**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-QSB**

| **x**      |       | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                      |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                                                                  |
| ** ** | ** ** | **For the  Quarterly Period Ended March 31, 2007**                                                                                                                                          |
| ** ** | ** ** | ** **                                                                                                                                                                                  |
| ** ** | ** ** | **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 inIts Charter)

| **DELAWARE**                                           |   | **75-2926437**       |
|--------------------------------------------------------|--------|----------------------|
| (State or Other  Jurisdiction of                       |   | (I.R.S. Employer     |
| Incorporation or  Organization)                        |   | 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) |

 

Checkwhether the issuer: (1) filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90days.   x Yes o No

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).   Yes o   No x

As ofMay 1, 2007, the issuer had 18,190,812 shares of issued and outstanding commonstock, par value $0.001 per share.

Transitional Small Business Disclosure Format (CheckOne):   Yes o   No x

 

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**TABLE OF CONTENTS**
| Part I.  |   | Financial Information                                                                                                                                                                    |   |   |
|---------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|          |   |                                                                                                                                                                                     |   |   |
| Item 1.  |   | Financial Statements                                                                                                                                                                     |   |   |
|          |   |                                                                                                                                                                                     |   |   |
|          |   | Consolidated Balance  Sheets  March 31, 2007 (unaudited) and December 31, 2006                                                                                                      |   |   |
|          |   |                                                                                                                                                                                     |   |   |
|          |   | Consolidated  Statements of Operations  Three months ended March 31, 2007 (unaudited) and March 31, 2006 (unaudited)  and cumulative period from inception to March 31, 2007 (unaudited) |   |   |
|          |   |                                                                                                                                                                                     |   |   |
|          |   | Consolidated  Statements of Shareholders’ Equity (Deficit)  From inception to March 31, 2007 (unaudited)                                                                            |   |   |
|          |   |                                                                                                                                                                                     |   |   |
|          |   | Consolidated  Statements of Cash Flows  Three months ended March 31, 2007 (unaudited) and March 31, 2006 (unaudited)  and cumulative period from inception to March 31, 2007 (unaudited) |   |   |
|          |   |                                                                                                                                                                                     |   |   |
|          |   | Notes to  Unaudited Consolidated Financial Statements                                                                                                                                    |   |   |
|          |   |                                                                                                                                                                                     |   |   |
| Item 2.  |   | Management’s  Discussion and Analysis or Plan of Operation                                                                                                                          |   |   |
|          |   |                                                                                                                                                                                     |   |   |
| Item 3.  |   | Controls and Procedures                                                                                                                                                                  |   |   |
|          |   |                                                                                                                                                                                     |   |   |
| Part II. |   | Other Information                                                                                                                                                                        |   |   |
|          |   |                                                                                                                                                                                     |   |   |
| Item 2.  |   | Unregistered Sales  of Equity Securities and Use of Proceeds                                                                                                                             |   |   |
|          |   |                                                                                                                                                                                     |   |   |
| Item 5.  |   | Other Information                                                                                                                                                                        |   |   |
|          |   |                                                                                                                                                                                     |   |   |
| Item 6.  |   | Exhibits                                                                                                                                                                                 |   |   |

 

2

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**PART I- FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS.**

Uni-Pixel, Inc.(A Development Stage Company)Consolidated Balance Sheets
| ** **                                                                                                                                                                                                                                                                                          | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                                                                                                                                                                                          | ** ** | **(unaudited)**          | ** ** | **(audited)**               | ** ** |
| **ASSETS**                                                                                                                                                                                                                                                                                          |       |                     |       |                        |       |
| Current assets                                                                                                                                                                                                                                                                                      |       |                     |       |                        |       |
| Cash and cash  equivalents                                                                                                                                                                                                                                                                          |       | $                        | 7,078,097  |                        | $          | 20,188 |   |
| Current portion  of restricted cash                                                                                                                                                                                                                                                                 |       | 5,123                    |       | 5,123                       |       |
| Other receivable                                                                                                                                                                                                                                                                                    |       | 25,845                   |       | —                      |       |
| Deferred loan  costs, net                                                                                                                                                                                                                                                                           |       | —                   |       | 94,189                      |       |
| Prepaid expenses                                                                                                                                                                                                                                                                                    |       | 16,965                   |       | 16,965                      |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Total current  assets                                                                                                                                                                                                                                                                               |       | 7,126,030                |       | 136,465                     |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Property and equipment,  net of accumulated depreciation of $529,415 and $464,564, at March 31, 2007  and December 31, 2006, respectively                                                                                                                                                 |       | 598,503                  |       | 641,385                     |       |
| Restricted cash, less  current portion                                                                                                                                                                                                                                                              |       | 34,877                   |       | 34,877                      |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Total assets                                                                                                                                                                                                                                                                                        |       | $                        | 7,759,410  |                        | $          | 812,727 |   |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY (DEFICIT)**                                                                                                                                                                                                                                            |       |                     |       |                        |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Current liabilities                                                                                                                                                                                                                                                                                 |       |                     |       |                        |       |
| Accounts payable                                                                                                                                                                                                                                                                                    |       | $                        | 265,633    |                        | $          | 428,733 |   |
| Accrued expenses                                                                                                                                                                                                                                                                                    |       | 76,575                   |       | 668,000                     |       |
| Deferred revenue                                                                                                                                                                                                                                                                                    |       | 33,333                   |       | 33,333                      |       |
| Derivative  liabilities for Warrants                                                                                                                                                                                                                                                                |       | —                   |       | 943,288                     |       |
| Current portion  of notes payable, net of unamortized discounts of $0 and $955,419 at March 31, 2007  and December 31, 2006, respectively                                                                                                                                                 |       | 4,021                    |       | 1,448,571                   |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Total current  liabilities                                                                                                                                                                                                                                                                          |       | 379,562                  |       | 3,521,925                   |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Note payable, less  current portion                                                                                                                                                                                                                                                                 |       | 8,457                    |       | 9,487                       |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Total  liabilities                                                                                                                                                                                                                                                                                  |       | 388,019                  |       | 3,531,412                   |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Commitments and  contingencies (Note 4)                                                                                                                                                                                                                                                             |       | —                   |       | —                      |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Redeemable convertible  Series B Preferred stock, $0.001 par value; $3.75 liquidation preference;  3,200,000 shares authorized, 3,200,000 and 0 issued and outstanding at March 31, 2007  and December 31, 2006, respectively, less unamortized discount of $7,245,424  at March 31, 2007 |       | 4,754,576                |       | —                      |       |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Shareholders’ equity  (deficit)                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Series A  Preferred stock, $0.001 par value; $3.50 liquidation preference; 4,500,000  shares authorized, 1,693,344 and 2,369,451 issued and outstanding at March  31, 2007 and December 31, 2006, respectively                                                                            |       | 1,693                    |       | 2,369                       |       |
| Common stock,  $0.001 par value; 100,000,000 shares and 40,000,000 shares authorized at  March 31, 2007 and December 31, 2006, respectively, 18,122,551 and  16,311,973 issued and outstanding at March 31, 2007 and December 31, 2006,  respectively                                     |       | 18,123                   |       | 16,312                      |       |
| Additional  paid-in capital                                                                                                                                                                                                                                                                         |       | 27,814,136               |       | 18,798,407                  |       |
| Accumulated  deficit during development stage                                                                                                                                                                                                                                                       |       | (25,217,137              | )          | (21,535,773                 | )          |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Total  shareholders’ equity (deficit)                                                                                                                                                                                                                                                          |       | 2,616,815                |       | (2,718,685                  | )          |
|                                                                                                                                                                                                                                                                                                |       |                     |       |                        |       |
| Total liabilities and shareholders’ equity (deficit)                                                                                                                                                                                                                                           |       | $                        | 7,759,410  |                        | $          | 812,727 |   |

 

*Theaccompanying notes are an integral part of these consolidated financialstatements.*

3

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Uni-Pixel, Inc.

(A DevelopmentStage Company)

Consolidated Statements of Operations

(unaudited)
| ** **                                                              | ** ** | **Three Months Ended  March 31,** | ** ** | **Cumulative  Period from  February 17, 1998  (date of inception)  to March 31,** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                              | ** ** | **2007**                                         | ** ** | **2006**                                                                                                             | ** ** | **2007** | ** ** |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Revenues                                                                |       |                                             |       |                                                                                                                 |       |   |   |
| Development  contract revenue                                           |       | $                                                | —     |                                                                                                                 | $          | 200,000 |   | $ | 1,158,201 |   |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Total revenues                                                          |       | —                                           |       | 200,000                                                                                                              |       | 1,158,201 |   |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Cost of revenues                                                        |       | —                                           |       | —                                                                                                               |       | 456,648 |   |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Gross margin                                                            |       | —                                           |       | 200,000                                                                                                              |       | 701,553 |   |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Selling, general  and administrative expenses                           |       | 2,396,263                                        |       | 830,263                                                                                                              |       | 12,786,183 |   |
| Research and  development                                               |       | 491,238                                          |       | 1,080,112                                                                                                            |       | 10,320,361 |   |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Operating loss                                                          |       | (2,887,501                                       | )          | (1,710,375                                                                                                           | )          | (22,404,991 | ) |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Other income  (expense)                                                 |       |                                             |       |                                                                                                                 |       |   |   |
| Net decrease in fair value of derivative liability                      |       | 382,920                                          |       | —                                                                                                               |       | 845,079 |   |
| Other income                                                            |       | —                                           |       | —                                                                                                               |       | 886,886 |   |
| Debt issuance expense                                                   |       | (94,189                                          | )          | —                                                                                                               |       | (644,346 | ) |
| Interest income (expense), net                                          |       | (1,051,250                                       | )          | 13,767                                                                                                               |       | (2,561,051 | ) |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Net loss                                                                |       | $                                                | (3,650,020 | )                                                                                                                    | $          | (1,696,608 | ) | $ | (23,878,423 | ) |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Preferred stock  dividends                                              |       | (454,332                                         | )          | (132,040                                                                                                             | )          | (1,761,702 | ) |
| Net loss  attributable to common shareholders                           |       | $                                                | (4,104,352 | )                                                                                                                    | $          | (1,828,648 | ) | $ | (25,640,125 | ) |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Per share  information                                                  |       |                                             |       |                                                                                                                 |       |   |   |
| Net loss – basic and diluted                                       |       | $                                                | (0.22      | )                                                                                                                    | $          | (0.11 | ) | $ | (3.26 | ) |
| Preferred stock dividends                                               |       | (0.02                                            | )          | (0.01                                                                                                                | )          | (0.25 | ) |
| Net loss  attributable to common shareholders – basic and diluted  |       | $                                                | (0.24      | )                                                                                                                    | $          | (0.12 | ) | $ | (3.51 | ) |
|                                                                    |       |                                             |       |                                                                                                                 |       |   |   |
| Weighted average number  of basic and diluted common shares outstanding |       | 16,900,078                                       |       | 15,667,897                                                                                                           |       | 7,314,073 |   |

 

*Theaccompanying notes are an integral part of these consolidated financialstatements.*

4

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Uni-Pixel, Inc.

(A Development Stage Company)

ConsolidatedStatements of Shareholders’ Equity (deficit)
| ** **                                                                               | ** ** | **Series A**        | ** ** | ** ** | ** ** | ** **            | ** ** | ** **     | ** ** | **Accumulated** | ** ** | ** **       | ** ** |
|------------------------------------------------------------------------------------------|------------|--------------------------|------------|------------|------------|-----------------------|------------|----------------|------------|-----------------|------------|------------------|------------|
| ** **                                                                               | ** ** | **Preferred Stock** | ** ** | ** ** | ** ** | ** **            | ** ** | ** **     | ** ** | **Deficit**     | ** ** | **Total**        | ** ** |
| ** **                                                                               | ** ** | **Number**               | ** ** | ** ** | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **Deferred**    | ** ** | **During**       | ** ** | **Shareholders’** | ** ** |
| ** **                                                                               | ** ** | **of**                   | ** ** | ** ** | ** ** | **Number of**    | ** ** | ** **     | ** ** | **Paid-In**     | ** ** | **Stock-Based**  | ** ** | **Development** | ** ** | **Equity** | ** ** |
| ** **                                                                               | ** ** | **Shares**               | ** ** | **Amount** | ** ** | **Shares**            | ** ** | **Amount**     | ** ** | **Capital**     | ** ** | **Compensation** | ** ** | **Stage** | ** ** | **(Deficit)** | ** ** |
| Founder shares  issued at inception at  February 17, 1998                                |       | —                   |       | $          | —     |                  | 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         |       | —           |       | — |   | 353,940 |   |
| 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, December  31, 2002                                                              |       | —                   |       | $          | —     |                  | 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, December  31, 2003                                                              |       | —                   |       | $          | —     |                  | 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            |       | 34,487          |       | —           |       | — |   | 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, December  31, 2004                                                              |       | 2,821,643                |       | $          | 2,822      |                  | 12,800,580 |           | $          | 12,801          |       | $                | 13,742,444 |   | $ | — |   | $ | (8,775,995 | ) | $ | 4,982,072 |   |
| Issuance of preferred stock                                                              |       | 930,000                  |       | 930        |       | —                |       | —         |       | 2,798,370       |       | —           |       | — |   | 2,799,300 |   |
| Conversion of preferred stock into common stock and  payment of preferred stock dividend |       | (1,222,499               | )          | (1,223     | )          | 2,594,477             |       | 2,594          |       | 260,296         |       | —           |       | (261,667 | ) | — |   |
| Issuance of preferred stock for dividends                                                |       | 156,507                  |       | 157        |       | —                |       | —         |       | 547,618         |       | —           |       | (547,775 | ) | — |   |
| Net loss                                                                                 |       | —                   |       | —     |       | —                |       | —         |       | —          |       | —           |       | (4,966,790 | ) | (4,966,790 | ) |
| Balance, December  31, 2005                                                              |       | 2,685,651                |       | $          | 2,686      |                  | 15,395,057 |           | $          | 15,395          |       | $                | 17,348,728 |   | $ | — |   | $ | (14,552,227 | ) | $ | 2,814,582 |   |
| Conversion of preferred stock into common stock and  payment of preferred stock dividend |       | (450,317                 | )          | (451       | )          | 916,916               |       | 917            |       | 28,039          |       | —           |       | (28,505 | ) | — |   |
| Stock compensation expense                                                               |       | —                   |       | —     |       | —                |       | —         |       | 914,755         |       | —           |       | — |   | 914,755 |   |
| Issuance of warrants to placement agent                                                  |       | —                   |       | —     |       | —                |       | —         |       | 37,596          |       | —           |       | — |   | 37,596 |   |
| Issuance of preferred stock for dividends                                                |       | 134,117                  |       | 134        |       | —                |       | —         |       | 469,289         |       | —           |       | (469,423 | ) | — |   |
| Net loss                                                                                 |       | —                   |       | —     |       | —                |       | —         |       | —          |       | —           |       | (6,485,618 | ) | (6,485,618 | ) |
| Balance, December  31, 2006                                                              |       | 2,369,451                |       | $          | 2,369      |                  | 16,311,973 |           | $          | 16,312          |       | $                | 18,798,407 |   | $ | — |   | $ | (21,535,773 | ) | $ | (2,718,685 | ) |
| Conversion of preferred stock into common stock and  payment of preferred stock dividend |       | (676,107                 | )          | (676       | )          | 1,810,578             |       | 1,811          |       | 30,209          |       | —           |       | (31,344 | ) | — |   |
| Stock compensation expense                                                               |       | —                   |       | —     |       | —                |       | —         |       | 935,102         |       | —           |       | — |   | 935,102 |   |
| Issuance of warrants to consultants                                                      |       | —                   |       | —     |       | —                |       | —         |       | 244,626         |       | —           |       | — |   | 244,626 |   |
| Issuance of warrants to Series B Preferred Stock  Investors                              |       | —                   |       | —     |       | —                |       | —         |       | 3,715,602       |       | —           |       | — |   | 3,715,602 |   |
| Intrinsic value of conversion option on Series B  Preferred Stock                        |       | —                   |       | —     |       | —                |       | —         |       | 3,715,602       |       | —           |       | — |   | 3,715,602 |   |
| Amortization of discount of Series B Preferred Stock                                     |       |                     |       | —     |       | —                |       | —         |       | (185,780        | )          | —           |       | — |   | (185,780 | ) |
| Reclassification of derivative liabilities to equity                                     |       | —                   |       | —     |       | —                |       | —         |       | 560,368         |       | —           |       | — |   | 560,368 |   |
| Net loss                                                                                 |       | —                   |       | —     |       | —                |       | —         |       | —          |       | —           |       | (3,650,020 | ) | (3,650,020 | ) |
| Balance, March 31, 2007  (unaudited)                                                     |       | 1,693,344                |       | $          | 1,693      |                  | 18,122,551 |           | $          | 18,123          |       | $                | 27,814,136 |   | $ | — |   | $ | (25,217,137 | ) | $ | 2,616,815 |   |

 

*The accompanying notes are anintegral part of these consolidated financial statements.*

5

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Uni-Pixel, Inc.

(A DevelopmentStage Company)

Consolidated Statements of Cash Flows

(unaudited)
| ** **                                                                   | ** ** | ** **                       | ** ** | **Cumulative Period**      | ** ** |
|------------------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                                   | ** ** | ** **                       | ** ** | **from February 18,** | ** ** |
| ** **                                                                   | ** ** | ** **                       | ** ** | **1998 (date of**     | ** ** |
| ** **                                                                   | ** ** | **Three Months Ended** | ** ** | **inception) to**          | ** ** |
| ** **                                                                   | ** ** | **March 31,**               | ** ** | **March 31,**              | ** ** |
| ** **                                                                   | ** ** | **2007**                         | ** ** | **2006**                        | ** ** | **2007** | ** ** |
| Cash flows from  operating activities                                        |       |                             |       |                            |       |   |   |
| Net loss                                                                     |       | $                                | (3,650,020 | )                               | $          | (1,696,608 | ) | $ | (23,878,423 | ) |
| Adjustments to reconcile net loss to net cash used  in operating activities: |       |                             |       |                            |       |   |   |
| Interest forgiven                                                            |       | —                           |       | —                          |       | (91,421 | ) |
| Interest earned, but not received                                            |       | —                           |       | (2,516                          | )          | — |   |
| Employee compensation notes payable forgiven                                 |       | —                           |       | —                          |       | (795,465 | ) |
| Depreciation and amortization                                                |       | 64,852                           |       | 65,674                          |       | 597,163 |   |
| Stock issued for services                                                    |       | —                           |       | —                          |       | 460,062 |   |
| Stock compensation expense                                                   |       | 935,102                          |       | 192,063                         |       | 1,849,857 |   |
| Non-cash compensation expense                                                |       | —                           |       | —                          |       | 1,100,000 |   |
| Amortization of debt issuance costs                                          |       | 94,189                           |       | —                          |       | 644,346 |   |
| Amortization of discounts on notes payable                                   |       | 955,389                          |       | —                          |       | 1,480,448 |   |
| Net decrease in fair value of derivatives                                    |       | (382,920                         | )          | —                          |       | (845,077 | ) |
| Change in operating assets and liabilities:                                  |       |                             |       |                            |       |   |   |
| (Increase) in cash restricted for note payable and  lease obligations        |       | —                           |       | —                          |       | (40,000 | ) |
| (Increase) in other receivables                                              |       | (25,845                          | )          | —                          |       | (25,845 | ) |
| (Increase) in prepaid expenses and other current  assets                     |       | —                           |       | 2                               |       | (161,311 | ) |
| Increase (decrease) in accounts payable                                      |       | (163,102                         | )          | 54,072                          |       | 265,626 |   |
| Increase (decrease) in accrued interest payable                              |       | —                           |       | —                          |       | 180,943 |   |
| Increase (decrease) in accrued expenses and other  liabilities               |       | (591,425                         | )          | (3,161                          | )          | 872,040 |   |
| Increase (decrease) in deferred revenue                                      |       | —                           |       | (200,000                        | )          | 33,333 |   |
| Net cash used in operating activities                                        |       | (2,763,780                       | )          | (1,590,474                      | )          | (18,353,724 | ) |
|                                                                         |       |                             |       |                            |       |   |   |
| Cash flows from  investing activities                                        |       |                             |       |                            |       |   |   |
| Purchase of property and equipment                                           |       | (21,970                          | )          | (48,185                         | )          | (1,155,708 | ) |
| 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                                        |       | (21,970                          | )          | (48,185                         | )          | (1,195,664 | ) |
|                                                                         |       |                             |       |                            |       |   |   |
| Cash flows from  financing activities                                        |       |                             |       |                            |       |   |   |
| Proceeds from notes payable to related party                                 |       | —                           |       | —                          |       | 115,103 |   |
| Payments on notes payable to related party                                   |       | —                           |       | (20,000                         | )          | (164,328 | ) |
| Proceeds from convertible notes payable                                      |       | —                           |       | —                          |       | 3,390,000 |   |
| Payments (payments) on convertible notes payable                             |       | —                           |       | —                          |       | (1,470,672 | ) |
| Proceeds from notes payable, net                                             |       | (2,400,967                       | )          | (25,365                         | )          | (62,520 | ) |
| Issuance of warrants to placement agent                                      |       | —                           |       |                            |       | 37,596 |   |
| Issuance of warrants to consultants                                          |       | 244,626                          |       |                            |       | 244,626 |   |
| Proceeds from the issuance of preferred stock, net                           |       | 12,000,000                       |       | —                          |       | 22,448,630 |   |
| Proceeds from the issuance of common stock, net                              |       | —                           |       | —                          |       | 2,089,050 |   |
| Net cash provided by (used in) financing activities                          |       | 9,843,659                        |       | (45,365                         | )          | 26,627,485 |   |
|                                                                         |       |                             |       |                            |       |   |   |
| Net increase  (decrease) in cash and cash equivalents                        |       | 7,057,909                        |       | (1,684,024                      | )          | 7,078,097 |   |
| Cash and cash  equivalents, beginning of period                              |       | 20,188                           |       | 2,328,385                       |       | — |   |
| Cash and cash  equivalents, end of period                                    |       | $                                | 7,078,097  |                            | $          | 644,361 |   | $ | 7,078,097 |   |
|                                                                         |       |                             |       |                            |       |   |   |
| Supplemental  disclosures of cash flow information:  Cash paid for interest  |       | $                                | 134,372    |                            | $          | 3,512 |   | $ | 960,665 |   |
| Cash paid for income taxes                                                   |       | $                                | —     |                            | $          | — |   | $ | — |   |
| Interest capitalized into notes payable                                      |       | $                                | —     |                            | $          | — |   | $ | 8,250 |   |
| Debt issuance cost for warrant issued                                        |       | $                                | —     |                            | $          | — |   | $ | 500,000 |   |
| Preferred stock dividend                                                     |       | $                                | 454,332    |                            | $          | 132,040 |   | $ | 1,761,702 |   |
| Conversion of notes payable for preferred stock                              |       | $                                | —     |                            | $          | — |   | $ | 898,250 |   |
| Conversion of notes payable for common stock                                 |       | $                                | —     |                            | $          | — |   | $ | 980,103 |   |
| Stock issued for services                                                    |       | $                                | —     |                            | $          | — |   | $ | 1,560,062 |   |
| Stock issued for interest                                                    |       | $                                | —     |                            | $          | — |   | $ | 81,272 |   |
| Reclassification  of derivatives to equity                                   |       | $                                | 560,368    |                            | $          | — |   | $ | 560,368 |   |

 

*The accompanying notes are anintegral part of these consolidated financial statements.*

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**Uni-Pixel, Inc.**

**(A Development Stage Company)**

**Notes to Unaudited Consolidated FinancialStatements**

**Note 1 –Basis of Presentation, Business and Organization**

Uni-Pixel, Inc., aDelaware corporation, is the parent company of our wholly-owned operatingsubsidiary, Uni-Pixel Displays, Inc.  As used herein, “Uni-Pixel,” “we,”“us,” and “our” refer to Uni-Pixel, Inc. and our wholly-owned consolidatedsubsidiary, Uni-Pixel Displays, Inc.  Our common stock, par value$0.001 per share, is quoted on the Over the Counter — Bulletin Board (“OTCBB”)under the ticker symbol “UNXL.”

Uni-Pixel is adevelopment stage company that has developed, patented and demonstrated a newcolor display technology in the form of proof of concept prototypes which wecall Time Multiplexed Optical Shutter (“TMOS”).  We intend to be a leaderin the research, development and commercialization of new flat panel displaysusing TMOS in a variety of applications, such as mobile phones, digitalcameras, notebook computers, televisions and other consumer electronic devices.As of March 31, 2007, we had accumulated a total deficit of $25.2 million fromoperations in pursuit of this objective.

We anticipate thatour TMOS displays will be thin, lightweight, and power-efficient devices, whichare highly suitable for use in full-color display applications.  Webelieve 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 that our technology leadership andintellectual property position will enable us to generate revenues initiallyfrom TMOS displays for existing vertical market segments such as the military,avionics, and automotive segments, and then subsequently from consumerelectronics markets (i.e., TVs, monitors, personal computers, cameras, games,etc.).

Our strategy is todevelop further our proprietary TMOS technology to the point of initiallymanufacturing small volumes of high performance displays for militaryapplications.  We intend to utilize contract manufacturing for productfabrication to augment our internal capabilities in the short term.  Wealso plan to be a supplier of our key thin film component and to enter intojoint ventures in certain vertical market segments to exploit the existingmanufacturing and distribution channels of our targeted partners.  Wefurther plan to license our technology to display manufacturers and supportingpartner companies 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.  Wecurrently have thirteen issued patents and forty-seven pending patent applicationsfiled in key venues worldwide including regionally in Europe, Asia Pacific,South and North America and contemplate obtaining exclusive field-of-uselicenses, with the right to sublicense, to complementary technologies fromtargeted strategic partners and U.S. national laboratories.

Through March 31,2007, we have been primarily engaged in developing our initial producttechnology, recruiting personnel, commencing our U.S. operations and raisingcapital. In the course of our development activities, we have sustained lossesand expect such losses to continue through at least 2007. We will finance ouroperations primarily through our existing cash and possible future financingtransactions.

Our ability tooperate profitably under our current business plan is largely contingent uponour success in developing beyond proof of concept to final prototypes and supportingtransferable manufacturing processes to partners to produce for sale ourproducts and upon our successful development of markets for our products and successfulmanufacturing relationships.  We may be required to obtain additionalcapital in the future to expand our operations. No assurance can be given thatwe will be able to develop our products, successfully develop the markets forour products or profitable manufacturing methods, or raise any such additionalcapital as we might need, either through equity or debt financing, onsatisfactory terms or at all. Additionally, no assurance can be given that anysuch financing, if obtained, will be adequate to meet our ultimate capitalneeds and to support our growth. If adequate capital cannot be obtained onsatisfactory terms, our operations could be negatively impacted.

If we achievegrowth in our operations in the next few years, such growth could place astrain on our management, administrative, operational and financialinfrastructure. Our ability to manage our current operations and future growthrequires the continued improvement of operational, financial and management controls,reporting systems and procedures. In addition, we may find it necessary to hireadditional management, financial and sales and marketing personnel to manageour expanding operations. If we are unable to manage this growth effectivelyand successfully, our business, operating results and financial condition maybe materially adversely affected.

As of March 31,2007, we had cash and cash equivalents of $7.1 million.  We believe thatour existing capital resources are adequate to finance our operations untilJune 2008.  However, our long-termviability is dependent upon successful operation 

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of our business, ourability to develop our manufacturing process, our ability to sign partnershipagreements, the development of our products and our ability to raise additionaldebt and equity to meet our business objectives.

*Acquisitionand merger and basis of presentation*

Uni-Pixel, Inc.was originally incorporated in the State of Nevada as Super Shops, Inc. OnNovember 15, 1999, Super Shops and its sister companies filed an amendedpetition under Chapter 11 of the United States Bankruptcy Code. OnJuly 31, 2000, the court approved Super Shops’ Amended Joint Plan ofReorganization. On October 13, 2000, and in accordance with the Plan ofReorganization, the management of Super Shops changed its state ofincorporation from Nevada to Delaware by merging with and into NEV AcquisitionCorp., a Delaware corporation formed solely for the purpose of effecting thereincorporation. On June 13, 2001, NEV Acquisition Corp. changed itscorporate name to Real-Estateforlease.com, Inc., as a result of the mergertransaction discussed in the following paragraph.

Real-Estateforlease.com, Inc.was incorporated 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 ofReal-Estateforlease.com, Inc. exchanged his equity ownership interest inReal-Estateforlease.com, Inc. for 9,500,000 shares (or approximately 96%)of NEV Acquisition Corp.’s common stock. At the time of the merger betweenReal-Estateforlease.com, Inc. and NEV Acquisition Corp.,Real-Estateforlease.com, Inc. had no operations and essentially no assets.Efforts by Real-Estateforlease.com, Inc. to implement its business planceased in June 2002. Prior to Real-Estateforlease.com, Inc.’s mergerwith Uni-Pixel Displays, Inc., as described in the next paragraph,Real-Estateforlease.com, Inc. had no operations and no material assets orliabilities.

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

The financialstatements presented in this quarterly report include Uni-Pixel, Inc. andour wholly-owned subsidiary, Uni-Pixel Displays, Inc. All significantintercompany transactions and balances have been eliminated. Uni-PixelDisplays, Inc. was, for accounting purposes, the surviving entity of themerger, and accordingly for the periods prior to the merger, the financialstatements reflect the financial position, results of operations and cash flowsof Uni-Pixel Displays, Inc.  The assets, liabilities, operations andcash flows of Real-Estateforlease.com, Inc. are included in theconsolidated financial statements from December 10, 2004 onward.

**Note2 -****                  Liquidity**

Uni-Pixel has sustained losses and negative cash flowsfrom operations since its inception. The Company’s ability to meet itsobligations in the ordinary course of business is dependent upon its ability toestablish profitable operations, raise additional financing through public orprivate equity financings, enter into collaborative or other arrangements withcorporate sources, or secure other sources of financing to fund operations.

On February 13,2007, the Company raised $12 million in a private placement of its Series BConvertible Preferred Stock (see Note 5) which management believes will enablethe Company to continue operations until June 2008.

**Note 3 -      Summary of Significant Accounting Policies**

*Interimfinancial information*

The financialstatements included herein, which have not been audited pursuant to therules and regulations of the Securities and Exchange Commission, reflectall adjustments which, in the opinion of management, are necessary for a fairpresentation of financial position, results of operations and cash flows forthe interim periods on a basis consistent with the annual audited statements.All such adjustments are of a normal recurring nature. The results ofoperations for interim periods are not necessarily indicative of the resultsthat may be expected for any other interim period or for a full year. Certaininformation, accounting policies and footnote disclosures normally included infinancial statements prepared in conformity with accounting principlesgenerally accepted in the United States of America have been omitted pursuantto such rules and regulations, although we believe that the disclosuresare adequate to make the information presented not misleading. These financialstatements should be read in conjunction with our audited financial statementsincluded in our Form 10-KSB, for the year ended December 31, 2006,filed with the Securities and Exchange Commission on March 6, 2007.

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*Use ofestimates*

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires us to make estimates andassumptions that affect the reported amounts of assets and liabilities,disclosures of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Examples include provisions for bad debts, useful lives ofproperty and equipment and intangible assets, impairment of property andequipment and intangible assets, deferred taxes, and the provision for anddisclosure of litigation and loss contingencies. Actual results may differmaterially from those estimates.

*Statementof cash flows*

For purposes ofthe statements of cash flows, we consider all highly liquid investments (i.e.,investments which, when purchased, have original maturities of three months orless) to be cash equivalents.

*Concentrationof credit risk*

We maintain ourcash primarily with major U.S. domestic banks. The amounts held in these banksexceed from time to time the insured limit of $100,000 and exceeded thatbalance at March 31, 2007 and December 31, 2006 by $6,601,615 and $7,411,respectively. The terms of these deposits are on demand to minimize risk. We have not incurred losses related to these deposits.

*Restrictedcash*

As of March 31,2007 and December 31, 2006, we had restricted cash of $40,000. Of this amount,$40,000 secured certain obligations under our lease agreement for our principalfacility located in The Woodlands, Texas at both March 31, 2007 and December31, 2006.  The restricted cash has beensegregated into current and long-term classifications based on its anticipatedliquidation.

*Propertyand equipment*

Property andequipment, consisting primarily of lab equipment, computer equipment, software,leasehold improvements, and office furniture and fixtures is carried at costless accumulated depreciation and amortization. Depreciation and amortizationfor financial reporting purposes is provided by the straight-line method overthe estimated useful lives of three to five years. Leasehold improvements areamortized using the straight-line method over the remaining lease term or thelife of the asset, whichever is shorter. The cost of repairs and maintenance ischarged as an expense as incurred.  Gainsor losses related to retirements or dispositions of fixed assets are recognizedin the period incurred.

*Intangibleassets*

Our intangibleassets represent patent applications which are recorded at cost.  We havefiled applications for patents in connection with technologies being developed.The patent applications and any patents issued as a result of theseapplications 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 the value recorded for intangibleassets to assess recoverability from future operations using undiscounted cashflows. Impairments are recognized in operating results to the extent thecarrying value exceeds fair value determined based on the net present value ofestimated future cash flows.

*Derivative instruments*

We account for allderivative financial instruments in accordance with SFAS No.  133, “Accounting for Derivative Instrumentsand Hedging Activities.” Derivative financial instruments are recorded asliabilities in the consolidated balance sheet and are measured at fair value.When available, quoted market prices are used in determining fair value.However, if quoted market prices are not available, we estimate fair valueusing either quoted market prices of financial instruments with similarcharacteristics or other valuation techniques. These derivative liabilities are marked-to-market each quarter with thechange in fair value recorded in the income statement.

We utilize theBlack-Scholes option-pricing model to determine the fair value of ourfreestanding derivative instruments. Key assumptions of the Black-Scholesoption-pricing model include applicable volatility rates, risk-free interestrates and the instruments’ expected remaining life. We also determined a fairvalue for our various embedded derivatives within our $1.5 

9

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million and $0.9 millionconvertible notes by using a layered discounted probability-weighted cash flowmodel.  The assumptions used in bothmodeling techniques required significant management judgment and estimates offuture fluctuation in stock price as well as changes in future interest rates.The reader should reference Note 6 for further details in regards to ourderivative liabilities.

*Revenuerecognition*

We recognizerevenue over the period the service is performed in accordance with SEC StaffAccounting Bulletin No. 104, “Revenue Recognition in Financial Statements”(“SAB 104”). In general, SAB 104 requires that four basic criteriamust be met before revenue can be recognized: (1) persuasive evidence thatan arrangement exists, (2) delivery has occurred or services rendered,(3) the fee is fixed and determinable, and (4) collectibility isreasonably assured.

Revenue fromlicenses and other up front fees are recognized on a ratable basis over theterm of the respective agreement.

Revenue fromdevelopment contracts are recognized when the contract is completed andcollectibility is reasonably assured. Deferred revenue on these contracts of $33,333 and $33,333 at March 31,2007 and December 31, 2006, respectively, consists of a development contract toproduce and deliver a prototype device.  During the first quarter ended March 31, 2006, the Company fulfilled itsobligation with a customer in providing a product prototype, and has releaseddeferred income of $200,000 into earned revenues during the period.  Thecosts incurred with this prototype were incurred in prior periods as acomponent of research and development expenses.

*Researchand development expenses*

Research and developmentcosts are expensed as incurred and include salaries and benefits, costs paid tothird-party contractors for research, development and manufacturing ofmaterials and devices, and a portion of facilities cost. Prototype developmentcosts are a significant component of research and development expenses andinclude costs associated with third-party contractors. Invoicing fromthird-party contractors for services performed can lag several months.  Weaccrue the costs of services rendered in connection with third-party contractoractivities based on our estimate of management fees, site management andmonitoring costs and data management costs. Actual costs may differ from estimatedcosts in some cases and are adjusted for in the period in which they becomeknown.

*Stock-basedcompensation*

In December 2004, the Financial AccountingStandards Board (“FASB”) issued SFAS No. 123 (Revised 2004) (“SFAS No.123(R)”), *“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—known as the requisite serviceperiod. No compensation cost is recognized for equity instruments for whichemployees do not render the requisite service. The grant-date fair value ofemployee share options and similar instruments will be estimated usingoption-pricing models adjusted for the unique characteristics of thoseinstruments. We have implemented SFAS No. 123(R) effective January 1,2006.

We may, from timeto time, issue common stock, stock options or common stock warrants to acquireservices or goods from non-employees. Common stock, stock options and commonstock warrants issued to persons other than employees or directors are recordedon the basis of their fair value, as required by SFAS No. 123 (“SFAS No.123”), “*Accounting for Stock Based Compensation”,*which is measured as of the date required by EITF Issue 96-18 (“EITF 96-18”),*“Accounting for Equity Instruments That AreIssued to Other Than Employees for Acquiring, or in Conjunction with Selling,Goods or Services.”*  In accordance with EITF 96-18, thestock options or common stock warrants are valued using the Black-Scholes modelon the 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.

The followingdisclosures provide information regarding the Company’s stock-basedcompensation awards, all of which are classified as equity awards in accordancewith SFAS No. 123(R):

*Stockoptions.*The Company grants stock options to employees thatallow them to purchase shares of the Company’s common stock. Options are alsogranted to members of the Board of Directors. The Company determines the fair value of stock 

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options at the date ofgrant using the Black-Scholes valuation model. Most options vest annually over a three-year service period.  The Company will issue new shares upon theexercise of stock options.

Total compensationexpense recognized for options was approximately $0.9 million and $0.2million for the three months ended March 31, 2007 and March 31, 2006,respectively.

A summary of thechanges in the total stock options outstanding during the three months endedMarch 31, 2007 follows:
|                                           | ** ** | ** **  | ** ** | **Weighted**            | ** ** |
|-------------------------------------------|------------|-------------|------------|-------------------------|------------|
| ** **                                | ** ** | ** **  | ** ** | **Average**             | ** ** |
| ** **                                | ** ** | **Options** | ** ** | **Exercise Price** | ** ** |
| Outstanding at December 31,  2006    |       | 3,661,667   |       | $                       | 1.25       |   |
| Granted                                   |       | 300,000     |       | 1.19                    |       |
| Forfeited or  expired                     |       | (1,001,667  | )          | 1.25                    |       |
| Exercised                                 |       | —      |       | —                  |       |
| Outstanding at  March 31, 2007            |       | 2,960,000   |       | $                       | 1.66       |   |
| Vested and exercisable  at March 31, 2007 |       | 1,859,421   |       | $                       | 1.60       |   |

 

The fair value of theCompany’s options were estimated on the date of grant using the Black-Scholesvaluation model with the following weighted-average assumptions:
|                        | ** ** | **Three Months  ended  March 31,   2007** | ** ** | **Three Months  ended  March 31,   2006** | ** ** |
|------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|
| Expected life  (years) |       | 5 years                                             |       | 5 years                                             |       |
| Interest rate          |       | 5.1                                                      | %          | 4                                                        | %          |
| Dividend yield         |       | —                                                   |       | —                                                   |       |
| Volatility             |       | 82.12                                                    | %          | 40.05                                                    | %          |
| Forfeiture rate        |       | —                                                   |       | —                                                   |       |

 

*Incometaxes*

An asset andliability approach is used for financial accounting and reporting for incometaxes. Deferred income taxes arise from temporary differences between incometax and financial reporting and principally relate to recognition of revenueand expenses in different periods for financial and tax accounting purposes andare measured using currently enacted tax rates and laws. In addition, adeferred tax asset can be generated by net operating loss carryforwards.   If it is more likely than not that someportion or all of a deferred tax asset will not be realized, a valuationallowance is recognized.

No benefit hasbeen recognized on the net loss as the realization of the net operating losscarryforward cannot be assured.

*Lossper share data*

Basic loss pershare is calculated based on the weighted average common shares outstandingduring the period, after giving effect to the manner in which the merger wasaccounted for as described in Note 1. Diluted earnings per share alsogives effect to the dilutive effect of stock options, warrants (calculatedbased on the treasury stock method) and convertible notes and convertiblepreferred stock. The Company does not present diluted earnings per share foryears in which it incurred net losses as the effect is antidilutive.

At March 31, 2007,options and warrants to purchase 13,592,179 shares of common stock at exerciseprices ranging from $1.10 to $2.00 per share were outstanding, but were notincluded in the computation of diluted earnings per share as their effect wouldbe antidilutive.

*Fairvalue of financial instruments*

Our financialinstruments consist of accounts receivable, accounts payable, notes payable andderivative liabilities. We believe the fair values of our accounts receivable,accounts payable, notes payable and derivative liabilities reflect theirrespective carrying amounts.

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*Recentaccounting pronouncements*

In July 2006, theFASB released FASB Interpretation No. 48, “Accounting for Uncertainty in IncomeTaxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48prescribes a comprehensive model for the financial statement recognition,measurement, presentation and disclosure of income tax uncertainties withrespect to positions taken or expected to be taken in income tax returns. TheCompany adopted FIN 48 in the first quarter of fiscal 2007, and managementconcluded that there was no material impact to its consolidated financialstatements.

In September 2006,the Financial Accounting Standards Board (“FASB”) issued Statement No. 157, “FairValue Measurements” (“FAS 157”), which addresses how companies should measurefair value when they are required to use a fair value measure for recognitionor disclosure purposes under generally accepted accounting principles (“GAAP”).As a result of FAS 157, there is now a common definition of fair value to beused throughout GAAP, which is expected to make the measurement of fair valuemore consistent and comparable. The Company must adopt FAS 157 in fiscal 2008,and management currently does not expect the impact to be material to itsconsolidated financial statements.

Effective July 1,2005, the Company adopted SFAS No. 153, Exchanges of Nonmonetary Assets, anamendment of Accounting Principles Board (“APB”) Opinion No. 29 (“SFAS 153”).SFAS 153 amended prior guidance to eliminate the exception for nonmonetaryexchanges of similar productive assets and replaced it with a general exceptionfor exchanges of nonmonetary assets that do not have commercial substance. Anonmonetary exchange has commercial substance if the future cash flows of theentity are expected to change significantly as a result of the exchange. Theprovisions of SFAS 153 were required to be applied prospectively. SFAS 153 didnot have a material impact on the Company’s consolidated financial statements.

In May 2005, FASBissued SFAS No. 154, Accounting Changes and Error Corrections, a replacement ofAPB Opinion No. 20 and FASB Statement No. 3 (“SFAS 154”). The statementrequires retrospective application to prior periods’ financial statements for avoluntary change in accounting principle unless it is deemed impracticable. Italso requires that a change in the method of depreciation, amortization, ordepletion for long-lived, non-financial assets be accounted for as a change inaccounting estimate rather than a change in accounting principle. SFAS 154 iseffective for accounting changes and corrections of errors made in fiscal yearsbeginning after December 15, 2005. SFAS 154 did not have a material impact onthe Company’s consolidated financial statements.

In February 2006,the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments—anamendment of FASB Statements No. 133 and 140,” to permit fair valueremeasurement for any hybrid financial instrument that contains an embeddedderivative that otherwise would require bifurcation in accordance with theprovisions of SFAS No. 133, “Accounting for Derivative Instruments and HedgingActivities.” The Company will adopt SFAS No. 155 in fiscal year 2007. SFAS 155is not expected to have a material impact on the Company’s consolidatedfinancial statements.

****InFebruary 2007, the FASB issued SFAS No. 159, “The Fair Value Option forFinancial Assets and Financial Liabilities”, which permits entities to chooseto measure many financial instruments and certain other items at fair value.The objective is to improve financial reporting by providing entities with theopportunity to mitigate volatility in reported earnings caused by measuringrelated assets and liabilities differently without having to apply complexhedge accounting provisions.  The statement amends SFAS No. 115, “Accountingfor Certain Investments in Debt and Equity”.****

In December 2006,the FASB issued the FASB Staff Position (FSP) No. EITF 00-19-2, (“FSP EITF00-19-2”), Accounting for Registration Payment Arrangements. This FSP addressesan issuer’s accounting for registration payment arrangements. This FSPspecifies that the contingent obligation to make future payments or otherwisetransfer consideration under a registration payment arrangement, whether issuedas a separate agreement or included as a provision of a financial instrument orother agreement, should be separately recognized and measured in accordancewith FASB Statement No. 5, Accounting for Contingencies. The guidance in thisFSP amends FASB Statements No. 133, Accounting for Derivative Instruments andHedging Activities, and No. 150, Accounting for Certain Financial Instrumentswith Characteristics of both Liabilities and Equity, and FASB InterpretationNo. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees,Including Indirect Guarantees of Indebtedness of Others, to include scopeexceptions for registration payment arrangements. This FSP further clarifiesthat a financial instrument subject to a registration payment arrangementshould be accounted for in accordance with other applicable generally acceptedaccounting principles (GAAP) without regard to the contingent obligation totransfer consideration pursuant to the registration payment arrangement. ThisFSP shall be effective immediately for registration payment arrangements andthe financial instruments subject to those arrangements that are entered intoor modified subsequent to the date of issuance of this FSP, or for financialstatements issued for fiscal years beginning after December 15, 2006, andinterim periods within those fiscal years.

The Companyadopted FSP EITF 00-19-2 beginning in 2007. The adoption of this FSP did nothave a material effect upon the Company’s financial statements.

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**Note 4 -****                  Commitments andContingencies**

*Leases*

The Company has entered into a lease for office,warehouse and laboratory facilities in The Woodlands, Texas under a third partynon-cancelable operating lease through 2010. Future minimum lease commitmentsas of March 31, 2007 are as follows: 
| Year Ending December 31 | ** ** | ** ** | ** ** |
|----------------------------------------|------------|------------|------------|
| 2007                                   |       | $          | 149,864    |   |
| 2008                                   |       | 202,997    |       |
| 2009                                   |       | 206,267    |       |
| 2010                                   |       | 191,825    |       |
| 2011                                   |       | —     |       |
| Thereafter                             |       | —     |       |
| Total                                  |       | $          | 750,953    |   |

 

This lease provides the Company with a 5-year renewaloption.

**Note 5 -****                  RedeemablePreferred Stock, Equity, Stock Plan and Warrants**

*Equity instruments issued to non-employees*

From time to time, in order to preserve cash and tofund our operating activities, common stock or other equity instruments may beissued for cash or in exchange for goods or services. Equity instruments issuedfor goods or services are recorded at the fair value of the goods or servicesreceived or the fair value of the equity instruments issued, whichever is morereliably measurable.  During the threemonths ended March 31, 2007, we did the following:

·                  EffectiveJanuary 15, 2007, we requested and Lusierna Asset Management, Ltd. (the “Consultant”)agreed to provide consulting and advisory services to us pursuant to and inaccordance with our request, including but not limited to, advice regardingcorporate structuring, the identification of potential candidates for our boardof directors and transaction structuring. In consideration of the consulting services, we agreed that at the timeof, and subject to, the closing of no less than gross proceeds of $12,000,000from the sale of the Company’s equity in a private placement, (the **“Offering Threshold Closing”**), the Company (i) issuedto the Consultant, simultaneously with the Offering Threshold Closing, initialclosing, a three year warrant to purchase 750,000 shares (the **“Option Shares”**) of our common stock, at an exerciseprice of $1.10 per Option Share, with a cashless exercise provision and noanti-dilution adjustment, and (ii) we paid to the Consultant a fee of$480,000.  The Company utilized theBlack-Scholes methodology in determining the fair market value ofthe warrants of $217,007 and recorded the expense in the first quarter of2007.  The Consultants’ fee of $480,000was paid from the proceeds of the Purchase Agreement, described below, andexpensed in the first quarter of 2007.

·                  Effective February 13, 2007 weentered into an Investor Relations Agreement with Lusierna Asset Management,Ltd. (the “Consultant”) which provides that the Agreement will terminate on thedate twelve (12) months from the Commencement Date, unless otherwise subject toearlier termination.  During the term ofthis Agreement, the Consultant shall provide public and investor relationsservices (collectively, the **“Services”**)to us, to result in improved investor recognition of Uni-Pixel, Inc., a broaderfollowing by analysts and institutions to include providing directly, ormanaging the delivery of, a wide range of services, including, but not limitedto:

·                  Proactive marketing of the Companydirectly to security analysts, stockbrokers and portfolio managers andinvestors.

·                  Assisting the Company in gainingmedia coverage both locally and nationally.

·                  Assisting in the preparation of pressreleases, including monitoring wire service coverage of the Company foraccuracy and pickup.

·                  Preparing presentations relating tothe Company for meetings with analysts, registered representatives andportfolio managers, other large investors, and sponsored forums.

·                  Assisting in preparing informationkits about the Company in response to press and/or investor inquiries.

·                  Providingsuch other services and assistance as Consultant and the Company shall deemnecessary or appropriate to enhance the Company’s business.

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The Consultant shall receive $10,000 per month payable monthly on thetenth (10th) dayof each month, commencing on the tenth (10th) day of the month following the month in which theCommencement Date occurs and a three (3) year warrant (the “**Warrant**”) to purchase 300,000shares of restricted Uni-Pixel, Inc. common stock at an exercise price of $1.10per share, with a cashless exercise provision and no anti-dilution adjustment.The Warrant shall vest in twelve (12) monthly installments on the tenth (10th) day of each month,commencing in the First Payment Month. The initial payment shall be for 75,000shares, with the remaining 225,000 shares equally divided into the remainingeleven (11) installments.  The Companyutilized the Black-Scholes methodology in determining the fair marketvalue of the warrants of $86,803 and this amount is expensed over 12months.

*Common Stock*

During the three monthsended March 31, 2007, (1) we issued no shares of common stock for cash inconnection with the exercise of stock options; (2) issued no shares of commonstock in exchange for cashless exercise of warrants; and (3) issued 1,810,578shares of common stock in connection with the conversion of 676,107 shares ofSeries A Preferred Stock and accrued dividends.

*Series A Convertible Preferred Stock*

Effective February13, 2007, each share of Series A Convertible Preferred Stock is convertibleinto 2.6515 shares of common stock at any time after issuance, together withaccrued dividends at 6% per annum payable in cash or additional shares ofSeries A Preferred Stock at the option of the Company. On December 31, 2007, all outstanding sharesof Series A Preferred Stock, if any, shall automatically convert on thatdate into common stock.

*Series B Convertible Preferred Stock*

On February 13, 2007, the Company entered into aSecurities Purchase Agreement (the “Purchase Agreement”) with The Raptor GlobalPortfolio Ltd., The Tudor BVI Global Portfolio Ltd., Tudor Proprietary Trading,L.L.C. and The Altar Rock Fund L.P. (collectively, the “Purchasers”) pursuantto which the Company sold on that date in a private placement to the Purchasers(a) 3,200,000 authorized but unissued shares of the Company’s Series BPreferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), and (b)warrants (the “Warrants”) to purchase, in aggregate, up to 6,839,279 shares ofthe Company’s common stock, par value $0.001 for an aggregate purchase price of$12,000,000.  As the Series B ConvertiblePreferred Stock is redeemable for cash at the option of the holder after fiveyears, the Series B Convertible Preferred Stock is classified as temporaryequity on the balance sheet.  Inaccordance with EITF 00-27, the Company determined that the Series BConvertible Preferred Stock had an intrinsic value of the conversion of optionof $3,715,602, which was credited to additional paid-in capital in the firstquarter of 2007, and is being amortized over five years.  The Company utilized the Black-Scholesmethodology in determining the fair market value of the warrantsof $3,715,602, which was credited to additional paid-in capital in the firstquarter of 2007, and is being amortized over five years.

Dividends shall accrue, whether or not declared andpaid, on the Series B Preferred Stock at the rate per annum of 8%, and shall becumulative as to any dividends not declared and paid in any year, compoundingannually at the same rate.  Each share ofSeries B Preferred Stock may, at the option of the holder, be converted at anytime into a number of fully paid and non-assessable shares of common stock of theCompany equal to the quotient obtained by dividing the original issue price of$3.75 for the Series B Preferred Shares, plus all accrued and unpaid Series BPreferred Stock dividends and any other declared and unpaid dividends, by theinitial Series B Preferred Stock conversion price of $0.75, which is subject toadjustment from time to time in accordance with the Certificate ofDesignations.

*2005 Stock Incentive Plan*

Effective January 27, 2005, we adopted theUni-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 Directors, which has exclusive discretion to select participants whowill receive the awards and to determine the type, size and terms of each awardgranted.

In the first quarter of 2007, we did not grant anyoptions under the 2005 Stock Incentive Plan and a total of 1,667 stock optionswith an exercise price of $2.00 per share to one employee were forfeited.

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*Other Stock Options*

In the firstquarter of 2007, we granted a total of 300,000 options to purchase our commonstock with an exercise price of $1.19 per share to three board members.  These options vest monthly over 36 months.

On February 1,2007, the 1,000,000 options with an exercise price of $1.25 per share grantedto Mr. Carl Yankowski on October 1, 2006, were cancelled as Mr. Yankowski didnot become Chief Executive Officer of Uni-Pixel, Inc. by January 31, 2007.

On February 13,2007, in connection with the Series B Convertible Preferred Stock PurchaseAgreement, the 1,000,000 options with an exercise price of $1.25 per sharegranted to Mr. Carl Yankowski on May 23, 2006 have all vested due to theCompany’s completion of an equity financing of $10 million or more.  The Company utilized the Black-Scholesmethodology in determining the fair market value of the warrantsof $726,241 and this amount was expensed in the first quarter of 2007.

**Note 6 –Notes Payable**

Note payables consist of the following:
|                                     | ** ** | **March 31,   2007** | ** ** | **December 31,   2006** | ** ** |
|-------------------------------------|------------|--------------------------------|------------|-----------------------------------|------------|
| Unsecured note  payable             |       | $                              | —     |                              | $          | — |   |
| Vehicle secured  note payable       |       | 12,478                         |       | 13,477                            |       |
| Equipment  secured note payable     |       | —                         |       | —                            |       |
| Secured  convertible note payable   |       | —                         |       | 1,500,000                         |       |
| Unsecured  convertible note payable |       | —                         |       | 900,000                           |       |
|                                |       |                           |       |                              |       |
| Notional  balances                  |       | 12,478                         |       | 2,413,477                         |       |
| Less:  unamortized discount         |       | —                         |       | 955,419                           |       |
| Less: current  portion              |       | 4,021                          |       | 1,448,571                         |       |
| Notes payable,  long-term portion   |       | $                              | 8,457      |                              | $          | 9,487 |   |

 

During 2005, the Company entered into a note payableagreement to purchase a vehicle with an original balance of $20,092, that isrepayable in monthly installments of principal and interest of $391 at 6.31%per annum and matures March 2010.  Thisnote payable had an outstanding balance of $12,478 at March 31, 2007 and$13,477 at December 31, 2006.

*Secured convertible note -*

On May 26, 2006,Uni-Pixel, Inc. entered into Securities Purchase Agreements with Trident GrowthFund, L.P. and CapSource Fund, L.P. pursuant to which Uni-Pixel issued 12%Senior Secured Convertible Debentures (the “Convertible Note”) for theprincipal amount of $1,500,000.  TheConvertible Note was paid in full in February 2007.

Common stock purchasewarrants-

In connection withthe Securities Purchase Agreement, both Trident Growth Fund, L.P. and CapSourceFund, L.P. received Common Stock Purchase Warrants (“Warrant”) to purchase anumber of shares of our Common Stock subject to adjustments as follows: 750,000divided by the lesser of (a) $1.75 per share or (b) 70% of the average priceper share of the Common Stock and Common Stock Equivalents sold to anyPerson in the first Qualifying Transaction to be consummated following theOriginal Issue Date, all as defined in the Common Stock Purchase Warrants.  The Common Stock Purchase Warrants may beexercised at any time within 5 years at a price equal to the lesser of (a)$1.75 per share or (b) 90% of the average price per share of the Common Stockand Common Stock Equivalents sold to any Person in the first QualifyingTransaction to be consummated following the Initial Exercise Date, as definedin the Common Stock Purchase Warrants. In September 2006, the total number of warrants to be issued to TridentGrowth Fund, L.P. and CapSource Fund, L.P. was fixed at 1,500,000warrants.  However, the Company believesthat the ultimate amount of warrants was negotiable until the $12 millionplacement was complete in February 2007. As such, the Company has continued to classify the warrants asderivative liabilities at December 31, 2006. Effective February 13, 2007, the Company reclassified the derivativeliabilities for warrants to additional paid in capital.  Effective in September 2006, the Common StockPurchase Warrants may be exercised at any time within 5 years at a price equalto $1.25 per share.

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The Warrant is afreestanding derivative financial instrument. Using the  Black-Scholes Method,  the  fair value of the derivative was computed at $1,298,031 at inception on May24, 2006 and recorded as a derivative liability which  resulted in  a  reduction of the initial carrying amount (asunamortized discount) of the Convertible Note.  This derivative liability is marked-to-market each quarter with thechange in fair value recorded in the income statement.  Unamortized discount is amortized to interestexpense using the effective interest method over the life of the ConvertibleNote, or 12 months.  The remainingunamortized discount was recorded in the income statement in the first quarterof 2007 when the derivative liabilities were reclassified to additional paid incapital.

The components of theConvertible Note at inception, at December 31, 2006 and at March 31, 2007 areas follows:

Convertible Note atInception (May 24, 2006) -

As a result ofthese contract provisions, the Convertible Note balance at Inception (May 24,2006) was adjusted as follows:
| Notional balance of  Convertible Note at May 24, 2006                               |   | $          | 1,500,000 |   |
|-------------------------------------------------------------------------------------|--------|------------|-----------|--------|
| Adjustments:                                                                        |   |       |      |
| Discount for derivative liability - Warrant                                         |   | (1,298,031 | )         |
| Discount for deferred loan costs paid to Trident and  CapSource on Convertible Note |   | (75,000    | )         |
| Convertible Note  balance, net of unamortized discount at May 24, 2006              |   | $          | 126,969   |   |

 

Convertible Note atDecember 31, 2006 -

The Convertible Notebalance on the consolidated balance sheet as of December 31, 2006 is comprisedof the following:
| Notional balance of  Convertible Note at December 31, 2006                  |   | $        | 1,500,000 |   |
|-----------------------------------------------------------------------------|--------|----------|-----------|--------|
| Adjustments:                                                                |   |     |      |
| Unamortized discount                                                        |   | (876,896 | )         |
| Convertible Note  balance, net of unamortized discount at December 31, 2006 |   | $        | 623,104   |   |

 

As the Convertible Notewas repaid in full on February 13, 2007, the Convertible Note balance on theconsolidated balance sheet as of March 31, 2007 is comprised of the following:
| Notional balance of  Convertible Note at March 31, 2007                  |   | $      | — |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|
| Adjustments:                                                             |   |   |   |
| Unamortized  discount                                                    |   | — |   |
| Convertible Note  balance, net of unamortized discount at March 31, 2007 |   | $      | — |   |

 

Change in unamortizeddiscount and loan costs of the Convertible Note -

For the year endedDecember 31, 2006, the discount on the Convertible Note changed foramortization of discounts for derivative liabilities related to the ConvertibleNote and Warrant and for amortization of loan costs paid to the lender inconnection with the Convertible Note. The total discount on the ConvertibleNote changed from $1,373,031 at inception to $876,896 at December 31, 2006, to$0 at March 31, 2007, as the remaining unamortized discount was recorded in theincome statement in the first quarter of 2007 when the derivative liabilitieswere reclassified to additional paid in capital.

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The followingassumptions were used in the preparation of the Warrant valuations at inception(May 24, 2006), December 31, 2006 and February 13, 2007:

Black-ScholesMethodology:
|                          | ** ** | **Inception** | ** ** | **December 31, 2006** | ** ** | **February 13, 2007** | ** ** |
|--------------------------|------------|---------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Assumptions**          | ** ** | **Warrant**   | ** ** | **Warrant**                     | ** ** | **Warrant**                     | ** ** |
| Dividend yield           |       | 0.00          | %          | 0.00                            | %          | 0.00                            | %          |
| Risk-free  interest rate |       | 4.93          | %          | 5.10                            | %          | 5.10                            | %          |
| Volatility               |       | 63.74         | %          | 63.74                           | %          | 68.80                           | %          |
| Expected Term            |       | 5.00 years    |       | 4.39 years                      |       | 4.27 years                      |       |

 

Change in fair value ofderivatives instruments-

The net decreasein derivative liability for the Warrant (marked-to-market) of $348,927 for thethree months ended March 31, 2007, has been recorded under Other income in theaccompanying consolidated statements of operations.

*Unsecured convertible note -*

On September 12,2006, Uni-Pixel, Inc. entered into Securities Purchase Agreements with variousinvestors pursuant to which Uni-Pixel issued 10% Senior Unsecured ConvertibleDebentures (the “Unsecured Convertible Note”) for the principal amount of$900,000.  The Unsecured Convertible Notewas paid in full in February 2007.

In connection withthe Securities Purchase Agreement, the Company issued 144,000 warrants at $1.25per share to the investors.  The warrantswill expire in five years.

As considerationfor the Placement Agent services in connection with the Securities PurchaseAgreement, the Company issued 50,400 warrants at $1.25 to the Placement Agentor its designees.  The warrants willexpire in five years.   In addition, thePlacement Agent received a commission equal to 5%, or $45,000.

The UnsecuredConvertible Note is a hybrid instrument which contains both freestandingderivative financial instruments and an embedded derivative feature which wouldindividually warrant separate accounting as a derivative instrument under SFASNo. 133. The freestanding derivative financial instrument includes the investor’swarrants, which were valued individually, and totaled $107,416 at inception onSeptember 12, 2006. The Company identified an embedded derivative featurerelated to the conversion price within the Unsecured Convertible Note. However,its fair market value is insignificant at inception.

Common stock purchasewarrants-

In connection withthe Securities Purchase Agreement, the investors received Common Stock PurchaseWarrants (“Warrant”) to purchase 144,000 shares of our Common Stock at $1.25.

The Warrant is afreestanding derivative financial instrument. Using the  Black-Scholes Method,  the  fair value of the derivative was computed at $107,416 at inception onSeptember 12, 2006 and recorded as a derivative liability which  resulted in  a  reduction of the initial carrying amount (asunamortized discount) of the Unsecured Convertible Note.   This derivative liability ismarked-to-market each quarter with the change in fair value recorded in theincome statement.  Unamortized discountis amortized to interest expense using the effective interest method over thelife of the Unsecured Convertible Note, or 12 months.  The remaining unamortized discount wasrecorded in the income statement in the first quarter of 2007 when thederivative liabilities were reclassified to additional paid in capital.

The components of theUnsecured Convertible Note at inception and at December 31, 2006 and at March31, 2007 are as follows:

Unsecured ConvertibleNote at Inception (September 12, 2006) -

As a result ofthese contract provisions, the Unsecured Convertible Note balance at Inception(September 12, 2006) was adjusted as follows:
| Notional balance of  Unsecured Convertible Note at September 12, 2006                  |   | $        | 900,000 |   |
|----------------------------------------------------------------------------------------|--------|----------|---------|--------|
| Adjustments:                                                                           |   |     |    |
| Discount for derivative liability - Warrant                                            |   | (107,416 | )       |
| Unsecured Convertible  Note balance, net of unamortized discount at September 12, 2006 |   | $        | 792,584 |   |

 

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Unsecured ConvertibleNote at December 31, 2006 -

The Unsecured ConvertibleNote balance on the consolidated balance sheet as of December 31, 2006 iscomprised of the following:
| Notional balance of  Unsecured Convertible Note at December 31, 2006                  |   | $       | 900,000 |   |
|---------------------------------------------------------------------------------------|--------|---------|---------|--------|
| Adjustments:                                                                          |   |    |    |
| Unamortized discount                                                                  |   | (78,493 | )       |
| Unsecured Convertible  Note balance, net of unamortized discount at December 31, 2006 |   | $       | 821,507 |   |

 

As the UnsecuredConvertible Note was repaid in full on February 13, 2007, the UnsecuredConvertible Note balance on the consolidated balance sheet as of March 31, 2007is comprised of the following:
| Notional balance of  Unsecured Convertible Note at March 31, 2007                  |   | $      | — |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Adjustments:                                                                       |   |   |   |
| Unamortized discount                                                               |   | — |   |
| Unsecured Convertible  Note balance, net of unamortized discount at March 31, 2007 |   | $      | — |   |

 

Change in unamortizeddiscount and loan costs of the Unsecured Convertible Note -

For the year endedDecember 31, 2006, the discount on the Unsecured Convertible Note changed foramortization of discounts for derivative liabilities related to the UnsecuredConvertible Note and Warrant and for amortization of loan costs paid inconnection with both the Unsecured Convertible Note. The total discount on theUnsecured Convertible Note changed from $107,416 at inception to $78,493 atDecember 31, 2006, to $0 at March 31, 2007, as the remaining unamortizeddiscount was recorded in the income statement in the first quarter of 2007 whenthe derivative liabilities were reclassified to additional paid in capital.

The followingassumptions were used in the preparation of the Warrant valuations at Inception(September 12, 2006) and December 31, 2006 and February 13, 2007:

Black-ScholesMethodology:
|                          | ** ** | **Inception** | ** ** | **December 31, 2006** | ** ** | **February 13, 2007** | ** ** |
|--------------------------|------------|---------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Assumptions**          | ** ** | **Warrant**   | ** ** | **Warrant**                     | ** ** | **Warrant**                     | ** ** |
| Dividend yield           |       | 0.00          | %          | 0.00                            | %          | 0.00                            | %          |
| Risk-free  interest rate |       | 5.10          | %          | 5.10                            | %          | 5.10                            | %          |
| Volatility               |       | 63.74         | %          | 63.74                           | %          | 68.80                           | %          |
| Expected Term            |       | 5.00 years    |       | 4.70 years                      |       | 4.57 years                      |       |

 

Change in fair value ofderivatives instruments-

The net decreasein derivative liability for the Warrant (fair value) of $33,993 for the threemonths ended ended March 31, 2007, has been recorded under Other income in theaccompanying consolidated statements of operations.

Future payments under outstanding notes payable as ofMarch 31, 2007 are as follows:
| Year ended December 31: | ** ** | ** ** | ** ** |
|----------------------------------------|------------|------------|------------|
| 2007                                   |       | $          | 2,991      |   |
| 2008                                   |       | 4,218      |       |
| 2009                                   |       | 4,492      |       |
| 2010                                   |       | 777        |       |
| 2011                                   |       | —     |       |
| Thereafter                             |       | —     |       |
|                                   |       | $          | 12,478     |   |

 

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**ITEM 2. MANAGEMENT’S DISCUSSION ANDANALYSIS OR PLAN OF OPERATON.**

**Forward Looking Statements**

Some of theinformation in this report contains forward-looking information that involverisks and uncertainties.  Ourforward-looking statements express our current expectations or forecasts ofpossible future results or events, including projections of future performance,statements of management’s plans and objectives, future contracts, andforecasts of trends and other matters. You can identify these statements by the fact that they do not relatestrictly to historic or current facts and often use words such as “anticipate,”“believe,” “plan,” “expect,” “future,” “intend,” “may,” “will,” “should,” “estimate,”“predict,” “potential,” “continue,” and other words and expressions of similarmeaning.  No assurance can be given thatthe results in any forward-looking statement will be achieved and actualresults could be affected by one or more factors, which could cause them to differmaterially.  For these statements, weclaim the protection of the safe harbor for forward-looking statementscontained in the Private Securities Litigation Reform Act. You should alsoconsider carefully the statements under “Description of Business - Risk Factors”in our 2006 Form 10-KSB, which address factors that could cause our actualresults to differ from those set forth in the forward-looking statements.

*CRITICAL ACCOUNTING POLICIES*

The following discussion and analysis of financialcondition and results of operations is based upon our consolidated financialstatements, which have been prepared in conformity with accounting principlesgenerally accepted in the United States of America. Our significant accountingpolicies are more fully described in Note 3 of Notes to the unaudited ConsolidatedFinancial Statements. However, certain accounting policies and estimates areparticularly important to the understanding of our financial position andresults of operations and require the application of significant judgment byour management or can be materially affected by changes from period to periodin economic factors or conditions that are outside of our control.  As aresult, they are subject to an inherent degree of uncertainty. In applyingthese policies, our management uses their judgment to determine the appropriateassumptions to be used in the determination of certain estimates. Thoseestimates are based on our historical operations, our future business plans andprojected financial results, the terms of existing contracts, our observance oftrends in the industry, information provided by our customers and informationavailable from other outside sources, as appropriate. The following discussesour significant accounting policies and estimates.

*Revenue Recognition:* We recognize revenue over the period the service is performed in accordancewith SEC Staff Accounting Bulletin No. 104, “Revenue Recognition inFinancial Statements” (“SAB 104”). In general, SAB 104 requires that four basiccriteria must be met before revenue can be recognized: (1) persuasiveevidence that an arrangement exists, (2) delivery has occurred or servicesrendered, (3) the fee is fixed and determinable, and(4) collectibility is reasonably assured.

Advance payments are deferred until shipment. Theamount 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 fees arerecognized on a ratable basis over the term of the respective agreement.

*Cost of Revenues and Selling,General and Administrative Expenses and Research and Development Expenses:* In an effort to consolidate our executive management team, we moved ourheadquarters from Austin, Texas to The Woodlands, Texas during the thirdquarter of 2005.  The primary purpose of our facility in The Woodlands,Texas is to conduct research on the development, testing and delivery of ourprototype devices, and the commercialization of our products.

If, in the future, the purposes for which we operateour facility in The Woodlands, Texas, or any new facilities we open, changes,the allocation of the costs incurred in operating that facility between cost ofsales and research and development expenses could change to reflect suchoperational changes.

*Research and Development Expenses:* Research and development costs are expensed as incurred and include salariesand benefits, costs paid to third-party contractors for research, developmentand manufacturing of materials and devices, and a portion of facilities cost.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 they becomeknown.

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*Intangible Assets:* Our intangible assets represent patent applications which are recorded at cost.We have filed applications for patents in connection with technologies beingdeveloped. The patent applications and any patents issued as a result of theseapplications 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 the value recorded for intangibles to assessrecoverability from future operations using undiscounted cash flows.Impairments are recognized in operating results to the extent the carryingvalue exceeds fair value determined based on the net present value of estimatedfuture cash flows. The projection of future cash flows requires us to makeestimates about when product approvals may be obtained, and the amount offuture revenues. The actual future results could differ significantly fromthese estimates, and resulting changes in the estimates of future cash flowscould be significant and could affect the recoverability of intangible assets.

*Stock-Based Compensation:* Beginning in the quarter beginning January 1, 2006, we adopted SFAS No. 123(Revised 2004), *“Share Based Payment,”*which eliminates the use of APB Opinion No. 25 and we will be required 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 will be recognized for equity instruments for which employeesdo not render the requisite service. The grant-date fair value of employeeshare options and similar instruments will be estimated using option-pricingmodels adjusted for the unique characteristics of those instruments. SFASNo. 123 (Revised 2004) must be applied to all options granted or modifiedafter its effective date and also to recognize the cost associated with theportion of any option awards made before its effective date for which theassociated service has not been rendered as of its effective date.

Prior to January 1, 2006, we accounted for ourstock-based compensation under the provisions of Statement of FinancialAccounting Standards (“SFAS”) No. 123— “Accounting for Stock BasedCompensation.” Under SFAS No. 123, we are permitted to either record expensesfor stock options and other employee compensation plans based on their fairvalue at the date of grant or to continue to apply the provisions of AccountingPrinciples Board Opinion No. 25 “Accounting for Stock Issued to Employees,”(“APB No. 25”), and recognize compensation expense, if any, based on theintrinsic value of the equity instrument at the measurement date. We haveelected to continue following the provisions of APB No. 25. Stock optionsissued to persons other than employees or directors are recorded on the basisof their fair value as required by SFAS No. 123.

*RESULTS OF OPERATIONS*

Comparisonof the three months ending March 31, 2007 and 2006

REVENUES.  We are a development stage companythat has developed, patented and demonstrated a new color display technology inthe form of proof of concept prototypes which we call Time Multiplexed OpticalShutter (“TMOS”).  We intend to be a leader in the research, developmentand commercialization of new flat panel displays using TMOS in a variety of applications,such as mobile phones, digital cameras, notebook computers, televisions andother consumer electronic devices. From inception, we have had a limited amountof revenue that is derived from development contracts.

Revenues decreased to $0 for the three months endedMarch 31, 2007, as compared to $200,000 for the three months ended March 31,2006, due to the revenues recognized from the work specific to a developmentcontract during each of those respective periods.

COST OF REVENUES.  Cost of revenues include alldirect expenses associated with the delivery of services including internallabor costs. Cost of revenues for the three months ended March 31, 2007 and thethree months ended March 31, 2007 was $0. No cost of revenues was recognized in the three months ended March 31,2006 as the cost of revenues was expensed in the period incurred prior to 2006as a component of research and development expenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,general and administrative expenses increased by 189% or $1,566,000, to$2,396,263 for the three months ended March 31, 2007 from $830,263 for thethree months ended March 31, 2006.  The major components of the increaseare as follows:

a)  Salaries and benefits increased byapproximately $795,000 to $1,243,000 for the three months ended March 31, 2007compared to $448,000 for the three months ended March 31, 2006 due to anincrease in the number of selling, general and administrative employees and dueto an increase in stock compensation expense of approximately $753,000 to$900,000 for the three months ended March 31, 2007 compared to $147,000 for thethree months ended March 31, 2006;

b) Contract labor increased by approximately $6,000 to$58,000 for the three months ended March 31, 2007 compared to $52,000 for thethree months ended March 31, 2006;

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c) Legal expense decreased by approximately $22,000 to$89,000 for the three months ended March 31, 2007 compared to $111,000 for thethree months ended March 31, 2006;

d) Accounting expense decreased by approximately$3,000 to $18,000 for the three months ended March 31, 2007 compared to $21,000for the three months ended March 31, 2006;

e) Office expense decreased by approximately $10,000to $29,000 for the three months ended March 31, 2007 compared to $39,000 forthe three months ended March 31, 2006;

f) Travel expense decreased by approximately $18,000to $12,000 for the three months ended March 31, 2007 compared to $30,000 forthe three months ended March 31, 2006;

g) Depreciation and amortization expense decreased byapproximately $1,000 to $65,000 for the three months ended March 31, 2007compared to $66,000 for the three months ended March 31, 2006;

h) A one time professional consulting fee of $697,000was incurred for the three months ended March 31, 2007.

RESEARCH AND DEVELOPMENT. Research and developmentexpenses decreased by approximately $588,874 during the three months endedMarch 31, 2007 to $491,238 from $1,080,112 for the three months ended March 31,2006. The major components of the decrease are as follows:

a) Salaries and benefits attributable to research anddevelopment decreased by approximately $124,000 to $273,000 for the threemonths ended March 31, 2007 compared to $397,000 for the three months endedMarch 31, 2006 due to a decrease in the number of research and developmentemployees and the level of compensation for these employees and due to andecrease in stock compensation expense of approximately $10,000 to $35,000 forthe three months ended March 31, 2007 compared to $45,000 for the three monthsended March 31, 2006;

b) Consulting expense attributable to research anddevelopment decreased by approximately $389,000 to $132,000 for the threemonths ended March 31, 2007 compared to $521,000 for the three months endedMarch 31, 2006 primarily due to decreased services related to prototypedevelopment;

c) Lab expense decreased by approximately $48,000 to$16,000 for the thee months ended March 31, 2007 compared to $64,000 for thethree months ended March 31, 2006; and

d) Travel expense attributable to research anddevelopment decreased by approximately $18,000 to $23,000 for the three monthsended March 31, 2007 compared to $41,000 for the three months ended March 31,2006.

OTHER INCOME (EXPENSE).

a) Net decrease in fair value of derivativeliabilities decreased to an income of $382,920 for the three months ended March31, 2007 as compared to $0 during the three months ended March 31, 2006, due tothe Warrant issued in connection with the 12% Senior Secured ConvertibleDebentures in May 2006 and the Warrant issued in connection with the 10% SeniorUnsecured Convertible Debentures in September 2006.   The Warrants are a freestanding derivativefinancial instruments. These derivative liabilities are marked-to-market eachquarter with the change in fair value recorded in the income statement.

b) Debt issuance expense increased to $94,189 for thethree months ended March 31, 2007 as compared to $0 during the three monthsended March 31, 2006, due to the debt raised in May 2006 and September 2006.

c)****Interestincome (expense), net decreased to ($1,051,250) for the three months endedMarch 31, 2007 as compared to $13,767 for the three months ended March 31, 2006primarily due to less cash on hand, the payment of interest on the $1,500,000loan received in May 2006, the amortization of the discount on the Warrantissued in connection with the 12% Senior Secured Convertible Debentures in May2006, the payment of interest on the $900,000 loan received in September 2006,and the amortization of the discount on the Warrant issued in connection withthe 10% Senior Unsecured Convertible Debentures in September 2006.

NET LOSS.**  **Net loss increased to $3,650,020 for the three months ended March31, 2007, as compared to $1,696,608 for the three months ended March 31, 2006.We compute our net loss per share on the basis of net loss attributable tocommon stockholders, which included the effects of certain items not includedin the determination of net loss. Net loss attributable to common stockholdersfor the three months ended March 31, 2007 was $4,104,352 as compared to a netloss attributable to common stockholders of $1,828,648 for the three monthsended March 31, 2006. The net loss attributable to common stockholders

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for thethree months ended March 31, 2007 includes $454,332 of accrued but unpaidpreferred stock dividends.  The net lossattributable to common stockholders for the three months ended March 31, 2006includes $132,040 of accrued but unpaid preferred stock dividends.

**Off-Balance Sheet Transactions**

We do not engage in material off-balance sheettransactions.

*LIQUIDITY AND CAPITAL RESOURCES*

OperatingActivities

Cash used in operating activities during the threemonths ended March 31, 2007 increased to $2,763,780 as compared to $1,590,474used for the three months ended March 31, 2006. The increase is primarily aresult of increases in the first three months of 2007 in general andadministrative expenses resulting from additional employee salary and relatedemployee costs and a one time cash Consulting Fee expense of $480,000.

InvestingActivities

Cash used for investing activities during the threemonths ended March 31, 2007 amounted to $21,970, as compared to $48,185 usedfor investing activities for the three months ended March 31, 2006 due to ourdecreased spending on computers, furniture, laboratory, metrology and testingequipment in the three months ended March 31, 2007.

FinancingActivities

We have financed our operating and investingactivities primarily from the proceeds of private placements of common stock,convertible investor notes, Series A Convertible Preferred Stock offering whichwe closed in December 2004 and January 2005 and Series B ConvertiblePreferred Stock offering which we closed in February 2007. During the threemonths ended March 31, 2007, the total net cash provided by financingactivities was $9,843,659.  The$9,843,659 includes: a) $2,400,967 payments on notes payable, b) $244,626 forissuance of warrants to consultants, and c) $12,000,000 net proceeds from theissuance of Series B Convertible Preferred Stock.  During the three months ended March 31, 2006,the total net cash used in financing activities was $45,365, which includes: a)$20,000 payments on notes payable to related party and b) $25,365 net paymentson notes payable.

WorkingCapital

As of March 31, 2007, we had a cash balance of $7.1million.  We project that current cash reserves will sustain ouroperations at least through June 2008, and we are not aware of any trends orpotential events that are likely to impact our short term liquidity throughthis term.

On February 13, 2007, we entered into a SecuritiesPurchase Agreement (the “Purchase Agreement”) with The Raptor Global PortfolioLtd., The Tudor BVI Global Portfolio Ltd., Tudor Proprietary Trading, L.L.C.and The Altar Rock Fund L.P. (collectively, the “Purchasers”) pursuant to whichwe sold on that date in a private placement to the Purchasers (a) 3,200,000authorized but unissued shares of the Company’s Series B Preferred Stock, parvalue $0.001 per share (the “Series B Preferred Stock”), and (b) warrants (the “Warrants”) topurchase, in aggregate, up to 6,839,279 shares at $1.24 per share, of theCompany’s common stock, par value $0.001, for an aggregate purchase price of$12,000,000.

We area development stage company and have not experienced significant operationssince our formation. We reached a positive working capital position as of thefirst quarter of 2005 as a result of our financing activities. We have incurredsignificant operating losses during the years ended December 31, 2002,2003, 2004, 2005 and 2006 and the three months ended March 31, 2007. We intendto utilize a proprietary methodology for development of our displays. Ourprincipal activities, from the beginning of the development stage, have beenorganizational matters, capital raising activities including issuance of stock,product research and development, fund raising, and market research.

Todate, we have had only a few revenue-generating services or developmentcontracts.  These include a prototype development agreement with a largepersonal computer company, and a Small Business Innovation Research (SBIR)Phase One agreement with the U.S. Air Force for $98,214 and a follow-on PhaseTwo agreement for $686,966.  We also entered into a prototype developmentagreement with Lockheed Martin, a large military contractor, inOctober 2005, for which we have received full payment from LockheedMartin.  Our immediate customer prospects are limited to Lockheed Martin,with which we entered into a License and Strategic Business Agreement datedOctober 5, 2005.  See “Risk Factors”included in our 2006 Form 10-KSB.

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Managementwill work to establish specific applications for our display technology thatwill generate significant revenues, and cash flows to support operations.

**ITEM 3.  CONTROLS ANDPROCEDURES.**

DisclosureControls and Procedures

As of March 31, 2007, management, including ourPresident and Chief Financial Officer, performed an evaluation of theeffectiveness of the design and operation of our disclosure controls andprocedures, as defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934. Based on their evaluation, management, including our President and ourChief Financial Officer, concluded that, as of March 31, 2007, our disclosurecontrols and procedures are effective to ensure that material informationrequired to be disclosed by us in the reports that we file or submit under theSecurities Exchange Act of 1934, as amended, is recorded, processed, summarizedand reported, within the time periods specified in the Securities and ExchangeCommission’s rules and forms, and that it is accumulated and communicatedto management, including our President and Chief Financial Officer, asappropriate, to allow timely decisions regarding required disclosure.

Changesin Internal Control Over Financial Reporting

We maintain a system of internal control overfinancial reporting that is designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with accounting principlesgenerally accepted in the United States. Based on the most recent evaluation, our President and Chief FinancialOfficer have determined that no significant changes in our internal controlover financial reporting occurred during our most recent fiscal quarter thathave materially affected, or are reasonably like to materially affect, ourinternal control over financial reporting.

**PART II - OTHER INFORMATION**

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

On February 13,2007, we entered into a Securities Purchase Agreement (the “Purchase Agreement”)with The Raptor Global Portfolio Ltd., The Tudor BVI Global Portfolio Ltd., TudorProprietary Trading, L.L.C. and The Altar Rock Fund L.P. (collectively, the “Purchasers”)pursuant to which we sold on that date in a private placement to the Purchasers(a) 3,200,000 authorized but unissued shares of the Company’s Series BPreferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), and (b)warrants (the “Warrants”) to purchase, in aggregate, up to 6,839,279 shares at$1.24 per share, of the Company’s common stock, par value $0.001, for anaggregate purchase price of $12,000,000. The Company utilized the Black-Scholesmethodology in determining the fair market value of the warrantsof $3,715,602, which was credited to additional paid-in capital in the firstquarter of 2007.

In connection withthe Purchase Agreement, the Company and the Purchasers also entered into anInvestors’ Rights Agreement dated as of February 13, 2007 (the “Investors’Rights Agreement”), pursuant to which the Company granted to the Purchaserscertain rights with respect to the Series B Preferred Stock and the Warrantssold (including the shares of common stock issuable upon exercise of theWarrants) under the Purchase Agreement.

Subsequent to the$12 million financing, we paid approximately $2.8 million to repay existingnotes payable and related accrued interest.

These securities were issued without registration inreliance upon the exemption from registration provided by Section 4(2) of theSecurities Act of 1933 because of the limited number of purchasers, theseparate negotiation of each transaction with each purchaser, the absence ofany public solicitation or advertising and the restriction of such securitiesfrom resale.

**ITEM 5.  OTHER INFORMATION.**

See the disclosure contained in Item 2 of this PartII.

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**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)                                                                                                                       |
| 4.1          |       | Certificate of Designations of Real-Estateforlease.com,  Inc. Series A Convertible Preferred Stock (1)                                                                    |
| 4.2          |       | Junior Subordinated Unsecured Promissory Note (1)                                                                                                                         |
| 4.3          |       | Common Stock Purchase Warrant No. 1 (1)                                                                                                                                   |
| 4.4          |       | Common Stock Purchase Warrant No. 2 (1)                                                                                                                                   |
| 4.5          |       | Common Stock Purchase Warrant No. 3 (1)                                                                                                                                   |
| 4.6          |       | Form of Common Stock certificate (2)                                                                                                                                      |
| 4.7          |       | Uni-Pixel, Inc. 12% Senior Secured Convertible  Debenture No. 1 issued to Trident Growth Fund, L.P., dated May 24, 2006. (3)                                              |
| 4.8          |       | Uni-Pixel, Inc. 12% Senior Secured Convertible  Debenture No. 1 issued to CapSource Fund, L.P., dated May 24, 2006. (3)                                                   |
| 4.9          |       | Uni-Pixel, Inc. 10% Senior Unsecured Convertible  Debenture dated September 12, 2006. (4)                                                                                 |
| 4.10         |       | Common Stock Purchase Warrant No. 1 issued to  Trident Growth Fund, L.P., dated May 24, 2006. (3)                                                                         |
| 4.11         |       | Common Stock Purchase Warrant No. 1 issued to  CapSource Fund, L.P., dated May 24, 2006. (3)                                                                              |
| 4.12         |       | Common Stock Purchase Warrant dated September 12,  2006. (4)                                                                                                              |
| 10.1         |       | Securities Purchase Agreement dated May 24, 2006, by  and between Uni-Pixel, Inc., Uni-Pixel Displays, Inc., Trident Growth  Fund, L.P. and CapSource Fund, L.P. (3) |
| 10.2         |       | Security Agreement dated May 24, 2006, by and  between Uni-Pixel, Inc., Uni-Pixel Displays, Inc., Trident Growth Fund, L.P.  and CapSource Fund, L.P. (3)                 |
| 10.3         |       | Securities Purchase Agreement dated September 12,  2006 (4)                                                                                                               |
| 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 (5)              |
| 31.2         |       | Certification of the Chief Financial Officer of  Uni-Pixel, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002 (5)                                |
| 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 (5)              |
| 32.2         |       | Certification of the Chief Financial Officer of  Uni-Pixel, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act  of 2002 (5)                                |

 

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(1)                                  Previously filed as an exhibit to the Company’sForm 10-SB, filed on February 18, 2005, and incorporated by reference hereto.

(2)                                  Previously filed as an exhibit to the Company’sForm 10-KSB, filed on March 28, 2006, and incorporated by reference hereto.

(3)                                  Previously filed as an exhibit to the Company’sForm 10-QSB, filed on August 14, 2006, and incorporated by reference hereto.

(4)                                  Previously filed as an exhibit to the Company’sForm 8-K, filed on September, 2006, and incorporated by reference hereto.

(5)                                  Filed herewith

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**SIGNATURES**

Inaccordance with the requirements of the Exchange Act, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto duly authorized.
|              | ** ** | **UNI-PIXEL, INC.** |
|--------------|------------|---------------------|
|         | ** ** | ** **          |
|         |       |                |   |   |
| May 14, 2007 |       |                | By: |   | /s/ James A. Tassone |   |
| Date         |       |                |   | James A. Tassone, Chief Financial Officer |
|              |            |                     |  |  |  |  |

 

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