For the first nine months of 2008, revenues were $541,248 versus $432,650 for the comparable period in 2007 and losses were $8.3 million or $0.39 loss per share, compared to $12.0 million or $0.73 loss per share for the first nine months of 2007.
Research and development expenditures were $1.5 million during the nine months ended September 30, 2008, compared to slightly less than $1.0 million during the first nine months of 2007. SG&A costs were $4.2 million for the nine months ended September 30, 2008, compared to $2.7 million for the previous year. The current year's SG&A charges include both long-term litigation and extraordinary audit fees. Since the Company's litigation and restatement issues have all been favorably resolved, the company expects its future SG&A burden to reflect the elimination of those issues.
CEO Thomas Granville commented, "The second half of 2008 is proving to be a watershed period for Axion and we continue to build momentum. We are diligently working on projects for the military, most recently under an initial $1.2 million 12-month federal grant we received October 6 to develop advanced batteries for the US Office of Naval Services and the Marine Corps. The initial grant we applied for covered a 36-month period and was for a total dollar amount of $5 million. While the 2nd and 3rd years will have to be applied for on a calendar basis, all parties are proceeding on a 3-year track. We have also been working to expand our manufacturing capabilities in anticipation of a flooded battery toll manufacturing contract(s). Last week we announced the first phase of an important toll-manufacturing relationship with a major North American battery company. During the first phase of operations under this agreement, we will utilize two unused production lines which we have been working to completely restore and modernize. That line work at our New Castle plant is largely completed and we have returned the assembly production to active status. Although the full capacity of the line will not be utilized initially, we will use the line, in its present condition, to manufacture approximately 90,000 flooded lead-acid batteries over the next 11 months. Our expected revenue from phase one activities is $6.4 million. We will gradually ramp-up activities under this toll-manufacturing agreement and believe that by mid-2009 we will be manufacturing up to 50,000 batteries per month on the restored flooded lines. As a result, we will be using our existing facilities more efficiently and we will be able to further expand our manufacturing staff. This contract will also provide us with reasonable margins and allow us to use internally generated cash flow to help support our ongoing R&D efforts, while we continue our efforts to achieve greater production of our proprietary PbC(TM) batteries."
Granville continued, "This is an exciting time. We are making steady progress in our ongoing effort to automate the manufacturing process for the carbon electrode assemblies used in our PbC batteries. Our first-generation electrode manufacturing equipment is largely complete and we expect to finish pre-delivery testing before year end. Thanks to funding received earlier this year, we had cash and cash equivalents of $8.0 million at September 30, 2008 and our current ratio was 5.26:1. We have no long-term debt."
Granville concluded, "2009 will see busier times and better manufacturing utilization at our New Castle factory. We will earn our first significant manufacturing revenue in the current quarter, which will mark our real transition from the development stage. From this point forward, we expect to report steadily increasing revenues with solid margins and good internally generated cash flow."
Conference Call and Webcast
Axion's management team will host a conference call to review the results and discuss other corporate news and its outlook this morning, November 11, 2008, at 10:00 AM ET.
Interested parties should call 888 713 4216 (domestic) or 617 213 4868 (international), with passcode 48263056 to access the call. You may also access this call via the Internet at:
For those who are unavailable to listen to the live broadcast, a replay will be available for 30 days and can be accessed by dialing 888 286 8010 (domestic) and 617 801 6888 (international) and using passcode 94140050.
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(TM) 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 without significant changes to production equipment and fabrication processes. It also believes it will be able to manufacture carbon electrode assemblies in volume at low cost using standard automated production methods that are commonly used in other industries. If and when its electrode manufacturing methods are fully developed, Axion believes it will be able to sell carbon electrode assemblies as virtual plug-and-play replacements for lead-based negative electrodes used by all other lead-acid battery manufacturers. Axion's goal is to become the leading supplier of carbon electrode assemblies for the lead-acid battery industry. For more information, visit www.axionpower.com.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995:
Certain statements in this Press Release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These statements include, without limitation, statements concerning the effect of the staged investment by Quercus, the timing of the Company's future SEC reporting, the Company's belief that the funds from the completed investment would provide sufficient capital liquidity to complete its process development work, expand its manufacturing capabilities and bring its new PbC based battery products to market, the Company's belief that its completed products will be the only class of advance battery of its kind and that it will be a viable replacement for older generation lead-acid batteries. 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 that the funding received does not prove sufficient 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.
Contact: Allen & Caron Axion Power International Inc www.allencaron.com www.axionpower.com Rudy Barrio (investors) Kelly Gubish Brian Kennedy (media) 724 654 9300 212 691 8087 firstname.lastname@example.org email@example.com firstname.lastname@example.org AXION POWER INTERNATIONAL, INC CONSOLIDATED STATEMENTS OF OPERATIONS (A Development Stage Company) (Unaudited) Three Months Ended September 30, 2008 2007 Revenues $149,441 $135,059 Manufacturing costs 596,004 268,302 Gross (loss) (446,563) (133,243) Expenses Selling, general & administrative 993,479 985,257 Research & development 518,976 303,051 Impairment of assets - (6,929) Interest expense - related party (2,500) 135,560 Derivative revaluation - (59,388) Mega C Trust Share Augmentation (Return) - - Interest & other income, net (42,961) (451) Net loss before income taxes (1,913,557) (1,490,373) Income Taxes - - Deficit accumulated during development stage (1,913,557) (1,490,373) Less preferred stock dividends and beneficial conversion feature (270,944) (492,089) Net loss applicable to common shareholders $(2,184,501) $(1,982,462) Basic and diluted net loss per share $ (0.08) $ (0.12) Weighted average common shares outstanding 26,045,156 16,747,298 Inception Nine Months Ended (9/18/2003) to September 30, September 30, 2008 2007 2008 Revenues $541,248 $432,650 $1,350,536 Manufacturing costs 1,243,737 694,397 2,932,605 Gross (loss) (702,489) (261,747) (1,582,069) Expenses Selling, general & administrative 4,172,675 2,722,081 17,341,867 Research & development 1,460,952 981,308 10,604,185 Impairment of assets - - 1,391,485 Interest expense - related party 1,175,370 135,560 2,189,857 Derivative revaluation (2,844) (59,358) 362,508 Mega C Trust Share Augmentation (Return) - - 400,000 Interest & other income, net (34,524) (46,969) (511,452) Net loss before income taxes (7,474,118) (3,994,369) (33,360,519) Income Taxes - - 83,469 Deficit accumulated during development stage (7,474,118) (3,994,369) (33,443,988) Less preferred stock dividends and beneficial conversion feature (843,230) (7,902,251) (13,372,065) Net loss applicable to common shareholders $(8,317,348) $(11,896,620) $(46,816,053) Basic and diluted net loss per share $(0.39) $(0.73) $(3.09) Weighted average common shares outstanding 21,263,533 16,247,299 15,127,333 AXION POWER INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (A Development Stage Company) September December 31, 30, 2008 2007 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $7,962,757 $671,244 Accounts receivable 87,443 133,646 Other receivables 77,306 341,801 Inventory 1,110,236 375,635 Prepaid expenses 56,437 82,102 Total current assets 9,294,179 1,604,428 Property & equipment, net 2,977,309 2,119,252 Other receivables, non-current 31,862 - TOTAL ASSETS $12,303,350 $3,723,680 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $1,174,811 $1,573,436 Other current liabilities 593,367 583,591 Notes payable to related parties - 2,259,826 Liability to issue equity instrument - 106,183 Total current liabilities 1,768,178 4,523,036 Deferred revenue 772,628 840,945 Total liabilities 2,540,806 5,363,981 Stockholders' Equity: Convertible preferred stock-12,500,000 shares authorized Senior preferred - 1,000,000 shares designated 137,500 issued and outstanding (137,500 in 2007) 1,620,346 1,515,376 Series A preferred - 2,000,000 shares designated 718,997 shares issued and outstanding (822,997 in 2007) 9,202,279 9,802,894 Common stock-50,000,000 shares authorized $0.0001 par value 26,414,437 issued & outstanding (16,248,298 in 2007) 2,641 1,625 Additional paid in capital 45,987,403 25,768,331 Deficit accumulated during development stage (46,816,053) (38,498,704) Cumulative foreign currency translation adjustment (234,072) (229,823) Total Stockholders' Equity 9,762,544 (1,640,301) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,303,350 $3,723,680