Axion Power International Reports First Quarter 2010 Results

NEW CASTLE, Pa., May 17 /PRNewswire-FirstCall/ -- Axion Power International, Inc. (OTC Bulletin Board: AXPW), the developer of advanced PbC® batteries, today announced financial results for its quarter ended March 31, 2010.

Net sales for the 2010 first quarter were $0.5 million with a net loss of $1.4 million or $0.02 per share, compared to net sales of $0.3 million with a net loss of $ 1.1 million or $0.04 per share during the first quarter of 2009. Of the improvement in net sales for the first quarter of 2010 as compared to the same period in 2009, service sales to a strategic partner accounted for 75% of the increase while product sales of our traditional lead acid batteries to existing customers accounted for the remaining 25% increase.

Loss before income taxes, excluding non-cash items, was $1.7 million in the first quarter of 2010, with no change as compared to the same period in 2009. The increase in gross profit was offset by higher non-cash operating expenses for the first quarter of 2010 compared to the same period in 2009.

At March 31, 2010 cash, net of debt, was $20.5 million. Total assets were $27.4 million and total stockholders' equity was $23.2 million.

"Our core technology and our PbC batteries continue to demonstrate their capabilities in a variety of important applications," said Axion Power CEO Thomas Granville. "Our strategic partners include Exide Technologies, one of the largest battery suppliers in the world with a significant presence in transportation globally. But whether it's the micro or mild hybrid vehicle market, mass transportation, off-grid storage of renewable energy, grid balancing or buffering, remote power sourcing or military applications, we believe our PbC technology will prove to be a low-cost, fully recyclable energy storage technology. Currently, we are exploring the development of solar power storage systems, solar powered electrical charging stations and new products for 'Smart Grid' systems, with potentially large, global markets and with important strategic partners.

"We made excellent progress in 2009 and in 2010 we are continuing to work with some very large potential customers in testing and pilot programs, and our goal is to be able to launch some noteworthy contracts this year, as well as to advance the phased testing of our PbC technology with Exide and others.  In the first quarter, we began a process to strengthen our team that is ongoing. Our $26 million private placement at the end of 2009 has allowed us to improve our management team, increase our overall talent pool and reward existing team members, as well as make strides with our products and processes. So far we are very pleased with the results," Granville concluded.

Company accomplishments in the first quarter of 2010 include:

• Award of a $300,000 Pennsylvania CFA state grant in February 2010, to develop a renewable solar energy storage system based on our proprietary PbC PowerCube™ battery technology to be used within a "Smart Grid" system.
• In accordance with our business plan and with a portion of the proceeds of our $26 million common stock offering in late December 2009, we engaged a well known design and fabrication company to supply 2 new stations to our first prototype carbon electrode production line and to design a second-generation version of the current manufacturing line. Work continues on schedule on both projects.
• Award in January 2009 of an $800,000 first-year grant from the Pennsylvania Alternative Fuels Incentive Grant program as part of the Commonwealth's overall effort to invest in businesses that are creating important and innovative clean energy and bio-fuels technologies. Award proceeds will be used to demonstrate the advantages the Axion proprietary PbC battery technology provides in a variety of electric vehicle types including: hybrids (HEVs); "plug-ins" (PHEVs) used in commuter, delivery and other vehicles; and in EV's and converted (from combustion engine operation) EV's. Work on this project continued in the first quarter and we anticipate completion of the project in the second quarter of 2010.

Subsequent to the end of the 1st quarter:

• We received the final contract documents and began work on federal contract number N00014-10-C-0094 for the development of new lightweight, high-powered PbC batteries for use in vehicles operated by the U.S. Marine Corps. This contract awards $1,004,747 to us in billings for this project. We expect to be able to complete and bill at least 90% of this contract in 2010.
• On April 21 2010, it was announced that our $3,000,000 proposal for the second phase of the ONR Navy and Marine Corps project was recommended for approval, and advanced to final sub-committee hearings, by Pennsylvania's two U.S. Senators and a Congressman from nearby Ohio.
• In April, we brought three new executives to Axion.  Charles Trego is our new Chief Financial Officer and comes to us with more than 25 years of CFO experience with both public and private companies. Philip Baker was appointed to a new position at Axion, Chief Operating Officer, and previously held similar positions with large manufacturing companies including lead acid battery manufacturing.  Jack Shindle was appointed Vice President of Manufacturing Engineering.  Jack held similar positions in the fuel cell industry where he was responsible for commissioning automated manufacturing equipment.  We are also well into the process of strengthening our team by extending the contracts of existing team members.    

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 877-485-3104 (domestic) or 201-689-8579 (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.

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 877-660-6853 (domestic) and 201-612-7415 (international) and using passcode 350405 and account number #356.

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 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 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.

SOURCE Axion Power International, Inc.