of New York pursuant to
which Unico planned to sell the majority of its concentrates to H & H Metals.
However, that agreement expired December 31, 2002, prior to H & H purchasing
any concentrates from Unico.
The lead and zinc concentrates can be transported by either rail or
truck, and there are a variety of trucking companies that are willing and able
to transport zinc and lead concentrates to smelters or other places designated
by purchasers.
The Pennolies Smelter in Torreon, Mexico recently agreed to purchase
concentrates from Unico. Unico also plans to send some concentrates to the
Teck Cominco Smelter in Trail, British Columbia, Canada to be tested and
evaluated. Depending on the results of the tests, Unico may sell concentrates
to the Teck Cominco Smelter.
3
Silver Bell Mine.
In September and December 2000, Unico acquired all of the issued and
outstanding shares of stock of Silver Bell Mining Company, Incorporated, a
Utah corporation, in consideration for the issuance of 3,000,000 restricted
shares of Unico common stock. Of the 3,000,000 shares of Unico common stock
issued in the acquisition, approximately 2,300,000 shares were issued to W.
Dan Proctor. W. Dan Proctor is the President and a director of Silver Bell
Mining Company, Incorporated. Mr. Proctor also serves as a business consultant
to Unico and project manager.
Silver Bell Mining Company, Incorporated was incorporated in the State
of Utah on April 26, 1993. It has acquired 26 patented mining claims located
in American Fork Canyon, Utah County, Utah, which is organized into three
separate parcels. The claims contain mining properties which have not been
mined for production since 1983. The properties were mined primarily for
silver, lead and zinc. There are no known, proven or probable reserves on the
property.
Unico intends to commence some mining activities on the Silver Bell Mine
in Summer, 2003. Unico anticipates that it may mine approximately 60 tons of
ore per day from the Silver Bell Mine initially. Unico intends to transport
the ore to the Deer Trail Mine site where it will be crushed and milled.
Bromide Basin Mines.
On July 20, 2001, Unico entered into a Mining Lease and Option to
Purchase ("Kaibab Mining Lease") with Kaibab Industries, Inc., an Arizona
corporation. Under the Kaibab Mining Lease, Kaibab has leased to Unico
certain mining claims located in the Henry Mountain Mining District in
Garfield County, Utah containing approximately 400 acres, which includes the
Bromide Basin Mines. The Kaibab Mining Lease also provides for the leasing of
certain mining equipment from Kaibab Industries, Inc. to Unico. The Kaibab
Mining Lease runs for a term of three years, and grants to Unico the option to
purchase all of the property being leased for $1,000,000. The option is
exercisable during the three year term of the Kaibab Mining Lease. There are
no known, proven or probable reserves on the property.
4
As consideration for the Kaibab Mining Lease, Unico has agreed to pay to
Kaibab Industries, Inc. a 5% net smelter return upon all ore taken from the
property during the term of the Kaibab Mining Lease. The Kaibab Mining Lease
requires Unico to meet certain minimum monthly production requirements equal
to the lesser of the following: (a) the mining and removal of a minimum of
1,000 tons of ore per month from the leased premises; or (b) the refining of a
minimum of 1,000 ounces of gold per month mined from the leased premises. The
monthly minimum production requirements apply only from June 10 through
November 20 of each year during the term of the Kaibab Mining Lease. Minimum
production requirements for partial months are to be pro rated. In the event
that Unico is unable to meet the minimum production requirements, then Kaibab
Industries, Inc. may terminate the Lease Agreement and require Unico to
purchase all or any portion of certain equipment and personal property leased
by Kaibab Industries, Inc. to Unico for an agreed upon value specified in the
Kaibab Mining Lease. The total agreed upon value of all equipment and
personal property specified in the Kaibab Mining Lease is approximately
$164,755.
Unico commenced mining efforts on the Bromide Basin Mines in September
2001 with five full time miners. Mining efforts stopped in November 2001 due
to weather. Mining activities resumed in late May 2002 and continued until
early November 2002 when they stopped due to weather. They should resume when
weather permits in approximately June 2003. At that time, Unico will continue
to remove ore from the property. Unico plans to continue to work to extend
the El Padre Tunnel approximately 200 feet to get under the Bromide vein in
order to reach higher grade ore and make the mining efforts more efficient.
Because of the Bromide Basin Mines= high elevation, mining activities are
seasonal and will likely occur only from June through November each year.
During 2002, Unico removed approximately 5,000 tons of ore from the
Bromide Basin Mines which has been stock piled there. Unico and Kaibab
Industries, Inc. have discussed the possibility of modifying certain terms of
the Kaibab Mining Lease in the near future so Unico can focus more on mining
higher quality ore rather than a larger quantity of lower quality ore.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
During the next 12 months, Unico's plan of operation consists of the
following:
- increase mining and milling activities at the Deer Trail Mine;
5
- begin making sales and shipping concentrates to smelters for
smelting and refining in the next two to three months;
- begin mining activities at the Silver Bell Mine in Summer, 2003;
- increase the number of full-time employees from 8 to approximately
20;
- explore the possibility of obtaining a joint venture partner to
more fully develop Unico's mining operations;
- explore the possibility of building a small portable gold
processing plant which could be located at the Bromide Basin Mine
which could crush and grind ore, and recover gold by gravity or
flotation means; and
- attempt to raise $200,000 to $300,000 through loans and/or the
sale of Unico common stock to provide Unico with additional
needed working capital.
Unico's current cash will sustain operations for approximately the next
60 days, and should be sufficient to enable Unico to implement its plan of
operation for the next 60 days.
Results of Operations.
During the three months ended November 30, 2002, Unico experienced a net
loss in the amount of $269,602, or approximately ($0.00) per share, which is
$90,660 more than the net loss of $178,942, or approximately ($0.00) per
share, incurred for the three months ended November 30, 2001. For the nine
months ended November 30, 2002, Unico incurred a net loss of $725,373, or
approximately ($0.01) per share. This was $207,679 more than the net loss of
$517,694, or approximately ($0.01) per share, incurred by Unico during the
nine month period ended November 30, 2001.
Unico attributes the increased net loss for the three month period ended
November 30, 2002 primarily to a $73,929 increase in general and
administrative expenses, an increase in interest expense of $14,895 and a
$1,832 increase in depreciation and amortization. Unico attributes the
increased net loss for the nine month period ended November 30, 2002 primarily
to a $171,201 increase in general and administrative expenses, a $26,888
increase in interest expense and an increase in depreciation and amortization
expenses of $8,229. Unico anticipates that general and administrative
6
expenses will increase as additional employees are hired in order to increase
Unico's mining operations.
Liquidity and Capital Resources
Unico's stockholders' deficit increased $480,413 in the nine months
ended November 30, 2002, from a deficit of ($1,365,748) as of February 28,
2002 to a deficit of ($1,846,161) as of November 30, 2002. Cash and cash
equivalents increased $6,028 to $39,037 at November 30, 2002 from $33,009 at
February 28, 2002.
Cash used in operating activities for the nine months ended November 30,
2002 reflects a net loss of $725,373 and a decrease in accounts receivable and
related receivables of $650, partially offset by non-cash expenses of $58,224
for depreciation and amortization expenses, a $41,755 increase in accounts
payable, $8,500 for stock issued for services, and $3,460 of pre-paid services
expensed.
Cash used in investing activities includes $76,824 for the purchase of
fixed assets, and a $20,000 loan made to a director of Unico in July 2002
which was subsequently reduced through a partial repayment of $15,000.
The increase in cash and cash equivalents for the nine months ended
November 30, 2002 was largely due to net cash provided by financing activities
through $625,000 received in loans from unrelated parties, a $66,795 increase
in advances from related parties, and $30,000 cash received for the issuance
of shares of Unico's common stock. It was partially offset by $16,534 of
payments made on notes payable and payments of $4,055 on a bank overdraft that
existed at February 28, 2002.
Unico is evaluating the possibility of purchasing and installing a hoist
in the Deer Trail Mine to increase its mining operations. Unico estimates
this could cost approximately $110,000. Unico is also making design plans for
a decline to access the 8600 ore body from the Three Mile Springs Area of the
Deer Trail Mine. If Unico implements these plans, they will likely not be
implemented until after Unico is generating sufficient revenues to pay for the
implementation. Unico estimates the decline would cost approximately $250 per
foot and would extend approximately 2,200 feet. Unico's other major cash
needs include raising additional funds to exercise Unico's option to purchase
the Deer Trail Mine for $4,000,000 on or before May 31, 2004. If Unico
decides to exercise the option, Unico will need to raise additional funds for
that purpose unless Unico's operations can generate sufficient profits before
the option expires.
7
Our auditors have issued a "going concern" opinion in note 2 of our
financial statements, indicating we do not have established revenues
sufficient to cover our operating costs and to allow us to continue as a going
concern.
In June 2002, Unico borrowed $550,000 from one of Unico's shareholders
through two loans. One loan is for $200,000, and it is secured by a first
trust deed on 680 acres of land owned by Unico near the Deer Trail Mine. This
land includes Unico's mill site. The other loan is for $350,000, and it is
secured by a first trust deed on all of the Silver Bell Mining claims owned by
Unico's Silver Bell Mining Company, Incorporated subsidiary. Both loans bear
interest at 10% per annum, with interest only payments to be made monthly.
The principal of each loan is due to be repaid in June 2007.
During the fiscal year ended February 28, 2000, Pellett Investments
purchased or arranged for the purchase of convertible notes for $400,000 which
were converted into 4,000,000 shares of Unico common stock at $0.10 per share.
Unico issued all 4,000,000 shares but Unico had received payment for only
approximately 1,207,400 of the shares as of August 31, 2001. Unico should
receive an additional $279,260 cash for the shares already issued, unless
Unico renegotiates the terms of the transaction, which Unico may seek to do.
After receiving payment of another $79,260 cash from the purchasers, Unico is
obligated to issue an additional 600,000 shares to persons affiliated with
Pellett Investments for no additional consideration. When the final $200,000
stock subscription receivable is paid, Unico will then issue another 600,000
shares to persons affiliated with Pellett Investments for no additional
consideration.
Revenue. We have had no revenues from operations during the past two
fiscal years or since our last fiscal year ended February 28, 2002. We
anticipate that we will begin generating revenues from operations during the
next two to three months.
ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REFLECT
MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS
AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.
Item 3. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures.
8
Ray Brown who serves as both Unico's chief executive officer and its
chief financial officer, after evaluating the effectiveness of Unico's
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c)
and 15d-14(c) as of a date within 90 days of the filing date of the quarterly
report (the "Evaluation Date") concluded that as of the Evaluation Date,
Unico's disclosure controls and procedures were adequate and effective to
ensure that material information relating to Unico and its consolidated
subsidiaries would be made known to him by others within those entities,
particularly during the period in which this quarterly report was being
prepared.
(b) Changes in internal controls.
There were no significant changes in Unico's internal controls or in
other factors that could significantly affect Unico's disclosure controls and
procedures subsequent to the Evaluation Date, nor any significant deficiencies
or material weaknesses in such disclosure controls and procedures requiring
corrective actions. As a result, no corrective actions were taken.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings involving Unico as a defendant were commenced
during the three month period ended November 30, 2002. No material
developments occurred in any legal proceedings involving Unico as a defendant
during the same time period.
Item 2. Changes in Securities.
During the three month period ended November 30, 2002, Unico made no
sales of shares of Unico's common stock which were not registered under the
Securities Act of 1933.
During the three month period ended May 31, 2002, and the three month
period ended August 31, 2002, Unico made sales of shares of Unico's common
stock which were not registered under the Securities Act of 1933. For a
description of those sales, please see Unico's quarterly reports on Form 10-
QSB for the periods ended May 31, 2002 and August 31, 2002.
Item 3. Defaults Upon Senior Securities.
None
9
Item 4. Submission of Matters to a vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits included with this report.
(b) No Current Reports on Form 8-K were filed by Unico during the quarter
ended November 30, 2002.
10
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNICO, INCORPORATED
(Registrant)
Date: January 13, 2003 By:/s/Ray C. Brown
-----------------------------------
Ray C. Brown, Chief Executive
Officer and Principal Financial and
Accounting Officer
11
CERTIFICATIONS
I, Ray C. Brown, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Unico,
Incorporated ("Unico");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, the results of operations and cash
flows of Unico as of, and for, the periods presented in this quarterly report.
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for Unico and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to Unico, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is
being prepared;
(b) evaluated the effectiveness of Unico's disclosure controls and
procedures as of a date within 90 days prior to the filing date of
this quarterly report (the 'Evaluation Date"); and
(c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to Unico's
auditors and the audit committee of Unico's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect Unico's ability to
record, process, summarize and report financial data and have
identified for Unico's auditors any material weaknesses in
internal controls; and
12
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in Unico's internal
controls; and
6. I have indicated in this quarterly report whether there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 13, 2003 /s/Ray C. Brown
-------------------------------
Ray C. Brown, Chief Executive
Officer and Principal Financial
and Accounting Officer
13
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Unico, Incorporated on
Form10-QSB for the period ending November 30, 2002 to be filed with the
Securities and Exchange Commission on the January 14, 2003 (the "Report"), I,
Ray C. Brown, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to
SS. 906 of the Sarbanes-Oxley Act of 2002, that:
i. The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
ii. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of the
operation of the Company.
/s/Ray C. Brown
- -------------------------------------------
Ray C. Brown
Chief Executive Officer and Chief Financial
Officer
January 13, 2003
14
Appendix "A"
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2002 and February 28, 2002
15
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
November 30, February 28,
2002 2002
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 39,037 $ 33,009
Certificate of deposit 5,006 5,006
Employee advance 650 -
------------ ------------
Total Current Assets 44,693 38,015
------------ ------------
PROPERTY AND EQUIPMENT, NET 784,043 765,443
------------ ------------
OTHER ASSETS
Refundable deposit 500 500
Receivable-related party (Note 4) 5,000 -
Reclamation bond 38,402 38,402
------------ ------------
Total Other Assets 43,902 38,902
------------ ------------
TOTAL ASSETS $ 872,638 $ 842,360
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
2
16
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
November 30, February 28,
2002 2002
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Bank overdraft $ 730 $ 4,055
Accounts payable 37,476 37,437
Accrued expenses 9,778 800
Notes payable related parties 608,384 544,589
Notes payable 879,966 301,500
Accrued interest payable 660,168 746,930
Commitments and contingencies 522,297 572,797
------------ ------------
Total Current Liabilities 2,718,799 2,208,108
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized at
$0.10 par value; 74,122,974 and 71,707,974
shares issued and outstanding, respectively 7,412,299 7,170,799
Additional paid-in capital 644,381 644,381
Services prepaid with common stock - (3,460)
Stock subscription receivable (379,260) (379,260)
Deficit accumulated prior to development stage (3,788,522) (3,788,522)
Deficit accumulated during the development stage (5,735,059) (5,009,686)
------------ ------------
Total Stockholders' Equity (Deficit) (1,846,161) (1,365,748)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 872,638 $ 842,360
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
17
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception of
the Development
Stage on
For the For the March 1,
Three Months Ended Nine Months Ended 1997 Through
November 30, November 30, November 30,
2002 2001 2002 2001 2002
REVENUES $ - $ - $ - $ - $ -
--------- --------- --------- --------- -----------
EXPENSES
General and
administrative 201,645 127,716 540,127 368,926 3,546,854
Depreciation and
amortization 20,353 18,521 58,224 49,995 282,303
--------- --------- --------- --------- -----------
Total Expenses 221,998 146,237 598,351 418,921 3,829,157
--------- --------- --------- --------- -----------
Loss from Operations (221,998) (146,237) (598,351) (418,921) (3,829,157)
--------- --------- --------- --------- -----------
OTHER INCOME (EXPENSES)
Investment income 552 556 1,152 2,513 13,572
Interest expense (48,156) (33,261) (128,174) (101,286) (890,919)
Decline in value of
assets - - - - (651,810)
Settlement of debt - - - - (91,000)
Loss on valuation of
assets - - - - (309,817)
Gain on gold contract - - - - 24,072
--------- --------- --------- --------- -----------
Total Other Income
(Expenses) (47,604) (32,705) (127,022) (98,773) (1,905,902)
--------- --------- --------- --------- -----------
NET LOSS $(269,602) $(178,942) $(725,373) $(517,694)$(5,735,059)
========= ========= ========= ========= ===========
NET LOSS PER SHARE $ (0.00) $ (0.00) $ (0.01) $ (0.01)
========= ========= ========= =========
WEIGHTED AVERAGE
NUMBER OF SHARED
OUTSTANDING 74,112,974 69,041,857 73,358,610 67,249,617
========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
4
18
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Additional Stock
Common Stock Paid-in Subscription Prepaid Accumulated
Shares Amount Capital Receivable Services Deficit
---------------------------------------------------------------
Balance,
February 28,
2001 65,322,546 $6,532,254 $564,618 $(379,260) $ - $(8,023,769)
April 12, 2001,
common stock and
options issued
for cash at
$0.13 per share 153,847 15,385 4,615 - -
April 21, 2001
common stock and
options issued
for cash at
$0.12 per share 416,667 41,667 8,333 - - -
May 24, 2001,
common stock and
options issued
for cash at
$0.11 per share 181,819 18,182 1,819 - - -
June 25, 2001,
common stock and
options issued
for cash at
$0.11 per share 909,090 90,909 9,091 - - -
August 3, 2001,
common stock and
options issued
for cash at $0.11
per share 272,728 27,273 2,727 - - -
August 3, 2001,
common stock and
options issued
for cash at $0.10
per share 200,000 20,000 - - - -
August 17, 2001,
common stock
issued for related
party debt at
$0.15 per share 908,900 90,890 53,178 - - -
September 15, 2001,
common stock and
options issued for
cash and services
at $0.10 per
share 388,890 38,890 - - - -
October 5, 2001,
common stock and
options issued for
cash at $0.10 per
share 100,000 10,000 - - - -
October 5, 2001,
common stock and
options issued for
cash at $0.10 per
share 200,000 20,000 - - - -
November 1, 2001,
common stock and
options issued for
cash at $0.10 per
share 100,000 10,000 - - - -
November 1, 2001,
common stock and
options issued for
cash at $0.10 per
share 200,000 20,000 - - - -
November 1, 2001,
common stock and
options issued for
cash at $0.10 per
share 100,000 10,000 - - - -
---------- ---------- -------- --------- -------- -----------
Balance
forward 69,454,487 $6,945,450 $644,381 $(379,260) $ - $(8,023,769)
---------- ---------- -------- --------- -------- ------------
The accompanying notes are an integral part of these consolidated financial
statements.
5
19
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Additional Stock
Common Stock Paid-in Subscription Prepaid Accumulated
Shares Amount Capital Receivable Services Deficit
---------------------------------------------------------------
Balance
forward 69,454,487 $6,945,450 $644,381 $(379,260) $ - $(8,023,769)
November 14,
2001, common
stock and
options issued
for cash at
$0.10 per share 100,000 10,000 - - - -
November 14, 2001,
common stock and
options issued
for cash at $0.10
per share 100,000 10,000 - - - -
November 14, 2001,
common stock
issued for
equipment at
$0.10 per share 24,000 2,400 - - - -
December 26, 2001,
common stock issued
for cash at $0.10
per share 250,000 25,000 - - - -
December 26, 2001,
common stock
issued for cash at
$0.10 per share 100,000 10,000 - - - -
December 26, 2001,
common stock
issued for
services at $0.10
per share 55,000 5,500 - - - -
January 17, 2002,
common stock
issued for cash
and services at
$0.10 per share 314,487 31,449 - - - -
January 17, 2002,
common stock
issued for
services and
prepaid services
at $0.10 per
share 100,000 10,000 - - (3,460) -
January 17, 2002,
common stock
issued for
services at $0.10
per share 100,000 10,000 - - - -
January 17, 2002,
common stock
issued for
services at $0.10
per share 500,000 50,000 - - - -
January 17, 2002,
common stock
issued for
services at $0.10
per share 10,000 1,000 - - - -
January 17, 2002,
common stock
issued for cash at
$0.10 per share 200,000 20,000 - - - -
February 7, 2002,
common stock issued
for services at
$0.10 per share 150,000 15,000 - - - -
---------- ---------- -------- --------- --------- -----------
Balance
forward 71,457,974 $7,145,799 $644,381 $(379,260)$ (3,460)$(8,023,769)
---------- ---------- -------- --------- --------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
6
20
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Additional Stock
Common Stock Paid-in Subscription Prepaid Accumulated
Shares Amount Capital Receivable Services Deficit
---------------------------------------------------------------
Balance
forward 71,457,974 $7,145,799 $644,381 $(379,260)$ (3,460)$(8,023,769)
February 7, 2002,
common stock
issued for cash
at $0.10 per
share 250,000 25,000 - - - -
Net loss for
the year ended
February 28, 2002 - - - - - (774,439)
---------- ---------- -------- --------- --------- -----------
Balance,
February 28,
2002 71,707,974 7,170,799 644,381 (379,260) (3,460) (8,798,208)
March 7, 2002,
common stock
issued for cash
at $0.10 per
share (unaudited) 100,000 10,000 - - - -
March 20, 2002,
common stock
issued for cash
at $0.10 per
share (unaudited) 50,000 5,000 - - - -
March 20, 2002,
common stock
issued for
services at $0.10
per share
(unaudited) 25,000 2,500 - - - -
March 20, 2002,
common stock
issued for
conversion of
related party
debt at $0.10 per
share (unaudited) 30,000 3,000 - - - -
April 10, 2002,
common stock
issued for cash
and services at
$0.10 per share
(unaudited) 75,000 7,500 - - - -
April 10, 2002,
common stock
issued for cash
and services at
$0.10 per share
(unaudited) 75,000 7,500 - - - -
June 4, 2002,
common stock
issued for debt
at $0.10 per
share (unaudited) 300,000 30,000 - - - -
June 4, 2002,
common stock
issued for cash
at $0.10 per
share (unaudited) 50,000 5,000 - - - -
June 5, 2002,
common stock
issued for
conversion of
related party
debt at $0.10
per share
(unaudited) 1,700,000 170,000 - - - -
August 31, 2002,
common stock
issued for
services at
$0.10 per share
(unaudited) 10,000 1,000 - - - -
---------- ---------- -------- --------- -------- -----------
Balance
Forward 74,122,974 $7,412,299 $644,381 $(379,260)$ (3,460) $(8,798,208)
---------- ---------- -------- --------- -------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
7
21
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Additional Stock
Common Stock Paid-in Subscription Prepaid Accumulated
Shares Amount Capital Receivable Services Deficit
---------------------------------------------------------------
Balance
Forward 74,122,974 $7,412,299 $644,381 $(379,260)$ (3,460) $(8,798,208)
Prepaid
services
expensed
(unaudited) - - - - 3,460 -
Net loss for
the nine months
ended November
30, 2002
(unaudited) - - - - - (725,373)
---------- ---------- -------- --------- -------- -----------
Balance,
November 30,
2002
(unaudited) 74,122,974 $7,412,299 $644,381 $(379,260)$ - $(9,523,581)
========== ========== ======== ========= ======== ===========
Accumulated deficit prior to the development stage $(3,788,522)
Accumulated deficit during the development stage (unaudited) (5,735,059)
-----------
$(9,523,581)
===========
The accompanying notes are an integral part of these consolidated financial
statements.
8
22
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
Inception of the
Development
Stage on
March 1,
For the Nine Months Ended 1997 Through
November 30, November 30,
2002 2001 2002
------------- ----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (725,373)$ (517,694)$ (5,735,059)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services 8,500 3,890 1,226,099
Warrants issued below market value - - 155,000
Pre-paid services expensed 3,460 - 3,460
Depreciation and amortization 58,224 49,995 282,303
Loss on disposition of asset - - (21,055)
Settlement of debt - - 19,000
Gain on gold contract - - (24,072)
Decline in value of assets - - 960,960
Changes in operating assets and liabilities:
Decrease in accounts receivable and
related receivables (650) - (65)
(Increase) in other assets - (19,402) (5,906)
Increase in accounts payable and
other liabilities 41,755 38,384 980,181
------------- ----------- -------------
Net Cash Used by Operating
Activities (614,084) (444,827) (2,159,154)
------------- ----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in receivable-related party (20,000) - (20,000)
Proceeds from receivable-related party 15,000 - 15,000
Purchase of land - (150,000) (50,000)
Decrease in investment - - 95,068
Purchase of fixed assets (76,824) (88,992) (559,415)
------------- ----------- -------------
Net Cash Used by Investing
Activities (81,824) (238,992) (519,347)
------------- ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on bank overdraft (4,055) - -
Proceeds from bank overdraft 730 - 730
Proceeds from notes payable-related party 66,795 128,500 1,016,580
Proceeds from notes payable 625,000 5,000 630,000
Payments on notes payable (16,534) - (166,534)
Issuance of stock for cash 30,000 365,000 1,190,750
Receipt of stock subscription receivable - - 41,990
------------- ----------- -------------
Net Cash Provided by Financing
Activities $ 701,936 $ 498,500 $ 2,713,516
============= =========== =============
The accompanying notes are an integral part of these consolidated financial
statements.
9
23
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
Inception of the
Development
Stage on
March 1,
For the Nine Months Ended 1997 Through
November 30, November 30,
2002 2001 2002
------------- ----------- -------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 6,028 $ (185,319) $ 35,015
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 33,009 228,512 4,022
------------- ---------- -------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 39,037 $ 43,193 $ 39,037
============= ========== =============
CASH PAID DURING THE PERIOD FOR:
Interest $ 44,886 $ 980 $ 65,698
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Issuance of stock for services $ 8,500 $ - $ 1,226,099
Issuance of stock for related party
debt $ 170,000 $ 144,068 $ 1,554,069
Issuance of stock for debt $ 33,000 $ - $ 33,000
Issuance of stock for subsidiary
acquisition $ - $ - $ 309,150
Issuance of stock for fixed assets $ - $ 2,400 $ 58,400
Issuance of stock for prepaid
services $ - $ - $ 3,460
Warrants issued below market value $ - $ - $ 155,000
The accompanying notes are an integral part of these consolidated financial
statements.
10
24
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial statements
November 30, 2002 and February 28, 2002
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted in
accordance with such rules and regulations. The information
furnished in the interim consolidated financial statements include
normal recurring adjustments and reflects all adjustments, which, in
the opinion of management, are necessary for a fair presentation of
such financial statements. Although management believes the
disclosures and information presented are adequate to make the
information not misleading, it is suggested that these interim
consolidated financial statements be read in conjunction with the
Company's most recent audited consolidated financial statements and
notes thereto included in its February 28, 2002 Annual Report on Form
10-KSB. Operating results for the nine months ended November 30,
2002 are not necessarily indicative of the results that may be
expected for the year ending February 28, 2003.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and liquidation
of liabilities in the normal course of business. The Company has
incurred losses from its inception through November 30, 2002. It
has not established revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. During the next 12
months, the Company's plan of operation consists of the following:
* increase mining and milling activities at the Deer Trail Mine;
* begin making sales and shipping concentrates to smelters for
smelting and refining in the next two to three months;
* begin mining activities at the Silver Bell Mine in Summer, 2003;
* increase the number of full-time employees from 8 to approximately
20;
* explore the possibility of obtaining a joint venture partner to
more fully develop Unico's mining operations;
* explore the possibility of building a small portable gold
processing plant which could be located at the Bromide Basin Mine
which could crush and grind ore, and recover gold by gravity or
flotation means; and
* attempt to raise $200,000 to $300,000 through loans and/or the
sale of Unico common stock to provide Unico with additional
needed working capital.
Management believes the Company's current cash as of November 30,
2002, will sustain operations for approximately sixty additional
days. In the event income from mining operations is delayed or is
insufficient to cover operating expenses, the Company will need to
seek additional funds from equity or debt financing, for which the
Company has no current commitments. In the interim, management is
committed to meeting the minimum operating needs of the Company.
11
25
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2002 and February 28, 2002
NOTE 3 - MATERIAL EVENTS
During the nine months ended November 30, 2002, the Company borrowed
an additional $75,000 and made payments of $15,000 cash and $30,000
in stock on short-term notes payable with interest rates from 0% to
10%. The Company also borrowed an additional $63,795 from a related
party.
The Company entered into two notes payable for a total of $550,000
with an interest rate of 10% for five years with interest only
payments due monthly. These notes are secured by the 680 acres of
land that the Company owns near Deer Trail Mine and by the Company's
Silver Bell Mining claims.
NOTE 4 - RECEIVABLE - RELATED PARTY
On July 18, 2002, the Company advanced $20,000 to a related party.
Repayment terms have not been established. On November 5, 2002, the
Company received payment of $15,000 on the advance. The balance of
the related party receivable at November 30, 2002 is $5,000.
12
26