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Unipixel's Questionnable Accounting Q1 2013

|Includes:Uni-Pixel, Inc. (UNXL)

Unipixel's Questionnable Accounting Q1 2013

We have recently read several articles that say they will soon reveal problems with Unipixel's accounting. We decided to carefully analyze the q1 2013 financial statements and indeed found a number of very alarming signs that demonstrate that the results were contrived to show earnings of almost $1,000,000 as well as an increase of cash on the cash flow statement. This likely was a critical prerequisite to Unixpixel's closing a $42,000,000 share offering at that time. The following points on the q1 statements are the most striking.

Here is how it appears to have been done:

Capitalize instead of Expensing Salaries thus Inflating the P&L

1) R&D expenses for the first quarter dropped by almost $2.7 million dollars on annualized basis. Through out 2012 R&D expenses were going up every quarter but suddenly they inexplicably dropped in Q1 2013. On the cash flow investing activities CAPEX went up to $6,400,000 which was an increase of $2,300,000 from the previous quarter. However of this $2,300,000 increase $1,900,000 of this is "work in progress" instead of the normal purchase of property and equipment. We suspect that some of this "work in progress" if not all of it is capitalizing the R&D salaries and possibly other salaries instead of expensing them thereby inflating the P&L results.

Mini Share offering in order to show net positive change in Cash

2) During Q1 UNXL sells $2,500.000 worth of shares even though they were in the midst of a $42,000,000 share offering. This appears to the company give the company an illusion of positive cash-flow in addition to a profitable P&L.

$5,000,000 "non recurring engineering revenue" with only $3,000 prorated as a cost of goods sold

3) During the quarter the company records $5,000,000 non recurring engineering revenue with no cost of good sold against it. Are we to assume that Unipixel's margins are almost 100% and that they pay their engineers no salaries? Or do companies simply hand Unipixel a gift for $5,000,000 with no expectation of anything in return. The next $5,000,000 deal that UNXL reports is suddenly deemed to be deferred revenue.

In our opinion the Q1 2013 statements appear to be nothing less then a massive fraud that were contrived to give the appearance of a profitable entity with positive cash flow and a nice even $1,000,000 profit per quarter.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in UNXL over the next 72 hours.

Stocks: UNXL