UNICORP INC, 10QSB, 1998-05-20

UNICORP INC
10QSB, 1998-05-20
CRUDE PETROLEUM & NATURAL GAS

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO ___________

COMMISSION FILE NUMBER: 2-73389

UNICORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA 75-1764386
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

600 TRAVIS, SUITE 6500 77002
HOUSTON, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 229-9100

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---

THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF MARCH 31, 1998 WAS 1,040,000.

Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---

<PAGE> 2

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The information required by this Item 1 appears on pages 7 through 9 of
this Report, and is incorporated herein by reference.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following is a discussion of the Company's financial condition and
results of operations. This discussion should be read in conjunction with the
Financial Statements of the Company described in Item 1 of this Report.
Statements contained in this "Management's Discussion and Analysis of Financial
Conditions and Results of Operations," which are not historical facts may be
forward-looking statements. Such information involves risks and uncertainties,
including those created by general market conditions, competition and the
possibility that events may occur which could limit the ability of the Company
to maintain or improve its operating results or execute its primary growth
strategy. Although management believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could be
inaccurate, and there can therefore be no assurance that the forward-looking
statements included herein will prove to be accurate. The inclusion of such
information should not be regarded as a representation by management or any
other person that the objectives and plans of the Company will be achieved.
Moreover, such forward-looking statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements that speak only as of the date hereof.

General. Management intends for the Company to proceed in its efforts
to expand holdings through the purchase of existing, profitable, private,
companies where there is a demonstrable gain in productivity through the
minimization of general and administrative costs which are duplicative.
Management will seek to implement a capital structure which affords the greatest
flexibility for future acquisitions while maintaining an adequate base of equity
to cushion against fluctuations in the business cycle. It is the belief of
management that numerous opportunities for vertical expansion in the refining
and petrochemical business are available. Many smaller private fuel distributors
and convenience store operators are available near current acquisition
candidates, and given the proper capital structure, could enhance the worth and
viability of the Company.

A public relations agreement has been signed with Jaz Bermaine &
Company to provide public relations and market exposure for the Company. It is
expected that the Company will be traded on the OTC Bulletin Board until such
time as the Company can qualify for a listing on different exchange.

Pending Acquisitions. As of the end of 1997, the Company had examined
nine potential acquisition candidates. Of these, a letter of intent has been
signed with Sellers Petroleum Products, Inc. ("Sellers") of Yuma, Arizona, and
negotiations continue with the others. Sellers engages in the marketing and
distribution of refined petroleum products in Arizona and California. Expected
consideration for the purchase is $7,000,000. The Company has also elected to
pursue an agreement to purchase a refinery located at the Valverde refurbishment
facility in Houston, Texas and a refinery and site, located in Nixon, Texas. The
Company continues its search for undervalued private and public entities in
related businesses. Meetings with several investment banking relationships have
been held pursuant to financing for these anticipated purchases.

Management expects that the Company's proposed acquisitions will expand
the business of the Company through the acquisition of an established, growing
distribution business in the southwestern United States. Management is of the
opinion, that the purchase of refining, and distribution facilities in Texas
will limit the Company's reliance upon outside refiners for refined petroleum
products. The Company is also currently negotiating for the purchase of a third
existing company which operates a distribution and convenience store operation
in the southwestern United States.

Sellers Petroleum. Sellers Petroleum Products, Inc. (herein "Sellers")
is one of the largest distributors of wholesale petroleum products in the Yuma,
Arizona and El Centro, California regions. Products offered include fuels

<PAGE> 3

(gasoline, oil, and diesel), lubricants, maintenance services, and tires,
batteries, and accessories. Sellers maintains two modern bulk plant facilities
located in Yuma, Arizona and El Centro, California, as well as seven
state-of-the-art cardlock facilities throughout its regions. The facilities are
the only ones of all regional competitors that are in compliance with all
applicable EPA standards through 1998, including above ground tank storage,
storm water compliance, and product transportation regulations.

Sellers is a branded Unocal 76 jobber, although fuel is also rack
purchased from various other major refiners and independents refiners based upon
pricing. Unocal, Chevron, and Texaco lubricant products are also offered.
Sellers has maintained a strong relationship with Unocal since its inception in
1954, and continues to be its premier distributor in the region. Sellers is
currently Unocal's third largest lubricant jobber nationwide, and has been
approached by Unocal to expand its service region further into both Southern
California and Arizona. Its customers include both commercial and retail
(cardlock and service station) accounts. Management strongly emphasizes service,
with customer satisfaction evident in its 95 percent + rate of repeat business.
Customer service is further augmented by through excellent staffing,
characterized by low employee turnover and average employee tenure of 10 years.
The Company expects that the current Sellers management will be retained post
acquisition. Sellers has over 1,300 active accounts which order at least once
per month.

Nixon, Texas Refinery. The Nixon refinery is located on a 50 acre site
approximately 40 miles south of San Antonio, Texas. The plant is certified by
the U.S. Department of Energy at a rate of 17,033 barrels per day of 42 API
Crude. The plant was designed to refine military jet fuel in addition to
propane, C3/C4, Naphtha, kerosene, diesel, gas, oil, and residuals. The refinery
ran for several years delivering Military Jet fuel to all three U.S. Air Force
bases in San Antonio prior to its closure after Desert Storm. The refinery can
be tuned to produce the standard range of refined petroleum products to meet
demand in its market area. The Company feels that through an association with a
minority owned petroleum distributor, profit margins exceeding $3.00 per barrel
refined may be realized. The refinery is currently being refurbished in Houston,
Texas. Management believes that by combining its additional 6,000 to 7,000
barrels of refining capacity to the Nixon Refinery, the Company can process
approximately 20,000 barrels of petroleum daily.

Fluid Catalytic Catalyst. Pursuant to an Asset Purchase Agreement, the
Company purchased from Equitable Assets Incorporated approximately 58,000 tons
of fluid catalytic catalyst (Zeolite), which is used in the refining,
agriculture, water purification, turf management, and air purification markets,
in exchange for 420,000 shares of the Company's Class A Common Stock and
$5,800,000 of $100 Par Series A Callable Preferred Stock. At the time of the
execution of the Asset Purchase Agreement, the Company did not have in place the
requisite capital structure to conclude the sale and purchase. Consequently, the
Company will amend its capital structure to provide the requisite capital stock.
The proposed purchase price for the Zeolite is approximately $175 per ton. The
current market price for Zeolite ranges from $300 to $1,100 per ton. The Company
plans to sell 20,571 tons of the Zeolite to Equitable Assets, Inc. in exchange
for notes and commercial paper equaling $5,000,000, or $243 per ton. Management
is currently examining the wholesale markets to find customers who might be
consistent purchasers for its remaining inventory of fluid catalytic catalyst.
The material will also be tested to determine its efficacy in any refinery that
the Company may purchase.

Liquidity and Capital Resources. In order to complete the proposed
acquisitions, the Company will require additional funding. Management believes
that this funding is available through investment bankers who have expressed an
interest in providing equity and debt funding. There can be no assurance as to
the availability or terms of this financing.

If the Company is to be successful in concluding the above described
proposed acquisitions, it will be obligated to spend at least $400,000 in
earnest money, $200,000 in purchase money, at least $100,000 in acquisition
costs, plus shares of the Common Stock and other costs before formal contracts
can be executed or closed. Certain anticipated transactions may require the
Company to incur additional debt, and the degree to which the Company may be
leveraged could have important consequences, including the following: (i) the
possible impairment of the Company's ability to obtain financing in the future
for potential acquisitions, working capital, capital expenditures or general
corporate purposes; (ii) the necessity for a substantial portion of the
Company's cash flow from operations to be dedicated to the payment of principal
and interest on its indebtedness; (iii) the potential for increased interest
expense due to fluctuations in interest rates; and (iv) the potential for
increased vulnerability of the Company to economic downturns and possible
limitation of its ability to withstand competitive pressures. The Company's
ability to meet its debt service

<PAGE> 4

obligations will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control.

Results of Operations. The Company has generated no revenues between
1991 and December 31, 1997, and has had no activity between 1992 and December
31, 1997. Since January 1, 1998, the Company has performed due diligence
analysis on several proposed acquisitions. Outside consultants specializing in
petroleum marketing were retained to analyze Sellers Petroleum Products, Inc.
and the markets in which its does business.

Additionally, since January 1, 1998, significant effort has been
expended on bringing the Company into compliance with all of its required
filings pursuant to the Securities Exchange Act of 1934, as amended. The Company
has also negotiated potential financing with respect to six potential
acquisitions representing in excess of $700 million in revenues in 1998,
although no such financing or acquisitions have yet been consummated.

On January 1, 1998, the Company acquired from Equitable Assets, Inc.
58,285.71 tons of FCC Catalyst (Zeolite) that is used in hydro-cracking in
non-simplex refineries. Likewise on January 1, 1998, the Company granted
Equitable Assets, Inc. an option to acquire 20,571 tons of the Company's
inventory of FCC Catalyst. On March 3, 1998, the option was exercised which
resulted in gross income to the Company in the amount of $1,400,000 and net
income of approximately $935,000. Payment for the Zeolite was in the form of
promissory notes. The Company does not anticipate consistent continued revenues
from the marketing of FCC Catalyst. Since January 1, 1998, expenditures have
been primarily related to research and analysis of potential acquisitions of
companies operating in the Southwestern United States.

PART II
OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) List of Documents Filed with this Report.

PAGE

(1) Balance Sheet-for the Period Ended March 31, 1998...............................................7
Income Statement for the Period Ended March 31, 1998............................................8
Notes to Financial Statements as of March 31, 1998..............................................9
</TABLE>

All schedules have been omitted since the information required to be
submitted has been included in the financial statements or notes or has been
omitted as not applicable or not required.

<PAGE> 5

(2) Exhibits--
The exhibits indicated by an asterisk (*) are incorporated by
reference.

EXHIBIT NO. IDENTIFICATION OF EXHIBIT

3(a)* Articles of Incorporation of Texoil, Inc. filed on May 8, 1981 with
the Secretary of State of Nevada, described in the Registration
Statement on Form S-2 of the Registrant effective October 13, 1981.
Commission File No. 2-73389.

3(b)* Certificate of Amendment to Articles of Incorporation of Texoil, Inc.
filed on October 10, 1989 with the Secretary of State of Nevada,
described in Form 10-KSB for the year ended December 31, 1997, filed
March 6, 1998. Commission File No. 2-73389.

3(c)* Bylaws, as Amended January 20, 1998, described in Form 10-KSB for the
year ended December 31, 1997, filed March 6, 1998. Commission File
No. 2-73389.

10(a)* Agreement and Plan of Reorganization dated December 15, 1997 by and
between UNICORP, Inc., The Laissez-Faire Group, Inc., and L. Mychal
Jefferson II with respect to the exchange of all of the shares owned
by L. Mychal Jefferson II in The Laissez-Faire Group, Inc. for an
amount of shares of UNICORP, Inc. equal to 94 percent of the issued
and outstanding shares of its capital stock, described in Exhibit "1"
to Form 8-K for the Registrant dated February 13, 1998 and filed
February 18, 1998. Commission File No. 2-73389.

10(b)* Agreement of Purchase and Sale of Assets effective as of January 1,
1998 by and between UNICORP, Inc. and Equitable Assets Incorporated
with respect to purchase of 58,285.71 tons of Zeolite for shares of
UNICORP, Inc., described in Exhibit "1" to Form 8-K for the
Registrant dated April 9, 1998 and filed April 10, 1998. Commission
File No. 2- 73389.

10(c)* Option to Acquire the Outstanding Stock of Whitsitt Oil Company, Inc.
effective as of January 1, 1998 by and between UNICORP, Inc. and AZ
Capital, Inc., described in Exhibit "2" to Form 8-K for the
Registrant dated April 9, 1998 and filed April 10, 1998. Commission
File No. 2-73389.

11 Computation of Per Share Earnings.

27 Financial Data Schedule.

(b) Reports on Form 8-K.

(1) Current Report on Form 8-K for the Company dated February 13,
1998 and filed February 18, 1998, Commission File No. 2-73389,
reporting the acquisition of The Laissez-Faire Group, Inc.
(Item 1. Changes in Control of Registrant, Item 2. Acquisition
of Assets, and Item 5. Other Events - Reverse Split.)

(2) Current Report on Form 8-K/A for the Company dated February
13, 1998 and filed April 20, 1998, Commission File No.
2-73389, reporting the acquisition of The Laissez-Faire Group,
Inc. (Item 1. Changes in Control of Registrant, Item 2.
Acquisition of Assets, and Item 5. Other Events - Reverse
Split.)

(3) Current Report on Form 8-K for the Company dated April 9, 1998
and filed April 10, 1998, Commission File No. 2-73389,
reporting the acquisition of 58,285.71 tons of Zeolite from
Equitable Assets Incorporated, and 871,000 shares of the Class
A Common Stock of AZ Capital, Inc. (Item 2. Acquisition or
Disposition of Assets.)

<PAGE> 6

No schedules are required as all information required has been
presented in the audited financial statements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

UNICORP, INC.

By /s/ L. Mychal Jefferson II
----------------------------------
L. Mychal Jefferson II, President

May 18, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ L. Mychal Jefferson II Chief Executive Officer, May 18, 1998
- ---------------------------------- President, Secretary, Chief
L. Mychal Jefferson II Financial Officer, and Director

/s/ Azie Taylor Morton Director May 18, 1998
- ----------------------------------
Azie Taylor Morton

/s/ Reginald V. Williams Director May 18, 1998
- ----------------------------------
Reginald V. Williams

</TABLE>

<PAGE> 7

<TABLE>

UNICORP, INC.
BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
----------

ASSETS
(IN 000S)
<S> <C>
Current assets:
Cash and cash equivalents (Note 1)................................................... $ 1,250
Short-term investments............................................................... 3,750
Prepaid inventories.................................................................. 7,740
-------
Total current assets................................................................... $12,740
=======

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Accounts payable, note payable and accrued expenses.................................. $ 205
Accrued income taxes................................................................. 400
-------
Total Liabilities...................................................................... $ 605
=======

Stockholders' equity:
Common stock, par value $0.01 per share,
100,000,000 shares authorized, 1040,000 shares issued................................ $ 10
Additional paid-in capital........................................................... 11,130
Retained earnings.................................................................... 995
-------
Total stockholders' equity............................................................. $12,135
-------
Total liabilities and stockholders' equity............................................. $12,740
=======
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS.

<PAGE> 8

<TABLE>

UNICORP, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1998 TO MARCH 31, 1998
----------
<S> <C>
Revenue:
Fluid catalytic cracking catalyst mineral sales........................................... $5,000,000
----------
Total revenue............................................................................... $5,000,000
----------
Cost of sales............................................................................... $3,600,000
----------

Gross Profit................................................................................ $1,400,000
==========
Operating expenses:
Rental and office expense................................................................. $ 13,000
Professional fees and expenses............................................................ 65,000
----------
Total operating expenses.................................................................... $ 78,000
----------

Operating income............................................................................ $1,335,000
==========

Provision for income taxes.................................................................. $ 400,000
----------

Net income.................................................................................. $ 935,000
==========
Earnings per share.......................................................................... $ 0.90

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS.

<PAGE> 9

Note 1. Cash and Cash Equivalents. Cash equivalent is any instrument
whose maturity is less than 90 days, such as, cash, money markets, CDs,
commercial paper, short-term notes, treasuries, etc.

Note 2. Short-Term Investments. Short-term investment is any instrument
whose maturity is less than 12 months, such as, CDs, commercial paper,
short-term notes, bonds, etc.

Note 3. Prepaid Inventories. Zeolite used as a primary component in the
manufacturing of fluid catalytic cracking catalysts. Used in the operations of
refineries for the making of hydrocarbons.

<PAGE> 10

INDEX TO EXHIBITS

EXHIBIT NO. IDENTIFICATION OF EXHIBIT

3(c)* Bylaws, as Amended January 20, 1998, described in Form 10-KSB for the
year ended December 31, 1997, filed March 6, 1998. Commission File
No. 2-73389.

11 Computation of Per Share Earnings.

27 Financial Data Schedule.

<PAGE> 1

EXHIBIT 11

COMPUTATION OF PER SHARE EARNINGS

The table below presents information necessary for the computation of
loss per share of the Common Stock, on both a primary and fully diluted basis,
for the three months ended March 31, 1998 and 1997 and the years ended December
31, 1997, 1996 and 1995.

THREE MONTHS ENDED MAR. 31, YEAR ENDED DECEMBER 31,
--------------------------- ---------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net loss applicable to shares of
Common Stock and Common
Stock equivalents $-0- $-0- $-0- $-0- $-0-

Average number of shares of
Common Stock outstanding 1,040,000* 16,377,951 16,377,951 16,377,951 16,377,951
Common Stock equivalents
--------- ---------- ---------- ---------- ----------
Total shares of Common Stock and
Common Stock equivalents 1,040,000 16,377,951 16,377,951 16,377,951 16,377,951
========= ========== ========== ========== ==========
Primary and fully diluted loss per
share of Common Stock $-0- $-0- $-0- $-0- $-0-

- ---------------------------
* After allowing for a 273 to 0ne reverse split which occurred on January 20,
1998.

Common Stock equivalents are considered anti-dilutive because of the
net losses incurred by the Company.

</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31
INCOME STATEMENTS AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH 1ST QUARTER FILINGS
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,250
<SECURITIES> 0
<RECEIVABLES> 3,750
<ALLOWANCES> 0
<INVENTORY> 7,740
<CURRENT-ASSETS> 12,740
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,740
<CURRENT-LIABILITIES> 605
<BONDS> 0
0
0
<COMMON> 1,040,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,740
<SALES> 5,000
<TOTAL-REVENUES> 5,000
<CGS> 3,600
<TOTAL-COSTS> 3,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,400
<INCOME-TAX> 400
<INCOME-CONTINUING> 1,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 935
<EPS-PRIMARY> 0.90
<EPS-DILUTED> 0.90

</TABLE>