• XSense Acquisition: In a somewhat unexpected M&A transaction, UniPixel has acquired the manufacturing assets of Atmel's (ATML, $8.20, Not Rated) XSense™ touch sensor business segment along with a five year license for the associated intellectual property from both Atmel and its film supplier, Carclo plc. (CAR.L $144.20, Not Rated). XSense is also a copper-based, metal-mesh touch sensor technology and was a noted competitor to UniPixel's InTouch™ sensor. Atmel's management had announced some months ago that the company was shutting down this business line due to the inability to achieve profitable operations and had written down the related assets. As a result, UniPixel was able to acquire these assets (based in Colorado Springs, CO) for the modest sum of $450,000. To acquire the related IP, UniPixel prepaid a royalty of $9.3 million to Atmel and $4.7 million to Carclo. UniPixel is financing the transaction with the issuance of $15 million in convertible notes due in April 2016.
• The Rationale -- Bottom Line Profits: During the diligence surrounding this transaction the team at UNXL discovered the low margins Atmel was generating from XSense were largely the result of the ongoing payments to Carclo and the high cost of printing the film. The management team at UNXL, will (within six months) transfer the film production to the Colorado campus, eliminating future payments to Carclo. In addition, UNXL has already run proof-of-concept tests and believes that it can replace the very expensive palladium-based catalyst currently used in printing the XSense film with UNXL's proprietary silver-based catalyst. These changes with the film production are expected to move gross margins from 10% to near 40% and allow for comfortable net profit margins. Less