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UNIQUE UNDERWRITERS, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

July 2, 2014

The following discussion should be read in conjunction with our financial statements and the notes thereto.

Forward-Looking Statements



This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks," and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.

Use of Certain Defined Terms

Except as otherwise indicated by the context, references in this report to " Unique Underwriters", "we," "us," or "our" , "UUI" and the "Company" are references to the business of Unique Underwriters, Inc.

Use of GAAP Financial Measures

We use GAAP financial measures in the section of this quarterly report captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations." All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.

Overview



This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.

General



Unique Underwriters, Inc. is a national Independent Marketing Organization that focuses exclusively on the sale of mortgage protection insurance policies, final expense insurance policies, annuities and life insurance policies. The Company provides sales and marketing assistance for its agents by utilizing direct-mail lead programs, insurance sales training and agency-building opportunities. The Company rents quality leads to its agents that allow the agent to generate sales of mortgage protection insurance policies, final expense insurance policies, annuities and life insurance policies. UUI generates revenue from three (3) sources: commissions from insurance carriers as a result of policies sold by our network of independent agents, renting leads to our network of independent agents, and the sales of annual membership packages to our agents that provide various levels of access to leads, training, personalized website, mentoring, customer support, company events and conventions.

During the last quarter, current management continued its reduction of expenses to insure the continued viability of the Company. Although future cash flow is always difficult to predict, by eliminating expenses and increasing our marketing, lead generation and production efforts, management continues to believe that profitability should improve during the coming year.

(12) Table of Contents Results of Operations



Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Revenues



We had revenue of $29,676 and $304,333 for the three and nine months ended March 31, 2014, respectively, of which $29,676 from the commissions due to sales of insurance products, including Mortgage life insurance, Funeral expense insurance and annuities, and $0 from the sales of leads during the three months ended March 31, 2014, and $127,275 from the commissions due to sales of insurance products, including Mortgage life insurance, Funeral expense insurance and annuities, and $177,058 from the sales of leads during the nine months ended March 31, 2014. Comparatively, We had revenue of $345,421 and $1,277,001 for the three and nine months ended March 31, 2013, respectively, of which $174,875 from the commissions due to sales of insurance products, including Mortgage life insurance, Funeral expense insurance and annuities, and $170,546 from the sales of leads during the three months ended March 31, 2013, and $790,498 from the commissions due to sales of insurance products, including Mortgage life insurance, Funeral expense insurance and annuities, and $486,503 from the sales of leads during the nine months ended March 31, 2013. The decrease by $315,745 and $931,580 during the three and nine months ended March 31, 2014, respectively, was due in large part to limited capital resources which caused the number of mailings to be decreased. Less mailings going out meant fewer leads coming in which in turn resulted in less income from the sale of leads and less production from the sale of insurance policies.

(13) Table of Contents Cost of Sales



The cost of sales was $1,353, or 4.6% of revenues, and $157,246, or 51.7% of revenue, for the three and nine months ended March 31, 2014, respectively. Comparatively, the cost of sales was $133,474, or 38.64% of revenues, and $466,824, or 36.56% of revenue, for the three and nine months ended March 31, 2013, respectively.

Cost of sales includes the costs directly attributable to revenue recognition, such as marketing and leads generation costs, leads purchased costs, and payments to agents, which was $43,675, $41,947, and $71,534 during the nine months ended March 31, 2014, respectively, and $164,064, $84,093, and $218,667 during the nine months ended March 31, 2013, respectively.

We recognized cost of sales in the same manner in conjunction with revenue recognition, when the costs were incurred. Contract labor expenses were not directly related to the generation of sales, rather were involved in the selling, general and administrative expenses of the business.

Expenses



We had operating expenses of $39,086 and $227,307 during the three and nine months ended March 31, 2014, respectively, compared to operating expenses of $229,900 and $865,996 during the three and nine months ended March 31, 2013, respectively. The decrease by $190,814 during the three months ended March 31, 2014 was due primarily to the decrease in consulting fees, contract labor, professional fee, and rent. The decrease by $638,689 during the nine months ended March 31, 2014 was due primarily to the decrease in consulting fees, contract labor and rent.

Expenses included in other administrative expenses in the accompanying statements of operations are miscellaneous and sundry expenses pertaining to office expenses and office supplies that are immaterial to be presented separately on the face of the statements of operations.

Liquidity and Capital Resources

Operating Activities

Net cash used in operating activities was $77,048 and $68,839 during the nine months ended March 31, 2014 and 2013, respectively. Negative cash flow from operations during the nine months ended March 31, 2014 was due to the net loss of $126,241, and offset by the stock issued for services rendered of $10,800, the amortization of debt discount of $35,265, expense of deferred financing fee of $2,500, the depreciation of $484, and increase in accrued interest of $2,730, the decrease in the accounts payable of $14,053, the increase of accrued expense of $5,110, and the write off rent deposit of $4,578. Negative cash flows from operation during the nine months ended March 31, 2013 was due to the net loss of $55,694, the increase in accounts receivable by $4,243, plus the decrease in accounts payable in amount of $30,375, offset by the increase in accrued payroll taxes by $25,893.

Investing Activities

Net cash used in investing activities was $1,315 for the nine months ended March 31, 2014 due primarily to the purchase of computers. Comparatively, net cash used in investing activities was $3,371 for the nine months ended March 31, 2013 due primarily to the purchase of furniture.

(14) Table of Contents Financing Activities



Net cash provided by financing activities was $68,036 for the nine months ended March 31, 2014 due to loan to shareholders, proceeds from advance from third party, issuance of note payable, and repayment of related party loans and advance from third party. Comparatively, Net cash provided by financing activities was $53,055 for the nine months ended March 31, 2013 due to proceeds from related party loans.

Critical Accounting Policies



Revenue Recognition - The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when services are realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

(i) persuasive evidence of an arrangement exists,

(ii) the services have been rendered and all required milestones achieved,

(iii) the sales price is fixed or determinable, and

(iv) collectability is reasonably assured.

The approval from the Company's insurance carriers, which occurs upon receipt of our commission check and the policy, is reviewed online, and related completion of services to the client is an event that triggers revenue recognition.

No revenue is recognized prior to receipt of the commission check.

The lead sales revenue is recognized when one of our agents submits an order to rent leads and simultaneously their credit card is processed and the leads are distributed to them. The Company recognizes revenue when the agent submits an order to rent the leads for 30 days. After thirty days the leads become available for rental to another agent. Leads may be rented multiple times at decreasing rates due to the lead's age and number of times it has been rented.

Membership revenue recognition occurs when an agent registers for one of the Company's websites online and submits their payment information; the agent must give 30 days notice of request to cancel their membership. The Company recognizes revenue related to our various membership plans as income on a straight-line basis over the length of membership period.

The customer deposit is strictly related to Executive Membership Package. After submitting a $500 deposit, an Executive Member can request that the Company directly mail letters to new home owners and/or senior citizens to generate new direct mail response leads. The Company refunds these deposits back to Executive Members when they no longer request that the Company directly mail letters to new home owners and/or senior citizens to generate new direct mail response leads. However, the Executive Members may also apply these deposits towards the leads sale or membership fees in the future. After the Executive Member cancels their direct mail service, they have the choice to use these deposits for additional leads, request that the deposits be applied towards membership, or ask for refunds. If deposits are used for additional leads, revenue is recognized when services are realized or realizable and earned. If deposits are used for membership fees, revenue is recognized over the length of membership period. For the nine months ended March 31, 2014 and 2013, the Company did not issue any refunds to Executive Members.

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Cost of Sales - The Company's policy is to recognize cost of sales in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of sales includes the costs directly attributable to revenue recognition and include marketing and leads generation costs, leads purchased costs and agent expenses. Selling, general and administrative expenses are charged to expense as incurred.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) mailing expenses; (ii) advertisement expenses; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and potentially debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or debt securities could potentially result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.

We had cash of $262 on hand as of March 31, 2014. The accumulated deficit as of March 31, 2014 was $11,484,067.

The Company's current cash on hand is not sufficient to meet our working capital requirements for the next twelve month period. Completion of our plan of operations is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. Even without adequate revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we may require financing to achieve operation and growth goals and to meet our working capital requirements. We will not receive any proceeds from the sale of common stock in this offering. If we are able to conduct an equity offering, there will be dilution to the current stockholders of the Company and to the investors that acquire shares in the offering; and if we are able to conduct a debt offering, we will likely be subject to various covenants on our business operations and may be required to make payments during the term of the securities.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Going Concern



The Company has suffered recurring losses from operations since inception and has a negative working capital. In addition, the Company has yet to generate an internal cash flow from its business operations. These factors raise substantial doubt as to the ability of the Company to continue as a going concern.

Management's plans with regard to these matters encompass the following actions: 1) obtain funding from new investors to alleviate the Company's working deficiency, and 2) implement a plan to generate sales. The Company's continued existence is dependent upon its ability to resolve it liquidity problems and increase profitability in its current business operations. However, the outcome of management's plans cannot be ascertained with any degree of certainty. The accompanying financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

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