SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 10-QSB

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934



For the quarterly period ended May 31, 2005

Commission  file number 000-30239



UNICO, INCORPORATED



(Exact name of small business issuer as specified in its charter)



|Arizona                                                         | 86-0205130                          
|--------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction  of incorporation or organization) | (IRS Employer Identification Number)





8880 Rio San Diego Drive, 8th Floor

San Diego, California 92108

(Address of principal executive offices)



(619) 209-6124

(Issuer's telephone number, including area code)



(Former Name, Former Address and Former Year,

if changed since last report)



Check whether the issuer (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 [X] No [_]



APPLICABLE ONLY TO CORPORATE ISSUERS:



State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:



As of July 13, 2005, the issuer had outstanding 498,427,896 shares of its common stock, $0.10 par value per share and 10,000,000 shares of its Series A Preferred Stock, $0.001 par value per share. Series A Preferred Stock is convertible to common stock on a one for one share basis.















PART I - FINANCIAL INFORMATION



Item 1. Financial Statements











UNICO, INCORPORATED



FINANCIAL STATEMENTS



May 31, 2005









2



|UNIICO, INCORPORATED |  | 
|-------------------- |  | 
|Balance Sheets       |  | 
|ASSETS               |  | 

| |  |  | May 31,     |  |  | February 28,
| |  |  | ----------- |  |  | ------------
| |  |  | 2005        |  |  | 2005        
| |  |  | (Unaudited) |  |  |             

|Current Assets |  |  |  |  | 
|-------------- |  |  |  |  | 

| | Cash            | $ | 39,411 |  | $ | 38,359
| | --------------- | - | ------ |  | - | ------
| | Prepaid expense |   | 3,664  |  |   | 3,664 

|Total Current Assets |  | 43,075 |  |  | 42,023
|-------------------- |  | ------ |  |  | ------
|Equipment, Net       |  | 2,087  |  |  | 2,285 
|Other Assets:        |  |        |  |  |       

| | Refundable deposit |  | 5,460 |  |  | 5,460
| | ------------------ |  | ----- |  |  | -----
| | Total Other Assets |  | 5,460 |  |  | 5,460

|Investments (See Schedule) |  |  |  |  | 
|-------------------------- |  |  |  |  | 

| | Investments       |   | 230,000 |  |   | 230,000
| | ----------------- | - | ------- |  | - | -------
| | Total Investments |   | 230,000 |  |   | 230,000
| | Total Assets      | $ | 280,622 |  | $ | 279,768

|LIABILITIES AND STOCKHOLDERS' EQUITY |  | 
|------------------------------------ |  | 

|Current Liabilities |  |  |  |  | 
|------------------- |  |  |  |  | 

| | Bank Overdrafts                          | $ | -         |  | $ | 1,585    
| | ---------------------------------------- | - | --------- |  | - | ---------
| | Accounts Payable                         |   | 68,308    |  |   | 26,259   
| | Accrued Expenses                         |   | 76,356    |  |   | 71,567   
| | Notes Payable - related party            |   | -         |  |   | 5,671    
| | Taxes payable                            |   | 787       |  |   | 787      
| | Accrued interest payable                 |   | 344,602   |  |   | 315,586  
| | Accrued interest payable - related party |   | 53,813    |  |   | 45,789   
| | Debentures payable                       |   | 1,167,500 |  |   | 917,500  
| | Debentures payable-related party         |   | 675,774   |  |   | 606,918  
| | Wages Payable                            |   | 37,500    |  |   | -        
| | Stock Payable                            |   | 50,000    |  |   | -        
| | Contingent liabilities                   |   | 286,000   |  |   | 286,000  
| | Total Current Liabilities                |   | 2,760,640 |  |   | 2,277,662

|Long Term Liabilities |  |  |  |  | 
|--------------------- |  |  |  |  | 

| | Notes payable - non current |  | -         |  |  | -        
| | --------------------------- |  | --------- |  |  | ---------
| | Total Long-Term Liabilities |  | -         |  |  | -        
| | Total Liabilities           |  | 2,760,640 |  |  | 2,277,662

|Stockholders' Equity |  |  |  |  | 
|-------------------- |  |  |  |  | 

| | Preferred Stock, Authorized 20,000,000 Shares, $0.001 Par Value, 10,000,000 and 10,000,000 Shares Issued and Outstanding respectively |  | 10,000       |  |  | 10,000      
| | ------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  |  | ------------
| | Common Stock,  Authorized 500,000,000 Shares, $0.10 Par Value,498,427,896 and 498,427,896 Shares Issued and Outstanding respectively  |  | 49,842,791   |  |  | 49,842,792  
| | Additional Paid in Capital                                                                                                            |  | (32,847,072) |  |  | (33,052,072)
| | Accumulated Deficit                                                                                                                   |  | (19,485,737) |  |  | (18,798,614)

|Total Stockholders' Equity |  | (2,480,018) |  |  | (1,997,894)
|-------------------------- |  | ----------- |  |  | -----------

| | Total Liabilities and Stockholders' Equity | $ | 280,622 |  | $ | 279,768
| | ------------------------------------------ | - | ------- |  | - | -------

|The accompanying notes are an integral part of these financial statements.
|--------------------------------------------------------------------------

3



|UNICO, INCORPORATED     
|------------------------
|Schedule of Investments 
|May 31, 2005
(unaudited)

|INVESTMENTS:                             |             |  |           |   |                |   |            |     |  |            
|---------------------------------------- | ----------- |  | --------- | - | -------------- | - | ---------- | --- |  | -----------
|                                         | Description |  | Percent   |   |                |   |            |     |  |            
|Company                                  | of Business |  | Ownership |   | Investment     |   | Fair Value |     |  | Affiliation
|Silver Bell Mining Company, Incorporated | Mining      |  | 100%      | $ | 309,150        | $ | -          |     |  | yes        
|Bromide Basin Mining Company, LLC        | Mining      |  | 100%      |   | 21,248         |   | -          |     |  | yes        
|Deer Trail Mining Company, LLC           | Mining      |  | 100%      |   | 2,192,722      |   | 230,000    | (1) |  | yes        
|Total Investment                         |             |  |           | $ | 2,523,120      | $ | 230,000    |     |  |            
|                                         |             |  |           |   |                |   |            |     |  |            
|COMMERCIAL LOANS:                        |             |  |           |   |                |   |            |     |  |            
|                                         | Description |  | Percent   |   |                |   |            |     |  |            
|Company                                  | of Business |  | Ownership |   | Type of Credit |   |            |     |  |            
|                                         |             |  |           |   |                |   |            |     |  |            
|Deer Trail Mining Company, LLC           | Mining      |  | 100%      |   | Credit Line    | $ | -          |     |  | yes        
|Total Loans                              |             |  |           |   |                | $ | -          |     |  |            
|Total Investment and Loans               |             |  |           |   |                | $ | 230,000    |     |  |            
|                                         |             |  |           |   |                |   |            |     |  |            
|                                         |             |  |           |   |                |   |            |     |  |            

|
|

| |  |  |  |  |  |  |  |  |  | 
| |  |  |  |  |  |  |  |  |  | 

|(1)- value based on net assets
|------------------------------

| |  |  |  |  |  |  |  |  |  | 
| |  |  |  |  |  |  |  |  |  | 

|The accompanying notes are an integral part of these financial statements.
|--------------------------------------------------------------------------

4





|UNICO, INCORPORATED                   
|--------------------------------------
|Statements of Operations
  (unaudited)

| |  |  |  |               |  |  |               | 
| |  |  |  | ------------- |  |  | ------------- | 
| |  |  |  | For the Three |  |  | For the Three | 
| |  |  |  | Months Ended  |  |  | Months Ended  | 
| |  |  |  | May 31,       |  |  | May, 31       | 
| |  |  |  | 2005          |  |  | 2004          | 

|Investment Revenue                  | $ | -           |  | $ | -          | 
|----------------------------------- | - | ----------- |  | - | ---------- | 
|Interest Income                     |   | -           |  |   | -          | 
|Total Revenues                      |   | -           |  |   | -          | 
|Operating Expenses                  |   |             |  |   |            | 
|General & Administrative            |   | 139,716     |  |   | 567,455    | 
|Professional fees                   |   | 6,069       |  |   | 24,817     | 
|Total Operating Expenses            |   | 145,785     |  |   | 592,272    | 
|Net Operating Loss                  |   | (145,785)   |  |   | (592,272)  | 
|Other Income (Expense)              |   |             |  |   |            | 
|Interest Income                     |   | -           |  |   | 43         | 
|Interest Expense                    |   | (340,986)   |  |   | (330,933)  | 
|Decline in value of investments     |   | (219,738)   |  |   | -          | 
|Other Income                        |   | 19,386      |  |   | -          | 
|Total Other Income (Expense)        |   | (541,338)   |  |   | (330,890)  | 
|LOSS FROM CONTINUING OPERATIONS     |   | (687,123)   |  |   | (923,162)  | 
|Income Tax Expense                  |   | -           |  |   | -          | 
|Net Loss                            | $ | (687,123)   |  | $ | (923,162)  | 
|Net Loss Per Share                  | $ | (0.00)      |  | $ | (0.01)     | 
|Weighted Average Shares Outstanding |   | 498,427,896 |  |   | 92,734,713 | 

|The accompanying notes are an integral part of these financial statements.
|--------------------------------------------------------------------------

5





|UNICO, INCORPORATED
Statements of Stockholders' Equity (Deficit)
|----------------------------------------------------------------

| |  |  |  |  |  |  |  |  | Additional |  | Retained
| |  |  |  |  |  |  |  |  | ---------- |  | --------

| | Preferred Stock |  | Common Stock |  | Paid-in |  | Earnings
| | --------------- |  | ------------ |  | ------- |  | --------

|                                                                                             | Shares      |  | Amount       |  | Shares      |  | Amount        |  | Capital          |  | (Deficit)      
|-------------------------------------------------------------------------------------------- | ----------- |  | ------------ |  | ----------- |  | ------------- |  | ---------------- |  | ---------------
|Balance, February 29, 2004                                                                   | -           |  | -            |  | 90,962,974  |  | 9,096,299     |  | 810,437          |  | (12,145,377)   
|March through April 2004, common stock issued for services                                   | -           |  | -            |  | 2,500,000   |  | 250,000       |  | -                |  |                
|May 2004, preferred stock issued for related party debt extinguishments                      | 6,898,032   |  | 6,898        |  | -           |  | -             |  | 485,764          |  |                
|May 2004, preferred stock issued for debt extinguishments                                    | 2,401,968   |  | 2,402        |  | -           |  | -             |  | 169,148          |  |                
|May 2004, preferred stock issued for services                                                | 700,000     |  | 700          |  | -           |  | -             |  | 49,294           |  |                
|July 2004, common stock issued for extinguishments of debt                                   | -           |  | -            |  | 8,464,922   |  | 846,492       |  | (34,693)         |  |                
|August 2004, common stock issued on conversions of convertible debentures                    | -           |  | -            |  | 39,000,000  |  | 3,900,000     |  | (3,705,000)      |  |                
|September through November 2004, common
stock issued on conversion of convertible debentures | -           |  | -            |  | 253,500,000 |  | 25,350,000    |  | (23,929,500)     |  |                
|Beneficial Conversion Expense related to convertible debentures                              | -           |  | -            |  | -           |  | -             |  | 2,982,478        |  |                
|December through February, 2005, Stock issued on conversion of
  convertible debentures      | -           |  | -            |  | 104,000,000 |  | 10,400,000    |  | (9,880,000)      |  |                
|Net Loss for period ended February 28, 2005                                                  |             |  |              |  |             |  |               |  |                  |  | (6,653,237)    
|Balance, February 28, 2005                                                                   | 10,000,000  |  | $     10,000 |  | 498,427,896 |  | $  49,842,791 |  | $   (33,052,072) |  | $  (18,798,614)
|March 2005, preferred stock purchased from related party (unaudited)                         | (3,000,000) |  | (3,000)      |  |             |  |               |  | (177,000)        |  |                
|March 2005, preferred stock issued for related party debt extinguishments (unaudited)        | 3,000,000   |  | 3,000        |  |             |  |               |  | 87,000           |  |                
|Beneficial Conversion Expense related to convertible debentures (unaudited)                  |             |  |              |  |             |  |               |  | 295,000          |  |                
|Net Loss for period ended May 31, 2005 
(unaudited)                                          |             |  |              |  |             |  |               |  |                  |  | (687,123)      
|Balance, May 31, 2005 (unaudited)                                                            | 10,000,000  |  | $     10,000 |  | 498,427,896 |  | $  49,842,791 |  | $   (32,847,072) |  | $  (19,485,737)

The accompanying notes are an integral part of these financial statements

6





|UNICO, INCORPORATED
Statement of Cash Flows
(unaudited)
|-------------------------------------------------------

|                                                                      |   | For the Three |  |   | For the Three | 
|--------------------------------------------------------------------- | - | ------------- |  | - | ------------- | 
|                                                                      |   | Months Ended  |  |   | Months Ended  | 
|                                                                      |   | May 31,       |  |   | May 31,       | 
|                                                                      |   | 2005          |  |   | 2004          | 
|                                                                      |   |               |  |   |               | 
|Cash Flows from Operating Activities:                                 |   |               |  |   |               | 
|Net Loss                                                              | $ | (687,123)     |  | $ | (923,162)     | 
|Adjustments to Reconcile Net Loss to Net Cash Provided by Operations: |   |               |  |   |               | 
|Depreciation and depletion                                            |   | 198           |  |   | 24,817        | 
|Beneficial Conversion Expense                                         |   | 295,000       |  |   | 268,750       | 
|Common Stock issued for services                                      |   | -             |  |   | 250,000       | 
|Preferred stock issued for services                                   |   | -             |  |   | 49,994        | 
|Decline in value of investments                                       |   | 219,738       |  |   | 1,050         | 
|Changes in Operating Assets and Liabilities:                          |   |               |  |   |               | 
|(Increase) Decrease in:                                               |   |               |  |   |               | 
|Other assets                                                          |   | -             |  |   | -             | 
|Increase (Decrease) in:                                               |   |               |  |   |               | 
|Accounts Payable and other liabilities                                |   | 114,121       |  |   | 97,259        | 
|Net Cash Used by Operating  Activities                                |   | (58,066)      |  |   | (231,292)     | 
|Cash Flows from Investing Activities:                                 |   |               |  |   |               | 
|Investment in portfolio companies                                     |   | (219,738)     |  |   | -             | 
|Net cash Used by Investing  Activities                                |   | (219,738)     |  |   | -             | 
|Cash Flows from Financing Activities:                                 |   |               |  |   |               | 
|Decrease in bank overdraft                                            |   | -             |  |   | (9,211)       | 
|Proceeds from stock payable                                           |   | 50,000        |  |   | -             | 
|Proceeds from notes payable                                           |   | -             |  |   | 101,800       | 
|Proceeds from convertible debentures                                  |   | 250,000       |  |   | 250,000       | 
|Payments on notes and debentures                                      |   | (21,144)      |  |   | (4,000)       | 
|Net Cash Provided by Financing Activities                             |   | 278,856       |  |   | 338,589       | 
|Increase in Cash                                                      |   | 1,052         |  |   | 107,297       | 
|Cash and at Beginning of Period                                       |   | 38,359        |  |   | 33,000        | 
|Cash and Cash Equivalents at End of Period                            | $ | 39,411        |  | $ | 140,297       | 
|Cash Paid For:                                                        |   |               |  |   |               | 
|Interest                                                              | $ | 8,947         |  | $ | 22,166        | 
|Income Taxes                                                          | $ | -             |  | $ | -             | 
|Non-Cash Financing Activities:                                        |   |               |  |   |               | 
|Common stock issued for services                                      | $ | -             |  | $ | 250,000       | 
|Preferred stock issued for services                                   | $ | -             |  | $ | 49,994        | 
|Preferred stock issued for debt extinguishments                       | $ | 90,000        |  | $ | 171,550       | 
|Preferred stock issued for debt extinguishments- related party        | $ | -             |  | $ | 492,662       | 

|The accompanying notes are an integral part of these financial statements. | 
|-------------------------------------------------------------------------- | 

7





UNICO, INCORPORATED

Notes to the Financial Statements

May 31, 2005



NOTE 1 – FINANCIAL STATEMENTS



The accompanying unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim financial statements be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its February 28, 2005 Annual Report on Form 10-KSB. Operating results for the three months ended May 31, 2005 are not necessarily indicative of the results that may be expected for the year ending February 28, 2006.



NOTE 2 – NATURE OF ORGANIZATION



This summary of significant accounting policies of Unico, Incorporated is presented to assist in understanding the Company's financial statements. The 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 financial statements.



Organization and Business Activities



Unico, Incorporated (the Company or UNCN) is an investment company reporting under the Investment Company Act of 1940 as a Business Development Company.  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.



On July 9, 2004 the Company's Board of Directors elected to be regulated as a business investment company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company is required to maintain at least 70% of its assets invested in "eligible portfolio companies", which are loosely defined as any domestic company which is not publicly traded on a major US Exchange or that has assets less than $4 million.



The Company presently has three portfolio investments: Deer Trail Mining Company, LLC, Silver Bell Mining Company, Inc., and Bromide Basin Mining Company, LLC.  Deer Trail Mining and Bromide Basin Mining were originally operations of Unico, Incorporated; however, in June 2004, Unico formed each company as a separate operating entity, wholly-owned by Unico, and transferred all respective operations and assets into these separate operating companies.



NOTE 3 – MATERIAL EVENTS



On May 11, 2005, the Company issued a stock subscription payable for 20,000,000 shares of common stock at a purchase price of $.0025 per share.  The shares were sold pursuant to Regulation E of the Securities and Exchange Act of 1933.



On March 7, 2005, Ray Brown, Chairman of the Board of Directors, sold 3,000,000 shares of Series A preferred stock back to the company at $.06 per share, payment for these shares were structured as a convertible debenture to Ray Brown in the amount of $180,000
which is convertible to shares of Unico common stock at 80% of the closing
market price on the date of conversion. The debenture bears interest at 10% per
annum. There was a beneficial conversion feature of $45,000 associated with the
debenture, which has been recognized as interest expense for the period. Although the $.06 per share was significantly above the market price of the Company’s Common Stock, the Company agreed to pay Ray Brown $.06 per share due to Ray Brown’s additional agreement to purchase 9,423,784 shares of Series B Preferred Stock.



On March 7, 2005, Mark Lopez, Chief Executive Officer of the Company, purchased 3,000,000 shares of Series A preferred stock at the purchase price of $.03 per share for converting $90,000 of debt. Mark Lopez paid significantly more than the current market price of the Company’s Common Stock, but was willing to do so in order to acquire majority ownership of the outstanding Series A Preferred shares which will permit him to have control over the election of two of the Company’s directors. During the quarter ended May 31, 2005, Mark Lopez was repaid the remaining $30,091 due to him in the form of cash, leaving an accrued interest balance of $283 due to him at the end of the quarter.



8



In December 2004, Unico’s Board of Directors authorized ten million (10,000,000) shares of Series B Preferred Stock. Each share of Series B stock is entitled to 50 votes and is convertible into that number of shares of the Company’s Common Stock equal to the stated value of the Series B Preferred Stock ($0.06 per share) divided by the closing bid price of the Common Stock on the date of conversion.  The Series B Preferred Stock is non-interest bearing and is not entitled to receive dividends.  In the event of a liquidation event, the Series B Preferred Stock automatically converts into Common Stock based on the foregoing formula.



On March 7, 2005, Unico’s Board of Directors authorized the issuance of 9,423,784 shares of its Series B Preferred Stock to Ray Brown at the purchase price of $.06 per share for a total consideration of $565,427. This Series B sale was to eliminate a substantial debt obligation which the Corporation owed to Ray Brown.



On March 24, 2005, Unico’s Board of Directors and Ray Brown mutually rescinded Ray Brown’s purchase of 9,423,784 shares of Series B Preferred Stock retroactively to March 7, 2005. This was due to the interpretation of the Securities Exchange Commission (Commission) that the super voting rights of Unico’s Series B Preferred Stock violate Section 18 of the Investment Act of 1940. No shares of Unico’s Series B Preferred Stock shall be issued to Ray Brown or anyone else. As a result Ray Brown shall hold a convertible debenture from the Company in the amount of $645,132 which contains all of the same terms and conditions as the prior convertible debenture held immediately prior to the conversion of that convertible debenture to shares of the Unico’s Series B Preferred Stock.



During the quarter ended May 31, 2005, the Company
received $250,000 cash from issuing convertible debentures. The debentures are convertible immediately at 50% of the closing market price of the Company’s common stock on the date of conversion. The debentures bear interest at 10% per annum. There was a beneficial conversion feature of $250,000 associated with these debentures, which has been recognized as interest expense for the period.  During the quarter ended May 31, 2005, the Company converted none of these debentures into common stock.



During the quarter ended May 31, 2005 the Company was notified by a staff attorney at the Securities Exchange Commission (Commission) that the debentures issued by the Company were considered senior securities as defined by the Investment Company Act of 1940.  As a result, the Company may not be in compliance with Section 18 of the Act which requires that the Company maintain net asset to senior security coverage of at least 200%.  The Company’s efforts to restructure the obligations into a format acceptable with the Commission have been unsuccessful.  As a result, the Company may be out of compliance with Section 18 of the Act and is pursuing various options to extinguish the debt or otherwise become compliant.



If the Company is unable to remedy the non-compliance, the Company may be forced to relinquish its status as an investment company.  In the meantime, the Company has abandoned the use of convertible debentures as a means of generating capital.  Should the Company cease operating as an investment company, it would forfeit its $5 million annual exemption from registration which could make raising additional capital difficult.



NOTE 4 – COMMON STOCK

The authorized common stock of the Company consists of 500,000,000 shares, par value $0.10 of which 498,427,896 shares were issued and outstanding on May 31, 2005, with 1,572,104 shares authorized but unissued. As of July
13, 2005, the Company has 2,835,000 options outstanding with an exercise price of $0.10 per share. There is also a stock payable for $50,000 related to the issuance of 20,000,000 shares. The Company will need to increase the authorized Common Stock to have sufficient shares to take care of these obligations.



NOTE 5 -

OUTSTANDING STOCK OPTIONS AND WARRANTS



A summary of the Company’s outstanding stock options as of February 28, 2005 and May 31, 2005 including all changes during the current quarter is presented below:



| |                                                               | Shares    |  | Weighted Average Exercise Price
| | ------------------------------------------------------------- | --------- |  | -------------------------------
| | Options outstanding at February 29, 2004:                     | 3,415,000 |  | $        0.10                  
| | Options expired in fiscal 2005                                | (580,000) |  | -                              
| | Total options outstanding, February 28, 2005                  | 2,835,000 |  | $        0.10                  
| |                                                               |           |  |                                
| | Summary of activity for the 
three months ended May 31, 2005: |           |  |                                
| |                                                               |           |  |                                
| | Balance at February 28, 2005                                  | 2,835,000 |  | $        0.10                  
| | Granted                                                       | -         |  | -                              
| | Canceled                                                      | -         |  | -                              
| | Exercised                                                     | -         |  | -                              
| | Expired                                                       | -         |  | -                              
| | Outstanding, May 31, 2005                                     | 2,835,000 |  | $        0.10                  
| |                                                               |           |  |                                
| | Exercisable, May 31, 2005                                     | 2,835,000 |  | $        0.10                  





9



NOTE 6 – GOING CONCERN



The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has incurred losses from its inception through May 31, 2005.   It has not established any revenues with which to cover its operating costs and to allow it to continue as a going concern.



The Company has raised a total of $2,975,000 through the issuance of convertible debentures since July 2004.  This has allowed the company to sustain operations.  The Company will have to raise an additional $5,000,000 to fully implement the operational plans of its portfolio companies.  Additional equity or debt financing is being sought but there are no current commitments.



During the next 12 months, Unico’s plan of operation is to raise approximately $5,000,000 which Unico intends to invest in its portfolio investment companies, Deer Trail Mining Company, Bromide Basin Mining Company and Silver Bell Mining Company.  The Deer Trail Mining Company, Bromide Basin Mining Company and Silver Bell Mining Company intend to use the funds for the following purposes:

- Complete the 2nd phase of exploratory drilling 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 mine infrastructure at both the Deer Trail and Bromide Basin Mines;
- Continue sampling and
testing ore from the Bromide Basin and Deer Trail Mines to evaluate the most
efficient means to conduct mining and milling activities;
- Conduct an extensive preproduction feasibility study prior to any additional mining production and to analyze the potential of the claims before exercising its purchase option from Kaibab Industries;
- Upgrade the screening plant and crushing facilities at the upper Deer Trail Mine and resume processing the ore dumps;
- Exercise the purchase option or extend the Bromide Basin Mine lease prior to November 1, 2005;
- Increase mining activities at the Deer Trail Mine and the Bromide Basin Mine;
- 
- 
- 
- 
- 
- Increase milling activities at the Deer Trail Mine;
- 
- Increase the number of employees from nine to approximately 25;
- 
- Explore the possibility of obtaining a joint-venture partner to increase the development of Unico's mining operations;
- 
- Commence an exploration and resource definition program at the Silver Bell Mine in Summer, 2005;
- 
- Acquire new mining equipment and vehicles to improve operations at the Deer Trail Mine and Bromide Basin Mine;
- Exercise an option to purchase the Deer Trail Mine for $3,000,000 on or before August 31, 2005;
- 
- Evaluate and possibly pursue potential acquisitions in the mining industry which are compatible with Unico's status as a business development company; and
- 
- Raise a minimum of $5,000,000 in additional equity capital, loans and/or other financing transactions.



Accomplishing the 12-month plan of operations is dependent on Unico raising approximately $5,000,000 in equity and/or debt financing during the next 12 months.



10



Item 2. Management's Discussion and Analysis or Plan of Operation



General Information Regarding Unico and its Operations



Unico, Incorporated (the Company or UNCN) an Arizona Corporation, is an investment holding company based on the Investment Company Act of 1940. Unico, Incorporated 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. The names Unico, we, our, and us used in this report refer to Unico, Incorporated or to one of its portfolio investment companies.



On July 9, 2004 the Company's Board of Directors elected to have the company be regulated as a business development  company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company is required to maintain at least 70% of its assets invested in "eligible portfolio companies".



The Company presently has three portfolio investments: Deer Trail Mining Company, LLC, Silver Bell Mining Company, Inc., and Bromide Basin Mining Company, LLC.  Deer Trail Mining and Bromide Basin Mining were originally operations of Unico, Incorporated; however, in June 2004, Unico formed each company as a separate operating entity, wholly-owned by Unico, and transferred all respective operations and assets into these separate operating companies.



The mining operations at the Deer Trail Mine have been conducted through Unico's subsidiary, Deer Trail Mining Company, LLC (Deer Trail Mining Company or DTMC) since soon after DTMC was formed in late June, 2004. The mining operations at the Bromide Basin Mines have been conducted through Unico's subsidiary, Bromide Basin Mining Company, LLC (Bromide Basin Mining Company or "BBMC") since soon after BBMC was formed in late June, 2004. Future mining operations at the Silver Bell Mine will be conducted through Unico's subsidiary, Silver Bell Mining Company, Inc. ("SBMC").



Deer Trail Mining Company, LLC



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



Effective December 1, 2001, a new lease agreement was entered into between the parties covering the same property for a period of thirty (30) months. It expired in May 2004, and was subsequently extended through August 31, 2005. The new lease agreement is referred to in this report as the "Deer Trail Lease". The Deer Trail Lease required Unico to make monthly lease payments and pay a 3% net smelter return on ore removed from the Deer Trail Mine.



Prior to the expiration of the Deer Trail Lease, Unico made an offer to Crown Mines, L.L.C. to extend the term of the Deer Trail Lease until August 31, 2005 and exercise the option to purchase the Deer Trail Mine.  The parties executed a Modification of Mining Lease and Option to Purchase dated May 31, 2004 which provides that:(a) Unico will pay all past due royalties, taxes, assessments and all other amounts then owed under the Deer Trail Lease (approximately $204,000) on or before September 1, 2004; (b) Unico will pay a non-refundable payment of $1,000,000 on or before September 1, 2004, which will be counted as a payment toward exercise of the option to purchase the Deer Trail Mine if Unico  pays an additional $3,000,000 to purchase the Deer Trail Mine on or before August 31, 2005; and (c) Unico will continue to make the payments required under the Deer Trail Lease during the extended lease term.



Following the formation of the Deer Trail Mining Company in June 2004, Unico assigned all of the various assets, liabilities and operations associated with the Deer Trail Mine to Deer Trail Mining Company which has assumed responsibility for making payments under the Deer Trail Lease. Deer Trail Mining Company has made the payments required under the Lease Modification through the date of this report.  Deer Trail Mining Company’s ability to make the required payments is dependent on either Unico or Deer Trail Mining Company raising substantial equity capital and/or securing substantial financing in the near future.  No assurance can be given that either Unico or Deer Trail Mining Company will be successful in its efforts to raise the necessary funds and/or secure the necessary financing.  If Unico and Deer Trail Mining Company fail in this regard, Unico and Deer Trail Mining Company will likely lose any rights they have to the Deer Trail Mine property.



11



Since June 2004 Deer Trail Mining Company has assumed operations, ownership and management control of the Deer Trail Mine.  Deer Trail Mining Company presently has seven full time employees, two full time consultants, and three part time consultants whose services are used on an as needed basis.



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 of the company's Large-Scale Mining Permit 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 mining project to a large mining operation, which is expected to significantly increase the area of mining 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.



Unico worked for more than two years to reopen the Deer Trail Mine.  Unico commenced mining activities in late March or early April 2001 on the Deer Trail Mine.  To date, the mining activities have been fairly limited.  There have been between 2 and 5 miners at various times working full time in the Deer Trail Mine both on mine development work and production 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 ore per month.  The ore has been 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 ore dumps on the upper Deer Trail Mine and moved the materials to the ball mill.  Currently the Deer Trail Mining Company is reconstructing the mill to enhance productivity and efficiency.  The Deer Trail Mining Company has temporarily suspended screening and crushing ore at the Deer Trail Mine to accommodate a construction project to upgrade the screening plant and crushing facility.



We believe that there are a variety of mining companies and other mineral companies that are potential purchasers for the lead concentrates, zinc concentrates and other concentrates which we intend to sell as the end product from our Deer Trail Mine mining and milling operations.



The concentrates can be transported by either rail or truck, and there are a variety of trucking companies that are willing and able to transport concentrates to smelters or other places designated by purchasers.



The Pennolies Smelter in Torreon, Mexico has agreed to purchase concentrates from Deer Trail Mining Company. Deer Trail Mining Company also plans to send some concentrates to the Teck Cominco Smelter in Trail, British Columbia, Canada to be tested and evaluated. Depending on the results of the tests, Deer Trail Mining Company may sell concentrates to the Teck Cominco Smelter.



The Deer Trail Mine Development Agreement



On October 5, 1998 Unico entered into the Deer Trail Mine Development Agreement with Guilderbrook, Inc. and Aurora Resources & Mining Corp.  The Deer Trail Mine Development Agreement was entered into at a time when Unico was seriously delinquent in its obligations under the Deer Trail Lease, and needed assistance with making both delinquent lease payments and future lease payments.  The Deer Trail Mine Development Agreement required Guilderbrook, Inc. to provide $60,000 to Unico in order to pay past due lease payments and to provide $9,000 per month for future lease payments.  In exchange for these payments, Guilderbrook, Inc. was to receive 25% of the net profits from ore sales, including all ore mined at the Deer Trail Mine.



12



The Deer Trail Mine Development Agreement provided that at a future time when exercising the existing option under the Deer Trail Lease is appropriate, Guilderbrook, Inc. is to pay 25% of the option price, Aurora Resources & Mining Corp. is to pay 50% of the option price and Unico is to pay 25% of the option price. In the event that the option is exercised under the Deer Trail Lease, the Deer Trail Mine Development Agreement provided that the full ownership interests of the parties, and the property, rights and privileges, and any net smelter returns to be shared between the parties, would then be own/shared on the following basis:



. Unico - 25%

. Guilderbrook, Inc. - 25%

. Aurora Resources & Mining Corp. - 50%.



Unico was to continue to be a leaseholder and operator of the Deer Trail Mine property.



In February 1999, Unico issued 500,000 shares of its common stock to Aurora Resources & Mining Co. in exchange for a 26% net profits interest under the Deer Trail Mine Development Agreement.  In October 1999, Aurora Resources & Mining Corp. agreed to return to Unico Aurora’s remaining 24% right to net profits under the Deer Trail Mine Development Agreement.  As a result of the February 1999 modification, Unico became entitled to 75% of any net profits generated under the Deer Trail Mine Development Agreement, and Guilderbrook, Inc. was entitled to the remaining 25% of any net profits.



Guilderbrook, Inc. ceased making payments under the Deer Trail Mine Development Agreement in approximately May, 2003.  It is possible that Deer Trail Mining Company may seek to obtain a full release of any rights or claims Guilderbrook, Inc. may have under the Deer Trail Mine Development Agreement.  In order to obtain such a release, Unico and/or Deer Trail Mining Company may have to agree to pay some consideration to Guilderbrook, Inc.



Silver Bell Mining Company, Incorporated



In September and December 2000, Unico acquired all of the issued and outstanding shares of stock of Silver Bell Mining Company, Incorporated, a Utah corporation, in consideration for the issuance of 3,000,000 restricted shares of Unico common stock. Of the 3,000,000 shares of Unico common stock issued in the acquisition, approximately 2,300,000 shares were issued to W. Dan Proctor. W. Dan Proctor is the President and a director of Silver Bell Mining Company, Incorporated. Mr. Proctor also serves as a business consultant to Unico and project manager.



Silver Bell Mining Company, Incorporated 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 commence an exploration and resource definition program at the Silver Bell Mine during Summer, 2005.  Silver Bell Mining Company may also seek a joint venture mining partner to jointly develop the Silver Bell Mine.  Silver Bell Mining Company anticipates that any ore mined from the Silver Bell Mine will be transported to the Deer Trail Mine site where it will be crushed and milled.



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 parties then entered into a Revised Mining Lease and Option to Purchase in April 2003 (the "Revised Kaibab Mining Lease").  Following the formation of the Bromide Basin Mining Company in June 2004, Unico assigned all of its assets, liabilities and operations associated with the Bromide Basin Mines to Bromide Basin Mining Company. A Second Revised Mining Lease and Option to Purchase was entered  into with Bromide Basin Mining Company in May 2005 (the Second Revised Mining Lease). Under the Second Revised Kaibab Mining Lease, Kaibab Industries, Inc. has leased to Bromide Basin Mining Company certain mining claims located in the Henry Mountain Mining District in Garfield County, Utah containing approximately 400 acres, which includes the Bromide Basin Mines. The Second Revised Mining Lease runs until November 1, 2005, and grants to Bromide Basin Mining Company the option to purchase six (6) fully permitted patented mining claims and twenty-one (21) located mining claims comprising in all over 400 acres of Bromide Basin in the Henry Mountain Mining District located in Garfield County, Utah. The option exercise price is $835,000 for all specified mining claims, mill sites and dumps being leased. The Bromide Basin Mining Company also has the right to extend the lease and purchase option term until October 31, 2006 assuming it has met all of its obligations due under the agreement. As consideration for the Second Revised Mining Lease, Bromide Basin Mining Company has agreed to pay Kaibab Industries in advance the sum of $5,000 per month and pay a five percent (5%) net smelter return upon all ore taken from the leased premises each month, to the extent that the amount for any month exceeds the $5,000 monthly base rent.



13



The primary purpose of this agreement is 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 its purchase option from Kaibab Industries.



Unico commenced mining efforts on the Bromide Basin Mines in September 2001 with five full time miners.  Ore removed from the Bromide Basin Mines was transported to the Deer Trail Mine site where it was crushed and stockpiled.  Because of the Bromide Basin Mine’s high elevation, mining activities are seasonal and occur only from May or early June through approximately mid-November.



In 2003 Unico began mining activities on the Bromide Mine by clearing snow and rocks from access roads.  New discharge pipes were installed at the Bromide Mine and then the tunnels were de-watered.



During 2003, Unico had two problems that delayed progress at the Bromide Mine. The Mine rescue coverage, required by MSHA, was unexpectedly terminated due to policies at the company.  This forced Unico to discontinue all work at the Bromide Mine until new coverage was secured and all MSHA concerns were satisfied.  Two wild fires in the Henry Mountains also forced Unico to stop mining activities until the fires were contained.  During the fires, mine water was dedicated to the fire fighting effort.



Through 2003, Unico continued exploration work in the Bromide Mine and re-confirmed the existence of a high-grade gold structure.  2.9 ounces of gold was recovered from a 400 pound sample of material extracted by crude methods from the high-grade area in the Bromide Mine.  The work at the tunnel included laying track to connect with track already in the tunnel, compressed air service, and establishing electricity with the addition of a diesel-powered generator.  Unico intended to use shrink, cut and fill stopping methods to extract the gold rich ore from the Bromide vein via the El Padre tunnel.  In addition, the mineralized rock from the Kimble and Turner can be extracted by mechanical means and shipped for processing.



Previous soil survey work revealed many prospective areas for the discovery of more gold occurrences in the basin, but most importantly, re-confirmed the strike of the Bromide, Crescent Creek and Kimble and Turner mineralized structures.  Past drilling clearly established that gold mineralization in Bromide Basin is structurally controlled and that no disseminated mineralization in the country rock was encountered.



The El Padre Tunnel will serve as access to the Bromide vein (400 feet above the tunnel) and possibly others, and provide drainage for the Bromide mine. Track for the El Padre Tunnel was obtained during the 2003 mining season and transported to the mine site.  The high wall above the El Padre Tunnel was secured and timbering of the portal was completed.  Preliminary ground leveling work at El Padre was begun in order to properly lay the track from the surface into the tunnel.  A mine locomotive, charger and other mining equipment were also delivered to the El Padre.  All infrastructure for completing the tunnel is in place.



Static screens were installed at Kimble and Turner and previously excavated gold rich mineralized rock was screened.  The gold recovered from the fines was tested by simple gravity methods confirming a very high recovery rate of coarse gold.  It is believed that the finer mesh gold (-10m) could be liberated by further pulverizing the ore and additional grinding would liberate even finer gold.  Limited amounts of Kimble and Turner material were transported to a staging station where it could be loaded for delivery to the Deer Trail mill in Marysvale, Utah.



Despite some frustrations in the 2003 mining season, Unico was able to improve the infrastructure at the Bromide Mines and transport about 400 tons of Bromide material to the Deer Trail mill; 235 tons coming from Hanksville, Utah and 160 tons from Fredonia, Arizona, formerly a processing site for Bromide-ore.



During 2004, Bromide Basin Mining Company conducted geological sampling and completed required reclamation for the Bureau of Land Management.



Plan of Operation



On July 9, 2004, the Company’s Board of Directors elected to have the company be regulated as a business investment company under the Investment Company Act of 1940.  As a business development company (BDC), the Company is required to maintain at least 70% of its assets invested in eligible portfolio companies.



14



During the next 12 months, Unico’s plan of operation is to raise approximately $5,000,000 which Unico intends to invest in its portfolio investment companies, Deer Trail Mining Company, Bromide Basin Mining Company and Silver Bell Mining Company.  The Deer Trail Mining Company, Bromide Basin Mining Company and Silver Bell Mining Company intend to use the funds for the following purposes:

- Complete the 2nd phase of exploratory drilling 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 mine infrastructure at both the Deer Trail and Bromide Basin Mines;
- Continue sampling and
testing ore from the Bromide Basin and Deer Trail Mines to evaluate the most
efficient means to conduct mining and milling activities;
- Conduct an extensive preproduction feasibility study prior to any additional mining production and to analyze the potential of the claims before exercising its purchase option from Kaibab Industries;
- Upgrade the screening plant and crushing facilities at the upper Deer Trail Mine and resume processing the ore dumps;
- Exercise the purchase option or extend the Bromide Basin Mine lease prior to November 1, 2005;
- Increase mining activities at the Deer Trail Mine and the Bromide Basin Mine;
- 
- 
- 
- 
- 
- Increase milling activities at the Deer Trail Mine;
- 
- Increase the number of employees from nine to approximately 25;
- 
- Explore the possibility of obtaining a joint-venture partner to increase the development of Unico's mining operations;
- 
- Commence an exploration and resource definition program at the Silver Bell Mine in Summer, 2005;
- 
- Acquire new mining equipment and vehicles to improve operations at the Deer Trail Mine and Bromide Basin Mine;
- Exercise an option to purchase the Deer Trail Mine for $3,000,000 on or before August 31, 2005;
- 
- Evaluate and possibly pursue potential acquisitions in the mining industry which are compatible with Unico's status as a business development company; and
- 
- Raise a minimum of $5,000,000 in additional equity capital, loans and/or other financing transactions.

Accomplishing the 12-month plan of operations is dependent on Unico raising
approximately $5,000,000 in equity and/or debt financing during the next 12
months.  The Company's cash as of May 31, 2005 will sustain operations for
approximately 90 days.



Valuation of Investments



As required by ASR 118, the investment committee of the company is required to assign a fair value to all investments. To comply with Section 2(a)(41) of the Investment Company Act and Rule 2a-4 under the Investment Company Act, it is incumbent upon the board of directors to satisfy themselves that all appropriate factors relevant to the value of securities for which market quotations are not readily available have been considered and to determine the method of arriving at the fair value of each such security. To the extent considered necessary, the board may appoint persons to assist them in the determination of such value, and to make the actual calculations pursuant to the board's direction. The board must also, consistent with this responsibility, continuously review the appropriateness of the method used in valuing each issue of security in the company's portfolio. The directors must recognize their responsibilities in this matter and whenever technical assistance is requested from individuals who are not directors, the findings of such intervals must be carefully reviewed by the directors in order to satisfy themselves that the resulting valuations are fair.



15



No single standard for determining "fair value...in good faith" can be laid down, since fair value depends upon the circumstances of each individual case. As a general principle, the current "fair value" of an issue of securities being valued by the board of directors would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on a multiple of earnings, or a discount from market of a similar freely traded security, or yield to maturity with respect to debt issues, or a combination of these and other methods. Some of the general factors which the directors should consider in determining a valuation method for an individual issue of securities include: 1) the fundamental analytical data relating to the investment, 2) the nature and duration of restrictions on disposition of the securities, and 3) an evaluation of the forces which influence the market in which these securities are purchased and sold. Among the more specific factors which are to be considered are: type of security, financial statements, cost at date of purchase, size of holding, discount from market value of unrestricted securities of the same class at time of purchase, special reports prepared by analysis, information as to any transactions or offers with respect to the security, existence of merger proposals or tender offers affecting the securities, price and extent of public trading in similar securities of the issuer or comparable companies, and other relevant matters.



The board has arrived at the following valuation method for its investments. Where there is not a readily available source for determining the market value of any investment, either because the investment is not publicly traded, or is thinly traded, and in absence of a recent appraisal, the value of the investment shall be based on the following criteria:



1. Total amount of the Company's actual investment ("AI"). This amount shall include all loans, purchase price of securities, and fair value of securities given at the time of exchange.

2. Total revenues for the preceding twelve months ("R").

3. Earnings before interest, taxes and depreciation ("EBITD")

4. Estimate of likely sale price of investment ("ESP")

5. Net assets of investment ("NA")

6. Likelihood of investment generating positive returns (going concern).



The estimated value of each investment shall be determined as follows:

- Where no or limited revenues or earnings are present, then the value shall be the greater of the investment's a) net assets, b) estimated sales price, or c) total amount of actual investment.
- Where revenues and/or earnings are present, then the value shall be the greater of two point five times (2.5x) revenues or six times (6x) earnings, plus the greater of the net assets of the investment or the total amount of the actual investment.
- Under both scenarios, the value of the investment shall be adjusted down if there is a reasonable expectation that the Company will not be able to recoup the investment or if there is reasonable doubt about the investments ability to continue as a going concern.

The Board of Directors of the Company, using the above formula, has valued the Company’s investments at $230,000.  The Board has not retained independent appraisers to assist in the valuation of the portfolio investments because the cost was determined to be prohibitive for the current levels of investments.



Results of Operations



During the three months ended May 31, 2005, Unico experienced a net loss of $687,123 or approximately ($0.001) per share compared to a net loss of $923,162 or approximately ($0.01) per share for the same quarter of 2004. Unico generated no revenues in either of the three month periods ended May 31, 2005 or May 31, 2004.

Unico attributes the $236,039 decrease in net
loss for the three month period ended May 31, 2005 primarily to a $427,739
decrease in general and administrative expense partially offset by a $219,738
decline in value of investments. The change in general and administrative
expenses primarily resulted from decreases in consulting and professional fees.

The substantial increase in interest expenses for the three month period ended May 31, 2005 is largely attributed to the issuance of certain debentures by Unico which contain features which allow the holders the right to convert the debentures to shares of Unico’s common stock at prices less than fair market value. The discounted conversion rate is treated as an interest expense. The debentures acquired by Ray C. Brown and C. Wayne Hartle allow them to convert amounts owing under the debentures to shares of Unico’s common stock at prices 20% less than fair market value. Other parties who are not officers or directors acquired debentures with conversion features that allow them to convert amounts owing under the debentures to shares of Unico common stock at prices 50% less than fair market value.



16



Liquidity and Capital Resources



The Company’s financial statements present an impairment in terms of liquidity. As of May 31, 2005 the Company had
a deficit in working capital of $2,717,565.  The Company has accumulated $19,485,737 of net operating losses through May 31, 2005, which may
be used to reduce taxes in future years through 2025. 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 its portfolio investments and the possible  acquisition of additional operating portfolio investment companies.  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.



Cash used in investing activities during the quarter ended May 31, 2005 was $219,738. This amount was invested into the Company’s portfolio investments.



As of May 31, 2005, our liquid resources are sufficient to support operations for approximately 90 days. We are dependent on raising approximately $5,000,000 to successfully implement our 12 month business plan described above.



Our auditors have issued a "going concern" opinion in note 3 of our February 28, 2005 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 $5,000,000 in equity, debt or through other financing transactions in the next 12 months, we believe that Unico will have sufficient funds to meet operating expenses until income from mining operations should be sufficient to cover operating expenses.



We intend to seek additional capital from private sales of Unico's common stock and, if necessary, from loans from our management and/or others. In the event income from mining operations is delayed or is insufficient to cover operating expenses, then Unico will need to seek additional funds from equity or debt financing.



Item 3. Controls and Procedures



(a) Evaluation of disclosure controls and procedures.



Mark A. Lopez who serves as Unico's chief executive officer and as Unico's chief financial officer, after evaluating the effectiveness of Unico's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) as of a date within 90 days of the filing date of this quarterly report (the "Evaluation Date") concluded that as of the Evaluation Date, Unico's disclosure controls and procedures were adequate and effective to ensure that material information relating to Unico and its subsidiaries would be made known to him by others within those entities, particularly during the period in which this quarterly report was being prepared.



(b) Changes in internal controls.



There were no significant changes in Unico's internal controls or in other factors that could significantly affect Unico's disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.



ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.





17



PART II - OTHER INFORMATION



Item 1. Legal Proceedings



During the quarter ended May 31, 2005, the Company was notified by a staff attorney at the Securities and Exchange Commission (Commission) that certain debentures and convertible preferred stock issued by the Company were considered senior securities as defined by the Investment Company Act of 1940. Unico believed at the time that the debentures and Series A Preferred shares were issued they were not senior securities.   The Company may not be in compliance with Section 18 of the Act which requires that the Company maintain net asset to senior security coverage of at least 200%.  The Company’s efforts to restructure the obligations and preferred stock into a format acceptable with the Commission have been unsuccessful. As a result, the Company may be out of compliance with Sections 18, 27 and 61 of the Act and is pursuing various options to extinguish the stock or otherwise become compliant. If the Company is unable to remedy any non-compliance, the Company may be forced to relinquish its status as an investment company.

On or about March 17, 2005, Eben C. Loewenthal filed a Complaint against the Company in the Third Judicial District Court in and for Salt Lake County, State of Utah, alleging that the Company owes him $33,000 plus prejudgment statutory interest from and after June 24, 2002 until judgment and post-judgment interest thereafter. The Company is attempting to negotiate a settlement with Mr. Loewenthal.



Item 2. Changes in Securities



During the quarter ended May 31, 2005, the Company issued a stock subscription payable for 20,000,000 shares of common stock at a purchase price of $.0025. No underwriter was involved in this transaction and no underwriting discounts or commissions were paid.  The subscription agreement provides that the shares of stock will be issued in reliance on Regulation E pursuant to Unico’s offering circular dated July 9, 2004.



Item 3. Defaults Upon Senior Securities



None



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



|Exhibit No. | Description                                                                                       
|----------- | --------------------------------------------------------------------------------------------------
|10.41       | Convertible Debenture No. 13 for $125,000 dated March 7, 2005 issued to Kentan Limited Corp.      
|10.42       | Convertible Debenture No. 14 for $125,000 dated March 30, 2005 issued to Reef Holdings, Ltd.      
|31.1        | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|31.2        | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|32.1        | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|32.2        | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



(b) Reports on Form 8-K



None







18



SIGNATURES



In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



UNICO, INCORPORATED

(Registrant)





|Date: July 14, 2005 | By: /s/ Mark A. Lopez
Mark A. Lopez, Chief Executive Officer and Principal Financial and Accounting Officer
|------------------- | -----------------------------------------------------------------------------------------------------------













19







EXHIBIT 31.1



SECTION 302

CERTIFICATION OF CHIEF EXECUTIVE OFFICER



I, Mark A. Lopez, certify that:



1. I have reviewed this quarterly report on Form 10-QSB of Unico, Incorporated;



2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, the results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;



4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:



(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and



5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):



(a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and



(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.





|Date: July 14, 2005 | By: /s/ Mark A. Lopez
Mark A. Lopez, Chief Executive Officer
|------------------- | ------------------------------------------------------------



























EXHIBIT 31.2



SECTION 302

CERTIFICATION OF CHIEF FINANCIAL OFFICER



I, Mark A. Lopez, certify that:



1. I have reviewed this quarterly report on Form 10-QSB of Unico, Incorporated;



2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, the results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;



4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:



(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and



5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):



(a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and



(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.





|Date: July 14, 2005 | By: /s/ Mark A. Lopez
Mark A. Lopez, Chief Financial Officer
|------------------- | ------------------------------------------------------------







EXHIBIT 32.1



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Unico, Incorporated (the "Company") on Form 10-QSB for the period ending May 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark A. Lopez, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:



(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.



|/s/ Mark A. Lopez
Mark A. Lopez
Chief Executive Officer
July 14, 2005
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EXHIBIT 32.2



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Unico, Incorporated (the "Company") on Form 10-QSB for the period ending May 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark A. Lopez, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:



(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.







|/s/ Mark A. Lopez
Mark A. Lopez
Chief Financial Officer
July 14, 2005
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