Texas District Court Denies in Part Motion to Dismiss Securities Fraud Claims Against Uni-Pixel, Inc. and former CEO

July 25, 2014

On July 25, 2014, the District Court for the Southern District of Texas denied in part a motion to dismiss claims for securities fraud against Uni-Pixel, Inc. ("Uni-Pixel") and the company's former CEO, Reed Killion.

Plaintiffs had alleged in their consolidated complaint that in a press release issued on February 26, 2013, and during a conference call held that same day, defendants made false and misleading statements regarding Uni-Pixel's efforts to scale its manufacturing capacity to meet anticipated demand by targeting 45,000 to 60,000 units of UniBoss per month by the end of April 2013; 200,000 units by the end of June 2013; 700,000 units by the end of September 2013, and 1.3 million units by January 2014, and having products with UniBoss on store shelves by September 2013. In fact, the actual number of UniBoss units produced and shipped in April 2013 was only 50. The Court concluded that plaintiffs had satisfied the requirements for pleading that defendants' manufacturing capacity and commercial release forecasts in February 2013 were false and misleading when made.

The court also found that the gross disparity between the defendants' predictions and Uni-Pixel's actual results, i.e., only 50 units were produced in April 2013, coupled with the profits that not only the individual defendants but also other outsiders made by selling stock in March 2013, raised a strong inference that defendants' false and misleading predictions about the manufacturing capacity and commercial release of UniBoss in February 2013 were made with scienter.

Finally, the court found that plaintiffs had satisfactorily pleaded loss causation by alleging corrective disclosures that demonstrated that defendants' February 2013 statements were untrue and caused a decrease in UNXL's stock price.

Click here to download a copy of the Court's decision and learn more about the history of the case.