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Axion Power Reports Results For Third Quarter And Nine Months Ended September 30, 2012

November 15, 2012

NEW CASTLE, Pa., Nov. 15, 2012 /PRNewswire/ — Axion Power International, Inc. (OTCQB: AXPW), the developer of advanced lead-carbon PbC® batteries and energy storage systems, today announced results for its third quarter and nine months ended September 30, 2012.

For the nine months ended September 30, 2012 revenue was $6.7 million with a net loss of $6.4 million or $0.06 loss per share, compared to revenue for the nine months of 2011 of $5.2 million with a net loss of $5.7 million or $0.07 loss per share. For the third quarter ended September 30, 2012 revenue was $2.2 million with a net loss of $2.1 million or $0.02 loss per share, versus revenue for the third quarter of the previous year of $2.1 million with a loss of $2.0 million or $0.02 loss per share. Revenue for all periods was largely attributable to the sale of specialty lead-acid batteries to a major lead-acid battery company that sells the batteries under its own brand.

Chairman & CEO Thomas Granville commented, “One of the major developments of the third quarter was the strategic partnership we announced with Rosewater Energy Group, which has joined with us in designing and marketing PbC-based energy storage and power conditioning systems, primarily for high-end residential applications. Compared to the ongoing work we are doing with transportation companies such as Norfolk Southern and a variety of automotive manufacturers, the Residential Energy Storage Hub systems are on a much faster track to market. In-house, we manufactured a demonstration system for the CEDIA Expo in September. We are on track for completion of all testing to applicable UL 1741 standards in early December and are looking to ship the first home system during the current quarter ending December 31, 2012.

“PbC based batteries and systems are being primarily marketed to two types of customers: transportation and those that require on- and off-grid power storage systems,” Granville said. “We continue to work with BMW and other automobile and truck companies based in the US, Europe and Asia, with the goal of implementing PbC-based start-stop systems in production models of passenger automobiles. Separately, we are in various stages of work and discussions, that vary from early to very advanced, with a number of small and large – start up to prominent well established – heavy ‘work horse’ truck OEMS here in the US. The objective is to outfit 18-wheelers with battery-powered Axion systems that will boost uphill performance as well as increase miles per gallon. This application is in addition to our truck OEM initiative designed to satisfy ‘anti-idling’ legislation with the use of our PbC battery. We feel that the unique properties of our PbC battery (high charge acceptance, fast recharge rate, long cycle life and string equalization) will allow the OEM’S segregated battery system to function more efficiently when the truck is at rest but still needs to run its ancillary load (e.g. heater, radio, electronics, air conditioning, etc.) without idling the engine and creating emissions. The first of the ‘boost performance’ trucks is scheduled to be on the road, and hauling freight, in November and we anticipate being able to announce that event, and the name of the customer, in the very near future.

“We are making meaningful progress toward marketing Axion Cube systems, of various sizes, to commercial users in North America and on offshore island Republics. In some cases our products will be used to decrease dependence on fossil fuels by accepting, regulating and storing power from renewables such as wind and solar. Our PowerCube(TM) systems can also provide power quality and can store power for backup purposes, as is the case with the Residential Energy Storage Hub. And finally, our PowerCube can assist utilities and grid managers with their efforts in load leveling and frequency regulation. In the case of utilities, the major demonstration system is the Axion PowerCube that was integrated 12 months ago into the huge PJM system here at our manufacturing plant in New Castle. We believe that the announcement of the first confirmed projects, for these various Axion Cube applications, will be made over the next several months. The market is sizable from both a geographic and a financial perspective.”

At September 30, 2012 Axion Power had $4.2 million in cash and cash equivalents, compared to $2.0 million at December 31, 2011. Total current assets at September 30, 2012 were $8.0 million, versus total current liabilities of $1.2 million, with no significant debt. In keeping with the road map established in early 2012, the Company will need to source additional capital – for both working and operational requirements – during 2013 in order to continue to develop the PbC products that customers are buying, and that potential customers are testing. Capital will also be required to transition manufacturing of complex power-storage systems to a major US contract manufacturer. That manufacturer will be fully capable of ramping up Cube and Hub manufacturing to meet future demand, take full advantage of economies of scale and further align with the company’s long-term strategy.

Granville continued, “2012 has been a challenging time for lithium-ion battery manufacturers such as Ener1, A123, Valence Technologies and International Battery, all of which were initially very dependent on a single developing market. We believe that our work with a variety of different types of users gives us a potentially broader, and more solid, base. The undeniable cost-efficiency of PbC batteries compared to lithium-ion batteries is becoming better understood by potential end users, many of whom had formerly assumed that lithium-ion would be the adopted battery of choice, in spite of its very high cost and its significant safety problems.

“Axion is not chasing the pure-electric vehicle market. We are not creating hybrid drive trains for cars or trucks. But we are designing practical, affordable battery systems for real-world uses such as the start-stop systems that every automobile manufacturer in the world is trying to perfect. Axion products do not require special alterations in the national or international power infrastructure. Just the opposite, our transportation systems, including the over the road locomotives, are all capable of charging themselves while in use by taking advantage of regenerative braking. Simply put, our technology is not constrained by dependence on others, for example – needing to wait for someone to build charging stations.”

Granville concluded, “And our Hubs and Cubes work with real-world solar and wind, while at the same time they offer the option of accepting grid power, or accepting emergency power from diesel generators. Recent weather events in the northeast have made it obvious to many that such power storage systems address a very real, and growing, need.”

Conference Call / Webcast

Today, November 15 at 11:00 am ET (8 a.m. Pacific) a conference call will be held to review the AXPW third quarter 2012 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 one week and can be accessed by dialing 877-344-7529 (domestic) and 412-317-0088 (international) and using conference number 10020964.

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, 2012                            December 31, 2011
    ASSETS                                                                    (Unaudited)
                                                                              ----------
    Current Assets
    Cash and cash equivalents                                                                     $4,172,818                    $1,987,637
    Accounts receivable                                                                              306,185                       309,354
    Other receivables                                                                                 21,860                       162,249
    Prepaid expenses                                                                                 231,017                       145,442
    Inventory, net                                                                                 3,229,175                     2,717,173
    Total current assets                                                                           7,961,055                     5,321,855

    Property & equipment, net                                                                      8,124,661                     8,417,163
    Other receivables- long-term                                                                      48,000                        53,000
    TOTAL ASSETS                                                                                 $16,133,716                   $13,792,018
                                                                                                 ===========                   ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities
    Accounts payable                                                                                $739,917                      $520,358
    Other current liabilities                                                                        312,943                       429,432
    Notes payable                                                                                    104,777                       104,777
    Total current liabilities                                                                      1,157,637                     1,054,567

    Deferred grant  revenue                                                                        1,347,280                     1,573,962
    Derivative liabilities                                                                             3,378                        15,843
    Notes payable                                                                                    358,610                       439,480
    Total liabilities                                                                              2,866,905                     3,083,852

    Stockholders' Equity
    Convertible preferred stock-12,500,000
     shares authorized                                                                                     -                             -

    Common stock- 200,000,000 shares
     authorized $0.0001 par value 113,260,006
     shares issued & outstanding (85,516,139 in
     2011)
                                                  11,326                                                        8,552
    Additional paid in capital                                                                    95,888,022                    86,953,180
    Deficit accumulated during development
     stage                                                                                       (82,380,861)                  (76,001,894)
    Cumulative foreign currency translation
     adjustment                                                                                     (251,676)                     (251,672)
    Total stockholders' equity                                                                    13,266,811                    10,708,166

    TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                                     $16,133,716                   $13,792,018
                                                                                                 ===========                   ===========
                                                          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
                                     -------------                 -------------
                                                 2012                  2011                         2012                      2011     9/30/2012
                                                 ----                  ----                         ----                      ----     ---------
    Product                               $2,178,0777           $2,097,4133                  $6,690,5022               $4,832,2266  $18,982,4945
    Service                                         -                     -                            -                   411,645     1,279,726
                                                  ---                   ---                          ---                   -------     ---------
    Net sales                               2,178,077             2,097,413                    6,690,502                 5,243,871    20,262,220

    Costs and expenses
    Product costs                           2,014,731             1,844,088                    6,014,886                 4,205,057    16,611,842
    Research & development                  1,198,834             1,329,783                    3,738,955                 3,599,545    32,609,846
    Selling, general &
     administrative                         1,114,993             1,020,352                    3,316,201                 3,215,518    33,080,882
    Interest expense                            4,090                 4,680                       13,313                    14,095     2,390,488
    Impairment of assets                            -                     -                            -                         -     2,062,160
    Derivative revaluations                   (17,176)             (128,187)                     (12,465)                 (119,166)   (1,639,101)
    Mega C Trust share
     augmentation                                   -                     -                            -                         -       400,000
    Interest income & other                    (1,393)                   (7)                      (1.421)                   (7,735)     (570,705)
    Loss before income taxes               (2,136,002)           (1,973,296)                  (6,378,967)               (5,663,443)  (64,683,192)

    Income taxes                                                                                                                          4,300
    Accumulated deficit                    (2,136,002)           (1,973,296)                  (6,378,967)               (5,663,443)  (64,687,492)

    Less preferred stock dividends
     and beneficial conversion
     feature                                        -                     -                            -                             (17,693,369)
    Net loss applicable to common
     shareholders                         $(2,136,002)          $(1,973,296)                 $(6,378,967)              $(5,663,443) $(82,380,861)
                                          ===========           ===========                  ===========               ===========  ============

    Foreign Translation Adjustment                 (1)                                                (4)                               (251,676)

    Comprehensive Income(Loss)             (2,136,003)           (1,973,296)                  (6,378,971)               (5,663,443)  (82,632,537)

    Basic and diluted net loss per
     share                                     $(0.02)               $(0.02)                      $(0.06)                   $(0.07)       $(2.05)
                                               ======                ======                       ======                    ======        ======

    Weighted average common shares
     outstanding                          113,249,335            85,511,255                  109,826,629                85,475,579    40,127,504
                                          ===========            ==========                  ===========                ==========    ==========
                                                                                  AXION POWER INTERNATIONAL, INC.
                                                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                   (A Development Stage Company)
                                                                                                          UNAUDITED

                                                                                                                         Nine Months Ended          Inception
                                                                                                                           September 30,          9/18/2003 to
                                                                                                                           -------------
                                                                                                                            2012           2011     9/30/2012
                                                                                                                            ----           ----     ---------

    Cash Flows from Operating Activities
    Accumulated deficit                                                                                              $(6,378,967)   $(5,663,443) $(64,687,492)

    Adjustments to reconcile deficit accumulated for noncash items
                                                                   Depreciation                                        1,035,336        710,850     3,707,458
                                                                   Interest expense                                            -              -     1,970,251
                                                                   Impairment of assets                                        -              -     2,062,160
                                                                   Derivative revaluations                               (12,465)      (119,166)   (1,639,101)
                                                                   Mega C Trust share augmentation                             -              -       400,000
                                                                   Share based compensation expense                      311,637        351,509     6,547,874

    Changes in operating assets & liabilities
                                                                   Accounts receivable                                     3,169       (247,162)     (313,054)
                                                                   Other receivables- current                            140,389       (326,579)          100
                                                                   Prepaid expenses                                      (85,575)      (103,903)     (228,429)
                                                                   Inventory, net                                       (512,002)    (1,660,053)   (3,229,174)
                                                                   Accounts payable                                      219,559         57,169     2,394,561
                                                                   Other current liabilities                            (116,489)         8,440       334,075
                                                                   Liability to issue equity instruments                       -              -       178,419
                                                                   Deferred grant revenue and other                     (226,682)       240,557     1,434,798

                                                                   Net cash used by operating activities              (5,622,090)    (6,751,781)  (51,167,554)

    Cash Flows from Investing Activities
                                                                   Other receivables -long term                            5,000          9,000    (1,265,016)
                                                                   Property & equipment, net                            (742,833)    (2,533,765)  (12,499,503)
                                                                   Investment in intangible assets                             -              -      (167,888)
                                                                   Net cash used by investing activities                (737,833)    (2,524,765)  (13,932,407)

    Cash Flows from Financing Activities
                                                                   Net proceeds from related party debt                        -              -     5,445,458
                                                                   Net proceeds (to)from notes payable                   (80,871)       (78,484)      463,387
                                                                   Net proceeds from sale of common stock              8,625,979              -    53,797,344
                                                                   Net proceeds from exercise of warrants                      -              -     2,014,766
                                                                   Net proceeds from sale of preferred stock                   -              -     7,472,181
                                                                   Net cash (used) provided by financing activities    8,545,109        (78,484)   69,193,137

    Net change in cash and cash equivalents                                                                            2,185,185     (9,355,030)    4,193,175
    Effect of exchange rate on cash                                                                                           (4)           (19)      (20,358)
    Cash and cash equivalents - beginning                                                                              1,987,637     13,330,009             -
    Cash and cash equivalents - ending                                                                                $4,172,818     $3,974,960    $4,172,818
                                                                                                                      ==========     ==========    ==========

SOURCE Axion Power International, Inc.


Source: PR Newswire