**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 August 31, 2009

£ 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 £ NoT

**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 October 10, 2009, the issuer had outstanding 420,489,553 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**

**August 31, 2009**

3

**UNICO, INCORPORATED**

**(An exploration stage company)**

**Consolidated Balance Sheets**

 

 

 

**August 31,**

 

**February 28,**

 

 

**2009**

 

**2009**

**ASSETS**

 

(Unaudited)

 

 

Current Assets

 

 

 

 

 

Cash 

$ 

225,452 

$ 

417 

 

Accounts receivable

 

- 

 

- 

 

Prepaid expense

 

- 

 

- 

           Total Current Assets 

 

225,452 

 

417 

Fixed Assets

 

 

 

 

 

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

 

6,248,274 

 

6,469,093 

 

Construction in progress

 

- 

 

- 

 

Total Fixed Assets

 

6,248,274 

 

6,469,093 

Other Assets:

 

 

 

 

 

Cash- reclamation bonds

 

221,526 

 

221,526 

 

Deposit

 

20,947 

 

20,947 

 

Total Other Assets

 

242,473 

 

242,473 

 

Total Assets 

$ 

6,716,199 

$ 

6,711,983 

**LIABILITIES AND STOCKHOLDERS' DEFICIT**

 

Current Liabilities 

 

 

 

 

 

Accounts payable 

$ 

1,006,210 

$ 

1,148,535 

 

Wages payable

 

44,122 

 

93,283 

 

Accrued expenses 

 

400 

 

400 

 

Reclamation obligations

 

164,748 

 

158,119 

 

Accrued interest payable

 

33,534 

 

32,006 

 

Accrued interest payable - related party (Note 2)

 

1,092,384 

 

813,008 

 

Accrued interest - at 50% conversion (Note 2)

 

1,119,419 

 

834,179 

 

Taxes payable

 

144,179 

 

53,315 

 

Debentures payable, (Note 3)

 

1,091,584 

 

187,584 

 

Debentures payable-related party  (Note 2)

 

6,904,985 

 

7,879,368 

 

Debentures payable - 50% conversion (Note 2)

 

7,892,885 

 

7,954,267 

 

Total Current Liabilities 

 

19,494,450 

 

19,154,064 

 

Total Liabilities 

 

19,494,450 

 

19,154,064 

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, 280,967,605 and 35,823,306 shares issued and outstanding, respectively

 

280,966 

 

35,823 

 

Stock Payable

 

999,000 

 

999,000 

 

Additional Paid in Capital

 

53,906,737 

 

51,766,789 

 

Accumulated Deficit prior to exploration stage

 

(15,340,078)

 

(15,340,078)

 

Accumulated Deficit during the exploration stage

 

(52,634,676)

 

(49,913,415)

          Total Stockholders' Deficit

 

(12,778,251)

 

(12,442,081)

 

Total Liabilities and Stockholders' Deficit

$ 

6,716,199 

$ 

6,711,983 

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

4

**UNICO, INCORPORATED**

**(An exploration stage company)**

**Consolidated Statements of Operations**

**(Unaudited)**

 

 

 

 

 

 

**Cumulative**

 

 

 

 

 

 

**Period from**

 

 

 

 

 

 

**Inception**

 

 

 

 

 

 

**(June 1,**

 

 

**For the Six Months Ended**

 

**For the Three Months Ended**

 

**2004) to**

 

 

**August 31,**

 

**August 31,**

 

**August 31,**

 

 

**2009**

 

**2008**

 

**2009**

 

**2008**

 

**2009**

 

 

 

 

**Restated**

 

 

 

**Restated**

 

 

Total Revenues

$

- 

$

- 

$

- 

$

- 

$

26,202 

Operating Expenses 

 

 

 

 

 

 

 

 

 

 

     Drilling, exploration and maintenance expense

 

59,309 

 

170,336 

 

41,727 

 

49,612 

 

1,712,628 

     Depreciation and accretion

 

248,141 

 

118,085 

 

124,564 

 

59,141 

 

1,188,561 

     Professional fees

 

214,866 

 

203,770 

 

163,075 

 

110,253 

 

2,301,035 

     Salaries/wages

 

301,592 

 

397,878 

 

150,302 

 

189,781 

 

2,408,302 

     General and administrative expense

 

207,744 

 

229,643 

 

105,357 

 

93,573 

 

3,886,888 

     Total Operating Expenses 

 

1,031,652 

 

1,119,712 

 

585,025 

 

502,360 

 

11,497,414 

Net Operating Loss 

 

(1,031,652)

 

(1,119,712)

 

(585,025)

 

(502,360)

 

(11,471,212)

Other Income (Expense) 

 

 

 

 

 

 

 

 

 

 

     Interest expense

 

(1,708,652)

 

(1,834,211)

 

(1,137,994)

 

(900,535)

 

(18,173,609)

     Interest income

 

644 

 

2,969 

 

644 

 

2,913 

 

29,939 

     Loss on sale of asset

 

- 

 

- 

 

- 

 

- 

 

(5,914)

     Gain/ (Loss) on settlement of debt 

 

18,399 

 

- 

 

5,246 

 

- 

 

(22,989,858)

     Other income

 

- 

 

- 

 

- 

 

- 

 

(23,672)

     Total Other Expense 

 

(1,689,609)

 

(1,831,242)

 

(1,132,104)

 

(897,622)

 

(41,163,114)

LOSS FROM CONTINUING OPERATIONS

 

(2,721,261)

 

(2,950,954)

 

(1,717,129)

 

(1,399,982)

 

(52,634,326)

Income Tax Expense 

 

- 

 

- 

 

- 

 

- 

 

(350)

Net Loss 

$ 

(2,721,261)

$

(2,950,954)

$ 

(1,717,129)

$

(1,399,982)

$

(52,634,676)

Net Loss Per Share 

$ 

(0.02)

$

(0.30)

$ 

(0.01)

$

(0.14)

 

 

Weighted Average Shares Outstanding 

 

138,320,881 

 

9,982,795 

 

209,666,812 

 

10,084,863 

 

 

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**

 

 

 

 

**(June 1,**

 

 

**For the Six Months Ended**

 

**2004) to**

 

 

**August 31,**

 

**August 31,**

 

 

**2009**

 

**2008**

 

**2009**

 

 

 

 

**Restated**

 

 

**Cash Flows from Operating Activities:**

 

 

 

 

 

 

Net Loss 

$ 

(2,721,261)

$ 

(2,950,954)

$ 

(52,634,676)

Adjustments to Reconcile Net Loss to Net Cash Provided by Operations: 

 

 

 

 

 

 

     Depreciation and accretion expense 

 

248,141 

 

118,084 

 

1,188,560 

     Loss on settlement of debt

 

- 

 

- 

 

23,442,317 

     Interest related to convertible debentures

 

1,385,044 

 

1,546,983 

 

15,782,540 

     Loss on sale of assets

 

- 

 

- 

 

5,914 

      S-8 stock issued for services

 

18,569 

 

- 

 

18,569 

     Common stock for services

 

- 

 

- 

 

280,500 

     Preferred stock for services 

 

- 

 

- 

 

35,710 

Changes in Operating Assets and Liabilities: 

 

 

 

 

 

 

     (Increase) Decrease in: 

 

 

 

 

 

 

     Reclamation deposit 

 

- 

 

(2,899)

 

7,928 

     Prepaid expense

 

- 

 

8,000 

 

(20,247)

     Deposit

 

- 

 

- 

 

5,158 

     Accounts receivable

 

- 

 

1,420 

 

- 

     Increase (Decrease) in: 

 

 

 

 

 

 

     Accrued expenses

 

312,986 

 

276,023 

 

702,520 

     Accounts payable and other liabilities

 

(91,250)

 

(74,485)

 

1,855,781 

Net Cash Used by Operating Activities 

 

(847,771)

 

(1,077,828)

 

(9,329,426)

 

**Cash Flows from Investing Activities:**

 

 

 

 

 

 

Purchase of fixed assets- Construction in progress

 

- 

 

(146,789)

 

- 

Sale of fixed assets

 

- 

 

- 

 

26,200 

Purchase of fixed assets

 

(20,694)

 

(5,649)

 

(6,752,310)

Net Cash Used by Investing Activities

 

(20,694)

 

(152,438)

 

(6,726,110)

 

**Cash Flows from Financing Activities:**

 

 

 

 

 

 

Decrease/increase in bank overdraft

 

- 

 

(3,142)

 

(13,622)

Capital contributions from shareholders

 

- 

 

- 

 

818,000 

Proceeds from notes and stock payables

 

6,000 

 

- 

 

1,106,800 

Issuance of convertible debentures

 

1,087,500 

 

1,290,000 

 

14,427,954 

Payments on notes and debentures

 

- 

 

- 

 

(58,144)

Net Cash Provided by Financing Activities 

 

1,093,500 

 

1,286,858 

 

16,280,988 

Net Increase (Decrease) in Cash 

 

225,035 

 

56,592 

 

225,452 

Cash at Beginning of Period 

 

417 

 

- 

 

- 

Cash at End of Period 

$ 

225,452 

$ 

56,592 

$ 

225,452 

 

Cash Paid For: 

 

 

 

 

 

 

  Interest 

$ 

2,000 

$ 

- 

$ 

91,010 

  Income Taxes 

$ 

- 

$ 

- 

$ 

350 

Non-Cash Financing Activities: 

 

 

 

 

 

 

  Common stock issued for services

$ 

18,569 

$ 

- 

$ 

410,185 

  Preferred stock issued for debt extinguishments

$

- 

$

- 

$

261,550 

  Common Stock issued for debt extinguishments

$

1,189,964 

$

30,000 

$ 

5,348,449 

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

6

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

August 31, 2009

**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**

 

**August 31,**

**2009**

 

**February 28,**

**2009**

Fixed Assets:

 

 

 

 

Furniture & Equipment

$

2,403,260 

$

2,397,566 

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

 

83,614 

 

68,614 

   Total

 

7,685,038 

 

7,664,344 

Less Depreciation

 

(1,436,764)

 

(1,195,251)

Net Equipment 

$

6,248,274 

$

6,469,093 

The Company exercised its option to purchase the claims covered by the Deer Trail lease and paid the balance of $1,700,000 that was owed on the purchase option agreement in the quarter ended August 31, 2007.    A total of $4,000,000 was paid to purchase the Deer Trail Claim over a period of approximately three years.  The initial $1,000,000 that was paid towards the lease purchase was expensed in the 2004 fiscal year based on the fact that the Company did not have independent third party verification of the mineable assets at the time.  As a result, only $3,000,000 of the total acquisition of $4,000,000 has been capitalized.  

The purchase of the Deer Trail mines claims is comprised of 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) will be treated as a purchase of land based on the fact that patented claims give the Company title to the use of the land.  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

August 31, 2009

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

c.

Accounting for Convertible Debentures

The outstanding convertible debentures issued by the Company are accounted for based on Statement No. 150 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 SFAS 150 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.  The company has not filed tax returns since the year 2000 and is therefore subject to examination by the IRS under the rules of the statute of limitations.

FIN 48 – Accounting for Uncertainty in Income Taxes

On March 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income taxes (FIN 48). FIN 48 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. FIN 48 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 March of 2008, the FASB issued statement 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB statement no. 133” (FAS 161).  FAS 161 requires companies to enhance disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting.  The provisions of FAS 161 become effective as of November 15, 2008.  We are currently evaluating the impact that FAS 161 will have on our financial statements

The FASB has issued SFAS No. 168 to replace FASB Statement No. 162.  It provides that for annual and interim periods ending after September 15, 2009, the FASB Accounting Standards Codification will become the single source of authoritative generally accepted accounting principles (GAAP) in the United States.  Once a company issues financial statements for a period ending after September 15, 2009, the SEC Staff believes any reference to specific elements of GAAP should use Codification references.

8

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

August 31, 2009

**NOTE 2 – RELATED PARTY DEBENTURES**

The Company previously issued convertible debentures of $645,132 to Ray Brown, a member of the board of directors.  Ray Brown 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. These debentures bear interest at 10% per annum and were due September 2005, and December 25, 2004, respectively. The debentures are 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. During the quarter ending August 31, 2009 the Company paid Ray Brown $7,584 in cash for interest owed and issued 3,227,124 shares of common stock for the conversion of  $45,000 of principal due Ray Brown.  The Company has recorded an accrued interest payable of $6,411 for Ray Brown’s debenture and $56,417 for JosephLopez’s debenture as of August 31, 2009.  As of the quarter ended August 31, 2009, the Company owes Mr. Brown $403,956 in principal and $6,411 in interest, and it owes Joseph Lopez $114,466 in principal and $56,417 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.  During the quarter ended May 31, 2009, the Company issued an additional $262,500 of convertible debentures to Moore Investment Holdings. And during the quarter ended August 31, 2009 the Company issued an additional $825,000 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 year ended February 28, 2009 the Company converted $62,649 of interest and $18,052 of principal due Moore Investment Holdings through the issuance of 7,800,000 post-reverse shares of common stock.  During the quarter ended May 31, 2009, the Company converted $7,543 of interest and $116,332 of principal due Moore Investment Holdings through the issuance of 24,750,000 post-reverse shares of common stock. And during the quarter ended August 31, 2009, the Company converted $4,048 of interest and $160,453 of principle due Moore Investment Holdings through the issuance of 32,000,000 post reverse shares of common stock.

During the fiscal year ended February 28, 2009, Moore Investment Holdings assigned $279,500 of its outstanding debentures to others for cash.  Of this amount $167,302 was converted to 10,699,874 post-reverse shares of common stock of the Company during the fiscal year ended February 28, 2009.   During the quarter ended May 31, 2009, Moore Investment Holdings assigned an additional $525,000 of its debentures to others for cash.  During the quarter ending May 31, 2009 $174,167 of principal and $3,208 of interest of the assigned debentures were converted into 66,650,439 post-reverse shares of common stock.  During the quarter ended August 31, 2009, Moore Investment Holdings assigned an additional $1,275,000 of its debentures to others for cash.  During the quarter ended August 31, 2009 $661,933 of principal and $8,254 of interest of the assigned debentures were converted into 105,797,290 post-reverse shares of common stock.  

The summary of outstanding related party debt of $6,904,985 of which $5,767,485 is in default as of August 31, 2009 is as follows:

Moore Investment Holdings

$

6,386,563 

Ray Brown

$

403,956 

Joseph Lopez

$

114,466 

Total

$

6,904,985 

As of August 31, 2009 the Company has recorded a liability for beneficial conversion of $7,892,885 based on the discount to market available at the time of conversion of which $6,801,301 is attributable to related party debentures.. 

As of August 31, 2009 the Company has accrued $1,092,384 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 $1,119,419 based on the discount to market available at the time of conversion of which $1,085,885 is attributable to related party debentures. 

**NOTE 3 – CONVERTIBLE DEBENTURES**

During the fiscal year ended February 28, 2009, the Company issued $1,908,000 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, 2009 there are non-affiliated convertible debentures, in the amount of $187,584 and related party debentures of $7,879,368, remaining on the 

 

9

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

August 31, 2009

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

Company’s books.  As of the fiscal year ending February 28, 2009, the Company has also recorded a liability for the 20% to 50% discount on conversion rights of the debentures.  As of February 28, 2009, the total liability of the beneficial conversion for the debentures is $7,954,267 and the total liability balance for the interest portion of the debentures is $834,179.

During the quarter ended May 31, 2009, the Company issued $262,500 of convertible debentures that were used primarily to support subsidiary operations.  And during the quarter ended August 31, 2009, the Company issued $825,000 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 August 31, 2009 there are non-affiliated convertible debentures, in the amount of $1,091,584 and related party debentures of $6,904,985 remaining on the 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 August 31, 2009, the total liability of the beneficial conversion for the debenture is $7,892,885 and the total liability for the interest portion of the debentures is $1,119,419.

**NOTE 4 –STOCKHOLDER’S EQUITY**

*Common Stock*

As of August 31, 2009, the Company had 280,967,605 post reverse shares of common stock issued and outstanding with 4,719,032,395 post reverse shares authorized but unissued.  On June 30, 2008 the Company effected a reverse split of its issued and outstanding common stock on the basis of one share of common stock to be issued for each 500 shares issued and outstanding.  As a result of this reverse split all share figures appearing in this report are generally expressed in numbers of post-reverse split shares, unless otherwise noted.  

During the year ended February 28, 2009 the Company issued 18,499,874 shares of free trading common stock in conversion of principal and interest based in the amount of $286,268 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, 2009, the Company also issued 4,680,050 shares of free trading common stock for the payment of services under an S-8 registration in the amount of $93,975. 

During the year ended February 28, 2009, the Company issued a total of 2,763,155 shares of common stock on the conversion of debentures payable plus interest to Ray Brown totaling $38,266.

During the quarter ended May 31, 2009 the Company issued 91,400,439 post-reverse shares of free trading common stock on the conversion of  $290,499 principal and $10,752 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.

During the quarter ended May 31, 2009, 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, 2009 the Company issued 1,500,000 post-reverse restricted shares of its common stock to Wayne Hartle, a member of the board of directors for $6,000 in cash.  The Company also issued 3,779,064 post-reverse shares for free trading common stock to Wayne Hartle for the conversion of old debt.

During the quarter ended May 31, 2009 the Company issued 3,640,383 post-reverse shares of free trading common stock on the conversion of $9,028 of interest payable to Ray Brown.

During the quarter ended August 31, 2009 the Company issued 137,797,290 post-reverse shares of free trading common stock on the conversion of  $822,385 principal and $12,302 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.

During the quarter ended August 31, 2009 the Company issued 3,227,124 post-reverse shares of free trading common stock on the conversion of $45,000 of principle payable to Ray Brown on the terms of the outstanding debentures; 10% interest per annum and conversion at a discount of 20% of the closing bid for the Company’s common stock on the date of conversion.

10

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

August 31, 2009

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

*Stock Options*

  

During the year ended February 28, 2007, all stock options expired unexercised.  As of August 31, 2009, there were no stock options outstanding.

*Preferred Stock*

As of August 31, 2009, 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 shares of restricted common stock to a third party for total consideration of $999,000.  As of May 31, 2009, these shares had not been issued, resulting in a stock payable of $999,000.

*Convertible Debentures*

At the end of the quarter ending August 31, 2009 the Company has $7,478,147 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 allege 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 plaintiffs seek no less than $20 million in damages from the named defendants, as well as injunctive relief, interest, attorney's fees, and court costs.  The defendants deny any liability, and are defending the lawsuit.    Since the claims are made against officers, a director and other third parties, Unico does not believe that its assets are at risk in this proceeding except to pay legal defense costs until the insurance deductible has been met, and unless the plaintiffs are successful in obtaining an award in excess of the insurance policy limits.  The parties have tentatively reached a settlement, subject to court approval, pursuant to which Unico’s insurance company will pay $850,000 (the “Settlement Award”) to Unico on behalf of two Unico officers and one Unico director, and Unico will agree 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.  Plaintiffs’ attorney’s fees and expenses will be paid, and an incentive award will be paid, from the Settlement Award, in such amounts approved by the court.  Notice of the proposed settlement will be sent to Unico shareholders.  If the settlement is approved by the court, Unico will issue a press release more fully describing the terms of the settlement which will also be published on Unico’s website atwww.unicomining.com.  

 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 $216,291as 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 

11

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

August 31, 2009

**NOTE 5 – LEGAL MATTERS - cont**

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.  

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 alleges 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 alleges that Deer Trail Mining Company, LLC breached the contract by failing to pay for the services and materials, and is seeking a money judgment against Deer Trail Mining Company, LLC for at least $182,144 plus interest at 18% per annum, plus costs.  Plaintiff is also seeking 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 has filed an Answer denying liability. The case is now in the discovery phase. Deer Trail Mining Company, LLC is also attempting to negotiate a settlement of the lawsuit.

On March 23, 2009, a lawsuit was filed by Workers Compensation Fund, a Utah non-profit corporation, against Unico Incorporated in the Third Judicial District Court for Salt Lake County, State of Utah (Case No. 090904860)in which the plaintiff alleged that it provided workers’ compensation insurance coverage to Unico for the policy period February 6, 2007 to February 5, 2008.  The plaintiff alleged that the sum of $14,245 remains due on the account, together with accrued interest.  The plaintiff alleged that it is entitled to recover damages in the principal amount of $14,245, plus interest at the rate of 8% per annum, plus court costs and a reasonable attorney’s fee. Settlement was reached in the matter and Unico paid $9,000 and settled the amount in full.

On December 18, 2008, a lawsuit was filed by ISCO Industries, LLC against Unico, Incorporated in the Superior Court of California, County of San Diego (Case No. 37-2008-00098400-CL-CL-CTL) in which the plaintiff sought to recover money owed for goods and/or services provided, interest thereon and attorney’s fees.  The defendant did not file an Answer in the case, and a default judgment was entered against Unico, Incorporated for $29,152.  Unico, Incorporated believed that a smaller amount was actually owing.  Settlement was reached and Unico paid $16,000 to settle the matter.  The Judgment has been satisfied and released.

Unico received a Subpoena Duces Tecum dated November 3, 2008 captioned “In the Matter of Certain Unregistered Offerings/HO-10859” requesting copies of various documents, most of which are related to certain fund raising efforts in which Unico engaged through the issuance of convertible debentures, and the settlements of many of those convertible debentures that Unico defaulted on.  The holders of the debentures or their assignees filed a large number of actions in Florida State Court which were eventually settled by Unico, Incorporated and the various debenture holders/assignees by agreeing to issue substantial number of shares of Unico common stock at prices that were significantly discounted from the then existing market prices for Unico shares, in court approved settlements.  Certain officers and/or directors of Unico received similar subpoenas from the SEC, and depositions of those officers or directors were taken in March 2009.  No action has yet been taken by the Securities and Exchange Commission against Unico and/or its officers and directors following the depositions.

**NOTE 6 – SUBSEQUENT EVENTS**

Subsequent to the quarter ended August 31, 2009, the Company received $60,000 through the issuance of new convertible debentures.  The new debentures were issued with terms of 180 days, bear interest at the rate of 8% per annum, and are convertible by the holder into shares of the Company’s common stock at a discount of 50% of the closing bid price on the date of conversion.

Subsequent to the quarter ended August 31, 2009 the Company issued 10,000,000 shares of common stock on the conversion of $29,332 of principal and $668 of interest payable to Moore Investment Holdings.

Subsequent to the quarter ended August 31, 2009 the Company issued 129,521,948 shares of common stock to third parties in conversion of $349,684 of principal to third parties.

The Company has evaluated and disclosed all subsequent events in accordance with FASB 165 through the filing of this interim report on October 13, 2009.

12

**UNICO, INCORPORATED**

Notes to the Consolidated Financial Statements

August 31, 2009

**NOTE 7 – 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 $67,974,754 from its inception through August 31, 2009.   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 approximately $5,500,000 for investment into its subsidiary companies: Deer Trail Mining Company and Silver Bell Mining Company. The funds are intended for the following purposes during the next twelve months: 

·

Continue sampling and analyzing mineralized rock samples, stockpiles and dump material from the Deer Trail Mine to evaluate the most efficient means to conduct future mining and milling activities;

·

Expand metallurgical research department at the Deer Trail Mine and Mill Facility;

·

Purchase additional lab equipment for metallurgical purposes;

·

Upgrade mine infrastructure and begin underground mining activities including maintenance and rehabilitation work at the Deer Trail Mine;

·

Continue to upgrade and complete the re-construction project on the existing mill at the Deer Trail Mine;

·

Upgrade the crushing facility at the upper Deer Trail Mine and continue screening the mineralized material dumps;

·

Construct large tailings pond for large scale processing;

·

Begin full scale milling and processing activities at the Deer Trail Mill and Processing Facility;

·

Upgrade mining equipment and infrastructure to bring operations to full scale at the Deer Trail Mine;

·

Conduct additional survey and mapping work on the Clyde and Crown Point mining claims including improvements to the property and potentially underground and surface exploratory drilling on the claims; and;

·

Commence exploration work to evaluate the potential of the mining claims at the Silver Bell Mine beginning in theSpring of 2010.

Accomplishing the 12-month plan of operations is dependent on: (a) the Company raising approximately $5,500,000 in equity and/or debt financing during the next 12 months to be used for the Company’s operations, of which approximately $1,500,000 is needed in the next 120 days.  Subsequent to the quarter ending August 31, 2009, the Company received $60,000 through the issuance of new convertible debentures to Moore Investments.  The new debentures were issued with terms of 180 days, bear interest at the rate of 8% per annum, and are convertible by the holder in shares of the Company’s common stock at a discount of 50% of the closing bid price on the date of conversion.  The Company intends to raise approximately an additional $5,500,000 during the next 12 months to fulfill the 12-month plan.

**NOTE 8 – PRIOR PERIOD RESTATEMENT**

The Consolidated financial statements for the six months ended August 31, 2008, and the three months ended August 31, 2008 have been restated to correct the way in which the Company accounts for the convertible debentures.  As a result of these changes, the Company recorded adjustments to the Company’s net profit for the periods with the elimination of the derivative loss and changes to interest expense.  

There was no tax-effect for the prior period adjustments for August 31, 2008, since the Company already had net operating losses during these periods.  These changes are reflected in the following schedules:

**For the Six Months Ended**

**Originally Reported**

**As Restated**

**Difference**

**August 31, 2008**

 

 

 

 

Interest expense

$1,695,148 

$1,834,211 

$139,063 

Derivative loss

$277,818 

$0 

($277,818)

Net loss

($3,089,709)

($2,950,954)

$138,755 

**For the Three Months Ended**

**Originally Reported**

**As Restated**

**Difference**

**August 31, 2008**

 

 

 

 

Interest expense

$782,457 

$900,535 

$118,078 

Derivative loss

$296,288 

$0 

($296,288)

Net loss

($1,578,192)

($1,399,982)

$178,210 

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**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. 

**Reverse Stock Split**

On January 28, 2008 the stockholders of Unico, Incorporated approved a proposal to amend the Company’s Articles of Incorporation to authorize the Board of Directors, in its discretion, to effect a reverse stock split of the Company’s common stock at a ratio of up to one for five hundred during the six month period following the date of the Special Meeting of Shareholders. The Board of Directors approved a reverse stock split of the Company’s common stock which became effective June 30, 2008.  This enabled the Company to increase the number of authorized, but unissued common shares, so as to permit the conversion of outstanding convertible debentures to shares of the Company’s common stock, and to enable the Company to  raise additional needed capital.  It has also enabled the Company to increase the trading price of the Company’s common stock to a level more acceptable to potential investors.  All share numbers and price per share figures appearing in this Annual Report are expressed in numbers of post-reverse split shares, unless otherwise noted.

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

Unico, Incorporated (“the Company”, “Unico” or “UNCN”) 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. 

On July 12, 2004, Unico filed an election with the U.S. Securities and Exchange Commission to become a business development company (“BDC”) pursuant to Section 54 of the Investment Company Act of 1940.   On August 1, 2005, the Board of Directors unanimously approved a proposal to withdraw the Company’s election to be treated as a business development company as soon as practicable so that Unico could begin conducting business as an exploration company rather than as a business development company subject to the Investment Company Act.  On October 11, 2005, a Special Meeting of the Unico shareholders was held to consider and vote upon a proposal to authorize the Company’s Board of Directors to withdraw the Company’s election to be treated as a BDC and the proposal was approved.  On October 12, 2005 a Notification of Withdrawal was filed with the Securities and Exchange Commission so that Unico could begin conducting business as an exploration company rather than as a BDC subject to the Investment Company Act.   

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 a fifty percent (50%) interest in Water Right No. 63-37, said fifty percent (50%) portion including a maximum flow of 0.125 cubic feet of water per second and a maximum annual diversion of 90.5 acre feet of water from Three Mile Spring for year-round mining purposes.  The purchase of the claims also included a fifty percent (50%) interest in a contractual right to use water diverted under Water Right No. 63-3043 as evidenced and described in the Agreement between Cottonwood Irrigation Company and Deer Trail Development Corporation dated July 28, 1977.  The fifty percent (50%) interest in the contractual water right allows Deer Trail Mining Company to truck not more than 2,500 gallons of water per week from the Cottonwood Creek to the Deer Trail Mine for mining activities during the irrigation season (April 15 to October 15), and possibly more during the remaining portion of each year. 

14

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.

Crown Mines, L.L.C. also retained an access easement and a water line pipeline easement across the claims sold to Deer Trail Mining Company.

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.

In August 2006, Deer Trail Mining Company entered into a Mining Lease with Joel Johnson covering the Clyde, Clyde Intermediate and Crown Point claims.  These claims are located near the Deer Trail Mine.  Deer Trail Mining Company has leased the claims for the purpose of conducting mine exploration, evaluation, and possible mining activities on the claims.  The Mining Lease is for two years, with options to extend the lease for 50 additional one year periods.  Under the terms of the Mining Lease, Deer Trail Mining Company paid initial down payments totaling $31,000 with $4,000 due in the second year of the lease.  If Deer Trail Mining Company elects to extend the lease, it must pay $3,000 for the first extension year, and the annual lease extension payment increases ten percent (10%) per year thereafter.  Additionally, Deer Trail Mining Company will pay three percent (3%) of the gross sale proceeds from the sale of any ore concentrates, or other mineral resources extracted from the claims.

In September 2006, Deer Trail Mining Company entered into a Non-Patented Mining Claims Lease covering approximately 70 additional claims covering approximately 1,500 acres in Piute County Utah for the purpose of exploration, evaluation and mining activities.  In consideration for the rights under the agreement, the Deer Trail Mining Company agreed to pay the lease holders $7,000 per year for each of the first three years.  Deer Trail Mining Company has the right to extend the lease for 50 additional one year periods.  If extended by Deer Trail Mining Company, the annual lease payment is $10,000 in each of years four and five, and thereafter the annual lease payment increases by ten percent (10%) per year.  In addition to the annual lease payments, Deer Trail Mining Company has also agreed to pay an amount equal to three percent (3%) of the gross sales proceeds from all ore, concentrates, and all other productions of mineral resources extracted from the claims.  The agreement contains an option to purchase the claims exercisable at $350,000 during the five first years of the lease.  The exercise price increases $50,000 per year thereafter.  It may only be exercised while the lease is effective.

Following the formation of the Deer Trail Mining Company in June 2004, Unico assigned all of the various assets, liabilities and exploration activities associated with the Deer Trail Mine to Deer Trail Mining Company which has assumed responsibility for making payments under the Deer Trail Lease.

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 18 full time employees, 1 part time employee and 4 consultants.  The necessary permits to commence mining activities at the Deer Trail Mine have been acquired, provided that the surface disturbance from the mining activities does not exceed 10 acres for both mine and mill. In early 2005, Unico and Deer Trail Mining Company received approval from the Utah Division of Oil, Gas and Mining of the Company's Large-Scale Mining Permit (file number 10311003) for the Deer Trail Mine in Marysvale, Utah. The State of Utah's Division of Oil, Gas and Mining granted approval of the Company's application to expand its existing small exploration project to a large mining exploration project, which is expected to significantly increase the area of activity and the capacity of the company's mill at the Deer Trail Mine. This Large-Scale permit takes the place of the previous two Small-Scale permits described above.  In 2004, Unico filed to obtain a construction permit with the State of Utah Department of Environmental Quality (both the Utah Division of Air Quality and the Utah Division of Water Quality) for the Deer Trail Mine tailings impoundment pond no. 2. 

15

Prior to June 2004, Unico worked to reopen the Deer Trail Mine.  Unico commenced limited exploration activities in late March 2001 on the Deer Trail Mine.  There were between 2 and 5 miners at various times working full time in the Deer Trail Mine on mine exploration work until approximately October 2003.  Their efforts were concentrated in the 3400 Area of the mine, from which they removed approximately 1,000 tons of mineralized materials per month.  The mineralized materials were stock-piled and some of it has been crushed.  Some of the employees have worked on mine maintenance. 

Unico completed a mill on site at the Deer Trail Mine. In November 2001, Unico began milling activities. Unico started screening and crushing old mineralized materials dumps on the upper Deer Trail Mine and moved the materials to the ball mill.  The Deer Trail Mining Company has completed construction of the flotation circuit in the mill to enhance efficiency.   In July 2006, Deer Trail Mining Company completed the upgrades to the screening plant and began screening the old mineralized material dumps at the upper Deer Trail Mine. Once screened, the material is moved to the mill facility and stockpiled for further processing. The Company has completed the mill and this material is being processed through the mill and will be shipped for processing.

During the quarter ending August 31, 2009, The Company entered into an Ore Processing Agreement with Royal Mines and Minerals.  The agreement calls for a minimum amount of 15 tons of concentrate to be shipped from the Deer Trail mine to Royal Mines and Minerals processing plant in Phoenix, AZ.  Deer Trail has the option of taking the processed product in the form of Dore bars, which will contain a minimum of ninety-nine percent (99%) precious metals.  The Deer Trail mine has shipped 23 tons of concentrate to date but it has not been completely processed.  After the shipment was made Royal decided to add an additional piece of equipment to more effectively and efficiently process the concentrate that was being shipped from the Deer Trail mine.  The new equipment has been installed and processing of the concentrates that has been shipped should be completed soon.      

The Company has not recognized any revenue from the shipment of 23 tons of concentrate that went to Royal Mines and Minerals.  Since the processing has not been completed the Company does not have the product in the final form to sell to the final buyer.    

**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 

16

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.

17

18

**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.  Unico has no immediate plans to try 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.

19

**Milling Facilities** - In the late 1990’s, Unico began re-conditioning the Lower Mine and in 2000 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 due to both large and small producers of precious metal-bearing base metals began having extreme difficulty with refineries and smelters buying their concentrates.  As a result, an additional process will be added to the mill to extract the precious metals.  

**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.  *

20

**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**

3400 Area Current Extraction Plan - A comprehensive channel sampling program throughout all three levels of the 3400 Area is planned in concert with a partner in order to re-confirm the tenor and tonnage prior to establishing additional mine headings.

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.

21

**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 – Re-development of the 8600 Area is currently being sought via acquisition of a joint venture partner.  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.  

22

**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. 

**Deer Trail Mining Company's Purchase of 680 Acres Near the Deer Trail Mine**

On August 28, 2000, Unico purchased approximately 680 acres of raw ground located in Piute County, State of Utah for $200,000.  This land is adjacent to the existing Deer Trail Mine property owned by Unico which is currently operated by the Deer Trail Mining Company. The property was purchased from Tech-Sym Corporation of Houston, Texas. 

Deer Trail Mining Company purchased the property for the purpose of establishing a mill site on the property and to use as a place to store waste rock, and for other general  business purposes.

23

**Exploration Drilling:**

In September 2004, Deer Trail Mining Company completed its first phase of exploratory drilling at the Deer Trail Mine.  The Deer Trail Mining Company contracted Lang Exploratory Drilling to complete the phase of drilling.  Lang completed a total of 3,653 feet of reverse circulation drilling and finished 28 drill holes at specified targets located on the Upper Deer Trail Mine.  741 samples were safeguarded by Lang Exploratory Drilling during this phase and shipped to ALS Chemex at its Elko, Nevada facility for independent lab verification and analysis. 

The first phase of exploration drilling was designed to identify near surface mineralized materials, determine potential resources and define limits of mineralization south of the main tunnel previously mined at the Upper Deer Trail Mine. Historical data of the workings was sufficient to delineate the grade of mineralization remaining in the stopes, but no data was available to delineate the grade of mineralization outside the workings or how far that mineralization flowed into the surrounding formations. The initial phase of reverse circulation drilling serves as an adequate means to define the limits of mineralization south of the main tunnel, which is situated in the lower Toroweap formation, along the crest and down the northeast limb of the Deer Trail anticline. 

This phase of drilling was accomplished with lower cost reverse circulation drill holes in order to establish the presence of mineralization at the Upper Deer Trail area. Once the limits of mineralization are established, work can begin to further define those zones by diamond core drilling.  The reverse circulation drilling determined that more expensive diamond core drilling is necessary to further determine exact areas to be mined.  Future plans for the complete drilling of this area have been determined but an exact timetable has not been determined.

The most upper holes RC-1 through RC-7 were placed well above the elevation of the known workings of the No. 2 Tunnel and slightly south of the northwesterly trending previously mined area. Significant mineralization was intercepted in holes RC-1 and RC-2, which were drilled in the area closest to the main tunnel.  Drill holes RC-5, 6, 8, 9, 13 and 14 were all drilled well south of the historically delineated mineralization, and on the southern most up-side of a post mineral fault. It can be concluded that mineralization intercepted in these holes is not directly related to the mineralization of the main Upper Deer Trail tunnel. 

**Hole**

**Interval**

**From – to--    (ft)**

**Gold  (grams/troy oz.)**

**Silver  (grams/**

**Troy oz.)**

**Lead  (%)**

**Zinc (%)**

RC-1

190 -- 230           40

0.207

10.98

0.355

0.205

RC-2

40 -- 45....            5

0.364

95.36

3.61

0.390

Includes 

175 -- 180             5

0.369

45.71

2.87

1.41

RC-10

65-- 95                30

0.363

16.48

0.086

0.022

RC-11

60 -- 70               10

1.36

52.25

0.758

0.191

Includes

65 -- 70                 5

2.26

32.69

0.961

0.289

RC-12

85 -- 90                 5

0.460

137.14

3.94

1.00

RC-17

55 -- 65               10

0.799

13.02

0.033

0.012

RC-18  

45 -- 50                 5

1.54

40.77

0.154

0.018

RC-19

0 -- 140             140

0.527

14.65

0.116

0.107

Includes

35 -- 45               10

2.64

14.11

0.840

1.26

Includes

35 -- 40                 5

4.66

21.15

1.30

2.14

Includes

75 -- 120             45

0.930

34.86

0.135

0.021

Includes

95 -- 105             10

3.17

88.63

0.303

0.019

Includes

100 -- 105             5

4.78

151.02

0.682

0.008

RC-20

95 – 100                5

1.92

62.02

0.218

0.030

RC-21

95 - 110               15

0.899

74.29

0.145

0.014

RC-22 

110 - 120             10

1.77

18.14

0.074

0.024

Includes  

115 - 120               5

3.25

27.52

0.079

0.014

In early 2005, Deer Trail Mining Company contracted with Connors Drilling to commence an underground diamond core drill program.  This 2nd phase of exploratory drilling inside the PTH Tunnel of the Deer Trail Mine has been completed. The Phase II underground diamond core drilling program was primarily designed to target known horizons of mineralization and identify new mineralized horizons throughout the main tunnel of the Deer Trail Mine. The Company completed 7,235 feet of diamond core drilling and finished 13 underground drill holes.  According to preliminary reports by the Company’s geologist, all of the holes drilled were reported to intersect mineralization within their designated targets. That report states that a total of approximately 514 feet of mineralization was intersected and consisted mostly of sulfide minerals (e.g. tetrahedrite, galena, pyrite, chalcopyrite and sphalerite). Other intercepts were encountered through oxidized mineral not reported in this total, as well as zones of subtly altered rock that may contain high mineral values and offer significant potential. The Company is now working on final independent core logging and splitting verification, and plans to ship its core samples to an independent lab for analysis.

24

In March 2006, Deer Trail Mining Company, LLC entered into an agreement with Behre Dolbear and Company (USA), Inc. to conduct geological services and consulting at Unico’s Deer Trail Mine in Marysvale, Utah. A report titled: “RELATIONSHIP OF STRATIGRAPHY AND MINERALIZATION AT THE LOWER (NEW) DEER TRAIL MINE, PIUTE COUNTY, UTAH (BEHRE DOLBEAR PROJECT 06-034)” was submitted by Behre Dolbear as final to the Company on September 18, 2008 and the report summary is included here as follows: 

UNICO, Inc. (UNICO) engaged Behre Dolbear & Company (USA), Inc. (Behre Dolbear) as of 15 March 2006 to lithologically log 7,235 feet of drill core at the Deer Trail Mine, select samples for analysis, submit those samples to a laboratory for analyses, and evaluate and interpret those logs and analyses. Deer Trail Mining Company, LLC (Deer Trail Mining), and Behre Dolbear agreed to a revised and expanded work scope in Work Change Order No. 1 in a letter dated 7 November 2006. That Work Change Order stated that Behre Dolbear’s ongoing work must have the primary objective of adding value to the Deer Trail Mine and related project assets in the short term. The work change order included provisions for completing the logging, correlating, and summarizing the results of the logging and analyses, and correlating that data with data from past drilling and mining to locate and model, to the extent possible, potentially mineable mineralization. The work change order also included provisions for evaluating the volume, tons, and grade of a tailings mineralized material at the mine. The tailings evaluation is the subject of a separate report.

Under a contract with Deer Trail Mining, Connors Drilling, LLC drilled 7,235 feet of BQ diameter (1.433 inches) core in 13 holes (UDDH #1-13) at various inclinations and azimuths from three drill stations in the Patrick Thomas Henry (PTH) Tunnel (actually an adit) in the Lower Deer Trail Mine which concluded in October 2005. This is the core that Behre Dolbear was engaged to log, analyze, and evaluate.

Table 1 summarizes the drilling statistics.  The station locations are defined based on the approximate footage from the PTH adit portal.

**Table 1**

**Unico Phase II Drill Holes**

 

**UDDH Drill**

**Hole #**

**Station**

**Location**

**Inclination**

**(in degrees)**

**Azimuth**

**Total Length**

**(Feet)**

1*

4400

-45

102

740

2

4400

-40

102

648

3*

4400

-42

92

782

4*

4400

-42

150

554

5*

4400

-55

102

664

6

4400

-45

21

409

7

4400

-58

298

733

8

4400

-75

300

565

9*

4700

-45

116

460

10

4900

-75

0

460

11*

3400

+45

258

454

12*

3400

+45

162

355

13*

3400

-65

125

420

Total Footage

 

 

 

7,235

*Logged by Behre Dolbear

The Deer Trail Mine is situated on 3,275 acres of patented and unpatented claims located in the Deer Trail Mountain-Alunite Ridge area of Piute County, Utah, approximately 5 miles south-southwest of the town of Marysvale. The Deer Trail Mine consists of the Upper Deer Trail Mine and the Lower Deer Trail Mine. The Upper Deer Trail Mine is hosted by the Permian Toroweap Sandstone and lies about 800 stratigraphic feet above the Lower Deer Trail Mine. The Lower Deer Trail Mine is hosted by the Pennsylvanian Callville Limestone. 

At the Deer Trail Mine, the Callville Limestone is an approximately 1,000-foot thick sequence of sandy to very sandy limestone, dolomite, and sandstone. Two separate stratabound, manto-type mineralized materials were developed and mined in the Lower Deer Trail from about 1945 to 1980. The locations of the mineralized materials are referenced based on their distance from the portal of the PTH Tunnel. One is hosted by the Callville Limestone, was mined in the 3400 Area of the mine, and is known as the 3400 East Stope. The 3400 East Stope mineralized materials extends northwestward a minimum of 1,000 feet along strike from the mined area to at least the 4400 Area and at least 400 feet further southeastward to what would be the 3000 Area. The other mineralized materials mined from the PTH Tunnel occurs in the 8600 Area of the mine and is the down-faulted portion of the Toroweap Sandstone mineralized materials mined in the Upper Deer Trail Mine. 

25

Behre Dolbear’s work yielded three targets within the PTH Tunnel of the Lower Deer Trail Mine that*may*merit further exploration. Behre Dolbear believes that there is the *possibility*that with additional successful follow-up drilling, a resource base*may eventually*be established within the PTH Tunnel. The components of this potential resource base are composed of stratabound, multiple thin (less than 10 feet), moderate- to high-grade zones as well as lower-grade (10 to 30 foot) zones and horizons of base and precious metals mineralization. Two of these are hosted by the Callville Limestone and one occurs in the Toroweap Sandstone. 

Behre Dolbear’s field work on the project took place between 23 March 2006 and 3 March 2007 and resulted in the generation of a large amount of stratigraphic and analytical data. That data were compiled and evaluated by Behre Dolbear at the Deer Trail Mine and in Denver, Colorado. This report is based on the following: 

·

on-site logging of 7,235 feet of underground core 

·

evaluation of 978 individual sample analyses and assays from 2,021.5 feet of the above core  

·

development of a detailed stratigraphic succession for the Pennsylvanian Callville Limestone and its integration with the mineralized intercepts from the core drilling  

·

review of all pertinent reports and other data related to past exploration at the mine by other companies since 1945

·

meetings and discussions with and data from the Unico, Inc. and Deer Trail Mining personnel; and 

·

a limited review of the published literature on the geology of the region, district, and the Marysvale, Utah, area. 

Following logging, sample selection, and splitting of the core by sawing at the Deer Trail Mine the samples were sent to the ALS Chemex (Chemex) laboratory in North Vancouver, British Columbia, for sample preparation, analyses, and assays. 

Table 2 shows that significant mineralization in most of the holes is confined to relatively narrow intervals ranging from 1.0 feet to 10.6 feet.  The thickest intercept with significant mineralization is in UDDH 12 at 55.2 feet.  The intervals are uncorrected for the true widths of the intercepts and will all be thinner than stated, some possibly as much as fifty percent thinner.  Overall, silver contributes the most value of the metals in Table 2 with zinc second and gold, copper, and lead contributing subordinate values.  In some of the intervals, the silver and gold are high but the base metals are low.  Copper contributes more value than zinc in some of these intervals.  Only one of the intervals (UDDH 11 at 105.0 to 110.6 feet) has high values in all of the metals.  The highest gold and silver values are in UDDH 1 (5.273 ppm Au=0.167oz/t Au; 366.9 ppm Ag= 10.71 oz/t Ag), and UDDH 11 (4.564 ppm Au= 0.133 oz/t Au; 585.1 ppm Ag= 17.08oz/t Ag).

**Table 2**

**Best Interval from Each Analyzed Hole**

**UDDH**

**Analyzed**

**From**

**Analyzed**

**To**

**Interval**

**(Feet)**

**Au**

**(ppm)**

**Ag**

**(ppm)**

**Cu**

**(%)**

**Pb**

**(%)**

**Zn**

**(%)**

1

365.5

370.4

4.9

5.723

366.9

0.01

0.16

0.42

 

406.6

417.2

10.6

1.062

177.6

0.11

0.58

1.58

 

456.0

462.5

6.5

0.350

156.4

0.24

1.38

2.08

 

 

 

 

 

 

 

 

 

5

322.0

327.0

5.0

0.870

164.1

0.25

2.09

1.27

 

419.0

419.9

0.9

1.510

116.0

0.27

0.35

0.18

 

 

 

 

 

 

 

 

 

9

293.7

300.1

6.4

0.372

46.8

0.15

1.28

1.78

 

434.6

435.6

1.0

0.310

102.0

0.39

5.20

6.59

 

 

 

 

 

 

 

 

 

11

7.7

13.4

5.7

4.564

585.1

0.45

0.71

0.83

 

105.0

110.6

5.6

1.600

550.6

0.96

2.0

2.43

 

 

 

 

 

 

 

 

 

12

5.8

61.0

55.2

0.608

183.1

0.44

0.40

0.67

 

220.0

221.9

1.9

2.170

128.0

0.01

0.01

3.32

 

 

 

 

 

 

 

 

 

13

77.9

78.9

1.0

0.380

188.0

0.60

3.10

3.89

Detailed logging of the holes developed a coherent stratigraphic succession consisting of multiple readily recognizable gross units.  Behre Dolbear defined nine provisional members and three sub-members (facies) of the Callville Limestone based on their lithologic character, accessory components, and color in the immediate vicinity of the Deer Trail Mine.  The provisional members are called Informal Members of the Pennsylvanian Callville Limestone. 

26

The names and letter codes of these Informal Members from youngest to oldest are: 

·

Orange and Gray Sandy Informal Member (OGS) (which may be basal Toroweap Sandstone); 

·

Upper White Ann and Quartzite Informal Member (UWAQ); 

·

Cherty Black Ann Informal Member (CBA); 

·

Upper Division of Lower White Ann and Quartzite Informal Member (UD-LWAQ);

·

Upper Dark Lentil Informal Member (UDL); 

·

Lower Division of Lower White Ann and Quartzite Informal Member (LD-LWAQ); 

·

Lower Dark Lentil Informal Member (LDL); 

·

Major Quartzite/Big Sandy Zone Informal Member (MQ/BSZ ); and 

·

Lower Carbonate and Quartzite Informal Member (LCAQ). 

The grades of the five precious and base metals (gold, silver, copper, lead, and zinc) vary considerably among the analyzed intervals. In order to compare intervals, Behre Dolbear used average metal prices over the past 12 quarters (3 years) from the second quarter of 2004 through the first quarter of 2007 to calculate equivalent grades of silver (opt equiv. Ag) and zinc (percent equiv. Zn), the dominant metals in the mineralized material. A dollar value was also calculated. The average metal prices used are: 

·

gold, $503 per ounce 

·

slver, $9.02 per ounce 

·

copper, $2.12 per pound 

·

lead, $0.51 per pound 

·

zinc, $0.95 per pound 

Behre Dolbear did not use the grades or the dollar values for an economic evaluation of the Deer Trail mineralized material. Behre Dolbear divided the composited analyses and assays of significant mineralization into two classes, Potentially Mineable Intercepts and Significantly Mineralized Intercepts. Behre Dolbear developed two figures showing the frequency of these intercepts in the Informal Members of the Callville Limestone stratigraphy and in various mineralized horizons. The two classes of intercepts are tabulated by area in the mine and by stratigraphic Informal Member in Tables 1.1 and 1.2.

**P****OTENTIALLY M****INEABLE I****NTERCEPTS BY A****REA AND S****TRATIGRAPHIC H****ORIZON**
**T****ABLE 1.1**
**Drill Hole**

**Number**

**(UDDH#)**

**Area**

**Stratigraphic**

**Unit**

**From**

**(feet)**

**To**

**(feet)**

**Thickness**

**(feet)**

**True**

**Thickness**

**(feet)**

**Ag. Equiv.**

**(opt)**

**Zn Equiv.**

**(%)**

**Dollar Value**

**($)**

11

3400

**MQ/BSZ**

8.6

13.4

4.8

3.7

32.36

15.32

$290.00

11

3400

LDL

103.3

112.0

8.7

7.5

21.30

10.11

$192.14

12

3400

**MQ/BSZ**

5.8

61.0

55.2

33.0

10.54

5.00

$95.08

12

3400

UD-LWAQ

220.0

230.3

10.3

5.2

6.79

3.22

$61.21

13

3400

LCAQ

77.9

82.6

4.7

4.4

10.49

4.98

$94.65

 

 

 

 

 

 

 

 

 

 

1

4400

**MQ/BSZ**

365.5

377.2

11.7

10.3

9.37

4.45

$84.50

1

4400

**MQ/BSZ**

406.6

417.2

10.6

9.6

11.40

5.41

$102.83

1

4400

LCAQ

442.2

462.5

20.3

17.2

9.23

4.38

$83.23

2

4400

**MQ/BSZ**

378.0

385.9

7.0

6.6

25.39

12.06

$299.06

2

4400

**MQ/BSZ**

417.9

425.5

7.6

6.8

17.05

8.10

$153.83

2

4400

LCAQ

540.3

564.0

23.7

22.1

7.70

3.66

$69.50

3

4400

**MQ/BSZ**

395.0

410.7

15.7

13.4

7.97

3.78

$71.85

3

4400

**MQ/BSZ** &

LCAQ

395.0

476.7

81.7

69.9

3.52

1.67

$31.78

5

4400

LDL

322.0

325.3

3.3

3.2

17.27

8.20

$155.75

6

4400

**MQ/BSZ**

374.0

378.5

4.5

3.2

6.91

3.28

$62.30

7

4400

LCAQ

616.3

624.7

8.4

7.3

12.33

5.85

$111.18

10

4400

CBA

96.7

135.4

38.7

30.5

7.37

3.50

$66.48

10

4400

LDL &

**MQ/BSZ**

283.7

295.0

11.3

9.8

7.33

3.48

$66.14

27

The thickest Potentially Mineable Intercepts are in UDDH #12 in the 3400 Area and in UDDH #1, 2, and 10 in the 4400 Area (Table 1.1). The interval in UDDH # 3 from 395.0 to 476.7 is shown because of its thickness (69.9 feet true thickness). Behre Dolbear does not classify that intercept as a Potentially Mineable Intercept because its equivalent grades and dollar value do not reach the levels of the other intervals in that classification. UDDH #11 (3400 Area) has two widely separated intervals with true thicknesses of 3.7 feet and 7.5 feet. Although these intervals are relatively thin, the silver and gold grades are high. The 3.7 foot interval has the highest weighted average silver and gold grades in any of these Potentially Mineable Intercepts at 19.0 troy ounces per ton (opt) Ag and 0.15 opt Au.

UDDH # 1, 2, 10, and 12 have one to two moderately thick Potentially Mineable Intercepts in addition to the thicker intercepts cited above. These moderately thick intercepts range from approximately 5 to 10 feet in true thickness. UDDH # 5, 6, 7, and 13 have single thinner intercepts, ranging from approximately 3 to 7 feet in true thickness. Thicker intervals are needed for these intervals to be actually mineable.

**POTENTIALLY MINEABLE INTERCEPTS BY AREA AND STRATIGRAPHIC HORIZON**

**TABLE 1.2**

**Drill Hole**

**Number**

**(UDDH#)**

**Area**

**Stratigraphic**

**Horizon**

**From**

**(feet)**

**To**

**(feet)**

**Thickness**

**(feet)**

**True**

**Thickness**

**(feet)**

**Ag. Equiv.**

**(opt)**

**Zn Equiv.**

**(%)**

**Dollar**

**Value**

**($)**

12

3400

UD-LWAQ

194.0

195.3

1.3

0.7

9.57

4.54

$86.28

 

 

 

 

 

 

 

 

 

 

1

4400

UD-LWAQ

276.8

277.3

0.5

0.4

23.19

11.01

$209.15

1

4400

LCAQ

545.0

546.9

1.9

0.9

45.73

21.71

$412.44

3

4400

LCAQ

588.6

590.6

2.0

1.5

16.30

7.74

$147.00

4

4400

**MQ/BSZ**

337.6

338.6

1.0

0.6

185.4

88.08

$1,673.57

4

4400

LCAQ

532.7

533.7

1.0

0.6

16.14

7.66

$145.57

6

4400

UD-LWAQ

184.0

185.0

1.0

0.8

22.49

10.68

$202.89

6

4400

**MQ/BSZ**

374.0

378.5

4.5

3.2

6.91

3.28

$62.30

7

4400

**MQ/BSZ**

389.0

390.0

1.0

0.5

6.55

3.11

$59.13

7

4400

**MQ/BSZ**

401.4

402.8

1.4

0.9

14.58

6.92

$131.49

8

4400

UD-LWAQ

223.3

224.3

1.0

0.8

25.78

12.24

$232.57

8

4400

**MQ/BSZ**

252.3

254.4

2.1

1.8

162.03

76.92

$1,451.49

8

4400

LCAQ

538.9

539.9

1.0

0.8

10.89

5.17

$98.24

9

4400

UDL

293.7

294.3

0.6

0.4

36.63

19.42

$256.41

9

4400

**MQ/BSZ**

434.6

435.6

1.0

0.8

23.13

12.27

$161.93

10

4400

LCAQ

377.7

379.7

2.0

1.8

11.02

5.23

$99.40

Significantly Mineralized Intercepts (Table 1.2) are intercepts of higher grade, but not of potentially mineable thickness. Thus they do not represent mineralization that can be mined, milled, and refined at a profit. True thicknesses of these intercepts range from 0.4 to 1.8 feet. Grades range from 185.4 opt equiv. Ag and 88.08% equiv. Zn in UDDH #4 to 6.55 opt equiv. Ag and 3.11% equiv. Zn in UDDH #7 (Table 1.2).

Summary graphic logs of each of the 13 UDDH drill holes are in Appendix 6.0. These logs show the Informal Members of the Callville Limestone and histograms of the silver and zinc equivalent thicknesses and grades. Along with Appendix 7.0, the graphic logs clearly show and summarize the overall relationship of stratigraphy and mineralization.

Behre Dolbear believes that the thickness and permeability of the Major Quartzite/Big Sandy Zone Informal Member (MQ/BSZ) have played a major role in the localization of three of the four most vertically and laterally persistent mineralized zones in the Lower Deer Trail Mine. These three zones occur within the MQ/BSZ Informal Member and straddle its contacts with the overlying Lower Dark Lentil Informal Member (LDL) and the underlying Lower Carbonate and Quartzite Informal Member (LCAQ). Behre Dolbear calls this horizon the MQ/BSZ Horizon. 

The zones within the MQ/BSZ Horizon are named the 3400 East Stope Zone, the DeBie Zone, and the Rosa de Marcos Zone. These zones extend from the 3400 to the 4400 Areas and arguably possess the highest overall average base and precious metal grades present in the Callville Limestone. The only major mineralized horizon that has been mined that does not occur in the MQ/BSZ Horizon is in the UDL Member in the 200 Level workings. 

28

All samples were analyzed for a 34-element suite of major and potentially significant trace elements that may serve as pathfinders to the metals of economic interest.  These trace pathfinder elements are part of the alteration and mineralizing process but may be more wide-spread than gold, silver, copper, lead, and zinc and therefore may serve as guides to valuable mineralization. Anomalous levels of the five base and precious metals are the best pathfinders for those same metals. The pathfinder trace elements at the Deer Trail Mine include arsenic, barium, bismuth, fluorine, manganese, mercury, molybdenum, tungsten, and yttrium. Manganese is the most significant pathfinder, and there is a strong association between manganese-rich lithologies and significant- to high-grade base and precious metal intercepts. 

In the “SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS,” the report states that Behre Dolbear’s work yielded three targets within the PTH Tunnel of the Lower Deer Trail Mine that may merit exploration.  Two of these are hosted by the Callville Limestone and one occurs in the Toroweap Sandstone. 

The 3400 Area is the most prospective of the three potential exploration targets.  Behre Dolbear defines the 3400 Area as encompassing the 3400 East Stope, the approximately 200 horizontal feet between it and UDDH #11 and #12 and the immediate environs of the latter 2 holes. The target is the MQ/BSZ Member of the Callville Limestone, particularly the mineralized zones occurring at the MQ/BSZ’s upper and lower extremities that respectively correspond to the 3400 East Stope and Rosa de Marcos Zones.  That span of mineralized strata is called the MQ/BSZ Horizon. 

The potential of the 3400 Area is suggested by the following: 

·

Weighted average grades calculated from all the Potentially Mineable Intercepts are 0.033 opt Au, 4.99 opt Ag, 0.22% Cu, 0.72% Pb, and 1.01% Zn.  The preceding are suggestive of the tenor of mineralization that*might*be extracted from zones in the 3400 and 4400 Areas;

·

The preceding grades are similar to but lower than the reported grades from the 3400 East Stope bulk sample (0.055 opt gold, 8.40 opt silver, 0.289% copper, 1.58% lead, and 1.65% zinc) and lower than the grades from both the bulk sample and the combined past mining at all levels within and below the PTH Tunnel in the 3400 Area (0.19 opt Au, 13.62 opt Ag, 0.61% Cu, 2.96% Pb, and 7.21% Zn);

·

Although the weighted average grades of all the Potentially Mineable Intercepts are lower than the grades from past mining and the bulk sample, the three individual intercepts in UDDH #11and #12 in the 3400 Area have Potentially Mineable grades and thicknesses; and

·

Underground workings already exist in the favorable MQ/BSZ Horizon in the 3400 Area. The favorable horizon can be drilled with relatively short holes, making the 3400 Area a more prospective exploration target than the 4400 Area. 

To decide if exploration in the 3400 Area mineralization is warranted, initial attention should focus on determining if the intercepts in UDDH #11 and #12 within the Rosa de Marcos Zone, the DeBie Zone, and the 3400 East Stope Zone are economic. If they are, follow-up drilling should initially key in on those two holes, preceded by underground surveying, mapping and sampling and development of cross sections at right angles into a three-dimensional model.

 

The 4400 Area is the second of the potential exploration targets. The main targets are hosted by the MQ/BSZ Horizon. These targets are located approximately 200- to 300-feet below the main level of the PTH Tunnel. Specific exploration targets in the MQ/BSZ Horizon are shown by holes UDDH #1, #2, and #3.  In addition to the Potentially Mineable Intercepts located here, many of the Significantly Mineralized intercepts drilled at this location may be laterally correlative with thicker intercepts, thus expanding the zones where Potentially Mineable mineralization may exist. Exploration in the 4400 Area would be contingent upon developing mineral resources and mineral reserves in the 3400 Area and successfully mining them. 

If expanded work in the 4400 Area is justified, it should focus on the MQ/BSZ Horizon and entail the same surveying, mapping, sampling, and development of a three-dimensional model as recommended in the 3400 Area. In particular, the Noranda drill logs should be reinterpreted and correlated with the Callville Limestone stratigraphy defined by Behre Dolbear. Deeper mineralization in the CBA Informal Member of the Callville Limestone is another potential exploration target in the 4400 Area. 

The 8600 Area is the third potential exploration target. Mineralization is hosted by the Toroweap Sandstone rather than the Callville Limestone. Features recommending the target include:

 

·

All tonnage (about 66,000 tons) mined here between 1963 to late 1980 averaged 0.099 opt Au, 10.80 opt Ag, 12.76% Zn, 7.47% Pb, and 0.21% Cu ; and

·

The grades for the last mining during 1980 were slightly lower but still potentially economic (0.032 opt Au, 4.60 opt Ag, 5.30% Zn, 4.10% Pb, and 0.15% Cu). 

Access to the 8600 Area is poor, and federal regulations would require additional connections to the surface before mining could be resumed. Behre Dolbear recommends that UNICO should first determine current mining and milling costs for the 8600 Area mineralization before estimating the size and grade potential in that area.

29

 

Behre Dolbear points out that there are mitigating factors that UNICO/Deer Trail should take into account in making its exploration decisions on the targets located in the 3400, 4400, and 8600 Areas. The most significant of these include the following: 

·

Behre Dolbear cannot predict whether additional exploration will find grades similar to those in UDDH #1-13, the bulk sample, or past mining; 

·

The silver and zinc equivalent grades and the associated dollar values of the Potentially Mineable Intercepts are calculated from highly variable amounts of gold, silver, and base metals in the different intervals; 

·

Silver and zinc equivalent grades do not indicate the variability of the five metals; 

·

Given the variability of the five potentially valuable metals, it may be difficult to maintain a uniform mill feed of these five metals in a mining operation; 

·

Noranda Exploration, Inc. concluded that milling followed by a cyanide vat-leach process to recover*only*gold and silver would be marginally more economic than recovering the gold, silver, and base metals in a flotation concentrate to be smelted and refined, further indicating the variability and generally low grades of the base metals over mineable widths; and 

·

Behre Dolbear has not estimated tonnages of mineralized material or mining and processing costs. 

**TABLE 7.1**

**STRATIGRAPHIC TOPS (BOLD) AND UNCORRECTED THICKNESSES (PARENTHESES) OF INFORMAL MEMBERS OF THE PENNSYLVANIAN CALLVILLE LIMESTONE, DEER TRAIL MINE, PIUTE COUNTY, UTAH**

**Hole #**

**OGS**

**UWAQ**

**CBA**

**UD-LWAQ**

**UDL**

**LD-LWAQ**

**LDL**

**MQ/BSZ**

**LCAQ**

UDDH #1

-45o/102o

740  ft

0 ft*

(44.8 ft)

44.8 ft

(65.0 ft)

109.8 ft

(77.7 ft)

187.5 ft

(103.2 ft)

290.7 ft

(17.1 ft)

307.8 ft

(26.2 ft)

334.0 ft

(19.0 ft)

353.0 ft

(64.2 ft)

417.2 ft

(322.9 ft)

UDDH #2

-40o/102o

654 ft

0 ft*

(50.5 ft)

50.5 ft

(63.8 ft)

114.3 ft

(82.2 ft)

196.5 ft

(112.3 ft)

308.8 ft

(9.4 ft)

318.2 ft

(29.6 ft)

347.8 ft

(17.3 ft)

365.1 ft

(65.0 ft)

430.1 ft

(217.9 ft)

UDDH #3

-42o/92o

782 ft

0* ft

(58.4 ft)

58.4 ft

(65.3 ft)

123.7 ft

(78.0 ft)

201.7 ft

(127.2 ft)

328.9 ft

(11.7 ft)

340.6 ft

(28.5 ft)

369.1 ft

(24.3 ft)

393.4 ft

(67.4 ft)

460.8 ft

(321.2 ft)

UDDH #4

-42o/150o

554 ft

0 ft*

(63.3 ft)

63.3 ft

(69.3 ft)

132.6 ft

(80.1 ft)

212.7 ft

(59.1 ft)

271.8 ft

(11.6 ft)

283.4 ft

(26.9 ft)

310.3 ft

(19.3 ft)

329.6 ft

(84.1 ft)

413.7 ft

(140.3 ft)

UDDH #5

-55o/102o 

664 ft

0 ft*

(40.6 ft)

40.6 ft

(63.6 ft)

104.2 ft

(66.1 ft)

170.3 ft

(78.2 ft)

248.5 ft

(9.0 ft)

257.5 ft

(34.0 ft)

291.5 ft

(35.5 ft)

327.0 ft

(76.1 ft)

403.1 ft

(260.9 ft)

UDDH #6

-45o/21o

409 f t

0 ft*

(75.2 ft)

75.2 ft

(56.9 ft)

132.1 ft

(6.9 ft)

139.0 ft

(94.7 ft)

233.7 ft

(7.7 ft)

241.4 ft

(27.6 ft)

269 ft

(42.6 ft)

311.6 ft

(71.7 ft)

383.3 ft

(25.7 ft)

UDDH #7

-58o/298

733 ft

0 ft*

(42.6 ft)

42.6 ft

(56.1 ft)

98.7 ft

(43.8 ft)

142.5 ft

(125.1 ft)

267.6 ft

(13.8 ft)

281.4 ft

(54.9 ft)

336.3 ft

(32.9 ft)

369.2 ft

(106.5 ft)

457.7 ft

(257.3 ft)

UDDH #8

-75o/298o

565 ft

0 ft*

(40.9 ft)

40.9 ft

(15.4 ft)

56.3 ft

(47.7 ft)

104.0 ft

(82.3 ft)

186.3 ft

(8.4 ft)

194.7 ft

(33.6 ft)

228.3 ft

(11.8 ft)

240.1 ft

(82.8 ft)

322.9 ft

(242.1 ft)

UDDH #9

-45o/116o

460 ft

0 ft*

(73.4 ft)

73.4 ft

(28.6 ft)

102.0 ft

(46.3 ft)

148.3 ft

(138.4 ft)

286.7 ft

(11.2 ft)

297.9 ft

(17.7 ft)

315.6 ft

(8.5 ft)

324.1 ft

(115.1 ft)

439.2 ft

(20.8 ft)

UDDH #10

-75o/0o

459 ft

0 ft*

(47.8 ft)

47.8 ft

(48.9 ft)

96.7 ft

(39.3 ft)

136.0 ft

(77.6 ft)

213.6 ft

(9.3 ft)

222.9 ft

(33.6 ft)

256.5 ft

(32.6 ft)

289.1 ft

(67.1 ft)

356.2 ft

(102.8 ft)

UDDH #11

+45o/258o

454 ft

454.9 ft***

(90.6 ft)

363.4 ft

(27.7 ft)

335.7 ft

(71.7 ft)

264.0 ft

(104.6 ft)

159.4 ft

(9.8 ft)

149.6 ft

(29.2 ft)

120.4 ft

(16.3 ft)

104.1 ft**

(104.1 ft)

CAH

UDDH #12

+45o/162o

355 ft

355.0 ft***

(28.5 ft)

326.5 ft

(30.9 ft)

295.6

(7.7 ft)

287.9 ft

(157.9 ft)

130.0 ft

(7.8 ft)

122.2 ft

(26.7 ft)

95.5 ft

(108.0 ft)

77.5 ft**

(77.5 ft)

CAH

UDDH #13

-65o/125o

420 ft

CBH

CBH

CBH

CBH

CBH

CBH

CBH

CBH

0 ft*

(420.0 ft)

*True stratigraphic top lies above drill collar.

**True stratigraphic top lies below drill collar.

*** True stratigraphic top lies above end of “up-hole.”

CBH – “Down-hole” drilled at negative angle collared stratigraphically below base of horizon or Informal Member.

CAH – “Up-hole” drilled at positive angle collared stratigraphically above top of horizon or Informal Member. 

30

**TABLE 7.2**

**POTENTIALLY MINEABLE INTERCEPTS**

**Drill Hole**

**Number**

**From**

**To**

**Thick-ness**

**True**

**Thick-ness**

**Gold**

**(opt)**

**Silver**

**(opt)**

**Copper**

**(opt)**

**Lead**

**(%)**

**Zinc**

**(%)**

**Silver**

**Equiv-**

**alent**

**(opt)**

**Zinc**

**Equiv-**

**Alent**

**(%)**

**Dollar**

**Value ($)**

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH01**

365.5

377.2

11.7

10.3

0.072

4.96

0.01

0.07

0.14

9.37

4.45

$84.50

406.6

417.2

10.6

9.6

0.031

5.14

0.11

0.68

1.55

11.4

5.41

$192.83

442.2

462.5

20.3

17.2

0.011

2.93

0.17

1.09

1.74

9.23

4.38

$83.23

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH02**

378.0

385.0

7.0

6.6

0.084

17.02

0.54

0.37

0.36

25.39

12.06

$229.06

417.9

425.5

7.6

6.8

0.049

14.08

0.01

0.07

0.05

17.05

8.10

$153.83

540.3

564.0

23.7

22.1

0.014

2.57

0.11

1.18

1.18

7.70

3.66

$69.50

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH03**

395.0

410.7

15.7

13.4

0.051

4.35

0.04

0.19

0.19

7.97

3.78

$71.85

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH05**

322.0

325.3

3.3

3.2

0.038

6.82

0.36

2.92

1.60

17.27

8.20

$155.75

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH06**

374.0

378.5

4.5

3.2

0.011

1.52

0.13

0.84

1.54

6.91

3.28

$62.30

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH07**

616.3

624.7

8.4

7.3

0.005

1.42

0.35

1.93

3.22

12.33

5.85

$111.18

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH10**

96.7

135.4

38.7

30.5

0.043

2.19

0.14

0.56

0.69

7.37

3.50

$66.48

283.7

295.0

11.3

9.8

0.037

3.54

0.02

0.46

0.55

7.33

3.48

$66.14

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH11**

8.6

13.4

4.8

3.7

0.146

19.02

0.50

0.75

0.91

32.26

15.32

$290.99

103.3

112.0

8.7

7.5

0.032

11.14

0.68

1.34

1.74

21.30

10.11

$192.14

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH12**

5.8

61.0

55.2

33.0

0.018

5.37

0.44

0.41

0.77

10.54

5.00

$95.08

220.0

230.3

10.3

5.2

0.016

2.00

0.05

0.17

1.65

6.79

3.22

$61.21

 

 

 

 

 

 

 

 

 

 

 

 

 

**UDDH13**

77.9

82.6

4.7

4.4

0.008

2.89

0.35

1.42

1.86

10.49

4.98

$94.65

 

 

 

 

 

 

 

 

 

 

 

 

 

A report titled: “Evaluation of the Deer Trail Tailings at the Deer Trail Mine, Piute County, Utah” was submitted by Behre Dolbear as final to the Company on September 18, 2008  and the report summary is included here as follows:

Behre Dolbear & Company (USA), Inc. (Behre Dolbear) has evaluated the Upper Tailings Dump at the Deer Trail Mine for UNICO, Inc. (UNICO) and the Deer Trail Mining Company, LLC (Deer Trail). The study estimates the tonnage of material and the average grades and contained ounces of gold and silver in the Upper Tailings Dump. Deer Trail personnel provided data from two different drilling programs to Behre Dolbear. The two programs covered the same area and were performed in 1990 by Energy Fuels Nuclear, Inc. (Energy Fuels) and in 1993 by Ecology Mining Company (Ecology Mining). In both programs, the drill holes were spaced approximately 50 feet apart.

The 1990 Energy Fuels drilling program consisted of 64 drill holes along with assays for gold and silver at approximately 5-foot intervals down the hole. In addition to samples taken within the tailings dump, all but two of the holes penetrated the soil below the tailings. Only 39 of the sub-soil locations were assayed, and one location had no silver assay.

The 1993 program by Ecology Mining consisted of at least 51 drill holes in the Upper Tailings Dump. A memo from Lionel Koon to Hal Cooper dated February 10, 1994 contains assays for some of the drill holes through DH51. Gold and silver analyses were performed for selected intervals down the holes, but were not performed on each interval. Because of the incompleteness of the data available, Behre Dolbear made no grade estimates for the 1993 program. Tonnages of tailings material were calculated based on the 51 drill holes recorded by Ecology Mining in 1993.

The calculation of volumes, tonnages, and gold and silver average grades and contained ounces for the 1990 data can only be considered approximate and for reference only because origins of the input data available are not substantiated in any other way than appearance on a printed table of unknown origin. No reports, chain of sample custody, original sample remains, or any other information is available for these samples. Therefore, Behre Dolbear cannot verify either the 1990 or the 1993 data.

31

Behre Dolbear’s evaluation focused only on the tonnage of the tailings dump and associated gold and silver grades. The results of the Behre Dolbear evaluation and the two drilling programs performed in 1990 and 1993 are shown in Table 1.1. 

**TABLE 1.1**

**SUMMARY OF TONNAGES, GRADES, AND CONTAINED OUNCES OF BEHREDOLBEAR EVALUATION AS COMPARED TO PREVIOUSLY REPORTED QUANTITIES**

**Source**

**Tonnage**

**(short**

**tons)**

**Average**

**Gold**

**Grade**

**(opt)**

**Average**

**Silver**

**Grade**

**(opt)**

**Contained**

**Golda**

**(ounces)**

**Contained**

**Silvera**

**(ounces)**

BD 2007 – 1990 data, Lowerb

  (Natural Neighbor Method)

80,300

0.032

2.62

2,500

218,300

BD 2007 – 1990 data, Higherb

  (Minimum Curvature Method)

102,500

0.031

2.70

3,100

294,000

BD 2007 – 1993 data, Lowerc

  (Natural Neighbor Method)

82,400

NA

NA

NA

NA

BD 2007 – 1993 data, Higherc

  (Minimum Curvature Method)

103,400

NA

NA

NA

NA

1990 Energy Fuels, Pratt Memo 

   to Andrus

132,540d

0.031

2.66

--

--

1990 Energy Fuels Data, Sub-soil

   (39 samples)

--

0.015

0.989

--

--

1993 Ecology Mining Map

76,836e

--

--

--

--

1993 Ecology Mining Grades

   From Several Sources

   (51 drill holes)

--

0.030

to

0.045

2.416

to

3.710

--

--

2004 Ash Report f

105,000

0.031

2.85

--

--

a No recoveries were applied . Contained ounces are obtained by summing gridded values, not by 

   multiplication of ounces and tons.

b 1990 Energy Fuels data obtained from printed spreadsheet.

c 1993 Ecology Mining data obtained from map.

d Tonnage reported by Deer Trail (Ash Report, 2004), attributed to J.M. Pratt (original report not

   available). Some tonnage may have come from other mines that were milled at Deer Trail.

e From map: 62,980 cu. yd. converted to tons using a tonnage factor of 1.22 tons/cu. yd. 

f Estimate compiled by Wayne Ash from all available sources.

The evaluation of tonnage and grade was made using two different methods; the Natural Neighbor method and the Minimum Curvature method (see Appendix 3.0 for more explanation of these methods). The Natural Neighbor method calculates a grid only within the boundaries of the drill holes and is a most conservative estimate compared to other methods. The Minimum Curvature method is less conservative than Natural Neighbor, and produces a higher result, primarily because more area is included in the estimate. The estimates produced with this study are within the same ranges as the estimates in earlier studies.

Behre Dolbear used a tonnage factor of 1.22 tons per cubic yard for the tonnage estimates in this report. The tonnage factor was determined by Deer Trail in recent tests, but was not confirmed by Behre Dolbear. Details explaining the determination of the tonnage factor are included in Appendix 1.0.

A report of results about the 1990 Energy Fuels drilling program is not available, but the Ash 2004 mineralized materials assessment report refers to a tonnage estimate of 132,540 tons by J.M. Pratt in a memo written to J.R. Andrus. This is about 28% higher tonnage than the other reports and the calculations done by Behre Dolbear. The Ash 2004 report speculates that the tonnage estimate was probably generated with a computer from drill hole data and a topographic survey. The report also speculates that minerailized materials from other mines were milled at Deer Trail.

32

Fire assay grades from the 1993 drilling project were reported in a memo from Lionel Koon to Hal Cooper (Ecology Mining). Because of uncertainties about origins of the analyses and because continuous intervals down the hole were not assayed, only tonnages were calculated for the 1993 data. Behre Dolbear observes that the grades from all the sources other than the Koon memo differ by less than 5%.

The 1990 drilling penetrated the soil below the original tailings level with the expectation that gold and silver from the tailings could have leached into the soil below (sub-soil). The drilling and subsequent assays of the soils did result in measurable gold and silver grades. Sub-soil assays were not available for all drill holes, so no estimate was made of the possible quantity of gold and silver or tonnage in the sub-soil.

Although Behre Dolbear cannot verify either the 1990 or the 1993 data, it is reasonable to use the averages of those tonnage and grade estimates as an approximation of the actual tonnage and grades of the material in the Upper Tailings Dump. Those averages are 92,150 tons at grades of 0.03 ounces per ton (opt) gold and 2.66 opt silver. Behre Dolbear has also not verified the tonnage factor provided by Deer Trail to calculate tonnages from estimates of volumes.

The United States Securities and Exchange Commission (SEC) in its requirements for information disclosure for the mining industry does not recognize the term “resource”. Mineralization that is classified as a resource in some other jurisdictions is called mineralized material by the SEC. Mineralized material is defined as*a mineralized body, which has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metals. Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade,*

*recoveries, and other material factors conclude legal and economic feasibility.*The SEC allows companies to publish tonnage and grade estimates of mineralized material but not estimates of contained metal.

Based on this definition and the above calculated averages, Behre Dolbear classifies the tailings material in the Upper Tailings Dump as Mineralized Material estimated to contain approximately 92,150 tons at grades of 0.03 opt gold and 2.66 opt silver. Additional drilling and an economic analysis would be required to classify the tailings as a Reserve. To verify the data, Behre Dolbear recommends that UNICO drill ten to fifteen holes distributed throughout the mineralized material, sample, and assay the drilled material for gold and silver, statistically analyze the data, and compare the results with the results from the 1990 and 1993 drilling programs. Behre Dolbear also recommends that UNICO produce a new surface contour map of the tailings as erosion subsequent to the 1990 and 1993 contour maps may have removed and/or redistributed some of the tailings. In addition, UNICO should determine a more accurate tonnage factor. All the resulting data, if sufficiently comparable with the 1990 and 1993 data, should be used to estimate tons, grades, and contained ounces of gold and silver. If not sufficiently comparable, the entire tailings mineralized material should be re-drilled.

An economic analysis using the estimates of tons, grades, and contained metals must be carried out to produce an SEC-compatible Reserve.

Table 1.1 summarizes the results of Behre Dolbear’s evaluation of the two drilling programs performed in 1990 and 1993. The table also shows the results of estimates from others based on those two drilling programs.

Behre Dolbear cannot verify either the 1990 or the 1993 data. However, the four tonnage estimates by Behre Dolbear and the two grade estimates for gold and silver (Table 9.1) are not significantly different from each other. In addition, those estimates are not widely different from the other estimates cited in that table. Therefore, it is reasonable to use the average of the Behre Dolbear tonnage and grade estimates as an approximation of the actual tonnage and grades in the Upper Tailings Dump. Behre Dolbear has used but has not verified the tonnage factor estimated by Deer Trail to calculate the tonnages from its estimates of volumes. The calculated averages are 92,150 tons of tailings at grades of 0.03 opt gold and

2.66 opt silver. 

UNICO has requested that Behre Dolbear classify the tailings in accordance with the mining disclosure policy of the United States Securities and Exchange Commission (the SEC). Additional drilling and an economic analysis would be required to classify the tailings as a Reserve. That work is beyond the scope of the current project. The SEC does not recognize the term “resource” to classify mineralization for investor information purposes. Mineralization classified as resources in some other jurisdictions, including Canada, is called mineralized material by the SEC. “Mineralized material” is defined as*a mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metals. Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors conclude legal and economic feasibility.*Based on this definition and the calculated tonnages and grades cited above, Behre Dolbear classifies the Upper Tailings Dump as containing approximately 92,150 tons of Mineralized Material averaging 0.03 opt gold and 2.66 opt silver.

33

As pointed out above, Behre Dolbear cannot verify the data used to estimate the tons and grades. To verify the data, Behre Dolbear recommends that UNICO drill ten to fifteen holes distributed throughout the tailings pile. That number of holes is approximately 20% of the holes drilled by Energy Fuels in 1990. The drilled material should be sampled in five-foot intervals and assayed for gold and silver. The resulting data should be statistically analyzed and compared with the results from the 1900 and 1993 drilling programs. Behre Dolbear also recommends that UNICO produce a new contour map of the surface of the tailings pile. As pointed out in Section 5.2, erosion subsequent to the 1990 and 1993 contour maps used by Behre Dolbear may have removed and/or redistributed some of the tailings. In addition, UNICO should determine a more accurate tonnage factor. All the resulting data, if sufficiently comparable to the1990 and 1993 data should be used to estimate tons and grade and contained ounces of gold and silver. If not sufficiently comparable, additional drilling should be performed to completely redrill the tailings.

An economic analysis using the estimates of tonnage, grade, and contained metals must be carried out to produce an SEC-compatible Reserve. That analysis must consist of a determination of mining, processing, and general and administrative costs to mine. Since the material will be processed by the Deer Trail mill, the recoveries of gold and silver in that mill must be determined as a part of that analysis.

In the early part of fiscal year 2010 the Company has determined to do a comprehensive channel sampling program throughout all three levels of the 3400 Area in planned concert with a partner in order to re-confirm the tenor and tonnage prior to establishing additional mine headings*.*This will be the next phase of exploration*.* Later in the fiscal year 2010 we plan to establish an indicated and/or measured reserve in the 8600 Area with underground or surface drilling.  This would include the area beyond the 1980 working face as well as the untested interval of the projected Toroweap mineralized body between the PTH Tunnel and the terminal levels of the Upper Mine.  Later in the fiscal year 2010 we also plan to test the potential in the Mississippian with a 6 to 10 hole program adjacent to known feeder structures in both the 3400 and 8600 Areas.  Based on the size of the existing mineralized bodies it is anticipated that the size of this area will be many multiples of that of the original combined Toroweap mineralized body in the Upper Mine and 8600 Area of the Lower Mine.  

In September 2007, Deer Trail Mining Company completed the construction of a new electrical substation that will supply power to the reconstructed mill and processing facility. The substation is designed to supply up to 2.5 megawatts of electrical power well beyond the estimated 1.5 megawatts estimated to run the mill and processing facility. Additional power is expected to be used for future mining activities and expansion plans on site. The Company recently completed the construction of a secondary substation to interface directly with the mill and processing facility and it is now energized. 

In February, 2008, the Deer Trail Mining Company completed underground rehabilitation work up through to the 3400 level of the PTH tunnel of the Deer Trail Mine. The work was contracted through Atlas Mining Company to conduct initial underground maintenance including the replacement of timber sets, clean up of the main haulage way and installation of ground support where needed to the main PTH haulage tunnel. 

In April, 2008, the Deer Trail Mining Company completed reconstruction work of the floatation circuit at the mill and processing facility at the Deer Trail Mine. Testing of the floatation circuit is currently underway utilizing screened material from the stockpiles on site.

**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 grid auger 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 installation of the acid leach circuit at the Deer Trail Mill has been completed and is operational.

**Exploration Time Table and Budget**

Additional exploration has been planned but no time or budget has been established to complete this work.

**Phased Program - Plan for Incremental Mine Development**

The six-point plan listed below outlines our proposed plan of action.  The bases of the plan is that profits, if any,  from the easily established acid leach recovery of precious metals from the Upper Mine’s tailings and possibly backfill can be utilized to finance exploration and development of the 3400 Area and ultimately the 8600 Area as well as other potential targets in successive stages. Details on the grade, tonnage, and planned processing of the oxidized material present at the Upper Mine can be found in the Deer Trail Mining Company’s Mining Engineer’s summary reports (Appendix II).

34

1.

Complete the acid leach circuit and begin processing the 100,000 tons of mill tailings. 

2.

Systematically sample the 100,000 tons of backfill in the Upper Mine. 

3.

Systematically sample and, if warranted, drill the most prospective portions of the 3400 Area.  Re-commence mining if warranted and up-grade equipment as necessary.  

4.

Establish at indicated and/or measured reserves in the 8600 Area with underground or surface drilling.  This would include the area beyond the 1980 working face as well as the untested interval of the projected Toroweap mineralized body between the PTH Tunnel and the terminal levels of the Upper Mine.  

5.

Rehabilitate the 8600 Area workings including rails, timbers, electrical system, ventilation system, hoist, etc.  Bore mandatory escape raise connecting the PTH Tunnel with the Upper Mine and re-commence mining in the 8600 Area.

6.

Test the potential in the Mississippian with a 6 to 10 hole program adjacent to known feeder structures in both the 3400 and 8600 Areas.  Anticipated size is many multiples of that of the original combined Toroweap mineralized body in the Upper Mine and 8600 Area of the Lower Mine.  

**Plans to Conduct Additional Exploration**

The time and budget have not been established for this program.

**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 Mining Company, Inc.

Silver Bell Mining Company, Inc. was incorporated in the State of Utah on April 26, 1993. It has acquired 26 patented mining claims located in American Fork Canyon, Utah County, Utah, which is organized into three separate parcels. The claims contain mining properties that 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.

 

Silver Bell Mining Company conducted some exploration work on the Silver Bell Mine through 2004. Silver Bell Mining Company plans to conduct further exploration work to evaluate the claims prior to commencing any future mining activities on the claims.  Silver Bell Mining Company anticipates that if there are any future  mining activities the Silver Bell Mine materials mined will be transported to the Deer Trail Mine site where they can be crushed, milled and processed.  Silver Bell Mining Company may also seek a joint venture mining partner to jointly develop the Silver Bell Mine if exploration work suggests that future mining is commercially viable. 

Bromide Basin Mining Company, LLC

On July 20, 2001, Unico entered into a Mining Lease and Option to Purchase with Kaibab Industries, Inc., an Arizona corporation. The lease was renewed multiple times and assigned to Unico’s subsidiary, Bromide Basin Mining Company, LLC.  The lease expired October 31, 2007, and the Company chose not to extend it or exercise the purchase option.  

 

The primary purpose of the agreement was to allow Bromide Basin Mining Company access to the claims to conduct an extensive preproduction feasibility study prior to any additional mining production and to analyze the potential of the claims before exercising the purchase option from Kaibab Industries.  The Company concluded its evaluation of the property, and determined that the leased premises under the Kaibab Mining Lease is not feasible for large scale mining activities by Bromide Basin Mining Company.

35

**Plan of Operation**

During the next 12 months, the Company’s plan of operation is to raise approximately $5,500,000 for investment into its subsidiary companies: Deer Trail Mining Company and Silver Bell Mining Company. The funds are intended for the following purposes during the next twelve months: 

·

Continue sampling and analyzing mineralized rock samples, stockpiles and dump material from the Deer Trail Mine to evaluate the most efficient means to conduct future mining and milling activities;

·

Expand metallurgical research department at the Deer Trail Mine and Mill Facility;

·

Purchase additional lab equipment for metallurgical purposes;

·

Upgrade mine infrastructure and begin underground maintenance and rehabilitation work at the Deer Trail Mine;

·

Continue to upgrade and complete the re-construction project on the existing mill at the Deer Trail Mine;

·

Upgrade the crushing facility at the upper Deer Trail Mine and continue screening the mineralized material  dumps;

·

Construct large tailings pond for large scale processing;

·

Begin full scale milling and processing activities at the Deer Trail Mill and Processing Facility;

·

Upgrade mining equipment and infrastructure to bring operations to full scale at the Deer Trail Mine;

·

Conduct additional survey and mapping work on the Clyde and Crown Point mining claims including improvements to the property and potentially underground and surface exploratory drilling on the claims; and

·

Commence exploration work to evaluate the potential of the mining claims at the Silver Bell Mine beginning in the summer of 2010.

Accomplishing the 12-month plan of operations is dependent on: (a) the Company raising approximately $5,500,000 in equity and/or debt financing during the next 12 months to be used for the Company’s operations, of which approximately $1,500,000 is needed in the next 120 days.  Subsequent to the quarter ended August 31, 2009, the Company received $60,000 through the issuance of new convertible debentures to Moore Investments.  The new debentures were issued with terms of 180 days, bear interest at the rate of 8% per annum, and are convertible by the holder in shares of the Company’s common stock at a discount of 50% of the closing bid price on the date of conversion.  The Company intends to raise approximately $5,500,000 during the next 12 months to fulfill the 12-month plan.

**Smelting and Refining**

All of the processing of concentrates generated from the mill will be processed on site or at a leaching plant in Phoenix owned by an unrelated party.  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. 

**Reverse Stock Split**

Effective June 30, 2008 the Company’s common stock underwent a 1 for 500 reverse stock split.  As a result, the number of outstanding shares of the Company’s common stock as of June 30, 2008 decreased from 4,940,363,072 pre-reverse split shares to 9,880,727 post-reverse split shares.  Share figures appearing in this report are generally expressed in numbers of post-reverse split shares, unless otherwise noted.  As of May 31, 2009, the Company had 139,943,191 post-reverse split shares of common stock issued and outstanding.

**Results of Operations**

For the three months ended August 31, 2009 and August 31, 2008, Unico reported no revenues.   For the six months ended August 31, 2009, and August 31, 2008, Unico reported no revenues.

During the three months ended August 31, 2009 the Company incurred total operating expenses of $585,025, an increase of $82,665 from the $502,360 of total operating expenses incurred in the three months ended August 31, 2008.  The increase is due primarily to an increase of $65,423 in depreciation and accretion, an increase of $52,822 in professional fees, and an increase of $11,784 in general and administrative expense, partially offset by a decrease of $7,885 in drilling, exploration and maintenance expense, and a decrease of $39,479 in salaries and wages.  During the six months ended August 31, 2009, the Company incurred total operating expenses of $1,031,652, a decrease of $88,060 from the $1,119,712 of total operating expenses incurred in the six months ended August 31, 2008.  

36

The decrease is attributable to a decrease of $111,027 in drilling, exploration and maintenance expense, a decrease of $96,286 in salaries and wages, and a decrease of $21,899 in general and administrative expense, partially offset by an increase of $130,056 in depreciation and accretion, and an increase of $11,096 in professional fees.  The overall decrease in operating expenses, except depreciation, during the six month period, is largely attributable to the decrease in milling activities associated with the production of concentrates.  The production of the concentrates has been held up due to the processing plant not being able to take the concentrates at this time as well as the large tailings pond not being completed.  Full scale production can not commence until the tailings pond is completed.

During the three months ended August 31, 2009, interest expense was $1,137,994, an increase of $237,459 from the $900,535 of interest expense recorded in the three months ended August 31, 2008.     During the three months ended August 31, 2009, the Company had interest income of $644 as compared to $2,913 for the same three month period ended August 31, 2008.  During the three months ended August 31, 2009, the Company had gain on settlement of debt of $5,246 as compared to $0 for the same three month period ended August 31, 2008.  During the six months ended August 31, 2009, interest expense was $1,708,652, a decrease of $125,559 from the $1,834,211 of interest expense recorded in the six months ended August 31, 2008.  During the six months ended August 31, 2009, the Company had interest income of $644 as compared to $2,969 for the same six month period ended August 31, 2008.  During the six months ended August 31, 2009, the Company had gain on settlement of debt of $18,399 as compared to $0 for the same six month period ended August 31, 2008.  The overall decrease in interest expense for the six month period is attributed to the fact that we have a smaller dollar amount of debentures outstanding in the six month period ended August 31, 2009 than we did in the same six month period a year ago.

During the three months ended August 31, 2009, Unico experienced a net loss in the amount of $1,717,129 or approximately ($0.01) per share, compared to a net loss of $1,399,982 or approximately ($0.14) per share for the same period in 2008.  Unico attributes the $317,147 increase in net loss for the three month period ended August 31, 2009 compared to the three month period ending August 31, 2008, largely to the increase in interest expense associated with debenture financing and to the increases in depreciation and accretion and professional fees.  During the six months ended August 31, 2009, Unico experienced a net loss in the amount of $2,721,261 or approximately ($0.02) per share, compared to a net loss of $2,950,954 or approximately ($0.30) per share for the same period in 2008.  Unico attributes the $229,693 decrease in net loss for the six month period ended August 31, 2009 compared to the six month period ending August 31, 2008, to a combination of  decreases in interest expense associated with debenture financing and overall operating expenses due to a decrease in milling and mining activities..

**Liquidity and Capital Resources**

The Company’s financial statements present an impairment in terms of liquidity. As of August 31, 2009 the Company had a deficit in working capital of $19,268,998.  The Company has accumulated $67,974,754 of net operating losses through August 31, 2009, which may be used to reduce taxes in future years through 2029. 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 $336,170 in the six month period ended August 31, 2009, from a deficit of ($12,442,081) as of February 28, 2009 to a deficit of ($12,778,251) as of August 31, 2009.

The Company’s cash as of August 31, 2009, when combined with $60,000 of additional cash the Company received in September 2009, will sustain operations for approximately 30 days.  The Company needs to raise approximately $5,500,000 in equity and/or debt financing during the next 12 months to be used for the Company’s operations, of which approximately $1,500,000 is needed in the next 120 days.  The Company has effected a reverse stock split of its issued and outstanding shares so that the Company will have sufficient authorized, but unissued, shares of its common stock available to provide for the conversion of the Company’s existing $7,996,569 of convertible debentures into shares of the Company’s common stock.  These additional authorized, but unissued, shares will also allow the Company to raise additional capital through the sale of shares of restricted common stock.

**Going Concern**

Our auditors have issued a "going concern" opinion in note 7 of our February 28, 2009 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 $5,500,000 in equity, debt or through other financing transactions in the next 12 months (of which $1,500,000 is needed in the next 120 days), we believe that Unico will have sufficient funds to meet operating expenses until income from future activities are sufficient to cover operating expenses. 

37

**Capital Expenditures**

The Company expended $20,694 on capital expenditures during the three months ended August 31, 2009.  The Company anticpates that it may spend, approximately, $1,000,000 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, 2009, 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 and with the participation of management, our principal executive officer and principal financial officer, Mark A. Lopez and Kenneth C. Wiedrich, respectively, 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 August 31, 2009.  Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and adequately designed 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.

Changes in Internal Control Over Financial Reporting

This quarterly report contains financial statements that have been restated.  The financial statements were restated to correct an error.  The error did not occur as a result of ineffective controls over our financial reporting.  The error occurred because of complex accounting issues.  During the last fiscal quarter ended August 31, 2009, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

38

**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 allege 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 plaintiffs seek no less than $20 million in damages from the named defendants, as well as injunctive relief, interest, attorney's fees, and court costs.  The defendants deny any liability, and are defending the lawsuit.    Since the claims are made against officers, a director and other third parties, Unico does not believe that its assets are at risk in this proceeding except to pay legal defense costs until the insurance deductible has been met, and unless the plaintiffs are successful in obtaining an award in excess of the insurance policy limits.  The parties have tentatively reached a settlement, subject to court approval, pursuant to which Unico’s insurance company will pay $850,000 (the “Settlement Award”) to Unico on behalf of two Unico officers and one Unico director, and Unico will agree 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.  Plaintiff’s attorney’s fees and expenses will be paid, and an incentive award will be paid, from the Settlement Award, in such amounts approved by the court.  Notice of the proposed settlement will be sent to Unico shareholders.  If the settlement is approved by the court, Unico will issue a press release more fully describing the terms of the settlement which will also be published on Unico’s website atwww.unicomining.com .

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 $216,291as 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. 

 

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 alleges 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 alleges that Deer Trail Mining Company, LLC breached the contract by failing to pay for the services and materials, and is seeking a money judgment against Deer Trail Mining Company, LLC for at least $182,144 plus interest at 18% per annum, plus costs.  Plaintiff is also seeking 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 has filed an Answer denying liability. The case is now in the discovery phase. Deer Trail Mining Company, LLC is also attempting to negotiate a settlement of the lawsuit.

On March 23, 2009, a lawsuit was filed by Workers Compensation Fund, a Utah non-profit corporation, against Unico Incorporated in the Third Judicial District Court for Salt Lake County, State of Utah (Case No. 090904860) in which the plaintiff alleged that it provided workers’ compensation insurance coverage to Unico for the policy period February 6, 2007 to February 5, 2008.  The plaintiff alleged that the sum of $14,245 remains due on the account, together with accrued interest.  The plaintiff alleged that it is entitled to recover damages in the principal amount of $14,245, plus interest at the rate of 8% per annum, plus court costs and a reasonable attorney’s fee.  Settlement was reached in the matter.  Unico paid $9,000 and settled the amount in full.

39

On December 18, 2008, a lawsuit was filed by ISCO Industries, LLC against Unico, Incorporated in the Superior Court of California, County of San Diego (Case No. 37-2008-00098400-CL-CL-CTL) in which the plaintiff sought to recover money owed for goods and/or services provided, interest thereon and attorney’s fees.  The defendant did not file an Answer in the case, and a default judgment was entered against Unico, Incorporated for $29,152.  Unico, Incorporated believed that a smaller amount was actually owing.  Settlement was reached and Unico paid $16,000 to settle the matter.  The judgment has been satisfied and released.

Unico received a Subpoena Duces Tecum dated November 3, 2008 captioned “In the Matter of Certain Unregistered Offerings/HO-10859” requesting copies of various documents, most of which are related to certain fund raising efforts in which Unico engaged through the issuance of convertible debentures, and the settlements of many of those convertible debentures that Unico defaulted on.  The holders of the debentures or their assignees filed a large number of actions in Florida State Court which were eventually settled by Unico, Incorporated and the various debenture holders/assignees by agreeing to issue substantial number of shares of Unico common stock at prices that were significantly discounted from the then existing market prices for Unico shares, in court approved settlements.  Certain officers and/or directors of Unico received similar subpoenas from the SEC, and depositions of those officers or directors were taken in March 2009.  No action has yet been taken by the Securities and Exchange Commission against Unico and/or its officers and directors following the depositions.

**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, 2009, the Company issued $262,500 of convertible debentures to Moore Investment Holdings.  During the quarter ended August 31, 2009, the Company issued $825,000 of convertible debentures that were used primarily to support subsidiary operations.  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. 

  

During the quarter ended August 31, 2009 the Company issued 137,797,290 post-reverse split shares of its common stock on the conversion of  $822,385 principal and $12,302 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

During the quarter ended August 31, 2009 the Company issued 3,227,124 post-reverse split shares of its common stock on the conversion of $45,000 of principal payable to Ray Brown.

 

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 August 31, 2009, there are approximately $7,996,569 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 please refer to Unico's annual reports on Form 10-KSB for the fiscal year ended February 28, 2007, and Form 10-K for the fiscal years ended February 29, 2008 and February 28, 2009, respectively. 

40

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

As of February 28, 2009 the Company had $8,066,952 of convertible debentures that were due and payable.  Of this amount, $7,448,952 were in default. 

As of August 31, 2009, the Company had $7,996,569 of convertible debentures of which $6,909,069 are in default and are due to the following:

Moore Investment Holdings, LLC

$

5,299,063 

Joseph Lopez

$

114,466 

Ray Brown

$

403,956 

C. M. Anderson and third parties

$

1,091,584 

    Total in default

$

6,909,069 

Of the remaining debentures that are due and payable, $62,500 defaulted in September, 2009, and $125,000 will defaulted in October, 2009, and $75,000 will default in November if not paid. 

The Company has also recorded a liability for the 20% to 50% discount conversion rights of the debentures.  As of August 31, 2009 the total liability of the beneficial conversion for the debentures is $7,892,885 and the total liability for the interest portion of the debentures is $1,119,419.  

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

None

**Item 5.    Other Information.**

None

**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**

10.142

Convertible Debenture No. 201 for $62,500 dated March 13,  2009 issued to Moore Investment Holdings, LLC

(1)

10.143

Convertible Debenture No. 202 for $40,000 dated April 3, 2009, issued to Moore Investment Holdings, LLC

(1)

10.144

Convertible Debenture No. 203 for $40,000 dated April 20, 2009 issued to Moore Investment Holdings, LLC

(1)

10.145

Convertible Debenture No. 204 for $45,000 dated April 27, 2009

issued to Moore Investment Holdings, LLC

(1)

10.146

Convertible Debenture No. 205 for $65,000 dated May 22, 2009

issued to Moore Investment Holdings, LLC

(1)

10.147

Convertible Debenture No. 206 for $10,000 dated May 28, 2009

issued to Moore Investment Holdings, LLC

(1)

10.148

Convertible Debenture No. 207 for $150,000 dated June 1, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.149

Convertible Debenture No. 208 for $10,000 dated June 9, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.150

Convertible Debenture No. 209 for $200,000 dated June 11, 2009

issued to Moore Investment Holdings, LL

Filed herewith

10.151

Convertible Debenture No. 210 for $10,000 dated June 18, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.152

Convertible Debenture No. 211 for $10,000 dated June 25, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

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10.153

Convertible Debenture No. 212 for $10,000 dated July 1, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.154

Convertible Debenture No. 213 for $20,000 dated July 16, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.155

Convertible Debenture No. 214 for $75,000 dated July 27, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.156

Convertible Debenture No. 215 for $20,000 dated August 10, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.157

Convertible Debenture No. 216 for $50,000 dated August 14, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.158

Convertible Debenture No. 217 for $20,000 dated August 25, 2009

issued to Moore Investment Holdings, LLC

Filed herewith

10.159

Convertible Debenture No. 218 for $250,000 dated August 31, 2009 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

(1) Incorporated by reference from Unico’s Quarterly Report on Form 10-Q for the Fiscal Quarter Ended May 31, 2009 filed on July 14, 2009.

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**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: October 14, 2009

*/s/ Mark A. Lopez*

Mark A. Lopez

Chief Executive Officer

 

 

43**