UniPixel Reports Fourth Quarter and Full Year 2013 Results

THE WOODLANDS, TX--(Marketwired - Feb 26, 2014) - UniPixel, Inc. (NASDAQ: UNXL), a provider of Performance Engineered Films™ to the touch screen, flexible printed electronics and display markets, reported results for the fourth quarter and year ended December 31, 2013.

Fourth Quarter 2013 Highlights

• Received three touch sensors purchase orders, one from the company's PC OEM partner, and shipped one of these orders in December from low-volume, lab-based production.
  
  
• Commissioned the first of four plating lines that have been installed at the Kodak Rochester facility, a state-of-the-art manufacturing and testing facility within the Eastman Business Park in Rochester, New York. The company expects to commission the other three plating lines in the coming months, bringing the total plating lines to seven, including three plating lines at the Texas facility.
  
  
• Received an automatic roll-to-roll electronic and optical tester at the Texas facility, which was installed in January. The company also installed semi-automated testers at the company's development lab and at the Kodak Rochester facility in the fourth quarter of 2013.
  
  
• Appointed Bernard Marren and Carl Yankowski as interim co-president and co-CEO.
  
  
• Expanded UniPixel's IP portfolio with two new patents issued, as well as submitting 18 new patent applications. The company's IP portfolio currently totals four U.S. issued patents, one Japan patent, and 111 patent applications submitted.
  
  

Q4 and Full Year 2013 Financial Summary
Revenue totaled $11,409 in the fourth quarter of 2013, as compared to $2,030 in the fourth quarter of 2012. The marginal revenues in the fourth quarter were generated by the low-volume order delivered in December 2013. For the full year of 2013, revenue totaled $5.1 million as compared to $76,154 in 2012. The increase in 2013 was primarily due to a $5.0 million payment received by the company's PC OEM licensee.

Selling, general and administrative (SG&A) expenses totaled $3.1 million in the fourth quarter of 2013, as compared to $1.3 million in the same year-ago quarter. For the full year 2013, SG&A totaled $9.9 million as compared to $4.0 million in 2012. The increase of SG&A in both periods was primarily due to an increase in salaries and benefits, partially driven by an increase in the number of employees, restricted stock expense and stock compensation expense, as well as an increase in legal expenses and depreciation expenses.

Research and development expenses totaled $3.1 million in the fourth quarter of 2013, as compared to $1.6 million in the fourth quarter of 2012. For the full year 2013, research and development expenses totaled $10.4 million as compared to $5.1 million in 2012. The increase in both periods was primarily due to increased salaries and benefits, partially driven by an increase in the number of employees, restricted stock expense and stock compensation expense, as well as lab expense related to prototype development of products based on the company's performance engineered films.

Net loss was $6.1 million or $(0.50) per share in the fourth quarter of 2013, as compared to a net loss of $2.9 million or $(0.30) per share in the same year-ago period. Net loss was $15.2 million or $(1.32) per share in 2013, as compared to a net loss of $9.0 million or $(1.11) per share in 2012.

Cash and cash equivalents totaled $39.4 million at December 31, 2013, as compared to $13.0 million at December 31, 2012.

Management Commentary
"While we experienced a number of setbacks in 2013, including management transitions and a delayed start to the roll-to-roll manufacturing of our touch sensors, we exited the year in a stronger position to complete and commercialize our manufacturing process," said Bernard Marren interim co-CEO, interim co-president and chairman of UniPixel.

"Our well-coordinated, focused technical work streams are leveraging the deep knowledge and capabilities of our manufacturing partner, Kodak, as well as the contributions of our ecosystem supply chain and strategic partners. These work streams have been tackling particular challenges of our unique touch sensor manufacturing process, such as those involving bezel design and substrates. While accommodating the unique sensor design requirements for each given commercial device, we learned that some unique bezel designs print better than others. We are also evaluating various support substrates in order to improve and enhance our manufacturing capabilities.

"Our ongoing efforts in solving technical issues as they have developed supports our outlook for our commercial manufacturing timeline. In addition, the know-how developed during this time has contributed to our IP portfolio. As we advance these process development activities, we continue to believe our additive, roll-to-roll, flexible electronics process will be price and performance competitive due to its lower cost base, especially when compared to traditional photolithographic, subtractive, ITO-based and ITO alternative touch sensor solutions.

"So, our focus in the first half of 2014 will continue to be on finalizing a high-volume manufacturing process that would enable shipments of commercial volumes of sensors in the second half of 2014. We anticipate achieving certain progress milestones in the second quarter of 2014 that will enhance our outlook regarding the exact timing around volume commercial shipments, and we look forward to reporting these and other activities as they develop."

Personal Computer Original Equipment Manufacturer (PC OEM) Partner Agreement Update
UniPixel has revised its touch sensors Preferred Price and Capacity license agreement with its PC OEM partner (signed December 7, 2012) to waive the notebook limited exclusivity option. The exclusivity waiver allows UniPixel the opportunity to sell its touch sensors for use in competing notebook applications. There will be no additional milestone payments recognized under the new terms and conditions of the agreement, with the preferred pricing and capacity aspects of the agreement remaining unchanged. The company continues to work closely with its PC OEM partner in product design and development.

CEO Search
As previously announced, the company has begun the search for a new CEO and president. UniPixel has interviewed a number of potential candidates, and plans to appoint a successor with a strong history specific to manufacturing and operational excellence to take advantage of UniPixel's opportunities in performance engineered films.

Conference Call
UniPixel management will host a conference call later today to discuss 2013 and the outlook for 2014, followed by a question and answer period.

The call will be webcast live here, as well as via a link in the Investors section of the company's website at www.unipixel.com/investors. Webcast participants will be able to submit a question to management via the webcast player.

Date: Wednesday, February 26, 2014