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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

 
AMENDMENT NO. 1
TO
FORM 10-K /A
 

 
ý
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
   
For the fiscal year ended December 31, 2013
     
   
or
     
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
   
For the Transition Period from                                to                               
     
   
COMMISSION FILE NUMBER: 0-49737

UNI-PIXEL, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
DELAWARE
 
75-2926437
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)

8708 Technology Forest Place, Suite 100
The Woodlands, Texas 77381
(Address of Principal Executive Offices)

(281) 825-4500
(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class
Name of Each Exchange on which Registered
Common Stock, par value $0.001 per share
The NASDAQ Capital Market

Securities Registered Pursuant to Section 12(g) of the Act:

 (Title of Class)
 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act.  Yes¨   Nox

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes¨   Nox

Indicate by check mark whether 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yesx   No¨
 
Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yesx   No¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer ¨
  
Accelerated Filer                   x
Non-Accelerated Filer   ¨
  
Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes¨   Nox
 
The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $172,748,456 on June 30, 2013, based on the last reported sales price of the registrant’s common stock on The NASDAQ Capital Market on such date. All executive officers, directors and 10% or more beneficial owners of the registrant’s common stock have been deemed, solely for the purpose of the foregoing calculation, “affiliates” of the registrant.
 
As of January 31, 2014, there were 12,244,714 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.
 
 
EXPLANATORY NOTE

On October 29, 2014, November 25, 2014 and January 5, 2015, Uni-Pixel, Inc. received letters from the Securities and Exchange Commission relating to our Annual Report on Form 10-K for the year ended December 31, 2013 that was filed on February 26, 2014 (the “Original Report”).  The purpose of this amendment (“Amendment No. 1”) is to respond to these comment letters.

The disclosures in Amendment No. 1 continue to speak as of the date of the Original Report, and do not reflect events occurring after the filing of the Original Report.  Accordingly, Amendment No. 1 should be read in conjunction with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Report and any other amendments to those filings.  The filing of Amendment No. 1 shall not be deemed to be an admission that the Original Report, when made, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.  In particular, we continue to believe that no law, rule or regulation requires the filing of certain agreements entered into by Uni-Pixel, Inc., but we are filing these agreements with Amendment No. 1 as exhibits 10.12 through 10.14 at the direction of the Securities and Exchange Commission.  The filing of these agreements shall not be deemed to be an admission that the agreements are required to be filed by any law, rule or regulation.
 
 
 

 
 
 
TABLE OF CONTENTS

PART I
 
ITEM 1.
5
ITEM 1A.
14
ITEM 1B.
19
ITEM 2.
19
ITEM 3.
19
ITEM 4.
20
     
PART II
 
ITEM 5.
21
ITEM 6.
23
ITEM 7.
23
ITEM 7A.
29
ITEM 8.
29
ITEM 9.
30
ITEM 9A.
30
ITEM 9B.
30
     
PART III
 
ITEM 10.
31
ITEM 11.
34
ITEM 12.
40
ITEM 13.
41
ITEM 14.
42
     
PART IV
 
ITEM 15.
43
     
 
44

 
PART I

ITEM 1.  BUSINESS

Cautionary Note About Forward-Looking Statements
 
Certain matters discussed herein may constitute forward-looking statements and as such may involve risks and uncertainties.  In this Annual Report on Form 10-K, the words “anticipates,” “believes,” “expects,” “intends,” “future” and similar expressions identify certain forward-looking statements.  These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our mission and vision.  Our actual results, performance, or achievements may differ significantly from the results, performance or achievements expressed or implied in such forward-looking statements.  For discussion of the factors that might cause such a difference, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”  We undertake no obligation to update or revise such forward-looking statements.  We urge readers to review carefully the risk factors described in this Annual Report found in Item 1A. and the other documents that we file with the Securities and Exchange Commission (“SEC”). These documents can be read at www.sec.gov.

OVERVIEW

We are a pre- production stage company delivering our Performance Engineered Film™ (PEF) products to the display, touch screen and flexible electronics market segments.   Our production to date has been limited to individual special orders.  We recently rebranded our PEF production process as Copperhead™.  We have also recently rebranded the touch sensors made with the Copperhead™ process as InTouch™ sensors.

We make transparent conductive films and flexible electronic films based on our proprietary Copperhead™ manufacturing process for high volume, roll to roll printing of flexible thin-film conductor patterns. The Copperhead™ process offers precision micro-electronic circuit patterning and modification of surface characteristics over a large area on an ultra-thin, clear, flexible, plastic substrate. These films may be incorporated into touch sensors, capacitive switches, general lighting, automotive, antenna, display and shielding applications.  We intend to sell the touch screen films, under the brand InTouch™, as sub-components of a touch sensor module.  

In addition to the flexible electronic films described above, for evaluation purposes we are currently shipping our hard coat resin and protective films for use with multiple types of devices either as protective cover films, a cover lens replacement or a conformal hard coat for plastic components. We sell our hard coat resin and optical films under the Diamond Guard™ brand.  Furthermore, our past work in developing the Time Multiplexed Optical Shutter (TMOS) technology, which we sold in May 2010, led to advances in the field of thin-film advanced optics that we believe can be leveraged for other marketable applications, such as low cost LCD backlights and general lighting films. We intend to explore the business potential within these applications and pursue those markets that offer profitable opportunities either through licensing or direct production and sales.  

Our strategy is to further develop our proprietary Performance Engineered Film™ technology around the vertical markets that we have identified as high growth profitable market opportunities.  These markets include touch sensors, antennas, automotive and lighting. We have and will continue to utilize contract manufacturing for prototype fabrication to augment our internal capabilities in the short term. We also plan to enter into licensing arrangements, joint developments or ventures in key market segments to exploit the manufacturing and distribution channels of the targeted partners.

Formation History

We were originally incorporated in the State of Nevada as Super Shops, Inc. On November 15, 1999, Super Shops and its sister companies filed an amended petition under Chapter 11 of the United States Bankruptcy Code. On July 31, 2000, the court approved Super Shops’ Amended Joint Plan of Reorganization. On October 13, 2000, and in accordance with the Plan of Reorganization, the management of Super Shops changed its state of incorporation from Nevada to Delaware by merging with and into NEV Acquisition Corp., a Delaware corporation formed solely for the purpose of effecting the reincorporation.

On June 13, 2001, Real-Estateforlease.com, Inc., a Delaware corporation, merged with and into NEV Acquisition Corp.  Following the merger, NEV Acquisition Corp. changed its name to Real-Estateforlease.com, Inc.  Real-Estateforlease.com, Inc. was incorporated on May 24, 2001, in the State of Delaware to serve as a business-to-business internet information intermediary providing turnkey marketing services to facilitate the leasing of commercial real estate properties.

Pursuant to the Agreement and Plan of Merger between NEV Acquisition Corp. and Real-Estateforlease.com, Inc., the sole stockholder and founder of Real-Estateforlease.com, Inc. exchanged his equity ownership interest in Real-Estateforlease.com, Inc. for 633,334 shares (or approximately 96%) of NEV Acquisition Corp.’s common stock. At the time of the merger between Real-Estateforlease.com, Inc. and NEV Acquisition Corp., Real-Estateforlease.com, Inc. had no operations and essentially no assets. Efforts by Real-Estateforlease.com, Inc. to implement its business plan ceased in June 2002.
 

Our wholly owned subsidiary, Uni-Pixel Displays, Inc. was originally incorporated as Tralas Technologies, Inc., a Texas corporation, on February 17, 1998. Tralas Technologies, Inc. changed its name to Uni-Pixel Displays, Inc. during 2001. On December 7, 2004, Real-Estateforlease.com, Inc. entered into a merger agreement with Uni-Pixel Displays, Inc. and certain other parties pursuant to which Uni-Pixel Displays, Inc. became a wholly-owned subsidiary of Real-Estateforlease.com, Inc. At the time of this merger, Real-Estateforlease.com, Inc. had no operations and no material assets or liabilities.  Pursuant to the merger, we changed our name from Real-Estateforlease.com, Inc. to Uni-Pixel, Inc. at the annual meeting of our stockholders held in January 2005.

Uni-Pixel, Inc. is now the parent company of our wholly-owned operating subsidiary, Uni-Pixel Displays, Inc. As used in this document, “Uni-Pixel,” “we,” “us,” and “our” refer to Uni-Pixel, Inc. and our wholly-owned consolidated subsidiary, Uni-Pixel Displays, Inc.

The common stock, par value $0.001 per share, of Uni-Pixel is currently quoted on The NASDAQ Capital Market under the ticker symbol “UNXL.” From January 18, 2006 until December 9, 2010, our common stock was quoted on the OTC Bulletin Board under the ticker symbol “UNXL”.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (SEC) via EDGAR.  Our SEC filings are available free of charge to the public at our website, www.unipixel.com, as soon as reasonably practicable after they have been filed with or furnished to the SEC.

The Touch Sensor Market

Proliferation of Touch-Enabled Mobile Consumer Electronics Devices.  Consumers throughout the world are rapidly adopting mobile consumer electronics devices such as smartphones, mini and full-size tablet computers, touch enabled notebook computers, All-In-One computers, mobile gaming devices and digital cameras. Advances in component technology are driving down the cost of these products and expanding their functionality. Early mobile devices were equipped with small displays with limited functionality. As the cost of color displays decreased and quality improved, consumers began rapidly adopting mobile devices with color displays. This trend towards greater functionality in mobile devices continues with the development of smartphones with touch sensors, ultra-high resolution displays, embedded cameras and high-speed data networking capability.

The overall touch sensor enabled computer electronics industry is continuing to experience significant growth.  The industry growth is being driven by a number of market forces including:

 
·
Increased demand for large format high resolution televisions and computer monitors;
 
·
Steady growth in usage of smartphones, phablets, tablet computers, notebooks, and All-In-One computers;
 
·
A migration to larger color screens, which are multi-touch enabled, for smartphones and other mobile devices; and
 
·
Decreasing costs, increasing production and improving efficiency as a newer generation of smart mobile devices are increasing production.

These factors in combination with additional market forces are driving overall growth and shifting the mix of product applications within the touch-enabled device industry.

Applications.  With the enormous growth in internet usage, there has not only been an explosion in the amount of available content, but a rapid evolution of the form in which it appears.  No longer is information a two-dimensional, text-only experience; online content is now being delivered in graphic rich, animated and video formats.  As the sophistication of the user base continues to heighten and bandwidth continues to increase, we believe there will be increasing demand for superior, high-resolution visual and touch experiences.  Flowing from this demand, we expect that new types of applications and functionality will evolve that, in turn, will enhance existing markets and create new ones. The continued evolution of technologies such as touch-enabled notebook computers, tablet computers, and smartphones, and the ability to connect all of these devices through mobile high-speed data networks, will likely fuel significant demand and, therefore, growth in what have become relatively mature markets.  The devices that deliver this rich user experience will generally have two things in common:  high resolution displays and touch interfaces.  We believe that Uni-Pixel is well situated to take advantage of these growing markets with our Diamond Guard™ hard coat and InTouch™ flexible printed touch sensors.
 
Films for Displays.  Glass and plastics are the principal materials being used as first surfaces for display systems.  Because displays are incorporated into devices that are used extensively and are transportable, the displays are subject to damage and the effects of use in challenging environments.  A large and growing business has developed in films that are designed to provide protection and other functional uses on top of the display surface.  The technologies that Uni-Pixel has developed can be applied to a variety of functional uses in films for display products. The Company’s Diamond Guard™ Anti-Scratch protective cover film product  can be  used to protect touch screen devices from scratches while providing a transparency and gloss equivalent to glass.  In other embodiments, our Diamond Guard™ coating can be applied to substrates that can be used as the first surface of hand held electronic devices or cover plastic parts that could form the shell casing for mobile electronic devices. Diamond Guard™ coating can be used to replace the current cover glass and enable softer plastics to be used in external cases and other components that have been heretofore dominated by glass or metal parts.  We believe it will be less expensive to manufacture and install in addition to being lighter and more shatter and scratch resistant.
 
 
Comparing Touch Screen Technologies

The touch screen is one of the easiest user interfaces to use, making it the interface of choice for a wide variety of applications.  Accordingly, there are several technologies that compete to capitalize on this market.  The following are some examples of these technologies:

Resistive. A resistive touchscreen panel comprises several layers, the most important of which are two thin, transparent electrically-resistive layers separated by a thin space. These layers face each other with a thin gap between. The top screen (the screen that is touched) has a coating on the underside surface of the screen. Just beneath it is a similar resistive layer on top of its substrate. One layer has conductive connections along its sides, the other along top and bottom. A voltage is applied to one layer, and sensed by the other. When an object, such as a fingertip or stylus tip, presses down on the outer surface, the two layers touch to become connected at that point. The panel then behaves as a pair of voltage dividers, one axis at a time. By rapidly switching between each layer, the position of a pressure on the screen can be read.

Resistive touch is used in restaurants, factories and hospitals due to its high resistance to liquids and contaminants. A major benefit of resistive touch technology is its low cost. Additionally, as only sufficient pressure is necessary for the touch to be sensed, they may be used with gloves on, or by using anything rigid as a finger/stylus substitute. Disadvantages include the need to press down, and a risk of damage by sharp objects. Resistive touchscreens also suffer from poorer contrast, due to having additional reflections from the extra layer of material placed over the screen.

Surface acoustic wave. Surface acoustic wave (SAW) technology uses ultrasonic waves that pass over the touchscreen panel. When the panel is touched, a portion of the wave is absorbed. This change in the ultrasonic waves registers the position of the touch event and sends this information to the controller for processing. Surface wave touchscreen panels can be damaged by outside elements. Contaminants on the surface can also interfere with the functionality of the touchscreen.

Capacitive.  A capacitive touchscreen panel consists of an insulator, such as glass, coated with a transparent conductor such as indium tin oxide (ITO). As the human body is also an electrical conductor, touching the surface of the screen results in a distortion of the screen's electrostatic field, measurable as a change in capacitance. Different technologies may be used to determine the location of the touch. The location is then sent to the controller for processing.

Unlike a resistive touchscreen, one cannot use a capacitive touchscreen through most types of electrically insulating material, such as gloves. This disadvantage especially affects usability in consumer electronics, such as touch tablet PCs and capacitive smartphones in cold weather. It can be overcome with a special capacitive stylus, or a special-application glove with an embroidered patch of conductive thread passing through it and contacting the user's fingertip.

The largest capacitive display manufacturers continue to develop thinner and more accurate touchscreens, with touchscreens for mobile devices now being produced with “in-cell” technology that eliminates a layer, such as Samsung's Super AMOLED screens, by building the capacitors inside the display itself. This type of touchscreen reduces the visible distance (within millimetres) between the user's finger and what the user is touching on the screen, creating a more direct contact with the content displayed and enabling taps and gestures to be even more responsive.

Surface capacitance.  In this basic technology, only one side of the insulator is coated with a conductive layer. A small voltage is applied to the layer, resulting in a uniform electrostatic field. When a conductor, such as a human finger, touches the uncoated surface, a capacitor is dynamically formed. The sensor's controller can determine the location of the touch indirectly from the change in the capacitance as measured from the four corners of the panel. As it has no moving parts, it is moderately durable but has limited resolution, is prone to false signals from parasitic capacitive coupling, and needs calibration during manufacture. It is therefore most often used in simple applications such as industrial controls and kiosks.
 
Projected capacitance.  Projected Capacitive Touch (PCT; also PCAP) technology is a variant of capacitive touch technology. All PCT touch screens are made up of a matrix of rows and columns of conductive material, layered on sheets of glass. This can be done either by etching a single conductive layer to form a grid pattern of electrodes, or by etching two separate, perpendicular layers of conductive material with parallel lines or tracks to form a grid. Voltage applied to this grid creates a uniform electrostatic field, which can be measured. When a conductive object, such as a finger, comes into contact with a PCT panel, it distorts the local electrostatic field at that point. This is measurable as a change in capacitance. If a finger bridges the gap between two of the "tracks," the charge field is further interrupted and detected by the controller. The capacitance can be changed and measured at every individual point on the grid (intersection). Therefore, this system is able to accurately track touches. Due to the top layer of a PCT being glass, it is a more robust solution than less costly resistive touch technology. Additionally, unlike traditional capacitive touch technology, it is possible for a PCT system to sense a passive stylus or gloved fingers. However, moisture on the surface of the panel, high humidity, or collected dust can interfere with the performance of a PCT system. There are two types of PCT: mutual capacitance and self-capacitance.
 
 
Mutual capacitance.  This is the common PCT approach, which makes use of the fact that most conductive objects are able to hold a charge if they are very close together. In mutual capacitive sensors, there is a capacitor at every intersection of each row and each column. A 16-by-14 array, for example, would have 224 independent capacitors. A voltage is applied to the rows or columns. Bringing a finger or conductive stylus close to the surface of the sensor changes the local electrostatic field which reduces the mutual capacitance. The capacitance change at every individual point on the grid can be measured to accurately determine the touch location by measuring the voltage in the other axis. Mutual capacitance allows multi-touch operation where multiple fingers, palms or styli can be accurately tracked at the same time.

Self-capacitance. Self-capacitance sensors can have the same X-Y grid as mutual capacitance sensors, but the columns and rows operate independently. With self-capacitance, the capacitive load of a finger is measured on each column or row electrode by a current meter. This method produces a stronger signal than mutual capacitance, but it is unable to resolve accurately more than one finger, which results in "ghosting", or misplaced location sensing.

Infrared grid.  An infrared touchscreen uses an array of X-Y infrared LED and photodetector pairs around the edges of the screen to detect a disruption in the pattern of LED beams. These LED beams cross each other in vertical and horizontal patterns. This helps the sensors pick up the exact location of the touch. A major benefit of such a system is that it can detect essentially any input including a finger, gloved finger, stylus or pen. It is generally used in outdoor applications and point of sale systems which cannot rely on a conductor (such as a bare finger) to activate the touchscreen. Unlike capacitive touchscreens, infrared touchscreens do not require any patterning on the glass which increases durability and optical clarity of the overall system. Infrared touchscreens are sensitive to dirt/dust that can interfere with the IR beams, and suffer from parallax in curved surfaces and accidental press when the user hovers his/her finger over the screen while searching for the item to be selected.

Infrared acrylic projection.  A translucent acrylic sheet is used as a rear projection screen to display information. The edges of the acrylic sheet are illuminated by infrared LEDs, and infrared cameras are focused on the back of the sheet. Objects placed on the sheet are detectable by the cameras. When the sheet is touched by the user the deformation results in leakage of infrared light, which peaks at the points of maximum pressure indicating the user's touch location. Microsoft's PixelSense tablets use this technology.

 Optical imaging. Optical touchscreens are a relatively modern development in touchscreen technology, in which two or more image sensors are placed around the edges (mostly the corners) of the screen. Infrared back lights are placed in the camera's field of view on the other side of the screen. A touch shows up as a shadow and each pair of cameras can then be pinpointed to locate the touch or even measure the size of the touching object. This technology is growing in popularity, due to its scalability, versatility, and affordability, especially for larger units.

Dispersive signal technology.  Introduced in 2002 by 3M, this system uses sensors to detect the piezoelectricity in the glass that occurs due to a touch. Complex algorithms then interpret this information and provide the actual location of the touch. The technology claims to be unaffected by dust and other outside elements, including scratches. Since there is no need for additional elements on screen, it also claims to provide excellent optical clarity. Also, since mechanical vibrations are used to detect a touch event, any object can be used to generate these events, including fingers and stylus. A downside is that after the initial touch the system cannot detect a motionless finger.

Acoustic pulse recognition (APR).  In this system, introduced by Tyco International's Elo division in 2006, the key to the invention is that a touch at each position on the glass generates a unique sound. Four tiny transducers attached to the edges of the touchscreen glass pick up the sound of the touch. The sound is then digitized by the controller and compared to a list of prerecorded sounds for every position on the glass. The cursor position is instantly updated to the touch location. APR is designed to ignore extraneous and ambient sounds, since they do not match a stored sound profile. APR differs from other attempts to recognize the position of touch with transducers or microphones in its use of a simple table lookup method rather than requiring powerful and expensive signal processing hardware to attempt to calculate the touch location without any references. The touchscreen itself is made of ordinary glass, giving it good durability and optical clarity. It is usually able to function with scratches and dust on the screen with good accuracy. The technology is also well suited to displays that are physically larger. Similar to the dispersive signal technology system, after the initial touch, a motionless finger cannot be detected. However, for the same reason, the touch recognition is not disrupted by any resting objects.
 

UNI-PIXEL’S TECHNOLOGY

Overview: Uni-Pixel  is developing  high-performance flexible electronic film products. The patent pending Copperhead™ process uses a high-fidelity manufacturing process to create complex micro-electronic patterns that enable revolutionary new electronic printed circuits, such as projected capacitive touch sensors.  Uni-Pixel believes that the Copperhead™ process can dramatically simplify and reduce the complexity, cost and risk of manufacturing touch sensors and other electronic circuit applications. The Copperhead™ production process enables the printing of fine line conductor patterns on flexible film substrates. This process can produce ultra-fine line (~ 6-8 µm width) conductive lines and patterns that can be used for many printed circuit applications. With our process we can also print pads for connectors along with our circuits, and depending on the design we may be able to eliminate the need for adding separate flex-connectors directly to the film. Our Copperhead™ process has many advantages over competing processes for making fine-line conductor patterns.  These advantages include:

·  
No photo etching process required
·  
Additive patterning, not subtractive like photolithography, uses fewer materials
·  
Room temperature processing
·  
Roll-to-roll for high speed/volume
·  
Single and double sided printing on film
·  
Fast mastering for quick turn around

Successful Prototypes: We have built prototypes that have demonstrated proof of concept, technical viability, and the operation of the InTouch™  touch sensor technology. Our prototyping efforts were directed to developing and optimizing the materials, manufacturing processes and assembly of touch sensor modules.  During 2013, we debuted several fully functional InTouch™  touch sensor prototypes.  

Spin-off Products:  In conjunction with the development of the TMOS display technology, we developed key core technology and know-how in many different areas, such as embossed film, micro-patterned conductors and optical films, that were necessary for the successful development of the TMOS displays.  Through these efforts, we gained a significant understanding of thin polymer films and coatings for thin films.  As part of our development of the TMOS displays, we developed the technology to make large area, high fidelity masters of our optical micro-structures and then replicate those optical micro-structures on a large area thin polymer film.  We also developed the ability to make large quantities of these large area micro-structured films.  The first product we developed as a spin-off from the core TMOS developed technology was our FingerPrint Resistant (FPR) film and both our Copperhead™ platform and our Diamond Guard™ technology were developed using the knowledge we gained in developing TMOS displays.  Our Copperhead™ platform enables the highly efficient manufacturing of flexible printed electronic patterns, such as transparent touch screens.  Our Diamond Guard™ technology enables softer, lighter, less expensive plastics to be used for applications that have been dominated by glass and metal parts.

STRATEGY

Our business strategy is to penetrate existing applications markets with our family of Performance Engineered Film™ technologies including InTouch™ produced touch panels and our Diamond Guard™ hard coat products by leveraging the capabilities and competencies achieved in the development of our functional application specific films. We are presently focused on the following steps to implement our business strategy:

 
·
Develop Strategic Relationships.  We plan to cultivate relationships to further our efforts in the development and commercialization of InTouch™ produced touch panel films and our Diamond Guard™ hard coat technology. We believe that if these efforts are successful, they could result in InTouch™ based touch panels reaching commercial markets in products within the next 12 months.  We are already offering our Diamond Guard™ hard coat films for sale.  We believe that gaining the assistance of technology leading OEMs in the deployment of InTouch™ produced touch panel films by including the films in their products would be a significant step for our commercialization effort of this product.  As a result, we will seek to build relationships with OEMs that will allow us to leverage our existing knowledge, scale, infrastructure, manufacturing and expertise in thin films, optics, fine line printed conductors, assembly, and logistics.

 
·
Enhance the Company’s Existing Performance Engineered Film™ Technology. We believe that continuing development and enhancement of our PEF technology is critical to our success, therefore, we engage in internal development efforts that we expect will expand our intellectual property portfolio, collaborative relationships, and other strategic opportunities. Our primary focus is to expand our intellectual property through development of additional prototypes and materials that enhance and extend our product capabilities or the processes by which the systems are produced, thereby allowing them to be used in a broader array of applications.
 
 
·
Develop Prototypes Suitable for Industry Demonstration.  We have produced prototypes that we believe demonstrate our ability to meet the product requirements with a performing system and film products that we believe have superior touch performance to those currently used in the industry.  We have developed partners that provide a small volume pilot production line that provides limited quantities of films to demonstrate our production solutions for all applications.

 
·
Finalize a Manufacturing Process. We are developing the core and foundation of our film manufacturing processes and have endeavored to protect the know-how and intellectual property in the developed processes.  While we use partners and sub-contractors to manufacture the Diamond Guard™ protective cover films and apply our hard coat resin to various products, we intend to acquire all necessary equipment to manufacture the Copperhead™ films internally with our manufacturing partner.
 
 
·
Target Leading Manufacturers. We are targeting leading display, materials and electronics manufacturers as potential partners and/or integrators of our Performance Engineered Film™ products. We will provide extensive technical assistance and support to manufacturers who are early evaluators, developers, or users of our protective cover and InTouch™ touch screen films. We also employ a “pull through” strategy (targeting end device OEMs) by actively marketing the advantages of our technologies to the manufacturers that incorporate touch screen technology into their devices.  This could result in our production partners to gaining access to the OEM supply chain driven by end OEMs seeking the competitive product advantages offered by our Performance Engineered Film™ technologies.  We also target Original Design Manufacturers (ODMs) targeted to assemble our sub-components and films into OEM products.
 
 
 
·
Drive Adoption by End-Product Original Equipment Manufacturers. We plan to employ a “pull through” strategy by using prototype devices and films to demonstrate our technology to OEMs and ODMs that produce end user products. We believe that the significant advantages that our films will offer in performance and protection will induce OEMs to request our solutions from their existing suppliers.

 
·
Build the Company’s Revenue Sources. We believe that we will be able to produce revenues from three distinct sources: product or production licenses, product sales (InTouch™, Diamond Guard™ resins and films, and other optical film sales), and funded engineering services (in support of one of our products, paid for by a customer).

We plan to conduct research on the use of a variety of different thin-film technology in surface modification applications and the construction of multi-layer stacks where micro-structures can play unique functional roles. Our focus on next-generation technologies is designed to help establish us as a recognized provider of Performance Engineered Film™ as new markets and applications emerge.

MILESTONES TO COMMERCIALIZATION

We will continue to focus on technical and business development milestones. The execution of our overall business plan includes a planned push (targeting computer component manufacturers) and pull (targeting end device OEMs) strategy for accelerating product development, supporting market entry, and the expansion of production capability and capacity.  Over the course of the last three years, we have pursued a technical development roadmap specific to Diamond Guard™ hard coat and Copperhead™ technologies that seeks to accomplish the following:

 
·
Finalization of Diamond Guard™ hard coat materials and coating technologies for protective cover films and anti-scratch coatings;
 
·
Characterization of the performance of Diamond Guard™ films and coatings as cover lens replacement across numerous touch screen devices;
 
·
Implementation of high volume production of protective cover film;
 
·
Implementation of high volume production of hard coating processes (spray coating, ink jet coating, etc.);
 
·
Establishment of numerous sales channels for Diamond Guard™ products;
 
·
Development of the Copperhead™ high volume production process; and
 
·
Finalization of specifications for the production of InTouch™ films for use in touch sensors

Specific to other Performance Engineered films, we have pursued:

 
·
Completion of designs for marketable products
 
·
Completion of production processes for those products
 
·
Completion of joint development and supply and manufacturing agreements

Our senior management team will work with various targeted strategic partners in each step of the process to provide certain market and technical support resources.  We intend to leverage partner resources in launching and growing a continuous flow manufacturing system.  
 
CUSTOMERS AND PARTNERS

We believe the future customers for the protective cover films and Copperhead™ printed electronic film will be the device manufacturers and OEMs that currently use touch screens with the LCD and OLED displays in their products. Initially, we expect that the process of commercializing our technology will result in our strategic partners, including our development partners, manufacturing partners and other vertical market partners, becoming our primary customers.

We expect that we will pursue discussions with a variety of potential assembly and manufacturing partners as we achieve our technical milestones for our InTouch™ printed electronic film for touch sensors.  We expect that these discussions will include the demonstration of touch sensor film that can either directly displace alternative technologies, or allow for unique new design implementations.  If design contracts for our films are secured, we will leverage these OEM customers for product unit demand to target potential manufacturing partners to expand production capacity.  We have completed, with the assistance of various partners, development work that provides comprehensive validation of our Performance Engineered Film™ technology and we believe that will serve as a basis for future customer growth.
 
 
We expect our future protective cover film customers to include a variety of companies from device OEMs to channel distribution partners.  We will seek to sell rolls of film in uncut format as well as films that are die-cut and packaged as direct-to-market products.  The type and variety of film sales will depend on the nature of the specific buyer and target application for the film.
 
Current Partners

 
·
Carestream (Film Manufacturing Partner): We engaged a production partner for specific varieties of our protective cover film products.  They provide assistance in the development and manufacturing of coated films.  Manufacturing of our protective cover films can be accomplished using proprietary resins that Uni-Pixel will provide.  They will support the manufacturing, warehousing and sales of our protective cover film line of products.

 
·
Undisclosed Plating Sub-Contractor: We have signed a manufacturing and supply agreement with this plating sub-contractor.  We have purchased and installed our initial 3 lines of roll-to-roll electroless plating equipment at the facilities owned and operated by this sub-contractor.

 
·
Undisclosed PC OEM: We have signed a preferred pricing and reserved capacity license agreement with this PC OEM.  We have utilized the license fee to expand our production capacity and believe that we will sell significant quantities of InTouch™ touch sensors through this relationship.

 
·
Intel: We have signed a preferred pricing and reserved capacity license agreement with this Intel.  We have utilized the license fee to expand our production capacity and believe that we will sell significant quantities of InTouch™ touch sensors through this relationship.

 
·
Kodak: We have signed a joint development and manufacturing agreement with Kodak.  We have worked with Kodak to modify one of its buildings in its Rochester, New York facility to house our high volume production capability for InTouch™ sensors.  In December 2013, we completed the installation of the first suite of manufacturing tools and cleanroom facilities. The installation includes plate mastering equipment, two roll-to-roll printing lines and four roll-to-roll plating lines in a 100,000 sq. ft. manufacturing space.  Kodak’s Rochester facility, along with the existing printing line and three additional plating lines at our Texas facility, will serve as the foundation for our commercial volume manufacturing efforts.  Our focus during the first and second quarters of 2014 will be on finalizing a highly reliable, high-volume manufacturing process to enable shipments of commercial volumes of InTouch™ sensors in the second half of 2014.

Targeted Partners

 
·
Touch Screen Controller Manufacturers: Although not material to our business plans, we will continue working with touch screen drive controller manufacturers to expand the market for our InTouch™ touch sensors.  We have demonstrated that, while InTouch™ touch sensors work with existing touch controllers, the touch controllers can be further modified to maximize the performance advantages that InTouch™ touch sensors offer.

 
·
Manufacturing and Assembly Partners: We are seeking strategic partners that are currently manufacturing or integrating touch screen panels into end user products.
 
Target Customers

 
·
Large OEM and ODM for InTouch™ touch screens and protective cover films: We have demonstrated unique proof of concept prototype devices and film products to large computer system OEMs under non-disclosure agreements to advance the evaluation of the technologies.  The initial prototypes established the first products for testing, evaluation and performance characterization necessary to gather direct performance feedback.  Additional work continues specifically to advancing the prototypes to implementation within an end user product.

 
·
Consumer Electronics Manufacturers: We have held initial exploratory meetings with a variety of consumer electronics OEMs, including cell phone, computer and television system manufacturers, that have all expressed a desire to possibly leverage InTouch™ touch screen films and protective cover films for the unique attributes in their products.  Each of these interactions has resulted in an invitation to return for further engineering specific meetings and significant sample exchange and evaluations, as our product development advances.
 
 
SALES AND MARKETING

We are seeking end user product OEMs that desire to integrate InTouch™ touch screens and Diamond Guard™ protective cover films and hard coat offerings into their products once available. We believe that some of the OEMs that have been engaged in these discussions will be interested in pursuing the advantages of InTouch™ touch screens and Diamond Guard™ films as a differentiator for their products relative to their competition in their individual market segments over time.  We believe that the proven entry into a single vertical market or application will drive the demand for that product for expanded applications to other product markets.

Our sales strategy intends to build a diverse revenue base that will derive revenues from multiple sources:

 
·
Product revenues — Proceeds from the sales of Performance Engineered Film™ products from retail, wholesale and OEM sales channels.
 
·
Critical materials — Proceeds from the sales of Performance Engineered Film™ products to integrators or manufacturers that produce or assemble devices with touch screens.
 
·
Engineering support contracts — Integrators that are seeking to differentiate their products by leveraging the unique attributes that our Performance Engineered Film™ can potentially provide.

Currently, management is introducing our products to OEMs in various market segments.  We do this by using our prototypes to demonstrate the advantages that our Performance Engineered Film™ can provide in the form of improved efficiencies and performance. We expect to create OEM interest in our products by gaining design wins for integration of protective cover films and InTouch™ printed electronic film into established end user devices and applications.

Our plan is to advance our brand in the industry by actively demonstrating to OEMs the elegance and performance advantages of our unique solutions.  If our initial products reach the market and we begin to build momentum and manufacturing capacity within the industry, we may launch a marketing program to drive awareness of our technology as a component “brand” within the end user products.   We expect that this marketing program will be designed to drive awareness and education of our unique capabilities and enhanced performance among OEMs and wholesale and retail channels.   We believe that we will be able to promote our brand as a valued component brand included within the OEM products as a part of our relationship with the end product OEMs.  Ultimately the goal of this marketing program will be to:

·  
establish us and our unique technologies, independently, as a differentiating factor in end user products; and

·  
help promote our value as a component product through the inclusion by our partner OEMs of our Performance Engineered Film™ technology in their products.

RESEARCH AND DEVELOPMENT

For the twelve months ended December 31, 2013, 2012 and 2011, we have spent approximately $10.4 million, $5.1 million and $4.5 million, respectively, on research and development activities.  We continue conducting research and development both internally and externally and anticipate investments going forward.

Our headquarters and primary development activities are located in The Woodlands, Texas in two facilities located within 2 blocks of each other.  The headquarters location, which is comprised of both the primary offices as well as the development facility which houses our chemistry and testing operations, includes a Class 100 clean room where Copperhead™, Diamond Guard™ and all PEF materials development and testing is conducted.  Our facilities also include a roll-to-roll prototype and initial production line, mastering equipment, an electronics lab, optical testing facilities, test and measurement equipment, and electronics development systems.
 
Currently, we are engaged in the development of next generation products and prototypes to further demonstrate the full functionality of the PEF technology across multiple applications and markets in a variety of implementations. We have consolidated our vendors to a small group that assist our prototype efforts.  Working with our strategic partners, we hope to advance to our next generation working prototype devices.

The next phase prototypes should serve to support a product roadmap that targets the production of viable commercial InTouch™ touch screens within six to twelve months. The development process is intended to also include selecting and completing the preferable manufacturing processes.  On January 6, 2014, we announced that the start of the manufacturing ramp for the InTouch™ sensors product line has been delayed until the second quarter of 2014.  In 2013, we provided hundreds of samples and demonstration units to key potential customers, including the delivery of a low-volume prototype order in December although no commercial production orders were shipped. The scaling from lab-based volumes to fully-automated, roll-to-roll production of InTouch™ films has proven to take longer than initially planned. Additional automated testing and in-line measurement equipment arrived in January 2014, and this is expected to accelerate our remaining process development activities. This new equipment will also serve to provide the necessary quality control and quality assurance capabilities once we begin manufacturing in commercial volumes.

We plan to complete the installation and optimization of the manufacturing process for our Copperhead film products and have engaged a small-scale pilot production line that has been the research and development proving ground for a continuous flow manufacturing process followed by a roll-to-roll manufacturing process for all of our Performance Engineered Film™. We believe that the combination of our internal pilot printing equipment, our equipment at the plating sub-contractor, and the Kodak manufacturing facility (both printing and plating) will have adequate capacity to supply potential customer needs for the near future.  It is planned to add additional production equipment to the Kodak facility as demand grows.
 
 
Research and development costs are expensed as incurred and include salaries and benefits, costs to third party contractors to perform research or other activities related to our research, professional fees related to intellectual property work, and a portion of facilities costs.  The materials used in our research and development and in the manufacturing of our Diamond Guard™ films are readily available for purchase in the open market.

INTELLECTUAL PROPERTY SUMMARY

Intellectual Property:  As a company primarily focused on developing new technologies, we expect that our most valuable asset will be our intellectual property. This includes U.S. and foreign patents, patent applications, registered trademarks, common-law trademarks, trade secrets and know-how. We are pursuing an aggressive intellectual property strategy.
 
As of the date of this report, we have 4 U.S. patents issued and 1 Japanese patent issued and 111 patent applications filed.  This includes 30 Paris Convention Treaty (PCT) patent applications which can still be individually filed in up to 172 different countries, including the U.S.  There are 26 applications filed already in the U.S.  We have also filed 46 patent applications in Taiwan, which is not a member of the PCT.  All of the patent applications, barring unforeseen problems, are expected to provide patent protection in many additional countries including China, Japan, South Korea, India and Europe.  We expect to file a significant number of additional patent applications as our technology matures.  Our issued U.S. patents will expire between September 2025 and April 2033.

We have also registered the marks “Unipixel”, “DiamondGuard” and “Uniboss” on the principal register of the U.S. Patent and Trademark Office and we have applied for registration of the marks “InTouch” and “Copperhead Flexible Printed Electronics”.

We rely on a combination of patent and trademark filings, laws that protect intellectual property, confidentiality procedures, and contractual restrictions with our employees and others, to establish and protect our intellectual property rights.

COMPETITION

The industry in which we operate is highly competitive. While existing touch screen technologies based on the use of indium tin oxide (ITO) currently dominate the marketplace, we will be more specifically competing against other emerging technologies that also seek to improve the performance of touch screen systems.  It is our objective to enable the existing touch module assembly infrastructure to incorporate the use of InTouch™ touch screen films into their current manufacturing and assembly operations.  In this way, we believe InTouch™ touch screen products can penetrate the touch screen industry quicker and overcome the resistance to change.  Given the potential advantages that we believe the InTouch™ touch screen films offer, we believe that this should be a relatively quick, inexpensive and profitable process for these manufacturers.
 
Compared to our competition, we believe we follow a more broadly developed business model allowing us to benefit from the following factors:

 
·
A wide range of opportunities to enter the market;
 
·
The flexibility to pursue multiple entry points to multiple market segments;
 
·
The ability to be a supplier of key materials;
 
·
The ability to profitably produce relatively small volumes of products; and
 
·
The ability to leverage established infrastructures.

We currently do not represent a significant competitive presence in our industry.

EMPLOYEES

As of January 31, 2014, we have 42 full-time employees and no part-time employees. None of these employees are covered by a collective bargaining agreement, and we believe our relationship with our employees is good. We also employ consultants on an as-needed basis to supplement existing staff.

OUR COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS

We are not aware of any current federal, state or local environmental compliance regulations that have a material effect on our business activities. We have not expended material amounts to comply with any environmental protection statutes and do not anticipate having to do so in the foreseeable future.
 
 
ITEM 1A. RISK FACTORS

Set forth below are certain risks and uncertainties relating to our business.

You should carefully consider the following information about risks described below, together with the other information contained in this Annual Report on Form 10-K and in our other filings with the SEC. We believe the risks described below are the risks that are material to us as of the filing date of this Annual Report on Form 10-K.  If any of the following risks actually occur, our business financial condition, operating results and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock could decline.

Risks Related to Our Business
 
We are a company with a limited operating history, our future profitability is uncertain and we anticipate future losses and negative cash flow, which may limit or delay our ability to become profitable.

We are a company with a limited operating history and no significant revenues to date.  To date, we have had only a few revenue-generating services and development contracts.  We expect to expend significant resources on consultants, intellectual property protection, research and development, advertising, hiring of personnel and startup costs.  We have not yet demonstrated our ability to generate ongoing revenue, and we may never be able to produce material revenues or operate on a profitable basis.  As a result, we have incurred losses since our inception and expect to experience operating losses and negative cash flow for the foreseeable future.  As of December 31, 2013, we had an accumulated total deficit of $86.5 million.

We anticipate our losses will continue to increase from current levels because we expect to incur additional costs and expenses related to prototype development, consulting costs, laboratory development costs, marketing and other promotional activities, the addition of engineering and manufacturing personnel, and the continued development of relationships with strategic business partners.  Moreover, planned products based upon our Performance Engineered Film™ technology may never become commercially viable and thus may never generate any revenues. Even if we find commercially viable applications for our Performance Engineered Film™ technology and materials, we may never recover our research and development expenses.
 
We are the subject of an SEC investigation.  Any final resolution of this matter could materially and adversely affect our business and our financial condition.

On November 19, 2013, we learned that the Fort Worth Regional Office of the United States Securities and Exchange Commission (“SEC”) issued subpoenas concerning our agreements relating to the InTouch Sensors. We are unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoenas or what impact, if any, the cost of responding to the subpoenas might ultimately have on the Company’s financial position, results of operations, or cash flows. We have not established any provision for losses in respect of this matter. Additionally, no assurance can be given that the ultimate outcome of the SEC investigation will not result in administrative, civil or other proceedings or sanctions against us or our employees by the SEC or any other state or federal regulatory agencies. Such proceedings may result in the imposition of fines and penalties, actions against us or our employees, modifications to business practices and compliance programs or the imposition of sanctions against us. Protracted investigations could also impose substantial costs and distractions, regardless of the outcome. There can be no assurance that any final resolution of this and any similar matters will not have a material and adverse effect on our business and financial condition.

Negative press from the SEC investigation and stockholder litigation could have a material adverse effect on our business and financial condition.

The negative press resulting from the SEC investigation and stockholder litigation matters may have harmed our reputation and could otherwise result in a loss of future business. It could also adversely affect the public’s perception of us and lead to reluctance by new parties to do business with us.  As a result, our business and financial condition may be materially adversely affected.

Current worldwide economic conditions may adversely affect our business, operating results and financial condition.

The United States economy continues to experience a financial downturn, with some financial and economic analysts predicting that the world economy may be entering into a prolonged economic downturn characterized by high unemployment, limited availability of credit, increased rates of default and bankruptcy, and decreased consumer and business spending.  These developments could negatively affect our business, operating results and financial condition in a number of ways.  For example, current or potential customers may delay or decrease spending with us or may not pay us, or may delay paying us for previously purchased products. In addition, this downturn has had, and may continue to have, an unprecedented negative impact on the global credit markets.  Credit has tightened significantly in the last several years, resulting in financing terms that are less attractive to borrowers, and in many cases, the unavailability of certain types of debt financing.  If this crisis continues or worsens, and if we are required to obtain financing in the near term to meet our working capital or other business needs, we may not be able to obtain that financing.  Further, even if we are able to obtain the financing we need, it may be on terms that are not favorable to us, with increased financing costs and restrictive covenants.
 
 
We may be unsuccessful in gaining recognition for our brand name and technology in the marketplace. If we cannot effectively promote our brand and technology, our results of operations and financial condition may suffer.

Our brand name and technology are new and unproven.  In order to gain brand recognition and provide adequate exposure of our technology in the marketplace, we may be required to increase our marketing and advertising budgets.  However, we may not be able to maintain an advertising budget that is sufficient to create and maintain brand loyalty and market exposure.  If we are unable to effectively develop and timely promote our brand and technology and establish a leading position in our marketplace, our results of operations and financial condition will suffer.  

We may fail to adequately protect our proprietary technology, which would allow our competitors to take advantage of our research and development efforts.

Our long-term success largely depends on our ability to market technologically competitive processes and products.  We rely on a combination of patent, trade secret and other intellectual property laws, confidentiality and security procedures and contractual provisions to establish and protect our proprietary rights in our technology, products and processes.  If we fail to obtain or maintain these protections, we may not be able to prevent third parties from using our proprietary technologies.  Our currently pending or future patent applications may not result in issued patents.  In addition, our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products or from third parties infringing our patents or misappropriating our trade secrets or provide us with any competitive advantage.  In addition, effective patent and other intellectual property protection may be unenforceable or limited in foreign countries.  If a third party initiates litigation regarding the validity of our patents, and is successful, a court could revoke our patents or limit the scope of coverage for those patents.
 
We also rely upon trade secrets, proprietary know-how and continuing technological innovation to remain competitive.  We protect this information with reasonable security measures, including the use of confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with strategic partners.  It is possible that these agreements may not be sufficient or that these individuals or companies may breach these agreements and that any remedies for a breach will be insufficient to allow us to recover our costs and damages.  Furthermore, our trade secrets, know-how and other technology may otherwise become known or be independently discovered by our competitors.

If we fail to enter cooperative research agreements, we might not succeed in commercializing our technology and materials.

Research and development of commercially viable applications for our Performance Engineered Film™ technology and materials may at some point depend substantially on the success of the work conducted by and with our present and future research partners. We cannot be certain that these research partners will make the additional advances in these technologies and materials that may be essential to successfully commercialize our Performance Engineered Film™ technology and materials. Moreover, although we fund Performance Engineered Film™ technology research, the scope and technical aspects of this research and the resources and efforts directed to this research currently are and may remain in large part subject to the control of our research partners.

If we cannot form and maintain lasting business relationships with targeted partners, our business strategy could suffer or fail.

Our business strategy includes some dependence upon developing and maintaining commercial licensing and material supply relationships. All of our current relationship discussions with product manufacturers are limited to technology exploration and the evaluation of our Performance Engineered Film™ technology and materials for possible use in commercial applications. Some or all of these relationships may not succeed or, even if they are successful, may not result in the manufacturers’ entering into commercial licensing and material supply relationships with us.

Under our planned technology development and evaluation agreements, we intend to work with strategic partners to incorporate our technologies into their products. However, many of these technology development and evaluation agreements may last for limited periods of time, such that our relationships with these partners could end unless the agreements are renewed. Our partners may not agree to renew their relationships with us on a continuing basis, or may do so on terms that are less favorable to us. In addition, we may continue working with certain strategic partners in evaluating our Performance Engineered Film™ technology and materials after our existing agreements with them have expired while we are attempting to negotiate contract extensions or new agreements with them. Should our relationships with these partners not materialize, or once in place, not continue to be renewed, our business could suffer.

Our ability to enter into commercial licensing and material supply relationships, or to maintain our existing technology development and evaluation relationships, may require us to make financial or other commitments. We might not be able, for financial or other reasons, to enter into or continue these relationships on commercially acceptable terms, or at all. Failure to do so will likely harm our business strategy, operating results and long-term business prospects.
 
 
Our potential for rapid growth and our entry into new markets make it difficult for us to evaluate our current and future business prospects, and we may be unable to effectively manage any growth associated with these new markets, which may increase the risk of your investment and could harm our business, financial condition, results of operations and cash flow.

Our recent development of the Copperhead™ process enables us to enter a large and growing market for transparent touch screens. We believe this technology is a superior replacement to indium tin oxide (ITO) as the transparent conducting layer in a touch screen device. Because this Copperhead™ process is relatively new and we have recently entered new markets in connection therewith, we may be unable to evaluate its relative success and future prospects, particularly in light of our goals to continually grow our existing and new customer base, expand our product offerings, integrate complementary businesses and enter additional new markets.
 
In addition, our potential growth, recent product introductions and entry into new markets may place a significant strain on our resources and increase demands on our executive management, personnel and systems, and our operational, administrative and financial resources may be inadequate. We may also not be able to effectively manage any expanded operations, or achieve planned growth on a timely or profitable basis, particularly if the number of customers using our products and services significantly increases or their demands and needs change as our business expands. If we are unable to manage expanded operations effectively, we may experience operating inefficiencies, the quality of our products and services could deteriorate, and our business and results of operations could be materially adversely affected.
 
If we do not receive additional financing when and as needed in the future, we may not be able to continue the research, development and commercialization of our technology and materials.

Our capital requirements have been and will continue to be significant. In the future, we will likely require substantial additional funds in excess of our current financial resources for research, development and commercialization of our Performance Engineered Film™ technology and materials, to obtain and maintain patents and other intellectual property rights in these technologies and materials, and for working capital and other purposes, the timing and amount of which are difficult to ascertain. Our cash on hand will likely not be sufficient to meet all of our future needs. When and as we need additional funds, such funds may not be available on commercially reasonable terms or at all. If we cannot obtain additional funding when and as needed, our business might fail. Additionally, if we attempt to raise funds in a future offering of shares of our common stock, preferred stock, warrants or convertible promissory notes, or if we engage in acquisitions involving the issuance of such securities, the issuance of these securities could dilute the ownership of our then-existing stockholders.

We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.

A third party may sue us or one of our strategic collaborators for infringing its intellectual property rights.  Likewise, we may need to resort to litigation to enforce our patent rights or to determine the scope and validity of third-party intellectual property rights.

The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert our time away from our business operations.   Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.  If we do not prevail in this type of litigation, we or our strategic collaborators may be required to pay monetary damages; stop commercial activities relating to the affected products or services; obtain a license in order to continue manufacturing or marketing the affected products or services; or attempt to compete in the market with a substantially similar product.

Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue some of our operations.  In addition, a court may require that we pay expenses or damages, and litigation could disrupt our commercial activities.

If we are unable to keep up with rapid technological changes, our processes, products or services may become obsolete.

The touch enabled device market is characterized by significant and rapid technological change.  Although we will continue to expand our technological capabilities in order to remain competitive, research and discoveries by others may make our processes, products or services less attractive or even obsolete.

Our efforts may never demonstrate the feasibility of our Performance Engineered Film™ technology and materials for broad-based product applications.

Our research and development efforts remain subject to all of the risks associated with the development of new products based on emerging and innovative technologies, including without limitation unanticipated technical or other problems and the possible insufficiency of funds for completing development of these products. Technical problems may result in delays and cause us to incur additional expenses that would increase our losses. If we cannot complete, or if we experience significant delays in completing, research and development of our Performance Engineered Film™ technology and materials for use in potential commercial applications, particularly after incurring significant expenditures, our business may fail. 
 
 
Many of our competitors have greater resources, and it may be difficult to compete against them.

The touch enabled device industry is characterized by intense competition. Many of our competitors have better name recognition and substantially greater financial, technical, manufacturing, marketing, personnel and/or research capabilities than we do. They have made and continue to make substantial investments in improving their technologies and manufacturing processes.  In addition, we believe that at times in the past certain plasma and LCD display panel manufacturers have priced their products below the marginal cost of production in an attempt to establish, retain or increase market share. Because of these circumstances, it may be difficult to compete successfully in the display market.
 
The loss of the services of our key management and personnel or the failure to attract additional key personnel could adversely affect our ability to operate our business.

A loss of one or more of our current officers or key employees could severely and negatively impact our operations. Specifically, the loss of services of Bernard T. Marren, interim co-CEO and interim co-President, Carl J. Yankowski, interim co-CEO and interim co-President, Robert J. Petcavich, Senior Vice President and General Manager, Daniel K. Van Ostrand, Senior Vice President Research & Development, or Jeffrey W. Tomz, Chief Financial Officer & Secretary, none of whom has an employment agreement with us, could significantly harm our business. We have no present intention of obtaining key-man life insurance on any of our executive officers or management. Additionally, competition for highly skilled technical, managerial and other personnel is intense. As our business develops, we might not be able to attract, hire, train, retain and motivate the highly skilled managers and employees we need to be successful. If we fail to attract and retain the necessary technical and managerial personnel, our business will suffer and might fail.

The touch enabled device industry has historically experienced significant downturns, which may adversely affect the demand for and pricing of our technology and materials.

The touch enabled device industry has experienced significant periodic downturns, often in connection with, or in anticipation of, declines in general economic conditions. These downturns have been characterized by lower product demand, production overcapacity and erosion of average selling prices. Industry-wide fluctuations and downturns in the demand for touch enabled devices would likely affect the demand for and pricing of our Performance Engineered Film™ technologies and materials and could cause significant harm to our business.

The reliability of market data included in our public filings is uncertain.

Since we operate in a rapidly changing market, we have in the past, and may from time to time in the future, include market data from industry publications and our own internal estimates in some of the documents we file with the SEC.  This data may be inaccurate, incomplete or unreliable. Industry publications generally state that the information contained in these publications has been obtained from sources believed to be reliable, but that its accuracy and completeness is not guaranteed.  Although we believe that the market data used in our filings with the SEC is and will be reliable, it has not been and will not be independently verified.  Similarly, internal company estimates, while believed by us to be reliable, have not been and will not be verified by any independent sources.

Risks Related to Owning Our Common Stock

Our common stock has experienced significant price and volume volatility, which substantially increases the risk of loss to persons owning our common stock.

Our common stock was quoted on the OTC Bulletin Board at prices as low as $2.25 and as high as $22.50 during a period from January 1, 2008 through December 9, 2010.  Our common stock has traded on The NASDAQ Capital Market as low as $3.98 and as high at $41.42 during the period from December 10, 2010 through December 31, 2013. In addition, the markets for high technology stocks have experienced extreme volatility that has often been unrelated to the operating performance of the particular companies.  These broad market fluctuations may adversely affect the trading price of shares our common stock.

The value of an investment in our common stock could decline due to the impact of any of the following factors upon the market price of our common stock:

 
·
Disappointing results from our development efforts;

 
·
Failure to meet our revenue or profit goals or operating budget;

 
·
Decline in demand for our common stock;
 
 
 
·
Downward revisions in securities analysts’ estimates or changes in general market conditions;

 
·
Technological innovations by competitors or in competing technologies;

 
·
Investor perception of our industry or our prospects;

 
·
General economic trends;

 
·
Variations in our quarterly operating results;
 
 
·
Our inability to increase revenues:

 
·
Announcement of new customer relationships by our competitors;

 
·
Departures of our executive officers;

 
·
General conditions in the worldwide economy, including fluctuations in interest rates;

 
·
Developments in patents or other intellectual property rights and litigation;

 
·
Developments in our relationships with our customers and suppliers;

 
·
Any significant acts of terrorism against the United States; and

 
·
Our currently limited public float.

We have a significant number of outstanding warrants and options, and future sales of the underlying shares of common stock could adversely affect the market price of our common stock.

As of December 31, 2013, we had outstanding warrants and options exercisable for an aggregate of 2,495,913 shares of common stock at a weighted average exercise price of $9.89 per share. The holders may sell these shares in the public markets from time to time, without limitations on the timing, amount or method of sale.  As our stock price rises, the holders may exercise their warrants and options and sell a large number of shares.  This could cause the market price of our common stock to decline.

We may be required to raise additional financing by issuing new securities with terms or rights superior to those of our existing stockholders, which could adversely affect the market price of our shares of common stock and our business.

We may require additional financing to fund future operations, including expansion in current and new markets, development and acquisition, capital costs and the costs of any necessary implementation of technological innovations or alternative technologies. We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our current stockholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of common stock, which could adversely affect the market price and the voting power of shares of our common stock. If we raise additional funds by issuing debt securities, the holders of these debt securities would similarly have some rights senior to those of the holders of shares of common stock, and the terms of these debt securities could impose restrictions on operations and create a significant interest expense for us which could have a materially adverse effect on our business.

There is no guarantee that our shares will continue to be listed on The NASDAQ Capital Market.

We may not be able to meet the requirements for continued listing on The NASDAQ Capital Market, or there may not be enough brokers interested in making a market for our stock to allow us to continue to list thereon. Therefore, it may be difficult to sell your shares of common stock if you desire or need to sell them.  

Shares eligible for future sale may adversely affect the market.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Of the 12,244,714 shares of our common stock outstanding as of December 31, 2013, approximately 12.0 million shares are held by non- “affiliates” and are, or will be, freely tradable without restriction, and the remaining shares are held by our “affiliates”, as of such date.  Any substantial sale of our common stock pursuant to Rule 144 or pursuant to any resale prospectus (including sales by investors of securities acquired in connection with this offering) may have a material adverse effect on the market price of our common stock.
 
 
We do not expect to pay dividends in the foreseeable future.

We have never paid cash dividends on our shares of common stock, and have no plans to do so in the foreseeable future.  We intend to retain earnings, if any, to develop and expand our business operations.
 
Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. These provisions:

 
·
authorize our board of directors to issue preferred stock without stockholder approval and to designate the rights, preferences and privileges of each class; if issued, such preferred stock would increase the number of outstanding shares of our capital stock and could include terms that may deter an acquisition of us;

 
·
establish advance notice requirements for nominations to the board of directors or for proposals that can be acted on at stockholder meetings;

 
·
limit who may call stockholder meetings;

 
·
do not provide for cumulative voting rights; and

 
·
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.

In addition, Section 203 of the Delaware General Corporation Law generally limits our ability to engage in any business combination with certain persons who own 15% or more of our outstanding voting stock or any of our associates or affiliates who at any time in the past three years have owned 15% or more of our outstanding voting stock. These provisions may have the effect of entrenching our management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

Our main corporate offices and research and development facility are located at 8708 Technology Forest Place, Suite 100, The Woodlands, Texas 77381. We currently lease approximately 13,079 square feet of space at this facility under a third party non-cancelable operating lease through April 30, 2016.  Further, we have also entered into a lease for office, warehouse and laboratory facilities for approximately 7,186 square feet at 3400 Research Forest Drive, Suite B2, The Woodlands, Texas 77381 under a third party non-cancelable operating lease through May 31, 2016.   We believe these properties are adequate for our operations at this stage of our development.

ITEM 3. LEGAL PROCEEDINGS

On or around December 12, 2012, we were served with notice of two lawsuits filed by Conductive Inkjet Technology Limited (“CIT”) in the Patent Court in the United Kingdom.  The two cases are respectively claim nos. HC12E02467 and HC12F02468 (the “UK Actions”).  The first action, which is case number HC12E02467, asserts that we included CIT’s confidential information in two Patent Cooperation Treaty (“PCT”) patent applications that we filed.  The second action, which is case number HC12F02468, seeks relief for (1) breach of contract, (2) causing loss by unlawful means, and (3) breach of confidence.  It also asserts that we included CIT's confidential information in the two PCT patent applications and a European and Korean application deriving from one of them. The UK Actions seek a finding that we violated a duty of confidence to CIT, an order that confidential materials be returned to CIT, an order that we change the inventorship on the four patent applications to include Xennia (a former co-owners of CIT) employees, and ownership of those patent applications to CIT, an inquiry into damages, other forms of injunctive and declaratory relief, and the award of attorney fees and costs.  On January 3, 2013, we filed an Acknowledgement of Service for each of the UK Actions with the court and indicated that we intended to contest the jurisdiction of the United Kingdom court over these matters. A hearing on our contest of jurisdiction took place on April 22-23, 2013.  On October 7, 2013, the UK court found UK jurisdiction proper on the inventorship claims but found that CIT had exceeded its jurisdiction with regard to certain of its breach claims.  The UK court allowed CIT to amend those claims to fall within UK jurisdiction.  The UK court also awarded CIT 80% of its reasonable costs related to the jurisdictional dispute with the sum of £50,000 being due by October 21, 2013, which was paid in full.  On October 28, 2013 we filed an Acknowledgement of Service for each of the UK Actions stating that we intended to defend the claims.  A substantive defense to CIT’s claims was filed on November 11, 2013.  No UK trial date has been set. 
 
 
On January 18, 2013, we filed a verified petition and applications for temporary and permanent injunction against CIT in the 284th Judicial District in Montgomery County, Texas (the “Texas Action”).  The case was assigned cause number 13-01-00561.  In the Texas Action, we asked the court to provide the following relief: issue a preliminary ruling that Montgomery County, Texas is the exclusive venue for the UK Actions, issue a preliminary ruling that CIT violated the terms of an agreement with us (the “2010 Agreement”) by filing the UK Actions, enter a judgment that we did not violate any duty of confidentiality to CIT, enter a judgment against CIT for breach of contract and award additional relief as set forth in the verified petition, including costs, pre and post judgment interest, and attorney’s fees.  A hearing on the temporary injunction application was set for January 31, 2013.  On January 25, 2013, CIT removed the Texas Action from state court to federal court in the Southern District of Texas based on CIT’s non-Texas resident status.  On April 30, 2013, the Federal Court remanded the case back to state court in Montgomery County.  On August 28, 2013, the state court set a trial date of June 4, 2014.  The case is currently pending. 
 
We believe these allegations to be without merit and intend to vigorously defend this action.  The potential impact of this action, which seeks unspecified damages, attorneys’ fees and expenses, is uncertain.  It is not possible to estimate the amount or range of possible loss that might result from an adverse judgment or a settlement of this matter. 
 
Class Action Litigation 

In June 2013, two purported class action complaints were filed in the United States District Court, Southern District of New York and the United States District Court, Southern District of Texas against the Company and our CEO, CFO, and Chairman. The Southern District of New York complaint was voluntarily dismissed by plaintiff on July 2, 2013.  The surviving complaint alleges that we and our officers and directors violated the federal securities laws, specifically Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by making purportedly false and misleading statements concerning our licensing agreements and product development.  The complaint seeks unspecified damages on behalf of a purported class of purchasers of our common stock during the period from December 7, 2012 to May 31, 2013.  We will vigorously defend against this lawsuit.  The Company has directors' and officers' and corporate liability insurance to cover risks associated with securities claims filed against the Company or its directors and officers and has notified its insurers of the complaints filed against the Company.  Based on the very early stage of the litigation, it is not possible to estimate the amount or range of possible loss that might result from an adverse judgment or a settlement of this matter. 
 
Shareholder Derivative Litigation

On February 19, 2014, a shareholder derivative lawsuit, Jason F. Gerzseny v. Reed J. Killion, et. al., was filed in the 165th Judicial District in Harris County, Texas.  On February 21, 2014, another shareholder derivative lawsuit, Luis Lim v. Reed J. Killion, et. al., was also filed in Harris County district court.  Both complaints allege various causes of action against certain current and former officers and directors, including claims for breach of fiduciary duty, corporate waste, insider selling, and unjust enrichment.  The Company intends to vigorously defend against these lawsuits, and has directors’ and officers’ liability insurance to cover risks associated with derivative claims against its directors and officers.  Based on the very early stage of the litigation, it is not possible to estimate the amount or range of possible loss that might result from an adverse judgment or a settlement of these matters. 
 
Securities and Exchange Commission Investigation

On November 19, 2013, the Company learned that the Fort Worth Regional Office of the United States Securities and Exchange Commission (“SEC”) has issued subpoenas concerning the Company’s agreements related to its InTouch Sensors.  The Company intends to cooperate fully with the SEC regarding this non-public, fact-finding inquiry. The SEC has informed the Company that this inquiry should not be construed as an indication that any violations of law have occurred or that the SEC has any negative opinion of any person, entity or security. The Company does not intend to comment further on this matter unless and until this matter is closed or further action is taken by the SEC which, in the Company’s judgment, merits further comment or public disclosure.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable
 

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Effective December 10, 2010, our common stock became listed on The NASDAQ Capital Market under the symbol “UNXL”.  Prior to that date, our common stock was quoted on the OTC Bulletin Board under the symbol “UNXL” The following table sets forth, for the quarters shown, the range of high and low sales prices of our common stock, reported by The NASDAQ Capital Market.  
 
Quarter Ended
 
High
   
Low
 
             
2013
           
Fourth Quarter
 
$
20.83
   
$
9.42
 
Third Quarter
 
$
20.39
   
$
12.11
 
Second Quarter
 
$
41.42
   
$
11.39
 
First Quarter
 
$
33.91
   
$
12.53
 
2012
               
Fourth Quarter
 
$
16.33
   
$
5.27
 
Third Quarter
 
$
6.70
   
$
5.50
 
Second Quarter
 
$
7.29
   
$
5.15
 
First Quarter
 
$
6.68
   
$
4.74
 

Holders

As of January 31, 2014, we had approximately 3,400 stockholders of record of our common stock.

Dividends

We have never paid dividends on our common stock. Currently, we anticipate that we will retain earnings, if any, to support operations and to finance the growth and development of our business and do not anticipate paying cash dividends on our common stock in the foreseeable future.

Performance Graph

We have presented both the cumulative total return to our stockholders during the period from December 10, 2010 (the date our common stock commenced trading on The NASDAQ Capital Market) through December 31, 2013 in comparison to the cumulative total return of the NASDAQ Composite Index and the Russell 2000 Index.  All values assume a $100 initial investment on December 10, 2010, and the reinvestment of the full amount of all dividends and are calculated as of the last stock trading day of each year.  The comparisons are based on historical data and not indicative of, nor intended to forecast, the future performance of our common stock.

GRAPHIC
 
 
The information under “Performance Graph” is not deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference in any filing of Uni-Pixel, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language in those filings.

Securities Authorized For Issuance Under Equity Compensation Plans

The following table provides information about shares of our common stock that may be issued upon the exercise of options under all of our existing equity compensation plans as of December 31, 2013.

Plan Category
 
Number of shares of
common stock to be
issued upon exercise of
outstanding options
   
Weighted-average
exercise price of
outstanding
options ($)
   
Number of shares of
common stock remaining
available for future issuance
under equity compensation
plans
 
Equity compensation plans approved by stockholders
    1,947,379     $ 10.59       458,838  
                         
Equity compensation plans not approved by stockholders (1)
    68,001       7.50        
                         
Total
    2,015,380     $ 10.48       458,838  

 (1)  
During 2006 and 2007, we granted a total of 86,668 stock options to board members.  As of December 31, 2013, 68,001 stock options remain outstanding.

Please see Note 6 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for additional information about our equity compensation plans.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.
 

ITEM 6. SELECTED FINANCIAL DATA

Our selected consolidated financial data shown below should be read together with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and respective notes included in Item 8 “Financial Statements and Supplementary Data” referencing Item 15 of Part IV. The data shown below is not necessarily indicative of results to be expected for any future period.

   
Years Ended December 31,
 
   
2013
   
2012
   
2011
   
2010
   
2009
 
                         
Statement of Operations Data:
                             
Revenue
  $ 5,081,574     (1)   $ 76,154     $ 195,237     $ 243,519     $ --  
Costs of revenues
  $ 9,005     $ 26,292     $ 46,985     $ 20,695     $ --  
Gross margin
  $ 5,072,569     $ 49,862     $ 148,252     $ 222,824     $ --  
Selling, general and administrative expenses
  $ 9,888,535     $ 3,961,667     $ 4,186,927     $ 2,748,697     $ 2,365,613  
Research and development
  $ 10,384,350     $ 5,112,855     $ 4,542,735     $ 2,551,226     $ 2,765,658  
Operating Loss
  $ (15,200,316 )   $ (9,024,660 )   $ (8,581,410 )   $ (5,077,099 )   $ (5,131,271 )
Other income (expenses)
                                       
   Gain on sale of intellectual property
  $ --     $ --     $ --     $ 2,088,835     $ --  
   Debt issuance expense
  $ --     $ --     $ --     $ (554,827 )   $ (164,960 )
   Interest income (expense), net
  $ 19,422     $ 6,852     $ 11,986     $ (274,703 )   $ (76,607 )
Net loss
  $ (15,180,894 )   $ (9,017,808 )   $ (8,569,424 )   $ (3,817,794 )   $ (5,372,838 )
Basic and diluted net loss per share
  $ (1.32 )   $ (1.11 )   $ (1.20 )   $ (1.05 )   $ (2.68 )
Weighted average number of basic and diluted common shares outstanding
    11,512,996       8,150,890       7,138,426       3,628,454       2,006,546  
 
   
Years Ended December 31,
 
   
2013
   
2012
   
2011
   
2010
   
2009
 
Consolidated Balance Sheet Data
                       
                               
Cash and cash equivalents
  $ 39,369,574     $ 13,000,372     $ 7,216,663     $ 13,049,446     $ 307,850  
Working capital (deficit)
  $ 33,327,235     $ 12,812,009     $ 7,133,745     $ 12,699,888     $ (2,573,808 )
Total assets
  $ 55,291,857     $ 14,714,789     $ 8,388,306     $ 13,215,508     $ 1,177,287  
Deferred revenue
  $ 5,000,000     $ --     $ --     $ 85,906     $ --  
Total liabilities
  $ 6,053,748     $ 348,683     $ 87,468     $ 427,447     $ 3,305,484  
Accumulated deficit
  $ (86,494,444 )   $ (71,313,550 )   $ (62,295,742 )   $ (53,726,318 )   $ (49,908,524 )
Total stockholders’ equity (deficit)
  $ 49,238,109     $ 14,366,106     $ 8,300,838     $ 12,788,061     $ (2,128,197 )
 
(1) Includes $5 million of non-recurring revenue paid for engineering services.
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion of our financial condition and results of operation should be read in conjunction with the financial statements and related notes that appear elsewhere in this report. This discussion contains forward-looking statements and information relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These forward-looking statements speak only as of the date of this report. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with accounting principles generally accepted in the United States.

Overview

We are a pre-production stage company delivering our Performance Engineered Film™ (PEF) products to the display, touch screen and flexible electronics market segments.   Our production to date has been limited to individual special orders.   We recently rebranded our PEF production process as Copperhead™.  We have also recently rebranded the touch sensors made with the Copperhead™ process as InTouch™ sensors.
 
We make transparent conductive films and flexible electronic films based on our proprietary Copperhead™ manufacturing process for high volume, roll to roll printing of flexible thin-film conductor patterns. The Copperhead™ process offers precision micro-electronic circuit patterning and modification of surface characteristics over a large area on an ultra-thin, clear, flexible, plastic substrate. These films may be incorporated into touch sensors, capacitive switches, general lighting, automotive, antenna, display and shielding applications.  We intend to sell the touch screen films, under the brand InTouch™, as sub-components of a touch sensor module.  
 
 
In addition to the flexible electronic films described above, for evaluation purposes  we are currently shipping our hard coat resin and protective films for use with multiple types of devices either as protective cover films, a cover lens replacement or a conformal hard coat for plastic components. We sell our hard coat resin and optical films under the Diamond Guard™ brand.  Furthermore, our past work in developing the Time Multiplexed Optical Shutter (TMOS) technology, which we sold in May 2010, led to advances in the field of thin-film advanced optics that we believe can be leveraged for other marketable applications, such as low cost LCD backlights and general lighting films. We intend to explore the business potential within these applications and pursue those markets that offer profitable opportunities either through licensing or direct production and sales.  

Our strategy is to further develop our proprietary Performance Engineered Film™ technology around the vertical markets that we have identified as high growth profitable market opportunities.  These markets include touch sensors, antennas, automotive and lighting. We have and will continue to utilize contract manufacturing for prototype fabrication to augment our internal capabilities in the short term. We also plan to enter into licensing arrangements, joint developments or ventures in key market segments to exploit the manufacturing and distribution channels of the targeted partners.

In 2014, we will remain focused on balancing the longer-term needs of our business while remaining prudent with our spending in the short term.  We believe in the underlying fundamentals of our core business strategy and we are focused on addressing the market trends of mobile devices.  We believe our strategy aligns well with the driving forces of the portable device manufacturers.  With our strategy, our product pipeline, and the deeper penetration in the various markets, we plan to address our challenges in the following manner:
 
·  
Assume continued uncertainty in the near-term US economic recovery;
·  
Grow faster than the markets we serve by focusing on new product introductions to accelerate growth as we enter 2014; and
·  
Maintain investments that deliver innovation and product development.

The financial statements presented in this annual report include Uni-Pixel, Inc. and our wholly-owned subsidiary, Uni-Pixel Displays, Inc. All significant intercompany transactions and balances have been eliminated.
 
Critical Accounting Policies

The following discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Our significant accounting policies are more fully described in the Notes to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.  However, certain accounting policies and estimates are particularly important to the understanding of our consolidated financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period-to-period in economic factors or conditions that are outside of our control.  As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. The following discusses our significant accounting policies and estimates.

Revenue Recognition:  We recognize revenue over the period the service is performed or when the product is delivered, depending on shipping method. In general, this requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the fee is fixed and determinable, and (4) collectability is reasonably assured.

Advance payments are deferred until shipment of product has occurred or services have been rendered.

Revenue from licenses and other up-front fees are recognized on a ratable basis over the term of the respective agreement.
 
Revenue on certain fixed price contracts where we provide research and development services are recognized over the contract term based on achievement of milestones.   When the contracts provide for milestone or other interim payments, the Company will recognize revenue under the milestone method.  Contracts with the PC OEM partner and the Eco-System Partner entered into during 2012 and 2013, respectively, are being accounted for under the milestone method.  The milestone method requires the Company to deem all milestone payments within each contract as either substantive or non-substantive.  That conclusion is determined based upon a thorough review of each contract and the Company’s deliverables committed to in each contract.  For substantive milestones, the Company concludes that upon achievement of each milestone, the amount of the corresponding defined payments is commensurate with the effort required to achieve such milestone or the value of the delivered item.  The payment associated with each milestone relates solely to past performance and is deemed reasonable upon consideration of the deliverables and the payment terms within the contract.  For non-substantive milestones, including advance payments, the recognition of such payments are pro-rated to the substantive milestones.
 

In December 2012, the Company and the PC OEM partner entered into a touch sensor Preferred Price and Capacity License Agreement and entered into Statement of Work Number One (collectively, the “Original Agreement”) to manufacture specified touch sensors.  Statement of Work Number One had three phases and three milestones.  The three phases were as follows:
 
·   
Phase 1 – The parties were to engage with designated manufacturers to design product solutions based on the Company’s technology
·   
Phase 2 - The Company was to deliver production-quality samples of products based on the PC OEM’s specifications for specific products
·   
Phase 3 – The Company was to deliver to the designated manufacturers production-level volumes in calendar year 2013

The three milestones were as follows:
 
·   
Milestone 1 – Execution of contract (non-substantive) and completion of new plating manufacturing facility per specifications on or about April 30, 2013 (substantive) - $5 million
·   
Milestone 2 – Deliver production quality metal mesh sensors on or around July 31, 2013 (substantive) - $5 million
·   
Milestone 3 – Production purchase order at production level volumes to be delivered in calendar year 2013 (non-substantive) - $5 million

During 2013, we recognized $5.0 million of revenue from our PC OEM partner as non-recurring engineering revenue under the milestone method for completion of Milestone 1. Because this was a one-time payment, the Company does not believe that the loss of this customer would have a material adverse effect on the Company’s business.
 
Effective February 25, 2014, the Company and the PC OEM partner entered into Amendment No. 1 to Statement of Work No. 1 (the “Amendment”).  The Amendment affirmed that the parties had agreed not to proceed with Phase 2 and Phase 3 as described in the Original Agreement and agreed that, as a result, no further payments were due to the Company.  The Amendment also revised the Milestone 2 due date from July 31, 2013 to June 30, 2014 and terminated the exclusivity option relating to notebook computers, which required the Company to exclusively make and sell touch sensor film to the PC OEM for notebook computer or hybrid devices that were launched in calendar year 2013. The exclusivity waiver allows the Company the opportunity to sell its touch sensors for use in competing notebook applications.  The preferred pricing and capacity aspects of the Original Agreement remained unchanged.  The Company continues to work closely with the PC OEM partner in product design and development. 
 
In April 2013, we entered into an agreement with an Eco-System Partner (the “Agreement”), whereby we were to receive $10 million of cash proceeds to assist us in increasing our production capacity. Under the terms of the Agreement, there were two milestones with related contingent consideration of $5 million for each milestone plus certain commissions as described below.  The Agreement required us to purchase certain equipment, which we purchased in 2013 and which we consider not a substantive milestone.   The Agreement required us to have the capability to produce at least 1 million sensor units per month (as defined in the Agreement) by April 2014, which we consider a substantive milestone.  We received $5 million in May 2013, which is non-refundable and is recorded as deferred revenue in the accompanying consolidated balance sheet at December 31, 2013.  Upon achieving the deliverables of the Agreement, we would have paid a commission to the Eco-System Partner of 10% on revenue derived from the sales of InTouch™ Sensors made directly to the Eco-System Partner or to those of the Eco-System Partner’s manufacturing partners that use the Eco-System Partner’s Preferred Price and Capacity License Agreement (“Eco-System Designated Customers”).  The commission amount was to be paid until the aggregate commissions paid equaled the commission cap of $18.5 million.  The term of the Agreement is the later of 3 years or the full payment of the commission cap.  If the Company committed a material breach of the license agreement, certain equipment of the Company with an original cost of approximately $10.1 million would be assigned to the Eco-System Partner to make them whole on any remaining amounts due under the commission cap of $18.5 million.
 
Cost of Revenues, Selling, General and Administrative Expenses and Research and Development Expenses:  The primary purpose of our facility in The Woodlands, Texas is to conduct research on the development, testing and delivery of our prototype devices, and the commercialization of our products.

If, in the future, the purposes for which we operate our facility in The Woodlands, Texas, or any new facilities we open, changes, the allocation of the costs incurred in operating that facility between cost of sales and research and development expenses could change to reflect such operational changes.
 

Research and Development Expenses:  Research and development costs are expensed as incurred and include salaries and benefits, costs paid to third-party contractors for research, development and manufacturing of materials and devices, and a portion of facilities cost. Prototype development costs are a significant component of research and development expenses and include costs associated with third-party contractors. Invoicing from third-party contractors for services performed can lag several months. We accrue the costs of services rendered in connection with third-party contractor activities based on our estimate of management fees, site management and monitoring costs and data management costs. Actual costs may differ in some cases from estimated costs and are adjusted for in the period in which they become known.

Stock-Based Compensation:  We measure stock-based compensation expense for all share-based awards granted based on the estimated fair value of those awards at grant-date. The fair values of stock option awards are estimated using a Black-Scholes valuation model. The compensation costs are recognized net of any estimated forfeitures on a straight-line basis over either the employee’s requisite service period, or other such vesting requirements as are stipulated in the stock option award agreements.  No compensation cost is recognized for equity instruments for which employees do not render the requisite service.  Forfeiture rates are estimated at grant date based on historical experience and adjusted in subsequent periods for any differences in actual forfeitures from those estimates.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, in Notes to the Consolidated Financial Statements in Item 8  of Part II of this Annual Report on Form 10-K for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, which is incorporated herein by reference.

Results of Operations

Comparison of Fiscal Years Ending December 31, 2013 and 2012

REVENUES.  During the first quarter of 2010, we began to manufacture, market and sell our thin film product.  We also earn engineering revenue.
 
Revenues increased to $5,081,574 for the year ended December 31, 2013, as compared to $76,154 for the year ended December 31, 2012, an increase of $5,005,420.  $5.0 million of revenue from a PC OEM partner was recognized in the year ended December 31, 2013 as non-recurring engineering revenue.

COST OF REVENUES.  Cost of revenues include all direct expenses associated with the delivery of services including internal labor costs. Cost of revenues were $9,005 for the year ended December 31, 2013 and $26,292 for the year ended December 31, 2012.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased by 150%, or approximately $5,926,868, to $9,888,535 for the year ended December 31, 2013 from $3,961,667 for the year ended December 31, 2012.  The major components of the increase are as follows:

a) Salaries and benefits increased by approximately $2,185,000 to $4,643,000 for the year ended December 31, 2013 compared to $2,458,000 for the year ended December 31, 2012 due primarily to the following: an increase in salaries to $1,574,000 for the year ended December 31, 2013 compared to $878,000 for the year ended December 31, 2012 due to an increase in the number of employees; an increase in stock compensation expense to $1,532,000 for the year ended December 31, 2013 compared to $1,270,000 for the year ended December 31, 2012; an increase in restricted stock expense to $1,177,000 for the year ended December 31, 2013 compared to $200,000 for the year ended December 31, 2012; and for the year ended December 31, 2013, an employee separation and release expense consisting of six months salary in the amount of $125,000 and six months car allowance of $6,000, both payable in fiscal year 2014 to Reed Killion, our former Chief Executive Officer;

b) Legal expense increased by approximately $1,577,000 to $1,926,000 for the year ended December 31, 2013 compared to $349,000 for the year ended December 31, 2012 primarily due to legal fees related to the UK Actions, the Texas Action and the class action lawsuit and an increase in patent related legal work;

c) Travel expense increased by approximately $225,000 to $293,000 for the year ended December 31, 2013 compared to $68,000 for the year ended December 31, 2012 primarily due to increased travel visiting potential customers and suppliers;

d) Depreciation and amortization expense increased by approximately $1,683,000 to $2,238,000 for the year ended December 31, 2013 compared to $555,000 for the year ended December 31, 2012.
 

RESEARCH AND DEVELOPMENT. Research and development expenses increased by 103% or approximately $5,271,495 during the year ended December 31, 2013 to $10,384,350 from $5,112,855 for the year ended December 31, 2012. The primary reason for the increase in research and development expense is due to an increase in lab expense related to prototype development.  The major changes to research and development expenses are as follows:

a) Salaries and benefits attributable to research and development increased by approximately $1,825,000 to $4,841,000 for the year ended December 31, 2013 compared to $3,016,000 for the year ended December 31, 2012 due primarily to the following: an increase in salaries to $2,081,000 for the year ended December 31, 2013 compared to $1,518,000 for the year ended December 31, 2012 due to an increase in the number of employees; an increase in stock compensation expense to $1,874,000 for the year ended December 31, 2013 compared to $1,214,000 for the year ended December 31, 2012; and an increase in restricted stock expense to $547,000 for the year ended December 31, 2013 compared to $29,000 for the year ended December 31, 2012;

b) Lab expense, which includes contract labor, increased by approximately $3,232,000 to $4,921,000 for the year ended December 31, 2013 from $1,689,000 for the year ended December 31, 2012 primarily due to increased services related to prototype development and an increase in third party plating expense to $1,835,000 for the year ended December 31, 2013 compared to $363,000 for the year ended December 31, 2012; and

c) Travel expense attributable to research and development increased by approximately $143,000 to $242,000 for the year ended December 31, 2013 from $99,000 for the year ended December 31, 2012 primarily due to offsite management of research and development activities.

OTHER INCOME (EXPENSE)

Interest income, net increased to income of $19,422 for the year ended December 31, 2013 as compared to income of $6,852 for the year ended December 31, 2012, primarily due to an increase in the average cash on hand during the twelve months ended December 31, 2013.

NET LOSS. Net loss was $15,180,894 for the year ended December 31, 2013, as compared to net loss of $9,017,808 for the year ended December 31, 2012.

Comparison of Fiscal Years Ending December 31, 2012 and 2011

REVENUES.  During the first quarter of 2010, we began to manufacture, market and sell our thin film product.

Revenues decreased to $76,154 for the year ended December 31, 2012, as compared to $195,237 for the year ended December 31, 2011.  The revenue for these periods was primarily related to engineering services and the sale of our thin film product.  The primary reason for the decrease in revenue is due to a decrease in engineering services revenue.

COST OF REVENUES.  Cost of revenues include all direct expenses associated with the delivery of services including internal labor costs. Cost of revenues were $26,292 for the year ended December 31, 2012 and $46,985 for the year ended December 31, 2011.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased by 5%, or approximately $225,000, to $3,961,667 for the year ended December 31, 2012 from $4,186,927 for the year ended December 31, 2011.  The major components of the decrease are as follows:

a)  Salaries and benefits decreased by approximately $227,000 to $2,458,000 for the year ended December 31, 2012 compared to $2,685,000 for the year ended December 31, 2011.  This decrease was due largely to a decrease in stock compensation expenses to $1,270,000 for the year ended December 31, 2012 compared to $2,014,000 for the year ended December 31, 2011, while restricted stock compensation expenses increased to $200,000 for the year ended December 31, 2012 compared to $0 for the year ended December 31, 2011, and salaries increased to $877,000 for the year ended December 31, 2012 compared to $568,000 for the year ended December 31, 2011;

b) Contract labor decreased by approximately $120,000 to $74,000 for the year ended December 31, 2012 compared to $194,000 for the year ended December 31, 2011;

c) Legal expense increased by approximately $120,000 to $349,000 for the year ended December 31, 2012 compared to $229,000 for the year ended December 31, 2011;
 
d) Accounting expense increased by approximately $12,000 to $79,000 for the year ended December 31, 2012 compared to $67,000 for the year ended December 31, 2011;
 

e) Office expense decreased by approximately $6,000 to $11,000 for the year ended December 31, 2012 compared to $17,000 for the year ended December 31, 2011;

f) Travel expense decreased by approximately $20,000 to $68,000 for the year ended December 31, 2012 compared to $88,000 for the year ended December 31, 2011;

g) Depreciation and amortization expense increased by approximately $122,000 to $555,000 for the year ended December 31, 2012 compared to $433,000 for the year ended December 31, 2011.

RESEARCH AND DEVELOPMENT. Research and development expenses increased by 13% or approximately $570,000 during the year ended December 31, 2012 to $5,112,855 from $4,542,735 for the year ended December 31, 2011. The major components of the increase are as follows:

a) Salaries and benefits attributable to research and development decreased by approximately $520,000 to $3,016,000 for the year ended December 31, 2012 from $3,536,000 for the year ended December 31, 2011.  The decrease was due largely to a decrease in stock compensation expenses to $1,214,000 for the year ended December 31, 2012 compared to $1,995,000 for the year ended December 31, 2011, while restricted stock compensation expenses increased to $29,000 for the year ended December 31, 2012 compared to $0 for the year ended December 31, 2011, and while salaries increased to $1,518,000 for the year ended December 31, 2012 compared to $1,315,000 for the year ended December 31, 2011;

b) Consulting expense attributable to research and development decreased by approximately $51,000 to $78,000 for the year ended December 31, 2012 from $129,000 for the year ended December 31, 2011;

c) Lab expense, which includes contract labor, increased by approximately $1,086,000 to $1,689,000 for the year ended December 31, 2012 from $603,000 for the year ended December 31, 2011 primarily due to increased services related to prototype development and an increase in third party plating expense in to $363,000 for the year ended December 31, 2012 compared to $0 for the year ended December 31, 2011; and

d) Travel expense attributable to research and development increased by approximately $34,000 to $99,000 for the year ended December 31, 2012 from $65,000 for the year ended December 31, 2011.

OTHER INCOME (EXPENSE)

Interest income, net decreased to income of $6,852 for the year ended December 31, 2012 as compared to income of $11,986 for the year ended December 31, 2011, primarily due to a decrease in the average cash on hand during the twelve months ended December 31, 2012.

NET LOSS. Net loss increased to $9,017,808 for the year ended December 31, 2012, as compared to net loss of $8,569,424 for the year ended December 31, 2011.

Off-Balance Sheet Transactions

We do not engage in off-balance sheet transactions.

Liquidity and Capital Resources

We have historically financed our operations primarily through the issuance of equity and debt securities and by relying on other commercial financing. Until our products begin to earn enough revenue to support our operations, which may never happen, we will continue to be highly dependent on financing from third parties.  On April 23, 2013, we sold 1,374,250 shares of our common stock, raising net proceeds of approximately $41.2 million.  Barring unanticipated expenses, we expect the proceeds from this offering, together with our cash on hand and collaborative agreements with corporate partners, to support our operations through December 31, 2014.

Operating Activities

Cash used in operating activities during the year ended December 31, 2013 decreased to $1,958,681 as compared to $5,646,617 used for the year ended December 31, 2012.  Cash used in operating activities during the year ended December 31, 2012 increased to $5,646,617 as compared to $4,393,600 used for the year ended December 31, 2011.
 
During the year ended December 31, 2013, we experienced the following:
 
·   
an increase in non-recurring revenue of $5 million from the PC OEM partner;
·   
an increase of deferred revenue of $5 million from the Eco-System Partner; and
·   
an increase in accounts payable of $0.7 million due to increased payable activity and timing of payments.
 
During the year ended December 31, 2012, we experienced an increase in accounts payable of $0.3 million due to increased payable activity and timing of payments.
 
During the year ended December 31, 2011, we experienced a decrease in accounts payable of $0.3 million due to decreased payable activity and timing of payments.
 

Investing Activities

Cash used in investing activities during the year ended December 31, 2013 increased to $16,594,313 as compared to $941,679 used for the year ended December 31, 2012.  The significant use of cash for investing activities during 2013 and 2012 was primarily attributable to the purchase of equipment related to our research and development activities and for anticipated production. Cash used in investing activities during the year ended December 31, 2012 decreased to $941,679 as compared to $1,512,322 used for the year ended December 31, 2011.
 
As of December 31, 2013, we have no material commitments for capital expenditures and we do not anticipate making additional significant expenditures for production equipment in the near future.

Financing Activities

Historically, we have financed our operating and investing activities primarily from the proceeds of private placements and public offerings of common stock, convertible investor notes, and a preferred stock offering.

The total net cash provided by financing activities was $44,922,196 for the year ended December 31, 2013, which includes:
 
·  
     $187,983 of net proceeds from the exercise of warrants;
·  
     $3,514,320 of net proceeds from the exercise of stock options; and
·  
     $41,219,893 of net proceeds from the issuance of common stock.

The total net cash provided by financing activities was $12,372,005 for the year ended December 31, 2012, which includes:
 
·  
     $12,271,995 net proceeds from the issuance of 2,520,585 shares of common stock;
·  
     $87,507 net proceeds from exercise of warrants; and
·  
     $12,503 net proceeds from exercise of stock options.

The total net cash provided by financing activities was $73,139 for the year ended December 31, 2011, which we realized from the exercise of stock options.

Working Capital

Our primary sources of liquidity have been the sale of registered shares of our common stock to the public which was completed in April 2013, short-term loans from private placements of convertible notes, private placements of equity securities, the sale of certain intellectual property and the issuance of shares of common stock.

As of December 31, 2013, we had a cash balance of approximately $39.4 million and working capital of $33.3 million.  We project that current cash reserves will sustain our operations through at least December 31, 2014, and we are not aware of any trends or potential events that are likely to adversely impact our short term liquidity through this term.  As noted above, we raised net proceeds of approximately $41.2 million in April 2013 through the sale of our common stock.

Contractual Obligations

Our contractual obligations are included in our consolidated financial statements and the related notes thereto called for by this item appear under the caption “Financial Statements” beginning on page F-1 of this Annual Report on Form 10-K.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Exchange Rate, Interest Rate and Supply Risks

The Company has no exchange rate risks as we conduct 100% of our operations in the United States of America, and we conduct our transactions in US dollars.  The Company has minimal market risk in the areas of financing and interest cost. Please refer to Item 1A.  Risk Factors for additional disclosure about risk.   The slightest disruption in our supply chain could also significantly increase our losses and hinder our ability to purchase our products for resale and application.  The Company has no protection against interest rate risk or supply disruptions.  

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and the related notes thereto called for by this item appear under the caption “Financial Statements” beginning on page F-1 of this Annual Report on Form 10-K.
 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures    

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  
 
The Company carried out an evaluation as of December 31, 2013, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2013.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  The Company has designed its disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.  
 
(b) Management’s Annual Report on Internal Control over Financial Reporting
 
The report of management required under this Item 9A is included on page F-2 of the Company’s Consolidated Financial Statements attached to this Report under the heading “Management’s Report on Internal Control over Financial Reporting” and is incorporated herein by reference.
 
(c) Changes in Internal Control over Financial Reporting
 
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
(d) Attestation Report of Independent Registered Public Accounting Firm
 
PMB Helin Donovan, LLP, the independent registered public accounting firm who audited the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting, which is contained in the Company’s consolidated financial statements under the heading “Report of Independent Registered Public Accounting Firm” on page F-3 and is incorporated herein by reference.
 
ITEM 9B. OTHER INFORMATION

None.
 

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth the names and ages of all of our directors and executive officers as of January 31, 2014. Our officers are appointed by, and serve at the pleasure of, the Board of Directors.

Name
 
Age
 
Title
Bernard T. Marren
  78  
Interim co-Chief Executive Officer, Interim co-President, co-Principal Executive Officer and Chairman
Carl J. Yankowski
  65  
Interim co-Chief Executive Officer, Interim co-President, co-Principal Executive Officer and Director
Robert J. Petcavich
  59  
Senior Vice President and General Manager
Daniel K. Van Ostrand 
  55  
Senior Vice President Research & Development
Jeffrey W. Tomz    
  42  
Chief Financial Officer and Secretary
Bruce I. Berkoff
  53  
Director
Ross A. Young
  48  
Director
William Wayne Patterson
  69  
Director
Anthony J. LeVecchio
  67  
Director

Biographical information with respect to our executive officers and directors is provided below. There are no family relationships between any of our executive officers or directors.

Bernard T. Marren, Interim co-Chief Executive Officer, Interim co-President, co-Principal Executive Officer and Chairman— Mr. Marren has served as a director since March 16, 2007 and has been Chairman of our Board of Directors since May 1, 2008.  Mr. Marren was appointed interim co-Chief Executive Officer, interim co-President, and co-Principal Executive Officer on December 30, 2013.  From May 1998 to December 2013, Mr. Marren was the President and CEO of OPTi, Inc., a company that licenses intellectual property for logic chips. In a career that spans more than 40 years, Mr. Marren was both a founder of and the top executive with multiple companies that pioneered new semiconductor technologies. He also served as chief executive with a number of high-tech firms, and is widely regarded for his leadership in sales and marketing, engineering and operations. He has been associated in his career with Western Micro Technology, Inc., Silicon Engineering, Inc., INNO COMM Wireless, American MicroSystems, Inc., and Fairchild Semiconductor. Extending his executive leadership to the electronics industry as a whole, Mr. Marren was a founder and the first President of the Semiconductor Industry Association. He is also a past President and Chairman of the National Electronic Distributors Association and a past President of the Electronic Industry Show Corporation.  Mr. Marren is a graduate of the Illinois Institute of Technology (BSEE).
 
Mr. Marren’s technology industry experience, particularly as it relates to our industry, makes him highly qualified to lead our Board.  His business experience and educational background, as well as the fact that Mr. Marren is well-versed in the review and evaluation of financial statements of publicly traded companies, led us to conclude that he should serve as a director.
 
Carl J. Yankowski, Interim co-Chief Executive Officer, Interim co-President, co-Principal Executive Officer and Director— Mr. Yankowski has served as a director since March 16, 2007.  Mr. Yankowski was appointed interim co-Chief Executive Officer, interim co-President, and co-Principal Executive Officer on December 30, 2013.  Mr. Yankowski has served as the CEO of Westerham Group since 2001. Mr. Yankowski also served as the CEO of Ambient Devices, Inc. and helped capitalize Ambient.   Mr. Yankowski was named CEO of Palm, Inc. in December 1999, three months before its initial public offering that raised in excess of $1 billion.  Immediately prior to joining Palm, Mr. Yankowski was CEO of the Reebok Brand, where he led the worldwide Reebok-brand business, a multibillion dollar enterprise that eventually merged with Adidas.  During his tenure at Reebok, Mr. Yankowski successfully reorganized the Company for growth, significantly streamlined operations, and improved profitability.  Mr. Yankowski spent over four years at Sony Electronics, Inc. as President and COO where he was responsible for the development and launch of numerous successful products in growing markets and new business categories for Sony, including DVD, CDMA, digital imaging, and VAIO personal computers.  He also oversaw the initial U.S. launch of PlayStation.  Mr. Yankowski led Sony to profitable U.S. revenue growth from $6+ Billion to over $10 Billion, and oversaw a dramatic expansion of U.S. manufacturing.  In an earlier position as Chairman of Polaroid’s Asia Pacific Region, Mr. Yankowski led growth in the business imaging market globally and established the Company’s Asia Pacific headquarters.  Mr. Yankowski has held marketing and strategic leadership positions in several other prestigious technology and consumer-products companies, including General Electric Co., Pepsi, Memorex and Procter & Gamble.  Mr. Yankowski earned simultaneous Bachelors of Science degrees in electrical engineering materials science and management from Massachusetts Institute of Technology (“MIT”).  He serves or has served on the visiting committee of the MIT Media Lab, and the Boards of Informatica, Avidyne, and many other public and private firms, plus the Boston College Carroll School of Business and the MIT Sloan School of Business.
 
Mr. Yankowski’s leadership roles in numerous fortune 500 companies make him a valuable member of our Board of Directors and other board committees.  The extensive management experience he has acquired in these roles provide him with the knowledge to deal with financial, accounting, regulatory and administrative matters.  Mr. Yankowski is well-versed in accounting principles and financial reporting rules and regulations.  He provides valuable insight to our board of directors and other board committees.  For these reasons we concluded that Mr. Yankowski should serve as a director.
 
 
Robert J. Petcavich, Senior Vice President and General Manager — Dr. Petcavich has been the Senior Vice President and General Manager of Uni-Pixel since he joined us in January 2008.  Dr. Petcavich was also the co-founder of Health Beacons Inc. in Kirkland, Washington, a company that develops leading edge implantable RFID technology for the medical surgical cancer field. Dr. Petcavich was Senior Vice President and Chief Technology Officer of Lumera Corporation (NASDAQ:LMRA) in Bothell, Washington, a publicly traded nanotechnology polymer platform bioscience and molecular photonics technology company. Dr. Petcavich has been the Chairman, CEO and CTO of several advanced materials and medical informatics technology companies. Dr. Petcavich was Vice President of Deposition Technologies Inc. from 1982 to 1988, an advanced materials company involved in electro optic and aerospace thin film materials development and manufacturing which was subsequently acquired by Brunswick Defense (NYSE:BC) and Material Sciences Corporation (NYSE:MSC) in 1986. From August 1988 until September 1995, Dr. Petcavich was President and CEO of Alphascribe Express Inc., an electronic medical records service enterprise, which was subsequently sold to Rodeer Systems.  Dr. Petcavich was also founder, Chairman and CTO of Planet Polymer Technologies Inc. (Nasdaq:POLY now PLNT) from 1992 until 2002, an advanced materials intellectual property development company which merged with Allergy Free Inc. of Houston, Texas.  Dr. Petcavich was also founder, CEO and Chairman from 1996 until 2001 of Alife Medical Inc., a natural language processing software services provider for the medical billing industry.  Alife Medical Inc. was one of the fasting growing companies in the United States in 2010 according to Red Herring, and was acquired by Ingenix, Inc.  Dr. Petcavich was also founder and board member of Molecular Reflections Inc., a MEMS based biotech design and discovery platform company, as well as Polytronix Inc., a custom LCD manufacturer of Richardson, Texas. Dr Petcavich has a Ph.D. degree in Polymer Science, a Master of Science Degree in solid state science, and a B.S. degree in chemistry from the Pennsylvania State University, and he completed the PMD executive management degree program at Harvard.  Dr. Petcavich holds 28 issued United States patents in fields such as electro optic LCD displays, biotechnology MEMS devices, time released animal neutraceuticals, fruit shelf life extension technology, and handheld wireless devices. Dr. Petcavich is also on the Board of Directors of the College of Science at the Pennsylvania State University and the Harvard Business School Alumni Club in the Houston area.

Daniel K. Van Ostrand, Senior Vice President Research & Development — Mr. Van Ostrand is one of our founders and has served in a Senior Executive position since our inception in February of 1998.  Mr. Van Ostrand has many years of experience in corporate operations, project management, systems engineering and systems design.   Since 2004, he has been leading our corporate R&D activities, including microstructure mastering and intellectual property development.  In 2009 he also took over responsibility for all of our engineering activities.  As co-owner from 1984 through 1992 of a closely-held company that designed ruggedized VME-based tactical computer systems for the United States Army, he was exposed to and became interested in the design, development and engineering principles of flat panel display technology.  Mr. Van Ostrand was a Systems Engineer from 1980 until 1992 for Informatics General, Magnavox, Teledyne and the Jet Propulsion Laboratory.  He has a BA with a double major in math and computer science from Mid-America Nazarene University.

Jeffrey W.  Tomz, Chief Financial Officer and Secretary — On March 14, 2010, Jeffrey W. Tomz became our principal financial officer and on July 1, 2010, the board of directors formally designated Mr. Tomz as our Chief Financial Officer and Secretary. Since June 2005, Mr. Tomz has been our VP of Finance. From August 2001 to April 2005, Mr. Tomz was the Chief Financial Officer of Isolagen, Inc. (AMEX:ILE) and was instrumental in raising over $190 million in equity and debt for Isolagen. From October 1999 to August 2001, Mr. Tomz was a Principal at Benchmark Equity Group, Inc. Mr. Tomz has served on the board of directors of various companies, including InfoHighway Communication Corp., a private communication company from September 1998 to September 2000. Prior to joining Benchmark in the fall of 1997, Mr. Tomz began his career with Arthur Andersen Worldwide. Mr. Tomz is licensed as a Certified Public Accountant in Texas and received his MPA from The University of Texas at Austin.
 
Bruce I. Berkoff, Director— Mr. Berkoff has served as a director since March 16, 2007. Mr. Berkoff is the Chairman of the LCD TV Association which is a global not-for-profit marketing trade association to help “inform, promote, improve, and connect” the entire supply chain involved with the large and growing multibillion dollar LCD TV industry.  Since March 2011, Mr. Berkoff has been the CMO (Chief Marketing Officer) of CBRITE, a Santa Barbara based leader in metal oxide back plane technology for FPDs (flat panel displays). He was also a Director of LG Display from 2007 until 2009.  Mr. Berkoff was the Chief Marketing Officer of Energy and Display Systems, working at Applied Materials, Inc. from October 2009 through January 2011.  Mr. Berkoff was the CMO of Ascent Solar from September 2008 to September 2009.  Mr. Berkoff was also the CEO and later Chairman of Enuclia Semiconductor, a fab-less semiconductor startup in the HDTV video processor market, and prior to that, he was the Executive Vice-President and Chief Marketing Officer of LG.Philips LCD, one of the world’s leading TFT-LCD manufacturers. Before that, Mr. Berkoff served as general manager of Philips Flat Display Systems’ software and electronics business unit in Silicon Valley. He has also held executive management positions at several technology companies, including UMAX Computer Corporation, Radius, and SuperMac Technologies.  Mr. Berkoff is well-known for his visionary keynote addresses, panel chairmanships and other roles at display and electronics industry events, including the Symposium on Information Displays (SID) Business & Investor Conferences, USDC (US Display Consortium) Conferences, DisplayForum Europe, HDTV Forum, Asia SID (ASID), EuroDisplays (ESID), the U.S. Flat Panel Display (US FPD) Conference, the Flat Information Display (FID) Conference and the Consumer Electronics Show (CES) in Las Vegas.  Mr. Berkoff holds undergraduate and graduate degrees in physics and biophysics from Princeton and the University of California, Berkeley, respectively, and also has display-related patents both granted and pending in the U.S. and China.
 
 
Mr. Berkoff’s technology industry experience, particularly as it relates to our industry, makes him highly qualified to serve as a member of our board of directors and other board committees.  With his business experience and educational background, Mr. Berkoff is well-versed in new technologies to help lead our company and is well-versed in the review and evaluation of financial statements of publicly traded companies.  He provides valuable insight to our board of directors and other board committees.  For these reasons we concluded that Mr. Berkoff should serve as a director.

Ross A. Young, Director— Mr. Young has served as a director since May 20, 2008. Mr. Young founded DisplaySearch, the leading provider of market intelligence on displays and related technology, in 1996, sold it to The NPD Group in 2005 and is credited with building the firm to what it is today. After leaving DisplaySearch in 2008, he served as VP at Samsung LCD before joining IMS Research in late 2009 as SVP of displays, LEDs and lighting. He left this position in January 2012 and currently provides his services as an independent consultant.   Mr. Young has made multiple appearances on television, including NBC’s  The Today Show as a display industry expert, and has been an invited speaker at over 30 different conferences worldwide. Mr. Young was appointed to the Board of Directors of semiconductor start-up Akhan Technologies in 2010 and the Advisory Board of Illumitex, an LED start-up in 2009. Mr. Young received The NPD Group’s prestigious John Byington Award for outstanding creativity and innovation in November 2006, was appointed to the Board of Directors at Westar Display Technologies in February 2005 and was named to the VLSI Research Executive All-Star Team in 1994. Prior to founding DisplaySearch in 1996, he served in senior marketing positions at OWL Displays, Brooks Automation, Fusion Semiconductor and GCA in the driver IC, flat panel automation, etch and strip and lithography markets. He is also a published author, having written a book on U.S. - Japanese competition titled Silicon Sumo: U.S.-Japan Competition and Industrial Policy in the Semiconductor Equipment Industry. Mr. Young holds a Bachelor Degree in economics from the University of California at San Diego.
 
Mr. Young’s technology industry experience, particularly as it relates to our industry, makes him highly qualified to serve as a member of our board of directors and other board committees.  With his business experience and educational background, Mr. Young is well-versed in new technologies to help lead our company and is well-versed in the review and evaluation of financial statements of publicly traded companies.  He provides valuable insight to our board of directors and other board committees.  For these reasons we concluded that Mr. Young should serve as a director.

William Wayne Patterson, Director Mr. Patterson has served as a director since May 9, 2011. Since August 2012, Mr. Patterson has been a co-Founder and a Partner in Dos Rios Partners, a Private Equity Fund, and is an experienced entrepreneurial manager who has demonstrated success in building businesses through innovative growth and cost containment strategies. From March 1970 to September 1991, Mr. Patterson was employed by Keystone International, Inc., where he served as CFO and then as COO. During his time with Keystone, it grew from $15 million in revenues to more than $1 billion. Keystone was sold in 1996 to Tyco International for $1.7 billion. Mr. Patterson was also a co-founder and CEO of Texas Micro (a NASDAQ-traded company) and of Briskheat Corporation. Since the sale of Keystone, Mr. Patterson has participated in more than 20 private equity transactions and has served as interim CEO of Integrated Graphics/Earthcolor and of Vector Global Services. From January 2005 until their sale in 2012 and 2011, respectively, Mr. Patterson served as the non-executive chairman of Ashbrook Simon-Hartley and of Controlled Recover. Mr. Patterson graduated with honors from the University of Texas in Austin and has a Law Degree from the University of Texas Law School. Mr. Patterson is also a CPA.
 
Mr. Patterson’s leadership roles in numerous companies make him a valuable member of our board of directors and audit committee.  The extensive management experience he has acquired in these roles provide him with the knowledge to manage financial, accounting, regulatory and administrative matters.  Mr. Patterson is well-versed in accounting principles and financial reporting rules and regulations, and is equipped to evaluate financial results and participate in our audit committee.  For these reasons we concluded that Mr. Patterson should serve as a director.
 
Anthony J. LeVecchio, Director Mr. LeVecchio has served as a director since May 9, 2011. Mr. LeVecchio has been the president and owner of The James Group, a general business consulting firm that has advised clients across a range of industries, since 1988. Prior to forming The James Group, Mr. LeVecchio was the senior vice president and chief financial officer for VHA Southwest, Inc., a regional healthcare system. Mr. LeVecchio currently serves as director, advisor and executive of private and public companies in a variety of industries.  Mr. LeVecchio also currently serves on the Board of Directors of ViewPoint Financial Group, a community bank based in Plano, Texas that is listed on The NASDAQ Global Select Market and as chairman of its Audit Committee. Mr. LeVecchio holds a Bachelor of Economics and a M.B.A. in Finance from Rollins College.
 
Mr. LeVecchio’s leadership roles in numerous companies make him a valuable member of our board of directors and audit committee.  The extensive management experience he has acquired in these roles provide him with the knowledge to manage financial, accounting, regulatory and administrative matters.  Mr. LeVecchio is well-versed in accounting principles and financial reporting rules and regulations, and is equipped to evaluate financial results and participate in our audit committee. For these reasons we concluded that Mr. LeVecchio should serve as a director.
 
 
 
The Board members serve until such the director’s successor is elected and qualified or until the director's earlier resignation, removal or death.  We have established procedures by which security holders may recommend nominees to our board of directors and those procedures have not changed.
 
Our executive officers are appointed by our board of directors and hold office until removed by the board.

Audit Committee Financial Expert

Our board of directors has determined that Anthony J. LeVecchio is an audit committee financial expert.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who beneficially own more than 10% of the registered class of the Company’s equity securities to file with the SEC reports of ownership and changes in ownership of the Company’s common stock. Directors, executive officers and greater than 10% beneficial stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of the reports furnished, management believes that the directors, executive officers and greater than 10% stockholders filed, on a timely basis, all reports required by Section 16(a) of the Exchange Act with respect to the year ended December 31, 2013.

Code of Ethics Disclosure

We have adopted a Code of Ethics that applies to all of our officers, directors and employees.  Copies of this code can be obtained free of charge from our website at www.unipixel.com under the tab “Investors”.
 
ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview
The Compensation Committee of the Board of Directors administers our executive compensation and benefit programs. The Compensation Committee is comprised solely of independent directors and oversees all compensation and benefit programs and actions that affect our executive officers.

Compensation Philosophy

We are committed to developing and commercializing innovative products.  We are engaged in a competitive industry, and to accomplish this objective, we design our compensation programs to attract, motivate and retain qualified executives dedicated to working towards our short and long-term corporate goals.  People are one of our key assets, and we seek to hire employees and executives who share our corporate vision and values and have the skills and motivation to execute on our corporate strategy.  In our dynamic work environment, we foster the following corporate values:
 
 
 
Leadership;
 
 
 
Innovation and creativity;
 
 
 
Diversity;
 
 
 
Teamwork;
 
 
 
Accountability; and
 
 
 
High ethical standards.

Our compensation structure is particularly focused upon rewarding our executives for achieving our corporate objectives, and for strong and dedicated performance to the interests of our stockholders.

Our total compensation package seeks to align an executive’s performance with our stockholders’ interests, measured over the short and the long-term. Accordingly, the Compensation Committee aims to balance a fixed cash base salary with variable cash and equity incentives to motivate each executive to reach his individual objectives as well as our overall corporate objectives.
 

Objectives of Our Compensation Program

The primary objective of our compensation programs for our executive officers is to attract and retain qualified executives and employees of outstanding ability and potential. In addition to the primary objectives of attracting and retaining qualified executives, the other objectives of our compensation program include the following:

 
 
Motivate executives and employees to work towards completing our overall corporate goals and milestones and their individual employee objectives over the short and long-term;
 
 
 
Align our executives’ and employees’ performance with our stockholders’ interests; and
 
 
 
Compete effectively with the compensation programs of comparable companies to allow us to compete with our peers for valuable human resources.

What Our Compensation Program is Designed to Reward

Our compensation program is designed to reward performance measured over a short and long-term basis. Base salaries, annual cash incentives and the vesting of our options and retirement plans encourage executive retention and provide a balance between short and long-term elements of compensation.

We generally set corporate objectives at the beginning of the fiscal year, against which the performance of our executives is evaluated for determining adjustments in compensation for the subsequent fiscal year. Our corporate objectives typically include the progress of sales growth, advancement of research and development programs, management of costs and expenses and attainment of necessary capital resources.

Compensation Process; Role of Management

The Compensation Committee is responsible for determining and approving all compensation for our executive officers. Pursuant to its charter, the Compensation Committee recommends to the full Board the salary, bonus, option grants and other aspects of the compensation of our President and Chief Executive Officer, approves the salary and bonus levels for other executive officers, approves stock option grants to other executive officers and approves all employment, severance and change-in-control agreements applicable to other executive officers. Our Chief Executive Officer assists the Compensation Committee in its deliberations with respect to the compensation payable to our other executive officers, and typically recommends specific compensation packages for our executive officers based upon his assessment and evaluation of their performance for the prior year.

Following the end of each fiscal year, our Chief Executive Officer evaluates executive officer performance for the prior fiscal year, other than his own performance, and discusses the results of such evaluations with the Compensation Committee. The Chief Executive Officer assesses each executive officer’s performance for the prior fiscal year based upon subjective factors concerning such officer’s individual business goals and objectives, and the contributions made by the executive officer to our overall results. The Chief Executive Officer then makes specific recommendations to the Compensation Committee for adjustments of base salary, target bonus, and equity awards, if appropriate, as part of the compensation packages for each executive officer, other than himself, for the next fiscal year.
 
The Compensation Committee reviews the performance of the Chief Executive Officer and determines all compensation for the Chief Executive Officer, subject to the final approval of the full Board.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee is an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the Board of Directors or Compensation Committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
 
COMPENSATION COMMITTEE REPORT
 
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K and in the Company’s Proxy Statement. The material in this report shall not be deemed to be “soliciting material” or “filed” with the SEC, and will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as a result of furnishing the disclosure in this manner.

Compensation Committee of the Board

Ross A. Young, Chairman
Bruce I. Berkoff
 

Executive Officer Compensation

The table below summarizes the total compensation paid to or earned by our co-principal executive officers, our former chief executive officer, our former chief operating officer, our principal financial officer and the three most highly compensated executive officers other than the principal executive officers and principal financial officer who were serving as executive officers at the end of the last completed fiscal year.  Collectively, we refer to these officers as the “named executive officers”.  The amounts represented in the “Option Awards” column reflect the stock compensation expense recorded by the Company pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 and does not necessarily equate to the income that will ultimately be realized by the named executive officers for such awards.

Summary Compensation Table
 
Name and
Principal Position
 
Year
   
Salary
(1)
   
Bonus
(2)
   
Stock Awards
(3)
   
 
 
OptionAwards
(4)
   
Non-Equity Incentive Plan Compensation
   
Nonqualified Deferred Compensation Earnings
   
All Other
Compensation
(5)
   
Total
 
                                                       
Bernard T. Marren
Interim co-Chief Executive Officer, Interim co-President (Principal Executive Officer) & Chairman
 
2013
2012
2011
   
$
 
 
 
   
$
 
 
 
 
   
$
 
 
88,428
28,520
 
   
$
 
 
99,072
 125,394
 214,016
     
 
 
     
 
 
   
$
 
 
   
$
 
 
187,550
153,914
214,016
 
                                                                       
Carl J. Yankowski
Interim co-Chief Executive Officer, Interim co-President (Principal Executive Officer) & Director
 
2013
 2012
2011
     
     
 
     
88,248
28,520
 
     
1,755
 21,058
 21,058
     
 
     
 
     
 
     
90,183
 49,578
21,058
 
                                                                       
Reed J. Killion
Former Chief Executive Officer, President (Principal Executive Officer) & Director
 
2013
2012
 2011
     
250,000
250,000
250,000
     
 5,000
 1,000
     
409,440
     
344,120
419,241
 725,580
     
 
 
     
 
     
143,000
12,000
12,000
     
1,146,560
686,241
988,580
 
                                                                       
Seong S. Shin (6)
Former Chief Operating Officer
 
 
2013
 2012
 2011
     
180,000
180,000
57,591
     
 5,000
 1,000
     
 
     
114,391
101,772
 33,503
     
 
     
     
 
     
294,391
 286,772
92,094
 
                                                                       
Robert J. Petcavich
Senior Vice President & General Manager
 
 
2013
2012
2011
     
195,000
195,000
195,000
     
5,000
 1,000
     
283,860
28,520
 
     
280,272
385,560
633,703
     
     
     
 
     
759,132
614,080
829,703
 
                                                                       
Daniel K. Van Ostrand
Senior Vice President Research & Development
 
2013
2012
2011
     
180,000
180,000
180,000
     
 5,000
1,000
     
263,220
 
     
  224,118
255,368
453,167
     
 
     
 
 
     
     
667,338
440,368
624,167
 
                                                                       
Jeffrey W. Tomz
Chief Financial Officer & Secretary
 
2013
2012
2011
     
180,000
180,000
180,000
     
 5,000
 1,000
     
237,420
28,520
     
231,683
291,796
 480,856
     
     
 
 
     
12,000
12,000
12,000
     
661,103
517,316
 673,856
 
 

 (1)  
Effective December 30, 2013, Mr. Marren and Mr. Yankowski were appointed interim co-Chief Executive Officer and interim co-Presidents.  Reed J. Killion resigned as Chief Executive Officer on December 30, 2013.  Seong S. Shin resigned as Chief Operating Officer on December 31, 2013.

(2)  
Amounts reflect the aggregate annual cash bonus earned by each of our named executive officers for fiscal years 2013 and 2012.  There was a $5,000 cash bonus paid to each of the named executive officers in fiscal year 2012. There was a $1,000 cash bonus paid to each of the named executive officers in fiscal year 2011.
 

(3)  
Amounts reflect restricted stock awards granted for each of fiscal years 2013 and 2012. The amounts represent the aggregate grant date fair value of the awards granted to each named executive officer computed in accordance with stock-based accounting rules (FASB ASC Topic 718).  The restricted stock awards granted on January 15, 2013 vested on August 16, 2013.  The restricted stock awards granted on April 26, 2013 vest 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock awards granted on November 27, 2012 vested immediately on the day of grant.
 
(4)  
For 2013 and 2012, the amounts reflect the compensation cost recognized in 2013 and 2012, respectively, for stock options in accordance with FASB ASC Topic 718, which reflects the fair value of all stock-based compensation in earnings based on the related vesting schedule.  For additional information relating to the assumptions made by us in connection with the valuation of these awards for 2013, refer to Note 6 of our financial statements herein.  For additional information relating to the assumptions made by us in connection with the valuation of these awards for 2012, refer to Note 6 of our financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012.

(5)  
Excludes perquisites and other personal benefits unless such compensation was greater than $10,000.  For Mr. Killion and Mr. Tomz, amounts include a car allowance of $12,000 per year.  For the year ended December 31, 2013, this includes an employee separation and release expense consisting of six months salary in the amount of $125,000 and six months car allowance of $6,000, both payable in fiscal year 2014 to Reed Killion, our former Chief Executive Officer.

401(k) Plan

Effective February 2007, the Company created an employee benefit plan available to all full-time employees under Section 401(k) of the Internal Revenue Code ("401(k) plan"). Employees may make contributions up to a specified percentage of their compensation, as defined. The Company is not obligated to make contributions under the 401(k) plan. In addition, the Company did not make any matching employer contribution to the 401(k) Plan in 2013, 2012 or 2011.

Employment Agreements

As of December 31, 2013, the Company does not have any employment agreements outstanding. 

Grants of Plan-Based Awards

Name
 
Grant date
   
All other stock awards: Number of shares of stock or units
   
Grant date fair value of stock
and option awards
 
Bernard T. Marren
   
1/15/2013
     
2,000
   
$
32,700
 
     
4/26/2013
     
5,400
     
208,980
 
                         
Carl J. Yankowski
   
1/15/2013
     
2,000
     
32,700
 
     
4/26/2013
     
5,400
     
208,980
 
                         
Reed J. Killion
   
1/15/2013
     
8,000
     
130,800
 
     
4/26/2013
(a) 
   
27,000
     
1,044,900
 
     
4/26/2013
(b)
   
27,000
     
1,044,900
 
                         
Seong S. Shin
   
--
     
--
     
--
 
                         
Robert J. Petcavich
   
1/15/2013
     
6,000
     
98,100
 
     
4/26/2013
(a)
   
18,000
     
696,600
 
     
4/26/2013
     
18,000
     
696,000
 
                         
Daniel K. Van Ostrand
   
1/15/2013
     
6,000
     
98,100
 
     
4/26/2013
(a)
   
16,000
     
619,200
 
     
4/26/2013
     
16,000
     
619,200
 
                         
Jeffrey W. Tomz
   
1/15/2013
     
6,000
     
98,100
 
     
4/26/2013
(a) 
   
13,500
     
522,450
 
     
4/26/2013
     
13,500
     
522,450
 
 

(a)  
Restricted stock award forfeited on December 31, 2013
(b)  
18,000 of the 27,000 restricted stock award forfeited on December 30, 2013
 

Executive Officer Equity Awards Outstanding

   
Outstanding Equity Awards at December 31, 2013
 
   
Option Awards
 
Stock Awards
 
Name
 
Number of Securities Underlying Unexercised Options
Exercisable
   
Number of Securities Underlying Unexercised Options
Unexercisable
   
Option Exercise Price
 
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested
   
Market Value of Shares or Units of Stock That Have Not Vested
   
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
   
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
 
Bernard T. Marren
    6,667       --     $ 7.50  
3/16/2017
    5,400
(b) 
  $ 54,054
(d) 
    --     $ --  
      20,000       --       7.50  
1/28/2020
    --       --       --       --  
      56,250       18,750
(a)
    6.93  
1/21/2021
    --       --       --       --  
                                                           
Carl J. Yankowski
    54,667       --       7.50  
5/23/2016
    --       --       --       --  
      6,667
(e)
    --       7.50  
3/16/2017
    5,400
(b) 
    54,054
(d) 
    --       --  
      14,667       --       7.50  
1/28/2020
    --       --       --       --  
                                                           
Reed J. Killion
    30,000       --       7.50  
3/15/2015
    9,000
(c) 
    90,090
(d) 
    --       --  
      54,000       --       7.50  
12/30/2015
    --       --       --       --  
      13,500       --       7.50  
12/30/2015
    --       --       --       --  
      1,667       --       7.50  
3/28/2014
    --       --       --       --  
      66,667       --       7.50  
12/30/2018
    --       --       --       --  
      137,500       62,500
(a)
    6.93  
12/30/2018
    --       --       --       --  
      4,000       --       7.13  
3/28/2014
    --       --       --       --  
                                                           
Seong S. Shin
    25,000       --       6.00  
12/31/2015
    --       --       --       --  
      4,000       --       7.13  
3/31/2014
    --       --       --       --  
                                                           
Robert J. Petcavich
    33,334       --       7.50  
1/7/2018
    18,000
(b) 
    180,180
(d) 
    --       --  
      1,667       --       7.50  
1/30/2019
    --       --       --       --  
      80,000       --       7.50  
1/28/2020
    --       --       --       --  
      107,500       52,500
(a)
    6.93  
1/21/2021
    --       --       --       --  
                                                           
Daniel K. Van Ostrand
    1,667       --       7.50  
1/30/2019
    16,000
(b) 
    160,160
(d) 
    --       --  
      33,334       --       7.50  
1/28/2020
    --       --       --       --  
      80,000       40,000
(a)
    6.93  
1/21/2021
    --       --       --       --  
      4,000       --       7.13  
11/27/2022
    --       --       --       --  
                                                           
Jeffrey W. Tomz
    3,669       --       7.50  
1/28/2020
    13,500
(b) 
    135,135
(d) 
    --       --  
      33,334       --       7.50  
5/19/2020
    --       --       --       --  
      80,000       40,000
(a) 
    6.93  
1/21/2021
    --       --       --       --  


(a)  
vest 100% on 1/21/2014.
(b)  
vest 1/3rd on 3/1/2014; 1/3rd on 3/1/2015; and 1/3rd on 3/1/2016.
(c)  
vest 100% on 3/1/2014.
(d)
valued at $10.01 per share which was the closing price of our common stock on December 31, 2013.


Option Exercises and Stock Vested

   
Option awards
   
Stock awards
 
Name
 
Number of shares acquired on exercise
   
Value realized on exercise
   
Number of shares acquired on vesting
   
Value realized on vesting
 
Bernard T. Marren
    --     $ --       2,000     $ 32,680  
                                 
Carl J. Yankowski
    12,000       149,031       2,000       32,680  
                                 
Reed J. Killion
    50,000       769,507       8,000       130,720  
                                 
Seong S. Shin
    25,000       408,161       --       --  
                                 
Robert J. Petcavich
    50,000       769,843       6,000       98,040  
                                 
Daniel K. Van Ostrand
    40,000       616,792       6,000       98,040  
                                 
Jeffrey W. Tomz
    76,000       1,063,367       6,000       98,040  

Director Compensation

The table below summarizes the total compensation paid to or earned by our directors during 2013. The amounts represented in the “Option Awards” column reflects the stock compensation expense recorded by the Company and does not necessarily equate to the income that will ultimately be realized by the director for such awards.   The table does not include Mr. Marren, Mr. Yankowski and Mr. Killion whose compensation is described in the Summary Compensation Table above.

Director Summary Compensation Table

Name
 
Fees Earned or Paid in Cash
   
Stock Awards (1)(2)
   
Option Awards (3)
   
Non-Equity Incentive Plan Compensation
   
Change in pension value and nonqualified deferred compensation earnings
   
All Other Compensation
   
Total
 
Bruce I. Berkoff
 
$
--
   
$
88,428
   
$
59,762
     
--
     
--
     
--
   
$
148,190
 
Ross A. Young
   
--
     
88,428
     
59,762
     
--
     
--
     
--
     
148,190
 
William Wayne Patterson
   
--
     
88,428
     
30,842
     
--
     
--
     
--
     
119,270
 
Anthony J. LeVecchio
   
--
     
88,428
     
30,842
     
--
     
--
     
--
     
119,270
 

(1)  
Amounts reflect restricted stock awards granted for fiscal year 2013. The amounts represent the aggregate grant date fair value of the awards granted to each named director computed in accordance with stock-based accounting rules (FASB ASC Topic 718).  The restricted stock awards granted on January 15, 2013 vested on August 16, 2013.  The restricted stock awards granted on April 26, 2013 vest 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.
(2)  
At December 31, 2013, Mr. Berkoff, Mr. Young, Mr. Patterson and Mr. LeVecchio held stock awards to acquire 5,400, 5,400, 5,400 and 5,400 shares of common stock, respectively.
(3)  
At December 31, 2013, Mr. Berkoff, Mr. Young, Mr. Patterson and Mr. LeVecchio held options to acquire 25,334, 37,334, 26,667 and 18,667 shares of common stock, respectively.

On January 15, 2013, each of Mr. Berkoff, Mr. Young, Mr. Patterson and Mr. LeVecchio were awarded 2,000 of common stock pursuant to our 2011 Stock Incentive Plan, at a price of $16.35 per share, which was the closing price of the Company’s common stock on the date of grant.  These shares vested on August 16, 2013.
 

On April 26, 2013, each of Mr. Berkoff, Mr. Young, Mr. Patterson and Mr. LeVecchio were awarded 5,400 of common stock pursuant to our 2011 Stock Incentive Plan, at a price of $38.70 per share, which was the closing price of the Company’s common stock on the date of grant.  These shares vest 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.

Overview
 
Uni-Pixel’s director compensation program consists of equity-based compensation. The equity component of Uni-Pixel’s director compensation program is designed to build an ownership stake in the Company while conveying an incentive to directors relative to the returns recognized by our shareholders.
 
Cash-Based Compensation
 
Company non-employee directors currently do not receive an annual stipend. All directors are reimbursed for ordinary and reasonable expenses incurred in exercising their responsibilities in accordance the Company’s Travel and Entertainment Expense Reimbursement policy applicable to all employees of the Company.  

Equity-Based Compensation
 
Under provisions adopted by the Board of Directors, each non-employee director receives an option to purchase 6,667 shares of our common stock issued upon his first election to the Board of Directors.  These options vest monthly over three years. Stock options granted under the plan are priced at the closing market price of the Company’s stock on the day of grant.  Further grants of stock options and/or restricted stock are issued to the Board of Directors at the discretion of the Board of Directors for continuing service to the Company.

Pension and Benefits
 
The non-employee directors are not eligible to participate in the Company’s benefits plans, including the 401(k) plan.
 
Indemnification Agreements
 
The Company’s certificate of incorporation requires the Company to indemnify both the directors and officers of the Company to the fullest extent permitted by Delaware state law.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

We have set forth in the following table certain information regarding our common stock, on an as converted basis, beneficially owned as of January 31, 2014 for (i) each stockholder we know to be the beneficial owner of more than 5% of our outstanding common stock, (ii) each of our directors and named executive officers, and (iii) all executive officers and directors as a group. Generally, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days pursuant to options, warrants, conversion privileges or similar rights. At January 31, 2014, we had 12,244,714 issued and outstanding shares of common stock and no preferred stock outstanding. 

Name and
Address of Beneficial Owner
 
Amount of Beneficial Ownership(1)
   
Percent of Class
 
Directors and Officers:
           
Bernard T. Marren
    204,046  (2)     1.7 %
Carl J. Yankowski
    87,401  (3)     0.7 %
Reed J. Killion (former Chief Executive Officer and President)
    426,901  (4)     3.4 %
Seong S. Shin (former Chief Operating Officer)
    39,000  (5)     0.3 %
Robert J. Petcavich
    319,001  (6)     2.5 %
Daniel K. Van Ostrand
    233,168  (7)     1.9 %
Jeffrey W. Tomz
    174,617  (8)     1.4 %
Bruce I. Berkoff
    36,734  (9)     0.3 %
Ross A. Young
    44,734  (10)     0.4 %
William Wayne Patterson
    32,271  (11)     0.3 %
Anthony J. LeVecchio
    25,771  (12)     0.2 %
All Directors and Executive Officers as a Group (11 persons)
    1,623,644       13.1 %
5% Stockholders:
               
Destrier Capital Management LLC
489 5th Avenue, 29th Floor
New York, NY 10017
    743,108       6.1 %
 
 

(1)
Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and is generally determined by voting power and/or investment power with respect to securities. Unless otherwise noted, all of such shares of common stock listed above are owned of record by each individual named as beneficial owner and such individual has sole voting and dispositive power with respect to the shares of common stock owned by each of them.

(2)
Includes 5,400 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 101,667 shares of common stock exercisable within 60 days from January 31, 2014.

(3)
Includes 5,400 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 76,001 shares of common stock exercisable within 60 days from January 31, 2014.

(4)
Includes 9,000 shares of restricted stock that vests 100% on March 1, 2014.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 369,834 shares of common stock exercisable within 60 days from January 31, 2014.

(5)
Includes options to purchase 29,000 shares of common stock exercisable within 60 days from January 31, 2014.

(6)
Includes 18,000 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 275,001 shares of common stock exercisable within 60 days from January 31, 2014.

(7)
Includes 16,000 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 159,001 shares of common stock exercisable within 60 days from January 31, 2014.

(8)
Includes 13,500 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 157,003 shares of common stock exercisable within 60 days from January 31, 2014.

(9)
Includes 5,400 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 25,334 shares of common stock exercisable within 60 days from January 31, 2014.

(10)
Includes 5,400 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 37,334 shares of common stock exercisable within 60 days from January 31, 2014.

(11)
Includes 5,400 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 20,371 shares of common stock exercisable within 60 days from January 31, 2014.

(12)
Includes 5,400 shares of restricted stock that vests 1/3rd on March 1, 2014, 1/3rd on March 1, 2015 and 1/3rd on March 1, 2016.  The restricted stock may not be sold or transferred until vested.  Includes options to purchase 12,371 shares of common stock exercisable within 60 days from January 31, 2014.
 

Related Party Transactions

Our practice has been that any transaction which would require disclosure under Item 404(a) of Regulation S-K of the rules and regulations of the Securities and Exchange Commission, with respect to a director or executive officer, must be reviewed and approved, or ratified, by our audit committee pursuant to the audit committee charter. The audit committee reviews and investigates any matters pertaining to the integrity of management and directors, including conflicts of interest, or adherence to standards of business conduct required by our policies. We are currently not a party to any such related party transactions.
 

Director Independence

Our common stock is currently listed on The NASDAQ Capital Market under the symbol “UNXL,” and therefore, our determination of the independence of directors is made using the definition of “independent” contained in the listing standards of The NASDAQ Capital Market.  On the basis of information solicited from each director, the board has determined that each of Mr. Berkoff, Mr. Young, Mr. Patterson and Mr. LeVecchio has no material relationship with the Company and is independent within the meaning of such rules.   As of December 30, 2013, Mr. Marren and Mr. Yankowski are no longer considered to be independent as on that date they were appointed interim co-Chief Executive Officers and interim co-Presidents.  Our audit committee consists of Mr. LeVecchio (Chairman), Mr. Patterson and Mr. Young; our compensation committee consists of Mr. Young (Chairman) and Mr. Berkoff; and our nomination and governance committee consists of Mr. Berkoff (Chairman), Mr. Young and Mr. Patterson, each of whom the board has determined has no material relationship with the company and is independent, as provided above.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed by PMB Helin Donovan, LLP (“PMBHD”) for professional services rendered for the audit of our annual consolidated financial statements during the fiscal year ended December 31, 2013, and for the reviews of the consolidated financial statements included in our quarterly reports on Form 10-Q for that fiscal year were $110,355.  The aggregate fees billed by PMBHD for professional services rendered for the audit of our annual consolidated financial statements and for the reviews of the consolidated financial statements included in our quarterly reports on Form 10-Q during the fiscal year ended December 31, 2012, were $82,410.  These fees include fees billed for professional services rendered by PMBHD for the review of registration statements or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years.

Audit Related Fees

PMBHD did not bill us for any professional services that were reasonably related to the performance of the audit or review of financial statements for either the fiscal year ended December 31, 2013 or 2012 that are not included under Audit Fees above.

Tax Fees

PMBHD billed $7,060 and $7,275 for the fiscal years ended December 31, 2013 and 2012, respectively, for professional services rendered for tax compliance, tax advice, and tax planning.

All Other Fees

PMBHD did not perform any services for us or charge any fees other than the services described above for either the fiscal year ended December 31, 2013 or 2012.

Pre-approval Policies and Procedures

The Audit Committee is required to review and approve in advance the retention of the independent auditors for the performance of all audit and lawfully permitted non-audit services and the fees for such services. The Audit Committee may delegate to one or more of its members the authority to grant pre-approvals for the performance of non-audit services, and any such Audit Committee member who pre-approves a non-audit service must report the pre-approval to the full Audit Committee at its next scheduled meeting. The Audit Committee is required to periodically notify the Board of their approvals. The required pre-approval policies and procedures were complied with during 2013, 2012 and 2011.
 

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit
No.
 
Description of Document
3.1
 
Amended and Restated Certificate of Incorporation of Uni-Pixel, Inc. (9)
3.2
 
Form of Certificate of Amendment to Amended and Restated Certificate of Incorporation of Uni-Pixel, Inc. (9)
3.3
 
Amended and Restated Bylaws of Uni-Pixel, Inc. (1)
4.1
 
Common Stock Purchase Warrant No. 1 (1)
4.2
 
Common Stock Purchase Warrant No. 2 (1)
4.3
 
Common Stock Purchase Warrant No. 3 (1)
4.4
 
Form of common stock certificate (3)
4.5
 
Common Stock Purchase Warrant dated September 12, 2006. (4)
10.1
 
Office Lease Agreement for Synergy North By and Between First Metro Limited Partnership (“Landlord”) and Uni-Pixel Displays, Inc. (“Tenant”) (1)
10.2
 
Employee Intellectual Property Assignment and Nondisclosure Agreement (1) (2)
10.3
 
Uni-Pixel, Inc. 2005 Stock Incentive Plan (1) (2)
10.4
 
Uni-Pixel, Inc. 2005 Stock Incentive Plan — Notice of Stock Option Award (1) (2)