FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1997
Commission File # 0-15303
UNICO, Inc.
(Exact name of Registrant as specified in its Charter)
Delaware
(State or other jurisdiction of incorporation or organization)
73-1215433
(IRS Employer Identification Number)
8380 Alban Road, Springfield, VA 22150
(Address of principal executive offices) (Zip Code)
(703) 644-0200
(Registrant's telephone number, including area code)
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 __
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class: Common Stock, $.01 Par Value
Number of shares outstanding as of November 8, 1997
8,476,309
UNICO, Inc.
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION
Item 1 Consolidated Balance Sheets
September 30, 1997 and December 31, 1996 3 & 4
Consolidated Statements of Operations
For the Quarter Ended September 30, 1997
and the Quarter Ended September 30, 1996 5
For the Nine Months Ended September 30, 1997
And the Nine Months Ended September 30, 1996 6
Consolidated Statements of Cash Flow
For the Nine Months Ended September 30, 1997
and the Nine Months Ended September 30, 1996 7
Notes to Interim Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART 11 - OTHER INFORMATION 14
SIGNATURE PAGE 19
PART 1. FINANCIAL INFORMATION
UNICO, Inc.
CONSOLIDATED BALANCE SHEETS 1 of 2
ASSETS September 30, December 31,
1997 1996
------------- ------------
CURRENT:
Cash and Cash Equivalents $ 123,263 $ 233,971
Accounts Receivable:
Trade (net of allowance for
uncollectible accounts of
$121,311 and $355,000) 352,795 357,774
Inventory 137,175 140,015
Notes Receivable 123,117 -
Territory Buy Back Allowance 497,500 -
Other Current Assets 30,682 -
Prepaid Expenses 6,856 22,636
---------- ----------
Total current assets 1,271,388 754,396
PROPERTY:
Furniture, fixtures and equipment 4,168,468 4,006,961
Leasehold improvements 109,995 109,045
Less accumulated depreciation (2,128,646) (1,759,425)
----------- ------------
Property, net 2,149,817 2,356,581
GOODWILL 226,801 232,407
DEPOSITS AND OTHER 54,151 75,830
---------- ----------
TOTAL $3,702,157 $3,419,214
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
UNICO, Inc.
CONSOLIDATED BALANCE SHEETS 2 of 2
September 30, December 31,
LIABILITIES & STOCKHOLDERS' EQUITY 1997 1996
- ---------------------------------- ------------- ------------
CURRENT LIABILITIES:
Accounts payable $1,190,176 $1,278,604
Accrued liabilities 528,687 428,092
Territory buy back payable 438,250 -
Notes payable, current portion 175,197 749,261
Deferred revenue - 124,788
---------- ----------
Total current liabilities 2,332,310 2,580,745
LONG TERM LIABILITIES:
Notes Payable 1,668,450 1,110,275
Deferred Rent 229,280 229,280
---------- ----------
Total long term liabilities 1,897,730 1,339,555
---------- ----------
Total liabilities 4,230,040 3,920,300
COMMITMENTS AND CONTINGENCIES(Note 2)
DEFICIENCY IN STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
5,000,000 shares authorized;
designated as:
Redeemable Preferred;
280 shares issued and outstanding 3 3
Series A Convertible Preferred - -
Series B Preferred - -
Series C Preferred stock, $.01 par
value; voting on the basis of 4
votes to 1 vote for the common
stock, preferred in liquidation at
$1 per share over common shareholders,
convertible into common stock on the
basis of 4 common shares for each
preferred share, with automatic
conversion on August 1, 1998;
authorized, 2,000,000 shares, issued
and outstanding, 1,712,739 shares 17,127 17,127
Common stock - $.01 par value;
20,000,000 shares authorized;
8,476,309 shares issued and
outstanding 84,763 84,763
Additional paid-in capital 6,724,589 6,724,589
Deferred Compensation (18,230) (18,230)
Accumulated deficit (7,336,135) (7,309,338)
----------- -----------
Total deficiency in stockholders'
equity (527,883) (501,086)
----------- -----------
TOTAL LIABILITIES AND DEFICIENCY IN
STOCKHOLDERS' EQUITY $3,702,157 $3,419,214
The accompanying notes are an integral part of the consolidated financial
statements.
UNICO, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
----------- ------------
REVENUES:
Coupon and advertising sales,
net of discounts and allowances $1,185,345 $1,263,685
Franchise fees 4,847 72,680
Other 118,768 373,958
---------- ----------
TOTAL REVENUES 1,308,960 1,710,323
EXPENSES:
Production 1,258,648 1,312,260
General and administrative 354,679 232,941
Franchise development 24,082 58,218
Interest expense - affiliate 22,800 14,264
Interest expense - other 30,366 57,158
---------- ----------
TOTAL EXPENSES 1,690,575 1,674,841
----------- -----------
NET INCOME (LOSS) BEFORE INCOME TAXES (381,615) 35,482
DEFERRED INCOME TAX EXPENSE 9,000 9,000
----------- -----------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (390,615) 26,482
EXTRAORDINARY GAIN FROM BUSINESS
DISSOLUTION 64,001 -
----------- -----------
NET INCOME (LOSS) $ (326,614) $ 26,482
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,476,309 7,886,608
----------- -----------
NET INCOME (LOSS) PER COMMON SHARE (.039) $ .003
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
UNICO, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
------------ ------------
REVENUES:
Coupon and advertising sales,
net of discounts and allowances $ 4,218,532 $ 4,640,826
Franchise fees 82,965 193,103
Other 344,714 554,203
----------- -----------
TOTAL REVENUES 4,646,211 5,388,132
EXPENSES:
Production 3,309,720 3,748,191
General and administrative 1,509,625 1,466,879
Franchise development 165,587 235,615
Interest expense - affiliate 69,222 72,827
Interest expense - other 85,240 195,660
----------- -----------
TOTAL EXPENSES 5,139,394 5,719,172
------------ ------------
NET (LOSS) BEFORE INCOME TAXES (493,182) (331,040)
DEFERRED INCOME TAX EXPENSE 27,000 26,667
NET (LOSS) BEFORE EXTRAORDINARY ITEM (520,182) (357,707)
EXTRAORDINARY GAIN FROM BUSINESS
DISOLUTION 493,386 -
----------- ------------
NET INCOME (LOSS) $ (26,797) $(357,707)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,476,309 7,884,274
----------- ------------
NET INCOME (LOSS) PER COMMON SHARE $ (.003) $ (.045)
The accompanying notes are an integral part of the consolidated financial
statements.
UNICO, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
------------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ (26,797) $ (357,707)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 344,124 370,828
Provision for bad debts 83,114 72,285
Deferred income taxes 27,000
Gain on exchange of stock (45,250)
Changes in operating assets and
liabilities:
Accounts and notes receivable (118,138) 366,969
Prepaid expenses and inventory (6,856) 39,692
Deposits and other (30,682) 49,415
Accounts payable and accrued
liabilities 147,838 274,272
Deferred revenue (124,788) (110,921)
Net Cash Provided by (Used in) ----------- -----------
Operating Activities 294,815 659,583
CASH FLOWS FROM INVESTING ACTIVITIES:
Territory Buy Back Allowance Credits
Granted (59,250) 0
Purchase of property (118,271) (160,372)
Net Cash Provided by (Used in) ---------- -----------
Investing Activities (177,521) (160,372)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debentures 0 25,000
Proceeds from notes payable 31,894 50,000
Payment of notes payable (259,897) (708,319)
Net Cash Provided (Used In) ---------- -----------
Financing Activities (228,003) (633,319)
---------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS: (110,709) (134,108)
Cash and Cash Equivalents -
Beginning of Period 233,971 300,821
Cash and Cash Equivalents - ---------- -----------
End of Period $ 123,263 $ 166,713
========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes $ 0 $ 5,000
Cash paid for interest $ 85,240 $ 268,487
The accompanying notes are an integral part of the consolidated financial
statements.
UNICO, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED SEPTEMBER 30, 1997 and 1996
1. BASIS OF PRESENTATION
---------------------
The interim consolidated financial statements at September 30, 1997
and for the three month and nine month, periods ended September 30,
1997 and 1996 are unaudited, but include all adjustments which the
Company considers necessary for a fair presentation. The
December 31, 1996 balance sheet was derived from the Company's
audited financial statements.
The accompanying unaudited financial statements are for the
interim periods and do not include all disclosures normally
provided in annual financial statements, and should be read
in conjunction with the Company's audited financial statements
included in the Company's Form 10-KSB for the year ended
December 31, 1996. The accompanying unaudited interim financial
statements for the three month and nine month periods ended September
30, 1997 are not necessarily indicative of the results, which can
be expected for the entire year.
2. COMMITMENTS & CONTINGENCIES
---------------------------
Prior to 1995, the Florida Department of Revenue issued a
Notice of Intent to levy additional sales taxes with penalty
and interest charges totaling approximately $480,000 against
the Company's subsidiary, Cal-Central Marketing Corporation.
A liability for a portion of this matter was recorded by
Cal-Central and was included in other long-term liabilities in
the financial statements at December 31, 1994. Subsequent to
December 31, 1995, written settlement was reached with Florida
authorities whereby the Company agreed to a payoff of $35,000,
payable at $5,000 per quarter, over seven quarters beginning in
June, 1996. The agreed to amount is recorded as a liability at
December 31, 1996 and September 30, 1997.
The Company is exposed to various other legal matters encountered
in the normal course of business. In the opinion of management,
the resolution of these matters will not have a material adverse
effect on the Company's consolidated financial position or results
of operations.
On June 20, 1997, the Company's wholly-owned subsidiary, Cal-
Central Marketing Corporation, was dissolved resulting in the
recording of an extraordinary gain of $429,385, the net effect
of asset and liability amounts written off. Final accounting
for this transaction increased the gain to $493,386 at
September 30, 1997.
3. INCOME TAXES
------------
The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"), which requires
an asset and liability approach to accounting for income taxes.
Under SFAS 109, deferred tax assets or liabilities are computed
on the difference between the financial statement and income tax
bases of assets and liabilities ("temporary differences") using
the enacted marginal tax rate. Deferred income tax expenses or
benefits are based on the changes in the deferred tax asset or
liability from period to period.
Management has determined that it is not more likely than not
that the Company will be able to realize all the tax benefits
from available net operating loss carryforwards and has,
therefore, provided a valuation allowance of an equal amount.
The deferred income tax expense of $9,000 and $27,000, reflected
in the Statements of Operations for the quarter and nine month
periods ended September 30, 1997, represents state income taxes
payable by United Coupon on operating profits that are not
impacted by available net operating loss carryforwards.
4. SUBSIDIARY RESTRUCTURING
------------------------
The Company acquired Cal-Central Marketing Corporation as a
wholly owned subsidiary on October 27, 1993. Operating
profitability and cash flow for the subsidiary were below
management's expectations and anticipated potential since
the acquisition. During the third quarter of 1995, management
determined that it was in the best interest of shareholders
and the Company to close the Fort Lauderdale, Florida,
production facility and consolidate all art and printing
functions for Cal-Central into the Company's newly expanded
facility in Springfield, Virginia. This transition was
accomplished during December 1995, and a restructuring charge
of $772,433 was recorded during 1995 to reflect initial costs
associated with the restructuring.
During the quarter ended March 31, 1996, the Company further
evaluated the collectibility of remaining accounts receivable
of Cal-Central, including receivables related to advertising
commitments completed during the period. As a result of this
review, the Company recorded additional bad debt expense of
$60,000 related to Cal-Central accounts receivable. During
the fourth quarter of 1996, management abandoned plans for
resurrecting the Cal-Central operation and all remaining
accounts receivable and goodwill related to the purchase
of Cal-Central were written off.
On June 20, 1997, the Company's wholly-owned subsidiary,
Cal-Central Marketing Corporation, was dissolved, resulting
in the recording of an extraordinary gain of $429,385, the net
effect of asset and liability amounts written off. Final
accounting for this transaction increased the gain to
$493,386 at September 30, 1997.
5. CORPORATE RESTRUCTURING
-----------------------
On March 4, 1996, the Company entered into a Third Restated
and Amended Loan Agreement with BancFirst, which provided for
the renewal of the Company's existing term and revolving credit
facilities until January 31, 1997.
In March 1996, as a component of the plan to consolidate the
corporate office functions from Oklahoma City to the expanded
offices of the Company in Springfield, Virginia, the Company's
Board of Directors appointed Gerard R. Bernier Chief Executive
Officer and President of the Company. This transition of
corporate authority and relocation of corporate headquarters
became effective March 31, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
The Company's principal measures of liquidity are cash,
certificates of deposit, accounts receivable and salable
inventory. Also, management deems appropriately managed and
collateralized bank lines of credit as a proper supplement to
its liquidity.
The Company's working capital was a deficit $1,060,922 at
September 30, 1997, a 42% improvement from December 31, 1996.
This change reflects: a decrease in Cash and Equivalents of
$110,708 resulting primarily from use of operating cash flow
to reduce current liabilities; a net increase of $118,138 in
trade Accounts and Notes Receivable, related to continuing
operations; a decrease of $2,840 in paper and work in process
Inventory; a decrease of $15,780 in Prepaid Expenses related
to utilization of annual insurance renewals and similar
contracts; and an increase of $497,500 in Territory Buy Back
Allowances. These changes were impacted by a decrease of
$88,428 in Accounts Payable and a $100,595 increase in Accrued
Liabilities related to accrual of seasonal operating costs
at United Coupon, as well as deferral of interest expense and
other debt service costs. Working capital was also aided by a
$574,064 reduction in current portion of Notes Payable and a
$124,788 reduction in deferred revenues during the period.
Working capital was negatively impacted by $438,250 of
Obligations entered into for Territory Buy Back Agreements.
During the first quarter of 1997, United Coupon Corporation
purchased the rights to acquire and resell non-developed
territories previously granted to various franchisees of
United Coupon. This purchase was recorded as an addition of
$497,500 to Territory Buy Back Allowances, a reflected as a
short term investment, offset by a liability of an equal amount.
The purchase price is paid to franchisees in the form of
production expense credits of $500 per 10,000 homes mailed,
granted at the time that Franchisees complete on-going
cooperative advertising mailings. Such credits are recorded
as period expenses when incurred. Period credits of $26,708
were granted during the third quarter of 1997.
Long-term liabilities, net of payment made, increased by $558,175
during the period as a result of deferral of interest payments on
subordinated debt and extension of notes payable obligations beyond
twelve months.
During the latter half of 1995, the Company's subsidiary Cal-
Central developed a serious liquidity shortfall as a result of
an unexpected, rapid decline in the subsidiary's core
cooperative advertising business. The decline, which was
precipitated by a temporary interruption of service by two
key advertising distributors, limited Cal-Central's ability
to meet current operating and debt-service obligations. As
a result, UNICO management initiated a restructuring program
for Cal-Central, which immediately reduced operating
expenditures, through the elimination of non-critical
personnel, marginal sales centers, and unprofitable sales
and manufacturing functions. In addition, management
arranged a deferral of interest payments on subordinated
debt obligations and arranged convertible debt financing
with the Company's major debenture holders to provide
supplemental working capital for financing the restructuring
plan. Management abandoned its restructuring plan for
Cal-Central during the fourth quarter of 1996 and wrote
off remaining accounts receivable and goodwill associated
with this operation. On June 20, 1997, the Company's
wholly owned subsidiary, Cal-Central Marketing Corporation,
was dissolved, resulting in an extraordinary gain of $429,385,
the net effect of asset and liability amounts written off.
Final accounting for this transaction increased the gain
to $493,386 at September 30, 1997.
On May 16, 1997, the Company received a notice of delisting
from NASDAQ Stock Market, Inc. due to capital and surplus
requirement deficiencies. Company management aggressively
pursued actions to maintain the NASDAQ listing. The NASD
Panel reviewing the Company's Plan to remedy its maintenance
requirement deficiencies found that the Plan did not present
a plan of compliance which could be completed within a
reasonable period of time and assure long term compliance
with the maintenance requirements. Accordingly, the Company's
Common Stock was delisted from the NASDAQ Stock Market,
effective July 11, 1997. The Company has appealed the NASD
Determination and is developing additional plans to regain
this listing for the Company's Common Stock, should the
Company's appeal not succeed. No assurances of success from
these actions can be determined at this time.
Results of Operations - Quarter Ended September 30, 1997
As Compared to the Quarter Ended September 30, 1996
- ---------------------------------------------------
Gross Revenue for the quarter ended September 30, 1997 decreased
23% from the same period in 1996, from $1,710,323 to $1,308,960.
Coupon and Advertising Sales, which include coupon production
service fees, national account advertising fees, advertising sales
and commercial printing, and which represent 91% of total revenue
for 1997, decreased by 6% from the corresponding period in 1996.
This decrease reflects the elimination of Cal-Central sales and
limitations placed on sales efforts as a result of limited working
capital availability.
Franchise Fee Income for the period declined by 93% from the
prior year, with $4,847 reported for the 1997-quarter compared
to $72,680 for the same period in 1996. Franchise sales are
receiving intensive effort and management attention, although
efforts are currently hampered by limited working capital. In
recent weeks, the Company has hired an experienced Western
Region Franchise Sales Director and is currently completing an
Internet web site for franchise opportunities.
Other Revenue for the current period was $118,768 compared to
$373,958 in 1996. This decrease is related to higher miscellaneous
service fees and interest income offset by the elimination of
Cal-Central other revenue.
Production Expenses, which include art development, printing,
bindery, delivery, product development, distributor support
and selling expense, decreased by $53,612, 4%, during the 1997
quarter in contrast to the same period in 1996. This decrease
is related to reduced sales levels, partially offset by slightly
higher prevailing operating costs and actions to improve quality
and customer service.
General and Administrative Expense increased by 52% over the same
period last year primarily as a result of costs associated with
Company restructuring, and pursuit of business expansion and
combination opportunies with third party organizations.
Franchise Development Cost, which includes the cost of
developing, advertising, selling, training and supporting United
Coupon franchises, was 59% less than the prior year, reflecting
lower sales and reduction of advertising costs.
Interest Expense decreased $18,256 over the same period last
year as a result of conversion of convertible debenture debt
to equity during the latter portion of 1996, as well as reduction
or other long-term debt during 1997.
During the latter portion of 1995, the Company's subsidiary,
Cal-Central, experienced a significant cash flow shortfall as
a result of the temporary interruption of product distribution
by two key distributors. This shortfall received reaction from
UNICO management through the initiation of a restructuring plan
to reduce Cal-Central administrative overhead and operating
expenses and to implement more efficient and effective approaches
to sales administration and product manufacturing. During the
initial phases of restructuring, Cal-Central was unable to meet
all product art and printing requirements. In addition, the
interruption of distribution of Cal-Central products caused a
delay in Cal-Central's ability to meet the distribution
commitment of advertising sales contracts. During the three
month period ended March 31, 1996, the Company completed art
and printing functions and delivered advertising products
related to approximately $460,000 in Cal-Central advertising
contracts. The Company did not record sales or accounts
receivable for these items due to the lateness in which such
delivery was completed. Art and printing costs related to
this work are reported as production expense for the 1996
period.
Consolidated Net Loss for the current quarterly period was
$326,614 compared to net income of $26,482 for the prior year.
This decline in profitability is directly related to lower
sales levels and higher general and administrative expenses
during the current period.
Results of Operations - Nine months Ended September 30, 1997
As Compared to the Nine months Ended September 30, 1996
- -------------------------------------------------------
Gross Revenue for the nine months ended September 30, 1997 declined
by 14% from the same period in 1996, from $5,388,132 to $4,646,211.
Coupon and Advertising Sales, which include coupon production
service fees, national account advertising fees, advertising
sales and commercial printing, and which represent 91% of total
revenue for 1997, decreased by 9% from the corresponding period
in 1996. This decrease reflects the elimination of Cal-Central
sales and limitations placed on sales efforts as a result of
limited working capital availability.
Franchise Fee Income for the period declined by 57% from the
prior year, with $82,965 reported for the 1997 period compared
to $193,103 for the same period in 1996. Franchise sales continue
to receive management attention, including expanded sales direction
and methods, although efforts are currently hampered by limited
working capital.
Other Revenue for the current period was $344,714 compared to
$554,203 in 1996. This decrease is related to higher miscellaneous
service fees and interest income offset by elimination of Cal-Central
fees.
Production Expenses, which include art development, printing,
bindery, delivery, product development, distributor support
and selling expense, declined by $438,471, 12%, during the 1997
period in contrast to the same period in 1996. This decline is
related to the lower sales levels and cost containment activities
early in the year, partially offset by higher prevailing operating
costs and actions to improve quality and customer service.
General and Administrative Expense increased by 3% over the same
period last year, primarily as a result of the costs of the
restructuring, as well as expenditures related to pursuit of
business combination opportunities.
Franchise Development Cost, which includes the cost of developing,
advertising, selling, training and supporting United Coupon
franchises, was 30% less than the prior year, reflecting lower
sales and reduction of advertising costs.
Interest Expense decreased $114,025 over the same period last
year as a result of conversion of convertible debenture debt
to equity during the latter portion of 1996.
During the latter portion of 1995, the Company's subsidiary,
Cal-Central, experienced a significant cash flow shortfall as
a result of the temporary interruption of product distribution
by two key distributors. This shortfall received reaction from
UNICO management through the initiation of a restructuring plan
to reduce Cal-Central administrative overhead and operating
expenses and to implement more efficient and effective
approaches to sales administration and product manufacturing.
During the initial phases of restructuring, Cal-Central was
unable to meet all product art and printing requirements. In
addition, the interruption of distribution for Cal-Central
products caused a delay in Cal-Central's ability to meet the
distribution commitment of advertising sales contracts. In
early 1996, the Company completed art and printing functions
and delivered advertising products related to approximately
$460,000 in Cal-Central advertising contracts. The Company did
not record sales or accounts receivable for these items
due to the lateness in which such delivery was completed.
Art and printing costs related to this work are reported as
production expense for the 1996 period.
Consolidated Net Loss for the nine months ended September 30,
1997 was $26,797 compared to a net loss of $357,707 for
the prior year. This improvement is directly related to
the restructuring of subordinated debt, reduced operating
expenses at United Coupon, and recognition of an extraordinary
gain of $429,385 related to the dissolution of Cal-Central
Marketing Corporation.
PART II - OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
-----------------
Omitted from this report as inapplicable.
Item 2. Changes in Securities
---------------------
Omitted from this report as inapplicable.
Item 3. Default Upon Senior Securities
------------------------------
Omitted from this report as inapplicable.
Item 4. Submission of Matters to Vote of Securities Holders
---------------------------------------------------
Omitted from this report as inapplicable.
Item 5. Other Information
-----------------
The transaction contemplated by the letter of intent executed
With a prospective third party investor as described in Item 5
of the Company's 10-QSB filed on August 14, 1997 did not close
on October 1, 1997. "As of the date of this filing, negotiations
with the same third party investor are still ongoing."
Item 6.
- -------
Exhibits and Reports on Form 8-K
- --------------------------------
A. Exhibits
- -----------
The following exhibits are filed with this Form 10-QSB and
are identified by the numbers indicated.
2 Plan of Reorganization and Agreement of Merger among
UNICO, Inc., AEC Acquisitions, Inc. and Cal-Central Marketing
Corporation (1)
3.1 Certificate of Incorporation, as amended (2)
3.2 By-laws, as amended (2)
3.3 Amendment to the Certificate of Incorporation to
increase the authorized shares of common stock (3)
3.4 By-laws, as amended (10)
4.1 Form of Common Stock Purchase Warrant, dated
September 11, 1988 (4)
4.2 Form of Class B Common Stock Purchase Warrant,
November 1, 1993 (3)
4.3 Form of Subordinated Debenture dated October 26,
1993, offered through Duncan-Smith Company (3)
4.4 Certificate of Designations, Preferences, and Rights
of Series A Convertible Preferred Stock (3)
4.5 Certificate of Designations, Preferences, and Rights
of Series A Redeemable Preferred Stock (3)
4.6 Certificate of Designations, Preferences, and Rights
of Series B Redeemable Preferred Stock (3)
4.7 Certificate of Designations, Preferences, and Rights
of Series C Preferred Stock (10)
10.4 Form of Common Stock Purchase Warrant dated October 26,
1993 offered through Duncan-Smith Company (3)
10.5 Second amendment to Lease Agreement Cal-Central Marketing
Corp. (3)
10.6 United Coupon Corporation Franchise Agreement (2)
10.7 Employment Agreement between United Coupon Corporation
and Gerard R. Bernier, as amended January 1, 1995 (5)
10.9 Credit Agreement by and between UNICO, Inc. and its
Subsidiaries and BancFirst (2)
10.10 Purchase Agreement with Concord Video (2)
10.11 Omnibus Equity Compensation Plan (2)
10.12 Convertible Debenture Loan Agreement by and between
UNICO, Inc. and its subsidiaries, United Coupon Corporation
and AEC Acquisitions, Inc. and Renaissance Capital Partners,
Ltd. Dated December 31, 1991 (2)
10.13 Amended and Restated Loan Agreement by and between
UNICO, Inc. and its Subsidiaries and BancFirst, as amended
August 31, 1994 (5)
10.17 Restructure Agreement among UNICO, Inc., Cal-Central
Marketing Corporation and The American Education Corporation,
dated as of December 31, 1993 (3)
10.18 United Coupon Corporation Lease Agreement (5)
10.19 Master Agreement and Schedules of Indebtedness 1 and
2 between CIT Group and United Coupon Corporation (5)
10.27 Subordinated Loan Agreement dated June 30, 1995,
among UNICO, Inc. and Cal-Central Marketing Corporation and
the Harlon Morse Fentriss Trust, Philip W. Stephenson, Jr.,
RHOJOAMT Partnership, Ltd., CITCAM Stock Co., Barbara T.
Grinnan, and Goose Creek (7)
10.28 Form of Common Stock Purchase Warrant, dated June 30,
1995 (7)
10.29 Subordinated Convertible Debt Loan Agreement, dated
October 1995, and schedule of advances, among UNICO, Inc.,
United Coupon Corporation, and Cal-Central Marketing
Corporation and Renaissance Capital Group, Inc. and Duncan-
Smith Company (7)
10.30 Third Restated Loan Agreement dated March 4, 1996,
among UNICO, Inc., United Coupon Corporation, Cal-Central
Marketing Corporation and BancFirst (7)
10.31 Debt Exchange Agreement among UNICO, Inc., Renaissance
Capital Partners, Ltd. And Duncan-Smith Investment Co. dated
July 1996 (8)
10.32 Employment Agreement Between United Coupon Corporation
Gerard R. Bernier, dated April 1, 1996 (10)
10.33 Modification and Extension to the Third Restated Loan
Agreement between UNICO, Inc., United Coupon Corporation,
Cal-Central Marketing Corporation, and BancFirst, dated
August 15, 1996 (10)
10.34 Consolidated Renewal Promissory Note between UNICO,
Inc., United Coupon Corporation and BancFirst, dated August
15, 1996 (10)
10.35 Loan Conversion Agreement between UNICO, Inc. and Kurt
H.C. Bottcher, dated September 30, 1996 (10)
27 Financial Data Schedule-Pursuant to EDGAR filing
requirements for the period ended September 30, 1997, filed herewith
this Form 10-QSB dated August 13, 1997.
*********************
(1) Incorporated by reference to the Registrant's Form 8-K, dated
October 27, 1993 (SEC File No. 0-15303).
(2) Incorporated by reference to the Registrant's Form 10-K for
the fiscal year ended December 31, 1992 (SEC file no. 0-15303).
(3) Incorporated by reference to the Registrant's Form 10-KSB for
the fiscal year ended December 31, 1993 (SEC file no. 0-15303).
(4) Incorporated by reference to the Registrant's Form S-18
Registration Statement (SEC file no. 33-73 10-FW).
(5) Incorporated by reference to the Registrant's Form 10-KSB for
the fiscal year ended December 31, 1994 (SEC file no. 0-15303).
(7) Incorporated by reference to the Registrant's Form 10-KSB for
the fiscal year ended December 31, 1996 (SEC file no. 0-15303).
(8) Incorporated by reference to the Registrant's Form 8-K, dated
July 30, 1996 (SEC file no. 000-15303).
(9) Incorporated by reference to the Registrant's Form 8-K/A
dated December 12, 1996 (SEC file no. 000-15303).
(10) Incorporated by reference to the Registrant's Form 10-KSB
for the fiscal year ended December 31, 1997 (SEC file no. 0-15303).
(11) Incorporated by reference to the registrant's Form 10-QSB for
period ended June 30, 1997 (SEC File No. 0-15303)
B. Reports on Form 8-K
There were no reports on Form 8-K filed during the three-
month period ended September 30, 1997.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the Undersigned.
UNICO, INC.
November 11, 1997
By: /s/Gerard R. Bernier
--------------------
Chief Executive Officer
and President
November 11, 1997
By: /s/Subhash Ghei
--------------------
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 123,263
<SECURITIES> 0
<RECEIVABLES> 597,223
<ALLOWANCES> (121,311)
<INVENTORY> 137,175
<CURRENT-ASSETS> 1,271,388
<PP&E> 4,278,463
<DEPRECIATION> (2,128,646)
<TOTAL-ASSETS> 3,702,157
<CURRENT-LIABILITIES> 2,332,310
<BONDS> 0
0
17,130
<COMMON> 84,763
<OTHER-SE> 6,724,589
<TOTAL-LIABILITY-AND-EQUITY> 3,702,157
<SALES> 4,218,532
<TOTAL-REVENUES> 4,646,211
<CGS> 3,309,720
<TOTAL-COSTS> 4,984,932
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,462
<INCOME-PRETAX> (493,182)
<INCOME-TAX> 27,000
<INCOME-CONTINUING> (520,182)
<DISCONTINUED> 0
<EXTRAORDINARY> 493,386
<CHANGES> 0
<NET-INCOME> (26,797)
<EPS-PRIMARY> .003
<EPS-DILUTED> .003
</TABLE>
