**UNITED STATES
**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549 

**FORM 10-Q**

(Mark One)

T  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended May31, 2010

£  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to ________________

*Commission file number 000-30239*

**UNICO, INCORPORATED******

(Exact name of registrant as specified in its charter) 

Arizona

86-0205130

*(State or other jurisdiction of incorporation or organization)*

*(I.R.S. Employer Identification No.)*

8880 Rio San Diego Drive, 8th Floor, San Diego, California 92108 

*(Address of principal executive offices)*

(619) 209-6124 

*(Issuer's telephone number)*

 

N/A

*(Former Name, former address and former fiscal year, if changed since last report)*

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

Yes T   No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes £  No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £

Accelerated filer £

Non-accelerated filer   £ (Do not check if a smaller reporting company)

Smaller reporting company  T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

Yes £ No T

**APPLICABLE ONLY TO CORPORATE ISSUERS**

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:  As of July 12, 2010, the issuer had outstanding 4,998,273,975 shares of its common stock, $0.001 par value per share. 

Transitional Small Business Disclosure Format Yes £ No T

2

**PART I - FINANCIAL INFORMATION**

**Item 1.     Financial Statements.**

**UNICO, INCORPORATED AND SUBSIDIARIES**

**FINANCIAL STATEMENTS**

**May 31, 2010**

**Unico, Incorporated**

**(An exploration stage company)**

**Consolidated Balance Sheets**

 

 

**MAY 31, 2010**

 

**FEB 28, 2010**

**ASSETS**

 

**(Unaudited)**

 

 

Current Assets 

 

 

 

 

 

Cash 

$ 

1,074 

$ 

- 

 

Other receivable

 

8,271 

 

23,381 

 

Total Current Assets

 

9,345 

 

23,381 

Fixed Assets

 

 

 

 

 

Equipment, furniture, etc. net of depreciation (Note 1)

 

5,945,751 

 

6,035,752 

 

Total Fixed Assets

 

5,945,751 

 

6,035,752 

Other Assets:

 

 

 

 

 

Cash- reclamation bonds

 

222,014 

 

222,014 

 

Deposit

 

14,810 

 

21,097 

 

Total Other Assets

 

236,824 

 

243,111 

 

Total Assets 

$ 

6,191,920 

$ 

6,302,244 

**LIABILITIES AND STOCKHOLDERS’ DEFICIT**

 

 

 

 

Current Liabilities 

 

 

 

 

 

Bank overdraft

$ 

- 

$ 

868 

 

Accounts payable 

 

1,051,010 

 

1,094,530 

 

Wages payable

 

103,168 

 

73,031 

 

Accrued expenses 

 

413,866 

 

315,400 

 

Reclamation obligations

 

182,210 

 

171,377 

 

Accrued interest payable

 

90,161 

 

40,510 

 

Accrued interest payable - related party (Note 2)

 

1,423,972 

 

1,323,635 

 

Accrued interest - at 50% conversion (Note 2)

 

1,493,821 

 

1,346,445 

 

Payroll taxes payable

 

274,053 

 

238,940 

 

Options payable

 

130,500

 

-

 

Debentures payable, (Note 3)

 

1,016,087 

 

629,130 

 

Debentures payable-related party  (Note 2)

 

6,358,520 

 

6,788,338 

 

Debentures payable - 50% conversion (Note 2)

 

7,270,924 

 

7,313,786 

 

Total Current Liabilities 

 

19,808,292 

 

19,335,990 

 

Total Liabilities 

 

19,808,292 

 

19,335,990 

Stockholders' Deficit

 

 

 

 

 

Preferred Stock, authorized 20,000,000 shares, $0.001 Par Value, 9,800,000 shares issued and outstanding 

 

9,800 

 

9,800 

 

Common Stock,  authorized 5,000,000,000 shares, $0.001 Par Value, 4,658,273,975 and 2,920,192,308 shares issued and outstanding, respectively

 

4,658,274 

 

2,920,192 

 

Stock Payable

 

999,000 

 

999,000 

 

Additional Paid in Capital

 

52,804,004 

 

54,048,020 

 

Accumulated Deficit prior to exploration stage

 

(15,340,078)

 

(15,340,078)

 

Accumulated Deficit during the exploration stage

 

(56,747,372)

 

(55,670,680)

 

Total Stockholders' Deficit

 

(13,616,372)

 

(13,033,746)

 

Total Liabilities and Stockholders' Deficit

$ 

6,191,920 

$ 

6,302,244 

The accompanying notes are an integral part of these consolidated financial statements

**Unico, Incorporated**

**(An exploration stage company)**

**Consolidated Statements of Operations**

**(Unaudited)**

 

 

 

 

 

 

Cumulative

 

 

 

 

 

 

Period from

 

 

 

 

 

 

Inception

 

 

For the Three Months Ended

 

(June 1, 2004) to

 

 

May 31, 2010

 

May 31, 2009

 

May 31, 2010

Total Revenues

$

- 

$

- 

$

26,202 

Operating Expenses 

 

 

 

 

 

 

     Drilling, exploration and maintenance expense

 

11,307 

 

17,582 

 

1,821,408 

     Depreciation and accretion

 

100,834 

 

123,577 

 

1,507,068 

     Professional fees

 

17,348 

 

51,791 

 

2,581,621 

     Salaries/wages

 

121,126 

 

151,290 

 

2,893,212 

     General and administrative expense

 

314,857 

 

102,387 

 

5,008,526 

          Total Operating Expenses 

 

565,472 

 

446,627 

 

13,811,835 

Net Operating Loss 

 

(565,472)

 

(446,627)

 

(13,785,633)

Other Income (Expense) 

 

 

 

 

 

 

     Interest expense

 

(511,220)

 

(570,658)

 

(19,984,892)

     Interest income

 

- 

 

- 

 

30,427 

     Loss on sale of asset

 

- 

 

- 

 

(5,914)

    Gain/(Loss) on settlement of debt 

 

- 

 

13,153 

 

(22,989,858)

    Gain on sale of equipment

 

- 

 

- 

 

12,520 

     Other income

 

- 

 

- 

 

(23,672)

          Total Other Expense 

 

(511,220)

 

(557,505)

 

(42,961,389)

LOSS FROM CONTINUING OPERATIONS

 

(1,076,692)

 

(1,004,132)

 

(56,747,022)

Income Tax Expense 

 

- 

 

- 

 

(350)

Net Loss 

$ 

(1,076,692)

$

(1,004,132)

$

(56,747,372)

Net Loss Per Share 

$ 

(0.00)

$

(0.01)

 

 

Weighted Average Shares Outstanding 

 

3,684,429,319 

 

66,974,951 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements

5

**Unico, Incorporated**

**(An exploration stage company)**

**Consolidated Statements of Cash Flows**

**(Unaudited)**

 

 

 

 

 

 

Cumulative

 

 

 

 

 

 

Period from

 

 

 

 

 

 

Inception

 

 

For the three months ended

 

(June 1, 2004) to

 

 

May 31, 2010

 

May 31, 2009

 

May 31, 2010

**Cash Flows from Operating Activities:**

 

 

 

 

 

 

  Net Loss 

$ 

(1,076,692)

$ 

(1,004,132)

$ 

(56,747,372)

  Adjustments to Reconcile Net Loss to Net Cash 

   Used by Operations: 

 

 

 

 

 

 

     Gain on disposal of fixed assets

 

- 

 

- 

 

(12,520)

     Gain on settlement of liabilities

 

- 

 

- 

 

(18,399)

     Depreciation and accretion expense 

 

100,834 

 

123,577 

 

1,507,066 

     Loss on settlement of debt

 

- 

 

- 

 

23,442,317 

     Interest related to convertible debentures

 

351,547 

 

423,420 

 

17,112,263 

     Loss on sale of assets

 

- 

 

- 

 

5,914 

     Options issued to directors

 

130,500 

 

- 

 

130,500 

     Stock issued for services

 

- 

 

 

 

409,069 

     Preferred stock for services 

 

- 

 

- 

 

35,710 

  Changes in Operating Assets and Liabilities: 

 

 

 

 

 

 

     (Increase) Decrease in: 

 

 

 

 

 

 

     Reclamation deposit 

 

- 

 

- 

 

7,440 

     Prepaid expense

 

- 

 

- 

 

(20,397)

     Deposit

 

6,287 

 

- 

 

11,445 

     Accounts receivable

 

15,110 

 

- 

 

1 

     Increase (Decrease) in: 

 

 

 

 

 

 

     Accrued expenses

 

251,126 

 

162,765 

 

1,556,532 

     Accounts payable and other liabilities

 

21,730 

 

31,022 

 

2,113,626 

  Net Cash Used by Operating Activities 

 

(199,558)

 

(263,348)

 

(10,466,805)

**Cash Flows from Investing Activities:**

 

 

 

 

 

 

  Sale of fixed assets

 

- 

 

- 

 

26,200 

  Purchase of fixed assets

 

- 

 

- 

 

(6,752,309)

  Net Cash Used by Investing Activities 

 

- 

 

- 

 

(6,726,109)

**Cash Flows from Financing Activities:**

 

 

 

 

 

 

  (Decrease)/increase in bank overdraft

 

(868)

 

- 

 

(13,622)

  Capital contributions from shareholders

 

- 

 

- 

 

818,000 

  Proceeds from notes and stock payables

 

- 

 

6,000 

 

1,116,800 

  Issuance of convertible debentures

 

201,500 

 

262,500 

 

15,330,954 

  Payments on notes and debentures

 

- 

 

- 

 

(58,144)

  Net Cash Provided by Financing Activities 

 

200,632 

 

268,500 

 

17,193,988

  Net Increase (Decrease) in Cash 

 

1,074 

 

5,152 

 

1,074

Cash at Beginning of Period 

 

- 

 

417 

 

-

Cash at End of Period 

$ 

1,074 

$ 

5,569 

$ 

1,074

**Cash Paid For:**

 

 

 

 

 

 

  Interest 

$ 

7,013

$ 

2,000

$ 

98,023

  Income Taxes 

$ 

-

$ 

-

$ 

350

**Non-Cash Financing Activities:**

 

 

 

 

 

 

  Common stock issued for services

$ 

-

$ 

18,569

$ 

417,685

  Preferred stock issued for debt extinguishments

$ 

-

$ 

-

$ 

261,550

  Common Stock issued for debt extinguishments

$

244,362

$

310,279

$ 

8,451,156

The accompanying notes are an integral part of these consolidated financial statements

6

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

May 31, 2010

**NOTE 1 – NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES**

This summary of significant accounting policies of Unico, Incorporated is presented to assist in understanding the Company's consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the consolidated financial statements.  The information furnished in the interim financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. 

a.

Organization and Business Activities

Unico, Incorporated was formed as an Arizona corporation on May 27, 1966 under the name of Red Rock Mining Co., Incorporated. It was later known as Industries International, Incorporated and I.I. Incorporated before the name was eventually changed to Unico, Incorporated in 1979. 

The Company presently has three wholly-owned subsidiaries: Deer Trail Mining Company, LLC, Silver Bell Mining Company, Inc., and Bromide Basin Mining Company, LLC.  As a result, the accompanying consolidated financial statements are those of the Company and its wholly owned subsidiaries, Deer Trail Mining Company, LLC, Silver Bell Mining Company, Inc. and Bromide Basin Mining Company, LLC.

b.

Fixed Assets

The Company’s property consists of mining equipment, vehicles, office furniture and computer equipment.  The property is depreciated in a straight-line basis over three to twenty years.  Fixed assets are recorded at cost. Major additions and improvement are capitalized. The cost and related accumulated depreciation of equipment retired or sold are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale are recorded as gain or loss on sale of assets.  Mineral rights are recorded at cost of acquisition.  When there is little likelihood of a mineral right being exploited, or the value of mineral rights have diminished below cost, a write-down is affected against income in the period that such determination is made.

**Fixed Asset Schedule**

 

**May 31,**

**2010**

 

**February 28,**

**2010**

Fixed Assets:

 

 

 

 

Furniture & Equipment

$

2,393,260 

$

2,393,260 

Land

 

200,000 

 

200,000 

Buildings

 

1,564,178 

 

1,564,178 

Electrical Substation

 

433,986 

 

433,986 

Patented mining claims

 

640,000 

 

640,000 

Mining Claim

 

2,360,000 

 

2,360,000 

Autos

 

78,914 

 

78,914 

   Total

 

7,670,338

 

7,670,338 

Less Depreciation

 

(1,724,587)

 

(1,634,586)

Net Equipment 

$

5,945,751 

$

6,035,752 

The Deer Trail mining claims purchased include 32 patented mining claims and 170 unpatented mining claims.  The patented claims comprise 16% of the total claims purchased.  As a result, $640,000 ($4,000,000 x 16% = $640,000) has been treated as a purchase of land based on the fact that patented claims give the Company title to the use of the land.  Only $3,000,000 of the original $4,000,000 purchase was capitalized.  The balance of the capitalized amount of $2,360,000 is for the unpatented claims and is subject to be amortized over the life of the mineable assets. 

7

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

May 31, 2010

**NOTE 1 – NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES – cont.**

c.

Accounting for Convertible Debentures

The outstanding convertible debentures issued by the Company have a fixed monetary amount known at the time of issue and because of this are accounted for based on ASU 2009-15 of the Financial Accounting Standards Board (FASB).  These convertible debentures have a fixed face amount that is payable by cash plus interest on the principle owed, or can be converted into common shares of the Company determined by the discounted rate specified on the debenture itself.  

In accordance with accounting for convertible debt based on ASU 2009-15 the Company records a beneficial conversion cost based on the conversion option of the debenture that equals the value of any discount to market available at the time of conversion.   The beneficial conversion cost is recorded as interest expense at the time the convertible security is first issued.   If the debenture is subsequently converted into stock, the liability is reduced and the common stock and additional paid in capital is increased.  A beneficial conversion cost is also recorded for the interest portion of the debenture that equals the value of any discount to market available at the time of conversion.  This beneficial cost is recorded as interest expense at the time the convertible security is first issued.   If the debenture is subsequently converted into stock, the accrued interest liability is reduced and the common stock and additional paid in capital is increased.  If the Company pays off the debt instead of converting it to common stock, the debenture liability and accrued interest liability is reduced and a gain on extinguishment of debt is recognized. 

d.

Accounting Method 

The Company's consolidated financial statements are prepared using the accrual method of accounting. The Company has elected a February 28th year-end.   The Company reports the operations of itself and its wholly owned subsidiaries on a consolidated basis.

e.

Significant Accounting Policies

The Company files income tax returns in the U. S. federal jurisdiction, and in the following state jurisdictions: California, Arizona, and Utah.  With few exceptions, the Company is no longer subject to U. S. federal, state and local, or non-U. S. income tax examinations by tax authorities for years before 2000.  

Accounting for Uncertainty in Income Taxes

On March 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation, Accounting for Uncertainty in Income taxes prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

f.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board, or FASB, issued ASC 105, *Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles*.  This statement established the Accounting Standards Codification, or ASC, and was effective for interim and annual periods ending after September 15, 2009.  The adoption of ASC 105 is reflected in the Notes to the Consolidated Financial Statements presented here.

In October 2009, the Financial Accounting Standards Board, or FASB, issued ASU 2009-15, *Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing* (Topic 470).  The provisions of ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years.  The Company has already adopted this standard and the provisions of ASU 2009-15 are not expected to have an impact on the Company’s Consolidated Financial Statements presented here. 

In February 2010, the Financial Accounting Standards Board, or FASB, issued ASU 2010-09 *Subsequent Events* (Topic 855).  ASU 2010-09 establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before interim financial statements are issued.  ASU 2010-09 is effective for interim financial periods ending after June 15, 2009.  The provisions of ASU 2010-09 have been evaluated by the Company and have been found to have no material impact on the Consolidated Financial Statements presented here.

8

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

May 31, 2010

**NOTE 2 – RELATED PARTY DEBENTURES**

Ray Brown, a former member of the board of directors, assigned $114,466 of his outstanding convertible debenture to Joseph Lopez, father of the Company’s Chief Executive Officer, Mark Lopez, as satisfaction on a personal loan. This debenture bears interest at 10% per annum and was due September 2005. The debenture is convertible into common stock of the Company at a discount of 20% off the closing bid price of the common stock on the date of conversion. The Company has recorded an accrued interest payable of $62,690 for Joseph Lopez’s debenture as of May 31, 2010.  As of the quarter ended May 31, 2010, the Company owes Joseph Lopez $114,466 in principal and $62,690 in interest. 

In January of 2008 all of the debentures issued to Compass Capital Corporation, Blue Marble Investments and Reef Holdings totaling $5,179,954 that remained unpaid by Unico were purchased by and assigned to Moore Investment Holdings, LLC (“Moore Investment Holdings”).  Moore Investment Holdings is controlled by Joseph Lopez, the father of CEO Mark Lopez. The Company subsequently issued convertible debentures in the amount of $2,408,000 to Moore Investment Holdings through the fiscal year ended February 28, 2009, and issued an additional $1,789,000 in convertible debentures in the fiscal year ending February 28, 2010.  During the quarter ended May 31, 2010, the Company issued an additional $201,500 of convertible debentures to Moore Investment Holdings. The debentures were issued with terms of 180 days, accrued interest at 8% per annum, and convert at a discount of 50% of the closing bid for the Company’s common stock on the date of conversion.  

During the fiscal year ended February 28, 2010, the Company converted $59,940 of interest and $415,281 of principal due Moore Investment Holdings through the issuance of 503,240,780 shares of common stock. During the quarter ended May 31, 2010, the Company converted $2,388 of interest and $143,362 of principal due Moore Investment Holdings through the issuance of 965,000,000 shares of common stock.   

During the fiscal year ended February 28, 2010, Moore Investment Holdings assigned $2,319,750 of its outstanding debentures to others for cash.  Of this amount $1,855,865 was converted to 2,325,848,319 shares of common stock of the Company and $112,198 of 2009 assignments was converted to 41,980,390 of common stock of the Company during the fiscal year ended February 28, 2010.   During the quarter ended May 31, 2010, Moore Investment Holdings assigned an additional $85,000 of its debentures to others for cash.  During the quarter ending May 31, 2010, $102,000 of principal and $283 of interest of the past assigned debentures were converted into 773,081,667 shares of common stock.  

  

The summary of outstanding related party debt of $6,358,520, of which $5,837,520 is in default as of May 31, 2010, is as follows:

Moore Investment Holdings

$

6,244,054 

Joseph Lopez

$

114,466 

Total

$

6,358,520 

As of May 31, 2010 the Company has recorded a liability for beneficial conversion of $7,270,924 based on the discount to market available at the time of conversion of which $6,335,627 is attributable to related party debentures.. 

As of May 31, 2010 the Company has accrued $1,423,972 for interest due to related parties in regard to these outstanding debentures.   The Company has also recorded a liability for beneficial conversion for this same interest on the debentures of $1,493,821 based on the discount to market available at the time of conversion of which $1,411,434 is attributable to related party debentures. 

**NOTE 3 – CONVERTIBLE DEBENTURES**

During the fiscal year ended February 28, 2010, the Company issued $1,789,000 of convertible debentures that were used primarily to support subsidiary operations.  The debentures were issued with terms of 180 days, accrued interest at 8% per annum, and converted at a discount of 50% of the closing bid for the Company’s common stock on the date of conversion.    As of February 28, 2010 there is non-affiliated convertible debentures, in the amount of $629,131 and related party debentures of $6,788,338, remaining on the Company’s books.  As of the fiscal year ending February 28, 2010, the Company has a liability balance for recorded beneficial conversion in the amount of $7,313,786 based on the discount to market available at the time of conversion.  The Company also recorded a liability balance for beneficial conversion for the interest portion of the debentures of $1,346,445 based on the discount to market available at the time of conversion.

During the quarter ended May 31, 2010, the Company issued $201,500 of convertible debentures that were used primarily to support subsidiary operations.  The debentures were issued with terms of 180 days, accrued interest at 8% per annum, and converted at a discount of 50% of the closing bid for the Company’s common stock on the date of conversion. As of May 31, 2010 there is non-affiliated convertible debentures, in the amount of $1,016,087 and related party debentures of $6,358,520, remaining on the 

9

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

May 31, 2010

**NOTE 3 – CONVERTIBLE DEBENTURES – cont.**

Company’s books.  The Company has also recorded a liability for the 20% to 50% discount on conversion rights of the debentures.  As of the quarter ended May 31, 2009, the total liability of the beneficial conversion for the debenture is $7,270,924 and the total liability for the beneficial conversion on the interest portion of the debentures is $1,493,821.  

**NOTE 4 –STOCKHOLDER’S EQUITY**

*Common Stock*

As of May 31, 2010, the Company had 4,658,273,975 shares of common stock issued and outstanding with 341,694,288 shares authorized but unissued 

During the year ended February 28, 2010 the Company issued 2,875,569,002 shares of free trading common stock in conversion of principal and interest based in the amount of $2,545,596 on the terms of the outstanding debentures; 8% interest per annum and conversion at a discount of 50% of the closing bid for the Company’s common stock on the date of conversion

During the year ended February 28, 2010, the Company also issued 3,800,000 shares of free trading common stock for the payment of services under an S-8 registration in the amount of $18,569. 

During the quarter ended May 31, 2010 the Company issued 1,738,081,667 shares of free trading common stock on the conversion of $244.362 principal and $2,671 interest on the terms of the outstanding debentures; 8% interest per annum and conversion at a discount of 50% of the closing bid for the Company’s common stock on the date of conversion.

*Stock Options*

  

 

Shares

Exercise price

   Total options outstanding, February 28, 2010

-

*-*

 

 

 

Summary of activity for the three months ended May 31, 2010:

 

 

   Balance at February 28, 2010

-

-

   Granted

535,000,000

$

.0003

   Canceled

100,000,000

-

   Exercised

-

-

   Outstanding balance, May 31, 2010

435,000,000

$

.0003

 

 

 

   Exercisable, May 31, 2010

-

$

-

The Options Grants shall become exercisable only when the Company has a sufficient number of authorized and unissued shares of its common stock available to cover all the conversion or exercisable of all previously issued convertible securities of the Company and all of the Options described above, and they shall be exercisable thereafter for a period of five (5) years.

The Company shall account for the fair market value of the options as a liability until such time as shares of common stock are available to cover all of the options that have been granted.

*Preferred Stock*

As of May 31, 2010, the Company had 9,800,000 shares of preferred stock issued and outstanding, all of which is Series A preferred stock. The Series A Preferred Stock entitle the holder to elect two of the Company’s directors and is convertible into shares of common stock on a 1:1 basis.

*Stock Payable*

During the year ended February 28, 2007, the Company sold a total of 152,238 post-reverse split shares of restricted common stock to a third party for total consideration of $999,000.  As of May 31, 2010, these shares had not been issued, resulting in a stock payable of $999,000. 

10

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

May 31, 2010.

**NOTE 4 –STOCKHOLDER’S EQUITY- cont.**

*Convertible Debentures*

At the end of the quarter ending May 31, 2010 the Company has $6,856,185 of convertible debentures outstanding that are convertible at a rate of 50% discount of the closing bid for the Company’s common stock on the date of conversion, and it has $518,422 of convertible debentures outstanding that are convertible at a rate of 20% discount of the closing bid for the Company’s common stock on the date of conversion.     

**NOTE 5 – LEGAL MATTERS**

On August 14, 2008, Unico shareholders Randall Sullivan, Barry Raykoske, and Jack Reilly filed a derivative lawsuit on behalf of Unico against Ray C. Brown, Kenneth C. Wiedrich, Mark A. Lopez, Shane Traveller, Javelin Advisory Group, Inc., and Unico (as a nominal defendant) in the Superior Court of the State of California, San Diego County Central Division (Case No. 37-2008-0008901-CU-PN-CTL).  The plaintiffs alleged that the named defendants breached fiduciary duties owed to Unico, and were negligent in the approval of certain financing transactions entered into on behalf of Unico.  The parties reached a settlement which was approved by the court, pursuant to which Unico’s insurance company paid $448,828 for attorney’s fees to Plaintiff’s counsel and $28,672 for reimbursement of expenses.  An incentive award of $7,500 was paid to each of the named plaintiffs.  Unico agreed to certain restrictions and limitations affecting Unico’s governance procedures, its ability to enter into financing transactions with certain persons, and restricting Unico from issuing its stock pursuant to Section 3(a)(10) of the Securities Act of 1933 in connection with settling debt arising from Unico financing activities.  A press release more fully describing the terms of the settlement has been published on Unico’s website at www.unicomining.com.  The court has approved the settlement and this litigation has concluded.

On September 30, 2008, a lawsuit was filed by Cache Valley Electric Company against Unico, Incorporated in the Third Judicial District Court for Salt Lake County, State of Utah (Case No. 080921346) in which the plaintiff alleges that it provided goods and services to Unico in the amount of $191,615, for which it has not received payment.  The plaintiff  alleges that Unico breached the contract by failing to pay for the goods and services, and is seeking a money judgment against Unico in the amount of $191,615 together with interest thereon at the statutory rate and court costs.  On March 2, 2009, a Default Judgment was entered against Unico in the amount of $216,291.  Unico subsequently entered into the Unico Incorporated Settlement Agreement, dated March 27, 2009 (“Settlement Agreement”).  The Settlement Agreement provides that Unico is to pay Cache Valley Electric Company $216,291 as follows: Unico is to make six monthly payments in the amount of $6,000 per month beginning April 25, 2009; six monthly payments of $10,000 per month beginning October 25, 2009; seven monthly payments of $15,000 per month; and a final monthly payment of $15,291.  The Settlement Agreement further provides that if the payments are made as set forth above, no further action will be taken against Unico.  If the payments are not received within a ten-day grace period following the respective due dates, the entire unpaid balance less any payments made will become due and payable immediately, and no rights as to the recovery of that amount, including  all legal fees, court costs, and interest due will have been waived by virtue of the Settlement Agreement.  The Settlement Agreement further provides that when the settlement amount is fully funded, Cache Valley Electric Company is to execute and file a Release of Judgment for the full amount of the claim.  Finally, the Settlement Agreement provides that if a Lien against Unico has been filed, Cache Valley Electric Company is to file a Release of Lien with the clerk of the Third Judicial District Court for Salt Lake County immediately upon receipt of the final payment.  Unico made payments under the settlement through November 2009, and is currently behind in its payment obligations under the settlement.

On or about January 5, 2009, a lawsuit was filed by Atlas Mining Company, an Idaho corporation, dba Atlas Fausett Contracting against Deer Trail Mining Company, LLC in the Sixth Judicial District Court for Piute County, State of Utah (Case No. 0090600001) in which the plaintiff alleged that it provided certain mine rehabilitation services and materials with respect to the Deer Trail Mine pursuant to a written contract for which it has not been paid.  The plaintiff alleged that Deer Trail Mining Company, LLC breached the contract by failing to pay for the services and materials, and sought a money judgment against Deer Trail Mining Company, LLC for at least $182,144 plus interest at 18% per annum, plus costs.  Plaintiff also sought a court order adjudging a mining lien filed by the plaintiff against the Deer Trail Mine on or about July 9, 2008 to be a good and sufficient lien on the Deer Trail Mine securing payment of the obligations under its contract with Deer Trail Mining Company, LLC, and ordering that the Deer Trail Mine be foreclosed and sold by the sheriff of Piute County, with the sales proceeds being applied against the amount due and owing to plaintiff from the Deer Trail Mining Company, LLC and to the foreclosure costs.  Deer Trail Mining Company, LLC filed an Answer denying liability. The parties reached a settlement of the lawsuit on November 6, 2009, and the plaintiff has since been paid in full.  This litigation has been dismissed.

11

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

May 31, 2010

**NOTE 6 – GOING CONCERN**

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has incurred losses of $72,087,450 from its inception through May 31, 2010.   It has not established any revenues with which to cover its operating costs and to allow it to continue as a going concern.   

During the next 12 months, the Company’s plan of operation is to raise additional funds for investment into its subsidiary Deer Trail Mining Company. Depending on the actual level of funding obtained, the following activities are planned: 

·

Development, exploration and operating activities to recommence production at upper Deer Trail Mine;

·

Installation of processing circuit, including tailings ponds, permits and upgrades to the primary circuit;

·

Research and testing to obtain 43-101 technical report;

·

Underground rehabilitation of the lower Deer Trail Mine 8600 area, including upgrades to electrical and mine drifting to support exploration;

·

Initial exploration program for the lower Deer Trail Mine 8600 area;

·

Additional exploration of the lower Deer Trail Mine 3400, 4400 and 6600 areas;

·

Research and testing on the Mississippian Redwall Limestone area;

·

Research on the Deer Trail Mine Porphyry.

Accomplishing the 12-month plan of operations is dependent onthe Company raising approximately $8,380,000 in equity and/or debt.  

**NOTE 7 – SUBSEQUENT EVENTS**

The Company has evaluated subsequent events through July 20, 2010, which is also the date the financial statements were issued.  Other than the items disclosed below, no other subsequent events have been noted.

Subsequent to the quarter ended May 31, 2010 the Company issued 340,000,000 shares of common stock on the conversion of $24,307 of principal and $4,693 of interest payable to Moore Investment Holdings.

12

**Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations.**

**Forward-Looking Statements.**

** **

When used in this Form 10-Q, the words "expects", "anticipates", "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.  ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-Q REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY. 

**General Information Regarding Unico and its Operations.**

Unico, Incorporated (“the Company”, “Unico”) an Arizona corporation, was formed as an Arizona corporation on May 27, 1966. It was incorporated under the name of Red Rock Mining Co., Incorporated. It was later known as Industries International, Incorporated and I.I. Incorporated before the name was eventually changed to Unico, Incorporated in 1979. 

Unico has been engaged in exploration and testing at the Deer Trail Mine through its subsidiary, Deer Trail Mining Company, LLC (“Deer Trail Mining Company” or “DTMC”). Future exploration, if any, at the Silver Bell Mine will be conducted through Unico's subsidiary, Silver Bell Mining Company, Inc. ("SBMC"). 

Deer Trail Mining Company, LLC

On March 30, 1992, Unico, Incorporated entered into a Mining Lease and Option to Purchase agreement with Deer Trail Development Corporation, with headquarters in Dallas, Texas. Deer Trail Development Corporation is now known as Crown Mines, L.L.C. The lease was to run for a period of 10 years, and cover 28 patented claims, 5 patented mill sites and 171 unpatented claims located approximately 5 miles South of Marysvale, Utah. It includes mine workings known as the Deer Trail Mine, the PTH Tunnel and the Carisa and Lucky Boy mines. There are no known, proven or probable reserves on the property.  Effective December 1, 2001, a new lease agreement was entered into between the parties (“Deer Trail Lease”) covering the same property for a period of thirty (30) months. It was subsequently extended through a series of amendments.  

  

In July 2007, Deer Trail Mining Company completed the purchase of the claims covered by the Deer Trail Lease.  A total of $4,000,000 was paid to purchase the property over a period of approximately three years.  The purchase of the claims also included the purchase of certain water rights as described in Item 2 of this report. 

Deer Trail Mining Company also obtained a lease from Crown Mines, L.L.C. of the remaining fifty percent (50%) interest in Water Right No. 63-37 and the remaining 50% interest in the contractual water right (Water Right 63-3043.  The lease is for an initial term of 5 years for no rent.  The lease may be terminated by Crown Mines, L.L.C. upon 12 months’ written notice if Crown Mines determines that the water rights covered by the lease are necessary for the operation and development of any of Crown Mines’ mining claims or for other permitted uses.  The lease may be extended if Crown Mines determines that the water rights covered by the lease are not required for the operation and development of any of Crown Mines’ mining claims or for other permitted uses during the extension period, provided that the parties can agree on other terms including a price or rent for the extended term. 

Crown Mines, L.L.C. retained a perpetual royalty interest on minerals taken from the claims purchased by Deer Trail Mining Company.  The perpetual royalty is three percent (3.0%) of net smelter returns on minerals other than gold.  The royalty rate for gold is three percent (3.0%) when the price of gold is less than or equal to $500 per troy ounce, four percent (4.0%) when the price of gold is more than $500 and less than or equal to $600 per troy ounce, and five percent (5.0%) when the price of gold is greater than $600 per troy ounce.  Crown Mines, L.L.C. also retained an undivided three percent (3.0%) interest in any oil and gas and associated hydrocarbons produced from the claims.

Deer Trail Mining Company has agreed to provide Crown Mines, L.L.C. with information obtained as a result of Deer Trail Mining Company’s exploration activities on the claims, and Deer Trail Mining Company granted to Crown Mines, L.L.C. a right of first refusal to repurchase the claims or any portion thereof.

Prior to June 2004, Unico worked to explore and reopen the Deer Trail Mine.  Since June 2004, Deer Trail Mining Company has assumed exploration activities, ownership and management control of the Deer Trail Mine.  Deer Trail Mining Company presently has 2 full time employees, 1 part time employee and consultants. Since 2004, Deer Trail Mining Company, LLC has engaged in significant exploration work at the Deer Trail Mine for which information has been provided in previous periodic reports filed by Unico.  Deer Trail Mining Company currently has in place a Large Scale Mining permit with The State of Utah’s Division of Oil Gas 

13

and Mining. The permit file# M10311003 is available for public viewing at the Division of Oil Gas and Mining’s Salt Sale City’s office.  Deer Trail recently received approval for the addition of a second tailings disposal impoundment, the construction permit was granted because of the low potential for contamination to the ground water, as a result of the application of best available technology, the proposed impoundment is likely to have de minimis effect on ground water quality. Under these conditions the project qualifies for permit-by-rule Status under R317-6-6.2(A)(25) of the Utah ground water protection code.

**Location of Deer Trail Mine:**

The Deer Trail claims are located in the Tushar Mountains of East Central, Utah in the Mount Baldy and Ohio Mining districts. They are located on Deer Trail Mountain, approximately 5 miles South of Marysvale, Utah and are accessible by a gravel county road which is in good condition. There are no known, proven or probable reserves on the property. 

The Deer Trail mineralized body was first discovered by deer hunters in 1878. The mineralized body originally cropped out at the surface. It is estimated that between 1878 and 1917, about 10,000 tons of mineralized materials were mined. A small mill was installed in 1918, and between 1918 and 1923 the mine produced about 138,000 tons of predominately oxidized mineralized materials averaging 1.38 opt gold, 11.49 opt silver and 3.26% lead. Zinc and copper were not recovered. In 1923, mining was suspended when the workings encountered a fault that cut off the mineralized materials, and for more than 20 years production was limited to drawing stopes and removing pillars. In 1945, the PTH tunnel was started to explore for the faulted extension of the Deer Trail mineralized body. The 3,400 mineralized body was encountered unexpectedly by this tunnel and a total of 5,000 tons of mineralized materials averaging 2.84% lead, 0.76% copper, 6.26% zinc, 15.17 opt silver and 0.19 opt gold were shipped. By 1964, the PTH tunnel had intersected the offset part of the Deer Trail mineralized body. From 1964 until 1981 this segment of the mineralized body produced over 100,000 tons of unoxidized sulfide mineralized materials averaging 5% lead, 0.6% copper, 12% zinc, 15 opt silver, and 0.10 opt gold. The present working face is still in mineralized material. 

The PTH Tunnel penetrates more than 10,000 feet with a developed network of tunnels, shafts and raises at the 3,400 foot area and at the 8,000 foot area and was mined extensively for gold and silver for about 20 years. The timbered and ventilated tunnel includes more than two miles of track for ore cars accessed through a covered entrance structure. 

The mine facilities also include ore cars, battery operated engines, an engine storage and charging house, an electric power substation, a miner's locker room, a compressor building, a 1,000 gallon underground gasoline storage tank with gas pump, two front end loaders, three dump trucks and a general office, a fully operational lab and a core sampling facility. Deer Trail Mining Company believes water is accessible to the site. 

The Deer Trail mining property was developed by the Deer Trail Development Corporation, now known as Crown Mines, LLC, located in Dallas, Texas. The property has been leased out several times since production ceased in 1981 and is presently owned by Deer Trail Mining Company, LLC. Several major mining companies have explored the property. These include Noranda, Phelps Dodge and Goldfields. One smaller company drilled and analyzed the mill tailings from the upper Deer Trail Mine area in 1990. The results of the drilling and other tests were not conclusive, and at present there are no known proven or probable reserves on the claims. 

Unico leased the property effective June 1, 1992. Unico has taken a few small lots of mineralized materials from the stopes in the 8600 area of the PTH tunnel for testing and evaluation purposes, and has identified several excellent targets within those workings. In April 2001, Unico began limited exploration activities which were concentrated in the 3400 area of the mine until underground exploration activities temporarily stopped in October 2003. Unico transferred all rights and obligations to the Deer Trail Mining Company in June 2004. Deer Trail Mining Company purchased the claims in July 2007, and is the current owner and operator of the Deer Trail Mine. Deer Trail Mining Company resumed underground exploration activities at the Deer Trail Mine in late 2004.  Underground exploration activities have focused on infrastructure improvements during this past fiscal year along with continuing the exploration and testing of mineralized areas.

Following is a map of the area where the Deer Trail Mine is located along with a map of the claims owned by the Deer Trail Mining Company, LLC.

14

15

16

**Deer Trail Mine Geological Information**

The Deer Trail mine workings expose westerly dipping sedimentary rocks of three units: the Toroweap and Queantoweap Formations and the Callville Limestone. The Deer Trail mineralized area is in the lower part of the Toroweap Formation and consists of a nearly continuous group of semiconcordant replacement bodies flanking a central vein. About half of this mineralized area is exposed in the Old Deer Trail mine workings and is oxidized; the other half is located in the 8600 area workings and consists of unoxidized sulphide mineralized material. The Queantoweap Formation, which underlies the Toroweap, is a quartzite and hosts no known mantos. The underlying Callville Limestone contained the 3400 mineralized area.

The Toroweap Formation exposed in the 8600 area consists of a wide range of interbedded lithologies, including quartzite, limestone, dolomite, shale, and chert, which form 50 or more recognizable units ranging in thickness from a inch to several feet. In contrast, the underlying Queantoweap Sandstone consists of a fairly uniform medium-grained, well-sorted massive quartzite. 

The Calville Limestone in the Deer Trail mine lacks marker beds, and lithologic facies change rapidly. The rocks are cut by several faults of unknown displacement. The marked lateral variations in lithology have made it possible to identify only seven correatable stratigraphic assemblages. The upper 240 feet of the Callville Limestone in the 3400 area consists dominantly of mudstones containing quartz silt, evaporite nodules, and sponge spicules. Below 240 feet, dolomite containing microfossils and peloids is abundant and evaporites are absent. In the 8600 area, the Callville has been observed in drill core and there it contains thick beds of course-grained anhydrite. 

The Toroweap Formation in the mine area strikes generally north-south and dips 201 W. The Deer Trail mineralized area rakes across this inclination with a bearing of N 701 W, so the average plunge of the mineralized zone into Deer Trail Mountain is about 181. 

The mantos in the Old Deer Trail mine workings closely followed the axis of the Deer Trail anticline, a relationship that was used to guide development. In the 8600 area, however, the mantos and the anticline axis diverge and the deepest workings are about 1500 feet apart. 

The Deer Trail mineralized area consists of a semicontinuous group of narrow, elongate strata-bound replacement bodies developed adjacent to a central vein. The mineralized area has a sinuous ribbon like shape in plain view and has been mined for a length of approximately 5,525 feet over a width averaging 32 to 38 feet and a height averaging about 15 to 30 feet. 

A set of cross faults that trends east-northeast and dip steeply to the north are exposed in the mine workings in the 8600 area. These have an aggregate stratigraphic throw of about 150 feet, down to the north. One of these faults is the 18 Drift fault or 18 North fault. These faults are now occupied by quartz veins as much as 15 feet thick that contain substantial quantities of lead, zinc, arsenic, silver, gold, copper and molybdennum. The 18 north fault consists of quartz with good values in gold, silver and copper with very little other metals which could possibly be marketed to smelters as a flux. 

**No Reserves -**None of the Deer Trail Mines has ever had measured or indicated ore reserves as currently defined by the Securities and Exchange Commission.  All four companies that previously conducted mining operations between the periods of 1878 and 1980 simply “followed the mineralized area” or its projected trend (Table 1).  This method was undertaken at the Upper (Old) Mine from 1878 to 1942 and in the Lower (New) Mine from 1945 to 1980.  Production at the former was terminated by Presidential Order because of World War II while exploitation of the latter ceased due to the precipitous and prolonged price decline of precious metals.****In both cases there was no lack of prominent mineralization.  The advent of much higher metal prices, particularly with regard to silver and gold, now makes potential mining of the Deer Trail Mine more attractive.  However, the grade and tonnage of the extensions need to be documented with modern methods such as core drilling and re-sampling of the drifts in order to establish any reserves.  

**TABLE 1 – SUMMARY OF MOST PRODUCTIVE PERIODS OF THE UPPER (OLD)**

**AND LOWER (NEW) DEER TRAIL MINE, PIUTE COUNTY, UTAH**

**MINE**

**FROM**

**TO**

**TONNAGE**

**AU**

**AG**

**ZN**

**PB**

**CU**

**Upper Deer Trail Mine (8)**

1918

1923

138,000

1.380 opt

11.49 opt

NA

3.26%

NA

 

 

 

 

 

 

 

 

 

**3400 Area Lower Deer Trail Mine**

1945

1962

 12,226 of 25,600

0.171 opt

11.61 opt

7.45%

2.96%

0.52%

 

 

 

 

 

 

 

 

 

**8600 Area Lower Deer Trail Mine (1)**

1964

1980

100,000

0.100 opt

15.00 opt

12.00%

5.00%

0.60%

Methods for delineating the stratabound mineralization ahead of the respective working faces has historically primarily been limited to following visible mineralization in successive rounds of blasting and mucking.  However, this has been augmented by considerable longhole and up-hole percussion drilling.

17

**Milling Facilities** - In 2000, Unico purchased approximately 680 acres of raw ground located in Piute County, State of Utah adjacent to the existing Deer Trail Mine property for the purpose of establishing a mill site on the property and to use as a place to store waste rock from mining operations, and for other general mining and business purposes.  In 2000 Unico began constructing a 250 ton/day floatation mill at the old town site of Alunite to process mineralized areas from both the 3400 and 8600 Areas of the mine.  The facility was completed in 2007 and was active until mid-January 2009 when activities were temporarily suspended. 

**Exploration of The Upper and Lower Deer Trail Mines**

**Upper Deer Trail Mine**

Upper Mine Geological Justification**-**The Upper (Old) Deer Trail Mine is hosted by the Permian Toroweap Sandstone and lies about 800 feet above the Pennsylvanian Callville Limestone that hosts the Lower (New) Deer Trail Mine.  Intervening between these two mineralized formations is the Permian Queantoweap Sandstone which carries no known mineralization.  This supergene gold-bearing oxide mineralized material has been incompletely exploited by over 6,900 feet of workings contained in a 3,300 foot long X 300 feet wide and 30 feet thick.  The latter two dimensions average 30 to 50 feet wide and 15 to 30 feet high (Beaty et al, 1986).  The workings exploited a series of inter-connected iron and manganese oxide manto-type mineralized areas whose original continuity is locally disrupted by several east-northeasterly-trending internal faults with relatively small displacement.  The distribution of the mantos here appears to be related to the axis of a northwesterly-trending anticline that plunges at an angle slightly greater than the regional dip of about 20o to the northwest.  

The Upper Deer Trail Mine’s primary period of production was from its discovery in 1878 though 1927.   Subsequent lesser efforts extended through 1942.  Production records from 1878 to 1917 indicate that metals with a contemporaneous value of $150,000 were extracted from approximately 10,000 tons of mineralized materials (Butler, et al, p. 557; Beaty, et al, 1986). Later from 1918 to 1923, 138,000 tons of mineralized materials averaging 1.38 opt gold, 11.49 opt silver, and 3.26 percent lead was mined from the Upper (Old) Deer Trail Mine (Callaghan, 1973 and Table 1).  However, zinc and copper were not recovered (Beaty et al, 1986, p. 1933; Bennett, 2000).   

Upper Mine Current Extraction Plan - Extreme high-grading of the mineralized materials took place because of the mine’s relatively remote location and need to maximize the value/ton of mineralized materials as well as to reduce transportation cost; the cut-off grade was reportedly 0.5 opt Au. Thus a considerable amount of material that was formerly considered waste but that is now economic at 2009 prices remains in the workings as both un-mined wallrock and mineralized coarse back-fill (gob).  

**Lower Deer Trail Mine**

Lower Mine Geological Justification - Extensive mining of laterally extensive silver and gold-bearing zinc-lead-cupper-rich sulphide beds (mantos) has been conducted within two separate areas of the Lower (New) Deer Trail Mine over the past 63 years (1945-2008).  However, the main period of activity took place over an interval of 36 years from 1945 to 1971 and from 1976 to 1980.  The sulphide mineralization from both mantos has or will be processed by the on-site Deer Trail Mill.

1.

3400 Area Geological Justification – The 3400 Area of Lower (New) Deer Trail Mine is hosted in the Pennsylvanian Callville Limestone and is comprised of approximately 5,000 feet of development workings.  The mineralization has been developed on the same mineralized bed (manto) on each of the three levels that are 100 vertical feet apart.  However, core drilling in 2005 by the Deer Trail Mining Company indicates that it is but one of a series of over 30 stacked thin mantos that occur over a vertical interval of approximately 600 feet (Fig. 4 and 4a, 4b, & 4c).  These mantos are comprised by single or multiple mineralized layers that are generally 0.3 to 1.6 feet thick within 1.0 to 6.0 foot thick beds (Beaty, Rohtert, and McGrane, 1982; Beaty and Stegen, 1983; Beaty, et al, 1986).  The known mineralized bodies here are up to 250 feet wide, 4,200 feet long, and open down-dip (Beaty, Rohtert, and McGrane, 1982).  Later work by Behre Dolbear (2007) documents that composite mantos commonly occur over intervals of 2.0 to 10.0 feet that locally range up to potentially mineable intervals of 30 feet.  These extend over 1,300 feet from at least the 3100 Area to the 4400 Area of the mine.  

The 3400 Area contains the oldest stopes of the Lower Mine.  It was mined on three levels primarily between 1945 and 1962 and briefly in 1981.  Production statistics providing insight into its overall grade only exist for about half of the estimated 25,600 tons mined (Table 3).  Weight-averaged calculations performed in August 2008 by the Deer Trail Mining Company using Concentrator Return Settlement Sheets document that approximately 48% (12,226 tons) of the estimated 25,600 tons apparently selectively mined during six separate years between 1945 to 1981 averaged 0.171 opt Au, 11.61 opt Ag, 7.45 percent Zn, 2.96 percent Pb, and 0.52 percent Cu.  More recently bulk mining by the Deer Trail Mining Company undertaken from 2002 to 2004 yielded 2,000 tons averaging 0.055 opt gold, 8.40 opt silver, 1.65 percent zinc, 1.58 percent lead, 0.289 percent copper.  

18

**TABLE 3 – KNOWN 3400 AREA PRODUCTION, LOWER (NEW) DEER TRAIL MINE,**

**PIUTE COUNTY, UTAH (DOCUMENTED BY DEER TRAIL MINING COMPANY, 2008).**

**YEAR**

**TONNAGE**

**AU**

**AG**

**CU**

**PB**

**ZN**

**ZN/PB**

 

 

 

 

 

 

 

 

**1945**

5,000 tons

0.190 opt

15.17 opt

0.76%

2.84%

6.26%

2.2/1

 

 

 

 

 

 

 

 

**1946-1959**

NA

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

**1960**

370 tons

0.170 opt

10.46 opt

1.19%

2.03%

9.01%

4.4/1

 

 

 

 

 

 

 

 

**1961**

2,199 tons

0.190 opt

7.42 opt

0.29%

2.78%

10.86%

3.9/1

 

 

 

 

 

 

 

 

**1962**

1,209 tons

0.060 opt

7.50 opt

0.22%

4.04%

4.71%

1.2/1

 

 

 

 

 

 

 

 

**1963-1980**

No Prod

8600

Area

Only

Mined

 

 

 

 

 

 

 

 

 

 

**1981**

3,048 tons

0.190 opt

11.08 opt

0.36%

3.18%

8.78%

2.8/1

 

 

 

 

 

 

 

 

**1982-2001**

No Prod

Extended

Period  of

Depressed

Metal

Prices

 

 

 

 

 

 

 

 

 

**2002**

500 tons

Not in total

or wgt avgs

 

 

 

 

 

 

 

 

 

 

 

 

**2003**

500 tons

Not in total

or wgt avgs

 

 

 

 

 

 

 

 

 

 

 

 

**2004**

500 tons

0.055 opt

8.40 opt

0.29%

1.58%

1.65%

1.0/1

 

 

 

 

 

 

 

 

**2005-2007**

No Prod

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**2008**

500 tons

Not in total

or wgt avgs

 

 

 

 

 

 

 

 

 

 

 

 

**Wgt Avg**

**12,326 tons**

**0.171 opt**

**11.61 opt**

**0.52%**

**2.96%**

**7.45%**

**2.6/1**

2.

8600 Area Geological Justification –The 8600 Area is the more newly developed portion of the Lower (New) Deer Trail Mine and was exploited from 1964 and 1980.  It constitutes the down-faulted northwesterly extension of the Upper (Old) Deer Trail Mine Au-Ag-Zn-Pb-Cu blanket-type (manto) mineralized body; both mines are hosted by the Permian Toroweap Sandstone.  The 8600 Area segment is +2,300 foot long X 20 to 100 foot wide X 10 to 40 foot thick segment of the mineralized materials and is comprised by unoxidized zinc, lead, and silver sulphides whereas the 3,300 foot long portion in the Upper (Old) Deer Trail Mine the former minerals have been completely converted to iron, manganese, zinc, and lead oxides.  The 8600 Area sulphide portion of the mineralization is comprised by a group of closely related mantos that flank a northwesterly-trending, steeply dipping limonitized vein known as the Red Fissure. Individual mantos are strata-bound and are as much as 10 feet thick; mineralized minerals are massive in nature. The mineralization is typically thickest at its intersection with the near-vertical structure.  The largest individual Toroweap-hosted manto observed to date in the 8600 Area is more than 600 feet long, 60 feet wide, and 10 feet thick (Beaty, et al 1986; Deer Trail Mining Company Mine Maps, 2008).  The latter two dimensions constitute the working face when mining operations ceased by the end of 1980 due to poor economic conditions (personal communication, Dr. Richard Kennedy, 2006).

A total of 100,000 tons of un-oxidized sulphide mineralized materials were produced from the 8600 Area from 1964 to 1980 (Table 1); it averaged and 0.100 opt gold, 15.00 opt silver, 12.0 percent zinc, 5.0 percent lead, and 0.6 percent copper (Beaty et al, 1986, p. 1933; Bennett, 2000).  Behre Dolbear’s (2007) independent compilation on the tonnage and grades produced during the same period largely corroborates the previously reported figures. Their work yielded 66,800 tons averaging 0.099 opt Au, 10.80 opt Ag, 12.76 percent Zn, 7.74 percent Pb, and 0.21 percent Cu; details for individual years are listed in Table 4.

19

**TABLE 4 - KNOWN 8600 AREA PRODUCTION, LOWER (NEW) DEER TRAIL MINE - 1964 to 1980**

**(INDEPENDENTLY DOCUMENTED BY BEHRE DOLBEHR, 2007a).**

**YEAR**

**TONNAGE**

**GOLD**

**SILVER**

**COPPER**

**LEAD**

**ZINC**

**ZN/PB**

 

 

 

 

 

 

 

 

**1963**

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

 

**1964**

15,119 tons

0.170 opt

5.74 opt

0.04%

5.74%

10.00%

1.7/1

 

 

 

 

 

 

 

 

**1965**

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

 

**1966**

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

 

**1967**

8,876 tons

0.150 opt

11.13 opt

0.15%

7.40%

14.20%

1.9/1

 

 

 

 

 

 

 

 

**1968**

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

 

**1969 & 1970**

31,798 tons

0.075 opt

15.23 opt

0.38%

9.27%

15.86%

1.7/1

 

 

 

 

 

 

 

 

**1971-1976**

No Prod

Midvale

Mill

Closed

 

 

 

 

 

 

 

 

 

 

 

**1976**

Unknown

0.050 opt

9.30 opt

0.22

9.30%

10.40%

1.1/1

**1976**

~100 tons

0.051 opt

15.50 opt

NA

14.50%

26.60%

1.8/1

 

 

 

 

 

 

 

 

**1977**

NA

NA

NA

NA

NA

NA

 

**1977 (4 days)**

224.4

0.040 opt

8.69 opt

0.15%

9.58%

1.56%

0.16/1

 

 

 

 

 

 

 

 

**1978**

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

 

**1979**

6,199

0.026 opt

4.50 opt

0.12%

4.90%

7.20%

1.5/1

 

 

 

 

 

 

 

 

**1980**

4,487

0.032 opt

4.60 opt

0.15%

4.10%

5.30%

1.3/1

 

 

 

 

 

 

 

 

**1981**

NA

NA

NA

NA

NA

NA

 

 

 

 

 

 

 

 

 

**1982-2001**

No Prod

Extended

Period  of

Depressed

Prices

Metal

 

 

 

 

 

 

 

 

 

**2002-2007**

No Prod

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**Wgt Avg**

**66,803 tons**

**0.099 opt**

**10.80 opt**

**0.21%**

**7.47%**

**12.76%**

**1.7/1**

8600 Area Current Extraction Plan –The re-development of the 8600 Area is currently being planned and once funds are available, the grade and tonnage lying ahead of the 1980 working face ahead will be documented.  Subsequently, minimal rehabilitation of the workings will be implemented and a critical new escape-way (raise) mandated by MSHA regulations will be undertaken, and mining resumed.

**Mill Tailings at Upper (Old) Deer Trail Mine** - An estimated 80,300 to 132,540 tons of oxidized mill tailings are present at the site of the Upper (Old) Deer Trail Mine Millsite; grades average from 0.031 to 0.04 opt Au and 2.62 to 8.0 opt Ag (Unico, Inc. Internal Data, 2004; Behre Dolbear, 2007).  Behre Dolbear’s (2007) evaluation of the same historical data from 1990 and 1993 systematic sampling programs of the same material are summarized in the Table 5.  

20

**TABLE 5 - SUMMARY OF TONNAGES, GRADES, AND CONTAINED OUNCES OF PRECIOUS METALS**

**OF 2007 EVALUATION AS COMPARED TO PREVIOUSLY REPORTED QUANTITIES –**

**UPPER (OLD) DEER TRAIL MINE TAILINGS, PIUTE COUNTY, UTAH (BEHRE DOLBEAR, 2007b)**

**(Behre Dolbear’s estimates for contained ounces of gold and silver were obtained by summing gridded values, not by multiplication of ounces and tons)**

**SOURCE**

**SHORT**

** TONS**

**AVG**

**GOLD OPT**

**AVG**

**SILVER OPT**

**CONTAINED**

**GOLD**

**OUNCES**

**CONTAINED**

**SILVER**

**OUNCES**

**BD 2007 - Energy Fuels 1990**

**Lower (Natural Neighbor Est.)**

80,300

0.031 opt

2.62 opt

2,500 oz

218,300 oz

 

 

 

 

 

 

**BD 2007 - Energy Fuels 1990**

**Higher (Min. Curvature Est.)**

102,500

0.031 opt

2.70 opt

3,100 oz

294,000 oz

 

 

 

 

 

 

**BD 2007 - Ecology Mining 1993**

**Lower (Natural Neighbor Est.)**

82,400

NA

NA

NA

NA

 

 

 

 

 

 

**BD 2007 - Ecology Mining 1993**

**Higher – (Min. Curve Est)**

103,400

NA

NA

NA

NA

 

 

 

 

 

 

**1990 Energy Fuels Internal Est.**

**(Pratt to Andrus Memo)**

132,540

0.031 opt

2.66 opt

NA

NA

 

 

 

 

 

 

**2004 Wayne Ash Compilation**

105,000

0.031 opt

2.85 opt

NA

NA

 

 

 

 

 

 

**2002 Unico, Inc Compilation**

123,000

0.040 opt

8.00 opt

NA

NA

**Deer Trail Mine Mineral Resources**

The resources have been outlined above. However, further efforts to increase the mineable resources of the mine are being explored. Deer Trail Mining Company completed phase one which included a reverse circulation exploratory drill program in the upper Deer Trail Mine area.  Deer Trail Mining Company also completed a second phase of underground diamond core drilling conducted in the PTH Tunnel of the Deer Trail Mine, which began in first quarter of 2005 to attempt to prove up reserves.  Deer Trail Mining Company is also evaluating ways to mine more efficiently in order to mine lower grade mineralized bodies economically. Deer Trail Mining Company is evaluating whether cyanide may be used in processing its mineralized materials. Deer Trail Mining Company acquired two heavy media separators. The heavy media separator is a method whereby low grade material can be upgraded underground. Areas  previously undeveloped in the mine due to the amount of waste rock between narrow mineralized beddings might effectively be produced by using heavy media separator technology. 

The Deer Trail deposit is similar to many deposits in Utah, such as Tintic and Park City, where mine reserves were drilled approximately two years ahead of production due to the nature of the deposits and the costs involved in drilling out entire reserves before mining began. Exploration drilling has been conducted. Several prospective targets have been drilled from underground as the workings advance. 

To date only two known mineralized horizons have been exploited. Deer Trail Mining Company believes the underlying formations contain very favorable horizons for mineralization, but they have yet to be tested. Deer Trail Mining Company believes the potential is excellent that more mineralization will be discovered. 

**Mill Tailings Current Extraction Plans**

The grade and tonnage of the tailings and dumps present at the Upper Mine site will be re-confirmed by reverse circulation or any other suitable means of drilling.  All economically prospective mill tailings and dumps existing on the property, as well as possibly from other nearby mines will be re-processed and the precious metals contained within them recovered.  This will be accomplished when metallurgical test work determines the best method of recovery and the required equipment has been installed and activated.

**Exploration Time Table and Budget**

Additional exploration is being planned and is part of the 12 month plan presented in the plan of operation.

21

**Plans to Conduct Exploration**

The budget for the exploration portion of the work presented in the 12 month plan is $2,500,000

**Funding for Exploration Programs**

It is anticipated that funding for most exploration programs will be generated through one or more of the following:

1.

Sale of Au-Ag-Zn-Pb-Cu concentrate.

2.

Acquiring joint venture partners.

3.

Private stock placements.

**Silver Bell Mine**

In 2000, Unico acquired all of the issued and outstanding shares of stock of Silver Bell Mining Company, Incorporated, a Utah corporation.  Silver Bell Mining Company, Incorporated was incorporated in the State of Utah on April 26, 1993. It has acquired the mineral rights to 26 patented mining claims located in American Fork Canyon, Utah County, Utah, which is organized into three separate parcels. The claims contain mining properties which have not been mined for production since 1983. The properties were mined primarily for silver, lead and zinc. There are no known, proven or probable reserves on the property. 

The Silver Bell deposit was first discovered in 1871 by soldiers stationed at Fort Douglas in Salt Lake City. Mining was confined to select high grade mineralized materials averaging 100 ounces per ton in silver. The workings consisted of an adit and a winze and mineralized materials were lowered down the mountain by means of a cable and rail system. The mine was enlarged to accommodate larger equipment in 1980 and some mineralized areas averaged 22 ounces in silver per ton of mineralized materials. The deposit consists of a single fissure or vein known as the Silver Bell fissure which averages six feet in width and dips to the NW at 62 degrees. It has been exposed for over 300 feet in depth and over 1,200 feet of strike length. Associated with the fissure several mineralized horizons (mantos) have been encountered. Independent sampling done by Watts, Grifiths, and McQuat and others demonstrate that the mantos are far richer than the vein mineralization with values as high as 120 ounces per ton silver. The deposit contains both oxide and sulphide mineralized materials rich in silver, lead, zinc and copper. The sulphide mineralization contains more values than the oxides. The mineralized system is located within the Maxfield cambrian limestone unit and extends down through the Ophir units into the Tintic Quartzite. There is presently an estimated resources of over 100,000 tons. 

Silver Bell Mining Company conducted some exploration work on the Silver Bell Mine in Summer, 2003 through 2004.  Future exploration, if any, at the Silver Bell Mine will be conducted through Unico's subsidiary, Silver Bell Mining Company, Inc. Unico intends to focus its efforts on the Deer Trail Mine for the immediate future

**Bromide Basin Mining Company, LLC**

Unico has a wholly-owned subsidiary known as the Bromide Basin Mining Company, LLC which was formed for the purpose of conducting mine exploration activities at the Bromide Basin Mines.  The lease and purchase option on this property expired on October 31, 2007.  The Company chose not to extend it or pursue the purchase option.

**Plan of Operation**

During the next 12 months, the Company’s plan of operation is to raise additional funds for investment into its subsidiary Deer Trail Mining Company. Depending on the actual level of funding obtained, the following activities are planned: 

·

Development, exploration and operating activities to recommence production at upper Deer Trail Mine;

·

Installation of processing circuit, including tailings ponds, permits and upgrades to the primary circuit;

·

Research and testing to obtain 43-101 technical report;

·

Underground rehabilitation of the lower Deer Trail Mine 8600 area, including upgrades to electrical and mine drifting to support exploration;

·

Initial exploration program for the lower Deer Trail Mine 8600 area;

·

Additional exploration of the lower Deer Trail Mine 3400, 4400 and 6600 areas;

·

Research and testing on the Mississippian Redwall Limestone area;

·

Research on the Deer Trail Mine Porphyry.

Accomplishing the 12-month plan of operations is dependent on: (a) the Company raising approximately $8,380,000 in equity and/or debt.  

22

**Smelting and Refining**

It is expected that the processing of concentrates generated from the mill will take place on site.  Gold, silver and tellurium will be extracted from the concentrates.  All base metals will be stored to be shipped later in rail car lots to smelters in Canada or Mexico.

**Dependence on Metal Prices**

Unico's future activities will be largely dependent on metal prices. The prices may fluctuate on the world commodity markets and will be beyond the influence of Unico. A substantial reduction in the price of metals might impede Unico's ability to economically mine or to raise additional capital. Similarly, recent increases in precious metal prices have been beneficial to mining companies, and may increase Unico's ability to acquire new capital. 

**Results of Operations**

For the three months ended May 31, 2010 and May 31, 2009, Unico reported no revenues.   

During the three months ended May 31, 2010 the Company incurred total operating expenses of $565,472, an increase of $118,845 from the $446,627 of total operating expenses incurred in the three months ended May 31, 2009.  The increase is due primarily to an increase of $212,470 in general and administrative expense offset by a decrease of $22,743 in depreciation and accretion, a decrease of $6,275 in drilling, exploration and maintenance expense, a decrease of $34,443 in professional fess and a decrease of $30,164 in salaries/wages. .  The overall increase is due to an increase in board fees and issuance of options to the board of directors offset in part by a decrease in other operating expenses which is largely attributable to a decrease in overall operations based on a lack of funding. 

During the three months ended May 31, 2010, interest expense was $511,220, a decrease of $59,438 from the $570,658 of interest expense recorded in the three months ended May 31, 2009.  During the three months ended May 31, 2009, the Company had $-0- gain on settlement of debt as compared to $13,153 for the same three month period ended May 31, 2010.    The overall decrease in interest expense for the three month period is attributed to the fact that there were a smaller dollar amount of debentures outstanding in the three month period ended May 31, 2010 than for the same three month period a year ago.

During the three months ended May 31 2010, Unico experienced a net loss in the amount of $1,076,692 or approximately ($0.00) per share, compared to a net loss of $1,004,132 or approximately ($0.01) per share for the same period in 2009.  Unico attributes the $72,560 increase in net loss for the three month period ended May 31, 2010 compared to the three month period ending May 31, 2009, to an increase in general and administrative expenses because of increased expenses for the board of directors offset by  a decrease in operating expenses, and a decrease in interest expense due to a decrease in operations and funding.  

**Liquidity and Capital Resources**

The Company’s financial statements present an impairment in terms of liquidity. As of May 31, 2010 the Company had a deficit in working capital of $19,798,947.  The Company has accumulated $72,087,450 of net operating losses through May 31, 2010, which may be used to reduce taxes in future years through 2030. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carry-forwards.  The potential tax benefit of the net operating loss carry-forwards have been offset by a valuation allowance of the same amount. Under continuing operations the Company has not yet established revenues to cover its operating costs.  Management believes that the Company will soon be able to generate revenues sufficient to cover its operating costs through the operations of its Deer Trail Mining Company, LLC subsidiary.  In the event the Company is unable to do so, and if suitable financing is unavailable, there is substantial doubt about the Company’s ability to continue as a going concern. 

The Company’s stockholders’ deficit increased $582,626 in the three month period ended May 31, 2010, from a deficit of ($13,033,746) as of February 28, 2010 to a deficit of ($13,616,372) as of May 31, 2010.

The Company needs to raise approximately $8,380,000 in equity and/or debt financing during the next 12 months to be used for the Company’s operations.  The Company will need to effect a reverse stock split of its issued and outstanding shares to permit the Company to have sufficient authorized, but unissued, shares of its common stock available to provide for the conversion of the Company’s existing $7,374,607 of convertible debentures into shares of the Company’s common stock.  

**Going Concern**

Our auditors have issued a "going concern" opinion in note 6 of our February 28, 2010 financial statements, indicating we do not have established revenues sufficient to cover our operating costs and to allow us to continue as a going concern. If we are successful in raising an additional $8,380,000 in equity, debt or through other financing transactions in the next 12 months we believe that Unico will have sufficient funds to meet operating expenses until income from future activities are sufficient to cover operating expenses. 

23

**Capital Expenditures**

The Company sold/traded $14,700 of property during the three months ended November 30, 2009.  The Company anticipates that it may spend, approximately $400,000 for additional capital expenditures during the balance of its current fiscal year.

**Critical Accounting Policies**

In the notes to the audited consolidated financial statements for the year ended February 28, 2010, included in the Company’s Annual Report on Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.

The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities.  The actual results may differ from these estimates under different assumptions or conditions. 

**Item 3.    Quantitative and Qualitative Disclosures About Market Risk****.**

A “smaller reporting company” (as defined by Item 10 of the Regulation S-K) is not required to provide the information required by this Item.

**Item 4.    Controls and Procedures.**

Evaluation of Disclosure Controls and Procedures

Under the supervision of the Board of Directors and with the participation of management, Mark A. Lopez, acting as our chief executive officer, and Kenneth C. Wiedrich, acting as our chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of February 28, 2010. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective and did not identify all data that was  to be record to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our chief executive officer and chief financial officer, in a manner that allowed for timely decisions regarding required disclosure.  During the audit period for the year ended February 28, 2010 journal entries to record stock awards were not initially recorded and adjusting entries were made during the audit process to correct this oversight.  Management has implemented a review process of all board minutes on a monthly basis to insure that all items are accounted for.   

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the required time periods and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.  The effectiveness of any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate improper conduct completely.  A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.  As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud.

Changes in Internal Control Over Financial Reporting

During the quarter ended May 31, 2010 management implemented a review process of all board minutes on a monthly basis to insure that all items are accounted for.   

24

**PART II - OTHER INFORMATION**

**Item 1.    Legal Proceedings.**

On August 14, 2008, Unico shareholders Randall Sullivan, Barry Raykoske, and Jack Reilly filed a derivative lawsuit on behalf of Unico against Ray C. Brown, Kenneth C. Wiedrich, Mark A. Lopez, Shane Traveller, Javelin Advisory Group, Inc., and Unico (as a nominal defendant) in the Superior Court of the State of California, San Diego County Central Division (Case No. 37-2008-0008901-CU-PN-CTL).  The plaintiffs alleged that the named defendants breached fiduciary duties owed to Unico, and were negligent in the approval of certain financing transactions entered into on behalf of Unico.  The parties reached a settlement which was approved by the court, pursuant to which Unico’s insurance company paid $448,828 for attorney’s fees to Plaintiff’s counsel and $28,672 for reimbursement of expenses.  An incentive award of $7,500 was paid to each of the named plaintiffs.  Unico agreed to certain restrictions and limitations affecting Unico’s governance procedures, its ability to enter into financing transactions with certain persons, and restricting Unico from issuing its stock pursuant to Section 3(a)(10) of the Securities Act of 1933 in connection with settling debt arising from Unico financing activities.  A press release more fully describing the terms of the settlement has been published on Unico’s website at www.unicomining.com.  The court has approved the settlement and this litigation has concluded.

On September 30, 2008, a lawsuit was filed by Cache Valley Electric Company against Unico, Incorporated in the Third Judicial District Court for Salt Lake County, State of Utah (Case No. 080921346) in which the plaintiff alleges that it provided goods and services to Unico in the amount of $191,615, for which it has not received payment.  The plaintiff alleges that Unico breached the contract by failing to pay for the goods and services, and is seeking a money judgment against Unico in the amount of $191,615 together with interest thereon at the statutory rate and court costs.  On March 2, 2009, a Default Judgment was entered against Unico in the amount of $216,291.  Unico subsequently entered into the Unico Incorporated Settlement Agreement, dated March 27, 2009 (“Settlement Agreement”).  The Settlement Agreement provides that Unico is to pay Cache Valley Electric Company $216,291 as follows: Unico is to make six monthly payments in the amount of $6,000 per month beginning April 25, 2009; six monthly payments of $10,000 per month beginning October 25, 2009; seven monthly payments of $15,000 per month; and a final monthly payment of $15,291.  The Settlement Agreement further provides that if the payments are made as set forth above, no further action will be taken against Unico.  If the payments are not received within a ten-day grace period following the respective due dates, the entire unpaid balance less any payments made will become due and payable immediately, and no rights as to the recovery of that amount, including  all legal fees, court costs, and interest due will have been waived by virtue of the Settlement Agreement.  The Settlement Agreement further provides that when the settlement amount is fully funded, Cache Valley Electric Company is to execute and file a Release of Judgment for the full amount of the claim.  Finally, the Settlement Agreement provides that if a Lien against Unico has been filed, Cache Valley Electric Company is to file a Release of Lien with the clerk of the Third Judicial District Court for Salt Lake County immediately upon receipt of the final payment.  Unico made payments under the settlement through November 2009, and is currently behind in its payment obligations under the settlement.

On or about January 5, 2009, a lawsuit was filed by Atlas Mining Company, an Idaho corporation, dba Atlas Fausett Contracting against Deer Trail Mining Company, LLC in the Sixth Judicial District Court for Piute County, State of Utah (Case No. 0090600001) in which the plaintiff alleged that it provided certain mine rehabilitation services and materials with respect to the Deer Trail Mine pursuant to a written contract for which it has not been paid.  The plaintiff alleged that Deer Trail Mining Company, LLC breached the contract by failing to pay for the services and materials, and sought a money judgment against Deer Trail Mining Company, LLC for at least $182,144 plus interest at 18% per annum, plus costs.  Plaintiff also sought a court order adjudging a mining lien filed by the plaintiff against the Deer Trail Mine on or about July 9, 2008 to be a good and sufficient lien on the Deer Trail Mine securing payment of the obligations under its contract with Deer Trail Mining Company, LLC, and ordering that the Deer Trail Mine be foreclosed and sold by the sheriff of Piute County, with the sales proceeds being applied against the amount due and owing to plaintiff from the Deer Trail Mining Company, LLC and to the foreclosure costs.  Deer Trail Mining Company, LLC filed an Answer denying liability. The parties reached a settlement of the lawsuit on November 6, 2009, and the plaintiff has since been paid in full.  This litigation has been dismissed. 

**Item 1A.    Risk Factors.**

A “smaller reporting company” (as defined by Item 10 of Regulation S-K) is not required to provide the information required by this Item.

**Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.**

During the quarter ended May 31, 2010, the Company issued $201,500 of convertible debentures to Moore Investment Holdings.  The Debentures are due in 180 days from their issuance dates, bear interest at 8% per annum, and provide that the principal amount and accrued interest are convertible, at the option of the holders of the Debentures, into Unico’s common stock at a price per share equal to 50% of the closing bid price of Unico’s common stock as quoted on the OTC Bulletin Board on the immediately preceding trading day prior to delivering the notice of conversion.  The cash from the issuance of the debentures was used for operations. 

25

  

During the quarter ended May 31, 2010, the Company issued 1,738,081,667 shares of its common stock on the conversion of $244,362 principal and $2,671 interest on the terms of the outstanding debentures, at a discount of 50% from the closing bid price for the Company’s common stock on the date of each conversion

All of the shares were issued without registration in reliance on Section 4(2) of the Securities Act of 1933 for transactions not involving any public offering.  Each of the recipients received disclosure information concerning Unico.  The certificates representing the shares issued were all appropriately restricted, except in those situations where shares could be issued without a restricted legend in reliance on Rule 144 (b) (1).

As of May 31, 2010, there are approximately $7,374,607 of outstanding convertible debentures and the holders of these debentures have the right to convert them to shares of the Company’s common stock.  Approximately $518,422 of these debentures are convertible at a 20% discount from the bid price of Unico’s common stock as of the time of conversion, and the balance are convertible at a 50% discount from the bid price of Unico’s common stock as of the time of conversion. 

All of the Debentures and shares of common stock were issued without payment of any underwriting discounts or commissions, and without the assistance of an underwriter.

For information concerning sales of other convertible debentures or shares of Unico's Common Stock by Unico which were not registered under the Securities Act of 1933 during the fiscal years ended February 28, 2007, February 29, 2008 and February 28, 2009, or during the first fiscal quarter of the current fiscal year, please refer to Unico's annual reports on Form 10-KSB for the fiscal year ended February 28, 2008, and Form 10-K for the fiscal years ended February 29, 2009 and February 28, 2010, respectively.

**Item 3.    Defaults Upon Senior Securities.**

As of February 28, 2010 the Company had $7,417,468 of convertible debentures that were due and payable.  Of this amount, $6,715,969 were in default. 

As of May 31, 2010, the Company had $7,374,607 of convertible debentures of which $6,853,607 are in default and are due to the following:

Moore Investment Holdings, LLC

$

5,723,054 

Joseph Lopez

$

114,466 

Ray Brown

$

403,956 

C. M. Anderson and third parties

$

612,131

    Total in default

$

6,853,607 

Of the remaining debentures that are due and payable, $95,000 defaulted in June, 2010, and $126,500 will default in July, 2010, and $98,000 will default in August, 2010, if not paid. 

The Company has also recorded a liability for the 20% to 50% discount conversion rights of the debentures.  As of May 31, 2010 the total liability of the beneficial conversion for the debentures is $7,270,924 and the total liability for the interest portion of the beneficial conversion of the debentures is $1,493,821.  

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

None

**Item 5.    Other Information.******

On January 12, 2010, Unico established an Audit Committee and adopted an Audit Committee charter.  Ernest H. Kuhn, Edward E. Winders and David A. Gillespie were appointed to the Audit Committee to serve for a period of one year.  Ernest H. Kuhn was appointed Chairman of the Audit Committee. Subsequent to the quarter ending May 31, 2010 on June 17, 2010, Ernest H Kuhn resigned as a member of the board of directors and as chairman of the audit committee.  The board of directors nominating committee is in the process of reviewing candidates to fill this vacancy.

26

**Item 6.    Exhibits and Reports on Form****8-K.**

(a) Exhibits 

The following exhibits are filed as part of this statement:

The exhibits listed below are required by Item 601 of Regulation S-B.  

**Exhibit No.**

**Description**

**Location**

10.100

Convertible Debenture No. 249 for $16,000 dated March 1,  2010 issued to Moore Investment Holdings, LLC

Filed herewith

10.101

Convertible Debenture No. 250 for $30,000 dated March 4, 2010, issued to Moore Investment Holdings, LLC

Filed herewith

10.102

Convertible Debenture No. 251 for $25,000 dated March 5, 2010 issued to Moore Investment Holdings, LLC

Filed herewith

10.103

Convertible Debenture No. 252 for $15,000 dated April 5, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.104

Convertible Debenture No. 253 for $30,000 dated April 9, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.105

Convertible Debenture No. 254 for $10,000 dated April 14, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.106

Convertible Debenture No. 255 for $10,000 dated April 20, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.107

Convertible Debenture No. 256 for $10,000 dated April 21, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.108

Convertible Debenture No. 257 for $10,000 dated April 26, 2010

issued to Moore Investment Holdings, LL

Filed herewith

10.109

Convertible Debenture No. 258for $5,000 dated April 29, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.110

Convertible Debenture No. 259 for $5,000 dated May 6, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.111

Convertible Debenture No. 260 for $5,000 dated May 7, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.112

Convertible Debenture No. 261for $5,000 dated May 17, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.113

Convertible Debenture No. 262 for $5,000 dated May 18, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.114

Convertible Debenture No. 263 for $5,000 dated May 19, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.115

Convertible Debenture No. 264 for $1,500 dated May 25, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.116

Convertible Debenture No. 265 for $7,000 dated May 26, 2010

issued to Moore Investment Holdings, LLC

Filed herewith

10.117

Convertible Debenture No. 266 for $7,000 dated May 28, 2010 issued to Moore Investment Holdings, LLC

Filed herewith

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  

Filed herewith

27

**SIGNATURES**

 

Pursuant to the requirements 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, INCORPORATED**

Date: July 20, 2010

*/s/ Mark A. Lopez*

Mark A. Lopez

Chief Executive Officer

 

 

28**