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Axion Power Reports Third Quarter Results for 2011

NEW CASTLE, Pa., Nov. 15, 2011 /PRNewswire/ -- Axion Power International, Inc. (OTC Bulletin Board: AXPW), the developer of advanced lead­carbon PbC® batteries and energy storage systems, today announced results for its third quarter ended September 30, 2011.

Net sales for the third quarter of 2011 were $ 2.1 million, compared to $0.6 million during the third quarter of 2010. The 250% increase in third quarter net sales for 2011 compared to 2010 is in keeping with the 230% increase in 2011 year-to-date sales compared to the corresponding period in 2010.

The Company reported a net loss of $ 2.0 million, or $0.02 per share, for the third quarter of 2011, as compared to a net loss of $0.7 million, or $0.01 per share, for the third quarter of 2010.

The net loss for the third quarter of 2010 included a reduction in legal expenses of $0.8 million resulting from the settlement of the Mercatus matter (as disclosed in the Company's Annual Report on Form 10K and Form 10K/A for the year ended December 31, 2010) that did not recur in the third quarter of this year.

At September 30, 2011, cash, net of debt, was $3.4 million. Total assets were $16.8 million and total stockholders' equity was $13.3 million.

Chairman and CEO Thomas Granville commented, "In the third quarter we continued to execute our long- term plan to position Axion for commercial success. This plan included needed 2011 capital expenditures to make improvements to several areas connected to the full PbC battery manufacturing process. The third quarter saw final completion of a number of these key projects including the modernization of the second production line; the rebuild of five casting machines and the important 35% expansion of the battery formation room."

Granville added, "We believe, more than ever, that Axion Power's PbC technology will be the low-cost leader in advanced batteries for transportation and electric utilities both on- and off-grid. It bears repeating, that our components are inexpensive, recyclable and not sourced from politically unstable areas around the world. Our total life cycle cost is a fraction of what is required to produce other advanced battery chemistries."

Two other important highlights include:

  • Norfolk Southern ("NS") has accepted delivery of large strings of PbC batteries to further their platform testing. These batteries are now installed in the NS platform facility and are under test. We are performing duplicate testing in New Castle, as well as comparison testing with other battery technology. As part of our agreement with NS, Penn State University is also performing string testing on our PbC batteries. To date the data from all battery system testing confirms PbC batteries are performing as anticipated. The success of this testing is allowing us to expand the locomotive application to include other locomotive end users and locomotive integrators.
  • Our onsite PowerCube™ ("Cube") is in the final days of testing as we move toward tying into the grid. We are qualifying for dispatchable power applications and will be proving out the Cube's ability to provide power quality, back-up power, power smoothing, and load leveling. This .5MW Cube can easily be scaled up or down from this building block size.
  • We continue to evaluate the market for smaller Cubes for residential and community storage and larger Cubes for utilities, oil rigs and other larger applications such as solar and wind. We anticipate establishing additional formal marketing agreements for some of these applications in the fourth quarter of 2011.

As we stated at the end of the second quarter, and want to repeat, "although we have made very significant progress with our PbC technology, the adoption process, and the general path to commercial viability, has been longer than we originally anticipated. In addition, we will need working capital to fund our anticipated continued growth of sales in traditional batteries and PbC products. Consequently, we initiated prudent and proactive steps in the second quarter that we have continued since that time, namely - to explore funding strategies that will ensure that we have the flexibility to access capital resources when they are needed to meet our business goals. We believe that currently available funds at September 30, 2011, along with internally generated funds, will provide sufficient financial resources for ongoing operations, working capital and capital expenditures through the second quarter of 2012. Subsequent financings will be required to fund the Company's ongoing operations, working capital, and capital expenditures beyond June 30, 2012."

Non–GAAP Measures

This release contains the non-GAAP measure EBITDA (earnings before interest, taxes, depreciation, amortization, share based compensations and derivative revaluations). Refer to the accompanying schedules for a discussion of this non-GAAP measure and reconciliation to the reported GAAP measure.

Conference Call / Webcast

Today at 11:00 am ET (8 a.m. Pacific) a conference call will be held to review the AXPW results. Interested parties should call 877-317-6789 (domestic) or 412-317-6789 (international), to access the call. You may also access this call via the Internet by visiting the company's website at www.axionpower.com and clicking on the Investors link. Access to the webcast will be available for 90 days.

For those who are unavailable to listen to the live broadcast, a replay will be available for 7 days and can be accessed by dialing 877-344-7529 (domestic) and 412-317-0088 (international) and using conference number 10005398.

About Axion Power International, Inc.

Axion has developed and patented a next generation energy storage device that won the prestigious Frost & Sullivan Technology Award for North America in the field of lead-acid batteries. According to Frost & Sullivan, Axion's new PbC batteries have "the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that is not well suited to the requirements of important new applications like hybrid electric vehicles and renewable power."

Axion Power International, Inc. is the industry leader in the field of lead-acid-carbon energy storage technologies. Axion believes this new battery technology is the only class of advanced battery that can be assembled on existing lead-acid battery production lines throughout the world utilizing Axion's proprietary carbon electrodes. Axion's future goal, after filling their plant's lead-carbon battery production capacity, is to become the leading supplier of carbon electrode assemblies for the global lead-acid battery industry.

For more information, visit www.axionpower.com

Forward-looking Statements

Certain statements in this Press Release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include the risk for the Company to complete its development work, as well as the risks inherent in commercializing a new product (including technology risks, market risks, financial risks and implementation risks, and other risks and uncertainties affecting the Company), as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov. We disclaim any intention or obligation to revise any forward-looking statements, including, without limitation, financial estimates, whether as a result of new information, future events, or otherwise.

Contacts

Axion Power International, Inc.
Charles Trego, CFO
ctrego@axionpower.com
(724) 654-9300

Allen & Caron Inc
Rudy Barrio (Investors)
r.barrio@allencaron.com
(212) 691-8087

Len Hall (Media)
len@allencaron.com
(949) 474-4300

–FINANCIAL TABLES FOLLOW–



AXION POWER INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(A Development Stage Company)









September 30, 2011


December 31, 2010

ASSETS


(Unaudited)



Current Assets





Cash and cash equivalents


$ 3,974,960


$ 13,330,009

Accounts receivable


469,084


221,922

Other receivables


471,552


144,973

Prepaid expenses


185,963


82,060

Inventory, net


3,088,613


1,428,560

Total current assets


8,190,172


15,207,524






Property & equipment, net


8,561,490


6,738,575

Other receivables


56,000


65,000

TOTAL ASSETS


$ 16,807,662


$ 22,011,099






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities





Accounts payable


$ 987,190


$ 930,021

Other current liabilities


234,244


225,804

Notes payable


104,776


101,684

Total current liabilities


1,326,210


1,257,509






Deferred revenue


1,625,742


1,385,185

Derivative liabilities


135,295


254,461

Notes payable


466,036


547,612

Total liabilities


3,553,283


3,444,767






Stockholders' Equity





Convertible preferred stock-12,500,000 shares authorized


-


-






Common stock- 200,000,000 shares authorized $0.0001 par value





85,516,139 shares issued & outstanding (85,453,302 in 2010)


8,552


8,545

Additional paid in capital


86,850,918


86,499,416

Deficit accumulated during development stage


(73,353,447)


(67,690,004)

Cumulative foreign currency translation adjustment


(251,644)


(251,625)

Total stockholders' equity


13,254,379


18,566,332






TOTAL LIABILITIES & STOCKHOLDERS' EQUITY


$ 16,807,662


$ 22,011,099











AXION POWER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(A Development Stage Company)

UNAUDITED














Three Months Ended


Nine Months Ended


Inception



September 30,


September 30,


9/18/2003 to



2011


2010


2011


2010


9/30/2011

Product


$ 2,097,413


$ 256,898


$ 4,832,226


$ 1,084,360


$ 9,492,690

Service


-


337,056


411,645


494,433


1,231,726

Net sales


2,097,413


593,954


5,243,871


1,578,793


10,724,416












Costs and expenses











Product costs


1,844,088


142,203


4,205,057


677,481


8,002,714

Research & development


1,329,783


1,175,945


3,599,545


3,762,054


27,410,401

Selling, general & administrative


1,020,352


63,518


3,215,518


2,284,550


28,516,933

Interest expense - related party


-


-


-


-


2,337,986

Impairment of assets


-


-


-


-


1,753,278

Derivative revaluations


(128,187)


(67,414)


(119,166)


(1,132,257)


(1,507,184)

Mega C Trust share augmentation


-


-


-


-


400,000

Interest & other income


4,673


2,706


6,360


11,184


(533,934)

Loss before income taxes


(1,973,296)


(723,004)


(5,663,443)


(4,024,219)


(55,655,778)












Income taxes


-


-


-


-


4,300

Accumulated deficit


(1,973,296)


(723,004)


(5,663,443)


(4,024,219)


(55,660,078)












Less preferred stock dividends and beneficial conversion feature


-


-


-


-


(17,693,369)

Net loss applicable to common shareholders


$ (1,973,296)


$ (723,004)


$ (5,663,443)


$(4,024,219)


$(73,353,447)












Basic and diluted net loss per share


$ (0.02)


$ (0.01)


$ (0.07)


$ (0.05)


$ (2.28)












Weighted average common shares outstanding


85,511,255


85,050,137


85,475,579


83,180,368


32,189,474
















AXION POWER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(A Development Stage Company)


UNAUDITED








Nine Months Ended


Inception



September 30,


9/18/2003 to



2011

2010


9/30/2011







Cash Flows from Operating Activities





Accumulated deficit

$ (5,663,443)

$ (4,024,219)


$ (55,660,078)







Adjustments to reconcile deficit accumulated for noncash items




Depreciation

710,850

448,690


2,368,311

Interest expense

-

-


1,970,251

Impairment of assets

-

-


1,753,278

Derivative revaluations

(119,166)

(1,132,257)


(1,507,184)

Mega C Trust share augmentation

-

-


400,000

Share based compensation expense

351,509

293,507


6,133,976







Changes in operating assets & liabilities





Accounts receivable

(247,162)

(232,724)


(475,953)

Other receivables

(326,579)

(158,272)


(449,592)

Prepaid expenses

(103,903)

(3,885)


(183,375)

Inventory, net

(1,660,053)

(617,966)


(3,088,612)

Accounts payable

57,169

(126,570)


2,641,834

Other current liabilities

8,440

121,799


255,376

Liability to issue equity instruments

-

-


178,419

Deferred revenue and other

240,557

457,928


1,713,260







Net cash used by operating activities

(6,751,781)

(4,973,969)


(43,950,089)












Cash Flows from Investing Activities





Other receivables

9,000

(33,399)


(1,273,016)

Purchases of property & equipment

(2,533,765)

(2,158,982)


(11,288,305)

Investment in intangible assets

-

-


(167,888)

Net cash used by investing activities

(2,524,765)

(2,192,381)


(12,729,209)












Cash Flows from Financing Activities





Net proceeds from related party debt

-

-


5,445,458

Net proceeds from notes payable

(78,484)

(76,166)


570,813

Net proceeds from sale of common stock

-

(55,894)


45,171,365

Net proceeds from exercise of warrants

-

302,266


2,014,766

Net proceeds from sale of preferred stock

-

-


7,472,181

Net cash (used) provided by financing activities

(78,484)

170,206


60,674,583













Net change in cash and cash equivalents

(9,355,030)

(6,996,144)


3,995,285

Effect of exchange rate on cash

(19)

387


(20,325)

Cash and cash equivalents - beginning

13,330,009

23,279,466


-

Cash and cash equivalents - ending

$ 3,974,960

$ 16,283,709


$ 3,974,960













Reconciliation of net loss to EBITDA







2011

2010


Change

GAAP loss before income taxes

$ (5,663,443)

$ (4,024,219)


$(1,639,224)

Plus: Interest expense

6,360

11,184


(4,824)


Depreciation

710,850

448,690


262,160


Share based compensation

351,509

293,507


58,002


Derivative revaluations

(119,166)

(1,132,257)


1,013,091

EBITDA (1)

$ (4,713,890)

$ (4,403,095)


$ (310,795)



(1)

EBITDA, a non-GAAP financial measure, is defined as earnings before interest, taxes, depreciation, amortization, share based compensation, and derivative revaluations. EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business.



 

SOURCE Axion Power International, Inc.

Nov 15, 2011
 

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