UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                 FORM 10-K

             Annual Report Pursuant to Section 13 or 15(d) of
                    the Securities Exchange Act of 1934


                For the fiscal year ended February 28, 1998

                      Commission file number 0-14973

                                UNICO,INC.                     
          (Exact name of Registrant as specified in its charter)

                 New Mexico                       85-0270072    
          (State of Incorporation)           (IRS Employer ID #)

Registrant's address: 1921 Bloomfield Blvd., Farmington, New Mexico   87401

     Registrant's telephone number, including area code:   505-326-2668  

     Securities registered pursuant to Section 12(g) of the Act:

                                        Name of exchange
               Title of class           on which registered

          $0.20 par value common stock        NASDAQ       

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

     Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form
10-K or any amendment to this Form 10-K   X  .

     The aggregate market value of the registrant's $0.20 par value common
stock held by non-affiliates at April 30, 1998, was $728,000.

     On April 30, 1998, there were 1,125,609 shares of Registrant's $0.20
par value common stock outstanding excluding 3,699 shares held by the
Registrant for resale.

     Documents incorporated by reference:  Portions of the Registrant's
annual report to stockholders for the year ended February 28, 1998 are
incorporated by reference to Parts I and II.
(1)
<PAGE>
                                   INDEX
                          TO REPORT ON FORM 10-K
                              FOR UNICO, INC.


Item in Form 10-K                                                    Page

                                  PART I

Item 1.  Business                                                       3 

Item 2.  Properties                                                     3 

Item 3.  Legal Proceedings                                              3 

Item 4.  Submission of Matters to a Vote of Security Holders            4

                                  PART II

Item 5.  Market for Registrant's Common Stock and Related Stockholder
         Matters                                                       4

Item 6.  Selected Financial Data                                       4

Item 7.  Management's Discussion and Analysis of Financial Condition 
      and Results of Operations                                        4

Item 8.  Financial Statements and Supplementary Data                   4 

Item 9.  Changes in and Disagreements with Accountants on Accounting and 
      Financial Disclosure                                             5

                                 PART III

Item 10. Directors and Executive Officers of the Registrant            5 

Item 11. Executive Compensation                                        6 

Item 12. Security Ownership of Certain Beneficial Owners and Management  7


Item 13. Certain Relationships and Related Transactions                9

                                  PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on 
         Form 8-k                                                      9 
(2)
<PAGE>
                                  PART I
Item 1. Business:

      Information relative to Registrant's business on pages 5 and 6 of
the Registrant's Annual Report to Stockholders for the year ended February
28, 1998 and information with respect to industry segments on pages 23
through 24 of the Annual Report are incorporated herein by reference.

Item 2. Properties.

      Information relative to properties owned by the Registrant on page 7
of the Registrant's Annual Report to Stockholders for the year ended
February 28, 1998 is incorporated herein by reference. 

Item 3. Legal Proceedings

      Other than collection actions or other actions arising in the
ordinary course of the Registrant's business, no legal proceedings to which
the Registrant is a party or of which any of its property is subject are
pending or known to be contemplated, and the Registrant knows of no legal
proceedings pending or threatened, or judgment against any director or
officer of the Registrant in their capacity as such, except the following:

      (a)   Information relative to pending litigation is discussed in Note
            Q on Page 32 of the Registrants Annual Report to Stockholders
            for the year ended February 28, 1998 incorporated herein by
            reference.

Item 4. Submission of Matters to a Vote of Security Holders.

      During the fourth quarter of the fiscal year covered by this report
the Registrant held its annual meeting of stockholders.  Matters presented
for a vote of the stockholders and the results of such vote were reported
on the Registrants Form 10-Q for the quarter ended November 30, 1997 filed
with the Commission on January 15, 1998.

                                  PART II
   
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.

      Information relative to Registrant's common stock on the inside
front cover of the Registrant's Annual Report to Stockholders for the year
ended February 28, 1998 is incorporated herein by reference. 


Item 6. Selected Financial Data

      Information relative to selected financial data on page 4 of the
Registrant's Annual Report to Stockholders for the year ended February 28,
1998 is incorporated herein by reference.
(3)
<PAGE>
Item 7. Management's  Discussion  and  Analysis  of  Financial  Condition 
     and  Results  of  Operations.

     Information relative to management's discussion and analysis of
financial condition and results of operations on pages 7 through 10 of the
Registrant's Annual Report to Stockholders for the year ended February 28,
1998 is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

     The consolidated financial statements on pages 12 through 32 of the
Registrant's Annual Report to Stockholders for the year ended February 28,
1998 are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting  and
        Financial Disclosure.

     There has not been any disagreement between the Registrant and its
Accountants of a nature which would require disclosure in compliance with
Item 304 of Regulation S-K.


                                 PART III

Item 10. Directors and Executive Officers  of Registrant.

     The directors and executive officers of the Registrant, their ages and
positions held in the Registrant are as follows:

        Name                   Age              Position         Held Since

William N. Hagler               66      President and Director   1979
603 Merino Kraal
Farmington, New Mexico 87401

Rick L. Hurt                    45      Controller, Secretary,   1985
5701 Tee Dr.                            Treasurer
Farmington, New Mexico 87401

William Hickey                  66      Director                 1998
100 Sunrise Way, Suite 430
Palm Springs, California 92262

Joe G. Watson                   68      Director                 1998
2713 E. 20th
Farmington, NM 87401

     Background information concerning the Officers and Directors is as
follows:
(4)
<PAGE>
     William N. Hagler received a B.S. degree in Industrial Engineering
from North Carolina State University in 1955.  From 1955 to 1968, he was
employed by Esso Standard Oil, Cities Service Oil Co. and Riffe Petroleum
Co. in various phases of the petroleum refining and marketing industry.  In
July of 1968, he became assistant to the president and later vice president
of Plateau, Inc., of Farmington, New Mexico, a regional refining and
marketing firm.  His responsibilities have included refinery management,
marketing, corporate development, economics and planning, crude oil supply,
negotiation and administration of processing arrangements, labor relations,
coordination of refinery acquisition and expansion programs, and relations
with state and federal regulatory bodies.  In 1979 Mr. Hagler organized the
Registrant and has served as its president and as a director at all times
since organization.  In April 1993, William N. Hagler accepted an
appointment as a director of Saba Petroleum Company which is registered
under section 12 of the Exchange Act.

     Rick L. Hurt received a BBA degree in Accounting from the University
of New Mexico in 1979.  From 1979 to 1982, he was employed as a staff
accountant and later as a senior accountant by the accounting firm of Fox &
Company in its Albuquerque, New Mexico, offices.  From 1982 until March of
1985 he was employed as chief accountant for the law firm of Davis and
Davis in Austin, Texas.  Mr. Hurt is certified as a public accountant in
the states of New Mexico and Texas.  Mr. Hurt joined the Registrant as
Assistant Controller in March of 1985, and became its Controller,
Secretary, Treasurer, and a Director on May 20, 1985. Mr. Hurt resigned as
a Director in 1998 to allow the appointment of Joe G. Watson to serve as an
outside director for the Registrant.


     William Hickey  a graduate of Cornell Law School, was general counsel,
corporate secretary and a director of Saba Petroleum Company (SAB; AMEX)
until 1997.  Retired from active legal practice, he is now a legal
consultant to Saba in complex business transactions.  Mr. Hickey is also
retained by Saba's parent company, Capco Resources, Ltd. (CRS, ASE), to
provide counsel in matters of corporate governance and regulatory
compliance.  Upon graduation from law school, Mr. Hickey was an antitrust
litigation attorney and corporate counsel for the General Electric Company. 
Later, he served as senior vice-president, general counsel and a director
of Consolidated Freightways, Inc. (CNF; NYSE); and, vice-president and
general counsel of Litton Industries, Inc. (Business Equipment Group)
(LIT;NYSE). Prior to joining Saba, Mr. Hickey was a professor of
corporation and securities law at California Pacific College of law.  A
member of the American Bar Association corporate law section, and the
American Society of Corporate Counsel, Mr. Hickey has been active in the
development of rules of corporate governance by these organizations.  An
officer in the U.S. Air Force Reserve for 25 years, Mr. Hickey is retired
with the permanent rank of captain.  Mr. Hickey is active in community
charitable work providing volunteer services to the Palm Springs Stroke
Center and the Angel View Crippled Children's Center.


     Joe G. Watson received a Bachelor of Business Administration from the
University of New Mexico in 1951. Mr. Watson officially retired in 1996 but
currently serves as a director and officer of Four Corners Insurance, Inc.
in Farmington, New Mexico, a business he formed in 1961. Mr. Watson served
as a director for Four Corners Savings and Loan from 1961 until 1986,
during which time he served as it's managing officer from 1967 until 1970
and then its president until the company was sold in 1986. Mr. Watson has
served on various governing boards including 6 years on the board of the
New Mexico Savings and Loan League, the last year as its president, 4 years
on the board of the Federal Home Loan Bank in Dallas, the last year as its
vice-chairman, and 15 years on the New Mexico State Board of Educational
Finance, the last 5 years as its vice-chairman. Mr. Watson is active in
various charitable organizations in the local community and is a member of
the New Mexico Amigos, a statewide organization recognized by the Governor
and the Legislature as the Official Goodwill Ambassadors for the State of
New Mexico.

     Mr. Hagler and Mr. Hurt devote substantially all of their time to the
affairs of the Registrant and will continue to do so in the future.

     No family relationship exists between any officer or director of the
Registrant and no officer or director has been involved in any proceeding
of the nature described in paragraph (d) of Item 401 of Regulation S-K.

     No officer or director of the registrant has been subject, during the
preceding 5 years, to any of the events set forth in paragraph (f) of Item
401 of Regulation S-K.
(5)
<PAGE>
     Since the Common Stock of the Registrant is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the"Exchange Act"),
the executive officers and directors of the Registrant and beneficial
owners of greater than 10% of the Registrant's Common Stock ("10%
beneficial owners") are required to file beneficial ownership reports,
pursuant to Section 16(a) of the Exchange Act, with both the Securities and
Exchange Commission ("SEC") and the Registrant, disclosing changes in
beneficial ownership of the Common Stock. SEC rules, pursuant to Section
16, require disclosure by the Registrant of the failure of an executive
officer, director or 10% beneficial owner of the Registrant to file
beneficial ownership reports on a timely basis. Based on the Registrants
review of such ownership reports, no executive officer or director of the
Registrant failed to file such an ownership report on a timely basis during
the 1998 fiscal year.

Item 11. Executive Compensation.

     The following table sets forth certain information concerning the
remuneration paid by the Registrant for the three most recent fiscal years
ending February 28, 1998.  

                     Annual Compensation                        
   Name                                                   Other 
    and                                                  Annual 
 Principal                                               Compen-
  Position               Year        Salary    Bonus     sation 
                                                           (1)  

William N. Hagler        1998      $100,958  $     0      $    0
CEO and Director         1997      $ 98,696  $     0      $    0
                         1996      $ 94,783  $     0      $1,441

   (1)    Includes discretionary employer 401(k) contributions totalling
          $2,222 for all officers including $1,441 for Mr. Hagler during
          1996.  There were no 401(k) contributions made during 1997, or
          1998.

   The Registrant's employees, including the Registrant's officers, may
also receive such bonuses and salary increases as the Board of Directors,
in its sole discretion, may award.

   The Registrant provides health insurance benefits to the officers and
directors and all other full time employees.

   No Registrant Director is compensated for attending meetings of the
Board of Directors.

   Effective for the year ended February 28, 1989, the Registrant adopted
an Employee Stock Ownership Plan ("ESOP"), for the benefit of all of its
employees, including those of wholly owned subsidiaries.  Contributions to
the plan were made at the sole discretion of the Board of Directors and
were limited to the maximum amount deductible for income tax purposes. 
Eligible employees included all full time employees with a minimum of six
months of service as of any anniversary date of the plan with vesting
taking place on a six year graded basis applied retroactive as of the
effective date of the plan.  During 1998, 1997 and 1996, the Registrant
made no contributions to the ESOP.  A copy of the plan was filed with the
Commission as an exhibit to the Registrant's Form 10-K filed for the fiscal
year ended February 28, 1989.

   During 1998, the ESOP was determined to be no longer cost effective and
was terminated effective February 5, 1998.  Amounts accrued to the benefit
of plan participants, consisting solely of common stock of the Registrant,
were distributed to the plan participants in accordance with the plan. 
Shares previously held by the ESOP for the benefit of officers and
directors totaled 17,719 shares including 11,315 shares held for the
benefit of William N. Hagler.  All such shares were distributed to
individual retirement accounts as qualified rollovers from the ESOP upon
termination of the plan.  

     Effective for the year ended February 28, 1994, the Registrant adopted
a 401(k) Plan for the benefit of all of its full time employees, including
those of wholly owned subsidiaries.  Employees meeting certain minimal
eligibility requirements were entitled to make voluntary contributions to
the Plan subject to limitations set by Internal Revenue Regulations.  The
Registrant, at it's sole discretion, could make both matching and
discretionary contributions for the benefit of participants of the Plan
limited by the maximum amounts deductible for income tax purposes. 
Employees were automatically 100% vested in voluntary contributions and
vested in Registrant contributions on a six year graded basis applied
retroactive as of the effective date of the Plan.  During 1998 and 1997,
the Registrant made no contributions to the Plan. During 1996, the
Registrant contributed $11,754 to the Plan which was allocated based on
elective deferrals made by employees during the year not exceeding 1.52% of
gross earnings.  A copy of the 401(k) Plan was filed with the Commission as
an exhibit to its Form 10-K filed for the year ended February 28, 1995.
(6)
<PAGE>
     During fiscal 1998, continued maintenance of the 401(k) plan was
determined not to be cost effective and the plan was terminated with all
plan assets distributed to participants in accordance with the plan.


Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) Security ownership of certain owners.

     On February 28, 1998, the only persons known to the Registrant to own
5% or more of the issued and outstanding Registrant common stock, its only
voting security, are as follows:

                   Name and address         Amount and nature
   Title of               of                        of             Percent
     Class        Beneficial owner         Beneficial ownership    of class


$0.20 par value    William N. Hagler        560,408 shares of        49.62%
common stock       603 Merino Kraal         record and beneficially
                   Farmington, NM 87401                         

$0.20 par value    William & Helen Braddock 149,400 shares of        13.23%
common stock       P.O. Box 403             record and beneficially
                   Dorado, PR  00646
<PAGE>
(b) Security ownership of management.

     On February 28, 1998, the ownership by the Registrant's management of
its common stock, its only voting security, was as follows:

  Name and address                  Amount and nature
    Title of                              of                    of Percent
     Class                         Beneficial owner    Beneficial
ownership     of class  

$0.20 par value    William N. Hagler         560,408 shares of       49.62%
common stock       603 Merino Kraal          record and beneficially
                   Farmington, NM 87401 

$0.20 par value    all officers and          567,312 shares of       50.40%
common stock       directors (2 People)      record and beneficially


     No shares of the Registrant's Series A Preferred Stock are presently
issued and outstanding.


(c) Changes in control.

     There are no arrangements known to the Registrant, including any
pledge by any person of securities of the Registrant, the operation of
which may at a subsequent date result in a change of control of the
Registrant, except as discussed in Note Q on Page 32 of the Registrant's
Annual Report to Stockholders for the year ended February 28, 1998
incorporated herein by reference.  

Item 13. Certain Relationships and Related Transactions.

     Since the beginning of the Registrant's last fiscal year, there were
no transactions, or series of similar transactions, or currently proposed
transactions, to which the Registrant or its subsidiaries was or is to be a
party, in which the amount involved exceeds $60,000, and in which any
director or executive officer, nominee for election as a director, security
holder known by Registrant to own 5% or more of any class of the
Registrant's voting securities or any member of the immediate family of any
of the foregoing, had or will have a direct or indirect material interest
except as follows:

     (a)      On November 1, 1996 the Registrants wholly owned subsidiary
              IRC, issued an 8% $325,000 revolving line of credit to Red
              Hills Manufacturing, Inc. ("RHMCO"), a New Mexico
              Corporation, which is collectively controlled by William N.
              Hagler and Rick L. Hurt who are both officers and directors
              of the Registrant.  The line of credit was issued to RHMCO
              for the purpose of purchasing certain equipment and for
              start-up working capital requirements of RHMCO.  During the
              year ended February 28, 1998, the maximum balance under the
              credit line was $433,000 and the balance due to IRC  as of
              February 28, 1998 is $102,000.  The note is secured by cash,
              accounts receivable, inventories and equipment owned by
              RHMCO.  During the year ended February 28, 1998 neither Mr.
              Hagler or Mr. Hurt received any payments in the form of
              compensation or dividends from RHMCO. 

     (b)      In February 1998, William N. Hagler, President and a
              Director of the Registrant, offered to convert $178,000 face
              value 10.5% convertible subordinated debentures into common
              stock of the Registrant at a conversion price of $1.40 per
              share.  In addition, Mr. Hagler requested that accrued
              interest on the debentures be paid to him by the issuance of
              common stock priced at $1.40 per share and that warrants to
              purchase 11,125 shares of common stock, which were attached
              to the debentures, be amended to reflect an exercise price
              of $1.40 per share and the expiration date extended to
              December 31, 1999.  The Registrant accepted Mr. Hagler's
              offer and on February 28, 1998 issued 142,718 shares of
              common stock to Mr. Hagler in exchange for cancellation of
              the $178,000 face value debentures and accrued interest of
              $21,805.
(7)
<PAGE>

                                  PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)  Financial Statements and Schedules:

        The financial statements and schedules listed in the accompanying
     Index to Financial Statements and Schedules are filed as part of this
     report.

        All other schedules for which provision is made in the applicable
     accounting regulations of the Securities and Exchange Commission are
     not required under the related instructions, are inapplicable, or have
     been provided elsewhere in this report, and therefore have been
     omitted.

(b)  No reports on Form 8-K were filed by the Registrant during the fiscal
     year ended February 28, 1998 except as follows: 

     (a)      On May 19, 1997, the Registrant filed a Form 8-K reporting
              the mutual termination of a merger agreement made between
              the Registrant and Chatfield Dean & Co.

(c)    (3) Exhibits required by Rule 601 of Regulation S-K

   3.  Articles of Incorporation and bylaws are incorporated by reference
       to the Registrant's registration statement on Form 10 filed
       September 9, 1986 and amendments thereto filed on July 29, 1994 on
       Form 8-K.

   4.  Instruments defining the rights of security holders including
       indentures are incorporated by reference to the Registrant's
       registration statement on Form 10 filed September 9, 1986.

   10. 401(k) Profit Sharing Plan adopted effective March 1, 1993 is
       incorporated by reference to the Registrants Form 10-K filed for
       the year ended February 28, 1995.  Other material contracts are
       incorporated by reference to the Registrant's Form 8-K filed on
       June 13, 1990. 

   11. Statement regarding computation of per share earnings.

   13. The Annual Report to Stockholders of the Registrant for the fiscal
       year ended February 28, 1998 (except for pages and information
       thereof expressly incorporated by reference in this report is
       provided solely for the information of the Securities and Exchange
       Commission and is not deemed "filed" as part of this report).

   21. Subsidiaries of the Registrant.
(8)
<PAGE>
   23. (a) Report of Atkinson & Co., Ltd., dated May 14, 1998, on the
       consolidated financial statements of Registrant for the three years
       ended February 28, 1998.

   27. Financial Data Schedule pursuant to Item 601(c) of Regulation S-K
       for the year ended February 28, 1998.

   All other exhibits required by Rule 601 are not applicable to this
   Registrant or this report.

   Incorporated by reference are the following documents:

   a.  Quarterly Reports on Form 10-Q for the quarters ended May 31,
       August 31, and November 30, 1997.
(9)
<PAGE>

                                SIGNATURES

   Pursuant to the requirements of Section 13 or 15d 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:

                        UNICO, INC
                        June 15, 1998


                        By William N. Hagler              
                           William N. Hagler, President


   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:




     By:   William N. Hagler                  Date: June 15, 1998
        William N. Hagler, President,
        Director and Chief Executive
        Officer




     By:   Rick L. Hurt                       Date: June 15, 1998
        Rick L. Hurt, Controller,
        Secretary, Treasurer, 
        and Chief Financial Officer

     By:   William Hickey                     Date: June 15, 1998
        William Hickey, Director 

     By:   Joe G. Watson                      Date: June 15, 1998
        Joe G. Watson, Director 
(10)
<PAGE>

                                UNICO, INC.

                        ANNUAL REPORT ON FORM 10-K

                            ITEM 8, ITEM 14(a)

                INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


The following consolidated financial statements of Unico, Inc. and
subsidiaries are contained in the Registrant's Annual Report to
Stockholders included in Exhibit 13 of the report. Page numbers listed
herein correspond to the page number in the annual report:  

                                                            Page No.
                                                           in Annual
                                                         Report ("AR") 

     Consolidated Balance Sheets - February 28, 1998, 
     and February 28, 1997.                                    AR 12

     Consolidated Statements of Operations - Years ended 
     February 28, 1998, February 28, 1997, and 
     February 29, 1996.                                        AR 14

     Consolidated Statements of Cash Flows - Years ended 
     February 28, 1998, February 28, 1997, and 
     February 29, 1996.                                        AR 15

     Consolidated Statements of Changes in Stockholders' 
     Equity - Years ended February 28, 1998, 
     February 28, 1997, and February 29, 1996.                 AR 16

     Notes to Consolidated Financial Statements - 
     February 28, 1998                                         AR 17
(11)
<PAGE>
<TABLE>
<CAPTION>

                                                       EXHIBIT 11

                              STATEMENT REGARDING COMPUTATION OF EARNINGS (LOSS) PER SHARE
                                                           OF
                                                       UNICO, INC.


                                                                  Year ended February           
                                                           1998          1997          1996   

<S>                                                     <C>           <C>           <C>
Basic Earnings (Loss) Per Common Share:

    Weighted average number of shares outstanding         986,413      986,590       986,590 

    Basic earnings (loss) per share
      from continuing operations                         $   (0.19)    $    (0.11)  $   (0.29)

    Basic earnings (loss) per share
      from discontinued operations                             0.22         (0.63)       0.84

    Basic earnings (loss) per share                      $    0.03     $    (0.74)  $    0.55


Fully Diluted Earnings (Loss) Per Common Share:

    Weighted average number of shares outstanding         967,519       996,583       997,149

    Fully diluted earnings (loss) per share
      from continuing operations                         $   (0.20)    $  (0.10)    $   (0.28)

    Fully diluted earnings (loss) per share
      from discontinued operations                              0.23      (0.62)          0.83 

    Fully diluted earnings (loss) per share              $      0.03   $  (0.72)    $      .55 

<FN>
    For fully diluted earnings per share presented for fiscal 1996 and
1997, the calculation assumes the exercise of subordinated debentures into
stock there-by increasing net income by the related interest savings net of
income taxes.  The number of shares assumed to be converted was 22,250 for
the years ended February 28, 1997 and February 29, 1996.  The subject
debentures were converted into common stock of the Registrant as of
February 28, 1998 and are therefore included in the weighted number of
shares outstanding for both basic and fully diluted earnings per share.  In
addition, 11,125 warrants to purchase common stock of the company were
outstanding as of the end of each of the periods presented and are included
in the calculation of the weighted average number of shares outstanding
using the treasury stock method.  Fully diluted earnings per share is not
reported in the audited financial statements because the impact of the
assumed debenture conversion and the assumed exercise of warrants are both
antidilutive or the reduction in fully diluted earnings per share is
insignificant.
</TABLE>
(12)
<PAGE>
                                EXHIBIT 13

                       UNICO, INC. AND SUBSIDIARIES

                       ANNUAL REPORT TO STOCKHOLDERS

                   For the Year Ended February 28, 1998
(13)
<PAGE>


Table of Contents









President's Letter to Stockholders . . . . . . . . . . . Page  2 


Selected Financial Data  . . . . . . . . . . . . . . . . Page  4 

Description of Business  . . . . . . . . . . . . . . . . Page  5 


Management's Discussion and Analysis of
Results of Operations and Financial Condition  . . . . . Page  7 


Report of Independent Auditors . . . . . . . . . . . .   Page 11 


Financial Statements . . . . . . . . . . . . . . . . . . Page 12 


Corporate Information  . . . . . . . . . . .  Inside Front Cover 


(1)
<PAGE>
President's Letter to Stockholders


(2)
<PAGE>

                                           Very truly yours,

                                           William N. Hagler
(3)
<PAGE>                                                      
<TABLE>
<CAPTION>
Selected Financial Data


RESULTS OF OPERATIONS
                                                                            Year ended February          
                                                     1998           1997           1996           1995           1994   
                                                                    (in thousands except per share data) 
<S>                                                 <C>            <C>            <C>          <C>             <C>
Revenues
   Electrical capacity and energy                   $   -          $   215        $   666      $   1,031       $  1,001 
   Processing and terminalling 
    agreements                                          -              -               60             17             40 
   Natural gas production                               216            245            141            193            257 
   Petroleum product sales                              -              478            468            675          3,218 
   Commissions                                          -              -              116            126            -   
   Rent and other income                                 20             13             15             19            155 
       Total revenues                               $   236        $   951        $ 1,466      $   2,061       $  4,671 

Net income (loss) from continuing operations
  before income taxes                               $  (288)       $  (161)       $  (440)     $    (236)      $   (284)

Net income (loss) from continuing operations        $  (192)       $  (106)       $  (287)     $    (153)      $   (185)

Net income (loss) discontinued operations           $   217        $  (620)           829            859           (193)

Net income (loss)                                   $    25        $  (726)       $   542      $     706       $   (378)

Net income (loss) from continuing operations
  per common share                                  $ (0.19)       $ (0.11)       $ (0.29)     $   (0.16)      $  (0.19)

Net income (loss) from discontinued operations
  per common share                                  $  0.22        $ (0.63)       $  0.84      $    0.88       $  (0.20)

Net income (loss) per common share                  $  0.03        $ (0.74)       $  0.55      $    0.72       $  (0.39)

Cash flow from operations                           $   546        $    13        $   (44)     $     228      $     (13)

Dividends declared per common share                 $   -          $   -         $     -      $      -       $      -   

FINANCIAL POSITION

                                                February 28,   February 28,   February 29,   February 28,   February 28,
                                                    1998           1997           1996           1995           1994    
                                                                              (in thousands)             
Working capital                                     $ 1,294        $   863        $   173       $    470       $    836 

Current ratio                                        14.37:1        4.09:1         1.31:1         1.73:1         5.33:1 

Total assets                                        $ 3,174        $ 3,178        $ 4,422       $  3,838       $  2,690 

Long-term debt, including
   current portion                                  $   -          $   197        $   310       $    396       $    226 

Long-term debt, excluding
   current portion                                  $   -         $      9        $   234       $    122       $    207 

Stockholders' equity                                $ 3,019        $ 2,803        $ 3,528       $  2,986       $  2,268 

Long-term debt-to-equity ratio                         .0:1         .003:1           .07:1         .04:1          .09:1 
</TABLE>
(4)
<PAGE>
Description of Business Activities                


BUSINESS

  The Company was incorporated under the laws of the State of New Mexico
in April, 1979.  Company resources are segmented into three categories of
business; petroleum product refining and processing, electrical energy
production and natural gas production.  Currently, refining and processing
and electrical energy production are performed by the Company's wholly-
owned subsidiary, Intermountain Refining Co., Inc. ("IRC"), while natural
gas production is carried-out by the Company under the name Unico
Resources.  Until August 31, 1997, through its wholly-owned subsidiary,
Intermountain Chemical, Inc. ("IC"), the Company managed and operated a
methanol production facility, owned by others, in Commerce City, Colorado. 
The facility was sold as of September 1, 1997 and is now classified as a
discontinued operation.

Refining

  The Company refines low-cost, heavy crude oil and other low gravity
refined products into diesel fuel, fuel oils, and asphalt that are
generally marketed on a wholesale basis in the intermountain region.  IRC
has experienced a sharp reduction in the availability of crude oil from
it's traditional sources and has operated it's refinery only on a limited
basis during the past five years.  The Company is hopeful that a long term
solution to the supply shortage can be resolved, but thus far has been
unsuccessful in locating raw materials that would allow the economic
operation of the facility.  IRC periodically provides certain asphalt
terminalling services wherein IRC receives fees and reimbursement of
certain operating expenses directly related to the service provided.

Co-Generation

  The co-generation plant is capable of producing up to 3,000 kilowatts of
electrical energy that has been sold to an electric company in the local
area.  When in operation, the plant produces all electricity and a portion
of the steam used in the refining process thereby contributing some savings
in refinery operating costs.  The generators are not presently in operation
but are available for use if needed for operation of the refinery or if an
electrical energy market is developed in the area.

Natural Gas Production

  The Company has an interest in and operates 19 natural gas wells located
in the Hugoton basin in Southwestern Kansas.  Natural gas and helium
produced is sold, under exclusive contract, to K.N. Energy, of Lakewood,
Colorado.

Methanol Production 

  In July, 1988, the Company initiated a project to construct a 250 ton
per day methanol production facility in the Denver, Colorado area.  The
facility converted natural gas into chemical grade methanol which was
marketed to refiners and chemical distributors.  Until September 1, 1997,
the Company, through its subsidiary IC, was the managing general partner of
Sand Creek Chemical Limited Partnership ("SCCLP") which performed all
production and marketing operations  associated with the facility.  IC held
the general partnership interest in IC Partners Limited, ("IC-PL"), the
general partner of SCCLP.  The facility is owned by Fleet Bank, formerly
Shawmut Bank Connecticut, who leases the facility to SCCLP under a fifteen
year operating lease. Construction and start-up testing of the facility was
substantially completed in October 1993 and the facility is currently
operating near design capacity.  The Company provided management,
accounting and personnel services to the facility and had been active in
the completion of construction of the project.  The Company has received
various payments and expense reimbursements associated with its services
and activities on the project.
(5)
<PAGE>
Description of Business Activities, Continued                


In December 1994, the Company, through a newly formed wholly-owned
subsidiary Gas Technologies Group, Inc. ("GTGI"), acquired a limited
partnership interest in IC-PL.  The Company has received allocations of
SCCLP income and losses in accordance with its various interests in IC-PL.

Effective as of September 1, 1997, IC-PL sold all of its interest in SCCLP
to an unrelated third party and then
dissolved.  Both IC and GTGI received cash distributions upon the
dissolution of ICPL. Effective as of February 28, 1998, both IC and GTGI
were liquidated into the Company.  Operations related to the Company's
investment in IC-PL are reflected as discontinued operations in the
Company's financial statements effective for the year ended February 28,
1998.

Competition

  The Company competes in the purchase of raw materials and the sale of
its products with other refiners, as well as many large independent
petroleum marketers, many of whom have been established longer and have
access to greater financial and other resources than the Company.

  The Company competes with other electrical power producers in the Utah
and Arizona general market areas. 
  The Company competes with other producers of natural gas in the
Southwestern Kansas area.  Gas supply is abundant, but gathering and
marketing resources in the area are somewhat limited.  The Company has not
had any problems selling its gas production.

Employees

  As of February 28, 1998, the Company employs 3 people, including
officers of Unico.  All of the employees work in the administrative offices
of the Company in Farmington, New Mexico. All three employees are salaried
and are employed on a full time basis.  On January 1, 1997, 26 full time
employees who were employed by the Company's subsidiary Intermountain
Chemical, Inc. were transferred to Sand Creek Chemical Ltd.  Prior to that
time, Sand Creek reimbursed the Company 100% of the employment costs
incurred by the Company for these employees.  Also effective on January 1,
1997, 3 employees who were employed by the Company's subsidiary
Intermountain Refining were laid off.  All of the full time employees
including those transferred to Sand Creek Chemical Ltd., were eligible to
participate in the Company's Employee Stock Ownership Plan, ("ESOP") and
401(k) Plan.  However, subsequent to the discontinuation of the Company's
investment in IC-PL, both the ESOP and the 401(k) Plan were terminated with
plan assets distributed to participants in accordance with the plans.  None
of the employees are represented by a union and the Company believes its
employee relations to be satisfactory.

Regulations  and  Taxes

  All operations of the Company are regulated by the United States
Environmental Protection Agency and various state environmental and health
departments.  The Company is responsible for the payment of applicable
Federal and State excise taxes on the sale of refined products.  Severance
taxes on natural gas production in Kansas are collected and paid by K.N.
Energy, the purchaser of the gas.

Impact of Year 2000

  The Company has reviewed the potential impact of Year 2000 issues and
believes that the cost to replace and or modify equipment, computer
hardware, and computer software will not be material and that Year 2000
issues will not have a material impact on the Company's ability to operate
into the next century.
(6)
<PAGE>
Description of Business Activities, Continued                
 

PROPERTIES

  All properties used by the Company in the conduct of its business are
owned in fee.  The Company's refinery is located on approximately 21 acres
of fee-owned land in Fredonia, Arizona.  Facilities include: a 4,000 barrel
per day crude and vacuum distillation unit, a 3,000 kilowatt co-generation
plant, boilers, cooling towers, offices, shops, control and electrical
buildings, loading racks, storage tanks and associated ancillary
facilities.  In addition, the plant contains a reforming unit which is not
currently employed in the refining operation.  The co-generation plant was
previously held under a 36 month lease requiring payments of $7,300 per
month.  The lease expired during 1996 and was carried on a month to month
basis thereafter.  In April, 1996, the Company acquired the generators from
the lessor for approximately $27,000.

  The Company owns an interest in and operates 19 producing natural gas
wells located in Southwestern Kansas.  Developed proven reserves are
estimated at 2,942 MMCF gross and 2,198 MMCF net to the Company's interest
as of February 28, 1998.  No reserve estimates have been filed with any
Federal authorities or agencies.

  The Company owns a 7,000 square foot office building in Farmington, New
Mexico.  Approximately 33 percent of the office building is being fully
utilized by the Company for its corporate office, tenants are leasing
another 43 percent, while the rest is currently vacant and offered for
lease to others.  There are no outstanding mortgages on any of the
properties owned by the Company.


Management's Discussion and Analysis of Financial
Condition and Results of Operations 


RESULTS OF OPERATIONS

  Fiscal 1998 compared to fiscal 1997

Revenues decreased to $236,000, down 75% from $951,000 realized in fiscal
1997.  Net income from continuing operations declined to a loss of
$192,000, down 81% from a loss of $106,000 realized in the prior year. 
Cash flow from operations increased to $546,000, up 4,160% from $13,000
last year.  Net income from discontinued operations increased to $217,000,
up 135% from a loss of $619,000 experienced last year.  

The reduction in revenues is attributed substantially to the termination of
crude oil sales in February 1997 and the termination of the electric
capacity stand-by contract in January 1997. The Company previously
maintained a contract to purchase a small amount of crude oil which had
been processed at its refinery. However, as the quantity was insufficient
to economically process at its refinery, the Company sold the crude to
other refiners.  The contract expired in February of 1997 and the Company
was unsuccessful in bidding to renew the contract. The electric capacity
stand-by contract was terminated in January 1997 which resulted in a
decline in revenues of $215,000.  The Company, as yet, has not been
successful in identifying a new market for the sale of electric capacity
and energy and the generators are presently standing idle but are available
for use if needed.  Revenues associated with natural gas sales also
declined by 12% during fiscal 1998 which is entirely related to a decline
in natural gas prices as compared to those received during the prior year.
(7)<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued


  Operating income (loss),from continuing operations by industry segment,
before allocation of general corporate overhead for 1998 compared to 1997
was as follows:
                                                                 Increase  
         Segment                      1998           1997       (Decrease) 

Refining                       $   (35,064)      $ (114,136)    $   79,072 
Electrical generation              (11,937)         127,821       (139,758)
Gas production                      76,389          135,811        (59,422)
Corporate overhead and other      (317,315)        (310,868)        (6,447)
                               $  (287,927)      $ (161,372)   $  (126,555)

The reduction in losses associated with refining activities is attributed
to the refinery facility being placed in a cold shutdown mode in January
1997 which significantly reduced on going maintenance costs.  The Company
continues to seek alternatives that would allow utilization of the
facility.  It is anticipated that a portion of the facilities asphalt
storage tanks will be rented to a third party during the summer of 1998
which will provide approximately $30,000 in revenue with little or no
operating costs.  The Company will provide minimal terminalling services
associated with this activity.  The Company is also presently evaluating a
plan to utilize the refinery in a wax manufacturing venture.  The exact
nature of the relationship to be developed, and the manner in which the
Company might participate, have not yet been determined.  Income associated
with electrical generation declined by $140,000 from last year due to the
termination of the electrical capacity stand-by contract in January 1997. 
The generators are presently in a cold shutdown mode and require little
cost to maintain.  The Company has been unsuccessful in locating an
electrical capacity and energy market for the generators but has been
contacted by parties interested in purchasing the equipment.  However, if
the Company is successful in developing the manufacturing venture
previously mentioned, the generators would be used to provide electrical
power to the refining process.  Operating income associated with natural
gas production declined by 78% during fiscal 1998 due to a 12% decline in
revenues coupled with a 42% increase in operating costs.  Production
quantities were relatively unchanged from the prior year, however,the
Company incurred a substantial increase in well maintenance costs
associated with down hole equipment failures.  The Company believes that
the repairs performed during fiscal 1998 should allow greater production
efficiency in the future.  The increase in costs associated with corporate
overhead cost represents an overall 2% increase in such costs which is
consistent with normal inflation.  The Company, since the disposal of its
methanol manufacturing activities, has been reviewing ongoing overhead
costs with the intention of minimizing such costs.

  Fiscal 1997 compared to fiscal 1996

  Revenues decreased to $951,000 down 35% from $1,466,000 in the prior
year.  Net income from continuing operations improved to a loss of
$106,000, up 63% from a loss of $287,000 during fiscal 1996.  Cash flow
from operations increased to $13,000, up 130% from a use of $44,000 in the
prior year.  Income associated with discontinued operations declined to a
loss of $619,000, down 175% from income of $829,000 during the previous
year.

The decline in revenues relates to a significant decline in electrical
energy sales of $452,000, the termination of the COTTI contract in the
prior year accounting for a decline of $116,000, and the termination of
processing of terminalling agreements in the prior year resulting in a
decline of $60,000.  The decline in electrical energy sales was the result
of a change during fiscal 1997 whereby the electric generators were
provided on a stand-by capacity basis and only operated briefly when
needed.  The decline in revenues was partially offset by a 74% increase in
natural gas sales due to a substantial increase in selling prices offset by
a slight reduction in production compared to the prior year.
(8)
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued


  Operating income (loss), by industry segment, before allocation of
general corporate overhead for 1997 compared to 1996 was as follows:
                                                                 Increase  
         Segment                      1997           1996       (Decrease) 

Refining                       $  (114,136)      $  (95,412)    $  (18,724)
Electrical generation              127,821         (147,733)       275,554 
Gas production                     135,811              483        135,328 
Corporate overhead and other      (310,868)        (197,668)      (113,200)
                               $  (161,372)      $ (440,330)   $   278,958 

The decline in refining income is attributed to  a $5,000 decline in gross
profits from sales of crude oil and earnings associated with terminalling
services, a $20,000 decline in interest earned on the investment of cash
balances, offset by a $6,000 reduction in refinery overhead and
depreciation costs.  The substantial improvement in electrical generation
earnings is attributed to the stand-by mode of operation of the generators
which was put into place effective April 1, 1996.  The stand-by agreement
was discontinued effective January 1, 1997.  During that period, the
generators were only operated briefly resulting in substantial cost savings
and the Company received $19,000 per month for providing the electric
generation capacity.  In addition, the Company purchased the generators
from the lessor in April 1996 which reduced the fixed cost of the
generators substantially.  Earnings associated with the production and sale
of natural gas improved by $135,000  over the prior year due mainly to the
substantial increase in sales prices realized during 1997 compared to 1996. 
The increase in corporate overhead loss is attributed to the termination of
the COTI agreement in December 1995. 

LIQUIDITY AND CAPITAL RESOURCES

  The Company had cash and cash equivalents of $1,237,000 at February 28,
1998 compared to $349,000 at February 28, 1997 representing a $888,000
increase during the current year.  The increase is comprised of a $546,000
increase in cash from operations, an increase of $369,000 from investing
activities, offset by $28,000  used in financing activities.  Significant
sources of cash during fiscal 1998 included $362,000 received from income
tax refunds, $179,000 received from the disposal of the Company's
investment in IC Partners, Ltd., and net collections on notes receivable of
$209,000.  The Company had no significant uses of cash during the year.

  Future capital requirements in the coming year are presently viewed as
minimal as the Company has no debt and management believes that cash flow
from ongoing operations will be adequate to meet cash demands in the near
future.  It is however recognized that it will be necessary to develop
additional sources of cash flow to avoid depletion of working capital.

Significant sources of cash in the coming year consists of estimated cash
flow from natural gas production and sales of approximately $10,000 per
month, approximately $2,500 per month from refinery tank leases, and
approximately $5,000 per month from office space rental and interest
income.  There are presently no anticipated significant uses of cash
projected for the coming year other than funding of ongoing monthly
overhead costs of approximately $18,000 per month.
(9)
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued


INFLATION, DEFLATION AND CHANGING PRICES

  The results of operations and capital expenditures will continue to be
affected by inflation, deflation and changing prices.  Prices of natural
gas and generator fuel could have a materially adverse effect on the
Company's operations.  Management is unable to determine the full impact of
inflation, deflation and changing prices on the results of operations or
working capital.

FINANCIAL ACCOUNTING STANDARDS

  Transfer  and  Servicing  of  Financial  Assets and  Extinguishment  of 
Liabilities: The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 125, "Transfer and Servicing of
Financial Assets and Extinguishment of Liabilities."  This Statement
requires that transferred assets could be recognized only when control is
surrendered, rather than when risks and rewards related to the asset are
passed to another party.  A liability would be extinguished when the
creditor no longer has ultimate responsibility for the liability.  In
December of 1996, the FASB issued SFAS No. 127, "Deferral of the Effective
Date of Certain Provisions of SFAS No. 125."  It defers for one year the
effective date of certain provisions of SFAS 125.  This Statement has not
had and is not anticipated to have a material impact on the Company's
financial condition.

  Earnings per Share: Recently the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share."  It simplifies the standards for computing earnings per share,
superseding the standards previously found in Opinion 15.  It replaces the
presentation of primary earnings per share with a presentation of basic
earnings per share.  It also requires dual presentation of basic and
diluted earnings per share on the face of the income statement for all
entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic earnings per share computation
to the numerator and denominator of the earnings per share computation. 
This Statement was effective for the Company's financial statements issued
as of February 28, 1998 and did not have a material effect on previous
earnings per share presentations.

  Disclosure of information about an Entity's Capital Structure: The
Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 129, "Disclosure of Information about an Entity's
Capital Structure."  This Statement applies to all entities.  Its
requirements are a consolidation of those found in APB Opinions 10 and 15,
and Statement of Financial Accounting Standards No. 47, and it eliminates
the exemption of non public entities from certain disclosure requirements. 
This Statement will affect the financial statements issued by the Company
after December 15, 1997.

  Reporting  Comprehensive  Income: In June 1997, the FASB issued SFAS No.
130, "Reporting Comprehensive Income".  This Statement establishes
standards for reporting and display of comprehensive income on its
components (revenues, expenses, gains and losses).  Comprehensive income is
defined as the change in equity of a business enterprise, during a period,
from transactions and other events and circumstances from nonowner sources. 
The Statement requires that entities classify items of other comprehensive
income by their nature in a financial statement and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in-capital in the equity section of a statement of
financial position.  This Statement is effective for fiscal years beginning
after December 31, 1997.

  Disclosures  About  Segments: Also in June 1997, the FASB issued SFAS
no. 131, "Disclosures About Segments of an Enterprise and Related
Information."  This Statement establishes standards for the way that public
entities report information about operating segments in annual financial
statements and requires that selected information about operating segments
be reported in interim financial reports as well.  It also establishes
standards for related disclosures about products and services, geographic
areas and major customers.  This Statement is effective for fiscal years
beginning after December 31, 1997. 
(10)
<PAGE>
Report of Independent Auditors











Stockholders and Board of Directors
Unico, Inc.

We have audited the accompanying consolidated balance sheets of Unico, Inc.
and subsidiaries as of February 28, 1998 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity, and
cash flows for each of the three years in the period ended February 28,
1998.  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 audits.

We conducted our audits in accordance with generally accepted accounting
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of 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 audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Unico,
Inc. and subsidiaries as of February 28, 1998 and 1997, and the
consolidated results of operations and cash flows for each of the three
years in the period ended February 28, 1998, in conformity with generally
accepted accounting principles.







                                    Atkinson & Co., Ltd. 

Albuquerque, New Mexico
May 14, 1998 (Except Note Q, for which the date is June 11, 1998)


(11)
<PAGE>
<TABLE>
<CAPTION>
UNICO, INC.
Consolidated Balance Sheets



                                                  February 28,      February 28,
                                                      1998              1997    

<S>                                               <C>               <C>
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                      $ 1,236,506       $   349,055 
   Accounts receivable - Note B                        22,059           114,685 
   Accounts and accrued interest receivable
     from related parties - Note H                      2,390             7,899 
   Inventories                                         20,861            20,861 
   Income tax refund receivable                         6,567           340,298 
   Notes receivable from related parties - Note H     102,026           310,200 
     TOTAL CURRENT ASSETS                           1,390,409         1,142,998 

PROPERTY, PLANT AND EQUIPMENT, at cost - Note E
   Land, buildings and improvements                   434,327           434,327 
   Equipment                                          164,930           164,930 
   Crude oil refining equipment                     1,183,333         1,183,333 
   Co-generation facilities - Note D                  290,298           290,298 
   Oil and gas properties, (successful efforts 
     method) - Notes L and M                          894,400           894,400 
                                                    2,967,288         2,967,288 
   Less accumulated depletion and depreciation     (1,960,679)       (1,828,936)
                                                    1,006,609         1,138,352 

OTHER ASSETS
   Notes receivable - Note B                            8,383             9,318 
   Investment in partnership - Note N                     -             134,663 
   Investment in Chatfield Dean - Note O              600,500           600,000 
   Other assets and deferred charges, 
     net - Note C                                     167,866           152,359 
                                                      776,749           896,340 

                                                                                
                                                  $ 3,173,767       $ 3,177,690 
(12)
<PAGE>

Consolidated Balance Sheets, Continued



                                                  February 28,      February 28,
                                                      1998              1997    


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                               $    62,553        $   87,033 
   Taxes other than income taxes                        9,156             2,566 
   Other accrued expenses                                 -               3,115 
   Income taxes payable - Note G                       25,024               -   
   Current portion of convertible subordinated 
     debentures payable to related parties 
     - Notes F and H                                      -             178,000 
   Current portion of long-term debt - Note E             -               8,892 
      TOTAL CURRENT LIABILITIES                        96,733           279,606 

LONG-TERM DEBT, net of current portion - Note E           -               9,727 


DEFERRED TAXES PAYABLE - Note G                        58,250            85,800 

COMMITMENTS AND CONTINGENCIES - Note I                    -                 -   

STOCKHOLDERS' EQUITY
   Preferred stock, $0.01 par value,
     authorized 8,000,000 shares, none
     outstanding
   Common stock, $0.20 par value,
     authorized 2,500,000 shares,
     issued and outstanding 1,129,308
     shares in 1998 and 986,590 in 1997 
     - Notes A and F                                  225,862           197,318 
   Additional paid in capital - Notes A and F       2,213,837         2,042,576 
   Less: Treasury stock 3,699 shares in 1998           (9,016)              -   
   Retained earnings                                  588,101           562,663 
                                                    3,018,784         2,802,557 

                                                                                
                                                  $ 3,173,767       $ 3,177,690 

The accompanying notes are an integral part of these financial statements.
</TABLE>
(13)
<PAGE>
<TABLE>
<CAPTION>
UNICO, INC.
Consolidated Statements of Operations



                                                           For the year ended 
                                                February 28,   February 28,   February 29,
                                                    1998           1997           1996    
<S>                                             <C>            <C>            <C>
REVENUES
  Natural gas sales                             $   216,137    $   244,666    $   140,794 
  Electrical capacity and energy                        -          214,697        666,345 
  Processing and terminalling agreements                -              -           59,944 
  Petroleum product sales                               -          478,662        468,491 
  COTI commissions                                      -              -          116,051 
  Rent and other income                              20,125         12,947         14,468 
                                                    236,262        950,972      1,466,093 
COSTS AND EXPENSES
  Cost of sales                                     101,787        676,637      1,478,679 
  General and administrative                        318,451        293,484        293,252
  Depletion, depreciation and amortization          131,743        135,340        140,483 
  Interest, net                                     (27,792)         6,883         (5,991)
                                                    524,189      1,112,344      1,906,423 
INCOME (LOSS) FROM CONTINUING OPERATIONS 
  BEFORE INCOME TAXES                              (287,927)      (161,372)      (440,330)
  
  Provision (benefit) for income taxes - Note G 
   Current                                          (80,499)       (39,132)      (142,227)
   Deferred                                         (15,700)       (16,100)       (10,800)
                                                    (96,199)       (55,232)      (153,027)

   NET INCOME (LOSS) FROM 
     CONTINUING OPERATIONS                         (191,728)      (106,140)      (287,303)

DISCONTINUED OPERATIONS

  Income from operations related to the investment
    in IC Partners, Ltd. (Less applicable income 
    taxes of $80,384, $(263,574), and $527,953 
    for 1998, 1997, and 1996 respectively-Note N    264,732       (619,436)       829,219 

  Loss on disposal of investment in IC 
    Partners, Ltd.(Less applicable income 
    tax credit of $(14,443)-Note N                  (47,566)           -              -   

  NET INCOME (LOSS)                             $    25,438    $  (725,576)   $   541,916 

WEIGHTED AVERAGE NUMBER OF 
  SHARES OUTSTANDING                                986,413        986,590        986,590 

BASIC AND FULLY DILUTED EARNINGS PER SHARE
  Net income (loss) from continuing 
    operations                                  $     (0.19)   $     (0.11)   $     (0.29)
  Net income (loss) from discontinued 
    operations                                         0.22          (0.63)          0.84 
  Net income (loss) per share                   $      0.03    $     (0.74)   $      0.55 
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
(14)
<PAGE>
<TABLE>
<CAPTION>
UNICO, INC.
Consolidated Statements of Cash Flows


                                                                      For the year ended
                                                          February 28,   February 28,   February 29,
                                                              1998           1997           1996    
<S>                                                       <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net income (loss)                                       $    25,438    $  (725,576)   $   541,916 
  Adjustments to reconcile net income (loss) to net
    cash provided (used) by operating activities:
    Depreciation, depletion and amortization                  131,743        135,340        140,483 
    Deferred income taxes                                     (27,550)       (15,250)           150 
    Dry hole costs                                                -              -           28,310 
    Conversion of interest on debentures to common stock       18,690            -             -    
    (Income) loss on investment in partnership                (44,121)     1,347,238     (1,029,736)
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable               98,135        (16,333)        99,913 
      Decrease in inventories                                     -           15,455         46,797 
      Increase (decrease) in accounts payable 
        and accrued expenses                                  (17,890)       (22,606)           663 
      Decrease in refundable deposits                           2,541          1,720           -    
      Increase (decrease) in income taxes 
        accrued/receivable                                    358,755       (707,449)       127,195 
  NET CASH FLOW (USED) BY 
     OPERATING ACTIVITIES                                     545,741         12,539        (44,309)

CASH FLOWS FROM INVESTING ACTIVITIES

  Purchases of property and equipment                             -          (26,950)          -    
  Increase in cash value of life insurance polices            (18,048)       (22,455)       (23,015)
  Increase in certificates of deposit and 
    short-term investments                                        -           (6,616)       (52,309)
  Decrease in certificates of deposit and 
    short-term investments                                        -          128,474           -    
  Redemption of certificates of deposit                           -          235,000           -    
  Cash distributions from partnership                         178,784        318,829        417,554 
  Investment in Chatfield Dean                                   (500)      (100,000)      (500,000)
  Issuance of notes receivable                               (416,300)      (310,200)      (350,000)
  Collections of notes receivable                             625,409          1,500        355,500 
  NET CASH FLOW PROVIDED (USED) BY
    INVESTING ACTIVITIES                                      369,345        217,582       (152,270)

CASH FLOWS FROM FINANCING ACTIVITIES

  Purchase of treasury stock                                   (9,016)          -              -    
  Proceeds from issuing long-term debt                            -           26,950           -    
  Payments on long-term debt                                  (18,619)      (140,425)       (86,207)
  NET CASH FLOW (USED) BY 
    FINANCING ACTIVITIES                                      (27,635)      (113,475)       (86,207)

  INCREASE (DECREASE) IN CASH 
    AND CASH EQUIVALENTS                                      887,451        116,646       (282,786)

  CASH AND CASH EQUIVALENTS AT BEGINNING 
    OF YEAR                                                   349,055        232,409        515,195 
 
  CASH AND CASH EQUIVALENTS AT END OF YEAR                $ 1,236,506    $   349,055      $ 232,409 

<FN>
The Company paid interest of approximately $1,600, $29,000, and $36,600 in 1998, 1997 and 1996, respectively.

The Company paid income taxes of $200 in 1998, $406,981 in 1997, and $251,000 in 1996 and received a refund of income
taxes of $362,300 in 1998, $1,300 in 1997, and $3,400 in 1996. 

Supplemental Schedule of Noncash Financing Activities:

  The Company converted $178,000 of debentures to common stock on February 28, 1998.

The accompanying notes are an integral part of these financial statements.
</TABLE>
(15)
<PAGE>
<TABLE>
<CAPTION>
UNICO, INC.
Consolidated Statements of Changes
in Stockholders' Equity



                                                                 Additional                                   Total     
                                           Common Stock           Paid In        Retained      Treasury    Stockholders'
                                    Shares         Par value      Capital        Earnings        Stock        Equity    

<S>                               <C>            <C>          <C>              <C>            <C>           <C>
BALANCE, February 28, 1995           986,590     $  197,318   $  2,042,576     $  746,323     $      -      $ 2,986,217 

  Net income                            -              -              -           541,916            -          541,916 

BALANCE, February 29, 1996           986,590        197,318      2,042,576      1,288,239            -        3,528,133 

  Net loss                              -              -              -          (725,576)           -         (725,576)

BALANCE, February 28, 1997           986,590        197,318      2,042,576        562,663            -        2,802,557 

  Conversion of debentures           142,718         28,544        171,261            -              -          199,805 

  Purchase of treasury stock             -              -              -              -           (9,016)        (9,016)

  Net income                             -              -              -           25,438            -           25,438 
  

BALANCE, February 28, 1998         1,129,308      $ 225,862    $ 2,213,837    $   588,101       $ (9,016)   $ 3,018,784 

<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
(16)
<PAGE>
UNICO, INC.
Notes to Consolidated Financial Statements
February 28, 1998


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business  Activity:  The Company operates a petroleum products refinery and
a 3,000 kilowatt co-generation facility. The Company owns an interest in
certain natural gas producing properties located in southwestern Kansas and
is the operator of the properties. Until September 1, 1997, the Company was
the general partner and a limited partner of a partnership which is engaged
in the operation of a 250 ton per day methanol production facility in
Commerce City, Colorado.  Effective as of September 1, 1997, the Company
sold its interest in the partnership and operating results related to this
activity are reported as discontinued operations for all years presented.

The Company's financial statements for the year ended February 28, 1998
have been prepared on a going concern basis which contemplates the
realization  of assets  and the settlement of liabilities and commitments
in the normal course of business. The Company incurred a net loss of
$725,576 for the year ended February 28, 1997 and incurred a loss from
continuing operations of $191,728 for the year ended February 28, 1998, and
several of the Company's revenue sources have substantially declined  over
the past two years.  Management recognizes that the Company must generate
additional resources to replace its existing depleting revenue base. The
Company has positive working capital and positive stockholders' equity at
February 28, 1998. The Company also has no debt service requirements at
February 28, 1998. The Company's current declining revenue stream would
allow the Company to sustain operations on an ongoing basis for at least
the next fiscal year. Management's plans to enhance its revenue base
include consideration of the sale of its refinery in Fredonia, Arizona,
with a possible continued equity participation, acquisition of additional
refinery equipment in other locations through a private placement offering,
or other business transactions which would generate sufficient resources to
assure continuation of the Company's operations.  See Also Note Q.

Basis of Presentation:  The accompanying consolidated financial statements
include the operations of Unico's wholly-owned subsidiaries, Intermountain
Refining Co., Inc. ("IRC"), Intermountain Chemical, Inc., ("IC") and Gas
Technologies Group, Inc., ("GTGI").  All significant intercompany accounts
and transactions have been eliminated.  The operations of IC and GTGI were
liquidated into the Company on February 28, 1998.  See also Note N.

Cash and Cash Equivalents:   For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, cash in depository institutions, and
interest bearing over-night cash investments.  The Company maintains its
cash balances and certificates of deposit in various local financial
institutions.  The balances maintained are in excess of the maximum
insurance provided by the Federal Deposit Insurance Corporation.

Inventories:  Raw materials, refined products, materials, and supplies
inventories of IRC are stated at the lower of cost (first-in, first-out) or
market.

Property, Plant and Equipment:   Property, plant and equipment is stated at
cost. Depreciation of property and equipment is provided on the straight-
line method over the following useful lives:

   Buildings                                    15-20
   Equipment                                     3-20
   Crude Oil Refining Equipment                  5-20
   Co-generation Facilities                      5-15
(17)
<PAGE>
Maintenance, repairs and renewals which neither materially add to the value
of the property nor appreciably prolong its life are charged to expense as
incurred. Electrical generator repair expenses are accrued based on machine
hours utilized.  Actual repair costs are charged against the accrued
liability when incurred.  Gains or losses on disposition of property are
included in results of operations.

Long-lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying
amount may not be recoverable.  When required, impairment losses on assets
to be held are recognized based on the excess of the assets carrying amount
and fair value of the asset and long-lived assets to be disposed of are
reported at the lower of carrying amount or fair value less cost to sell.

Investment  in Partnership and Chatfield Dean:  The investment in IC
Partners Limited Partnership has been accounted for under the equity
method.  The Company's share of the results of operations of the
Partnership, are reflected in discontinued operations of the Company.  Cash
distributions from the Partnership have been reflected as a reduction of
the investment in the Partnership.  Summarized financial information for IC
Partners Limited Partnership has been presented in Note N to these
financial statements.  The Company sold its interest in the partnership
effective as of September 1, 1997. The investment in Chatfield Dean is
reported at cost and is discussed  in Note O to these financial statements.

Oil and Gas Properties:  The successful efforts method of accounting for
the acquisition, exploration, development and production of oil and gas
properties is utilized. Costs of acquiring undeveloped oil and gas leases
are capitalized. All development costs of proved properties are capitalized
as incurred and all exploration costs are expensed. The capitalized costs
of oil and gas wells and related equipment are amortized by the units-of-
production method based on the estimated proved oil and gas reserves.

Income Taxes:  Deferred income taxes are provided on temporary differences
arising primarily from the use of straight-line depreciation for financial
reporting purposes and accelerated depreciation on certain assets for
income tax purposes. The Company files a consolidated income tax return
with its wholly-owned subsidiaries. Taxes are allocated to each subsidiary
as if separate returns are filed. Investment tax credits are accounted for
on the flow-through method.

Earnings Per Share:  Income (loss) per share is based on the weighted
average number of common shares outstanding during each period. Stock
warrants are not included in fully diluted earnings per share because they
are antidilutive. The assumed conversion of subordinated debentures into
common stock prior to their conversion in 1998 were not included in fully
diluted earnings per share because they were antidilutive.

Reclassifications:   Certain reclassifications have been made to the 1997
and 1996 financial statements to conform with the 1998 presentation.

Estimates:   The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.

Fair Value of Financial Instruments:   The carrying amount of cash and cash
equivalents, accounts receivable, accounts payable, and accrued expenses
approximate fair value because of the short maturity of these amounts. The
carrying amount of the Company's notes receivable, long-term debt and
debentures approximate fair value because the interest rates are at or near
market value.
(18)
<PAGE>
NOTE B - ACCOUNTS AND NOTES RECEIVABLE

Accounts receivable consists of amounts due from customers for sales of
petroleum products, natural gas, and electrical energy and capacity.  Such
credit sales are generally made on terms ranging from net 10 days to net 30
days in accordance with normal industry practice.  The Company performs
periodic credit evaluations of its customers' financial condition and
generally does not require collateral.  Management does not believe that an
allowance for bad debts on accounts receivable is necessary.

Notes receivable consists of a note to a related party for $102,026 (See
Note H), and a $8,383 note, due in monthly installments through 2000,
secured by various collateral including real estate and equipment. The
Company uses the specific write-off method of accounting for bad debts.


NOTE C - OTHER ASSETS AND DEFERRED CHARGES    

Other assets and deferred charges consist of the following:
                                                February 28,   February 28,
                                                    1998          1997     

   Cash value of life insurance contracts         $ 167,591      $ 149,543 
   Utility and license deposits                         275          2,816 
                                                  $ 167,866      $ 152,359 


NOTE D - CO-GENERATION  FACILITIES

IRC installed energy co-generation facilities at its refinery and commenced
operations of the co-generation equipment in February 1986. The co-
generation facilities and certain ancillary equipment had been acquired
under an operating lease with the manufacturer of the equipment.  In
January 1993, the original lease of the co-generation facilities expired
and a new operating lease was negotiated.  The new lease had a term of
three years with fixed monthly lease payments of $7,300.  As of February
29, 1996, the lease had expired and continued on a month to month basis
pending re-negotiation of the lease. In April 1996, the Company acquired
the generators from the lessor for $26,950. 

In conjunction with the operation of the co-generation facilities, IRC had
entered into an agreement with a local utility company for the sale of
electrical capacity and energy. The agreement was terminated in 1997. 
Revenues from the sale of electrical generating capacity and energy were
approximately $0 in 1998, $215,000 in 1997, and $666,000 in 1996, and
rental expense under the operating lease was approximately $7,300 in 1997,
and $88,000 in 1996. 


NOTE E - LONG-TERM DEBT

Long-term debt consists of the following:
                                                February 28,   February 28,
                                                    1998           1997    
Note payable to Caterpillar Financial 
  Services, fixed rate of 9%, due in monthly 
  installments of $851 per month through 
  03/01/99. Secured by co-generation equipment 
  with a book value of $23,000 as of February 
  28, 1998.  This note was fully retired 
  during 1998.                                    $     -        $  18,619 
                                                        -           18,619 
Less current portion                                    -           (8,892)
                                                  $     -        $   9,727 

(19)
<PAGE>
NOTE F - CONVERTIBLE  SUBORDINATED  DEBENTURES


The Company had $178,000 of four year 10.5% subordinated convertible
debentures issued to related parties which were originally issued in
September 1986.  The maturity date of the debentures had been extended on
several occasions by mutual agreement of the parties.  Effective February
28, 1998, the Company accepted an offer by the holder of the debentures to
convert all of the debentures, along with the accrued interest thereon,
into 142,718 shares of common stock.  The conversion price accepted in the
offer was $1.40 per share compared to the original conversation price of
$8.00 per share.

In addition to the conversion of the debentures, the Company reduced the
exercise price on 11,125 warrants attached to the debentures from $5.00 per
share to $1.40 per share and extended the expiration date of the warrants
to December 31, 1999.

Interest expense related to these debentures was approximately $18,700 in
1998, $18,700 in 1997, and $18,700 in 1996. 

NOTE G - INCOME TAXES

Income tax expense (benefit) from continuing operations differs from income
tax at the statutory rate of 34% as follows:

                                       February 28,February 28,February 29,
                                           1998       1997        1996    

   Income taxes at statutory rate             (34)%   (34)%       (34)%   
   State income taxes                           -       3 %        (5)%   
   Other (net)                                  1 %    (3)%         4 %   
   Income tax expense (benefit)               (33)%   (34)%       (35)%   

Income tax expense (benefit) for the periods ended February 28, 1998,
February 28, 1997 and February 29, 1996 consists of the following:

Continuing Operations:                      1998       1997        1996   
   Current
     Federal                             $ (81,536) $ (44,082)  $(119,724)
     State                                   1,037      4,950     (22,503)
   Deferred
     Federal                               (15,700)   (16,100)    (10,800)
     State                                    -          -           -    
   Total taxes continuing operations     $ (96,199) $ (55,232)  $(153,027)

Discontinued Operations:
   Current
     Federal                                77,791  $(264,424)  $ 456,390 
     State                                     -          -        60,613 
   Deferred
     Federal                               (11,850)       850      10,950 
     State                                    -          -           -    
   Total taxes discontinued operations   $  65,941  $(263,574)  $ 527,953 
(20)
<PAGE> 
As of February 28, 1998, there were no net operating loss carry forwards or
unused investment tax credit carry forwards for Federal income tax
purposes. As of February 28, 1998 there were approximately $1,163,000 in
operating loss carry forwards for state income tax purposes which expire in
4 to 15 years depending on the State to which the carry forwards are
allocated. No deferred tax assets have been provided for on the state
carryforwards as the realization of those carryforwards is uncertain.

Deferred taxes payable as of February 28, 1998 and February 28, 1997
consist of the following:

                                                       1998        1997   
   Deferred tax liability arising from
     using accelerated depreciation
     for income tax purposes                         $ 58,250   $  73,950 

   Deferred tax liability arising from 
     basis differences in investment in partnership
     for financial and tax reporting purposes             -        11,850 

   Deferred taxes payable                            $ 58,250   $  85,800 


NOTE H - RELATED PARTY TRANSACTIONS

The Company was obligated under debentures payable to an officer, director
and stockholder totaling $178,000 at February 28, 1997 and during the year
ended February 28, 1998. Interest expense on the debentures was
approximately $18,700 in 1998, 1997 and 1996.  As of February 28, 1998, the
debentures, along with accrued interest of $21,805, were converted into
142,718 shares of the Company's common stock.  See Note F.

In conjunction with the Company's management of SCCLP's Commerce City,
Colorado methanol production facilities, the company received certain
payments and reimbursements of payroll and related costs.  All payments,
with the exception of a basic monthly management fee were based on actual
costs accrued by the Company.  Management fees paid to the Company were
$20,833 per month from December 1995 through August 1998, and $8,333 per
month from March 1995 through November 1995.
                                            1998       1997        1996   

   Direct payroll and benefits         $       -  $ 1,045,426  $ 1,218,879
   Management fees and overhead costs      240,118    465,210      328,815
   Liquified CO2 sales                         -         -          19,997
                                       $   240,118$ 1,510,636  $ 1,567,691

Amounts receivable from SCCLP for these transactions were $0 as of February
28, 1998 and $520 as of February 28, 1997. 

In addition to payments received from SCCLP in conjunction with the
Company's management of SCCLP, the Company has also received cash
distributions associated with its investment in SCCLP.  The Company
received $318,829 in 1997 and $417,554 in 1996 representing the estimated
tax liabilities associated with taxable partnership income allocations
through February 1996, and received $178,784 during 1998 representing
estimated tax liabilities for operations through August 31, 1997 and the
liquidation of IC-PL.
(21)
<PAGE>

On November 1, 1996, IRC issued an 8%, $325,000 revolving line of credit to
Red Hills Manufacturing, Inc. ("RHMCO)" a New Mexico Corporation controlled
by certain current and former officers and employees of IRC.  The revolving
line of credit was established to facilitate the purchase of certain
woodworking equipment and to fund start-up working capital requirements of
RHMCO.  The revolving credit line was scheduled to terminate on December
31, 1997 but was extended until December 31, 1998.  The credit line is
secured by cash, accounts receivable, inventories and equipment owned by
RHMCO.  The balance outstanding on the revolving credit line was $102,026
as of February 28, 1998 and $310,200 as of February 28, 1997.  In addition,
RHMCO was indebted to the Company in the amount of $2,390 as of February
28, 1998 and $7,400 as of February 28, 1997 for interest and accrued
expenses.  RHMCO is currently occupying unutilized building space owned by
IRC in exchange for certain maintenance and monitoring services required by
IRC.   

NOTE I - COMMITMENTS AND CONTINGENCIES

Reservation  of Common  Stock:  At February 28, 1998, the Company has
11,125 shares of common stock reserved for issuance under stock purchase
warrants outstanding.  Holders of convertible debentures were issued
warrants to purchase common stock at $5.00 per share that expired on
September 17, 1990.  In consideration to those holders that agreed to
extend the maturity date of debentures held by them, the Company extended
the expiration date on the associated warrants to purchase 11,125 shares of
common stock, until September 17, 1997.  In conjunction with the conversion
of the debentures on February 28, 1998, the Company agreed to reduce the
exercise price on the warrants to $1.40 per share and extend the expiration
date to December 31, 1999.

Guarantee  of  Debt  of  Others:  In January 1994, the Company agreed to
provide credit support to Consolidated Oil and Transportation, Inc.
("COTI") in the form of guarantees of commercial credit and stand by
letters of credit.  COTI is a marketer and transporter of heavy fuel oils
and asphalt.  The agreement between the parties provided for the Company to
obtain a collateral position in COTI, subordinated to commercial lenders to
COTI.  In exchange for credit support provided to COTI, the Company
received a commission of 8.75% of the gross profits of COTI.  The Company
does not have an ownership interest in COTI.  The Agreement expired on
December 31, 1995 and has not been renewed.  However, the Company continues
to be the guarantor on one account.  As of the date of this report,
commitments to creditors of COTI amount to approximately $1,296,000 under a
railcar lease agreement.  The railcar lease guarantee relates to a 5 year
lease of 100 railcars and the limit of the guarantee is reduced by $648,000
annually as long as COTI is not in default under the terms of the lease. 
The Company believes that COTI has sufficient working capital to satisfy
its outstanding obligations secured by the guarantee.

Environmental Matters:  The Company has been involved in the manufacture,
storage, and sale of petroleum products since 1979, which exposes the
Company to potential claims for environmental remediation costs, if any, of
sites previously operated by the Company. The Company is not aware of any
claims pending for such sites.  

Starlicon Merger:  The Company has entered into an agreement to acquire all
of the outstanding stock of Starlicon International, Inc. as discussed in
Note Q to these financial statements.

NOTE J - EMPLOYEE STOCK OWNERSHIP AND 401(k) PLANS

Effective for the year ended February 28, 1989, the Company adopted an ESOP
for the benefit of all of its full time employees. Company contributions to
the plan were determined at the discretion of the Company and were limited
to the maximum amount deductible for income tax purposes. Eligible
employees included all full time employees with a minimum of six months of
service as of any anniversary date of the plan and vesting over a six year
graded basis applied retroactive as of the effective date of the plan.  The
Company made no contributions to the ESOP during 1998, 1997, or 1996. 
Effective as of February 5, 1998, the ESOP plan was terminated with all
plan assets distributed to plan participants in accordance with the plan.
(22)
<PAGE>

In 1994, the Company adopted a 401(k) Plan for the benefit of all its full
time employees.  Company contributions to the Plan were determined at the
discretion of the Company and were limited to the maximum amount deductible
for income tax purposes.  Eligible employees included all full time
employees with a minimum of six months of service as of a semi-annual
anniversary date of the plan.  Employees were 100% vested in all voluntary
contributions and vested in Company contributions over a six year graded
basis applied retroactive as of the effective date of the plan.  Company
contributions to the Plan were $0 for 1998 and 1997, and $11,758 for 1996. 
Effective as of December 31, 1998 the plan was terminated and all plan
assets were distributed to the participants in accordance with the plan.

NOTE K - FINANCIAL  INFORMATION  RELATING  TO  INDUSTRY  SEGMENTS

The Company's major industry segments are natural gas production, petroleum
refining and processing, and electrical co-generation.  Selected financial
information relating to these segments is as follows:

                                              Years Ended                
                                  February 28,    February 28,     February 29,
                                      1998            1997             1996    
                                             (Dollars in thousands)            
REVENUES
 Petroleum refining and processing  $   -          $   478          $   528 
 Electrical co-generation               -              215              666 
 Natural gas production                 216            245              141 
 Other                                   20             13              131 
                                    $   236        $   951          $ 1,466 

OPERATING PROFIT (LOSS)
 Petroleum refining and processing  $   (36)       $   (91)         $   (47)
 Electrical co-generation               (12)            66               (4)
 Natural gas production                 (15)            60              (43)
 Other (1)                             (225)          (196)            (346)
                                    $  (288)       $  (161)         $  (440)

IDENTIFIABLE ASSETS
 Petroleum refining and processing  $ 1,031        $ 1,008          $ 1,096 
 Electrical co-generation               121            132              179 
 Natural gas production                 369            467              435 
 Other                                1,653          1,571            2,712 
                                    $ 3,174        $ 3,178          $ 4,422 

DEPRECIATION, AMORTIZATION AND DEPLETION
 Petroleum refining and processing  $    65        $    66          $    64 
 Electrical co-generation                11             15              -   
 Natural gas production                  40             39               43 
 Other (1)                               16             15               33 
                                    $   132        $   135          $   140 

(1)  Amounts include allocations of general and administrative, interest
and depreciation costs previously allocated to methanol plant operations
which were discontinued during 1998.
(23)
<PAGE>
                                                 Years Ended
                                 February 28,  February 28,   February 29,
                                     1998           1997          1996    
                                          (Dollars in thousands)          

CAPITAL EXPENDITURES
 Petroleum refining and processing    $   -         $   -         $   -   
 Electrical co-generation                 -              27           -   
 Natural gas production                   -             -             -   
 Other                                    -             -             -   
                                      $   -         $    27       $   -   

Sales of crude oil during 1997 were made substantially to one customer. 
Sales to the customer during 1997 were $479,000. No sales of crude oil were
made in 1998.

Electrical energy and capacity has been sold substantially to one customer. 
Sales of energy and capacity to the customer were $0 for 1998, $215,000 for
1997, and $666,000 for 1996.

The Company sells substantially all natural gas produced from the Kansas
gas properties to one customer. Natural gas sales to the customer, net to
the Company's interest, totaled $210,000 for 1998, $240,000 for 1997, and
$135,000 for 1996.

NOTE L - OIL AND GAS PROPERTIES

Kansas Gas Properties:  On July 1, 1988, the Company acquired certain
natural gas producing properties from Methanol Production Corporation
(MPC), a privately held Denver firm. The assets, valued at $902,000,
included an estimated 2,850,000 Mcf, net to the Company's interest, of
proven and developed natural gas reserves and related production equipment
located in Southwestern Kansas. In exchange for the assets, the Company
gave $180,000 in cash, issued 106,851 shares of its common stock, and
incurred a $290,000 note payable to a bank.

Oil and Gas Leases:  In September 1988, the Company acquired a 25% revenue
interest in certain unproven oil and gas leases located in Hardeman County,
Texas, for $22,500. In conjunction with the acquisition, the Company agreed
to participate, to the extent of a 33 1/3% working interest, in the
drilling of one test well. Drilling activity on the test well was completed
and initial results indicated that the well would not produce sufficient
quantities 
of oil or gas to warrant final completion.  During 1996, the Company
determined that it had no further interest in the lease and accordingly,
wrote off the remaining capitalized costs in the project.

Capitalized Costs:  Capitalized costs relating to oil and gas producing
activities, as of February 28, 1998 and February 28, 1997 are as follows:

                                      1998          1997    
 Proved gas properties              $ 894,400     $ 894,400 
 Unproved oil and gas properties         -              -   
 Less accumulated depletion          (540,037)     (505,928)
 Net capitalized costs              $ 354,363     $ 388,472 

(24)
<PAGE>
Results of Operations:  Results of operations of oil and gas producing
activities, excluding overhead and interest allocations, for the years
ended February 28, 1998, February 28, 1997 and February 29, 1996 are as
follows:

                                      1998          1997          1996    
 Revenues
   Natural gas sales                $ 216,137     $ 244,666     $ 140,794 

 Costs and Expenses
   Operating costs                    103,199        72,576        98,384 
   General and administrative           2,438         2,992         1,703 
   Depletion, depreciation and 
      amortization                     34,109        33,988        40,224 
                                      139,746       109,556       140,311 

 Pre-tax net income (loss)             76,391       135,110           483 
 Income tax expense                    26,737        45,937           164 
 Net income (loss)                  $  49,654      $ 89,173      $    319 

NOTE M - GAS RESERVE DATA AND SUPPLEMENTAL DATA (UNAUDITED)

In accordance with Statement of Financial Accounting Standards No. 69, the
following unaudited information is presented with regard to the Company's
proved gas reserves. Information for gas is presented in million cubic feet
(MMcf) except where otherwise indicated in thousand cubic feet (Mcf).

Production:  The Company's net gas production, average sales price and
production cost for the years ended February 28, 1998, February 28, 1997
and February 29, 1996 are as follows:

                                      1998          1997          1996    
 Net gas production (Mcf)             211,528       211,723       250,568 
 Average sales price ($/Mcf)         $ 1.0218      $ 1.1556      $ 0.5619 
 Average production cost ($/Mcf)     $ 0.4994      $ 0.3569      $ 0.2865 

Reserves:  On July 1, 1988 the Company acquired certain natural gas
producing properties, (See Note L).The gas reserves are located primarily
in Western Kansas and are based upon the Jerry R. Bergeson & Associates
Petroleum Engineers Reserve Report, dated May 10, 1991 and reserve
information developed internally by the Company. Estimated net quantities
of proved developed and proved undeveloped gas reserves as of February 28,
1998 and February 28, 1997 are as follows:
                                                    1998          1997    
                                                   (MMcf)        (MMcf)   
Proved developed                                      2,198         2,422 
Proved undeveloped                                      -             -   
                                                      2,198         2,422 

Statement of Changes in Quantities of Proved Developed and Undeveloped Gas
Reserves for the years ended February 28, 1998, February 28, 1997 and
February 29, 1996 are as follows:

                                      1998           1997          1996   
                                     (MMcf)         (MMcf)        (MMcf)  
 Proved reserves - beginning of year    2,422         2,634         2,884 
 Adjustment to reserves                   (13)          -               1 
 Production                              (211)         (212)         (251)
 Proved reserves - end of year          2,198         2,422         2,634 

(25)
<PAGE>
The Standardized Measure of Discounted Future Net Cash Flows relating to
Proved Gas Reserves as of February 28, 1998 and February 28, 1997 are as
follows:
                                      1998          1997    
                                    ($/1000)      ($/1000)  
 Future cash inflows                $   2,246   $     2,799 
 Future production costs               (1,098)         (864)
 Future income tax expense               (278)         (541)
 Future net cash flow                     870         1,394 
 Ten percent discount factor             (371)         (635)
 Standardized measure of discounted
   future net cash flows            $     499   $       759 

Changes in the Standardized Measure of Discounted Future Net Cash Flows
From Proved Gas Reserve Quantities for the years ended February 28, 1998,
February 28, 1997 and February 29, 1996 are as follows:

                                       1998          1997          1996   
                                    ($/1,000)     ($/1000)      ($/1000)  
 Standardized measure - beginning 
   of year                          $     759    $      353    $      619 
 Adjustment to reserves                    (2)          -            -    
 Sales, net of production costs 
   and income taxes                       (84)         (122)          (59)
 Accretion of discount (including 
   changes in present value due 
   to price changes)                     (174)          528          (207)
 Standardized measure - end of year $     499    $      759    $      353 


Developed and Undeveloped Acreage:  The following summarizes the Company's
gross and net undeveloped and developed acreage at February 28, 1998 and at
February 28, 1997:

                              1998                       1997             
                         Gross           Net       Gross             Net
Developed Acreage
  Kansas                11,088          9,040        11,568         9,324 

Undeveloped Acreage        -              -             -             -   

"Gross Acres" refers to the number of acres in which the Company owns a
working interest. "Net Acres" refers to the sum of the fractional working
interest owned by the Company in gross acres.

Other:  The Company held interests, at February 28, 1998 and February 28,
1997, in the following wells, none of which are multiple completion wells:

                             1998                        1997             
                       Gross           Net          Gross          Net    

 Producing gas wells        19          15.49          20           16.12 

(26)
<PAGE>
NOTE N - METHANOL  PLANT  DEVELOPMENT 

In July 1989, the Company initiated a project to construct and operate a
250 ton per day methanol production facility in the Denver, Colorado area.
In December 1989, the Company accepted a proposal from General Electric
Capital Corporation ("GECC"), for financing and third party equity
investment for the $26,000,000 facility.  In accordance with the proposal,
GECC provided a $24,000,000 construction loan which, upon completion of the
facility, was to be replaced by a $20,000,000 term loan. Ownership of the
facility was to vest in Sand Creek Chemical Limited Partnership ("SCCLP"),
a Colorado limited partnership, with the Company acting as the managing
general partner. The initial partnership equity contributions were to
consist of $4,000,000 in cash to be provided by the GECC limited partner
upon completion of construction, and $2,000,000 in cash, capitalized costs
and equipment provided by the general partner and funded upon closing of
the construction loan.  The construction loan was closed effective on May
31, 1990.

The general partner of SCCLP was IC Partners Limited ("IC-PL"), a Colorado
limited partnership, the initial ownership of which consisted of the
Company as the general partner and Public Service Company of Colorado
("PSCO"), as the limited partner. The initial equity contributions to IC-PL
consisted of capitalized costs and equipment valued at $500,000 provided by
the Company and $1,500,000 provided by PSCO.  On December 1, 1994, PSCO
sold it's 46% interest in IC-PL, 31.7% to Gas Technologies Group, Inc.,
("GTGI") a wholly owned subsidiary of the Company, and 14.3% to William N.
Hagler, president, director, and stockholder of the Company.

The Company's investment in IC-PL through ICI was recorded at the book
value of the equipment and capitalized costs contributed to the partnership
totalling $250,000, but was valued at $500,000 for purposes of establishing
ownership and profit sharing percentages in IC-PL and SCCLP.  No gain was
recognized by the Company on the transaction.  The Company's investment in
IC-PL through GTGI was recorded at cost of $200,000.

Construction of the facility was originally scheduled to be completed
during December 1991.  However, in late November 1991, amid concerns
regarding the financial stability of a major subcontractor, the general
contractor terminated it's contract with the subcontractor and advised
SCCLP that it was unable to complete the project under the terms of the
existing construction contract with SCCLP.  SCCLP advised the general
contractor that it expected full performance under the construction
contract without amendment.  On December 11, 1991, the general contractor
discontinued all construction activity on the project.  Upon notice to the
general contractor and its bonding company, SCCLP took over construction
activities on the project.  Funding for the project continued under the
terms of the construction loan agreement, as amended, to cover additional
costs associated with the general contractor's abandonment of the project.

SCCLP initiated a legal claim against the general contractor claiming
damages for the costs to complete construction of the facility plus delay
penalties and interest in accordance with the construction contract.  In
March 1995, SCCLP was awarded a judgement in the net amount of $9,415,559. 
In December 1995, SCCLP settled the claim for a cash payment of $7,500,000.

As the cost to complete the facility materially exceeded the budgeted
construction funding and it was uncertain as to the amount and timing of
the receipt of damages from the legal claim against the contractor, SCCLP
and GECC agreed that it was necessary to restructure the existing financing
arrangements for the project.  Effective on November 1, 1993, substantially
all of the facility assets were sold to Fleet Bank, formerly Shawmut Bank
Connecticut, for $34,600,000 who then leased the facility back to SCCLP
under a 15 year operating lease.  The sale transaction resulted in a loss
to SCCLP of approximately $7,578,000.  The proceeds from the sale were
applied entirely to outstanding construction debt owed to GECC.

(27)
<PAGE>
Immediately prior to the sale to Fleet, GECC transferred its limited
partnership interest in SCCLP to San Juan Holdings, ("SJH"), a Colorado
limited liability corporation owned by William Hagler and Rick Hurt, who
are officers and directors of the Company.  

Simultaneous with the sale to Fleet, GECC loaned $7,800,000, non-recourse
term debt to SCCLP, the proceeds of which were applied first to the
remaining construction loan and credit line then outstanding and then
deposited the remainder in a restricted account to be used by SCCLP for
future capacity and safety modifications and such other purposes as may
have been approved by GECC.  In addition, GECC provided a $1,000,000 credit
line to SCCLP for the purpose of funding working capital as needed to
operate the facility.  Both of the credit facilities were secured by cash,
accounts receivable, inventories, and other property and equipment held by
SCCLP.  During 1995 the term loan to GECC was paid in its entirety out of
cash flow from operations and proceeds from the legal settlement.

On October 6, 1997 and effective as of September 1, 1997, IC-LP sold all of
its interest in SCCLP to an unrelated third party and dissolved by
distributing its net assets to its partners.  The Company, through its
investments in IC-LP, received cash distributions totaling $178,784 in
conjunction with the dissolution of IC-LP.

The Company has been allocated income and losses from SCCLP through its
investment in IC-LP based on allocation percentages contained in the
partnership agreements.  In accordance with the operative sections of the
SCCLP and IC-LP partnership agreements, IC's effective allocation
percentage for distributions and income/loss allocations from SCCLP was
approximately 38% and approximately 60% for allocation of income associated
with SCCLP's receipt of proceeds resulting from the contractor litigation. 
GTGI's effective allocation percentage for distributions and income/loss
allocations from SCCLP was approximately 22% and approximately 7% for
allocation of income associated with SCCLP's receipt of proceeds resulting
from the contractor litigation.

The Company's share of income/loss allocations for the fiscal years ended
February 29, 1996, February 28, 1997, and the six months ended August 31,
1997 are as follows:

                          INCOME (LOSS) FROM OPERATIONS           
                                                                IC & GTGI 
     Partnership       SCCLP         IC-LP       IC & GTGI      Effective 
     Year Ended   Income (Loss)  Income (Loss) Income (Loss)  Allocation %

 February 29, 1996  (2,699,032)   (1,889,322)  (1,619,420)      60.0%
 February 28, 1997  (2,245,397)   (1,571,778)  (1,347,238)      60.0%
 August 31, 1997       176,906       123,821      106,130       60.0%


    INCOME (LOSS) FROM SALE OF ASSETS AND LEGAL SETTLEMENT               
                                                              IC & GTGI
 Partnership          SCCLP          IC-LP        IC & GTGI   Effective
 Year Ended        Income (Loss)  Income (Loss) Income (Loss) Allocation %

 February 29, 1996   6,346,570     4,442,599    4,235,574       66.7%
 February 28, 1997         -             -            -         - 
 August 31, 1997           -      (1,313,623)    (913,530)      70.0%

(28)
<PAGE>
Changes in the Company's investment in IC-LP, accounted for using the
equity method, for the three most recent fiscal years is as follows:

                    Investment                   Cash
   Fiscal           Beginning   Income (Loss)  Investment      Investment
 Year Ended            of Year   Allocations  (Distributions)  End of Year 
                                      (1)            (2)  
 IC - General Partner:
 February 29, 1996          -   1,156,590 (1)     (22,244)     1,134,346
 February 28, 1997   1,134,346   (848,760)       (267,607)        17,979
 February 28, 1998      17,979     94,674        (112,653)           -  

 GTGI - Limited Partner:
 February 29, 1996    1,188,548  (126,854)       (395,310)       666,384
 February 28, 1997      666,384  (498,478)        (51,222)       116,684
 February 28, 1998     116,684    (50,553)        (66,131)           -  

(1) Total losses allocated to the General Partner  through the year ended
February 28, 1994 totaled $4,774,218.  The allocated losses recognized in
1994 represented only allocated losses to the extent of its basis in the
investment.  Income allocated to IC for the year ended February 28, 1995
totaled $2,924,733.  The remaining unrecognized loss of $1,599,385 as of
February 28, 1995 was carried forward and utilized to offset allocations of
income from the legal settlement of $3,776,209 in 1996.  The net amount of
income allocations recognized for 1996 includes an allocated operating loss
of $1,020,234.  The net amount of income allocations recognized in 1998
include $106,180 net operating income offset by a net loss on the sale of
the investment of $62,009 which was limited to the remaining basis of the
investment.

(2) Cash distributions to partners were restricted until such time as the
note payable to GECC was fully paid and cash reserves for future plant
rental payments were established at contractually established levels.  
However, cash distributions have been made to partners to the extent that
income allocations resulted in taxable income to individual partners.  The
Company received cash distributions for estimated income tax liabilities
for income allocations of  $318,829 in 1997 and $417,534 in 1996.  Included
with the $178,784 liquidating distribution received from IC-PL in 1998 was
$28,822 distributed by SCCLP for estimated tax liabilities through August
31, 1997.

Although the Company owned  a greater than 50% ownership in IC-PL through
its wholly owned subsidiaries, management determined that control did not
rest with the Company and therefore IC-PL had not been consolidated with
the Company's financial statements.

Financial statements for IC-LP consist only of its investment in SCCLP and
specific disclosure herein is not considered necessary.

Condensed balance sheet information for SCCLP as of August 31, 1997,
February 28, 1997, and February 28, 1996 is as follows:
                                     August       February    February  
                                      1997          1997        1996    
                                 (Audited)(1)    (Audited)     (Audited)
                                     $/1000       $/1000        $/1000  
 Current assets                      $ 2,171    $   2,381      $  5,100 
 Property, plant and equipment 
  (net)                                  437          461           433 
 Other assets (net)                      219          229           250 
   Total Assets                      $ 2,827    $   3,071      $  5,783 

(29)
<PAGE>

 Current liabilities                 $ 1,620    $   1,993      $  1,614 
 Long-term debt (net of current 
   portion)                              -            -             -   
 Other liabilities                       -            -             -   
 Partners' capital (deficit)           1,207        1,078         4,169 
   Total liabilities and partners' 
    capital                          $ 2,827    $   3,071      $  5,783 

Condensed results of operations for SCCLP for the six months ended August
31, 1997, and the years ended February 28, 1997, and February 29, 1996, is
as follows:
                                  August 31,  February 28,  February 29,
                                     1997         1997          1996    
                                 (Audited)(1)   (Audited)     (Audited) 
                                    $/1000       $/1000         $/1000  

 Revenues                           $  6,184    $   9,847      $  7,767 
 Costs and expenses                   (5,995)     (12,116)      (10,192)
 Interest expense (net)                   21           89           (72)
 Depreciation and amortization           (33)         (65)         (202)
 Income (loss) from operations           177       (2,245)       (2,699)
 Extraordinary item                      -            -           6,347 
   Net income (loss)                $    177     $ (2,245)     $  3,648 

 (1) A separately issued audit report has not been prepared for SCCLP as of
August 31, 1997 and for the six month period then ended, however, the
information has been audited for the inclusion in these notes to the
Company's financial statements.

NOTE O - INVESTMENT IN CHATFIELD DEAN

On January 15, 1996 the Company executed a Letter of Intent with Chatfield
Dean & Co., ("Chad") setting out the terms of a proposed acquisition, by
the Company, of all of the outstanding Common and Preferred stock of Chad.
On July 20, 1996, the Company and Chad executed a definitive merger
agreement.  On February 10, 1997, the Company filed a Form S-4 with the
Securities and Exchange Commission ("SEC") and received comments on the
Form S-4 from the SEC on March 27, 1997. On May 14, 1997, the merger
agreement was terminated by mutual agreement of the parties. There are no
current plans to renegotiate the merger agreement and the Form S-4 was
withdrawn.

Investment in Chatfield Dean: On January 13, 1996, the Company acquired
50,000 shares of Chatfield Dean & Co., Inc., (Chatfield Dean) Series B 7%
commutative preferred stock directly from Chatfield Dean for $500,000.  The
shares have not been registered with the SEC and are therefore restricted. 
The shares are redeemable by Chatfield Dean upon the occurrence of certain
events for an amount equal to $10 per share, plus unpaid accumulated
dividends plus a premium ranging from $1 to $5 per share depending upon the
length of time the shares are outstanding.  In addition to the shares
acquired, the Company received 50,000 warrants to purchase 50,000 shares of
Chatfield Dean common stock with an exercise price of $0.01 per share.  On
September 12, 1997 the Company exercised all of the warrants and received
50,000 shares of Chatfield Dean common stock for $500.

On March 8, 1996, the Company purchased 10,000 shares of Chatfield Dean
Series A 7% cumulative, convertible preferred stock directly from Chatfield
Dean for $100,000.  The shares have not been registered with the SEC and
are therefore restricted.  The shares are convertible into Chatfield Dean
common stock at any time at the option of the Company at the ratio of 1
share for 3.33 shares of common stock subject to certain events.  The
shares may be redeemed by Chatfield Dean for the original issue price of $1
per share plus $1 per share for each year after issuance up to a maximum of
$15 per share.  During the fiscal year ended February 28, 1997, the Company
received $1,517 in dividends on this investment. No dividends were received
during the fiscal year ended February 28, 1998.

(30)
<PAGE>
Both the 50,000 shares of Series B and the 10,000 shares of Series A
preferred stock were, under the now terminated merger agreement, to be sold
to a third party prior to closing of the merger. In the absence of the
agreement, the Company, through the assistance of Chad, intends to seek a
buyer for or other disposition of the shares. As the shares are not
publicly traded and there is currently no apparent market for the shares,
the liquidity of this investment is questionable. However, it is believed
that the shares can ultimately be sold or disposed of without material loss
to the Company and in the opinion of Management, the establishment of a
valuation allowance is not necessary at this time.

NOTE P - FINANCIAL ACCOUNTING STANDARDS

The following new accounting standards will impact the Company in future
reporting periods:

 Transfer  and  Servicing  of  Financial  Assets and  Extinguishment  of 
Liabilities: The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 125, "Transfer and Servicing of
Financial Assets and Extinguishment of Liabilities."  This Statement
requires that transferred assets could be recognized only when control is
surrendered, rather than when risks and rewards related to the asset are
passed to another party.  A liability would be extinguished when the
creditor no longer has ultimate responsibility for the liability.  In
December of 1996, the FASB issued SFAS No. 127, "Deferral of the Effective
Date of Certain Provisions of SFAS No. 125."  It defers for one year the
effective date of certain provisions of SFAS 125.  This Statement has not
had and is not anticipated to have a material impact on the Company's
financial condition.

 Earnings per Share: Recently the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share."  It simplifies the standards for computing earnings per share,
superseding the standards previously found in Opinion 15.  It replaces the
presentation of primary earnings per share with a presentation of basic
earnings per share.  It also requires dual presentation of basic and
diluted earnings per share on the face of the income statement for all
entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic earnings per share computation
to the numerator and denominator of the earnings per share computation. 
This Statement was effective for the Company's financial statements issued
as of February 28, 1998 and did not have a material effect on previous
earnings per share presentations.

 Disclosure  of  information  about  an  Entity's  Capital  Structure: The
Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 129, "Disclosure of Information about an Entity's
Capital Structure."  This Statement applies to all entities.  Its
requirements are a consolidation of those found in APB Opinions 10 and 15,
and Statement of Financial Accounting Standards No. 47, and it eliminates
the exemption of non public entities from certain disclosure requirements. 
This Statement will affect the financial statements issued by the Company
after December 15, 1997.

(31)
<PAGE>
 Reporting  Comprehensive  Income: In June 1997, the FASB issued SFAS No.
130, "Reporting Comprehensive Income".  This Statement establishes
standards for reporting and display of comprehensive income on its
components (revenues, expenses, gains and losses).  Comprehensive income is
defined as the change in equity of a business enterprise, during a period,
from transactions and other events and circumstances from nonowner sources. 
The Statement requires that entities classify items of other comprehensive
income by their nature in a financial statement and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in-capital in the equity section of a statement of
financial position.  This Statement is effective for fiscal years beginning
after December 31, 1997.

 Disclosures  About  Segments: Also in June 1997, the FASB issued SFAS no.
131, "Disclosures About Segments of an Enterprise and Related Information." 
This Statement establishes standards for the way that public entities
report information about operating segments in annual financial statements
and requires that selected information about operating segments be reported
in interim financial reports as well.  It also establishes standards for
related disclosures about products and services, geographic areas and major
customers.  This Statement is effective for fiscal years beginning after
December 31, 1997. 

NOTE Q - STARLICON MERGER      

     On February 21, 1998 the Company entered into an agreement ("the
Agreement") with Starlicon Group Inc. ("SGI") to acquire 100% of the
outstanding stock of privately held Starlicon International Corporation
("SI").  Based in Fremont, California, SI markets computer peripherals
under the Paradise brand name as well as certain generic computer
components.  The effective date of the transaction was to have been
November 30, 1997.

     A preliminary audit of SI's books as of November 30, 1997 revealed
that SI failed to meet certain financial criteria.  As a result, the
Company notified SGI and SI on May 20, 1998 of its unilateral rescission of
the transaction.  In addition, on May 21, 1998, the Company filed a
Complaint in the United States District Court for the Central District of
California entitled Unico, Inc. v. Starlicon Group, Inc., Starlicon
International Corporation, et al, Case No. CV 98-3990 DT (Shx), seeking the
Court's confirmation of the Company's unilateral rescission.

     The parties have subsequently agreed that the Agreement executed on
February 21, 1998 did not close and are presently negotiating a novation
agreement which, among other things, would result in a subsequent effective
date for the merger. In connection with these negotiations, the Company has
agreed to withdraw its Complaint upon execution of the novation agreement.
(32)
<PAGE>
Corporate Information




QUARTERLY STOCK PRICES

  The Company's $0.20 par
value common stock is listed on
the Nasdaq Stock Market
(SmallCap) under the symbol
UNRC.  On February 28, 1998,
there were approximately 444
beneficial owners of the
Company's common stock,
including approximately 374
round lot holders with
beneficial  interest of 100 or
more shares.  No dividends have
been declared on the Company's
common stock and there are no
plans to pay dividends in the
foreseeable future.  The
quarterly range of the high and
the low trade prices for the
Company's common stock for the
most recent two fiscal years,
is as follows:


          Trade Prices       
Quarter Ended   High    Low  

February 29, 19963.000   2.125
May 31, 1996     4.125   2.500
August 31, 1996  3.500   2.250
November 30, 19963.500   2.000
February 28, 19972.500   1.750
May 31, 1997     2.250   1.750
August 31, 1997  2.938   1.500
November 30, 19971.875   1.250
February 28, 19983.250   1.000

FORM 10-K

  A copy of the Company's
Annual Report on Form 10-K, as
filed with the Securities and
Exchange Commission, is
available upon request.  Please
direct your request to Rick L.
Hurt, Secretary, at the
Corporate office.
<PAGE>
OFFICERS AND DIRECTORS

William N. Hagler
Chairman of the Board,
President and 
Chief Executive Officer


Rick L. Hurt
Secretary and Treasurer 


Thois Chatterley
Vice President, 
Intermountain Refining Co.,
Inc.


William Hickey     
Director                      
        

Joe G. Watson
Director

COUNSEL

Thad H. Turk
P.O. Box 27560
Albuquerque, New Mexico 87125


AUDITORS

Atkinson & Co., Ltd.
P.O. Box 25246
Albuquerque, New Mexico 87125

TRANSFER AGENT

Corporate Stock Transfer,
Inc.
Republic Plaza
370 17th Street, Suite 2350
Denver, Colorado 80202-4614

CORPORATE OFFICES

1921 Bloomfield Blvd.
P.O. Box 35
Farmington, New Mexico 87499
(INSIDE FRONT COVER)
<PAGE>

                                EXHIBIT 22

                           LIST OF SUBSIDIARIES
                                    OF
                                UNICO, INC.



  NAME OF SUBSIDIARY               STATE OF INCORPORATION        

  1. Intermountain Refining Co., Inc.             New Mexico     

  2. Intermountain Chemical, Inc. (1)             Colorado       

  3.  Gas Technologies Group, Inc. (1)            Colorado       

  The Registrant has three subsidiaries.  Each does business only under
their individual corporate name.

(1)   Effective as of February 28, 1998 the Registrant liquidated its
      wholly owned subsidiaries Intermountain Chemical Inc. and Gas
      Technologies, Inc. by transferring their remaining assets to itself,
      and then dissolved the two subsidiaries.
(14)
<PAGE>