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 5/31/02
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
________________________________________________
(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 [ ] No [X]
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 July 10, 2002, the issuer had outstanding 74,112,974 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 May 31, 2002, the related audited consolidated
balance sheet of Unico, Incorporated as of February 28, 2002, the unaudited
related consolidated statements of operations and cash flows for the three
month periods ended May 31, 2002 and May 31, 2001 and from inception of the
development stage on March 1, 1997 through May 31, 2002, the unaudited related
statement of stockholders' equity for the period from February 28, 2001
through May 31, 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.
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.
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 been removing
approximately 1,500 tons of ore per month. The ore is being stock-piled and
some of it has 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. Unico recently started milling ore removed from the Deer Trail
Mine also.
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 recently signed an agreement with H & H Metals of New York pursuant
to which Unico will sell the majority, and possibly all, of its concentrates
to H & H Metals. Unico may also sell concentrates to other parties.
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. H & H Metals plans to transport the concentrates it purchases
in its own trucks.
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
3
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 late 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 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 Industries, Inc. 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.
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
4
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. Unico will continue
to remove ore from the property, and transport the ore to the Deer Trail Mine
site where it will be crushed and milled. 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, our plan of operation consists of the
following:
- increase mining activities at the Deer Trail Mine;
- increase milling activities at the Deer Trail Mine;
- begin making sales and shipping concentrates to smelters for smelting
and refining in July or August 2002;
- begin mining activities at the Silver Bell Mine in late Summer 2002;
and
- increase the number of full-time employees from 8 to approximately 35.
Unico's current cash will sustain operations for the next 12 months, and
should be sufficient to enable Unico to implement its plan of operations for
the next 12 months.
5
Results of Operations.
During the three months ended May 31, 2002, Unico experienced a net loss
in the amount of $152,528, or approximately ($0.00) per share, compared to the
net loss of $133,867, or approximately ($0.00) per share, for the three months
ended May 31, 2001.
Unico attributes the $18,661 increase in net loss for the three month
period ended May 31, 2002 primarily to a $14,581 increase in general and
administrative expenses and a $3,119 increase in depreciation and
amortization. Unico anticipates that general and administrative 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 $115,298 in the three months
ended May 31, 2002, from a deficit of ($1,365,748) as of February 28, 2002 to
a deficit of ($1,481,046) as of May 31, 2002. Cash and cash equivalents
increased $17,295 to $50,304 at May 31, 2002 from $33,009 at February 28,
2002. Cash used in operating activities reflects a net loss of $152,528
partially offset by non-cash expenses of $18,115 for depreciation expense,
$7,500 for stock issued for services, $1,730 of pre-paid services expensed and
$1,790 increase in accounts payable and other liabilities.
This increase in cash and cash equivalents was partially due to net cash
provided by financing activities through $25,000 cash received for the
issuance of shares of Unico's common stock, $85,000 received in loans from
unrelated parties, and a $43,617 increase in advances from related parties.
It was partially offset by a decrease in a bank overdraft of $4,055. Unico
utilized $8,874 cash for the purchase of mining equipment.
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'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.
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.
6
In June 2002, Unico borrowed $550,000 from one of Unico's shareholders.
One of the loans 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. With the cash
provided by these two loans, Unico believes that it now has sufficient funds
to meet operating expenses for the next 12 months, and possibly until income
from mining operations should be sufficient to cover operating expenses.
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 May 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 generating revenues from operations beginning in August 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.
7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings involving Unico as a defendant were commenced during
the three month period ended May 31, 2002. No material developments occurred
in any legal proceedings involving Unico as a defendant during the same
period.
Item 2. Changes in Securities.
During the three month period ended May 31, 2002, Unico made the
following sales of shares of Unico's common stock which were not registered
under the Securities Act of 1933:
No. Of
Date Recipient Shares Consideration Valuation
- -------- ------------------ ------------ ---------------- ------------
03/07/02 Leo Lowenthal 100,000 Cash $ 10,000
03/20/02 C.M. Anderson & 50,000 Cash $ 5,000
Colina J. Anderson
03/20/02 C.M. Anderson & 25,000 Services $ 2,500
Colina J. Anderson
03/20/02 Kiyoshi Kasai 30,000 Promissory Note $ 3,000
04/10/02 C.M. Anderson & 75,000 Cash $ 5,000
Colina J. Anderson Services $ 2,500
04/10/02 International 75,000 Cash $ 5,000
Ventures, Inc. Services $ 2,500
Leo Lowenthal also received options to purchase an equal number of shares
at the same $0.10 per share exercise price during the two years following his
stock purchase.
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.
8
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)
Exhibits
- --------
Exhibit
Number Description
-------- -----------
10.6 Promissory Note for $200,000
10.7 Trust Deed Covering 680 Acres
10.8 Promissory Note for $350,000
10.9 Trust Deed Covering Silver Bell Mining Claims
(b) No Current Reports on Form 8-K were filed by Unico during the quarter
ended May 31, 2002.
9
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: July 12, 2002 By: /s/ Ray C. Brown
------------------------------
Ray C. Brown, Chief Executive Officer
and Principal Financial and Accounting
Officer
10
EXHIBIT INDEX
Exhibit Exhibit
Number Description Location
10.6 Promissory Note for $200,000 __
10.7 Trust Deed Covering 680 Acres __
10.8 Promissory Note for $350,000 __
10.9 Trust Deed Covering Silver Bell __
Mining Claims
11
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2002 and February 28, 2002
12
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
May 31, February 28,
2002 2002
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 50,304 $ 33,009
Certificate of deposit 5,006 5,006
------------- -------------
Total Current Assets 55,310 38,015
------------- -------------
PROPERTY AND EQUIPMENT
Property and equipment, net 756,202 765,443
------------- -------------
Total Property and Equipment 756,202 765,443
------------- -------------
OTHER ASSETS
Refundable deposit 500 500
Reclamation bond 38,402 38,402
------------- -------------
Total Other Assets 38,902 38,902
------------- -------------
TOTAL ASSETS $ 850,414 $ 842,360
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
2
13
UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
May 31, February 28,
2002 2002
------------- -------------
(Unaudited)
CURRENT LIABILITIES
Bank overdraft $ - $ 4,055
Accounts payable 50,033 37,437
Accrued expenses 800 800
Notes payable related parties 585,206 544,589
Notes payable 386,500 301,500
Accrued interest payable 771,874 746,930
Commitments and contingencies 537,047 572,797
------------- -------------
Total Current Liabilities 2,331,460 2,208,108
------------- -------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized at
$0.10 par value; 72,062,974 and 71,707,974
shares issued and outstanding, respectively 7,206,299 7,170,799
Additional paid-in capital 644,381 644,381
Services prepaid with common stock (1,730) (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 (5,162,214) (5,009,686)
------------- -------------
Total Stockholders' Equity (Deficit) (1,481,046) (1,365,748)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 850,414 $ 842,360
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
3
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 Three Months Ended 1997 Through
May 31, May 31,
2002 2001 2002
------------- ------------ -------------
REVENUES $ - $ - $ -
EXPENSES
General and administrative 100,911 86,330 3,107,639
Depreciation and amortization 18,115 14,996 242,194
------------- ------------ -------------
Total Expenses 119,026 101,326 3,349,833
------------- ------------ -------------
Loss from Operations (119,026) (101,326) (3,349,833)
------------- ------------ -------------
OTHER INCOME (EXPENSES)
Investment income 442 829 12,862
Interest expense (33,944) (33,370) (796,688)
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) (33,502) (32,541) (1,812,381)
------------- ------------ -------------
NET LOSS $ (152,528) $ (133,867) $ (5,162,214)
============= ============ =============
NET LOSS PER SHARE $ (0.00) $ (0.00)
============= ============
WEIGHTED AVERAGE NUMBER OF
SHARED OUTSTANDING 71,965,691 65,599,480
============= ============
The accompanying notes are an integral part of these
consolidated financial statements.
4
15
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
16
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
17
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 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 - - - -
Prepaid services expensed
(unaudited) - - - - 1,730 -
Net loss for the three months
ended May 31, 2002 (unaudited) - - - - - (152,528)
----------- ---------- ------------- ------------ --------- ------------
Balance, May 31, 2002 72,062,974 $7,206,299 $ 644,381 $ (379,260) $ (1,730) $(8,950,736)
============ ========== ============= ============ ========= ============
Accumulated deficit prior to the development stage $(3,788,522)
Accumulated deficit during the development stage (5,162,214)
------------
$(8,950,736)
============
The accompanying notes are an integral part of these consolidated financial statements.
7
18
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 Three Months Ended 1997 Through
May 31, May 31,
2002 2001 2002
------------- ------------- -------------
<s> <c> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (152,528) $ (133,867) $ (5,162,214)
Adjustments to reconcile net loss to
net cash (used) by operating activities:
Stock issued for services 7,500 - 1,225,099
Warrants issued below market value - - 155,000
Pre-paid services expensed 1,730 - 1,730
Depreciation expense 18,115 14,996 242,194
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 - - 585
(Increase) in other assets - (19,402) (5,906)
Increase in accounts payable and other liabilities 1,790 (5,360) 940,216
------------- ------------- -------------
Net Cash Used by Operating Activities (123,393) (143,633) (1,668,463)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of land - (150,000) (50,000)
Decrease in investment - - 95,068
Purchase of fixed assets (8,874) (34,604) (491,465)
------------- ------------- -------------
Net Cash Used by Investing Activities (8,874) (184,604) (446,397)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in bank overdraft (4,055) - -
Proceeds from notes payable - related party 43,617 62,000 993,402
Proceeds from notes payable 85,000 - 90,000
Payments on notes payable - - (150,000)
Issuance of stock for cash 25,000 90,000 1,185,750
Receipt of stock subscription receivable - - 41,990
------------- ------------- -------------
Net Cash Provided by Financing Activities $ 149,562 $ 152,000 $ 2,161,142
------------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
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UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)(Continued)
From
Inception of the
Development
Stage on
March 1,
For the Three Months Ended 1997 Through
May 31, May 31,
2002 2001 2002
------------- ------------- -------------
<s> <c> <c> <c>
NET INCREASE (DECREASE) IN CASH $ 17,295 $ (176,237) $ 46,282
CASH AT BEGINNING OF PERIOD 33,009 228,512 4,022
------------- ------------- -------------
CASH AT END OF PERIOD $ 50,304 $ 52,275 $ 50,304
============= ============= =============
CASH PAID DURING THE PERIOD FOR:
Interest $ 9,000 $ 980 $ 29,812
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Issuance of stock for services $ 7,500 $ - $ 1,225,099
Issuance of stock for related party debt $ - $ - $ 1,384,068
Issuance of stock for subsidiary acquisition $ - $ - $ 309,150
Issuance of stock for fixed assets $ - $ - $ 58,400
Issuance of stock for prepaid services $ - $ - $ 3,460
The accompanying notes are an integral part of these consolidated financial statements.
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UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial statements
May 31, 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 three months ended May 31, 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 May 31, 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 activities at the Deer Trail Mine;
. increase milling activities at the Deer Trail Mine;
. begin making sales and shipping concentrates to smelters for smelting and
refining in July or August 2002;
. begin mining activities at the Silver Bell Mine in late Summer, 2002;
. increase the number of full-time employees from 8 to approximately 35;
Management believes the Company's cash as of May 31, 2002, 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.
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UNICO, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2002 and February 28, 2002
NOTE 3 - MATERIAL EVENT
During the three months ended May 31, 2002, the Company borrowed an additional
$85,000 on short-term notes payable with interest rates from 0% to 10%. The
Company also borrowed an additional $43,617 from a related party and made
$9,000 in interest payments to the same related party.
NOTE 4 - SUBSEQUENT EVENTS
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 Trial Mine and by the Company's Silver Bell Mining claims.
On June 4, 2002, the Company issued 300,000 shares of common stock to convert
debt of $30,000 to equity at $0.10 per share.
On June 4, 2002, the Company issued 50,000 shares of common stock for cash of
$5,000 or $0.10 per share.
On June 5, 2002, the Company issued 1,700,000 shares of common stock to
convert $170,000 of the note payable-related party to equity at $0.10 per
share.
On June 24, 2002, the Company paid cash of $15,000 to pay off a note payable.
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