March 18, 2005
Mail Stop 03-06
Reed J. Killion
President and Director
Uni-Pixel, Inc.
11940 Jollyville Road, Suite 200N
Austin, Texas 78759
Re: Uni-Pixel, Inc.
Form 10-SB
Filed February 18, 2005
File No. 0-49737
Dear Mr. Killion:
We have the following comments to your filing. Please file
an
amendment by April 11, 2005 to comply with our comments. If you
cannot amend the filing by that time, you should consider
withdrawing
the filing before it becomes effective by operation of law. You
could then refile when you are able to respond to the comments.
Please note that you should file the request for withdrawal by
April
19, 2005.
If you disagree with our comments, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Part I
Item 1. Description of Business - Page 1
Overview- Page 1
1. Please expand the first paragraph to quantify the amount of
your
accumulated deficit. Also revise the related disclosure on page
12.
2. We note your disclosure here and on page 3 regarding the size
and
estimated growth of the electronic display market. Please
supplementally provide us with the reports of DisplaySearch and
mark
the section or sections of the supplemental materials that
supports
your statements. With a view toward disclosure, also tell us
whether
you commissioned the research conducted by DisplaySearch.
3. Please explain to us your reasonable basis for concluding that
the
TMOS technology is more economical, durable, reliable and
efficient
than existing competitive products, such as LCD and plasma
displays,
when you have not yet commercialized a product based on this
technology. In this regard, we note your disclosure on page 16
regarding the risk that the TMOS technology may not be
commercially
or technically feasible for broad-based product applications.
4. We note your disclosure that you have had "only a few revenue-
generating services or development contracts." Here and on page
12,
please revise to quantify the revenues you have recorded to date
and
the time period over which you recorded these revenues.
Furthermore,
please revise to identify the military contractor, the personal
computer company, and the military agency to which you refer on
page
3, as well as the national laboratory and leading military
contractor
on page 4. Clarify the nature of your relationship with each of
these parties.
Our Competitive Strengths - Page 4
5. Please reconcile your statement that you have adopted what you
believe to be an "innovative" business model with your disclosure
on
page 10 that some of your competitors follow a similar business
model.
6. We note your disclosure that you have entered into research and
development agreements with a United States government agency
under
the Small Business Innovation Research program, through which you
have received or will receive some funding. Please identify the
government agency, quantify the amount of funding you have
received
or expect to receive under this program, and indicate when the
agreements expire. Also expand your disclosure to describe
briefly
the government`s rights to your technology under these agreements.
Item 2. Management`s Discussion and Analysis or Plan of Operation
- -
Page 20
Results of Operations - Comparison of Fiscal Years Ending December
31, 2004 and 2003 - Page 20
7. Please revise your disclosure to explain the reasons underlying
the factors you cite for the change in your results. For example,
we
note you attribute the increase in selling, general and
administrative expenses from 2003 to 2004 to an increase in salary
expense and in legal fees. Please revise to explain why salary
expense increased, and why legal fees increased. For instance,
did
your salary expense increase due to an increase in the number of
employees, or another reason? Refer to Exchange Act Release No.
34-
48960 (December 19, 2003), available on our website at
www.sec.gov.
8. Please revise to clarify the term "impacts of additional debt
financing" to which you attribute an increase in interest expense
of
almost 50% from 2003 to 2004.
Historical Cash Flows - Page 20
9. We note that your discussion of changes in cash flows is a
recitation in narrative form of certain items within your cash
flow
statement. For instance, we note that the increase in cash used
in
operating activities is attributed "primarily" to increased
research
and development spending and increased general and administrative
expenses; however, only $827,000 of the $1,282,000 increase in
operating cash flow is attributable to the items specified.
Please
revise to discuss the reason for the remaining increase in your
operating cash flow, and describe the reasons underlying the
changes
in your operating cash flow.
Liquidity and Financial Condition - Page 21
10. Please revise to discuss any known trends, events or
uncertainties that have or are reasonably likely to have a
material
impact on your short-term or long-term liquidity. For example, we
note your disclosure on page 20 that your interest expense
increased
due to the "impacts of additional debt financing."
Item 5. Directors, Executive Officers, Promoters and Control
Persons
- - Page 24
11. We note that Section 1 of Exhibit 10.2 indicates that you have
agreed to elect one director designated by the Fordham Financial
Management to the board of directors, and that the director will
be
compensated and will receive reimbursed expenses for attending
meetings of the board. Please revise the appropriate sections of
your document to discuss this arrangement and to disclose the
terms
of any non-employee director compensation.
Item 6. Executive Compensation - Page 26
Summary Compensation Table - Page 26
12. Please revise the table to disclose the named executive
officers`
compensation for the last three fiscal years. Refer to Item
402(b)(2) of Regulation S-B.
13. Please supplementally advise, with a view to disclosure, why
this
section does not address the advances and cancellations discussed
in
Note 4 of the financial statements. Also, revise page 21 to
discuss
the impact on liquidity and capital resources.
14. Please confirm that none of the options representing 1,490,000
shares of common stock that were issued to employees in 2004 were
issued to named executive officers for which disclosure under Item
402 of Regulation S-B is required. Alternatively, please provide
the
disclosure required under this item.
Item 7. Certain Relationships and Related Transactions - Page 26
15. Please revise to provide the disclosure required under Item
404
of Regulation S-B with regard to the transactions described in
Section 7.4, Section 8.5 and Section 8.6 of Exhibit 10.9.
16. Please revise to provide the disclosure required under Item
404
of Regulation S-B with regard to the $117,846 in employee advances
receivable that were settled with your employees during 2004.
The Merger Agreement - Page 26
17. We note your disclosures about the merger agreements in
December
2004 between Uni-Pixel Displays, Inc., Uni-Pixel Merger Sub, Inc.,
Gemini V, Inc. and certain of your principal stockholders. Please
revise this section to briefly explain the background of all
entities
involved in the transaction, to indicate the accounting acquirer
and
the legal acquirer in the transaction and to clearly disclose how
you
accounted for the transaction. Consider adding graphic
disclosures
to the filing that present your current and former ownership
structure and percentages. We may have further comments after
reviewing your response and revisions.
18. Please revise this section to describe the assets purchased
from
Gemini V, Inc. for which you issued 2,917,250 shares of common
stock.
We note your disclosure in Note 1 to the financial statements that
Gemini was a non-operating private company with limited assets.
Cancellation and Transfer Agreement - Page 27
19. Please revise your disclosure to indicate the consideration
Mr.
Disalvo received in exchange for the cancellation and transfer of
his
shares.
Lock-Up Agreements - Page 28
20. Please revise to indicate which stockholders have signed lock-
up
agreements. Please ensure that the signed versions of these
agreements are filed as exhibits to the registration statement.
Item 8. Description of Securities - Page 29
21. The statement that all outstanding shares of your common stock
are fully paid and non-assessable is a legal conclusion that you
are
not qualified to make. Please revise to identify the counsel that
has made the conclusion and file counsel`s consent to be named in
this section as an exhibit to the registration statement.
Series A Convertible Preferred Stock - Page 30
22. Please revise your disclosure regarding restrictions on
transferability to indicate that preferred stockholders who
purchased
Series A preferred stock in your recent private placement are also
entitled to piggy-back registration rights, and identify the
period
in which those rights may be exercised.
Part II
Item 4. Recent Sales of Unregistered Securities - Page 31
23. Please reconcile your disclosure with regard to the 2,565,000
shares of Series A preferred stock issued on December 9, 2004 with
your balance sheet, which indicates that 2,821,643 shares of
preferred stock were outstanding at December 31, 2004.
Part F/S
Consolidated Statements of Stockholders` Equity (Deficit) - Page
F-5
24. Revise your Statement of Stockholders` Equity to include the
disclosures as listed in paragraph 11(d) of SFAS 7.
Note 1. Incorporation and Nature of Business
(h) Revenue Recognition - Page F-10
25. We note your disclosure that "revenue is generally recognized
when persuasive evidence of an arrangement exists, delivery of the
product or service has occurred, the fee is fixed and
determinable,
and collectibility is probably." Please tell us and revise future
filings to describe those circumstances when revenue would be
recognized at a different point in the sales process and how you
would account for such revenue transactions.
(j) Stock-Based Compensation Plans - Page F-10
26. Supplementally tell us how you accounted for the rescission of
stock options and the related re-issuance of fully vested shares
in
accordance with paragraph 47(f) of SFAS 123. Further, tell us the
price at which the shares were re-issued. Please cite the
accounting
guidance that supports your accounting.
Note 4. Related Party Transactions - Page F-14
27. Please provide us with further details regarding your
agreement
with various past and present employees to cancel debts in the
form
of promissory notes and accrued wages totaling $895,465. Tell us
the
nature of any related additional liabilities or agreements the
company entered into with these employees, if any.
28. We noted that the amounts advanced to officers of the company
"were settled between the company and all employees." Please tell
us
how these arrangements were settled. It does not appear that these
amounts were repaid to the company based on the cash flow
statement.
Please clarify for us and revise your footnote to tell investors,
see
paragraph 2 (d) of SFAS 57.
Note 6. Income Taxes - Page F-15
29. Revise your footnote to include the disclosures required by
paragraphs 43 through 47 of SFAS 109, as applicable.
Note 8. Common Stock - Page F-16
30. We see on December 9, 2004 you were recapitalized pursuant to
a
Reverse Merger accounted for as a recapitalization of Uni-Pixel
via
an issuance of common stock by Uni-Pixel for the net assets of
REFL
and Gemini V, Inc. Please revise the note to disclose the
business
of Gemini V and why you issued shares for their net assets. Also,
clarify who REFL is - we assume it is Real-Estateforlease.com,
Inc.
Finally, please tell us why both share issuances are properly
accounted for as a recapitalization. Do both Gemini V, Inc. and
REFL
have common ownership? Why isn`t the transaction with Gemini V a
purchase business combination with you as the accounting acquirer?
We may have further comments after reviewing your response.
Revise
the filing as necessary based on our concerns.
Note 9. Convertible Preferred Stock - Page F-16
31. We noted that the shares of Series A Preferred Stock
automatically convert to common stock on December 31, 2007 and
have a
liquidation preference of $3.50 per share. Please confirm these
shares are not mandatorily redeemable as a result of a liquidation
preference or otherwise. Further, please clarify how EITF D-98 and
ASR 268 impacts how you are required to present the securities in
your balance sheet. Revise the filing as necessary based on our
comment.
32. Revise the filing to disclose how you valued and accounted for
the warrants to purchase 769,500 shares of common stock issued to
the
Series A Preferred Stock placement agent.
Part III
Item 1. Index to Exhibits
33. Please file the complete versions of Exhibits 10.7 and 10.9.
We
may have further comment upon review of the complete exhibits.
34. Please revise the exhibit index to clarify the references to
Form
1-A. It does not appear that these exhibits have been filed with
any
document other than the registration statement on Form 10-SB.
* * *
If you cannot amend your filing in the timeframe mentioned
on
page 1, please tell us when you will provide us with a response.
You
may wish to provide us with marked copies of the amendment to
expedite our review. Please furnish a cover letter with your
amendment that keys your responses to our comments and provides
any
requested supplemental information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Julie Sherman at (202) 824-5506 or Daniel
Gordon, Accounting Branch Chief, at (202) 942-2813 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Mary Beth Breslin at (202) 942-2914 or me
at
(202) 942-1927 with any other questions.
Sincerely,
Thomas A. Jones
Senior Attorney
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Reed J. Killion
Uni-Pixel, Inc.
March 18, 2005
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