The Shorting of Frauds, Overhyped and Bankrupt Stocks Journal

2) When UNXL first began touting Diamond Guard, we noted that the company claimed it had a hardness of 9H on the hardness scale – see for instance this presentation from 2011 http://bit.ly/16uOHC9 or this press release http://bit.ly/14DoEKJ. Somehow that has changed to 6H today – see for instance http://bit.ly/16uOGhz. Why is this and why does it matter? Well, as you can easily see on this handy Wikipedia page (http://bit.ly/14DoFhy) 6H is basically like a soft version of glass but we know that Gorillla Glass (the gold standard for consumer electronics) is really closer to 9H – see http://bit.ly/16uOGhB. Is it any wonder that UNXL can’t sell Diamond Guard? First they materially misrepresent its hardness and then they admit it’s an inferior product.



3) Despite their abject failure of Diamond Guard in 2011, UNXL brazenly tried again in 2012. Hoping that a new calendar year would make investor forget all about their broken promises in 2011, during the 4Q 2011 earnings call, Reed Killion again promises significant Diamond Guard revenues. He says, "We anticipate shipping initial commercial quantities of Diamond Guard by the end of the first quarter with a production and distribution partner, and foresee multiple design wins for Diamond Guard in the second quarter."



Reed Killion qualifies it further by stating, "Several major electronic OEMs and ODMs are evaluating testing Diamond Guard films produced from our in-house production runs. Some evaluations have advanced to the submission of purchase orders for test piloting purposes, and we expect to begin production level shipments in late May and June."



He doesn’t end there. In the Q&A session, Reed clarifies his statement once more and says he expects pilot production orders by the end of the first quarter and "real orders" in June of 2012.



Revenues of $70,560 in the second quarter of 2012 are “real,” but we wouldn’t characterize them as significant. Revenues of $0 in the third quarter of 2012 are really nonexistent.



After 1 significant revenue downgrade, 1 massive change to specifications, and 2 failed promises for meaningful revenue generation, UNXL now claims that Diamond Guard won’t be commercialized until after UniBoss gains traction. We are not holding our breath on either promise.



CONSISTENT HISTORY OF PRODUCT FAILURES



Investors must realize that these aren’t isolated incidents. UNXL’s executive team has a history of broken promises regarding product commercialization.



TMOS – Same exact playbook as UniBoss

UNXL’s initial claim to fame was its TMOS technology for flat panel displays. It promised to provide better image quality over LCD and OLED displays while being up to 60% cheaper to manufacture than LCD’s. UNXL claimed TMOS consisted of just 6 layers, compared to 15 for plasma and 30 for LCDs, and that it only took 12 steps to manufacture versus 128 steps for an LCD. Essentially TMOS was cheaper, faster, and better than the existing technology. These claims sound suspiciously similar to their current claims on UniBoss.



In fact, a simple search into past filings shows UNXL used the same exact playbook on TMOS as they are now on UniBoss. Like UniBoss, TMOS was a simpler process that claimed to give you superior performance at half the cost. Like with touch screens, the flat panel display market was gigantic and UNXL just needed to grab a small percent of that market to make significant money. In fact, UNXL claimed that the display market segment was $100 billion and growing, much larger than the touch screen market. They also had patents! Unlike with UniBoss where they only have 2 issued patents, UNXL had 31 issued patents for TMOS along with 4 allowed and 82 pending patent applications. Just like with UniBoss, UNXL signed up agreements with blue chip partners. This time, it was Samsung, which they announced back in February 2009.



Like with all their past lies, UNXL’s promises led to nothing. In an interview March 19, 2007, UNXL promised “to have the display in a television application by the fourth quarter.” No product utilizing TMOS was ever introduced.



What about the development agreement with Samsung? Nothing ever came of it.



What about all the patents they had? UNXL sold them to Rambus in May 2010 for less than $2.5 million. In the press release, UNXL states that they “entered into an engineering services agreement with Rambus providing the ability for future collaboration and technology development.” This gives off the illusion that something could come out of TMOS after all. In our due diligence, we spoke with a former Rambus employee. He said nothing ever came out of the TMOS-related patents or with their relationship with UNXL , that the executive who okayed the purchase was seduced by UNXL’s powerpoint presentation but had no technical background, and that the money spent was completely wasted.



Why did TMOS fail? In our due diligence, we spoke with an engineer who was at a partner that tested TMOS. He told us that while he thought TMOS was a neat idea, it had a number of issues regarding viewing angle, color purity, and performance in a real-life operating environment due to humidity issues. Basically, he said it had essential issues with every important aspect of a display product and didn’t work. Is it any surprise all the promises, the partnerships, and patents led to nothing?





Opcuity – Double failure by UNXL management

As UNXL management was failing to deliver on their TMOS promises, they began touting their finger print resistant film technology, called Opcuity. On 3 separate instances, UNXL promised revenues from Opcuity.



1) In a press release from May 27, 2009, UNXL touted Opcuity as a “revenue producer for UniPixel… which is sampling now and expected to start volume production beginning early third quarter 2009.”



2) A press release from August 26, 2009 states, “Killion noted, ‘By bringing our fingerprint-resistant film to market, UniPixel transitions from a development stage company to a commercial manufacturing business. We are currently preparing volume production of Opcuity film and expect to ship products in the fourth quarter.’ The company forecasts revenue in 2009, and cash-flow positive by the second half of 2010.”



3) In a press release from December 1, 2009, Reed Killion says the same exact quote verbatim as in August 2009.



Like with TMOS, UNXL signed up blue chip partners like Avery Dennison and Targus for Opcuity. UNXL went as far as to announce when they received their first orders for Opcuity. A press release dated October 1, 2009 proudly leads with the headline, “UniPixel Receives First Orders for Opcuity Film Products.” UNXL even publicized that they had begun taking pre-orders through Amazon.com on UNXL’s storefront starting August 16, 2010.



Unfortunately, like every other one of UNXL’s products, revenue projections, and promises for commercialization, Opcuity failed. Revenues in 2009 were $0 and cash flow in 2010 was negative and increasingly negative in every quarter, totaling -$3.4 million in CFFO.

 

Why did UNXL’s FPR products fail? UNXL’s management blamed it on a collapsing industry cost structure. They have said on numerous occasions that they successfully produced the product; however, by the time that they began commercializing it, numerous low-cost Asian players entered the market and UNXL’s FPR products were uncompetitive.



Is this true? Would you be surprised if it weren’t true? In a channel check with an engineer at Targus, he said that UNXL approached them with a prototype of the FPR film. After some market research, Targus decided to move forward with UNXL and signed two development agreements, one for the finger print resistant film and the second for a privacy screen. Upon entering the agreements, Targus went back to UNXL and asked for a series of changes to the prototype to make it market-ready. He said that unfortunately the products that UNXL returned were completely unusable and very poor in quality. At the same time, competing products had entered the market, and they were better and cheaper than anything UNXL could produce. Targus ultimately ended up moving forward with a competitor due to UNXL’s poor performance. Targus also ended up scrapping the privacy film project with UNXL. The engineer said that UNXL failed to even deliver a workable product so Targus canceled the project.



Shockingly, UNXL management continued making promises on Opcuity commercialization. More than a year later, in March 2011, CEO Reed Killion touted “an improved, next generation finger print resistant protective cover film” that “has been completely re-mastered and re-qualified.” He even promised, “We see the sales of our FingerPrint Resistant films ramping up dramatically in 2011.” We’ll kill the suspense and inform you that revenues in fiscal 2011 totaled $195,237, which was a 20% drop from 2010. That’s quite a dramatic ramp!



CONCLUSION



Today investors are now asked to believe that this time is truly different and that the same promises of future revenues they’ve made in the past are now going to come true. This time, management claims that a large PC maker will soon come to market with a product and that UNXL will finally revolutionize an industry. Let me assure you that a tiger doesn’t change its stripes.



Just in case UNXL’s history isn’t enough to convince you that the company will fail, we’ve also done exhaustive work on Uniboss itself. While we intend to incorporate this work into an “expose” paper that will include all of our work above, I’ll give you the conclusions here. First, we don’t think UNXL can manufacture a working product to reasonable specifications. Second, even if they manage to make it, we are convinced that it will not meet even a low level of acceptable quality for use in displays.



We are short UNXL. Our target price on UNXL is $1/share. They have $1/share of cash that they are burning through

 

interactive brokers doesn't have anymore UNXL shorts
so i'm holding a small position from 25.5 ish
want to add here
hope there will be some available tomorrow

 

Exide Tumbles 48% as Debtwire Reports Restructuring Plan

http://www.bloomberg.com/news/2013-...6-as-debtwire-reports-restructuring-plan.html

 

I made a few bucks after the news broke but never made a big bet. I have no position right now. Stock is already down 50% and there doesn't seem to be an imminent bk filling. These lazard guys will need some time to advise them, meanwhile the stock could squeeze and people might get hopeful

 

interactive found some more unxl
avg in at 26.15 (1/2 position)

 

i make dozens of trades a week but i always seem to post the bad ones here
hmmm

 

I put a long-term short at 27.33, stop at 100%. I want to see these fuckers shake me out of this one haha

 

I like your entry in UNXL

I put a small short in SPY here at 154.44 with a stop at 154.75
for a bit of a shorter term trade

 

GOOG might be pulling an AAPL here (maybe not that bad but could be similar). Momentum game seems to be weaking and all the funds might start to liquidate now. This thing could get pounded for weeks. I'm considering a short there. I wonder if others have any thoughts on this