It’s not often you’ll come across a stock that has risen roughly 200% in the past year and is still valued at less than six times projected 2014 profits. Equally impressive: Those profits are expected to come on the heels of 450% revenue growth.

Sounds too good to be true? It quite likely is.

Yet those are the heady numbers swirling around technology upstart Uni-Pixel (Nasdaq: UNXL).

Here’s another stat to ponder: More than 40% of the trading float of this stock is held by short sellers. There are a whole lot of investors that think the entire company is a sham. And unless the company can soon point to tangible progress, then short sellers may reap some handsome profits as the stock tumbles back to the single digits.

I took a deep look at Uni-Pixel’s business model about four months ago, right after shares had plunged 50% in a matter of weeks. (I encourage you to re-read that piece before continuing, as I’ll be referencing it throughout this follow-up.) Since my last look at the company, shares have rebounded almost 10%. But that doesn’t begin to reflect the behind-the-scenes drama that continues to play out for this company.

The Kodak Connection
Shares of Uni-Pixel began to rebound in early August when management discussed the company’s pre-production efforts underway at the manufacturing facilities of Eastman Kodak. (As I noted in June, the two companies had inked an agreement in April of this year that initially powered the stock higher before investors grew dubious of the relationship.)#-ad_banner-#

CEO Reed Killion noted in a second-quarter conference call: “The construction in [this] build-out effort is well on track; Kodak now has over 40 full-time Kodak employees dedicated to the manufacturing and supply chains for UniBoss touch sensor solutions. Our rapid progress during [the second quarter] enabled us to receive the two printing lines and supporting equipment at the Kodak Rochester facility around the end of June.”

There was plenty of other fodder for the company’s supporters on that conference call, including presumed agreements with other technology firms that may seek to use Uni-Pixel’s technology in their own manufacturing processes.

Still, the company had yet to actually build any products for sale. Killion said, “We are on track to meet production-level revenue in [the fourth quarter],” adding that “that this PC partner wants product on a shelf of holidays. … For us, the drop-dead date to ship product would be … Oct. 1.”

It increasingly looks as if investors won’t see any production this year. In late September, Uni-Pixel said commercial production trials are underway, which actually doesn’t mean anything. Ostensibly, the company has been cultivating its production processes in a small, controlled fashion for quite a while now, and executives would say only that it is “quickly approaching the global market rollout of a functionally printed touch-screen sensor.”

	Rivals are also working feverishly to build more advanced touch-sensor screens, and if Uni-Pixel waits much longer, a key window may have closed.

On Seeking Alpha, some bloggers have suggested that Uni-Pixel is a complete fraud, and these apparent production delays are a mere cover-up for the fact that production will never take place — that the company, in effect, has been fooling Kodak and others, and possesses no special technological advantages.

However, there is no way to know that. To be sure, the fact that this company keeps moving the goalposts can hardly be assuring to its bullish supporters. But they insist that a revenue ramp will come, even if it’s pushed out to 2014.

My biggest concern is timing. Rivals are also working feverishly to build more advanced touch-sensor screens, and if Uni-Pixel waits much longer, a key window may have closed.

That may be a big concern for insiders as well. Since the early August conference call, they’ve been quietly heading for the exits, selling more than $2 million worth of stock. If Uni-Pixel were really on track for stunning revenue growth, and earnings per share (EPS) of more than $3 in 2014, as consensus forecasts imply, then these insiders would have to have their heads examined.

Instead, they are cashing in, even as this stock has fallen by half from its springtime highs.

Hefty Insider Selling

As the insiders have stepped up their sales, short sellers seem to be taking that as a cue to build bigger positions. In recent months, the short position has quietly moved up to 4.9 million shares, the highest level yet.

Rising Short Selling (mil. of shares)

Risks to Consider: As an upside risk, the company continues to speak of other partners besides Kodak, and if a key partner is named, shares could get a bump.

Action To Take–> Uni-Pixel will discuss third-quarter results in early November, at which time the company will be under the gun to deliver specific near-term revenue targets. Further delays will simply be fodder for the shorts and likely to discourage whatever bulls are left.

To be sure, this company faces a potentially huge market opportunity. And a partnership with Eastman Kodak is already more than the short sellers would have suspected this company could generate. Yet time is running short, and this stock, which has bounced around the $15 to $20 trading range in recent months, may not be able to hold up much longer if management doesn’t start delivering the goods.

P.S. Uni-Pixel’s touch-screen technology is intriguing — but if you’re interested in game-changing technological innovations, check out our latest report, “The Hottest Investment Opportunities For 2014.” In it, you’ll find investable opportunities such as the technological breakthroughs taking over the operating room and Apple’s moves to become the biggest bank in the country. To learn more, click here.