Uni-Pixel at Center of Possible Securities Fraud Claims Investigation

“Build a better mousetrap,” so the saying goes, “and the world will beat a path to your door.” Saying you built a better mousetrap, however, is not the same as actually doing it.

In a press release issued Saturday, Ademi & O’Reilly, LLP, announced an investigation into possible securities fraud claims against Uni-Pixel, Inc. UNXL that the law firm said resulted from “inaccurate statements UniPixel made regarding its financial performance and future prospects for the period Dec. 7, 2012 to May 30, 2013.”

Specifically, the charges surround Uni-Pixel’s UniBoss technology, which the company, in a 2010 release, touted as a “unique embossing technology that enables high-speed, low-cost production of printed electronic devices. In addition, the technology eliminates the need for photolithography or screen printing typically required to produce fine line conductors for rigid and flexible electronic devices.”

According to Ademi & O’Reilly, its investigation  deals with whether Uni-Pixel issued false and misleading statements by failing to disclose certain facts about UniBoss. These, according to the press release include the charge that the production yield for UniBoss was much less than the 70 percent claimed; that no PC OEM partner had been secured to bring UniBoss to market; that no purchase orders for UniBoss had been received; and that UniBoss was a substandard, low quality product.

The entire brouhaha resulted from a story published on Seeking Alpha Friday by someone using the pseudonym Seth Shaw. The author of the Seeking Alpha article said he had been able to see a UniBoss sample and take pictures of it when company officials weren’t watching.

His verdict: “The lines are too visible. No consumer electronics company would approve this in a display for their product. If it works, it’d be relegated to a niche, low-end product where optical quality doesn’t matter.”

Uni-Pixel shares fell 24 percent Friday after the Seeking Alpha story came out.

Barron’s, in a report on Uni-Pixel Friday, said an unnamed source told them that the sample referred to in the Seeking Alpha story was broken and that the company expected to have a new, working sample at an industry conference next week.

At this point, it’s a case of unsubstantiated claims, charges, and explanations, by pseudonyms and unnamed sources. In other words, Wall Street at its best. Not a lot to go on – except the net result, so far, is a 24 percent drop in share price.

At the time of this writing, Jim Probasco had no position in the security mentioned above.