As filed with the Securities and Exchange Commission
April 17, 2014
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Registration
Statement No. 333-188802
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
ON FORM S-1
UNDER
THE SECURITIES ACT OF 1933
AXION POWER INTERNATIONAL, INC.
(Exact name of registrant as specified
in its charter)
Delaware
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65-0774638
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3690
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(State or other jurisdiction of
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(I.R.S. Identification Number)
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(Primary Standard Industrial
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incorporation or organization)
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Classification Code Number)
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3601 Clover Lane
New Castle, Pennsylvania 16105
Telephone (724) 654-9300
(Address, including zip code, and telephone
number, including
area code, of registrant’s principal
executive offices)
Thomas Granville
3601 Clover Lane
New Castle, Pennsylvania 16105
Telephone (724) 654-9300
(Name, address, including zip code, and
telephone number,
including area code, of agent for service)
Copy to:
Jolie Kahn, Esq.
1020 Riverview
Conshohocken, PA 19428
Telephone (215) 253-6645
Approximate Date of Commencement of Proposed Sale to the
Public:
At such time or times after the effective date of this registration statement as the selling stockholders shall determine.
If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box.
¨
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
x
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(Do not check if a smaller reporting company)
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Explanatory Note
This Post-Effective Amendment No. 1 on Form S-1 (this
“Post-Effective Amendment”) relates solely to the sale by selling stockholders of up to 17,281,108 shares of
common stock to be issued upon conversion of warrants issued with respect to that certain securities purchase agreement
between the registrant and certain selling shareholders, which are signatories thereto which were previously registered under
the Registration Statement on Form S-1 (Registration No. 333-188802) of the registrant declared effective on June 4, 2013 by
the Securities and Exchange Commission. This Post –Effective Amendment is being filed to include the financial
statements for the year ended December 31, 2013. All filing fees payable in connection with the registration of
these securities were previously paid by the registrant at the time of filing the original registration statement on Form
S-1.
Subject to Completion, dated April 17,
2014
PROSPECTUS
The information in the prospectus
is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell and is not soliciting an offer
to buy these securities in any jurisdiction where the offer or sale is not permitted.
17,281,108 Shares
of Common Stock
This prospectus relates to the
offer and sale of up 17,281,108 shares of common stock of Axion Power International, Inc., a Delaware corporation,
issued to certain selling stockholders, which are signatories on the below listed securities purchase agreement dated May 7,
2013, between the selling stockholders and the Company, upon the exercise of warrants issued thereunder, and that may be
offered and sold from time to time by the selling stockholders. The balance of the original 61,327,781 shares registered
hereunder have been sold by the selling stockholders.
This prospectus covers any
additional shares of common stock that may become issuable upon any anti-dilution adjustment pursuant to the terms of the
warrants and also by reason of stock splits, stock dividends, and other events described therein. The Senior Convertible
Notes due on February 8, 2015 and warrants were acquired by the selling stockholders in a private placement with us that
closed on May 8, 2013.
Under the registration rights agreement
entered into by the Company and the selling shareholders in connection with the issuance of the Senior Convertible Notes due February
8, 2015, and the warrants issued in conjunction therewith (“Senior Warrants”), the Company is required to register
for resale 125% of the number of shares of the Company’s common stock issuable pursuant to the Senior Convertible Notes
and 100% of the number of shares of the Company’s common stock issuable pursuant to the Senior Warrants, both as of the
trading day immediately preceding the applicable date of determination (which was May 8, 2013). This amount represents a good
faith estimate of the maximum number of shares issuable pursuant to the Senior Warrants.
Unless otherwise noted, the terms “the
Company,” “our Company,” “Axion,” “we,” “us” and “our” refer
to Axion Power International, Inc. and its subsidiaries.
The selling stockholders may offer their
shares from time to time directly or through one or more underwriters, broker-dealers or agents, in the over-the-counter market
at market prices prevailing at the time of sale, in one or more privately negotiated transactions at prices acceptable to the
selling stockholders, or otherwise, so long as our common stock is trading on the OTCQB, and if it is not trading on the OTCQB,
OTCBB or a listed exchange, sales may only take place at fixed prices.
We are registering these shares of our
common stock for resale by the selling stockholders named in this prospectus, or their transferees, pledgees, donees or assigns
or other successors-in-interest that receive any of the shares as a gift, distribution, or other non-sale related transfer. We
will not receive any proceeds from the sale of shares by the selling stockholders. These shares are being registered to permit
the selling stockholders to sell shares from time to time, in amounts, at prices and on terms determined at the time of offering.
The selling stockholders may sell this common stock through ordinary brokerage transactions, directly to market makers of our
shares or through any other means described in the section entitled “PLAN OF
DISTRIBUTION” beginning of page
45. In connection with any sales of the common stock offered hereunder, the selling stockholders, any underwriters, agents, brokers
or dealers participating in such sales may be deemed to be “underwriters” within the meaning of the Securities Act
of 1933, as amended (the “Securities Act”).
We will pay the expenses related to the
registration of the shares covered by this prospectus. The selling stockholders will pay any commissions and selling expenses
they may incur.
Our common stock trades on the OTCQB under
the symbol “AXPW”. The closing sale price on the OTCQB on April 11, 2014, was $0.1645 per share.
Our principal executive offices are located
at 3601 Clover Lane, New Castle PA 16105. Our telephone number at that address is (724) 654-9300.
Investing in the common stock offered
by this prospectus is speculative and involves a high degree of risk. See “Risk Factors” beginning on page 5.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is April
17, 2014
TABLE OF CONTENTS
PROSPECTUS SUMMARY
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3
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RISK FACTORS
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6
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USE OF PROCEEDS
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12
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MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
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12
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MANAGEMENT’S DIS]CUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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13
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AXION POWER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
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13
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BUSINESS
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13
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LEGAL PROCEEDINGS
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20
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MANAGEMENT
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21
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EXECUTIVE COMPENSATION
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24
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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30
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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30
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DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
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31
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THE SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
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39
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DESCRIPTION OF SECURITIES
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43
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LEGAL MATTERS
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46
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EXPERTS
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46
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WHERE YOU CAN FIND MORE INFORMATION
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46
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PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
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47
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SIGNATURES
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53
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration
statement that we filed with the Securities and Exchange Commission using the Securities and Exchange Commission’s registration
rules for a delayed or continuous offering and sale of securities. Under the registration rules, using this prospectus and, if
required, one or more prospectus supplements, the selling stockholders named herein may distribute the shares of common stock
covered by this prospectus. This prospectus also covers any shares of common stock that may become issuable as a result of stock
splits, stock dividends or similar transactions.
A prospectus supplement may add, update
or change information contained in this prospectus. We recommend that you read carefully this entire prospectus, especially the
section entitled “Risk Factors” beginning on page 6, and any supplements before making a decision to invest in our
common stock.
You should rely only on the information
contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained
in this prospectus. The common stock is not being offered in any jurisdiction where offers and sales are not permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered
or when any sale of our securities occurs.
Cautionary Note Regarding Forward-Looking
Information
This prospectus, in particular the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” appearing herein, contains certain “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended , and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements represent our expectations, beliefs, intentions or strategies
concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance;
the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the
expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated
problems and our plans for future operations; and the economy in general or the future of the electrical storage device industry,
all of which are subject to various risks and uncertainties.
When used in this prospectus as well as
in reports, statements, and information we have filed with the Securities and Exchange Commission, in our press releases, presentations
to securities analysts or investors, in oral statements made by or with the approval of an executive officer, the words or phrases
“believes,” “may,” “will,” “expects,” “should,” “continue,”
“anticipates,” “intends,” “will likely result,” “estimates,” “projects”
or similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements
contained in this prospectus that are not statements of historical fact may be deemed to be forward-looking statements. We caution
that these statements by their nature involve risks and uncertainties, certain of which are beyond our control, and actual results
may differ materially depending on a variety of important factors.
PROSPECTUS SUMMARY
This summary highlights important information
about this offering and our business. It does not include all information you should consider before investing in our common stock.
Please review this prospectus in its entirety, including the risk factors and our financial statements and the related notes,
before you decide to invest.
Our Company
Axion
Power Corporation, our wholly owned subsidiary, was formed in September 2003 to acquire and develop certain innovative battery
technology. Since inception Axion Power Corporation has been engaged in research and development (“R&D”) of new
technology for the production of our PbC batteries. On December 31, 2003, Axion Power Corporation engaged in a reverse acquisition
with Tamboril Cigar
Company, a public shell company whereby Axion Power Corporation became a wholly owned subsidiary of
Tamboril, which subsequently changed its name to Axion Power International, Inc.
In February 2006, we commenced operations
at our Clover Lane facility in New Castle, PA. We have utilized this space to manufacture our PbC and specialty lead-acid battery
products and to continue to produce and test prototypes which incorporate our developed technology. Our Clover Lane plant allows
us to manufacture batteries for sale under the Axion brand name; to manufacture for third parties under specific contract arrangements;
or to manufacture prototypes for our own use and testing, or for testing by our customers. Our facility has been fully tested and
found to be in compliance with emission standards established by new federal guidelines in accordance with the Clean Air Act–Title
III. In November 2010, we expanded into our Green Ridge facility, also in New Castle, PA, to house offices, research & development,
electrode manufacturing and warehousing.
Since inception, our operations have been
financed through the sale of equity and debt instruments to investors, as well as loans and proceeds from government grants, and
with minimal revenue generated from our operations. We transitioned from an R&D - based development stage company to a commercial
manufacturing company in the fourth quarter of 2012, and we believe that the transition is providing us with the growth opportunities
to commercialize our PbC technology and thereby improve our financial condition, cash flow and market presence.
Our Business
We have devoted more than ten years to
research and development on our PbC technology. Our work has focused on developing our intellectual property, characterizing baseline
performance, developing proprietary treatment processes for the activated carbon we use in our electrodes, developing proprietary
designs and manufacturing techniques for electrode assemblies and fabricating a series of material and design evaluation prototypes
that range from single cell to multi-cell batteries for use in energy storage devices and systems.
Our PbC energy storage device is a hybrid
battery supercapacitor that combines the simplicity of lead-acid batteries with the faster recharge rate, longer cycle life and
greater charge acceptance of supercapacitors. The result is a relatively low cost device that has versatility of design that will
allow differing iterations to deliver maximum power, maximum energy, or a range of balances between the two.
Our PbC technology is protected by thirteen
issued U.S. patents and other proprietary features and structures, and we typically have a number of additional patent applications
in process at any point in time. The resulting devices are technically sophisticated yet simple in design. The carbon negative
electrode assemblies are fabricated from readily available raw materials using, for the most part, standard industrial processes
and techniques. The PbC negative electrodes that are then assembled into PbC batteries can be used with the same cases, covers,
positive electrodes, separators and electrolyte that are used in conventional lead-acid batteries. Our PbC batteries can be assembled
with the same equipment and methodology commonly used for manufacturing conventional lead-acid batteries. PbC batteries use significantly
less lead than standard lead-acid batteries with a comparable footprint. Moreover, the lead, plastics and acid employed, just like
lead-acid batteries, can be routinely and profitably recycled at existing recycling facilities around the world. As is the case
with the lead-acid battery, we expect that in the United States our PbC battery will be fully recycled 99.2% of the time (United
States Environmental Protection Agency, Solid Waste and Energy Response [5306P]).
Recent Developments
May 2013 Private Placement of Senior
Convertible Notes and Warrants.
On May 7, 2013, the Company entered into definitive agreements relating to a private placement
(the “Private Placement”) of $9.0 million in principal amount of Senior Convertible Notes due February 8, 2015 (the
“Senior Convertible Notes”) and Warrants to the purchasers of the Senior Convertible Notes giving them the right to
purchase up to an aggregate of 17,281,107 shares of our common stock at an exercise price of $0.302 per share (the “Senior
Warrants”) (subject to adjustment as described below under “
DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
”
beginning on p. 38 of this prospectus). The Senior Convertible Notes are convertible at any time at the option of the holder into
shares of the Company’s common stock at $0.264 per share (subject to adjustment as described below under “
DESCRIPTION
OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
” beginning on p. 38 of this prospectus.). The closing of the Private Placement
occurred on May 8, 2013. The Senior Convertible Notes and the Senior Warrants were issued pursuant to a Securities Purchase Agreement,
dated May 7, 2013, among the Company and the purchasers of the Senior Convertible Notes (the “Senior Securities Purchase
Agreement”). In addition, in connection with the Private Placement, the Company entered into a Registration Rights Agreement
under which it agreed to file a registration statement with the U.S. Securities and Exchange Commission (the “SEC”)
covering the resale of the shares of the Company’s common stock issuable pursuant to the Senior Convertible Notes and Senior
Warrants. The purchasers of the Senior Convertible Notes and the Senior Warrants in the Private Placement are the selling stockholders
described in this prospectus. See “
DESCRPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
” beginning on p. 38
of this prospectus.
May 2013 Private Placement of Subordinated Convertible Notes
and Warrants.
On May 7, 2013, the Company entered into definitive agreements relating to a private placement (the “Junior
Private Placement”) of $1.0 million in principal amount of Subordinated Convertible Notes due May 9, 2015 (the “Subordinated
Convertible Notes”) and Warrants to the purchasers of the Subordinated Convertible Notes giving them the right to purchase
up to an aggregate of 1,920,123 shares of our common stock at an exercise price of $0.302 per share (the “Junior Warrants”)
(subject to adjustment as described below under “
DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
” beginning
on p. 38 of this prospectus). The Subordinated Convertible Notes are convertible at any time at the option of the holder into
shares of the Company’s common stock at $0.264 per share (subject to adjustment as described below under “
DESCRIPTION
OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
” beginning on p. 38 of this prospectus.). The closing of the Junior Private
Placement occurred on May 8, 2013. The Subordinated Convertible Notes and the Junior Warrants were issued pursuant to a Securities
Purchase Agreement, dated May 7, 2013, among the Company and the purchasers of the Subordinated Convertible Notes (the “Subordinated
Securities Purchase Agreement”).
The Offering
Common stock offered by the selling stockholders:
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Originally up to
61,327,781
shares of our common stock, par value $0.0001 per share, were originally covered, with all shares sold except for
the 17,281,108 shares issuable upon conversion of the Senior Warrants (as defined below) which are
currently being offered by the selling shareholders. These shares are issuable upon the
exercise of Warrants (the “Senior Warrants”) at an exercise price of $0.302
(both subject to adjustment as described below under “
DESCRIPTION OF PRIVATE PLACEMENT
AND CONVERTIBLE NOTES
” beginning on p. 38 of this prospectus). The Senior
Convertible Notes and Senior Warrants were issued by us to various selling stockholders
in a private placement on May 8, 2013.
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Offering prices:
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The shares offered by this prospectus may be offered and sold at
prevailing market prices or such other prices as the selling stockholders may determine.
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Common stock outstanding:
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221,511,725 shares as of April 14, 2014.
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Dividend policy:
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Dividends on our common stock may be declared and paid when and
as determined by our board of directors. We have not paid and do not expect to pay dividends on our common stock.
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OTCQB:
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AXPW
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Use of proceeds:
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We are not selling any of the shares of common stock being offered
by this prospectus and will receive no proceeds from the sale of the shares by the selling stockholders. All of the proceeds
from the sale of common stock offered by this prospectus will go to the selling stockholders at the time they sell their shares.
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Risk Factors
See “Risk Factors” beginning
on page 6 for a discussion of factors you should carefully consider before deciding to invest in our common stock.
Our Address
Our principal executive offices are located
at 3601 Clover Lane, New Castle, Pennsylvania 16105, and our telephone number is (724) 654-9300.
We are registering the shares being offered
under this prospectus pursuant to the registration rights agreement that we entered into with the selling stockholders described
below under “
DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
” beginning on p. 38 of this prospectus.
We entered into the registration rights agreement in connection with a private placement (which closed on May 8, 2013) in which
we offered and sold to the selling stockholders $9.0 million in principal amount of the Senior Convertible Notes (with a conversion
price of $0.264 per share, subject to adjustment as described below under “
DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE
NOTES
” beginning on p. 38 of this prospectus) together with common stock purchase warrants (“Senior Warrants”)
to purchase up to 17,281,107 shares of our common stock at an exercise price of $0.302 per share (subject to adjustment as described
below under “
DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
” beginning on p. 38 of this prospectus.)
The number of shares of common
stock that will be outstanding immediately after this offering is based on the 221,511,725 shares of our common stock
outstanding as of April 14, 2014 and assumes full conversion of the Senior Convertible Notes identified above. There
is no guarantee that the Senior Convertible Notes will be converted into common stock. The number of shares of common stock
that will be outstanding immediately after this offering does not include:
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17,281,107
shares of common
stock issuable upon
exercise of the
Senior Warrants
outstanding as of
April 14, 2014, at
a conversion price
of $0.302 per share;
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·
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1,920,123
shares of common
stock issuable upon
exercise of the
Junior Warrants
outstanding as of
April 14, 2014, at
a conversion price
of $0.302 per share;
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3,787,879
shares of common
stock issuable upon
conversion of the
Junior Convertible
Notes outstanding
as of April 14, 2014,
at an exercise price
of $0.264 per share;
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45,661 shares of common
stock issuable upon
the exercise of
warrants (other
than the Senior
Warrants and the
Junior Warrants)
outstanding as of
March 31, 2014,
at a weighted average
exercise price of
$2.00 per share;
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4,021,523 shares of common
stock issuable upon
the exercise of
options outstanding
as of March 31,
2014, at a weighted
average exercise
price of $1.43 per
share; and
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1,821,867 shares of common
stock reserved for
future grant or
issuance as of December
31, 2013 under all
of our 2004 Outside
Directors Stock
Option Plan, our
2004 Incentive Stock
Plan and our 2010
Employees and Officers
Stock Option Plan.
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RISK FACTORS
Investing in our common stock is very speculative
and involves a high degree of risk. You should carefully consider all of the information in this report before making an investment
decision. The following are among the risks we face related to our business, assets and operations. They are not the only risks
we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also arise.
Any of these risks could materially and adversely affect our business, results of operations and financial condition, which in
turn could materially and adversely affect the trading price of our common stock. You should not purchase our shares unless you
can afford to lose your entire investment.
Our business may not be able to continue
as a going concern, and we will need to raise additional capital to continue operations through the 4
th
quarter of 2014.
We believe that our current financial resources
will support ongoing operations, working capital, and capital expenditures into the 4
th
quarter of 2014. However, we
will not be able to continue operations through the 4
th
quarter, without raising additional funding. We believe
that there is sufficient risk in achieving revenue levels sufficient to generate liquidity adequate to cover our costs of operations,
working capital, and capital expenditures without raising additional capital. We cannot assure you that any additional
capital will be available to us on favorable terms, or at all. If we are unable to obtain additional capital when needed, our production,
research, development and testing, and other commercial activities will be materially and adversely affected, and we may be unable
to take advantage of future opportunities or respond to competitive pressures or to continue our operations through the 4
th
quarter of 2014. The inability to raise capital in sufficient amounts and on acceptable terms would have a material adverse effect
on our ability to continue operations and could result in our inability to continue as a going concern which would mean that we
would need to wind down our business.
We are subject to stringent environmental
regulation.
We use or generate certain hazardous substances
in our research and manufacturing facilities. We do not carry environmental impairment insurance. We believe that all permits and
licenses required for our current business activities are in place. Although we do not know of any material environmental, safety
or health problems in our property or processes, there can be no assurance that problems will not develop in the future which could
have a material adverse effect on our business, results of operation, or financial condition.
Our products contain hazardous materials
including lead.
Lead is a toxic material that is an important
raw material in our batteries. We also use, generate and discharge other toxic, volatile and hazardous chemicals and wastes in
our research, development and manufacturing activities. We are required to comply with federal, state and local laws and regulations
regarding pollution control and environmental protection. Under some statutes and regulations, a government agency, or other parties,
may seek to recover response costs from operators of property where releases of hazardous substances have occurred or are ongoing,
even if the operator was not responsible for such release or otherwise at fault. In addition, more stringent laws and regulations
may be adopted in the future, and the costs of complying with those laws and regulations could be substantial. If we fail to control
the use of, or inadequately restrict the discharge of, hazardous substances, we could be subject to significant monetary damages
and fines, or be forced to suspend certain operations.
As we sell our products, we may become
the subject of product liability claims.
Due to the hazardous nature of many of
the key materials used in the manufacturing of our batteries, the producers of such products may be exposed to a greater number
of product liability claims, including possible environmental claims. We currently have domestic product liability insurance up
to $1,000,000 per occurrence and $5,000,000 in the aggregate to protect us against the risk that in the future a product liability
claim or product recall could materially and adversely affect our business operations. Inability to obtain sufficient insurance
coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the
commercialization of our product. We cannot assure you that as we continue distribution of our products that we will be able to
obtain or maintain adequate coverage on acceptable terms, or that such insurance will provide adequate coverage against all potential
claims. Even if we maintain adequate insurance, any successful claim could materially and adversely affect our reputation and prospects,
and divert management’s time and attention. If we are sued for any injury allegedly caused by our future products our liability
could exceed our total assets and our ability to pay such liability.
We depend on key personnel, and our
business may be severely disrupted if we lose the services of our key executives, employees, and consultants.
Our business
is dependent upon the knowledge and experience of our key scientists, engineers, manufacturing staff and executive officers. Given
the competitive nature of our industry, there is the risk that one or more of our key scientists or engineers will resign their
positions, which could have a disruptive impact on our operations. If any of our key scientists, engineers or executive officers
do not continue in their present positions, we may not be able to easily replace them and our business may be severely disrupted.
If any of these individuals joins a competitor or forms a competing company, we could lose important know-how and experience and
incur substantial expense to recruit and train suitable replacements. Our Compensation Committee remains committed to keeping our
key team members in place as we move forward into greater commercialization of our PbC product. Currently, all of our key employees
have employment contracts that include non-compete provisions.
Our operations expose us to litigation,
tax, environmental and other legal compliance risks.
We are subject to a variety of litigation,
tax, environmental, health and safety and other legal compliance risks. These risks include, among other things, possible liability
relating to product liability matters, personal injuries, intellectual property rights, contract-related claims, government contracts,
taxes, health and safety liabilities, environmental matters and compliance with U.S. and foreign laws, competition laws and laws
governing improper business practices. We or one of our business units could be charged with wrongdoing as a result of such matters.
If convicted or found liable, we could be subject to significant fines, penalties, repayments or other damages (in certain cases,
treble damages). As a business with international reach, we are subject to complex laws and regulations in the U.S. and other countries
in which we operate. Those laws and regulations may be interpreted in different ways. They may also change from time to time, as
may related interpretations and other guidance. Changes in laws or regulations could result in higher expenses and payments, and
uncertainty relating to laws or regulations may also affect how we conduct our operations and structure our investments and could
limit our ability to enforce our rights.
In the area of taxes, changes in tax
laws and regulations, as well as changes in related interpretations and other tax guidance could materially impact our tax receivables
and liabilities and our deferred tax assets and tax liabilities. Additionally, in the ordinary course of business, we are subject
to examinations by various authorities, including tax authorities. In addition to ongoing investigations, there could be additional
investigations launched in the future by governmental authorities in various jurisdictions and existing investigations could be
expanded. The global and diverse nature of our operations means that these risks will continue to exist and additional legal proceedings
and contingencies will arise from time to time. Our results may be affected by the outcome of legal proceedings and other contingencies
that cannot be predicted with certainty.
In the sourcing of our products throughout
the world, we process, store, dispose of and otherwise use large amounts of hazardous materials, especially lead and acid. As a
result, we are subject to extensive and changing environmental, health and safety laws and regulations governing, among other things:
the generation, handling, storage, use, transportation and disposal of hazardous materials; remediation of polluted ground or water;
emissions or discharges of hazardous materials into the ground, air or water; and the health and safety of our employees. Compliance
with these laws and regulations results in ongoing costs. Failure to comply with these laws or regulations, or to obtain or comply
with required environmental permits, could result in fines, criminal charges or other sanctions by regulators. From time to time
we have had instances of alleged or actual noncompliance that have resulted in the imposition of fines, penalties and required
corrective actions. Our ongoing compliance with environmental, health and safety laws, regulations and permits could require us
to incur significant expenses, limit our ability to modify or expand our facilities or continue production and require us to install
additional pollution control equipment and make other capital improvements. In addition, private parties, including current or
former employees, could bring personal injury or other claims against us due to the presence of, or exposure to, hazardous substances
used, stored or disposed of by us or contained in our products.
Certain
environmental laws assess liability on owners or operators of real property for the cost of investigation, removal or remediation
of hazardous substances at their current or former properties or at properties at which they have disposed of hazardous substances.
These laws may also assess costs to repair
damage to
natural resources. We may be responsible for remediating damage to our properties caused by former owners. Soil and groundwater
contamination has occurred at some of our current and former properties and may occur or be discovered at other properties in
the future. We are currently investigating and monitoring soil and groundwater contamination at several of our properties, in
most cases as required by regulatory permitting processes. We may be required to conduct these operations at other properties
in the future. In addition, we have been and in the future may be liable to contribute to the cleanup of locations owned or operated
by other persons to which we or our predecessor companies have sent wastes for disposal, pursuant to federal and other environmental
laws. Under these laws, the owner or operator of contaminated properties and companies that generated, disposed of or arranged
for the disposal of wastes sent to a contaminated disposal facility can be held jointly and severally liable for the investigation
and cleanup of such properties, regardless of fault.
Changes in environmental and climate
laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional investment in production
designs and could increase environmental compliance expenditures. Changes in climate change concerns, or in the regulation of such
concerns, including greenhouse gas emissions, could subject us to additional costs and restrictions, including increased energy
and raw materials costs. Additionally, we cannot assure you that we have been or at all times will be in compliance with environmental
laws and regulations or that we will not be required to expend significant funds to comply with, or discharge liabilities arising
under, environmental laws, regulations and permits, or that we will not be exposed to material environmental, health or safety
litigation.
Risks related to our PbC Technology
We have limited manufacturing experience
with respect to our PbC technology, which may translate into cost overruns in manufacturing our products.
We have limited manufacturing experience
with respect to production of our commercial PbC negative electrodes in quantities required to achieve our operational goals, and
there is no assurance that we will be able to retain a qualified manufacturing staff or effectively manage the manufacturing of
our proposed products when we are ready to do so.
We began the commercial production of our
energy storage devices in the fourth quarter of 2012. As production levels increase, we may experience cost overruns in manufacturing
our PbC products, and we may not have sufficient capital in the future to successfully complete such tasks. In addition, we may
not be able to manufacture our products because of industry conditions, general economic conditions, and/or competition from potential
manufacturers and distributors. These inabilities could cause us to abandon our current business plan and may cause our operations
to eventually fail.
We need to continue to improve the
performance of our commercial PbC products to meet future requirements and competitive pressures
We need to continue to improve various
aspects of our PbC technology as we move forward with larger scale production and new applications of our products. Future developments
and competition may reveal additional technical issues that are not currently recognized as obstacles. If we cannot continue to
improve the performance of our products in a timely manner, we may be forced to redesign or delay large scale production or possibly
abandon our product development efforts altogether.
We do not have any long-term
supplier contracts.
We currently purchase the raw materials
for our carbon electrodes and a variety of other components from third parties. We then fabricate our carbon electrodes and build
our products in-house. We do not have any long-term contracts with suppliers of raw materials and components, and our current suppliers
may be unable to satisfy our future requirements on a timely basis. Moreover, the price of purchased raw materials and components
could fluctuate significantly due to circumstances beyond our control. If our current suppliers are unable to satisfy our long-term
requirements on a timely basis, we may be required to seek alternative sources for necessary materials and components or redesign
our proposed products to accommodate available substitutes.
We are a small player in an intensely
competitive international market and may be unable to compete.
The lead-acid battery industry is large,
intensely competitive and resistant to technological change. We may need to compete or enter into further strategic relationships
with well-established companies that are much larger and have greater financial capital and other resources than we do. We may
be unable to convince end users that products based on our PbC technology are superior to available alternatives. Moreover, if
competitors introduce similar products, they may have a greater ability to withstand price competition and finance their marketing
programs. There is no assurance that we will be able to compete effectively.
Our failure to introduce new
products and product enhancements and broad market acceptance of new technologies introduced by our competitors could adversely
affect our business.
Many new energy storage technologies have
been introduced over the past several years. For certain important and growing international energy storage markets, lithium-based
battery technologies have a large and growing market share. Our ability to achieve significant and sustained penetration of key
developing markets, including aerospace and defense, will depend upon our success in developing or acquiring these and other technologies,
either independently, through joint ventures or through acquisitions. If we fail to develop or acquire, and manufacture and sell,
products that satisfy our customers’ demands, or we fail to respond effectively to new product announcements by our competitors
by quickly introducing competitive products, then market acceptance of our products could be reduced and our business could be
adversely affected. We cannot assure you that our products will remain competitive with products based on new technologies.
To the extent we enter into strategic
relationships, we will be dependent upon our partners.
Some of our products are not intended for
direct sale to end users and our business may require us to enter into strategic relationships with manufacturers of other power
industry equipment that use batteries and other energy storage devices as important components of their finished products. The
agreements governing any future strategic relationships may not provide us with control over the activities of any strategic relationship
we negotiate and our future partners, if any, could retain the right to terminate the strategic relationship at their option. Our
future partners will have significant discretion in determining the efforts and level of resources that they dedicate to our products
and may be unwilling or unable to fulfill their obligations to us. In addition, our future partners may develop and commercialize,
either alone or with others, products that are similar to or competitive with the products that we intend to produce.
Risks relating to our intellectual property
We may rely on licenses for our PbC
technology, which may affect our continued operations with respect thereto.
As we develop our PbC technology, we may
need to license additional technologies to optimize the performance of our products. We may not be able to license these technologies
on commercially reasonable terms or at all. In addition, we may fail to successfully integrate any licensed technology into our
proposed products. Our inability to obtain any necessary licenses could delay our product development and testing until alternative
technologies can be identified, licensed and integrated. The inability to obtain any necessary third-party licenses could cause
us to abandon a particular development path, which could seriously harm our business, financial position and results of our operations.
New technology may lead to our competitors
developing superior products which would reduce demand for our products.
Research into the electrochemical applications
for carbon nanotechnology and other storage technologies is proceeding at a rapid pace, and many private and public companies and
research institutions are actively engaged in the development of new battery technologies based on carbon nanotubes, nanostructured
carbon materials and other non-carbon materials. These new technologies may, if successfully developed, offer significant performance
or price advantages when compared with our technologies. There is no assurance that our existing patents or our pending and proposed
patent applications will offer meaningful protection if a competitor develops a novel product based on a new technology.
If we are unable to protect our proprietary
technology and preserve our trade secrets, we will increase our vulnerability to competitors which could materially adversely impact
our ability to remain in business.
Our ability to successfully commercialize
our products will depend on our ability to protect those products and our technology with domestic and foreign patents. We will
also need to continue to preserve our trade secrets. The issuance of a patent is not conclusive as to its validity or as to the
enforceable scope of the claims of the patent. The patent positions of technology companies, including us, are uncertain and involve
complex legal and factual issues.
We cannot assure you that our patents will
prevent other companies from developing similar products or products which produce benefits substantially the same as our products,
or that other companies will not be issued patents that may prevent the sale of our products or require us to pay significant licensing
fees in order to market our products.
From time to time, we may need to obtain
licenses to patents and other proprietary rights held by third parties in order to develop, manufacture and market our products.
If we are unable to timely obtain these licenses on commercially reasonable terms, our ability to commercially exploit such products
may be inhibited or prevented. Additionally, we cannot assure investors that any of our products or technology will be patentable
or that any future patents we obtain will give us an exclusive position in the subject matter claimed by those patents. Furthermore,
we cannot assure investors that our pending patent applications will result in issued patents, that patent protection will be secured
for any particular technology, or that our issued patents will be valid or enforceable or provide us with meaningful protection.
If we are required to engage in expensive
and lengthy litigation to enforce our intellectual property rights, the costs of such litigation could be material to our results
of operations, financial condition and liquidity and, if we are unsuccessful, the results of such litigation could materially adversely
impact our entire business.
We may find it necessary to initiate litigation
to enforce our patent rights, to protect our trade secrets or know-how or to determine the scope and validity of the proprietary
rights of others. We plan to aggressively defend our proprietary technology and any issued patents if funding is available to do
so. Litigation concerning patents, trademarks, copyrights and proprietary technologies can often be time-consuming and expensive
and, as with litigation generally, the outcome is inherently uncertain.
Although we have entered into invention
assignment agreements with our employees and with certain advisors, if those employees or advisors develop inventions or processes
independently which may relate to products or technology under development by us, disputes may also arise about the ownership of
those inventions or processes. Time-consuming and costly litigation could be necessary to enforce and determine the scope of our
rights under these agreements.
We also rely on confidentiality agreements
with our strategic partners, customers, suppliers, employees and consultants to protect our trade secrets and proprietary know-how.
We may be required to commence litigation to enforce such agreements, and it is certainly possible that we will not have adequate
remedies for breaches of our confidentiality agreements.
Other companies may claim that our
technology infringes on their intellectual property or proprietary rights and commence legal proceedings against us which could
be time-consuming and expensive and could result in our being prohibited from developing, marketing, selling or distributing our
products.
Because of the complex and difficult legal
and factual questions that relate to patent positions in our industry, we cannot assure you that our products or technology will
not be found to infringe upon the intellectual property or proprietary rights of others. Third parties may claim that our products
or technology infringe on their patents, copyrights, trademarks or other proprietary rights and demand that we cease development
or marketing of those products or technology or pay license fees. We may not be able to avoid costly patent infringement litigation,
which will divert the attention of management away from the development of new products and the operation of our business. We cannot
assure investors that we would prevail in any such litigation. If we are found to have infringed on a third party’s intellectual
property rights, we may be liable for money damages, encounter significant delays in bringing products to market or be precluded
from manufacturing particular products or using particular technology.
Other parties may challenge certain of
our foreign patent applications. If such parties are successful in opposing our foreign patent applications, we may not gain the
protection afforded by those patent applications in particular jurisdictions and may face additional proceedings with respect to
similar patents in other jurisdictions, as well as related patents. The loss of patent protection in one jurisdiction may influence
our ability to maintain patent protection for the same technology in other jurisdictions.
Risks relating to our recent financing
Our recently acquired indebtedness
reduces our financial flexibility and could impede our ability to operate.
We consummated a private
placement on May 8, 2013 in which we issued an aggregate $9 million principal amount of Senior Convertible Notes and $1 million
principal amount of Junior Convertible Notes. The Senior Convertible Notes are payable in nine equal monthly installments starting
no later than October 1, 2013. The Junior Convertible Notes are payable once 2/3 of the principal amount of the Senior Convertible
Notes are repaid. Although the notes are payable through the issuance of shares of our common stock to the noteholders, our ability
to issue stock, instead of paying cash, to satisfy our payment obligations under the notes, is limited and subject to various
conditions (including trading volume and stock price conditions for our Senior Convertible Notes) that we may not be able to meet.
If we cannot meet these conditions, we could be required to repay some or all of the amounts due under the notes in cash, and
we may not have the funds available to make one or more of such payments when due. Even if we do have funds so available, the
use of cash to make such payments could adversely affect our ability to fund operations due to the diversion of necessary cash
flow to fund operations to utilization for note payments. Furthermore, the notes impose certain restrictive covenants on us which
may impede our ability to operate our business or raise further funds in the capital markets. For example, there are restrictions
on incurring additional indebtedness, with exceptions, while the notes are outstanding.
Risks relating to our common stock
We have issued a large number of
warrants and options, which if exercised would substantially increase the number of common shares outstanding.
On May 8, 2013, we
had 113,290,364 shares of common stock outstanding, and (a) we have warrants outstanding that, if fully exercised, would generate
proceeds of $10,664,800 and cause us to issue up to an additional 24,754,153 shares of common stock, and (b) we have options outstanding
to purchase common stock that, if fully exercised, would generate proceeds of $6,815,638 and result in the issuance of an additional
4,050,559 shares of common stock.
As disclosed in
“DESCRIPTION
OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES”
, we have also entered into a dilutive private placement transaction with
respect to the May 8, 2013 issuance of $9.0 principal amount of Senior Convertible Notes and $1.0 principal amount of Subordinated
Convertible Notes.
As a key component
of our growth strategy we have provided and intend to continue offering compensation packages to our management and employees
that emphasize equity-based compensation and would thus cause further dilution.
Historically, we have not paid dividends
on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.
We have never paid
cash dividends on our common stock. We intend to retain our future earnings, if any, to fund operational and capital expenditure
needs of our business, and we do not anticipate paying any cash dividends in the forseeable future. Furthermore, certain of the
terms of the Senior Convertible Notes and Subordinated Convertible Notes preclude us from paying dividends, and future financing
instruments may do the same. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for
our common stockholders in the forseeable future.
Our stock price may not stabilize
at current levels.
Our common stock
is quoted on the OTCQB. Since trading in our common stock began in January 2004, trading has been sporadic, trading volumes have
been low and the market price has been volatile. The closing price reported as of May 17, 2013, the latest practicable date, was
$
0.259 per share. Current quotations are not necessarily a reliable indicator of value and there is no assurance that the
market price of our stock will stabilize at or near current levels.
Future sales of our common stock
could depress our stock price.
Sales of a large number
of shares of our common stock, or the availability of a large number for sale, could materially adversely affect the per share
market price of our common tock and could impair our ability to raise funds in addition offering of our debt or equity securities.
In the event that we propose to register shares of common stock under the Securities Act of 1933 for our own account, certain
shareholders are entitled to receive notice of that registration to include their shares in the registration, subject to limitations
described in the agreements granting these rights.
USE OF PROCEEDS
We are not selling any of the shares of
common stock being offered by this prospectus and will receive no proceeds from the sale of the shares by the selling stockholders.
All of the proceeds from the sale of common stock offered by this prospectus will go to the selling stockholders at the time they
offer and sell such shares. We will bear all costs associated with registering the shares of common stock offered by this prospectus.
MARKET FOR REGISTRANT’S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Market information
Our common stock trades on the OTCQB under
the symbol “AXPW”. Trading in our common stock has historically lacked consistent volume, and the market
price has been volatile.
The following table shows the range of
high and low bid prices for our common stock as reported by the OTCQB. The quotations reflect inter-dealer prices, without retail
markup, markdown or commission and may not represent actual transactions.
Period
|
|
High
|
|
|
Low
|
|
First Quarter 2012
|
|
$
|
0.64
|
|
|
$
|
0.28
|
|
Second Quarter 2012
|
|
$
|
0.47
|
|
|
$
|
0.30
|
|
Third Quarter 2012
|
|
$
|
0.36
|
|
|
$
|
0.25
|
|
Fourth Quarter 2012
|
|
$
|
0.34
|
|
|
$
|
0.20
|
|
First Quarter 2013
|
|
$
|
0.38
|
|
|
$
|
0.27
|
|
Second Quarter 2013
|
|
$
|
0.29
|
|
|
$
|
0.14
|
|
Third Quarter 2013
|
|
$
|
0.20
|
|
|
$
|
0.12
|
|
Fourth Quarter 2013
|
|
$
|
0.14
|
|
|
$
|
0.10
|
|
First Quarter 2014
|
|
$
|
0.23
|
|
|
$
|
0.08
|
|
On April 14, 2014, the sale price for
our common stock as reported on the OTCQB was $0.1645
per share.
Securities outstanding and holders of
record
On April 14, 2014, there were approximately
400 shareholders of record for our common stock and 221,511,725 shares of our common stock outstanding.
Dividends
We have never paid dividends.
Information respecting equity compensation
plans
Summary Equity Compensation Plan Information
:
The following table provides summary information on our equity compensation plans as of December 31, 2013:
Equity Compensation Plan category:
|
|
Number of shares
Issuable on exercise of
Outstanding options
|
|
|
Weighted average
exercise price of
outstanding options
|
|
|
Number of shares
available for future
issuance under
equity
compensation plans
|
|
Compensation plans approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Directors’ Option Plan
|
|
|
1,222,847
|
|
|
$
|
0.69
|
|
|
|
1,777,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Employees and Officers Stock Option Plan
|
|
|
3,969,293
|
|
|
|
1.71
|
|
|
|
2,030,707
|
|
Total equity awards
|
|
|
5,192,140
|
|
|
$
|
1.22
|
|
|
|
|
|
The 2004 Directors’ Option Plan
is an equity compensation plan and the 2010 Plan is an unqualified plan. On December 18, 2013, the board of directors amended
both plans and ratified the changes on March 19, 2014, to increase the authorized shares for each plan to 3,000,000 shares
and 6,000,000 shares respectively. For certain positions, the Company enters into employment and other contracts that provide
for equity compensation arrangements other than those contemplated by the stockholder approved plans.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Management’s
Discussion and Analysis of Financial Condition and Results of Operations for the period ended December 31, 2013 is hereby incorporated by reference in their entirety from the Company’s Form 10-K for the year ended December 31,
2013, filed with the SEC on March 31, 2014
1
.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2013
The Company’s audited
financial statements for the years ended December 31, 2013 and 2012, respectively, are hereby incorporated by reference in
their entirety from the Company’s Form 10-K for the year ended December 31, 2013, filed with the SEC on March 31, 2014.
BUSINESS
The primary business of Axion Power International,
Inc. (the “Company”, Axion, “we”, “our”, or “us”) is to develop, design, manufacture
and sell advanced energy storage devices, components and systems that are based on our patented PbC® technology. We also manufacture
standard and specialty lead-acid batteries. Our PbC batteries and battery components, which are manufactured primarily through
the use of activated carbon as an alternative to lead in the battery’s negative electrode, have application to varied energy
system storage functions.
The Energy Storage Industry
The energy storage industry has traditionally been based on
battery, flywheel, capacitor, thermal, chemical systems, power to gas, gravity, pumped storage hydroelectricity, and compressed
air systems, to provide a temporary or back-up source for energy. The major industries utilizing energy storage systems are automotive
for stop/start, hybrid and electric vehicle applications, heavy duty truck and rail for hybrid applications, renewable energy for
storage and smoothing, and electrical utilities for back-up, energy smoothing and frequency regulation.
Energy storage for vehicles, including stop/start technology,
electric drive, hybrid electric cars, trucks and locomotives is a fundamental factor to improving vehicles’ economic, social,
and environmental sustainability. The combination of high fuel costs and increasingly more stringent government regulation of emissions,
fuel efficiency and mileage requirements for vehicles for passenger and freight transport, and other commercial applications, is
a major impetus for the development of new green technologies.
The electric power sector’s demands for energy storage
continue to increase. The amount of electricity which can be generated is relatively fixed over short periods of time, although
demand for electricity fluctuates throughout the day. Energy storage devices and systems store electrical energy for use as required,
even during periods when power is not generated. Electrical storage devices can manage the amount of power required to supply customers
at times when need is greatest, which is typically during peak load. These devices assist in regulating the flow of power from
renewable energy applications, like wind and solar power. The result is a system which is smoother and more dispatchable, which
makes it easier for grid operators to control the power output from those sources. Energy storage devices and systems can also
balance microgrids to achieve a good match between generation and load. They can provide frequency regulation, to maintain the
balance between the network's load and power generated, and can achieve a more reliable power supply for high tech industrial facilities.
There are several revenue opportunities (e.g. peak shaving,
load shifting, synchronized reserve, etc.) that can be accessed when a storage component is included in a renewable energy application.
The greatest current rate of return is achieved when the storage asset is focused on the frequency regulation sector of the demand
response market. Revenue rates are set per the Federal Regulatory Energy Commission’s (“FERC”) 'pay for
performance' regulations ( FERC Order No. 755 adopted in 2011 and FERC Order No. 784 adopted in 2013), which means that systems
that respond faster than other systems, and respond with measured accuracy within the parameter guidelines, will be paid at the
highest revenue rate. Solar photovoltaic farms as a stand- alone system cannot effectively participate in the ancillary markets
because of lack of availability (evening hours), intermittency and other factors. When a solar photovoltaic farm is combined with
a storage source, we believe the revenue provided by the system, when augmented with tax subsidies, is increased by more than
double when combined with participation in ancillary services such as frequency regulation. In addition, the storage system in
this application can be a source of emergency power if the grid goes completely down.
1
The
Company is eligible to incorporate by reference under General Instruction VII of Form S-1. Specifically, the Company
notes that it has met the requirements of paragraphs A. – D. of General Instruction VII, and that it has not been,
during the past three years, a registrant for an offering of “penny stock” as defined in Rule 3a51-1 as under
Rule 3a51-1.g.1., it has had net tangible assets (Stockholders Equity) of at least $2 million in all three of its last
fiscal years as set forth in its balance sheets for the years ended December 31, 2013, 2012 and 2011 (as reported in the
Forms 10-K of the Company for the years ended December 31, 2013 and 2012, respectively), of $9.6 million, $11.2 million and
$10.7 million, respectively.
Our Corporate History
Axion
Power Corporation, our wholly owned subsidiary, was formed in September 2003 to acquire and develop certain innovative battery
technology. Since inception Axion Power Corporation has been engaged in research and development (“R&D”) of new
technology for the production of our PbC batteries. On December 31, 2003, Axion Power Corporation engaged in a reverse acquisition
with Tamboril Cigar
Company, a public shell company whereby Axion Power Corporation became a wholly owned subsidiary of
Tamboril, which subsequently changed its name to Axion Power International, Inc.
In February 2006, we commenced operations
at our Clover Lane facility in New Castle, PA. We have utilized this space to manufacture our PbC and specialty lead-acid battery
products and to continue to produce and test prototypes which incorporate our developed technology. Our Clover Lane plant allows
us to manufacture batteries for sale under the Axion brand name; to manufacture for third parties under specific contract arrangements;
or to manufacture prototypes for our own use and testing, or for testing by our customers. Our facility has been fully tested and
found to be in compliance with emission standards established by new federal guidelines in accordance with the Clean Air Act–Title
III. In November 2010, we expanded into our Green Ridge facility, also in New Castle, PA, to house offices, research & development,
electrode manufacturing and warehousing.
Since inception, our operations have been
financed through the sale of equity and debt instruments to investors, as well as loans and proceeds from government grants, and
with minimal revenue generated from our operations. We transitioned from an R&D - based development stage company to a commercial
manufacturing company in the fourth quarter of 2012, and we believe that the transition is providing us with the growth opportunities
to commercialize our PbC technology and thereby improve our financial condition, cash flow and market presence.
Development History
Since 2008, we have invested in upgrading,
and where necessary, replacing existing battery manufacturing equipment in order to support our long range business plan. These
early improvements included the installation of a new automatic paste mixer and a fixed orifice pasting line for improved quality
and dimensional tolerances of battery plates, an automatic stacker for precise wrap and alignment of absorbed glass matt separator
that is needed for the production of our premium PbC products, the modernization of our second lead-acid production line; the rebuild
of five casting machines; the addition of new welding equipment; and a 35% expansion of our formation area. Subsequently, a new
robotic carbon electrode manufacturing line was installed at our Green Ridge Road facility in New Castle, PA. These initiatives
have provided the manufacturing framework and capability for improvements in our quality, cost and ability to deliver our products.
From March 2011 through 2013, we utilized
our capability and capacity primarily to produce specialty lead-acid batteries for a third party. Shipments of these products generated
sales of $8.6 million and $7.9 million, respectively, in 2013 and 2012. The flooded lead-acid batteries were manufactured in our
facility, with the purchaser carrying the cost of inventory and providing the raw materials required. As 2014 progresses, we expect
a decline in our lead-acid battery production and an increase in the production of our PbC batteries.
In 2011, we continued our automotive work
and added new OEM partners. There is an increasing body of empirical evidence being presented with respect to the lack of merit,
and/or practicality, of existing stop/start battery solutions, while the potential applicability of our PbC product gains more
traction. We and others believe that the fastest, and least expensive, method of reducing CO2 emissions from an internal combustion
engine vehicle, and the way to helping meet current and future Corporate Average Fuel Economy (“CAFE”) standards is
attained by equipping the vehicle with stop/start technology. The solution offered by our PbC technology combines low cost, with
a fast rate of charge acceptance, and achieves the specified stop/start performance that is needed to comply with CO2 emissions
regulations, while at the same time improving miles per gallon performance to help meet CAFE standards. We believe our PBC technology
is well suited for the emerging micro-hybrid market incorporating stop/start systems; therefore, we have devoted considerable
time and money in working with our supply chain partners and prospective customers in this area.
We continue our efforts in hybrid heavy
duty truck and hybrid locomotive market. Similar to the hybrid automotive market, battery charge acceptance, fast re-charge ability
and high cycle life are critical characteristics required in a product for the heavy duty truck and locomotive hybrid markets.
Most of our work in the heavy duty truck market has been in partnership with ePower Engine Systems, Inc. and with Norfolk Southern
Corporation in conjunction with their all electric and hybrid locomotive programs.
With the financial assistance provided
by the Pennsylvania Energy Development Authority and Commonwealth Financing Authority grants, we commissioned our first PowerCube
™
product onsite at our Clover Lane facility in 2011. The PowerCube was fully integrated by us and, in addition to the batteries,
contains a racking system, electronics and power equipment, battery management system, climate control and fire suppression systems.
As part of this undertaking, we entered into a partnership with Viridity Energy and PJM Interconnection (the largest regional
power transmission organization in the US which coordinates the movement of wholesale electricity for more than 61 million people
in all or parts of 13 states (http://www.pjm.com/about-pjm/who-we-are.aspx)). The PowerCube was network-connected to the PJM system
and allows us to respond through Viridity to curtailment and demand response signals from PJM and participate in frequency regulation.
Due to the implementation of the FERC “pay for performance” provisions, there are economic incentives to utilize our
PowerCube as fast response to these signals from PJM increases therate the utility will pay on a per kilowatt basis based on set
performance metrics.
Since the PowerCube can be scaled, we also
commenced development of smaller PowerCube units (mini-cubes). These mini-cube applications include residential storage (at levels
down to 10kW) and small commercial storage. The units can be connected to wind and solar power sources in addition to filtering
power directly from the grid. The end product will provide backup power, power quality, power smoothing, and potential peak shaving.
We are working with installers and integrators and have begun to take this product to market in North America, as was the case
with the Washington Naval Yard which was brought online in 2012 and has continued to function with all of the original equipment
and batteries since that time.
In November 2013, the Company announced
it had received the first in a series of expected orders, for our PowerCube that is being commissioned into a solar project.
The PowerCubes will provide storage for energy created by the solar panel system and also service the frequency regulation market.
The order includes batteries, racks, wiring, and data communication system encompassing electronics coordination. Shipment and
installation began in the fourth quarter of 2013, and the first installation is being completed early in 2014. Axion's PowerCube
has proven its effectiveness and reliability by providing daily frequency regulation and demand response services in the PJM grid
utility network for the last two years. The solar storage adaptation of the PowerCube was developed with data extracted from the
PJM network model, including the important "frequency regulation market" component.
We have consummated two major financing
transactions in recent years. On February 3, 2012, we completed a registered direct common stock offering at a price of $0.35 per
share. This straight equity transaction provided total gross proceeds of $9.4 million and net cash proceeds of $8.6 million to
us after allowing for placement fees and expenses of the offering. On May 8, 2013, the Company consummated the sale of $9 million
in aggregate principal amount of senior convertible notes due on February 8, 2015 and warrants to various institutional investors).
At closing, the Company received $2.76 million in net proceeds. The $6,000,000 balance of the gross proceeds was deposited into
a series of control accounts in the Company’s name, and withdrawals from the control accounts are permitted upon meeting
certain conditions. Simultaneously, the Company raised $1 million through the sale of subordinated notes to insiders and one accredited
investor. The 2013 financing transactions were exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended.
Our Business and Products
We have devoted more than ten years to
research and development on our PbC technology. Our work has focused on developing our intellectual property, characterizing baseline
performance, developing proprietary treatment processes for the activated carbon we use in our electrodes, developing proprietary
designs and manufacturing techniques for electrode assemblies and fabricating a series of material and design evaluation prototypes
that range from single cell to multi-cell batteries for use in energy storage devices and systems.
Our PbC energy storage device is a hybrid
battery supercapacitor that combines the simplicity of lead-acid batteries with the faster recharge rate, longer cycle life and
greater charge acceptance of supercapacitors. The result is a relatively low cost device that has versatility of design that will
allow differing iterations to deliver maximum power, maximum energy, or a range of balances between the two.
Our PbC technology is protected by thirteen
issued U.S. patents and other proprietary features and structures, and we typically have a number of additional patent applications
in process at any point in time. The resulting devices are technically sophisticated yet simple in design. The carbon negative
electrode assemblies are fabricated from readily available raw materials using, for the most part, standard industrial processes
and techniques. The PbC negative electrodes that are then assembled into PbC batteries can be used with the same cases, covers,
positive electrodes, separators and electrolyte that are used in conventional lead-acid batteries. Our PbC batteries can be assembled
with the same equipment and methodology commonly used for manufacturing conventional lead-acid batteries. PbC batteries use significantly
less lead than standard lead-acid batteries with a comparable footprint. Moreover, the lead, plastics and acid employed, just like
lead-acid batteries, can be routinely and profitably recycled at existing recycling facilities around the world. As is the case
with the lead-acid battery, we expect that in the United States our PbC battery will be fully recycled 99.2% of the time (United
States Environmental Protection Agency, Solid Waste and Energy Response [5306P]).
We believe our advanced battery technologies
are uniquely situated to answer the current challenges facing the lead-acid battery industry and newer battery chemistries
such as lithium-ion, nickel metal hydride, etc. While we further commercialize and continue to explore various potential applications
for our PbC technology, the two facilities in New Castle, Pennsylvania provide us with both an excellent R&D facility and a
production plant in which to produce our advanced energy storage devices. In manufacturing our PbC battery using conventional lead-acid
battery production methods, we provide proof to our potential future PbC negative electrode customers that our product is suitable
for immediate use in their lead-acid battery factories.
As we transitioned to commercial manufacturing,
in 2010 we entered into a long term lease for an additional New Castle, Pennsylvania facility that we had been subleasing since
2008 (our Green Ridge Road facility). This 45,000 square foot facility currently houses our Gen II robotic PbC negative electrode
production line. In addition, during this transition we:
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refined our fabrication methods for carbon sheeting, packet assembly and other key components of
our carbon electrode assemblies;
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demonstrated the feasibility of manufacturing our PbC device and our other technologies, using
standard techniques and equipment;
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demonstrated that the proper quality control can be achieved on our robotic PbC negative electrode
manufacturing line;
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demonstrated and documented the performance of our products in key applications; and
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demonstrated that we can respond appropriately to anticipated and unanticipated technical and manufacturing
challenges.
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Our Clover Lane facility has a permitted
manufacturing capacity of 3,000 batteries per day, so we currently have excess lead-acid battery manufacturing capacity. This allows
us to dedicate a portion of this production capacity to direct sale high margin specialty batteries that are required in relatively
small numbers, as well as have the flexibility to respond to industry requests to provide contract manufacturing. We are
also able to respond quickly if other opportunities to manufacture traditional products present themselves.
Meanwhile, we continue to develop our lead
carbon technology for use in a variety of applications in different markets including:
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motive power, hybrid
and stop/start;
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utility grid connected
power and frequency regulation;
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renewable energy buffering;
and
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We believe demand for cost-effective energy
storage systems produced using our PbC technology will grow rapidly. We also believe that our technologies can be among the leaders
in the high performance battery market, and that our competitive advantages will include:
-
excellent partial state –of-charge performance when compared
to advanced lead-acid and lithium ion products;
-
significantly longer life in string applications with minimal battery management when
compared to advanced lead-acid batteries;
-
dramatically better charge acceptance when compared to advanced lead-acid batteries;
-
significantly faster recharge rate when compared to advanced lead-acid and lithium ion
and other storage chemistries;
-
significantly longer cycle lives in deep discharge applications when compared to advanced
lead-acid and similar life when compared to lithium ion batteries;
-
inherent voltage equalization among cells in individual batteries and especially among
batteries in string applications of all quantities which aids performance and length of battery life ; and
-
superior recovery economics and end of life value (PbC batteries should achieve an average
recovery of approximately $0.30 per pound upon recycling as compared to a disposal cost of approximately $0.45 per pound for lithium
ion batteries).
We anticipate our ability to establish and maintain a competitive
position will be dependent on several factors, including:
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the availability of raw materials and key components;
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our ability to manufacture commercial carbon electrode assemblies;
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our ability to operate facilities that can fabricate PbC negative electrode assemblies and commercially manufacture our PbC
device with consistent quality at a predictable cost;
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our ability to establish and expand a customer base;
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our ability to execute and perform on any future strategic distribution agreements with tier one and/or tier two battery manufacturers;
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our ability to compete against established, emerging, and other storage technologies;
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the market for batteries in general; and
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our ability to attract and retain key personnel.
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Our objective has consistently been to
become an industry leader in the development, production and sourcing of components for low cost, high performance energy storage
systems. We plan to achieve this objective by pursuing the following core strategies:
-
Platform technology business model. We are implementing a platform
technology business model that will focus on developing and manufacturing carbon electrode assemblies that we can offer for sale
to established battery manufacturers who want to use our PbC carbon electrode products in their batteries.
-
Leverage relationships with thought leaders. We are engaged in
discussions with industry consortia, research institutions, automotive OEMs, rail and trucking transportation providers and other
thought leaders in the fields of utility applications and hybrid electric vehicle technology. As we develop our relationships in
the field of energy storage research, we believe we will improve our access to potential suppliers and customers.
-
Leverage relationships with battery manufacturers. Our business
model is based on the premise that, as we continue forward, we can most effectively address the needs of the market by selling
PbC negative electrode assemblies to established lead-acid battery manufacturers who want to add advanced battery technology to
their existing product lines. This business model should allow us to leverage the business abilities, manufacturing facilities
and distribution networks of established manufacturers in order to reduce our time to market and increase our potential market
penetration.
-
Build a recognized brand. We believe strong brand name recognition
is important in order to increase product awareness and to effectively penetrate the mass market. We intend to differentiate our
brand by emphasizing our combination of high performance and low total cost of ownership per storage cycle.
-
Focus on specific markets. Markets for motive power, utility grid
connected power, frequency regulation, standby power (UPS) and military applications are becoming increasingly attractive. We are
actively pursuing the use of our lead carbon technology products in these emerging market sectors.
-
Maintain our technical advantage and reduce manufacturing costs.
We intend to maintain our technical advantage by continuing to invest in R&D in order to improve the performance of our PbC
devices and other technologies and to continue to lower our manufacturing costs. Our R&D focus will now be working with prospective
customers on the commercial application of our PbC technology to fit their unique requirements.
The battery industry is mature, capital
intensive, heavily regulated, highly competitive and averse to product performance risks associated with radical departures from
established technology. We believe we will be able to make a credible entry into the battery market as we continue to prove the
advantages of our PbC device technology in projects with end users in our targeted markets. Therefore, our business plan has had
two discrete phases: the development phase (including prototype and demonstration) and the commercialization phase.
In the fourth quarter of 2012, we began
early stage commercialization of our PbC technology products. We began implementation of a platform technology business model including
fine tuning both the development and manufacturing of our proprietary carbon electrode assemblies that are unique to our PbC batteries.
In addition to using these assemblies in our batteries, we eventually intend to sell the assemblies to other established battery
manufacturers that are seeking to market more advanced batteries. We believe a platform technology business model will reduce our
time to market, allow us to rely on the established business abilities of existing manufacturers and forge a strong brand identity
for our PbC products, while, at the same time, allow us to focus on a narrow band of value-added activities that should minimize
our investment and maximize our profitability.
Our Patents and Intellectual Property
We own thirteen
issued U.S. patents at the date of this report covering various aspects of our PbC technologies, and we typically have a number
of patent applications in process at any point in time. There is no assurance that any of the pending patent applications will
ultimately be granted. Our issued patents are:
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U.S. Patent No. 6,466,429 (expires May 2021) - Electric
double layer capacitor
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U.S. Patent No. 6,628,504 (expires May 2021) - Electric
double layer capacitor
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U.S. Patent No. 6,706,079 (expires May 2022) - Method
of formation and charge of the negative polarizable carbon electrode in an electric double layer capacitor
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U.S. Patent No. 7,006,346 (expires April 2024) - Positive
Electrode of an electric double layer capacitor
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U.S. Patent No. 7,110,242 (expires February 2021) - Electrode
for electric double layer capacitor and method of fabrication thereof
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U.S. Patent No. 7,119,047 (expires February 2021) - Modified
activated carbon for carbon for capacitor electrodes and method of fabrication thereof
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U.S. Patent No. 7,569,514 (expires May 22, 2021) - Method
of Fabrication of Modified Activated Carbo
n
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U.S. Patent No. 7,881,042 (expires March 2027) –
Activated Carbon Electrode with PTFE B
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U.S. Patent No. 7,998,616 (expires February 2028) –
Negative Electrode for a Hybrid Energy Storage Device
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U.S. Patent No. 8,023,251
(expires November 2028) – Hybrid Energy Storage Device and Method of Making Same
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U.S. Patent No. 8,192,865 (expires October 2027) – Negative
Electrode for a Hybrid Energy Storage Device
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U.S. Patent No. 8,202,653 (expires February 2028) –
Electrode Grid Structure
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U.S. Patent No. 8,347,468 (expires February 2031) –
Method of Making a Current Collector
|
Presently, we have no obligation to pay
any royalties or license fees with respect to the commercialization of our PbC device technology, and we are not subject to any
field of use restrictions. We believe our patents and patent applications, along with our trade secrets, know-how and other intellectual
property will be critical to our success.
Our ability to compete effectively with
other companies will depend on our ability to maintain and protect the PbC device intellectual property and technology. We plan
to file additional patent applications in the future. However, the degree of protection offered by our existing patents or the
likelihood that our future applications will be granted, or the degree of protection afforded by future patents, if granted, is
uncertain. Competitors in both the United States and foreign countries, many of which have substantially greater resources and
have made substantial investment in competing technologies, may have, or may apply for and obtain patents that may prevent, limit
or interfere with our ability to make and sell products based on our PbC device technology. Competitors may also intentionally
infringe on our patents. The prosecution and defense of patent litigation is both costly and time-consuming, even if the outcome
is favorable to us. An adverse outcome in the defense of a patent infringement suit could subject us to significant liabilities
to third parties and prevent us from using all or any portion of the technology covered by such a patent. Although third parties
have not asserted any infringement claims against us to date, there is no assurance that third parties will not assert such claims
in the future.
We also rely on trade secrets and know-how,
and there is no assurance that others will not independently develop the same or similar technology or obtain unauthorized access
to our trade secrets, know-how and other unpatented technology. To protect our rights in these areas, we require all employees,
consultants, advisors and collaborators to enter into strict confidentiality agreements. These agreements may not provide meaningful
protection for our unpatented technology in the event of an unauthorized use, misappropriation or disclosure. While we have attempted
to protect the unpatented proprietary technology that we develop or acquire, and will continue to attempt to protect future proprietary
technology through patents, copyrights and trade secrets, we believe that our success will depend, to a large extent, upon continued
innovation and technological expertise.
In general, the level of protection afforded
by a patent is directly proportional to the ability of the patent owner to protect and enforce those rights through legal action.
Since our financial resources are limited, and patent litigation can be both expensive and time consuming, there can be no assurance
that we will be able to successfully prosecute an infringement claim in the event that a competitor develops a technology or introduces
a product that infringes on one or more of our patents or patent applications. There can be no assurance that our competitors will
not independently develop other technologies that render our proposed products obsolete. In general, we believe the best protection
of our proprietary technology will come from market position, technical innovation, speed-to-market, and product performance. There
is no assurance that we will realize any benefit from our intellectual property rights.
Our Competition
Our PbC technology is competitive with
technologies being developed by a number of new and established companies engaged in the manufacture of energy storage components,
devices and systems. In addition, many universities, research institutions and other companies are developing advanced electrochemical
energy storage technologies including:
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symmetric supercapacitors;
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asymmetric supercapacitors with organic electrolytes;
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nickel metal hydride batteries;
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other advanced lead-acid devices; and
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Other business entities are developing
advanced energy production technologies like fuel cells, solar cells and windmills which may use our products, or, in some cases,
compete with our products. Since some of our competitors are developing technologies that may ultimately have costs similar to,
or lower than, our projected costs, there can be no assurance we will be able to compete effectively.
Our competitors with more diversified product
offerings may be better positioned to withstand changing market conditions. Some of our competitors own, partner with, or have
longer term or stronger relationships with suppliers of raw materials and components, which could result in them being able to
obtain raw materials on a more favorable basis than us. It is possible that new competitors or alliances among existing competitors
could emerge and rapidly acquire significant market share, which would harm our business.
The development of technology, equipment
and manufacturing techniques and the operation of a facility for the automated production of rechargeable batteries require large
capital expenditures. In order to minimize our capital investment in manufacturing facilities and establish strong brand name recognition
for our products, our overall strategy is to negotiate strategic alliances and other production agreements with established battery
manufacturers that want to add high-performance co-branded products to their existing product lines. There can be no assurance
that our PbC platform technology business model will succeed in the battery industry.
Raw Materials and Components
During the research stage, we used available
raw materials, off-the-shelf components manufactured by others and hand-made components fabricated by our staff. When we begin
manufacturing our PbC products in large commercial quantities, we will need to establish reliable supply channels for commercial
quantities of raw materials and components. We believe established suppliers of raw materials and components will be able to satisfy
our requirements on a timely basis. However, we do not have any long-term supply contracts and the unavailability of necessary
raw materials or components could delay the production of our products and impact our results of operations.
Lead is an important raw material in lead-acid
batteries and currently accounts for 80% of our raw material and component costs in the specialty conventional lead-acid batteries
we now manufacture. Lead prices historically, have fluctuated similar to other industrial commodity metals. Although our PbC battery
does not require as much lead as a conventional lead-acid battery, lead is still an important raw material cost component.
Environmental Protection
Lead is a toxic material that is an important
raw material in our PbC batteries. We also use, generate and discharge other toxic, volatile and hazardous chemicals and wastes
in our research, development and manufacturing activities. We comply with federal, state and local laws and regulations regarding
pollution control and environmental protection. Under some statutes and regulations, a government agency, or other parties, may
seek to recover response costs from operators of property where releases of hazardous substances have occurred or are ongoing,
even if the operator was not responsible for such release or otherwise at fault. In addition, more stringent laws and regulations
may be adopted in the future, and the costs of complying with those laws and regulations could be substantial. If we fail to control
the use of, or to adequately restrict the discharge of, hazardous substances, we could be subject to significant monetary damages
and fines, or forced to suspend certain operations. Our facility was previously tested and found to be in compliance with emission
standards as established by new federal guidelines in accordance with the Clean Air Act – Title III.
Our Research and Development
As we embark on our second full year of
commercialization, we acknowledge that R&D activities are still an integral part of our business. We engage in extensive R&D
activities for the purpose of improving our PbC technology and our proposed products. We remain focused on continuous improvement
increase our manufacturing efficiency and reduce our total supply chain costs in order to maximize our competitive advantage. Our
R&D organization works closely with our engineering and business development teams, our suppliers and our potential customers
as we continue to improve our product design and lower our manufacturing costs as well as our total supply chain costs. Going forward
R&D will be primarily focused working with prospective customers to determine how our PbC technology best fits their unique
energy storage system requirements. During 2013 and 2012, we spent $2.2 million and $2.6 million, respectively, on R&D.
Our Employees
As of December 31, 2013 we employed a staff
of 83, including a 10 member scientific and engineering team, and 50 people who are involved principally in manufacturing. We are
not subject to any collective bargaining agreements, and we believe we have a good relationship with our employees.
Description of Properties
On March 10, 2013, we exercised our option
for a 5 year renewal on our lease on existing space at our manufacturing plant located at 3601 Clover Lane in New Castle, Pennsylvania.
The salient terms of the renewal lease are as follows:
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The renewal term commenced on March 10, 2013 with a term of five years.
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The lease may be extended for one additional five-year term with future rent to be negotiated at
a commercially reasonable rate.
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The battery manufacturing facility includes 70,438 square feet of floor space, including 7,859
square feet of office, locker, lab and lunch area, 46,931 square feet of manufacturing space, 1,488 square feet of dedicated lab
space, 9,200 square feet of storage buildings and 5,000 square feet of basement area.
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The rental amount for the initial term is $16,700 per month, which is fixed through March 2015.
In addition to the monthly rental, we are obligated to pay all required maintenance costs, taxes and special assessments, maintain
public liability insurance, and maintain fire and casualty insurance for an amount equal to 100% of the replacement value of the
leased premises.
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On May 26, 2011 we executed an addendum to the existing lease agreement which resulted in the lease
of an additional 2,160 square feet of additional space for $500.00 per month. There were no other changes to the existing lease.
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With the execution of the addendum we now lease 72,598 square feet for a monthly rent of $17,200.
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On November 4, 2010, the Company entered
into a Commercial Lease (“Lease”) with Becan Development, LLC (“Lessor”) to lease a 45,000 square foot
building, located at 209 Green Ridge Road in New Castle PA, (the “Property”), which the Company currently occupies
to house various offices and manufacturing facilities. The salient terms of the Lease are as follows:
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The Lease term
commenced on January 1, 2011 and the term expires on December 31, 2015.
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The Lease may be
extended for two 5-year terms, by giving notice not less than 30 nor more than 120 days before the expiration of the initial term
or first renewal term (as applicable). The renewal leases shall be on terms substantially similar to the terms of the initial Lease
except for any adjustment to rent, if warranted, as mutually agreed upon by Lessor and the Company.
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The rental amount
for the initial term is $19,297 per month and is on a “triple net” basis.
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If the Company
is able to obtain sufficient funding from either the federal or state government or agencies, and it enters into a binding agreement
to purchase the Property, the Lease shall be immediately terminated and Lessor shall credit the most recent 6 months of actual
rental payments made to Lessor against the purchase price of the Property.
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The Company also
has a right of first refusal to purchase the property within 30 days of receipt of notice of a third party offer from Lessor upon
substantially the same terms as those offered by the third party.
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The Lease contains market terms on standard
provisions such as defaults and maintenance.
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LEGAL PROCEEDINGS
From time to time, we are involved in
lawsuits, claims, investigations and proceedings, including pending opposition proceedings involving patents that arise in the
ordinary course of business. There are no matters pending that we expect to have a material adverse impact on our business, results
of operations, financial condition or cash flows.
MANAGEMENT
Our board of directors
directs the management of the business and affairs of our company as provided in our certificate of incorporation, our by-laws
and the General Corporation Law of Delaware. Members of our board of directors keep informed about our business through discussions
with senior management, by reviewing analyses and reports sent to them, and by participating in board and committee meetings.
Board Leadership Structure and
Risk Oversight; Diversity
Our Company is
led by Thomas Granville, who has served as chief executive officer and chairman of the board since 2005 (he also served as interim
Principal Financial Officer effective as of August 2, 2013 until the newly announced Chief Financial Officer, Stephen Graham, joined
us on October 21, 2013.) Our board of directors is divided into three classes of directors that serve for staggered three-year
terms. Two of our current board members have been elected to serve for terms that expire on the date of our 2014 Annual Meeting;
one has been elected to serve for term that expires on the date of our 2015 Annual Meeting; and two were elected at the 2013 Annual
Meeting to serve for a term that expires on the date of our 2016 Annual Meeting. The board has four standing committees –
audit, compensation, nominating and technology. The Audit Committee is comprised solely of independent directors (except for Charles
Trego), and each committee has a separate chair. Our Audit Committee is responsible for overseeing risk management, and our full
board receives periodic reports from management.
Our board leadership
structure is used by other smaller public companies in the Unites States, and we believe that this leadership structure is effective
for the Company. We believe that having a combined Chairman/CEO and chairs for each of our board committees is the correct form
of leadership for our Company. We have a single leader for our Company and oversight of Company operations by experienced directors,
three of whom are also committee chairs. We believe that our directors provide effective oversight of the risk management function,
especially through the work of the Audit Committee and dialogue between the full board and our management.
The Company does
not currently consider diversity in identifying nominees for director. Due to the small size of the Company, the priority has been
in attracting qualified directors, and issues such as diversity have not yet been considered.
The following
table identifies our current directors and specifies their respective ages and positions with our Company.
Name
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Age
|
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Position
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Thomas Granville
|
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69
|
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Chief Executive Officer and Director
|
David DiGiacinto(1)
|
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60
|
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Director
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Michael Kishinevsky
|
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47
|
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Director
|
Howard K. Schmidt, Ph. D.
|
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55
|
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Director
|
Charles R. Trego(2)
|
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63
|
|
Director
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D. Walker Wainwright
|
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63
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Director
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(1)
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Mr. DiGiacinto was appointed to the Board effective as of February 1, 2014.
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(2)
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Mr. Trego was our Chief
Financial Officer until August 2, 2013.
|
Thomas
Granville
, has served on our board of directors since February 2004 and is both our chairman of our board of directors
and chief executive officer. Mr. Granville served as the president of a New York State elevator company that specialized in the
installation and maintenance of elevators, escalators, moving walkways and other building transportation products. Mr. Granville
also served 15 years as treasurer and ten years as the president of the National Elevator Industry Inc., a trade association that
represents elevator manufacturers and contractors, where his duties included labor negotiations for national contracts and oversight
duties to a $2.3 billion national pension fund. Mr. Granville has also been a partner, or the general partner, of a number of
real estate partnerships that owned multi-family housing, commercial real estate and a cable television company. Mr. Granville
is a 1967 graduate of Canisus College. (BA - Business Administration). The Company has determined that Mr. Granville should serve
as a director due to his position as senior executive officer of the Company, which gives him valuable insight, as well as his
prior managerial experience which provides unique insight for the Board into the operations of the Company.
David
T. DiGiacinto,
is currently the elected Controller for the City Of Bethlehem, and has managed
his own Business Consulting Company, BETHNY Enterprise, Inc. From January 2010 thru January 2013, he served as an elected
Councilman for the City of Bethlehem. He also serves as a Managing Director for the COLMAN Group. He has independent
affiliate consulting agreements with the COLMAN Group and Oriel Stat A Matrix. From December of 2011 thru November of 2012,
he was a Vice President of ConAgra Foods Inc. which acquired National Pretzel Company in 2011. From December 2009-December
2011,, Mr DiGiacinto was an Executive Vice President/General Manager and Director for the National Pretzel Company. From
April 1, 2008 until March 31, 2009, Mr. DiGiacinto was President and CEO (and Director) of Minrad International, Inc., which
was merged with Piramal Critical Care in February of 2009. From 2000 to March 2008, Mr. DiGiacinto was a Senior Managing
Director of Spencer Trask Specialty Group, an investment firm, focused on investing in emerging and development companies in
the Life Sciences arena. From December 1982 to March 2000, he worked at Pfizer, Inc. in various positions including sales,
marketing, business development and general management in the Chemical/Food Science and Consumer Health Care Groups.
Currently Mr. DiGiacinto serves on the Board of Directors of Penn Sheet Metal, LV and Board of Advisors of Gusmer
Enterprises, Inc. He was a director of Vyteris, Inc. from 2000 through January 2011. He holds a BS in Engineering from the
U.S. Military Academy at West Point. The Company has determined that Mr. DiGiacinto should serve as a director due to his
background in marketing, investment banking/private equity and as an executive and director of other public and private
companies.
Michael
Kishinevsky
, is an independent director who has served on our board since June 2005. Mr. Kishinevsky is a Canadian
lawyer who had been principally engaged in the practice of corporate and commercial law from February 1995 until August 2005.
For five years Mr. Kishinevsky served as general legal counsel for C&T. Mr. Kishinevsky currently serves as a director of
Sunrock Consulting Ltd., a company he co-founded in October 1995, which specializes in the import and distribution of carbon
black and synthetic rubber. He is also the president and director of SunBoss Chemicals Corp., a corporation specializing in
chemical additives for the custom rubber mixing industry. Mr. Kishinevsky is a 1989 graduate of the University of Calgary
(B.Sc. in Cellular, Molecular and Microbial Biology and B.Sc. in Psychology) and a 1993 graduate of the University of Ottawa
Law School. Mr. Kishinevsky was called to the bar in the Ontario courts in 1995 and is a member of the Law Society of Upper
Canada. The Company has determined that Mr. Kishinevsky should serve as a director due to his legal background as well as his
import and distribution experience which provides expertise on the Board with regard to product distribution.
Howard
K. Schmidt, Ph.D.,
is an independent director, who has served on our board of directors since April, 2005. Dr.
Schmidt has been employed as a Petroleum Engineering Consultant at Saudi Aramco since August, 2009. Dr. Schmidt is an expert
in the field of carbon nanotechnology and single-wall carbon nanotubes, and occasionally acts as an expert witness in
nanotechnology patent litigation. He founded AOTA Energy, LLC in mid-2009 to pursue long-term research in renewable energy
and sustainable water technologies. Prior to Aramco, Schmidt served as a Senior Research Fellow in the Department of Chemical
and Biomolecular Engineering at Rice University in Houston, Texas. Between September, 2003 and March, 2008, he was the
Executive Director of the Carbon Nanotechnology Laboratory (the “CNL”) at Rice University. Before joining CNL,
Dr. Schmidt operated Stump Partners, a Houston-based consultancy firm and was involved in two Internet ventures. In 1989, Dr.
Schmidt founded SI Diamond Technology, Inc., a company that received the prestigious R&D 100 Award from Research and
Development Magazine in 1989, went public in 1993, and recently changed its name to Applied Nanotech Holdings, Inc. Dr.
Schmidt holds two degrees from Rice University (BS-Electrical Engineering, 1980 and Ph.D.-Chemistry, 1986). The Company has
determined that Dr. Schmidt should serve as a director due to his unique and extensive technical knowledge.
Charles
R. Trego,
joined the Company as Chief Financial Officer on April 1, 2010 and resigned on August 2, 2013. He
was elected as a director on September 26, 2013. He most recently served as Executive Vice President and Chief Financial
Officer of Minrad International, an Amex-listed pharmaceutical and medical device company in Orchard Park, NY. Minrad was
acquired by India's Piramal Healthcare in early 2009, and Trego was an integral part of the acquisition strategy and managed
the bridge financing through the transition. He served as a consultant providing financial management services to several
companies from April 2009 to February 2010. Prior to that, from 2005 to 2008, he was Senior Vice President and Chief
Financial Officer of Elmira NY-based Hardinge Inc, a Nasdaq-listed global machine tool company ($327 million in annual
revenue), and from 2003 to 2005 he was Chief Financial Officer and Treasurer of Latham NY-based Latham International ($180
million in annual revenue), a privately held manufacturer and marketer of swimming pool components, His career began with a
position as Senior Auditor with Ernst & Whinney in Dayton, and continued with financial officer positions with increasing
responsibility with Ponderosa Inc., Bojangles of America, Rich Sea Pak, Rymer Foods and Rich Products Corporation. During his
14-year tenure as Chief Financial Officer at Rich Products, revenue increased from $650 million to more than $1.8 billion. He
has over 30 years of experience as a financial officer of global middle businesses across several industries and includes
private (family), public and private equity ownership structures. He has served as the chief financial officer of startup,
turnaround, restructuring and growth businesses with revenue ranging from $25 million to $2 billion. Trego graduated from the
University of Dayton in 1972 (BS in Accounting) and in 1978 (MBA). He achieved his CPA designation in 1973 from the State of
Ohio. The Company has determined that Mr. Trego should serve as a director due to his long term finance and accounting experience.
D.
Walker Wainwright
, is an independent director who was appointed to our board of directors in January 2007. He is
the founder and Chairman of American Intermodal Container Manufacturing Co., LLC, a manufacturing concern to be located in
Fulton, NY. He is the former Chairman of Interboro Insurance Company, a provider of personal lines insurance products in New
York State. He is also the founder and chief executive of Wainwright & Co. LLC, an independent financial advisory firm
and investment manager. In this capacity he is the manager of a fund of hedge funds titled Dunemere Investor Partners, LP.
Formerly a Managing Director in investment banking at Smith Barney, Inc. and at Kidder, Peabody & Co., Mr. Wainwright has
over 37 years’ consulting, banking and investment banking experience. Having directed Kidder’s investment banking
efforts in the Asia Pacific Region, he has extensive international experience and has lived in Australia and Lebanon. Mr.
Wainwright began his career at Chemical Bank and, subsequently, the Schroder Group. He is a graduate of Stanford University
(A.B. – 1972) and of Columbia University (M.B.A. – 1976). The Company has determined that Mr. Wainwright should
serve as a director due to his long term finance and banking experience.
Executive officers.
The following
table identifies our current non-director executive officers and specifies their respective ages and positions with the Company.
(1)
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Philip S. Baker
|
|
65
|
|
Chief Operating Officer
|
Vani Kumar Dantam
|
|
54
|
|
Senior Vice President
|
Philip S.
Baker
joined the Company as Chief Operating Officer on April 1, 2010. He was with Santa Fe Springs CA-based Trojan
Battery Company from 1997 to 2009. From 2006 to 2009 he was Senior Vice President and General Manager of a new battery facility
for which he led all the phases of development and operations in Sandersville, GA. Baker guided the lead-acid battery plant from
negotiations and permitting forward, and is considered to be an expert in quality control and documentation, productivity and the
maximization of uptime, automation and the management of environmental issues. Prior to Sandersville, Baker served from 2001 to
2005 at the Trojan plant in Lithonia GA as Senior Vice President and General Manager, where he executed a turn-around in leadership,
quality and output, introduced Kaizen events and Six-Sigma tools and improved productive output by 20% in critical bottleneck areas.
Before Lithonia, Baker worked for Trojan in Santa Fe Springs as Director of Operations. He was with privately held Wyomissing PA-based
Glen-Gery Corporation, a manufacturer of building materials where 700 employees reported upstream to him. He began his career at
the Houston Brick & Tile Company. He is a graduate of Georgia Institute of Technology in 1971 (BS in Ceramic Engineering).
Vani Kumar
Dantam
joined the Company as Senior Vice President-Business Development, Sales and Marketing on January 23, 2012.
From 2010 – 2011, Mr. Dantam served as the Vice President – Business Development & Sales for Ener 1, a manufacturer
of EV and HEV batteries. During his tenure with Ener 1, Dantam developed over 35 comprehensive proposals for new global customers,
building a pipeline of over $500 million in EV and HEV battery business. From 1994 – 2010, Dantam was employed with Remy
International, as Director – Sales & Marketing, Global Director – Heavy Duty Sales & Marketing (2004-2009)
and Global Director – Hybrid & Traction Motor Sales & Business Development (2009 – 2010). Mr. Dantam holds
an MBA (Finance and International Business) from Indiana University, an MS, Mechanical Engineering from Vanderbilt University
and a BE, Metallurgical Engineering from Banaras Hindu University- in India.
Presiding Director
Our Chief Executive
Officer, Thomas Granville, acts as the presiding director at meetings of our board of directors. In the event that Mr. Granville
is unavailable to serve at a particular meeting, responsibility for the presiding director function will rotate among the chairmen
of each of the committees of our board of directors.
Corporate Governance
Our board of directors
believes that sound governance practices and policies provide an important framework to assist them in fulfilling their duty to
stockholders. Our board of directors is working to adopt and implement many “best practices” in the area of corporate
governance, including separate committees for the areas of audit and compensation, careful annual review of the independence of
our Audit and Compensation Committee members, maintenance of a majority of independent directors, and written expectations of management
and directors, among other things. In 2012, all incumbent directors attended 75% of our meetings of the board of directors.
Code of Business Conduct and Ethics
Our board of
directors has adopted a Code of Business Conduct and Ethics, which has been distributed to all directors, officers, and employees
and will be given to new employees at the time of hire. The Code of Business Conduct and Ethics contains a number of provisions
that apply principally to our Chief Executive Officer, Chief Financial Officer and other key accounting and financial personnel.
A copy of our Code of Business Conduct and Ethics can be found under the “Investor Information” section of our website
at
www.axionpower.com
. We intend to disclose future amendments to certain provisions of
our Code of Business Conduct and Ethics, or waivers of such provisions, applicable to our directors and executive officers, at
the same location on our web site identified above. The inclusion of our web site address in this proxy statement does not include
or incorporate by reference the information on our web site into this proxy statement.
Communications with the Board of
Directors
Stockholders and
other parties who are interested in communicating with members of our board of directors, either individually or as a group, may
do so by writing to Thomas Granville, c/o Axion Power International, Inc., 3601 Clover Lane, New Castle, Pennsylvania, 16105. Mr.
Granville will review all correspondence and forward to the appropriate members of the board of directors copies of all correspondence
that, in the opinion of Mr. Granville, deals with the functions of the board of directors or its committees or that he otherwise
determines requires their attention. Concerns relating to accounting, internal controls or auditing matters should be immediately
brought to the attention of our audit committee and will be handled in accordance with procedures established by that committee.
Director Independence
Our board of directors
has determined that three of our current directors would meet the independence requirements of the NYSE MKT if such standards applied
to the Company. In the judgment of the board of directors, Mr. Granville and Mr. Trego do not meet such independence standards.
In reaching its conclusions, the board of directors considered all relevant facts and circumstances with respect to any direct
or indirect relationships between the Company and each of the directors, including those discussed under the caption “Certain
Relationships and Related Transactions” below. Our board of directors determined that any relationships that exist or existed
in the past between the Company and each of the independent directors were immaterial on the basis of the information set forth
in the above-referenced sections.
(1)
Stephen Graham resigned as CFO effective April 1, 2014.
Board Committees
The board of directors
currently has four standing committees: the audit committee, the compensation committee, the nominating committee and the technology
committee. These committees are responsible to the full board.
Audit Committee
– Our board of directors has created an audit committee that presently consists of Mr. Wainwright, Mr. Trego and Dr. Schmidt.
Mr. Wainwright serves as the current chairman of our audit committee. Each of the members has a basic understanding of finance
and accounting, and is able to read and understand fundamental financial statements. The board of directors has determined that
each of the members of the audit committee, other than Mr. Trego, would meet the independence requirements applicable to NYSE MKT
listed companies although such standards do not apply to our company. Our board of directors has also determined that based on
work history Mr Trego meets the definition of an “Audit Committee Financial Expert” as defined in Item 407(d)(5)(ii)
under Regulation S-K, promulgated under the Securities Exchange Act of 1934. The audit committee has the sole authority to appoint,
review and discharge our independent registered public accounting firm. The audit committee reviews the results and scope of the
audit and other services provided by our independent registered public accounting firm, as well as our accounting principles and
our system of internal controls, reports the results of their review to the full board of directors and to management, and recommends
to the full board of directors that the our audited consolidated financial statements be included in our Annual Report on Form
10-K.
The audit committee
met four times during the year-ended December 31, 2013. The audit committee charter can be found on our website under
About
Axion; Corporate Governance / Committees
, at
www.axionpower.com
.
Compensation
Committee
– Our board of directors has created a compensation committee that presently consists of
Messrs. Kishinevsky, Wainwright and Trego. Mr. Wainwright serves as chairman of the compensation committee. The compensation
committee makes recommendations concerning compensation of the executive management team and non-employee directors and
administers our stock-based incentive compensation plans. The chairman establishes meeting agendas after consultation with
other committee members and Mr. Thomas Granville, our Chief Executive Officer. Subject to supervision by the full board of
directors, the compensation committee administers our stock option plans. Our Chief Executive Officer and other members of
management regularly discuss our compensation issues with compensation committee members. Subject to compensation committee
review, modification and approval, Mr. Granville typically makes recommendations respecting bonuses and equity incentive
awards for the other members of the executive management team. The compensation committee in conjunction with other
non-employee directors establishes all bonus and equity incentive awards for Mr. Granville and the other executive members of
the management team. Our board of directors has determined that all members of the compensation committee would meet
the independence requirements applicable to NYSE MKT listed companies although such standards do not apply to us.
The compensation
committee met twice during the year ended December 31, 2013. The compensation committee charter can be found on our website under
“
About Axion; Corporate Governance; Committees
,” at
www.axionpower.com
.
Nominating
Committee
-Our board of directors has created a nominating committee that consists of Messrs. Trego, Wainwright and Kishinevsky.
Mr. Kishinevsky serves as chairman of the nomination committee. As currently constituted, the nominating committee will seek out
candidates for director positions on the board of directors and present those candidates to the entire board for approval. At the
current time, due to the recent formation of the committee, a charter has not yet been enacted. With respect to director nominees,
our nominating committee will consider nominees recommended by stockholders that are submitted in accordance with our By-Laws.
We do not have any specific minimum qualifications that our board believes must be met by a board recommended nominee for a position
on our board of directors or any specific qualities or skills that our board believes are necessary for one or more of our directors
to possess. We are developing a formal process for identifying and evaluating nominees for director, including nominees recommended
by security holders. The nominating committee may consider use of an executive search firm for assistance in discovering potential
board candidates.
Technology
Committee
– Our board of directors has created a technology committee that consists of Dr. Schmidt, and Messrs. Kishinevsky
and Granville. The technology committee provides board-level oversight, guidance and direction to our R&D staff, and makes recommendations with respect to the acquisition and licensing of complementary and competitive technologies
and supervises the activities of our intellectual property lawyers.
The technology
committee met 9 times during the year ended December 31, 2013 and met informally with members of the R&D and manufacturing
teams during the course of the year. The technology committee was disbanded in March 2014.
Board nominations
Stockholders wishing
to bring a nomination for a director candidate before a stockholders meeting must give written notice to our Corporate Secretary,
either by personal delivery or by United States mail, postage prepaid. The stockholder’s notice must be received by the Corporate
Secretary not later than (a) with respect to an Annual Meeting of Stockholders, 120 days before the date on which next year’s
proxy statement will be mailed, which the Company anticipates will be on or about May 1, 2014, and (b) with respect to a special
meeting of stockholders for the election of directors, the close of business on the tenth day following the date on which notice
of the meeting is first given to stockholders. The stockholder’s notice must set forth all information relating to each person
whom the stockholder proposes to nominate that is required to be disclosed under applicable rules and regulations of the SEC, including
the written consent of the person proposed to be nominated to being named in the proxy statement as a nominee and to serving as
a director if elected. The stockholder’s notice must also set forth as to the stockholder making the nomination (i) the name
and address of the stockholder, (ii) the number of shares held by the stockholder, (iii) a representation that the stockholder
is a holder of record of stock of the Company, entitled to vote at the meeting and intends to appear in person or by proxy at the
meeting to nominate the person named in the notice, and (iv) a description of all arrangements or understandings between the stockholder
and each nominee.
Stockholder Communications with
the Board of Directors
Stockholders may
communicate directly with the board of directors or any board member by writing to them at Axion Power International, Inc., 3601
Clover Lane, New Castle, PA 16105, C/O Secretary, Michael Kishinevsky. The outside of the envelope should prominently indicate
that the correspondence is intended for the board of directors or for a specific director. The secretary will forward all such
written communications to the director to whom it is addressed or, if no director is specified, to the entire board of directors.
Director Attendance at Annual Meetings
of Stockholders
We encourage our
directors to attend Annual Meetings, although such attendance is not required. Four directors attended the 2013 Annual Meeting.
EXECUTIVE COMPENSATION
The following
table sets forth the compensation earned by or paid to our Named Executive Officers with respect to the years ended December 31,
2012 and 2013. The Named Executive Officers are as shown. We did not have any non-equity incentive plans, pension plans
or deferred compensation plans during the years ended December 31, 2012 and 2013.
SUMMARY COMPENSATION
TABLE
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
All Other
|
|
|
Total
|
Name and Principal
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
Position
|
|
Year
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
Thomas Granville
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO and Director
|
|
2013
|
|
|
|
380,000
|
|
|
|
38,000
|
|
|
|
|
|
|
|
13,994
|
|
|
|
422,994
|
Thomas Granville
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO and Director
|
|
2012
|
|
|
|
380,000
|
|
|
|
|
|
|
|
|
|
|
|
20,175
|
|
|
|
400,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. Trego (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
2013
|
|
|
|
147,115
|
|
|
|
22,500
|
|
|
|
|
|
|
|
6,897
|
|
|
|
176,513
|
Charles R. Trego
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
2012
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
22,109
|
|
|
|
247,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Graham (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
2013
|
|
|
|
48,077
|
|
|
|
|
|
|
|
64,836
|
|
|
|
6,536
|
|
|
|
119,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip S. Baker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COO
|
|
2013
|
|
|
|
199,800
|
|
|
|
19,180
|
|
|
|
|
|
|
|
7,882
|
|
|
|
227,662
|
Philip S. Baker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COO
|
|
2012
|
|
|
|
199,800
|
|
|
|
|
|
|
|
|
|
|
|
18,317
|
|
|
|
218.117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vani K. Dantam
|
|
2013
|
|
|
|
225,000
|
|
|
|
22,500
|
|
|
|
|
|
|
|
12,538
|
|
|
|
260,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vani K. Dantam
|
|
2012
|
|
|
|
225,000
|
|
|
|
20,000
|
|
|
|
21,384
|
|
|
|
44,271
|
|
|
|
310,655
|
1.
|
Salaries are presented as the contractual amount paid during 2013 and 2012.
|
2.
|
Discretionary bonuses are not made pursuant to any specific bonus plan. Bonuses cited were awarded and paid in 2013.
|
3.
|
Stock and option awards were granted pursuant to the individual employment contracts. Options are valued using the Black-Scholes-Merton option pricing model.
|
4.
|
Other compensation includes Company perquisites relating to pre and post-employment consulting contracts, severance payments, auto allowance, personal use of company cars, accrued vacation payments, moving expenses, other earned compensation, as well as healthcare premiums paid under the group health plan.
|
5.
|
Mr Trego resigned effective August 2, 2013
|
|
|
6.
|
Mr Graham joined on October 21, 2013
|
Employment Agreements
Messrs. Baker,
Dantam and Granville and Mr. Trego (who resigned effective August 2, 2013)
Effective as of
April 1, 2013, Axion Power International, Inc. (the “Company”) entered into new three year employment agreements (“Agreement”
or “Agreements”) with each of Thomas Granville, Charles Trego, Phillip Baker and Vani Dantam, which expire on March
31, 2016. Each of the Agreements is identical to the prior employment agreements in effect with each of the officers, except with
respect to the new terms and as set forth below.
For each officer, there is a new payment
schedule, which calls for a stipend payment equal to 10% of base salary (which is the same as in the prior Agreement and which
remains unchanged during the term of said Agreement), in cash within 45 days from the date of effectiveness of each Agreements,
and then the same stipend payment is due on the first, second and third anniversaries of the effective date of the Agreement so
long as the executive is still employed by the Company on each said anniversary date.
The following table sets forth the
stipend payment schedule:
Executive
|
|
Payment within 45 days
of April 1, 2013
|
|
|
Payment on 1 year
anniversary (1)
|
|
|
Payment on 2 year
anniversary (1)
|
|
|
Payment on 3 year
anniversary (1)
|
|
Thomas Granville
|
|
$
|
38,000
|
|
|
$
|
38,000
|
|
|
$
|
38,000
|
|
|
$
|
38,000
|
|
Charles Trego (3)
|
|
$
|
22,500
|
|
|
$
|
22,500
|
|
|
$
|
22,500
|
|
|
$
|
22,500
|
|
Vani Dantam (2)
|
|
$
|
22,500
|
|
|
$
|
22,500
|
|
|
$
|
22,500
|
|
|
$
|
22,500
|
|
Philip Baker
|
|
$
|
19,980
|
|
|
$
|
19,980
|
|
|
$
|
19,980
|
|
|
$
|
19,980
|
|
(1)
|
Payable only if executive is still employed by the Company on the anniversary date.
|
(2)
|
Also has been given an automobile allowance of $500 per month.
|
(3)
|
Mr. Trego resigned as our Chief Financial Officer effective as of August 2, 2013.
|
A description of the previous contracts
is set forth below due to the almost identical terms.
During 2010, the
Company has entered into executive employment agreements with Thomas Granville, Charles R. Trego, and Phillip S. Baker. These agreements
generally require each executive to devote substantially all of his business time to the Company’s affairs, establish standards
of conduct, prohibit competition with our company during their term, affirm our rights respecting the ownership and disclosure
of patents, trade secrets and other confidential information, provide for the acts and events that would give rise to termination
of such agreements and provide express remedies for a breach of the agreement. Each of the executives is allowed to participate
in our standard employee benefit programs, including medical/hospitalization insurance and group life insurance, as in effect from
time to time. Each of the covered executives will generally receive an automobile allowance, reimbursement for all reasonable business
expenses incurred by him on behalf of the Company in the performance of his duties, and a severance package that guarantees continued
remuneration equal to the executive’s base salary for a total of 23 months so long as the Company elects to enforce the provisions
of the Non-Competition Agreement, should the executive be unable to find employment or accepts employment at a reduced rate of
pay due solely to the Non-Competition Agreement. There are no non-qualified deferred compensation plans. The provisions of the
individual agreements are set forth in the following table:
|
•
|
Thomas Granville
. On June 29, 2010, the Company entered into an Executive Employment Agreement with Thomas Granville as Chief Executive Officer. Pursuant to this agreement, Mr. Granville receives an annual salary of $380,000, and an annual car allowance of $9,000 for the period commencing June 29, 2010, and terminating June 30, 2013. Mr. Granville’s base salary is subject to annual review, and such salary is subject to renegotiation on the basis of Mr. Granville’s and the Company’s performance. In addition, Mr. Granville received a signing bonus of $270,000 and was paid on July 9, 2010. The Company also granted Mr. Granville an option to purchase 360,000 shares of our common stock at a price of $1.50 per share at a vesting rate of 10,000 shares per month through the term of the agreement. Mr. Granville is eligible to participate in any executive compensation plans adopted by the shareholders of the Company and the Company's standard employee benefit programs.
|
|
•
|
Charles R.
Trego.
On April 1, 2010, the Company entered into an Executive Employment Agreement with Charles R. Trego as Chief
Financial Officer
.
Under the terms of his employment agreement, which has a term of three years (and thus terminates
on March 31, 2013), Mr. Trego received an annual salary of $225,000, which is subject to review after the initial six month
term of the agreement and annually thereafter, an annual car allowance of $9,000, bonuses as determined by the compensation
committee, and a 5-year option to purchase 265,000 shares of our common stock at a price of $1.50 per share. 27,000 options
shall vest upon execution of this contract and, beginning in June 2010, 7,000 options will vest monthly through the remaining
34 months of this agreement.
Mr Trego resigned as Chief Financial Officer effective August 2, 2013.
|
|
•
|
Philip S. Baker.
On April 1, 2010, the Company entered into an Executive Employment Agreement with Philip S. Baker as Chief Operating Officer. Under the terms of his employment agreement, which has a term of three years (and thus terminates on March 31, 2013), Mr. Baker receives an annual salary of $199,800,which is subject to review after the initial six month term of the agreement and annually thereafter, an annual car allowance of $6,000, and a 5-year option to purchase 230,000 shares of our common stock at a price of $1.50 per share, of which 26,000 options shall vest upon execution of this contract and, beginning in June, 2010, 6,000 options will vest monthly through the remaining 34 months of this agreement.
|
In conjunction
with the appointment of Mr. Dantam, the Company entered into an employment agreement with him that generally requires the executive
to devote substantially all of his business time to our affairs, establish standards of conduct, prohibit competition with our
company during his term, affirm our rights respecting the ownership and disclosure of patents, trade secrets and other confidential
information, provide for the acts and events that would give rise to termination of such agreements and provide express remedies
for a breach of the agreement. Each of our executives will participate in our standard employee benefit programs, including medical/hospitalization
insurance as in effect from time to time. Each of the covered executives will generally receive reimbursement for all reasonable
business expenses incurred by them on behalf of the Company in the performance of their duties.
Under the terms
of his employment agreement effective January 1, 2012, which has a term of three years, Mr. Dantam receives an annual salary of
$225,000, which is subject to review on an annual basis, a $20,000 sign on bonus, bonuses as determined by the compensation committee,
and a 5-year option to purchase 150,000 shares of our common stock at a price of $1.50 per share, 15,020 options shall vest upon
execution of this contract and, beginning in March 2012, 3,970 options will vest monthly through the remaining 34 months of this
contract.
Mr. Graham
On October 9, 2013, the Company appointed
a new Chief Financial Officer, Stephen Graham, effective as of October 21, 2013.
In conjunction with this appointment, we entered into an employment
agreement with Mr. Graham. This agreement generally requires this executive to devote substantially all of his business time to
our affairs, establishes standards of conduct, prohibits competition with our company during his term in office, affirms our rights
respecting the ownership and disclosure of patents, trade secrets and other confidential information, provides for the acts and
events that would give rise to termination of such agreements and provides express remedies for a breach of the agreement. Mr.
Graham will participate in our standard employee benefit programs, including medical/hospitalization insurance as in effect from
time to time. He will receive an automobile allowance and reimbursement for all reasonable business expenses incurred by him on
behalf of the Company in the performance of his duties. The provisions of his individual agreement are summarized below:
|
·
|
The term of employment is three years.
|
|
·
|
Mr. Graham shall receive an annual salary of $250,000, which is subject to annual review, and a monthly car allowance of $750.
|
|
·
|
Mr. Graham will be granted a 5-year option to purchase 900,000 shares of our common stock at a price of $0.15 per share, 180,000 options shall vest immediately, and thereafter 20,000 options shall vest on the last day of each consecutive calendar month, commencing on October 31, 2013 and ending on September 30, 2016.
|
|
·
|
In consideration of the level of compensation paid to Mr. Graham, the Company will pay him a stipend as an additional inducement to retain his services over the term of his employment as follows: provided he is an employee in good standing in the position of Chief Financial Officer on each of October 21, 2014, October 21, 2015 and October 21, 2016, he will be paid a stipend of $25,000.00, subject to normal withholdings and deductions on the first regularly scheduled payroll following each such date, respectively.
|
Mr. Graham resigned effective as
of April 1, 2014.
Warrants
As of December
31, 2013, we had 20,828,436 outstanding warrants that represent potential future cash proceeds to our company of $6,366,162. The
warrants are divided into four classes that are presently exercisable and expire at various times through December 8, 2018. The
following table summarizes the number of warrants in each class, the anticipated proceeds from the exercise of each class, and
the expiration date of each class.
Warrant
Series
|
|
|
Number of
Warrants
|
|
|
|
Exercise
Price
|
|
|
|
Anticipated
Proceeds
|
|
|
Expiration Date
|
2009 Bridge Warrants
|
|
|
45,661
|
|
|
|
2.00
|
|
|
$
|
91,322
|
|
|
August 12, 2014
|
Senior Convertible Notes
|
|
|
17,281,107
|
|
|
|
0.30
|
|
|
|
5,218,894
|
|
|
May 07, 2018
|
Junior Convertible Notes
|
|
|
1,920,123
|
|
|
|
0.30
|
|
|
|
579,877
|
|
|
May 07, 2018
|
Placement Agent
|
|
|
909,090
|
|
|
|
0.30
|
|
|
|
274,545
|
|
|
May 07, 2018
|
Placement Agent
|
|
|
325,758
|
|
|
|
0.30
|
|
|
|
97,727
|
|
|
October 22,2018
|
Placement Agent
|
|
|
193,182
|
|
|
|
0.30
|
|
|
|
58,341
|
|
|
November 14, 2018
|
Placement Agent
|
|
|
151,515
|
|
|
|
0.30
|
|
|
|
45,455
|
|
|
December 07,2018
|
Total
|
|
|
20,826,436
|
|
|
|
|
|
|
$
|
6,366,162
|
|
|
|
The holders of
warrants are not required to exercise their rights at any time prior to the expiration date and we are unable to predict the amount
and timing of any future warrant exercises. We reserve the right to temporarily reduce the exercise prices of our warrants from
time to time in order to encourage the early exercise of the warrants.
Stock Options
As of December
31, 2013, we had 5,192,140 outstanding stock options that represent potential future cash proceeds to our company of $6,439,231.
The outstanding options include 3,431,729 options that are currently vested and exercisable and 1,760,411 that will vest and become
exercisable over the next three years. These options represent potential future cash proceeds to our company of $5,697,560 and
$741,671 respectively.
|
|
Shares
|
|
|
Price
|
|
|
Proceeds
|
|
|
Shares
|
|
|
Price
|
|
|
Proceeds
|
|
2013 Employee & Officer plan options
|
|
|
1,734,395
|
|
|
$
|
1.50
|
|
|
$
|
2,601,430
|
|
|
|
1,069,148
|
|
|
$
|
0.48
|
|
|
$
|
518,467
|
|
Directors plan options
|
|
|
531,584
|
|
|
|
0.96
|
|
|
|
501,505
|
|
|
|
691,263
|
|
|
|
0.32
|
|
|
|
223,204
|
|
Non-plan options to consultants and employees
|
|
|
1,165,750
|
|
|
|
2.22
|
|
|
|
2,585,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,431,729
|
|
|
$
|
1.66
|
|
|
$
|
5,697,560
|
|
|
|
1,760,411
|
|
|
$
|
0.41
|
|
|
$
|
741,671
|
|
The holders of
options are not required to exercise their rights at any time and we are unable to predict the amount and timing of any future
option exercises. We reserve the right to temporarily reduce the exercise prices of our options from time to time in order to encourage
the early exercise of the options.
Outstanding Equity Awards at 2013
Fiscal Year-End
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
Non-Plan
|
|
|
Equity
Incentive Plan Awards
|
|
|
|
|
|
|
|
Equity
Incentive Plan Awards
|
|
|
Number
of shares underlying unexercised options
|
|
|
|
|
|
|
|
#
Shares
|
|
|
|
|
|
|
Name
|
|
#
Exercisable
|
|
|
#
Unexer-
cisable
|
|
|
Unearned
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
Number
Unearned
Shares
or units
of
stock
|
|
|
Market
Value
|
|
|
Unearned
shares,
units, or
other
rights not
vested
|
|
|
Market
Value
|
|
|
Footnotes
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granville,
Tom
|
|
|
63,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.50
|
|
|
varies
through 6/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
pursuant to June 2008 Executive Employment Agreement. Options Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granville, Tom
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.50
|
|
|
varies
through 6/29/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued pursuant
to June 2010 Executive Employment Agreement. Options Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Trego
|
|
|
265,000
|
|
|
|
,
|
|
|
|
-
|
|
|
$
|
1.50
|
|
|
varies
through 3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued pursuant
to April 2010 Executive Employment Agreement. Options Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip Baker
|
|
|
230,000
|
|
|
|
|
|
|
|
-
|
|
|
$
|
1.50
|
|
|
varies
through 3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued pursuant
to April 2010 Executive Employment Agreement. Options Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Graham
|
|
|
240,000
|
|
|
|
|
|
|
|
660,000
|
|
|
$
|
0.15
|
|
|
varies
through 9/21/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued pursuant
to October2013 Executive Employment Agreement. Options Expire 5 years after monthly vest date
|
Post-Termination Compensation
We have not entered into change in control
agreements with any of our named executive officers or other members of the executive management team, although our employment
agreements with certain members of management do call for immediate vesting of options upon a 50% change in control. No awards
of equity incentives under our 2004 Incentive Stock Plan or awards of options under our 2004 Outside Directors Stock Option Plan
provide for immediate vesting upon a change in control other than a restricted stock grant of 36,000 shares issued to Robert Nelson.
However, the compensation committee has the full and exclusive power to interpret the plans, including the power to accelerate
the vesting of outstanding, unvested awards. A “change in control” is generally defined as (1) the acquisition by any
person of 30% or more of the combined voting power of our outstanding securities or (2) the occurrence of a transaction requiring
stockholder approval and involving the sale of all or substantially all of our assets or the merger of us with or into another
corporation.
Director Compensation
The following table provides information
regarding compensation paid to non-employee directors for services rendered during the year ended December 31, 2013
|
|
Fees Earned or
|
|
|
Stock
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
Total ($)
|
|
Thomas Granville (2)
|
|
|
|
|
|
|
|
|
|
Robert G. Averill
|
|
|
40,250
|
|
|
|
|
|
|
|
40,250
|
|
Dr. Howard K. Schmidt
|
|
|
44,760
|
|
|
|
46,452
|
|
|
|
91,212
|
|
Michael Kishinevsky
|
|
|
43,820
|
|
|
|
42,353
|
|
|
|
86,173
|
|
Chuck Trego (3)
|
|
|
8,113
|
|
|
|
8,063
|
|
|
|
16,176
|
|
D. Walker Wainwright
|
|
|
35,260
|
|
|
|
46,452
|
|
|
|
81,712
|
|
1.
|
Fees are presented based on the amount paid during 2013.
|
2.
|
Mr. Granville received no compensation during 2013 for his service as a Director, as he served as our chief executive officer during that time period. For a summary of the compensation received by him as chief executive officer during 2013, see Summary Compensation Table above.
|
3.
|
Mr. Trego was elected to
serve on the Board of Directors at the Annual Meeting held on September 26,2013, receiving 498,501 five-year options
with an exercise price of $0.12 per share, pursuant to the 2004 Outside Directors Stock Option Plan. The options
granted shall vest at the rate of 166,667 per year commencing on the date of the company's Annual Meeting, so long as
the director serves as a member of the board on the date of such meeting.
|
The members of our board of directors
are actively involved in various aspects of our business ranging from relatively narrow board oversight functions to providing
hands-on guidance to our executives and scientific staff with respect to matters within their personal experience and expertise.
We believe that the active involvement of all directors in our principal business and policy decisions increases our board of directors’
understanding of our needs and improves the overall quality of our management decisions. In recognition of the substantial time
and personal effort that we require from our directors, we have adopted director compensation policies that provide for higher
director compensation than is typically found in companies at our early stage of development.
Only non-management
directors are compensated separately for service as members of our board of directors. Each of our non-management directors received
the following components of compensation for the period January 1, 2012 through December 31, 2013:
|
•
|
A basic annual retainer of $25,000 for service as a director;
|
|
•
|
A supplemental retainer of $6,000 for service as chairman of any committee;
|
|
•
|
A supplemental annual retainer of $3,000 for service as a committee member;
|
|
•
|
A meeting fee of $1,500 per day for each board or committee meeting attended in person or $500 for each board or committee meeting attended by telephone;
|
|
•
|
Reimbursement for all reasonable travel, meals and lodging costs incurred on our behalf;
|
|
•
|
Options to reelected directors; and
|
|
•
|
Reimbursement for expenses up to $5,000 annually for education related to chairmanship of a committee.
|
The 2004 stock option plan for independent directors authorized
the issuance of options to purchase $20,000 of our common stock for each year of service as a director. The plan was amended on
September 28, 2010 increasing the shares reserved for issuance under the outside directors’ stock option plan to 500,000.
On October 17, 2012, the Board of Directors amended the Axion Power International, Inc. independent director’s stock option
plan to increase the number of shares of common stock available thereunder from 500,000 shares to 1,000,000 shares.
For 2013 and
2012, we issued 500,000, and 171,429, options respectively pursuant to our directors’ stock option plan. Of this total,
no options were exercised during the year ended December 31, 2013, 531,584 options are currently vested and exercisable at a weighted
average price of $1.03 per share and 958,479 options are unvested and will be exercisable at a weighted average price of $0.31
per share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On April 14, 2014, we had 221,511,725
shares of common stock issued and outstanding. The following table sets forth certain information with respect to
the beneficial ownership of our securities as of October 4, 2013, for (i) each of our directors and executive officers and
(ii) all of our directors and executive officers as a group. We do not have any persons who we know beneficially owns more
than 5% of our common stock. Normally, the Company would rely on the Section 16 filings for determining if there are any 5%
owners. Our reporting is limited to the information we do have when we do not have the benefit of further information.
Beneficial ownership data in the
table has been calculated based on the Securities and Exchange Commission rules that require us to identify all securities
that are exercisable for or convertible into shares of our common stock within 60 days of April 14, 2014 and treat the
underlying stock as outstanding for the purpose of computing the percentage of ownership of the holder.
Except as indicated by the footnotes following
the table, and subject to applicable community property laws, each person identified in the table possesses sole voting and investment
power with respect to all capital stock held by that person. The address of each named executive officer and director, unless indicated
otherwise by footnote, is c/o Axion Power International, Inc. 3601 Clover Lane, New Castle PA 16105.
|
|
Common Stock
|
|
|
Warrants & Options (1)
|
|
|
Combined Ownership
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granville, Tom
|
|
696,596
|
|
|
442,751
|
|
|
1,139,347
|
|
|
*
|
|
Graham, Stephen
(2)
|
|
-
|
|
|
900,000
|
|
|
900,000
|
|
|
*
|
|
Trego,
Charles
|
|
|
36,795
|
|
|
|
784,201
|
|
|
|
820,996
|
|
|
|
*
|
|
Wainwright,
Walker
|
|
|
140,491
|
|
|
|
270,287
|
|
|
|
410,778
|
|
|
|
*
|
|
Baker,
Philip
|
|
|
-
|
|
|
|
249,201
|
|
|
|
249,201
|
|
|
|
*
|
|
Schmidt,
Howard
|
|
|
135,006
|
|
|
|
137,250
|
|
|
|
272,256
|
|
|
|
*
|
|
Kishinevsky,
Michael
|
|
|
128,273
|
|
|
|
137,250
|
|
|
|
265,523
|
|
|
|
*
|
|
Dantam,
Vani
|
|
|
-
|
|
|
|
169,201
|
|
|
|
169,201
|
|
|
|
*
|
|
DiGiacinto, David
|
|
|
-
|
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
*
|
|
Directors
and officers as a group (9 persons)
|
|
|
1,137,161
|
|
|
|
3,690,141
|
|
|
|
4,827,302
|
|
|
|
2.2
|
%
|
*Less than 1%
|
(1)
|
Represents shares of
common stock issuable upon exercise of warrants and options held by the stockholders that are presentably exercisable or will
become exercisable within 60 days.
|
|
|
|
|
(2)
|
Mr. Graham resigned as CFO effective as of April 1, 2014.
|
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
Transactions with Executive Management
See the “Executive Compensation”
section for a discussion of the material elements of compensation awarded to, earned by or paid to our named executive officers.
Other than as stated in the “Executive Compensation” section, we have not entered into any transactions with executive
management.
DESCRIPTION OF PRIVATE PLACEMENT AND
CONVERTIBLE NOTES
Description of the Private Placement
$9 Million Financing Transaction
On May 7, 2013 (“Closing”),
we entered into a financing transaction for the sale of Senior Convertible Notes (“Senior Convertible Notes”) of Axion
Power International, Inc. and warrants issued by the Company in connection therewith (“Senior Warrants”) with gross
proceeds of $9 million to us. On Closing, we received cash proceeds of $3 million and deposit an additional $6 million into a series
of control accounts in our name. We are permitted to withdraw funds from our control accounts (i) in connection with certain conversions
of the Senior Convertible Notes or (ii) otherwise, as follows: $500 thousand on each 30 day anniversary of the Effective Date commencing
on the 60
th
day after the Effective Date until there are no more funds in the control accounts (each, a “Funds
Release”).
We received approximately $2.76 million
in net proceeds at Closing, after deducting our placement agent’s fee of $240,000. Our other offering expenses, other than
our placement agent’s fee, are approximately $100,000, which expenses will be paid out of the proceeds at Closing. At each
Funds Release, we received approximately $460 thousand in net proceeds, after deducting our placement agent’s fee of $40,000.
The following is intended to provide a summary
of the terms of the agreements and securities described above. This summary is qualified in its entirety by reference to the full
text of the agreements, each of which is attached as an exhibit to our Current Report on Form 8-K filed with the SEC on May 8,
2013. Readers should review those agreements for a complete understanding of the terms and conditions associated with these transactions.
Securities Purchase Agreement
The Senior Convertible Notes and Senior
Warrants were issued pursuant to the terms of a Securities Purchase Agreement (“Purchase Agreement”) among us and the
Investors. The Purchase Agreement provided for the sale of the Senior Convertible Notes and Senior Warrants for gross proceeds
of $9 million to us.
Senior Convertible Notes
Ranking
The Senior Convertible Notes are senior
unsecured obligations of the Company, subject only to certain secured obligations of the Company for up to a maximum of $1 million
of government issued indebtedness for purchase of plant and machinery and other purchase money financing for property, plant and
equipment.
Maturity Date
Unless earlier converted or redeemed, the
Senior Convertible Notes mature 21 months from the Closing (“Maturity Date”), subject to the right of the investors
to extend the date (i) if an event of default under the Senior Convertible Notes has occurred and is continuing or any event shall
have occurred and be continuing that with the passage of time and the failure to cure would result in an event of default under
the Senior Convertible Notes and (ii) for a period of 20 business days after the consummation of a fundamental transaction if certain
events occur.
Interest
The Senior Convertible Notes bear interest
at the rate of 8% per annum and are compounded monthly, on the first calendar day of each calendar month. The interest rate will
increase to 18% per annum upon the occurrence and continuance of an event of default (as described below).
Interest on the Senior Convertible Notes
is payable in arrears on each Installment Date (as defined below). If a holder elects to convert or redeem all or any portion of
a Senior Convertible Note prior to the Maturity Date, all accrued and unpaid interest on the amount being converted or redeemed
will also be payable. If we elect to redeem all or any portion of a Senior Convertible Note prior to the Maturity Date, all accrued
and unpaid interest on the amount being redeemed will also be payable.
Conversion
All amounts due under the Senior Convertible
Notes are convertible at any time, in whole or in part, at the option of the holders into shares of our common stock at a fixed
conversion price, which is subject to adjustment as described below. The Senior Convertible Notes are initially convertible into
shares of our common stock at the initial price of $0.264 per share. This conversion price is subject to adjustment for stock splits,
combinations or similar events and “full ratchet” antidilution provisions.
Payment of Principal and Interest
We have agreed to make amortization payments
with respect to the principal amount of each Senior Convertible Note in shares of our common stock, subject to the satisfaction
of certain equity conditions, or at our option, in cash on each of the following installment dates:
|
¨
|
the twenty-third trading day after the earlier of:
|
|
(x)
|
the initial effective date of a registration statement
filed in connection with this offering or
|
|
(y)
|
October 1, 2013; the first trading day of the calendar
month immediately following the initial installment date (or if such date is less than twenty trading days after the initial installment
date, the second calendar month immediately following the initial installment date to the extent); and then each month through
and including the Maturity Date, each in an amount equal to 1/9 of the principal amount of each Senior Convertible Note.
|
The holder of each Senior Convertible Note agrees that, with
respect to shares of our common stock received in payment of a Senior Convertible Note as described above, to not sell shares
of our common stock during any trading day in an amount, in the aggregate, exceeding 15% of the composite aggregate share trading
volume of the common stock measured at the time of each sale of securities during such trading day.
Acceleration and Deferral of Amortization
Amounts
During each period after an installment
date and prior to the immediately subsequent installment date, a holder may elect to accelerate the amortization of a Senior Convertible
Note at the applicable amortization conversion price for such prior installment date, if either:
|
¨
|
in the aggregate, all such accelerations in such period does not exceed the sum of two (2) other installment amounts (or, if the Company has delivered shares of Common Stock in satisfaction of the entire installment amount of such installment date, one (1) other installment amount),
|
|
|
|
|
¨
|
no more than five (5) separate accelerations have been consummated in such period, or
|
|
|
|
|
¨
|
such holder has not accelerated any portion of any installment amount in six (6) prior periods.
|
The holder of a Senior Convertible Note
may, at the holder’s election by giving notice to us, defer the payment of the installment amount due on any installment
dates, in whole or in part, to another installment date, in which case the amount deferred will become part of such subsequent
Installment Date and will continue to accrue interest.
Events of Default
The Senior Convertible Notes contain standard
and customary events of default including but not limited: (i) failure to register our Common Stock within certain time periods;
(ii) failure to make payments when due under the Senior Convertible Notes; and (iii) bankruptcy or insolvency of the Company.
If an event of default occurs, each holder
may require us to redeem all or any portion of the Senior Convertible Notes (including all accrued and unpaid interest thereon),
in cash, at a price equal to the greater of (i) up to 125% of the amount being redeemed, depending on the nature of the default,
and (ii) the intrinsic value of the shares of Common Stock then issuable upon conversion of the Senior Convertible Note.
Fundamental Transactions
The Senior Convertible Notes prohibit us
from entering into specified transactions involving a change of control, unless the successor entity assumes in writing all of
our obligations under the Senior Convertible Notes under a written agreement.
In the event of transactions involving a
change of control, the holder of a Senior Convertible Note will have the right to require us to redeem all or any portion of the
Senior Convertible Note it holds (including all accrued and unpaid thereon) at a price equal to the greater 125% of the amount
of the Senior Convertible Note being redeemed and the intrinsic value of the shares of Common Stock then issuable upon conversion
of the Senior Convertible Note being redeemed.
Limitations on Conversion and Issuance
A Senior Convertible Note may not be converted
and shares of common stock may not be issued under the Senior Convertible Notes if, after giving effect to the conversion or issuance,
the holder together with its affiliates would beneficially own in excess of 4.99% of our outstanding shares of common stock. At
each holder’s option, the Senior Convertible Note Blocker may be raised or lowered to any other percentage not in excess
of 9.99%, except that any raise will only be effective upon 61-days’ prior notice to us.
Senior Warrants
The Senior Warrants entitle the holders
of the Senior Warrants to purchase, in aggregate, 17,281,107 million shares of our common stock. The Senior Warrants will not be
exercisable until the six month anniversary of the Closing and will expire 5 years from the date of first exercise. The Senior
Warrants are initially exercisable at an exercise price equal to $0.302, subject to certain adjustments.
The Senior Warrants may be exercised for
cash, provided that, if there is no effective registration statement available registering the exercise of the Senior Warrants,
the Senior Warrants may be exercised on a cashless basis. This prospectus does not cover the shares of common stock issuable from
time to time upon exercise of the Senior Warrants. We anticipate that we will file a registration statement covering the shares
of common stock issuable upon the exercise of the Senior Warrants prior to the time the Senior Warrants become exercisable.
The exercise price of the Senior Warrants
is subject to adjustment for stock splits, combinations or similar events, and, in this event, the number of shares issuable upon
the exercise of the Senior Warrant will also be adjusted so that the aggregate exercise price shall be the same immediately before
and immediately after the adjustment. In addition, the exercise price is also subject to a “full ratchet” anti-dilution
adjustment where if we issue or are deemed to have issued securities at a price lower than the then applicable exercise price.
Limitations on Exercise
The Senior Warrants may not be exercised
if, after giving effect to the exercise, the holder of the Senior Warrant together with its affiliates would beneficially own in
excess of 4.99% of our outstanding shares of common stock. At each holder’s option, the warrant blocker applicable to the
exercise of the Senior Warrants may be raised or lowered to any other percentage not in excess of 9.99%, except that any increase
will only be effective upon 61-days’ prior notice to us.
Fundamental Transactions
The Senior Warrants prohibit us from entering
into specified transactions involving a change of control, unless the successor entity assumes all of our obligations under the
Senior Warrants under a written agreement before the transaction is completed. When there is a transaction involving a permitted
change of control, a holder of a Senior Warrant will have the right to require us to repurchase the holder’s Senior Warrant
for a purchase price in cash equal to the Black Scholes value (as calculated under the Senior Warrants) of the then unexercised
portion of the Senior Warrant.
Registration Rights Agreement
The Company entered into a Registration
Rights Agreement with the Holders as of the date of Closing. Under this Agreement, the Company has agreed to register 125% of the
shares issuable under the Notes and 100% of the shares issuable under the Senior Warrants, with filing to occur no later than 20
days of the Closing and with effectiveness to occur no later than 75 days of the Closing. If we are unable to meet either of these
deadlines, we may be required to pay certain cash damages under the Registration Rights Agreement or, with the passage of additional
time, an Event of Default under the Notes may occur.
Dollar Value of Underlying Securities and Potential Profits
on Conversion
The following table sets forth the potential
profit to be realized upon conversion by the selling stockholders of the Senior Convertible Notes based on the conversion price
on May 8, 2013 and the closing price of our common stock on May 8, 2013 (the date the Senior Convertible Notes were issued).
Potential Profit from Conversion of the Senior Convertible
Notes at the Option of the Selling Stockholders
Per share market price as of May 8, 2013
|
|
$
|
0.251
|
|
Per share conversion price as of May 8, 2013
|
|
$
|
0.264
|
|
Total shares underlying Senior Convertible Notes based on conversion price
|
|
|
34,090,909
|
|
Aggregate market value of underlying shares based on per share market price as of May 8, 2013
|
|
$
|
8,556,818
|
|
Aggregate conversion price of underlying shares
|
|
$
|
9,000,000
|
|
Aggregate cash purchase price for the Senior Convertible Notes
|
|
$
|
9,000,000
|
|
Total premium to market price of underlying shares
|
|
|
5.18
|
%
|
The following table sets forth the potential
profit to be realized upon exercise of the Senior Warrants by the selling stockholders based on the exercise price at May 8, 2013
and the per share closing price of our common stock on May 8, 2013 (the date of issuance of the Senior Warrants). Although, the
Senior Warrants are not exercisable until November 8, 2013, the figures set forth in the following table have been calculated as
if the Senior Warrants were exercisable on the Closing Date of May 8, 2013 for illustrative purposes only.
Potential Profit from Exercise of the Senior Warrants
Per share market price as of May 8, 2013
|
|
$
|
0.251
|
|
Per share exercise price as of May 8, 2013
|
|
$
|
0.302
|
|
Total shares underlying Senior Warrants
|
|
|
17,281,107
|
|
Aggregate market value of underlying shares based on market price as of May 8, 2013
|
|
$
|
4,337,558
|
|
Aggregate exercise price of underlying shares
|
|
$
|
5,218,894
|
|
Total premium to market price of underlying shares
|
|
|
20.32
|
%
|
Shares Issuable to Selling Stockholders in Satisfaction of
Principal and Interest
The following table sets forth the total
number of shares of Company common stock which would be issued to the selling stockholders if the Company elects to convert all
principal and interest under the Senior Convertible Notes into shares of its common stock in lieu of paying cash. The following
table assumes that: (a) principal and interest payments are made on the nine regularly scheduled installment dates (beginning on
August 14, 2013), (b) that no such regularly scheduled installment payments are accelerated or deferred, (c) that no payments of
interest will be made prior to the first installment date ( August 14, 2013), (d) that the indicated conversion price remains the
same from the first installment date until the Senior Convertible Notes are paid in full, and (e) that the selling stockholders
do not convert the Senior Convertible Notes at their election. This table is provided for illustrative purposes only, as it is
unlikely that these assumptions will be fully accurate at all relevant times.
Number of Shares Issuable in Satisfaction
of the Senior Convertible Notes
Based on Various Assumed Conversion Prices
Assumed Conversion Price*
|
|
Number of Shares Potentially Issuable
|
|
|
|
|
|
Initial Conversion price ($0.264 per share)
|
|
|
35,237,340
|
|
$0.24 per share
|
|
|
38,761,074
|
|
$0.22 per share
|
|
|
42,284,807
|
|
$0.20 per share
|
|
|
46,513,288
|
|
$0.18 per share
|
|
|
51,681,431
|
|
*Assumes conversion price remains the same throughout the entire
installment payment period, which is unlikely to occur because the conversion price applicable to each installment payment will
be based on the market price of the Company’s common stock prior to each such installment date.
Payments to Selling Stockholders and Affiliates
In connection with the Senior Convertible
Notes, we are or may be required to make the following payments to the selling stockholders and their affiliates:
Payee
|
|
Maximum Interest
Payments (1)
|
|
|
Maximum Early
Redemption
Premiums (2)
|
|
|
Maximum
Registration
Penalties (3)
|
|
|
Total Maximum
Payments During
First 12 Months (4)
|
|
Selling Stockholders
|
|
$
|
302,658
|
|
|
$
|
12,863,134
|
|
|
$
|
727,200
|
|
|
$
|
1,029,858
|
|
(1) Represents the maximum amount of
interest payable by the Company to the selling stockholders under the Senior Convertible Notes assuming (a) that all nine
installment payments thereunder are timely made (beginning with the first installment payment being made on August 14, 2013)
and that no installment payments are accelerated or deferred, (b) that no payments of interest will be made prior to the
first installment date, (c) that the Senior Convertible Notes are not otherwise converted prior to the maturity date, (d)
that interest is paid in cash and on the declining balance only and (e) that no event of default thereunder occurs.
(2) Represents the cash amount that would be payable by the
Company if it were required to redeem the Senior Convertible Notes as a result of an event of default or change of control assuming
(a) that the applicable premium to be applied upon the event of default or change of control is 125%, (b) that the event of default
or change of control occurs on May 28, 2013, and (c) that the required payments continue until May 7, 2014. The default interest
rate is 18% per annum upon the occurrence and continuance of an event of default.
(3) Represents the maximum monetary penalties and interest that
would be payable if the Company failed to timely file, obtain a declaration of effectiveness or maintain the effectiveness with
respect to the registration statement required under the above-described Registration Rights Agreement. Assumes that (a) the monetary
penalties begin to accrue in May, 2013, (b) the monetary penalties continue to accrue until May 7, 2014, and (c) the monetary penalties
will not be paid until May 8, 2014 (which results in the payment of interest on unpaid amounts at a rate of 1% per month from
May 8, 2013 to May 7, 2014).
(4) Represents the maximum amounts payable in cash under the
other columns in this table during the first 12 months after the sale of the Senior Convertible Notes assuming that there is no
redemption thereof during the first year due to an event of default or change of control. Since this table assumes that the first
installment payment is made on August 14, 2013, there will be no interest due and payable after the first 12 months as all nine
installment payments would be made within the first year
.
Net Proceeds from Private Placement of Senior Convertible
Notes
The following table sets forth the gross
proceeds received from the private placement of the Senior Convertible Notes and calculates the net proceeds thereof after deduction
of the anticipated payments pursuant to the Senior Convertible Notes and related documents. The net proceeds do not include the
payment of any contingent payments, such as liquidated damages or repayment premiums in the case of default or a change of control.
The net proceeds assumes that all interest and principal will be paid in cash and that all nine installment payments are timely
made (beginning with the first installment payment on August 14, 2013), notwithstanding that the Company may pay (and is expected
to pay) interest and principal in shares of its common stock under specified circumstances, as described above. The interest amount
reflected below assumes that all nine installment payments are made when due without any event of default, and the table assumes
that none of the Senior Convertible Notes are converted prior to maturity. Based on the foregoing assumptions, the net proceeds
represent approximately 82.53% of the gross proceeds.
Gross Proceeds
|
|
$
|
9,000,000
|
|
Approximate Aggregate Interest Payments
|
|
$
|
302,658
|
|
Approximate Transaction Costs (including Placement Agent Fees)
|
|
$
|
820,000
|
|
Net Proceeds
|
|
$
|
7,877,342
|
|
Comparison of Issuer Proceeds to Potential Investor Profit
As discussed above, the Company plans to
use the proceeds from the sale of the Senior Convertible Notes for general corporate purposes. The following table summarizes the
potential proceeds the Company will receive pursuant to the Senior Securities Purchase Agreement, the Senior Convertible Notes
and the Senior Warrants. For purposes of this table, we have assumed that the selling stockholders will exercise all of the Senior
Warrants on a cash basis. We have also assumed that the Senior Convertible Notes will be held by the selling stockholders through
the maturity date thereof.
Total Gross Proceeds Payable to the Company in the Senior Private Placement(1)
|
|
$
|
14,218,894
|
|
Payments that have been made or may be required to be made by the Company until maturity(2)
|
|
$
|
1,029,858
|
|
Net proceeds to the Company assuming maximum payments made by the Company(3)
|
|
$
|
13,189,036
|
|
Total possible profit to the selling stockholders (4)
|
|
$
|
0.00
|
|
Percentage of payments and profit over net proceeds(5)
|
|
|
7.81
|
%
|
Percentage of payments and profit over net proceeds per year of the term(6)
|
|
|
4.46
|
%
|
(1) Includes gross proceeds payable to the Company on the sale
of the Senior Convertible Notes in the amount of $9,000,000 and assumes full exercise of the Senior Warrants to yield an aggregate
exercise price of $5,218,894. However, there is no assurance that any Senior Warrants will actually be exercised or if they are
exercised, whether they will be exercised for cash.
(2) Total possible payments (excluding repayment of principal)
payable by us to the selling stockholders or their affiliates assuming the Senior Convertible Notes remain outstanding until the
maturity date and that interest is paid in cash. Assumes that no liquidated damages are incurred and that no redemption premium
on the Senior Convertible Notes will be applicable.
(3) Total net proceeds to the Company calculated by subtracting
the result in footnote (2) from the result in footnote (1).
(4) This number represents the total possible profit to the
selling stockholders based on the aggregate discount to market price of the shares underlying the Senior Convertible Notes and
Senior Warrants as indicated in the above table entitled “Potential Profit from Conversion of Senior Convertible Notes.”
Because the conversion price of the Senior Convertible Notes and the exercise price of the Senior Warrants was higher than the
market price on the date of issuance thereof (as reflected on such table), this number indicates a profit of “0”. However
this does not mean that the selling stockholders will not realize a profit on their investment which could occur if the market
price for the common stock exceeds the exercise price of the Senior Warrants.
(5) Percentage of the total possible payments to the selling
stockholders as calculated in footnote (2) plus profit calculated in footnote (4) compared to the net proceeds disclosed in footnote
(3).
(6) Based on a 21-month term.
Shares to be Registered Under this
Registration Statement (as of January 28, 2014)
Shares issued in the Registration Statements declared effective on June 4, 2013
and November 1, 2013:
|
|
|
126,659,495
|
|
|
Warrant reserve:
|
|
|
17,281,107
|
|
|
Shares issuable for Senior Convertible Notes:
|
|
|
109,378,388
|
|
|
Shares issued for the Senior Convertible Notes:
|
|
|
79,002,027
|
|
|
Shares remaining for issuance under the Notes:
|
|
|
30,376,361
|
|
|
|
|
|
|
|
|
Principal and interest remaining: (assuming no deferrals/accelerations)
|
|
$
|
3,449,218
|
|
|
(Assuming floor VWAP price) conversion price:
|
|
$
|
.0720
|
|
|
Shares for remaining principal and interest:
|
|
|
47,905,813
|
|
|
With 125% reserve requirement:
|
|
|
59,882,267
|
|
|
Less shares remaining for issuance:
|
|
|
30,376,361
|
|
|
Shares registered hereunder:
|
|
|
30,000,000
|
(rounded from 29,505,906)
|
|
Comparison of Registered Shares to Outstanding Shares
The following table compares the number
of shares held by persons other than the selling stockholders, Company affiliates, and affiliates of selling stockholders with
the number of shares registered for resale and sold by such parties in prior transactions as well as in the current transactions
involving the Senior Convertible Notes and Senior Warrants:
Shares Outstanding Prior to the Senior Private Placement Held by Persons Other than the Selling Stockholders, or Affiliates of the Company or Selling Stockholders
|
|
|
108,684,517
|
|
|
|
|
|
|
Shares Registered for Resale by Selling Stockholders or Affiliates of Selling Stockholders in Prior Registration Statements
|
|
|
126,659,495
|
|
|
|
|
|
|
Shares Registered for Resale by Selling Stockholders or Affiliates of the Selling Stockholders that Continue to be Held by Such Persons other than in the prior registration statement
|
|
|
0
|
|
|
|
|
|
|
Shares Sold in Registered Resale Transactions by the Selling Stockholders or Affiliates Thereof other than in the prior registration statement
|
|
|
0
|
|
|
|
|
|
|
Shares Registered for Resale on behalf of the Selling Stockholders or Affiliates Thereof in Connection with the Senior Private Placement second registration statement
|
|
|
30,000,000
|
|
Other Information
As of the date
of this prospectus, the Company does not believe that it will have the financial ability to make all payments on the Senior Convertible
Notes in cash when due. Accordingly, the Company intends, as of the date of this prospectus, to make such payments in
shares of Company common stock to the greatest extent possible.
Each selling shareholder
has advised the Company that it may enter into short sales in the ordinary course of its business of investing and trading securities.
Each selling shareholder has advised the Company, and represented to the Company in the purchase agreement for the Senior
Convertible Notes and Senior Warrants, that no short sales were entered into during the period beginning when such selling
shareholder obtained knowledge that the Company was contemplating a private placement and ending upon the public announcement of
any such private placement. Additionally, each selling shareholder has agreed in the Senior Securities Purchase Agreement
that, so long as a selling shareholder holds any Senior Convertible Note, the selling shareholder will not maintain a “net
short position” in the Company’s common stock, which generally means that the selling shareholder has agreed not to
maintain a short position in the Company’s common stock without maintaining an equivalent offsetting long position.
The Company has
not had any material relationships or arrangements with any of the selling stockholders, their affiliates, or any person with whom
any selling shareholder has a contractual relationship regarding the Senior Private Placement (or any predecessors of those persons).
According to information
provided by each selling stockholder to the Company, none of the selling stockholders has been involved in a transaction with the
Company prior to the May 8, 2013 purchase by the selling stockholders of the Senior Convertible Notes and Senior Warrants.
We believe that the available funds at
December 31, 2013, and including the net proceeds from our May 8, 2013 issue of $9 million in senior convertible notes and $1
million in subordinated convertible notes plus internally generated funds from products sales will provide sufficient financial
resources to fund our operations, working capital, and capital expenditures into the beginning of the fourth quarter of 2014.
Subsequent sources
of outside funding will be required to fund the Company’s working capital, capital expenditures and rate operations beyond
the beginning of the fourth quarter of 2014. No assurances can be given that the Company will be successful in complying with
certain of the terms and conditions in the issuance of the Senior Convertible Notes or in arranging further funding, if needed,
to continue the execution of its business plan including the development and commercialization of new products, or if successful,
on what terms. Failure to obtain such funding will require management to substantially curtail, if not cease operations, which
will result in a material adverse effect on the financial position and results of operations of the Company.
$1 Million Financing Transaction
Simultaneously with
the Closing of the $9 million financing transaction, the Company sold $1 million principal amount of Subordinated Convertible
Notes to investors consisting of management and directors of the Company and one individual investor. The sale of the Subordinated
Convertible Notes did not carry any additional fees and expenses, so the entire $1 million investment netted to the Company. The
Subordinated Convertible Notes are subordinated in right of repayment to the Convertible Notes to the Company and mature 91 days
subsequent to the Maturity Date of the Convertible Notes. The Subordinated Convertible Notes bear interest at the rate of 8% per
annum which shall accrue. Once 2/3 of the Senior Convertible Notes have been repaid, then the Subordinated Convertible Notes may
be converted and/or prepaid in cash so long as there is no Event of Default with respect to the Convertible Notes and all Equity
Conditions of the Senior Convertible Notes are met. The conversion price for the Subordinated Convertible Notes is $0.264 per
share. The holders of the Subordinated Convertible Notes were issued five year warrants to purchase 1,920,123 shares of Company
common stock. Each warrant has an exercise price of $0.302 per share.
THE SELLING STOCKHOLDERS AND PLAN OF
DISTRIBUTION
The shares of common stock being offered
by the selling stockholders are issuable to the selling stockholders pursuant to the terms of the Senior Convertible Notes and
Senior Warrants. For additional information regarding the issuance thereof, see “
DESCRIPTION OF SENIOR PRIVATE PLACEMENT
AND SENIOR CONVERTIBLE NOTES
” in this prospectus. We are registering the shares of common stock in order to permit the
selling stockholders to offer the shares for resale from time to time. Except for the ownership of the Senior Convertible Notes
and Senior Warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material relationship
with us or our affiliates within the past three years.
The table below lists the selling stockholders
and other information regarding the beneficial ownership of the shares of common stock by each of the selling stockholders. The
second column lists the number of shares of common stock beneficially owned by each selling stockholder, based on its ownership
of the Senior Convertible Notes and Senior Warrants, as of May 8, 2013, assuming conversion of all Senior Convertible Notes on
that date, without regard to any limitations on conversions, amortizations, redemptions or exercises. The third column lists the
shares of common stock being offered by this prospectus by the selling stockholders. The fourth column lists the number of shares
of common stock anticipated to be beneficially owned by the selling stockholders following the offering, assuming the sale of
all of the shares offered by the selling stockholders pursuant to this prospectus.
This prospectus covers the resale of
100% of the number of shares of common stock issuable pursuant to the Senior Warrants as of May 8, 2013. Because the
conversion price of the Senior Convertible Notes may be adjusted, the number of shares that will actually be issued may be
more or less than the number of shares being offered by this prospectus.
Under the terms of the Senior Convertible
Notes, a selling stockholder may not convert the Senior Convertible Notes to the extent such conversion would cause such selling
stockholder, together with its affiliates, to beneficially own a number of shares of common stock which would exceed 4.99% of
our then outstanding shares of common stock following such conversion or exercise, excluding for purposes of such determination
shares of common stock issuable upon conversion of the Convertible Notes which have not been converted. The number of shares in
the second column does not reflect this limitation (the "Maximum Percentage"). The selling stockholders may sell all,
some or none of their shares in this offering. See "Plan of Distribution."
Name of Selling Stockholder
|
|
Number of Shares of
Common
Stock Owned
As a Result of the Offering
|
|
|
Maximum Number of Shares
of Common Stock to be Sold
Pursuant to this Prospectus (9)
|
|
|
Number of Shares of
Common
Stock Owned
After Offering
|
|
|
|
|
|
|
|
|
|
|
|
Parsoon Special Situation
Ltd. (1)
|
|
|
13,129,612
|
(2)
|
|
|
4,320,277
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Bay Master Fund Ltd. (3)
|
|
|
13,129,612
|
(4)
|
|
|
4,320,277
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Empery Asset Master Ltd. (5)
|
|
|
13,129,612
|
(6)
|
|
|
4,320,277
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ventures International
(7)
|
|
|
13,129,612
|
(8)
|
|
|
4,320,277
|
|
|
|
0
|
|
(1) Robin R. Shah has voting and/or investment
power over such shares of Common Stock.
(2) Represents 8,809,335 shares of Common
Stock issuable pursuant to the terms of the Convertible Notes without regard to the Maximum Percentage. Includes 4,320,277 shares
of Common Stock issuable upon exercise of the Warrants, even though the Warrants are not exercisable until six (6) months after
the date of issuance.
(3) Hudson Bay Capital Management LP, the
investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the
managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP. Sander Gerber
disclaims beneficial ownership over these securities.
(4) Represents 8,809,335 shares of Common
Stock issuable pursuant to the terms of the Convertible Notes without regard to the Maximum Percentage. Includes 4,320,277 shares
of Common Stock issuable upon exercise of the Warrants, even though the Warrants are not exercisable until six (6) months after
the date of issuance.
(5) Empery Asset Management LP, the authorized
agent of Empery Asset Master Ltd ("EAM"), has discretionary authority to vote and dispose of the shares held by EAM
and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers
of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by EAM.
Mr. Hoe and Mr. Lane disclaim any beneficial ownership of these shares.
(6) Represents 8,809,335 shares
of Common Stock issuable pursuant to the terms of the Convertible Notes without regard to the Maximum Percentage.
Includes 4,320,777 shares of Common Stock issuable upon exercise of the Warrants, even though the Warrants are not
exercisable until six (6) months after the date of issuance. In January 2014, Empery Asset Master purchased the Hartz Capital
portion of the Convertible Notes and Warrants.
(7) Heights Capital Management, Inc., the
authorized agent of Capital Ventures International (“CVI”), has discretionary authority to vote and dispose of the
shares held by CVI and may be deemed to be the beneficial owner of these shares. Martin Kobinger, in his capacity as Investment
Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and voting power over the shares
held by CVI. Mr. Kobinger disclaims any such beneficial ownership of the shares.
CVI
is affiliated with one or more registered broker-dealers. CVI purchased the shares being registered hereunder in the ordinary
course of business and at the time of purchase, had no agreements or understandings, directly or indirectly, with any other person
to distribute such shares
.
(8) Represents 8,809,335 shares of Common
Stock issuable pursuant to the terms of the Convertible Notes without regard to the Maximum Percentage. Includes 4,320,277 shares
of Common Stock issuable upon exercise of the Warrants, even though the Warrants are not exercisable until six (6) months after
the date of issuance.
(9) On May 8, 2013, we entered into
a Registration Rights Agreement with the selling stockholders listed in this table. See the section of this prospectus
entitled “
DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
.” Under the Registration Rights
Agreement, we are required to file a resale registration statement for the shares underlying the Senior Convertible Notes and
Senior Warrants to enable the resale of such shares by the selling stockholders on a delayed or continuous basis under Rule
415 of the Securities Act. Pursuant to the terms of the Senior Convertible Notes, we may make interest and/or installment
payments with shares of our common stock, and we are including in this registration statement 1.25 times the number of shares
issuable upon the conversion of the Senior Convertible Notes and 1.00 times the number of shares issuable upon the exercise
of the Senior Warrants as of the date of the Registration Rights Agreement. The shares with respect to the Notes have been
resold in full, and the column only reflects Warrant Shares. Accordingly, the full number of shares set forth in this column
may not ultimately become issuable to the selling stockholders under such Senior Warrants.
PLAN OF DISTRIBUTION
We are registering
the shares of common stock issuable upon conversion of the notes and exercise of the warrants to permit the resale of these shares
of common stock by the holders of the notes and warrants from time to time after the date of this prospectus. We will not receive
any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock.
The selling stockholders
may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through
one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers,
the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares
of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale,
at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions, pursuant to one or more of the following methods:
|
·
|
on
any national securities
exchange or quotation
service on which
the securities may
be listed or quoted
at the time of sale;
|
|
·
|
in
the over-the-counter
market;
|
|
·
|
in
transactions otherwise
than on these exchanges
or systems or in
the over-the-counter
market;
|
|
·
|
through
the writing or settlement
of options, whether
such options are
listed on an options
exchange or otherwise;
|
|
·
|
ordinary
brokerage transactions
and transactions
in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which
the broker-dealer
will attempt to
sell the shares
as agent but may
position and resell
a portion of the
block as principal
to facilitate the
transaction;
|
|
·
|
purchases
by a broker-dealer
as principal and
resale by the broker-dealer
for its account;
|
|
·
|
an
exchange distribution
in accordance with
the rules of the
applicable exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
short
sales made after
the date the Registration
Statement is declared
effective by the
SEC;
|
|
·
|
broker-dealers
may agree with a
selling security
holder to sell a
specified number
of such shares at
a stipulated price
per share;
|
|
·
|
a
combination of any
such methods of
sale; and
|
|
·
|
any
other method permitted
pursuant to applicable
law.
|
The selling stockholders
may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described
in this prospectus. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters,
broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions
or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers
or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of
common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders
may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions
and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of
common stock to broker-dealers that in turn may sell such shares.
The selling stockholders
may pledge or grant a security interest in some or all of the notes, warrants or shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of
common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate
the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.
To the extent required
by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in
the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities
Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a
prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being
offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed
or re-allowed or paid to broker-dealers.
Under the securities
laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance
that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement,
of which this prospectus forms a part.
The selling stockholders
and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders
and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged
in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock.
All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common stock.
We have paid all
expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be
$35,000 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance
with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some
liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholders will
be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act that may arise from any written information furnished to us by the selling stockholder
specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled
to contribution.
Once sold under the
registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands
of persons other than our affiliates.
Once sold under the
registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands
of persons other than our affiliates.
DESCRIPTION OF SECURITIES
General
Our amended and restated certificate of incorporation
authorizes the issuance of 350,000,000 shares of common stock and 12,500,000 shares of preferred stock. As of April 14,
2014, we have 221,511,725 common shares issued and outstanding. Outstanding warrants and vested options entitle the holders
to purchase 28,026,080 additional shares of common stock.
Within the limits established by our amended
and restated of incorporation, our board of directors has the power at any time and without stockholder approval to issue shares
of our authorized common stock or preferred stock for cash, to acquire property or for any other purpose that the board of directors
believes is in the best interests of our company. Our stockholders have no pre-emptive rights and any decision to issue additional
shares of common stock or preferred stock will reduce the percentage ownership of our current stockholders and could dilute our
net tangible book value.
Our board of directors has the power to
establish the designation, rights and preferences of any preferred stock we issue in the future. Accordingly, our board of directors
may, without stockholder approval, issue preferred stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders of common stock. Subject to the directors’ duty to act
in the best interest of our company, shares of preferred stock can be issued quickly with terms calculated to delay or prevent
a change in control or make removal of management more difficult.
The following summary of our capital stock
does not purport to be complete and is subject to and qualified in its entirety by our amended and restated certificate of incorporation
and our by-laws, each of which are included as exhibits to the registration statement of which this prospectus forms a part and
by the provisions of applicable law.
Common Stock
Our common stockholders are entitled to
one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect
to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors
can elect the entire board of directors. The holders of common stock are entitled to receive dividends when, as and if declared
by our board of directors out of funds legally available. In the event of our liquidation, dissolution or winding up, our common
stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities
and after provision has been made for each class of stock, if any, having preference over the common stock. The holders of common
stock have no preemptive or other subscription rights and there are no redemption provisions applicable to the common stock. All
of our outstanding shares of common stock are fully paid and non-assessable.
Warrants
As
of January 14, 2014, we have 20,826,436 outstanding warrants that represent potential future cash proceeds to our
company of $6,366,162. The warrants are divided into six classes that are presently exercisable and expire at various times
through December 8, 2018. The following table summarizes the number of warrants in each class, the anticipated proceeds from
the exercise of each class, and the expiration date of each class.
Warrant
Series
|
|
Number of
Warrants
|
|
|
Exercise
Price
|
|
|
Anticipated
Proceeds
|
|
|
Expiration Date
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Bridge Warrants
|
|
|
45,661
|
|
|
|
2.00
|
|
|
|
91,322
|
|
|
August 12, 2014
|
2013 Senior Warrants
|
|
|
17,281,107
|
|
|
|
0.302
|
|
|
|
5,218,894
|
|
|
November 8, 2018
|
2013 Junior Warrants
|
|
|
1,920,123
|
|
|
|
0.302
|
|
|
|
579,878
|
|
|
November 8, 2018
|
2013 Placement Agent
|
|
|
1,579,545
|
|
|
|
0.302
|
|
|
|
476,068
|
|
|
November 8, 2018 - December 8, 2018
|
TOTAL
|
|
|
20,826,436
|
|
|
|
|
|
|
|
6,366,162
|
|
|
|
The holders of
warrants are not required to exercise their rights at any time prior to the expiration date and we are unable to predict the amount
and timing of any future warrant exercises. We reserve the right to temporarily reduce the exercise prices of our warrants from
time to time in order to encourage the early exercise of the warrants.
Stock Options
As
of January 14, 2014, we have 5,192,140 outstanding stock options that represent potential future cash proceeds to
our company of $6,419,318. The outstanding options include 3,431,729 options that are currently vested and exercisable,
and represent potential future cash proceeds to our company of $5,734,116. The remaining options will vest and become
exercisable over the next three years. The following table provides summary information on our outstanding options.
|
|
Vested Option Grants
|
|
|
Unvested Option Grants
|
|
|
|
Shares
|
|
|
Wtd Avg. Price
|
|
|
Proceeds
|
|
|
Shares
|
|
|
Wtd Avg Price
|
|
|
Proceeds
|
|
2011 Employee & officer plan options
|
|
|
1,734,395
|
|
|
$
|
1.50
|
|
|
$
|
2,601,430
|
|
|
|
801,932
|
|
|
$
|
0.48
|
|
|
$
|
388,885
|
|
Directors plan options
|
|
|
531,584
|
|
|
|
1.03
|
|
|
|
547,061
|
|
|
|
958,479
|
|
|
|
0.31
|
|
|
|
296,317
|
|
Non-plan options, consultants and employees
|
|
|
1,165,750
|
|
|
|
2.22
|
|
|
|
2,585,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,431,729
|
|
|
|
1.67
|
|
|
$
|
5,734,116
|
|
|
|
1,760,411
|
|
|
|
0.39
|
|
|
$
|
685,002
|
|
The holders of
options are not required to exercise their rights at any time and we are unable to predict the amount and timing of any future
option exercises. We reserve the right to temporarily reduce the exercise prices of our options from time to time in order to encourage
the early exercise of the options.
Delaware Anti-takeover Statute
We are subject to the provisions of section
203 of the Delaware General Corporation Law regulating corporate takeovers. In general, those provisions prohibit a Delaware corporation
from engaging in any business combination with any interested stockholder for a period of three years following the date that
the stockholder became an interested stockholder, unless:
|
¨
|
the transaction is approved by the board of directors before the date the interested stockholder attained that status;
|
|
¨
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
|
|
¨
|
on or after the date the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
|
Section 203 defines “business combination” to include
the following:
|
¨
|
any merger or consolidation involving the corporation and the interested stockholder;
|
|
¨
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
|
¨
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
|
¨
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
|
|
¨
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
|
In general, Section 203 defines an interested
stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any
entity or person affiliated with or controlling or controlled by any of these entities or persons.
A Delaware corporation may opt out of
this provision either with an express provision in its certificate of incorporation or bylaws approved by its stockholders. However,
we have not opted out, and do not currently intend to opt out, of this provision. The statute could prohibit or delay mergers
or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us.
Certificate of Incorporation and By-laws
Our amended and restated certificate of
incorporation and by-laws include provisions that may have the effect of delaying or preventing a change of control or changes
in our management. These provisions include:
|
¨
|
the
division of our
board of directors
into three classes
of directors that
serve for rotating
three-year terms;
|
|
¨
|
the
right of the board
of directors to
elect a director
to fill a vacancy
created by the
resignation of
a director or the
expansion of the
board of directors;
|
|
¨
|
the
prohibition of
cumulative voting
in the election
of directors, which
would otherwise
allow less than
a majority of stockholders
to elect director
candidates;
|
|
¨
|
the
requirement for
advance notice
for nominations
of candidates for
election to the
board of directors
or for proposing
matters that can
be acted upon at
a stockholders’
meeting;
|
|
¨
|
the
ability of the
board of directors
to issue, without
stockholder approval,
up to 12,355,000
shares of preferred
stock with terms
set by the board
of directors, which
rights could be
senior to those
of common stock;
and
|
|
¨
|
the right of our board of directors to alter our bylaws without stockholder approval.
|
Transfer Agent
Our transfer agent is Continental Stock
Transfer & Trust, 17 Battery Place, New York, New York 10004.
LEGAL MATTERS
The legality of the shares of common stock
offered by this prospectus will be passed upon for us by Jolie Kahn, Esq. of Philadelphia, PA.
EXPERTS
The financial statements as of December
31, 2013 and 2012 incorporated by reference in this prospectus have been so included in reliance on the report of EFP Rotenberg,
LLP, an independent registered public accounting firm, given on the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement
on Form S-1 with the Securities and Exchange Commission with respect to this offering. This prospectus, which is part of the registration
statement, does not include all of the information contained in the registration statement. You should refer to the registration
statement and its exhibits and schedules for additional information. Whenever we make reference in this prospectus to any of our
contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits and
schedules attached to the registration statement for copies of the actual contract, agreement or other document.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference
the information we file with it, which means that we can disclose important information to you by referring you to another document
that we have filed separately with the SEC. You should read the information incorporated by reference because it is an important
part of this prospectus. We incorporate by reference the following information or documents that we have filed with the SEC:
|
•
|
Our annual report on Form 10-K for the year ended December
31, 2013;
|
Any statement contained in any document
incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that
a statement contained in this prospectus or any prospectus supplement modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We will provide without charge to
each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request, a copy of
any or all documents that are incorporated by reference into this prospectus, but not delivered with the prospectus, other
than exhibits to such documents unless such exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates. You should direct written requests to: Axion Power International, Inc., Attn: Thomas Granville,
Chief Executive Officer, 3601 Clover Lane, New Castle, PA 16105, telephone number: (724) 654-9300.
We also file annual, quarterly and current
reports, proxy statements and other documents with the Securities and Exchange Commission under the Exchange Act. You may read
and copy any materials that we may file without charge at the Securities and Exchange Commission’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. You may call the Securities and Exchange Commission at 1-800-Securities and Exchange
Commission-0330 for further information on the operation of the Public Reference Room. You may obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the Securities and Exchange Commission at 100 F Street, N.E.,
Washington, D.C. 20549. The Securities and Exchange Commission also maintains an Internet site, http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding issuers that file electronically with the Securities
and Exchange Commission. The other information we file with the Securities and Exchange Commission is not part of the registration
statement of which this prospectus forms a part.
61,327,781 Shares of Common Stock
PART II – INFORMATION NOT REQUIRED
IN PROSPECTUS
We estimate that our expenses in connection with this offering,
other than underwriting discounts and commissions, will be as follows:
Securities and Exchange Commission registration fee
|
|
$
|
2091.28
|
|
Printing and engraving expenses
|
|
$
|
-
|
|
Legal fees and expenses
|
|
$
|
25,000
|
|
Accountant fees and expenses
|
|
$
|
5,000
|
|
Total
|
|
$
|
32,091.28
|
|
Item 14. Indemnification of Directors and Officers
Section 102 of the Delaware General Corporation
Law allows a corporation to eliminate the personal liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except where the director breached his or her duty of loyalty to the corporation
or its stockholders, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the
payment of a dividend or approved a stock purchase or redemption in violation of the Delaware General Corporation Law or obtained
an improper personal benefit.
Our amended and restated certificate of
incorporation specifically limits each director’s personal liability, as permitted by Section 102 of the Delaware General
Corporation Law, and provides that if the Delaware General Corporation Law is hereafter amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall
be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended.
Section 145 of the Delaware General Corporation
Law provides, among other things, that a corporation may indemnify any and all persons whom it shall have power to indemnify under
said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section,
and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, vote of stockholders or disinterested directors of otherwise both as to action in his official
capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be
a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
Our amended and restated certificate of incorporation provides for indemnification of our directors, officers, employees and agents
to the fullest extent permitted by the Delaware General Corporation Law.
Item 15. Recent Sales of Unregistered Securities
Since January 1, 2011, Axion has issued
and sold the following securities in transactions exempt from registration under Section 4(2) of the Securities Act of 1933:
May 8, 2013 sale of $9.0 million
aggregate principal amount of Senior Convertible Notes and Senior Warrants and $1.0 million aggregate principal amount of
Subordinated Convertible Notes and Junior Warrants as described in
“DESCRIPTION OF PRIVATE PLACEMENT AND CONVERTIBLE
NOTES"
on p. 38 of this prospectus.
All of the above equity transactions were
made in reliance on Section 4(2) of the Securities Act and/or Regulation D promulgated under the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
2.1
|
|
Reorganization Agreement (without exhibits) between Tamboril Cigar Company, Axion Power Corporation and certain stockholders of Axion Power Corporation dated December 31, 2003.
|
|
(1)
|
2.2
|
|
First Addendum to the Reorganization Agreement between Tamboril Cigar Company, Axion Power Corporation and certain stockholders of Axion Power Corporation dated January 9, 2004.
|
|
(1)
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Tamboril Cigar Company dated February 13, 2001.
|
|
(2)
|
3.3
|
|
Amendment to the Certificate of Incorporation of Tamboril Cigar Company dated June 4, 2004.
|
|
(3)
|
3.4
|
|
Amendment to the Certificate of Incorporation of Axion Power International, Inc. dated June 4, 2004.
|
|
(3)
|
3.5
|
|
Amended By-laws of Axion Power International, Inc. dated June 4, 2004. (3)
|
|
|
3.6
|
|
Amendment to the Certificate of Incorporation of Axion Power International, Inc., dated July 22, 2011
|
|
(30)
|
3.7
|
|
Amendment to the Certificate of Incorporation of Axion Power International, Inc., dated September 26, 2013.
|
|
(35)
|
4.1
|
|
Specimen Certificate for shares of Company’s $0.00001 par value common stock.
|
|
(9)
|
4.2
|
|
Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated December 31, 2003.
|
|
(1)
|
4.3
|
|
Succession Agreement Pursuant to the Provisions of the Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated March 25, 2004.
|
|
(4)
|
4.4
|
|
Form of Warrant Agreement for 1,796,300 capital warrants.
|
|
(9)
|
4.5
|
|
Form of Warrant Agreement for 667,000 Series I investor warrants.
|
|
(9)
|
4.6
|
|
Form of Warrant Agreement for 350,000 Series II investor warrants.
|
|
(9)
|
4.7
|
|
Form of Warrant Agreement for 313,100 Series III investor warrants.
|
|
(9)
|
4.8
|
|
Form of 8% Cumulative Convertible Senior Preferred Stock Certificate
|
|
(D)
|
4.9
|
|
First Amended and Restated Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated February 28, 2005.
|
|
(11)
|
4.10
|
|
Second Amendment and Restated Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated November 21, 2006
|
|
(19)
|
4.11
|
|
Certificate of Powers, Designations, Preferences and Rights of the 8% Convertible Senior Preferred Stock of Axion Power International, Inc. dated March 17, 2005.
|
|
(12)
|
4.12
|
|
Certificate of Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, Par Value $0.0001 Per Share, of Axion Power International, Inc. dated October 23, 2006.
|
|
(13)
|
4.13
|
|
Amended Certificate of Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, Par Value $0.0001 Per Share, of Axion Power International, Inc. dated October 26, 2006.
|
|
(13)
|
5.1
|
|
Opinion of Jolie Kahn, Esq.
|
|
(25)
|
9.1
|
|
Agreement respecting the voting of certain shares beneficially owned by the Trust for the Benefit of the Shareholders of Mega-C Power Corporation.
|
|
Included in
Exhibit 4.2
|
10.1
|
|
Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated November 15, 2003.
|
|
(1)
|
10.2
|
|
Letter Amendment to Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated November 17, 2003.
|
|
(1)
|
10.3
|
|
Tamboril Cigar Co. Incentive Stock Plan dated January 8, 2004
|
|
(A)
|
10.4
|
|
Tamboril Cigar co. Outside Directors Stock Option Plan dated February 2, 2004
|
|
(A)
|
10.5
|
|
Stock Purchase & Investment Representation Letter among John L. Petersen, Sally A. Fonner and C and T Co. Incorporated dated January 9, 2004
|
|
(1)
|
10.6
|
|
Letter Amendment to Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated January 9, 2004.
|
|
(1)
|
10.7
|
|
First Amendment to Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated as of January 9, 2004.
|
|
(5)
|
10.8
|
|
Definitive Incentive Stock Plan of Axion Power International, Inc. dated June 4, 2004.
|
|
(3)
|
10.9
|
|
Definitive Outside Directors’ Stock Option Plan of Axion Power International, Inc. dated June 4, 2004.
|
|
(3)
|
10.10
|
|
Executive Employment Agreement of Charles Mazzacato.
|
|
(9)
|
10.11
|
|
Executive Employment Agreement of Peter Roston.
|
|
(9)
|
10.12
|
|
Amended Retainer Agreement between the law firm of Fefer, Petersen & Cie dated March 31, 2005
|
|
(C)
|
10.13
|
|
Retainer Agreement dated January 2, 2004 between the law firm of Fefer, Petersen & Cie and Tamboril Cigar Company.
|
|
(10)
|
10.14
|
|
Bankruptcy Settlement Agreement Between Axion Power International, Inc. and Mega-C Power Corporation dated December, 2005
|
|
(E)
|
10.15
|
|
Second Amendment to Development and License Agreement between Axion Power International, Inc. and C and T Co. Incorporated dated as of March 18, 2005.
|
|
(12)
|
10.16
|
|
Executive Employment Agreement of Thomas Granville dated June 23, 2008.
|
|
(20)
|
10.17
|
|
Loan agreement dated January 31, 2006 between Axion Battery Products, Inc. as borrower, Axion Power International, Inc. as accommodation party and Robert Averill as lender respecting a $1,000,000 purchase money and working capital loan.
|
|
(14)
|
10.18
|
|
Security agreement dated January 31, 2006 between Axion Battery Products, Inc. as debtor and Robert Averill as secured party.
|
|
(14)
|
10.19
|
|
Security agreement dated January 31, 2006 between Axion Power International, Inc. as debtor and Robert Averill as secured party.
|
|
(14)
|
10.20
|
|
Promissory Note dated February 14, 2006 between Axion Battery Products, Inc. as maker and Robert Averill as payee.
|
|
(14)
|
10.21
|
|
Form of Warrant Agreement between Axion Power International, Inc. and Robert Averill.
|
|
(14)
|
10.22
|
|
Commercial Lease Agreement dated February 14, 2006 between Axion Battery Products, Inc. as lessee and Steven F. Hoye and Steven C. Warner as lessors.
|
|
(14)
|
10.23
|
|
Asset Purchase Agreement dated February 10, 2006 between Axion Battery Products, Inc. as buyer and National City Bank of Pennsylvania as seller.
|
|
(14)
|
10.24
|
|
Escrow Agreement dated February 14, 2006 between Axion Battery Products, Inc. and National City Bank of Pennsylvania as parties in interest and William E. Kelleher, Jr. and James D. Newell as escrow agents.
|
|
(14)
|
10.25
|
|
Executive Employment Agreement of Edward Buiel dated June 23, 2008.
|
|
(21)
|
10.26
|
|
Consulting Agreement, dated as of September 27, 2007, by and between Axion Power International, Inc. and Andrew Carr Conway, Jr.
|
|
(16)
|
10.27
|
|
Amendment No. 1 to Consulting Agreement, dated as of October 31, 2007, by and between Axion Power International, Inc. and Andrew Carr Conway, Jr.
|
|
(16)
|
10.28
|
|
Securities Purchase Agreement dated as of January 14, 2008, by and between Axion Power International, Inc. and Quercus Trust.
|
|
(17)
|
10.29
|
|
Common Stock Purchase Warrant dated January 14, 2008, executed by Axion Power International, Inc.
|
|
(17)
|
10.30
|
|
Executive Employment Agreement of Donald T. Hillier dated June 18, 2008.
|
|
(19)
|
10.31
|
|
Amendment to Warrants and Securities Purchase Agreement dated as of September 22, 2009, by and between Axion Power International, Inc. and Quercus Trust.
|
|
(22)
|
10.32
|
|
Securities Purchase Agreement dated as of December 18, 2009, by and between Axion Power International, Inc. and the Investors named therein.
|
|
(23)
|
10.33
|
|
Registration Rights Agreement, executed by Axion Power International Inc. and the Investors named therein.
|
|
(23)
|
10.34
|
|
Amendment No. 2 to Securities Purchase Agreement dated as of January 14, 2008, by and between Axion Power International, Inc. and Quercus Trust.
|
|
(23)
|
10.35
|
|
Lock-Up Agreement executed by Quercus Trust and David Gelbaum and Monica Chavez Gelbaum.
|
|
(23)
|
10.36
|
|
Lease Agreement, dated March 28, 2010, by and between Steven F. Hoye and Steven C. Warner, Lessor, and Axion Power Battery Manufacturing, Inc., Lessee.
|
|
(24)
|
10.37
|
|
Executive Employment Agreement, dated as of April 1, 2010, between Charles R. Trego and the Company
|
|
(26)
|
10.38
|
|
Executive Employment Agreement, dated as of April 1, 2010 between Philip S. Baker and the Company
|
|
(26)
|
10.39
|
|
Executive Employment Agreement of Thomas Granville dated June 29, 2010.
|
|
(27)
|
10.40
|
|
Amendment No. 3 to Securities Purchase Agreement by and between Axion Power International, Inc. and the Quercus Trust dated September 30, 2010.
|
|
(28)
|
10.41
|
|
Commercial Lease with Becan Development, LLC dated November 4, 2010.
|
|
(29)
|
10.42
|
|
Form of Subscription Agreement
|
|
(31)
|
10.43
|
|
Placement Agency Agreement, dated January 31, 2012
|
|
(31)
|
10.44
|
|
Securities Purchase Agreement, dated May 7, 2013, between Axion Power International, Inc. and the Investors
|
|
(32)
|
10.45
|
|
Form of Note
|
|
(32)
|
10.46
|
|
Form of Warrant
|
|
(32)
|
10.47
|
|
Registration Rights Agreement, dated May 8, 2013, between Axion Power International, Inc. and the Investors
|
|
(32)
|
10.48
|
|
Subordinated Note Purchase Agreement, dated May 7, 2013, between Axion Power International, Inc. and the Subordinated Investors
|
|
(32)
|
10.49
|
|
Form of Subordinated Note
|
|
(32)
|
10.50
|
|
Form of Subordinated Note Warrant
|
|
(32)
|
10.51
|
|
Subordination Agreement, dated May 8, 2013, by and among Axion Power International, Inc., the Investors and the Subordinated Investors
|
|
(32)
|
10.52
|
|
Executive Employment Agreement of Thomas Granville, effective April 1, 2013
|
|
(33)
|
10.53
|
|
Executive Employment Agreement of Charles Trego, effective April 1, 2013
|
|
(33)
|
10.54
|
|
Executive Employment Agreement of Phillip Baker, effective April 1, 2013
|
|
(33)
|
10.55
|
|
Executive Employment Agreement of Vani Dantam, effective April 1, 2013
|
|
(33)
|
10.56
|
|
Executive Employment Agreement of Stephen Graham, effective October 21, 2013
|
|
(34)
|
10.57
|
|
Form of Senior Note Amendment
|
|
(35)
|
14.1
|
|
Code of Business Conduct and Ethics
|
|
(6)
|
23.1
|
|
Consent of Jolie Kahn, Esq. (included in Exhibit 5.1)
|
|
|
23.2
|
|
Consent of EFP Rotenberg, LLP
|
|
|
(1)
|
Incorporated by reference from our Current Report on Form 8-K dated January 15, 2004.
|
(2)
|
Incorporated by reference from our Current Report on Form 8-K dated February 5, 2003.
|
(3)
|
Incorporated by reference from our Current Report on Form 8-K dated June 7, 2004.
|
(4)
|
Incorporated by reference from our Current Report on Form 8-K dated April 13, 2004.
|
(5)
|
Incorporated by reference from our Form S-3 registration statement dated May 20, 2004.
|
(6)
|
Incorporated by reference from our Annual Report on Form 10-KSB dated March 30, 2004
|
(7)
|
Incorporated by reference from our Current Report on Form 8-K dated April 13, 2003.
|
(8)
|
Incorporated by reference from our Current Report on Form 8-K dated February 16, 2004.
|
(9)
|
Incorporated by reference from our Form S-1 registration statement dated September 2, 2004.
|
(10)
|
Incorporated by reference from our Form S-1 registration statement dated December 17, 2004.
|
(11)
|
Incorporated by reference from our Current Report on Form 8-K dated February 28, 2005.
|
(12)
|
Incorporated by reference from our Current Report on Form 8-K dated March 21, 2005.
|
(13)
|
Incorporated by reference from our Current Report on Form 8-K dated November 8, 2006.
|
(14)
|
Incorporated by reference from our Current Report on Form 8-K dated February 16, 2006.
|
(15)
|
Incorporated by reference from our Current Report on Form 8-K dated January 3, 2007.
|
(16)
|
Incorporated by reference from our Current Report on Form 8-K dated November 6, 2007.
|
(17)
|
Incorporated by reference from our Current Report on Form 8-K dated January 17, 2008.
|
(18)
|
Incorporated by reference from our Current Report on Form 8-K dated January 31, 2008.
|
(19)
|
Incorporated by reference from our Registration Statement on Form S-1 dated July 3, 2008.
|
(20)
|
Incorporated by reference from our Current Report on Form 8-K dated June 27, 2008.
|
(21)
|
Incorporated by reference from our Current Report on Form 8-K dated July 2, 2008.
|
(22)
|
Incorporated by reference from our Current Report on Form 8-K dated September 22, 2009.
|
(23)
|
Incorporated by reference from our Current Report on Form 8-K dated December 18, 2009.
|
(24)
|
Incorporated by reference from our Form 10-K for the year ended December 31, 2009 filed on March 30, 2010
|
(25)
|
Intentionally omitted.
|
(26)
|
Incorporated by reference from our Current Report on Form 8-K, filed on April 6, 2010.
|
(27)
|
Incorporated by reference from our Current Report on Form 8-K dated July 6, 2010.
|
(28)
|
Incorporated by reference from our Current Report on Form 8-K dated October 4, 2010.
|
(29)
|
Incorporated by reference from our Current Report on Form 8-K dated November 10, 2010.
|
(30)
|
Incorporated by reference from our Current Report on Form 8-K dated July 22, 2011.
|
(31)
|
Incorporated by reference from our Current Report on Form 8-K dated January 31, 2012.
|
(32)
|
Incorporated by reference from our Current Report on Form 8-K dated May 8, 2013
|
(33)
|
Incorporated by reference from our Quarterly Report on Form 10-Q dated May 15, 2013
|
(34)
|
Incorporated by reference from our Current Report on Form 8-K, dated October 15, 2013
|
(35)
|
Incorporated by reference from our Current Report on Form 8-K dated January 3, 2014.
|
(A)
|
Incorporated by reference from our Current Report on Form 8-K/A dated February 2, 2004.
|
(B)
|
Incorporated by reference from our Current Report on Form 8-K dated April 4, 2005.
|
(C)
|
Incorporated by reference from our Registration Statement on Form SB-2 dated April 16, 2005.
|
(D)
|
Incorporated by reference from our Current Report on Form 8-K dated December 13, 2005.
|
Item 17. Undertakings
The undersigned registrant hereby undertakes:
1.
|
To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
|
|
i.
|
To include any prospectus required by section 10(a)(3) of the Securities
Act;
|
|
ii.
|
To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective registration statement.
|
|
iii.
|
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any material change to such information in the registration
statement.
|
2.
|
That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
2.
|
That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
3.
|
To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of the offering.
|
4.
|
That, for the purpose of determining liability under the Securities
Act to any purchaser:
|
|
i.
|
If the registrant is relying on Rule 430B (Section 430B of this
chapter):
|
|
A.
|
Each prospectus filed by the registrant pursuant to Rule 424(b)(3)shall
be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in
the registration statement; and
|
|
B.
|
Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to
such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately prior to such effective date; or
|
|
ii.
|
If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as
to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such date of first use.
|
5.
|
That, for the purpose of determining liability of the registrant
under the Securities Act to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes
that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
|
|
i.
|
Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
|
|
ii.
|
Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
iii.
|
The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its securities provided by or on behalf of the
undersigned registrant; and
|
|
iv.
|
Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
|
6.
|
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue.
|
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in New Castle, Pennsylvania, on the 17
th
day of April, 2014.
AXION POWER INTERNATIONAL, INC.
By: /s/ Thomas
Granville
|
Thomas Granville, Principal Executive Officer
and Principal Financial Officer
|
Date: April 17, 2014
Pursuant to the requirements of the Securities
Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ D. Walker Wainwright
|
|
Director
|
|
April 17, 2014
|
D. Walker Wainwright
|
|
|
|
|
|
|
|
|
|
/s/ Thomas Granville
|
|
Director
|
|
April 17, 2014
|
Thomas Granville
|
|
|
|
|
|
|
|
|
|
/s/ Michael Kishinevsky
|
|
Director
|
|
April 17, 2014
|
Michael Kishinevsky
|
|
|
|
|
|
|
|
|
|
/s/ Howard K. Schmidt
|
|
Director
|
|
April 17, 2014
|
Howard K. Schmidt
|
|
|
|
|
|
|
|
|
|
/s/ Charles Trego
|
|
Director
|
|
April 17, 2014
|
Charles Trego
|
|
|
|
|
|
|
|
|
|
/s/ David DiGiancinto
|
|
Director
|
|
April 17, 2014
|
David DiGiancinto
|
|
|
|
|
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