<PAGE>
                                  FORM 10-KSB
                        SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                 Annual Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
 
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
For Fiscal Year Ended                                      December 31, 1996
 
                           Commission File #0-15303
 
                                  UNICO, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                                <C>
          Delaware                                     73-1215433
-------------------------------               ----------------------------
(State or other jurisdiction of                       (IRS Employer
 incorporation or organization)                    Identification Number)

</TABLE>
 
              8380 Alban Road, Springfield, VA 22150
           -------------------------------------------------- 
           (Address of principal executive offices)(Zip Code)

(Registrant's telephone no., including area code)         (703) 644-0200
                                                          --------------

          ----------------------------------------------------
          (Former name, former address and former fiscal year,
                      if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act: NONE
 
       Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.01 par value
                               Warrants
 
    Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes X      No 
                                                  ---       --- 

    Check if there is no disclosure of delinquent filers in response to Item 
405 of Regulation S-B not contained in this form, and no disclosure will be 
contained, to the best of the registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-KSB or any amendment to this Form 10-KSB. (X)
 
    Revenues for year ended December 31, 1996.                 $6,825,875
 
    Aggregate market value of the voting common stock held by non-affiliates 
of the registrant as of April 1, 1997, was:                    $1,589,308
 
    Number of shares of the registrant's common stock outstanding as of 
April 1, 1997 was:                                              8,476,309

                                       1 
<PAGE>

                                 UNICO, Inc.
                                 FORM 10-KSB
 
                                   PART I
 
ITEM 1. DESCRIPTION OF BUSINESS
 
GENERAL
 
    UNICO, Inc., (the Company), was incorporated on April 11, 1984 under the 
laws of the State of Delaware. Initial business activities, associated with 
the sale and administration of cooperative direct mail advertising 
franchises, commenced during May 1984. In September 1986, the Company filed 
an initial registration statement with the Securities and Exchange Commission 
and initiated a plan to expand Company operations through the acquisition of 
existing businesses operating in related fields.

THE COMPANY'S BUSINESS
 
    Presently, the Company operates as a publicly-owned holding company with 
two wholly-owned subsidiaries, United Coupon Corporation ("United Coupon") 
and Cal-Central Marketing Corporation, ("Cal-Central"), involved in 
cooperative advertising. United Coupon is involved in cooperative direct mail 
advertising through franchising and production. Cal-Central is currently 
inactive and was involved in cooperative advertising distributed primarily 
through supermarkets, pharmacies and restaurants. Management's plans for 
expansion of the existing cooperative direct mail advertising operations 
include internal growth through the granting of additional franchises, and 
introducing new products for use and sale by franchisees. Management has also 
stated intentions to expand operations through acquisition of existing 
businesses operating in related fields.
 
    The Company's direct mail cooperative advertising and production business 
involves the design, layout, printing, packaging and distributing of public 
relations, marketing materials and promotional coupons for private 
businesses, usually involved in retailing goods or providing professional 
services.
 
    Franchising activities related to this business involve the granting and 
administering of independent franchise operations to conduct cooperative 
direct mail advertising sales. All activities related to franchising are 
conducted through the Company's wholly-owned subsidiary, United Coupon, 
acquired on July 17, 1987. At year end, December 31, 1996, United Coupon had 
approximately 66 active Area franchise operations.
 
THE COMPANY'S MARKETS
 
                      COOPERATIVE DIRECT MAIL ADVERTISING
 
    The customer base of most local retailers and professionals comes from 
within a three mile radius of their location, therefore it is difficult for 
them to advertise effectively and economically. The Company believes that 
direct mail is an effective advertising method for the local merchant and 
professional since they can target a specific area and have substantial 
saturation of their advertising message. Radio and television advertising, in 
contrast, is costly to produce and air. The advertiser is paying for 
broadcasting over a large metropolitan area, much of which is not part of its 
customer base. It may not be efficient or affordable unless the advertiser 
has multiple locations. Major city newspapers are also comparatively 
expensive since they, too, cover an entire city and not just the specific 
area relevant to the local retailer and professional. In addition, newspapers 
usually contain large amounts of advertising, which may limit the 
effectiveness of small ads.

                                       2
<PAGE>
 
    Individual direct mail programs are also expensive, when the cost of 
postage, design, envelopes, printing, and mailing lists are considered. 
Cooperative direct mailing of advertisements for several businesses in one 
mailing substantially reduces the advertisers' cost from the price of an 
individual direct mail program.


    The Company's franchisees sell cooperative direct mail advertising to 
retailers and service organizations in a given market area. They assist each 
business owner with the design and content of advertisements or coupons. The 
Company produces and mails a packet of coupons (usually consisting of twenty 
or more coupons) to thousands of homes in a targeted geographic area. The 
Company receives a majority of its revenue by providing, on a wholesale basis 
to its franchisees, a complete mailing service. Such services include 
computerized design, typesetting, proofing, printing, inserting, addressing, 
and mailing, as well as paper, envelopes, labels and postage.
 
    The market segment targeted by the Company's franchisees includes local 
retailers, service businesses and professional organizations. In addition, 
specialty mailings are conducted on a regular basis and major consumer 
products companies, that market on a national level, are solicited to 
advertise in the Company's mailings.

                                  FRANCHISING
 
    The Company targets the major markets of the United States with a 
population of 500,000 or more. Each Area franchise territory can consist of 
50,000 to 80,000 mailable homes. Franchise prospects are located through the 
use of local and national advertising, franchise shows and seminars, and a 
network of franchise sales representatives. Sales tools consist of Company 
brochures, a franchise sales booth, and a video presentation.
 
    The Company has also implemented a franchise sales program whereby the 
Company assists existing franchisees in selling parts of their respective 
territories. Generally, franchise territories which would be involved in this 
program are those which have more than 150,000 mailable homes.
 
    Each franchise consists of an independent operation in an exclusive 
territory in which no competition from other Company franchisees is allowed. 
The Company provides the franchisee with a thorough, individually-oriented, 
three-week training program covering all facets of the business. In addition, 
the Company provides the franchisee with operation manuals, sales support 
materials, market softeners (direct mailings to potential customers), use of 
its trademarks and logos, WATTS telephone and FAX service for transferring 
layouts, and continuing management support, including research and 
development.
 
    Franchise fees are based upon the total number of mailable homes in the 
exclusive territory. Area franchise fees are $21,900 for 50,000 mailable-home 
territories plus $1,500 for each additional increment of 10,000 mailable-home 
territories. Generally, the franchise agreements are for a period of ten 
years, and are renewable at the option of the franchisee, if certain 
conditions are met. These agreements include a performance clause which is 
based upon a minimum distribution standard and frequency of mailings over the 
term of the franchise agreements.
 
    Regional franchisees, in addition to operating an Area franchise, are 
directly involved in recruiting and training Area franchisees within their 
region. United Coupon carefully designed the Regional franchising program to 
provide substantial opportunity for the Regional franchisee, while 
maintaining appropriate corporate control over the approval of Area franchise 
grants and contractual agreements. A Regional Franchisee also has an 
exclusive territory, comprised of approximately 1,000,000 mailable homes, and 
supervises 15-18 Area Franchisees. The license fee for a Region is $51,000 to 
$59,000. Regional Franchisees attend one additional week of training at the 
corporate headquarters.
 
    The Company retains the right to terminate a franchise for a variety of 
reasons, including insolvency or bankruptcy, failure to operate the business 
according to prescribed standards, failure to pay fees, and material 
misrepresentation on an application for a franchise.

                                       3
<PAGE>

    Set forth below is the geographical location of the franchises in 
operation as of December 31, 1996.
 
<TABLE>
<S>             <C>      <C>              <C>       <C>                 <C>
Alabama         2        Maryland          6        North Carolina      2
California      5        Massachusetts     8        Connecticut         2
Minnesota       2        Pennsylvania      6        Delaware            1
Florida         2        Illinois          1        New Hampshire       1
Tennessee       1        New York         10        Georgia             3
Virginia        6        Louisiana         1        New Jersey          7
</TABLE>
 
                ACQUISITION OF CAL-CENTRAL MARKETING CORPORATION
 
    On October 21, 1993, UNICO, Inc. (the "Company") and AEC Acquisitions, 
Inc. ("AEC"), a wholly-owned subsidiary of the Company, entered into a 
definitive Agreement for the merger of Cal-Central Marketing Corporation, a 
Florida Corporation ("Cal-Central/Florida") into AEC. The merger was effected 
on October 27, 1993, through the issuance of 1,200,000 shares of restricted 
Common Stock of the Company, 600 shares of Redeemable Preferred Stock of the 
Company and 1,000 shares of Convertible Preferred Stock of the Company. The 
terms of the Redeemable Preferred Stock provided that such shares be redeemed 
for $600,000 at the holders' option after certain profit performance tests 
are met by Cal-Central. The shares of Convertible Preferred Stock were 
mandatorily convertible into Common Stock of the Company after 12 months, and 
after certain profit performance tests by Cal-Central for such period. The 
Convertible Preferred Stock expired in October 1994, with performance tests 
not achieved. In March 1995, 320 shares of the Redeemable Preferred Stock 
were converted into 355,556 shares of Common Stock of the Company at a 
conversion price of $.90 per share, in lieu of cash redemption.
 
    The acquisition was accounted for as a purchase with a price of 
approximately $1,400,000. The operating results have been included in the 
consolidated financial statements of the Company since October 22, 1993. The 
Company acquired assets of $1,887,242 and assumed liabilities of $2,687,824. 
The excess purchase price over the fair value of the net assets acquired was 
recorded as goodwill in the Company's balance sheet and was amortized on the 
straight line method over forty years. During 1995, the Company was forced to 
close the majority of the Cal-Central business segment due to lingering 
operating losses and a shortage of working capital as a part of its overall 
restructuring plan. In furtherance of this plan, management determined that it 
was in the best interests of the shareholders and the Company to discontinue 
the minimal remaining operations of Cal-Central in 1996 and abandon the 
restructuring plan for this business segment. Accordingly, remaining goodwill 
of $1,468,453 was written off in 1996.
 
                     COOPERATIVE DISTRIBUTION POINT ADVERTISING
 
    With the acquisition of Cal-Central in October 1993, the Company acquired 
several new product lines including TV Sports & Movies Previews, Video 
Previews, Family Health & Fitness, bulletin board displays, cash register 
tape coupons and take-out menus. The advertising products were distributed 
primarily through supermarkets, pharmacies, restaurants and other specialty 
retailers.
 
   In December 1995, the Company closed Cal-Central's art development and 
printing facility in Fort Lauderdale, Florida and seven of its ten regional 
sales offices. The remaining offices were closed in 1996.

TRADE NAMES, SERVICE MARKS AND LOGO TYPES
 
    The United Coupon Corporation service mark was registered with the United 
States Patent Office on Principal Register, register number 1,310,366 on 
December 16, 1984. In addition, the service mark was registered in the 
Commonwealth of Virginia on April 27, 1984.
 
    Pursuant to its License Agreement, United Coupon Corporation authorizes 
franchisees to operate a United Coupon cooperative direct mail, advertising 
business under the name United Coupon and in accordance with the United 
Coupon System. In connection with the operation of a United Coupon 
cooperative direct mail advertising business, franchisees are authorized to 
use the name and service mark "UNITED COUPON" as well as other such service 
marks or commercial symbols as United Coupon from time to time adopts and 
makes a part of the United Coupon System.
 
                                       4
<PAGE>

GOVERNMENT REGULATION
 
    The Company is subject to regulation under the rules of the Federal Trade 
Commission regarding disclosure of certain information for the sale of 
franchises as well as state regulatory authorities in certain states where 
the Company does business. Statutory provisions in certain states impose 
certain substantive requirements on the relationship between the franchiser 
and the franchisee. Management believes the Company is in material compliance 
with such regulatory requirements.
 
COMPETITION
 
    The advertising industry is highly competitive with many firms having 
vast resources competing for businesses' advertising dollars. The Company's 
business, primarily cooperative direct mail advertising, is a rapidly growing 
segment of the advertising industry. The Company's major competitors in 
direct mail cooperative advertising are Val-Pak and Money Mailer. Management 
estimates the Company has about 5% of that market segment. There are a number 
of small, independent businesses operating in each market segment serviced by 
the Company.
 
EMPLOYEES
 
    The Company had approximately 100 employees as of December 31, 1996. The 
Company also relies upon commissioned sales representatives involved in the 
franchise sales operations and temporary workers during peak production 
periods at United Coupon.
 
ITEM 2. DESCRIPTION OF PROPERTY
 
    The Company operates its corporate headquarters and its coupon sales and 
franchise activities (United Coupon) through an office and production 
facility at 8380 Alban Road, Springfield, VA 22150. The annual rental 
payment in 1996 for this space covering approximately 63,000 square feet was 
approximately $290,000, with scheduled escalations in future years. This 
lease expires in April 2005.
 
    Until March 31, 1996, the Company's corporate office was located at 1101 
Sovereign Row, Oklahoma City, OK 73108. The Company has consolidated former 
operations conducted from this office with those of United Coupon in 
Springfield, VA.
 
    The Company also formerly operated a general office and production 
facility for Cal-Central, at 5420 N.W. 33rd Avenue, Suite 100, Ft. 
Lauderdale, FL 33309. This facility was closed in December 1995. The Company 
was required to make final payments totaling $48,000 during 1996 as a 
condition for early termination of this lease.
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company's subsidiaries, United Coupon Corporation and Cal-Central 
Marketing Corporation, are involved in various legal actions associated with 
the normal conduct of business operations. No such actions involve known 
material gain or loss contingencies not reflected in the consolidated 
financial statements of the Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    The Company's Annual Meeting of Stockholders was held on December 2, 
1996. The following directors were nominated and elected at this meeting:

    Gerard R. Bernier
    Gerald Bomstad, Jr.
    Leon Zajdel

    The Stockholders also adopted amendments to the Company's Bylaws at the 
Annual Meeting. 5,323,409 shares voted for the amendments while 2,655,148 
shares abstained from voting on the amendments.

                                       5
<PAGE>

                                    PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    On April 1, 1997, there were approximately 520 shareholders of record of 
the Company's Common Stock. Based on information received from brokers and 
others in fiduciary capacity, the Company estimates that the total number of 
shareholders of the Company's Common Stock exceeds 520. The Company's Common 
Stock is traded over the counter on the National Association of Securities 
Dealers Automated Quotation System ("NASDAQ").
 
    On October 26, 1993, the Company issued $435,000 of five year 
subordinated debentures with interest at 10.5% through October 1996, and 12% 
from November 1996 through October 1998, together with 230,000 common stock 
purchase warrants (referred to herein as the D .S. Warrants). The debentures 
and D. S. Warrants were offered in a private placement through Duncan-Smith 
Co., which received 30,000 warrants with the same terms and conditions noted 
above. The D. S. Warrants entitle the holders to purchase one share of common 
stock per warrant at prices which range from $.90 in 1994 to $1.40 in 1998. 
On January 11, 1994, an additional $25,000 of these debentures, along with 
12,500 common stock purchase warrants, were issued under the same terms. At 
the time the warrants were issued, the exercise prices were in excess of the 
market price of the Company's Common Stock. The warrants are presently 
exercisable and expire in 1998. They contain anti-dilution provisions and 
registration rights for the underlying Common Stock. The Company is currently 
discussing possible conversion of these debentures to common or preferred 
stock of the Company.
 
    On November 22, 1993, an additional $100,000 of these debentures were 
issued to pay debt owed by Cal-Central. Terms and conditions were the same as 
stated above, including issuance of an additional 50,000 common stock 
purchase warrants. These warrants were exercised May 3, 1994 at $.90 per 
share.
 
    On June 30, 1995, the Company and Cal-Central Marketing Corporation 
entered into a $300,000 Subordinated Loan Agreement with six lenders (the 
"Humphrey Group"). Interest is due quarterly at an annual rate of 12%. In 
conjunction with this financing, the Company issued 450,000 Common Stock 
purchase warrants. The warrants entitle the holders to purchase one share of 
common stock per warrant at an exercise price of $.90 per share. At the time 
these warrants were issued, the exercise price was in excess of the market 
price for the Company's Common Stock. The warrants are presently exercisable 
and expire on December 31, 2000. They contain anti-dilution provisions and 
registration rights for the underlying Common Stock. None of these warrants 
have been exercised. The Company is also discussing possible conversion of 
these loans to common or preferred stock of the Company.
 
    On October 6, 1995, the Company entered into a Convertible Loan Agreement 
with Renaissance Capital Group, Inc. and Duncan-Smith Investments Co. The 
terms of this agreement allowed the periodic borrowing of up to $300,000 by 
the Company at an annual interest rate of 10%. No payments of principal or 
interest were required before July 1, 1997. The loan matures on October 1, 
1997. At January 31, 1996, $298,500 had been advanced and was outstanding. 
The holders of the note have the right, at the holders' option, to convert at 
any time, all or any increments of $1,000 of the outstanding principal and 
accrued interest, into Common Stock of the Company, such conversion to be 
effected at $.25 per share. The conversion price was subject to anti dilution 
provisions and registration rights for the underlying Common Stock. As 
discussed below, the note and accrued interest was converted to Series C 
Preferred Stock in July 1996.

    On March 22, 1996, the Board of Directors voted to issue its former Chief 
Financial Officer 20,000 shares of the Company's Common Stock as severance in 
lieu of cash. The estimated value of the stock at the date of issue was $2188. 
This transaction was exempt from registration pursuant to Rule 4(2) of the 
Securities Act of 1933.

    Effective April 1, 1996, the Company's Board of Directors voted to issue 
its new President and Chief Executive Officer 250,000 shares of the Company's 
Common Stock as compensation for his services during the initial two years of 
his appointment. The estimated value of the stock at the date of issue was 
$27,344. In the event the President and Chief Executive Officer does not 
serve the full two years of the initial term, a ratable portion of the shares 
are subject to forfeiture. This transaction was exempt from registration 
pursuant to Rule 4(2) of the Securities Act of 1933.

    On July 30, 1996, the Company entered into a Loan Conversion Agreement 
and Addendum to Loan Conversion Agreement, by and among Unico, Inc., 
Renaissance Capital Partners, Ltd., and Duncan Smith Investments Co. Pursuant 
to these Agreements, the holders of the Company's Convertible Notes and 
Convertible Debentures converted their $1,712,739 of convertible debentures 
and subordinated notes and accrued interest into shares of the Company's 
Series C Convertible Preferred Stock. These securities were exempt from 
registration pursuant to Rule 3(a)(9) of the Securities Act of 1933.

    The holders of the Company's Series C Convertible Preferred Stock are 
entitled to convert all or any increments of 250 shares of that stock into 
shares of Unico's Common Stock at a ratio of four shares of Common Stock for
each share of Preferred Stock converted, the intention being that the 
conversion ratio yield one share of Common Stock per $.25 of indebtedness 
under the converted debentures and notes. The Conversion Ratio is Subject to 
anti dilution provisions for the underlying Common Stock. Further, in the 
event of a capital reorganization or reclassification of Common Stock (other 
than a change in par value or from par value to no par value due to a 
subdivision or combination), a consolidation or merger of the Company with or 
into another corporation (unless the Company is the continuing corporation 
and no changes to the Common Stock occur), or a sale of all or substantially 
all of the Company's properties and assets, the holders of the Series C 
Preferred Stock are entitled to obtain common stock of the surviving entity 
as if the holder had held the Company's Common Stock immediately prior to the 
event. On August 1, 1998 or, if earlier, the date upon which a registration 
statement with respect to an offering of Unico's securities is declared 
effective, the Series C Preferred Stock will automatically be converted into 
the Company's Common Stock according to the conversion ratio described above.

    In 1996, the Company offered the holders of its five year subordinated 
debentures the opportunity to exchange their securities for Unico Common 
Stock. In response, $100,000 in principal debentures, together with accrued 
and unpaid interest of $13,125, was exchanged for 323,214 shares of Unico's 
Common Stock, effective September 30, 1996. These securities were exempt from 
registration pursuant to Rule 3(a)(9) of the Securities Act of 1933.

                                       6
<PAGE>
 
    The following table sets forth, for the periods indicated, the range of 
high and low closing bid prices for the Company's Common Stock, as reported 
by NASDAQ:
 
<TABLE>
 
<CAPTION>

                                          COMMON STOCK BID
                                        --------------------
<S>                                     <C>            <C>
                                          HIGH            LOW
                                        ---------      ---------
1994
First Quarter.........................  $    1.19      $     .94
Second Quarter........................       1.00            .78
Third Quarter.........................       1.00            .81
Fourth Quarter........................        .94            .71

1995
First Quarter.........................  $     .87            .65
Second Quarter........................        .87            .50
Third Quarter.........................        .75            .50
Fourth Quarter........................        .56            .25

1996
First Quarter.........................  $     .22      $     .22
Second Quarter........................        .34            .31
Third Quarter.........................        .38            .34
Fourth Quarter........................        .25            .25

</TABLE>

DIVIDENDS
 
    The Company has never declared a cash dividend on Common Stock. The 
Company intends to retain future earnings to support the Company's growth. 
Any payment of cash dividends in the future will be dependent upon: the 
amount of funds legally available therefore; the Company's earnings; 
financial condition; capital requirements; and other factors which the Board 
of Directors deems relevant.
 
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS
 
    Certain matters discussed herein (including the documents incorporated 
herein by reference) are forward-looking statements intended to qualify for 
the safe harbors from liabilities established by the Private Litigation 
Reform Act of 1995. These forward-looking statements can generally be 
identified as such because the context of the statement will include words 
such as the Company "believes," "plans," "intends," "anticipates," "expects," 
or words of similar import. Similarly, statements that describe the Company's 
future plans, objectives, estimates, or goals are also forward-looking 
statements. Such statements address future events and conditions concerning 
capital expenditures, earnings, litigation, liquidity and capital resources 
and accounting matters. Actual results in each case could differ materially 
from those currently anticipated in such statements by reason of factors such 
as future economic conditions, including changes in customer demands; future 
legislative, regulatory and competitive developments in markets in which the 
Company operates; and other circumstances affecting anticipated revenues and 
costs.
 
GENERAL
 
    The Company commenced operations in May 1984. During 1985, the Company 
established its marketing office and began a concentrated effort of 
developing sales tools, procedures, and training sales personnel. The first 
six months of operation in 1986 were devoted to packaging and preparing a 
franchise system, developing a sales force and documenting procedures to 
provide to franchisees. The actual implementation of the operations as a 
franchiser commenced in October 1986.
 
    In July 1987, the Company acquired United Coupon Corporation ("United 
Coupon"), a franchiser of cooperative direct mail advertising 
distributorships. On October 21, 1993, the Company acquired Cal-Central 

                                       7
<PAGE>

Marketing Corporation ("Cal-Central"). Management of the Company has stated 
that future growth of its cooperative advertising business could be enhanced 
through the acquisition of existing operations in similar or related 
businesses.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    Management views cash, certificates of deposit, and accounts receivable 
as principal measures of liquidity. Management also deems appropriately 
collateralized and managed bank lines of credit as proper means for 
supplementing liquidity.
 
    In August 1994, the Company renewed a revolving and term credit facility 
with a bank which had originally been secured to consolidate existing debt 
and to provide supplemental working capital for Company operations. This 
renewed credit facility was a revolving note with a borrowing base of 
$600,000 at inception and a reducing term note with an initial borrowed 
amount of $500,000. The term facility required monthly principal payments of 
$10,500 and both notes required monthly interest payments. At December 31, 
1995, the Company had borrowed $934,433, the maximum available on the credit 
facility. The interest rate on the term note was 1% over bank prime and on 
the revolving note was 1.5% over bank prime. No principal payments were 
required on the revolving note until the funds advanced on the facility 
exceeded the available borrowing base. The loan was secured by accounts and 
notes receivable, inventory, equipment and other assets of the Company. On 
March 4, 1996, the Company entered into an amended and restated credit 
facility, which extended the amounts owed the bank through January of 1997. 
Under the terms of this amended and restated agreement, the Company was 
required to make semi monthly principal payments of $20,000 plus accrued 
interest on the outstanding balance owed, beginning March 1, 1996. 
Additionally, principal payments were required to be made on March 1, April 
1, May 1, and June 1, 1996, in that amount which is equal to 50% of certain 
Cal-Central accounts receivable which were collected during such periods. For 
the periods July 1, August 1, September 1, October 1, November 1, and 
December 1, 1996, such additional principal payments would be made from 100% 
of the certain Cal-Central accounts receivable collected. The interest rate 
was 1% over bank prime through June 30, 1996. On July 1, 1996, the rates 
increased to 3% over national prime for the remaining term of the agreement. 
The Company was required to maintain a collateral base equal to or greater 
than the balance outstanding on the original term note. The Company was in 
compliance with this collateral requirement at December 31, 1995. On August 
15, 1996, the Company entered into a consolidated renewal promissory note 
with BancFirst in the face amount of $721,425, with interest at the prime 
rate plus 1%. The note is payable in monthly installments, including 
interest, of $22,500 through January 15, 1997 and $27,500 through December 
15, 1998. The note matures December 31, 1998. The note is collateralized by 
substantially all assets of the Company. The balance outstanding at December 
31, 1996 was $643,022.
 
    On December 31, 1991, the Company entered into a $1,250,000 Convertible 
Debenture financing with Renaissance Capital Partners, Ltd. The debenture was 
in the form of a seven-year note with interest only payable quarterly during 
years one through three. Beginning in 1995, unless waived, the Company was to 
begin quarterly principal payments, plus interest, in an amount sufficient to 
amortize 50% of the outstanding principal balance over the final four years 
of the note. The remaining principal amount was due and payable December 31, 
1998. On March 4, 1996, Renaissance executed a subordination agreement which 
deferred all principal and interest payments regarding this debenture until 
July 1997 or until such time as the current amount owed to the bank was 
extended under terms which would allow such payments. During 1995, 
Renaissance and Duncan-Smith Investment Co. loaned the Company an additional 
$298,500 under several notes that were convertible into Common Stock of the 
Company at $.25 per share. On July 12, 1996, the Company, Renaissance and 
Duncan-Smith entered into a loan conversion agreement whereby the debenture, 
notes and accrued interest related thereto were exchanged for 1,712,739 
shares of Series C Preferred Stock of the Company. Each share of Series C 
Preferred Stock is convertible into four shares of the Company's Common Stock 
at any time, at the option of the Holder.
 
    On October 21, 1993, the Company and AEC Acquisition, Inc. ("AEC"), a 
wholly-owned subsidiary of the Company, entered into a definitive Agreement 
for the merger of Cal-Central Marketing Corporation, a Florida Corporation 
("Cal-Central/Florida") into AEC. The merger was effected on October 27, 
1993, through the issuance of 1,200,000 shares of restricted Common Stock of 
the Company, 600 shares of Redeemable Preferred Stock of the 

                                       8 

<PAGE>

Company, and 1,000 shares of Series A Convertible Preferred Stock of the 
Company. As a result of the merger, the name of AEC, the surviving 
corporation, was changed to Cal-Central Marketing Corporation ("Cal-Central"). 
The terms of the Redeemable Preferred Stock provided that such shares be 
redeemed at any time as an option of the Company or, at the holders' option 
after certain profit performance tests were met by Cal-Central. The shares of 
Series A Convertible Preferred Stock of the Company were mandatorily 
convertible into Common Stock of the Company after 12 months, and after 
certain profit performance tests by Cal-Central for such period. The 
conversion rights of the Series A Convertible Preferred Stock expired in 
October 1994 with performance tests not achieved. In March 1995, 320 shares of 
the Redeemable Preferred Stock were converted to 355,556 shares of Common 
Stock of the Company at a conversion price of $.90 per share. The terms of the 
remaining Redeemable Preferred Stock of the Company provide that the shares 
are redeemable by the Company at any time or by the holders after certain 
profit performance tests are met by Cal-Central. Funds to be utilized in 
redeeming the remaining Redeemable Preferred Stock will be provided through 
collection of existing notes receivable from stockholders. During 1996, the 
collectibility of these loans became doubtful and an allowance for the full 
amount of the loans was recorded.

    In the fourth quarter of 1993, the Company received $435,000 from the 
private sale of five year unsecured subordinated debentures with interest at 
10.5% through October 1996, and 12% from November 1996 through October 1998, 
together with 230,000 common stock purchase warrants (referred herein as the 
D. S. Warrants). The debentures and D. S. Warrants were offered in a private 
placement through Duncan-Smith Co., which received 30,000 warrants with the 
same terms and conditions noted above. The D. S. Warrants entitle the holders 
to purchase one share of common stock per warrant at prices which range from 
$.90 in 1994 to $1.40 in 1998. On January 11, 1994, an additional $25,000 of 
these debentures, along with 12,500 common stock purchase warrants, were 
issued under the same terms. At the time the warrants were issued, the 
exercise prices were in excess of the market price of the Company's Common 
Stock. The warrants are presently exercisable and expire in 1998. They 
contain anti-dilution provisions and registration rights for the underlying 
Common Stock. The proceeds received from the issuance of these debentures 
were utilized to pay Cal-Central acquisition costs of $52,552, to reduce debt 
of Cal-Central and to provide working capital. Management believes it is in 
the best interest of shareholders, lenders and the Company that these 
debentures be converted in whole or in part to equity in the Company. On 
November 22, 1993, an additional $100,000 of these debentures were issued to 
pay debt owed by Cal-Central. Terms and conditions were the same as stated 
above, including issuance of an additional 50,000 common stock purchase 
warrants. These warrants were exercised May 3, 1994 at $.90 per share. In 
1996, the Company offered the holders of its five year subordinated 
debentures the opportunity to exchange their securities for Unico Common 
Stock. Effective September 30, 1996, $100,000 of these debentures, together 
with $13,125 in accrued and unpaid interest, were exchanged for 323,214 shares 
of the Company's Common Stock. Discussions are ongoing to effect the 
converstion of the remaining subordinated debentures as a component of the 
overall restructuring of the Company's long term debt.

    On June 30, 1995, the Company and Cal-Central Marketing Corporation 
entered into a $300,000 Subordinated Loan Agreement with six lenders (the 
"Humphrey Group"). Interest is due quarterly at an annual rate of 12%. In 
conjunction with this financing, the Company issued 450,000 common stock 
purchase warrants. The warrants entitle the holders to purchase one share of 
common stock per warrant at an exercise price of $.90 per share. At the time 
these warrants were issued, the exercise price was in excess of the market 
price for the Company's Common Stock. The warrants are presently exercisable 
and expire on December 31, 2000. They contain anti-dilution provisions and 
registration rights for the underlying Common Stock. None of these warrants 
have been exercised. The Company is also discussing possible conversion of 
these loans to common or preferred stock of the Company. Management believes 
that cash flow from operations and from available borrowing capacity may not 
be sufficient to pay the debentures upon maturity unless a significant 
portion is converted to equity.

    Also, the holders of these debentures have been required, as a provision 
of the amended and restated loan agreement with the bank, to defer all 
requirements for receipt of principal and interest until July 1997. At 
December 31, 1996, over 90% of these debenture holders had executed such 
subordination agreements.
 
    The acquisition of Cal-Central was accounted for as a purchase with a 
price of approximately $1,400,000. The operating results have been included 
in the consolidated financial statements from October 22, 1993. The Company 
acquired assets of $1,887,242 and assumed liabilities of $2,687,824. 

                               9

<PAGE>

    In February 1995, the Company exchanged 221,018 shares of Common Stock at 
a market value of $.90 per share, in full payment of $198,917.22 of amounts 
owed by Cal-Central. These shares, along with 355,556 shares issued in 
exchange for redeemable preferred stock, were subsequently registered in April 
1995 via Form S-3 Registration Statement. During 1995 and 1996, Cal-Central's 
operations were closed and the remaining unamortized goodwill was written off 
in 1996.
 
FOR THE PERIOD ENDED DECEMBER 31, 1996
 
    At December 31, 1996, the Company's working capital position, current 
assets minus current liabilities, was a negative $1,826,349. Working capital 
was impacted by use of $232,795 in cash and equivalents during the year to 
purchase property and equipment related to the United Coupon art and printing 
facility, and $462,200 for net payment of notes payable. In addition, short 
term notes and accounts receivable decreased by $901,034, as a result of 
discontinuation of the Cal-Central business and impairment of notes 
receivable; inventories decreased by $114,490 due to utilization of stocks 
built in prior periods; and prepaid expenses decreased by $148,567 due to 
utilization of accrued expenses related to the reorganization attempt for 
Cal-Central. Also, accrued liabilities increased by $280,831 and deferred 
rent increased by $229,280 as a result of accelerated recognition of deferred 
rent payments as current period expenses.
 
    Total assets for the Company decreased 49% during 1996. This decrease 
reflects the changes in current assets and property noted above, as well as a 
writedown of $1,468,453 of goodwill related to closure of the Cal-Central 
business.
 
    Long term liabilities decreased by $1,940,899 during 1996 as a result of 
required principal payments made and conversion of convertible debentures and 
notes to the Company's Series C Preferred Stock. The Company is currently 
discussing the possible conversion of additional long term debt to equity.
 
    Management has considered operating losses and acquisitions which have 
required substantial utilization of funds, as well as anticipated operating 
and debt service requirements for the near term, and believes that sufficient 
liquidity may not be available from working capital to support the 
requirements of continuing operations for the foreseeable future. As a result, 
management has taken steps to assure continued operation. These actions 
include closure of the Cal-Central business to stem operating losses and 
restructuring of bank and debenture debt. This restructuring includes 
conversion of appropriate debt to equity. In addition, to reduce operating 
costs and solidify administrative control with a minimal staff, all Company 
operations are now conducted from a central headquarters in Springfield, 
Virginia.
 
    Although the ultimate outcome from these strategic actions cannot be 
assured, management expects that these efforts will be fruitful and will 
provide the basis for future operating success for the Company.
 
RESULTS OF OPERATIONS--YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR 
ENDED DECEMBER 31, 1995
 
    Total Revenues for the Company decreased by 35% during 1996 due 
primarily to the elimination of cooperative advertising sales and services 
of the Company's subsidiary Cal-Central. Cal-Central's 
decline was caused initially by an unexpected interruption in distribution of 
its products through three major distributors. In addition, strong 
sales during the summer months of 1995 created a production backlog within 
the art development group of Cal-Central. This backlog, coupled with the 
interruption of product distribution, caused a breakdown in customer service 
related to the timely delivery of advertising products for customers of 
Cal-Central. This delay in delivery impaired the collectibility of accounts 
receivable for Cal-Central, precipitating an acute liquidity shortfall for 
Cal-Central during the second half of 1995. Company management reacted to 
this problem by arranging supplemental working capital through borrowings and 
by initiating a program to down size Cal-Central, thereby reducing operating 
losses and requirements for supplemental working capital. The number of 
Cal-Central marketing centers was reduced from ten to three during this 
period and the art and printing facility for Cal-Central, in Fort Lauderdale, 

                                      10
<PAGE>

Florida, was closed in December 1995. Sales of distributor based cooperative 
advertising for Cal-Central were completely discontinued in 1996. Sales of 
coupons through the Company's subsidiary United Coupon, increased marginally 
during 1996, reflecting restrained operations as a result of working capital 
limitations.

    Other Income decreased by $103,939 during 1996. The decline is related to 
elimination of accounts receivable maintenance fees by Cal-Central in 1996.

    Franchise Fee Income increased by $80,654 during 1996, reflecting 
positive results from expanded franchise sales efforts conducted during 1996 
by both Company staff and independent franchise sales representatives. The 
number of active United Coupon franchises remained constant, at 66, during 
1996.

    Total expenses decreased by approximately 19% during 1996, reflecting the 
lower sales results and restructuring actions. Included in total expense in 
1995 is $772,443 of non-recurring restructuring cost related to the 
reorganizing of the Cal-Central business, including the closing of the Fort 
Lauderdale production facility and seven marketing centers. Included in 1996 
costs is $956,913 of one-time charges related to closing Company locations 
and other one-time charges, as well as 1,692,710 in one-time costs associated 
with abandonment and re-evaluation of assets and other one-time costs 
totaling approximately $916,000. Had all non-recurring expenses not been 
incurred, total expenses would have declined by approximately 36% for the 
year. Production Expenses declined by 45% during 1996, reflecting lower sales 
levels and discontinuation of unprofitable operations. General and 
Administrative Expenses declined by 24% during 1996 due to consolidation of 
administrative functions throughout the year. In addition, interest expense 
declined during 1996 by 8% due to the conversion of subordinated debt to 
equity, as disclosed. Franchise Development Expenses decreased $36,255 (9%) 
during 1996 reflecting more efficient sales efforts and utilization of 
outside sales services.

    For fiscal 1996, the Company incurred a consolidated loss of $3,343,449 
compared to a net loss of $2,394,516 in 1995. This decline was caused by 
substantial non-recurring charges primarily incurred in connection with the 
restructuring plan begun in 1995 designed to spawn long term profitability and 
growth. Management believes these non-recurring charges relate to: 1) the 
Company's determination that previously capitalized and unamortized goodwill 
in the amount of $1,468,453 associated with the Cal-Central marketing 
subsidiary should be written off concurrent with the elimination of that 
business segment; 2) $956,913 associated with closed locations and other one 
time charges; 3) approximately $400,000 in one-time costs associated with the 
fulfillment of Cal-Central customer orders; 4) a $280,000 one-time loss on 
uncollectible loans to former Cal-Central officers; 5) approximately $224,257 
in one-time costs associated with the closing of the Oklahoma City 
headquarters office and transfer of those activities to the Springfield, 
Virginia facility; 6) approximately $200,000 in one-time charges relating 
to the write-off of bad debt; and 7) approximately $36,000 relating to the 
one-time incurrence of a state sales tax. Management believes that, in the 
absence of these one-time charges, the Company would have recognized a profit 
of more than $200,000. Management believes that the completion of the 
Company's restructuring plan, the consolidation of all the Company's functions 
to its expanded and modernized facility and the elimination of resource 
draining segments will unleash the Company's true profit potential.

ITEM 7. FINANCIAL STATEMENTS
 
    The financial statements of the Company, together with the report of 
auditors, are included in the report after the signature pages.
 
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND   
FINANCIAL DISCLOSURE
 
    During the fourth quarter of 1996, the Company elected to dismiss Arthur 
Andersen, L.L.P. as its independent accountants and auditors and to retain 
the services of Aronson, Fetridge & Weigle. The change was initiated to 
reduce professional fees and out of pocket expenses through use of a firm 
located geographically in the area of the Company headquarters in 
Springfield, Virginia. Prior auditing services had been conducted through the 
Oklahoma City office of Arthur Andersen, L.L.P. There were no disagreements 
on accounting matters at the time of the change in independent accountants.

                                      11 

<PAGE>
                             PART III
 
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:   
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
 
    The directors and officers of the Company and its subsidiaries, as of 
April 1, 1997, are set forth below. The directors hold office for their 
respective term and until their successors are duly elected and qualified. 
Vacancies in the existing Board are filled by majority vote of the remaining 
directors. The officers serve at the will of the Board of Directors.

                          WITH COMPANY
                          ------------

NAME                     AGE    SINCE          DIRECTOR/POSITION
---------------------    ---    -----   --------------------------------------
Gerard R. Bernier         47    1987    Chairman of the Board, Chief Executive
                                        Officer & President
Gerald Bomstad, Jr.       69    1993    Director
                                                
Leon Zajdel               49    1990    Director
                                                
Subhash Ghei              53    1994    Corporate Secretary and Treasurer,
                                        Chief Financial Officer

 
BUSINESS EXPERIENCE
 
    Gerard R. Bernier was founder and has been a Director of United Coupon 
Corporation of Springfield, Virginia, since November 1981, and Chief 
Executive Officer since August 1985. Mr. Bernier has held the position of 
Vice President and Vice Chairman of the Board of Directors of UNICO, Inc. 
since November, 1991. He was elected Chief Executive Officer & President 
effective April 1, 1996. Prior to 1981, Mr. Bernier was an executive with 
various advertising and manufacturing companies.
 
    Gerald Bomstad, Jr. has been an investor of Cal-Central Marketing 
Corporation since its inception in 1983. Mr. Bomstad held various positions 
with Automation Industries, Inc., from 1951 to 1986. In 1951, he began his 
career as a staff accountant. In 1960, he became the General Manager of the 
Aerospace Division. In 1962, he was appointed Vice President, Treasurer and 
Controller. From 1968 to 1978, he served as Senior Vice President and 
Controller. From 1978 to 1986, after Automation Industries became a 
subsidiary of Penn Central Corporation, Mr. Bomstad served as President of 
the Manufactured Productions Group. In 1986, he led a group of investors and 
management in a spin-off of three divisions of Penn Central and was appointed 
President and Chief Executive Officer of the new operation. He has been 
active as a consultant, investor and director for various enterprises. He 
became a Director of the Company on October 26, 1993, when the Company 
acquired Cal-Central Marketing Corporation.
 
    Leon Zajdel was founder and has served as President of Energy Guard 
Corp., a manufacturer and retailer of replacement windows, located in 
Beltsville, Maryland, since 1972. Mr. Zajdel served as a director of United 
Coupon Corporation from April, 1985 to November, 1991, and has served as a 
director of the Company since July, 1990.
 
    Subhash Ghei, Controller, Secretary and Treasurer of United Coupon 
Corporation since 1994, was appointed Chief Financial Officer, Secretary and 
Treasurer of UNICO, Inc. and subsidiaries effective August 8, 1996. Prior to 
joining the Company he was employed with several organizations in management, 
accounting and administrative positions. He earned his Bachelors Degree with 
emphasis in accounting and economics from the University of Delhi in 1972 and 
another Bachelors Degree in Business Administration from the University of 
Phoenix in 1987. He also holds a Masters Degree in Business Administration 
from Averett College.

                                      12
<PAGE>

CERTAIN LEGAL PROCEEDINGS
 
    No director; nominee for director, or executive officer of the Company 
has appeared as a party in any legal proceeding material to an evaluation of 
his ability or integrity during the past five years.
 
ITEM 10. EXECUTIVE COMPENSATION
 
    The following information relates to compensation received by employees 
who served as Chief Executive Officer of the Company in 1996 and, to the 
executive officers who were serving as of December 31, 1996 whose salary and 
bonus during fiscal 1996 exceeded $100,000.

                          Summary Compensation Table
                             Annual Compensation
 
<TABLE>
<CAPTION>
                                                                            RESTRICTED
NAME AND PRINCIPAL POSITION            YEAR       SALARY      BONUS(1)      STOCK AWARD
----------------------------------    ------     --------    ----------     -----------
<S>                                  <C>         <C>         <C>            <C>
Gerard R. Bernier                     1996             $0            $0      $250,000(2)
Chief Executive Officer     
and President, Unico, Inc.

Gerard R. Bernier                     1996       $125,000            $0             0
Chief Executive Officer               1995       $124,403       $50,347             0
and President                         1994       $106,635            $0             0

W. Douglas Frans                      1996       $ 46,000(3)         $0             0
Chief Executive Officer               1995       $115,890            $0             0
and President, Unico, Inc.            1994       $103,322            $0             0

</TABLE>
 
------------------------
 
     (1) Bonus amounts are reflected in the year received by the employee. 
All bonus payments relate to services performed, and incentive goals met by 
the employee during the prior year. Expenses for such compensation are 
accrued and reflected in the operating statements of the year such services 
are performed.

     (2) Stock issued as compensation for services during initial two year 
term of appointment as President and Chief Executive Officer of Unico. Shares 
subject to forfeiture of a ratable amount of such shares if officer does not 
serve full two years of initial term.

    (3) This compensation was for Mr. Frans' services as the Company's CEO 
from January 1, 1996 through March 31, 1996.

                                      13
<PAGE>

         Aggregated Option Exercises in Fiscal Year Ending December 31.1996
                       and Fiscal Year-End Option Values
 
<TABLE> 
<CAPTION>
                                                                                                  
                                                                                      VALUE OF
                                                                    NUMBER OF        UNEXERCISED
                                                                   UNEXERCISED       IN-THE-MONEY
                                                                    OPTIONS AT        OPTIONS AT
                                                                    12-31-96(1)      12-31-96(2)
                                SHARES ACQUIRED        VALUE       EXERCISABLE/     EXERCISABLE/
                                ON EXERCISE (#)      REALIZED      UNEXERCISABLE    UNEXERCISABLE
                              -------------------  -------------  ---------------   -------------
<S>                           <C>                  <C>            <C>               <C>
Gerard R. Bernier                     --                --        185,000 Exer.     $ 0 Exer.(2)
</TABLE>
 
------------------------
 
(1) There were no options granted to Officers or Directors during fiscal year
    1996.
 
(2) This amount reflects the difference between the market value of the
    Company's Common Stock on December 31, 1996 and the exercise price.
 
    Compensation Pursuant to Plans--Omnibus Equity Compensation Plan. The 
Company has adopted an Omnibus Equity Compensation Plan (the "Plan") under 
which 1,000,000 shares of Common Stock have been reserved for issuance upon 
exercise of options granted pursuant to the Plan. Under the Plan, incentive 
stock options may be granted to employees, and non-qualified stock options 
may be granted to employees, Directors, Franchisees, and other persons, as 
the Compensation Committee determines will assist the Company's business 
endeavors, at exercise prices equal to at least 100% of the fair market value 
of the Common Stock on the date of grant. In addition to selecting the 
options, the Compensation Committee determines the number of shares subject 
to each option and otherwise administers the Plan. Options granted under the 
Plan are not exercisable until six months after grant and expire a minimum of 
three years or maximum of five years after the date of grant, provided 
employment is continued. As of April 1, 1997, options to purchase 535,970 
shares are outstanding under the Plan, including options for 185,000 shares 
to officers of the Company. These options have been granted at exercise 
prices ranging from $.25 to $1.16. The average exercise price for all 
outstanding options is approximately $.45 per share. The shares underlying 
the options were registered during 1994.

    EMPLOYMENT AGREEMENTS.  The Company's subsidiary, United Coupon 
Corporation has entered into an Employment Agreement with Gerard R. Bernier 
to serve as the Chief Executive Officer and President of that company. The 
major terms of this Agreement provide for a base salary of $125,000 plus a 
company provided automobile or monthly allowance, and an incentive bonus 
based upon the pre-tax profitability of United Coupon. The Agreement provides 
for an annual cost of living increase based upon annual increases in the 
Consumer Price Index of the general area surrounding the home office of 
United Coupon. The Agreement was entered into on April 1, 1996 and extends 
through March 31, 1999.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The following table sets forth as of April 1, 1997, information with 
respect to the beneficial ownership of the Company's Common Stock by (i) each 
person known by the Company to own beneficially 5% or more of such stock, 
(ii) each Director of the Company who owns any Common Stock, and (iii) all 
Directors and Officers as a group, together with their percentage of 
beneficial holdings of the outstanding shares.
 
<TABLE>
<CAPTION>
                                      NUMBER OF SHARES OF
NAME OF BENEFICIAL OWNER/                COMMON STOCK         % OF BENEFICIAL

                                      14
<PAGE>

  IDENTITY OF GROUP                    BENEFICIALLY OWNED       OWNERSHIP (1)
-------------------------------        ------------------       -------------
<S>                                    <C>                      <C>
Renaissance Capital Partners, Ltd.       $6,267,220 (2)            42.5%
8080 North Central Expressway
Suite 210 LB 59
Dallas, TX 75206-1857

Gerard R. Bernier                           862,728 (3)             9.2%
8380 Alban Road
Springfield, VA 22150

Gerald Bomstad, Jr.                         823,600 (4)             8.7%
422 Montigue, Suite 6
Greenwood, SC 29649

Duncan Smith Company                        638,736 (6)             7.0%
311 Third
San Antonio, TX 78205

Officers and Directors                    1,711,328 (3)(4)(5)      16.8%
As a Group

</TABLE>
 
------------------------
 
    (1) Percent is rounded to one decimal place.
 
    (2) Includes 6,267,220 shares, the current maximum amount that 
Renaissance is entitled to receive upon conversion of the Series C Preferred 
Stock issued in July 1996. Such preferred shares are convertible at the 
option of the Holder at any time.
 
    (3) Includes 185,000 shares which may be purchased at $.25 per share 
pursuant to the Company's Omnibus Equity Compensation Plan and 250,000 shares 
which have been granted to Mr. Bernier subject to continued employment for a 
specified period.
 
    (4) Includes 50,000 shares which may be purchased at $.97 per share 
pursuant to the Company's Omnibus Equity Compensation Plan and 55,000 shares 
which are issued, but restricted from sale until certain profit performance 
tests are met by Cal-Central Marketing Corporation.
 
    (5) Includes shares underlying stock options granted to Mr. Bernier and 
Mr. Bomstad, as well as 25,000 shares which may be purchased at $.25 per 
share by Leon Zajdel, a Director of the Company, pursuant to the Company's 
Omnibus Equity Compensation Plan.
 
    (6) Includes 583,736 shares, the current maximum amount that Duncan-Smith 
is entitled to receive upon conversion of the Series C Preferred Stock issued 
in July 1996, plus 55,000 stock purchase warrants which entitle the holder to 
purchase Common Stock at a minimum of $.90 per share.
 
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
                                      15
<PAGE>

TRANSACTIONS WITH MANAGEMENT AND OTHERS
 
    No business relationship between the Company and any business or 
professional entity, for which a director of the Company has served during 
the last fiscal year or currently serves as an executive officer of, or has 
owned a 10% record or beneficial interest in, has existed since the beginning 
of the Company's last fiscal year, or currently exists, which represented or 
will represent payments for property or services in excess of 5% of the 
Company's gross revenues for its last full fiscal year or of the other 
entity's consolidated gross revenues for its last full fiscal year.
 
    In addition, except as noted below, the Company did not owe, at the end 
of its last fiscal period, to any business or professional entity for which a 
director of the Company has served during the last fiscal year or currently 
serves as an executive officer, or has owned during the last fiscal year or 
currently owns a 10% record or beneficial interest in, an aggregate amount in 
excess of 5% of the Company's total assets at the end of its last fiscal 
period. No director of the Company has served as a partner or executive 
officer of any  investment banking firm that performed services for the 
Company during the last fiscal year or that the Company proposes to have 
perform services during the current year, except as noted below.

    At the end of the last fiscal year and at April 1, 1997, the Company has 
1,566,805 shares of Series C Preferred Stock issued to Renaissance Capital 
Partners, Ltd. Russell Cleveland, who served as a Director of the Company 
until the Annual Meeting of Shareholders on December 2, 1996, is a major 
owner and Managing General Partner of Renaissance Capital Partners, Ltd. The 
Series C Preferred Stock was issued to Renaissance upon conversion of a 
$1,250,000 Convertible Debenture entered into with Renaissance in 1991 and a 
Subordinated Convertible Note in the amount of $149,250 entered into with 
Renaissance during 1995. Mr. Cleveland did not serve as a Director of the 
Company at the time that the Convertible Debenture was issued. Mr. Cleveland 
was a director in 1995, when the Company entered into the Subordinated 
Convertible Note with Renaissance to provide interim financing to support the 
working capital requirements. This note was deemed to be in the best 
interests of the Company and its shareholders and was entered into on an arms 
length basis, at the request of Company management.

    The Company has advanced $280,000, in prior periods, to two former 
officers of its subsidiary, Cal-Central Marketing Corporation, Jack Brown, 
formerly President, and Gerald Bomstad, Jr., formerly Executive Vice 
President. These advances are evidenced by notes which are payable on demand 
by the Company. These notes originally bore interest at 4%, but subsequent to 
October 26, 1995, bear an annual interest rate of 10%. Redeemable preferred 
stock, with cash redemption value of an amount equal to the principal value 
of these advances, has been pledged as security for the advances. These notes 
were deemed uncollectible and were fully reserved during 1996.
 
    The Company believes the terms of these transactions are as favorable as 
it might have obtained from unaffiliated parties.
 
                                      16
<PAGE>

                                    PART IV
 
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
 
    (a) The following documents are filed as part of this report: 
 
1. Financial statements; see index to financial statement and schedules 
   immediately following the signature pages of this report. (7)
 
2. Financial statement schedules; see index to financial statements and 
   schedules immediately following the signature pages of this report. (7)
 
3. Exhibits:

   The following exhibits are filed with this Form 10-KSB and are identified 
   by the numbers indicated; see index to exhibits immediately following 
   financial statements and schedules of this report.
 
    2     Plan of Reorganization and Agreement of Merger among UNICO, Inc.,
          AEC Acquisitions, Inc. and Cal-Central Marketing Corporation(1)
    3.1   Certificate of Incorporation, as amended(2)
    3.2   Bylaws, as amended(2)
    3.3   Amendment to the Certificate of Incorporation to increase the 
          authorized shares of Common Stock(3)
    3.4   Bylaws, as amended.
    4.1   Form of Common Stock Purchase Warrant, dated September 11, l986(4)
    4.2   Form of Class B Common Stock Purchase Warrant dated November 1, 
          1993(3)
    4.3   Form of Subordinated Debenture dated October 26, 1993, offered 
          through Duncan Smith Co.(3)
    4.4   Certificate of Designations, Preferences, and Rights of Series A 
          Convertible Preferred Stock(3)
    4.5   Certificate of Designations, Preferences, and Rights of Series A 
          Redeemable Preferred Stock(3)
    4.6   Certificate of Designations, Preferences, and Rights of Series B 
          Redeemable Preferred Stock(3)
    4.7   Certificate of Designations, Preferences, and Rights of Series C 
          Preferred Stock.
   10.1   Employment Agreement between Cal-Central Marketing Corporation and 
          Jack Brown. (1)
   10.2   Employment Agreement between Cal-Central Marketing Corporation and 
          Gerald Bomstad, Jr. (1)
   10.3   Lease of executive offices at 1101-B Sovereign Row, Oklahoma City, 
          OK 73108. (3)
   10.4   Form of Common Stock Purchase Warrant dated October 26, 1993 offered
          through Duncan-Smith Co. (3)
   10.3   Second Amendment to Lease Agreement Cal-Central Marketing 
          Corporation(3)
   10.6   United Coupon Corporation Franchise Agreement. (2)

                                      17
<PAGE>
   10.7   Employment Agreement between United Coupon Corporation and Gerard R.
          Bernier, as amended January 1, 1995. (5)
   10.8   Employment Agreement between UNICO, Inc. and W. Douglas Frans. (2)
   10.9   Credit Agreement by and Between UNICO, Inc., and its subsidiaries 
          and BancFirst. (2)
   10.10  Purchase Agreement with Concord Video. (2)
   10.11  Omnibus Equity Compensation Plan. (2)
   10.12  Convertible Debenture Loan Agreement by and between UNICO, Inc. and 
          its subsidiaries, United Coupon Corporation and AEC Acquisitions, 
          Inc. and Renaissance Capital Partners, Ltd. Dated December 31, 
          1991. (2)
   10.13  Amended and Restated Loan Agreement by and between UNICO, Inc. and 
          its subsidiaries and BancFirst as amended August 31, 1994. (5)
   10.14  Promissory Note of Jack Brown. (3)
   10.15  Promissory Note of Gerald Bomstad, Jr. (3)
   10.16  Novation(3)
   10.17  Restructure Agreement Among UNICO, Inc., Cal-Central Marketing 
          Corporation, and The American Education Corporation, dated as of 
          December 31, 1993. (3)
   10.18  United Coupon Corporation Lease Agreement. (5)
   10.19  Master Agreement and Schedules of Indebtedness 1 and 2 between CIT 
          Group and United Coupon Corporation. (5)
   10.20  Machinery Contract between MAN Roland, Inc. and Cal-Central 
          Marketing Corporation. (5)
   10.21  Exchange Agreement between Gerald Bomstad and the Company dated 
          February 22, 1995. (6)
   10.22  Exchange Agreement between Jack Brown and the Company dated 
          February 22, 1995. (6)
   10.23  Debt Exchange Agreement between Graphic Rolls Unlimited and the 
          Company dated February 22, 1995. (6)
   10.24  Debt Exchange Agreement between McCollum & Bunch and the Company 
          dated February 22, 1995. (6)
   10.25  Debt Exchange Agreement between Walter Rose and the Company dated 
          February 22, 1995. (6)
   10.26  Debt Exchange Agreement between Ronald Martin and the Company dated 
          February 22, 1995. (6)
   10.27  Subordinated Loan Agreement dated June 30, 1995, among UNICO, Inc. 
          and Cal-Central Marketing Corporation and the Harlon Morse Fentress 
          Trust, Philip M. Stevenson, Jr., RHOJOAMT Partnership, Ltd., CITCAM 
          Stock Co., Barbara T. Grinnan, and Goose Creek. (7)
   10.28  Form of Common Stock Purchase Warrant, dated June 30, 1995. (7)
   
                                      18
<PAGE>
   10.29  Subordinated Convertible Debt Loan Agreement dated October, 1995, 
          and schedule of advances, among UNICO, Inc., United Coupon 
          Corporation, and Cal-Central Marketing Corporation and Renaissance 
          Capital Group, Inc. and Duncan-Smith Company. (7)
   10.30  Third Restated Loan Agreement dated March 4, 1996, among UNICO, 
          Inc., United Coupon Corporation, Cal-Central Marketing Corporation and
          BancFirst (7)
   10.31  Debt Exchange Agreement among UNICO, Inc., Renaissance Capital 
          Partners, Ltd. and Duncan-Smith Investment Co. dated July 1996. (8) 
   10.32  Employment Agreement Between United Coupon Corporation and Gerard 
          R. Bernier dated April 1, 1996.
   10.33  Modification and Extension to the Third Restated Loan Agreement 
          between Unico, Inc., United Coupon Corporation, Cal-Central Marketing
          Corporation, and BancFirst dated August 15, 1996.
   10.34  Consolidated Renewal Promissory Note between UNICO, Inc., United 
          Coupon Corporation and Cal-Central Marketing Corporation and BancFirst
          dated August 15, 1996.
   10.35  Loan Conversion Agreement between Unico, Inc. and Kurt H.C. 
          Bottcher dated September 30, 1996.
   16     LETTER From Arthur Andersen, LLP to Securities & Exchange 
          Commission, DATED DECEMBER 3, 1996 (9)
   21     List of Subsidiaries(3)
   27     Financial Data Schedule--Pursuant to EDGAR filing requirements for 
          the period ended December 31, 1995, filed herewith this Form 10-KSBA
           dated May 30, 1996.
   (b)    Reports on Form 8-K.--Form 8-K was filed during the last quarter of 
          the Registrant's fiscal year ending December 31, 1996 describing 
          the change in independent accountants and auditors and Chief 
          Financial Officer.
 
------------------------
 
(1) Incorporated by reference to the Registrant's Form 8-K, October 27, 1993
    (SEC File No. (0-15303).
 
(2) Incorporated by reference to the Registrant's Form 10-K for the fiscal 
    year ending December 31, 1992 (SEC File No. 0-15303).
 
(3) Incorporated by reference to the Registrant's Form 1O-KSB for the fiscal
    year ending December 31, 1993 (SEC File No. 0-15303).
 
(4) Incorporated by reference to the Registrant's Form S-18 registration
    statement (SEC File No. 33-73 10-FW).
 
(5) Incorporated by reference to the Registrant's Form 10-KSB for the fiscal
    year ended December 31, 1994, (SEC File No. 0-15303).
 
(6) Incorporated by reference to the Registrant's Form S-3 dated April 28, 
    1995 (SEC File No. 33-91270).
 
(7) Incorporated by reference to the Registrant's Form 10-KSB dated April 15,
    1996 (SEC File No. 0-15303).

(8) Incorporated by reference to the Registrant's Form 8-K dated July 30, 
    1996 (SEC File No. 000-15303).
 
(9) Incorporated by reference to the Registrant's Form 8-K/A DATED DECEMBER 
    12, 1996 (SEC FILE No. 000-15303).

                                      19
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.
 
                                UNICO, Inc.
 
April 15, 1997                     By: /s/ Gerard R. Bernier
                                     -----------------------------------------
                                     Gerard R. Bernier
                                     Chief Executive Officer and President
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

<TABLE> 
<CAPTION>
NAME                                      TITLE                  DATE
------------------------------     -----------------------     ---------
<S>                                <C>                         <C>


 /s/ Gerard R. Bernier
------------------------------     Chief Executive officer     April 15, 1997
Gerard R. Bernier                  Chairman of the Board


 /s/ Subhash Ghei
------------------------------     Chief Financial officer     April 15, 1997
Subhash Ghei


 /s/ Gerald Bomstad, Jr.
------------------------------     Director                    April 15, 1997
Gerald Bomstad, Jr.


 /s/ Leon Zajdel
------------------------------     Director                    April 15, 1997
Leon Zajdel
</TABLE>

                                      20
<PAGE>
                                  UNICO, Inc.
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
                                                                Page
                                                               ------  
Independent Auditor's Report--1996                               22
Report of Independent Public Accountants--1995                   23
Consolidated Financial Statements:
    Consolidated Balance Sheet, December 31, 1996                24
    Consolidated Statements of Operations for the Years Ended 
     December 31, 1996 and 1995                                  26
    Consolidated Statements of Stockholders' Equity for the 
     Years Ended December 31, 1996 and 1995                      27
    Consolidated Statements of Cash Flows for the 
     Years Ended December 31, 1996 and 1995                      28
    Notes to Consolidated Financial Statements                   30
 
    All other schedules are omitted because of the absence of the condition
    under which they are required or because the information is included in 
    the financial statements or notes thereto.

                                      21


<PAGE>

                          Independent Auditor's Report

Board of Directors
UNICO, INC. AND SUBSIDIARIES
Springfield, Virginia

We have audited the accompanying Consolidated Statement of Financial 
Condition of UNICO, INC. AND SUBSIDIARIES as of December 31, 1996, and the 
related Consolidated Statements of Operations, Stockholders' Equity 
(Deficiency) and Cash Flows for the year then ended. These financial 
statements are the responsibility of the Company's management. Our 
responsibility is to express an opinion on these financial statements based 
on our audit.

We conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principals used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audit provides a 
reasonable basis for our opinion.

In our opinion, the 1996 consolidated financial statements referred to above 
present fairly, in all material respects, the consolidated financial position 
of UNICO, INC. AND SUBSIDIARIES as of December 31, 1996, and the consolidated 
results of their operations and their cash flows for the year then ended 
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the 
Company will continue as a going concern. As discussed in Note 16 to the 
financial statements, the Company suffered losses from operations in 1996 and 
1995, and its consolidated current liabilities exceeded its consolidated 
current assets at December 31, 1996. These conditions raise substantial doubt 
about the Company's ability to continue as a going concern. Management's 
plans regarding these matters are also described in Note 16. The financial 
statements do not include any adjustments that might result from the outcome 
of this uncertainty.


                                       Aronson, Fetridge & Weigle
                                       (A Professional Corporation)


Rockville, Maryland
March 14, 1997

                                     22

<PAGE>

                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of UNICO, Inc.:

We have audited the consolidated statements of operations, stockholders' 
equity and cash flows of UNICO, Inc. and subsidiaries for the year ended 
December 31, 1995. These financial statements are the responsibility of the 
Company's management. Our responsibility is to express an opinion on these 
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audit provides a reasonable basis 
for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the results of operations and cash flows of UNICO, 
Inc. and subsidiaries for the year ended December 31, 1995, in conformity 
with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared 
assuming that the Company will continue as a going concern. The Company 
suffered a loss from operations in 1995 and its consolidated current 
liabilities exceeded consolidated current assets at December 31, 1995. 
These factors, among others, raise substantial doubt about the Company's 
ability to continue as a going concern. Management's plan in addressing these 
matters is set forth in Note 16. The consolidated financial statements do not 
include any adjustments that might result from the outcome of this 
uncertainty.

                                               ARTHUR ANDERSEN LLP

Oklahoma City, Oklahoma
 March 24, 1996


                                23
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                               DECEMBER 31, 1996
 
 
<TABLE>
<CAPTION>
                                     ASSETS

<S>                                                                                <C>
CURRENT ASSETS
 Cash and cash equivalents (Note 1)..............................................  $   233,971
 Accounts and notes receivable--trade (net of allowance for uncollectible 
   accounts of $355,000).........................................................      357,774
 Inventory (Note 1)..............................................................      140,015
 Prepaid expenses................................................................       22,636
                                                                                   -----------
   Total current assets..........................................................      754,396
                                                                                   -----------
PROPERTY AND EQUIPMENT, AT COST (NOTE 1)
 Furniture, fixtures and equipment...............................................    4,006,961
 Leasehold improvements..........................................................      109,045
 Less:Accumulated depreciation...................................................   (1,759,425)
                                                                                   -----------
   Net property and equipment....................................................    2,356,581
                                                                                   -----------
GOODWILL (NOTE 1)................................................................      232,407
                                                                                   -----------
DEPOSITS AND OTHER ASSETS........................................................       75,830
                                                                                   -----------
TOTAL ASSETS.....................................................................  $ 3,419,214
                                                                                   -----------
                                                                                   -----------
</TABLE>
 
The accompanying Notes to Financial Statements are an integral part of 
these financial statements.

                                      24
<PAGE>
 
                          UNICO, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (CONTINUED)
                               DECEMBER 31, 1996
 
<TABLE>
<CAPTION>
               LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
<S>                                                                               <C>
CURRENT LIABILITIES
 Accounts payable...............................................................  $  1,278,604
 Accrued liabilities............................................................       428,092
 Current portion of long-term liabilities (Note 2)..............................       749,261
 Deferred revenue (Note 1)......................................................       124,788
                                                                                  ------------
   Total current liabilities....................................................     2,580,745
                                                                                  ------------
LONG-TERM LIABILITIES
 Notes payable (Note 2).........................................................     1,110,275
 Deferred rent (Note 3).........................................................       229,280
                                                                                  ------------
   Total long-term liabilities..................................................     1,339,555
                                                                                  ------------
   Total liabilities............................................................     3,920,300
                                                                                  ------------
</TABLE>
 
COMMITMENTS AND CONTINGENCIES (NOTES 3, 4, 8, 15 AND 16)
 
<TABLE>
<S>                                                                                                     <C>
 DEFICIENCY IN STOCKHOLDERS' EQUITY
 Preferred stock, $.01 par value; 5,000,000 shares authorized, designated as:
   Redeemable preferred; 280 shares issued and outstanding (Note 5)                                               3
   Series A Convertible Preferred                                                                              --
   Series B Preferred                                                                                          --
 Series C Preferred stock--$.01 par value; voting on the basis of 4 votes to 1 vote for the common
   stock, preferred in liquidation at $1 per share over common stockholders, convertible into common
   stock on the basis of 4 common shares for each preferred share with automatic conversion on August
   1, 1998; authorized, 2,000,000 shares, issued and outstanding, 1,712,739 shares (Note 6)                  17,127
 Common stock--$.01 par value; 20,000,000 shares authorized, 8,476,309 shares issued and outstanding
   (Notes 8, 9 and 10)                                                                                       84,763
 Additional paid-in capital                                                                               6,724,589
 Deferred compensation (Note 8)                                                                             (18,230)
 Accumulated deficit                                                                                     (7,309,338)
                                                                                                      -------------
   Total deficiency in stockholders' equity                                                                (501,086)
                                                                                                      -------------
   TOTAL LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY                                             $ 3,419,214
                                                                                                      -------------
                                                                                                      -------------
</TABLE>
 
The accompanying Notes to Financial Statements are an integral part of 
these financial statements.
 
                                       25
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                       1996          1995
                                                                   ------------  -------------
<S>                                                                <C>           <C>
REVENUE
  Printing, design and advertising sales, net of discounts and
    allowances..................................................  $  6,410,818  $  10,058,864
  Franchise fees................................................       185,708        105,054
  Interest income...............................................        35,677           --
  Other.........................................................        91,150        195,089
  Extinguishment of current debt obligations....................       102,522        121,500
                                                                   ------------  -------------
     Total revenue..............................................     6,825,875     10,480,507
                                                                   ------------  -------------
EXPENSES
  Cost of sales.................................................     4,205,160      7,596,629
  General and administrative....................................     2,616,612      3,442,690
  General and administrative associated with closed locations and
    other one time charges                                             956,913       --
  Franchise development.........................................       360,719        396,974
  Interest expense--affiliate...................................        87,514        158,022
  Interest expense--other.......................................       249,696        207,946
  Loss on abandonment and revaluation of assets.................     1,692,710       --
  Restructuring expense.........................................       --             772,443
                                                                   ------------  -------------
     Total expenses.............................................    10,169,324     12,574,704
                                                                   ------------  -------------
NET LOSS BEFORE INCOME TAXES....................................    (3,343,449)    (2,094,197)
INCOME TAX PROVISION............................................       --             300,319
                                                                   ------------  -------------
NET LOSS (SEE DISCUSSION AT NOTE 16)                               $(3,343,449)   $(2,394,516)
                                                                   ------------  -------------
                                                                   ------------  -------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......................  $  8,190,470  $   7,710,913
                                                                   ------------  -------------
                                                                   ------------  -------------
NET LOSS PER COMMON SHARE                                         $       (.41) $        (.31)
                                                                   ------------  -------------
                                                                   ------------  -------------
</TABLE>
 
The accompanying Notes to Financial Statements are an integral part of 
these financial statements.
 
                                       26
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
 
          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
 
<TABLE>
<CAPTION>
                               PREFERRED STOCK
                ---------------------------------------------------
                  REDEEMABLE       SERIES A          SERIES C             COMMON STOCK        
                --------------  --------------  --------------------   --------------------
                SHARES  AMOUNT  SHARES  AMOUNT    SHARES     AMOUNT     SHARES     AMOUNT  
                ------  ------  ------  ------  -----------  -------   ---------  ---------
<S>             <C>     <C>     <C>     <C>     <C>          <C>       <C>        <C>      
BALANCE,                                                                                   
  JANUARY 1,                                                                               
  1995......     600     $  6    1,000   $  10     --   $     --       7,306,521  $  74,773
EXCHANGE OF                                                                                
  PREFERRED                                                                                
  FOR COMMON                                                                               
  STOCK                                                                                    
  (NOTE 5)..    (320)      (3)    --       --      --         --         355,556      3,556
ISSUE OF                                                                                   
  STOCK FOR                                                                                
  PAYABLES                                                                                 
  (NOTE 7)..     --       --      --       --      --         --         221,018      2,211
CANCEL                                                                                     
  SERIES A                                                                                 
 PREFERRED..     --       --    (1,000)    (10)    --         --          --          --   
CANCEL                                                                                     
  TREASURY                                                                                 
  STOCK.....     --       --      --       --      --         --          --         (1,710)
NET LOSS FOR                                                                               
  1995......     --       --      --       --      --         --          --          --   
                ------  ------  ------  ------  -----------  -------   ---------  ---------
BALANCE,                                                                                   
  DECEMBER                                                                                 
  31, 1995..     280        3     --       --      --         --       7,883,095     78,830
ISSUE OF                                                                                   
  COMMON                                                                                   
  STOCK AS                                                                                 
  COMPENSATION                                                                             
  (NOTE 8)..     --       --      --       --      --         --         270,000      2,700
CONVERSION                                                                                 
  OF DEBT TO                                                                                       
  PREFERRED                                                                                
  STOCK                                                                                    
  (NOTE 6)..     --       --      --       --   1,712,739     17,127       --         --   
CONVERSION                                                                                 
  OF DEBT TO                                                                               
  COMMON                                                                                   
  STOCK                                                                                    
  (NOTE 7)..     --       --      --       --       --         --        323,214      3,233
NET LOSS FOR                                                                               
  1996......     --       --      --       --       --         --          --         --   
                ------  ------  ------  ------  -----------  -------   ---------  ---------
BALANCE,                                                                                   
  DECEMBER                                                                                 
  31, 1996..     280     $  3     --    $  --   1,712,739    $17,127   8,476,309  $  84,763
                ------  ------  ------  ------  -----------  -------   ---------  ---------
                ------  ------  ------  ------  -----------  -------   ---------  ---------
                                                                                           
<CAPTION>
                    PAID-IN      DEFERRED     TREASURY    ACCUMULATED               
                    CAPITAL    COMPENSATION     STOCK       DEFICIT        TOTAL     
                   ----------  -------------  ----------  ------------  ----------
<S>                <C>         <C>           <C>          <C>           <C>         
BALANCE,                                                                            
  JANUARY 1,                                                                        
  1995......       $5,070,024    $  --        $(292,077)  $(1,571,373)  $ 3,281,36  
EXCHANGE OF     
  PREFERRED     
  FOR COMMON    
  STOCK         
  (NOTE 5)..          119,865       --           --            --          123,418  
ISSUE OF        
  STOCK FOR     
  PAYABLES      
  (NOTE 7)..           74,512       --           --            --           76,723  
CANCEL          
  SERIES A      
 PREFERRED..           --           --           --            --              (10) 
CANCEL          
  TREASURY      
  STOCK.....         (290,367)      --         292,077         --         --        
NET LOSS FOR    
  1995......           --           --           --        (2,394,516)  (2,394,516) 
                   ----------  -------------  ----------  ------------  ----------
BALANCE,        
  DECEMBER      
  31, 1995..         4,974,034      --           --        (3,965,889)   1,086,978  
ISSUE OF        
  COMMON        
  STOCK AS      
  COMPENSATION    
  (NOTE 8)..            26,832    (18,230)       --            --           11,302  
CONVERSION      
  OF DEBT       
  TO            
  PREFERRED     
  STOCK         
  (NOTE 6)..         1,695,612      --           --            --        1,712,739  
CONVERSION      
  OF DEBT TO    
  COMMON        
  STOCK         
  (NOTE 7)..            28,111      --           --            --           31,344  
NET LOSS FOR    
  1996......           --           --           --        (3,343,449)  (3,343,449) 
                   ----------  -------------  ----------  ------------  ----------
BALANCE,        
  DECEMBER      
  31, 1996..        $6,724,589   $(18,230)    $  --       $(7,309,338) $  (501,086) 
                   ----------  -------------  ----------  ------------  ----------
                   ----------  -------------  ----------  ------------  ----------
</TABLE>
 
------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
 
                                       27
<PAGE>

                          UNICO, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
                                                                          1996           1995
                                                                       ----------     ----------
<S>                                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES                                                  
Net loss                                                               $(3,343,449)   $(2,394,516)
Adjustments to reconcile net loss to net cash provided (used) by                      
  operating activities                                                                
    Depreciation and amortization....................................     414,454        472,112
    Provision for bad debts..........................................     (17,606)       323,532
    Deferred income tax provision....................................      --            267,000
    Write-off of assets from closure of offices......................   1,944,310         --
    Gain on sale of equipment........................................      --            (31,500)
    Gain on exchange of common stock.................................      --           (121,561)
    Write-down of fixed assets due to restructuring..................      --            325,898
    Impairment of accounts receivable................................      --            330,000
    Common stock issued for compensation.............................      11,302         --
    Changes in assets and liabilities                                                 
      Inventory......................................................     114,490        (40,103)
      Accounts and notes receivable..................................     901,034        181,185
      Prepaid expenses...............................................     148,567        (61,788)
      Deposits and other assets......................................       3,162        256,301
      Accounts payable...............................................      19,836        183,791
      Accrued liabilities............................................     280,831         49,491
      Deferred rent..................................................     229,280         --
      Deferred revenue...............................................      13,867          3,041
      Other..........................................................     (91,933)        --
                                                                       ----------     ----------
         Net cash provided (used) by operating activities............     628,145       (257,117)
                                                                       ----------     ----------
CASH FLOWS FROM INVESTING ACTIVITIES                                                  
  Purchase of property...............................................    (232,795)    (1,099,968)
  Proceeds from sale of equipment....................................      --             31,500
                                                                       ----------     ----------
         Net cash used by investing activities.......................    (232,795)    (1,068,468)
                                                                       ----------     ----------
CASH FLOWS FROM FINANCING ACTIVITIES                                                  
  Proceeds from debentures...........................................      --            573,500
  Proceeds from notes payable........................................      93,599        861,435
  Payment of notes payable...........................................    (555,799)      (517,271)
                                                                       ----------     ----------
         Net cash (used) provided by financing activities............    (462,200)       917,664
                                                                       ----------     ----------
DECREASE IN CASH AND CASH EQUIVALENTS................................     (66,850)      (407,921)
                                                                                      
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.........................     300,821        708,742
                                                                       ----------     ----------
CASH AND CASH EQUIVALENTS, END OF YEAR...............................  $  233,971     $  300,821
                                                                       ----------     ----------
                                                                       ----------     ----------
</TABLE>
 
------------------------
 
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
 
                                       28
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
 
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                          1996         1995
                                                                      ------------  ----------
<S>                                                                   <C>           <C>
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for income taxes..........................................  $    --       $   22,000
                                                                      ------------  ----------
                                                                      ------------  ----------
Cash paid for interest..............................................  $    338,357  $  289,661
                                                                      ------------  ----------
                                                                      ------------  ----------
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES
  Exchange of common and preferred stock for debt and other
    liabilities at fair value on date of exchange...................  $  1,744,083  $   76,723
                                                                      ------------  ----------
                                                                      ------------  ----------
  Common stock issued (270,000 shares) for compensation at an
    estimated fair value at the date of issue of....................  $     29,532  $   --
                                                                      ------------  ----------
                                                                      ------------  ----------
</TABLE>
 
------------------------
 
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
 
                                       29
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996
 
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(A) NATURE OF OPERATIONS
 
    UNICO, Inc. (the "Company") was incorporated on April 11, 1984 in the State
of Delaware. The Company's primary business, cooperative direct mail
advertising, involves the designing, printing, packaging, and distributing of
public relations and marketing materials and coupons for retailers who provide
goods and services. Sales are conducted through franchise operations. The
Company's customers are primarily located in the eastern, southeastern,
midwestern and western United States.
 
    (B) Basis of consolidation
 
    The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, United Coupon Corporation, Cal-Central
Marketing Corporation ( a dormant corporation) and Greenleaf Catalogue, Inc. (a
dormant corporation). All material intercompany accounts and transactions have
been eliminated in consolidation.
 
    (C) Use of accounting estimates
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
    (D) Property and equipment
 
    Property is recorded at cost and is depreciated over the estimated useful
lives of the individual assets, which are ten to fourteen years using the
straight-line method. Leasehold improvements are amortized over their estimated
useful life or the term of the lease, whichever is shorter.
 
    (E) Revenue recognition
 
    The Company recognizes revenue from the design, production and printing of
coupons on a percentage of completion basis as stages of the production process
are completed. Revenue from initial franchise fees are recognized when
substantially all services or conditions relating to the sale have been
substantially performed. Franchise support and other fees are recognized when
billed to the franchisee. Franchise fees recognized as revenue in 1996 includes
$174,000 of initial franchise fees. Amounts billed or collected in advance of
final delivery or shipment are reported as deferred revenue.

                                       30
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996
 
    (F) Inventory
 
    Inventory consists primarily of paper, envelopes and printing materials and
is stated at the lower of cost or market, with cost determined on the first-in,
first-out method.
 
    (G) Goodwill
 
    Goodwill represents the excess of the cost of businesses acquired over the 
fair value of the net assets acquired and is amortized over the estimated 
economic life of the intangible assets, but not longer than 40 years. It is 
management's policy to re-evaluate the estimated economic life of all 
intangible assets on an annual basis and adjust the carrying amount of such 
assets when circumstances so dictate. During 1996, the Company wrote-off 
goodwill that had a book value at the beginning of the year of $1,468,453 as a 
result of its re-evaluation. During 1996, the Company recorded amortization of 
goodwill of $6,853 and had accumulated amortization at December 31, 1996 of 
$66,604.
 
    (H) Net loss per share
 
    Net loss per common share is computed by dividing the net loss by the
weighted average number of shares outstanding during the period. Stock options
and convertible securities have not been considered as common stock equivalents
since their effect would be anti-dilutive.
 
    (I) Cash and cash equivalents
 
    The statements of cash flows are prepared on the basis of cash on hand and
in banks which are subject to withdrawal on demand. The Company considers all
investments that have an original maturity of three months or less to be cash
equivalents.
 
    The Company maintains cash balances which may exceed Federally insured
limits. The Company does not believe that this results in any significant credit
risk.
 
    (J) Income taxes
 
    THE COMPANY FILES A CONSOLIDATED FEDERAL INCOME TAX RETURN.  Deferred income
taxes are provided for temporary differences between the financial reporting and
tax bases of the Company's assets and liabilities and for all loss and tax
credit carryforwards, less valuation allowances as applicable.

                                       31
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (CONTINUED)

    (K) Fair value of financial instruments
 
    The fair value of the financial instruments included in the consolidated
financial statements, except as otherwise discussed in the notes to financial
statements, approximates their carrying value.
 
    (L) Impairment of long-lived assets
 
    It is the Company's policy to periodically evaluate the economic
recoverability of all of its long-lived assets. In accordance with that policy,
when the Company determines that an asset has been impaired, it recognizes the
loss on the basis of the discounted future cash flows expected from the asset.
 
    (M) Accounting pronouncements
 
    In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting No. 123, Accounting for Stock Based
                                           --------------------------
Compensation (SFAS No. 123). That Standard recommends the use of a fair market
------------
valuation method for recognizing compensation from stock options and similar
equity instruments. However, SFAS No. 123 permits the continued measurement of
compensation using the intrinsic value based method as prescribed by Accounting
Principle Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
                                ----------------------------------------
No. 25), provided that financial statements disclose the effect of applying SFAS
No. 123 had it been adopted. This pronouncement was effective for transactions
entered into in fiscal years that began after December 15, 1995. In that regard,
the Company has elected to continue to measure stock based compensation on the
basis of APB No. 25.
 
    In February 1997, the FASB issued SFAS No. 128, Earning per Share to
                                                    -----------------
supersede all prior standards issued concerning earnings per share calculations
and disclosures. The new Standard is effective for financial statements of
interim and annual periods ending after December 15, 1997, with earlier
application not permitted. The Company is currently evaluating the effect of
this pronouncement on its calculations of loss per share for 1996 and 1995 and
believes that had it been applied to those periods, that the effect on the loss
per share as herein reported would not have been significant.

    (N) Reclassifications
 
    Certain amounts in the 1995 financial statements as reported herein have
been reclassified to conform with the 1996 presentation. This reclassification
had no effect on the net loss, total current assets or total current liabilities
as previously reported.
 

                                       32
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 2--NOTES PAYABLE
 
    Notes payable at December 31, 1996 consisted of the following:
 
<TABLE>
<S>                                                                                         <C> 

       BancFirst--consolidated renewal promissory note dated August 15, 1996 in 
         the face amount of $721,425 with interest at the prime rate, as defined, 
         plus 1%. The note is payable in monthly installments of $22,500 through 
         January 15, 1997, and $27,500 through December 15, 1998, including 
         interest, with the entire unpaid balance due on December 31, 1998. The 
         note is collateralized by substantially all assets of the Company.                  $ 643,022

       Duncan-Smith Company--eighteen notes due in October 1998 bearing interest 
         at 12%. This note has been subordinated as to payment to the BancFirst 
         note.                                                                                 460,000

       Humphrey Group--four notes for $25,000, one note for $50,000 and one note 
         for $150,000 that bear interest at 12%, and due in quarterly installments 
         of principal commencing March 31, 1997 of $25,000, with a final payment 
         of $225,000 on December 31, 1997. This note has been subordinated as to 
         payment to the BancFirst note.                                                        300,000

       CIT Group--three installment notes bearing interest at rates ranging from 
         8.3% to 10.3% and requiring monthly payments, in aggregate, of $12,867 
         including interest. One note with a balance at December 31, 1996 of 
         approximately $30,000 is scheduled to be paid 1997 with the two remaining 
         notes scheduled for final payment in 1999 and 2000. The proceeds of these 
         loans were used to purchase specific equipment and are collateralized by 
         the equipment.                                                                        332,397

     Renaissance Capital Partners, Ltd. -note dated August 13, 1996 requiring 
         interest at 9.35% payable monthly, with principal due December 31, 1998. 
         This note is subordinate in payment to the BancFirst note described 
         above. Renaissance Capital Partners, Inc. are the holders of all of the 
         Company's Series C Preferred Stock, and a principal of Renaissance is 
         also a common stockholder and was a member of the Board of Directors of 
         the Company for a portion of 1996.                                                     50,000

</TABLE>
 

                                       33
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 2--NOTES PAYABLE (CONTINUED)
 
 
<TABLE>
<S>                                                               <C>
Unsecured note to an individual bearing interest at 15% and due  
  July 7, 1996.                                                   $    30,000
Other--two installment agreements for the purchase or lease of
  specific equipment payable in monthly installments of $7,376,
  including interest.One agreement with a balance at December
  31, 1996 of $25,518 requires final payment in 1997, with the
  remaining loan's final payment due in 1999.                          44,117
                                                                  -----------
Total notes payable                                                 1,859,536
Less:Current portion                                                  749,261
                                                                  -----------
Long-term portion                                                  $1,111,275
                                                                  -----------
                                                                  -----------
</TABLE>
 
    Scheduled future maturities of notes payable at December 31, 1996, are as
follows:
 
YEAR ENDING  
DECEMBER 31   AMOUNT
-----------  ------------
1997         $    749,261
1998              973,556
1999               99,290
2000               37,429
             ------------
  Total      $  1,859,536
             ------------
             ------------
 
    Subsequent to December 31, 1996, Renaissance Capital Partners, Ltd. loaned
the Company an additional $200,000 under terms similar to those described above.
 
NOTE 3--LEASES
 
    The Company leases its main office and printing facility under an agreement
last amended by restatement in September 1994. The lease has a term of 10 years
and requires payment of base rent which includes scheduled rent increases plus
increases in the annual operating costs and real estate taxes applicable to the
property. The lease provides for an eighteen month abatement of rent during the
initial period for a portion of the space leased. The Company has an option to
renew the lease for a five year period at the end of the base term at the then
current fair rental value of the property. The minimum payments required under
the lease, which takes into account the rent abatement and scheduled increases
in base rent, are recognized as expense on a straight-line basis over the life
of the lease, with a liability recognized in the balance sheet to the extent
that expense to date exceeds the minimum lease payments to date.
 

                                       34
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 3--LEASES (CONTINUED)

SCHEDULED FUTURE MINIMUM PAYMENTS REQUIRED UNDER THE LEASE ARE AS FOLLOWS:
 
YEAR ENDING  
DECEMBER 31   AMOUNT
------------  ------
1997          $    351,469
1998               383,799
1999               415,088
2000               444,290
2001               474,534
Thereafter       1,804,275
              ------------
Total         $  3,873,455
              ------------
              ------------
 
    Rent expense for the years ended December 31, 1996 and 1995 was $652,659 and
$451,821, respectively.
 
NOTE 4--PROFIT SHARING PLAN
 
    The Company has a defined contribution plan that is qualified under 401(k)
of the Internal Revenue Code. Employees may elect to contribute up to 15% of
their salary before income taxes subject to an annual limit provided for in the
Code, which was $9,500 for 1996. The Company matches employee contributions up
to 3% of gross wages. All employees who are at least 18 years of age are
eligible to participate in the plan. Contributions to the plan by the Company
were $27,578 and $33,619 in 1996 and 1995, respectively.
 
NOTE 5--REDEEMABLE PREFERRED STOCK
 
    In the Company's 1993 acquisition of Cal-Central Marketing Corporation
(CCMC), 600 shares of redeemable preferred stock were issued. These shares are
redeemable at $1,000 per share at the option of the holder after the attainment
of certain profit performance tests by CCMC. On April 20, 1995, holders
exchanged 320 of these shares for 355,556 shares of common stock at an exchange
rate of $.90 per common share. The profit performance tests of CCMC were never
achieved, and in 1995 CCMC's operations were discontinued except for fulfillment
of work in process. This stock was pledged as collateral for loans totaling
$280,000 by two former officers of CCMC (Note 12).
 
                                       35
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996



NOTE 6--SERIES C PREFERRED STOCK
 
    Prior to 1996, the Company had issued a 12.5% Convertible Debenture to 
Renaissance Capital Partners, Ltd. in the face amount of $1,250,000. During 
1995, Renaissance and Duncan-Smith Investment Co. loaned the Company $298,500 
under several notes that were to be convertible into common stock of the 
Company. On July 12, 1996, the Company, Renaissance and Duncan Smith entered 
into a loan conversion agreement whereby the debenture and notes plus accrued 
interest were exchanged for 1,712,739 shares of the Company's newly authorized 
Series C Preferred Stock. Each share of the Series C Preferred Stock is 
convertible into four shares of the Company's common stock at any time at the 
option of the holders. The agreement further provides that if and whenever any 
additional shares of common stock are issued by the Company for a net 
consideration of less than $.25 per share then in each such case the 
conversion price shall be reduced to the net consideration received per share 
and the number of shares issuable to the holders of the Series C Preferred 
Stock shall be proportionality increased. In addition, the agreement provides 
for adjustment of the conversion ratio in the event the number of shares of 
common stock outstanding is changed as the result of a subdivision or 
combination in manner of the common stock or the making of a stock dividend.
 
NOTE 7--CONVERSION OF DEBT TO COMMON STOCK
 
    Effective September 30, 1996, the holder of a debenture issued by the
Company prior to 1996 agreed to exchange the debenture and all accrued interest
for 323,214 shares of the Company's common stock. The Company recognized a gain
on the conversion of $45,250 representing the differences in the fair value of
the stock at the date of the exchange and the amount of the debt. The gain is
included in income in the Statement of Operations as part of the revenue from
extinguishment of current obligations.
 
    During 1995, the Company entered into agreements with two vendors of the
Company and two note holders whereby the Company issued 221,018 shares of its
common stock in exchange for these debts which totaled $198,917. These exchanges
were recorded at the estimated fair value of the stock at the date of the
exchanges and resulted in a gain to the Company of $121,500, which is included
in revenue from extinguishment of current obligations in the Statement of
Operations.
 
NOTE 8--COMMON STOCK ISSUED FOR COMPENSATION
 
    Pursuant to an action by the Board of Directors, the Company issued 20,000 
shares of its common stock to its former Chief Financial Officer as 
compensation. The estimated value of the stock at the date of issue was 
$2,188, which is recognized as a general and administrative expense in the 
Statement of Operations.
 
                                       36
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 8--COMMON STOCK ISSUED FOR COMPENSATION (CONTINUED)

    Effective April 1, 1996, the Board of Directors adopted a resolution to
issue 250,000 shares of the Company's common stock to the newly appointed
President and Chief Executive Officer of the Company as compensation for his
services during the initial two year term of his appointment. Under the
resolution, the shares shall be subject to forfeiture of a ratable amount of
such shares in the event the officer does not serve the full two years of the
initial term. The Board further resolved to issue 100,000 shares of the
Company's common stock for each successive one year term which the officer is so
appointed by the Board. The 250,000 shares issued were estimated to have a fair
value of $27,344 at the date of the award and are being recognized over the two
year period. As a result, $9,114 has been recognized as an expense in 1996, and
$18,230 is reported as deferred compensation in the Statement of Stockholders'
Equity (Deficiency).
 
NOTE 9--STOCK PURCHASE WARRANTS
 
    In connection with a financing arrangement entered into in October 1993 and
January 1994, the Company issued 230,000 common stock purchase warrants to the
lenders, known as the D.S. Warrants, and 30,000 warrants to Duncan-Smith Co.,
the investment banker that arranged the private placement. The warrants entitle
the holder to purchase one share of common stock per warrant at prices which
range from $.90 to $1.40. The warrants expire in 1998.
 
    In February 1994, the Company issued warrants to the owner of Duncan-Smith
Co. to purchase 25,000 shares of common stock at a price of $1.25 per share.
These warrants are exercisable over a five year period from the date granted.
These warrants were issued in connection with a financing arrangement.
 
    In June 1995, in connection with a lending arrangement, the Company issued
warrants to purchase 450,000 shares of common stock at $.90 per share. These
warrants expire if not exercised on December 31, 2000.
 
    Certain of the above mentioned warrants contain anti-dilution provisions and
require the Company to register the warrants under certain conditions. The
Company has reserved 730,000 shares of its unissued common stock for exercise of
these warrants.
 
                                       37
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 10--STOCK OPTION PLAN
 
    The Company has reserved 1,000,000 shares of its common stock for issuance
to directors, key employees, franchisees, and others contractually related to
the Company, pursuant to an Omnibus Equity Compensation Plan adopted by the
Company in 1989. The Plan provides for the granting of both incentive and
non-qualified stock options. The exercise price of the options is not less than
the market value of the stock on the date of grant. Options granted become
exercisable at the date of grant or at such other time as the compensation
committee may determine, and expire in a maximum of five years. The following
table reflects a summary of stock option activity for 1996 and 1995.
 
<TABLE>
<CAPTION>
                                                                            1996       1995
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
Shares available for grant at beginning of year.........................    331,671    213,544
Options granted during the year.........................................     --        (88,610)
Options forfeited or cancelled..........................................     91,092    206,737
                                                                          ---------  ---------
Shares available forgrant at the end of the year........................    422,743    331,671
                                                                          ---------  ---------
                                                                          ---------  ---------
Shares under option at the end of the year at option prices of $.25 to
  $1.16.................................................................    535,970    627,042
                                                                          ---------  ---------
                                                                          ---------  ---------
Options exercised since inception of the plan...........................     41,287     41,287
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
NOTE 11--INCOME TAXES
 
    The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"), which requires an asset and liability approach to
accounting for income taxes. Under SFAS 109, deferred tax assets or liabilities
are computed on the difference between the financial statement and income tax
basis of assets and liabilities ("temporary differences") using the enacted
marginal tax rate. Deferred income tax expenses or benefits are based on the
changes in the deferred tax asset or liability from period to period.
 
    The Company has a deferred tax asset at December 31, 1996 of approximately
$2,100,000 that is principally the result of income tax net operating loss
carryforwards of approximately $5,200,000. Because of the uncertainty that the
Company will be able to utilize these losses, which expire in years 2010 and
2011, a valuation allowance for the full amount of the deferred tax asset has
been provided at December 31, 1996. Accordingly, there is no income tax
provision or benefit for 1996.
 
                                       38
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996


NOTE 11--INCOME TAXES (CONTINUED)
 
    A reconciliation of the 1995 provision for income taxes to the statutory
rates is as follows:
 
<TABLE>
<S>                                                                    <C>
Statutory rate.......................................................      (34.0)
Current year loss                                                           34.0
Change in valuation allowance on deferred tax asset                         14.3
                                                                       ---------
Effective rate.......................................................       14.3
                                                                       ---------
                                                                       ---------
</TABLE>
 
NOTE 12--LOANS TO OFFICERS
 
    At the time the Company acquired its Cal-Central Marketing Corporation 
subsidiary in October 1993, the Company loaned two of the officers of CCMC 
$280,000 on notes that matured in October 1995. The Company's 280 shares of 
Redeemable Preferred Stock were pledged as collateral for these loans. During 
1996, the Company determined that collectibility of these loans was doubtful 
and provided an allowance for the full amount of the loans. This loss has been 
charged to general and administrative expense in the Statement of Operations.
 
NOTE 13--SUBSIDIARY RESTRUCTURING
 
    The Company acquired Cal-Central Marketing Corporation as a wholly owned
Subsidiary on October 27, 1993. Operating profitability and cash flow for the
subsidiary were below management's expectations and anticipated potential since
the acquisition. During the third quarter of 1995, management determined that it
was in the best interest of shareholders and the Company to close the Fort
Lauderdale, Florida, production facility and consolidate all art and printing
functions for Cal-Central into the Company's newly expended facility in
Springfield, Virginia. This transaction was accomplished during December 1995,
and a restructuring charge comprised of the following items was recorded during
1995 to reflect the costs associated with the restructuring:
 
<TABLE>
<S>                                                                 <C>
Leasehold improvement forfeiture..................................  $  59,426
Write down of plant and equipment.................................    266,472
Deposits forfeiture...............................................     34,110
Employee severance................................................     20,000
Distributor cancellations.........................................     30,000
Legal, accounting, and moving costs...............................     32,435
Accounts receivable impairment....................................    330,000
                                                                    ---------
Total restructuring expense.......................................  $ 772,443
                                                                    ---------
                                                                    ---------
</TABLE>
 
                                       39
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 13--SUBSIDIARY RESTRUCTURING (CONTINUED)
 
    Additionally, as a result of the restructuring plan that began in 1995
whereby the Company closed Cal-Central's Fort Lauderdale, Florida production
facility, Cal-Central entered into a settlement agreement with its former
landlord to extinguish its long term lease agreement in exchange for a $48,000
early termination fee. This amount was recorded as an expense in 1995.
 
NOTE 14--FOURTH QUARTER ADJUSTMENTS
 
    During the first and second quarters of 1996, the Company continued the 
corporate restructuring plan it initiated in 1995 by closing its headquarters 
office in Oklahoma City, Oklahoma, and transferring these activities to its 
expanded and modernized Springfield, Virginia facility. These actions, 
designed to realize long-term benefits for the Company, resulted in a one-time 
charge of $224,257 in costs in 1996, or $.03 per share. In furtherance of the 
restructuring plan, management determined that it was in the best interests of 
the shareholders and the Company to discontinue the minimal remaining 
operations of its Cal-Central subsidiary. As a result, the Company determined 
that previously capitalized and unamortized goodwill associated with the 
acquisition of Cal-Central should be written-off concurrent with the 
elimination of that business segment. That adjustment, in the amount of 
$1,468,453 or $.18 per share, was also recorded in the fourth quarter of 1996.
 
NOTE 15--CLOSURE OF CAL-CENTRAL MARKETING CORPORATION
 
    As discussed in Notes 13 and 14, the Company has closed its Cal-Central
operations in Florida and that subsidiary has ceased all activities. In that
regard, Cal-Central has recorded liabilities of approximately $400,000, not
otherwise guaranteed or co-obligated by the Company. The Company is evaluating
when it can recognize the cancellation of these debts as income.
 
                                       40
<PAGE>
                          UNICO, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

NOTE 16--FINANCIAL CONDITION
 
    The Company has a deficiency in stockholder's equity at December 31, 1996 
of approximately $500,000 and a deficit in working capital of approximately 
$1,800,000. These conditions primarily resulted from nonrecurring expenses 
relating to the write-off of $1,468,453 of goodwill associated with the 
Cal-Central marketing subsidiary; and general and administrative expenses of 
$956,913 associated with closed locations and other one time charges; a 
$280,000 loss on uncollectible loans to former Cal-Central officers; one-time 
costs associated with the fulfillment of Cal-Central customer orders of 
approximately $400,000; one-time costs associated with the closing of the 
Oklahoma City headquarters office and transfer of those activities to the 
Springfield, Virginia facility of $224,257; and certain other one-time costs 
of approximately $236,000. It is management's belief that, absent these 
burdens, the Company is now in a position to operate profitably and generate 
funds through operations that will enable it to meet its obligations as they 
come due. The ability to meet its obligations was further enhanced by the 
conversion of approximately $1,700,000 of debt into equity during 1996. 
However, the ability to continue operating during 1997 is dependent upon the 
forbearance of certain creditors of the Company and the availability of 
short-term credit on an as-needed basis. While management believes it can 
work through these issues, there can be no assurance it will be successful, 
in which event, the Company may not be able to continue as a going concern.
 
                                       41