UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended June 30, 2004

OR

For the transition period from                      to                     

Commission file number: 0-26096

The UniMark Group, Inc.

Registrant’s telephone number: (972) 518-1155

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 o   No þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
Yes o    No þ

On March 29, 2005, 21,044,828 shares of common stock, par value $0.01 per share were outstanding.

INDEX

2

Part I            Financial Information

Item 1. Condensed Consolidated Financial Statements (Unaudited)

THE UNIMARK GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share amounts)

See accompanying notes.

3

THE UNIMARK GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

See accompanying notes.

4

THE UNIMARK GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

See accompanying notes.

5

THE UNIMARK GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2004

NOTE 1 — Significant Accounting Policies

     Description of Business: The UniMark Group, Inc., a Texas corporation, (“we,” “us,” “our” and the “company”) is a producer and marketer of high quality branded fruit with substantially all of its operations in Mexico. The company was organized in 1992 to combine the packaged fruit operations of a Mexican citrus and tropical fruit processor, which commenced operations in 1974, with UniMark Foods, Inc. (“UniMark Foods”) a company that marketed and distributed citrus products in the United States. We conduct substantially all of our operations through our wholly-owned operating subsidiaries. In Mexico, our operating subsidiaries include: Industrias Citricolas de Montemorelos, S.A. de C.V. (“ICMOSA”) and Grupo Industrial Santa Engracia, S.A. de C.V. (“GISE”). In the United States, our subsidiary is UniMark Foods. On August 30, 2004, the company sold its packaged fruit business segment, which included the sale of all outstanding shares of the company’s Mexican subsidiary, ICMOSA (“Del Monte sale”).

     Historically, we have, for operating and financial reporting purposes, classified our business into two distinct business segments: packaged fruit and juice and oil. Upon the divestiture of our juice and oil division’s remaining assets and the sale of our packaged fruit business segment, our business for operating and financial reporting purposes now consists solely of our fresh lemon business (agricultural segment). We now conduct substantially all of our operations through our Mexican operating subsidiary, GISE, and our newly formed Delaware subsidiary, Sierra Foods, Inc. (“Sierra Foods”).

     Within our packaged fruit business segment, we focused on niche citrus and tropical fruit products including chilled, frozen and canned cut fruits and other specialty food ingredients. The packaged fruit business segment processed and packaged our products at three processing plants in Mexico, which were located in major fruit growing regions. We utilized independent food brokers to sell our foodservice and industrial products in the United States. Sales to our Japanese consumers were facilitated through Japanese trading companies.

     On August 31, 2000, we sold to Del Monte Foods Company (“Del Monte”) all of our interests in our worldwide rights to the Sunfreshâ, Fruits of Four Seasonsâ and Flavor Freshä brands, our McAllen, Texas distribution facility, including certain inventory associated with our retail and wholesale club business, and other property and equipment. Separately, we entered into a 5-year supply agreement with Del Monte under which we were contracted to produce chilled and canned citrus products for Del Monte’s retail and wholesale club markets. Under the terms of the agreement, Del Monte agreed to purchase minimum quantities of our citrus products at agreed upon prices for sale in the United States. We also retained the rights to our foodservice, industrial and Japanese business and were granted by Del Monte a 5-year license for the rights to the Sunfreshâ, Fruits of Four Seasonsâ and Flavor Freshä brands for specific areas, including Europe, Asia, the Pacific Rim and Mexico.

     On August 30, 2004, we sold our packaged fruit business segment to Del Monte in a transaction valued at approximately $11.0 million. The transaction included the sale of all outstanding shares of our Mexican subsidiary, ICMOSA. In connection with the transaction, we received at closing, cash of approximately $350,000 and an additional $600,000, less recording expenses of approximately $50,000, in November 2004. As part of the transaction, approximately $7.0 million of defaulted ICMOSA bank debt was transferred and retired, $3.0 million of other liabilities were transferred and the 5-year supply contract and trademark license agreements were terminated.

     Due to the continued unfavorable and volatile worldwide market prices of frozen concentrate orange juice (“FCOJ”) that existed over the past several years and negative long-term prospects for the FCOJ market, we explored various strategic alternatives for our juice and oil business segment. In March 2003, we received formal offers from The Coca-Cola Export Corporation, Mexico Branch (“Coca-Cola”) to purchase our Victoria juice and oil plant and rescind certain contract rights for the growing and processing of lemons for aggregate cash payments by Coca-Cola of $16.0 million (“the Coca-Cola transaction”). In

6

April 2003, we consummated the portion of the Coca-Cola transaction pertaining to the rescission of all contract rights and obligations for the growing and processing of lemons for an aggregate cash payment of $12.5 million, plus value added taxes. Effective November 2003 we closed the sale of our Victoria juice and oil plant, for a cash payment of $3.5 million, plus value added taxes. In this regard, we retained the approximately 7,100 acres of lemon groves, which included all the land, irrigation systems and related agricultural equipment. As part of the sale agreement we are contractually restricted from industrially processing our lemons and are limited to marketing our lemons solely as fresh fruit until July 30, 2007. In June 2003, we sold our Poza Rica juice plant to an unaffiliated third party for $1.0 million plus value added taxes of $120,000. As a result of the divestiture of all of our juice and oil processing facilities and related equipment, we no longer have a juice and oil business segment. Our new agricultural business segment consists of our lemon groves.

     After exploring strategic alternatives, including the sale of the lemon groves, in May 2004, we adopted a new business strategy that includes the growing and marketing of fresh lemons. As such, our current business consists of the growing and marketing of our high quality branded fresh lemons.

     Interim Financial Statements: The condensed consolidated financial statements at June 30, 2004, and for the three month and six month periods ended June 30, 2003 and 2004, are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed consolidated statements of operations and cash flows for the 2003 periods differ from those previously reported due to the classification of our juice and oil business segment as discontinued operations in 2003. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and six months ended June 30, 2004 are not necessarily indicative of future financial results.

     Year End Balance Sheet: The condensed consolidated balance sheet at December 31, 2003 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

     Pending Adoption of Recent Accounting Pronouncements:

     Recently issued accounting pronouncements that could have an impact on our company are discussed below.

     In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs – an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material. Paragraph 5 of Accounting Research Bulletin (“ARB”) 43, Chapter 4 “Inventory Pricing,” previously stated that “...under certain circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current-period charges....” SFAS No. 151 requires that those items be recognized as current-period charges regardless of whether they meet the criteria of “so abnormal.” In addition, SFAS No. 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 is not expected to have any impact material on our condensed consolidated financial position or results of operations.

     In December 2004, the FASB issued FASB Staff Position No. FAS 109-1, “Application of FSAB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) and FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”). FSP 109-1 clarifies the guidance in SFAS No. 109, “Accounting for Income Taxes” that applies to the new deduction for qualified domestic production

7

activities under the American Jobs Creation Act of 2004 (the “Act”). FSP 109-1 clarifies that the deduction should be accounted for as a special deduction under SFAS No. 109 not as a tax-rate reduction, because the deduction is contingent on performing activities identified in the Act. As a result, companies qualifying for the special deduction will not have a one-time adjustment of deferred tax assets and liabilities in the period the Act is enacted. FSP 109-2 addresses the effect of the Act’s one-time deduction for qualifying repatriations of foreign earnings. FSP 109-2 allows additional time for companies to determine whether any foreign earnings will be repatriated under the Act’s one-time deduction for repatriated earnings and how the Act affects whether undistributed earnings continue to qualify for SFAS No. 109’s exception from recognizing deferred tax liabilities. FSP 109-1 and FSP 109-2 both became effective upon issuance. The adoption of FAS 109-1 did not have a material impact on our condensed consolidated financial position or results of operations.

     In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”, which requires all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value and to recognize cost over the vesting period. SFAS 123R is effective for public companies (except small business issuers as defined in SEC Regulation S-B) for interim or annual periods beginning after June 15, 2005. Retroactive application of the requirements of SFAS No. 123, “Accounting for Stock-Based Compensation,” not SFAS No. 123R, to the beginning of the fiscal year that includes the effective date would be permitted, but is not required. The adoption of SFAS No. 123R is not expected to have a significant impact on our condensed consolidated financial position or cash flow, but could impact our future condensed consolidated results of operations depending on our stock price, share-based payments granted in future periods or future modifications to existing share-based plans.

     In December 2004, the FASB issued SFAS No. 153, “Accounting for Nonmonetary Transactions,” an amendment to SFAS No. 29, “Accounting for Nonmentary Transactions.” SFAS No. 153 eliminates certain differences in the guidance of SFAS No. 29 as compared to the guidance contained in standards issued by the International Accounting Standards Board. The amendment to SFAS No. 29 eliminates the fair value exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Such an exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary assets exchanges occurring in periods beginning after December 16, 2004. The adoption of SFAS No. 153 is not expected to have a material impact, if any, on our condensed consolidated financial position or results of operations.

NOTE 2 — Liquidity and Capital Resources

     Financial Position:

     At June 30, 2004, our cash and cash equivalents totaled $8.7 million, a decrease of $1.9 million from year-end 2003. During the first six months of 2004, our operating activities from continuing operations used cash of $1.9 million primarily from our net loss of $2.6 million, offset by non-cash charges associated with depreciation expense and disposal of property and equipment aggregating $829,000. Investing activities from continuing operations used cash of $291,000, primarily for the purchase of property and equipment. Net cash used in financing activities from continuing operations of $268,000 was the result of a net decrease in our short and long-term debt. Working capital at June 30, 2004 amounted to $1.4 million, a decrease of $2.0 million from our December 31, 2003 amount of $3.4 million and was due primarily from our loss from continuing operations.

     Recent Transactions:

     In April 2003, we consummated the portion of the Coca-Cola transaction pertaining to the rescission of all contract rights and obligations for the growing and processing of lemons for an aggregate cash payment of $12.5 million, plus value added taxes. Effective November 17, 2003, we closed the sale of our Victoria juice and oil plant to Coca-Cola, for a cash payment of $3.5 million, plus value added taxes. In June 2003, we sold our Poza Rica juice plant to an unaffiliated third party for $1.0 million, plus value added taxes of

8

$120,000. As of December 31, 2003, current assets of discontinued operations of $598,000 represented the remaining balance owed under the sale. On June 30, 2004, we received final payment of $541,500 in full satisfaction from the Poza Rica sale.

     On August 4, 2004, the company and FOCIR entered into a new agreement that restructured its debt into a $47.0 million Mexico peso (approximately U.S. $4.2 million) secured term loan. Under the terms of the restructured agreement, FOCIR agreed to forgive all accreted interest (approximately $2.0 million which will be recognized as income in our third quarter of 2004) and changed the repayment terms to a seven-year note payable in increasing amounts with the first annual principal payment due in October 2005 with interest payable quarterly at the rate of 2.5% plus Certificados de la Testorenia de la Federation (“CETES”), the Mexican Treasury Bill rate which was approximately 8.3% at the restructuring date. The FOCIR debt is secured by a first lien on our El Cielo lemon grove.

     On August 30, 2004, we sold our packaged fruit business segment to Del Monte in a transaction valued at approximately $11.0 million. The transaction included the sale of all outstanding shares of our Mexican subsidiary, ICMOSA. In connection with the transaction, we received at closing cash of approximately $350,000 and an additional $600,000, less recording expenses of approximately $50,000, in November 2004. As part of the transaction, approximately $7.0 million of defaulted ICMOSA bank debt was transferred and retired, $3.0 million of other liabilities were transferred and the 5-year supply contract and trademark license agreements were terminated.

NOTE 3 — Short and Long-term Debt

Short-term debt:

     As of December 31, 2003 and June 30, 2004, our Mexican subsidiary, ICMOSA, owed $3.5 million under a secured pre-export U.S dollar financing loan agreement with Banco Nacional de Comercio Exterior, S.N.C. (“Bancomext.”) The outstanding balance, which consisted of six separate notes that became due in various amounts and dates during 2002, were not renewed by Bancomext, and were in default. As of June 30, 2004, unpaid interest under these notes, computed at the default interest rate, was approximately $824,000.

     On August 30, 2004, the company sold its packaged fruit business segment to Del Monte, which included all of the outstanding shares of ICMOSA. As part of the transaction, the Bancomext debt was transferred and retired.

     The Bancomext outstanding balance has been included under the caption “Short and long-term debt in default” in our December 31, 2003 and June 30, 2004 condensed consolidated balance sheets.

Long-term debt:

     During 2002, ICMOSA entered into a restructured U.S dollar loan agreement with Grupo Financiero Banorte (“Banorte”), which amortized the outstanding principal balance over a period of five and one-half years. The loan repayment schedule required quarterly payments of principal and interest (Libor plus 3.50%) through December 31, 2007, with $425,000 due over the next twelve months. As of December 31, 2003 and June 30, 2004, $2.7 million and $2.6 million respectively, were outstanding under the restructured loan agreement. The restructured loan agreement was secured by certain assets of ICMOSA, corporate guarantees by the company and certain covenants that, amongst others, restricted future borrowings and contained a cross-default provision. As a result of the default of the Bancomext loan, we were in default of the Banorte loan agreement and the entire loan balance was included under the caption “Short and long-term debt in default” in our condensed consolidated balance sheets at December 31, 2003 and June 30, 2004.

     On August 30, 2004, the company sold its packaged fruit business segment to Del Monte, which included all of the outstanding shares of ICMOSA. As part of the transaction, the Banorte debt was transferred and retired.

9

     On February 21, 2000, we entered into a $48.0 million Mexican pesos (U.S. $5.1 million at the exchange rate in effect at that time), 9-year term financing agreement with FOCIR. Under the terms of the FOCIR Agreement, FOCIR agreed to provide up to $48.0 million Mexican pesos to fund additional lemon grove costs, which included land preparation, planting, equipment, irrigation systems and grove maintenance. This financing represented the purchase of an equity interest in GISE of approximately 17.6%. Under U.S. GAAP, amounts advanced under the FOCIR Agreement were classified outside equity due to a mandatory redemption provision. As of December 31, 2003 and June 30, 2004, advances under the FOCIR Agreement were $4.2 million and $4.1 million ($47.0 million Mexican pesos), respectively.

     The terms of the FOCIR Agreement provided for the calculation and accrual of annual accretion using one of two alternative methods. The first method calculated accretion by multiplying the year’s Mexican inflation index rate plus 4.2% by the FOCIR balance. The second method determined annual accretion by multiplying GISE’s shareholders equity; using Mexican generally accepted accounting principles, by factors of 1.168 for 2003, and 1.210 for 2004, and then multiplying by the FOCIR equity interest percentage. The calculation that resulted in the greater amount would be the annual accretion amount. Accretion would accumulate over the 9-year period of the prior FOCIR Agreement and would be paid only upon expiration or early termination of the FOCIR Agreement. As of December 31, 2003 and June 30, 2004, accumulated interest accreted under the FOCIR Agreement amounted to $1.8 million and $2.0 million, respectively, and was classified as a long-term liability in our condensed consolidated balance sheets as of December 31, 2003 and June 30, 2004. The FOCIR Agreement also contained, among other things, certain provisions relating to GISE’s future financial performance, the establishment of an irrevocable trust guaranteeing the FOCIR debt, which included transferring to the trust GISE common shares that represented 33.4% of GISE’s outstanding shares and the governance of GISE. As of December 31, 2003 and June 30, 2004, we were not in compliance with certain of the FOCIR Agreement covenants, and accordingly, we were in default of the agreement.

     On August 4, 2004, the company and FOCIR entered into a new agreement that restructured its debt into a $47.0 million Mexican peso (approximately U.S. $4.2 million) secured term loan. Under the terms of the restructured agreement, FOCIR agreed to forgive all accreted interest (approximately $2.0 million which will be recognized as income in our third quarter of 2004) and changed the repayment terms to a seven-year note payable in increasing amounts with the first annual principal payment due in October 2005 with interest payable quarterly at the rate of 2.5% plus Certificados de la Testorenia de la Federation (CETES), the Mexican Treasury Bill rate which was approximately 8.3% at the restructuring date. The FOCIR debt is secured by a first lien on our El Cielo lemon grove. Prior to the restructuring of the FOCIR debt, the company was in violation of several of the previous agreement covenants. These defaulted covenants have been eliminated from the new agreement.

     Scheduled maturities of long-term debt at June 30, 2004, as adjusted to reflect the Del Monte transaction and the FOCIR restructuring, are as follows:

     Certain of our Mexico loan contracts establish restrictions and obligations with respect to the application of funds and require maintenance of insurance on the assets and timely presentation of financial information. As of December 31, 2003 and June 30, 2004, approximately $7.0 million of net property, plant and equipment and certain receivables were pledged as collateral under our short and long-term debt agreements. As of August 30, 2004, in conjunction with the debt retirement associated with the Del Monte transaction and the FOCIR debt restructuring, approximately $600,000 is now collateralized under our debt agreements.

10

NOTE 4 — Related Party Transactions

     Effective September 1, 2000, we entered into an agreement with Promecap, S.C. (“Promecap”) for the services of Emilio Castillo Olea to become our President and Chief Executive Officer at the annual rate of $150,000. As of June 30, 2004, the company owed Promecap $362,500 in connection with this agreement. Mr. Castillo was also a Director of Promecap, a financial advisory services firm to Mexico Strategic Investment Fund Ltd., (“MSIF”), which owned 80% of M&M Nominee, LLC (“M&M Nominee”). M&M Nominee was our largest shareholder (see discussion below). On January 31, 2003, Mr. Castillo resigned his officer positions with our company, and on May 30, 2003, resigned as a Director. In January 2005, the company paid Promecap the amounts owed in connection with Mr. Castillo’s salary

     On May 20, 2004, the company’s board of directors appointed its then chairman, Jakes Jordaan, to serve as our President and Chief Executive Officer. Mr. Jordaan is a member of the firm Jordaan & Riley, PLLC, which served as the company’s legal counsel.

     On July 7, 2004, we announced that Cardinal UniMark Investors, LP (“Cardinal”) purchased 10,519,419 shares of UniMark common stock in a private transaction from MSIF for $0.40 per share. MSIF was a member of UniMark’s controlling shareholder, M&M Nominee, which owned 13,149,274 shares of the company’s common stock. Madera LLC, the other partner in M&M Nominee, retained its 2,629,855 shares of common stock.

     Effective October 1, 2004, the company agreed to pay an affiliate of Cardinal a monthly management fee of $10,000.

     On October 1, 2004, Robert Bobb, an affiliate of Cardinal, was named as chairman of our company’s board and is being compensated at the rate of $10,000 per month. Mr. Jordaan continued as a director.

     Effective December 1, 2004, the company agreed to pay Promecap a monthly fee of $20,000 for financial services

NOTE 5 — Lemon Groves

     In March 2003, we received formal offers from Coca-Cola to purchase our Victoria juice and oil plant and rescind certain contract rights for the growing and processing of lemons for aggregate cash payments from Coca-Cola of $16.0 million. In April 2003, we consummated the portion of the Coca-Cola transaction pertaining to the rescission of all contract rights and obligations for the growing and processing of lemons for an aggregate cash payment of $12.5 million, plus value added taxes. In this regard, we retained the approximately 7,100 acres of lemon groves, which included all the land, irrigation systems and related agricultural equipment. As part of the sale agreement we are contractually restricted from industrially processing our lemons and are limited to marketing our lemons solely as fresh fruit until July 30, 2007. The proceeds from the rescission of the contract rights were offset against our capitalized orchard development costs during the second quarter of 2003.

     As of June 30, 2004, our lemon groves consisted of 2,871 hectares (approximately 7,100 acres). This land, which is situated in the northern states of Tamaulipas and San Luis Potosi, consists of two separate groves with different maturity profiles. These groves were initially planted with approximately 800,000 lemon trees. Pursuant to the terms of the now cancelled long-term supply contract, Coca-Cola provided us, free of charge, 765,000 lemon tree seedlings that were used for planting approximately 6,023 acres. We also operate our own nursery where young seedlings are prepared for planting, which provided us with the remaining 35,000 trees, as well as acting as a source of replanting for damaged trees. In connection with the transaction with Coca-Cola pertaining to the rescission of all contract rights and obligations for the growing and processing of lemons for an aggregate cash payment of $12.5 million, we elected to cease active cultivation of certain planted lemon tree seedlings and used some for replanting of damaged trees. In October 2004, we commenced actively cultivating the plantings that were abandoned in 2003. As part of the sale agreement we are contractually restricted from industrially processing our lemons and are limited in marketing our lemons solely as fresh fruit until July 30, 2007.

11

     All costs incurred to plant and maintain our lemon orchards were capitalized and deferred through March 31, 2003. As a result of the rescission of all contract rights and obligation for the growing of lemons in April 2003, these deferred and capitalized orchard development costs were reduced by the $12.5 million sale proceeds, and all remaining costs are now being depreciated over their estimated useful lives commencing in the second quarter of 2003. In prior periods, it was determined that these deferred costs would be amortized based on the projected year’s yield to total estimated yield over the life of the rescinded supply contract.

     As of June 30, 2004, our lemon groves consisted of the following:

     The Flor de Maria grove lease is a 30-year land lease. The property rights associated with the lease were acquired in 1999 from a group of local Mexican landowners, whom acquired the land under the “Ejido” system of land ownership. The lease and purchase price of approximately $1.9 million were prepaid. In late 2001, we formally entered into the 30-year lease agreement with the landowners. Although we are currently in the process of transitioning the lease into a land purchase, we are amortizing the cost over the remaining life of the lease. In connection with transfer of this land, we have received a request from the “Ejido” for the payment of an additional $1.2 million ($12.6 million Mexican pesos).

NOTE 6 — Net Loss Per Share

     The following table sets forth the computation of basic and diluted net loss per share:

     We had stock options outstanding of 95,000 and 80,000 at June 30, 2003 and June 30, 2004, respectively, which were not included in their respective periods per share calculations because their effect would have been anti-dilutive.

12

NOTE 7 – Inventories

     Inventories consist of the following:

NOTE 8 — Segment Information

     For operating and financial reporting purposes, we have historically classified our business into two distinct business segments: packaged fruit and juice and oil. With the sales of our juice and oil business segments assets and our packaged fruit segment, our business for operating and financial reporting purposes now consists solely of our fresh lemon business (agricultural segment). We now conduct substantially all of our operations through our Mexican operating subsidiary, GISE and our newly-formed subsidiary, Sierra Foods.

     Within our packaged fruit business segment, we focused on niche citrus and tropical fruit products including chilled, frozen and canned cut fruits and other specialty food ingredients. The packaged fruit business segment processed and packaged our products at three processing plants in Mexico, which were located in major fruit growing regions. We utilized independent food brokers to sell our foodservice and industrial products in the United States. Sales to our Japanese consumers were facilitated through Japanese trading companies.

     We evaluate our segment performance and allocate resources based on profit or loss from operations before income taxes and commenced allocating a portion of our corporate general and administrative expenses in 2003. Inter-segment sales and transfers are insignificant. Our reportable segments are each managed separately because they process and distribute distinct products with different production processes. Information pertaining to the operations of our two business segments is set forth below.

13

     The following are reconciliations of reportable segment profit or loss to our consolidated totals.

NOTE 9 — Commitments and Contingencies

     Several legal proceedings arising in the normal course of business are pending against us, including certain of our Mexican subsidiaries.

     As a result of the decline in the worldwide market prices of FCOJ, during 2000 we decided to discontinue operating a juice processing facility in Mexico that had been leased from Frutalamo S.A. de C.V. (“Frutalamo”) under the terms of deposit, operating and stock purchase agreements entered into in December 1996. As we were unsuccessful in negotiating a settlement with Frutalamo to terminate such agreements, we wrote off a previously recorded non-refundable deposit of $1.5 million and recorded a cancellation fee of $1.0 million, both of which were non-cash charges which were associated with our discontinued juice and oil business segment.

     Subsequent to December 31, 2000, Frutalamo and certain of its shareholders (collectively, the “Frutalamo Plaintiffs”) initiated legal proceedings in Mexico naming as defendants certain of our Mexican subsidiaries, certain current and former employees, officers and directors of our company and a former contractor. In September 2002, we settled these claims for $125,000 in cash. We have learned that, notwithstanding such settlement, certain claims asserted against us by the Frutalamo Plaintiffs, prior to September 2002, continue to be under review before the Mexican courts. Management denies any wrongdoing in this matter and intends to vigorously contest these claims. The resolution of this matter is not expected to have a material adverse effect on our condensed consolidated financial condition or results of operations.

     In addition to the actions described above, from time to time our company is engaged in various other legal proceedings in the normal course of business. The ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time. However, our company, based on the consultation with legal counsel, is of the opinion that there are no matters pending or threatening which could have a material adverse effect on our condensed consolidated financial position or results of operations.

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

Recent Developments

     Our business has changed dramatically. We have sold our juice and oil business segments assets and our packaged fruit business segment. See Item 1, Note 1 – Significant Accounting Policies.

     All costs incurred to plant and maintain our lemon orchards were capitalized and deferred through March 31, 2003. As a result of the rescission of all contract rights and obligation for the growing of lemons in April 2003, these deferred and capitalized orchard development costs were reduced by the $12.5 million sale proceeds, and all remaining costs are being depreciated over their estimated useful lives commencing in the second quarter of 2003. In prior periods, it was determined that these deferred costs would be amortized based on the projected year’s yield to total estimated yield over the life of the rescinded supply contract.

14

Introduction

     The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto, and the “Risk Factors” included elsewhere in this Item 2.

Conversion to U.S. GAAP

     We conduct substantially all of our operations through our operating Mexican subsidiaries. ICMOSA was a Mexican corporation whose principal activities consisted of operating citrus processing plants and various citrus groves throughout Mexico. GISE is a Mexican corporation whose principal activities were the operation of two citrus juice and oil processing plants, as well as currently managing our Italian lemon groves. ICMOSA and GISE maintain their accounting records in Mexican pesos and in accordance with Mexican generally accepted accounting principles and are subject to Mexican income tax laws. Our Mexican subsidiaries financial statements have been converted to United States generally accepted accounting principles (“U.S. GAAP”) and U.S. dollars.

     On August 30, 2004, the company sold its packaged fruit business segment to Del Monte, which included all of the outstanding shares of ICMOSA.

     Unless otherwise indicated, all dollar amounts included herein are set forth in U.S. dollars. The functional currency of the company and its subsidiaries is the U.S. dollar.

Critical Accounting Policies

     The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances, which results in forming the basis for making judgments about the carrying values of our assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

     The critical accounting policies described herein are those that are most important to the depiction of our condensed consolidated financial condition and results of operations and their application requires management’s most subjective judgment in making estimates about the effect of matters that are inherently uncertain. We believe that the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements.

Allowance for doubtful accounts

     In the normal course of business, we extend credit to our customers on a short-term basis. Although credit risks associated with our customers is considered minimal, we routinely review our accounts receivable balances and make provisions for probable doubtful accounts. In circumstances where management is aware of a specific customer’s inability to meet their financial obligations to us, a specific reserve is provided to reduce the receivable to the amount expected to be collected. Historically, we do not provide a general reserve.

Impairment of Long-Lived Assets

     Effective January 1, 2002, we adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“FAS No. 144”), which requires our management to review for impairment its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset’s carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. Prior to January

15

1, 2002, management determined whether any long-lived assets had been impaired based on the criteria established in Statement of Financial Accounting Standards No. 121 (SFAS 121), “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be disposed of.” The carrying amount of a long-lived asset was considered impaired when the estimated undiscounted cash flow from each asset was less than its carrying amount. In that event, we recorded a loss equal to the amount by which the carrying amount exceeds the fair value of the long-lived asset. Changes in our projected cash flows as well as differences in the discount rate used in the calculation could have a material effect on our condensed consolidated financial statements.

Income Taxes

     Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. In assessing the realization of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to our historical operating results, management is unable to conclude on a more likely than not basis that all deferred income tax assets generated through operating losses through June 30, 2004 will be realized. Accordingly, we have recognized a valuation allowance equal to the difference between deferred income tax assets and the deferred income tax liabilities.

Legal Proceedings and Loss Contingencies

     Our company is involved in routine legal and administrative matters that arise from the normal conduct of business. Some of these matters are not within our control and are difficult to predict and often are resolved over long periods of time. We maintain insurance, including directors’ and officers’ and corporate liability insurance, with third parties to mitigate any loss that is related to certain claims. Loss contingencies are recorded as liabilities in the financial statements when it is determined that we have incurred a loss that is probable and the amount of the loss is reasonably estimable, in accordance with SFAS No. 5, “Accounting for Contingencies.”

Cautionary Statement Regarding Forward-Looking Statements

     The discussion in this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The actual results could differ significantly from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as those discussed elsewhere in this report. Statements contained in this report that are not historical facts are forward-looking statements that are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. A number of important factors could cause the actual results for 2004 and beyond to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. These factors include risks relating to our financial condition, our Mexican operations, general business risks and risks relating to our common stock. For a discussion of these factors that may affect actual results, investors should refer to our filings with the Securities and Exchange Commission and those factors listed under “Risk Factors” starting on page 22 of this Form 10-Q.

Results of Operations

     The following table sets forth certain condensed consolidated financial data expressed as a percentage of net sales for the periods indicated. The financial information and discussion below should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto. The discussion following the table is provided separately for continuing and discontinued operations. In November 2003, with the divesture of our Victoria juice and oil plant, the company discontinued any further operating activities related to its juice and oil business segment. Accordingly, our condensed

16

consolidated statements of operations include the results of operations of our juice and oil business segment in discontinued operations for our 2003 periods. In addition, as a result of the sale of our packaged fruit business segment in August 2004, these operations also qualify as discontinued operations and will be reclassified as discontinued operations in our third quarter 2004 condensed consolidated financial statements.

Three Months Ended June 30, 2004 and 2003

Continuing Operations

Net sales

     Net sales in the 2003 period consist entirely of packaged fruit sales. The 2004 period consists of both packaged fruit and lemon sales. Packaged fruit net sales decreased $1.8 million from $6.9 million in 2003 to $5.1 million in 2004, or 26.1%. This sales decrease was primarily caused by a decrease in our retail sales of $1.9 million from $5.7 million in 2003 to $3.8 million in 2004, or 33.3%. Our foodservice and Japanese sales in the 2004 period were comparable to the prior year quarter. Retail sales consist primarily of sales to Del Monte, which includes both retail and wholesale club products. The decrease in retail sales was primarily due to the timing of our production schedule for our citrus products sold to Del Monte.

     Lemon net sales were only $4,000 in the 2004 period as compared to no sales in the comparable period in the previous year and were insignificant.

     As a result of the foregoing, net sales decreased from $6.9 million in the 2003 period to $5.1 million in the 2004 period, or 26.1% due primarily to decreases in our retail sales in our packaged fruit business segment.

Gross profit (loss)

     Gross profit, as a percentage of net sales, in our packaged fruit segment, improved from less than one percent in the 2003 period to 4.5% in the 2004 period. This increase was primarily the result of an improvement of approximately $240,000 in ICMOSA’s unfavorable manufacturing variance in the current period as compared to the prior year period.

     Gross loss on our agricultural segment for the 2004 period was $483,000 as compared to a gross loss of $422,000 in the 2003 period. Effective April 2003 with the consummation of the Coca-Cola transaction,

17

we started expensing all costs associated with our lemon groves. Accordingly, these losses represent our orchard operating expenses expensed in each quarter.

     Gross profit overall improved slightly as a percent of net sales from a loss of 5.8% in the 2003 period to a loss of 5.0% in the 2004 period due to the factors discussed above.

Selling, general and administrative expenses

     Selling, general and administrative expenses (“SG&A”) increased from a gain of $70,000 in the 2003 period to an expense of $1.3 million in the 2004 period. This increase was primarily caused by a non-recurring gain in the 2003 period of $896,000 resulting from the reversal of previously recorded Mexican deferred profit sharing expenses (“PTU”), as required under generally accepted accounting principles and the expensing of our orchard SG&A costs. This non-recurring gain in the 2003 period was caused by the calculation method of determining the PTU liability, which allowed the $12.5 million proceeds from the Coca-Cola transaction to be offset against prior net operating losses at GISE.

Interest expense

     Interest expense increased slightly from $104,000 in the 2003 period to $131,000 in the 2004 period.

Other income (expense), net

     Other income (expense), net increased from net income of $1,000 in the 2003 period to net expense of $78,000 in the 2004 period. Both periods consist primarily of miscellaneous non operating income and expense items.

Foreign currency translation gain (loss)

     Foreign currency translation gain (loss) decreased from a net gain of $94,000 in the 2003 period to a net loss of $162,000 in the 2004 period and result primarily from the re-measurement of our foreign subsidiaries financial statements to U.S. dollars.

Income tax expense

     Income tax expense decreased from $161,000 in the 2003 period to $106,000 in the 2004 period and consists entirely of asset tax expense. Under Mexican tax laws, our Mexican subsidiaries are required to pay annually an asset tax, which is an alternative minimum tax if the asset tax calculation is greater than income taxes payable for the year and is calculated at 1.8% of assets less certain liabilities.

Loss from continuing operations

     As a result of the factors noted above, we reported losses from continuing operations of $502,000 in the 2003 period and $2.0 million in the 2004 period.

Loss from discontinued operations

     During the fourth quarter of 2003 we discontinued any further operating activities related to our juice and oil business segment, which was no longer considered part of the company’s strategic plan for the future. In accordance with SFAS No. 144, we have reported the results of operations of our juice and oil business segment as discontinued operations in our condensed consolidated statements of operations. As a result, we reported a loss from discontinued operations of $823,000 in the 2003 period.

Net loss

     As a result of the foregoing, we reported net losses of $1.3 million in the 2003 period and $2.0 million in the 2004 period.

18

Six Months Ended June 30, 2004 and 2003

Continuing Operations

Net sales

     Net sales in the 2003 period consist entirely of packaged fruit sales. The 2004 period consists of both packaged fruit and lemon sales. Packaged fruit sales decreased by $900,000 from $14.5 million in 2003 to $13.6 million in 2004, or 6.2%. This sales decrease was caused by decreases in our retail sales of $1.2 million from $11.3 million in 2003 to $10.1 million in the 2004 period, or 10.6%, but was offset by an increase in our Japan sales of $600,000 from $1.8 million in 2003 to $2.4 million in 2004, or 33.3%. Retail sales consist primarily of sales to Del Monte, which includes both retail and wholesale club products. This retail sales decrease was attributable to the timing of our production schedule for our citrus products sold to Del Monte. The increase in our Japan sales during the 2004 period was caused by timing differences in shipments compared to the prior year period and increased demand in Japan for our citrus products.

     Lemon net sales amounted to $173,000 in the first six months of 2004 compared to no net sales in the comparable period in the previous year and were insignificant.

     As a result of the foregoing, net sales decreased from $14.5 million in the 2003 period to $13.8 million in the 2004 period, or 4.8% due to decreases in our retail sales in our packaged fruit business segment.

Gross profit

     Gross profit, as a percentage of net sales, in our packaged fruit segment improved slightly from 10.6% in the 2003 period to 11.6% in the 2004 period.

     Gross loss on our agricultural segment for the 2004 period was $1.1 million as compared to a gross loss of $422,000 in the 2003 period. Effective April 2003 with the consummation of the Coca-Cola transaction, we started expensing all costs associated with our lemon groves. Accordingly, these losses represent our orchard operating costs expensed in each period.

     Gross profit overall decreased as a percent of net sales from 7.7% in the 2003 period to 3.2% in the 2004 period due to the factors discussed above.

Selling, general and administrative expenses

     Selling, general and administrative expenses increased $1.5 million from $688,000 in the 2003 period to $2.2 million in the 2004 period. This increase was primarily caused by a non-recurring gain in the 2003 period of $896,000 resulting from the reversal of previously recorded Mexican deferred profit sharing expenses (“PTU”), as required under generally accepted accounting principles. This non-recurring gain in the 2003 period was caused primarily by the calculation method of determining the PTU liability, which allowed the $12.5 million proceeds from the Coca-Cola transaction to be offset against prior net operating losses at GISE.

Impairment of long-lived assets

     Impairment of long-lived assets of $232,000 in the 2003 period represents a non-cash charge that resulted from our decision to discontinue our pineapple growing operations and write-down all long-lived assets associated with these operations to estimated fair value.

Interest expense

     Interest expense increased from $210,000 in the 2003 period to $549,000 in the 2004 period, or $339,000. This resulted primarily from the change in the capitalization of interest costs associated with our

19

Lemon groves, to expensing these costs in the current period and in recording interest expense on the Bancomext debt at the default rate which is twice the stated rate.

Other income (expense), net

     Other income (expense), net increased from a net expense of $49,000 in the 2003 period to a net expense of $206,000 in the 2004 period. Both periods consist primarily of miscellaneous non-operating income and expense items.

Foreign currency translation gain (loss)

     Foreign currency translation gain (loss) increased from a net loss of $85,000 in the 2003 period to a net gain of $48,000 in the 2004 period and result primarily from the re-measurement of our foreign subsidiaries financial statements to U.S. dollars.

Income tax expense

     Income tax expense decreased from $317,000 in the 2003 period to $216,000 in the 2004 period and consists entirely of asset tax expense. Under Mexican tax laws, our Mexican subsidiaries are required to pay annually an asset tax, which is an alternative minimum tax if the asset tax calculation is greater than income taxes payable for the year and is calculated at 1.8% of assets less certain liabilities.

Loss from continuing operations

     As a result of the factors noted above, we reported losses from continuing operations of $464,000 in the 2003 period and $2.6 million in 2004 period.

Loss from discontinued operations

     During the fourth quarter of 2003 we discontinued any further operating activities related to our juice and oil business segment, which was no longer considered part of the company’s strategic plan for the future. In accordance with SFAS No. 144, we have reported the results of operations of our juice and oil business segment as discontinued operations in our condensed consolidated statements of operations. As a result, we reported a loss from discontinued operations of $1.4 million in the 2003 period.

Net loss

     As a result of the foregoing, we reported net losses of $1.8 million in the 2003 period and $2.6 million in 2004 period.

Liquidity and Capital Resources

     Financial Position:

     At June 30, 2004, our cash and cash equivalents totaled $8.7 million, a decrease of $1.9 million from year-end 2003. During the first six months of 2004, our operating activities from continuing operations used cash of $1.9 million primarily from our net loss of $2.6 million, offset by non-cash charges associated with depreciation expense and disposal of property and equipment aggregating $829,000. Investing activities from continuing operations used cash of $291,000, primarily for the purchase of property and equipment. Net cash used in financing activities from continuing operations of $268,000 was the result of a net decrease in our short and long-term debt. Working capital at June 30, 2004 amounted to $1.4 million, a decrease of $2.0 million from our December 31, 2003 amount of $3.4 million and was due primarily from our loss from continuing operations.

20

Recent Transactions:

     In April 2003, we consummated the portion of the Coca-Cola transaction pertaining to the rescission of all contract rights and obligations for the growing and processing of lemons for an aggregate cash payment of $12.5 million, plus value added taxes. Effective November 17, 2003, we closed the sale of our Victoria juice and oil plant to Coca-Cola, for a cash payment of $3.5 million, plus value added taxes. In June 2003, we sold our Poza Rica juice plant to an unaffiliated third party for $1.0 million, plus value added taxes of $120,000. On June 30, 2004, we received final payment of $541,500 in full satisfaction from the Poza Rica sale.

     On August 4, 2004, the company and FOCIR entered into a new agreement that restructured its debt into a $47.0 million Mexican peso (approximately U.S. $4.2 million) secured term loan. Under the terms of the restructured agreement, FOCIR agreed to forgive all accreted interest (approximately $2.0 million which will be recognized as income in our third quarter of 2004) and changed the repayment terms to a seven-year note payable in increasing amounts with the first annual principal payment due in October 2005, with interest payable quarterly at the rate of 2.5% plus Certificados de la Testorenia de la Federation (“CETES”), the Mexican Treasury Bill rate which was approximately 8.3% at the restructuring date. The FOCIR debt is secured by a first lien on our El Cielo lemon grove.

     On August 30, 2004, we sold our packaged fruit business segment to Del Monte in a transaction valued at approximately $11.0 million. The transaction included the sale of all outstanding shares of our Mexican subsidiary, ICMOSA. In connection with the transaction, we received at closing cash of approximately $350,000 and an additional $600,000, less recording expenses of approximately $50,000 in November 2004. As part of the transaction, approximately $7.0 million of defaulted ICMOSA bank debt was transferred and retired, $3.0 million of other liabilities were transferred and the 5-year supply contract and trademark license agreements were terminated.

Pending Adoption of Recent Accounting Pronouncements:

     Recently issued accounting pronouncements that could have an impact on our company are discussed below.

     In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs – an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material. Paragraph 5 of Accounting Research Bulletin (“ARB”) 43, Chapter 4 “Inventory Pricing,” previously stated that “...under certain circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current-period charges....” SFAS No. 151 requires that those items be recognized as current-period charges regardless of whether they meet the criteria of “so abnormal.” In addition, SFAS No. 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 is not expected to have any impact material on our condensed consolidated financial position or results of operations.

     In December 2004, the FASB issued FASB Staff Position No. FAS 109-1, “Application of FSAB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) and FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”). FSP 109-1 clarifies the guidance in SFAS No. 109, “Accounting for Income Taxes” that applies to the new deduction for qualified domestic production activities under the American Jobs Creation Act of 2004 (the “Act”). FSP 109-1 clarifies that the deduction should be accounted for as a special deduction under SFAS No. 109 not as a tax-rate reduction, because the deduction is contingent on performing activities identified in the Act. As a result, companies qualifying for the special deduction will not have a one-time adjustment of deferred tax assets and liabilities in the period the Act is enacted. FSP 109-2 addresses the effect of the Act’s one-time deduction for qualifying repatriations of foreign earnings. FSP 109-2 allows additional time for companies to determine whether any foreign earnings will be repatriated under the Act’s one-time deduction for

21

repatriated earnings and how the Act affects whether undistributed earnings continue to qualify for SFAS No. 109’s exception from recognizing deferred tax liabilities. FSP 109-1 and FSP 109-2 both became effective upon issuance. The adoption of FAS 109-1 did not have a material impact on our condensed consolidated financial position or results of operations

     In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”, which requires all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value and to recognize cost over the vesting period. SFAS 123R is effective for public companies (except small business issuers as defined in SEC Regulation S-B) for interim or annual periods beginning after June 15, 2005. Retroactive application of the requirements of SFAS No. 123, “Accounting for Stock-Based Compensation,” not SFAS No. 123R, to the beginning of the fiscal year that includes the effective date would be permitted, but is not required. The adoption of SFAS No. 123R is not expected to have a significant impact on our condensed consolidated financial position or cash flow, but could impact our future condensed consolidated results of operations depending on our stock price, share-based payments granted in future periods or future modifications to existing share-based plans.

     In December 2004, the FASB issued SFAS No. 153, “Accounting for Nonmonetary Transactions,” an amendment to SFAS No. 29, “Accounting for Nonmentary Transactions.” SFAS No. 153 eliminates certain differences in the guidance of SFAS No. 29 as compared to the guidance contained in standards issued by the International Accounting Standards Board. The amendment to SFAS No. 29 eliminates the fair value exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Such an exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary assets exchanges occurring in periods beginning after December 16, 2004. The adoption of SFAS No. 153 is not expected to have a material impact, if any, on our condensed consolidated financial position or results of operations.

Risk Factors

     If any of the following risks actually occur, our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our underlying common stock could decline and you may lose part or all of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. As a result, we cannot predict every risk factor, nor can we assess the impact of all of the risk factors on our businesses or to the extent to which any factor, or combination of factors, may impact our financial condition and results of operation. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Agricultural Risks

We are dependent upon fruit growing conditions, access and availability of water.

     Lemon production is subject to many risks common to agriculture that can materially and adversely affect the quality and quantity of lemons produced. These hazards include, among other things, adverse weather conditions, such as drought, frost, excessive rain, excessive heat or prolonged periods of cold weather, lack of water and natural disasters, such as hurricanes, floods, droughts, frosts, earthquakes or pestilence. The conditions may affect the supply and could significantly impact the yields of our groves. These conditions can materially and adversely affect the quality and quantity of lemons produced by the company and its profitability. Our orchards are also susceptible to certain diseases, insects and pests, which can increase operating expenses, reduce yields or kill lemon trees. To the extent a lemon producer’s properties are geographically concentrated; the effects of local weather can be material. Our two groves spread over a distance of approximately 60 miles in northeast Mexico. Accordingly, adverse weather in the future could affect a substantial portion of the company’s groves in any year and have a material adverse effect on the company’s business, financial condition and results of operations.

22

     Substantially all of our lemon groves are irrigated and a lack of water has not had a materially adverse effect on our growing operations. There can be no assurances that future weather conditions and lack of irrigation water will not have a material adverse effect on the results of our operations and our financial conditions.

We experience fixed costs and revenue fluctuations and uncertainty of profitability.

     Our annual farming costs are incurred throughout the year preceding harvest and are relatively fixed. Revenues from lemon sales are not realized until harvest and vary depending upon yields and changing market prices. Grove productivity varies from year to year depending upon a number of factors, and significant variations in annual yields should be expected from time to time. Furthermore, lemon prices have fluctuated significantly in the past and should be expected to continue to fluctuate from year to year and to decrease at times in the future. Because production costs are not significantly adjustable in light of productivity or revenue levels, weak harvests or lower lemon prices cannot be mitigated by cost reductions and should be expected to have significant adverse effects upon profitability.

We have a seasonal business.

     We have a seasonal business. We anticipate harvesting and selling our lemons during the summer and fall. Our management believes that our quarterly consolidated operating results will continue to be impacted by this pattern of seasonality.

General Business Risk

We are subject to risks associated in implementation of our new business strategy.

     As a company with an unproven business strategy, our limited history of fresh fruit operations makes an evaluation of our business and prospects difficult. We have had a limited operating history for our new fresh fruit business. We may not be able to achieve profitability or revenue growth in the future.

We face strong competition.

     We operate in a highly competitive market. The fresh lemon market, in which we compete, is highly competitive with respect to price and quality. We face direct competition from Sunkist Growers, Inc., (“Sunkist”), a cooperative of United States citrus growers. Sunkist has substantially greater financial, marketing, personnel and other resources than we do. In addition, we face competition from foreign producers particularly from Chile, Spain and other Mexican growers.

We are subject to governmental and environmental regulations.

     We are subject to numerous domestic and foreign governmental and environmental laws and regulations as a result of our agricultural activities.

     The Food and Drug Administration (“FDA”), the United States Department of Agriculture (“USDA”), the Environmental Protection Agency and other federal and state regulatory agencies in the United States extensively regulate our activities in the United States. The manufacturing, processing, packing, storage, distribution and labeling of food products are subject to extensive regulations enforced by, among others, the FDA and to inspection by the USDA and other federal, state, local agencies. Applicable statutes and regulations governing food products include “standards of identity” for the content of specific types of foods, nutritional labeling and serving size requirements and under “Good Manufacturing Practices” with respect to production processes. We believe that our products satisfy, and any new products will satisfy all applicable regulations and that all of the ingredients used in our products are “Generally Recognized as Safe” by the FDA for the intended purposes for which they will be used. Failure to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material adverse effect on our consolidated results of operations and financial condition.

23

We are dependent upon our senior management team.

     We rely on the business, technical expertise and experience of our senior management and certain other key employees. The loss of services of any of these individuals could have a material adverse effect on our results of operations and financial condition. We believe that our future success is also dependent upon our ability to continue to attract and retain qualified personnel in all areas of our business. No senior members of our management team are bound by non-compete agreements, and if such members were to depart and subsequently compete with us, such competition could have a material adverse effect on our consolidated results of operations and financial condition.

We had a change in controlling shareholders during 2004. Such shareholder has substantial control over our company and can affect virtually all decisions made by our shareholders and directors.

     M&M Nominee LLC (“M&M Nominee”) owned 13,149,274 shares of our common stock accounting for 62.48% of all issued and outstanding shares. On July 7, 2004, we announced that Cardinal UniMark Investors, LP, (“Cardinal”), purchased 10,519,419 shares of UniMark common stock in a private transaction from Mexico Strategic Investment Fund Ltd., (“MSIF”) for $0.40 per share. MSIF was a member of UniMark’s controlling shareholder, M&M Nominee. Madera LLC (“Madera”), the other partner in M&M Nominee, retained its 2,629,855 shares of common stock. Cardinal has the contractual right to vote Madera’s shares. As a result, Cardinal has the requisite voting power to significantly affect virtually all decisions made by our company and its shareholders, including the power to elect all directors and to block corporate actions such as amendments to most provisions of our articles of incorporation. This ownership and management structure could inhibit initiatives taken by our company that are not acceptable to Cardinal.

We are subject to recent legislative actions and potential new accounting pronouncements.

     In order to comply with the provisions of the Sarbanes-Oxley Act of 2002 and proposed accounting changes by the SEC, we may be required to increase or modify our internal controls, hire additional personnel and additional outside legal, accounting and advisory services, all of which could cause our general and administrative costs to increase. Proposed changes in accounting rules, including legislative and other proposals to account for employee stock options as compensation expense among others, could potentially increase the expenses we report under United States Generally Accepted Accounting Practices and could adversely affect our operating results.

Risks Relating to Our Mexican Operations

We are subject to the risk of fluctuating foreign currency exchange rates and inflation.

     We are subject to market risk associated with adverse changes in foreign currency exchange rates and inflation in our operations in Mexico. We have a $47.0 million Mexican peso denominated (approximately U.S. $4.2 million) secured term loan with FOCIR. Our consolidated results of operations are affected by changes in the valuation of the Mexican peso to the extent that our Mexican subsidiaries have peso denominated net monetary assets or net monetary liabilities. In periods where the peso has been devalued in relation to the U.S. dollar, a gain will be recognized to the extent there are peso denominated net monetary liabilities while a loss will be recognized to the extent there are peso denominated net monetary assets. In periods where the peso has gained value, the converse would be recognized. Our consolidated results of operations are also subject to fluctuations in the value of the peso as they affect the translation to U.S. dollars of our Mexican subsidiaries financial statements. Since the assets and liabilities therein are peso denominated, a falling peso results in a translation loss to the extent there are net peso assets or a translation gain to the extent there are net peso liabilities.

We are subject to governmental laws that relate to ownership of rural lands in Mexico.

     We own or lease, on a long-term basis, approximately 7,100 acres of rural land in Mexico, which are used primarily for growing our lemons. Historically, the ownership of rural land in Mexico has been subject to legal limitations and claims by residents of rural communities. Although we have not experienced any legal disputes with respect to our land ownership, we are transitioning, pursuant to the

24

terms of an existing agreement with an “Ejido” system of land ownership, approximately 5,300 acres of land from a 30-year lease to a land purchase. In connection with transfer of this land, we have received a request from the “Ejido” for the payment of an additional $1.2 million ($12.6 million Mexican pesos).

Labor shortages and union activity could affect our ability to hire and we are dependent on the Mexican labor market.

     We are heavily dependent upon the availability of a large labor force to harvest and work our lemon groves. If it becomes necessary to pay more to attract labor, our labor costs will increase.

We are subject to statutory employee profit sharing in Mexico.

     All Mexican companies, including ours, are required to pay their employees, in addition to their agreed compensation benefits, profit sharing in an aggregate amount equal to 10% of taxable income, as adjusted to eliminate most of the effects of Mexican inflation, calculated for employee profit sharing purposes, of the individual corporation employing such employees. As a result of losses for income tax purposes at our Mexican subsidiaries over the past several years, we have not been required to pay any profit sharing. Statutory employee profit sharing expense, when paid, is reflected in our cost of goods sold and selling, general and administrative expenses, depending upon the function of the employees to whom profit sharing payments are made. Our net losses as shown in our consolidated statements of operations are not always a meaningful indication of taxable income of our subsidiaries for profit sharing purposes or of the amount of employee profit sharing.

We are subject to volatile interest rates in Mexico, which could increase our capital costs.

     We are subject to volatile interest rates in Mexico. Historically, interest rates in Mexico have been volatile, particularly in times of economic unrest and uncertainty. High interest rates restrict the availability and raise the cost of capital for our Mexican subsidiaries and for growers and other Mexican parties with whom we do business, both for borrowings denominated in pesos and for borrowings denominated in U.S. dollars. As a result, costs of operations in Mexico could be higher.

Risks Relating to Our Financial Condition

We may continue to sustain losses and accumulated deficits in the future.

     We have sustained net losses in each of the last seven fiscal years and in the first six months of 2004. As of June 30, 2004 our accumulated deficit was $63.9 million. Our ability to achieve profitability in the future will depend on many factors, including our ability to successfully execute our new business strategy to produce and market fresh lemons. Because we were not profitable in each of the last seven years and during the first six months of 2004, there can be no assurance that we will achieve a profitable level of operations in the remainder of fiscal 2004 and beyond, or, if profitability is achieved that it can be sustained.

We may lose our net operating loss carryforwards, which could prevent us from offsetting future taxable income in the United States.

     In June 2001, we completed a rights offering wherein M&M Nominee, our largest shareholder, purchased an additional 6,849,315 shares of our common stock increasing their ownership from 45.2% to 62.48%. Accordingly, we experienced an ownership change as defined by Section 382 of the Internal Revenue Code of 1986, as amended, which limits the use of net operating loss carryforwards where changes occur in the stock ownership of a company. As a result, this limitation allowed us to use only a portion of our pre-change net operating loss carryforwards, which amounted to approximately $17.7 million at December 31, 2003, to reduce subsequent taxable income in the United States, if any for federal income tax purposes. Based upon the limitations of Section 382, we were allowed to use approximately $425,000 of such losses each year to reduce taxable income, if any, until such unused losses expire.

     On July 7, 2004, we announced that Cardinal purchased 10,519,419 shares of UniMark common stock in a private transaction from MSIF. MSIF was a member of UniMark’s controlling shareholder, M&M

25

Nominee, which owned 13,149,274 shares of the company’s common stock. Madera, the other partner in M&M Nominee, retained its 2,629,855 shares of common stock. As a result of this transaction, additional Section 382 limitations could further reduce the amount of our net operating losses available each year to reduce taxable income.

We have been unable to file our Form 10-Q quarterly report for our third quarter of 2004 with the SEC, and material information concerning our current operating results and financial condition is therefore unavailable.

     We have been unable to file our periodic reports with the SEC for our quarter ended September 30, 2004 and the information to be contained therein is unavailable at this time. We cannot predict how soon complete financial and operational information relating to our third quarter 2004 report will become available. When it is, it may reflect changes or trends that are material to our business.

The internal control system at one of our Mexican subsidiaries is ineffective and failure to comply with Section 404 of the Sarbanes-Oxley Act of 2002 in a timely fashion may have a negative impact on investor confidence.

     Management has concluded that we have a material weakness in internal financial reporting at one of our Mexican subsidiaries which is more fully described in Item 4 of this Form 10-Q. Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes”), beginning with our Annual Report on Form 10-K for our fiscal year ending December 31, 2006, we will be required to assess the effectiveness of our internal controls over financial reporting and report that our internal control over financial reporting is effective. Although we continue to take action to comply with the internal controls, disclosure controls and other requirements of Sarbanes, we have limited qualified personnel to prepare and file our SEC reports and we are not certain that we can complete the documentation of our internal controls as required by Section 404 of Sarbanes and provide our auditors with the required report without assistance of a third party. Resources available in the marketplace and our company’s ability to acquire them will affect our ability to complete  the required  procedures by the  filing deadline of our 2006 Annual Report on Form 10-K.

     If we are unable to satisfy the requirements of Section 404 by the filing deadline, we may be unable to assert that our internal controls over financial reporting are effective, or our auditors may not be able to render the required attestation concerning our assessment and the effectiveness of the internal controls over financial reporting. This may negatively impact investor confidence in the accuracy and completeness of our financial reports, which could have a material adverse effect on our stock price.

If conditions or assumptions differ from the judgments, assumptions or estimates used in our critical accounting policies, the accuracy of our financial statements and related disclosures could be affected.

     The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions, and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies, which are set forth above, describe the significant accounting policies and methods used in the preparation of our consolidated financial statements. These accounting policies are considered “critical” because they require judgments, assumptions and estimates that materially impact our consolidated financial statements and related disclosures. As a result, if future events differ significantly from the judgments, assumptions, and estimates in our critical accounting policies or different assumptions are used in the future, such events or assumptions could have a material impact on our consolidated financial statements and related disclosures.

Risks Relating to Our Common Stock

The delisting from the Over-the-Counter Bulletin Board has further reduced the liquidity and marketability of our common stock and may further depress the market price of our common stock.

     On March 15, 2001, Nasdaq delisted our common stock from The Nasdaq National Market and moved our common stock to the Over-the-Counter Electronic Bulletin Board (“OTC Bulletin Board”) under the symbol “UNMG.OB.” On May 29, 2003, our common stock ceased to be quoted for trading on the OTC

26

Bulletin Board, and is presently listed on the “Pink Sheets.” Prices for securities traded solely on the Pink Sheets may be difficult to obtain. As such, our stock has very limited liquidity and marketability. This very limited liquidity, marketability, the reduced public access to quotations for our common stock and lack of a regular trading market for our stock have depressed the market price of our stock. Although we intend to take actions necessary to have our stock included in the OTC Bulletin Board, there can be no assurance that we will be successful. Further, the OTC Bulletin Board is an unorganized, inter-dealer, over-the-counter market with significantly less liquidity than other recognized markets such as The Nasdaq Stock Market.

“Penny Stock” regulations may impose restrictions on marketability of our common stock.

     The SEC has adopted regulations which generally define “penny stock” to be any equity security that is not traded on a national securities exchange or Nasdaq and that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Since our securities that are currently included on the OTC Bulletin Board are trading at less than $5.00 per share at any time, our common stock may become subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors. Accredited investors generally include investors that have assets in excess of $1.0 million or an individual annual income exceeding $200,000, or, together with the investor’s spouse, a joint income of $300,000. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require, among other things, the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market and the risks associated therewith. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the penny stock rules may restrict the ability of broker-dealers to sell our securities and may affect the ability of stockholders to sell our securities in the secondary market.

Our common stock price has been and may continue to be highly volatile.

     The price of our common stock has been particularly volatile and will likely continue to fluctuate in the future. Announcements of chronological innovations, regulatory matters or new commercial products by us or our competitors, developments or disputes concerning patent or proprietary rights, publicity regarding actual or potential product results relating to products under development by us or our competitors, regulatory developments in both the United States and foreign countries, public concern as to the safety of pharmaceutical or dietary supplement products, and economic and other external factors, as well as period-to-period fluctuations in financial results, may have a significant impact on the market price of our common stock. In addition, from time to time, the stock market experiences significant price and volume fluctuations that may be unrelated to the operating performance of particular companies or industries. The market price of our common stock, like the stock prices of many publicly traded smaller companies, has been and may continue to be highly volatile.

Legislative Actions and Potential De-registration

In order to comply with the provisions of Sarbanes and related SEC rules, the company may be required to increase its internal controls, hire additional personnel, and engage outside legal, accounting and advisory services, all of which could cause the company’s general and administrative cost to increase. Because the company has less than 200 record holders of its common stock, should the increased burdens of being a reporting company prove to be too great, the company may elect to de-register its common stock with the SEC and discontinue its periodic reporting obligations.

27

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Interest rate risk

Our interest expense is most sensitive to changes in the general level of U.S. interest rates and the Certificados de la Testorenia de la Federation (“CETES”) rates. In this regard, changes in these interest rates affect the interest paid on our debt.

     The following table presents principal cash flows and related weighted-average interest rates by expected maturity dates for our debt obligations, as adjusted to reflect the Del Monte transaction and the FOCIR restructuring previously discussed in this Form 10-Q.

Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate
(In thousands, except interest rates)

     At June 30, 2004, the above debt consisted entirely of Mexican peso denominated debt.

     In August 2004, our Mexican peso denominated debt was restructured into a secured term loan. The repayment terms were changed to a seven year note payable in increasing amounts with the first annual principal payment due in October 2005 with interest payable quarterly at the rate of 2.5% plus CETES, the Mexican Treasury Bill rate, which was approximately 8.3% at the restructuring date.

     On August 30, 2004, the company sold its packaged fruit business segment to Del Monte, which included all of the outstanding shares of ICMOSA. As part of the transaction, substantially all the U.S. denominated debt was transferred to Del Monte and retired.

Item 4. Controls and Procedures

          (a) Evaluation of Disclosure Controls and Procedures

     Our company maintains a system of disclosure controls and procedures. The term “disclosure controls and procedures”, as defined by regulations of the SEC, means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that our company files or submits to the SEC under the Securities Exchange Act of 1934, as amended (the “Act”), is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits to the SEC under the Act is accumulated and communicated to our company’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions to be made regarding required disclosure. Our company’s Chief Executive Officer and our Chief Financial Officer have evaluated our company’s disclosure controls and procedures as of a date within 90 days of the filing date of this quarterly report on Form 10-Q and have concluded that our company’s disclosure controls and procedures indicate that a material weakness exists at one of its Mexican subsidiaries. The company is currently addressing these issues and implementing procedures to eliminate these weaknesses, including the hiring of a bilingual controller. (See Item 4. (b) below.)

28

     With the filing of this quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, we will be filing over seven months past our extension request to August 14, 2004. This filing delay has been caused by several factors, which are as follows –

	•	The annual audit of our consolidated financial statements for our fiscal year ending December 31, 2003, by our independent public accountants was finalized on November 15, 2003 and we filed our annual report on Form 10-K for our fiscal year ended December 31, 2003 on February 23, 2005.
	•	The company has limited qualified personnel to prepare and file its SEC reports.
	•	As part of our company’s decision to discontinue the juice division of our juice and oil business segment, we entered into contracts to sell our juice processing plants and related equipment located in Mexico. As a result, additional analysis was required in assessing the impairment of these long-lived assets under current accounting literature.
	•	As a result of discontinuing our juice and oil business segment, the company’s historical financial statements had to be restated to reflect this discontinuance as discontinued operations.
	•	The company went through a further change in control in July 2004 which resulted in further management and director changes.
	•	On August 30, 2004, the company sold its packaged fruit business segment which required the allocation of already limited personnel resources.
	•	The review of certain internal control deficiencies by our company’s Audit Committee and independent accountants.
	•	The replacement of several members of our company’s Audit Committee with independent directors.
	•	The resignation of certain personnel and their impact on financial statement preparation.
	•	The company changed its independent auditors on March 4, 2005, from Mancera S.C., Member Practice of Ernst & Young Global to KBA Group LLP.

     (b) Changes in Internal Controls

     Our company also maintains a system of internal controls. The term “internal controls”, as defined by the American Institute of Certified Public Accountants’ Codification of Statement on Auditing Standards, AU Section 319, means controls and other procedures designed to provide reasonable assurance regarding the achievement of objectives in the reliability of our company’s financial reporting, the effectiveness and efficiency of our company’s operations and our company’s compliance with applicable laws and regulations. In connection with the preparation of our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2003, our management identified certain deficiencies in the company’s internal control procedures, one of which would be deemed to be a material weakness under standards established by the American Institute of Certified Public Accountants. The nonmaterial internal control deficiencies were investigated by our previous Audit Committee and our independent accountants and did not result in a material misstatement of our condensed consolidated financial statements. The material weakness, which was concurred by our auditors and Audit Committee, was the result of the company’s delay in timely filing its SEC Form 10-Q reports for 2004 and its Form 10-K report for December 31, 2003. Our management and its new Audit Committee have adopted corrective measures, and will be adopting others to address and eliminate this material and nonmaterial deficiencies, which should improve our internal and disclosure controls and timely SEC reporting. These corrective measures include:

	1)	Hiring of a bilingual controller.
	2)	Improved controls relating to the payment of certain expenses at one of our Mexican subsidiaries.
	3)	The hiring of an additional external accounting firm hired to assist in the preparation of its monthly and quarterly financial statements.
	4)	Continued emphasis on the timely receipt of monthly and quarterly financial information from one of our Mexican subsidiaries.
	5)	Closer monitoring of the preparation of its monthly and quarterly financial information to assure timely receipt in order to timely file its SEC reports.

29

Part II — OTHER INFORMATION

Item 1. Legal Proceedings.

     As a result of the decline in the worldwide market prices of FCOJ, during 2000 we decided to discontinue operating a juice processing facility in Mexico that had been leased from Frutalamo under the terms of deposit, operating and stock purchase agreements entered into in December 1996. As we were unsuccessful in negotiating a settlement with Frutalamo to terminate such agreements, we wrote off a previously recorded non-refundable deposit of $1.5 million and recorded a cancellation fee of $1.0 million, both of which were non-cash charges which were associated with our discontinued juice and oil business segment.

     Subsequent to December 31, 2000, Frutalamo and certain of its shareholders initiated legal proceedings in Mexico naming as defendants certain of our Mexican subsidiaries, certain current and former employees, officers and directors of our company and a former contractor. In September 2002, we settled these claims for $125,000 in cash. We have learned that, notwithstanding such settlement, certain claims asserted against us by the Frutalamo Plaintiffs, prior to September 2002, continue to be under review before the Mexican courts. Management denies any wrongdoing in this matter and intends to vigorously contest these claims. The resolution of this matter is not expected to have a material adverse effect on our consolidated financial condition or results of operations.

     In addition to the matter described above, from time to time our company is engaged in various other legal proceedings in the normal course of business. The ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time. However, our company, based on the consultation with legal counsel, is of the opinion that there are no matters pending or threatening which could have a material adverse effect on our consolidated financial position or results of operations.

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

None

Item 3. Defaults Upon Senior Securities.

     See Note 3 to our condensed consolidated financial statements for a discussion of our noncompliance with our loan agreements with Bancomext, Banorte and FOCIR. As part of the Del Monte sale on August 30, 2004, the Bancomext and Banorte debt was transferred and retired. The FOCIR debt was restructured on August 4, 2004, and the defaulted covenants were eliminated from the new agreement.

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

None

Item 5. Other Information.

None

Item 6. Exhibits and Report on Form 8-K

	(a)	Exhibits
		See “Exhibit Index” immediately following the signature page.
	(b)	Report on Form 8-K
		None

30

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE UNIMARK GROUP, INC.                    Registrant

Date: March 30, 2005	/s/ Jakes Jordaan
	Jakes Jordaan, President
	(Principal Executive Officer)

Date: March 30, 2005	/s/ David E. Ziegler
	David E. Ziegler, Chief Financial Officer
	(Principal Accounting Officer)

31

EXHIBIT INDEX

Exhibit
Number

31.1	Certification of Chief Executive Officer Pursuant to Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32