U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from to
Commission File No. 0-15303
UNICO, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 73-1215433
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Harbor Park, 333 Ludlow Street, Stamford, CT 06902
(Address of Principal Executive Offices) (Zip Code)
(203) 323-6239
(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 Exchange Act
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
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date: As of October 19, 1999, the Company had
6,759,160 shares of Common Stock outstanding, $0.001 par
value.
UNICO, INC.
Form 10-QSB Quarterly Report
For the Period Ended March 30, 1999
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Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Unaudited Consolidated Statement of Financial Condition
at March 31, 1999 for Unico, Inc. and Subsidiary 4-5
Unaudited Consolidated Statement of Operations at March 31,
1999 for Unico, Inc. and Subsidiary 6
Unaudited Consolidated Statement of Stockholders' Equity
(Deficiency) at March 31, 1999 for Unico, Inc. and Subsidiary 7-8
Unaudited Consolidated Statement of Cash Flows at March 31,
1999 for Unico, Inc. and Subsidiary 9
Notes to Interim Consolidated Financial Statements 10-11
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 12
PART II - OTHER INFORMATION 13
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Signatures 13
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------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BASIS OF PRESENTATION
The accompanying unaudited financial statements are
presented in accordance with generally accepted
accounting principles for interim financial information
and the instructions to Form 10-QSB and item 310 under
subpart A of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. The accompanying statements should
be read in conjunction with the audited financial
statements for the years ended December 31, 1998 and
1997. In the opinion of management, all adjustments
(consisting only of normal occurring accruals) considered
necessary in order to make the financial statements not
misleading, have been included. Operating results for
the three months ended March 30, 1999 are not necessarily
indicative of results that may be expected for the year
ending December 31, 1999. The financial statements are
presented on the accrual basis.
UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
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March 31, December 31,
1999 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $159,614 $105,404
Accounts and notes receivable (net of
allowance for uncollectible accounts) 238,734 350,354
Receivable from NexGen 794,665 834,665
Receivable Other - -
inventory 182,677 117,564
Prepaid expenses 9,140 28,379
Total current assets 1,384,830 1,436,366
PROPERTY AND EQUIPMENT, AT COST
Furniture, fixtures and equipment 4,400,845 4,354,072
Leasehold improvements 81,394 81,029
(Less) Accumulated depreciation and
amortization (2,701,003) (2,602,599)
Net property and equipment 1,781,236 1,832,502
OTHER ASSETS 8,105 8,105
ASSETS $3,174,171 $3,276,973
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UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
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March 31, December 31,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $592,345 $531,983
Sales tax liability - -
Accrued liabilities 277,894 170,206
Line of credit 74,988 74,988
Current portion of long-term liabilities 560,428 594,668
Deferred revenue - 103,000
Total current liabilities 1,505,655 1,474,845
--------- ---------
LONG-TERM LIABILITIES
Notes payable 45,193 83,058
Deferred rent 401,000 374,376
Total long-term liabilities 446,193 457,434
--------- ---------
Total liabilities 1,951,848 1,932,279
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, Series A, C & Redeemable
All recalled and retired - -
Common stock
$.01 par value, 20,000,000 shares authorized,
5,636,927, 5,631,817 and 2,119,077 shares
issued and outstanding at March 31, 1999,
December 31, 1998 and March 31, 1998
respectively
56,369 56,318
Additional paid-in capital 7,821,440 7,883,898
Stock dividend declared 172,665 172,665
Deferred compensation - -
Retained earnings (deficit) (6,828,151) (6,768,187)
Total stockholders' equity 1,222,323 1,344,694
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$ 3,174,171 $3,276,973
---------------- -----------
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UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
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1999 1998
---- ----
REVENUE
Other $ - $7,973
Total revenue - 7,973
------- ------
EXPENSES
General and administrative 56,033 117,882
Interest expense - 5,681
Total expenses 56,033 123,563
INCOME (LOSS) BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS (56,033) (115,590)
Income tax provision - -
Income (loss) from discontinued
operations (3,931) 55,473
NET INCOME (LOSS) $ (59,964) $( 60,117)
BASIC NET INCOME (LOSS) PER COMMON SHARE
Weighted average common shares
outstanding 5,631,817 2,119,077
(Loss) from continuing operations $(0.01) $ (.06)
Income from discontinued operations - .03
NET INCOME (LOSS) PER COMMON SHARE $ (0.01) $ (.03)
</TABLE>
UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIODS ENDED DECEMBER 31, 1998 AND MARCH 31, 1999
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Preferred Stock
Redeemable Series A Series C Common Stock
Shares Amt Shares Amt Shares Amt Shares Amt
Balance
December 31, 1997 70 $ 1 - $ - 428,185 $4,282 2,119,077 $21,191
Deferred compensation earned
Stock issued in forgiveness
of debt - TC EQUITIES 1,800,000 $18,000
Converted preferred
to common (70) (1) (428,185)(4,282) 1,712,740 17,127stock
----- ---- ---------- -------- ------- --------- -----------
All stock options & warrants
canceled or expired
Proceeds from pending sale
of subsidiary - United Marketing
Solutions, Inc.
Stock dividend declared
Net income
Balance
December 31, 1998 - - - - - - 5,631,817 56,318
Correction # shares outstanding 5,110 51
Reduction in anticipated proceeds
from pending sale of subsidiary -
Marketing Solutions, Inc.
Net (loss)
Balance March 31, 1999 - $ - - $ - - $ - 5,636,927 $56,369
---- ----- ----- ----- ---- ---- --------- -------
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UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIODS ENDED DECEMBER 31, 1998 AND MARCH 31, 1999
(CONTINUED)
-----------
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Additional Stock
Paid-In Divid. Deferred Accum.
Capital Decl. Compensation Deficit Total
---------- ------- ------------ -------- ----------
Balance
December 31, 1997 $6,801,008 $ $(4,557) $(8,226,004) (1,404,079)
Deferred compensation
earned 4,557 4,557
Stock issued in
forgiveness of debt
- TC EQUITIES 162,000 180,000
Converted preferred
to common stock (12,844)
All stock options & warrants
canceled or expired
Proceeds from
pending sale
of subsidiary
- United Marketing
Solutions, Inc. 1,106,399 1,106,399
Stock dividend
declared (172,665) 172,665
Net income 1,457,817 1,457,817
Balance
December 31, 1998 7,883,898 172,665 6,768,187 1,344,694
Correction # shares
outstanding (51)
Reduction in anticipated
proceeds from pending
sale of subsidiary -
Marketing
Solutions, Inc. (62,407) (62,407)
Net (loss) (59,964) (59,964)
Balance
March 31, 1999 $7,821,440 $172,665 $ - $(6,828,151) $1,222,323
---------- --------- ----- ------------ -----------
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UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31,
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1999 1998
------- -----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(59,964) $(60,117)
Adjustments to reconcile net income to net cash
Provided (used) by operating activities
Depreciation and amortization 98,404 170,932
Provision for bad debts - 22,900
Deferred income taxes - 9,000
Changes in assets and liabilities
Increase (decrease) accounts and notes receivable 111,620 (115,736)
(Increase) prepaid expenses and inventory ( 45,874) ( 40,099)
Decrease deposits and other - 3,147
Increase (decrease) accounts payable and accrued 168,050 ( 71,274)
liabilities
Increase (decrease) deferred revenue and rent (76,376) 146,842
Net cash (used) by operating activities 195,860 65,595
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property (47,138) (85,012)
Net cash (used) by investing activities (47,138) (85,012)
CASH FLOW FROM FINANCING ACTIVITIES
Payment of notes payable (72,105) (20,407)
Proceeds stock sale of subsidiary (UMSI) (22,407) -
Net cash provided by financing activities (94,512) (20,407)
(DECREASE) IN CASH AND CASH EQUIVALENTS 54,210 (39,824)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 105,404 129,860
CASH AND CASH EQUIVALENTS, END OF YEAR $159,614 $90,036
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UNICO AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 1999 AND 1998
NOTE 1 - BASIS OF PRESENTATION
---------------------
The interim consolidated financial
statements at March 31, 1999 and for the three month
periods ended March 31, 1999 and 1998 are unaudited, but
include all adjustments which the Company considers
necessary for a fair presentation. The December 31, 1998
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 Form 10-KSB for the year ended December 31,
1998. The accompanying unaudited interim financial
statements for the three month period ended March 31,
1999 are not necessarily indicative of the results which
can be expected for the entire year.
The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
NOTE 2 - COMMITMENTS & CONTINGENCIES
---------------------------
The Company is not exposed to any legal
matters at this time.
NOTE 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
likely that the Company will be able to realize all the
tax benefits from available net operating loss carry
forwards and has, therefore, provided a valuation
allowance of an equal amount. The income tax expense of
$9,000 reflected in the Statement of Operations for the
quarter ended March 31, 1998 represents state income
taxes payable by United Marketing Solutions, Inc. on
first quarter profits that are not impacted by
the net operating loss carry forwards.
NOTE 4 - COMMON STOCK
------------
The Company recently changed stock transfer
agents. The new stock transfer agent identified an
additional 5,110 shares issued and outstanding not
previously known about. The discrepancy is corrected in
the first quarter of 1999 and now agrees with the records
of the current stock transfer agent. No additional stock
was actually issued since December 31, 1998.
NOTE 5 - DISCONTINUED OPERATIONS OF SUBSIDIARY
-------------------------------------
During 1998, the Company entered into an
agreement to sell its principal operating subsidiary
United Marketing Solutions, Inc. ("UMSI"), formerly
United Coupon Corporation. Accordingly, the results of
operations for 1999 and 1998 are presented showing the
results of continuing operations and discontinued
operations net of applicable income taxes (income tax
benefits).
A summary of the subsidiary's operations for
the three months ended March 31, 1999 and 1998 are as
follows:
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1999 1998
---- -----
REVENUE
Printing, design and advertising sales
Net $ 1,902,906 $ 1,195,648
Other 62,383 50,272
------------- -------------
Total revenue 1,965,289 1,384,705
------------ -------------
EXPENSES
Direct cost of sales 1,495,041 797,930
General and administrative and
Franchise development 474,159 522,302
------------- -------------
Total expenses 1,969,200 1,320,232
Net income (loss) before income
tax (provision) (3,931) 64,473
Income tax provision - 9,000
------------ ------------
INCOME (LOSS) FROM OPERATIONS $ (3,931) $ 55,473
--------------- ------------
--------------- ------------
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Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations.
Forward-Looking Statements
--------------------------
Forward-Looking statements, based on management's
current views and assumptions, are made throughout the
Management's Discussion and Analysis and elsewhere in
this report t stockholders. These statements are subject
to certain risks and uncertainties that could cause
actual results to differ materially from historical
results and those presently anticipated or projected.
Among the factors that may affect operating results are
the following: success of the Company's change in focus;
competitive environment; and general economic conditions.
Form 10-KSB for the year ended December 31, 1998 contains
further discussions on these matters.
Results of Operations
---------------------
Revenues from regular and discontinued operations
increased by $572,611 to $1,965,269 for the three months
ended March 31, 1999 as compared to $1,392,678 for the
three months ended March 31, 1998. Net (loss) decreased
from $60,117 to a net loss of $59,954. The increase in
sales is due primarily from continued growth in the
subsidiary which has been sold off and is reported as
discontinued operations. Despite increased income the
expenses also increased, with the result that the losses
for each quarter were about the same - $60,000 loss each
quarter.
Future Outlook
--------------
During the quarter ended March 31, 1999, the Company
was focusing on the finalization of its sale of its only
operating subsidiary, United Marketing Solutions, Inc. to
Next Generation Media, Corp. Simultaneously, the Company
was looking to change directions in its general course of
business. Market research during the first quarter of
1999 concluded that the Internet/High-Technology and
Natural Resources should become the Company's primary
medium for conducting business. In March 1999, the
Company began talks with several oil and gas and other
natural resource companies, and Internet related
companies.
On May 28, 1999, the Company in exchange for stock
acquired all of the issued and outstanding shares of
Silver Valley Energy, Inc., a privately held Texas
corporation. Silver Valley Energy, Inc. holds an
undeveloped oil, gas and mineral lease on approximately
1,340 acres in Pecos County, Texas. The oil and gas
property has been appraised and classified by Nova
Petroleum Resource Co., Certified Petroleum Geologists
and Registered Professional Engineers. The report
classifies the petroleum reserves as proved undeveloped
reserves containing 55,699,072 MCF natural gas, at a
net present value of $40,027,951.
With this and other planned acquisitions through the
issuance of common stock and additional external
financing, management is optimistic the Company will be
profitable in the near future.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security
Holders.
A shareholders meeting was held on January 29, 1999,
whereby Gerald Bernier resigned as the sole director of
the Company and Shane Sutton and Peter Barnes were
nominated and elected. In addition, thereafter, William
D. Batts, Thomas Philip Page, Jay R. Weppler and Ron
Stoeppelwerth were nominated and elected as directors.
Each director was elected for a term of two years each.
Such persons continue to serve as directors. Mr. Weppler
was also nominated and elected as Chairman, President and
Chief Executive Officer, Mr. Stoeppelwerth was also
nominated and elected as Chief Financial Officer and Mr.
Page was nominated and elected as Vice President -
Natural Resources.
On January 29, 1999, the Company held a special meeting
of shareholders. At such meeting, the shareholders
approved the sale of all the issued and outstanding
common stock of United Marketing to Next Generation Media
Corp. ("NexGen"). The sale was effective April 1, 1999.
NexGen paid the Company the following: (i) $172,665 in
cash; (ii) forgiveness of indebtedness owed by the
Company to NexGen in the amount of $175,500; (iii)
payment to the Company of approximately $164,000 for
payments of certain debts of the Company to third-party
creditors; and (iv) assumption of the Company's debt to
its primary lender of approximately $402,000. In
addition, the shareholders voted to amend Section 3.16 of
the Company's Bylaws to permit stockholders to take
action by written consent signed by the holders of the
Company's stock having at least the minimum number of
votes required to approve such actions.
Item 5. Other Information. None
Item 6. Exhibits and Reports of Form 8-K. None
Exhibit 27 - Financial Date Schedule - Electronic Filing
Only
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 in its behalf by the
undersigned, thereunto duly authorized, on October 19,
1999.
UNICO, INC.
-----------------
(Registrant)
Date: October 19, 1999 s/s Jay R. Weppler
-------------------
Jay R. Weppler
Chairman and President
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
- ------------------------------------
[DESCRIPTION] ART. 5 FDS FOR 3RD QUARTER 10-Q
[TEXT]
[ARTICLE] 5
[MULTIPLIER] 1,000
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[PERIOD-TYPE] 3 MOS
[FISCAL-YEAR-END] DEC-31-9999
[PERIOD-END] MAR-31-1999
[CASH] 159,614
[SECURITIES] 0
[RECEIVABLES] 1,033,399
[ALLOWANCES] 0
[INVENTORY] 182,677
[CURRENT-ASSETS] 1,384,830
[PP&E] 4,400,845
[DEPRECIATION] 2,701,003
[TOTAL-ASSETS] 3,174,171
[CURRENT-LIABILITIES] 1,505,655
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 56,369
[OTHER-SE] 1,165,954
[TOTAL-LIABILITY-AND-EQUITY] 3,174,171
[SALES] 0
[TOTAL-REVENUES] 0
[CGS] 0
[TOTAL-COSTS] 56,033
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] <56,033>
[INCOME-TAX] <56,033>
[INCOME-CONTINUING] <56,033>
[DISCONTINUED] (3,931)
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] <59,964>
[EPS-BASIC] <.01>
[EPS-DILUTED] <.01>
</TABLE>
