SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<P>
FORM 10-KSB
<P>
Annual Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
<P>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
<P>
For Fiscal Year Ended
December 31, 1999
<P>
Commission File #0-15303
<P>
UNICO, Inc.
(Exact name of registrant as specified in its charter)
<P>
Delaware
(State or other jurisdiction of incorporation or
organization)
<P>
73-1215433
(IRS Employer Identification Number)
<P>
Harbor Park, 333 Ludlow Street, Stamford, CT 06902
(Address of principal executive offices ) (Zip Code)
<P>
(203) 323-6299
(Registrant's telephone no., including area code)
<P>
(Former name, former address and former fiscal year, if
changed since last report)
<P>
Securities registered pursuant to Section 12(b) of the
Act: NONE
<P>
Securities registered pursuant to Section 12(g) of the
Act: Common Stock, $.01 par value
<P>
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.
<P>
Yes [ X] No [ ]
<P>
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B not contained in
this form, and no disclosure will be contained, to the
best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. (X)
<P>
Revenues for year ended December 31, 1999. $ 0
<P>
Aggregate market value of the voting common stock held by
non- affiliates of the registrant as of December 31,
1999, was:
<P>
$681,888.75
<P>
Number of shares of the registrant's common stock
outstanding as of December 31, 1999 was:
<P>
5,929,185
<P>
Transfer Agent as of December 31, 1999:
Olde Monmouth Stock Transfer Co., Inc.
77 Memorial Parkway, Suite 101
Atlantic Highlands, NJ 07716
<P>
PART I
<P>
Item 1. Description of Business
--------------------------------
<P>
General
--------
<P>
UNICO, Inc., (the "Company"), was incorporated on April
11, 1984 under the laws of the State of Delaware. Initial
business activities, associated with the sale and
administration of cooperative direct mail advertising
franchises commenced in May 1984. In September 1986, the
Company filed an initial registration statement with the
Securities and Exchange Commission and initiated a plan
to expand Company operations through the acquisition of
existing businesses operating in related fields.
<P>
The Company's Business
----------------------
<P>
As of December 31, 1998, the Company operated as a
publicly-owned holding company with one active wholly-
owned subsidiary, United Marketing Solutions, Inc.,
formerly United Coupon Corporation ("United Marketing"),
involved in cooperative advertising. United Marketing is
involved in cooperative direct mail advertising through
franchising and production. The Company also operated
and owned a second subsidiary during 1996, Cal-Central
Marketing Corporation ("Cal-Central"). Cal-Central was
discontinued during 1996 and was involved in cooperative
advertising distributed primarily through supermarkets,
pharmacies and restaurants.
<P>
The Company's cooperative advertising and production
business involves the design, layout, printing, packaging
and distributing of public relations, marketing materials
and promotional coupons for private businesses, usually
involved in retailing goods or providing professional
services. Cal-Central's cooperative advertising process
included sales of advertising through independent sales
representatives.
<P>
Franchising activities related to this business involve
the granting and administering of independent franchise
operations to conduct cooperative direct mail advertising
sales. All activities related to franchising are
conducted through United Marketing, which was acquired on
July 17, 1987. At year-end, December 31, 1998, United
Marketing had approximately 65 active franchise
operations.
<P>
On January 29, 1999, the shareholders of the Company
approved the sale of all the issued and outstanding
common stock of United Marketing to Next Generation Media
Corp. ("NexGen"). The sale was effective and closed
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.
<P>
Presently, Unico is developing a unique diversified
holding company. To achieve this goal, the Company
intends to capitalize on three primary opportunities: (a)
incubating and developing entrepreneurial Internet and
High Technology businesses, (b) acquiring or entering
into strategic partnerships or joint ventures with non-
Internet companies seeking to develop an Internet
presence, (c) pursue asset rich, undervalued, natural
resources companies, including oil, gas and water
properties.
<P>
First, companies are identified through a global and
regional network of business contacts developed over many
years. Once identified and an investment commitment is
made, portfolio companies will receive added strategic
and operational value from UNICO in the form of (a)
assistance in sourcing, hiring and retaining seasoned
management, (b) providing legal, accounting and other
technical business support, (c) facilitation of
investment banking support for capital market activities
such as future capital rounds and the sale or the initial
public offering of the company.
<P>
Revenues and earnings from on-line, emerging technology
companies vary as a result of the transactional
orientation of the business and the change in national
and regional business and market conditions. The
Company's goal is to diversify its revenue and earnings
by: (i) acquiring or investing in early stage Internet
and High-Technology companies, thereby acting as an
incubator providing them with capital, leadership and
strategic focus in the development process with the
intent to capitalize via future initial public offering
(ii) creating a natural resources business which will
acquire equity interests in proven developed and
undeveloped reserves thereby creating the opportunity for
ongoing dividend income and capital gains transactions;
and (iii) applying its strategic partners expertise to
the international market place thereby diversifying the
regions from which its revenue may be generated.
<P>
In order to increase the Company brand image as well as
provide for an active database of possible acquisitions,
the Company also intends to expand its presence on the
Internet. The Company believes that such capabilities
will enable it to reach a far broader and potentially
more lucrative strategic partner base. The Company has
recently established an alliance with Nateko, S/A, a
software company located in Argentina that provides
technical and marketing support to developing Internet
companies in South America. Nateko has strategic
alliances with educational institutions, political
organizations and businesses in Argentina and Brazil.
<P>
UNICO is also establishing a network of strong
relationships with institutions, broker dealers and
individuals. These relationships are mutually beneficial
as they (a) provide growth capital as UNICO portfolio
companies mature into later rounds of financing, (b)
provide industry expertise to both UNICO at the point of
investment decision and to portfolio companies following
investment, (c) assist with the management recruiting,
(d) introduce merger and acquisition opportunities from a
co-investor's portfolio to UNICO's portfolio, and (e)
help co-investors put additional capital to work, thereby
leveraging their time and money.
<P>
Overall, the Company believes that the implementation of
the Company's business plan, will be "transformational,"
creating a larger, more stable firm capable of generating
an expanded and more broadly based revenue stream with a
significantly higher and better quality of earnings. The
Company hopes that by focusing on emerging, high-growth
entities, the Company will be able to grow along with
such clients in terms of the level and sophistication of
services to be provided by the Company. The Company
believes that this strategy will achieve attractive
returns for shareholders by realizing long-term capital
appreciation and building shareholder value by:
<P>
- Becoming the Internet and High Technology
entrepreneur's partner of choice;
- Creating a community of partner companies;
- Utilizing the management team's extensive industry
contacts and relationships;
- Building the UNICO brand; and
- Influencing the decision-making processes of our
partner companies.
<P>
As part of its plan, the Company entered into a non-
binding Letter of Intent on November 15, 1999 ("letter of
Intent") to acquire 27% of e-clarity, Inc for $3,000,000.
e-clarity will introduce a patent-pending Language-Based
Protocol (LBP) that will enable person to person
communications, building of relationships between
businesses and business to consumer, consumer,
personalization, demographic analysis and unprecedented
personality privacy on the Internet.
<P>
In effect, e-clarity will transform the intangible and
impersonal nature of the Web to a more personal,
relevant, understandable and meaningful environment. E-
clarity will create an electronic framework that will
bring the structure of a brick-and-mortar world to the
Internet world.
<P>
From time to time the Company may purchase majority as
well as minority equity positions in companies. The
Company is currently considering investment in a variety
of Internet related businesses, including, but not
limited to, the Internet Shopping and Style Resource
industry, the Temporary Staffing business, the Travel
Agency industry, the Wholesale Produce Industry, the
Audio/Video hardware market, the Commercial and
Industrial Construction Project Bid Invitations and the
Wireless Products and Services fulfillment business.
<P>
As part of the Company's plans to stabilize the revenue
and earnings flows of its portfolio of companies, the
Company finalized a share exchange, on June 25, 1999,
whereby the Company acquired 100% of Silver Valley
Energy, which includes the assets of the Glass Mountains
"799" property comprising oil and gas reserves located in
Pecos County Texas in exchange for stock of the Company.
On June 5, 1999, the Glass Mountains "799" property has
been independently valued at $40,027,951 by Joseph V.
Rochefort, a certified geologist.
<P>
As of November 15, 1999 the Company entered into
negotiations to acquire Independent News, Inc., which
operates Independent News, a free weekly and monthly
newspaper provided to more than 115,000 homes in northern
New Jersey. Unico would provide Independent News with
additional working capital and strategic leadership to
expand its business on the Internet and to acquire
additional newspapers enabling Independent News to
substantially increase its advertising revenue.
<P>
The Internet/Emerging Technology Entrepreneur
---------------------------------------------
<P>
The Company believes emerging companies generally require
operating support and strategic guidance in addition to
capital. Although traditional sources of start-up
capital provide some level of non-financial support, the
Company believes this support is minimal and, in-turn,
may limit the ability of entrepreneurs to realize their
business objectives:
<P>
1.Friends and Family. Friends and family
investors generally offer entrepreneurs a minimal amount
of capital and little or no operating expertise.
<P>
2.Venture Capital Firms. The primary goal of
venture capital firms is to maximize their financial
return within a short time frame. The Company believes
that venture capital firms typically focus solely on
providing capital and do not provide the business
development and operational support which emerging
companies require to succeed. In addition, venture
capital firms often cause their portfolio companies to
engage prematurely in a public offering or sale.
<P>
3.Corporate Strategic Investors. Corporate
strategic investors are typically large corporations that
invest in emerging companies to obtain access to a
promising product, potential customer, technology or
skill set that the larger company does not possess or
cannot develop in a cost-effective or timely manner.
While corporate strategic investors can provide business
development and sometimes managerial support, the goals
of the strategic investor are often incompatible with the
business goals and entrepreneurial spirit of the emerging
company and its founders.
<P>
The Company believes that its emphasis on developing
companies will make UNICO an attractive alternative to
the traditional sources of capital described above.
Through its network and strategic partnering approach,
the Company intends to offer the following business
development support and advisory services to its
portfolio companies:
<P>
1.Strategic guidance, branding and business
positioning. The Management Team and the Company's
strategic partners possess a combination of managerial,
operational and technology experience, and have extensive
relationships in various Internet and other interactive
media markets. This experience should provide the
Company's partner companies with guidance in developing
and refining their business strategies, products and
branding concepts, as well as assisting them in
positioning their businesses once their strategy has been
developed.
<P>
2.Rapid product or service deployment support. The
Company intends to employ or outsource a staff of
technology developers and marketing consultants. The
Company believes that by providing portfolio companies
with technological assistance it will enable them to
accelerate their development by allowing them to focus on
key business goals and to tailor their existing
technology and/or business models for their market
segment. Furthermore, providing portfolio companies with
marketing consultants will enable them to introduce their
products to market more quickly and to promote their
brand name more effectively. In addition, the Company
plans to provide portfolio companies with legal and other
assistance to guide and assist them in developing and
protecting their intellectual property rights.
<P>
3.Human resources. Through the Company's strategic
partners, the Company intends to assist its portfolio
companies in attracting and retaining management, finance
and technology personnel.
<P>
4.Back-office support services. Start-up companies
generally need to contract for numerous advisory services
and develop a variety of plans and documents. The
Company intends to provide portfolio companies with
access to accounting, legal and other advisors to
complete necessary start-up tasks.
<P>
5.Access to other partner companies. The Company
intends to create a community of Internet businesses that
exchange and develop ideas, technologies, products and
services. The Company also expects cooperation among
the portfolio companies to cross-market their products
and services where appropriate, which the Company
believes will increase brand recognition and penetration
and reduce marketing costs for each company.
<P>
Building and Internet Presence
------------------------------
<P>
Many traditional businesses are losing market share to
emerging Internet businesses due to the relative ease and
convenience of Internet commerce and the delayed entry of
these traditional businesses into the Internet
marketplace. The Company believes these companies
realize that to compete successfully they need to build
an Internet presence. Many of these companies want to
develop Internet-based business platforms but do not want
to do so independently, because the research and
development and other start-up costs of developing those
platforms may negatively impact their operations or
financial statements. The Company believes that this
presents an opportunity for these companies to partner
with third parties, such as UNICO, to provide financial
support and strategic guidance.
<P>
Company History
---------------
<P>
UNICO was incorporated on April 11, 1984 under the laws
of the State of Delaware. Initial business activities,
associated with the sale and administration of
cooperative direct mail advertising franchises commenced
in 1984. In September 1986, the Company filed an initial
registration statement with the Securities and Exchange
Commission and initiated a plan to expand the Company
operations through the acquisition of existing businesses
operating in related fields.
<P>
As of December 31, 1998, the Company operated as a
publicly-owned holding company with one active wholly-
owned subsidiary, United Marketing Solutions, Inc.,
formerly United Coupon Corporation ("United Marketing"),
involved in cooperative advertising. On January 29,
1999, the shareholders of the Company 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 (refer to Certain
Transactions Section). As of June 25, 1999, the Company
acquired Silver Valley Energy, which includes the assets
of the Glass Mountains "799" property comprising oil and
gas reserves located in Pecos County, Texas in exchange
for stock of the Company.
<P>
On November 15, 1999 the Company entered into
negotiations with Independent News, Inc., a weekly and
monthly newspaper circulated to more than 70,000 homes in
northern New Jersey. Independent News had revenues
$1,800,000 for the year ended December 31, 1998.
<P>
Company Strategy
-----------------
<P>
Our strategy is to use the Company's industry,
technological and capital markets expertise and strategic
network to develop and grow the Company's portfolio and
partnerships to achieve superior returns for our
stockholders. The Company will focus on developing,
operating and entering into strategic alliances with
companies conducting business in what the Company
believes to be the most compelling segments of the
Internet and Emerging Technologies industries. The
Company believes that it can build value for stockholders
through the long-term capital appreciation of portfolio
companies, and anticipates realizing returns from
mergers, sales and/or initial public offerings of
selected portfolio companies or alliance companies.
<P>
The Company intends to become the Internet and Emerging
Technology entrepreneur's partner of choice. It intends
to provide entrepreneurs with the following business
development resources:
<P>
1. Ongoing marketing, technical and financial
expertise.
2. Strategic and general business development
guidance.
3. The expertise of our management team and
members of our advisory board to assist our
partner companies in identifying and
capitalizing on business development and
strategic partnership opportunities.
4. Enhanced visibility and cross-marketing
opportunities for our partner companies'
affiliation with UNICO and the Company's other
partner companies.
5. Create a community among our partner companies.
The Company intends to create a community of
businesses where the joint development and
exchange of ideas, technologies, products, and
services is encouraged and facilitated. UNICO
will also encourage the exchange of best
practices between portfolio companies in many
areas, including business formation, human
resources management, sales and marketing and
technology development. The Company may
develop or acquire companies that provide
technical, marketing and development support to
other portfolio companies.
6. Build the UNICO brand. The Company's plans to
promote a entrepreneurial spirit by funding,
supporting and counseling entrepreneurs. The
Company believes that as it develops public
awareness of the brand, it will become valuable
to portfolio companies, providing them with
enhanced visibility and a strong network of
strategic, technical and managerial support;
7. Influence the decision-making process. The
Company will generally seek to acquire equity
interests in portfolio companies and strategic
partnerships that are large enough to enable it
to have a significant influence over the
management and policies of those companies and
partnerships thereby further protecting our
capital investment.
<P>
The Company's Internet/Emerging Technology Focus
------------------------------------------------
<P>
The Internet has become a global medium enabling millions
of people to obtain and share information, to communicate
and to conduct business electronically. The Internet has
grown rapidly since its introduction to the public in the
early 1990s. The Company intends to create, develop and
operate companies competing in a variety of Internet-
related and other interactive media markets and segments.
<P>
Due Diligence Model and Investment Structure
---------------------------------------------
<P>
The Company believes that there are several key elements
to evaluating the potential success of a Company. The
Company intends to focus on companies exhibiting one or
more of the following characteristics:
<P>
Management. The entrepreneurs who will guide the
strategy or technological development of a new venture
are critical to its success. The Company will focus on
attracting and partnering with companies with management
teams that demonstrate leadership, marketing and/or
technology skills. The Company believes that the
flexibility on an entrepreneur is extremely important.
Management may need to adapt and refine its business plan
to adjust to changes in market conditions, the
introduction of new competition and possible strategic
failures.
<P>
Multiple revenue streams. The Company believes that
many successful Internet and interactive media companies
generate revenue from more than one source. Potential
sources of revenue include subscription processing and
licensing fees, advertising, electronic commerce, direct
marketing.
<P>
Technology advantage. In addition to providing a
new or unique product, service or business model, the
Company believes that companies should have a
technological advantage or innovation to prevent
competitors from easily entering their niche market.
<P>
Complimentary Companies and off-line business. The
Company will focus on companies that will be able to
interact with, cross-market with, or provide services or
products that are complimentary to those offered by
another partner company.
<P>
The Company intends to acquire at least 25% equity
interests in the portfolio companies with initial
investment. These interests may represent a minority
stake or a controlling interest in the enterprise,
depending on the stage of the company's development and
the entrepreneur's objectives. As the Company's partner
companies require more capital to meet their business
objectives, the Company intends to provide additional
capital and business development support and increase its
ownership in those companies. The Company intends to
structure substantially all its investments so that it
has rights of participation in and control over material
decisions affecting the portfolio company, including the
right to approve business plans, mergers and
acquisitions, management compensation, stock and option
issuance and corporate borrowing. The Company also
expects to negotiate to obtain additional rights,
including registration rights, rights of first refusal,
buy/sell arrangements, anti-dilution protection and
preemptive rights relating to the portfolio company's
issuance of additional equity.
<P>
Company management will only participate in the success
of a venture through their UNICO equity ownership, and
will be prohibited from co-investing in our portfolio
companies. The Company anticipates that it will realize
returns from our investments through mergers, sales and
initial public offerings. The Company intends to
carefully consider each of these liquidity events with a
focus on selecting an exit strategy that maximizes the
value of that portfolio company and, in turn, the
Company's value. Our effort to comply with an exemption
from the registration requirements of the Investment
Company Act will affect the structure and exit strategies
or investments.
<P>
Competition
------------
<P>
The Company may encounter intense competition from other
companies seeking to invest in Internet and emerging
technology businesses. Traditional venture capital and
private equity firms have dominated investments in such
companies, and their involvement has been particularly
strong in areas such as Internet enabling technology,
vertical applications, electronic commerce, security and
enterprise software development. In addition, several
public companies such as Safeguard Scientifics, Inc.,
Rare Medium Group, Inc. CMGI, Inc., private ventures like
idealab! and Internet Capital Group, Inc. devote
significant resources to providing capital and other
resources to entrepreneurs and their emerging companies.
Finally, corporate strategic investors include Fortune
500 and other significant companies that are developing
Internet strategy and capability. These strategic
investors also include many of the larger technology and
established Internet companies, which are also a source
of competition for the Company, as these groups often
partner with emerging companies to seek to obtain access
to a promising product or technology.
<P>
Many of these potential competitors may have more
experience identifying, investing in and advising
Internet-focused companies and may possess greater
financial, personnel or other resources or industry
contacts than the Company. Competition to invest in a
limited number of emerging businesses could cause the
company to pay higher prices for its investments. These
inherent competitive disadvantages to the Company may
make acquisition or investment opportunities more
difficult to accomplish and may compel the Company to
select less attractive investment prospects. Further,
the Company cannot assure you that its efforts to
differentiate itself from competition will prove to be
effective or that the Company ultimately will be able to
compete effectively in the acquisition of equity stakes
in attractive Internet or emerging technology companies.
<P>
Government Regulation
---------------------
<P>
With the exception of regulation applicable to businesses
generally, most Internet-related companies are not
currently regulated by any government agency. Due to
the increasing popularity and use of the Internet,
however, it is possible that a number of laws may be
adopted that will apply to the Internet in the future
which will affect the Company's portfolio companies and
financial results. These potential laws cover issues
including:
<P>
User privacy;
<P>
* Dissemination of information;
* Pricing of goods and services offered; and
* Types of products and services offered.
<P>
If the government adopts any additional laws or
regulations governing use of the Internet, these actions
could decrease the growth of the Internet or increase the
costs of doing business for Internet-focused companies.
Finally, the sales of goods and services by the Company's
portfolio companies may be reduced and the costs of
producing those goods and services may be increased if
existing U.S. State and federal laws and foreign laws
governing issues such as commerce, taxation, property
ownership, defamation and personal privacy are
increasingly applied to the Internet.
<P>
Employees
---------
<P>
The Company had one employee as of December 31, 1999.
The Company also previously relied upon commissioned
sales representatives involved in the franchise sales
operations and temporary workers during peak production
periods at United Marketing.
<P>
Item 2. Description of Property
-------------------------------
<P>
As of December 31, 1999, the Company operated its
corporate headquarters through an executive office
located 333 Ludlow Street, Stamford, Connecticut 06902.
This space is leased for a monthly fee of approximately
$1,250 per month covering approximately 900 square feet.
<P>
Item 3. Legal Proceedings
--------------------------
<P>
The Company and its subsidiaries are not presently
parties to any litigation, nor to the Company's knowledge
and belief is any litigation threatened or contemplated.
<P>
Item 4. Submission of Matters to a Vote of Security
Holders
----------------------------------------------------
<P>
(a) On August 12, 1999, the majority shareholder of
the Company executed a resolution authorizing a 1 for 3
reverse stock split of its common shares. No
shareholders meeting was held and no information
statements was distributed in connection with such
meeting.
<P>
(b) Not Applicable.
<P>
(c) The Company's majority shareholder at such time
executed the resolution in favor of the 1 for 3 reverse
stock split of the then outstanding shares of common
stock of the Company.
<P>
(d) Not Applicable.
<P>
PART II
<P>
Item 5. Market for Common Equity and Related Stockholder
Matters
--------------------------------------------------------
<P>
On December 31, 1999, there were approximately 499
shareholders of record of the Company's common stock.
Based on information received from brokers and others in
fiduciary capacities, the Company estimates that the
total number of shareholders of the Company's common
stock exceeds 500. The Company's common stock was
formerly traded on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). During
1997, the Company no longer qualified for this listing
and is now available through electronic trading services
via the OTC Electronic Bulletin Board.
<P>
The following table sets forth, for the periods
indicated, the range of high and low closing bid prices
for the Company's common stock through December 31, 1999
and as available through electronic trading services
subsequent to such date.
<P>
Common Stock Bid
High Low
1998
----
First Quarter $.125 $.125
Second Quarter .125 .125
Third Quarter .0625 .0625
Fourth Quart .0625 .0625
<P>
1999
First Quarter $.10 $.0625
Second Quarter .04 .04
Third Quarter .07 .04
Fourth Quarter .75 .50
<P>
Dividends
<P>
On January 29, 1999, the Company declared a cash dividend
of $.10 a share to shareholders of record as of December
31, 1998 in consideration for the sale of United
Marketing Solutions, Inc. The Company intends to retain
future earnings to support the Company's growth. Any
payment of cash dividends in the future will be dependent
upon: the amount of funds legally available therefore;
the Company's earnings; financial condition; capital
requirements; and other factors which the Board of
Directors deems relevant.
<P>
Item 6. Management's Discussion and Analysis Plan of
Operation
-----------------------------------------------------
<P>
Certain matters discussed herein (including the documents
incorporated herein by reference) are forward-looking
statements intended to qualify for the safe harbors from
liabilities established by the Private Litigation Reform
Act of 1995. These forward-looking statements can
generally be identified as such because the context of
the statement will include words such as the Company
"believes," "plans," "intends," "anticipates," "expects,"
or words of similar import. Similarly, statements that
describe the Company's future plans, objectives,
estimates, or goals are also forward-looking statements.
Such statements address future events and conditions
concerning capital expenditures, earnings, litigation,
liquidity and capital resources and accounting matters.
Actual results in each case could differ materially from
those currently anticipated in such statements by reason
of factors such as future economic conditions, including
changes in customer demands; future legislative,
regulatory and competitive developments in markets in
which the Company operates; and other circumstances
affecting anticipated revenues and costs.
<P>
General
------------
<P>
On April 1, 1999, the Company sold its only asset, the
stock of its operating subsidiary United marketing to
NextGen, Inc. This sale was agreed to in May of 1998 and
Unico received $1,106,000. The Company declared a stock
dividend of $172,000 in December 1998 to be paid in 1999.
The subsidiary was in the franchising of cooperative
direct mail advertising distributorship business. The
results of operations of United Marketing are included in
the statement of operations for the period January 1,
1999 through April 1, 1999.
<P>
As a result of the above described transaction, Unico
became a publicly traded "shell" company. The Company,
immediately after the sale of United Marketing, had no
assets and no liabilities. The Company was funded by two
new shareholders, Nathan International and TC Equities,
selected a new board of directors and management team and
changed its business plan.
<P>
In May of 1999, the Company purchased an interest in an
oil and gas lease covering approximately 1,200 acres of
land in Texas. This oil and gas lease will be disposed
of in 2000.
<P>
Unico intends to become a diversified holding company
focused on the incubation, acquisition and financing of
development stage companies in the software electronic
commerce and highly technology business. Unico's mission
is to focus on early stage companies where Unico can add
significant value through its network of relationships
and the Company's experience in building distribution,
developing brands and financing.
<P>
The Company believes that its primary strengths are its
ability to acquire attractive development stage companies
on favorable terms, to provide the necessary funding and
guidance, enabling these companies to implement their
business plans.
<P>
No meaningful comparison can be made between 1998 and
1999 because of the sale of the United Marketing
subsidiary and the entrance into a completely new
business for the Company.
<P>
The Company's net loss for 1999 of $211,571 was primarily
due to start up costs permitting the Company to build its
infrastructure.
<P>
Item 7. Financial Statements
----------------------------
<P>
The financial statements of the Company, together with
the report of auditors, are included in this report after
the signature pages.
<P>
Item 8. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure
-------------------------------------------------------
<P>
None.
<P>
PART III
<P>
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a)
of the Exchange Act
--------------------------------------------------------
<P>
The directors and officers of the Company and its
subsidiaries, as of December 31, 1999, are set forth
below. The directors hold office for their respective
term and until their successors are duly elected and
qualified. Vacancies in the existing Board are filled by
a majority vote of the remaining directors. The officers
serve at the will of the Board of Directors.
<P>
<TABLE>
<S> <C> <C> <C>
With Company
Name Age Since Director/Position
-----------------------------------------------------------------------
Jay R. Weppler 56 1999 Chairman, President and Chief
Executive Officer
Ron Stoeppelwerth 52 1999 Chief Financial Officer and
Director
Shane Sutton 51 1999 Director
</TABLE>
<P>
Business Experience
-------------------
<P>
JAY R. WEPPLER. Mr. Weppler was employed from 1994
through 1999 by Auerbach, Pollack & Richardson, an
investment banking firm, as Executive Vice President and
a Director. He was responsible for the overall strategic
development of the firm's various operations including
all investment banking activities, corporate finance,
capital raising and investment management, including
opening offices in London, Paris and New York. He
successfully completed 43 syndications, 3 initial public
offerings, 6 private placements and 4 advisory
assignments. Prior to that time, he was a partner and
co-founder of Buckingham Partners, a merchant banking
boutique formed to undertake and manage mezzanine and
equity capital investments in private United States
companies. The company raised $30 million, successfully
invested in 5 companies and completed 4 merger and
acquisition assignments totaling $62 million. From 1988
to 1993, Mr. Weppler worked as Senior Vice President and
Manager of the Merchant Banking Group at GE Capital
Corporation, closing 9 transactions resulting in $487
million of new investments and advised and structured 6
strategic acquisitions in aggregate value of $230 million
for an affiliated GE company. Prior to that, he spent 16
years at Chemical Bank in general management positions in
New York, London, Hong Kong, Sydney and San Francisco.
He received his bachelor of Science Degree from Johnson
State College, completed post-graduate work at Harvard
Business School and served as a Lieutenant in the United
States Navy. He serves as a director of numerous
financial services related companies.
<P>
RON STOEPPELWERTH. Mr. Stoeppelwerth is a corporate
finance executive and corporate tax executive. From
March 1995 to the present, he has served as a corporate
finance/mergers and acquisitions/ and investment banking
consultant for Somerset Financial Group, Inc. in Norwalk,
Connecticut and Capital International Securities Group,
Inc. in Miami, Florida. Prior to such time, from October
1989 through May 1995, he served as a Vice President in
corporate taxation for Aetna Life & Casualty. His other
positions include the following: Vice President
PaineWebber Group, Inc.; Chief Operating Officer and
Chief Financial Officer of Paramount Group, Inc.; Partner
for Touche Ross & Co. and Coopers & Lybrand (now known as
PriceWaterhouseCoopers). He graduated from the
University of Florida with High Honors in April 1973.
<P>
SHANE H. SUTTON is an attorney and was admitted to
practice law in Victoria, Australia in 1974. He built
the law firm Henty Sutton and Kelly, which developed its
expertise in real estate and commercial law. While
continuing to practice law, he ran several successful
real estate joint ventures, as well as being legal
advisor during the setting up of the First Australian
Fund in conjunction with Bear Stearns. Mr. Sutton is
also admitted to practice law in the State of New York
and is a principal in the law firm Shane Hanty Sutton,
P.C. with offices in New York City, New York, and Sydney,
Australia. In the United States, Mr. Sutton and his law
firm have successfully initiated or advised many domestic
and international public companies on general corporate
and SEC matters. Mr. Sutton also serves as a director on
the boards of several public companies.
<P>
Certain Legal Proceedings
--------------------------
<P>
No director, nominee for director, or executive officer
of the Company has appeared as a party in any legal
proceeding material to an evaluation of his ability or
integrity during the past five years.
<P>
Item 10. Executive Compensation
--------------------------------
<P>
The following information relates to compensation
received by the Chief Executive Officer of the Company in
1997 and 1998, to executive officers who were serving as
of December 31, 1999, whose salary and bonus during
fiscal 1998 exceeded $100,000. In 1999, no officer
received compensation in excess of $100,000.
<P>
<TABLE>
<S> <C> <C> <C> <C>
Summary Compensation Table
Annual Compensation
Name and Principal Position Year Salary Bonus Restricted Stock Award
----------------------------------------------------------------------------------
Gerald R. Bernier 1996 $0 $ 0 250,000
Chief Executive Officer and
President, Unico, Inc.
1998 $ 125,000 0 $ 7,6430
1997 $ 117,428 0 $ 30,000
</TABLE>
<P>
Employment Agreements. The Company's previously wholly-
owned subsidiary United Marketing Solutions, Inc. entered
into an Employment Agreement with Gerard R. Bernier to
serve as the Chief Executive Officer and President of
that Company. The major terms of such Agreement provided
for a base salary of $125,000 plus a company provided
automobile or monthly allowance, and an incentive bonus
based upon the pre-tax profitability of United Marketing.
The Agreement provides for an annual cost of living
increase based upon annual increases in the Consumer
Price Index of the general area surrounding the home
office of United Marketing. The Agreement was entered
into on April 1, 1996 and extended through March 31,
1999. As of January 29, 1999, Mr. Bernier resigned as an
officer and director of the Company. Therefore, his
employment agreement terminated.
<P>
Item 11. Security Ownership of Certain Beneficial Owners
and Management
--------------------------------------------------------
<P>
The following table sets forth as of December 31, 1999,
information with respect to the beneficial ownership of
the Company's Common Stock by (i) each person known by
the Company to own beneficially 5% or more of such stock,
(ii) each Director of the Company who owns any Common
Stock, and (iii) all Directors and Officers as a group,
together with their percentage of beneficial holdings of
the outstanding shares.
<TABLE>
<S> <C> <C>
Number of Shares of
Name of Beneficial Owner/ Common Stock % of Beneficial
Identity of Group Beneficially Owned Ownership (1)
--------------------------------------------------------------------------------
T. C. Equities, Ltd. 1,170,000 19.73%
Nathan International 3,500,000 59.03%
Jay Weppler 250,000 4.22%
Ron Stoeppelwerth 50,000 Less than 1%
Shane Sutton 50,000 Less than 1%
Officers and Directors As a Group 350,000 5.9%
</TABLE>
<P>
Item 12. Certain Relationships and Related Transactions
-------------------------------------------------------
<P>
Transactions with Management and Others
-----------------------------------------
<P>
No business relationship between the Company and any
business or professional entity, for which a director of
the Company has served during the last fiscal year or
currently serves as an executive officer of, or has owned
a 10% record or beneficial interest in, has existed since
the beginning of the Company's last fiscal year, or
currently exists, which represented or will represent
payments for property or services in excess of 5% of the
Company's gross revenues for its last full fiscal year or
of the other entity's consolidated gross revenues for its
last full fiscal year.
<P>
In addition, except as noted below, the Company did not
owe, at the end of its last fiscal period, to any
business or professional entity for which a director of
the Company has served during the last fiscal year or
currently serves as an executive officer, or has owned
during the last fiscal year or currently owns a 10%
record or beneficial interest in, an aggregate amount in
excess of 5% of the Company's total assets at the end of
its last fiscal period. No director of the Company has
served as a partner or executive officer of any
investment banking firm that performed services for the
Company during the last fiscal year or that the Company
proposes to have performed services during the current
year, except as noted below.
<P>
At the end of the 1997 fiscal year and at April 13, 1998,
the Company has 397,305 shares of Series C Preferred
Stock issued to Renaissance Capital Partners, Ltd.
Russell Cleveland, who served as a Director of the
Company until the Annual Meeting of Shareholders on
December 2, 1996, is a major owner and Managing General
Partner of Renaissance Capital Partners, Ltd. The Series
C Preferred Stock was issued to Renaissance upon
conversion of a $1,250,000 Convertible Debenture entered
into with Renaissance in 1991 and a Subordinated
Convertible Note in the amount of $149,250 entered into
with Renaissance during 1995. Mr. Cleveland did not
serve as a Director of the Company at the time that the
Convertible Debenture was issued. Mr. Cleveland was a
director in 1995, when the Company entered into the
Subordinated Convertible Note with Renaissance, to
provide interim financing to support the working capital
requirements. This note was deemed to be in the best
interests of the Company and its shareholders and was
entered into on an arms length basis, at the request of
Company management.
<P>
The Company believes the terms of the above transactions
are as favorable as it might have obtained from
unaffiliated parties.
<P>
PART IV
<P>
Item 13. Exhibits and Reports on Form 8-K
------------------------------------------
<P>
(a) The following documents are filed as part of this
report: (7)
<P>
1. Financial statements; see index to financial
statement and schedules immediately following the
signature pages of this report. (7)
<P>
2. Financial statement schedules; see index to financial
statements and schedules immediately following the
signature pages of this report. (7)
<P>
3. Exhibits:
<P>
The following exhibits are filed with this Form 10-KSB
and are identified by the numbers indicated; see index to
exhibits immediately following financial statements and
schedules of this report.
<P>
2 Plan of Reorganization and Agreement of Merger among
UNICO, Inc., AEC Acquisitions, Inc. and Cal-Central
Marketing Corporation (1)
<P>
3.1 Certificate of Incorporation, as amended (2)
<P>
3.2 Bylaws, as amended (2)
<P>
3.3 Amendment to the Certificate of Incorporation to
increase the authorized shares of Common Stock (3)
<P>
3.4 By-laws, as amended. (Corrected Version)
4.1 Form of Common Stock Purchase Warrant, dated
September 11, l986 (4)
<P>
4.2 Form of Class B Common Stock Purchase Warrant dated
November 1, 1993 (3)
<P>
4.3 Form of Subordinated Debenture dated October 26,
1993, offered through Duncan Smith Co. (3)
<P>
4.4 Certificate of Designations, Preferences, and Rights
of Series A Convertible Preferred Stock (3)
<P>
4.5 Certificate of Designations, Preferences, and Rights
of Series A Redeemable Preferred Stock (3)
<P>
4.6 Certificate of Designations, Preferences, and Rights
of Series B Redeemable Preferred Stock (3)
<P>
4.7 Certificate of Designations, Preferences, and Rights
of Series C Preferred Stock. (3)
<P>
10.1 Employment Agreement between Cal-Central Marketing
Corporation and Jack Brown. (1)
<P>
10.2 Employment Agreement between Cal-Central Marketing
Corporation and Gerald Bomstad, Jr. (1)
<P>
10.3 Lease of executive offices at 1101-B Sovereign Row,
Oklahoma City, OK 73108. (3)
<P>
10.4 Form of Common Stock Purchase Warrant dated October
26, 1993 offered through Duncan-Smith Co. (3)
<P>
10.3 Second Amendment to Lease Agreement Cal-Central
Marketing Corporation. (3)
<P>
10.6 United Coupon Corporation Franchise Agreement. (2)
<P>
10.7 Employment Agreement between United Coupon
Corporation and Gerard R. Bernier, as amended January 1,
1995. (5)
10.8 Employment Agreement between UNICO, Inc. and W.
Douglas Frans. (2)
<P>
10.9 Credit Agreement by and Between UNICO, Inc., and
its subsidiaries and BancFirst. (2)
<P>
10.10 Purchase Agreement with Concord Video. (2)
<P>
10.11 Omnibus Equity Compensation Plan. (2)
<P>
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)
<P>
10.13 Amended and Restated Loan Agreement by and between
UNICO, Inc. and its subsidiaries and BancFirst as amended
August 31, 1994. (5)
<P>
10.14 Promissory Note of Jack Brown. (3)
<P>
10.15 Promissory Note of Gerald Bomstad, Jr. (3)
<P>
10.16 Novation (3)
<P>
10.17 Restructure Agreement Among UNICO, Inc., Cal-
Central Marketing Corporation, and The American Education
Corporation, dated as of December 31, 1993. (3)
<P>
10.18 United Coupon Corporation Lease Agreement. (5)
<P>
10.19 Master Agreement and Schedules of Indebtedness 1
and 2 between CIT Group and United Coupon Corporation.
(5)
<P>
10.20 Machinery Contract between MAN Roland, Inc. and
Cal- Central Marketing Corporation. (5)
<P>
10.21 Exchange Agreement between Gerald Bomstad and the
Company dated February 22, 1995. (6)
<P>
10.22 Exchange Agreement between Jack Brown and the
Company dated February 22, 1995. (6)
<P>
10.23 Debt Exchange Agreement between Graphic Rolls
Unlimited and the Company dated February 22, 1995. (6)
<P>
10.24 Debt Exchange Agreement between McCollum & Bunch
and the Company dated February 22, 1995. (6)
<P>
10.25 Debt Exchange Agreement between Walter Rose and
the Company dated February 22, 1995. (6)
<P>
10.26 Debt Exchange Agreement between Ronald Martin and
the Company dated February 22, 1995. (6)
<P>
10.27 Subordinated Loan Agreement dated June 30, 1995,
among UNICO, Inc. and Cal-Central Marketing Corporation
and the Harlon Morse Fentress Trust, Philip M. Stevenson,
Jr., RHOJOAMT Partnership, Ltd., CITCAM Stock Co.,
Barbara T. Grinnan, and Goose Creek. (7)
<P>
10.28 Form of Common Stock Purchase Warrant, dated June
30, 1995. (7)
<P>
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)
<P>
10.30 Third Restated Loan Agreement dated March 4, 1996,
among UNICO, Inc., United Coupon Corporation, Cal-Central
Marketing Corporation and BancFirst. (7)
<P>
10.31 Debt Exchange Agreement among UNICO, Inc.,
Renaissance Capital Partners, Ltd. and Duncan-Smith
Investment Co., dated July 1996. (8)
<P>
10.32 Employment Agreement Between United Coupon
Corporation and Gerard R. Bernier dated April 1, 1996.
(10)
<P>
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)
<P>
10.34 Consolidated Renewal Promissory Note between UNICO,
Inc., United Coupon Corporation, Cal-Central Marketing
Corporation and BancFirst dated August 15, 1996. (10)
<P>
10.35 Loan Conversion Agreement between UNICO, Inc. and
Kurt H.C. Bottcher dated September 30, 1996. (10)
<P>
10.36 Agreement between Southwin Financial, Ltd. and
Unico, Inc. dated June 25, 1999. (11)
<P>
10.37 Amended and Restated Agreement between Southwin
Financial, Ltd., Unico, Inc., T.C. Equities, Ltd. and
Nathan International, Inc. dated November 30, 1999. (11)
<P>
16 Letter from Arthur Andersen, LLP to Securities &
Exchange Commission dated December 3, 1996. (9)
<P>
21 List of Subsidiaries (3)
<P>
27 Financial Data Schedule
<P>
(b) Reports on Form 8-K. - Form 8-K was filed during the
last quarter of the Registrant's fiscal period ending
December 31, 1996 describing the change in independent
accountants and auditors and Chief Financial Officer.
<P>
(1) Incorporated by reference to the Registrant's Form
8-K, October 27, 1993 (SEC File No. (0-15303).
<P>
(2) Incorporated by reference to the Registrant's Form
10-K for the fiscal year ending December 31, 1992 (SEC
File No. 0-15303).
<P>
(3) Incorporated by reference to the Registrant's Form
1O-KSB for the fiscal year ending December 31, 1993 (SEC
File No. 0- 15303).
<P>
(4) Incorporated by reference to the Registrant's Form
S-18 registration statement (SEC File No. 33-73 10-FW).
<P>
(5) Incorporated by reference to the Registrant's Form
10-KSB for the fiscal year ended December 31, 1994, (SEC
File No. 0- 15303).
<P>
(6) Incorporated by reference to the Registrant's Form
S-3 dated April 28, 1995 (SEC File No. 33-91270).
<P>
(7) Incorporated by reference to the Registrant's Form
10-KSB dated April 15, 1996 (SEC File No. 0-15303).
<P>
(8) Incorporated by reference to the Registrant's Form
8-K dated July 30, 1996 (SEC File No. 0-15303).
<P>
(9) Incorporated by reference to the Registrant's Form
8-K/A dated December 12, 1996 (SEC File No. 0-15303).
<P>
(10) Incorporated by reference to the Registrant's Form
10-KSB dated April 15, 1997 (SEC File No. 0-15303).
<P>
(11) Incorporated by reference to the Registrant's Form
8-KSB dated September 23, 1999 and filed February 17,
2000 (SEC File No. 000-15303).
<P>
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.
<P>
UNICO, INC.
April 14, 2000
<P>
By: /s/ Ron Stoeppelwerth
----------------------
Ron Stoeppelwerth
Chief Financial Officer
And Director
<P>
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.
<P>
<TABLE>
<S> <C> <C>
Name Title Date
----------------- ------ -----
/s/Jay R. Weppler Chairman, Chief Executive Officer, April 14, 2000
President and Director
/s/Ron Stoeppelwerth Chief Financial Officer and Director April 14, 2000
</TABLE>
UNICO, INC.
FINANCIAL STATEMENTS
<P>
<TABLE>
<S> <C>
TITLE PAGE
---------------------------- ------
INDEPENDENT AUDITOR'S
REPORT..................................................... ......1
AUDITED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION.................2-3
CONSOLIDATED STATEMENT OF OPERATIONS......... ..................4
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY..................5
CONSOLIDATED STATEMENT OF CASH FLOWS............................6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................7-19
</TABLE>
INDEPENDENT AUDITOR'S REPORTS
<P>
Board of Directors and Stockholders
UNICO, INC. AND SUBSIDIARY
Springfield Virginia
<P>
We have audited the accompanying Consolidated Statement
of Financial Condition of UNICO, INC. AND SUBSIDIARY, as
of December 3l, 1999 AND 1998, and the related
Consolidated Statements of Operations, Stockholders'
Equity and Cash Flows for the years then ended. These
financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the statements are free or
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for
our opinion.
<P>
In our opinion, the consolidated financial statement
referred to above presents fairly, in all material
respects, the consolidated financial position of UNICO,
INC. AND SUBSIDIARY, as of December 3l, 1999 and 1998 and
the consolidated results of their operations and cash
flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going
concern. As discussed in Note 8 to the financial
statements, the Company is disposing of all of its assets
and will end up with no liabilities, and will be left
without a business activity.
<P>
These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
Management's plans regarding these matters are also
described in Note 8. The financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.
<P>
Sellers & Associates, P.C.
Ogden, Utah
March 30, 2000
<P>
UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
YEARS ENDING DECEMBER 31,
ASSETS
------
<TABLE>
<S> <C>
1999 1998
----- -----
CURRENT ASSETS
Cash and cash equivalents 4,910 $ 105,404
Accounts and notes receivable - trade (net
of allowance for uncollectible accounts
of $-0- and $4,638 for 1999 and
1998 respectively) - 306,469
Sales tax receivable - 43,885
Receivable from NexGen - 834,665
Receivable from Shareholder 35,000 -
Inventory - 117,564
Prepaid expenses - 28,379
----------------------
Total current assets - 1,436,366
<P>
PROPERTY AND EQUIPMENT, AT COST
Furniture, fixtures and equipment - 4,354,072
Leasehold improvements - 81,029
(Less) Accumulated depreciation and
amortization - (2,602,599)
---------------------
Net property and equipment - 1,832,502
---------------------
OTHER ASSETS
Oil and gas lease in Texas 40,000 -
All other assets 8,105
-----------------------
Total other assets 40,000 -
TOTAL ASSETS 79,910 $3,276,973
-----------------------
</TABLE>
See Notes to Financial Statements
<P>
UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
YEARS ENDING DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
1999 1998
----- -----
CURRENT LIABILITIES
Accounts payable $ 43,381 $ 531,983
Sales tax liability - 127,578
Accrued liabilities - 42,628
Line of credit - 74,988
Due to Shareholder 122,470 -
Current portion of long-term liabilities - 594,668
Deferred revenue - 103,000
------------------------
Total current liabilities 165,851 1,474,845
LONG-TERM LIABILITIES
Notes payable - 83,053
Deferred rent - 374,376
------------------------
Total long-term liabilities - 457,434
------------------------
Total liabilities 165,851 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,
5,929,185 and 5,631,817 shares issued and
outstanding as of December 31, 1999 and 1998 59,292 56,318
Additional paid-in capital 6,834,525 7,883,393
Stock dividend declared - 172,665
Retained earning (deficit) (6,979,758) (6,768,187)
-----------------------
Total stockholders' equity (85,941) 1,344,694
-----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $79,910 $3,276,973
=======================
See Notes to Financial Statements
</TABLE>
UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<S> <C> <C>
1999 1998
----- -----
REVENUE
Printing, design and advertising sales
net of discounts and allowances $ - $ -
Franchise fees - -
Other - 175,500
-----------------------
Total revenue - 175,500
-----------------------
EXPENSES
Direct cost of sales - -
General and administrative and
franchise development 201,474 247,206
Interest expense - 32,904
-----------------------
Total expenses from operations 201,474 280,110
-----------------------
INCOME (LOSS) FROM OPERATIONS (201,474) (104,610)
Write (down) of long-term assets impaired (6,166) (309,207)
Income from forgiveness of debt - 1,314,248
Income (loss) from discontinued operations (3,931) 557,386
-----------------------
NET INCOME $ (211,571) $1,457,817
=======================
BASIC EARNINGS (LOSS) PER SHARE
(Loss) from continuing operations (0.06) (0.03)
(Loss) from sale of subsidiary (0.00) -
(Loss) from write (down) of long-term
assets impaired - (0.11)
Income from forgiveness or debt - 0.45
Income from discontinued operations (0.00) 0.19
-----------------------
NET EARNINGS (LOSS) PER SHARE $ (0.06) $ 0.50
=======================
Weighted average common shares
Basic common shares 3,232,264 2,915,924
Assuming dilution for unexercised
stock options 3,354,378 2,915,924
=======================
See Notes to Financial Statements
</TABLE>
UNICO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<P>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Preferred Stock
Redeemable Series A Series C Common Stock
Shares Amt Shares Amt Shares Amt Shares Amt
--------------------------------------------------------------
Balance
December 31, 1997 70 $ - - $ - 428,185 $4,282 706,359 $7,064
<P>
Deferred compensation earned
<P>
Stock issued in forgiveness
of debt - TC EQUITIES 600,000 6,000
<P>
Recalled & retired stock (70) (1) (428,185)(4,282)
<P>
Additional stock issued 570,913 5,709
<P>
All stock options & warrants
canceled or expired - -
<P>
Proceeds from pending sale
of subsidiary United
Marketing Solutions, Inc.
<P>
Stock dividend declared
<P>
Net Income
------------------------------------------------------------
Balance
December 31, 1998 - - - - 1,877,272 $18,773
<P>
Sale of subsidiary - United
Marketing Solutions, Inc.
<P>
Stock dividend paid
<P>
Stock options issued for
services - -
<P>
Stock issued for services 133,335 1,333
<P>
Correction number of shares 168,578 1,686
<P>
Stock issued for Silver Valley
Energy, Inc. 250,000 2,500
<P>
Stock issued for cash 3,500,000 35,000
<P>
Net (loss)
------------------------------------------------------------
Balance
December 31, 1999 5,929,185 $ 59,292
===============================================================
<P>
UNICO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
CONTINUE
<P>
Additional Stock
Paid-In Dividend Deferred Accumulated Net Equity
Capital Declared Compensation (Deficit)
(Deficiency)
-------------------------------------------------------------
Balance
December 31, 1997 $ 6,815,135 $ - $ (4,557) $ (8,226,004)$(1,404,079)
<P>
Deferred compensation earned 4,557 4,557
<P>
Stock issued in forgiveness
of debt - TC EQUITIES 174,000
<P>
Recalled & retired stock 4,283 -
<P>
Additional stock issued (5,709) -
<P>
All stock options & warrants
canceled or expired
<P>
Proceeds from pending sale
of subsidiary United
Marketing Solutions, Inc. 1,106,399 1,106,399
<P>
Stock dividend declared (172,665) 172,665
<P>
Net Income 1,457,817 1,457,817
------------------------------------------------------------
Balance
December 31, 1998 7,921,443 172,665 - $ (6,768,187)$1,344,694
<P>
Sale of subsidiary -
United Marketing
Solutions, Inc. (1,106,399) (1,106,399)
<P>
Stock dividend paid (172,665)
<P>
Stock options issued for
services 8,000 8,000
<P>
Stock issued for services 3,167 4,500
<P>
Correction number of shares (1,686) -
Stock issued for Silver
Valley Energy, Inc. 2,500 5,000
<P>
Stock issued for cash 7,500 42,500
<P>
Net (loss)
-------------------------------------------------------------
Balance
December 31, 1999 $(6,979,758)$(85,941)
===============================================================
<P>
UNICO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
</TABLE>
<TABLE>
<S> <C> <C>
1999 1998
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (211,571) $1,457,817
Adjustments to reconcile net income
to net cash provided (used) by
Operating activities
Depreciation and amortization - 398,917
Provision for bad debts - (55,362)
Deferred compensation - 4,557
Stock options issued for services
rendered 8,000 -
Changes in assets and liabilities
Inventory - 1,639
Accounts, notes, and sales tax receivable - (112)
Receivable from shareholders (35,000) -
Receivable from NexGen 65,630 (834,665)
Prepaid expenses - (19,239)
Other assets - 10,197
Accounts payable 43,381 (775,215)
Accrued liabilities & sales liability - (315,227)
Deferred rent - 53,502
Deferred revenue - (17,509)
------------------------
Net cash (used) by operating activities (2,590) (90,700)
------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property - (162,863)
------------------------
Net cash (used)
by investing activities -
------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from notes payable - 199,988
Payment of notes payable - (1,257,280)
Acquisition of subsidiary (SVE) (35,000) -
Proceeds to receive (reduce) from
stock sale of subsidiary (USMI) (105,404) 1,106,399
Proceeds sale common stock of the Company 42,500 180,000
------------------------
Net cash provided by financing activities (97,904) 229,107
------------------------
(DECREASE) IN CASH AND CASH EQUIVALENTS (100,494) (24,456)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 105,404 129,860
------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR 4,910 105,404
=======================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest - 56,974
NON CASH ITEMS:
Stock issued to acquire Subsidiary - Silver
Valley Energy, Inc. 5,000 -
Stock issued for services rendered 4,500 -
Stock options issued for services rendered 8,000 -
=======================
</TABLE>
See Notes to Financial Statements
<P>
UNICO, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
<P>
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-------------------------------------------------
<P>
(A)Nature of operation
----------------------
<P>
In May 1998, the Company entered into an agreement to
sell the common stock of its wholly owned subsidiary,
United Marketing Solutions, Inc. (UMSI) to Next
Generation Media (NexGen). Closing on this sale occurred
on April 1, 1999, leaving Unico as a publicly traded
shell company.
<P>
Under new management, the Company is an "Internet
Incubator," and is actively seeking private financing for
that purpose.
<P>
(B)Basis of consolidation
---------------------------
<P>
The consolidated financial statements include the
accounts of the Company and its wholly owned
subsidiaries, UMSI until sold, and Silver Valley Energy,
Inc. (SVE) since acquisition. All material inter-company
transactions have been eliminated.
<P>
(C)Acquisition
---------------
<P>
During May 1999, the Company acquired all of the common
stock of SVE for $35,000 and 250,000 shares of common
stock. SVE owns oil, gas, and mineral lease rights on
approximately 1,200 acres of land located in Texas. SVE
is inactive and is not developing these lease rights at
this time.
<P>
(D)Property
------------
<P>
Property is recorded at cost and is depreciated over
its estimated useful life.
<P>
(E)Cash and cash equivalents
----------------------------
<P>
The statement of cash flows is presented on a basis
of cash available.
<P>
(F)Income taxes
---------------
<P>
The Company has adopted the provisions of statements of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which incorporates the use of the asset
and liability approach of accounting for income taxes.
The asset and liability approach
<P>
Income taxes - (continued)
-------------------------
<P>
requires the recognition of deferred tax assets and
liability for the expected future consequences of
temporary differences between the financial reporting
basis and tax basis of assets and liabilities.
<P>
During 1999, the Company underwent an ownership change as
defined in Section 382 of the Internal Revenue Code.
Consequently, management believes the net operating loss
carry forwards are lost. Therefore, no recognition of
any net operating loss carry forwards or benefits are
reflected in these financial statements.
<P>
(G)Impairment of long-lived assets
----------------------------------
<P>
The company policy is to periodically evaluate the
economic recover ability of all of its long-lived assets.
In accordance with that policy, when the company
determines that an asset has become impaired, it
recognizes the loss on the basis of the discounted cash
flows from that asset.
<P>
(H)Earnings (loss) per share
----------------------------
<P>
Basic earnings (loss) per share are computed by the net
income for the year by the weighted average number of
shares outstanding during the year. Diluted earnings
(loss) per share is computed by taking into consideration
unexercised stock options as if the stock were issued.
<P>
NOTE 2 - RELATED PARTY TRANSACTIONS AND THE LOSS ON SALE
OF SUBSIDIARY
--------------------------------------------------------
<P>
During 1998 and 1999, throughout the pendency of the
NexGen acquisition of UMSI, monies were advanced by
NexGen to the Company. All monies received or accrued
during 1998 are reported in equity as paid in capital.
Anticipated monies yet to receive as of December 31, 1998
are reported in current assets as a receivable from
NexGen. In 1999, after the sale was finalized in 1999
and all monies were accounted for the loss on the sale of
UMSI was recognized. The $1,106,399 as paid in capital
in 1998 was offset by the same amount in 1999. The
difference of that and what was ultimately accounted for
is reported in 1999 in the statement of operations as a
$6,166 loss on the sale of the subsidiary.
<P>
NOTE 2 - RELATED PARTY TRANSACTIONS AND THE LOSS ON SALE
OF SUBSIDIARY - (CONTINUED)
--------------------------------------------------------
<P>
During 1998, the Company's President and certain other
members of the Board of Directors resigned and became
stockholders of NexGen, having exchanged their interests
in the Company for NexGen's common stock. New management
was appointed by the new majority stockholders.
<P>
NOTE 3 - COMMON STOCK
----------------------
<P>
On May 28, 1999, the Company acquired 100% of SVE
for 1,080,000 restricted shares of
common stock. Subsequently, the purchase price was
renegotiated providing for the return of the 1,080,000
shares, giving SVE a cash payment of $35,000 and 250,000
shares of Common stock. The financial statements
recognize only the agreement only as amended and sets
aside the original agreement.
<P>
The Company also made a 1 for 3 reverse stock split
immediately before acquiring SVE. This 1 for 3 reverse
stock split has been recognized in these financial
statements retroactive to December 31, 1997.
<P>
The stock transfer agent was changed in May of 1999. In
the transition to the new stock transfer agent as well as
subsequent to that, an additional 168,587 shares of
issued and outstanding stock came to light. Management
has not been able to explain who owns these shares or for
what purpose they were issued. Management has chosen to
report these 168,587 shares as a reduction in paid in
capital and an increase in common stock at par value.
<P>
NOTE 4 - DISCONTINUED OPERATIONS OF SUBSIDIARY
-----------------------------------------------
<P>
During 1998, the Company entered into an agreement to
sell its principal operating subsidiary UMSI, formerly
United Coupon Corporation. Accordingly, the results of
operations for 1999 are presented showing the results of
continuing operations and discontinued operations net of
taxes. The Company fully disposed of UMSI on April 1,
1999. After this transaction the Company had no assets
or liabilities.
<P>
NOTE 5 - ACQUISITION OF PRECISION COMMUNICATION
CONSULTANTS LLC
--------------------------------------------------
<P>
On December 28, 1999, the Company entered into a share
exchange agreement with Precision Communication
Consultants LLC. (Communication). In that agreement the
Company was to acquire all interest in Communication in
exchange for 416,470 shares of common stock of the
Company and warrants to acquire an additional 500,000
shares of stock of the Company at varying prices. The
Company believes that it was induced to enter into the
transaction based on several financial misrepresentations
by Communication. The Company plans to cancel all of
the common stock issued in the transaction and will not
honor the warrants when they are presented for exercise.
Management does not know of any threatened litigation at
present.
<P>
NOTE 6 - STOCK OPTIONS
-----------------------
<P>
Effective September 30, 1999, the Company adopted an
omnibus stock option plan. The plan provides for
2,000,000 shares as either Incentive Non-employee Stock
Options or Employee Stock Options. As of December 31,
1999, 359,450 options have been granted to Directors and
key sub contractors. The exercise price is $.01 per
share. The difference of the stock option exercise price
and the market value of the common stock at the time the
options were granted has been recognized in the financial
statements.
<P>
NOTE 7 - GOING CONCERN
-----------------------
<P>
On April 1, 1999, the Company disposed of all its assets
and liabilities. This was done in connection with the
sale of its only subsidiary at the time, United Marketing
Solutions, Inc. (UMSI). This sale finalized April 1,
1999. The Company was then a publicly held shell
corporation. Anticipating this, new management continues
searching for other business acquisitions.
<P>
The first acquisition, Silver Valley Energy, Inc. (SVE),
took effect May 1999 - refer to Note 3. The second
acquisition, Precision Communication Consultants LLC
(Communications), took place effective December 1999.
This second acquisition most likely will be undone -
refer to Note 5. Since December 1999, the Company
completed its third acquisition, BidInvite.com, Inc. -
refer to Note 8.
<P>
NOTE 7 - GOING CONCERN - (CONTINUED)
-------------------------------------
<P>
Despite all of the acquisitions and related efforts, the
only funds raised to date are those of the majority
shareholder in the form of loans and capital
contributions to the Company. Unless additional funds
are obtained from other sources, or the Company makes
positive cash flow from its operations, the Company could
jeopardize its ability to continue as a going concern.
Presently, the majority shareholder plans to continue
funding the operations of the Company, anticipating other
sources will come about in the near future.
<P>
NOTE 8 - SUBSEQUENT EVENT
-------------------------
<P>
On March 1, 2000, the Company acquired 95% of the
outstanding stock of BidInvite.com, Inc. for 100,000
shares of its common stock. Management intends to
account for the transaction as a "pooling of interests."
<P>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,910
<SECURITIES> 0
<RECEIVABLES> 35,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,910
<PP&E> 40,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 79,910
<CURRENT-LIABILITIES> 165,851
<BONDS> 0
0
0
<COMMON> 59,292
<OTHER-SE> <145,233>
<TOTAL-LIABILITY-AND-EQUITY> 79,910
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 201,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> <6,166>
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> <211,571>
<INCOME-TAX> 0
<INCOME-CONTINUING> <207,640>
<DISCONTINUED> <3,931>
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> <211,571>
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
