SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended 11/30/01
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 (IRS Employer Identification Number)
of incorporation or organization
6475 Grandview Avenue
P.O. Box 777
Magalia, California 95954
------------------------------------------------
(Address of principal executive offices)
(530) 873-4394
------------------------------------------------
(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 December 31, 2001, the issuer had outstanding 69,678,487 shares of
its Common Stock, $0.10 par value per share.
NOTE: This Form 10-QSB has been amended to correct a typographical error
in the table presented at the top of page 9. Mr. J. Bruce Hirschberg's
consideration on 9/15/01 has been corrected to reflect $17,500 Cash & and
$1,945 Services.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited consolidated balance sheet of Unico, Incorporated, an
Arizona corporation, as of November 30, 2001 and the related audited
consolidated balance sheet of Unico, Incorporated as of February 28, 2001, the
unaudited related consolidated statements of operations and cash flows for the
three and nine month periods ended November 30, 2001 and November 30, 2000,
the unaudited related consolidated statement of stockholders' equity for the
period from February 28, 1997 through November 30, 2001, 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.
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
2
and pay a 3% net smelter return on ore removed from the Deer Trail Mine.
During Unico's last 2 fiscal years ended February 28, 2001, and since
then, Unico has worked toward reopening 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 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 been removing
approximately 2,000 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 on certain ore removed from the Bromide
Basin Mines. Eventually Unico intends to begin milling activities on the ore
removed from the Deer Trail Mine in order to process the Deer Trail Mine ore
into lead and zinc concentrates and ship the concentrates to various smelters.
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. We do not believe that we will be
dependent on one or a few major customers for sales of the lead and zinc
concentrates.
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.
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
3
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.
Unico intends to commence some mining activities on the Silver Bell Mine
in late Spring or Summer, 2002. 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 August 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.
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 certain equipment and personal property leased by
4
Kaibab Industries, Inc. to Unico for an agreed upon value of approximately
$125,430.
Unico commenced mining efforts on the Bromide Basin Mines in September
2001 with five full time miners. Unico removed ore from the property, and is
transporting the ore to the Deer Trail Mine site where it is being crushed and
milled. Recent mining activities at the Bromide Basin Mines ceased
approximately November 20, 2001 due to weather. Because of the Bromide Basin
Mines' high elevation, mining activities are seasonal and will likely occur
only from June through November.
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 activities at the Deer Trail Mine;
- process some of the gold ore removed from the Bromide Basin Mines in
January or February 2002;
- begin making sales and shipping concentrates to smelters for smelting
and refining in January or February 2002;
- begin selling gold mined from the Bromide Basin Mine in January or
February 2002;
- begin mining activities at the Silver Bell Mine in late Spring or
Summer, 2002;
- increase the number of full-time employees to approximately 35; and
- raise approximately $200,000 in additional equity capital and/or loans
to be used as operating capital.
Accomplishing our 12 month plan of operations is dependent on Unico
raising approximately $100,000 in equity and/or debt financing during the next
60 days and an additional $100,000 during the following 2 to 3 months.
Unico's current cash will sustain operations for approximately 60 days.
Between February 28, 2001 and November 30, 2001, Unico issued 4,355,941
shares of its common stock at prices varying from $0.10
5
to almost $0.16 per share for which Unico received approximately $509,068 in
cash (including a loan conversion of approximately $144,068), $3,890 in
services and $2,400 in equipment.
Results of Operations.
During the three months ended November 30, 2001, Unico experienced a net
loss in the amount of $178,942, or approximately ($0.003) per share, which is
$37,771 less than the net loss of $216,713, or approximately ($0.003) per
share, incurred for the three months ended November 30, 2000. For the nine
months ended November 30, 2001, Unico incurred a net loss of $517,694, or
approximately ($0.007) per share. This was $32,889 less than the net loss of
$550,583, or approximately ($0.009) per share, incurred by Unico during the
nine month period ended November 30, 2000.
Unico attributes the decreased net loss for the nine month period ended
November 30, 2001 primarily to a $33,058 decrease in general and
administrative expenses and a decrease in interest expense of $8,513. Unico
attributes the decreased net loss for the nine month period ended November 30,
2001 primarily to a $34,351 decrease in general and administrative expenses
and a $14,195 decrease in interest expense partially offset by an increase in
depreciation and amortization expenses of $16,892. Unico anticipates that it
will commence earning revenues before its fiscal year ends February 28, 2001.
Liquidity and Capital Resources
Unico's stockholders' deficit increased $2,335 in the nine months ended
November 30, 2001, from a deficit of ($1,306,157) as of February 28, 2001 to a
deficit of ($1,308,492) as of November 30, 2001. Cash and cash equivalents
decreased $185,319 to $43,193 at November 30, 2001 from $228,512 at February
28, 2001. Net cash used in operating activities for the nine months ended
November 30, 2001 reflects a net loss of $517,694 and an increase in other
assets of $19,402, partially offset by non-cash expenses of $49,995 for
depreciation and amortization expenses and an increase in accounts payable and
other liabilities of $38,384.
This decrease in cash and cash equivalents for the nine months ended
November 30, 2001 was partially offset by net cash provided by financing
activities through approximately $365,000 cash received for the issuance of
shares of Unico's common stock. Unico utilized approximately $238,992 cash
for capital requirements of which $150,000 was used for the purchase of real
property, and approximately $88,992 was used to purchase personal property and
equipment.
6
Unico's most significant cash needs in its present fiscal year include
raising funds to cover operating expenses until such time as revenues are
sufficient to cover operating expenses. Unico's present cash resources are
only adequate to sustain operations for approximately 60 days. Unico will be
required to raise additional capital through borrowing or additional sale of
equity to fund operations beyond the end of its current fiscal year.
The Deer Trail Lease contains an option to purchase the Deer Trail Mine
for $4,000,000 plus a continuing 3% net smelter return. In the event mining
operations from the Deer Trail Mine are profitable and Unico decides to
exercise its option to purchase the Deer Trail Mine, Unico will either need to
obtain an extension of the lease agreement or raise the $4,000,000 necessary
to exercise the option to purchase the Deer Trail Mine before the lease
expires in May 2004. Unico presently does not have sufficient funds to
exercise the option to purchase the Deer Trail Mine, and no assurance can be
given that Unico will have sufficient funds to purchase the Deer Trail Mine
before the lease expires.
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. If we are successful in raising and/or collecting $100,000 in the
next 60 days and an additional $100,000 in equity or debt capital in the
following 2 to 3 months, we believe that Unico will have sufficient funds to
meet its operating expenses until income from mining operations should be
sufficient to cover operating expenses. However, substantial additional funds
must be raised to enable Unico to exercise the option to purchase the Deer
Trail Mine.
We intend to seek additional capital from private sales of Unico's common
stock and, if necessary, from loans from our management. In the event income
from mining operations is delayed or is insufficient to cover operating
expenses, then Unico will need to seek additional funds from equity or debt
financing, for which we have no commitments.
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
7
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, 2001. We
anticipate that we will begin generating revenues from operations before
February 28, 2002.
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.
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, 2001. 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, 2001, Unico made the
following sales of shares of Unico's common stock which were not registered
under the Securities Act of 1933:
8
No. of
Date Recipient Shares Consideration Valuation
______________________________________________________________________________
09/15/01 Anthony G. Nuzzo 138,889 $12,500 Cash & $ 13,889
and Julie Nuzzo $1,389 Services
09/15/01 J. Bruce Hirschberg 194,445 $17,500 Cash & $ 19,445
$1,945 Services
09/15/01 Joseph C. Gabriel 55,556 $5,000 Cash & $ 5,556
$556 Services
10/05/01 Frederick A. Johnson 200,000 Cash $ 20,000
10/05/01 Richard C. Wood 50,000 Cash $ 5,000
10/05/01 Lorraine H. Wood 50,000 Cash $ 5,000
11/01/01 J. Bruce Hirschberg 100,000 Cash $ 10,000
11/01/01 James Joseph Maclellan 200,000 Cash $ 20,000
11/01/01 Joseph F. Gabriel 100,000 Cash $ 10,000
11/14/01 Darwin L. Peterson 100,000 Cash $ 10,000
11/14/01 C. Bradley Johnson 100,000 Cash $ 10,000
11/14/01 Donna Sorenson 24,000 Equipment $ 2,400
Each of the persons who purchased shares during the three months ended
November 30, 2001, other than Donna Sorenson, received options to purchase an
equal number of shares at the same price per share during the two years
following their respective stock purchases.
All of the shares described above in the table were sold directly by
Unico, and no underwriters were involved in the transactions. Unico relied on
section 4(2) of the Securities Act of 1933 in making the sales of securities.
No advertising or general solicitation was employed in offering the shares.
Each purchaser received disclosure information concerning Unico. Each
purchaser also had the opportunity to investigate Unico and ask questions of
its president and board of directors. The securities sold were offered for
investment purposes only and not for the purpose of resale or distribution.
The transfer of the shares sold was appropriately restricted by Unico.
During the three month period ended May 31, 2001, and the three month
period ended August 31, 2001, 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, 2001 and August 31, 2001.
9
Item 3. Defaults Upon Senior Securities.
None
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) On September 4, 2001, Unico filed a Current Report on Form 8-K describing
Unico's acquisition of the Kaibab Mining Lease. The report was dated August
30, 2001 and referred to the event as having occurred on August 20, 2001.
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 14, 2002 By: /s/ Ray C. Brown
------------------------------------
Ray C. Brown, Chief Executive
Officer and Principal Financial and
Accounting Officer
11
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2001 and February 28, 2001
12
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
November 30, February 28,
2001 2001
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 43,193 $ 228,512
Taxes receivable 433 433
------------- -------------
Total Current Assets 43,626 228,945
------------- -------------
PROPERTY AND EQUIPMENT
Property and equipment, net 776,891 735,493
------------- -------------
Total Property and Equipment 776,891 735,493
------------- -------------
OTHER ASSETS
Refundable deposit 500 500
Reclamation Bond 38,402 19,000
------------- -------------
Total Other Assets 38,902 19,500
------------- -------------
TOTAL ASSETS $ 859,419 $ 983,938
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
13
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
November 30, February 28,
2001 2001
------------- -------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 48,329 $ 49,829
Accrued expenses 12,410 1,410
Advances from related parties 516,454 500,200
Notes payable 301,499 446,499
Accrued interest payable 411,703 351,351
Accrued interest payable to related parties 311,719 303,509
Commitments and contingencies 565,797 637,297
------------- -------------
Total Current Liabilities 2,167,911 2,290,095
------------- -------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized at
$0.10 par value; 69,678,487 and 65,322,546
shares issued and outstanding, respectively 6,967,850 6,532,254
Additional paid-in capital 644,381 564,618
Stock subscription receivable (379,260) (379,260)
Accumulated deficit prior to development stage (3,788,522) (3,788,522)
Accumulated deficit from inception of the
development stage on March 1, 1997 (4,752,941) (4,235,247)
------------- -------------
Total Stockholders' Equity (Deficit) (1,308,492) (1,306,157)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 859,419 $ 983,938
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
14
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception of
the Development
Stage on
March 1,
For the Nine Months Ended For the Three Months Ended 1997 Through
November 30, November 30, November 30,
2001 2000 2001 2000 2001
------------- ------------- ------------- ------------- -------------
REVENUES $ - $ - $ - $ - $ -
EXPENSES
General and administrative 368,926 403,277 127,716 160,774 2,792,920
Depreciation and amortization 49,995 33,103 18,521 14,502 206,264
------------- ------------- ------------- ------------- -------------
Total Expenses 418,921 436,380 146,237 175,276 2,999,184
------------- ------------- ------------- ------------- -------------
Loss from Operations (418,921) (436,380) (146,237) (175,276) (2,999,184)
------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSES)
Investment income 2,513 1,278 556 337 11,255
Interest expense (101,286) (115,481) (33,261) (41,774) (736,457)
Decline in value assets - - - - (651,810)
Settlement of debt - - - - (91,000)
Loss on valuation of asset - - - - (309,817)
Gain on gold contract - - - - 24,072
------------- ------------- ------------- ------------- -------------
Total Other Income
(Expenses) (98,773) (114,203) (32,705) (41,437) (1,753,757)
------------- ------------- ------------- ------------- -------------
NET LOSS $ (517,694) $ (550,583) $ (178,942) $ (216,713) $ (4,752,941)
============= ============= ============= ============= =============
BASIC LOSS PER SHARE $ (0.01) $ (0.01) $ (0.00) $ (0.00)
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
15
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Common Stock Additional Stock
------------------------- Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ -------------
Balance, February 28, 1997 36,887,712 $ 3,688,771 $ 170,052 $ - $ (5,254,277)
Common stock issued for
services rendered 1,760,000 176,000 - - -
Common stock issued for cash 1,740,000 174,000 - - -
Common stock issued in
payment of debt 400,000 40,000 - - -
Common stock issued for
acquisition of fixed assets 60,000 6,000 - - -
Stock subscription receivable 1,000,000 100,000 - (100,000) -
Net loss for the year ended
February 28, 1998 - - - - (670,808)
------------ ------------ ------------ ------------ -------------
Balance, February 28, 1998 41,847,712 4,184,771 170,052 (100,000) (5,925,085)
Common stock issued for
payment of debt at $0.10
per share 5,000,000 500,000 - - -
Common stock issued for
investment in mining
properties at $0.10 per
share 500,000 50,000 - - -
common stock issued for
services rendered at
$0.10 per share 250,000 25,000 - - -
Net loss for the year ended
February 28, 1999 - - - - (527,681)
------------ ------------ ------------ ------------ -------------
Balance, February 28, 1999 47,597,712 $ 4,759,771 $ 170,052 $ (100,000) $ (6,452,766)
------------ ------------ ------------ ------------ -------------
The accompanying notes are an integral part of these consolidated financial statements.
16
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional Stock
------------------------- Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ -------------
Balance, February 28, 1999 47,597,712 $ 4,759,771 $ 170,052 $ (100,000) $ (6,452,766)
Common stock issued for
services rendered at
$0.10 per share 39,000 3,900 - - -
Common stock issued for
cash and services at
$0.10 per share 580,000 58,000 - - -
Common stock issued for
cash at $0.10 per share 500,000 50,000 - - -
Common stock issued for
cash at $0.10 per share 1,550,000 155,000 - - -
Warrants granted below
market price - - 155,000 - -
Net loss for the year
ended February 29, 2000 - - - - (493,267)
------------ ------------ ------------ ------------ -------------
Balance, February 29, 2000 50,266,712 5,026,671 325,052 (100,000) (6,946,033)
Common stock issued for
cash and subscription
receivable at $0.10 per
share 4,000,000 400,000 - (321,250) -
Common stock issued for
cash at $0.10 per share 500,000 50,000 - - -
Common stock issued for
services at $0.10 per share 500,000 50,000 - - -
Partial receipt of stock
subscription - - - 11,990 -
Common stock issued for
services at $0.10 per share 460,000 46,000 - - -
Partial receipt of stock
subscription - - - 25,000 -
Common stock issued for
cash at $0.12 per share 208,334 20,833 4,166 - -
Common stock issued for
deposit on subsidiary
acquisition at $0.12
per share 457,500 45,750 9,150 - -
------------ ------------ ------------ ------------ -------------
Balance Forward 56,392,546 $ 5,639,254 $ 338,368 $ (384,260) $ (6,946,033)
------------ ------------ ------------ ------------ -------------
The accompanying notes are an integral part of these consolidated financial statements.
17
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional Stock
------------------------- Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ -------------
Balance Forward 56,392,546 $ 5,639,254 $ 338,368 $ (384,260) $ (6,946,033)
Partial receipt of stock
subscription - - - 5,000 -
Common stock issued for
cash and services at
$0.10 per share 500,000 50,000 - - -
Common stock issued for
related party debt and
services at $0.14 per
share 5,000,000 500,000 200,000 - -
Common Stock issued for
cash at $0.10 per share 350,000 35,000 - - -
Common Stock issued for
subsidiary acquisition
at $0.10 per share 2,542,500 254,250 - - -
Common Stock issued for
cash at $0.10 per share 100,000 10,000 - - -
Common Stock issued for
cash at $0.16 per share 125,000 12,500 7,500 - -
Common Stock issued for
cash at $0.16 per share 312,500 31,250 18,750 - -
Net loss for the year
ended February 28, 2001 - - - - (1,077,736)
------------ ------------ ------------ ------------ -------------
Balance, February 28, 2001 65,322,546 $ 6,532,254 $ 564,618 $ (379,260) $ (8,023,769)
------------ ------------ ------------ ------------ -------------
The accompanying notes are an integral part of these financial statements.
18
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional Stock
------------------------- Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ -------------
Balance, February 28, 2001 65,322,546 $ 6,532,254 $ 564,618 $ (379,260) $ (8,023,769)
Common stock and options
issued for cash at $0.13
per share (unaudited) 153,847 15,385 4,615 - -
Common stock and options
issued for cash at $0.12
per share (unaudited) 416,667 41,667 8,333 - -
Common stock and options
issued for cash at $0.11
per share (unaudited) 181,819 18,182 1,819 - -
Common stock and options
issued for cash at $0.11
per share (unaudited) 909,090 90,909 9,091 - -
Common stock and options
issued for cash at $0.11
per share (unaudited) 272,728 27,273 2,727 - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 200,000 20,000 - - -
Common stock issued for
related party debt at $0.15
per share (unaudited) 908,900 90,890 53,178 - -
Common stock and options
issued for cash and
services at $0.10 per
share (unaudited) 388,890 38,890 - - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 100,000 10,000 - - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 200,000 20,000 - - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 100,000 10,000 - - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 200,000 20,000 - - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 100,000 10,000 - - -
Common stock and options
issued for cash at $0.10
per share (unaudited) 100,000 10,000 - - -
------------ ------------ ------------ ------------ -------------
Balance Forward 69,554,487 $ 6,955,450 $ 644,381 $ (379,260) $ (8,023,769)
============ ============ ============ ============ =============
The accompanying notes are an integral part of these consolidated
financial statements.
19
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional Stock
------------------------- Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ -------------
Balance forward 69,554,487 $ 6,955,450 $ 644,381 $ (379,260) $ (8,023,769)
Common stock and options
issued for cash at $0.10
per share (unaudited) 100,000 10,000 - - -
Common stock issued for
equipment at $0.10 per
share (unaudited) 24,000 2,400 - - -
Net loss for the nine
months ended November 30,
2001 (unaudited) - - - - (517,694)
------------ ------------ ------------ ------------ -------------
Balance, November 30, 2001
(unaudited) 69,678,487 $ 6,967,850 $ 644,381 $ (379,260) $ (8,541,463)
============ ============ ============ ============ =============
The accompanying notes are an integral part of these consolidated
financial statements.
20
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,
2001 2000 2001
-------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (517,694) $ (550,583) $ (4,752,941)
Adjustments to reconcile net loss to
net cash (used) by operating activities:
Stock issued for services 3,890 152,512 1,101,110
Warrants issued below market value - - 155,000
Depreciation expense 49,995 33,103 206,564
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 - - 152
Decrease in prepaid expenses - 9,719 -
(Increase) in other assets (19,402) (2,578) (900)
Increase in accounts payable and other liabilities 38,384 122,434 930,419
-------------- -------------- --------------
Net Cash (Used) by Operating Activities (444,827) (235,393) (1,425,763)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of land (150,000) - (200,000)
Decrease in investment - - 95,068
Purchase of fixed assets (88,992) (324,565) (485,723)
-------------- -------------- --------------
Net Cash (Used) by Investing Activities (238,992) (324,565) (590,655)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes receivable - related party 129,000 471,500 931,349
Payment on notes receivable - related party (500) - (500)
Proceeds from notes receivable 5,000 - 5,000
Issuance of stock for cash 365,000 178,750 1,077,750
Receipt of stock subscription receivable - 41,990 41,990
-------------- -------------- --------------
Net Cash Provided by Financing Activities $ 498,500 $ 692,240 $ 2,055,589
-------------- -------------- --------------
The accompanying notes are an integral part of these consolidated financial statements.
21
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From
Inception of
the Development
Stage on
March 1,
For the Nine Months Ended 1997 Through
November 30, November 30,
2001 2000 2001
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH $ (185,319) $ 132,282 $ 39,171
CASH AT BEGINNING OF PERIOD 228,512 212,786 4,022
-------------- -------------- --------------
CASH AT END OF PERIOD $ 43,193 $ 345,068 $ 43,193
============== ============== ==============
CASH PAID DURING THE PERIOD FOR:
Interest $ 980 $ 15,000 $ 18,112
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Issuance of stock for services $ 3,890 $ 152,512 $ 1,101,110
Issuance of stock for related party debt $ 144,068 $ 700,000 $ 1,384,068
Issuance of stock for subsidiary acquisition $ - $ 77,775 $ 309,150
Issuance of stock for fixed assets $ 2,400 $ - $ 58,400
The accompanying notes are an integral part of these consolidated financial statements.
22
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial statements
November 30, 2001 and February 28, 2001
NOTE 1 -CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at November 30, 2001 and 2000
and for all periods presented have been made.
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. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
February 28, 2001 audited financial statements. The results of operations for
periods ended November 30, 2001 and 2000 are not necessarily indicative of the
operating results for the full years.
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, 2001. 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 activities at the Deer Trail Mine;
. process some of the gold ore removed from the Bromide Basin Mines in
January or February 2002;
. begin making sales and shipping concentrates to smelters for smelting
and refining in January or February 2002;
. begin selling gold mined from the Bromide Basin Mine in January or
February 2002;
. begin mining activities at the Silver Bell Mine in late Spring or
Summer, 2002;
. increase the number of full-time employees from 10 to approximately
35; and
. raise approximately $200,000 in additional equity capital and/or
loans to be used as operating capital.
Management believes the Company's current cash will sustain operations for
approximately two additional months. 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.
23
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2001 and February 28, 2001
NOTE 3 - MATERIAL EVENT
On August 20,2001, the Company entered into a Mining Lease and Option to
Purchase ("Mining Lease") with Kaibab Industries, Inc., an Arizona
corporation. Under the Mining Lease, Kaibab has leased to the Company certain
mining claims located in the Henrey Mountain Mining District in Garfield
county, Utah containing approximately 400 acres. The Mining Lease also
provides for the leasing of certain mining equipment from Kaibab Industries,
Inc. to the Company. The Mining Lease runs for a term of three years, and
grants to the Company 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
Mining Lease.
As consideration for the Mining Lease, the Company 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 Mining Lease. The Mining Lease requires the Company 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 Mining Lease. Minimum production requirements for
partial months are to be pro rated. In the event that the Company is unable
to meet the minimum production requirements, then Kaibab Industries, Inc. to
the Company for an agreed upon value of approximately $125,430.
The Company recently commenced mining efforts on the property and Unico is now
removing ore from the property.
NOTE 4 -SUBSEQUENT EVENT
On December 1, 2001, a new lease agreement was entered into for the Deer Trail
Mine. The lease period is for 30 months. The lease expires in May 2004. The
new lease requires the Company to make monthly lease payments of $10,000 and
to pay a 3% net smelter return on ore removed from the Deer Trail Mine.