**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM 10-QSB**

 
| **ý**                                             | ** ** | **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**                                                                                                                                                                                                                                          |
|--------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                             |
| **For the Quarterly Period Ended June 30,  2005** |
|                                                   |
| **or**                                                 |
| ** **                                             |
| **o**                                                  | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                          |
| ** **                                             | ** ** | ** **                                                                                                                                                                                                                                                                                                                                       |
|                                                   |       | **For the Transition Period from                         to                         ** |
|                                                   |       |                                                                                                                                                                                                                                                                                                                                             |
|                                                   |       | **COMMISSION FILE NUMBER: 0-49737**                                                                                                                                                                                                                                                                                                              |

 

**UNI-PIXEL,INC.**

(Exact Name of Small Business Issuer as Specified in Its Charter)

 
| **DELAWARE**                                                               | ** ** | **75-2926437**                         |
|----------------------------------------------------------------------------|------------|----------------------------------------|
| (State or  Other Jurisdiction of  Incorporation or Organization)           |       | (I.R.S.  Employer  Identification No.) |
|                                                                       |
| **8708 Technology Forest Place, Suite 100**The Woodlands, Texas 77381 |
| **(Address  of Principal Executive Offices)**                              |
| ** **                                                                 |
| **(281) 825-4500**                                                         |
| **(Issuer’s  Telephone Number, Including Area Code)**                 |

 

Check whether the issuer: (1) filed all reports required to befiled by Section 13 or 15(d) of the Exchange Act during the past 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.   ý Yes o No

 

As of August 10, 2005, the issuer had 12,800,580 shares of issuedand outstanding common stock, par value $0.001 per share.

 

Transitional Small Business Disclosure Format (Check One):   Yes o   No ý

 

 

----

 

**TABLEOF CONTENTS**

 
| Part I.  | Financial Information                                                                                                                                                                              |   |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|          |                                                                                                                                                                                               |   |
| Item 1.       | Financial Statements                                                                                                                                                                               |   |
|          |                                                                                                                                                                                               |   |
|          | Consolidated Balance Sheets  June 30, 2005 (unaudited) and December 31, 2004                                                                                                             |   |
|          |                                                                                                                                                                                               |   |
|          | Consolidated Statements of Operations  Six months ended June 30, 2005 (unaudited) and June 30, 2004  (unaudited)  and cumulative period from inception to June 30, 2005 (unaudited) |   |
|          |                                                                                                                                                                                               |   |
|          | Three  months ended June 30, 2005 (unaudited) and June 30, 2004  (unaudited)                                                                                                             |   |
|          |                                                                                                                                                                                               |   |
|          | Consolidated Statements of Shareholders’  Equity  From inception to June 30, 2005 (unaudited)                                                                                            |   |
|          |                                                                                                                                                                                               |   |
|          | Consolidated Statements of Cash Flows  Six months ended June 30, 2005 (unaudited) and June 30, 2004  (unaudited)  and cumulative period from inception to June 30, 2005 (unaudited) |   |
|          |                                                                                                                                                                                               |   |
|          | Notes to Unaudited Consolidated Financial Statements                                                                                                                                               |   |
|          |                                                                                                                                                                                               |   |
| Item 2.       | Management’s Discussion and Analysis of Financial Condition and  Results of Operations                                                                                                        |   |
|          |                                                                                                                                                                                               |   |
| Item 3.       | Controls and Procedures                                                                                                                                                                            |   |
|          |                                                                                                                                                                                               |   |
| Part II. | Other  Information                                                                                                                                                                                 |   |
|          |                                                                                                                                                                                               |   |
| Item 2.       | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                        |   |
|          |                                                                                                                                                                                               |   |
| Item  6.      | Exhibits                                                                                                                                                                                           |   |

 

2

----

 

**PART I - FINANCIAL INFORMATION**

 

**ITEM 1. FINANCIAL STATEMENTS.**

 

Uni-Pixel, Inc.

(A Development Stage Company)

ConsolidatedBalance Sheets

 
| ** **                                                       | ** ** | **June 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                       | ** ** | **(unaudited)**         | ** ** | **(audited)**               | ** ** |
| **ASSETS**                                                       |       |                    |       |                        |       |
| Current assets                                                   |       |                    |       |                        |       |
| Cash and cash equivalents                                        |       | $                       | 5,527,825  |                        | $          | 5,342,641 |   |
| Prepaid expenses                                                 |       | 39,303                  |       | 18,163                      |       |
|                                                             |       |                    |       |                        |       |
| Total current assets                                             |       | 5,567,128               |       | 5,360,804                   |       |
|                                                             |       |                    |       |                        |       |
| Property and equipment, net                                      |       | 641,486                 |       | 12,474                      |       |
| Intangible assets                                                |       | —                  |       | 13,520                      |       |
|                                                             |       |                    |       |                        |       |
| Total assets                                                     |       | $                       | 6,208,614  |                        | $          | 5,386,798 |   |
|                                                             |       |                    |       |                        |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                   |       |                    |       |                        |       |
|                                                             |       |                    |       |                        |       |
| Current liabilities                                              |       |                    |       |                        |       |
| Accounts payable                                                 |       | $                       | 301,405    |                        | $          | 33,213 |   |
| Accrued expenses                                                 |       | 1,772                   |       | 27,185                      |       |
| Deferred revenue                                                 |       | 200,000                 |       | 200,000                     |       |
| Current portion of note payable                                  |       | 178,847                 |       | 75,000                      |       |
|                                                             |       |                    |       |                        |       |
| Total current liabilities                                        |       | 682,024                 |       | 335,398                     |       |
|                                                             |       |                    |       |                        |       |
| Note payable, less current portion                               |       | 110,606                 |       | 69,328                      |       |
|                                                             |       |                    |       |                        |       |
| Total liabilities                                                |       | 792,630                 |       | 404,726                     |       |
|                                                             |       |                    |       |                        |       |
| Shareholders’ equity                                        |       |                    |       |                        |       |
| Preferred stock, $0.001 par value;  10,000,000 shares authorized |       | 3,752                   |       | 2,822                       |       |
| Common stock, $0.001 par value; 40,000,000  shares authorized    |       | 12,801                  |       | 12,801                      |       |
| Additional paid-in capital                                       |       | 16,540,814              |       | 13,742,444                  |       |
| Accumulated deficit during development  stage                    |       | (11,141,383             | )          | (8,775,995                  | )          |
|                                                             |       |                    |       |                        |       |
| Total shareholders’ equity                                  |       | 5,415,984               |       | 4,982,072                   |       |
|                                                             |       |                    |       |                        |       |
| Total liabilities and shareholders’ equity                  |       | $                       | 6,208,614  |                        | $          | 5,386,798 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

3

----

 

Uni-Pixel, Inc.

(A Development Stage Company)

Consolidated Statements of Operations

(unaudited)

 
| ** **                                                              | ** ** | **Six Months Ended  June 30,** | ** ** | **Cumulative  Period from  February 17, 1998  (date of inception)  to June 30,** | ** ** |
|-------------------------------------------------------------------------|------------|-------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|
| ** **                                                              | ** ** | **2005**                            | ** ** | **2004**                                                                                   | ** ** | **2005** | ** ** |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Revenues                                                                |       |                                |       |                                                                                       |       |   |   |
| Development contract revenue                                            |       | $                                   | 19,689     |                                                                                       | $          | 250,000 |   | $ | 958,201 |   |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Total revenues                                                          |       | 19,689                              |       | 250,000                                                                                    |       | 958,201 |   |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Cost of revenues                                                        |       | 9,844                               |       | 125,000                                                                                    |       | 456,648 |   |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Gross margin                                                            |       | 9,845                               |       | 125,000                                                                                    |       | 501,553 |   |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Selling, general and administrative  expenses                           |       | 1,117,147                           |       | 549,028                                                                                    |       | 5,576,564 |   |
| Research and development                                                |       | 1,321,683                           |       | 543,794                                                                                    |       | 5,613,727 |   |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Operating loss                                                          |       | (2,428,985                          | )          | (967,822                                                                                   | )          | (10,688,738 | ) |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Other income (expense)                                                  |       |                                |       |                                                                                       |       |   |   |
| Other income                                                            |       | —                              |       | —                                                                                     |       | 886,886 |   |
| Debt issuance expense                                                   |       | —                              |       | (125,000                                                                                   | )          | (500,000 | ) |
| Interest income (expense), net                                          |       | 63,597                              |       | (120,739                                                                                   | )          | (839,531 | ) |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Net loss                                                                |       | $                                   | (2,365,388 | )                                                                                          | $          | (1,213,561 | ) | $ | (11,141,383 | ) |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Preferred stock dividends                                               |       | (381,951                            | )          | —                                                                                     |       | (417,666 | ) |
| Net loss attributable to common  shareholders                           |       | $                                   | (2,747,339 | )                                                                                          | $          | (1,213,561 | ) | $ | (11,559,049 | ) |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Per share information                                                   |       |                                |       |                                                                                       |       |   |   |
| Net loss – basic and diluted                                       |       | $                                   | (0.18      | )                                                                                          | $          | (0.24 | ) | $ | (2.05 | ) |
| Preferred stock dividends                                               |       | (0.03                               | )          | —                                                                                     |       | (0.08 | ) |
| Net loss attributable to common  shareholders – basic and diluted  |       | $                                   | (0.21      | )                                                                                          | $          | (0.24 | ) | $ | (2.12 | ) |
|                                                                    |       |                                |       |                                                                                       |       |   |   |
| Weighted average number of basic and  diluted common shares outstanding |       | 12,800,580                          |       | 5,147,580                                                                                  |       | 5,427,690 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

4

----

 

Uni-Pixel, Inc.

(A Development Stage Company)

Consolidated Statements of Operations

(unaudited)

 
| ** **                                                              | ** ** | **Three Months Ended  June 30,** | ** ** |
|-------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                              | ** ** | **2005**                              | ** ** | **2004** | ** ** |
|                                                                    |       |                                  |       |   |   |
| Revenues                                                                |       |                                  |       |   |   |
| Development contract revenue                                            |       | $                                     | 1,470      |   | $ | 250,000 |   |
|                                                                    |       |                                  |       |   |   |
| Total revenues                                                          |       | 1,470                                 |       | 250,000 |   |
|                                                                    |       |                                  |       |   |   |
| Cost of revenues                                                        |       | 735                                   |       | 125,000 |   |
|                                                                    |       |                                  |       |   |   |
| Gross margin                                                            |       | 735                                   |       | 125,000 |   |
|                                                                    |       |                                  |       |   |   |
| Selling, general and administrative  expenses                           |       | 604,766                               |       | 215,756 |   |
| Research and development                                                |       | 814,140                               |       | 116,583 |   |
|                                                                    |       |                                  |       |   |   |
| Operating loss                                                          |       | (1,418,171                            | )          | (207,339 | ) |
|                                                                    |       |                                  |       |   |   |
| Other income (expense)                                                  |       |                                  |       |   |   |
| Other income                                                            |       | —                                |       | — |   |
| Debt issuance expense                                                   |       | —                                |       | — |   |
| Interest income (expense), net                                          |       | 39,991                                |       | (56,664 | ) |
|                                                                    |       |                                  |       |   |   |
| Net loss                                                                |       | $                                     | (1,378,180 | ) | $ | (264,003 | ) |
|                                                                    |       |                                  |       |   |   |
| Preferred stock dividends                                               |       | (196,098                              | )          | — |   |
| Net loss attributable to common  shareholders                           |       | $                                     | (1,574,278 | ) | $ | (264,003 | ) |
|                                                                    |       |                                  |       |   |   |
| Per share information                                                   |       |                                  |       |   |   |
| Net loss – basic and diluted                                       |       | $                                     | (0.11      | ) | $ | (0.05 | ) |
| Preferred stock dividends                                               |       | (0.01                                 | )          | — |   |
| Net loss attributable to common  shareholders – basic and diluted  |       | $                                     | (0.12      | ) | $ | (0.05 | ) |
|                                                                    |       |                                  |       |   |   |
| Weighted average number of basic and  diluted common shares outstanding |       | 12,800,580                            |       | 5,155,080 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

5

----

 

Uni-Pixel, Inc.

(A Development Stage Company)

Consolidated Statements of Shareholders’ Equity

(unaudited)

 
| ** **                                                                | ** ** | **Series A** | ** **       | ** ** | ** ** | **Additional  Paid-In  Capital** | ** ** | **Deferred  Stock-Based  Compensation** | ** ** | **Accumulated  Deficit  During  Development  Stage** | ** ** | **Total  Shareholders’  Equity  (Deficit)** | ** ** |
|---------------------------------------------------------------------------|------------|-------------------|------------------|------------|------------|----------------------------------|------------|-----------------------------------------|------------|------------------------------------------------------|------------|--------------------------------------------------|------------|
| **Preferred Stock**                                                       | ** ** |
| **Number**                                                                | ** ** | ** **        | **Common Stock** |
| **of**                                                                    | ** ** | ** **        | **Number of**    | ** ** | ** ** |
| **Shares**                                                                | ** ** | **Amount**        | **Shares**       | ** ** | **Amount** |
| Founder shares issued at inception at 2/17/98                             |       | —            |             | $          | —     |                             | 4,500,000  |                                    | $          | 4,500                                                |       | $                                                | (500       | ) | $ | — |   | $ | — |   | $ | 4,000 |   |
| Stock issued during 1999 (prices ranging from $0.50 - $0.62 per  share)   |       | —            |             | —     |       | 180,000                          |       | 180                                     |       | 183,820                                              |       | —                                           |       | — |   | 184,000 |   |
| Stock issued during 2000 (prices ranging from $11.34 - $17.00 per  share) |       | —            |             | —     |       | 63,750                           |       | 64                                      |       | 956,186                                              |       | —                                           |       | — |   | 956,250 |   |
| Stock issued during 2001 (prices ranging from $10.00 - $17.00 per share)  |       | —            |             | —     |       | 28,176                           |       | 28                                      |       | 404,227                                              |       | —                                           |       | — |   | 404,255 |   |
| Stock issued during 2002 (prices ranging from $2.00 - $10.00 per  share)  |       | —            |             | —     |       | 157,327                          |       | 157                                     |       | 353,783                                              |       | —                                           |       | — |   | 359,940 |   |
| Deferral of stock-based compensation                                      |       | —            |             | —     |       | —                           |       | —                                  |       | 1,100,000                                            |       | (1,100,000                                       | )          | — |   | — |   |
| Amortization of stock-based compensation                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | 206,250                                          |       | — |   | 206,250 |   |
| Net loss                                                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | —                                           |       | (3,968,540 | ) | (3,968,540 | ) |
| Balance, 12/31/02                                                         |       | —            |             | $          | —     |                             | 4,929,253  |                                    | $          | 4,929                                                |       | $                                                | 2,997,516  |   | $ | (893,750 | ) | $ | (3,968,540 | ) | $ | (1,859,845 | ) |
| Stock issued during 2003 (prices ranging from $1.00 - $2.00 per  share)   |       | —            |             | —     |       | 210,827                          |       | 211                                     |       | 263,943                                              |       | —                                           |       | — |   | 264,154 |   |
| Amortization of stock-based compensation                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | 275,000                                          |       | — |   | 275,000 |   |
| Warrants issued                                                           |       | —            |             | —     |       | —                           |       | —                                  |       | 500,000                                              |       | —                                           |       | — |   | 500,000 |   |
| Net loss                                                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | —                                           |       | (2,492,123 | ) | (2,492,123 | ) |
| Balance, 12/31/03                                                         |       | —            |             | $          | —     |                             | 5,140,080  |                                    | $          | 5,140                                                |       | $                                                | 3,761,459  |   | $ | (618,750 | ) | $ | (6,460,663 | ) | $ | (3,312,814 | ) |
| Issuance of common stock for services                                     |       | —            |             | —     |       | 738,309                          |       | 738                                     |       | 316,975                                              |       | —                                           |       | — |   | 317,713 |   |
| Conversion of note payable for common stock                               |       | —            |             | —     |       | 51,008                           |       | 51                                      |       | 95,052                                               |       | —                                           |       | — |   | 95,103 |   |
| Exercise of stock options                                                 |       | —            |             | —     |       | 1,490,000                        |       | 1,490                                   |       | 28,310                                               |       | —                                           |       | — |   | 29,800 |   |
| Exercise of warrants                                                      |       | —            |             | —     |       | 512,500                          |       | 513                                     |       | 34,488                                               |       | —                                           |       | — |   | 35,000 |   |
| Amortization of stock-based compensation                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | 618,750                                          |       | — |   | 618,750 |   |
| Conversion of bridge loans                                                |       | 256,643           |             | 257        |       | 850,625                          |       | 851                                     |       | 1,834,242                                            |       | —                                           |       | — |   | 1,835,350 |   |
| Issuance of preferred stock                                               |       | 2,565,000         |             | 2,565      |       | —                           |       | —                                  |       | 7,646,765                                            |       | —                                           |       | — |   | 7,649,330 |   |
| Issuance of common stock for net assets of REFL                           |       | —            |             | —     |       | 1,100,808                        |       | 1,101                                   |       | (1,101                                               | )          | —                                           |       | — |   | — |   |
| Issuance of common stock for net assets of Gemini                         |       | —            |             | —     |       | 2,917,250                        |       | 2,917                                   |       | 26,255                                               |       | —                                           |       | — |   | 29,172 |   |
| Net loss                                                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | —                                           |       | (2,315,332 | ) | (2,315,332 | ) |
| Balance, 12/31/04                                                         |       | 2,821,643         |             | $          | 2,822      |                             | 12,800,580 |                                    | $          | 12,801                                               |       | $                                                | 13,742,444 |   | $ | — |   | $ | (8,775,995 | ) | $ | 4,982,072 |   |
| Issuance of preferred stock – Q1                                     |       | 930,000           |             | 930        |       | —                           |       | —                                  |       | 2,798,370                                            |       | —                                           |       | — |   | 2,799,300 |   |
| Net loss                                                                  |       | —            |             | —     |       | —                           |       | —                                  |       | —                                               |       | —                                           |       | (2,365,388 | ) | (2,365,388 | ) |
| Balance, 6/30/05                                                          |       | 3,751,643         |             | $          | 3,752      |                             | 12,800,580 |                                    | $          | 12,801                                               |       | $                                                | 16,540,814 |   | $ | — |   | $ | (11,141,383 | ) | $ | 5,415,984 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

6

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Uni-Pixel, Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(unaudited)

 
| ** **                                                                   | ** ** | **Six Months Ended  June 30,** | ** ** | **Cumulative Period  from February 18,  1998 (date of  inception) to  June 30,** | ** ** |
|------------------------------------------------------------------------------|------------|-------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|
| ** **                                                                   | ** ** | **2005**                            | ** ** | **2004**                                                                                   | ** ** | **2005** | ** ** |
| Cash flows from operating activities                                         |       |                                |       |                                                                                       |       |   |   |
| Net loss                                                                     |       | $                                   | (2,365,388 | )                                                                                          | $          | (1,213,561 | ) | $ | (11,141,383 | ) |
| Adjustments to reconcile net loss to net  cash used in operating activities: |       |                                |       |                                                                                       |       |   |   |
| Interest forgiven                                                            |       | —                              |       | —                                                                                     |       | (91,421 | ) |
| Employee compensation notes payable  forgiven                                |       | —                              |       | —                                                                                     |       | (795,465 | ) |
| Depreciation and amortization                                                |       | 66,802                              |       | 4,769                                                                                      |       | 148,124 |   |
| Stock issued for services                                                    |       | —                              |       | 80,000                                                                                     |       | 460,062 |   |
| Non-cash compensation expense                                                |       | —                              |       | 137,500                                                                                    |       | 1,100,000 |   |
| Amortization of debt issuance costs                                          |       | —                              |       | 125,000                                                                                    |       | 500,000 |   |
| Change in operating assets and liabilities:                                  |       |                                |       |                                                                                       |       |   |   |
| (Increase) decrease in related party  receivables                            |       | —                              |       | (592                                                                                       | )          | — |   |
| (Increase) in prepaid expenses and other  current assets                     |       | (21,140                             | )          | —                                                                                     |       | (39,303 | ) |
| Increase in accounts payable                                                 |       | 268,192                             |       | 199,875                                                                                    |       | 301,405 |   |
| Increase (decrease) in accrued interest  payable                             |       | (7,635                              | )          | 43,647                                                                                     |       | 180,943 |   |
| Increase (decrease) in accrued expenses and  other liabilities               |       | (17,778                             | )          | 212,567                                                                                    |       | 797,237 |   |
| Increase in deferred revenue                                                 |       | —                              |       | (250,000                                                                                   | )          | 200,000 |   |
| Net cash used in operating activities                                        |       | (2,076,947                          | )          | (660,795                                                                                   | )          | (8,379,801 | ) |
|                                                                         |       |                                |       |                                                                                       |       |   |   |
| Cash flows from investing activities                                         |       |                                |       |                                                                                       |       |   |   |
| Purchase of property and equipment                                           |       | (682,294                            | )          | —                                                                                     |       | (749,654 | ) |
| Proceeds from the sale of property and  equipment                            |       | —                              |       | —                                                                                     |       | 27,792 |   |
| Purchases of patents, trademarks and  organization costs                     |       | —                              |       | —                                                                                     |       | (67,748 | ) |
| Net cash used in investing activities                                        |       | (682,294                            | )          | —                                                                                     |       | (789,610 | ) |
|                                                                         |       |                                |       |                                                                                       |       |   |   |
| Cash flows from financing activities                                         |       |                                |       |                                                                                       |       |   |   |
| Proceeds from notes payable to related  party                                |       | —                              |       | 25,000                                                                                     |       | 115,103 |   |
| Payments on notes payable to related party                                   |       | (66,048                             | )          | —                                                                                     |       | (86,048 | ) |
| Proceeds from convertible notes payable                                      |       | —                              |       | 625,202                                                                                    |       | 3,390,000 |   |
| Payments on convertible notes payable                                        |       | —                              |       | —                                                                                     |       | (1,470,672 | ) |
| Net proceeds from notes payable                                              |       | 211,173                             |       | —                                                                                     |       | 211,173 |   |
| Proceeds from the issuance of preferred  stock, net                          |       | 2,799,300                           |       | —                                                                                     |       | 10,448,630 |   |
| Proceeds from the issuance of common stock,  net                             |       | —                              |       | —                                                                                     |       | 2,089,050 |   |
| Net cash provided by financing activities                                    |       | 2,944,425                           |       | 650,202                                                                                    |       | 14,697,236 |   |
|                                                                         |       |                                |       |                                                                                       |       |   |   |
| Net increase in cash and cash equivalents                                    |       | 185,184                             |       | (10,593                                                                                    | )          | 5,527,825 |   |
| Cash and cash equivalents, beginning of  period                              |       | 5,342,641                           |       | 19,760                                                                                     |       | — |   |
| Cash and cash equivalents, end of period                                     |       | $                                   | 5,527,825  |                                                                                       | $          | 9,167 |   | $ | 5,527,825 |   |
|                                                                         |       |                                |       |                                                                                       |       |   |   |
| Supplemental disclosures of cash flow  information:                          |       |                                |       |                                                                                       |       |   |   |
| Cash paid for interest                                                       |       | $                                   | 12,458     |                                                                                       | $          | 77,092 |   | $ | 734,643 |   |
| Interest capitalized into notes payable                                      |       | $                                   | —     |                                                                                       | $          | — |   | $ | 8,250 |   |
| Debt issuance cost for warrant issued                                        |       | $                                   | —     |                                                                                       | $          | — |   | $ | 500,000 |   |
| Preferred stock dividend                                                     |       | $                                   | 381,951    |                                                                                       | $          | — |   | $ | 417,666 |   |
| Conversion of notes payable for preferred  stock                             |       | $                                   | —     |                                                                                       | $          | — |   | $ | 898,250 |   |
| Conversion of notes payable for common  stock                                |       | $                                   | —     |                                                                                       | $          | — |   | $ | 980,103 |   |
| Stock issued for services                                                    |       | $                                   | —     |                                                                                       | $          | 80,000 |   | $ | 1,560,062 |   |
| Stock issued for interest                                                    |       | $                                   | —     |                                                                                       | $          | — |   | $ | 81,272 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

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Uni-Pixel, Inc.

(A Development StageCompany)

Notes to Unaudited Consolidated Financial Statements

 

**Note 1 – Basis of Presentation, Business andOrganization**

 

Uni-Pixel, Inc., a Delaware corporation,is the parent company of our wholly-owned operating subsidiary, Uni-PixelDisplays, Inc.  As used herein, “Uni-Pixel,”“we,” “us,” and “our” refer to Uni-Pixel, Inc. and our wholly-ownedconsolidated subsidiary, Uni-Pixel Displays, Inc.  Our common stock, par value $0.001 per share,is quoted on the Over the Counter – Pink Sheets (“OTC.PK”) under the tickersymbol “UNXL.”

 

Uni-Pixel is a development stage company thathas developed, patented and demonstrated a new color display technology in theform of proof of concept prototypes which we call Time Multiplexed OpticalShutter (“TMOS”).  We intend to be aleader in the research, development and commercialization of new flat paneldisplays using TMOS in a variety of applications, such as mobile phones,digital cameras, notebook computers, televisions and other consumer electronicdevices. As of June 30, 2005, we had accumulated a total deficit of $11.1million from operations in pursuit of this objective.

 

We anticipate that our TMOS displays will bethin, lightweight, and power-efficient devices, which are highly suitable foruse in full-color display applications. We believe TMOS displays will be able to capture a share of the growing$60+ billion flat panel display market due to the significant advantagesit should provide over competing displays with respect to manufacturing andmaterials cost, brightness, power efficiency, viewing angle, video responsetime and image quality.  We believe thatour technology leadership and intellectual property position will enable us togenerate revenues initially from TMOS displays for existing vertical market segmentssuch as the military, avionics, and automotive segments, and then subsequentlyfrom consumer electronics markets (i.e., TVs, monitors, personal computers,cameras, games, etc.).

 

Our strategy is to develop further ourproprietary TMOS technology to the point of initially manufacturing smallvolumes of high performance displays for military applications.  We intend to utilize contract manufacturingfor product fabrication to augment our internal capabilities in the shortterm.  We also plan to enter into jointventures in certain vertical market segments to exploit the existingmanufacturing and distribution channels of our targeted partners.  We further plan to license our technology todisplay manufacturers for use in applications such as mobile phones, digitalcameras, laptop computers, and other consumer electronic devices. Through ourinternal research and development efforts we have established a portfolio ofTMOS-related patents and patent applications and other intellectual propertyrights that support these joint venture and licensing strategies.  We currently have seven issued patents andfifteen pending patent applications worldwide and contemplate obtainingexclusive field-of-use licenses, with the right to sublicense, to complementarytechnologies from targeted strategic partners and U.S. national laboratories.

 

Through June 30, 2005, we have beenprimarily engaged in developing our initial product technology, recruitingpersonnel, commencing our U.S. operations and raising capital. In the course ofour development activities, we have sustained losses and expect such losses tocontinue through at least 2005. We will finance our operations primarilythrough our existing cash and possible future financing transactions.

 

Our ability to operate profitably under ourcurrent business plan is largely contingent upon our success in developing beyondproof of concept to final prototypes and manufacturing for sale our productsand upon our successful development of markets for our products and profitablemanufacturing processes.  We may berequired to obtain additional capital in the future to expand our operations.No assurance can be given that we will be able to develop our products,successfully develop the markets for our products or profitable manufacturingmethods, or any such additional capital as we might need, either through equityor debt financing, on satisfactory terms or at all. Additionally, no assurancecan be given that any such financing, if obtained, will be adequate to meet ourultimate capital needs and to support our growth. If adequate capital cannot beobtained on satisfactory terms, our operations could be negatively impacted.

 

If we achieve growth in our operations in thenext few years, such growth could place a strain on our management,administrative, operational and financial infrastructure. Our ability to manageour current operations and future growth requires the continued improvement ofoperational, financial and management controls, reporting systems andprocedures. In addition, we may find it necessary to hire additionalmanagement, financial and sales and marketing personnel to manage our expandingoperations. If we are unable to manage this growth effectively andsuccessfully, our business, operating results and financial condition may bematerially adversely affected.

 

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As of June 30, 2005, we had cash andcash equivalents of $5.5 million.  Webelieve that our existing capital resources are adequate to finance our operationsuntil December 31, 2006, however our long-term viability is dependent uponsuccessful operation of our business, our ability to develop our manufacturingprocess, the development of our products and our ability to raise additionaldebt and equity to meet our business objectives.

 

*Acquisition and merger and basis ofpresentation*

 

Uni-Pixel, Inc. was originallyincorporated in the State of Nevada as Super Shops, Inc. On November 15,1999, Super Shops and its sister companies filed an amended petition underChapter 11 of the United States Bankruptcy Code. On July 31, 2000,the court approved Super Shops’ Amended Joint Plan of Reorganization. On October 13,2000, and in accordance with the Plan of Reorganization, the management ofSuper Shops changed its state of incorporation from Nevada to Delaware bymerging with and into NEV Acquisition Corp., a Delaware corporation formedsolely for the purpose of effecting the reincorporation. On June 13, 2001,NEV Acquisition Corp. changed its corporate name to Real-Estateforlease.com, Inc.,as a result of the merger transaction discussed in the following paragraph.

 

Real-Estateforlease.com, Inc. wasincorporated on May 24, 2001, in the State of Delaware to serve as abusiness-to-business internet information intermediary providing turnkeymarketing services to facilitate the leasing of commercial real estateproperties. On June 13, 2001, the management of NEV Acquisition Corp.entered into an Agreement and Plan of Merger with Real-Estateforlease.com, Inc.pursuant to which the sole stockholder and founder of Real-Estateforlease.com, Inc.exchanged his equity ownership interest in Real-Estateforlease.com, Inc.for 9,500,000 shares (or approximately 96%) of NEV Acquisition Corp.’s commonstock. At the time of the merger between Real-Estateforlease.com, Inc. andNEV Acquisition Corp., Real-Estateforlease.com, Inc. had no operations andessentially no assets. Efforts by Real-Estateforlease.com, Inc. toimplement its business plan ceased in June 2002. Prior to Real-Estateforlease.com, Inc.’smerger with Uni-Pixel Displays, Inc., as described in the next paragraph,Real-Estateforlease.com, Inc. had no operations and no material assets orliabilities.

 

Our wholly-owned subsidiary, Uni-PixelDisplays, Inc., was originally incorporated as Tralas Technologies, Inc.,a Texas corporation, on February 17, 1998. Tralas Technologies, Inc.changed its name to Uni-Pixel Displays, Inc. during 2001. On December 7,2004, Real-Estateforlease.com, Inc. entered into a merger agreement withUni-Pixel Displays, Inc. and certain other parties pursuant to whichUni-Pixel Displays, Inc. became a wholly-owned subsidiary ofReal-Estateforlease.com, Inc. Pursuant to the merger, we changed our nameto “Uni-Pixel, Inc.” at the annual meeting of our stockholders held in January 2005.

 

The financial statements presented in thisquarterly report include Uni-Pixel, Inc. and our wholly-owned subsidiary,Uni-Pixel Displays, Inc. All significant intercompany transactions andbalances have been eliminated. Uni-Pixel Displays, Inc. was, foraccounting purposes, the surviving entity of the merger, and accordingly forthe periods prior to the merger, the financial statements reflect the financialposition, results of operations and cash flows of Uni-Pixel Displays, Inc.  The assets, liabilities, operations and cashflows of Real-Estateforlease.com, Inc. and Gemini V, Inc. areincluded in the consolidated financial statements from December 10, 2004onward.

 

**Note 2 -****                  Summaryof Significant Accounting Policies**

 

*Interim financial information*

 

The financial statements included herein,which have not been audited pursuant to the rules and regulations of theSecurities and Exchange Commission, reflect all adjustments which, in theopinion of management, are necessary for a fair presentation of financialposition, results of operations and cash flows for the interim periods on abasis consistent with the annual audited statements. All such adjustments areof a normal recurring nature. The results of operations for interim periods arenot necessarily indicative of the results that may be expected for any otherinterim period of a full year. Certain information, accounting policies andfootnote disclosures normally included in financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America have been omitted pursuant to such rules and regulations,although we believe that the disclosures are adequate to make the informationpresented not misleading. These financial statements should be read inconjunction with our audited financial statements included in our Form 10-SB,as amended, including the year ended December 31, 2004, filed with theSecurities and Exchange Commission on July 22, 2005.

 

9

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*Use of estimates*

 

The preparation of financial statements inconformity with accounting principles generally accepted in the United Statesof America requires us to make estimates and assumptions that affect thereported amounts of assets and liabilities, disclosures of contingent assetsand liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. Examples includeprovisions for bad debts, useful lives of property and equipment and intangibleassets, impairment of property and equipment and intangible assets, deferredtaxes, and the provision for and disclosure of litigation and losscontingencies. Actual results may differ materially from those estimates.

 

*Statement of cash flows*

 

For purposes of the statements of cash flows,we consider all highly liquid investments (i.e., investments which, whenpurchased, have original maturities of three months or less) to be cashequivalents.

 

*Concentration of credit risk*

 

We maintain our cash primarily with majorU.S. domestic banks. The amounts held in these banks exceed the insured limitof $100,000 from time to time and exceeded that balance at June 30, 2005and December 31, 2004. The terms of these deposits are on demand to minimizerisk.  We have not incurred lossesrelated to these deposits.

 

*Property and equipment*

 

Property and equipment, consisting primarilyof lab equipment, computer equipment, software, leasehold improvements, andoffice furniture and fixtures is carried at cost less accumulated depreciationand amortization. Depreciation and amortization for financial reportingpurposes is provided by the straight-line method over the estimated usefullives of three to five years. Leasehold improvements are amortized using thestraight-line method over the remaining lease term or the life of the asset,whichever is shorter. The cost of repairs and maintenance is charged as anexpense as incurred.

 

*Intangible assets*

 

Our intangible assets represent patentapplications which are recorded at cost. We have filed applications for patents in connection with technologiesbeing developed. The patent applications and any patents issued as a result ofthese applications are important to the protection of our technologies that mayresult from our research and development efforts. Costs associated with patentapplications and maintaining patents are capitalized and will be amortized overthe life of the patents.  We review thevalue recorded for intangibles to assess recoverability from future operationsusing undiscounted cash flows. Impairments are recognized in operating resultsto the extent the carrying value exceeds fair value determined based on the netpresent value of estimated future cash flows.

 

*Revenue recognition*

 

We recognize revenue over the period theservice is performed in accordance with SEC Staff Accounting Bulletin No. 104,“Revenue Recognition in Financial Statements” (“SAB 104”). In general,SAB 104 requires that four basic criteria must be met before revenue canbe recognized: (1) persuasive evidence that an arrangement exists, (2) deliveryhas occurred or services rendered, (3) the fee is fixed and determinable,and (4) collectibility is reasonably assured.

 

Revenue from licenses and other up front feesare recognized on a ratable basis over the term of the respective agreement.

 

*Research and development expenses*

 

Research and development costs are expensedas incurred and include salaries and benefits, costs paid to third-partycontractors for research, development and manufacturing of materials anddevices, and a portion of facilities cost. Prototype development costs are asignificant component of research and development expenses and include costsassociated with third-party contractors. Invoicing from third-party contractorsfor services performed can lag several months. We accrue the costs of services rendered in connection with third-partycontractor activities based on our estimate of management fees, site managementand monitoring costs and data management costs. Actual costs may differ fromestimated costs in some cases and are adjusted for in the period in which theybecome known.

 

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*Stock-based compensation*

 

We may, from time to time, issue commonstock, stock options or common stock warrants to acquire services or goods fromnon-employees. Common stock, stock options and common stock warrants issued topersons other than employees or directors are recorded on the basis of theirfair value, as required by SFAS No. 123, which is measured as of the daterequired by EITF Issue 96-18, *“Accountingfor Equity Instruments That Are Issued to Other Than Employees for Acquiring,or in Conjunction with Selling, Goods or Services.”*  In accordance with EITF 96-18, the stockoptions or common stock warrants are valued using the Black-Scholes model onthe basis of the market price of the underlying common stock on the “valuationdate,” which for options and warrants related to contracts that havesubstantial disincentives to non-performance, is the date of the contract, andfor all other contracts is the vesting date. Expense related to the options andwarrants is recognized on a straight-line basis over the shorter of the periodover which services are to be received or the vesting period. Where expensemust be recognized prior to a valuation date, the expense is computed under theBlack-Scholes model on the basis of the market price of the underlying commonstock at the end of the period, and any subsequent changes in the market priceof the underlying common stock through the valuation date is reflected in theexpense recorded in the subsequent period in which that change occurs.

 

Had compensation costs for our stock optionplan been determined based on the fair value at the grant date for the threemonths and six months ended June 30, 2005, consistent with the provisionsof SFAS No. 123 and SFAS 148, our net loss and net loss per sharewould have increased to the pro forma amounts indicated below:

 
| ** **                                                                                                                                                            | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **                                                                                                                                                            | ** ** | **2005**                             | ** ** | **2004**                           | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                                                                                                                                  |       |                                 |       |                               |       |   |   |   |   |
| Net loss attributable to common shareholders  – as reported                                                                                                      |       | $                                    | (1,574,278 | )                                  | $          | (264,003 | ) | $ | (2,747,339 | ) | $ | (1,213,561 | ) |
| Add: Stock-based employee compensation expense  (gain) included in reported net loss, net of related tax effects of $0                                                |       | N/A                                  |       | N/A                                |       | N/A |   | N/A |   |
| Less: total stock-based employee  compensation expense determined under fair value based method for all awards  granted to employees, net of related tax effect of $0 |       | (147,641                             | )          | —                             |       | (177,800 | ) | — |   |
| Net loss – pro forma                                                                                                                                             |       | $                                    | (1,721,919 | )                                  | $          | (264,003 | ) | $ | (2,925,139 | ) | $ | (1,213,561 | ) |
|                                                                                                                                                                  |       |                                 |       |                               |       |   |   |   |   |
| Net loss per share – as reported                                                                                                                                 |       |                                 |       |                               |       |   |   |   |   |
| Basic and diluted                                                                                                                                                     |       | $                                    | (0.12      | )                                  | $          | (0.05 | ) | $ | (0.21 | ) | $ | (0.24 | ) |
| Net loss per share – pro forma                                                                                                                                   |       |                                 |       |                               |       |   |   |   |   |
| Basic and diluted                                                                                                                                                     |       | $                                    | (0.13      | )                                  | $          | (0.05 | ) | $ | (0.23 | ) | $ | (0.24 | ) |

 

As required under SFAS 123 andSFAS 148, the pro forma effects of stock-based compensation on net lossper share have been estimated at the date of grant using the Black Scholesoption-pricing model based on the following weighted average assumptions:

 
| ** **            | ** ** | **Three Months  ended  June 30, 2005** | ** ** | **Three Months  ended  June 30, 2004** | ** ** | **Six Months  ended  June 30, 2005** | ** ** | **Six Months  ended  June 30, 2004** | ** ** |
|-----------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------|------------|
| Expected life (years) |       | 5 years                                |       | N/A                                         |       | 5 years                              |       | N/A                                       |       |
| Interest rate         |       | 4                                           | %          | N/A                                         |       | 4                                         | %          | N/A                                       |       |
| Dividend yield        |       | —                                      |       | N/A                                         |       | —                                    |       | N/A                                       |       |
| Volatility            |       | 40.05                                       | %          | N/A                                         |       | 40.05                                     | %          | N/A                                       |       |

 

*Income taxes*

 

An asset and liability approach is used forfinancial accounting and reporting for income taxes. Deferred income taxes arisefrom temporary differences between income tax and financial reporting andprincipally relate to recognition of revenue and expenses in different periodsfor financial and tax accounting purposes and are measured using currentlyenacted tax rates and laws. In addition, a deferred tax asset can be generatedby net operating loss carryforwards (“NOLs”). If it is more likely than notthat some portion or all of a deferred tax asset will not be realized, avaluation allowance is recognized.

 

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No benefit has been recognized on the netloss as the realization of the net operating loss carryforward cannot beassured.

 

*Loss per share data*

 

Basic loss per share is calculated based onthe weighted average common shares outstanding during the period, after givingeffect to the manner in which the merger was accounted for as described inNote 1. Diluted earnings per share also gives effect to the dilutiveeffect of stock options, warrants (calculated based on the treasury stockmethod) and convertible notes and convertible preferred stock. The Company doesnot present diluted earnings per share for years in which it incurred netlosses as the effect is antidilutive.

 

At June 30, 2005, options and warrantsto purchase 2,723,500 shares of common stock at exercise prices ranging from$1.75 to $4.00 per share were outstanding, but were not included in thecomputation of diluted earnings per share as their effect would beantidilutive.

 

*Fair Value of Financial Instruments*

 

Our financial instruments consist of accountsreceivable and accounts payable. The fair values of our accounts receivable andaccounts payable, in our opinion, reflect their respective carrying amounts.

 

*Recent accounting pronouncements*

 

In December 2004, the FASB issued SFAS No. 123(Revised 2004), *“Share Based Payment,”*which eliminates the use of APB Opinion No. 25 and will require us tomeasure the cost of employee services received in exchange for an award ofequity instruments based on the grant-date fair value of the award. That costwill be recognized over the period during which an employee is required toprovide service in exchange for the reward—the requisite service period. Nocompensation cost is recognized for equity instruments for which employees donot render the requisite service. The grant-date fair value of employee shareoptions and similar instruments will be estimated using option-pricing modelsadjusted for the unique characteristics of those instruments. SFAS No. 123(Revised 2004) is effective for the first interim or annual reporting periodthat begins after June 15, 2005 (the quarter beginning July 1, 2005for us) and must be applied to all options granted or modified after itseffective date and also to recognize the cost associated with the portion ofany option awards made before its effective date for which the associatedservice has not been rendered as of its effective date.  We are still studying the requirements ofSFAS No. 123 (Revised 2004) and have not yet determined what impact itwill have on our results of operations and financial position.  On April 14, 2005, the U.S. Securitiesand Exchange Commission announced a deferral of the effective date of FAS123(R) for calendar year companies until the beginning of 2006.

 

**Note 3 -****                  Commitments and Contingencies**

 

Leases

 

The Companyhas entered into a lease for office, warehouse and laboratory facility in TheWoodlands, Texas under third party non-cancelable operating leases through2010. Future minimum lease commitments are as follows:

 
| **Year Ending December 31** | ** ** | ** ** | ** ** |
|-----------------------------|------------|------------|------------|
| 2005                        |       | $          | 95,000     |   |
| 2006                        |       | 190,000    |       |
| 2007                        |       | 190,000    |       |
| 2008                        |       | 190,000    |       |
| 2009                        |       | 190,000    |       |
| Thereafter                  |       | 159,000    |       |
| Total                       |       | $          | 1,014,000  |   |

 

This lease provides the Company with one 5-year renewal options.

 

**Note 4 -****                  Equity,Stock Plan and Warrants**

 

*Equity instruments issued to non-employees*

 

From time to time, in order to preserve cashand to fund our operating activities, common stock or other equity instrumentsmay be issued for cash or in exchange for goods or services. Equity instrumentsissued for goods or services are recorded at the fair value of the goods orservices received or the fair value of the equity instruments issued, whicheveris more reliably measurable.

 

*Common Stock*

 

During the six months ended June 30,2005, we issued no shares of common stock for cash in connection with theexercise of stock options and issued no shares of common stock in exchange forcashless exercise of warrants.

 

*2005 Stock Incentive Plan*

 

Effective January 27, 2005, we adoptedthe Uni-Pixel, Inc. 2005 Stock Incentive Plan. The Stock Incentive Plan isdiscretionary and allows for an aggregate of up to 2,000,000 shares of ourcommon stock to be awarded through incentive and non-qualified stock optionsand stock appreciation rights. The Stock Incentive Plan is administered by ourBoard of

 

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Directors, which has exclusive discretion to select participants whowill receive the awards and to determine the type, size and terms of each awardgranted.

 

In thefirst quarter of 2005, we issued under the Stock Incentive Plan a total of1,050,000 options to purchase our common stock with an exercise price of $4.00per share to two employees.  The optionsvest over periods of a maximum of 36 to 46 months from the date of grant.

 

In thesecond quarter of 2005, we issued under the Stock Incentive Plan a total of 625,000options to purchase our common stock with an exercise price of $4.00 per shareto four employees.  The options vest overperiods of a maximum of 36 months from the date of grant.

 

**ITEM 2.  MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**

 

The following discussion and analysis shouldbe read in conjunction with the consolidated financial statements including thenotes thereto.

 

**Forward-Looking Information**

 

This report contains certain “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended, as well as information relating to us that is based on our exerciseof business judgment and assumptions made by and information currentlyavailable to us.  When used in thisdocument and other documents, releases and reports released by us, the words “anticipate,”“believe,” “estimate,” “expect,” and “intend” and words of similar import, areintended to identify any forward-looking statements. You should not place unduereliance on these forward-looking statements. These statements reflect our current view of future events and aresubject to certain risks and uncertainties as noted below. Should one or moreof these risks or uncertainties materialize, or should underlying assumptionsprove incorrect, our actual results could differ materially from those anticipatedin these forward-looking statements. Actual events, transactions and results may differ materially from theanticipated events, transactions or results described in such statements. Thediscovery and development of applications of our business are subject tosubstantial risks and uncertainties. There can be no assurance that ourbusiness plan can be conducted within the timeframe that we expect.  These and other factors, some of which aredescribed below, could cause future results to differ materially from theexpectations expressed in this report.  Althoughwe believe that our expectations are based on reasonable assumptions, we cangive no assurance that our expectations will materialize. Many factors couldcause actual results to differ materially from our forward lookingstatements.  Several of these factorsinclude, without limitation:

 

•                  ourability to develop our flat panel display technology into marketable products;

•                  ourability to finance our business;

•                  ourability to improve our current pricing model;

•                  ourability to service the demand for our product;

•                  astable interest rate market in the world, and specifically the countries inwhich we are doing business or plan to do business;

•                  astable currency rate environment in the world, and specifically the countriesin which we are doing business or plan to do business;

•                  continuedavailability of supplies at satisfactory prices;

•                  nonew entrance of competitive products in our markets;

•                  noadverse publicity related to our products or the Company itself;

•                  noadverse claims relating to our intellectual property;

•                  theadoption of new, or changes in, accounting principles, and/or legalproceedings;

•                  ourability to maintain compliance for continued listing of our common stock;

•                  thecosts inherent with complying with new statutes and regulations applicable topublic reporting companies, such as the Sarbanes-Oxley Act of 2002;

•                  ourability to efficiently integrate future acquisitions, if any;

•                  othernew lines of business that we may enter in the future; and

•                  otherrisks referenced from time to time elsewhere in this report and in our filingswith the Securities and Exchange Commission.

 

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These factorsare not necessarily all of the important factors that could cause actualresults of operations to differ materially from those expressed in theseforward-looking statements. Other unknown or unpredictable factors also couldhave material adverse effects on our future results.  We undertake no obligation anddo not intend to update, revise or otherwise publicly release any revisions tothese forward-looking statements to reflect events or circumstances after thedate hereof or to reflect the occurrence of any unanticipated events. We cannot assure you that projected results willbe achieved.

 

*CRITICAL ACCOUNTING POLICIES*

 

The following discussion and analysis offinancial condition and results of operations are based upon our consolidatedfinancial statements, which have been prepared in conformity with accountingprinciples generally accepted in the United States of America. Our significantaccounting policies are more fully described in Note 2 of Notes to the UnauditedConsolidated Financial Statements. However, certain accounting policies andestimates are particularly important to the understanding of our financialposition and results of operations and require the application of significantjudgment by our management or can be materially affected by changes from periodto period in economic factors or conditions that are outside of ourcontrol.  As a result, they are subjectto an inherent degree of uncertainty. In applying these policies, ourmanagement uses their judgment to determine the appropriate assumptions to beused in the determination of certain estimates. Those estimates are based onour historical operations, our future business plans and projected financialresults, the terms of existing contracts, our observance of trends in theindustry, information provided by our customers and information available fromother outside sources, as appropriate. The following discusses our significantaccounting policies and estimates.

 

*Revenue Recognition:*  We recognize revenue over the period theservice is performed in accordance with SEC Staff Accounting Bulletin No. 104,“Revenue Recognition in Financial Statements” (“SAB 104”). In general, SAB 104requires that four basic criteria must be met before revenue can be recognized:(1) persuasive evidence that an arrangement exists, (2) delivery hasoccurred or services rendered, (3) the fee is fixed and determinable, and (4) collectibilityis reasonably assured.

 

Advance payments are deferred until shipment.The amount of the revenue deferred represents the fair value of the remainingundelivered products measured in accordance with Emerging Issues Task ForceIssue (“EITF”) 00-21, *“Accounting forRevenue Arrangements with Multiple Deliverables,”* which addressesthe issue of accounting for arrangements that involve the delivery of multipleproducts or services.

 

Revenue from licenses and other up-front feesare recognized on a ratable basis over the term of the respective agreement.

 

*Cost of Sales andSelling, General and Administrative Expenses and Research and DevelopmentExpenses:*  In aneffort to consolidate our executive management team, we moved our headquartersfrom Austin, Texas to The Woodlands, Texas during the third quarter of2005.  The primary purpose of ourfacility in The Woodlands, Texas is to conduct research on the development,testing and delivery of our prototype devices, and the commercialization of ourproducts so the costs incurred in operating our facility in The Woodlands,Texas have been classified as research and development expenses.

 

If, in the future, the purposes for which weoperate our facility in The Woodlands, Texas, or any new facilities we open,changes, the allocation of the costs incurred in operating that facilitybetween cost of sales and research and development expenses could change toreflect such operational changes.

 

*Research andDevelopment Expenses:* Research and development costs are expensed as incurred and includesalaries and benefits, costs paid to third-party contractors for research,development and manufacturing of materials and devices, and a portion of facilitiescost. Prototype development costs are a significant component of research anddevelopment expenses and include costs associated with third-party contractors.Invoicing from third-party contractors for services performed can lag severalmonths. We accrue the costs of services rendered in connection with third-partycontractor activities based on our estimate of management fees, site managementand monitoring costs and data management costs. Actual costs may differ in somecases from estimated costs and are adjusted for in the period in which theybecome known.

 

*Intangible Assets:*  Our intangible assets represent patentapplications which are recorded at cost. We have filed applications for patentsin connection with technologies being developed. The patent applications andany patents issued as a result of these applications are important to theprotection of our technologies that may result from our research anddevelopment efforts. Costs associated with patent applications and maintainingpatents are capitalized and will be amortized over the life of the patents. Wereview the value recorded for intangibles to assess recoverability from futureoperations using undiscounted cash flows. Impairments are recognized inoperating results to the extent the carrying value exceeds fair value

 

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determined based on the net present value of estimated future cashflows. The projection of future cash flows requires us to make estimates aboutwhen product approvals may be obtained, and the amount of future revenues. Theactual future results could differ significantly from these estimates, andresulting changes in the estimates of future cash flows could be significantand could affect the recoverability of intangible assets.

 

*Stock-Based Compensation:*  We account for our stock-based compensationunder the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123—”Accountingfor Stock Based Compensation.” Under SFAS No. 123, we are permitted toeither record expenses for stock options and other employee compensation plansbased on their fair value at the date of grant or to continue to apply theprovisions of Accounting Principles Board Opinion No. 25 “Accounting forStock Issued to Employees,” (“APB No. 25”), and recognize compensationexpense, if any, based on the intrinsic value of the equity instrument at themeasurement date. We have elected to continue following the provisions of APB No. 25.Stock options issued to persons other than employees or directors are recordedon the basis of their fair value as required by SFAS No. 123.

 

Beginning in the quarter beginning January 1,2006, we will be required to adopt SFAS No. 123 (Revised 2004), *“Share Based Payment,”* which eliminatesthe use of APB Opinion No. 25 and we will be required to measure the costof employee services received in exchange for an award of equity instrumentsbased on the grant-date fair value of the award. That cost will be recognizedover the period during which an employee is required to provide service inexchange for the reward—the requisite service period. No compensation cost willbe recognized for equity instruments for which employees do not render therequisite service. The grant-date fair value of employee share options andsimilar instruments will be estimated using option-pricing models adjusted forthe unique characteristics of those instruments. SFAS No. 123 (Revised2004) must be applied to all options granted or modified after its effectivedate and also to recognize the cost associated with the portion of any optionawards made before its effective date for which the associated service has notbeen rendered as of its effective date. We are still studying the requirementsof SFAS No. 123 (Revised 2004) and have not yet determined what impact itwill have on our results of operations and financial position.  On April 14, 2005, the U.S. Securitiesand Exchange Commission announced a deferral of the effective date of FAS123(R) for calendar year companies until the beginning of 2006.

 

*RESULTS OF OPERATIONS*

 

Comparison of the six months ending June 30,2005 and 2004

 

REVENUES.  Revenues decreased to $19,689 for the sixmonths ended June 30, 2005, as compared to $250,000 for the six monthsended June 30, 2004, due to the revenues recognized from the work specificto a development contract during each of those respective periods.

 

COST OFREVENUES.  Cost of revenuesinclude all direct expenses associated with the delivery of services includinginternal labor costs. Cost of revenues for the six months ended June 30,2005 decreased to $9,844 as compared to $125,000 for the six months ended June 30,2004, due to the decrease in revenues recognized from the work specific to adevelopment contract.

 

SELLING, GENERALAND ADMINISTRATIVE EXPENSES. Selling, general and administrativeexpenses increased by 103% or $568,119, to $1,117,147 for the six months ended June 30,2005 from $549,028 for the six months ended June 30, 2004.  The major components of the approximately $568,000increase in selling, general and administrative expense are as follows:

 

a) Salaries and benefits increased by approximately $203,000 to $457,000for the six months ended June 30, 2005 compared to $254,000 for the sixmonths ended June 30, 2004 due to an increase in the number of employeesand the level of compensation for employees, including executive pay increases;

 

b) Contract labor increased by approximately$89,000 to $140,000 for the six months ended June 30, 2005 compared to$51,000 for the six months ended June 30, 2004;

 

c) Legal expense increased by approximately $43,000to $240,000 for the six months ended June 30, 2005 compared to $197,000for the six months ended June 30, 2004 due to an increase in legalexpenses related to the preparation of the Form 10-SB, as amended, filedwith the Securities and Exchange Commission on July 22, 2005 andassociated securities work;

 

d) Accounting expense increased byapproximately $21,000 to $26,000 for the six months ended June 30, 2005compared to $5,000 for the six months ended June 30, 2004 due to anincrease in accounting expenses related to audits and

 

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reporting required for the preparation of the Form 10-SB, asamended, filed with the Securities and Exchange Commission on July 22,2005;

 

e) Office expense increased by approximately$36,000 to $45,000 for the six months ended June 30, 2005 compared to $9,000for the six months ended June 30, 2004;

 

f) Travel expense increased by approximately$31,000 to $36,000 for the six months ended June 30, 2005 compared to $5,000for the six months ended June 30, 2004; and

 

g) Depreciation and amortization expenseincreased by approximately $62,000 to $67,000 for the six months ended June 30,2005 compared to $5,000 for the six months ended June 30, 2004 as a resultof an increase in property and equipment during the six months ended June 30,2005.

 

RESEARCH AND DEVELOPMENT. Research anddevelopment expenses increased by approximately $777,889 during the six monthsended June 30, 2005 to $1,321,683 from $543,794 for the six months ended June 30,2004. The major components of the approximately $778,000 increase in researchand development expense are as follows:

 

a) Salaries and benefits attributable toresearch and development increased by approximately $173,000 to $611,000 forthe six months ended June 30, 2005 compared to $438,000 for the six monthsended June 30, 2004 due to an increase in the number of employees and thelevel of compensation for employees, including executive pay increases;

 

b) Consulting expense attributable toresearch and development increased by approximately $385,000 to $452,000 forthe six months ended June 30, 2005 compared to $67,000 for the six monthsended June 30, 2004 primarily due to increased services related toprototype development and an increase in legal expenses related to patent work;

 

c) Lab expense increased by approximately $102,000to $105,000 for the six months ended June 30, 2005 compared to $3,000 forthe six months ended June 30, 2004; and

 

d) Travel expense attributable to researchand development increased by approximately $66,000 to $85,000 for the sixmonths ended June 30, 2005 compared to $19,000 for the six months ended June 30,2004.

 

OTHER INCOME(EXPENSE).  Debt issuanceexpense decreased to $0 for the six months ended June 30, 2005 as comparedto $125,000 during the six months ended June 30, 2004, due to thefinalization of debt utilization for funding in 2004.

 

INTERESTINCOME (EXPENSE).**  **Interestincome increased to $63,597 for the six months ended June 30, 2005 ascompared to an expense of $120,739 for the six months ended June 30, 2004primarily due to the investment of proceeds from the sale of shares of our Series APreferred Stock during the first six months of 2005.  During the first six months of 2004, we wereincurring interest expense because of the impact of debt associated with loansthat were repaid in December 2004 with the proceeds from the sale of our Series APreferred Stock.

 

NET LOSS.**  **Net loss increased to $2,365,388for the six months ended June 30, 2005, as compared to $1,213,561 for the sixmonths ended June 30, 2004. We compute our net loss per share on the basisof net loss attributable to common stockholders, which included the effects ofcertain items not included in the determination of net loss. Net lossattributable to common stockholders for the six months ended June 30, 2005was $2,747,339 as compared to a net loss attributable to common stockholders of$1,213,561 for the six months ended June 30, 2004. The net lossattributable to common stockholders for the six months ended June 30, 2005includes $381,951 of accrued but unpaid preferred stock dividends.

 

Comparison of the three months ending June 30,2005 and 2004

 

REVENUES.  Revenues decreased to $1,470 for the threemonths ended June 30, 2005, as compared to $250,000 for the three monthsended June 30, 2004, due to the revenues recognized from the work specificto a development contract during each of those respective periods.

 

COST OFREVENUES.  Cost of revenuesinclude all direct expenses associated with the delivery of services includinginternal labor costs. Cost of revenues for the three months ended June 30,2005 decreased to $735 as compared to $125,000 for the three months ended June 30,2004, due to the decrease in revenues recognized from the work specific to adevelopment contract.

 

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SELLING, GENERALAND ADMINISTRATIVE EXPENSES. Selling, general and administrativeexpenses increased by 180% or $389,010, to $604,766 for the three months ended June 30,2005 from $215,756 for the three months ended June 30, 2004.  The major components of the approximately $389,000increase in selling, general and administrative expense are as follows:

 

a) Salaries and benefits increased by approximately $169,000 to $286,000for the three months ended June 30, 2005 compared to $117,000 for thethree months ended June 30, 2004 due to an increase in the number ofemployees and the level of compensation for employees, including executive payincreases;

 

b) Contract labor increased by approximately$36,000 to $52,000 for the three months ended June 30, 2005 compared to$16,000 for the three months ended June 30, 2004;

 

c) Legal expense increased by approximately $45,000to $105,000 for the three months ended June 30, 2005 compared to $60,000for the three months ended June 30, 2004 due to an increase in legalexpenses related to the preparation of the Form 10-SB, as amended, filedwith the Securities and Exchange Commission on July 22, 2005 andassociated securities work;

 

d) Accounting expense increased byapproximately $3,000 to $4,000 for the three months ended June 30, 2005compared to $1,000 for the three months ended June 30, 2004 due to anincrease in accounting expenses related to audits and reporting required forthe preparation of the Form 10-SB, as amended, filed with the Securitiesand Exchange Commission on July 22, 2005;

 

e) Office expense increased by approximately$23,000 to $26,000 for the three months ended June 30, 2005 compared to $3,000for the three months ended June 30, 2004;

 

f) Travel expense increased by approximately$15,000 to $17,000 for the three months ended June 30, 2005 compared to $2,000for the three months ended June 30, 2004; and

 

g) Depreciation and amortization expenseincreased by approximately $47,000 to $49,000 for the three months ended June 30,2005 compared to $2,000 for the three months ended June 30, 2004 as aresult of an increase in property and equipment during the three months ended June 30,2005.

 

RESEARCH AND DEVELOPMENT. Research anddevelopment expenses increased by approximately $697,557 during the threemonths ended June 30, 2005 to $814,140 from $116,583 for the three monthsended June 30, 2004. The major components of the approximately $698,000increase in research and development expense are as follows:

 

a) Salaries and benefits attributable toresearch and development increased by approximately $231,000 to $320,000 forthe three months ended June 30, 2005 compared to $89,000 for the threemonths ended June 30, 2004 due to an increase in the number of employeesand the level of compensation for employees, including executive pay increases;

 

b) Consulting expense attributable toresearch and development increased by approximately $300,000 to $309,000 forthe three months ended June 30, 2005 compared to $9,000 for the threemonths ended June 30, 2004 primarily due to increased services related toprototype development and an increase in legal expenses related to patent work;

 

c) Lab expense increased by approximately $99,000to $100,000 for the three months ended June 30, 2005 compared to $1,000for the three months ended June 30, 2004; and

 

d) Travel expense attributable to researchand development increased by approximately $36,000 to $45,000 for the threemonths ended June 30, 2005 compared to $9,000 for the three months ended June 30,2004.

 

INTERESTINCOME (EXPENSE).**  **Interestincome increased to $39,991 for the three months ended June 30, 2005 ascompared to an expense of $56,664 for the three months ended June 30, 2004primarily due to the investment of proceeds from the sale of shares of our Series APreferred Stock during the second quarter of 2005.  During the second quarter of 2004, we wereincurring interest expense because of the impact of debt associated with loansthat were repaid in December 2004 with the proceeds from the sale of our Series APreferred Stock.

 

NET LOSS.**  **Net loss increased to $1,378,180for the three months ended June 30, 2005, as compared to $264,003 for thethree months ended June 30, 2004. We compute our net loss per share on thebasis of net loss attributable to common stockholders, which included theeffects of certain items not included in the determination of net loss. Net lossattributable to common stockholders for the three months ended June 30,2005 was $1,574,278 as compared to a net loss attributable to

 

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common stockholders of $264,003 for the three months ended June 30,2004. The net loss attributable to common stockholders for the three monthsended June 30, 2005 includes $196,098 of accrued but unpaid preferredstock dividends.

 

**Off-Balance Sheet Transactions**

 

We do not engage in material off-balancesheet transactions.

 

*LIQUIDITY AND CAPITAL RESOURCES*

 

Operating Activities

 

Cash used in operating activities during the sixmonths ended June 30, 2005 increased to $2,076,947 as compared to $660,795used for the six months ended June 30, 2004. The increase is primarily aresult of increases in the first six months of 2005 in research and developmentspending and general and administrative expenses resulting from additionalemployee salary and related employee costs.

 

Investing Activities

 

Cash used for investing activities during thesix months ended June 30, 2005 amounted to $682,294, as compared to $0used for investing activities for the six months ended June 30, 2004 dueto our increased spending on computers, furniture, laboratory, metrology andtesting equipment in the six months ended June 30, 2005.

 

Financing Activities

 

We have financed our operating and investingactivities primarily from the proceeds of private placements of common stock,convertible investor notes, and a preferred stock offering which we closed in December 2004and January 2005. During the six months ended June 30, 2005, werealized $2,799,300 net from cash sales of shares of our Series APreferred Stock. During the six months ended June 30, 2005, we paid out $66,048to retire notes payable to a related party. Further, during the six months ended June 30, 2005, we received netproceeds of $211,173 on a note payable from Bank of America to purchaseequipment. The total net cash provided by financing activities was $650,202 forthe six months ended June 30, 2004. The $650,202 includes $625,202received from cash sales of convertible investor notes provided by financingactivities for the six months ended June 30, 2004 which were converted toour common stock during December 2004.

 

Working Capital

 

As of June 30, 2005, we had a cashbalance of $5.5 million.  We project thatcurrent cash reserves will sustain our operations at least through December 31,2006, and we are not aware of any trends or potential events that are likely toimpact our short term liquidity through this term.  As discussed above, during the first sixmonths of 2005, we had unusually high expenses associated with independentcontractors, accountants and attorneys associated with the preparation andfiling of our Form 10-SB, as amended, and associated securities work andincreased research and development activities and increased legal fees relatedto the associated patent work.  As aresult, we do not believe that those expenses are reflective of future expensesthrough the end of 2006.

 

We are a development stage company and havenot experienced significant operations since our formation. We have reached apositive working capital position as of the first quarter of 2005 as a resultof our financing activities. We have incurred significant operating lossesduring the years ended December 31, 2002, 2003, and 2004 and during the six-monthperiod ended June 30, 2005. We intend to utilize a proprietary methodologyfor development of our displays. Our principal activities, from the beginningof the development stage, have been organizational matters, capital raisingactivities including issuance of stock, product research and development, fundraising, and market research.

 

We are subject to many risks associated withearly-stage businesses in the electronics industry, including our loss history,the absence of revenues and revenue producing agreements and products, ourability to raise capital, our reliance on key persons, competition,uncertainties surrounding the ability to develop our products and ultimatelymarket acceptance of our products.

 

To date, we have experienced losses from ouroperations. We anticipate that we will require additional capital resources,including the net proceeds from additional equity and debt financing transactions,to generate revenue and achieve positive cash flows from operations. Ourability to generate positive cash flows depends upon a variety of factors,including the acceptance in the market of our products and various otherfactors, some of which may be beyond our control. There can

 

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be no assurance that such financing transactions will be consummated orthat such revenue will be generated.

 

To date, we have had only a fewrevenue-generating services or development contracts.  These include a prototype developmentagreement with a large personal computer company, and a Small BusinessInnovation Research (SBIR) Phase One agreement with the U.S. Air Force for$98,214 and a follow-on Phase Two agreement for $686,966.  We also entered into a prototype developmentagreement with Lockheed Martin, a large military contractor, in October 2004,for which we have received full payment from Lockheed Martin.  Our immediate customer prospects are limitedto Lockheed Martin, with which we expect to form a strategic relationship,but with which we currently have no legally binding commitments oragreements.  There can be no assurancethat our current discussions with Lockheed Martin will result in any bindingcommitments or agreements, or even if they do, that such binding commitments oragreements will be material to our business. See “Risk Factors” included in our Form 10-SB, as amended, filedwith the Securities and Exchange Commission on July 22, 2005.

 

Management will work to establish specificapplications for our display technology that will generate significantrevenues, and cash flows to support operations. Our ability to continue as agoing concern will be dependent upon achieving profitable operations, and obtainingadditional funding from current shareholders and new investors.

 

**ITEM 3.  CONTROLS AND PROCEDURES.**

 

Disclosure Controls and Procedures

 

*Interim financial information*

 

The financial statements included herein,which have not been audited pursuant to the rules and regulations of theSecurities and Exchange Commission, reflect all adjustments which, in theopinion of management, are necessary for a fair presentation of financialposition, results of operations and cash flows for the interim periods on abasis consistent with the annual audited statements. All such adjustments areof a normal recurring nature. The results of operations for interim periods arenot necessarily indicative of the results that may be expected for any otherinterim period of a full year. Certain information, accounting policies andfootnote disclosures normally included in financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America have been omitted pursuant to such rules and regulations,although we believe that the disclosures are adequate to make the informationpresented not misleading. These financial statements should be read inconjunction with our audited financial statements included in our Form 10-SB,as amended, including the year ended December 31, 2004, filed with theSecurities and Exchange Commission on July 22, 2005.

 

*Use of Estimates*

 

The preparation of financial statements inconformity with accounting principles generally accepted in the United Statesof America requires us to make estimates and assumptions that affect thereported amounts of assets and liabilities, disclosures of contingent assetsand liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. Examples includeprovisions for bad debts, useful lives of property and equipment and intangibleassets, impairment of property and equipment and intangible assets, deferredtaxes, and the provision for and disclosure of litigation and losscontingencies. Actual results may differ materially from those estimates.

 

*Statement of cash flows*

 

For purposes of the statements of cash flows,we consider all highly liquid investments (i.e., investments which, whenpurchased, have original maturities of three months or less) to be cashequivalents.

 

*Concentration of credit risk*

 

We maintain our cash primarily with majorU.S. domestic banks. The amounts held in these banks exceed the insured limitof $100,000 from time to time. The terms of these deposits are on demand tominimize risk.  We have not incurredlosses related to these deposits.

 

We have evaluated, under the supervision andwith the participation of management, including our President and ChiefFinancial Officer, the effectiveness of the design and operation of ourdisclosure controls and procedures, as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act, as of the end of the period covered bythis report.  Based upon that evaluation,our President and our Chief Financial Officer concluded that, as of the end ofthe period covered by this report,

 

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our disclosure controls and procedures are effective to ensure thatinformation required to be disclosed by us in the reports that we file orsubmit under the Securities Exchange Act of 1934, as amended, is recorded,processed, summarized and reported, within the time periods specified in theSecurities and Exchange Commission’s rules and forms, and that it isaccumulated and communicated to management, including our Chief ExecutiveOfficer and Chief Financial Officer, as appropriate, to allow timely decisionsregarding required disclosure.

 

Changes in Internal Control Over FinancialReporting

 

In anticipation of the filing of this Form 10-QSB,our Chief Executive Officer and Chief Financial Officer, with the assistance ofother members of our management, reviewed our internal controls and havedetermined, based on such review, that there were no changes in our internalcontrols over financial reporting that occurred during our most recent fiscalquarter that have materially affected, or are reasonably like to materiallyaffect, our internal control over financial reporting.

 

**PART II- OTHER INFORMATION**

 

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**

 

On April 19, 2005, we issued under theStock Incentive Plan a total of 625,000 options to purchase our common stockwith an exercise price of $4.00 per share to four employees.  The options vest over periods of a maximum of36 months from the date of grant.  Theoptions are exercisable for a term of ten years.  The issuance was exempt from registrationunder the Securities Act pursuant to Regulation D thereunder.

 

**ITEM 6.EXHIBITS.**

 
| **Exhibit  No.** | ** ** | **Description**                                                                                                                                            |
|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1              |       | Amended and Restated Certificate of  Incorporation of Real-Estateforlease.com, Inc.  (1)                                                         |
| 3.2              |       | Amended and Restated Bylaws of  Uni-Pixel, Inc.  (1)                                                                                             |
| 31.1             |       | Certification of the President and  Principal Executive Officer of Uni-Pixel, Inc., pursuant to Section 302  of the Sarbanes-Oxley Act of 2002** |
| 31.2             |       | Certification of the Chief Financial  Officer of Uni-Pixel, Inc., pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002**                   |
| 32.1             |       | Certification of the President and  Principal Executive Officer of Uni-Pixel, Inc., pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002** |
| 32.2             |       | Certification of the Chief Financial  Officer of Uni-Pixel, Inc., pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002**                   |

 

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(1)                                  Filedas an exhibit to Uni-Pixel.’s Form 10-SB filed with the SEC on February 18,2005 and incorporated by reference herein

**                                  Filedherewith

 

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**SIGNATURES**

 

In accordance with the requirements of the ExchangeAct, the registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|                 | **UNI-PIXEL, INC.** |
|----------------------|---------------------|
|                 |                |   |
|                 |                |   |
| August 10, 2005 |                | By: | /s/ James A. Tassone |   |
| Date                 |                | James A. Tassone, Chief Financial Officer |
|                      |                     |  |  |  |

 

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